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tv   Key Capitol Hill Hearings  CSPAN  November 6, 2015 12:00am-2:01am EST

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. it doesn't paint a rosy picture. >> one more quick round of questions. you to talk more about the refugee convention itself. explain what the convention involves and what its requirements are. i would like for you, given your youground and work with when hc, what is the u.s. role in this? responsibility? europeans were saying, where is the u.s.? great question and one i hear a lot as well. the core obligation under the 1951 convention is not to return efugee to a country where his life or freedom would be in danger.
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that from thend perspective of our refugee, there is no rights to enter a country career you have to somehow reach another country's territory to claim that protection. term -- it doesn't injure into the picture. unless you are under the jurisdiction of another country. there are a lot of controversies over maritime indictments. -- a shipe ship flying knee flag obligates you. no agreement on that. the supreme court of the u.s. said no. the convention, are convention obligations in their view do not apply extra territorially.
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primarily maritime crisis. what that does is create an incentive to- prevent people from lending. we have not seen that happening so far in this crisis. bush backs from the shores of europe and god for bid we should ever see that. there are forces within europe who would like to see that. turkey,ussions with other countries, are aimed at keeping people in the region. disrupting those close to europe for all kinds of good reasons and perhaps some bad ones as well. role, a hear that from europeans all the time. 10,000 refugees from syria this year. really? when that is a day's reception
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in greece. important to understand the difference between asylum-seekers and resettled refugees. by its. is protected geography. german doesn't have the luxury of screening. planning for their reception. which we do. through our resettlement program. there is a lot of pressure from u.s. advocacy groups. refugee resettlement organizations, for the u.s. to take more. opposes that we should be taking 100,000 a year. that is almost impossible logistically. if that is going to happen, we need to change our procedure. >> i want to turn back to philip. in germanystudying many years ago, i was told they had a specific culture.
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this is a country based on a very strong cultural identity. today, your chancellor tells us germany has a new political culture. i would love to hear you talk about what that means. and more about german leadership on these issues. getting the eu to respond. that is from a long time ago. the fact is, this is interesting. you observe germany over the two decades. the fact is. it has become an immigration society. 20% of germans have at least one parent, more than the u.s. even per capita.
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we are an immigration society. political parties from the right, more political conservative, they would qualify as conservative in the u.s. but more conservative in germany, they have come to terms with this. we are anee immigration society. everybody in germany sees we need an immigration society. we have a bad earth rate. we are shrinking, demographically. therefore, we need migration. to need migration. getting one million refugees in six months is a different cup of tea. that is in mean their profiles match with what we need to read of course we would like to have a canadian approach. protected by geography, to pick the midwives we really need to read . i geographic situation does not allow that. we have to work with what we get. i was encouraged, let's try to
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make the best of it. all european countries generally speaking, particularly in central and eastern europe, should be aware -- poland has compared of birth rate to germany. countries who found their freedom 20 years ago, to the five years ago, and are very homogenous and cold for unified compared to germany, have a problem. refugees. to i understand. it is difficult to read it took us decades to understand we are an immigration society. times are moving quicker. you better get used to the fact that you need immigration. you have to prepare for it. i do not expect slovakia or czech republic to take the same
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percentage that germany takes. but the total blocking of a danger toause of the culture, values, that is also wrong. wrong politics. interest, notnal only because there is a lack of european solidarity. also from a national point of view, they should be much more open-minded. >> charles, i want to come back to you. the hungarian prime minister accused germany of moral imperialism. what was he talking about mark -- could you ask any easier one? i think what he must have had in , we used to in the 1990's.
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what he must have had in mind was there were certain national interests as opposed to humanitarian approaches. standard,es, by his these countries remain homogeneous. this is what we are talking about. they don't want anybody who is not like them. when chancellor merkel who, as you can tell, i admire, when she these refugees are welcome. they thought that was an invitation for them to come. individualthink
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countries in the european union to embrace them. to admit them. this is the best interpretation i can give. if you want to hear what i really think, we will talk after the session. >> this is on the record as you know. one final question. then we are going to open it up for questions. i want you to say more about the issue.control how europeans are dealing with this. at is in bout -- remarkable accomplishment. used to be that you could not cross a national border without having your papers checked.
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they have constructed a border free europe. but the deal is, if you're going to have these illuminated, you have to have external border control. it is just a skeletal operation. very few assets. how are the europeans going to get a handle on the border questions? >> it is definitely a challenge. we have the luxury in the u.s. of having the coast guard having customs and border protection. federal agencies with broad authorities and responsibilities. although you have the european union, you have sovereignty issues with each state. it is challenging. very challenging. i'm not the best qualified person to speak to that. i am more the operator level. one of the things we look at in the coast guard are the push and
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pull factors associated with migration. look say to africa, where we are engaged through africanraining teams, navy and coast guard partners coming to the u.s., what i would say, maritime governance. good maritime law enforcement. search and rescue. port security. --we can help so secure in sub-saharan african coastal states with development, trade, safe and secure marine won'tortation, maybe they feel the need to leave their country. i will give one example. state, itan coastal has historically had a lot of illegal fishing going on.
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of effects that had. the country was not receiving the revenue for fishing licenses. it was illegal fishing. they lost the revenue. their local fishing fleets were unemployed or underemployed. they couldn't get to the fish stocks. there was a food security issue because in that particular country, the majority of the protein the citizens got came from fish. you have that perfect storm that led to mass migration to europe. >> i wanted to get you to tell the audience what you were talking about before we started. we were talking about libya. the smuggling operations, how they are working.
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using libya as an example of what is going on in the coast. >> the european union did have a capacity building mission. help the trying to navy and coast guard. they wereions became, no longer permissive. they had to leave. in the past, the libyan coast guard has been trained by western countries. when you have no effective border control, it makes it very difficult. just that vector of 140,000 from north-central africa, libya, you don't know where that money is going. you don't know who is facilitating that. the smugglers as travel agents.
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crime isrganized involved, transnational organized crime, they want to make things as easy as they can. for their victims, if you well. it is a most like a travel agency. if you want to go from point a to point b, you pay your money and do it. europe --d, even in >> the british refer to it derisively. lower 48. what we have seen is a desperate attempt to try to secure our borders. hungary has set up something with their border with syria. serbia.
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we have to accept if people, for whatever reasons, are walking through the balkans and greece, 300,000 or 400,000 people, it comes to an end. imagine the pictures. you have seen it on the hungarian serbian border. front ofeople sit in the border. what do you do? what is border protection worth? imagine honduras has a thestrophe to read half population moves to the u.s.. what is happening at the border? you have to cope with the in flux. securing the border only goes so far. set upey have to do is this registration center.
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we call them hotspots. i never understood. they are in greece and italy. you try to channel the influx through these registration centers. ift means at the same time, you are really a refugee, you are entitled to refugee status. if you are not refugees, because we have many of them, you might be set back. add toleen wanted to that. kathleen: that is a good description. one of the problems is the non-refugees are not sent it back in great numbers. of free this crisis. only 40% field asylum-seekers are returned. it is probably much higher now. systems get so overwhelmed, people not moving very quickly through. not easy.m, it is the problem that europeans have
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returning people were not entitled to international protection is one of the factors they are trying to come to grips with. it is a difficult one. people have family ties. supported communities. dragging people out of their beds. putting them in chains. not a good object. that is a difficult problem. >> the audience has been patient. let's open it up for questions. i see this gentleman has a question. brief and keep them to the point. just, please. we will have a chance to get the reaction of the panel. as i watch the news and listen to the comments of the panel, i can't help but think of the response of european nations and the u.s. and great britain to the efforts from european jews to escape the holocaust. i am wondering whether any of you have thought about that parallel in your own work. >> of course.
