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tv   Politics and Public Policy Today  CSPAN  September 14, 2016 9:00am-11:01am EDT

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the states of europe didn't interact. the power became a zero game. the way to solve the problem was
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to merge europe together and create a european union. the phrase is already out there so that france, germany, russia, poland, don't see events as a zero sum game. >> on sunday night at 8:00 eastern. >> the idea that american presidents have always gotten the very best health care available in whatever era they lived, this is a charming myth and problems began almost immediately with george washington. >> richard levinson, on myths surrounding presidents and their health. he has talked about how doctors have sometimes contributed to a president's death or saved them from dying without public knowledge. go to for our complete schedule. national intelligence director, james clapper, recently spoke about the intelligence briefings being
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provided to hillary clinton and donald trump. this was part of an intelligence and national security summit here in washington, d.c. it is about an hour. good morning, everyone. i will tell you it is a little tough to hear backstage but i did hear hokie football. come on, let's go. we have a few hokies in the crowd there. a big thank you to maureen and chuck. i will tell you, i am delighted to be here today. i am so pleased to see the partnership between efsia and insa continue to grow. each year, this year gets better. the summit offers a great service to the intelligence community, our industry partners, the press and the
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public. forums like this play an important role in fostering the public dialogue around intelligence and national security issues. i really want to thank the members of the press in attendance, which i understand is nearly 100. thank you for being here today. now, down memory lane, i recall the buzz the first year we were in the omniforum when i was participated with admiral rogers, director brennan and acting director, david shed. the atmosphere really was electric. it was looking out on a full house just like today. i think that was the moment that both organizations realized we have a hit. there is a demand for dialogue
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that is ir a demand that afsea and nsa are uniquely positioned to deliver. i want to say thank you for all of the afcea and nsa members. we want this to be a first class experience for every aten deand exhibit tore. that certainly is not responsible without all of our sponsors. so thank you for your support and how about a round of applause. so, again, i'm excited to participate in this summit once more. i actually get to be on the other side of things to moderate our first session of conversation with our quarterback of the intelligence community, director of national intelligence, jim clapper.
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last month marked six years since director clapper assumed the dni post, an unprecedented term, longer than all of his predecessors combined. i think he truly has become sin on synonymous with the position. we are honored to welcome him back to the national security summit stage. please join me in a very warm welcome for director of national intelligence, james r. clapper jr. >> i'll move it out of the way. >> i might use it. >> then you'll be really high. for those that you couldn't see, there was a footstool here for tisch, so she could see over the podium. i was thinking maybe i should
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use it too. one thing i want to do before i start is recognize an old friend, colleague, who has served with great distinction in afcea is steve richey. please stand. i would like to recognize your tremendous service. when i was president of sasa, the predecessor of nsa in the 1990s and i tried to promote a combined symposium with afcea but could never pull it off. so this event now marks the third year in a row for this joint summit. so i want to congratulate everyone who is involved in both organizations. afcea and nsa, and putting these things on and now they are
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becoming accustomed. so it proves that over time, things do change. but i think it is clearly an idea we can safely say it is an idea whose time has really come and that you have made it stick. this has also been for me a very useful forum to convey messages and roll out afcea-wide initiatives. at the first summit i rolled out the 2014 national intelligence strategies, which included our principles of professional ethics for the intelligence community. last year, i rolled out the principles of intelligence for transparency and a number of community-wide initiatives. >> this year, about the only thing that will be rolling out the door in the next four months is me.
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i thought this morning to talk about what seem toss be on everybody's mind, which is the forthcoming transition of our presidential administration and leadership. in about two months, we will know who the next president will be, hopefully. many of the faces and names at the top of the national security structure will probably accordingly change. any presidential transition is a very vulnerable time for the country. during president obama's inauguration in 2009, i had a unique opportunity to experience this firsthand. just like for the state of the union speeches during inaugurations when everyone else, when everybody who is everybody, who is anyone is on the d.c. mall, the administration picks a designated survivor and a cabinet official stays at an
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undisclosed location away from washington, d.c. so that in case something terrible happens that person could assume the duties of president. now, during the 2009 inauguration, that person was bob gates, not me. as secretary of defense, bob was, i think, the only holdover cabinet official from president bush's administration. i was the undersecretary of defense for intelligence. i got to be the p acting sect def for bob while he was playing designated survivor. i spent the inauguration in a cave at fort richey, maryland. the experience drove home the vulnerability we experience during a transition and particularly the exact moment when the baton is passed from one president to the next. this upcoming transition will happen at a particularly, i think, difficult time. as we're facing the most complex and diverse array of global
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threats that i've seen in my 53 years in the intel business. so we are living in what i have come to call a world of unpredictable instability in which two-thirds of the nation around the world are at some risk of instability in the next few years. let me illustrate with perspectives just on africa. africa is enormous, over 11 million square miles with more than 1.1 billion people. just between the years 2010 and 2015, 52 presidential elections were held on the continent contributing to the constant political change. more than 1130 armed conflict events occurred resulting in conservatively over 50,000 fatalities. the two factors driving the scope and complexity of unrest, which span political economics, security, cultural and ethnic
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sectors and resulting clashes between varying factions, massive humanitarian crises and perpetual and regional instability. that led to some interventions from the u.s. and other nation states as well as multinational organizations. so africa is just one region of the world where such turmoil is present. nearly everywhere, the p i.c. it point out the failures or collapses, can't pinpoint the specifics, the when, where, and how for our policymakers. it has been a constant for certainly this administration and i think will be for the next one too no matter who our president is. in the coming decades, an underlying met da driver of unpredictability instability will be i believe climate change. major population centers will compete forever-diminishing food
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and water resources. governments will have an increasingly difficult time controlling their territories. so because of all these factors, after isil is gone, we can expect some other terrorist entity to arise and a cycle of extremism which will continue to control us for the foreseeable future. by the way, our month traditional adversaries like russia and china and iran and north korea, will continue to challenge us. of course, technology will continue to be disruptive. just think about the fact that uber is the biggest taxi company in the world and they don't own any cars. air b&b is the biggest hotel company and they don't own any properties. it is difficult to predict how technology will affect national security. tech areas like artificial intelligence, health care and agriculture, self-driving cars and 3-d printing have the potential to revolutionize our
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lives for the better or they could present vulnerabilities that are very hard to predict. with all this as a backdrop, i think it makes a lot of people nervous with an election cycle that's been sportier than we are used to, we will drop a new president with new national security leaders into this situation and 135 days but who is counting. i know a lot of people have been feeling uncertainty about what will happen with this presidential transition. i have done a lot of cat tas tro fizing in the 24-hour news cycle and on social media. i am here with a message. it will be okay. two weeks ago, participated in a meeting at the white house led by the white house chief of staff, dennis mcdonough, in which it was the first formal meeting between the current administration and the two
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transition teams. i was struck by ho sober and professional and courteous and civil the conversation was when you pass on an inkling of whoever exceeds this administration, some insight into the magnitude, complexity and the gravity of what it is to lead the u.s. government. our nation has a great legacy of orderly transition and power, going back to george washington retiring from 1797 when he turned the presidency over to john adams. i remember it well. because of our mission and our professionalism, today's i.c. represents a pillar of stability during such a transition. in contrast to the rapid technology advances and the unpredictable instability of the world and any uncertainty
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surrounding the election and transmission to the next administration, one constant in national security is the people of the intelligence community. over the past few years, our nation has held a very public conversation about our work and how we should conduct it as an intelligence community. i believe a lot of what has been lost in the public debate about how we conduct intelligence is why we even do it in the first place. why does any nation state conduct intelligence? i spent some time and thought on that question. we conduct intelligence maybe at its most basic level to reduce uncertainty for our decisionmakers. that could be the president in the oval office or a war fighter if i can stretch the metaphor in an oval-shaped fox hole. we can't eliminate uncertainty for any decisionmaker, whether in the oval office or the fox
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hole but we can provide insight and analysis to help their understanding and to make uncertainty manage believe so our national security decisionmakers can make educated decisions with an understanding of the risk involved. so we, our friends and allies can operate on a shared understanding of the facts and the situation. that's why we are already briefing the candidates to help reduce uncertainty for our next president, whoever it is. so that he or she will step into the oval office with as good an understanding of our complex and uncertain world as we can help provide. i've thought a lot about our work through a historical lens. maybe that's because i've lived through a lot of history. although, despite what i said before, i really wasn't there when washington turned the presidency over to adams. i was deployed at the time.
