[House Hearing, 118 Congress]
[From the U.S. Government Publishing Office]


                     LOWERING COSTS AND INCREASING
                       ACCESS TO HEALTHCARE WITH
                       EMPLOYER-DRIVEN INNOVATION

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

                                HEARING

                               Before The

                          SUBCOMMITTEE ON HEALTH, 
                       EMPLOYMENT, LABOR, AND PENSIONS

                                 OF THE

                        COMMITTEE ON EDUCATION AND THE 
                                WORKFORCE
                     U.S. HOUSE OF REPRESENTATIVES

                    ONE HUNDRED EIGHTEENTH CONGRESS

                             SECOND SESSION

                               __________


            HEARING HELD IN WASHINGTON, DC, JANUARY 11, 2024

                               __________

                           Serial No. 118-33

                               __________

  Printed for the use of the Committee on Education and the Workforce
  
 [GRAPHIC NOT AVAILABLE IN TIFF FORMAT] 


        Available via: edworkforce.house.gov or www.govinfo.gov
        
                              __________

                   U.S. GOVERNMENT PUBLISHING OFFICE                    
56-309 PDF                  WASHINGTON : 2024                    
          
-----------------------------------------------------------------------------------         
       
                COMMITTEE ON EDUCATION AND THE WORKFORCE

               VIRGINIA FOXX, North Carolina, Chairwoman

JOE WILSON, South Carolina           ROBERT C. ``BOBBY'' SCOTT, 
GLENN THOMPSON, Pennsylvania             Virginia,
TIM WALBERG, Michigan                  Ranking Member
GLENN GROTHMAN, Wisconsin            RAUL M. GRIJALVA, Arizona
ELISE M. STEFANIK, New York          JOE COURTNEY, Connecticut
RICK W. ALLEN, Georgia               GREGORIO KILILI CAMACHO SABLAN,
JIM BANKS, Indiana                     Northern Mariana Islands
JAMES COMER, Kentucky                FREDERICA S. WILSON, Florida
LLOYD SMUCKER, Pennsylvania          SUZANNE BONAMICI, Oregon
BURGESS OWENS, Utah                  MARK TAKANO, California
BOB GOOD, Virginia                   ALMA S. ADAMS, North Carolina
LISA McCLAIN, Michigan               MARK DeSAULNIER, California
MARY MILLER, Illinois                DONALD NORCROSS, New Jersey
MICHELLE STEEL, California           PRAMILA JAYAPAL, Washington
RON ESTES, Kansas                    SUSAN WILD, Pennsylvania
JULIA LETLOW, Louisiana              LUCY McBATH, Georgia
KEVIN KILEY, California              JAHANA HAYES, Connecticut
AARON BEAN, Florida                  ILHAN OMAR, Minnesota
ERIC BURLISON, Missouri              HALEY M. STEVENS, Michigan
NATHANIEL MORAN, Texas               TERESA LEGER FERNANDEZ, New Mexico
JOHN JAMES, Michigan                 KATHY MANNING, North Carolina
LORI CHAVEZ-DeREMER, Oregon          FRANK J. MRVAN, Indiana
BRANDON WILLIAMS, New York           JAMAAL BOWMAN, New York
ERIN HOUCHIN, Indiana

                       Cyrus Artz, Staff Director
              Veronique Pluviose, Minority Staff Director
                                 ------                                

        SUBCOMMITTEE ON HEALTH, EMPLOYMENT, LABOR, AND PENSIONS

                      BOB GOOD, Virginia, Chairman

JOE WILSON, South Carolina           MARK DeSAULNIER, California
TIM WALBERG, Michigan                  Ranking Member
RICK ALLEN, Georgia                  JOE COURTNEY, Connecticut
JIM BANKS, Indiana                   DONALD NORCROSS, New Jersey
JAMES COMER, Kentucky                SUSAN WILD, Pennsylvania
LLOYD SMUCKER, Pennsylvania          FRANK J. MRVAN, Indiana
MICHELLE STEEL, California           PRAMILA, JAYAPAL, Washington
AARON BEAN, Florida                  LUCY McBATH, Georgia
ERIC BURLISON, Missouri              JAHANA HAYES, Connecticut
LORI CHAVEZ-DeREMER, Oregon          ILHAN OMAR, Minnesota
ERIN HOUCHIN, Indiana                KATHY MANNING, North Carolina
                         
                         
                         C  O  N  T  E  N  T  S

                              ----------                              
                                                                   Page

Hearing held on January 11, 2024.................................     1

                           OPENING STATEMENTS

    Good, Hon. Bob, Chairman, Subcommittee on Health, Employment, 
      Labor, and Pensions........................................     1
        Prepared statement of....................................     4
    DeSaulnier, Hon. Mark, Ranking Member, Subcommittee on 
      Health, Employment, Labor, and Pensions....................     7
        Prepared statement of....................................     9

                               WITNESSES

    Beehler, Michele, Senior Director of Health and Wellbeing, 
      Schweitzer Engineering Labs (SEL)..........................    11
        Prepared statement of....................................    14
    Josh, Laura, General Manager, California Schools VEBA........    18
        Prepared statement of....................................    20
    Ducas, Andrea, Vice President of Health Policy, Center for 
      American Progress..........................................    34
        Prepared statement of....................................    36
    Whaley, Dr. Christopher M., Health Economist, RAND 
      Corporation................................................    48
        Prepared statement of....................................    50

                         ADDITIONAL SUBMISSIONS

    Ranking Member DeSaulnier:
        Letter dated January 10, 2024 from California Public 
          Employees' Retirement System...........................    80
        Letter dated January 11, 2024 from the American 
          Federation of State, County and Municipal Employees....    82
        Testimony dated January 23, 2024 from Marilyn Bartlett...   108
    Chavez-DeRemer, Hon. Lori, a Representative in Congress from 
      the State of Oregon:
        Statement dated January 11, 2024 from Lori Chavez-DeRemer   112
    Courtney, Hon. Joe, a Representative in Congress from the 
      State of Connecticut:
        Article dated January 10, 2024 from The Hill.............    65
    Foxx, Hon. Virginia, a Representative in Congress from the 
      State of North Carolina:
        Statement dated January 11, 2024 from Transcarent........    85
        Letter dated January 10, 2024 from ATA Action............    91
        Statement dated January 11, 2024 from ERIC...............    92
        Statement dated January 11, 2024 from Purchaser Business 
          Group on Health........................................    96
        Letter dated January 10, 2024 from Partnership to Advance 
          Virtual Care...........................................   105
        Statement dated January 25, 2024 from Business Group on 
          Health.................................................   113
        Testimony dated January 11, 2024 from Health Rosetta.....   118
        Testimony dated January 11, 2024 from VerSan Consulting, 
          LLC....................................................   121
        Letter dated January 11, 2024 from Parkview Health.......   125
        Letter dated January 24, 2024 from Corporate Health Care 
          Coalition..............................................   129

                        QUESTIONS FOR THE RECORD

    Responses to questions submitted for the record by:
        Dr. Christopher Whaley...................................   133

 
                     LOWERING COSTS AND INCREASING
                       ACCESS TO HEALTHCARE WITH
                       EMPLOYER-DRIVEN INNOVATION

                              ----------                              


                       Thursday, January 11, 2024

                  House of Representatives,
    Subcommittee on Health, Employment, Labor, and 
                                          Pensions,
                  Committee on Education and the Workforce,
                                                    Washington, DC.
    The subcommittee met, pursuant to notice, at 10:17 a.m., 
2175 Rayburn House Office Building, Hon. Bob Good [Chairman of 
the Subcommittee] presiding.
    Present: Representatives Good, Walberg, Allen, Burlison, 
Chavez-DeRemer, Houchin, Foxx, DeSaulnier, Courtney, Norcross, 
Wild, Hayes, Manning, and Scott.
    Staff present: Cyrus Artz, Staff Director; Nick Barley, 
Deputy Communications Director; Mindy Barry, General Counsel; 
Jackson Berryman, Speechwriter; Michael Davis, Legislative 
Assistant; Isabel Foster, Press Assistant; Daniel Fuenzalida, 
Staff Assistant; Sheila Havenner, Director of Information 
Technology; Taylor Hittle, Professional Staff Member; Andrew 
Kuzy, Press Assistant; Georgie Littlefair, Clerk; CJ Mahler, 
Professional Staff Member; John Martin, Deputy Director of 
Workforce Policy/Counsel; Hannah Matesic, Deputy Staff 
Director; Audra McGeorge, Communications Director; Rebecca 
Powell, Staff Assistant; Seth Waugh, Director of Workforce 
Policy; Maura Williams, Director of Operations; Nekea Brown, 
Minority Director of Operations; Ilana Brunner, Minority 
General Counsel; David Foster, Minority Senior Health and Labor 
Counsel; Carrie Hughes, Minority Director of Health & Human 
Services Policy; Suyoung Kwon, Minority AAAS Fellow; Stephanie 
Lalle, Minority Communications Director; Raiyana Malone, 
Minority Press Secretary; Olivia McDonald, Minority Staff 
Assistant; Kota Mizutani, Minority Deputy Communications 
Director; Veronique Pluviose, Minority Staff Director; Dhrtvan 
Sherman, Minority Committee Research Assistant; Nick Schiach, 
Minority Legal Intern; Jamar Tolbert, Minority Intern; Adrianna 
Toma, Minority Intern; Banyon Vassar, Minority IT 
Administrator.
    Chairman Good. The Subcommittee on Health, Employment, 
Labor, and Pensions will come to order. I note that a quorum is 
present, and without objection, the Chair is authorized to call 
a recess at any time.
    President Ronald Reagan once said the nine most terrifying 
words in the English language are I am from the government, and 
I am here to help. The government often causes more harm than 
it does good, and that is particularly true when it comes to 
healthcare. Thankfully, America is filled with innovators and 
problem solvers, and today we will hear from some of those 
leaders on these important topics of lowering prices for 
quality healthcare.
    The cost of healthcare is one of the greatest challenges 
our country faces. Last year healthcare spending reached four 
and a half trillion dollars, costing over $13,000.00 per 
American citizen. Meanwhile, Medicare is set to become 
insolvent by 2031. In 2023, Federal subsidies for healthcare 
insurance are estimated to be 1.8 trillion, or 7 percent of our 
GDP, our gross domestic product.
    This has led to premiums drastically increasing for 
commercial insurance. The other side does not seem to 
understand that when the government subsidizes something, it 
actually becomes more expensive. It merely shifts the costs 
from the patient to the taxpayer. In my district in Campbell 
County, Virginia, premiums for a family plan have increased 81 
percent, or $9,000.00 over the last decade.
    So much for the claim that premiums will go down with the 
Affordable Care Act. The Biden administration's plan is to 
increase spending, and impose more mandates, which will only 
result in more inflated healthcare prices, further bankrupting 
our country.
    Today we are going to learn from innovators in the business 
world who are delivering savings to workers through lower 
healthcare costs, while still providing timely access and 
quality care. Employers not only have a strong incentive to 
deliver high-quality benefits to retain their employees, but 
they also have a legal, fiduciary obligation to do so.
    Unsurprisingly, 67 percent of Americans are satisfied with 
their employer-sponsored care, but sadly the system is rigged 
against employers who want to pursue value-based models. It 
takes time and resources for healthcare innovators to overcome 
the significant economic and regulatory barriers in place 
across the country.
    We can learn a lot from the witnesses here today, as well 
as from other innovators who are working to overcome these 
barriers and teach employers how to use innovative models as 
well. In 2012, Walmart, the largest private employer in the 
world, launched its Center of Excellence, or COE program, which 
directs patients to specific sites and providers for specialty 
care.
    Since the launch of Walmart's COE program for spine 
surgery, Walmart has found that patients who underwent surgery 
at a COE, had a shorter hospital stay, and drastically lowered 
readmission rates and that patients returned to work sooner 
than non-COE patients.
    For the 2017 benefits year, it has estimated that Walmart, 
Lowes, and McKesson saved 19.4 million through their spine and 
joint surgery programs. Schweitzer Engineering Lab, which is 
represented here today, saved nearly 2 million dollars in 2023 
by participating in innovative models. California VEBA, or 
VEBA, is also represented here today, and has drastically 
slowed premium growth in its plans, and its beneficiaries have 
reported a 94 percent satisfaction rating.
    The Boeing Company also engages in direct contracts with 
doctors and health systems, effectively bypassing insurance 
companies. One study found that patient cost sharing decreased 
expenses per procedure by $498.00 for orthopedic and surgical 
procedures when using the direct contract model. However, many 
barriers still exist, which make it especially difficult for 
small and mid-size employers to use these models.
    One barrier is a lack of data. Employers often struggle to 
access their own health plan and spending data from their 
third-party administrator. Without this information employers 
and providers are unable to adequately design innovative 
payment methods and assess quality and savings.
    Another barrier is the overzealous State regulators, who 
threatened to prohibit or over-regulate payment models that 
allow provider risk sharing, even when the payment is between a 
self-funded ERISA plan and a provider. Some states even try to 
regulate these self-funded ERISA plans as insurance carriers.
    Furthermore, inconsistent quality measurement standards 
pose a challenge in the healthcare market. The lack of 
reasonably established costs and quality benchmarks can be a 
challenge for employers, providers, and third-party 
administrators. These barriers often translate into 
administrative burdens, costing time, money, and personnel to 
navigate and overcome.
    These are administrative burdens that many small and mid-
size companies do not have the resources to cover. One solution 
would be to allow employers to take advantage of economies of 
scale by permitting them to join together in one direct 
contract with a provider. Another solution could be to 
strengthen data sharing requirements, as this Committee has 
done in the provisions included in the House-passed Lower Cost 
More Transparency Act.
    The Federal Government could also clarify that ERISA self-
funded plans can participate in innovative payment models 
without being targeted by overzealous State regulators. These 
are just a few of the ways to address barriers employers face 
today.
    Our witnesses will speak more about the different 
challenges and solutions that Congress can consider when 
providing space for our healthcare innovators and business 
owners. I look forward to today's discussion and seeking ways 
to create more pathways for lower cost, high-quality and 
innovative healthcare, and with that, I yield to the Ranking 
Member for his opening statement.
    [The prepared statement of Chairman Good follows:]
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]    