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>> this is certainly something which is strongly in our mind. it will always directed german politics. it is clearly one of the numerous reasons why we would not close of our country to refugees. emphasize the uk's part of europe. that is important. >> let's go to the gentleman back here. this gentleman in the back. >> thank you very much. i'm an immigrant from ghana. my concern when i look at the saids in europe, and i with ties with what the europeans have to through. >> it seems to me everybody is forgetting the libyan part of it. the european union, especially britain and france, intervened.
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they helped to break libya. as our former secretary of state says, you break it, you own it. i would like some comments on refugees trying to get europe -- to europe europe are centrall getting less attention. president obama confessed the intervention in libya was not handled well. when he is increasingly refu to come to the u.s., he doesn't mention the libyans at all. i think there is a blind spot where the libyans are concerned. if you could share thoughts on that i would appreciate it. >> very few of the refugees coming through libya are libyan. they are coming from points further south.
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the sea arrivals to italy, about a quarter are from a reach. another 15% from nigeria. sudan, gambia. bangladesh. but two of those countries are sub-saharan african countries. many of them are not considered, people seeking protection from many of those countries. gambia. ghana bey are not considered to refugees. their countries are not at war. the reach reasons, their rates are over 80% in europe. syria is over 90%. d sudanese areer danny
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among the top groups. they are regarded probably more than half get asylum. libyanblem with the departure is they are almost all from western libya which is not controlled by the libyan government that we talked to but by the islamic government. that coast is lawless. we don't have the power. the europeans don't have the power. nobody so far has the power to bring order to that. it is really the wild west. worse than the wild west. problem.eally the i will say, the numbers coming along the route have declined. to last year. as opposed to the aegean route to greece where it has increased by over 1000% since last year. there is some logic to the focus on greece. ignoringo excuse for
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the central mediterranean route. >> it has become much more dangerous compared to crossing the edgy and see, which is easier. libya was still under qaddafi, many countries including the european union had a dirty deal with this guy. you have to accept, you are closing sub-saharan african refugees. to embark.allow them now you have lawlessness and they do embark. they still continue to come over the mediterranean. i think it in your future, weugees from ghana, senegal, will be less generous with african refugees sub-saharan african refugees than we used to because of the other syrians.
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let's go to this gentleman in the front row. as fast as we can. let's take the question. >> i am a 40 year analyst. i have a easy question for you. it seems the west in europe has been forced, just by numbers, to be reactive. how we get ahead of this power curve, address it in a humane way. on the issue of conspiracy theories. conspiracies, or at least talking points would have been floated, syria is actively egress of syrian sunnis so that one, he gets root
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of a problem, and two he can repopulate the areas with friendly peoples. >> which includes the christian minorities in syria. >> conspiracy theories are all over the place. there is no day when i cannot read a new one. it is a habit in russia and eastern europe to look under the rug and look for a reason other than the one given. times, this is true. i don't deny it to i also work for the u.s. government. is going on as opposed to what is being said. these are fantasies. the one you mentioned, and the one i refer to, obviously, are false. and are ridiculous.
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i would like to make a comment about previous question about the holocaust. is a very important question in eastern europe, especially in hungary. germany has come to terms with its role and acknowledged the horrors that it brought to the world. some of the world war ii supporters have not admitted responsibility whatsoever. in fact, they see the two were victims. example, there is a new statue right in the makes of the city which no distinction between the 600,000 jews killed with hungarian assistance during world war ii. on the one hand, and the hungarians themselves who were invaded by germany on march 19, 1944.
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this putting them together in itself is an outrage. they were willing executioners. the hungarian participation in the deportation of those jews was extensive. germansle to what the were doing. if you don't come to terms with what you did, then of course your response to the new immigrants and refugees, the new people who look for a better life, obviously will be different. hungary is not alone in this. anti-semitism is pervasive. >> let's go to the lady in the front of the row. there is a microphone coming. i was teaching classes in
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europe. i am originally from croatia. i think this is important. i have seen these refugees. super the in of those countries, croatia, serbia, macedonia. we went through this. these refugee flows, migrant flows, are rather different than what we have seen. peoplend kids and unhappy, leaving their homes. hoping to come back. now we see 70% of young men of fighting aids. of men and kids. most of these people are not even interested in asylum in any of these so-called safe countries. with low economic opportunity,
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greece, slovenia, croatia. they started writing and slovenia. they burned tents because they wanted to get to germany as soon as possible. they crossed several safe countries. life of fleeing a despair. there's a lot of sympathy for their plight. have you seeo you, the situation? i think it might in danger because of the confusion between what is a migrant and what is a refugee. you tell them apart in the situation? you can return a refugee to other countries. and her stand about european solidarity and all of this.
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i think the problem within see, and this is not just part of eastern europe, the crisis, the migrant crisis was partly triggered by german european suspending mechanisms for asylum. before, there was a rush to get to germany before germany closes its borders. have you forcing out the future because the migrant flow has exposed the balkan countries to a lot of trouble. i know they are under pressure to put limits to the number of current -- refugees. >> i knew dublin would come up eventually. the dublin convention. the issue of moral hazard.
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who would like to start? you raise good questions and you have articulated some of the contradictions inherent among eu countries. where people want to go to germany, sweden. they are economically vibrant. they don't want to stay in eastern europe. they want to go to a welcoming country. there is the contradiction. people don't want to stay in hungary. hungarians are hostile to refugees. the unwillingness to accept refugees on the part of many of the eu members has reinforced the style and the where there are only a few countries that are seen as welcoming. refugees are rational people. they want to be able to earn a
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living. of young men, a that is often a household decision tree of are seen as more likely to survive the journey tribute also, more likely to work & money back. again, that is a rational, household decision. it is not they are saying we are going to leave the women and children behind. they are doing what they think is best for their families. 90 percent of refugees want to go back to syria as soon as possible. mind if change their the moment cons. at this point, that is their objective. possibilities for temporary protection are one of the things that will come on the menu as it will in the case of the balkan refugees in germany in the 1990's. , ii could say one more thing
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mentioned at the end of my opening remarks or the need to open alternative legal channels. unfortunately what we are seeing now, european countries going in the opposite direction. they are probably going to be cutting down on labor migration because they can fill their needs from among the refugee population. cracking down on family reunification. this will just feed into the illegal movements over time. something's got to crack. >> you want to add something? i'm confident. let me tell you. out, theuld single argument that the germans invited them to read it is a simple argument and i think it is wrong. these people are desperate.
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they flee their home because they do not see any future. we have inhat invitation saying, please comment. will be happy to provide you with a job and house and mercedes. they sleep in shelters on the ground. they are in difficult circumstances. they knowa secret exactly, through their smartphones, what to expect. if people are desperate, they find their way. way, refugee removes, you put one border up and they find other ways. the dublin system which you alluded to is good for germany. there we has the right to come to germany. they must stay in croatia. the first country --
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greece, even croatia would not like greece to be overburdened with millions of refugees. system, the first country in the european country you set foot on is where you seek asylum. united states in this country. the germans never set this openly but in fact, they set the rules. for many countries on the road including croatia. >> how many refugees were staying in greece and italy? >> italy more than greece. we have all seen what greece is going through. nobody wants greece to fall because of refugees.