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so i missed the ceremony. only kidding. so today, considering the press of public interest in what the i.c. is doing during this presidential transition, which is unlike anything that we have seen before, we want to shed a little light on what we are doing. first off, to dispel a myth, we north giving president obama's pdb or any pdb product to the candidates. in fact, we are giving the candidate classified briefings precedes the existence of the pdb. president truman offered the first candidate briefings to general eisenhower and governor stevenson and the newly formed cia conducted these briefings. truman felt an obligation to do that because of his experience and how woefully uninformed he felt on his first day in office as president when he succeeded president roosevelt. in fact, if he had known of the existence of the manhattan
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project 12 days after he was sworn in as president and he had been roosevelt's vice-president. he wanted his successor to be a little better prepared. based on the nomination to be president, not on any clearance the candidate held or has held. he has carried over for every election since then, since 1952. the cia handled his briefings until 2008 when the office of director of national intelligence assumed the responsibility. as a point of trivia, there have only been three elections in which briefings were offered to candidates from both major parties. 1952, 2008, and now this year, 2016. p those are the only years in which one of the candidates wasn't already receiving intelligence briefings as the incumbent president or vice-president. just to be clear, one team produces and delivered the pdb, as we always do.
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a completely separate team produces and coordinates the cross agency effort to brief the candidates. in fact, in our effort to try to make sure that there is no political influence on the briefings, the candidate briefing team does not coordinate with the white house and only career intelligence officers give the briefings, not political appointees like me. we set ground rules months before the briefing started, which the white house concur td on on june 2nd. the i.c. has been operating independently since then. we have topics we offer them. they can ask for briefings on p 23 any and all of them. if we give briefs on new topics, we will make sure both candidates have a chance to get the briefs. otherwise, we don't tell either campaign or the public what
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happens in the briefings, not what topics each candidate shows interest in or gets briefs on, not how either candidate reacts or what questions get ask. we take that confidentiality so seriously, i am still sworn to secrecy about what happened when i briefed general eisenhower and governor stevens. another geezer joke there. i'll make a serious point. people all around the world, not just aposi just opposing candidates, want to know what the candidates are thinking. we have seen intentional cyberattacks going back more than one election. we see this network with the network intrusion against the democratic national party. the president said last week and i quote, experts have attributed this to the russians. i won't get on the president on this particularly while the fbi is still conducting
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investigation but i can reiterate his other point. the russians hack our systems all the time, not just government but also corporate and personal systems and so do the chinese and others including non-state actors. the point is, cyber will to be a huge problem for the next presidential administration as it has been for this one. back to the i.c.'s roll in this orderly transition. on the day after the election, the briefing process i described changes. the new president-elect will receive his or her first pdb briefing. it will be essentially identical to that which president obama receives. i will send over proposed ground rules about how we will make all that happen. later, our office will also provide support to prepare the next dni and next generation of i.c. leaders. this whole process is built on
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the precedent set by harry truman back in 1952. i am glad as a citizen he made that generous decision to better prepare his successor. i talked about the uncertainty of our world and the diversity of threats we face. i believe i know it is crucial for our next president to step into office on january 20th as informed and prepared as possible to face that uncertain world. president johnson once said, a president's hardest das ctask i to do what is right but to know what is right. having worked closely with and for our current president, i can absolutely test that statement by president johnson still holds true. knowing what is right is the president's hardest task. the i.c. can't make that decision for him. we wouldn't want to. when it comes to national security, it is our job to give
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him the intelligence he needs to decide what's right. so our work means a great deal to the person we call intelligence customer number one. i believe that in this time of change when we don't know today who our next intel customer number one will be, what our national priorities will be or what challenges we will face next, i'm confident our unique accesses and insight will continue to help our national leaders manage this inevitable uncertainty. and for a long time to come. let me wrap up with a story from about 54 years ago. 1962. about a year before i started in the intel profession. i was an air force rotc cadette at otis air force base in massachusetts when i briefly met president kennedy. he had flown into the base en route to the family vacation at the family residence in hyannis
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port. they sent out all the rotc graduates to greet him. i ended up in the front of the rope line when he got off air force one. there were maybe a dozen right up against the rope. the president came through and shook our hands. each of my fellow cadettes gave the president his name and told him which aircraft they wanted to fly in the air force. when he got to me, i gave my name. he asked me what i wanted to do when i joined the air force. i told him, i wanted to be an intelligence officer. he paused, looked at me abit askance. he said, good, we need more like you. he continued down the rope line. i am sure president kennedy never gave that little exchange another thought. i, on the other hand, never forgot that. that's the impact our work has at the highest levels of government, something i learned as a 19-year-old or 20-year-old
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rotc cadette. at the time, i certainly never would have dreamed in my wildest imagination that i closed my intelligence career in a job in which i have the privilege of briefing the president. there is simply no way he could ha have told me i would have spent six plus years briefing our nation's first african-american president. that's something my parents would have been astounded by, my father and my mother would have been very proud of. i look back over my half century in the intel business and concede the evolution of our i.c. we are better, much, much better than we were 53 years ago when i first took my oath of office as a young second lieutenant. we are better, more capable than we were 15 years ago on september 11th, 2001. i believe we are better or like to think we are, more integrated
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than we were six years ago when vice-president biden swore me in as an dni. i will leave it for somebody else, for others to grade my term paper. the reason we keep evolving and keep getting better is because of the people, people in this room. the people in the i.c., their instinct to serve. the nation continues to be a rock bed constant. just as it was when i started. yes, the world changes, the threats evolve. the technology mushrooms but our people, our i.c. will be a steady constance of vigilance and stability as it will be through this transition. i couldn't be prouder to serve in this great community. that's something that you will keep hearing from me p for another 135 days but who is counting. so, thanks, very much.
