tv Politics and Public Policy Today CSPAN October 7, 2016 1:00pm-3:01pm EDT
what was remarkable about the guard unit in st. louis was who these people are in their day jobs. we're talking about very top level of cyber security in a fortune 500 company that has huge needs in this area. huge needs. this guy knows more than a huge number of people that you're commanding within the you're commanding within the active military in terms of both cyber offense and cyber defense and i realized this is a great opportunity for our guard to recruit some of the most talented and technically capable people in the private sector since the vast majority of the networks that we are supporting in terms of protection in this country are, in fact, private networks. so i wanted to bring that up with you and ask your opinion about that integration and particularly as it relates to
the linchpin with the department of homeland security. the beauty of the guard is it is busy with domestic security as part of their mission because of the tag and involvement of the state governments whether it's a natural disaster or other kinds of problems, so it seems to me that utilizing the guard as the linchpin between the department of homeland security and department of defense would make a great deal of sense, admiral rogers, and i would like your comment on that. >> first of all, i agree with the fundamental premise. the guard brings a lot of capability. that's why it's predicated as the idea to bring it all together. it's our ability to bring it all together. in terms of who should be the fundamental linchpin, before i get involved in endorsing,
there's challenge if you do active only, reserve only. i would be interested in what's dhs's perspective in this. one of the challenges i found in my time in command, we have to work our way through -- this is where the guard becomes incredibly critical. what's the difference between using d.o.d. capability to work federal large critical infrastructure versus the d.o.d. by extension the guard can bring to the fore at a localized state and federal level. the guard is very optimized, the active piece is not as ready optimized. >> i'm sure one of our problems in this space is retaining active personnel because if they become very skilled in this area, there's lots of lucrative opportunities in the private sector. has there been any thought given to an active recruitment of these folks into the guard? as they move into the private
sector for a lot more money and people not being able to tell them where they are going to live 24/7? is it possible that we are losing an opportunity in terms of retaining some of the talent we have by not directly recruiting them into the guard? >> knock on wood, retention is -- on the active side is exceeding our expectations. that doesn't mean it won't change tomorrow, next week, next month. i will say since the guard is an air force and army specific construct, i know both of those services in my discussion with my commanders from them talk about how do we make sure as we're watching the work force transition out of the act of separate, retired, is there a way to tie in the guard piece. senator cruz mentioned san antonio. i saw many instances in the stoned area, because there's such a large concentration where this is working very well. i'll not sure how well it's working in these areas where we don't have this large guard and
then force if it will. so i just don't know. >> this idea has been discussed openly, and i know there is a lot of controversy around it. a lot of pros and cons, but one of these really talented cyberwarriors at the guard i visited with, i was told one of them was almost removed because of sit-ups. and what about the pt requirement, and what value is there to forming an elite cybersquad that is civilian as opposed to losing a really talented guy because of sit-ups. >> my first comment would be, remember the law of armed conflict. it specifically describes what civilians in uniforms can do in some applications. i remind people, a lot would be what is the mission you gave that entity.
that entity because there's some things that it physically cannot do. uniforms have to do it as uniforms have to do it as opposed to application of force and capability. to date are there numbers where that is an issue? clearly. not going to pretend for one minute, but we have been able to retain people and still meet the requirements associated with a broader military without decreasing capability. if that changes over time, it's one of the things i have talked about. we need to be mindful that we -- as circumstances change, we need to look about changing the rules that we currently operate. and if the situation were to change that's one of the things i would say, do we need to look at a different balance mix or a different set of standards or requirements associated with individuals? i don't think we're at that point now, but if the situation were to change, we'd definitely need to do that. >> i would urge that flexibility because this is going to be a growing part of our national security. >> right. >> thank you.
>> on behalf of the chairman, i'd like to recognize senator cain. >> thank you, mr. chairman. it seems to me the good news is that we're the most wired society on earth. it gives us fantastic efficient sis and productive and advantages in many ways but the bad news is we're the most wired society on earth which means we're the most vulnerable. admiral rogers, you're familiar i'm sure with the ukraine hack of the grid in december 2015. one of the things we learned is that hack might have been much less serious than it might have been because of retro technology analog switches. dmitri had to throw a switch somewhere and relay. do we have lessons from that that we ought to be thinking about? and thing about elections it's hard to hack a paper ballot. those kinds of things. is that -- should we be examining that area? >> we certainly are. one of the lessons from the
uk, for example, their analog is the physical piece but also the way their grid was broken down into components. it is leading to some things for example as a naval officer we're teaching celestial navigation. >> i wanted to bring that up. i understand it's the first time in 20 years. >> which we had stopped doing because we said to ourselves we had automated chart processes. why would we need to use celestial bodies. >> you can't hack a -- >> exactly. so we acknowledge that there are things that we'll be able to look back in this current world we're living in and say to ourselves perhaps some of the assumptions that we made are not going to prove to be accurate and ask ourselves what are the second and third order implications? how are we going to train different? what skills do we need to have? as. >> as i think you said, we need to question the assumption that digital is always better. we have a bill to ask the national labs to work with utilities to look at the ukraine situation and see if there are
places, not to de-digitize the grid but places where there could be analog switches or other devices put in to deal with just this issue. let me turn to encryption for a minute. while this hearing was going on, i don't want to sound like this is a big production, but in a minute and a half, i downloaded telegram. it's an app that's encrypted. i thought it was interesting. i looked at how it works. it's fully encrypted. it's in english, arabic, dutch, german, italian, korean, portuguese and spanish. it was started by two brothers from russia and is based in berlin. >> this is the reality, isn't it, mr. rogers, that we can't stop this. the idea of somehow being able to control encryption is just
not realistic. >> we can't stop these trends, you're right, senator. and individuals, all of us benefit from strong encryption. the department of defense does. i personally am in favor of having strong encryption that allows me to protect my personal data. the challenge is, and yet we need to think our way through how we can continue to fulfill our responsibilities to enforce the laws and protect the nation. and i think what we do find is there are a number of instances where government leaders have been able to strike a very collaborative and cooperative dialogue with key sectors in the tech sector. individual players and executives have been able to focus on finding solutions. >> that worked pretty well in the 20s when you were talking about the telephone system that was only within the country.
and we can deal with apple or with microsoft or with cisco or whoever, but if you have a cloud-based app whose headquarters is in berlin who knows where the data is, as hard as it is for us to believe, there are places our power doesn't reach. we can't regulate something that's over in berlin. or switzerland. schwaziland. or swaziland. >> that's a very good point. there will always be places across these sectors and these technology solutions that we may not be able to find a way forward. they may be -- the solution maybe elusive. it does require us to think innovatively beyond encryption about how we can continue to go after national security challenges. >> the word innovation -- this is the world history of conflict is invention, reinvention, reinvention. i want to associate myself with senator lee's comments. we need to get back to old-fashioned human intelligence.
and i think it was easy in a sense so you can pick up conversations. now that that's no longer as easy as it once was, we need to be thinking about, what are the other techniques we can use. and it may be old-fashioned intelligence and it may be also other high-tech satellite or other things, but we can't -- i think innovation is going to be an absolute key to this. >> yes, that's absolutely right. in particular, as you pointed out, we do need to build innovation across a range of intelligence disciplines and collection capabilities. so even in the human intelligence arena, we know how effective it can be. we also know that technology trends are changing how we do, and we need to be able to adapt and invest in innovation in how we conduct our human intelligence operations as well. >> and my time is up. i would suggest big data analysis is one of those tools.
>> how do we measure greatness in america? the height of our skyscrapers? the size of our bank accounts? no. it's measured by what we do for our children, the values we pass on. i've spent my life fighting for kids and families, and it will be my mission to build a country where our children can rise as high as their dreams and hard work take them. it means good schools for every child in every zip code, college that leads to opportunities, not debt. an economy where every young american can find a job that let's them start a family of their own. we face big challenges but we can solve them the same way families do, working together, respecting one another, and never
giving up. i want our success to be measured by theirs. i'm hillary clinton, and i approve this message. >> what does electing donald trump president mean for you,
families making $60,000 a year? you get a 20% tax rate reduction. working moms? you get paid maternity leave and an average $5,000 child care tax reduction. business owners, your taxes get cut from 35 to 15%,
so you can expand and create more jobs. donald trump, prosperity for you. america great again. >> i'm donald trump, and i approve this message. the second presidential debate is sunday night washington university st. louis, missour missouri,. watch for a preview of the debate and the audience. live coverage of the debate followed by your reaction, your calls, tweets and dmentcomments. the second presidential debate. watch live on c-span. listen with the c-span radio app available in the app store or
google play. now a house committee reviews the 6-year-old health care law and its effects on the insurance market including rising health care premiums, also fraud allegations in the exchanges and lawsuits filed by health insurers against the administration over lack of funding for insurers losses. representatives from blue cross, blue shield and national association of insurance commissioners testify. paragraph meeting of come to order without objection chair is authorized to call a recess at any time.