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don't think wrong idea that the refugees in germany are welcomed with open arms. wonderful flats right away. they are in a difficult situation. they know it. they are well aware of what to expect. idea is cynical. it's a little the refugees that fleet out of despair. >> the countries who are saying no refugees here, it gets them off the hook. i think we still have quite a bit of time. fast as i to you as can. the professor wants to add something. >> complications.
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it is misleading to talk about countries as if they were all good or all bad. we are talking about majorities. they differ from country to country. spentermany, where i have considerable time praising. , they areion partners not only finding merkel -- they welcomed a person in bavaria who is their hero. even germany, there is an shoe. hungarians. that is a good point. even the hungarians. i saw similar organizations and individuals handing out link its.
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a reasonably poor country. they were going out of their way to be helpful. the other complication, the refugees want to go to germany. they don't want to go to lithuania. how do you send somewhere where you don't want them to go. it is an important question to keep in mind. >> lived we need -- if lithuania made itself more welcoming, that would change. and i keep going around will get to you in a moment. built in the middle. right there. speaking the microphone. >> you mention the fact that germany has receives the like 700,000. there was an enormous reservoir of potential refugees in turkey,
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jordan, and displaced syrians who are in even more rigid shape than elsewhere. this must come to many more millions. what is the situation for handling this? some of the countries in europe haven't done anything. i haven't heard anything about friends. -- france. francois hollande made nice noises but i have not heard policy made. done in the next two years to stem this? in the countries where these people are? and possibly move toward some sort of oracle situation so the 92% who would like to go back
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will at least consider going back? >> that is a tough question. who would like to take it on? a huge decision to leave one's home. we have seen it during the war and after the war. emotionally a strong feeling. i'm not surprised some of the people want to go back. syria is still their home. if you ask me, 12 million syrians are refugees. more than half the population. 2 million are in turkey. one point some in lebanon. jordan can the rest inside syria. you are better on that. the remedy is to stop the conflict in syria. that is the remedy. to try tohing we can stop the war in syria.
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let me say at this table, this administration is showing effort and strength. we see you are secretary of state doing the most to come to a solution. doing original things. the fact that he brought the iranian and saudi minister together is a huge step forward. that doesn't mean that we are close to a solution. we have seen new diplomatic momentum. the only remedy to this terrible crisis is stop the war in syria. to show you how desperate the refugees are, people are already going back to syria from jordan. from lebanon. before the russian bombing campaign started. they were going back in considerable numbers. the number of refugees in jordan is dropping. now, few going back because of
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the conflict intensify in korea that is how badly people want to go back. while the war is going on, people are going back. which i find extraordinary. >> this gentleman here has been patient. another gentleman there come and we will keep going around. the lady down in front. if the remedy is diplomacy in syria? why isn't there more activity in europe to produce some kind of result in syria? why isn't there more military engagement in iraq or afghanistan? to calm those places? why aren't there more aid programs to stem the flow of your trends and others? why aren't we doing long-term thinking?
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>> that is a good question. will not accept aid. they think they are just fine. does not a conflict or development problem, it is a repression problem. conscription, which is in effect forced labor. in other countries, we don't know how to do development effectively. there are governance issues ability to donors' fix. massive obstacles to development. development tends to be self starting. i would advocate for more aid. it is not in itself going to solve the problem. r's military intervention. >> i served as a senior member of the policy planning staff.
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of the department of state. i can tell you categorically there is no such thing as long-term planning. >> looks come to the front. this lady who has been patient. and then this gentleman. cover law. immigration law. migrants dot, these not have the right to invade another country's borders. there are such deep compassion, it seems we are not allowed to use rhetoric that would reflect laws. here in the u.s., we have to look at the pull factor as well as the push factors. definitely, it seems when the
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migrants are rescued and brought to europe, that is a great reward for their efforts. albania a couple of years ago. it is sparsely populated. have christian, half muslim. they want very much to have goodwill with the european union. they are developing their coastline. why doesn't europe take it vantage of countries like kosovo? pay huge amounts of money that would allow them to accept and settle at least temporarily many fugeees? muslim rest of th summer, the biggest number of asylum seekers came from kosovo and albania.
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that explains a bit where we stand. these are not countries who deem themselves in a position to do that. they are all sent back. now they are all sent back. think we are living in a more and more globalized world. their push factors and pull factors. american universities are pull factors. lots of german scientists, russian scientists, go to american universities. a brain drain. when people from ghana and senegal think their life is europe, they are taking the risk and opportunity. rankly, i don't blame them. it is possible they will be sent back.
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in a globalized world, where information exchanges quickly, mobility is a huge problem or huge factor that influences our society. i can only say, america is the best example, the more open the society is, the more reason there is to believe it will survive. the >> looks go around. i want to get a couple of questions. then back to you. the gentle man right here. he has waited patiently. i was in the international judge in kosovo. second with the investor said about the lack of capacity to handle any of the refugees. that is not the point i want to make. far, the european countries have absorbed 100% of the burden , to their credit. my question is, do any of you
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think the arab states, saudi arabia, the wealthy gulf states, have any obligation to step up to the plate? i was struck by the irony several weeks ago when saudi harsaj.osted the annual of course it was a catastrophe me saudi arabia has the infrastructure and ability to handle millions of people at the same time. thererious as to whether is any justification for saudi arabia not taking on any of the obligation? it is the sunni shia divide. europe, it isat historically christian but europe is welcoming people of the muslim faith, which is a wonderful thing.
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why can't the other folks in the gulf step up? >> because they are all sitting on powder cakes. own domestic politics. apart from saudi arabia, which is a big country. the other goal states have tiny populations. 75% of the population composed of immigrants. hundreds of thousands of syrians live and work in the gulf states. many middle-class and wealthy syrians have fled from syria to do by. abu dhabi. other places in the gulf. they are not there as refugees, rightmeans they lack the andut they are living working as syrians and the gulf states.
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are of the gulf states signatories to the refugee convention, they do not have a refugee laws. there is no legal status of refugee in those states, which is not excusing them. but explaining what the situation is. lots of syrians in the gulf. they are not there as refugees. the call to account is much more on fueling the conflicts than not taking refugees. add, you'd be surprised how little people want to go to these countries. i have served in the arab world. these rich arab countries are unpopular among the others. whether it is correct or not, i am not to judge. there is a general feeling once they are in saudi arabia, they ed as second orn
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third class. majority of syrians would say, i would rather go to europe. crocs let's go to the lady in the back and read and then we will come back to you. >> i wanted to go back to the question of the u.s.'s role in the european refugee crisis. i have worked in resettlement through the international rescue committee. i would like to know what we are doing to bolster resettlement programs. repair them for a potential larger surge, if we are advocating for the u.s. to take in more refugees, especially syrian refugees. as i said before, there is a strong at the city -- advocacy .ffort to take more refugees the u.s. government has upped
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the resettlement ceiling from 70,000 last year to 85,000 this fiscal year. aiming for 100,000 that year. it is still a drop in the bucket. locations are considerable. just the betting come a, reception and placement, the less thanat lasts for a year, comes to something on the order of $10,000 a person. that is partially because we make our procedures so complicated. extra 10,000 refugees, that is $100 million. serious money. there has to be a consensus and a willingness on the part of congress to appropriate those funds or other ways of dealing with this permit the canadians have a private sponsorship program in which private citizens take on the
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responsibility for supporting refugees. i would love to see that happen here. i think there's a tremendous willingness on the part of the public to do it. we have done similar things in the past. would have two really, there would have to be a serious streamline procedures, especially security. we put them through four levels. there is such a aversion and paranoia about the idea, in my view, quite silly idea, the terrorists would use this group nice channel to enter the u.s. resettlede, we have 784,000 refugees and there have been exactly three arrests for terrorism related activities. none of which came near completion. there would have to be a reform
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of the system to accommodate more people. we can do it. resettled people from vietnam. if there is a will, there was a way. there have to be resources. was aealize that it different time and circumstances. in 1957, when i was a refugee, the quota for hungarian refugees was about 3000-4000. that was filled practically in minutes in november, 1956. president eisenhower went to congress and asked for special quota of 44,000. that was approved in a few days. by a congress that is rather different than the one we now have. as a result, i was able to come here. was the cold war. the circumstances were different.