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>> terrific job, jim, as always. when we were backstage, i mentioned to jim that i always learn something new whenever he talks. when he heard the comment about getting continuing education credits for this session, he said, well, i better say something. so what i learned actually was a new word that i never heard before, and that's catastrophizing. i am heartened that you said everything will be okay. you ended with talking with the people. so 54 years later, if you were starting in the intelligence
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community today, what would you tell yourself now or what would you tell someone who is starting in the intelligence community today? >> well, i don't know what i would tell myself. i would tell people contemplating, particularly young people contemplating coming to the intelligence community that it's a noble profession, i think. you are helping to discharge a sacred public trust. there is always a new challenge every day. just work hard and think about one assignment ahead of the one you are in. >> good advice. i think you gave that to me about 20 some years ago. what's on the top of your list to tell the next d.n.i.? >> it depends on who it is, i
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guess. i think probably at least initially, do no harm. i think it is always a good idea to kind of assess, survey and assess how things are operating today and it gives them thoughts to whatever changes the next d.n.i. would want to make, which are inevitable. hopefully, he or she will build on the legacy of what we leave, just as we built on the legacy of the first three d.n.i.s. i would also, of course, the dni will be governed and guided by whatever direction he or she gets from the next president. so that will clearly determine
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change. you also have to remember that the congress certainty gets a vote in any change no matter how inconsequential that one macon template for the intelligence committee. >> so speaking about the next president, let's assume you have the opportunity to meet with the incoming president, not far fetched, i would hope, in fact, that would happen. what will you tell the next president are the qualities that she or he should look for in the next dni? >> i hope, above all, it is somebody who is willing to tell the truth in power, the objective and to tell it straight. i think that's kind of a rockbed principle, a holy writ almost of
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what the intelligence community is all about. >> let's shift gears a little bit. you talked a bit about technology. technology has mushroomed, to use your word. from a technology standpoint and integration standpoint across the intelligence community, what's your 60 second elevator speech on eyesight. >> well, it is designed to take us to the next level of both integration sharing and security. probably less than 60 seconds. >> are we past the tipping point? do you see it as an enduring initiative into the next administration? >> i think so. the reason i say that, we have a buy-in certainly from the leadership. you always get the passive-aggressive resistance
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from some people, which is inevitable with any change, human nature. i believe, some of the reasons, stephanie and i stuck around as long as we have is hopefully to substantiate eyesight so it will not be too difficult to turn off. the major reason is not because of something we have been driving as much as people are really starting to see the virtues of what is entailed with eyesight. it is not about an i.t. upgrade. it is more about fundamentally changing the way we conduct our business. people are starting to see the virtue of that. people vote ing with their feet so to speak, is what is going to substantiate it for the future. >> recognizing this is an unclassified forum, is there anything you can share from an operational standpoint where eyesight has had a substantive
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impact on an outcome to a problem? >> i will give a specific example. what we are seeing, one of the benefits of it is discovery. where by an analyst who if he or she doesn't have access to particular data, the design of eyesight is intended such that it will facilitate discovery, that there is other data available. we have seen examples of that working already and notably. i will highlight in the counter proliferation of business. that is as far as i want to go on specifics. that to me is one of the great virtues of eyesight. >> continuing with technology, we are very dependant upon
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technology for our trade craft to do our business. do you see as more and more technology comes in, you mentioned artificial intelligence. do you see a point where there will be or has there already been a decrease in human intelligence collection? >> no. i don't think we will ever see a lessening of the need for human intelligence collection, at least not in the foreseeable future, any future i can see. we are always going to need that. of course, the artificial intelligence itself is controversial m. there are big thinkers in this country who are very concerned about it's governance, oversight and regulation. it is something that if not properly overseen can get out of
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hand. it is another tool for us. we will have to adjust both in terms of others who employ artificial intelligence as well as are using it ourselves in our work. >> we are getting a lot of good questions from the audience. thank you. please keep the questions coming. send your questions to questions at intel another question from the audience. you talked about the uncertainty of the world and diversity of threats. a lot has been said over the last three, four, five years that terrorism really dominates the resources and the efforts of the intelligence community. do we have the balance right? are we covering down on everything that we should be?
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particularly, the current and the more strategic. >> well, that's a very good question. it's one that i have -- we, collectively, the i.c. leadership has agonized over it. we do expend a great deal of resources, money and manpower, certainly is a proportion of the national intelligence program on c.t. that concerns me. we skew a lot of our resource towards the top targets, the four countries i mentioned and the challenges posed by c.t. and cyberand now counter intelligence. those are huge claimants as we allocate resources, money and manpower, in the national intelligence program. you always worry about, is the
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balance right? have we continued to stain whus what is expected of us, which is global coverage. i do worry about the relevance proportion and the skewing towards the top targets. it is the nontop targets that have a habit of biting you. this is a topic that we will certainly discuss, tee up for the transition team for the next administration. >> okay. there was a related question. let me just give you the kudos that was a part of it. good job on the global trends. i know there are a lot of folks looking forward to the 2030 which will be released in the next couple of months. >> pretty soon. one of the great merits, virtues
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of a couple was global trends, first of which is unclassified. almost as important as the output, the written product, is the process that we use to compile it. it's a lot of dialogue, a lot of outreach with not the usual suspects. we reach out to academics, foreign countries. we engage a lot of people that we wouldn't normally do in a classified context. that's one of the great strengths of this publication. >> so there was a question actually related to that, which i think would be a nice follow-on. impacts of -- how are we positioned to deal with impacts of such changes as climate and technology? i know that's one that's really looked at in the trends.
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>> i alluded to that briefly in my remarks. i do think climate change is going to be an underpinning for a lot of national security issues. the effect on climate, which driving so many things, availability of basics like water and food and other resources which are increasingly going to become matters of conflict. they already are. this is going to give rise to national security p insight that we'll need to understand this and hopefully help anticipate it. i think climate change over time is going to have an effect on our national security picture. >> i think many would agree. >> let's shift gears a little
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bit. you spoke at the space symposium about a revolutionary intelligence space architecture that included automatic cueing, fast processing of imagery and persistence. that was something i talked a lot about when i was director of nga. how important is autonomy to developing this approach and how well is the community progressing? >> autonomy? >> the automated tipping and cueing. >> untouched by human hands? >> are we there. should we ever be there? >> we are getting there. there is some great work going on right now under the auspices of the nro on tipping and cueing. when we reach the point where we have persistence in both sig and geo domains, to me, it is almost a no-brainer to do as much of this on an automatic tipping and
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cueing basis as possible and to get as much as possible humans out of it. the classic pattern particularly in the geo business is i want my picture tomorrow. if i don't get it because of weather, i'll try it again. we raise the discourse up to, here is my problem. now, you intelligence community, particularly with an architecture p as the question describes will be a lot more responsive, a lot more agile and a lot more comprehensive than what we can do today. . >> it is bringing those customers along. i think that's part of the challenge with the cultural mind-set of i want a pretty picture. >> that's right. >> so this administration has been focused on space resilience and ensuring that we have robust overhead capabilities. do you think that focus and
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vision will transition into the next administration? >> i hope so. that would be in the face of the evidence both what the russians and the chinese have embarked on. a very aggressive, impressive space capabilities and counter space capabilities. if we are going to continue to operate in that domain, which i think we must, the investments which we have gone and laid out over the future will need to be staine sustained. it is hard for me to imagine that any administration wouldn't see the merit of sustaining it. >> many in this room would certainly agree particularly with our increased need. one off or tracts today is about
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acquisition services, acquisition management, acquisition reform. how do you think we are doing in the intelligence community if you had to give us a score on a scorecard and are there specific rules, regulations, policies that hamper our ability to procure the services and things that we need? >> first of all, we are doing pretty well in the i.c. we have something on the order of 27 major systems acquisition programs across the i.c. 17 of them. for the most part, they are in the green, meaning they are meeting cost, performance and schedule goals. there are certain exceptions to that. by and large, that's been my experience in the six years i have had this job.