    Mr. DeSaulnier. Thank you, Mr. Chairman, and welcome back 
everyone to this committee in the Congress. I hope you had a 
wonderful holiday break, Mr. Chairman, and everyone. While I am 
interested in hearing from the witnesses today about the work 
that some employers are doing to foster innovation, as I have 
often said, I am agnostic in some regards to health care, well 
in many regards as a consumer, unfortunately, of health care in 
the last few years as a survivor of cancer and 4 weeks on a 
ventilator.
    I see the inefficiencies in our current system personally 
and professionally. I also think that when you look around the 
world, holding Walmart up, Mr. Chairman with all due respect, 
as sort of a model, I cannot disagree with more--what paradise 
on earth, we all could be Walmart employees as a former small 
business owner who had to deal with them.
    There is a mixed market and the rest of the industrialized 
world either has, like the British, a full public system of 
health care, or a mixed, like the Japanese and the Germans, and 
so if we can show some place that actually works with a 
complete free market, I would be interested in seeing how that 
works and perhaps somebody could enlighten me today to that 
model.
    14 years ago, President Obama signed into the law the 
Affordable Care Act, an innovative, that seems to be the word 
of the day, piece of legislation that has reduced the 
universal, the uninsured rate, to the lowest level in American 
history. Before the ACA, by law insurance could deny people 
with health care coverage because of pre-existing conditions, 
including pregnancy, substance abuse disorder, and even cancer.
    Insurance, insurers, could also charge a woman more than 
men for health insurance. What was once considered an out of 
reach privilege for many Americans has turned into more than 20 
million consumers projected to sign up for the coverage during 
this year's open enrollment period, a dramatic increase over 
last year's record enrollment. congressional Democrats and the 
Biden-Harris administration continue to build on the ACA and 
have made historic strides toward patching remaining loopholes 
in our health care system and expanding high quality healthcare 
coverage for Americans. Quality insurance for health is very 
important, not just cost.
    In 2021, congressional Democrats passed the American Rescue 
Plan, which enhanced the ACA tax credits to lower monthly costs 
for low-income individuals, and eliminated the subsidy cliff, 
so that more low-and moderate-income individuals could get 
coverage.
    In 2022, congressional Democrats passed the Inflation 
Reduction Act. This historic legislation extended the premium 
tax credit enhancements, capped the cost of insulin for people 
with Medicare, and, for the first time, directed the Federal 
Government to negotiate lower prices for prescription drugs 
covered by Medicare.
    Democrats have demonstrated that innovation, there goes 
that word again, provides relief to workers and families from 
the burden of excessive health care costs. Unfortunately, many 
of the bills proposed by my friends on the other side during 
the current Congress, would undermine in my estimation, 
affordability, and quality of care, and ultimately make it 
harder to access quality coverage.
    For example, expanding association health plans might 
provide lower premiums for some enrollees, but it would 
increase costs for other consumers in the traditional insurance 
market, while adding nothing to address the underlying price of 
healthcare. That is a bad deal for American workers and for 
small business.
    The idea of scale for small businesses is one that I would 
appreciate exploring more, but the devil is in the details. I 
have heard many of my colleagues call to repeal the drug price 
negotiation program outlined in the Inflation Reduction Act. 
Repealing this program would reverse the hundreds of dollars in 
savings on out-of-pocket costs that those in Medicare have 
benefited from.
    Similarly, I am concerned that everyday Americans are 
increasingly being pushed to adopt unregulated, low-quality 
junk health care plans. These plans often discriminate against 
people with preexisting conditions, like myself, do not cover 
essential health benefits, and raise costs throughout the 
health care system. Instead of encouraging counterintuitive 
policies, we should work together in good faith, recognize our 
differences in approach, to focus on expanding quality health 
coverage for all Americans, workers, families, employers, and 
their employees.
    Together we can strengthen the Affordable Care Act to 
expand access to quality health care by lowering prescription 
drug costs for all Americans. Last July, House Democrats 
introduced the Lowering Drug Costs for American Families Act to 
rein in pharmaceutical price gouging and reduce prescription 
costs for Americans with private health insurance, including 
those covered by employer-sponsored health plans.
    It is also worth noting that similar legislation passed by 
House Democrats during the 116th and 117th Congress would have 
slashed premiums and cost-sharing for privately insured 
individuals by as much as $53.8 billion, save American 
businesses $43.1 billion, and raise worker's wages by $116 
billion.
    In short, when employers save more, employees take home 
more. This is good for everyone, including the American economy 
as they have more disposable income to spend. This is the 
innovation we should strive for. With that, I want to thank you 
again, thank the witnesses, and look forward to the discussion.
    [The prepared statement of Ranking Member DeSaulnier 
follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

    Chairman Good. Thank you, Ranking Member. Pursuant to 
Committee Rule 8(c), all members who wish to insert written 
statements into the record may do so by submitting them to the 
Committee Clerk electronically in Microsoft Word format by 5 
p.m., 14 days after the date of this hearing, which is January 
24, 2024.
    Without objection, the hearing record will remain open for 
14 days to allow for such statements, and other extraneous 
materials referenced during the hearing to be submitted for the 
official hearing record. I will now turn to the introduction of 
our distinguished witnesses.
    Our first witness is Ms. Michele Beehler, who is a Senior 
Director of Health and Well-being for Schweitzer Engineering 
Laboratories, or SEL, which is located in Pullman, Washington. 
Welcome.
    Our second witness is Ms. Laura Josh, who is a General 
Manager of California School VEBA, which is located in San 
Diego, California. Welcome.
    Our third witness is Ms. Andrea Ducas. Andrea or Andrea? 
Andrea, Andrea, who is the Vice President of Health Policy at 
the Center for American Progress, which is located in 
Washington, DC. Welcome.
    Our final witness is Dr. Christopher Whaley, who is the 
Health Economist at the RAND Corporation, and is located in 
Providence, Rhode Island.
    We thank all of our witnesses for being here today. I look 
forward to your testimony. Pursuant to Committee rules, I would 
ask that you each limit your oral presentation to a 5-minute 
summary of your written statement. I would also like to remind 
the witnesses to be aware of their responsibility to provide 
accurate information to this Subcommittee. I first recognize 
Ms. Beehler for 5 minutes.

 STATEMENT OF MRS. MICHELE BEEHLER, SENIOR DIRECTOR OF HEALTH 
 AND WELLBEING, SCHWEITZER ENGINEERING LABORATORIES, PULLMAN, 
                          WASHINGTON.

    Mrs. Beehler. Chair Good, Ranking Member DeSaulnier, and 
members of the Subcommittee, thank you for holding this 
important hearing. Thank you for the opportunity to testify. I 
am Michele Beehler. I am the Senior Director of Health and 
Wellbeing at Schweitzer Engineering Laboratories, SEL.
    SEL was founded by Dr. Edmund Schweitzer over 40 years ago 
in the basement of his home in Pullman, Washington. We are a 
proud 100 percent employee-owned American company, researching, 
designing, and manufacturing right here in the U.S. At SEL we 
specialize in creating digital products and systems that 
protect, control, and automate power systems here at home and 
in 170 countries around the world.
    We make power outages safer and shorter in duration. We add 
cybersecurity, automation, and communication to critical, 
electrical infrastructure. We have over 6,500 employee owners 
worldwide, nearly 10,000 covered lives in our U.S. healthcare 
system, and we have a presence in 37 states around the country.
    At SEL we are rooted in a seat of values that we call our 
principles of operation. These principles guide us, and in the 
words of Dr. Schweitzer, they help us to run our business the 
way our mothers would want us to.
    Central to these principles are the ideas of ownership and 
community. When it comes to healthcare, we believe we should 
own our claims data, and we can make the best and informed 
decisions, and meet our fiduciary responsibility to our 
employees and their families. We strive to empower employee-
owners to take ownership of pricing and quality information to 
make the right choices for themselves and their families.
    We believe in strong community partnerships, especially 
with our local hospitals to take ownership, and work toward 
lower cost and higher quality care. This drive for ownership 
inspired SEL to start our own health clinics over 10 years ago 
to serve employee owners and their families.
    SEL now has two health clinics in the United States, and in 
2023 these clinics completed over 20,000 patient visits. Our 
medical staff includes a doctor, nurse practitioners, nurses, 
physical therapists, mental health professionals, and a 
pharmacist. We provide convenient access to high-quality, 
comprehensive primary care services at no out-of-pocket cost to 
our patients.
    We deliver high-quality and patient centric care with 
virtually no wait time, and at similar or lower costs than 
other clinics. We have removed barriers when it comes to 
seeking care--with a simple walk across the parking lot, our 
employee owners can see their healthcare provider.
    We are proud of our work, and support in the mental health 
space as well. We offer in-house counselors, a robust employee 
assistance program, and free virtual counseling services for 
all employees and their families. We are excited about the 
continued growth of our pharmacy program, which has 
consistently delivered savings, while improving patient care.
    SEL has a physician dispensing pharmacy with medications 
such as anti-biotics, and dosage starting drugs. We counsel our 
patients on drug interactions, and help patients review their 
prescriptions to look for ways to serve on lower cost options, 
like generic drugs.
    Recently, by working with just 25 individuals to help them 
identify low-cost sources for their medications, we will likely 
reduce our annual pharmacy care spend by 25 percent. Let me 
share with the Committee just one example of the positive 
impact your policies are having on individuals.
    Recently, we worked with an employee-owner taking a drug 
that cost nearly $10,000.00 per month, with an out-of-pocket 
cost of nearly $3,000.00 per month for them. Sadly, the 
employee was taking on mounds of credit card debt and 
struggling to pay for basic needs like groceries and utilities, 
just to pay for this medication.
    In utilizing our in-house pharmacist, we identified a 
generic equivalent on Mark Cuban's Cost Plus pharmacy for 
$12.80 a month, saving the employee nearly $36,000.00 a year in 
out of pocket expenses, and saving SEL an additional 
$84,000.00, for a total savings of $120,000.00. That is the 
power of transparency.
    In addition to improving our healthcare and benefits 
offerings within SEL, we also began to work with external 
partners, like our local hospitals and providers, through 
direct contracting. On the policy front, the No Surprises Act, 
specifically Section 201, has been tremendously helpful, 
providing us with critical access to claims.
    This law, along with others, has given us more valuable and 
useful information about the market, equipping us with the 
right tools to find the price that is both fair and reasonable 
for SEL, and the provider as well. Thank you again for the 
opportunity to testify today.
    [The prepared statement of Mrs. Beehler follows:]
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
    
    Chairman Good. Thank you, Mrs. Beehler, and I would now 
like to recognize Ms. Josh for 5 minutes for your opening 
statement.