an important hearing examining affordable care act. premium increases. there's a deep concern most americans about the cost of health care. under the affordable care act health insurance premiums are soaring, soaring to say the least. president obama promised multiple times the affordable care act would lower our family's health insurance premium by $2500. we'd love to hear from any americans who think their health care premiums went down $2500. american families are still waiting for the cut in cost. instead the health care insurance premiums have skyrocketed unaffordable care act. "new york times" this summer acknowledged affordable care act causing increased premiums warning to its readers, quote, get ready for big increases, end quote. in utah, health insurers in individual market request premium increases of nearly 30% on average. most americans are seeing higher proposed memorial increases.
conceding to the massive premium increase, the administration then relies on tax subsidies. however, regardless of subsidies, americans are feeling the full brunt of how costly the affordable care act is. second under the affordable care act with soaring premiums many americans must then pay massive deductibles. health care costs are one of the top concerns for families and even people with insurance oftentimes can't afford to use it, especially those enrolled in high deductible health plans under aca. again, this is no longer deniable. another "new york times" article reported, quote, many say high deductibles make this health law insurance all but useless, end quote. third, remember the promise for the increased competition? according to "new york times" in many parts of the country, quote, customers will be down to one insurer when they go to sign
up. quote. hardly a choice. insurers seeing unprecedented losses on the exchange. losses on the exchanges reaching billions of dollars with the health industry. as a result some large insurers are pulling out of the exchanges with concerns more will pull out this year unless premiums are going to be allowed to be increased significantly. according to an analysis done by "the new york times," 17% of americans may only have one insurer to choose from, 17%. united health care, aetna limiting their exposure in the workplace. particularly concerned in north carolina where they may face the prospect of having no insurer participating at all. this committee has been warning for almost a year about the collapse of the co-op program. hhs has refused on numerous occasion toss provide us with the information about the
program. then this week another co-op failed. there are only six left, down from 23. finally, of course, we cannot forget aca was sold on one of the biggest political lies of all tile. quote, if you like your plan, you can keep it. if you like your doctor, you can keep your doctor, end quote. that wasn't true ever. it was a political lie. even the president had to apologize for that one. today i wan to hear from industry about why premiums continue to increase under aca and hear about proposed solutions and how we can lower premiums for americans. i want to hear from state regulators to hear about challenges as premium skyrocket and more insurers pull out of the insurance exchanges. i want to hear from hhs on implementation of aca. i want to know what can be done for premium increases and get healthier, younger enrolled in insurance. hhs, health and human services
with us i would like to point out the sad truth about the health care law. every step of the way this administration, everything the administration has told us that would be just fine, and it's not. it's not just fine. you can keep putting lipstick on it but it doesn't look good and it ain't good. so premiums will get down. healthcare.gov will work. these are all things that told us would be great. come opposes, they would be there. they are failing, failing, and failing. it's only one faced with undeniable evidence of public outcry do we finally hear aca isn't quite so perfect. i look forward to the discussion today. we all care about health care insurance. we've got an important hearing next week that elijah cummings and i have been working hard on to deal with some of the costs americans are going for.
epipen, in particular, something we will be addressing next week. we're here to talk about the aca and problems associated. we need candid talk and solutions. it's going to be a good hearing. now recognize ranking member mr. cummings from maryland. >> thank you very much, mr. chairman. i want to thank you for holding this hearing. this is a very important hearing. i thank you all of the eyewitnesss today for testifying on this very important subject. i'd like to start off by reading a few headlines. let me start with this one. blue cross dramatically raising rates for californians with individual health policies. here is another one. health insurance rates soar as oregon regulators nod. here is another one. this one says millions in u.s.
can't afford health insurance. the thing is, these headlines are not from today. or this week or this year. they are from several years ago before congress passed the affordable care act. of course, that will not come as a surprise to anyone who remembers how horrible the individual insurance market was before congress passed the affordable care act. insurance companies used to be able to discriminate against women. they could charge more for people with pre-existing conditions. from asthma to cancer. they could impose exclusions and caps on coverage. they could terminate policies when people got sick. they could deny coverage all
together. people who were lucky enough to get health insurance were often stuck with whatever premiums the insurance companies decided to charge. these premiums were increasing by double digits every year. double digits every year. before we passed the affordable care act, the individual insurance market was, indeed, a complete mess. the purpose of today's hearing is to examine recent increases in health insurance premiums. the republicans love to attack affordable care act even though it has improved the health care of millions of our fellow americans and millions of our constituents. but there is one critical fact that they do not want you to know. premium increases have actually been lower in tthan the
congressional budget officer predicted when they passed affordable care act. they were lower than we anticipated. based on ceo's projections at that time they estimated premiums would be 12% to 20% higher than they are today. here is another key fact you will never hear republicans admit. national health care spending has slowed more significantly than projected when we passed affordable care act. that includes spending across medicare, medicaid, and the private insurance market. national health care spending for 2014 through 2019 will be $2.6 trillion less -- $2.6 trillion with a t, trillion, than cms projected in 2010 when we passed the affordable care act. of course all this is happening
as the affordable care act expands health coverage for 20 million americans, offers them more comprehensive coverage and ends discrimination of the past. as a result we now have the lowest uninsured rate in our nation's history. unfortunately my republican colleagueston wasn't to talk about these facts. this is the rest of the story. they want to attack the aca for political reasons without offering solutions of their own. from day one republicans have been focused on undoing and undermining this law. they have taken every single opportunity to sabotage it by any means necessary. they challenge the law in court, tried to defund it and voted more than 60 times. hello, 60 times, to repeal or weaken it. they are truly obsessed.
if we want to talk about premium increases, we need to also talk about drug companies that are jacking up the prices of their drugs. i want all of our witnesses to talk about that. drug companies that are jacking up prices and how does that affect premiums? one of the biggest drivers in premium increases skyrocketing prescription drug prices. that is across the board. not just for people with plans under the affordable care act. for that reason i'm very pleased to hold a hearing next week to examine massive price increases with ep pens and including representative ming, stephen lynch, tammy duck worth and peter welch all requested the hearing.
mr. trump, i do appreciate you doing that and working with us to get the documents we have been been able to -- are getting from mylan. let me be clear. i told my staff, prescription drug prices and the unconscionable raising of these prices is one of my top three priorities in this congress. the reason why it's one of the top three priorities because i think it's unfair. it's like putting a gun to a sick person's head and say either you pay or you go into bankruptcy. either you pay or you get sicker. either you pay or you die. so we cannot even have this discussion about premium increases unless we address that. i hope that our witnesses will do that. so a majority of americans, democrats, republicans, and independents, by the way, believe this is our number one
health care priority as a nation. number one, it used to be affordable care act. now prescription drugs. that's republicans, democrats, independents. they are saying this is a major problem. you know why? it's affecting them every single day. they are tired of it. one of the reasons why the american public is so frustrated, they want us to do something about these problems. they don't want us to skirt down the road and say have a good day, they are trying to get well. as one of my constituents said to me, congressman, i can get the treatment but i can't get the cure, can't afford the cure. so i'm so glad we're having this hearing. let's be clear. there's something else that goes into the bottom line of this. it's the health care of americans. it's the health care of americans. we are all in this country right now. we are all in this planet right now. it would be nice for us to do everything in our power to keep our nation healthy.
how do you keep the nation healthy? you keep the individuals healthy. when you keep the individuals healthy, you have a stronger country. with that, mr. chairman, i appreciate it. i am excited about the epipen hearing coming up. i'm excited about possibly bringing him back. he said he wants to come back. that would be nice. i hope he provides some testimony this time. i thank you again and, again, witnesses thank you. i yield back. >> thank the gentleman. i'm not sure he's coming back but i appreciate your passion on it. we will hold the record open for five legislative days for any members who would like to submit a written statement. let's now recognize our panel of rit necessary, we're pleased to welcome dr. mandy cohen chief of staff centers for medicare and medicaid services. mr. allred -- al red mayor.