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still, this is a different america. that is my response to your question. >> the lady here has been patient. i want to thank the panel for elucidating this intricate problem. complex. if we could have each person on the panel say something about what you mentioned. center tof the wilson bring forth actionable ideas. suggested we try to end the war in syria. another person gave a comment about the willful and ability have to do long-range planning. notwithstanding, -- >> that is a superb question with which to end the panel and take one final round of questions.
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that would give you time to interact with the panel individually. i think that is an excellent question. the george w. bush presidential library to smu where i teach. president bush said he wanted not a think tank but an action tank to read wants action. let's come up with ideas and put them into action. we can make bad jokes about this , but what are we going to do? what are the europeans going to do? the dublin system is broken. it has not worked for decades. is the new policy going to look like? if you were asked to design it for the commission can build a consensus, what would it be? >> that is a different question. that europe should try to sit down and develop an
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asylum and refugee welcoming policy that is equally distributed according to some parameters that have to be developed. at the end of the day, the refugees would not have the right to decide in which countries your she is going to be -- countries they are going to reside. at the end of the day, every refugee could be sure even if he sent to estonia or portugal, he would have a decent living any circumstances. to have such great a general policy. we are far from that, unfortunately. it will not be imminent. policy that could cope with crisis like we are , hasg >> my answer is
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little to do with the immediate issue at hand. in the longer run, it is essential for the european union to work out procedures to penalize members were not cooperative and to go far away from the central purposes and standards and spirit of the european union. such measures come on out only that they don't exist but those that do exist could not be applied. if you penalize austria and they tried to do 15 years ago, every other country in the union will believe if they vote for that next time around, they could get the bad treatment. same with hungry. it is a member of the epp group.
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therefore, it is impossible short of expelling the countries to apply any serious measures. this way, the european union, i believe, will face more and more difficulties unless it changes this which is not going to be easy. >> you want to get in on this? >> yes. as far as actionable ideas, i think the coast guard will continue to do what we do well. subject matter expert exchanges on search and rescue. boarding officer training. how to do things safely. areas such as evidence and investigative techniques. we are working with department of homeland security agencies and some of our european counterparts, doing that. with the we partner armed forces of malta.
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the search-and-rescue training center. on bringingself neighboring countries in for a one-month coordinating class. i have taught in this school. we have had all jerry and and tunisian officers in class for a month. they are learning how to properly execute search and rescue operations. that is half of a read the other half, socialization outside of the classroom. getting to know your neighbors. the international maritime organization's search-and-rescue system encourages collaborative agreements with neighboring countries so it will lead to a more effective and timely search-and-rescue response. i would say continuing to do the things we do well, search and rescue, maritime law enforcement at sea, working >> that is definitely actionable and something that the u.s. can
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contribute to in a concrete way. it is one of the few bright spots. that cooperation has brought down the death rates. and saved hundreds and thousands of people. i am trying to think about how to breathe brief on this because the migration policy institute .as a program we are investigating things like legal channels for mobility for refugees and other forced migrants. it is not so easy to draw lines between refugees and migrants as the legal categories implied. opening opportunity through labeled market -- through labor market channels. and creating opportunities in countries of first asylum in countries of destination. using technology is something we really are way behind on. there is a great deal more i believe that could be done.
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to af refugees have access mobile phone. and 40% to a smart phone. that is one of the real transformations of this whole flow and we should be able to use that technology and more productive ways. more generous attitudes towards family regenerate -- reunification's. it is a key to successful integration of refugees and migrants. and drawing in diaspora communities where people already have ties and have established ismselves as an important -- an important aspect of that. private sponsorship. it is important to develop a long-term prospect of this. get away from this exclusively emergency response. when things call down a little bit, we have to put that aside and not plan for the next crisis. we need global solidarity in
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this decision, it is not just a european problem. the united states needs to step up to the plate but so does brazil and thailand and so do other countries around the world need to be part of a comprehensive way of dealing with these global crises. and finally, it is really important to bring in the private sector which is a lot better at channeling flows and logistics and employment and all of these issues. a lot better than governments are in dealing with these. private sector and civil society need to be brought into that global compact. and go to migration >> it is safe to say that we have had a very enhanced and enlightened discussion that all of you that have, have learned to something from. hopefully, you will take this
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back to your workplace and think about this. let us keep solidarity with the europeans and our middle eastern friends who are coping with these crises. alive would bee the way i would put it. let us think that analyst. [applause] think -- thank the panelist. >> have announced they will be shutting down. the health panel investigates the closures next. patrick leahy and republican senator of utah discussed bipartisanship. later, a conversation on the refugees coming into europe from syria. >> the u.s. house has approved a multiyear highway funding bill. on the next washington journal,
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joe that we talked about transportation funding and the legislation. champion willhess discuss the u.s.-russian relationships and his recent book, winter is coming. why vladimir putin and enemies of the free world must be stopped. the bureau of labor statistics on the october employment numbers. washington journal is live every morning at 7:00 a.m. eastern. you can join the conversation by phone, and on facebook and on twitter. every weekend, the c-span network features programs on politics, nonfiction books, american history. at the nation commemorates veterans day, saturday starting at 11:00 a.m., american history will be live from the national world war ii museum in new orleans as we look back 70 years of the war's and its legacy. we will tour the museum exhibits
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and take your calls and tweets. starting this week and every sunday morning at 10:00 a.m., our new program, road to the white house rewind, take a look at past presidential campaigns through archival footage. this is a, we will take a look at ronald reagan's campaign. and on c-span, saturday night at 8:30 p.m. the free -- steamboat debates. sunday evening at 6:30 p.m., our road to the white house coverage continues with former maryland governor and democratic residential candidate martin o'malley who will speak at a town hall meeting at the university of new hampshire in durham. on saturday afternoon at c-span2 starting up for a clutch p.m., it is the boston book festival featuring nonfiction author presentations including jessica stern on ice and -- on isis. and james would and his book,
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the nearest thing to life on the connections between fictional writing and life. one sunday night at 11:00 p.m., a book discussion on ann romney and her book, in this together about her journey with ms. get our complete weekend schedule on more than half of the nonprofit health insurance company's under the affordable care act have failed financially. dr. mandy: with the centers of medicaid services in several state insurance officials testified at a house subcommittee meeting. >> good morning. start -- mittee will
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the subcommittee convened this hearing to examine another obamacare failure. the plans or collapse. an experimental program that awarded loans. of the 23 that sold health insurance plans, 12 have failed to date. 1.2 $3o-ops represent billion in federal taxpayer money. since co-ops must pay an outstanding -- any outstanding debts or reapplication's, it is unlikely the federal government will ever recover these funds. originally intended to increase choice, they are flawed and financial risky from the start. predicteds 2011, hhs these loans would go unpaid. would --
