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tv   Insurance Commissioners Testify on Health Care Market Stabilization  CSPAN  September 9, 2017 1:25pm-4:21pm EDT

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eastern, the- 45 9/11 commemoration at the flight 93 national memorial. watch it live on the c-span networks, online at c-span.org, and listen live with the free c-span radio app. hearing on a social security disability benefits and claims processing. panelist examined the claims assess and gave recommendations for how to improve and ultimately catch up with a backlog for those applying for benefits. this is held by house ways and means subcommittee, this is three hours. >> will please come to order.
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we are holding our first hearing on stabilizing premiums and ensuring access to into intervals health insurance market for 2018. we have five state insurance commissioners. thank you for coming from long distances to be with us to give your testimony on how to help the 18 million americans in individual insurance market. manyve an idea of how people are interested in this, we invited senators who were not on our committee, which is about a quarter of the senate on this committee to come to a coffee with commissioners that we have completed for an hour and 31 senators were there. that is a remarkable level of we will have an opening statement and we will introduce the five witnesses. ask questionskend
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in five-minute rounds. this committee includes 23 united states senators. it includes senators with the whitest diversions of abuse. it has a republican majority of only one. working together during the last two years, we have been able to agree on big steps, big issues, about which we have a differences of opinion. as fixing no child left behind, which president obama called a christmas miracle, 21st century cares. the majority leader said was the legislation that passed congress last year. the first overhaul of mental health laws in a decade. in early august after two years of work, i want to thank the staff for that two years of work, and we passed new laws to get safe drugs into medicine cabinets and prided funding for
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the fda. i congratulate senator murray and democratic as well as republican members of the committee for those accomplishments. the united way states expects the senate to work. those were big and this hearing is about taking one small step, a small step on a big issue that has been locked in partisan stalemate for seven years, health insurance. it is a step conga's needs to take by the end of this month. . by the end of this month. to the 18 million americans, songwriters and self-employed farmers, those that don't get -- congress needs to take by the end of the month. to the 18 million americans, songwriters and self-employed farmers, those that don't get their health insurance from the government or on-the-job committee's 18 million by their
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health insurance in the individual market and about half of them have zero government support to help buy that insurance. 18 million is only 6% of those who have health insurance in america. so that's the individual market. nearly 300 million have health insurance 18 million have the . individual market that is 6% of all of the insured and 9 million of the 18 million have no government help to buy their insurance and are the ones hurt by higher premiums and higher co-pays and deductibles. hypothetical from tennessee. a 35-year-old making 48,000 a year in lynchburg would receive no tax benefit to cover her $7,100 a year premiums. she is an estimate of take-home pay of $39,000 and zero cents after taxes, which means a fifth of her take-home hay is spent on health insurance premiums which doesn't include deductibles or co-pays. next year, department of insurance premiums are going to go up by an average of 21% to
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for herh is an average between $1,523,000 more in premiums next year. that doesn't include increases in deductibles and copayments. she ought not have to pay a fifth of the income for health insurance. tennessee's insurance commissioner, who is here today has described the state , individual market as very near collapse. at the end of september last year, blue cross, the largest insurer pulled out of the market in knoxville, nashville and memphis, not just for tennessee with affordable care act subsidies but for everybody. that could happen again at the end of the september if congress does not act. and if it happens again, up to 350,000 tennesseans and millions of americans could literally be left with zero options to buy insurance in the individual market. last year, only 4% of american counties had one insurance commissioner on the exchange.
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this year, 36% have won the one insurer on the exchange and for 2018, one half of the counties will have one insurer only on the exchange. in tennessee, it is 78 of the 95 counties. if we do act, we can limit increases in premiums next year, 2018. we can continue support for the co-pays and deductibles for many low-income families and make certain that health insurance is available in every county and lay the groundwork for future premium decreases. i would suggest we do this by taking two actions, although there may be others that come from the hearings. one, appropriate cost sharing payments through the end of 2018 to help with copayments and deductibles for many low-income americans. number two, amended the section 13321332 waiver already in the affordable care act so that states can have more flexibility to devise ways to provide
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coverage with more choices and lower cost. on the first, cost sharing payments or extra subsidies or discounts for many low-income individuals who receive premium subsidies under the law. they help these individuals pay for out-of-pocket costs like co-pays and deductibles but the overall effect is the lower premiums in this individual market. on the second, the section 1332 waivers, as i said, are already written into the affordable care act and under some circumstance they allowed allow the flexibility from certain elements of the law such as the essential health benefits but they do not in any way reduce the patient's protections most of us support. including protections for those with pre-existing conditions and ensuring those that are under 26 may remain on their parents
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'insurance and have no annual or lifetime limits. right now, 23 states have begun steps to apply for section 1332, seven states have applied and two states, alaska and hawaii , have received the waiver so far. to get the result, democrats will have to agree to something, more flexibility for states and some may be reluctant to support. and republicans will have to agree to something, additional funding for the affordable care act that some may be reluctant to support. that is called a compromise. a much smaller but similar agreement to the compromise that created this united states senate in 1789. when the founders created with o mbs om eacste d use ofepresentates space -- based on population, that was a compromise. this is a compromise that we ought to be able to accept.
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the great payments were included in both the senate and house republican bills to repeal and replace major parts of the affordable care act. these section 1332 waiver is already in the affordable care act it just has not been very appealing to the states because it is a difficult tool to use. we hope to hear more about that from the witnesses today. if we were able to take the big steps i mentioned earlier, fixing no child left behind in the 21st century we ought to be able to take this small limited , bipartisan step on health insurance, we know millions of americans will be hurt. timing is a challenge so i propose that we tried to come to a consensus by the end of next week when the hearings are complete so that congress can act on what we recommend before the end of september. otherwise we won't be able to , affect insurance rates and the availability for insurance next year. that's because the department of health and human services requires insurance companies to
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submit their final rates by september 20, and the department plans to put the rates on health -- healthcare.gov by september 27. i believe we can do this here because we have a very familiar ground. our goal is a small step in so many americans will be hurt if we fail. if we don't do it, it will not be possible for republicans for republicans to make political blaming democrats for democrats to make political hay to blaming republicans. the blame will be on every one of us, and deservedly so. we will have four hearings from state insurance commissioners today, five state governors tomorrow, various experts on state flexibility next tuesday and a variety of perspectives next including representatives thursday, from doctors, hospitals, insurers, patients and insurance commissioners.
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this is what we call a bipartisan hearing, as most of our hearings are. the senator and i have agreed on the hearings and on the topic and who the witnesses will be. the committee has a clear jurisdiction over the rules that govern the individual insurance market which is what we are , discussing today. we have jurisdiction over private insurance and exchanges created by the affordable care act and the cost-sharing reduction. the purpose of the hearings is to provide a forum and create an environment for raising the consensus we can act on quickly during the month of september. note that we do not have jurisdiction over taxes including the affordable care , act, tax credits subsidy nor over medicare or medicaid. those belong to the finance committee, although there are at least nine members of that committee on this committee. there has been such great interest in this effort that senators that are not members of
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our committee are being invited to coffee before each of the four hearings, and 31 senators came to the one today. and i haveray invited them to do that and participate in this process. my goal is to get a result on a small bipartisan and balanced stabilization bill. sense we will , work with other committees and members to get that result. it has been very bipartisan topic for a long time. but the bottom line is 18 , million americans need our help. senator murray. >> thank you very much. i hope we can stay focused on getting a result. i want to start by expressing my appreciation for your leadership in holding these hearings. it is refreshing to have an opportunity for these discussions on the whole through system and consistency as he said with long-standing tradition from working across
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the aisle in the committees are -- committees. thank you very much. i'm also very grateful to the insurance commissioners have come a long way to join us today. your perspective is incredibly valuable in the discussion and i look forward to hearing from each of you. and i particularly want to acknowledge that commissioner who came all the way from washington state today. good to have you here as well. we are beginning these conversations at an important moment for haitians and families. there is a lot of work that needs to be done to undo the damage this administration caused in the healthcare system because the administration is trying to create term care by sabotage. the healthcare system is more stable than president trump would have you believe that it's weaker than the steps that have been taken. unfortunately, the president has undermined outreach efforts and put forward executive orders , seemingly designed to inject uncertainty into the markets. just last week, this
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administration cut funding for outreach by 90% and funding for consumer assistance by over 40%. another pressing example is the threats to cut off payments to reduce coverage cost for low income people. should these out-of-pocket cost reductions be discontinued, independent analysis suggests premiums would be an average of 20% higher at year than most popular plants on the exchanges. there will be even more uncertainty in the market and patients and families will have fewer options when they go to pick their plans. that is unacceptable and it is avoidable. congress can act right away to confirm once and for all out-of-pocket reductions will continue and we will have a very narrow window to do that, as the chairman said, before insurance is finalizing the plans for 28 -- 2018 later this month. i'm very glad there are members
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on both sides of the aisle who agree we do need to take the steps and i believe it is critical we work towards the multitier solution in order to provide the kind of certainty there will have the most impact on families premiums have choices in the marketplace. it takes plans months to develop their rates. if we don't find a multitier solution, we will just be back in this room to pass the same problem a few months from now and that's simply not what , certainty looks like. this kind of discussion around strengthening the health care system is exactly what democrats hoped for over the last few years. we put forth a number of ideas that would stabilize the market and lower costs in the near term. and as i said before to work together on one to consider additional ideas from the other side of the aisle to make our health care system look better for our families and patients . but to be clear that means , moving forward not backwards on the affordable on affordability, coverage and quality of care.