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the congress requires very rigorous oversight by both odni as well as d.o.d. on these programs. they get a lot of governance. by and large, i think we do pretty well unless there is going to be some revolution in the federal acquisition regulations or laws that govern this activity p. it is hard to see how we could streamline it much more than we already are. i think we do pretty well. i think one of the things i am particularly proud of in this regard is the fact that we have sustained our percentage of about 5% in the national intelligence program for research and technology. even with the pressure that you
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always have on the now and urgent as opposed to investing in the important and the future. i think we have done a reasonably good job of that given all the pressures and vicisitudes of program management these days. >> what do you think the state of the public/private partnership is? >> i any it is pretty good. we have had other stresses over the last few years. we have had our issues with the private sector. hopefully, we will get over that and get past that. obviously, a key issue here is encryption, ubiquitous encryption and the imfact that has on both law enforcement and national security.
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i'm hopeful that some dialogue will take place and we always seem to eventually find a balance. >> i am surprised i don't have a question here on encryption. perhaps they are saveing that for admiral rogers or director comey. >> good. let me give you one that is equally as thorny if you will. >> how would you respond to the criticism of some that the intelligence committee is sometimes guilty of overclassified? say a little bit about the classification system. >> we are guilty. well, we are. >> what are you doing to work on that? >> i put out a charge to the agency has, this memo i put out
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involves four areas of pursuit that i hope to undertake. we are starting to get those back in. i have an excellent response from cia yesterday. on what we can do to be more transparent, not to overclassify. there are proposals going around, one of which is, why don't we just not bother with confidence, that would somewhat simplify the system. we have embarked on extensive declassification of historical documents. i participated with john brennan last september at the university of texas and again last month at y yorba linda for the johnson library and nixon library p roll out the declassified
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presidential daily briefs. we're doing a lot more of this than we ever have in the past in terms of declassifying as much as we can. there is more work to be done here. at some point, there will need to be, i believe, a fairly fundamental change in the classification system, not just in the n.i.c. but across the government. the basic structure is born out of the hard copy paper area. the rules we have today are not compatible with the technology and the way we conduct our business. at some point, i think it will have to be a fundamental change. in the meantime, i'm kind of working what i can within the confines of the current system. >> so i guess that will be one of the things on your list of items for the next dni and the
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next administration. >> yes. i will wish them luck too. >> recognizing we have a cybertract in our breakout sessions and we will have admiral rogers here tomorrow, can you talk a little bit about what the community is doing in the cybera arena. do we have enough in place to track cyber threat vectors, the actors, intention is always a hard thing to do. >> it is. do we have enough? the stock answer is always no. never met a collection capability that i didn't like. a will rogers sort of thing. yes, we could always use more. i think we have a very healthy
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and have sustained a pretty healthy investment in the national intelligence program on intelligence support to cyber, which cuts across all the i.c. . i think -- so i think when you reason well and accessing the threat, i think we're more kwork needs to be done in sharing the pie vit sectors and more of sharing and private sector companies and implied and that's kind of the work in progress. >> speaking of threat, do you see isis has an enduring threat? >> well, isis eventually will be suppre suppressed. i think for some time it will have more extreme organizations
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and we will be in that for some time. >> okay. let's shift gears a little bit as we're closing here. three thingsings that you will see as far as priorities? >> well, i think the i sort of frame it around what is outd lined in the intelligence and there's one and that lays out in the broad terms what i am supposed to do and as the primary i am certainly not the
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exclusive but the primary adviser to the president and intelligence and security matters. >> so 54 years, is there anything that surprises you? >> not really.
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sometimes people surprise me. i can't think of things that surprise me or suppress me or anything. no. >> okay. nothing surprises you. >> what was the question? >> what's being left undone? >> well, these jobs and you're a temperature secure of public trust. you build on the legacy of what you inherit and that's based on the next or whoufr takes over
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for me. all of these are journeys and it's by the close of business on friday. there are a number of things that will continue to, i think draw the attention of the dni that will need to be worked and that was the original in tent and the i rtph and that was the integration and to get to the point that we don't have to talk about it very much and it's default you gauge most people and hopefully my successor will
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build on that. >> so you just said the integration word again and one of the questions here is the structure of the intelligence community optimum? >> well, that's a hard one. it's the americans have a great one and if we have some ill and some problems, let's reorganize. that's going to make it better. well, the older i have gotten the less i am of reo organizatio organizations. >> we have noticed that there have not been major shake ups lately. i think you're better served to make whatever organization structure that you have and that's going to be imperfect.
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too often i have seen people failed to recognize the consequences that you have to adjust to and then that's the sub zan shl reorganizations and the groups that were studying and then i just recounted my experience. i have done three agency level o organizations in my time. i did one at ng skparks that worked pretty well. mainly because i was there for almost five years to see it through. then i did two in the early 90s with the director of the cia. the second was intended to undue
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the bad affects of the fist one. >> what's the impact of the program manager and the sharing environment. how are we doing with the nt 50s and can you talk about information sharing? >> well, it has many dimensions. let me start with what you did not mention and that's a foreign -- >> and the foreign partners. >> of course.
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>> there's a way of the perception of the threat and that's an impact and that does promote more sharing. i said at some point, and i will probably have both feet in assisted living, but we will go with the common health countries and just extend them in each others intelligence footprint. my experience has been that we have chipped away and chipped away at that and doing more and more operations with the common
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wealth and that's a good thing. and it so happens that i'm meeting with title 950 organizations and agencies and departments that are not formally part of the i c, but do have intelligence and counter intelligence and security related equity. we meet with them and do what we can. this is where it comes to play in fostering a greater sharing and the private sector levels. we have done a lot there and the mentalities that i use for that have helped me promote that nationally and the system and the network of domestic reps that we have and they're 12 of the fbi and special agents in
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charge and in those cases where the assistant director is in charge because to have size of the office. we have done a lot there to the better that it was 15 years ago. what will you do on the first day after you leave this position? >> sleep. >> i think sue and mrs. clapper may have some other ideas. >> no, i'm going to start to go to the gym two days, plan to lose 15 pounds and sleep. that's all that i have in mind service. everybody had that and after the question it was thank you for the service. we are so fortunate to have you
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leading our community for you to have agreed to stay on through this entire administration and we look forward to your advice to your successor and we look forward to inviting you back in any capacity, so thank you very much. >> thanks. >> a big round of applause. we're live on capital hill this morning where the centers for medicare and medicaid services are going to imply and we're going to do two house committees on the state of these. this hearing is just getting under way. >> lead to lower cost for consumers and insured. the consumer options are more
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limit and they have been drifb out of the aca marketplace. the exchanges have faced numerous problems and lower than expected in enrollment with sick er people enrolling and larger unpredictable operation costs and leaving the exchanges. particular concerns are the persistent vulnerables of the application and eligibility and enrollment processes. just this week the office released two reports and detailing the severity of the lack of the real safe guard of the exchanges. of the 18 fictitious applications that were made for the plans in 2015, 17 received coverage. jo was intentionally 15 for 15 in 2016 with one fictitious enrolling in three different
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states at the same time. also of interest section 1322 of the aca established the consumer operated and oriented plan or co-op program, but these two are failing. one as recently as tuesday and disrupting coverage for thousands of enroll. so instead of the organize 23 funded with 2.3 billion taxpayer dollars, only six are in existence for thousands of people in the middle of the planned year and resulting the higher pocket cost and changing doctors. the staff reports that we will