mr. chris carlson, principal speaking on behalf of america health insurance plan. mr. giesa, speaking on behalf of blue cross blue shield and mr. topher spiro, vice president of health policy at the center for american progress. we thank you all for being here. pursuant to committee rules, all witnesses are to be sworn before they testify, so if you will please rise and raise your right-hand." do you solemnly swear or affirm the testimony you're about to give will be the truth, the whole truth, and nothing but the truth? thank you. you may be seated. let the record reflect the witnesses all answered in the
affirmative. in order to allow time for discussion, we would appreciate it if you would limit your oral testimony to five minutes. your entire written record will be made part of the record. doctor cohen you are recognized. >> thank you very much, members of the committee, thank you for discussing the continued work for affordable care act and provide consumers with affordable access for high-quality health courage. changes to affordable care act has made our health system providing millions of americans the security to know they have coverage when they need it. the market that serves all consumers regardless of their health history requires all of us, consumer, issuers, state regulators to build and test new businesses, coordinated care systems, payment model toss provide the care people need. we're making historic gains in coverage. as of early this year, an estimated 20 million americans have coverage because of the
law. 8.6% -- 8.6 uninsured rate for americans is the lowest on record. we believe these remarkable results were at a lower cost in the congressional budget office originally projected with coverage provisions costing 25% less than the original estimates. but we do expect 2017 to be a transition year for the marketplace with several one-time factors putting upward pressure on premiums. because the individual market previously operate bid excluding sick people, no one knew how much it was going to cost to start covering everyone. as a result, some marketplace issuers initially priced below the cost of new enrollees and now they need to catch up. as evidence of this fact, independent experts stilted marketplace premiums are 12 to 20% lower than predicted when it was passed. this year marks end of aca premium stabilization programs which were designed to support the new market. however high consumer satisfaction, more people
getting care, and an improving rick pool, data shows the future of the marketplace is stropg and we're confident issuers will continue to participate given the growth opportunities. nonetheless, we know premium increases have real life consequences for families. that's why it's so important that the marketplace has built-in protections for consumers. the marketplace provides tax credits that mirror premium increases so consumers are always protected. even with significant rate increases the majority of consumers can access coverage for less than $75 per month. we continue to work in partnership with state departments of insurance who remain the primary regulators of health insurance in this state. to help support their efforts, effectively enforce rate review provisions, rate review ensures in every state proposed rate increases are evaluated by experts to make sure they are actuarial sound and justified. it's also important to remember for the roughly 150 americans who get coverage to their employer premium growth has slowed. four out of the five last years
have seen the slowest growth rate on record saving families millions of dollars. since aca was passed, health care prices have risen at the slowest rate in 50 years but we know more needs to be done. just as in the private sector, rising health care costs impact all cms programs and we work every day to control health care cost for benefit of taxpayers, beneficiaries and consumers. we're working to improve affordability and quality for all consumers whether they get their coverage -- no matter where they get their coverage rewarding health care providers for quality they deliver, not the quantity. many health plans are meeting the challenge of providing quality coverage to all with marketplace serving as a laboratory for those innovations and strategies helping build a better health care system overall. innovative insurers are succeeding serving these new consumers and paying off for the marketplace as a whole. cost in aca individual market actually fell slightly by .1%
from 2014 to 2015 which is a positive sign of the long-term market and risk pool. states that saw above average growth in enrollment also saw an above average p dro in cost showing that growth of enrollment is leading to a broader healthier risk pool that brings down costs. we're also using the tools at our disposal to make the marketplace more attractive for consumers and insurers alike. over the past sell months cms muffed aggressively on enrollment periods, risk adjustment program, which could bring more certainty to the marketplace and help issuers account for risk of all enrollees and reefing out to marketplace consumers helping them successfully transition to medicaid coverage and many other actions we've taken. cms committed to strengthening growing marketplace, heard suggestion from stakeholders, issuers and states and others and we have responded. working together i know we can further our shared goal of
improving health care for america and making sure american families continue to have access to quality affordable health coverage. thank you. >> mr. redmer you're now recognized five minutes. >> thank you. my name is al redmer, appointed and representing national association of insurance commissioners. i'd like to begin my comments by offering a short historical review of health insurance market in maryland which i believe will offer context to rate discussion in january of next year. in the early 1908s and anyone 90s maryland's health insurance market had conditions similar to those discussed during debate of affordable care act. in 1993, maryland general assembly passed small group insurance reform, which included provisions similar to those
contained in the aca, including such thing as guaranteed issue, a babb on pre-existing condition limitations, a standard benefit plan and adjusted community rating. initially those changes created disruptions to the market. but it has evolved into a competitive market that is seeing moderate single digit premium increases. given that experience, we knew that there would be considerable instability in the individual market when the aca was enacted but hopefully eventually that there would be some equilibrium to the small group market. unfortunately due to a variety of factors, the instability of the individual market created by aca has now extended into the fourth year of implementation and corrections are long overdue. i recently attended national neic meeting where regulators across the country expressed serious concerns about the condition of individual market in their states. major insurance carriers have
pulled out of the exchanges citing substantial losses in the individual markets and some carriers have closed their doors or failed to meet solvency requirements. this means thousands of consumers will need to reenroll to a new health plan by december 1th or the not have coverage on the first. in addition, too many counties only one insurer offering individual coverage on the exchange and there could still be one or two without any plans at all on the exchange. furthermore, many insurance carriers are only offering hmo-style health benefits with narrow provider networks in the individual market, which dramatically reduces the coverage options available for consumers and increases the pricing. finally my colleagues have reported that individual market carriers are requesting premium
increases of 30, 40, and in some cases more than 50%. i and my colleagues take very seriously our responsibility under state law to ensure all rates are actuarially justified, nondiscriminatory and sufficient to ensure solvency. proposed rate increases are thoroughly reviewed and under aca, they are more transparent than ever. in maryland, for example, we had two public rate hearings. individual market premiums continue to rise. for too many consumers is still unaffordable and consumers want to know why. rising health care cost remain driving force behind rising health insurance premiums and this must be addressed if health insurance coverage is ever going to be truly affordable for the broadest possible group of policyholders. another key factor we are seeing as a result of the aca, it is implementation is uncertainty.
and as any actuary will tell you, insurance hates uncertainty. aca has been as implemented -- has considerable uncertainty in three areas, risk pools, funding. the fact far fewer, younger, healthier consumers are enrollees than expected, even with increasing penalties means risk pools are sicker than either we or the policy carriers expected. other contributing factors at work are the uncertainty of medicaid, abuse of special enrollment periods which contributes to adverse selection. we would urge congress to consider legislative proposals to improve the risk of the pools and a act before market deteriorates further. as far as funding, carriers
receiving less with the -- i'm sorry the risk payments have higher than expected risk adjustment bills and potentially we're seeing less reinsurance payments than expected. finally to wrap up, i would like to point out that if the department of justice is successful in seeking precedence over policyholders, we will see even more carriers fail as regulators are forced to step in sooner to preserve dollars for the benefit of policyholders. i'll look forward to any questions you may have. thank you. >> mr. carlson, you're recognized for five minutes. >> thank you, ranking members cummings, distinguished members of the community. thank you for the opportunity to testify on premium increases in 2017 and noninsurance market. my name is chris carlson. i'm testifying today on behalf
of america's health insurance plans. the national trade association representing health insurance plans and the millions of americans they serve across the country. my testimony will focus on three main issues, evolution of premium rates on the exchanges, the current factors that are being considered and calculating premium rates for 2017 and policy options for making health insurance more affordable in the long time. changed many rules regarding premiums that existed prior to 2014 which allowed for a broad increase in the number of individuals with health insurance and significantly reduced in uninsured population. as health plan actuaries we were prayer back in 2013 and had limited information visible to port estimates for premium rates due primarily to considerable amount of uncertainty about the characteristics of population likely to enroll in the exchange market. premium rates for 2015 were
developed by actuaries in the manner consistent with 2014. in both cases there was limited amount of data available for pricing assumptions. premium rates for 2016 also followed a similar pattern. while there were a wide range of rate changes, both increases and decreases, the average increase for the second lowest silver plan was 7 1/2% consistent with underline medical trend. to put it simply health insurance is medical care delivery and priced accordingly. always the primary driver in the increased cost of health insurance. when costs of delivering medical care go up, so, too, does the cost of health insurance. more specifically premium components of premium rate calculations being considered in developing rates for 2017 include the underlying medical trend, risk pool composition. two of the three premium stabilization programs and
enrollment periods will actuary rick pool setting premium rates. however, as discussed earlier, the risk pool was relatively unknown when premiums were priced for 2014 to 2015. in general, the actual composition of the risk pool has been less healthy than originally expected. another significant factor reentrance program which forces insurers toss cost in premiums. the risk corridor program has not worked as designed and led to upward pressure on premium rates. reviewed special enrollment period on insurers and found individuals who enrolled during seps had claim costs 23% higher in the first months of enrollment than those in the open enrollment leaving higher anticipated cost for insurers. while health insurers are trying to utilize best estimates of cost for health insurance this continues to be a market in
transition tochl make health insurance more affordable in the long-term, additional action must be taken to address factors driving underlying health care costs. my written testimony discusses several areas where there are opportunities for legislative and regulatory action to provide relief from health care cost and stabilize the market. i will name a few, though. strengthening risk adjustment to promote greater payment accuracy. improving verification of special enrollment periods and providing further relief from health insurer tax these changes and others will deliver more affordable choices in the marketplace. that's what consumers deserve and what health insurance plans are committed to delivering. thank you for this opportunity and i look forward to answering any questions. >> thanks, mr. carlson. mr. giesa, you're recognized five-minutes. >> ranking members cummings and distinguished members of the committee, thank you for log me
to be here this morning to provide testimony for rising premiums. in the patient protection and affordable care act, i'm here today on behalf of blue cross blue shield association. the association a national association of 36 independe community-based and locally operated blue cross and blue shield companies that collectively provide health care to members. blue cross and blue shield plans have an 85 years history of providing individual health insurance coverage in local communities across the united states. issuers and actuaries faced extraordinary challenges setting premiums in the market which i describe in my written testimony. 2017 will be the first year that issuers are setting premiums in the nongroupish mark. based on the thorough understanding of the health of that market, the makeup of the people they are in insuring. issuers have come to understand
the people they have enrolled are older and sicker than they had initially assumed. in the report sbiltsed health of america blue cross and blue shield found the prevalence of hiv is four times higher and the prevalence of hepatitis c is twice as high as prevalence of these diseases in employer group. in-patient hospital admissions are 40% higher. a lot of cost per member are higher. data point showing half enrollees in the exchange are 45 or older. that was in 2014. that situation persists today in spite of the growth in the market. in order to create a viable and sustain able marketplace, younger, healthier individuals will need to enroll, which will require changing the value equation for younger people purchasing coverage. congress and the administration could take steps to ensure long-term viability of this market by improving verification of eligibility for special
enrollment provisions and making other changes to continue to -- to encourage continuous enrollment. in addition congress should make changes to age structure and premium tax credits tonight courage more young and healthier people to enroll. thank you and i look forward to the discussions this morning. >> thank you, m. mr. spiro, you're recognized for five minutes. >> thank you. when evaluating markets context is important. before aca individual market was volatile and people in rural areas did not have much choice. the difference is this market did not work at all for anyone who was sick. even as aca put in place consumer protections, the average benchmark premium in 2014 was 10% lower than the average premium in 2013. the rate of the uninsured is now at a historic low giving more peace of mind to an additional 21 million americans.