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families have rejected the approach taken which would have raised families cost indicating critical protections like those with pre-existing conditions and congress should listen. willding that this data not be easy, but i do believe an agreement that protects patients and families from higher costs and uncertainty and maintains the guardrails in the system is possible. this would not only make a difference to the patients and families we serve that could provide a bipartisan foundation for future work. i said many times this didn't end when the affordable care act past. it is certainly true today. there is much more we need to do to strengthen the system to lower costs and expand coverage and improve quality of care. these are the issues we should be able to work together on in a bipartisan way. i hope with today's conversation we continue to turn the page the page away from trumpcare and partisanship that we have seen way too much of and working on
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health care for patients and families to afford. that is the goal we should be focused on. im so glad we have interest on both sides of the aisle for coming together and working to find common ground on these issues and i want to thank all of the commissioners and all of our colleagues that are joining us and turn it back over to the chairman. >> thank you senator murray. our first witnesses commissioner of tennessee's department of commerce and director of the insurance administration. isour second commissioner mike. he is a washington's eighth insurance commissioner for the state of a washington and the country's longest serving commissioner. i will ask senator murkowski to introduce the next witness.
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introduce pleasure to an individual who has been for director and alaska's director of insurance she has been in that position since 2014 and has done an exceptional job. we recognize not only her service there, but she is also indianir of the american liaisons committee and on the association of insurance commissioners she is, as you have noted, one of two states waiver, received a 1332 and it has been under the whennce of director higher. i thank her for being here but for her leadership and persistence in working at only with the obama administration but with the trump administration in getting that final signoff.
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>> i am pleased to introduce teresa miller who is pennsylvania's acting secretary secretary miller served as commissioner from 2015 through august of this year and she was nominated by governor wolf to serve as secretary of human services. in her role as insurance commissioner, she has been a person of the marketplace and demonstrating a deep understanding of the insurance industry while advocating for policies in the best interest of pennsylvanians very i congratulate her on being nominated to serve as secretary of human services and happy to welcome her to the health committee today. thank you for your testimony today. we are grateful you are here. >> our fifth witness is mr.
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doak. he is commissioner for oklahoma's department of insurance. he is well-known for health care finds state and six to answers to health care challenges. there is a lot of interest among the senators. if you could please a summarize your remarks in about five minutes, will then turn to a series of questions from senators. >> thank you. good morning, chairing -- members of the committee. i am the commissioner of the tennessee commissioner of insurance. today i plan to highlight tennessee's history with the aca and discuss immediate solutions congress can consider to stabilize the individual insurance market. before i get started, i would like to thank you for holding the hearing and inviting my state colleagues.
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in an interview last year, i characterize tennessee's insurance market is very near collapse. in the 12 months since, our market has not collapsed but it is not any more stable and probably less so. tennessee in 2017 has continued theee health carriers flee market because of tremendous uncertainty around the 20 18 year as well as year over year of substantial losses. as of today, and subject to , tennessee consumers across the state will have at least one option for coverage, only one in the clear majority of our state. we feel very fortunate tennesseans will have opportunity for coverage, i don't think many people believe that having a single choice represents ideal market competition. to summarize tennessee's experience over the last four years, our consumers have seen premium prices skyrocket while their plan choices have diminished.
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tennessee had around a dozen here -- carriers and it is reduced to only three in 2018. tennessee's current aca is not sustainable. today's hearing could not be timely as we are working for final rate filings. tennessee's carriers filed rates youreach carrier at meeting approximately 14% of their average rate increase to csr uncertainty. the csr funding issue is the single most critical issue you can address to he stabilize insurancmarket in 2018. toe clear, ts iue inot a bailout. funding eures some of theost areitable insurers that
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required to pay under federal law and has the effect of reducing proposed premium increases and has a direct from the subsidy and federal government. on the other hand, should the federal government plan to fund csr and cms works with the state, tennessee could see proposed increases for 2018 reduced. have acsr's, they should mechanism that would stop losses for individual claims at a specified amount by carriers. must be immediate it federal as it would be impossible for many states to develop such a program for 2018 plan. states should have the option and flexibility to set up their own plans to set up unique dynamics. the federal government should set up a default mechanism to stabilize markets during
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state-run run programs. following these immediate talkres, congress must about aca reforms and underline costs of health care. as the cost of health care services increase social the cost of insurance. this causal relationship is simple to understand but it is not discussed in conversations in health care reform. health insurance rate requests to review. in tennessee, the rate review process is an entirely public one. when the rate is a filed, it is open to anyone interested. rates are filed and approved that prohibits rate changes during the year and provides consumers notice before rate increase for the following year. these protections are nonexistent in the pharmaceutical and this transparency is lacking in helping with appropriate costs. these issues cannot remain unaddressed in the focus for sensibility.
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countrys around this need access to quality health insurance at affordable rates per working together, we can get back to a vibrant market where insurers look to expand rather than contract operations. congress should focus on two critical elements to make that happen, csr and insurance. congress should focus its attention on broader conversation of our nation's health and strategy while to haveering the aca unsustainable markets across the country. thank you again for your time. i look forward to answering your questions. >> thank you. >> good morning mr. chairman and ranking member and members of the committee. is mike. i am the insurance commissioner for the state of washington. i want to thank you for your bipartisan work.
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this is especially true for the individuals and families who by their own health insurance. some 330,000 people in the state and that is the canary in the coal mine. if there is a problem in the individual market, it is a problem for all of us. this is made up as you have pointed out with early retirees and self-employed people who work for employers who don't offer health insurance. the individual market is clearly a very critical safety net. are relying on us to find a path forward that offers a great deal more certainty than we have right now. washington state is fully embrace the affordable care act's from the very beginning. we have a very stable market since 2014.
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our uninsured rates has plummeted from 15% down to under 6% in the state of washington. this year, there has been a serious jolt to the system. initially we had two counties in the state of washington did not have health insurance. but i am that problem nervous about what will happen next year. because of the growing and actions by the administration, our individual health insurance markets are in serious peril. the proposed average rate increases that we have seen for 2018 are 23%. in years past, it has been under 10%. insurer pullback in our state completely where most of the people live. be very two weeks will telling. insurers will be making their
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final decisions as to whether they are going to participate in the health insurance marketplace or not. congress must act quickly to address the growing uncertainties. fund the car sharing reduction payments. that is something that will help in our marketplace. it affects him 72,000 people in the state of washington for a low income family in the state of washington, the deductible is the difference of being $1200 with the csr or $14,000. i urge you to create a federal reinsurance program this year. doing this would show your commitment to stabilizing the market. it worked very well in the state of washington for the first three years that we had a reinsurance program. we would like to see it continue and go forward. it is another way of reassuring the insurance market that .nsurance carriers
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it does not help them financially, but it gives predictability and helps hold down rates. make sure you maintain the coverage in the 1332 waivers. what we do not want to say essential health and guarantees on out-of-pocket costs are eroded away. these are protections no one wants to see leave the marketplace. that youg, let me say must take bold action to shore up these markets. millions of hard-working families and individuals are counting on this. in washington state, we have first-hand experience with what can happen with violating basic insurance principles are allowed to occur. they are occurring right now. the 1990's andn we saw the individual market in the state of michigan -- washington totally collapse.
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that is something no one wants to go through. let me be a harbinger and say can and will happen if you do not take action now. that is how critical it is out there in the insurance market to make sure we do not have that kind of collapse we saw in washington happen for the whole country in the individual market. lives depend on it and rest on your bipartisan efforts. thank you, mr. chairman. >> thank you. >> thank you for the opportunity to testify today about the health insurance market in alaska and need for congressional help for the
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insurance market in 2018 and beyond. alaska has amongst the highest health care in the nation due to population density and limited health care provider or facility competition in much of the state . while individual mandate reduced the number of uninsured alaskans and unintended consequence was that the high cost of individual health care premiums increase even further. premiums and the individual market and alaska have increased by 203 sent since 2013. -- 203% since 2013. alaskans were paying monthly and in 2017 it is $1040 per month. to stabilize the volatile market, the alaska reinsurance program was created. the 29th of alaska the legislature passed a bill in
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2016 with overwhelming bipartisan support. programka reinsurance is intended to provide stability to the individual health insurance market, mitigating read increases by removing high cost claims. as planned, this had an immediate impact on rate. an insuranceting program, indications that the rate filing from a single insurer in alaska would be close to 40% in 20. after enactment, the rate increased was a moderate 7.3%. an independent actuarially analysis estimates the reinsurance program would increase enrollment in the individual market by 1650 individuals. modeling also indicates that the program may attract healthier members to the individual market and further reducing premiums. after an acting reinsurance program, alaska than applied and was subsequently approved for a federal aca section 1330 two
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state innovation waiver. -- waived for it. a five years to ensure the states reinsurance program. it is based on the savings generated as a reduction in advance premium tax credits. it is estimated that the alaska reinsurance program saved the federal government $51.6 million in advance income tax credits and 2018, relative to what would have been a tax liability had the program not been put into place. arer the federal funds accounted for, the state would be responsible for providing approximately 50% of the 55 million dollar program costs necessary to stable the individual market. as you consider congressional action to stabilize premiums across the country and 2018, we offer the following perspectives.
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to not disrupt the health insurance market but instead focus immediately on stabilization. any decision made after the filings are proved could cause unintended, unfavorable disruption to insurance markets. thertainty destabilizes market. committee to funding cost-sharing reductions through 2019 will keep premium rates from increasing at even higher rates. we support collaborative reforms developed in consultation with state regulators that strengthen markets with the goal of health insurance not only being assessable, but affordable. programs that allow states to address the unique needs of their citizens such as section 1332 waivers are vital to the long-term stability of health insurance markets. further deliberation on health insurance taxes are needed. in particular, citizens in states like alaska that face extremely high costs are ready,
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maybe unfairly penalized by the tax and additionally exempting insurers from health insurance tax in counties are states by one insurers may be an effective way to increase competition that will please consider continuing and funding the navigator and sister alaska in rural areas of . these programs reduce the number of uninsured citizens and the media and public announcements are vital to open enrollment and did review. some better unnecessarily burdensome and costly to medical providers and insurers. so under the extreme tight considerations please make your
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decision in a bipartisan manner we are here to assist you in a k a -- to the way we can. >> good morning to the ranking member and members of the committee. i'm an honor to be here today thanks for hosting an important conversation. i will not sit here to tell you aca is perfect but the fact that it is imploding is false but but the law put in place millions of americans have benefited and the employer markets with a moderation of cost. pennsylvania uninsured rate is the lowest it has ever ben during the next three engine and those set have of individual marketplace 80 percent have subsidies to help pay premiums. [indiscernible] -- and then to pay those out-of-pocket cost.