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review today and provide a sad reminder of the failed promises we have the officials that can answer the questions arounding these troubling reports. the acting and then the services and then the account blthd office. i look forward to hear of the over site work conducted by the jao as well as the steps taken by cms to improve the exchange risks and co-op programs. the chair recognizes the ranking member of the committee mr. green and five minutes for the opening ceremony. >> thank you mr. chairman. it's been three years since the reform of the affordable care about and the law is delivered
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on a principle goal of covering manies of americans and today 20 million more people have insurance, health in sur skprans the per sing take of the americans is at an all-time low. this is improvement where as a nation before the aca and should not be undervalued. all of this is achieved in spite of the political opposition and constant efforts to undermine and chip away at the law and unfund asking the challenges of launching and stabilizing a new marketplace. as we look to the future of the aca and great opportunities exist to improve the law and we can not take it until we move from the bitter partisan ship. for a long time to expect the aca is a law of the land and get back to work on the behalf of the american people. prior to the affordable care act the individual market was deeply broken. people were sold jump plans and
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many individuals with the preexisting conditions were locked out of the market and planned to drop you the moment that you got sick. the time that you needed st. coverage the most. the previously insured are protected from the worst abuse in the industry and a standard of covering more robust. they're currently 12 to 20 approximate percent lower than the office predicted when the aca was passed. premiums for 150 americans and the coverage have grown more slowly than before the law was enacted. the marketplace with the affordable care act is relati relatively the in stan si and with every newing mart there's an adjustment period. we saw this when medicare advantage and part d programs were created. resent reports of the high premiums and entering and exiting the exchanges have
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guarded. the reality on the ground is the reflections of doom and gloom it's no surprise that companies are aexpecting at rates for the market. they repeat for cost and quality rather than cherry picking and denying the preexisting conditions. they're working like my law and it's not approximate perfect. it would take an effort on the part of congress and regulators to bring forth the solutions that stabilize the market. this can only be done if we're honest and separated and betrayals that do not reflect the fact of the critiques. 2017 is a unique transition year and one reason is that the program is designed to support the maurkt. they're going to have a one time affect on the cost. yet we see it strengthen by the efforts that the young adults
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not yet taken advantage of the opportunity and get coverage. hhs is also taking risks. 19 states also need to expand medicaid and in my district in texas and texas is one of those 19 states and if they expand it, they would have medicaid if the state expanded it. the law was designed that allstates would and refused to do so distort to the echo system. it shows that not only does medicaid have a benefits for sake, but on the average marketplace premiums of the states are 7 percent lower than than nonexpansion states. the aca has lead to higher consumer satisfaction and lower
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rates and data supports the stabilization of the marketplace in the future. it's now time for congress to put aside the partnership and come zpoth improve the law. the american people are counting on it, and i look forward to hearing from the witnesses, and i thank you mr. chairman for the time. >> thanks to the gentlemen. now recognize the gentlemen from pennsylvania dr. murphy and the chair. >> thank you. this committee began the investigation of a state based in the charges of the spring of o 2015. we aim to exam why they failed to utilize billions in federal groont building. they resisted and received documents and over the course of two hearings, we heard testimony from the state exchanges and leader. the investigation found that the centers for the services cms wasted 4 ht $6 billion in grants
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due to excessively careless and over site. disappoint disappointingly and the exchanges have now closed down and a very small and aamount of federal dollars have been recooped. we were told that it was by and it continues and the federal government money is illegal and today every state exchange is still using the federal money. more over, some state exchanges went so far as to violate the rules and use the medicaid dollars to pay for an allowable exchange ex pensions. the details and fines are outlined in the report and that was released yesterday on september 13, 2016. the work that we have done on the state exchanges and the subcommittee and held a hearing last move ton co-ops and the costly failures.
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we exam the collapse of 17 out of 23 co-ops and what an over site and mechanisms and cms use and the likelihood that the federal government was going to recoop any of the loans. since the hearing five more have closed and these have caused the taxpayers $1.8 billion and similar to the state exchanges the committees investigation into the co-ops found that they were disadvantaged from the start and then the loan agreements and then to obtain outside capital and then the programs made financial stability mere impossible. cms mismanagement as they failed on numerous occasions to fail the co-ops when needed.
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this will result in the loss of more taxpayer money and leaving hundreds of thousands americans displaced with insurance. the details and findings from the committees are outline in the report that were released yesterday. while we look forward to a prozuk tif diagnose log with the witnesses today, i want to know that on behalf of the commit tee, we're deeply trounled by the findings of this investigation. we're seeing the affordable care act fail the american people. the findings prove that the aca is accomplishing just the opposite. hundreds of americans have been uprooted from their plans and left without any insurance coverage. thousands i should say. they recommend administrative changes to address the concerns highlighted in the reports. it's my hope that we're able to
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have an honest and open conversation about the reality of this legislation and discuss solutions rather than continue to identify it's well known problems. i thank the witnesses for testifying today and look forward to hearing the questions and with that i yield back. >> thank you chairman. >> i wonder if it covers dah gentlemen view. here are the symptoms from the health committee and the over site subcommittee that i'm a ranking member of, we have had over 40 hearings on the aca since it was law in 2010. ten, we have been through six years of efforts to repeal and
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undermine the law. three, we ever seen any number of officials and some that are sitting here today interrogated by membersover congress to work and implement the law. the same are those that have the countless letter of the work. but despite the hours and hours spent on these efforts, how republicans have nothing to show for it. mr. murphy, my chairman on the over site committee just mentioned the resent over night and investigations hearings that we have had in our committee. instead of conducting good faith review and followed up by targeted thoughtful bipart son to improve the law as congress did on other major pieces of legislation like the medicare part d program that was passed by the republican congress some years ago, this congress has
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used it's over site powers to highlight failures over and over again while offering no solutions. as we just heard from mr. mur y murphy, we have had two hearings on the aca state insurance market and places. again, we're going hear today about how some states struggle to set up the exchanges and make them workers more possible. as you heard, we had a hearing earlier about the co-ops and i am sure that we're going hear gain today about the fact that many co-ops including one in my state of colorado have failed or are facing the challenges. this is not news folks. what would be news is if the majority would sit down with us and try to work out some solutions to help more and more americans get affordable and is expansive health care insurance. i'm not saying that these issues are not worth attention.
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it's time to start to figure out how to fix the affordable care act. highlights the solutions and making course corrections requires a will in congress. at this point my colleagues on the other side of the i'll don't seem to add note the public that the law has actually helped millions of people and needs fixing rather atlanta being appealed. now, many of my colleagues on the other side of the aisle offer thoughts that we can perhaps work on this together in the next congress. in the meantime, all we're doing is having hearing after hearing and wasting a lot of time and money that could be spent giving more insurance to more people on these hearings. let me just briefly in the final remaining sects remind people of
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what the aca has done and what it has. we have had historic reductions in the number of people in the country. the cbc reported that the rate is at a historic low. the lowest that we have had in four deck raids. that's an accomplishment. since the passage of the aca 20 o million have coverage and this includes millions of young adults who can stay on their parents plans until the age of 26. i just want to introject a personal note here. my daughter who everybody on this committee knows just graduated from college and 22 years old. she is a type one diabetic. she just left to go teach in madrid for a year and she is on my insurance and because of the affordable care act can't get tlun thrown off of mine because she has a preexisting conditions
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or over 21, and further more we were able to get her a year's worth of supplies before leaving for madrids. there are thousands of families that are benefitting in the way that i have, and i will fight until the end to make sure that they can keep the benefits and keep expanding it so that every american has high health insurance, and i yield back. >> thank you. now the gentlemen from michigan. >> thank you mr. chairman, so in 2009 the american people were promised of the new health care system to pick a plan that would be affordable and at that time we remember the president saying that you will have a choice of a number of plans that offer packages, but every plan is an affordable basic package. six years later the facts tell a different story.