contrary to popular perception aca risk pool is stable and improving. from 2014 to 2015, the cost per enrollee in exchanges actually fell by 0.1%. this begs 21%. this begs the question why are insureds increasing the substantially. the new market launched in 2014. some insurers under price premiums to establish a foothold. as a result the average benchmark premium came in 15% lower than the cbo had projected. congress constrained the risk corridor program which was designed specifically to address pricing uncertainty in a new market. congress did so after insurers had already priced their plans for 2015 and 2016. the resulting shortfall is responsible for about two-thirds
of the financial losses incurred by insured in 2014. premium increases in 2015 and 2016 were not sufficient to close the gap from 2014. compounding the program, the reassurance program began to phase out in 2014. it's not prized that the markets are due for a correction in 2017. although this correction will be significant, the aca subsidy strak chur will act as a stabilizing force. even after the correction premiums will still be 11% lower than average premiums would have been in the absence of the affordable care act. even though aca markets are not in crisis, policymakers should take additional actions to accelerate the transition to equilibrium. the administration should here on the side of caution. first the administration should verify eligibility for special enrollment periods. and in my written testimony i
detail several important conditions and consumer protections that would be necessary. second the administration should quickly prohibit providers from steering high cost payer from medicare to the exchanges. third states should establish their own reinsurance programs. under innovation waivers the administration should offer states the federal savings that would result from lower premium tax credits to help pay for the reinsurance. fourth, the administration and states should expand rating areas to cover larger geographical areas. in states with a mixture of urban and rural areas, this policy option would provide greater choice in rural areas. fifth, states should require all plans to be sold through the exchange. although there is a single risk pool for each insurer, insurers who sell outside steal enrollees who might broaden the pool. states that have not done so should expand their medicaid
programs. in states that expand in medicaid aca market premiums are about 7% lower than in states that did not. seventh, the government should use active purchasing to get the best deal from insureds for all programs. insureds that profit from participation in medicaid and medicare advantage should be willing to participate in the exchanges. eighth, congress should create a guaranteed choice plan in perhaps less partisan times congress created a fallback option in the medicare prescription drug program. ninth, congress should tackle the high cost of specialty drugs as mr. cummings mentioned. this is one of the biggest factors cited by large insureds for leaving aca markets. tenth, congress should increase cost share subsidies and increase tax credits for young and middle income people.
but most of all the administration, congress, states, insurers and other stakeholders should act in a constructive spirit to fix any problems that arise rather than root for failure or cut and run. thank you. >> thank you, mr. spiro. i'm going to go to the gentleman from michigan, mr. wahlberg for a series of questions. but i would like to comment, mr. spiro. some of your comments in your opening remarks defy reality and so i look forward to some robust questioning as you make your premise and see if you can back those up. so i go to mr. wahlberg for five minutes. >> well, thank you, mr. chairman. i think you said it as well as i was going to say it. but it started with dr. cohen, as well as mr. spiro, some comments that defy credibility and reality. i mean we -- i know positions
have been taken and we have to sell certain things. my gracious. it's not dealing with reality and i'm expected toto in the land of oz. we're not in kansas yet. i read in the detroit free pass, not an organ of conservatism. they could see an average of 17.3% increase next year and we're a made cade expansion state. this would mean a financial hit for taxpayers in general and the 345,000 mish ganders who buy their health insurance on the heal healthcare.gov website. ten are seeking increases exceeding 10%, including proposed 13.9% average increase by priority health, 18.7% by bluecross blueshield of
michigan, 16.8% by health alliance plan and 39.2% by humana. the avenue lar health analysis of 2017 rate increases for individual plans in 14 states, including michigan, found that the average silver plan, the second cheapest class after bronze would rise 11% in 2017. we've got a problem and we have to admit that. and i appreciate the hearing today to do that very thing. and get away from simply selling something that was doomed to fail. and one of the providers said it's failed two years ahead of time and it's getting worse. when i talk to my rate pairs back in any district, people who say yes, i have insurance but i don't have health care. because when i go in to take care of my health, i find out that my out of pocket expenses, it precludes me caring for my
health. having got that off miff shoulder, mr. charlson what impact has the rate filing process had on competition and insurance premiums? >> well i think that the industry as a whole is fairly highly regulated and certainly premium increases being requested are higher than anybody would like to see. and you know, from the health plan perspective, you know, we certainly want to be able to justify the rates that have being asked for. the regulatory process puts somewhat of a barrier but it also puts an opportunity for everyone to see exactly what is being requested. and you know, as far as making it more -- you know, limiting the choice in the marketplace, i can't speak to me specific plan.
but it is -- does make it more difficult for a health plan to make sure they maintain their solvency to get the rate increases that are necessary for that fact. >> mr. redmer, can you explain the rate process? >> certai the country is pretty specific. the law requires us to approve or disapprove rates to make sure that those rates are adequate, to protect solvency. they cannot be excessive, have to be actuarially justified and cannot be discriminatory. the beginning of may we receive the proposed rate increases from the carriers, along with all of the supporting actuarial data. we have a team of actuaries, some states use outside
actuarial consultant to scrub the data, to challenge the data and the projections of the carriers. in maryland we had not one but two separate rate increases where different stakeholders, consumer groups come in and provide their feedback and information. and at the end of the day we come out with our final rates. and maryland is an example. if you look at the aggregate price increases and what we ultimately approved, we approved aggregate rates that were $24.5 million less -- >> let me ask a question quickfully the remaining seconds here. some state regulators have said they're put in the position of having to decide between agreeing to the price increases or have plans withdrawn from the markets entirely. is that what you're finding? >> well, no. the end result is we're required
to approve adequate rates. so if -- the problem that some carriers have is they can't get the rates that they believe are sufficient to operate their business. insurance 101 is you have to collect revenue to pay the claims, the administrative expense and the reserves that government requires. the key is not necessarily the approval process but carriers being able to get sufficient rates in order to run their organizations. >> thank you. i yield back. >> i thank the gentleman. the chair recognizes the gentleman from tennessee mr. cooper for five minutes. >> thank you, mr. chairman. i would like to welcome this distinguished panel of experts. and for most viewers of this hearing, it's about as exciting as watching paint dry. let me try to put the cookies on a low shelf and simplify the issues. here we have a distinguished panel of experts and none of them are echoing the political outrage that any friends on the
other side of the aisle are trying to express. we do not have the real chairman of the committee charg the hearing and the hearing is sparsely attended. they're not getting the political impact that apparently they were expecting. i think the testimony is best summed. by the nic witness mr. redmer when he concludes in his final paragraph on page 7 and says this, quote, it has been over six years since the aca was signed into law and the time is long past due for state and federal policymakers to move past the politics and come together to make substantive correction to the law to bring about more stable risk pools, defendable funding and reasonable regulations for the individual health insurance markets. the markets are suffering. let's roll up our sleeves and fix them. well put. here we have a committee that
literally has no jurisdiction over any fix. we are purely an investigative committee. and oftentimes that translates into pure political theater. members of this committee if they wanted to study the issues couldn't do anything about them. so let's review the bidding. a think tank reported in their journal last year that there still is no substitute republican plan for the aca. there are mandates here and there but really no alternative. it's not a question of if we had only done the republican plan. i was one of the supporters of the bipartisan plan, the alternative to the obamacare plan, the so-called widen bennett plan that could have solved many of these problems but we had difficulty getting people to be construct tuff, to be for something. it's much easier to criticize. so as you deal with these
important issues, the most important lesson is to learn who's hurt? where are the victims? mrs. cohen pointed out the vast majority of folks getting insurance are paying less than $75 a month. that's a pretty awesome deal. >> with market subsidies that translates into $2 or $3 a month up creases in cost. while that's regrettable, as ranking member cummings pointed out in his opening testimony, spiraling insurance costs have been happening to america for some 40 years. and the cost under the aca are actually less than expected. let me repeat that for some of my friends who prefer not to live in a fact-based world. less than expected.