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pennsylvania has about 420,000 people. half benefit from cost-sharing reductions. >> so for most individuals the aca is working well. those that our no longer third denied coverage and to benefit quality comprehensive coverage of the market has experienced difficulties. assuming no changes to the aca i am pleased to report they are seeing improved experience reflected in the rate increase. but i am very concerned that is on fragile ground and in particular cost sharing reductions.
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these statements have a significant impact in failing to make the long term commitment will only drive up costs for consumers. because those you do will be shielded from the premium increase if they stayed in the market. those half to be finalized they will be left to bear the burden and congress should allocate money through 2019 to get through that predictability that they desperately need. the health of any insurance market depends on the strength of the risk pool. such as last week we found out the extent of cuts funded by the federal government hhs will
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spend $10 million with open enrollment so in addition to navigate it is almost half of the levels of the previous administration. believe more people without coverage and raise rates for those left of the market and implementing the yoda outreach program and that also into courage eight enrollment and have a more robust risk pool.
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so over time to resolve to lower premiums for consumers. and those with the market instability. the every insurance program than the of bipartisan approach that is a great place to start so the reinsurance programs successfully moderated premiums live in place in the reintroduction long term could be the effective way to scale back their premium increases and we need to have a serious national conversation they are constantly growing we must address health care cost of the web to ensure the health care system is sustainable. and we cannot fix this on our own. so without question partisan the goals we're trying to achieve
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are not be there is recognizing the problems and our system to have access to the care that they need and we don't want them to have choices. ungrateful for your review shabbier moving in the direction to find real solutions. >> our hearts and prayers of those in mind of the hurricanes we will keep the manner prayer'' without flood reauthorization act. i appreciate of opportunity to
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give the oklahoma perspective it with those very networks and they have been ignored at the federal level i am interested to see how congress will address these problems to be the 2018 deadline. and without meaningful reduction of the uninsured and in 2014 citizens chose plans from five different carriers that sustained heavy losses and by 2017 that number dropped to only one carrier leaded happening now we cannot expect oklahoma has no market or no losses.
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but over the past four years rates have increased by 130%. those that qualify for the premium assistance between 2016 and 2017. and the self-employed individuals are the back 20 - the backbone of the economy is suffering. the people with the average per capita income is 25,000 a dually is being forced to pay in then to have those provider networks it turns a you cannot always keep your doctor. so all recent efforts to repeal failed. i am carriage by the truck administration and priorities
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but obamacare gives no other options at this point oklahomas submitted the waiver application under the obamacare framework focusing on the freight framework of the market stabilization program resulting state based assessments to create the reinsurance program this initial plan estimated to increase enrollment in the marketplace of 2018 to regain state control of the error -- over other requirements by not convinced obamacare waivers are the solution we need is the innovative long term solution returning power to the state to implement tailored to feet -- with those specific needs that is why we encourage those proposals that would repeal the
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individual plot grant dollars this flexibility to the long-term stability of the market's. but that doesn't work for oklahoma we should have the opportunity to do something different or face an uncertain future of this past. in conclusion former senator said if you want to fix health care fix the market's. and all the government will ever fix health care so for please of regency by written testimony that i sent in january. and with those insurance problems.
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>> your testimony -- alaska has been faced with dramatic premium increases and with the exchange to set up their reinsurance program and those that includes several market reforms and would be seen from the waiver and what you might look for or the impediments to get the waiver? >> that is somewhat odorous it is not defined application to submit their hold a bear providing the data requested and
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that it is within the guardrails and then what is stifling the states is the six month waiting period before they receive final approval the first part is the actuarial analysis can be done over a couple of months but then wait after the first approval for six months to go of you will receive final approval for your finding ready ability to go forward with state innovation you think would benefit your state to. cms was very helpful but still it was sailing the process. see you could provide us with some suggestions to simplify the
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process? so those reforms we thought would help an old thing they have been adopted and those eggs that could have that waiver process. oklahoma faces similar challenges as we're practically neighbors only one insurers offering individual coverage of the exchange. can you talk about that challenge with one carrier holding all the of risk? blue cross sustained real losses last year and that was the only carrier offering coverage. what changes would you suggest to encourage more competition in states like oklahoma and wyoming?
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we do share some similarities with your state while our blue cross has a huge amount of losses like yours one of the things we can do this while we're on that curve rework that 1332 waiver is the path to go ahead of us to make other dramatic changes and in my letter i see many options in the future with small businesses to bear the brunt of those unintended consequences so those other types of debris across state lines is a possibility but maybe more catastrophic type of plan for them to hot choices of
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their carriers and services and deductibles the more choice is we can have is the right thing to do for my state and the others. i notice mentioning the of stop-loss of a specific amount and unusual market changes. i know and wyoming to boys had a $30,000 prescription each that was bought out by a the primary companies bought out by the generic companies so they had a hit just from one family. and will be asking is riding for some suggestions to do that stop-loss of the specified amount. 84 staying within five minutes
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to set a good example. thinks the chairman and the ranking member for making this hearing possible. when i was going across pennsylvania with 32 of the 67 counties to have bipartisan health care to have that audible sigh of relief. so in particular with a broad consensus emerging of the importance of the reduction payments and now discussion over 1332 waiver. you said on page six and seven that it could be streamlined to ruth minimize the administration
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of burden also protecting the guard rails so in particular those concerns of those guardrails. explain that. senator casey as we think looking at that 1332 waiver you have to pass legislation go through public hearings that alaska is familiar red so the more we can streamline the process so for states have the opportunity as opposed do pass legislation to allow us to
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respond to market changes to make sure there stabled going forward so if we did have some planning funding available that would be very helpful also have been flexibility around the 1332 wafers to think about those is in conjunction but. can you explain what you mean? the 1332 waivers each have requirements for budget neutrality so to think about those together to have the overall budget neutrality requirements look that that
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would be very helpful to allow the states to be more innovative. put that baseline coverages are important whenever read to you does not show fewer people covered or erode the coverage. so with the high deductibles and out of pocket cost me want to keep those baseline coverage intact but the more we can streamline the process to make it easier to respond to the market dynamics. so we know for example, ages 50 through 64 dropped from 11.six down and 6.1% december through march that is good news with that huge drop of almost 50 percent so with your experience how have they stabilize the marketplace while protecting
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pennsylvania's who are not eligible for medicare yet. so that current system with that age began that we currently have hopes to make sure that older pennsylvania's can afford the coverage. so to be focused on more young and healthy people and to the risk pool those data not on the backs of older americans talk about expanding enrollment in getting assistance to get people enrolled that is the way to boost enrollment on the backs of older people.
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you have another question? >> of 2002 folkish essonne the of problem 6% of the marketplace of we have bickered what is working in the insurance market maybe we should look at those to find out some of mexico's 6 percent of people in the individual marketplace or the large groups of the insurance marketplace and then you can
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make the argument it works better than anyone else. and then have the pool of people with their protected against 1% getting sec. and to this is a more fundamental question can you fix it morally or ethically right to take money from the taxpayer to take it to insurance companies? and to talk about this with the health association in his state i go a step further with to a
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million restaurants these are though lower wage working-class this in several struggling 90 then insured under obamacare. so what if one person when negotiating over 15 million people the or bound to get a better price. so let's legalize that to cost the taxpayer nothing. so get the heck out of the individual market.
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i think the artificial construction to attach insurance your taxes now we have big insurance council in washington. to make $15 billion per year all this money is given to big insurance. but the individuals get into the group of market place and who pays for that? that comes out of the profits from the group market. what ischium to make billions of dollars in the groupon market but then they are winding they can make it in the individual market within the state we will not so give them that power the with as collective bargaining for consumers. while senator sanders and i don't often agree on things, alliterative by them health care than give money to the insurance company. it makes no sense to try by people insurance -- who already know what's wrong with them. by them health care, don't buy them insurance. reinsurance, police backstops, they don't work.
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we are subsidizing individual market that doesn't work. it's non-functional, you can never get there. it's too expensive. why not have subsidization? we could just put a bunch of taxpayer money and say we will make it lower by giving money to the people who provide these things, people who make iphones, who supply. i think we've got to look at it a different way. let's not try to fix the individual market give them the exit ramp to get out completely for those who can't then we have to provide health care and rather than buying insurance for them. and those from the individual market. but there are some of frameworks and that scrutiny that i do agree that the association and health care plans so that could be a viable market to band
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together as you mention those of the restaurant business or the flour industry how do they banded together to purchase coverage. things to the chairman alexander so with that market reform some of personal issue that affects millions of americans with the bipartisan hearings and to lower the of health care costs for consumers digest want to spend a moment on the correct pronunciation of insurance which is insurance which is not insurance. [laughter] so whether the commissioners
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pronounced it correctly you all agree we should have reinsurance and i believe that all but one mispronounced a. and with that importance of cost sharing and all of those who'd talked about it are you for continuing the cost sharing? is that frank n. or franken? [laughter] so under the current obamacare network we must continue what we are working under the duty to continue that cost sharing agreement. >> so we all have of consensus on this panel that we should continue cost sharing so commissioner it is nice to see you again as minnesota has applied for the waiter to set up a federal state reinsurance
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program and my hope is the administration will approve this quickly with the eric times article over the past weekend in passing that bipartisan report reduce a health insurance premiums by 20 percent.