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major health insurance and fleeing the exchanges and levering more than one-third of counties and states with only one carrier. when new jersey collapsed this week 17 have now closed their doors and costing the taxpayers $2 billion and resulting in tens of thousands of americans without a plan. today, just 12 states are running their own exchange. just 12. premiums are off the charts and competition is declined and all in all the everyday patient is left paying for fewer choices. every number has a name and each one of these patients have a story to tell. karen from michigan tells us that she pays $700 for insurance and she and her kids are in the process of picking having a home or having health insurance and moving back home with her folks. because of the affordable care act, my insurance has doubled.
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help the hardworking middle class in the country. lisa lives about an hour east and paying $744 a month for a plan with a $3,000 deduckable. before the aca she paid less than $300 a month for the families health care. my bet is that she wishes that she had the plan that she had before. greg lives with his wife and says aca is a disaster and has been from the start. i think he is right. it's across the country and they're promised that 21 million have the exchanges by the end of 2016. sadly with the individuals this number is set to come in at about half. simply one reason why house republicans have offered a better way to help patients get and keep the insurance. that puts the patients first and improves the quality of care and
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restores the freedom and it's the parents insurance until they're 26 years old and will not deny the coverage on the preexisting conditions. we want to lead the world and the plan builds upon this important workout line in the 21st century to help with the cure now. resent nonpartisan analysis found that solutions would lower the premiums by ten to 35 percent and increase access and boost the product activity all while cutting it by a half a trillion dollars on the next deca decade. every one in michigan and karen, lisa and greg deserves affordable health care. i goomg to bounce any time to the lady from tennessee. >> thank you mr. chairman and you all for being here to talk to us today. we do look at this plan and realize that the affordable care
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act product is unaffordable it is indeed on shaky ground as the hearing title reflects. i will spend my time talking about the special enrollment periods. i come from tennessee. we know that these special enrollment periods have a tendency to get these programs into trouble. lack of verification and then delayed verification and then all of a sudden what you do is get something on shashaky groun then a risk pool. if you look at the imbalance, you want to drill down on that just a little bit. i do have the legislation hr 559 and the fairness act that would get to the heart of this issue because it's a problem that
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worsens every single day and when you have a sep and there's not the appropriate over sight or due diligence, then you do end up with the imbalances and the risk pools. welcome and we look forward to the hearing and i yield back. >> thanks. the lady recognizes the ranking. >> thank you mr. shar man kb just this congress and while i continue to hope that the republican colleagues will come to the senses and hold it to improve the aca & they want to appeal the ac skparks point out the problems on the health care system and then without proposing any alternatives and then we're here today to discuss the reports on different aspects of the affordable care act and
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two of which is available to the staff on monday. now the one report of the office and the inspector general found that no wrong doing occurred. and another report released by the ja and this month exams the health insurance concentration and competition in 2014 and finding that it's among the few issuers. however, this is the data clengtive and the aca's insurance exchanges and it does not shed the light on whether the exchanges have affected the market concentration. we will be discussing the report of the continuation of the fake shopper investigation and whether they used fake identity and document itself to attempt to enroll through the health insurance marketplace. let me say that i will be critical of the way that the j o
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o carried out this. even if someone were to obtain health insurance with fake information, they have to pay premiums and any out of pocket costs to get the medical services. never the less for the third year in a year jao continues with this and they created false identities and attempted to enroll in coverage and that the system is vulnerable to fraud. there's a conclusion to mean that this sort of enrollment is ramped in the marketplace. i think to use this deeply flawed jo report to try to say that people can get so called free health insurance is ridiculous. the fake shoppers paid them each month and did not seek any
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health care. this report fails to answer two important questions and is this a real problem, and if so, dhou we fix it. these are questions that democrats are interested in answering. they have not provided the answers and this information could help the agency learn from jo's work and fix it within the systems. now, the democrats care about the integrity and once again i feel that it's not about over sight but the headlines. it's unrealistic that they would have to desire time, money and expertise to gain the coverage the way that they did in the study and the lack of recommendations is disappointing. we rely on jo for the recommendations and these fake shoppers provide neither er. now, let me talk about the success of the aca because the republicans would make you think that the health care system was better off before the aca.
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we can not forget the thank toss the ac skparks the rate is at a low. 20 million people have health coverage and then the majority have the coverage and it's important to remember because of the aca they have access to the services and kids can stay on their parents plan up to 26 and there are no lifetime or annual limits on the coverage. since the aca, the medicare trust fund is extended and then in addition to the hospital admission and medicare have fallen for the first time on record and resulting in a hundred thousand admissions in 2015 alone. the aca marketplace is new and then it's consumer protection and then the law with the necessary changes and that's -- what is different about this law is that we have not been able to make the changes. instead of working together to make sure that it works for everyone, my colleagues have tried to appeal this more than 60 times and we have resistance
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at every turn. there are ways to improve upon the successes and expand to affordable coverage and unfortunately no one on the republican side wants to improve anything. well, let me hear from my colleagues on the other side is negativity. my colleague from tennessee who i love is still talking about ten care. i don't think that ten care exists anymore. if it does, it's not what it is. this is what we get. we get the constant hearings and efforts to say that everything is terrible and stinks. when ever we have anything, i don't hear anything from the other side other than what is proposed and what we have tried to do to change the system and make it better and that's truly been successful and needs to be appealed and thrown out without any suggestion or alternative that's meaningful. i'm not too happy with this hearing today mr. chairman, but none the less, you will continue. >> chair, thanks to the
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gentlemen for the opening statement. all of those with the opening statements will be made part of the record. at this point i will introduce the panel. we have one panel, and i will introduce them in the order of the presentation. first mr. andy slavitt. mrs. gloria jarmon and the department of the u.s. department and services and mr. sato the director of the forensic audits and the services for the accountability office. thank you for coming today. we look forward to your testimony, your written testimony will be made part of the record. you will each be recognized for five minutes because of a
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summary. you're aware that the committee is holding an investigative hearing and when doing so has had the practice of taking testimony underoath. do you have any objection to testifying under oath? response is no. the chair then advices you that under the rules of the house, and the rules of the committee you're entitled to be advise bid counsel. do you desire to be advised by counsel today? the response is no and in that case if you would please rise and raise your right hand, i will swear you in. >> do you swear that the testimony you're about to give is the truth, whole truth and nothing but the truth? response as i do. you're now under oath and
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subject to the penalties set forth in title 18 section 1001 of the united states code. you may know give a five minute summary of the written statement. the chair recognizes mr. slavitt for five minutes. >> thank you for the invitation to the hearing to discuss the progress that we have made under the affordable care act as well as key priorities for the improvement. with the law, we have taken a significant step together as a nation to provide for the first time access to quality care for all americans regardless of the status. for millions of americans, this represents the largest shift in how the health care system works since the creation of the medicare more than 50 years ago. as you all know well, medicare that's lifted more than millions
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of senors out of poverty is out of uncertainty. it's evolved to reflect the need of the seniors and adjusting to cover the prescription drugs and then the treatment and then the payments that support the high quality of care. i continue to appreciate the leader on the leader of the evolution and hope that we can continue to work together to fulfill the vision of the payment program that's on affordable, high quality patient care. undertaking the change is rarely easy. from the outset, we knew that like medicare the implementation would be a multiyear process. as we look to the fourth open enrollment, we are very proud of what we have accomplished so far. more than 20 million people now have coverage because of the law. the insured rate for the