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the following year, hhs report expressed concern about the co-op financial stability and the ability to repay loans. even staunchest supporters of the affordable care act predicted the co-op programs would fail. senator rockefeller wrote -- there has been knows he never get research into consumer co-ops. what we do know is that this motto was tried in the early part of the 20th century and largely failed. the senator also called co-ops a dying business model for health insurance. widespreadse it concerns, cm is aware to $2.4 billion in federal loans to 23 co-ops operating in 22 states. this total does not include the co-op that failed before it enrolled a single person. a co-op in vermont was awarded over 30 million taxpayer dollars. from a state insurance commissioner denied the co-op a license calling its application fatally flawed. the federal funds that had
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already been spent to establish this -- vermont's co-op were never recovered. was axt co-op that failed co-op operating in iowa and nebraska. at first it seemed to be a success. it enrolled over 120,000 individuals which amounted to 1/5 of the enrollees nationally. the premiums were too low. it was concerned about its ability to pay claims to some -- upon liquidation it had operating losses of over $163 million. we are grateful today that we will be joined later by senator ben sasse who had to do a vote on the senate side. he will be here to talk about the programs and nebraska. awardednd of 2014, cms $315 million in last-minute loans to bolster six co-ops. of those, three have closed. it is doubtful cms will recover
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any of those additional funds. several factors have caused this failure. low enrollment. premiums were too low. audit issued found -- incurred them of net losses. low enrollment and net losses would limit the mobile -- the ability of some to repay loans. ensures ended up with 12.6% of the payments they were anticipating. given their abysmal financial the risk corridor intended toalways be budget neutral. only what was paid into the program would be paid out. in early 2014, a spokesman from cms confirmed that a policy
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modeled on the risk corridor or, which was supported on a bipartisan basis, it was intended to intimate as designed. we are here today to hear what went wrong. we will hear from individuals on the ground and state regulators. we will hear from individuals who established co-ops to keep them afloat. we will hear from auditors of the co-ops. it was because the financial challenges. we will hear from cms about what went wrong and how we can fix it. the goal of recovering taxpayer dollars to the co-ops. i would thank all the witnesses testifying today. now, magically appearing, the ranking member. >> i'm sorry that this important hearing has been impacted by the vote today.
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because it is an important hearing. from day one, i worked with the state of colorado and the administration to help our co-op succeed. across the country, the co-op has provided consumer coverage options and have injected competition into the health insurance market. yet a number of co-ops are facing financial challenges, and unfortunately they will not be able to compete in the 2016 marketplace. we've all seen announcements in the last two weeks about co-ops closing their doors, including the one in my home state of colorado. i am very disappointed about it being shut down. it faced challenges, but it also served a critical need for 80,000 coloradans. it was on its way to fiscal
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stability. something equally to blame is us, congress. i believe that congress has not worked as a partner to support the emerging co-op market that is attempting to bring more competition and choices to a market frequently dominated by one or two insurers. i do wish we had saved the co-op in colorado. but we cannot do that, i hope we would use our time productively today to make sure the remaining co-ops are successful. unfortunately, i know better than that. i know that in hearing the subcommittee title with obamacare in the title, it will
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not be a productive endeavor. we will not spend the next several hours learning from the experts about the challenges will begin to improve them, we could be doing meaningful oversight. instead of taking 61 votes to abolish the affordable care act. and instead, my colleagues on the other side of the aisle prefer to sit on the sidelines and root for the law to fail. congress has squandered the last five years by celebrity every in the road as we -- some of my colleagues admitted harder for constituents to access care. the aca is far from perfect. but these bumps in the road should move the ball forward. if we can do that, we will work together to improve coverage for millions of americans. in his op-ed, the senator, i guess he will testify, he said last weekend, "this is not about spreadsheets, it is about people." i cannot agree more.
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it is about people before the aca faced skyrocketing costs. it was about people at the mercy of the insurance health insurance companies could raise rates or deny coverage for arbitrary reasons to protect profits. people who feared that uninspected medical costs would bankrupt them, but thanks to the affordable care act, they do have to face these uncertainties anymore. americans are no longer one accident or illness away from financial ruin. our constituents should be able to depend on congress to work productively in a bipartisan manner to improve the health care landscape in this country. that is what i hope to do today. i'm going to use my time to hear from the experts before us about how we can make the remaining co-op succeed. frankly, as i said earlier, i have some hard questions for
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cms. i want to know what went wrong with the risk mitigation mechanism that were designed to promote competition and ensure stability in the insurance marketplace. i want answers about how the co-ops wound up owing money to the big insurance companies through risk adjustment programs. i want to understand why cms over the summer said risk corridor or payments would be sufficient. lesson three months later, they revealed they would only be up to pay 13% of the requested amounts. in short, i want to know whether cms is thinking outside the box. coming up with a path forward to support competitive ingredients. thanks to all of our witnesses for coming today. thanks for waiting while we went to vote. i think we will wait again -- you will be waiting again while we go back to vote. but your expertise will improve the law and the lives of our constituents. and i hope the members on both sides of the aisle have come ready to hear your ideas. so we can finally have a productive hearing on the affordable care act.
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i yield back. >> mr. mckinley is recognized for five minutes. mr. mckinley: i agree with a lady from colorado that this is about people. the failure these co-ops have had real-life consequences. the collapse of the west virginia kentucky co-op leaves 56,000 policyholders searching for coverage before the close of the enrollment period. seven years ago, coal industry was booming. but now fast-forward to 2015, the employment rate is the fifth -- the worst in the nation. 45% of coal miners have lost their jobs. and thousands more affiliated with the coal industry have lost their paychecks. these individuals and their families are hurting. they found a peace of mind in knowing their health care was
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secure. unfortunately, the comfort and not last long. families enrolled in the west virginia and kentucky co-op had the rug jerked out from under them, because the cms did not do its job. address the red flags that were raised after the iowa, nebraska co-op failed. instead of hitting because -- instead of hitting the -- pause button they awarded $50 million in additional funding. 12 of the 24 co-ops have already failed. this year, i didn't ask, who will be responsible for the medical costs incurred? who will pick those up? will cms give much ability to families? what about, with only one statewide exchange available in west virginia, one statewide
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exchange -- senator this will now result in families paying 120% higher premiums than they were the last year. is that fair? this issue is not just about another failed obamacare program costing taxpayers in excess of billions of dollars. it is an opportunity for us in this room and in congress to express our compassion and empathy for the hard-working families that have lost their sense of security. i look forward to the presentation today. i yield back the balance of my time. >> dr. burgess will take the rest of the time. dr. burgess: thank you for the recognition. i think it is important we have this hearing today. there is a lot of policy in the affordable care act. a lot of it was bad. and the co-op program was no exception. it has wasted millions of dollars, suffer from a lack of oversight, and created instability for millions.