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and then to consider those proposals. with that federal reinsurance program what advantages does a federal reinsurance program offer? i am from the south so i have no guarantees. so the federal reinsurance program has benefits for states like mine may not have the ability and then to create the legislative approval a then when that legislature isn't until the first of the year.
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the additional benefit and with that market competition and then with that program to have better estimates. and to have that reinsurance program. so wisdom of day federal reinsurance program like the one established under medicare part b.
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you are not a guy like that. certainty is a heavier looking for under 1332 of the application will be accepted if that meets the criteria speed is what we're interested in. i like people nodding when i something.ni -- the application will be accepted if that meets the criteria speed is what we're interested in. that was an option and is in counties is it your public employees with the medicaid program.
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because of that six month waiting period to go back to the legislature but we are trying to make changes for 2019. so we're confident the swill me stable so getting that funded will call to restore their confidence we don't want to see there backs turned or the protection and of other of
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pocket expenses. >> i am not a time my does want to say one thing that might cost sharing and reinsurance as a virtuous cycle to bring down the cost of premiums and ultimately bring healthier people in to enforce the of mandates so there is more advertising and to help
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you navigate. commissioner good to see you back again so looking at that reinsurance issue as well with of individual market is a major concern and we've heard today of the pool that alaska set up to have that reinsurance pool to lower rates of the individual markets so this shows the benefit of the reinsurance as a practical matter however that they are not in a position to immediately stand up for the of reinsurance. so do you see a role for the federal government in the short term with a high risk pool or
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second the analysis i have seen has suggested the cuts to replicate that pool would be $15 billion aid you leave so do they agree with that? i did believe the of reinsurance mechanism were high-risk pool has the effect of removing the risk pool biased cost claims that helps them prize product for those other individuals in the risk pool and also unties insurers with those options so with that ultimate risk might be for that area. i don't know if we have provided any analysis on that figure
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although it does seem like it is a good place to set up that federal mechanism until states could get on their feet with their own system that could be reinsurance for the high-risk pool i feet we would be more interested belgrade don't have the ability to do a set that up not just with the 2018 rates. >> thanks for being here and sharing your experience. one of the keys to driving down
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rates of the individual market so let me ask about to ids one comes from conversations i had with insurance experts. so right now under the affordable care racked if you are over age 29, you cannot purchase the copper plan and get the subsidies even if your income warrants that. even if you don't qualify your also prohibited from buying the of copper plan. should we change that is the first question. we believe been able to have day catastrophic copper plan for the younger population is beneficial to get the healthier individuals said we also think it should be complained with the health savings account and is a learning experience for the younger population to come in and purchase insurance but not because of the prohibitive cost so we are in support to have that bundled with a gsa for the younger population. that is a great combination because then the hsh can pay the
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out-of-pocket cost. and another idea that senator cassidy and i proposed this although enrollment instead of the individual mandate but what we know from the experience of the 41k plan and people are automatically enrolled so do you have any thoughts on that?
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i would say very briefly to assist people to use day enrolled if we have more than one carrier i would like to have the ability for consumers to choose as detrimental option with some ability to make sure your in ruled that a plan that works for your family. >> i also want to thank you and the ranking member for holding this hearing and i was so pleased to use cs so many senators so to suggest that a bipartisan effort how to fix
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this. also to underscore what you said for a perspective we're jockeying 6 percent of those that are injured if we could take the book of business but what i hear from my people in my state whether they close the affordable care act they are deeply dissatisfied the way their lives intersect with the health care system they are forced to make choices with other industrialized countries to not have to make about health care or their business or to go to a doctor and a lot of that has to do with the transparency in our health care system.
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that we can continue to work and a bipartisan way and that we spend too much money on health care without the results we have reason to expect. the most solid say you're forcing me to buy insurance that costs too much because there is no competition in my area this is in rural parts of the state. so we are -- i am not in a position of having to rely on
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the federal government but there is a lot of help to come because of marketing approaches, we are in the slipstream picking up benefits with our own state exchange. i encourage a strong outreach, allows us to get out of this, there are problems with individuals to sign up for it, they need to listen on these issues, health insurances we shouldn't be ignoring and to the
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extent that message is delivered it becomes more effective. for both of you i would like to hear your comments, washington has the state exchange, looking at a different context. we're doing a joint effort. i don't know if it will work in thistate of washington -- might exist for counties so we are offering them something, which is right now not acceptable. either limited competition or no competition. ideas?hese two separate >> is a two separate ideas. >> i've one minute left if there's anyone who would like to answer. >> there's a bipartisan group of government to send letters to congress last week.
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and letters, they have recommendations of offering -- one of the proposals was to have people access to buy benefit programs. deb a great place to start. that iflect to suggest we could provide maybe a less robust schedule and benefits within the categories, providing coverage for things like for practice preventative care and a lesser scale than what is currently on. we can have a lot of folks into i can't use access health care. >> amount of my time. is important for americans not to be forced to buy lousy
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insurance, insurance no one else would sell. it needs to be real. appreciate this. murkowski: thank you. i want to follow up some of the comments the senator has just made. a bite to think chairs of the ranking member for this important beginning of the good dialogue. about howo the issue we deal with those in our rural areas, and of course, alaska is the poster child when it comes to real role, but we are talking about our individual market, this is a group of 16,000 people. construct a market off of 18,000 people. in alaska, we have been looking
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this. i was pleased to read letter from the governor. i might be a workable idea -- don't know if that is the place. [applause] and above sustained employees program, i don't know if it's other programs we have out there. we have a big population of our native people. we're trying to construct something for 18,000 people come up to me just doesn't seem like a measure that works. another proposal that has been out there a lot, so if you raise the opportunity for purchasing across state lines -- i would
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as ayou to address that viable alternative for us in alaska. are not attracted to anybody. we are high risk. why would anyone want to adopt alaska into this pool? something that has merit even for a state like ours? >> it could possibly have merit. selling across state lines, when we have discussed -- insurers look at us, i don't know that it will matter if you join with the wyoming rn idaho. we have to doing a co-op, or -- other western rural states. that's to see if we can come up with members that 18,000, 20,000 there, if we can develop our own
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co-op so to speak, of insurers. we still cannot come up with the numbers. you're right. when we have talked, no one has one of us because of the cost of health care. but the transit spending to insurance -- we will bring the rest of the market down. it's not a position we want to be in, it's just the fact of living in alaska. role ere role facilities, rural areas that are hard to get across. state lines is something we could explore. but we have not done well so far. >> let me ask about the issue of cost sharing raised by everyone. we recognize that uncertainty in deadly.et is
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you cannot do -- there has been some -- i believe the chairman in his remarks, that we need to through 2018, 2019 is another date that has been out there, but the governor in fact asked for an extension of least third 2019. if we were to do this just third two thousand 18, to that provide , or does itertainty right now 2019 -- we're going month to month. we know that doesn't work. and you all speak to that? >> i believe it has to be at least 2 years. right now, i believe there's enough in the market that the insurers are looking for a one-year commitment.
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>> i would say in its to go even further than that. insurers right now our be looking at 2009 team. we are already taking two years out already. them moreo give certainty in the future that it's going to be there. that's the biggest concern i have. we've seen it happen in washington state during the 1990's and it shouldn't be replicated for the rest of the country. >> thank you sen. murkowski: senator booker baldwin. >> thank you mr. chairman. entendre for what many college authorities said. grateful for your bipartisan leadership, both of you.
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i believe we can find common coverage androve reduce costs for what we represent. while the committee is working together to achieve this -- the administration is playing dangerous games that are stabilizing the market. wisconsin insurers requesting between 10 and 30% increases. they're pointing to president trump's failure to advise certainty in the markets. -- aseduction in payments amounts to the plans. addition, some of you raised it in your testimony -- 90%
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funding for enrollment programs, get the word out, especially to young , who can helpople with the enrollment process. the navigator program, that in my state has provided such useful assistance to those enrolling, the shorter , all of theseiod add up. beyond that is the issue of whether the individual mandate will be important at all. deeply -- is more want to focus more deeply on those today. republican and democratic colleagues should partner as we explore policy to enhance enrollment again, among young and healthy people.
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kreidler, why is it critical to market stability and affordability, particularly in to 2018 enrollment period, boost the coverage of younger individuals, and what do we need to do in the stabilization effort we are talking about i bipartisan basis? you haveally important good and bad risk in the insurance pool. risk, noly have bad one can afford the insurance. you got have good risk. a younger individual will represent better risk --
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>> there's a lot of health to come because of approaches they have taken on the national level. i would certainly encourage that we continue to have a very strong outreach that allows us to get the message out to individuals. there are problems with individuals who sign up for it. we need to make sure they get health insurance. this is something that shouldn't be ignoring. >> for both of you, i would like to hear your comments.