no one knows if the trends will continue but this is astonishing news. we live in a world where people don't want to talk about the facts, especially if it includes good news of what might be happening. this is a chance to understand how this is done. most folks at home don't understand that congress gave away jurisdiction on insurance in 1947 with the mckaren-ferguson act. most of the regulatory power is really at the state level. some states do a good job, some not so much. there's not even a committee in congress that has jurisdiction over insurance per se because most of the work is properly done at the state level. but the issue of rising health costs is a challenging one. my friend from the state of michigan who's already departed the hearing, when the big three
auto makers had their nice health plans, some of those folks were considered to be one of the instigators of health cost because when you have first dollar coverage no one questions pricing. medical prices in the detroit area were far higher than the rest of the country because nobody was questioning the bills. moving into an era where people are questioning the bills, paying attention to dedistrictables and coinsurance, that is a good thing. we already have more clarity in the market than we had in previous generations. and most important, a better benefits package. i'm proud of maryland for having instituted some of these reforms as far back as 1993, ban on preexisting conditions, things like that that are necessary elements of a decent insurance market. there are way to solve the problems and let's all echo
commissioner redmer's call for bipartisan action. let's roll up or sleeves and fix the glitches that remain. thank you, mr. chairman. >> mr. chairman. >> yes. >> just one moment. i want to associate myself with everything the gentleman just said but i also want to make sure in all fairness to chairman chaffetz, of course he was here and the fact that he's not here at this moment does not mean that he doesn't consider this very important. chaffetz and i have been in a lot of hearings and rarely does he or i miss one moment. but he has a bill on a major bill that -- his bill justified in another committee. i didn't want to -- i want to make sure that's clear to all of us that he rarely misses a moment but he does consider this an important hearing. we've talked about that many times. >> i thank the gentleman. and as we go to the gentleman
from tennessee, mr. duncan, i do want to clarify one quick thing. mr. cooper said you're not outraged. dr. cohen, do you buy your health insurance from healthcare.gov? >> no, i'm a federal employee. >> commissioner do you buy your health care from healthcare.gov? >> mr. carlson >>, i have employer coverage. >> mr. giesa? >> i have employer coverage. >> so perhaps they're not outrage because they're not having to use the system. i'll recognize the gentleman from tennessee, mr. duncan for five minutes. >> thank you. i want to read a tiny portion of some of what i've received. linda mays, a registered nurse who decided to retire at the age of 63 said she was shocked at the price shes was quoted twb
cheapest plan was $2586 that covered nothing with a $4,000 deductible and no medication coverage. she says i'm still looking for the affordable part of health care. les gato of knoxville sent me this e-mail. bluecross blueshield of tennessee up 62%. that's the percentage increase that bluecross blueshield requested in tennessee. bluecross blueshield of tennessee up 62% after going up 39% last year and these plans pay for nothing. he's not nothing in all capital letters. where am i supposed to get another 6,000 bucks next year, paid 10,000 this year for premiums and four wellness exams, maid 6,000 out of pocket for health care. christopher d. bush, says average healthy 30-year-old male and he said that his policy that he got two years ago, it's now going up -- it's now four times
the original cost of the premium. bluecross blueshield cites obamacare as the cause for the increase. anne kovaleski, a 61-year-old from knoxville is paying $761 a month now, which was nearly a 63% over her prior premium the year before. and included a 3,000 innetwork deductible, $6,000 out of network said this is quite expensive since she will have paid out more than 9,000 in premiums and 3,000 in deducts before their policy pays out a cent. now she's been notified for the 62% bluecross blueshield increase he said this would bring my monthly priemium plus the $3,000 deductible.
and the president promised on many occasions as the average family's health insurance premiums would be lower by up to $2500. and finally mr. william h. power of knoxville sent a message about his premium increases and he says, in reality i feel we're experiencing -- what we are experiencing is the sellout of the federal government to pass along the issue that we were told would not happen as a result of the aca. my late mother was from iowa. there was a public hearing out there where one individual testified that his policy would increase by $4,000 from $15,000 a year to $19,000 a year. that's what we're hearing from not only from all over my district but all over tennessee and all over the country. and i tell you the people are really up in arms about this and we're going to have to do -- make some major changes. i went to a reception in the
mid-1990s where the doctor who delivered me came and brought my records and i asked him, i said, how much did you charge back then in he said he charged $60 for nine months of care and the delivery if they could afford it. medical care was cheep and affordable until the federal government messed it all up. and the few people who know how to manipulate the system have been getting filthy rich. it makes so sense whatsoever because we've got more doctors, more nurses and health care workers per person by any country in the world by far. i sometimes think the people who foisted this so-called unaffordable care plan out on us knew that it wouldn't work but that would get so bad that people would then demand that we go to a single pair plan and then we'll end up with shortages, waiting periods, a
lower quality of health care. and we'll have a russian cuban type of medical system. a few weeks ago on the front page of the newspaper in ireland said they had 530,000 people on a waiting list for medical care. you multiply that by 70 in the united states and you see where we're heading. i yelled back. >> thank you. the chair recognizes ms. lawrence for five minutes. >> thank you, chair. in the six years since congress passed the aca we've found ourselves in this hearing again and again. as is being debated some will call obsession with under mining
this law, there's more than 60 times we've voted to repeal and undermine the aca. there have been lawsuits filed, they've krit critical funding and the majority have held hearing after hearing just like todays using overheated rhetoric and claims that seems to be exaggerated. it's not productive. it's really tiresome. because when i came to this congress, i recognize that the aca was not perfect. and i'm willing to work with the other side of the aisle to make it better. but i never get a chance to have a conversation on what to do to make it better because of the continuous, continuous attack to repeal it. so dr. cohen, how many americans
have gained quality affordable insurance coverage since the aca has passed in 2010? >> 20 million. >> i'm sorry? >> 20 million. >> 20 million. 20 million people have gained insurance coverage. the aca has also cut the uninsured rate nearly in half. it's now at an historic low of 8.6% according to the national center on health statistic. dr. cohen, what was the primary goal of aca? >> to increase access to affordable quality coverage. >> i would say we're well on our way to reaching that goal. just imagine how much we could accomplish if republicans and democrats would work together
instead of against this. i can understand the -- i can understand differences of opinion, but it is unacceptable to have a stalemate on an issue that is so important to the american public. and if we can sit here today and clearly identify the areas that we should address so that we can make it better, then why don't we do that. why don't we come together and work to make this plan because we have changed 20 million people in america. we have affected 20 million people and we have increased the goal of aca, we are on our way and we have increased that number. and i'm speaking today -- the facts are the facts. and i will not say the aca is perfect. but i can tell you it is the foundation for us to build on,
and we waste time hearing after hearing after hearing where we refuse to come to the table and say, let's fix what's wrong with this so we can continue to make this country competitive with other countries who are providing health care for all of the citizens of that country to make it affordable. with that i yield back my time. >> i thank the gentlewoman. the chair recognizes the gentleman from arizona for five minute. >> thank you, mr. chairman. before being elected to congress i owned and operated a dental practice in northern arizona for more than 25 years. so i know a few things about health care and how it works in the real world. in fact one of the primary reasons i ran for congress in 2010 was out of the frustration in the way that washington was damaging health care with obamacare. now sadly another obamacare
failure is hitting arizonians. aetna pulled out of the growing list of insurers who have announced their intention to pull out of arizona. this move is leaving my constituents without access to any -- without any insurance place marketplace plan. the county marketplace is the first but i'm afraid it won't be the last, to be abandoned and wrecked by the obamacare regulatio regulations. mr. cohen was this exactly what president obama meant when he told them that if you like your plan you can keep your plan? >> i think you may have seen last week bluecross blueshield of arizona did announce that they will be stay in that county. >> good. but once again you can keep your plan? >> again, i think what the affordable care act meant to do
is to give access to affordable coverage -- >> that's not what he meant. that's not what he meant. >> okay. >> the president's health care law is a quagmire of bureaucratic tape that's left tens of thousands of zone yans left scrambling to find health insurance. the bill is inharntly flawed and inworkable as it wsz passed. the administration has decided to delay aspects of the law. >> we want to continue to make improvements -- >> once again. answer the question. answer the question. you delayed implementation. thank you for answering. how many individual changes have been made in the law u since it was passed to try to make it workable? >> how many congressional actions have been take snn. >> how many actions have you taken -- >> to make improvement -- >> 70. let me answer for you. 70. now in my first three terms i've now represented over 85% of the
geography of arizona, most of the rural aspects. so for every person i hear that's been help by the program i can give you two that have been hurt. you can make statistics say anything you want to make statistics. i've got a pretty good background in statistics. so mr. giesa, i'm going to come back to you. so if we took this highly regulated industry and we stream lined the process, we gave money towards -- to people for their ability to buy in the marketplace and came up with the industry coming up with a different idea and competitive advantage, do you think that we could actually come up with a fairly industry solution to this problem? >> i'm afraid congressman, that question is a little beyond what i'm prepared to talk about today. it's certainly possible but i can't say with any sort of certainty that the answer is yes. >> so when you're looking at this marketplace, i mean we're
seeing fewer and fewer options. is the whole intention of single payer? >> i can't speak to the intention but i can say with certain changes, the changes that we've -- that are in my written testimony, i think the marketplace can continue and can continue to improve. >> a vibrant marketplace has lots of entries and opportunities and options, is that true? >> that is true. >> so are we shrinking in options and opportunities? >> we are shrinking in options and opportunities going into 2017, yes. >> now i'm going to make a meanmean comment. we've made it worse in health care. my wife on election day in arizona ends up being in the emergency room with a neck injury that we can't figure out. it's going to be three months before she sees her primary care doctor. she's been in the emergency room
twice and they won't take an mri because she doesn't have her authorization from her primary care doctor. it's pretty incredible that that's what exists today in arizona. that's pretty incredible that's what's happening. so it is causing a defamation of the marketplace, a defamation in regards to the way care is being applied. and i think the marketplace and the industry has an opportunity the that we could reset that bar. one of the people that has looked at different options outside that in its evolutionary process and i've got to say i'm pretty sad with what i see my folks on the other side of the aisle complaining about. i would yield back. >> i thank the gentleman. the chair recognizes the gentlewoman from the district of columbia. >> thank you very much, mr. chairman. mr. chairman, it's been six years since congress passed the affordable health care act.