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american social security t americans is the lowest on record. first we're learning using data and feedback to define and the recommendations and in put of the jo and oig who together have conducted over 50 aca audits and have been valuable at the efforts to strengthen the processes and controls. we have made improvements on the marketplace so that it continues to function properly and this is the changes to the risk sharing mechanism and eligibility rules. we're targeting bad actors for the marketplace and significantly increased with the documents and requirements. we're going to continue to learn and adjust. second, we stand ready to work with the states to expand the
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medicaid and do the job with all americans. expanding medicare helps to gain access to care but helps to reduce for the middle and income families and data shows that the premium is seven percent lower in states that expand medicaid. third we know the cost is critical for purchasing and taxpayers. the good news for the vase majorities is that the aaffordable care act offer protection to keep it affordable. even if the premiums rise next year the vase majority of the consumers will be able to pick a plan for less than $75 a month. the good news for the taxpayers is that we have achieved the gain at a 25 percent lower cost than what is originally projected. this has benefitted the newly recovered americans. going in, we calculate that the
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marketplace premiums are currently 12 to 20 percent lower than the initial predictions. there's no question that as a country more people are paying less, getting more and with greater consumers with the aca. of course any conversation on the cost of health insurance is a conversation about the overall cost of care and the value that we get for the money that we spend. as cms and access for the 140 million americans that we serve everyday is critical. this is why we mist keep the medications affordable and coordinate the care and why we have a special task force on the access to care and rural america with the cost have long created concerns. personally, it's been very rewarding to serve at cms at a time of so much transformation. for the vase majority of my 25 years in health care, it did not
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seem possible that we would ever achieve a real reduction in the rate or have a time that a preexisting condition did not disqualify a person. as the marketplace matures, we will listen and add capabilities and adapt to serve the patients and american tax payers. thank you and i will be happy to answer any questions. >> thank you. now i recognize mrs. jarmon. >> good morning mr. pitts and those of the subcommittee. thank you for the opportunity to testify today of the office of inspector general of the health insurance marketplace. as part of the plan to over sea the implementation of the affordable care act, we have a federal and state and market places and the aca previsions. the marketplace focuses on the payment accuracy, eligibility systems, management and
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administration and security and data of systems. my testimony today focuses on the most resent work which is the consumer and operated oriented plans and co-op and state marketplaces. regarding the co-op work, we recently looked at the start up loans. these are to provide capital. we conducted the review to access whether they comply with the centers for medicare and services and accounting principles. we found that they guided with it and the principles when converting the start up loan sboos the surplus notes. however, cms did not document the impact of the federal governments to recover the loan payments if they were to fail. based on the findings we recommended that cms improve the process for any future conversions of the start up
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loans and surplus notes and document any negative impact on the changes in the priority and to quantity identify the likely impact on the federal governments of the ability to recover the loan payments. following up on these recommendations, we're reaccessing to determine if any improvements were made in 2015 and 2016. we're also monitoring the actions to address under performing co-ops. this is the work that going to be in fiscal year of 2017. we reviewed if they have those in place to acure that individuals signing up for health insurance and receiving assistance through the affordable programs are eligible. we reviewed the first open enrollment period as the seven state marketplaces and found that they were affective and however most of the state marketplaces had some in
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affective controls and making sure that they were enrolled and then the requirements. with respect to the establishment gra establishment grant found, we have a series of reviews and the use of the funds. this work focuses on whether the marketplace have the calls to the establishment grants and federal environments. there are some states revied and then the percentages on the estimated enrollment data and instead of updated dat that. we recommend that the states refund the allocated amounts or work to resolve the al akaabama katkat allocated amounts. we are close to completing reviews of two others. all of the states for which we have completed reviews have implemented some security controls for the personally and
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pi. however, vulnerables and assistants is in those states and each had one that if expl t exploited could have exploded pii and other information. there are going to improve the security and reported taken action to correct, identify and vun blt. we appreciate the committees interest in the important issue and continue to urge you to the recommendations in the over site and financial sov earn sage and the marketplaces. oig is committed to providing over site of the programs to help insure that they operate efficiently, affectively and economically. this concludes my testimony. i would be happy to answer your questions. thank you. >> chair thanks to the lady and now mr. sato.
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>> thank you and i am plead to be here to go to the reports of the health care issues. this morning at the request, i will focus my remarks on the results of the enrollment processes -- i note that these results are not definitive regarding the entire application process. our work focused on identifying indicators of potential and enrollment fraud and vulnerable and we talk about the california exchange and their responses are included in the final report. in terms of what's at risk, aca coverage is a substantial financial commitmented for the
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federal government. 11 million have coverage and up to 85 percent receive subty. they estimate the cause for a fiscal year and then about 56 billion and then totally 866 billion for the next ten years. in the regard we note that while they're paid directly to insure ers, they are in the enrollees and that's the cost of premiums and detuckables. returning to the coverage results, we obtained a qualified health plan or medicaid coverage for all applicants. in doing so we worked around all primary enrollment process checks and mainly the identity proving and sub committing the documents and filing the tax
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returns. we maintained coverage for 11 applicants to the present and that's well into the coverage year. even though that some had not filed tax returns or submitted information as required. our totalled about $60,000 on an annual basis. we failed to maintain the coverage for three applications because of the payment issues and because of one whose coverage was terminated because of the internality failure for the requested documentation. these are the results combined with those and the earlier work and 2014 and 2015 from a consistent pattern of three principle interrelated fraud and risk indicators that we're pursuing further during the ongoing aca related work. first no year on year changes in the processes and control are readily apparent and remain that
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these are vulnerable to fraud at multiple points in their spectrum, front, middle and end and raising the integrity for the aca. second applicants intending to act to obtain the coverage in which they're not over wise entitled and the applicants could exploit the enrollment process like the deadline extensions and relaxed standards for the resolving and consistency to the advantage and policies through the entire year. third, if they're flagged and lose the coverage for administer of the compliance issues, they're able to apply for new coverage the following open season as allowed by the program rules and thus engaging in the form of health coverage. in closing i underscore that a program is at risk for fra
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fraudulent activity and a high priority is set to prevent the enrollment processes and controls up front to help narrow the window of opportunity for such risks and safe guard the government's substantial investment. in this regard cms said that it's responding to eight recommendations that we made in the february 2016 report and if executed well, this remipresenta major opportunity. chairman pit and murphy, this concludes my remarks and i look forward to the questions. >> thanks to the gentlemen. i will begin the question and give myself five minutes. jao has been a great government watchdog for the taxpayer and
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while the government enrollment testing is helpful, it's troubling to learn how bad the vunerabilities are and the changes. mr. barks as i understand it, this is the first year that the coverage eligibility must be verified to determine if an applicant that received and exchanged and filed a federal tax return, is that correct? >> yes, that's correct. >> the applicant that is you used for plan year of 2014 and of the 15 applicants that you tried to gain coverage for, all 15 were enrolled in plans. it's my understanding that still to date ten of these fictitious applicants are receiving monthly advance tax creditsment about $1,100 a month and all ten have cost share and reduction. are any of these ten enrollees
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false applicant that is you use in 2014 that never paid federal t taxes? >> four of those are reviewed identity from the 2014 work. >> mr. slavitt announced that they would be ended in 2016, but did not reconcile the payments on the federal taxes. within on of these cases a federal marketplace told the enrollee that they were not approved for the sub staty and then they test that had they filed a return to representative and they approved the coverage everyone though that it was a false one. one does cms apply applicants to self-attest to the self-guard designed to protect the taxpayers credit?