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it was unsound from the start, another example of the administration's desire to conduct dangerous experience with health care. let us not forget that the ultimate protection is the insurance that their health care will not evaporate into the night believing them without the coverage on which they rely. at last count, 12 had shut down. the rate of failure continues to accelerate. in fact, the subcommittee staff struggles to finalize materials for this hearing because co-ops were failing and announcing failures faster than they can finalize the memorandum. we will hear from witnesses today through the center for medicaid and medicare services. they continue to stand in the way of sustainability. so we should not stand by as
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more and more dollars are lost. and more are invested in failed experiments, and millions remain at risk of losing their insurance as coverage for co-ops close and continue to close their doors. thank you mr. chairman. i yield. >> thank you. i want to thank our witnesses, especially i want to thank the commissioner from tennessee for joining. we are fortunate to have you in our state. and we are fortunate to have your guidance, and we look forward to what you will tell us about the failed co-op that we have had in our state. we also appreciate cms taking the time to be here today. there are answers that we need as we conduct our oversight and due diligence on the system. mr. chairman, i yield the time back to you. >> i now recognize mr. polone for five minutes. mr. polone: we dramatically
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changed the health care landscape in this country. the law has been a historic success, with access to comprehensive health care in reality for the american people. before the affordable care act was passed, the insurance system in this country was broken. it was a system with rapidly rising costs, gross inefficiencies, and painful inequalities. a headline in february 2010, month before the law was passed, declared that soaring premiums were unsustainable. up to 129 million americans could be discriminated against for pre-existing medical conditions. many plans lacked important benefits. these are no longer true. people who were previously deemed uninsurable because of a pre-existing condition are finally getting coverage. today, insurers cannot cancel a
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policy because someone comes ill. women are no longer discriminate against. the co-op fill a critical role in this new post-aca world. they put choice in the consumers' hand. they foster competition in the market place by bringing down prices. they do exactly what we had in mind when we passed the law. today's hearing should be an opportunity to examine how we can ensure the remaining co-ops succeed. we should be talking about how to infuse competition to bring premiums down. we should be figuring out ways to make sure our constituents have access to affordable health care. this committee has had dozens of hearings since it was passed into law. they have only one purpose -- to undermine the aca, regardless of how many people it is actually helping.
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they highlight the flaws in the program. i look forward to having a hearing where we can applaud. we should be taking the opportunity to do valuable oversight. the aca oversight has neither served to enlighten or improve the law. it is on the opposite. in short, it is credibly frustrating your republicans criticize the law without offering productive ways to improve it and get better health care to those who need it. with over 60 votes to repeal are undermining, the record is clear that most in the majority would rather root for failure. many of my colleagues on the other side of the aisle lament that in the closing of the co-op, many beneficiaries will now have to find new policies. my republican colleagues are crying. mr. burgess in texas, why don't you get the governor and the state legislature to expand medicaid?
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that might help a lot of people. or ms. blackburn, although she did not bring it up today, i usually hear about. the fact of the matter is people that signed up for the co-ops today had no insurance prior to their existence. where are the voices of concern when people cannot afford insurance or were uninsurable? because the child had a pre-existing condition? it is time to have a productive conversation about how to improve the lives of our constituents. let us get to the place where he can work together to improve the law. i yield back. >> the gentleman yields back. we will get your testimony, if you do not need the full five minutes, you do not have to use it. we will come back and ask questions. when so doing, there is a practice of taking testimony under oath, do any of you have any objections? you all answered no. the chairman advises you that you are entitled to be advised
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by counsel. do any of you seek counsel today? you desire to be advised? would you identify yourself? will they be testifying? ok, thank you. anybody else have counsel? ok. i will swear you in. you are now under oath of the u.s. code. we'll start with the insurance commissioner from tennessee. you may get a five-minute summary of your statement. >> good morning, chairman murphy. representative blackburn and numbers of the committee. thank you for inviting me to testify. i'm the commissioner of the tennessee department of insurance. in addition to my
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responsibilities in tennessee, i serve in leadership roles on the national association of insurance commissioners. and as a member of the federal advisory committee. i spent most of my career in insurance regulation, previously serving in kentucky. i have a strong affinity for the state-based oversight. my testimony today will highlight the history of tennessee co-ops. my comments will focus on events this year that ultimately led to cha on october 14. they were awarded loans and advances to launch the company. cha first offered plans in 2014 with plans and five of disease eight service areas -- of tennessee's eighth service areas. having limited network options,
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the company memberships and rate challenges were compounded by a population that was less healthy and sought more services. the loss was $22 million in 2015. enrollment grew financially, during open enrollment. and are the same period, medical costs continued to increase. the department and cha quickly recognized that it was too much too fast. see our departmental letter, exhibit 1, on january 8. requesting an enrollment freeze due to accompany triggering the hazardous financial condition standard. it was and remains the right decision for the company, and most importantly for tennessee consumers. in 2015, the department conducted a thorough review of the proposed 2016 rates. after the review, the department
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approved a rate increase. we peaked down to 25,000 lives, where there remain today. we approved the rates to meet the deadline. but we were not going to formally unfreeze the company until the reviewed initial results to evaluating expenses, and liabilities. in late september, the department was provided -- i think you have that as exhibit 2. that announcement was followed by risk corridor guidance. the announcement created a deficiency for cha. cha asked the department if they
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start loan could be counted as surplus if the loan terms were changed to be identical to the terms of a solvency contribution. the department did not think that option was appropriate but told cha, exhibit 3, that statutory principles would because five as surplus if they bilaterally agreed to the terms. after a review of the department, cms concluded the loan conversion was not proven. they voluntarily entered one in october. the department of commerce and contractors are working in close cooperation to ensure successful runoff. our focus is on tennesseans. the runoff will continue well into 2016. there may be additional surprises. but as of today, cooperation between the entities has helped us have a smooth operation. thank you, and i look forward to your questions. >> i now recognize mr. donaldson, the commissioner from
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louisiana. >> thank you very much. >> please put the microphone on and put it right up to your face. >> maybe i should put it on. >> put it up to your face. >> thank you mr. chairman for the invitation and the opportunity to be here today to speak briefly about our experience in louisiana with the creation and now the demise of our co-op. let me start at the outset by telling you about myself, and if -- emphasizing the point that i am here on the half of the state of louisiana and not as a representative with the national association of commissioners. though i am an active participant having served the president in 2013. i have been chairman in louisiana since 2006. recently, i was reelected for the third time last month,
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beginning my next four-year term as we speak. the creation of the louisiana health cooperative, along with co-ops in 23 states around the u.s., was a welcome part from my perspective. although i have said repeatedly throughout my time as commissioner that if i had been here, i would have voted no for final passage on the affordable care act for other concerns. but not for the opposition to the creation of co-ops. i saw that as a mechanism to address competition, which i believe is the most important aspect of consumer protection in my state. where my top insurer, blue cross, has 70% of the market. my friends next door in mississippi have a more dominant blue them that. alabama is even more dominant. that is the well-intentioned purpose of the creation of these co-ops.