STATEMENT OF MS. LAURA JOSH, GENERAL MANAGER, CALIFORNIA SCHOOL 
                  VEBA, SAN DIEGO, CALIFORNIA

    Ms. Josh. Chairman Good, Ranking Member DeSaulnier, and 
distinguished members of the Committee, thank you for the 
opportunity to appear before you today. My name is Laura Josh. 
I am the General Manager of California School's VEBA. VEBA was 
founded in 1993 through the combined efforts of school 
superintendents and representatives of the California Teachers 
Association, and the California School Employees Association, 
to combat rising healthcare costs in Southern California.
    Since then, we have grown to more than 70 participating 
public sector employers, including four of the top ten largest 
school districts in California, as well as the County of San 
Diego, with more than 150,000 covered members in our plan. We 
are now the fourth largest purchaser of healthcare in the State 
of California.
    VEBA strives to leverage our collective purchasing power to 
keep health premiums low and ensure access to comprehensive 
benefits designed to keep employees physically and mentally 
healthy. As a 501(c)(9) nonprofit healthcare trust, all funds 
are spent on member benefits and health improvement, and we are 
governed by a board that represents both labor and management.
    As fiduciaries, at the heart of every decision we make is 
our members, which are our teachers, our custodians, our 
transportation workers, and other staff who have dedicated 
their professional lives to educating future generations. We 
strive for the highest quality benefits at the lowest possible 
cost to keep more in each worker's paycheck, and drive as many 
tax dollars as possible to student education.
    This is our motivation to innovate and keep costs low. VEBA 
consistently beats national averages with annual aggregate 
premium increases around just 4 to 5 percent. Additionally, as 
a recent member survey, VEBA delivered a 94 percent member 
satisfaction rating.
    The trust and satisfaction that we built over the past 
three decades has enabled us to think more about the long-term 
cost drivers of healthcare in a more creative and personalized 
manner. In order to drive innovation that will reduce 
healthcare costs, four critical things are needed. First, 
transparency.
    True transparency enables you to know where every dollar is 
going and ensure that it is fully utilized. This is one of the 
primary reasons VEBA is working to remove regulatory barriers 
to direct contracting in California, and we are the first to 
participate in a groundbreaking pilot that directly contracts 
with health systems using risk bearing contracts.
    Transparency also helps us ensure incentives are aligned 
across the healthcare industry, so providers, payers and 
purchasers are all singularly aligned on improving population 
health, and treating each patient holistically, meeting both 
their physical and mental health needs.
    Second, competition. We need robust competition in the 
healthcare market to drive down costs. Having visibility into 
our contracts through the direct contracting pilot will 
facilitate this competition, drive more effective cost 
structures, allow for greater innovation, and give the consumer 
more visibility into their care options.
    Third, market power. While we have seen significant 
consolidation in the healthcare industry, many purchasers 
remain fragmented in trying to negotiate on their own. Policies 
that allow purchasers to come together and navigate the market 
jointly will help drive down costs.
    Finally, removing barriers to innovation. VEBA worked 
closely with State regulators to enable our direct contracting 
pilot, but barriers still exist that prevent us from further 
partnering with small businesses or enabling the organizations 
in other states to benefit from these important, direct 
contracting models.
    At VEBA we have successfully fought the rising costs in 
healthcare through innovative patient-focused care, and quality 
programs. VEBA and other purchasers can achieve quality care at 
lower cost and build on our success if Congress takes the 
following actions. First, remove barriers to employer 
participation in value-based programs, such as high-performance 
networks, and direct contracting.
    Next, increase transparency into healthcare claims and in 
counter data, along with information on costs and quality for 
healthcare providers. Next, ease Federal and State restrictions 
on pooling with appropriate protections for small employer 
groups to bring the VEBA value to other employers.
    Finally, invest in our pipeline of critical mental health 
workers and other healthcare professionals. I look forward to 
discussing with the Committee how we can work together to bring 
more patient centered innovation to the employer marketplace 
using direct contracting, improving transparency, leveraging 
group purchasing, and cementing a commitment to cost reduction 
while improving the health of our members. I look forward to 
your questions.
    [The prepared statement of Ms. Josh follows:]
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
    
    Chairman Good. Thank you, Ms. Josh. Now I recognize Ms. 
Ducas for 5 minutes for your opening testimony.

 STATEMENT OF MS. ANDREA DUCAS, VICE PRESIDENT, HEALTH POLICY, 
         CENTER FOR AMERICAN PROGRESS, WASHINGTON, D.C.

    Ms. Ducas. Thank you to the subcommittee for your attention 
to this critical issue. I will begin by acknowledging the 
squeeze employers are facing when it comes to providing 
affordable coverage. This phenomenon is not new. I know it well 
from my time working at a small nonprofit back in 2009, before 
the ACA.
    We had around 50 employees, the vast majority of whom were 
women, and several of whom had kids or were pregnant in the 
past year. It was close to impossible to keep premiums 
manageable. I knew health care, so I was asked to help find a 
solution, and what we wound up with even then was an exclusive 
provider product with no out-of-network coverage.
    I applaud the employers who are doing what they can to 
bring costs down on their own, while trying to do right by 
their employees. Some of the innovations being discussed today 
can even be successful for the businesses who invest the 
considerable time and resources developing them.
    Unsurprisingly though, only small numbers do. There are 
limits to success considering the headwinds of health care 
consolidation and high prices. Employers, instead of being 
responsible for bending the cost curve, should be able to focus 
on their core business.
    I am passionate about health policy, and I would have liked 
nothing more 15 years ago than to focus on my day job, which 
brings me to today. Today's ESI products are significantly 
better than they were back when we were negotiating with our 
broker, thanks to the ACA. At that time people were subject to 
preexisting condition exclusions, coverage limits, cost sharing 
for preventive services, and many other challenges that the ACA 
eliminated.
    When people lost their jobs, they also did not have the ACA 
marketplaces to fall back on, and thanks to ARPA and the IRA, 
the enhanced premium tax credits made that coverage even more 
affordable. The difference cannot be more pronounced. As I 
acknowledge, however, it is difficult for employers to 
affordably provide that coverage.
    Premiums, which have been growing faster than inflation and 
wages over the last 25 years at least, are now close to 
$9,000.00 for a person, or $24,000.00 for a family. Perhaps 
even more troubling is the increase out-of-pocket expenses 
employees are responsible for as employers, by shifting costs 
onto them in the form of higher deductibles.
    As a result, about 30 percent of workers are considered 
underinsured.
    This stubborn cost growth is primarily a function of high 
prices. From 2017 to 1921, prices for health care services grew 
at almost double the rate of utilization, and those prices are 
primarily driven by two things. Consolidation, which in 
particular drives up hospital prices, and exorbitant 
prescription drug prices. Employers understand this, and they 
want relief.
    Close to 90 percent of surveyed business leaders believe 
there should be a greater government role in providing coverage 
and containing costs. They believe, correctly I might argue, 
that a bigger government role would be better for their 
businesses, and for their employees.
    90 percent of business leaders want to see more government 
intervention to increase transparency. We agree, and strongly 
recommend congressional action to establish a Federal All-Payer 
Claims Data base, or APCD, which could make health care claims 
data available across payers and enable employers of all sizes 
to make informed choices about which providers to contract 
with, also encouraging providers to lower their costs.
    More than 90 percent of those leaders want greater action 
against anticompetitive behavior. That makes sense, considering 
how problematic health care consolidation is becoming. 
Consolidation can increase the price of hospital stays by as 
much as 54 percent. Consolidation within the insurance market 
is also rapidly increasing, as is consolidation across entity 
types.
    It may surprise you to know that United Health Group now 
purportedly owns or is affiliated with 10 percent of all 
physicians in the United States. That is 90,000 doctors, 20,000 
of whom were acquired, or affiliated with United within the 
last year alone. While largely outside of the scope of the 
subcommittee, we strongly encourage congressional action for 
more expansive monitoring of this kind of behavior.
    To help lower drug prices, Congress can also build on the 
historic Medicare prescription drug pricing reforms established 
through the Inflation Reduction Act, and bring innovation, such 
as the Medicare drug price negotiation program, and inflation 
rebates to the commercial market, as the Lowering Drug Costs 
for American Families Act would do.
    These innovations are estimated to save the Medicare 
program billions of dollars. There is also bipartisan interest 
in lowering drug prices by closing the loopholes that are 
regularly exploited by pharmaceutical companies, like patent 
system abuses and stalling tactics to keep generics from 
entering the market. We implore Congress to pass legislation to 
do that.
    We also encourage congressional action on bipartisan 
proposals to regulate pharmacy benefit managers that profit 
when drug prices are set as high as possible. I highlight a 
number of those opportunities in my written testimony and 
appreciate the subcommittee's engagement on this issue.
    Finally, Congress can consider bolder reforms, for example 
exploring the introduction of an employer public option as an 
alternative to current ESI offerings. Congress has the ability 
to provide relief employers want and need to help ESI's become 
more sustainable and affordable for the years to come. Thank 
you again.
    [The prepared statement of Ms. Ducas follows:]
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
    
    Chairman Good. Thank you, Ms. Ducas. Now we will recognize 
our final witness, Dr. Whaley, for 5 minutes for your opening 
statement please.