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you are working in a different context. >> thank you. perspective,ania's we are very concerned that the decrease in funding for advertising for the exchange, which read -- we rely on, for the decrease in funding around navigators command critical assistance they provide to get people enrolled. all those things we are concerned about -- the mandate and enforcement of that mandate. that has an impact on premiums. even if we get cost sharing i think there's still a lot of concern. we hear from our insurers, because we are not sure how effective this will be going forward because of all the conversations about eliminating it, for going to see that uncertainty going to a rates going forward. that's a major concern for us. >> i like to make a comment regarding a couple of your earlier statements. we here because of the many things have failed in one we had
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cost -- even while we had ist-sharing in place to read would ask for a full committee to do this for the navigator program to find out, are they doing the job they are supposed to be doing? in millions of dollars spent that area -- haven't hieved the outcome. one, navigators are not incentivized regarding health care. that always should have been handled by licensed agents in the united states, particularly in oklahoma. ofe been in all 77 counties oklahoma. there's an insurance agent on every corner readily available. there's an insurance professional but should be help. programthe navigator needs some oversight. that's one of the things we're going to be looking at, where hey were --
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>> thank you. cassidy: >> i've the privilege of being with you all this morning. i'll ask you to respond quickly. we spoke this morning, regarding the individual mandate. the individual mandate is related to aovernor. the individual mandate has minimal effects on its own. as i leaed about this, maine and alaskhave been great things, innovative things towards the reinsurance program, which has lower cost and interest rate coverage. i say that the shears the first andy three questions --
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this grand plan, we want to give states grants, allowing them to do with a wish to do. that's an overview -- my colleagues can say what's in new ones here, they're absolutely right. love statesis, we to innovate. that's number one. do you say now -- commissioner, you said earlier this -- as much as possible, we knowheoney for obamacare's there,aybe not. it's just assume the money is going to be there. it's got to spend this on health care. secondly, i am concerned about oklahoma. louisiana's ability to afford a 10% match on the medicaid expansion. that 10% match is going to be huge. my state $310 million, we are in oil state -- can we afford that? and there is even size expansion versus non-expansion, some states have dramatically increased cost of care and washington state does such a
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good job controlling costs, others not so good. how do we compensate? should we equalize the payment or prejudice towards high-cost stes as opposed to those that manage costs well. you have two minutes and 45 seconds. try to be concise. >> i will say your comments on the individual mandate reflect experience in tennessee. i don't know that it has driven our consumer behavior. we see a lot of our individuals being willing to risk thpenalty for not having a client coverage. i'm accessing other products in the market, non-aca compliant plans and other cost-sharing mechanisms which would require a penalty to be paid if mandate reinforcement i ask our insurers to break out a provion on 2018 ratencrease requests attributable to nonenforcement of mandate and it was
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negligible, 5% increase where csr is 14%. is the stateetting engaged. i might respond to your comment about the cost of expansion. i >> senator, i might respond to the cost of the expansion. i was trying to find some notes and we'll get it sent to you but i think former oklahoma governor frank keating wrote an article about the cost to the state of oklahoma which needs to be taken into effect. on your other point, i am 100% in favor of all the funds coming to the state of oklahoma, giving the state of oklahoma, our legislare, govern and people of oklahoma the best ability to put together the best plan. if california wants to come up with a universal health care, let california do that. if washington, my friend from washington, if they want different type of policy, i think e laboratory of democracy and the success we
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could all learn from each other but get those moneys back to the state where we can take care of oklahomans. senator cassidy: amen, brother. anyone else? >> i hope the block grants wouldn't vary. senator cassidy: you have to do it per enrollee, correct? >> we do better than most states. it's really not appropriate that wehould wind up being essentially punished for doing a good job. senator cassidy: so equity across states would be important? mr. creidler: so we don't wind up seeing diminishment. senator cassi: ladies, i have 20 seconds left. >> we would ask you take into consideration the cost of health care andhe ruralness of alaska because of the cost of health care and the diminished facilities just due
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to what alaska is. senator csidy: simple answer, we do. i yield back. thank you. >> thank you, senator cassidy. senator murphy. thank you very much, mr. chairman. ms. mcpeak, i want to ask you to expand a little bit on your opening comments in wch you talked about predicting last year that your marketplaces were on the verge of collapse and as you testified today they have not collapsed during that time. i guess it speaks to a worry that have about how the rhetoric gets overheated with respect to the stability of these exchanges and the overall stability of the affordable care act. i am so appreciative of the
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process both senator alexander and senator murray have begun. i acknowledge the fact that we need to make some changes. changes democrats want and changes reblicans want in order to provide some certainty. but maybe you can talk a little bit about what happened over the last year. you said you were on t verge of collapse. you didn't collapse. and what did that say about how this -- these marketplaces are and have en holdingogether? just tell us a little bit about that story. ms. mcpeak: i am proud that the market in tennessee have t collapsed but i will say we are on the verge of being in a very difficult situation and probably still on the verge of collapse. what we have experienced is carriers fleeing the market year over year. we did have one of our nine rating areas that didn't have any options when humana decided
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to withdraw from the exchange earlier this year. we did in fact receive coverage to that area from one of our carriers. 78 of 91 counties having one tion on the exchange is not a place i'd like to be. we need to have a competitive environment so ouronsumers ve choice and we can do something to address premium rates. when you have one insurer that is threatening to pull out of rating areas, it's very, very diffult to really challenge the rate increase request tha we are receiving on a lot of different factors because the worst possible situation would be for a carrier to flee the market and our consumers not have any choice in the market. we are still very much concned about that possibility until the q.h.p. contracts are signed at the end of this month by the carriers. senator murphy: i think it's a caution for everybody to be careful how fast we declare that the sky is falling here, the popular phrase is death spiral. yet during a period of time we've been debating the bill,
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there have been less and fewer bare counties rather than more. so i appreciate that explanation. mr. kreidler, i want ttalk to you about the importance of advertising and marketing. i think senator baldwin raised this question. you are an interesting state because you have pretty much type of populationhat exists, rural communities, suburban communities, communities with easy access of resources, places where it's hard to get the word out. there's study out of kentucky that looks at what happens when the marketing efforts effectively stopped. you haa democratic governor who's doing robust marketing and new republican governor has effectively shut down funding for a.c.a. advertising. what happened was there were 50,000 fewer page vis f the state marketplace. there were 20,000 unique visitors per week for the website. guess what, a.c.a. enrollment
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fell by 100,000 to 94,000 people in 2016 to now 81,000 people. so there seems to be a pretty direct correlation between telling people these options exist and people actually going and taking a look at the information that wod lead them to get coverage. that speaks to what's happening right now with a 90% reduction in federal funding. i just would love to hear you talk about h you communicate effectivy and how instrumental those communications are in making fective marketplaces that insurers want to be a part of. mr. kreidler senator, we saw an increase on the number of people who were signing up through our health insurance exchange even while the federal exchans were shong a slight decrease, we were actually showing an increase. and i think part of that is we do have a very active website through our health insurance exchange. it makes it very cvenient a easy for people to go there and
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shop. it was not as robust an increase as we hadnticipated, and that really is because of the effect that you have when they are doing it on a national basis, the kind of sharing of information and strategies ing forward that really assist us a great deal and helped addressed the issues of language which are a particular issue for many of us. i think that's where we can really make a difference from the standpoint of getting people to sign up for health insurae. if you have that kind of outreach out there it helps to offset the enforcement of the individual mandate. i'd argue quite strongly you need an individual mandate that's effective. if it's not the one we have now, you got to come up with something that's comparable. senator murphy: i support the chairman's goal of getting a narrow package that can pass quickly but i hope we include in our discussion this dramatic reduction in advertising and marketing funding which i think has a depositive effect on the
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health of the exchanges. thank you, mr. chairman. >> thank you, setor murphy. senator burr. senator burr: i listened intently of this discussion and i am reminded how we bring health care costs down that each state is unique but health care cost reduction is a function of a change in outcomes. change outcomes you change the cost of health care. so let's not lose focus on what the most important thing is, but, mrs. miller, i got to admit i was moved by a statement you made that everybody should be able to bite into fbhp that can't fit in the box. i came in my private sector and my health care went up and benefit went down. then the a.c.a. came a i'm now a participant in the d.c. exchange. my premium cost went up. my deductible went up and my benefits went down. i would love to buy into fehbp
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as a member of congress wholeheartedly. not sure that's the answer for a population that's scattered most of the rule, most of it without the delivery system that's needed to change the health outcome. this is not just about coverage. this about placing them in some type of delivery system. i am going to start at this end and go up to mr. doak. all i want to know, yesr no, are you supportive of your state having control over how your health care plan looks in your state? in other words, you got a 1332 waiver or 1215 waiver, you can decide how it's going to look, we will figure it out? ms. mcpeak: i think our state can better help. mr. kreidler: the answer would be yes but let's make sure we protect consumers and not take away their protection. senator burr: you would have full control over that so you
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would be the one held responsible. ms. wing-heier. ms. wing-heier: alaska needs to be in control of its health insurance program for its residents. mrs. miller: as long as we are not talking about reduc federal funding and requiring states to come up, then, yes, we are in a great position to regulate our market. senator burr: one of the thing we need to look at is empower states to design their health care, to structure their health care systeto meet the unique delivery systems within their states. process.e made ms. mcpeak are in order to solve the health care crisis we need of ways to levage all of the tools provided through innovation in heah care. insurers have access to tremendous amounts of data on individuals enrolled in their plans in a w wasn't
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imaginable just a decade ago the. with this new information, insurers have an opportunity to design plans to ensure the best possible outcomes for their customers. as an insurance commiioner, have you had an opportunity to review plan decides for your state? ms. mcpeak: well, no. unfortunately, ithe individual market the carriers are limited by the a.c.a. to the plan design and underwriting factors in the law. senator burr: do you believe that should be a function of the commissioner and the state? ms. mcpeak: absolutely i do. senator burr is that in your timation a way to leverage health care data to offer more health insurance? ms. mcpeak: i do. actual benefits that are accessible and uble by our consumers. senator burr: do you believe you have the tools you need to review innovative plan designs working to keep pace with the new capabilities of health care data? ms. mcpeak: i believe we do because we review those plans and rates for the employer markets and small group markets already today.
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senator burr: i'm rinded we're headed for a decade of disruption where technology is going to impact every sector of our economy. probably health care as big if not bigger than anywhere else. some of the challens we're trying to build into our construction of policy today will be trumped, for lack of a better word, by our capabilities of connectinan individual in a rural or noncovered area where there's not a hospital, not a doctor but because every american has this device that there's going to be software that enables them to send their own vitals that are needed to a lab that will give them a reading without a hospital, without a doctor, without a nurse. how do we take advantage of this incdible innovation if in ct we've constructed concrete what insurers can and can't do, mr. doak? mr. doak: great question. you are absolutely right.