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to put consumers in control of an insurer and also to create more competition in our states. i welcome them at the outset. having said that, i'm now described the effort --describing the effort to create insurance as the rollout of the aca. in hindsight, i have analogized it being similar to learning how to sail in a hurricane, it truly was not possible in my judgment to succeed under those circumstances. much happened in my state that affected that. we licensed our co-op in april of 2013, and then began signing up enrollees in accordance with the loan agreement with cms in october of 2013. that loan agreement called for them to sign up 28,000 lives. they ended up with 9000 lives instead.
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in the several months between their approval and beginning of their doing business, they had the challenges of the issues presented by guarantee issue, no lifetime limits, age caps, etc. not to mention the need for them to go out and rent a network of providers in a not very friendly to purchaser of service environment. they had a higher someone to do claims, the premium collection and payments on. they had to build a marketing network. of agents all of that in a hindsight market that was not functional. the next challenge came on june 30 with the rollout of transitional reinsurance program numbers, and the risk adjustment program numbers. and where the co-op would
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receive $10 million under the reinsurance payment, it would 07 --it would 07 $.5 million $7.5 million under the readjustment. that represented a $5 million hit to the bottom line and triggered our calling them in on july 1, the leadership of our co-op, to tell them they should actually make the decision to go into runoff before the enrollment period began. on july 7, their board voted to accommodate that request from our folks. and it began doing that. the situation is dire, and we are doing everything we can to preserve the network of providers to make sure their policyholders will continue to have coverage through the end of 2015. now state regulators have the unenviable task, as i have had, of trying to wind down a company, at the same time
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conserving it -- in my state, unlike tennessee -- without the protection of the guaranty fund to assure the health care providers that their bills would be paid. let me talk for a few minutes about our relationship -- >> we do not have the minutes. you're out of time. here's the thing, we have one vote. we also have staff -- is he? >> mr. chairman, the problem is there down to two or three minutes. i don't think they will hold open for us. with all due respect, i will invite my members to go down and vote. unless someone wants to -- be very quick. come back as quickly as possible. we should be up to reconvene in about 10 minutes. thank you.
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>> we are joined by senator ben sasse, who taught mr. fortenberry everything he knows. do make sure you turn your microphone on. senator you are recognized for five minutes. senator sasse: thank you for inviting me to testify today. i appreciate the opportunity to think about how we should respond to the failure of co-ops in 13 states. i'm tempted to joke that two co-ops have failed while you were off voting. it is a problem.
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before we dive into the details, i suggest we take our partisan hats off. i'm a fierce opponent of the aca. i know many of you might be strong supporters of the aca. but that is not what you're hearing is about today. this is about getting to the bottom of what is actually going on, why so many of our neighbors are losing their health care coverage. the tumultuous failure of the co-op began in my own backyard. it began with co-opportunity. i want to speak to two issues. first, while there is much we need to understand, we would suggest a systematic failure of the co-op program. and an even greater bureaucratic incompetence. the lack of transparency is harmful. in the department of health and
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human services owns the american public answers. our constituents deserve nothing less than a full accounting of what is happened. the co-op program was included in the aca to purportedly foster competition by federally funding the startup of 23 nonprofit health insurers. to get them off the ground, taxpayers loaned them $2.4 billion. after less than two years, the program has a failure rate of over 50%. the first failure, headquartered in iowa but majority of subscribers in nebraska, was arguably the messiest because members of the program lost their health plan in the middle of a plan year. co-opportunity have bee awarded millions of loans.
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in a garnered 10 times the number of enrollees and was seemingly successful. despite ample funding and obviously far more enrollees, on december 16, 2014 -- a month into the new season, by january 23, the iowa insurance commissioner deemed it impossible and sought liquidation. after just one year from the new not-for-profit insurer abruptly collapsed. this was a terrible midyear shock. these people were forced out of their plans and had to go through the grueling process of signing up on all over again. so why did co-opportunity failed? curiously, nine months later, we do not have any answers. sadly, the messy demise was just
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the first of the dominoes to fall. now a total of 12 co-ops will be closed by the end of the year. these 12 were awarded more than $12.1 billion in loans and had more than half a million enrollees. another failure is health republic of new york -- the largest in the nation. it received more in taxpayer loans than anyone. in late september, the announced they would be ceasing operations at the end of the year, but just last friday, the state health insurance regulatory body revealed the situation was actually much worse than have been understood. a review conducted in conjunction with cms now finds the previously reported findings were not an accurate representation of health republic's financial condition. the co-op is planning to close down as fast as possible, instead of being in business until the end of the year.
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that means that more than 200,000 enrollees in help her public will have to pick a new insurer and plan to maintain, as well as planning for next year. the new coverage, which they now have to sign up for, will be expiring at the end of the next month. and they will have to begin the process all over again of trying to find a health insurer. it is eerily similar to what happened to nebraskans and iowans. with inaccurate filings on the new york co-op and with more than $1 billion in taxpayer loans out the door, there are more questions than ever regarding the co-op program at large. and if those that are responsible for regulating it knew what they were doing. i do believe it is essential that we answer some basic
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questions and all of us should be demanding that. cms awarded additional solvency loans to co-opportunity and health republic new york. doubling down on the initial misjudgment by awarding additional loans, how to decide to make these loans? did they have any expectation they would be paid back or were they only going to be used to pay immediate claims. they were operating at substantial losses, one analysis measure the difference between the silver plan premium for a 27-year-old to the corresponding insurance market for all other carriers. co-opportunity in nebraska and health republic in new york and in kentucky they were pricing their products more than 20% below competitors. how could this be possible?
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should they have given more taxpayer numbers given the anomalies of the model? moreover, have yet to address if and when taxpayers will be repaid for the loans that have closed. these are the types of questions that we should be providing to the american people through congress. why are they not? the lack of transparency thus far has been terribly disappointing. i started asking questions right after co-opportunity failed, without receiving a response to my question, i asked more when a second co-op failed in louisiana. by the time eight more had gone under, i elevated my answer. these are not partisan questions. i elevated my questions by pledging we would oppose the fast tracking of all nominations for the senate. since that announcement less than three weeks ago, four more co-ops have closed.
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still, we do not hear from hhs. consumers of faith the disruption and the taxpayers that footed the bill deserve answers. cms needs to provide a complete accounting of what is going wrong, and i hope that starts today with your important hearing. thank you for the invitation. >> i thank you, senator. i think he will head back to the senate. we do appreciate your insight and persistence on this. we want to continue to work with you. >> let me just add, you do not hear my opening statement, i said the same thing as you did. this should not be a partisan issue. we need to figure out what is going on with the co-ops closing. [inaudible] >> thank you. we will now continue with the panel, next up is dr. peter.