  STATEMENT OF DR. CHRISTOPHER WHALEY, HEALTH ECONOMIST, RAND 
             CORPORATION, PROVIDENCE, RHODE ISLAND

    Mr. Whaley. Thank you. Chairman Good, Ranking Member 
DeSaulnier, and members of the Committee, thank you for the 
opportunity to testify today. My name is Christopher Whaley. I 
am a Healthcare Economist at the nonprofit, nonpartisan RAND 
Corporation, as well as an Associate Professor of Healthcare 
Policy at the Brown University School of Public Health.
    My research in general focuses on healthcare price 
transparency, the impacts of evolving healthcare market 
structures, importantly the role of employers who purchase 
healthcare benefits, and many innovations that employers are 
doing as purchasers of healthcare.
    Employers play a significant role in the United States 
healthcare system. Employers provide health insurance coverage 
for over 150 million people, the largest source of insurance in 
the United States. Employers also importantly select many of 
the plant offerings employees select from, thus determining the 
types of insurance that most Americans have.
    Collectively, U.S. employers contribute about 1.2 trillion 
dollars toward healthcare spending, and thus play an important 
role in financing the U.S. healthcare system. Because 
healthcare benefits are financed from wages, employers have 
both a legal and a moral obligation to be responsible 
fiduciaries when they are purchasing healthcare benefits on 
behalf of their workforce.
    Unfortunately, many employers face challenges fulfilling 
this obligation. Many employers are unable to access their 
planned claims data, limiting their ability to audit and 
negotiate, or audit prices and negotiate on their behalf, as 
well as prudently designed plan offerings.
    Employers often face volatility in provider markets with 
limited access to lower price, high-quality providers, due in 
large part to decades of consolidation among providers and 
plans, it has driven down competition. Prices paid by employers 
are often high and variable, with little to no link between 
price and quality.
    However, a handful of employers have used benefit design 
innovations to reduce spending and improve access to high-
quality care. These programs typically use price utilization 
and quality data to identify efficient providers that deliver 
high-quality care at lower prices, and in design incentive 
programs to direct members to these providers.
    A particularly innovative example actually comes from 
Purdue University, which has used data on local provider prices 
and quality to contract directly with high value providers and 
incentivize their use. These types of so-called direct 
contracting plans are often accompanied further by negotiation 
of price discounts because providers gain member volume.
    Due in part to these programs, Purdue has not had employer 
premium increases in 5 years and has saved approximately 200 
million dollars. Likewise, General Motors direct contract 
program with the Henry Ford system in Michigan reduced 
healthcare spending by an estimated 15 percent.
    Other examples include reference-based pricing, which tie 
reimbursement rates to benchmark rates, and it has also led to 
considerable savings. For example, the referencing pricing 
program implemented by the State of Oregon, has reduced 
spending by about 100 million dollars for Oregon teachers and 
public employees.
    Due to reference pricing savings, the State of Montana 
employee plan had no deductible or premium increases for 
several years. Anecdotally, my father was a member of this plan 
and certainly benefited from having his pay increase come in 
the form of take-home dollars, and not healthcare dollars.
    A critical component for an employer's ability to innovate 
and implement these types of programs is the use of transparent 
data on differences in provider price and equality. 
Unfortunately, several self-funded employers who want access to 
the plan's claim data, for monitoring purposes, have actually 
had to file lawsuits to gain access to this type of data.
    Additionally, access to hospital-insured posted price 
transparency data required by Federal regulations, that allow 
employers to comparison shop across providers and plans without 
placing additional burdens on their members, have not been 
widely useful.
    This type of data, if further expanded, would allow 
employers to benchmark their own prices against market rates. 
In conclusion, whether they like it or not, U.S. employers are 
in the healthcare business. To be responsible fiduciaries of 
their member's money, employers need to use data to ensure 
their healthcare benefits deliver high-quality care at 
reasonable prices.
    Federal policy can strengthen employer access to their own 
claims data and improve compliance and useability of Federal 
transparency policies and data. I am happy to answer any 
questions and thank you for the opportunity.
    [The prepared statement of Dr. Whaley follows:]
   [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
    