and the majority has been the majority for that entire time. all they have done is propose to repeal it 60 times. they could have come forward with their own bill. the closest they've come is no bill at all. it's a recently unveiled proposal from speaker ryan that he calls the better way. terribly short on specifics of this criticism of the aca. for example, it rolls back the aca's vital consumer protections. and if you can imagine this, would allow companies once again to discriminate by charging higher premiums based on race and sex and health status.
i cannot believe that any congressman would want to go back to those bad old days. mr. spiro, what effect would repealing these consumer protections have on those who have gained coverage under the aca? >> well, in general it would shift cost to consumers back to consumers. and i think the way to think about is that the goal of the aca was to spread risk broadly. and some of the alternatives that have been floated to replace the aca, what they in effect do is quarantine the sick instead. and so what they do is repeal essential health benefits so you're not guaranteed coverage for prescription drugs, maternity care, mental health care which we all would agree is essential, limits on out-of-pocket costs and most
critically reduce the value of coverage. one congressman was talking about how constituents have written in about the high deductibles. so the answer is not to actually reduce the value of coverage back to the way it was before to rely on health savings accounts and high deductible plans, that's going in the exact wrong direction and it seems to me that there are obvious constructive solutions to address that issue. >> yeah, any large piece of legislation, this is a work in progress. it's amazing the progress that has been achieved on its first iteration. you mentioned the out-of-pocket -- the cap on out-of-pocket expenses. let me ask dr. cohen how important have the premium tax credits been in helping people afford health care? >> we've seen them be essential
on the marketplace, 85% of consumers do qualify for some sort of financial assistance. and we put out an analysis earlier this year that goes state by state so folks can see for their own state even with significant increases that consumers are protected. because if premiums do go up, the financial assistance goes up as well. so the majority of consumers can purchase a plan for less than $75 a month. >> imagine that. less than $75. that's important here. the majority of the consumer consist be protected for less than $75 a month. if it were not for these tax credits, they obviously wouldn't be in the market at all and mr. spiro's notion about what insurance is all about, spreading the risk. and that is essential to this or any insurance program which leads me to a question about the
option for turning medicaid into a block grant. here be the options. block grant program which would say to the states to do what you want to do or proposing a per capita cap on benefits that would not keep up with the growth of health care costs. so. both of those options would leave states with less funding and take away care from those who can least afford it, the poor and the elderly. mr. spiro, do you think that the speaker's proposed changes to medicaid would have a negative effect on the private insurance market? >> to medicaid would have a negative impact on the private insurance market? yeah. they would roll back the medicaid expansion. as i mentioned in my testimony, states that have done medicaid expansion wir their premiums in
the private markets are 7% lower and that's because the population from 100 to 138% of poverty would be in the medicaid risk pool instead of in the exchange risk pool. >> the gentlewoman's time has expired mpl tha expired. >> thank you very much. my questions have been aimed at showing the benefits and at showing that the majority has failed on its option to not propose but to come forward a bill. thank you very much, mr. chairman. >> i thank the gentlewoman. the gentleman from texas is recognized -- >> thank you very much. i can't get started without questioning some of the characterizations of the speakers and the house republicans plan. i'm not sure our panelists or the lady from the district of
columbia has reviewed the detailed plan outlined on the better.gop website. i would encourage them to do that. at this point time going to ask some of my questions. dr. cohen, i'm going to start with you. in your testimony you said that the cbo estimates said that we are actually below the cbo estimates for what this plan would cost. how does that jive with everybody's health insurance is going to go down $2500? it seems like you knew with the cbo estimates, you referred in our testimony at the time the affordable care act was enacted. we knew they were going to go up? >> i think we're talking about two different groups of folks. both i mentioned. one are the 150 million american, all of these panelists who get our health insurance through our employers. and if you look at the cost of
those premiums, it's actually been the slowest growth in the last -- >> wouldn't you say the benefit have gone down? i'll just an anecdotal example. my daughter's employer based on increase of coverage was forced take her from a very general louse first dollar plan to a$,000 deductible plan that when she had to visit the emergency room this year wiped out her savings account. >> so we very much agree with you that high deductible plans are challenges for folks which is why the affordable care act has limit on out of pocket costs and for folks who have income below 250% of poverty. they have limits and ability to do cost sharing. >> under the affordable care act as a members of congress i'm required to purchase my insurance on the d.c. exchange. i pay over $1,000 a month for that insurance. with these premium increases
that we're talking about of double digits, i could see as much as a $2,000 per year increase in my premiums. that doesn't sound affordable to me either. >> so the important part about this affordable care act is now that you know what you're buying when you buy that insurance. it covers those essential health benefits, prescription drug costs and such. in addition if you had any preexisting conditions before yb you have options. >> no. i was better off under fhp, i'll tell you that. and again, i'm also concerned about the lack of coverage options that are available. mr. giesa, i'm going to go to you and go texas specific since i'm a texen. we're seeing rate increases phenomenal. what the you see going and happening with those rate increases for people forced to
buy through the exchange? mike phone please. >> please understand that the bluecross blueshield association that i'm hearing representing is a federation of 36 independently run plans. >> right. >> the strategy and pricing decisions of any specific plan are -- >> all right. go to mr. redmer for a second. one of the complaints i'm hearing out of my hometown of corpus christi and the areas that i represent is if you wanted to buy a ppo plan now in cities like houston, and we're getting there in corpus christi, there simply isn't one available. you're stuck with an hmo where you have things like a gate keeper before you can get the care. why are relosing automatic of these choices? >> that's one of the problems we're seeing all over the country. in some parts of the country we're seeing folks only having an option of a ppo, in other parts of the country, other
counties, they may only have an option of an hmo. so is shrinkage of competition and carriers is a real problem. >> all right. thank you very much. and dr. cohen, one last question for you as my time is about to expire. when dr. go sar asked the question about was the intent all along to move to a single pay system you smiled. is that because you believe that to be true or what's your take on that. >> it's because we work so collaboratively and the private inshires to provide americans access to affordable korchl through private insurance. i think my smile was we work so closely with the folks in the private sector i don't see how to intent could be read into what we're doing. >> it certainly seems to be the end result with the premiums going so high and deductibles skyrockets and choices going down. the american people are incredibly dissatisfied.