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your recognized for 5 minutes. >> thank you for inviting me to testify today. as the chairman said, i am president and ceo of evergreen health co-op in maryland. i also serve, as to all of the ceos, is a board member for the national alliance of state health cooperative. and i appreciate the opportunity to appear before you today. as several of you have said, while many of the elements of the aca have engendered significant partisan disagreement, the notion of establishing local consumer driven and innovative options, while enhancing competition in the marketplace, should be appealing across the ideological spectrum. the question we now confront with remaining 11 co-ops, how can they succeed and how can taxpayer investment be
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preserved? unlike the difficulties experienced by many others in their first two years, evergreen health in maryland is strong, due to our quick and nimble response. going into the current open enrollment, started a few days ago, we have a healthier than average population due to a diversified business. we have $35 million in assets. we have solvency inadequacy of 30%, and we have been turning a profit. our strong relationship with governor larry hogan and his staff continues to provide us with significant support. evergreen, like all others, takes very seriously our obligation to pay back the loans granted to us by the federal government. however, regulations developed by cms at their discretion, not as required by provisions of the aca, are significantly impeding the ability of the remaining co-ops to successfully innovate
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and compete with a few carriers left on each state's respective markets. i would like to highlight three solutions that can forge a successful path forward. these do not require an act of congress, they do not require additional appropriations by the congress. first, as the co-op successfully market themselves and capture large enrollment, they would need additional solvency dollars to continue to meet state regulatory requirements. however, as you know, cms has no additional funds to assist. the solution to this issue is to allow individual co-ops to raise capital. in fact, as you may remember, the ability to obtain private capital in section 1322 was one of the measures by which the original applications were judged. cms should amend the loan agreements to allow for its
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ability in raising capital because the restrictions on obtaining additional capital are not required under the aca section 1322. second, risk adjustment creates additional issues and formal is applied by cms are skewed due the benefit of pre-existing insurers with administrative ability and years of claims data. the solution? cms must revise it to create a level playing field. third and finally, the risk corridor payments. a swift resolution to the current funding deficit for the program will go a long way to improving the balance sheets and long-term outlook. finally, we at evergreen health look at both sides of the aisle to recognize that the nonprofit member governed co-ops are trying to forge a new path to give consumers increased choice in their coverage.
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this competition has had demonstrable effects. the co-ops have brought innovative approaches. for example, evergreen health offers a value-based product for diabetics in maryland. which removes virtually all financial barriers, co-pays, and deductibles to services, medications, and care that is needed to keep a diabetic patient from developing a disease. in conclusion, i share the concern protecting the initial investment. the solutions i propose today do not entail an act of congress or any additional appropriations. a simply require cms, the congress, and the co-ops to work together to make sure the remaining 11 co-ops are preserved and taxpayer dollars preserved, as well. thank you very much. >> now we will hear from john, the vice chairman in montana.
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john: ranking members, neighbors of the subcommittee, thank you for inviting me to testify. my name is john morrison. i was montana's insurance commissioner. i'm the founder and past president of the montana health club. co-ops into the marketplace in 2014 and are now providing coverage to a million americans. they are brought much-needed competition to the marketplaces, giving consumers more choices and introducing innovations. montana, where i live, as a co-op. wyoming does not. in 2013, montana's average premium was 18% lower than wyoming. in 2015, with the montana health co-op, based on the second lowest tiered plan, montana is now 40% lower. in 2015, among states, the delta
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was about 13%. and over $500 per person for the year, based on the roughly 3.7 million americans and rolled co-op states in 2015, consumers in the states have already saved more than the total cost of the co-op program. moreover, when rates are lower, subsidy cost to the federal government are lower. taxpayers have already saved at least hundreds of millions in subsidies and would have saved billions of the decade ahead. one study published projected that if co-ops kept rates down by just 2.5%, the savings over the next five years would be $17 billion. so the question is not how much their cost the taxpayer. the better question, how much have the co-ops cost the
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consumer and the taxpayer for years to come? this question should be studied carefully. so i think you are holding this hearing today. senator kent conrad said the long knives came out to kill the co-ops in their cribs. we need to get to the bottom of this and find out who killed these co-ops and how much americans will pay for that mistake. i got involved in the co-op project at the request of others, because it believed co-ops can break the inflationary spiral in our system. in my opinion, the following conduct of congress and the administration has contributed significant. one, the $6 billion in capitalization grants were changed to loans. two, they were prohibited to market. three, in 2011 when dozens of groups began meeting to turn them into a nation right reality, congress slashed funding from $6 billion to $3.4
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billion. four, omb directed caps to prevent co-ops from achieving 5% market share. five, in late 2012, 24 co-ops and signed loan agreements and more than 40 additional groups were awaiting review. congress responded by rescinding the main lending authority and prohibiting cms from operating. although co-ops and not yet opened doors, congressional committees attack them and tied them up with excessive document demands. seven, requirements were more than twice as high as other insurers. eight, they were allowed to degrade the marketplace pool. nine, were prohibited to access private capital.
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10, in year one, co-ops were primitive from a limiting enrollment. 11, many co-ops were forced to pay risk adjustment to existing carriers without consideration of the effect of early renewals or the co-op solvency requirement. 12, recently, congress reneged on the risk corridor. paying $.13 on the dollar. americans will pay more because these co-ops are closing. there are 11 co-ops remaining in 13 states. in my written statement, i make recommendations for measures that should be taken to maximize the chance for long-term survival. i hope we can discuss some of these options today. thank you, i look forward to your questions. >> let me start was in questions. many factors contributed to the failure of the co-ops.
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lower than higher expected enrollments, restrictions on investors, risk adjustment formulas, lots of those. let me start off. what are the top reasons the co-op failed in your state? >> thank you for your question. our co-op had challenges from inception, in that as the commissioner mentioned, going into a state without provider networks cause the company to have to lease those. there were administrative costs that were new to the startup, that any startup would have. but in 2014, we had disastrously low enrollment. truly, at most 1000 people signed up for the co-op plan. mostly because the rates were somewhat higher than the leader and the well-established companies in tennessee. overcoming those challenges
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became extremely difficult. and is why we saw significant rate increases for 2015 and beyond because of the enrollees across the market intimacy, we -- across the market in tennessee, we had higher-than-expected utilization, i claims costs, and insufficient premiums. >> did they lose money with a lower cost of the premiums? >> yes, every plan on exchange lost. >> nationwide, a bid to get enrollees, they had to underbid. and we found out how many of them realized to make up for the losses by charging more. some survive, some did not. >> we did not have any copy accurately project the claims cost that were going to be coming from these enhanced if it plans that were sold in the state mandated affordable care act. some of our larger established companies could withstand losses and offer plans. but the co-op did not have the
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resources available. >> thank you. what would you say are the top reasons that 12 out of 23 failed? internal problems, too. not just external. >> i don't know specifically what happened with the other groups. although the risk corridor was clearly an issue, there were surprising payments and vice versa. >> mr. morrison? mr. morrison: i don't mean to suggest that there were no mistakes made in management and co-ops. but if you look across the marketplace, what you see is that this is a very competitive marketplace. and insurance companies all priced aggressively. everybody lost money. the difference was that the co-ops were new, they do not have other business and surplus to offset the losses.
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and their capital was continuously reduced and capped. so sailing in a hurricane is accurate. we were prohibited from building a big boat. >> given that roll up, we heard it was the website. not a lot that was clearly rolled out. it was pushed out, more like it. with the web enrollment, what we found out, would you say it was not ready? more foresight should have gone into setting up for the co-ops were drawn into the hurricane? mr. morrison: to my knowledge, there's never been a situation where 22 new health insurance companies entered the health insurance market across the country in the same year, two years after they chartered their business.
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and so that was certainly a challenging situation. but it was much more challenging and indeed fatal for some, because it did not have adequate capital to deal with the risks they were put into. >> mr. donaldson, can you comment on that, too? microphone. mr. donaldson: thank you for the chairman's question. my situation was worse. we were one of the last thoughts the time frame from licensing in was soelling and october constrained, building our company was quite a challenge. i was initially very encouraged because the group that got approval from cms for co-op loans and from us for licensing was closely associated with our optional health plan back in new orleans. a maybe 100-year-old hospital


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