    Chairman Good. Thank you, Dr. Whaley. Under Committee Rule 
9, we will now question witnesses under the 5-minute rule. I 
will wait to ask my questions, and therefore I will recognize 
Mr. Walberg from Michigan for 5 minutes.
    Mr. Walberg. Thank you, Mr. Chairman, and thanks to the 
panel for being here. A very, very, important subject we are 
dealing with today. Ms. Josh, it is my understanding that 
California Schools VEBA operates as an association health plan. 
Last year House Republicans passed my legislation codifying the 
Trump administration's 2018 rule to expand association health 
plans.
    How would expanding AHPs help reduce overall healthcare 
spending among employers?
    Ms. Josh. Thank you, Congressman, for that important 
question. VEBA operates similar to an association health plan, 
not exactly as an association health plan, but I think the 
concept of increased market power is incredibly powerful. 
Within VEBA, we have employers that have more than 15,000 
employees down to our smallest employer that is a single room 
schoolhouse with only three employees in the mountains of San 
Diego.
    What I think is most valuable about pooled purchasing is 
that every employee, no matter which employer they participate 
at, receives the high quality and lower costs of the broader 
pool. We are also able to expand benefits and being able to add 
additional services like enhanced mental health, enhanced 
cancer screenings, expert second opinions.
    It would be unaffordable or unreachable for small groups 
outside of the pool.
    Mr. Walberg. I appreciate that. That leads me to the second 
question. The Biden administration recently proposed a rule to 
repeal the Trump administration's rule. Their statement as to 
the reason why they wanted to repeal associated health plans as 
implemented by Trump is that AHPs are skinny plans.
    You just mentioned some significant benefits that come in 
your plans for your people. Is the Biden administration's 
characterization correct, specifically does California Schools 
need to skimp on coverage for its enrollees?
    Ms. Josh. California Schools VEBA is incredibly proud of 
the coverage that we offer for our employees. Almost none of 
our employees have deductibles in their plans. They have a 
$10.00 copay. Our view on healthcare has always been, if it is 
unaffordable for the family to use it, the healthcare coverage 
itself is practically useless, so we are very proud that we 
have kept the quality very, very high.
    I compare it to--my husband works for a small employer. My 
out-of-pocket maximum for my family under my plan is only 
$6,000.00 a year. His option at the small employer's, 
$13,000.00 a year. We are able to offer significantly enhanced 
benefits relative to what small employers are able to access.
    Mr. Walberg. I would assume the next issue would be 
positive for what you have experienced. I would assume AHPs, or 
similar are effective at reducing healthcare costs without 
skimping on coverage?
    Ms. Josh. I believe with appropriate protections and 
regulations group purchasing can be a very powerful tool in 
producing market power for purchasers.
    Mr. Walberg. Thank you. Thank you. Dr. Whaley, in your 
written testimony you highlight that a ``plan and price data 
are critical to health benefit innovation.'' In addition to 
access to data, are there other barriers that limit the ability 
of employers to implement direct contracting or similar 
programs?
    Mr. Whaley. Quite frankly, I think access to data is the 
No. 1 hurdle, and without knowing what your own prices are, 
what prices are in your market, it is really impossible for 
employers to design these types of programs.
    Second, I think where there is a will on behalf of 
employers to act as responsible fiduciaries and recognize that 
healthcare is a huge component of their business, and respond 
prudently, and respond in the business focus fashion.
    Mr. Walberg. What could Congress do to eliminate these 
barriers?
    Mr. Whaley. I think codifying that employers have access to 
their own claims data if they are self-funded as a regular 
employer, it would be critical and have access in a timely 
manner. Second, I think expanding access to transparency and 
coverage policies, and making sure that a hospital-posted data 
is accurate and timely, and ensure posted data is widely 
useable.
    Mr. Walberg. I will jump quickly here, not much time left. 
How does the use of telehealth in these models differ from 
telehealth use in traditional fee for service care?
    Mr. Whaley. What we have seen in published research studies 
that were conducted is that providers that are paid in a non-
fee for service setting, where getting patients in the door is 
the most profitable source of revenue, actually tend to use 
telehealth more than providers that are paid in a capitated or 
value-based manner.
    Mr. Walberg. Good to know.
    Mr. Whaley. Sorry, the opposite direction.
    Mr. Walberg. Yes. Good to know. Thank you. I yield back.
    Chairman Good. Thank you, Mr. Walberg. I would now like to 
recognize Ms. Wild from Pennsylvania for 5 minutes.
    Ms. Wild. Thank you, Mr. Chairman, and thank you to the 
witnesses for being here for this important hearing. It is a 
subject I have long been concerned about, even though I feel as 
though we have made a lot of progress over the last few years, 
health care costs are still too high for too many Americans.
    Ms. Ducas, and am I saying that, pronounced okay, I was 
very proud last Congress to support the Inflation Reduction 
Act, which was signed into law in August 22, which as I 
think everyone knows, dramatically lowers the cost of 
prescription drugs for seniors on Medicare, and slashes 
premiums for people who purchased coverage under the Affordable 
Care Act, and of course caps insulin prices for millions of 
Americans.
    As I said initially, we have not done enough yet, and the 
work must go on to lower these health care costs, particularly 
I think for the millions of people who are covered through 
employer-sponsored plans, and my biggest concern are items that 
are not covered in those employer-sponsored plans, including 
some preventive cares.
    We know that a majority of Americans receive their health 
coverage through a job-based plan, and we need to make sure 
that their health care needs are being met. Can you give us an 
example of some of the basic preventive services that are not 
covered through many employer-sponsored plans?
    Ms. Ducas. Thank you for the question. As you mentioned, 
the Affordable Care Act had a provision that required the 
coverage of essential health benefits which applied to the 
group market.
    Ms. Wild. Can you speak up just a tiny bit?
    Ms. Ducas. Yes. Thank you very much. Thank you for the 
question. As you mentioned, the Affordable Care Act had a 
provision that required the coverage of essential health 
benefits. What I would share, which include things like 
colorectal screening, annual preventive service visits, but 
what I would share is that there are many states who are able 
to regulate insurance within their states, that pass laws that 
require even more comprehensive coverage of different services.
    Some examples might be, you know, assisted reproductive 
technologies help.
    Ms. Wild. You said assisted reproductive technologies?
    Ms. Ducas. Yes. Thinking about--like IVF, but many, many 
plans are self-insured plans that are subject to ERISA, and 
therefore not necessarily subject to those enhanced regulations 
that require even more access to services.
    Ms. Wild. Right.
    Ms. Ducas. There are a number of services that are not in 
the essential health benefits, that would be especially prudent 
for people to incorporate into more employer sponsored plans, 
but I am happy to followup.
    Ms. Wild. There are a lot of variances, you are saying?
    Ms. Ducas. There are a lot of variances, yes.
    Ms. Wild. Depending on the State and the employer and the 
nature of the plan.
    Ms. Ducas. That is exactly right.
    Ms. Wild. Okay. I would like to turn to you, Dr. Whaley, 
there is I think a growing bipartisan recognition that we do 
not have enough information about costs and the health care 
system. In your testimony you identify an important issue, 
which is the lack of transparency from companies that contract 
with employer-sponsored health plans to administer their 
benefits, including pharmacy benefit managers and insurance 
companies that serve as third-party administrators.
    Can you share with us some of the challenges that plans 
face when they are trying to get cost information from their 
PBMs, or their third-party administrators, and as part of that 
answer, could you address what the impact is on health care 
costs?
    Mr. Whaley. Yes. Some self-funded plans when they as for 
their claims data, either for their own use or an entity 
directed by the self-funded plan to use the claims data, have 
faced challenges in actually accessing that data, so some large 
insurers or third-party administrators often argue that 
negotiated prices and network design contained in claims data 
are trade secrets, and thus the employer, even though they are 
the one that is paying the bill does not have access to that 
type of data.
    I think not having that type of access to data does not 
allow the employer to essentially monitor what's going on under 
the hood and audit the prices that are being negotiated on 
behalf of themselves, and more importantly, their workers. I 
think having access to that type of data can greatly allow 
employers to innovate and address prices.
    Ms. Wild. Would you agree with me that as a capitalist 
society, competition is important, and that without data on 
pricing it is very hard for a consumer, whether it is a health 
care plan, employer, whatever, to make sure that they are 
getting the benefit of competition?
    Mr. Whaley. That is correct.
    Ms. Wild. Thank you.
    Mr. Whaley. If we are going to have a system, we need data 
and competition.
    Ms. Wild. Thank you so much.
    Chairman Good. Thank you, Ms. Wild. I would like to 
recognize myself now for 5 minutes. Ms. Josh, we have heard 
today already about the negative impact of consolidation in the 
healthcare market and its affect on healthcare prices. How 
would allowing employers, multiple employers, to pool together 
to use one type of payment model help bring more competition to 
market, and lower prices?
    Ms. Josh. Thank you for that question, Congressman. I think 
one of the things that we see is consolidation with the 
healthcare purchasers, and the providers of healthcare whereas 
individual consumers we have seen very fragmented, and trying 
to negotiate against these behemoths on our own. By pooling 
together the purchasing powers of employers, we start to have 
the power of volume in negotiation.
    When we talk about market power, part of where you really 
get that market power is being able to go to a local hospital 
system, and tell them you represent 10, 20, 30,000 of their 
members to get more effective pricing, to get more access to 
your data, to drive better primary prevention. The more in 
different markets healthcare consumers can come together to 
purchase together, the more market power you are going to have 
against that consolidation, which will ultimately create 
greater competition.
    Chairman Good. Thank you. What other barriers need to be 
lifted to ensure further access to voluntary employees, 
beneficiary association plans, and similar employers pooling?
    Ms. Josh. There are various requirements around it. One of 
the existing requirements for VEBA is the type of employer that 
can participate. We have had many small employers approach us 
wanting to join and access these benefits, but based on the 
VEBA regulations they cannot. There are also various State 
regulations across the country that require--that will actually 
look through an association to the underlying size of the 
employers.
    We would really be looking for a clear definition of the 
areas of pre-emption for a purchasing group to be able to act 
as that single purchasing entity to consolidate that market 
power.
    Chairman Good. Very good. Thank you. Dr. Whaley, your 
research has identified provider consolidation as one of the 
main drivers of healthcare costs. How would encouraging the 
uptake of risk base and other payment models help address the 
consolidated healthcare market?
    Mr. Whaley. One of the things we have seen through 
especially referenced based pricing and direct contracting is 
that this is a model that allows for lower priced, high-quality 
providers to essentially gain volume and gain patient revenue 
through offering more competitive prices, and being a more 
efficient provider.
    If you are an independent provider who is efficient, then 
these types of models actually allow you to remain independent 
and promote more competition.
    Chairman Good. Very good, thank you. In your written 
testimony you also noted that large employers like General 
Motors and Purdue University have created savings through 
direct contracts with high value providers. What barriers do 
smaller employers face in entering into similar contracts?
    Mr. Whaley. Again, in some sense the main barrier to these 
types of models is not the size of the employer, but the 
ability and innovation or desire to innovate and recognize that 
they are fiduciaries for their employees.
    I think for smaller employers it is often hard to have the 
market volume within a given market to essentially corral your 
market power and to form these types of direct contracts, and 
especially negotiate better prices.
    I think other plans that allow employers to essentially 
form co-ops or come together can help address that limitation.
    Chairman Good. Very good, thank you. I would like to go to 
Ms. Josh. We have heard today, I am sorry, I am going to go 
to--actually I am going to go to Ms. Beehler. You talked in 
your testimony about the transparency coverage regulation that 
has helped you to get data that you need, but you still have 
data access issues with claims administrators.
    Can you explain why it matters for employers to have access 
to data?
    Ms. Beehler. Thank you for the question. It is very 
important for employers to have access and transparency to that 
data. Without it we are unable to recognize and see what is 
happening on our plan.
    When we received our claims data after 18 months of trying 
to get it, we were able to find trends, find opportunities and 
gaps in our plan, buy in areas in which we can go and direct 
contract directly with providers to negotiate better pricing, 
as well as follow through to make sure that our employees and 
our family members are getting the best prices and the highest 
quality.
    Chairman Good. How about from the patient's standpoint? How 
does it help the patients to have access to data? Why does it 
matter for them?
    Ms. Beehler. We partner both with educating our employees, 
as well with all that we are learning from our aggregate data, 
as well as providing tools to them such as healthcare blue 
book, so that they can part and pair both quality ratings, as 
well as price to make the best decisions for them and their 
family, which directly impacts their out-of-pocket costs.
    Chairman Good. Very good. Thank you so much. I would now 
like to recognize Mr. Norcross from New Jersey for 5 minutes.
    Mr. Norcross. Thank you, Chairman, and to the Ranking 
Member for holding this hearing, and it feels like we are just 
scratching the top grains of sand in a beach dealing with this, 
but as we all know it has to start somewhere, and I appreciate 
bringing this up.
    Now we all know that access to health care is much more 
than just that, particularly after coming through the pandemic 
when so many of the mental health issues reared its ugly head, 
not to of the least, which is the disease of addiction, which 
has decimated and literally killed over 85,000 people a year, 
but that all now gets lumped into this.
    I hear from each of the testimoneys a variation of how, not 
only trying to save money, but expand services. The very nature 
of expanding services costs money, whether it is efficient or 
not. If we go back 20 years the idea of what we are spending on 
mental health as compared to today is just dramatically 
different, and it adds, just as pharmaceuticals do, adds to the 
top line.
    Back in 2008 I believe it was, the Parity Act was passed, 
which indicates to the insurance companies that you have to 
treat mental health the same way you treat your physical 
health. One of the issues with that is there is no upfront 
enforcement of how we deal with that. Ms. Ducas, I just want to 
talk to you.
    We have introduced a bill in the past couple sessions 
called About the Parity Enforcement Act, which instead of where 
the incentive is now for an insurance company if they are 
caught, and I use the term caught, not providing the proper 
mental health, their penalty is oh, you will have to pay it 
afterwards.
    The fact of the matter is, great, we did not lose anything 
because we would have had to pay it. By being able to give the 
Department of Labor the ability not only to investigate, but to 
levy fines up front on these issues, hopefully that will expand 
mental health services, and certainly when we look at the 
parity from health care, 85,000 people alone dying in just that 
one sliver called addiction.
    Will this make a difference? You are fighting increasing 
access to services, but we are saving lives. Can you touch base 
on the complexity of that?
    Ms. Ducas. Yes, and thank you for the question. I really 
appreciate it. You highlight a very significant issue, and I 
would argue gap in coverage, behavioral and mental health 
services are very, very difficult for people to access, even 
with very good insurance.
    Anecdotally, you know, many friends, family members, and 
colleagues find it very challenging to use even their employer 
sponsored insurance to find an in-network therapist, or 
behavioral health counselor.
    We know that only two out of three firms say that there are 
enough mental health providers in their networks that they 
offer to their enrollees, and 21 percent of firms, large firms 
that offer behavioral health benefits, have limits on those 
services.
    There are many complex reasons for this. I think a lot of 
behavioral health providers are largely incentivized not to 
contract with insurance because they are paid less than other 
types of physical health providers. As a result, people often 
have to go out of network to be able to access either a 
therapist, a psychiatrist, you know, what have you.
    I think having stronger parity enforcement laws are going 
to be critical, so that the onus is not on the employee or the 
consumer reporting that they cannot access services to then 
trigger an investigation into the insurance provider. Yes, the 
short answer to your question is yes. It would make a 
difference.
    Mr. Norcross. Thank you. Dr. Whaley, could you expand on 
this because gaining more access to lifesaving, and I am 
focusing more on the disease of addiction is increasing cost to 
the plan, but in the long term many people will suggest this 
saves the plan money by giving you earlier access. You are not 
going into more physical health care issues. Can you touch base 
on sort of the two main issues we are dealing with?
    Mr. Whaley. Yes. There are probably many areas in health 
care where we have inefficient spending, so if you're trying to 
get say a knee replacement and one provider charges $150,000.00 
and the other charges $30,000.00, that's a huge increase in 
spending with little to no quality improvement. There are other 
areas where we have inefficient underspending, where we should 
actually probably spend more and devote more resources.
    It does include things like primary care, and I think 
importantly mental health and addiction services.
    Mr. Norcross. Thank you. I yield back.
    Chairman Good. Thank you, Mr. Norcross. I would now like to 
recognize Ms. Chavez-DeRemer of Oregon for 5 minutes.
    Mrs. Chavez-DeRemer. Thank you, Chairman Good, for holding 
this important hearing today, and thank you to the witnesses 
for being here. Central to the issue of high-quality and 
affordable health plans is transparency. To make the best 
decision, small business owners need to better access what goes 
into those costs they are being asked to pay.
    Small businesses have enough on their plate. They should 
not have to play games with anyone to get the full picture on 
the cost of health plans they are offering their employees. I 
have been proud to lead the bipartisan Health Data Act, 
alongside Congressman Takano and Congresswoman Manning, which 
is common sense solution to make it easier for employers to 
choose affordable healthcare options.
    It would strengthen the ability of plan sponsors to access 
data from TPAs. Such reforms would make it easier for employers 
to leverage their own data when designing innovative payment 
models. Some PBMs and third-party administrators are using 
loopholes to circumvent current law by one, limiting the number 
of claims an employer can audit.
    Two, limiting the number of audits an employer can conduct. 
Three, demanding the audit be conducted by their own company. 
Four, hiding indirect compensation received by the service 
provider for its role in administering a plan.
    Five, and demanding that the audit take place on the 
service provider's premises. The Health Data Act would close 
those loopholes. All of us were excited last month to see it 
pass the House as part of the Lower Costs More Transparency 
Act.
    Ms. Josh, you have highlighted that increased transparency 
from pharmacy benefit managers would allow employers to better 
track their drug spending and make sure their payments are 
being used well, squarely focused on care for their employees. 
Could you expand on how the Lower Costs More Transparency Act 
would help employers reduce those drug costs?
    Ms. Josh. I thank you, Congresswoman, for that important 
question, and I applaud you on the work that you are doing. I 
think transparency is an incredibly critical issue here.
    One of the ways we have really been able to use 
transparency is understanding both our costs, as well as 
partnering it with quality data from the Office of the Patient 
Advocate in the State of California to be able to understand 
the value of the providers that we are seeing. We think it is 
really important that you pair both cost and quality together 
to understand value so that we are able to encourage our 
members and create opportunities for our members to select the 
highest value providers.
    Using that data we actually created a tiered network that 
had lower patient costs and premiums for network one, where you 
chose the highest value providers. If you were going to network 
three, where the costs were 180 percent of the rest of the 
county average, you actually paid 30 percent more in your 
premiums, and you paid three times more at the time of the cost 
of service.
    Without access to our data that would have been impossible. 
In our very first year it saved our participating employers 
more than 50 million dollars, and delivered higher quality to 
the members, and delivered great member satisfaction.
    Mrs. Chavez-DeRemer. Great. Thank you. Dr. Whaley, I had a 
question for you, but you have answered it. You are good to go. 
I will not make you say it again, so I am going to go on to 
Mrs. Beehler. Given your experience in developing innovative 
healthcare models for employees, are there other policies 
Congress should consider to promote employer innovation and 
transparency in healthcare?
    Mrs. Beehler. Thank you for that important question. 
Essentially any policies that can expand access to transparency 
of our data, and in a timely manner, will help employers be 
able to use that information to share with their employees, 
educate their employees, and make sure that they have 
information they need to make good decisions for themselves and 
their families.
    Mrs. Chavez-DeRemer. For Congress, certainty oftentimes is 
what you all ask us for, right? To lay the pathway. In the 
healthcare industry on the personal side, I can tell you this. 
If we are going to offer affordable healthcare, and we are 
going to have the providers provide for that transparency is 
key, which is what this hearing is about, so thank you for 
being here today, and I truly appreciate the time that you have 
given us today. With that, Mr. Chair, I yield back.
    Chairman Good. Thank you. We would now like to recognize 
Mr. Courtney for 5 minutes.
    Mr. Courtney. Thank you, Mr. Chairman, and before I begin 
my remarks, I would ask for unanimous consent to introduce an 
article which was in the Hill yesterday, Obamacare Enrollment 
Breaks Record for Third Consecutive Year, which again documents 
the fact that they have now exceeded 20 million enrollees in 
qualified health plans, which is 8 million higher than when 
President Biden took office 4 years ago.
    Obviously, the more generous tax credits, which does reach 
some employees of the smallest of small businesses, is 
providing obviously a real medical home and insurance home.
    Chairman Good. Without objection, and you are now 
recognized for 5 minutes.
    [The information of Mr. Courtney follows:]
    [GRAPHIC] [TIFF OMITTED] T6309.043
    