seems like if you were to create a system designed to wreck what i considered to be the best health care system in the world, you've done it. i see i'm out of time and ield yield back. >> the chair recognizes the gentlewoman from illinois, ms. duckworth for five minute. >> thank you. i'm concerned about the significant premium increases we've been kies cussing, especially the ones going up in 2017 on the illinois health insurance exchange. of course the aca tax credits will shield the vast majority of the 330,000 who shop. but as a chicago tribune reported with, even if the premiums increase by 50%, the tax credits insure that two-thirds could still enroll in plans that cost them $100 or less per month. i am concerned about the impact of this increase on the 84,000
illinois resident who don't qualify for tax credits. and i'd like to know what steps we can take to empower these consumers to be smart shoppers in tex change and what reforms are needed to ensure regulators effectively protect these people from unreasonable rate hikes. with that i'd like to address this idea of filing health care rate increases. i understand that all states are required to file health care rate increases of 10% of greater with cms. each state determines whether or not to reject or modify the rates even though they have to file them with the cms. am i correct in understanding that the state review programs are not created equal, some are weak and some have strong? >> i think that would be correct. there are a number of states we do that process. but in a majority of states the department of insurance does do that process. but i agree with you that variable in terms of the authorities that they have. >> okay. so while some states are
empowered to provide relief from the skyrocketing rate for their citizens, others like illinois, we don't have the regulators to reject the rate increases. i'm hearing the term foul and use for states like illinois, so long as insurers file the rates with their regulators. they can use them? is that correct? can you explain that file and use term a little bit? >> i think my colleague can speak to this in addition. but depending on what state you're in, there are different authorities and illinois has one where they can review them but essentially can't change them. >> okay. is it mr. redmer, do you have a comment on that in. >> i will not speak to illinois. maryland is not file and use when it comes to health insurance but other parts of the insurance market are file and use. but just because it's file and use does not mean that we lose or regulatory authority over those rates. >> okay.
>> in maryland. >> okay. back to you, dr. cohen. can you tell me, do we need to change policies regulators in illinois and other states so they can do more to stop the rate increases that make the care unaffordable? or what could potentially be done? >> well if you look across the country, i think congresswoman what you're seeing in states that do have the ability to do rate review, you are seeing folks look at those rates and make changes to them. i think what we've been talking about for this year is that the there are some one-time upward pressures on those rates, but we have been working very closely with the state departments of insurance and you know when they are working closely with their insurers to make sure that those rates are appropriate. >> so is this a state-by-state issue or anything that can be done at the federal issue. >> that's correct, state by state. >> state by state. is there any type of coincidence or matching with the states that
are more file and use and have less enabled regulators versus the states who, for example, have refused medicare expansion? >> so we have seen that in medicaid expansion states that the private market, the marketplace has seen premium increases that are about 7% less. so we definitely are seeing where medicaid expansion is having an impact on marketplace premiums. and i can get back to you -- i don't have it at my fingertips but i know there are studies that have shown where states are effective ratereviewers there are is more, they do the public hearings and they're able to do additional work on understanding the rates. >> do you have the public hearing in maryland? how does that work? >> i discuss thd earlier. in maryland we have the rates, proposed rates are given to us may 1st.
we receive the actuarial documentation and data. we have a team of actuaries that scrub the data, they challenge the projections and the experience. in maryland this year we had two public hearings and then we ultimately approved rates that in aggregate were $24.5 million less than was originally requested. but you bring up a great point, and that is the -- as is always the case, the vast majority of the middle class that does not have access to medicaid, they don't have access to subsidies and they really are being hurt by these rates. and my concern is that it is the business death spiral. in other words as the rates increase and folks have to pay 100 cents on the dollars, it's going to be the folks that are healthy year and younger that
are going to choose to leave the market, pay the penalty and the experience will deteriorate further. >> thank you. i'm out of time. thank you, mr. chairman. >> i thank the gentlewoman. the chair recognizes the gentleman from florida, mr. de santas for five minutes. >> congress has the risk corridor program in recent years, that's correct? >> that's correct? and i think that obviously reflects the will of the congress who controls the purse. but i was wondering because this memo that cms issued on september 9th said about these risk corridor payments and the prospect of lawsuits from tin surers, quote we know that a number of insurers have pseudoin federal court seeking to obtain the risk corridor amounts that have not been paid to date. the department of justice is vigorously defending the claims on behalf of the united states. however as in all cases, we are
open to discussing resolution of those claims. we're willing to begin such discussions at any time end quote. so was the purpose of that to basically invite lawsuits and try to provide the risk corridor payments through the judicial process rather than through the appropriations process? >> as we said last year and again this year, these payments are an obligation of the federal government. that is not new. there are ongoing lawsuits and doj represents us in those suits and continue to work through a legal process. >> can you say whether hhs, anybody with hhs has encouraged lawsuit settlements for risk corridors? >> doj would need to be the one to answer questions about ongoing litigation. >> if there are people in the department, your department who were ken urging this in conversations with others, that would be something that would be noteworthy. can you say whether that's
happened? >> what i can say is that we are -- that the process of litigation has been moving forward and doj is doing their work as they would in any other case. >> so nobody in hhs has done anything to try to point in this direction where you would have lawsuits settlements. is that what you're saying? >> what i think hhs has done, as we said last year, this is an obligation of the federal government -- >> i understand that. congress has not saw fit to provide the money in the appropriations process. you disagree with that. but congress expressed intent and refused to provide the funds. can you use the judicial process to get around an expressed prohibition that congress enacted. can you provide the committee with any documentations on your end where people are discussing these lawsuits? >> so, you know, we have just been doing at hhs is focusing on implementing the law -- >> so there's no documents that
we would get, correspondence involving the lawsuits? >> so the lawsuits are handled by the department of justice. >> so the answer so that is no? >> i could refer you to the department of justice. >> i'm not asking about the department of justice. i'm asking whether you or anyone in your agency has correspondence about facilitating lawsuits for risk corridor payments. can you answer the question? >> we are the client. doj is representing us. and so our general counsel does correspond with doj -- >> what about outside actors? >> our general counsel is the one that interacts with doj on our behalf because we're the client. >> but not yourtd actors? >> outside actors? >> is there interaction between the general counsel or people of hhs trying to bring people along to see that the litigation track is the track that the administration would like to see? >> i think it's been very public that the litigation has moved
forward. a judge in one of the cases related to one of the fist cases moving forward asked for all motions to be submitted by september 23rd. so -- but everything is evolving sort of in the normal course -- >> we may have to send a request for some of these documents to just see so this is transparent. let me ask you this. does the department of this health and human services agree with the department of jus ice office of legal counsel which has stated in analysis that judgment funds cannot be used to circumstance vent a prohibition on appropriations enacted by congress many. >> i'd have to talk to my lawyers on that. i can't speak to that. >> we'd like to get an answer to that. do you know, did your counsel or anyone at hhs confer with doj before the september 9dth memo was issued, do you know? >> like i said, our counsel does interact with the department of justice as we are the subject of
those litigation. so -- >> do you know if doj reviewed the memo? >> i know they are working towards whatever legal processes is unfolding as they would -- >> that's not the issue. the issue is this conflicts with a 1998 olc opinion about whether you can use judgment funds in this way. doj is on record saying that's illegal and improper. and my question to you is, was that shown to the justice department for their advice or consent on that. >> i wouldn't be able to speak to that. >> okay.. do you -- so is it the position of hhs's general counsel that using judgment funds in that matter is appropriate and legal? >> so i'd have to have our lawyers get back to you on that. >> okay. we will -- but the general counsel of hhs did approve the memo of september 9th? do you know if the general counsel reviewed it? >> they did review it. yes. >> i'm out of time.
i yield back. >> the chair recognizes the gentleman from massachusetts mr. lunch for five minutes. >> thank you mr. chairman and i want to thank the witnesses for helping us with our work. so we have the article in the boston globe of september 9th and it does in a concise way explain the problem we're having. we have one, one subsidized network plan that offers access to the mass general hospital and brig hasman's women's hospital. they are teaching hospitals, a lot of research for us. but the neighborhood health plan that would allow enrollees who are subsidized to go to those hospitals pumped up their premiums by 21%. a lot of people -- thousands of people are faced with the fact that -- one of the big fierce of the affordable care out when it
came out -- i want to confescon. i voted against it. my vote would not change if it were held again today. but we were worried that we might end up with two systems, two health care systems, one for the people who could afford it and then everybody else on the subsidy, they can't get access to the good docs. that is exactly what is happening here who threatened hereby. we've got one subsidized network. and this goes away, if people can't pay the 20% increase, then the doors are locked to the mass general, two of the finest hospitals in the country. and i'm worried about that. the basic idea behind the affordable care act was, as it was presented to congress, since we were paying multiples of what
other countries were paying in terms of providing health care for their citizens, if question could squeeze the cost, get the cost down, we could use the savings and the cost curve, use the savings to cover. that was the idea. but as we have seen and as jonathon grouber, i know people use that as a punch line but he's a smart man, testified before the senate. and he admitted, he said we punted on cost containment. we punted on that. we have very strong incentives to get coverage, very low incentive to actually squeeze the cost down. and now -- and there were several other items in the affordable care act that caused me to vote against it. one was an anti-trust exemption. in the senate version we gave back the anti-trust exemption so that they could act in restraint of trade.