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with the mobile phone, devices, the innovation is taking on. one of the tngs we just held an innovation summit in tulsa in partnership with oklahoma state university and university of new mexico. they presented on a project echo whi actually has dramatically helped and assisted rural outcomes across the country. i think when you take a look at this program, it's in my report and see what they're doing, the partnerships they're doing, able to drive great health care through programs to rural america is really -- is the innovation is ppening at such a quiclevel that you're absolutely right. i think that's why th naic and ted nickel from wisconsin formed the innovation committee that we really have to stay ahead of the curve so you are on the right track, sir. senator burr: can i ask members of the committee on offering multiyear -- multiyear access
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to plans? in other words, individuals in the individual market, not signing up for one year but five years or longer so we can truly feel the benefits of the vestment by the insurer to get people healthy, to keep them healthy, to eliminate the risks that drives up these premiums so drastically? thank you, mr. chairman. >> thank you, senator burr, that would be great if you could do that. >> thank you for holding the hearing. know i share -- i think senator casey said people around new hampshire when we said we would have bipartisan hearings and listen to experts that deal wh the nitty gritty of health insurance and how health care works, there was a real sigh of relief so i am very grateful for the hearings. senator hassan: i am grateful pronounces that
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insurers in different ways. i the daughter of a southerner and a new englander. i am glad you are here because it is essential we really drill down to how things actually work as opposed to just talking about big concepts. one of the concerns i have when we talk about letting people buy into employer sponsored plans, well, that sounds great but most people have their employer subsidize the pns. so remember when we enacted cobra so people who terminated their employment could still buy their plan, a lot of people couldn't afford it once the employer subsidy went away. so i think it's really important as we have these discussions that we hear from all of you about how things work. and to that point, secretary miller, i'd like to just start with you. right now about 5% of people who buy health insurance coverage in the individual market represent almost 60% of
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health care claims costs. so we've talked about reinsurance. we've talked about the importance of what federal reinsurance plan could have as kind of the biggest bang for the buck idea. i just wanted to talk, ask you a little bit how the temporary reinsurance program that the a.c.a. had at the beginning of the plan -- of the program, how did it successfully moderate premiums in your state? mrs. miller: senator, in pennsylvania, in the last year of the program we saw between 4% and 7% increase because of the end of the program. so in other words, it modered premiums by 4% to 7% and that's what we saw a increase happen between 2016 and 2017 was when that program went away. senator hassan: well thank you. that bngs me to another question which is for commissioner winheier. when you talked about using the
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1332 waiver to establish alaska's reinsurance program, as i understand it, the 1332 waivers program initially wasn't really to help states establish reinsurance, it was to help em innovate within the insurance market in their state in ways that could really help move us forward and gain efficiencies and really tailor the insurance programs to the states. i guess the question i have is, if we had a federal reinsurance program, could the states then turn to 1332 waivers to do some of the other work that we all need to do and that states need to do to tailor their insurance to their states? ms. wing-heier: you most certainly could. the flexibility should be great within the waivers. it should be only limited by the innovation that state can come up with. at the time alaska was down to one insurer as we are now and we felt we were in enough a crisis mode to take the
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appropriate action at the appropriate time. our legislature agreed to fund for two years the reinsurance program which led us to then apply for the section 1332 waiver which will allow us for a five-year funding mechanism for this. we will certainly be looking at other waivers in the future to benefit our citizens and to make sure that our program is uniquely designed for alaskans and our conditions. senator hassan: i applaud you doing what you did. if we had the federal reinsurance program part of the a.c.a. for the first two years then you could be doing the second stage approach you are doing right now. secretary miller, i want to come back to another issue. i know that your state is grappling with the opioid addiction crisis as many states are. new hampshire has been heavily hit by it. and i know that you've been both an insurance commissioner
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and now as i understand it you're undersecretary of health and human services. if the administration decided to cut off the cost-aring reduction payments, how would that affect access to coverage for people who are suffering from opioid addiction? . miller: senator, i think pennsylvania, as all states right now, we're grappng with this issue and it's having huge impact on our communities. we need to stabilize this market so consumers have tions in terms of quality coverage. the essential health benefits and that requirement ensures people have access to that coverage if they have a.c.a. compliant coverage. we need to stabilize this market. keep insurers in it. by doing that we will have more competition. i think the problem right now is it's not a very attractive market to be in because of all the uncertainty and that's hurting the competition. that's why this coverage we're having today is so important because if we can stabilize this mart, we can increase the competition, make sure consumers have options that
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include that quality coverage that has that treatment availability for people who are struggling with addiction. senator hassan: thank you very much. thank you, mr. chair. am -- >> thank you. i want to ask the whole panel about reinsance since all of you mentioned it and i have two questions and i'll ask them and let you just answer them. one is, how can we make it easier for you to use the 1332 waiver to set up state reinsurance program as alaska and minnesota have done? as i understand it, ms. wing-heier, you e not getting any more fedel money than you did before. you're just using it better because you're able to use some of the federal money to pay for 85% of the reinsurce program. state pays for 15% and you lower premiums 20%. senator alexander: with basically the same amount of federal dollars. is that right?
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ms. wing-heier: our waiver was based on the fact that the reinsurance program reduced liability of the federal government to pay the advanced premium tax credits thatould have been paid. senator alexander: here are my two question if we need reinsurance, why can't states do it? the same taxpaye? let's take maine for example. not a rich state. maine set up a reinsurance program. $4 per month applied to all policies and insurance plans. plus, insurance ceded 90% of the risk given to the pool and paid the first $7,500 in claims. the federal government has a $20 trillion debt. the federal government is paying an average, according to the congressional budget office, $4,200 for each individual in the individual market who qualifies for a subsidy. if a reinsurance program is such a good idea and alaska was able to setne up using some
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state funds and minnesota was using some state funds, why don't states do it? all it takes is money. and state budgets are balanced. the federal government's $20 trillion in debt. already contributing a lot. all of you could put a $4 tax on every policy, create enoug money to take the sickest people out ofour individual market and lower premiums for everybody else. so my questions are, why don't you do it, number one, and how could we let you use section 1332 to pay for it? well, if it's our legislature it and on't let us do my answer is this legislature has a $20 tllion debt. ms. wing-heier: the requirement for alaska is we ced the program for the first year. we hear from states they can't
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get the funds from their legislature for the first year to show there is an impact to the rates that would bring down the rates so there is the money in the premium tax credits that it's a chicken and an egg, that they want to e the results of the premiums coming down so there is that savingsnd the premium tax crets to then put th pass-through funding back to the states. senator alexander: there is nothing keeping you raise taxes or put a charge on every policy in alaska to help pay for the insurance fund? ms. wing-heier: that's true. in t state of alaska we would have a hard time putting that tax through because we are a small market. we would be taxing the market we are trying to help, the 18,000 we are trying to help. senator alexander: who else has an answer? why can't the states do it and how can we help you use 1332 to set up your own reinsurance und, at least initially?
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senator kreidler have an easier process. when you file for a waiver, that you have a quicker turn-around time, that you get definitive answers on a much shorter notice. you also heard the description of saving us from having to wait untilur legislature is in sessi before weave to return to them. and the states like washington and oklahoma, where we're elected as insurance commissioners, turn it over to the insurance commissioners to make that decision. other states, leave it to the governors to make the call. we're not asking to have increase the national debt at the federal level when it comes to 1332. what we're askg for is to make it more predictle as to whether it's going to work or t. and in the end, even though you might wind up having some impact on the federabudget, it's one that's going to have to meet the budget neutrality standard. i'm in favor of that. i think that's not unreasonable to have that standard apply
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when it comes to these 1332's. so we're not asking for more money. just make it process work a little bit smoother than we have right now with some certainty. senator alexander: thank you. i agree, exander: let the states make the decision. . doak: it will be a $2.15 tax for folks to come up with $3 million which will -- the reinsurance program will pick everything om 15 to 400,000. it's a fee disguised as a tax for oklahomans. it's up to oklahomans to decide and how we come up with that money with a state that's having a very challenging time as you'll hear from some of the other gompors tomorrow. that's kind of where we are in oklahoma. senator alexander: thank you, mr. doak.
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my timis up. senator king. senator king: thank you, mr. chair. to the chair and ranking member, i am so happy we're here hearing from the people who are affected about what's good, what's bad and what needs to be fixed about our health care system. i'd like to make sure everybody knows what you do. your expert witnesses, you're in the box and giving us recommendations. there is significant consistency where you work for a democratic or republican administrations. senator kaine: each of you, ms. mill, until your promotion, you are the chief regulator of your state, is that correct? are you active in the -- you're the incoming president of that, that not right? ms. miller: that's correct. senator kaine: each of you have different state laws so there some peculiarities about your state but the neic says the mission of the neic is to assist insurance regulators individually and collectively in serving the public interest
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and achieving the following insurance regulatory goals in a responsive, efficient and cost-effective manner consistent with the wishes of its members. the five goals of the neic -- protect the public interest, promote competitive markets, facilitate the fair and equitable treatment of insurance consumers, promote the reliability, solvency and slidity of insurance institutions. and five, support and improve state regulation of insurance. again, recognizing each of your states have your own legal peculiarities, is that a mission you generally accept in the work you do as the chief shurps regulator in your own states? let me then ask this, and ms. mcpeak, you said this in your testimony. all of you support, mr. doak, with the qualification all of you support the c.s.r. payments continuing. you said if we chose not to alter it would be necessary. all of you support to some
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degree or another state or federal reinsurance. there are other areas of commonality. none of what you are proposing us today is yoare trying to bail out insurance companies, is that correct? ms. mcpeak: that's correct. senator kaine: i hear colleagues in this body say c.s.r. payments, that's bailing out insurance companies or reinsurance, that's bailing out insurance companies. as the chief insurance regulator in your state who's edged to basically follow these goals, you are not here to bail out insurance companies, correct? ms. mcpeak: that's correct. senator kaine: let me talk about one of these, reinsurance, because bothhe c.s.r. and reinsurance have been talked about if they are insurance company bailos. of let 34e use my meat head powerpoint to see what a reinsurance is. we use reinsurance for crop insurance, flood insurance, medicare part d. we use it had for the affordable care act. but health care, families have different costs.