    [GRAPHIC] [TIFF OMITTED] T6309.044
    
    Mr. Courtney. Thank you. I would just like to followup with 
Ms. Ducas, the question about prescription drugs and the impact 
that it is having on employer health plans. Again, the State of 
Connecticut Insurance Department just increased premiums this 
year, and they noted the fact that as a percentage of premium 
dollar from like even just 10 years ago, it has gone from 10 
percent of premium dollar to over 20 percent, and it is headed 
right toward 30 percent of premium dollars.
    Again, the Inflation Reduction Act, which again has now put 
into place a mechanism for negotiating lower prices for 
prescription drug, the first tranche of ten medications is now 
actively under consideration. There is a bill in Congress, H.R. 
4895, the Lowering Drug Costs for American Families Act, which 
would extend that mechanism to small businesses, to private 
health plans, to working age Americans outside of Medicare.
    That obviously would be a very beneficial impact, but just 
again if you could talk about that a little bit because you 
mentioned it in your written testimony.
    Ms. Ducas. Yes, sure I would be happy to, and thank you for 
the question. As you mentioned, the prescription drug price 
negotiation, and the inflation rebates in the Inflation 
Reduction Act are tremendous savings vehicles for the Medicare 
program.
    With respect to extending those into the commercial market, 
one of the analyses for a similar bill, H.R. 3 found that 
extending drug price negotiations into the commercial market 
would increase Federal revenues by $45 billion over 10 years, 
as a result of decreased subsidies provided by the Federal 
Government. It would be a significant savings driver, yes.
    Mr. Courtney. Great, thank you. Ms. Josh, I read your 
testimony very closely. Again, it is a really impressive 
program that is happening out there in California. You know, 
you again alluded to the association health plans as a 
potential way to again, expand pooling and lower costs for 
drugs, but you did mention on page 14 that there has to be 
appropriate guardrails in that type of mechanism.
    Would one of those guardrails be that we at least make sure 
that essential health benefits, which a lot of blood, toil, and 
tears went into in terms of, you know, the implementation of 
the Affordable Care Act, to make sure that quality health plans 
are being sold, as opposed to what preceded the passage of the 
Affordable Care Act.
    Ms. Josh. Thank you for that important question. California 
Schools VEBA has been really committed to making sure we have 
high quality benefits. I think one of the keys of that in the 
appropriate protections is that the members of our board are 
fiduciaries to the individual members, so they have a legal 
obligation to ensure that they are delivering high quality 
value to the members under which they cover.
    We launched our direct contracting pilot that required 
legislation with the State of California to use a self-funded 
plan that could use risk-bearing contracts. One of the items 
within that bill was actually codifying the essential health 
benefits that would be offered under those direct contracts to 
ensure and codify that it continued to be high quality, and 
that the fiduciaries were delivering their value to their 
participants.
    Mr. Courtney. Well, thank you for that answer because 
again, you know, Mr. Walberg, who we have served together for a 
long time, and I really respect him, but his bill actually 
allowed for waiver of the essential health benefits in the 
legislation that, you know, that the other side has been 
pushing forward.
    To me that is a step backward, and that is where, as a 
former small employer, before I came to Congress. I mean I get 
it, you know, that people really by themselves, if you have got 
six or seven employees like I did, you know, you are helpless 
in the marketplace. Pooling is good, but the fact is that we, 
as you point out on page 14 of your testimony, if we are going 
to go that route, we have got to make sure that we are at least 
building in those safeguards and guardrails.
    I hope that point is well understood and documented in 
today's hearing because again, I think there is potential for 
bipartisan movement on that type of issue, but again, we cannot 
just walk away from protections for employees who are going to 
be patients at some point with these health plans, so that they 
are getting access to critical care, which was again identified 
through the essential health plan rulemaking that took place 
back in 2010.
    Again, I am running out of time, but really quickly, you 
mentioned that as a public option for employers, Ms. Ducas, as 
again is something that Congress should look at. Can you 
comment quickly?
    Ms. Ducas. Yes, sure. We will be releasing a report in the 
next few weeks outlining what the contours of that might look 
like, but essentially it would be an alternative that employers 
could offer, rather than their current ESI offerings. We 
outline a number of different designations for that.
    You would want to sort of have different tiers, preserve 
employee choice. You have government negotiations. Yes.
    Mr. Courtney. Thank you. More choice is good.
    Ms. Ducas. Sure, more choices.
    Mr. Courtney. Thank you. I yield back, Mr. Chairman.
    Mr. Burlison [Presiding.] Thank you. The Chair now 
recognizes Mr. Allen for 5 minutes.
    Mr. Allen. Thank you, Mr. Chairman, and thanks for being 
with us today and sharing your expertise. Dr. Whaley, as of 
2021, Southern Company, located in my home State of Georgia, it 
is the largest utility company in the U.S. in terms of customer 
base. It is large size has afforded it the ability to stay well 
below the national average in healthcare costs for the last 10 
years, resulting in a cost avoidance of around 15 million 
annually.
    Major contributing factor to keeping healthcare costs low 
for their employees has been their capacity to implement 
innovative care models, such as muscular skeletal centers of 
excellence, direct contracting through hinge help for muscular 
skeletal, and onsite cancer screenings. Where unfortunately not 
all of employers have the ability, expertise, or the resources, 
particularly small businesses, to invest in innovative payment 
models.
    What types of employers have successfully implemented 
direct contracting or other innovative benefit designs, and 
what types of employers struggle to do so?
    Mr. Whaley. I think the importance is less on the size of 
the employer, but more so recognizing that they are 
fiduciaries, and taking that obligation seriously. It may be a 
challenge for smaller employers however, to design these 
programs, and to scale these programs if they do not have a 
sufficient number of patients.
    There are, I think, many entrepreneurs who are trying to 
fill this space, and essentially pool employer populations, and 
do a lot of that work on behalf of employers.
    Mr. Allen. What would be the impact for example in the 
Affordable Care Act that carved out two groups that got waivers 
and did not have to deal with the regulatory environment of the 
Obamacare law. That was the labor unions and faith-based 
organizations, which offer healthcare plans. If we were able to 
carve out, employer-based insurance, and plus under ERISA allow 
self-employed folks to participate, would that decrease costs 
substantially?
    Mr. Whaley. One example, a purchaser where you see lots of 
innovation actually comes from labor unions. For example, on 
the reference pricing program that I have studied in the 
context of the California Public Employees Retirement System, a 
lot of the impetus for designing that type of program actually 
came from labor because they recognized that a dollar in 
healthcare costs comes directly from a dollar in wages.
    Mr. Allen. Right. Well, our Nation spends twice as much of 
all the other countries average for healthcare, and the 
taxpayers of this country in Fiscal Year 202023 spent 1.6 
trillion on healthcare. Obviously, the healthcare cost is the 
driver of our debt, which is now 24 trillion. We have got to 
come up with something to compete with government healthcare.
    There has to be two systems. We have seen employers figure 
this out. In other words, if you leave it, like Ms. Josh, if 
you leave it to the business community they are going to take 
care of their folks. The reason we have health insurance in the 
first place was because during World War II under wage and 
price controls, the only way you could compete for employees 
was benefits, and that is when healthcare was introduced.
    Josh, if you are given the freedom, in fact, Mr. Whaley 
before I leave you, do you know where the dollars are going in 
healthcare?
    Mr. Whaley. They go all over the place. To your question, 
you know, one thing that employers have learned is that it does 
not make sense to pay more for the exact same services that is 
done in one setting versus another.
    Mr. Allen. Yes.
    Mr. Whaley. For example, Safeway decided to pay for 
hospital, for laboratory tests done in independent settings, 
and Medicare and others could learn from those types of sites.
    Mr. Allen. Well, we are not going to reduce the costs of 
healthcare until we know where all the money is going. At least 
that is the way we do it in the business world. We take it 
apart, and we say okay, what can we do, and why is this costing 
so much money? All this started happening when the government 
got in the healthcare business, and the government owns the 
healthcare business today.
    Ms. Josh, I have got 12 seconds, do you have anything to 
add to that?
    Ms. Josh. I think just for small employers the more market 
power you can give them that they can come together, the more 
able they are going to be able to access these individuals.
    Mr. Allen. The only way to do that is association health 
plans.
    Ms. Josh. Or something similar.
    Mr. Allen. Give them the same waiver, so they do not have 
to fool with the government.
    Ms. Josh. That they could design their programs to meet the 
needs of their populations.
    Mr. Allen. Yes, exactly. Thank you, and I yield back.
    Mr. Burlison. Thank you. The Chair recognizes Mr. Scott for 
5 minutes.
    Mr. Scott. Thank you, Mr. Chairman. Ms. Ducas, we have 
heard a lot about association plans. I just wanted to point out 
that one of the benefits of the ACA is that essentially 
everybody pays average. In an association plan you let a low-
cost group to pull out, which essentially causes everybody else 
to pay more, and that is the fundamental problem with 
association plans.
    What happens when some groups can negotiate for lower 
prices. Do we see other people's prices go up as we do in 
association plans?
    Ms. Ducas. Thank you for the question. Not that I am aware 
of. In part, I think that has to do with transparency. It is 
often difficult for one employer or business to know that lower 
prices have been negotiated elsewhere when they have no access 
to that information.
    I would just underscore that you are correct in what you 
shared about association health plans, and note that there was 
an actuarial analysis that found that if the Trump 
administration's association health plans rules had been 
allowed to go into effect, the self-employed folks that would 
have left ACA regulated markets, would have been significantly 
healthier than those who stayed, and that would have caused 
premiums to go up for those who were not able to leave the 
marketplace.
    Mr. Scott. Well, if an association formed and found that 
prices would be higher than the ACA, nobody would buy it.
    Ms. Ducas. That is right.
    Mr. Scott. It would not work. The only ones that would work 
were those that could save money, pulling out healthier people. 
Everybody else on average, prices go up.
    Ms. Ducas. That is exactly right.
    Mr. Scott. There are other things we need to look out for, 
and that is if a large group can negotiate with a hospital for 
lower prices, it is one thing if they get lower prices. It is 
another thing if they are the only ones that can go to the 
hospital in terms of, and if you have a group of providers, if 
it is an exclusive group just for them, that could affect the 
availability for everybody else.
    Can you say a word about what happens when you have these 
different groups? I guess one would be that you cannot get 
enough people in your group to cover all the ailments your 
group may have, and so you are out-of-network.
    Ms. Ducas. Yes. There because I will parse that question in 
two different ways. One would be looking at the market power 
that some providers have in terms of when they are contracting 
and executing that market power. If they are the dominant 
player in a particular place, often they will use 
anticompetitive sort of contract terms that might say, hey, if 
you want to contract with me and send your employers, and 
release to me, you cannot send them to our competitor. If you 
want to send them to see some of our providers, you have to 
send them to see all of our providers, so there are a number of 
opportunities to address anticompetitive behavior on the part 
of very large providers, that's one piece.
    To your other point around purchasers executing contracts 
with these types of provider groups, it is very heavily 
reliant, I think, to do this successfully and having a very 
large number of enrollees that you can send there. If there is 
anything else that would be helpful to expand on, I am happy to 
do that.
    Mr. Scott. Okay. The most I have heard about the problem 
with essential benefits, again everybody is paying average, but 
if benefits become optional, then only those that actually need 
it will sign up for it. What would happen to maternal and child 
care obstetrical services if that became optional?
    Ms. Ducas. That is a very good question. We know that those 
are two very expensive services, and that association health 
plans are not required to cover essential health benefits, so I 
would leave that speculation in the air, but you know, I think 
if I were a plan and had a choice about what to cover, I would 
look to potentially offload expensive services.
    Mr. Scott. Well, everybody has to pay for a little bit for 