so that, so that one insurance company can cover an entire state and squeeze out competition because they've got everybody signed up. we allowed that. we put that into law. it was taken out of the house, put in by the senate and part of the final bill. we eliminated the public option. so we were relying on the public option, even the state run public option to put out a bare bones plan to compete with some of the private plans so that by competition, if the state put out a bare bones plan at low cost but reliable, providing adequate health care, people would buy that and it would be up to the private insure es to compete with that. we eliminated a lot of competition that would have occurred. and lastly we put in a cadillac tax. so you have these good employers, a lot of them union employers who sat down with
their employees and worked out a plan because health care was not taxed back then. so a lot of the union employees said rather than take money in our envelope, rather than take pay raises, we're going to take good health care which would help their families. now we turned around after they did that, to those employers and those unions that sat down and worked together, we punished them. put in a cadillac tax. congress in its wisdom has postponed that. but what was eliminating the anti-trust exemption, the cadillac tax and eliminating the public option, mr. spiro, what impact has that had on moving forward here? and we're trying to meet the goals of the affordable care act, the original goals. >> thank you for the question. i think if you look at the hospitals in boston, that is a unique situation and we shouldn't judge hospital quality based on reputation alone. i would refer -- >> these are the best docs
though just so you know. i live in the city. i know where the best doctors are. that's where my wife goes. look, i think it's generally accepted that those are the best helicopters -- >> i would refer you to state's which has identified growth in hospital prices as the main driving factor in the rise of health care costs. so that's an issue that needs to be addressed. >> we're also teaching hospitals, though, right? so, the benefit is benefiting the rest of the country by -- it costs more, obviously, to deliver health care when you're a teaching hospital than if you're not. >> well, again, teaching hospitals are heavily subsidized without much transparency or accountability. but that's a different issue from i think the thrust of your question, which is on antitrust and the public option. on antitrust, the aca did not change the law on the antitrust exemption. >> we changed it in the house version. we took out the antitrust exemption, but -- >> but i just want to clarify that that was pre-existing, the
aca, the antitrust exemption. i would support removing it, but -- >> there are over 300 members of congress that voted to change it. republicans and democrats. >> i don't think it's fair to blame the aca for changing the law. >> we put it back in. included an antitrust exemption -- >> the house bill never became law. >> right. >> so, the aca -- the senate bill, the aca did not change the law on antitrust exemption. on the public option, i said in my testimony i support, i would call it the guaranteed choice plan, and i think the president has voiced support for that idea. >> okay. >> i think it's important to -- >> the gentleman's out of time, so i appreciate it. i'm sorry to cut you off, but as we go, we've got a few other members. so, the chair recognizes the gentleman, mr. hice from georgia. >> thank you, mr. chairman. i just have really some comments here. i'm kind of just amazed, shocked
at some of the things i've heard here today. you would literally think, heck, it's been implied that aca has somehow reduced cost and increased coverage. in fact, i believe i heard someone actually say something along the lines of we now have the lowest health care cost in our nation's history. i'm trying to wrap my head around this kind of nonsense. look, it's not the federal government's responsibility to take over the health care industry in the first place. and i'm as concerned as anyone with health care costs, but government intrusion is the problem, not the solution. and if obamacare's as great as it is, i'm curious why none of our witnesses here participate. i mean, we all know that this is a disaster. and mr. chairman, what sets this
hearing apart from other hearings on the aca is that now we have a track record that we're able to look back on and see where this thing has been taking us. we have a track record to look at what the president and his administration originally told us versus what has come to fruition, things like what's already come up today. if you like your health care, you can keep it. if you like your doctor, you can keep your doctor. we now have the track record to know that was totally false. and you know, as we look at these kinds of things, we've got to face reality. now we're facing the fourth enrollment period, and this whole thing is coming off the tracks. it is a national disaster. it's a health care disaster. it's an economic disaster. we've got, ms. cohen, you mentioned 20 million people have been enrolled, including the
medicaid people. the real numbers are 12 million actual people enrolled in obamacare, just over half of what was predicted. and all this contributes to the problem. i mean, many of you know firsthand, we've got insurers that are leaving. it wasn't long ago united health backed away. a couple weeks ago, etna backed out. and why? why are these insurers -- because they're hemorrhaging in their costs. they cannot survive, despite the fact that billions of taxpayer dollars are subsidizing this thing. insurance companies are still losing their shirts. and it can't continue. and for those insurance companies that remain, premium's going up and up and up and up just to cover the costs. this year, going up again in 2017. i think looking at a national average, a 25% increase this
year. in my state of georgia, we're expecting double-digit increases, more and more increases. bluecross blueshield going up over 20% in georgia this year, just to cover costs. and you know, we talk about all these people, all these millions of people that's going, getting insurance coverage. let's face reality. we have 20 million, perhaps, who think they have insurance. but in reality, and if i've heard it once, it's been dozens and dozens of times, particularly in rural hospitals across my district -- people go to the hospital thinking they have insurance only to find out they've got $5, $10, $15, however thousands of deductible. so they can't make the deductible payment. hospitals are not getting paid. some are on the verge of collapse because nobody's paying for the coverage they're getting. and the problem goes up and up. this year, what, 65% of americans are actually going to
have the higher deductible option in this thing? this is not affordable for anybody. it's not affordable for our entire nation. and yet we have people continuing to try to defend it. i think it's clear to anyone watching and anyone experiencing this, which none of you are experiencing it, because none of you participate. the people who are experiencing the horrors of obamacare, they know what it's doing to their families, they know what it's doing to their health care options, and i think it's time, mr. chairman that we get honest with this whole reality and face the facts, that this is a disaster, and we need to get rid of this thing and let free market enterprise and individuals with their doctors determine what's best for them, rather than government getting
involved in this. with that i yield back. >> i thank the gentleman. the chair recognizes the gentleman from virginia, mr. connolly, for five minutes. >> i thank the chair and i couldn't disagree any more with my fellow from georgia. i find it ironic, mr. spiro, wasn't the aca absolutely modeled on a republican governor's health care bill in massachusetts? >> yes, mitt romney's. >> right. was not the scheme here, rather than having a single-payer system, but the idea of having stakeholders having skin in the game so they become cost-conscious, a republican think tank idea? >> the heritage foundation, in fact, came up with the idea for the individual mandate. >> right. not a democratic idea, a republican idea. absolutely heart and soul incorporated into this so-called
government takeover, my friend from georgia just mischaracterized. >> correct. >> dr. cohen, when i had to face voting, i told my voters, there are three things i'm going to measure a bill by -- is there a meaningful basket of reforms that protect consumers? does it address the long-term cost curves so we have some hope of reducing the growth in costs in terms of health care in america? and does it address the problem, the crisis, the scandal of huge numbers of uninsured americans? does it reduce the number of uninsured americans? in your opinion, did we address those three things or not? and are they working or not today? >> so, let me take them in reverse. obviously, on the uninsured, we've talked about the historic lows in uninsured. on the consumer -- >> let's just stop there for a
second, uninsured, because i don't know what the general -- what the legislature in georgia has done. i do know what they've done in my state in virginia. the republican majority, against the wishes of the democratic governor, have refused to take advantage of the provision on medicaid. medicaid would cover 400,000 uninsured virginians. and the scandal of not taking advantage of that is costing virginia billions of dollars of federal money that we're entitled to but we're not taking advantage of. and every year we have a voluntary clinic in a rural part of our state where thousands of people without health insurance line up overnight to get basic medical care, highlighting the need. my friend talked about hospitals closing. we've had hospitals close in rural areas because of the fact that we're not taking advantage of that medicaid provision, for political reasons, not out of concern for patients.
if we really want to do something, that's money waiting to be taken advantage of. and some republican governors have, such as john kasich of ohio. is that not correct. >> that is correct, sir. >> okay. please continue with the other two. >> so, on the consumer protections, i think now we've been talking about essential health benefits so that folks know that they have quality health insurance when they're purchasing it. but also important to note the preventive services that everyone has access to have cost-sharing. that's not just in the marketplace, but that's across the market, that we're able to take advantage of through our employer-sponsored coverage as well. the other consumer protection, given that we're talking about premiums today, is the medical loss ratio. that's a consumer protection in and of itself. we've paid -- insurance companies have paid back $2 billion to consumers when they've overcharged them, and that's an important backstop for what we've been talking about related to