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some have low mdcal claims. some have medium medical claims. some have high medical claims. the insurance will write a premium up here. if you can provide a backstop on the high co claims they don't have to write the premium here. they can write t premium down here. so it generally reinsurance is a tool you are all familiar with for the low or moderate cost or the normal claimant has a significant -- can have a significant effect in reducing premiums, isn't that correct? when you get to the high claim side, by providing reinsurance, what you're doing is you are providing a backstop -- senator enzi called it a stop loss -- a backstop and that has the effe of providing people protection but also by providing a backstop keeps insurers in thmarket that might otherwise vacate the market. isn't one of the reasons that many insurers are vacating the
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individual markets because they are worried about these high cost claims, isn't that one of the main reasons they're vacating the market? ms. mcpeak: if i could respond, you are exactly correct. in addition to that, when you have very limited carriers in a market like the majority of my state, if you are the one carrier writing in that market and you know you have guaranteed issue, guaranteed renewability and no ability to cap tate risk because of no lifetime max yums, you have to rate everyone hi because you are taking all incomers. if you are able to say this is the backstop and this is the ultimate level of risk that you would have for writing in this market, it does entice additional insurers to be in the market. senator kaine: it encourages insurers to stay in the market but it also allows them to do a premium that doesn't have to take into account all of the superhigh cost claims but that premium then is more favorable
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to the average person. and by reducing premiums on most, because so many folks get the advanced premium tax credits, the subsidies, when you bring the premiums down on most, you also reduce the federal premium payment which has a counteravailing effect. reinsurance costs something, but it also brings down the federal government's obligation by reducing the advanced premium tax credit, isn't that correct? and that's what you're using in your state to try to use that reduced federal obligation dn the road as one mechanism for paying for what alaska is doing with its state reinsurance program, is that correct? senator carper and i have a reinsurance bill in that we think would basically go what we did with the first ree years of the affordable care act and put a reinsurance provion back in that we think would accomplish all of those goals. it would reduce premiums for the overwhelming majority of individuals in the individual market. it would provide a backstop
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that would keep insurers in. and by reducing premiums it would also reduce the federal obligation, pay the advanced tax credit, the advanced premium tax credit which would have a countervailing effect in reducing the cost of reinsurance program. i know that may not be the immediate issue on the table, i understand, but i'm happy to hear to some degree this is a concept that these witnesses support. thank you. senator alexande thank you, senator kaine. next we have senator young, then senator murray, then senator roberts and senator warren. senator young: i thank our panelistsoday. we recognize if we don't control the cost of health care delivery in this country we are going to continue to see an increase in the cost of health insurance, whether that's at the consumer level or among taxpayers or some combination ereof. and a number of you spe to that in your testimony. i thank you for bringing that important topic up. so i'd like to focus a couple
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questions on that area for each of you. what do you think the primary drivers of health care cost increases are, based on your professional experience, and what are your ideas for actual bending the cost curve down as we head in the future? i'll start with ms mcpeak because i know in your stimony you spoke to the importance of incentivizing preventative care and perhaps you could fill in some details on that. ms. mcpeak: thank you, senator. our experience is there are claims costsn tennessee are extremely high. those are real dollars going outor real health care services that are being provided. the majority of those seem to be going to prescription drugs, and also to co-morbidities, real claims and issues that need to be addressed for our population. now, bending the cur down is
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certainly something that can be affected through preventative care, wellness,nitiatives and certainly an examination of the rebursement cost to see, is there a discrepcy that is reasonable from area-to-area in my state and also from tennessee to surrounding states? senator young: preventative care, from a gym membership, to seeing your primary ce physicians, what have you, it's beater wellns program for your life. ms. mcpeak: wee use some of those programs on ou tenncare side that's been effective for disease management, for health coaching, smoke cessation and wellness the physical
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attributable to the fitness activities. senator young: i am going to go down to mr. doak because in your testimony you spoke about the importance of price transparency, empowering the consumer on the information of services value and perceived value of those services. and so it is a lack of transparency, to your mind, a primary driver of health care costs and thus health insurance premiums? and if so, how do we improve the functioning of the market so there is a more transparent market? mr. doak: great question. one of the answers is, as i mentioned in my earlier discussion that was very near and dear to former oklahoma senator coburn is talk about price transparency. we've seen that through the -- and i ask the committee as we said earlier this morning to get the c.e.o. of oklahoma surgical center to testify on
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behalf of what that -- what he's bn able to do with transparency in oklahoma city and where me of those things are going. i think the more transparent we can be with our cost all through health care is you are going to provide and empower consumers to be able to see the outcomes that senator burr was talking about relative to the cost expenditures and there's various places around the state of oklahoma that are doing that very well. i think that's a true opportunity. senator young: but you don't have particula recommendations here at the federal level regarding obstacles we could remove or regulaons we could put in place so it would facilitate more transparency? mr. doak: that's something worthwhile to consider. i'm always hesitant to have anything further done here in washington. i'd rather see it done at the local and state level, quite frankly. senatoyoung: oftentimes a healthy insinket. i will give others to speak to this issue. mr. kreidler: i put a high
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emphasis on pharmaceutal drugs. that's one area where if you remove thehackles that are on the states right now as to what they wind up doing on contracting either through their medicaid program or other programshat they have at the state level, we can have a very strong impact. particularly if we join together with like minded states to take on the same approach toward bargaining when it comes to these drugs. that is the number one driver in the individual market. we see it on the filings. is the cost of pharmaceuticals. senator young: i am pretty much out of time. i will give others to respond to that question on writing. pharmaceutical cts, we need to make sure we don't absorb an opportunity cost by adopting some of the suggestions we put forward. thank you. senator murray: thank you very much. this is great. a lot of senators are participating and i think they all really appreciate all your
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testimony so thank you for being here. commissioner kreidler, i wanted to ask you, in your testimony you talked about the cost sharing reductions are the difference between wheer a 40-year-old in tacoma earning $23,00per year has a $2,000 deductible or a $7,000 deductible. consumers have really come i think to rely on these measures to lower their own health care costs the same way employer contributions to help keep costs down for people to get insurance through their jobs. something changed this year. president trump has made patients and families and insurance companies and state regulators play this guessing game about whether or not those paymen are actually going to be made. and we know that failing to make those payments is going to spike premiums for the most popular plans in the marketplace by 20%. leading an increase to the federal deficit of $200 billion. so this is reay an important issue. and i wanted to ask you, what
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did you have to change about the way you review and improve insurance premiums this year because of that guessing game? mr. kreidler: senator, we have to sit down with the health insurers and press them on it. the point has been made, if you get down to just one carrier in a particular county, you don't have a lot of bargaining flexibility. they're in a position of saying, well, if you don't give me the rate increases i want, then we're looking toward the highway and then you don't have an insurer there. we are under a lot of pressure. stabilizing the market is number one. you got to stabilize that market and the c.s.r.'s are number one from the standpoint of what you can do immediately can have a direct impact. get away from this idea of funding on a month-to-month basis or year-to-year.
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it needs to be multiyear. senator murray: we heard one year, two years. tell me the difference between -- if we just did a one year, what difference would that make rather than two year? mr. kreidler: one year is better than month-to-month. but even two years it's very tough because of the range which the insurers are planning right now as to what the rate increases are. any degree of increase in predictability that goes beyond this situation where we have right now of being so tentative right now with just month-to-month is going to help. the longer we can give it, the better it will be. senator murray: more certainty lower costs? mr. kreidler: absolutely. senator murray: i wanted to ask you, commissioner wing-heier. when talked about the navigators and money there, i think you testified it's really needed in many remote parts of
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alaska. across the country in important ways. the budget has been cut by 40%. tell me what impact will that have in alaska? ms. wing-heier: it will have a hard time. i know mr. doak said he has insurance brokers throughout his state. we don't. outside ankradge, juneau, there is not a -- anchorage, juneau, there is not an insurance broker. this will be devastating to our population to know what their options are, to understand basic things from the dates of enrollment. there's also a part that is very cultural in alaska in the fact we have a variety of languages and the navigators cross that bridge in being able o talk the native languages of
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alaska. they provide that service. we don't have that very readily in the insurance community unfortunately. senator murray: and commissioner kreidler, quickly. are states looking at a 1332 waiver. when applying for that waiver, states have to show they are going to cover the same number of people, the same types of services and the same amount of out-of-pocket costs for consumers. those are the guardrails in the waiver. can you just talk really quickly about how important those guardrails are as you look at the waiver? mr. kreidler: senator, we changed the environment that we have right now with health care delivery through insurance because of the a.c.a. we are now competing on quality and service because we have the standardized benefits, the essential health benefits, limitations on out-of-pocket expenses so it's changed the dynamic of the game tremendously.
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if we want to go forward and have the insurers in there, we got participating, it's absolutely critical that we wind up making sure that those guardrails aren't eroded away. focus on what can really make a difference. one, stabilize. second, be in a position to allow the insurance companies to innovate without being punished with reinsurance program to back them up. senator murray: mr. chairman, i do want to submit four letters for the record. they are signed by of hundreds of leading, provider insurance and business organizations that are requesting multiple years of certainty for out-of-pocket reductions and federal investment in risk mitigation programs like reinsurance we heard so much about. and preserving the protections for pre-existing conditions, including the essential health benefits. i would like to put them in the record for today. senator alexander: thank you. hey will be.