obstetrical care now. Only people in childbearing age that 
expect to have children and sign up for it and that would 
become not insurance.
    Ms. Ducas. Yes.
    Mr. Scott. Prepaid obstetrical care, and essentially paying 
the full value.
    Ms. Ducas. Yes.
    Mr. Scott. What did removal of the cliff do to the 
attractiveness of association plans?
    Ms. Ducas. Removal of the cliff was associated with many 
more people on the Affordable Care Act marketplaces qualifying 
for subsidies. We saw on average premiums go down about 20 
percent for those folks who were on the marketplaces. Now, 80 
percent of people in the marketplaces are able to access a plan 
for less than up to $10.00 a month.
    That obviously becomes a very attractive alternative when 
you know that those plans are comprehensive, and cover all of 
the benefits you're going to need.
    Mr. Scott. People could get benefits instead of losing 
them, about $100,000.00 for a family of four, almost 
$200,000.00.
    Ms. Ducas. Yes.
    Mr. Scott. Still getting help. Thank you, Mr. Chairman.
    Mr. Burlison. The Chair now recognizes myself for 5 
minutes. Ms. Beehler, I understand that to direct contracts and 
the centers of excellence come with they are encountering 
geographic barriers issues because really it is the logistics 
of having to create contracts with providers which ultimately 
means that they are generally to more specific areas.
    How do you recommend, or do you see any solutions to expand 
outside of these geographic areas?
    Mrs. Beehler. Thank you for the question. At SEL we have 
put a number of things in place on our plans to help reach 
geographical areas and expand services. First and foremost, our 
onsite health clinic providers are able to consult with any of 
our members across the country. They may not be able to 
prescribe or diagnose, but they certainly can provide their 
expertise and direct people in the right area.
    In addition, we do also----
    Mr. Burlison. Is there something that you would like to see 
changed?
    Mrs. Beehler. Absolutely.
    Mr. Burlison. The providers of different states can 
prescribe, and can diagnose and treat?
    Mrs. Beehler. Provider reciprocity is a huge issue, and we 
feel it having our own providers. We saw expansion of this 
during the pandemic, in which many of those barriers came down 
from that. We have seen a lot of State pacts come in place that 
began to increase access, but the ability to do that much more 
than just regionally is very important and would provide more 
care to everyone.
    Mr. Burlison. Are there any private solutions of 
consolidating contracts with providers, so that it is easier 
for an employer to directly contract through a group of 
providers?
    Mrs. Beehler. Yes.
    Mr. Burlison. I mean we call these networks originally, but 
they have kind of--but are there any of those within the direct 
contracting model?
    Mrs. Beehler. Yes, so their DPCs, direct providers have 
begun to network together, so that you can access those 
networks, and patients can access those networks, and be able 
to be seen by providers that are licensed in the right area.
    Mr. Burlison. Thank you. Mr. Whaley, in your testimony you 
noted that the large employers like General Motors, Purdue 
University, they have saved healthcare dollars through using 
the direct contracts, specifically General Motors direct 
contract with Henry Ford Health has lowered its healthcare 
spending by 15 percent.
    Purdue has saved over 200 million dollars and has not had 
to raise the employee's premiums over the past 5 years. What, 
as we continue the discussion, what barriers do you see for 
direct contracting?
    Mr. Whaley. I think that one barrier that could easily be 
addressed is knowledge of both what your prices are now as an 
employer, so these organizations were actually able to get 
access to their data, and understand the prices that they were 
paying. Then I think, just as importantly, understand the 
prices across the market.
    Mr. Burlison. Mr. Whaley, you do not think that they 
understand what check they are writing?
    Mr. Whaley. For most, employer's healthcare is a black box 
in which they write a monthly check.
    Mr. Burlison. Right.
    Mr. Whaley. Have very little insight into the prices 
negotiated on their behalf.
    Mr. Burlison. Let me ask the question in a different way. I 
think what is ironic, we have talked about price transparency, 
but it is worth nothing if there is no choice available. Would 
you agree?
    Mr. Whaley. That is right.
    Mr. Burlison. We are talking about transparency in pricing, 
but I can think of most of the private sector that we do not 
have to pass laws to force transparency because they are 
competitive in their market, correct? We do not have to have a 
law in place that says that gas stations have to put their 
price in big, bold letters outside and on highways, but they do 
it, right?
    Mr. Whaley. That is correct. As I allude to in my remarks, 
both decades of both provider and plan consolidation.
    Mr. Burlison. I have got short time, but to me the answer, 
the reason is that there is so much competition. They have got 
a gas station across the street. In health insurance, how many 
carriers are there in the United States?
    Mr. Whaley. Well, there is a handful that dominate the 
market.
    Mr. Burlison. Five?
    Mr. Whaley. Roughly.
    Mr. Burlison. Five. The employer, while they can get all 
the transparency in the world, if you have only got five 
options available, what good is your transparency?
    Mr. Whaley. I think that is certainly correct, as well as 
on the provider side.
    Mr. Burlison. I would contend we are trying to get the cart 
before the horse. I think if you provide more choice, then 
transparency follows. That is my contention. Let me ask this. 
We were talking about a lot on the demand side. What about the 
supply side? Do you study, you know, other states, sort of 
State to State they have occupational licensing laws, 
certificate of need laws, things that ratchet down the 
availability of healthcare.
    Are there states that do a better job at that, and their 
prices are lower?
    Mr. Whaley. I think states without certificate need laws in 
general have more access and more choice, and lower prices.
    Mr. Burlison. Thank you. My time has expired. I now 
recognize Ms. Manning from North Carolina for 5 minutes.
    Ms. Manning. Thank you, Mr. Chair. Thank you to our 
witnesses for being here today to discuss this critically 
important issue. I was very proud to support the Inflation 
Reduction Act in the last Congress, which helped lower costs of 
prescription drugs for people on Medicare, by capping the cost 
of insulin, and for the first time allowing the Federal 
Government to start negotiating for lower prices for certain 
prescription drugs covered by Medicare.
    This was an important step, but it is not enough. I am 
proud to have introduced the Health Data Access Transparency 
and Affordability Act, with Representatives Chavez-DeRemer, and 
Representative Takano, which passed this Committee with 
bipartisan support because there is agreement that greater 
transparency will help employers and consumers make better 
health care choices.
    Mrs. Beehler, have you been able to use health care data 
that you have been able to access in administering your 
employer-sponsored group health plan to lower costs and improve 
quality?
    Mrs. Beehler. Yes, we have. We have had a number of 
examples both within pharmacy, as well as within our own, 
bringing in our own health care clinics, and being able to 
provide our service in-house, and direct contracting with local 
providers.
    In addition, in our communities, and where we know that 
there are huge price discrepancies. For instance, advanced 
imaging is an area, especially in rural communities, where we 
pay a much higher price than you would see in a non-rural 
community. Using that information, we were able to direct 
contract with our local hospital and in 1 year we will save 
over $200,000.00 in advanced imaging alone.
    Ms. Manning. Greater transparency is one avenue for helping 
employers and consumers reduce their health care costs. Ms. 
Ducas, as you pointed out in your testimony, despite the 
efforts that we have made with the ACA, the IRA, and hopefully 
we will make with increased transparency, prescription drug 
prices have nevertheless continued to rise. While this 
Committee has largely focused on PBM's anticompetitive 
practices, and how they increase costs for employers, it seemed 
to be a bit of a shell game that we were talking about at the 
last hearing.
    I think we should also be looking at other points along the 
pharmaceutical supply chain to lower costs, including the drug 
manufacturers. You have mentioned that other countries have 
lower costs for drugs, and in some cases better health outcomes 
than in the U.S.
    What are some of the tactics that peer nations are using to 
rein in drug prices beyond price negotiation with 
manufacturers?
    Ms. Ducas. I would say a key one is price negotiation and 
caps. I mean that is critical. Without that, there is little 
opportunity to bring pharmaceutical prices down. There is a lot 
of asymmetrical information when it comes to drug 
manufacturing, and there is also a lot of consolidation and, 
not consolidation, but concentration in the market of the 
suppliers of the materials that go into producing a drug, the 
manufacturers who produce the drugs that are invented, you 
know, by pharmaceutical companies.
    What I would point to is that the primary vehicle for 
success in other places is their ability to directly negotiate 
prices.
    Ms. Manning. In your testimony, you mentioned that one 
barrier to lowering costs of employer-sponsored health plans is 
certain anticompetitive contract terms that inhibit plan 
designs that could lower costs for consumers. These include 
all-or-nothing clauses, anti-tiering and anti-steering 
provisions, and other restrictions.
    If these contract provisions are harmful to workers and 
raise costs, why do employers or health care plans agree to 
them?
    Ms. Ducas. That is a great question and thank you for it. 
The primary reason is because of the outsized market power that 
the providers that are bringing these contract terms to the 
table have. If you are the one game in town, if you are the big 
name in town, it is a credible threat to be able to say that if 
you want a contract with us, you have to play by our rules.
    If you are not in the network that you are offering your 
employees, that is being offered to your employees, if the 
biggest hospital, or the biggest, most recognizable hospital in 
a particular place is out of your network, your employees are 
not going to be happy.
    Ms. Manning. What is the solution to that?
    Ms. Ducas. Greater regulation of anti-competitive behavior.
    Ms. Manning. Thank you. My time is about to expire. I yield 
back.
    Mrs. Foxx [Presiding.] Ms. Hayes, you are recognized for 5 
minutes.
    Mrs. Hayes. Thank you. Health care costs in the United 
States are the highest in the world, accounting for 4.5 
trillion in 2022. In my home State of Connecticut, we ranked 
9th in the country for per person health care spending. 
Employer premiums in Connecticut are significantly higher than 
the national average.
    Individuals covered by private health insurance plans, 
including employer-sponsored plans, are billed at rates much 
higher than what Medicare, Medicaid, and other public programs 
pay for the very same services. Ms. Ducas, why is it so 
difficult for employers to reduce how much they pay for health 
care?
    Ms. Ducas. Thank you for the question. A large reason for 
that is not having sufficient market power to be able to push 
on that. You are correct that on average commercial insurers 
pay significantly more than Medicare for the same services. 
There can be pretty tremendous variation, one my co-witnesses 
has done a lot of research into this in more, in states with 
more competitive markets, you see less of a differential.
    To answer your question, when you are negotiating on behalf 
of a very large pool of individuals, as you are with the 
Medicare program, you can achieve greater economies of scale.
    Mrs. Hayes. What can we as policymakers do to lower the 
cost for Americans covered by private insurance?
    Ms. Ducas. I think one of the things that we could do is 
level the playing field between purchasers and providers, and 
as we have discussed there is heavy consolidation in the health 
care provider market, and also in the insurance market. One way 
to do that is to tamp down on that behavior, reduce the market 
power that those entities have, which tip the scales a little 
bit more in the favor of private purchasers.
    Then another issue, as I have mentioned, is prescription 
drug pricing. Doing more to regulate prescription drug price to 
bring those down, to make it more affordable for employers to 
be able to offer coverage, that covers those comprehensibly.
    Mrs. Hayes. Absolutely, and I think that this Committee and 
the Congress are uniquely positioned to do that, and not leave 
it up to employers to have to try to figure that out on their 
own.
    Ms. Ducas. Yes.
    Mrs. Hayes. I can tell you that House Democrats have been 
dedicated to addressing the health care crisis for over a 
decade, and as we have heard over, and I am sure you are aware 
of, the U.S. Department of Health and Human Services announced 
yesterday that more than 20 million people have selected an ACA 
health insurance marketplace plan enrollment. I have seen the 
numbers in my State skyrocket.
    There is a record number of enrollments all around the 
country, so while there are still issues that we have to 
address, the plan is working. As you mentioned in your 
testimony, the ACA improved health care benefits and 
strengthened consumer protections for more than 178 million 
Americans and employer-sponsored insurances.
    Ms. Ducas, you also mentioned additional action to address 
the underlying drivers of health care cost growth. What are 
some of the most important consumer protections under the ACA 
that have made coverage more affordable, and how can we 
continue to buildupon that work today?
    Ms. Ducas. Thank you for the question. Some key ones, we 