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>> thank you chairman pitts and thank you to those for the work that wuf done. with respect to the people that have -- we call them people that have failed to reconcile and who have received an advance premium tax credit and have not had yet filed and many of those that i work with the irs turn out to be those that are filing taxes for the first time and so what happens when they come back to get the coverage for 2015 if the irs did not have a file for them that they filed, they were not able to get the coverage. we did allow people to attest if there's an extension or if they filed the taxes and claim that had the irs did not claim that. to the heart of the question, we had 19,000 people that attested and many of them have since demonstrated that they have paid the taxes and as of this month
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those that have not demonstrated that, these people are terminated. >> so how long individuals have had the coverage ended by vo violating the safe guard? >> as of this month it's several thousands. i don't have to figure up here with me. >> okay. the irs expressed the concern on this approach and also point out that in february 2016 report from jao recommended that cms do a risk assessment of the fraud. has cms does a risk assessment in the enrollment process? >> i'm not entirely sure what you're referring to. the jo give us a reck e men dags earlier to create a risk assessment frame work and we accessed all of the risks to the exchanges and we have implemented that. it's been extremely helpful to us. >> can you provide the committee with the copy of that report?
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>> the report from the jao? >> yeah, the recommendations? >> yeah, we will get that. >> okay. we have three years of under cover testing and the results have not i speak for taxpayers across pennsylvania and our country when i say this is frustrating and alarming. i will yield bounce my time to kathie mcmorris rogers. [ inaudible ]. >> thanks. our state insurance commissioner recently approved premium increases for 2017. on average they're increasing by over 13%. rate increases like these are being seen across the country and they are far from affordable. in my state they go from 4.6% to 22.75. i want to take the moment here to thank my colleagues for their
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efforts to come up with common sense solutions to ensure americans will have access to high quality and lowest cost possible. we must respect the sacred relationship between the patient and the doctor. thank you very much. >> now recognize the ranking member of the health committee mr. green. >> thank our witnesses for being here today and the work you do. let me talk about the texas's experience. under the affordable care act millions of americans were able to access vital health care resources in our communities. in my state texas realizes the benefits. during last enrollment period individuals selected market place plan. 48% of those individuals were new consumers. unfortunately, 1.2 million individuals who were otherwise covered remain uninsured because texas refused to expand the medicaid. 50,000 of that 1.2 million are my constituents.
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as of 2015 aca provided community health centers with over 470 million in funding to offer a broad array of primary care extended hours of operation and hire more providers. medicare beneficiarys in texas saved more than $971 million on prescription drugs because the affordable care act in the closing of the donut hole created in 2003. i'm proud of the progress that we have in our country and i couldn't be more pleased with these results. congress could make it better by stopping the dozens of repeal efforts and help provide more health care for our constituents. regardless of whether you support the aca six years ago or when it passed in law it is hard to deny that there is historic success. premiums before the affordable care act was passed the insurance system was broken. premiums were increasing rapidly. in 2009-2010 according to kaiser
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family foundation survey average increase in individual market premiums for individuals were covered for more than one year was 15%. under the pre-aca system there were no protections for consumers and insurance companies could drop them within any time. and before the aca was passed could an individual with pre-existing condition be charged more for insurance than his or her healthy peers? >> in most places in the country, yes. >> before aca could insurers protect bottom lines? >> yes in almost every state in the country. >> before aca was passed was there mechanism for the federal government to review health insurance rates to ensure that the rates were reasonable? do consumers have recourse if premiums went up? >> not in most places, sir. >> was there out of pocket maximum consumers had to shoulder potentially tens or
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hundreds of thousands of dollars due to medical emergencies? >> there was not. >> let me give you an example in my last time. when i was in business we had a printing company. we had 13 employees and one of my jobs as a manager of it was to negotiate for insurance rates. small business, 13 employees, we could never get top companies to give us bids. we did select coverage because we also had a union contract for our line folks. we had to match what the union plan would have done. we negotiated it and we would sign a three-year contract. and with renewal opening of the premiums every year. in my experience in that, every year of that three-year contract they would come in and offer say we need 20% or 25% more. we would negotiate it down. it ended up i almost had to negotiate every year with a new company, but my experience was
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with 13 employees, one of our carriers who had our insurance said we need to raise your premiums substantially because one of your employees had a double mu sectomy. he said what we would suggest if you keep your group at 12 people and buy a separate plan for that 13th employee. i said i appreciate that option but that particular lady is the owner's wife and i will be glad to share you're willing to put them out on the individual market. negotiations got much better. that doesn't need to happen today because the affordable care act. that's why it is successful and it could be more successful if this congress would do like we have done every other piece of legislation. something gets passed, you wait a few years and see what the problems are and go back in and fix it. but we haven't had that opportunity since we have tried to repeal it over the last six
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years probably 60 something times. if you are looking for perfection in any piece of legislation you don't come to congress. we compromise. we work to get things passed. so whatever we pass needs to be looked at by new congresss or next congresss to make sure we can fix it. the affordable care act is not subjected to that because of the repeal. i would love to see a plan that would actually help expand coverage more than we have done. thank you. i yield back my time. >> recognize the chair of the subcommittee dr. murphy five minutes for questioning. >> first i want to ask, you had mentioned in your testimony that premiums have gone down in actuality or they have gone less than what estimated? after the second -- after 2016 so current premiums are between 12% and 20% lower than in going
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estimates. >> than estimates? >> they were lower than estimated to be. i can get you the site. >> cbo is not -- >> it wasn't cbo. >> estimates. have you shared this information with aetna, united. maybe you have a break through that these companies haven't seen. it's amazing to me health care costs have gone up. i saw one estimate say they have gone 69%. insurance premiums have gone up. there is adverse selection. people enroll and disenroll when they are well. co-pays and deductibles are still high. i hope you can show us the source of this. i don't want estimates. i want hard core data with regard to our premiums going up or not. all the data we see is they are going up. in the pittsburgh market they are going up. in other communities they are going up.
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co-ops are failing because they can't handle the finances. unless something is heavily subsidized or old or a problematic health care program the costs are going up and that's why people aren't signing up. it's not a matter of -- i just want accurate data so we can deal with this. please get us that. the committee staff report released yesterday examines how cms awarded federal tax dollars to state-based exchanges. the aca states that they were supposed to be self-sustaining by january 1, 2015. cms gave them exchanges so that they can continue to use federal money. your staff tells me that currently as of september 2016 every state-based exchange is still using federal money. is that correct? >> to clarify, no new money has been granted after that initial startup stage. >> still using federal money? >> there are states that have no cost extensions which allow them to continue to complete the
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startup activity that they -- >> still using federal money. when you talk about premiums being down the fact that they are subsidized is phony. when does cms think the federal money is going to run out? 2017? 2018? >> for state-based market places? >> i think it will differ by state. we can get you a schedule of that. >> that's when we are going to find out what premiums are. when the federal money runs out, do you think the state-based exchanges will be sustainable? >> i think each state has its own calculation as people are probably aware kentucky most recently decided to move off of the state-based platform to the federal platform. i wouldn't necessarily that was for reasons they weren't sustainable. they just chose that they would
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rather be on the federal platform than state-based. >> these are not just things as let's get together and switch to different platform. it is because they have been financial disasters. let's go to the co-ops. you have 17 closures. one issued an audit finding that four of the remaining six co-ops fell below cms risk-based capital requirements. do you think they will survive to enroll individuals for 2017 plan year? >> i think the assessment that the states will make and we will make it along with the states is whether or not the remaining co-ops have sufficient capital to get through 2017. >> we have given $1.8 billion. so when you say sufficient capital we have to give them more sufficient capital to thep them? >> there is no additional capital.


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