are getting rid of annual and lifetime limits. Prior to the 
ACA, there were about 105 million people who were in plans that 
had lifetime limits, and 20,000 people hit those limits each 
year, so for those folks, the Affordable Care Act meant the 
difference between bankruptcy and financial solvency.
    I would say another key protection was also enabling 
dependents to stay on their parents plan up to the age of 26, 
which made affordable health coverage possible for a lot of 
young adults in this country. Also, the provision of essential 
health benefits was fairly key. I mean it is a night and day 
difference today.
    Mrs. Hayes. Yes.
    Ms. Ducas. In terms of what you are able to purchase either 
on your own, or through employer-sponsored insurance thanks to 
the ACA.
    Mrs. Hayes. Well, thank you. I appreciate that, and this is 
an ongoing debate. We have heard in the last week on everyone's 
platform a resurgence of conversations about the Affordable 
Care Act, and the benefits or lack thereof, the plans. As my 
grandmother would say, do not throw out the baby with the bath 
water.
    We have to figure out what works in the plan. Many of the 
things that you just said, and then improve upon the things 
that do not work, but I think it is a dangerous proposition to 
go back to a place where we are insuring less people and not 
more in the United States of America. With that I yield back, 
thank you.
    Mrs. Foxx. Thank you, Ms. Hayes. I now yield myself 5 
minutes. Dr. Whaley, in your written testimony you descript 
your research as ``studying innovations that employers are 
making when they have access to price information.'' As you 
know, the House recently passed the Lower Cost More 
Transparency Act, which gives employers greater access to their 
own data to price information.
    How will this legislation benefit employers who are 
engaging in innovative payment models?
    Mr. Whaley. What we have seen so far is that it is really 
the frontier employers who have been able to get access to 
their own data. I think that is largely just because 
traditionally it has been such a herculean task to get access 
to data. I think expanding employer access to claims data, as 
well as having market comparisons through the transparent and 
coverage policies, will actually allow more employers to 
participate in these types of innovations.
    Mrs. Foxx. Thank you. Ms. Josh, I am very impressed by 
California's VEBA's ability to reduce costs for workers while 
maintaining robust access to high-quality benefits. Your 
written testimony states that VEBA faced challenges standing up 
its direct contracting model because of restrictions on the use 
of risk-bearing contracts in your State. Can you elaborate on 
the regulatory challenges you faced when implementing VEBA's 
direct contracting pilot programs?
    Ms. Josh. Thank you for the question, Chairwoman. It is one 
of the items that we think is critical when you look at 
innovation is aligning the incentives of the health systems and 
the provider groups with those of the purchasers. Really, at 
the end of the day, that is how are we both investing toward 
making the population healthier and ensuring they have the 
services that they need.
    One of our key tools is called capitation, which is a risk-
bearing contract that allows the group to also take downside 
risk, as well as upside risk in the management of a population. 
In the State of California, if you are to direct contract, you 
can only do it on a fee-for-service basis. We were required to 
run special legislation to be able to get the ability to run a 
pilot to use capitation in direct contracts.
    Fortunately, it has been a 5-year journey. We have 
successfully enrolled members in that starting January 1st. For 
others to access it, both in California and outside of 
California, we would be looking, and hope for support in 
clarifying the ability to use those contracts on a direct 
basis.
    Mrs. Foxx. Thank you. Ms. Beehler, in your written 
testimony, describe challenges obtaining claims data and 
navigating the complexity of our healthcare system in creating 
new benefit designs. Could you elaborate on these challenges, 
and how they have affected your efforts to improve healthcare 
access and affordability?
    Ms. Beehler. Thank you for the question, Chairwoman. Our 
attempt to get claims data started years ago. Really, since the 
passing of the No Surprise Act were we able to make any 
traction, but still, at SEL we went through an arduous process 
that lasted over 18 months while we tried to get our claims 
data, both in discussions with our third-party administrator, 
as well as back and forth with data submissions that were not 
complete in nature.
    This should not be the norm. That should not be the 
expectation. Also, during this process we were informed by our 
TPA that we were the first one in our State that had asked for 
this level of data, and that also should not be the norm.
    Mrs. Foxx. Well, thank you very much. I am in a rare 
situation where I can yield back time. I now recognize the 
Ranking Member, Mr. DeSaulnier.
    Mr. DeSaulnier. Madam Chair, I will take your time.
    Mrs. Foxx. Okay.
    Mr. DeSaulnier. No, no, I am only kidding. Thank you so 
much. Thank you all for being here. I cannot help but think of 
the possibilities that we have to work together on evidence-
based research, Dr. Whaley, that you have been involved with 
that is bipartisan that improves life for consumers.
    I made a comment about innovation, being a member from San 
Francisco Bay area, and then dealt with innovation with tech 
industry. It was a wonderful thing until people whose vested 
interest was primarily return on investment for the investor, 
without a consideration for the consumer, and then innovation 
just became an excuse, in my view, for some of the down sides.
    Pardon me for that editorial comment. Ms. Ducas, maybe you 
could just briefly talk about some of the things that we could 
do based on what you have heard at this hearing with the 
Affordable Care Act right now to improve the quality of care. 
That balance between quality assurance and cost.
    Ms. Ducas. Sure. Thank you for the question. Well, I think 
we have heard a lot about the need for transparency, and for 
employers and others to be able to actually see how much they 
are spending on care, where their money is going. One of the 
things that I highlight in my testimony, would be to establish 
a Federal All-Payer Claims Data base, that would allow everyone 
to be able to see what their claims look like across payers, 
and would essentially be a place for both self-insured and 
fully insured employers to go, and to bring their data into as 
well.
    I think also looking to--we talked a bit about the enhanced 
premium tax credits. It would be great to see those made 
permanent, given the impact that they are having on the 
Affordable Care Act marketplaces. Then I think in addition to 
building on the ACA, Congress has a key opportunity to build on 
the IRA and the prescription drug pricing provisions and 
inflation rebates therein, sending those to the commercial 
market, and making those really powerful tools work for 
everyone in this country.
    Mr. DeSaulnier. Thanks. Ms. Josh, thank you for all your 
great work. As a Californian, albeit from Northern California, 
you have a unique partnership where you have CTA and 
administrators working together. The challenge--and you 
mentioned you avoid high deductible, that question is for you 
to elaborate on that, but also the quality assurance.
    Yesterday I got a call from a dear college friend who has 
literally a family practice he inherited from his father. He 
was telling me about how difficult it is for him as a primary 
care physician, where his clients will come in, they have 
health insurance, and then they spend hours, both staff and his 
patients, trying to get what they believe the insurance company 
is required to give them for prescriptions.
    Then they go out, and they give up and they pay out of 
pocket. How do you handle that in addition to high deductible?
    Ms. Josh. On the cost, like I said earlier, we have always 
believed that our members need to be able to afford to go to 
see the doctor. We cannot give them a health plan, and we are 
covering gardeners, bus drivers, lunchroom workers, who make 
$30-40,000 in California. It is important to keep the cost of 
coverage really effective for them.
    We drive that through high quality. One of the things that 
California is very, has a great advantage on, is the Office of 
the Patient Advocate, which is run through the State of 
California. It is an independent quality monitoring tool that 
we can use because we often see if someone has skin in the 
game, if it is a carrier or someone else determining the 
quality, you can get differing messages.
    What we really like in having that independent quality 
measure is that there is no incentive to drive business or 
membership one place. We really encourage access to that data, 
access to that quality information, to be more broadly 
available, because it has been very useful in California.
    Mr. DeSaulnier. I remember it well. As a former Chair of 
the Budget Subcommittee on Health Care in the State Senate. Mr. 
Whaley, you mentioned Safeway. I have a constituent who is a 
former CEO of Safeway, Steve Bird, talked to him many times 
about prevention.
    We had some difficulty with some of our friends and retail 
clerks over that, but can you talk a little bit about 
prevention, and to the degree you could include behavioral 
health, which was also a big issue for, those, contract 
negotiations.
    Mr. Whaley. As I mentioned earlier, there are probably many 
areas in health care where we spend too much and spend 
inefficiently, but at the same time, there are many areas such 
as prevention and particularly mental health and addiction 
services where we probably spend too little, and I think it's 
actually important for the health of employers and populations 
to actually spend more and devote resources to those services.
    Mr. DeSaulnier. Thank you, Madam Chair, and I will 
gratefully now give you time back. I just gave you 3 seconds 
back, Madam Chair.
    Mrs. Foxx. Thank you.
    Mr. DeSaulnier. It is a biblical number.
    Mrs. Foxx. You do yours and I will do mine.
    Mr. DeSaulnier. For any newcomers, this is a comedy routine 
we have. We both think it is funny, I do not know if anyone 
else does. Thank you, Madam Chair, and again thank you for you, 
Chairman Good, and the witnesses.
    I think this could be a really productive hearing. It is in 
the best interests of American consumers. I am shocked that, in 
spite of everything, we are still at almost 18 percent of GDP 
in terms of percentage of GDP as health care costs, and we do 
not have the outcomes that would, in spite of everything that 
we have tried to do, as opposed to our global competitors, who 
I think the Japanese are the next closest, and it is 10 
percent, and they have better outcomes.
    We can do things that extend people's lives in this country 
if we work together. Madam Chair, I would like you to ask 
unanimous consent to enter the following documents into the 
record. A letter from the California Public Employees 
Retirement System, and a letter from the American Federation of 
County, State, Municipal Employees.
    Mrs. Foxx. Thank you, Mr. DeSaulnier. I ask unanimous 
consent to submit the following letters into the record. From 
Transcarant, ATA Action, ERIC. Purchaser Business Group on 
Health, and the Partnership to Advance Virtual Care. Without 
objection, so ordered. Without objection on yours.
    [The information of Mr. DeSaulnier follows:]
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    [The information of Mrs. Foxx follows:]
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    Mr. DeSaulnier. No. Unless you want me to continue to talk 
Madam Chair, I am happy to yield back.
    Mrs. Foxx. That is all right.
    Mr. DeSaulnier. I thought you would say that.
    Mrs. Foxx. Well, as you can tell Mr. DeSaulnier and I get 
along very well, and this is a very bipartisan issue and we 
have worked very hard in this Committee, and I am particularly 
proud as the Chair, and the Ranking Member has already left, 
but we have really worked closely on this issue.
    Now I will share my prepared remarks. Healthcare costs 
continue to be a major threat to employers, employees , and our 
economy. As premiums and healthcare spending continue to rise 
at unprecedented rates, innovative solutions are needed that 
will provide higher quality healthcare at more affordable 
prices. As we have learned today, businesses are the innovators 
who can solve these challenges, not government mandates.
    By investing in new payment models like direct contracts, 
high performance networks and centers of excellence, the 
employers our witnesses represent, have proved to be effective 
models for a new future in healthcare. Despite their successes, 
we know that there remain barriers for innovation in 
healthcare.
    Access to data, overzealous State regulators, oppressive 
bureaucracy, administrative burdens, and accurately measuring 
performance remain challenges employers face in improving their 
health plans for their employees. We cannot afford to keep the 
status quo.
    It is our job in Congress to help expand innovative options 
broadly across the country. Congress can clarify ERISA's pre-
emption to help insulate employers from overbearing State 
regulations. Congress can establish meaningful cost and quality 
benchmarks to help employers maximize their plans values, and 
Congress can build off of the great work of the Education and 
Workforce Committee to strengthen healthcare price transparency 
and codify the transparency and coverage rule in the law.
    I look forward to working with members of this Committee to 
tackle these challenges. Again, I thank the witnesses for 
participating in today's hearing, and I yield back. There being 
no further business to come before the Committee, the 
Subcommittee, we stand adjourned.
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    [Whereupon, at 12:01 p.m., the Committee was adjourned.]

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