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thank you, senator murray. senator roberts. senator roberts: yes, thank you, mr. chairman. thank you to all the witnesses for taking time out of your very valuable time out of your schedule to come and visit with us. as rates have failed and not failed by some plans, obviously exiting the marketplace like we've seen in kansas city and serves nobody so thank you for holding this hearing. i think we focus on permanent or longer term reforms so we can make help slow the growth of premiums and maintain options for consumers as opposed to patching or providing an influx of cash to these markets which has been touched on by the witnesses. i know many are focused on the uncertainty surrounding the cost-sharing reduction subsidies. i think it's important to note at least in kansas we've had insurers leaving the exchange
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market before this administration or the court ruling on this matter and with the c.s.r.'s in place. premiums still doubled in kansas since obamacare has been in place. i think that's only one piece to the puzzle with regard to crrment s.r.'s. tighter age rating bands can be there. that's controversy. a tax that's passed on the consumer or the patient. other mandates that you talked about all add to the premium increases. we had 60,000 families paying $13 million in punltpenlts in 2014. $6 billion i think was the figure with regards to the nation as a whole. so as premiums continue to increase, we had something in the recent reform proposals that didn't pass obviously considered by the house and senate that took two different approaches to encourage not
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mandate folks to maintain continuous coverage. premiere position, which do you see more effective to operationalize a premium on -- for lack of continuous coverage or a waiting period for enrollees upon returning to enroll in coverage or anything else you might suggest? we'll start with ms. mcpeak. ms. mcpeak: thank you. i have a preference for the waiting period over the premium penalty for not maintaining continuous coverage because there is an administrative issue for our insurers that have been participating in the exchange market with individuals coming in and out of coverage. really trying to catch up with premium payments through grace periods and so i think from my perspective a waiting period would be more effective to incentivize consumers to maintain continuous coverage.
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senator roberts: appreciate it. sir. mr. kreidler: thank you, senator. one of the things that's been challenging for the states is not all states have truly embraced the affordable care act. the expansion of the medicaid program had a very profound positive impact. creation of our own exchange so we were more in control of our own destiny. establishing standards that reflected our values in the state of washington is something that we did. most states did not take those actions and as a consequence they've seen more in the way of rate increases. our rate increases have not gone up until this last year. we were under 10% per year and now we've seen an increase. stabilizing the market is really going to make a difference from our standpoint. senator roberts: appreciate that. next, please. ms. wing-heier: it's a tough call because you hate to see people without insurance. we have the special enrollment
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periods for a reason and that brings into your waiting period because you cannot just in all circumstances just go and enroll if you miss open enrollment. there is few criteria if you miss it. alaska would be looking more at the penalty. senator roberts: yes, ma'am. ms. miller: we need to do everything we can to make sure our risk pools are as robust as possible. i haven't seen an alternative to the individual mandate that would be as good an option to make sure we have the young and healthy. i am not saying the mandate has been perfect by any stretch but i haven't seen an altertive that would do as well as that terms of keeping the young and healthy in. mr. doak: i am not in favor of a mandate. you might be surprised. there are other ways to reach plan design, to reach this group that does not have insurancthat avail themselves of more creative plan design relative to catastrophic plans for the young and invincible to
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possibly having them use health savings accounts. there are ways. i am not sold on this marketing campaign that some of these -- that a few of the senators talked about either. insurance companies have been marketing at every football game we watch. possibly if they incentivized agents and brokers to sell this type of product they might have a better result than use navigators. senator roberts: is that football game oklahoma comes to kansas state? mr. doak: yes, sir. senator roberts: i have a real quick question and i aout of time. how would increasing the age ting curve 5-1 to 4-1 as opposed to 3-1? that would be an intermediate change. if you so choose, if you so choose with regard -- trying to get more younger people into the plan? for it, against it, what? yes or no?
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start with oklahoma. senator alexander: we are basically out of time. if you could -- senator roberts: they can submit it for the record, mr. chairman. senator alexander: you can make a short answer, that's . senator roberts: the rating band, the exchange doesn't have -- mr. doak: i would be in favor of changes. ms. miller: i would have concerns increasing. ms. wing-heier: we have concer strictly because our rates for the older population are so high right now we'd price them out of ever being able to afford it. enator roberts: in the designate we say mature. . kreidler: we are 3-1 before the a.c.a. we were not far off 3-1. ms. mcpeak: i wou be in favor
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of 5-1 to bring the younger, healthier into the risk pool with more affordable premiums. senator warren: thank you, mr. chairmanfor holding this hearing. thank you, ranking member. i think it's important we are having a bipartisan conversation about how to improve health care instead of destroy health care in america. at the same time we are having this conversation, president trump is actively working to sabotage our health care system. he's using a l of different tactics but two of them include keep ng federal help to out-of-pocket costs low. and advertising efforts so people can know about affordable health insurance. let me see if i can do this first part quickly. withholding the federal dollars that keep costs lower, commissioner mcpeak, are american families better off or worse off if the president
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refuses to make cost reduction payments? ms. mcpeak: if those payments are not funded, the american consumer is worse off, certainly. not only the individuals that are eligible for those reduced co-payments and deductible amounts but the individuals that would have to pay the increased premium dollars from the carriers associated with that lack of funding. senator warren: and commissioner kreidler, if the government cuts advertising, fewer people will sign up for health iurance, but how does that affect the cost for the people who do sign up for health insurance? . kreidler: you want to encourage the people that are probably the least likely to sign up to sign up because they are more likely to be healthier individuals that are now protected. they don't become the free riders in our system that rely on uncompensated care to take care of them. it adds costs to the system. the more accountable you make health care, the better it is for all of us. senator warren: well, very strong points on both of these.
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the president has been perfectly clear what he's dog, sabotaging health care and dring up costs for families. it's petty. 's going to hurt millions of people. and if he won't stop on his own, then congress should stop him. but for me at's just the beginning of what we need to do to really impve health insurance in this country. secretarmiller, did the a.c.a. put in place any sort of restrictions on how high an insurance company can raise its premiums in gaven year? ms. miller: senator, i think aside from the fact in many states we approved those -- senator warren: i am not going -- ms. miller: there are no restrictions in the a.c.a. nator warren: there are no restrictions but some states impose tgh rules to protect consumers and they insist that the insurance companies have their tes approved by the insurance commissioner before those rates can go into effect. so let me ask secretary miller.
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in the past years before all the chaos that has come to the markets lately, did you let insurers in pennsylvania charge whatever they wanted for their plans? ms. miller: did i not, senator. senator warn: you did not? coissioner kreidler, i understand that in washington state, like nnsylvania, insurance companies have to get permission ahead of time. do insurers always come up wh reasonable premiums the first time around? mr. kreidler: no, theyo not. senator warren: someone laughed t loud during that. mr. kreidler: we apply a vigorous review. we are one of the states that are the most vigorous. in fact, we're rked by the federal government as being a state that can do that hard reew. i think several of us -- senator warren: hard review. and you have data how much yo pushed down one of the most recent premium requests.
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mr. kreidler: we do. i am not going -- i can't remember exactly which one that was. senator warren: 30% drop in average rates? mr. kreidler: it was something like that. senator warren: good. good. 30% drops in average rates. the reason i raise this, letting insurance compani charge whatever they want opens up price gouging. rate review programs among various states have saved consumers about $1.5illion in premium costs in just 2015 alone in a single year. unfortunately, not every state is stepping up on this, andhe difference is huge. from 2010 to 2013, just that short ti period, premium increases in states with the weakest review programs were 10% higher thain states with the strongest review programs. and that's a lot of money that a lot of families paid out.
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for met just shows the kind of work that we need to do. right now medicare restricts premium increases for most beneficiarie but the a.c.a. doesn't. medicare has high stdards for the medicare advantage plans while the a.c.a. in many cases has lower standards. medire and medicaid plans cover everybody who qualifies. a.c.a. plans can pick and choose who they get in the game with. let's be blunt. we can either make tse markets work better for consumers or we can let insurance companies hold people hostage in order to maximize their own profits. so in my view, if we're really serious about trying to make these rkets work, we need to talk about the kind of rules that make them work best for consumers. thank you, mr. chairman. senator alexander: thank you, senator warren. senator whitehouse. senator whitehouse: thank you, chairman. let me first as former
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insuranc commissioner in our state welcome our distinguished nel and, again, thank the chairman and the ranking member for trusting this committee to do a fair and thoughtful bipartisan process. we did it in education with great success to unanimous significant bill out of this committee and i'm confident we can do something very worthwhile here. i want to open by pointing out that our health inrance commissioner in rhode island has written that the a.c.a. has worked in rhode island and we have a remarkable story to tell. i'm quoting a letter from this january. rhode island has enjoyed mke stability and enjoyed -- premium increases in the individual and small group markets have been relatively modest. for plan year 2017, plan changes in the individual market will range from a 5.9% decrease to 5.9% increase based on issuer. in the small group market average premium changes in 2017 will range from a decrease of
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3.1% to an increase of 3.6% based on issuer. so to my colleagues, please follow the hippocratic oath and do no harm to those of us who have stas where this is all working very well. the last point i'll make before i go to questions is i hope that the bipartisan process that we're embarked on here with respect to shoring up the markets can continue and be extended into other areas, patient safety and medical errors remains a huge issue with tens of thousands of american casualties every year. there's nothing republican or democrat about ending hospital-acquired infections. the wild variations in care and outcomes is an issue that we can address. it ought to be bipartisan to find the best states and best practices and encourage those. there is nothing republican or
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democrat about high administrative overhead and continuing feuding between insurers and providers over payment. the care that patients want at the end of life ought to be something we can make sure that they actually get. there ought to be no bipaisan -- no partisan difference about honoring a patient's and family's wishes as they near the end of life. and finally, payment reform so that doctors are compensated for keeping people healthy rather than starved onhat front and compsated only when they do late-stage procedures when somebody's health is already compromised. another great area for bipartisan action. so i hope we will continue on those fronts. my queions are my questions are primarily to director when i are --
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appreciate you coming away from alaska. i ask about the 1332 waiver process in which you created your reinsurance program, not based on hitting a financial number, a dollar number in claims and having the reinrance kick in but based on a diagnosis, based on conditions, correct? >> yes, we did. >> w did you make that choice? we did a data call and had all the insurers in the market the first two years submit their claims, submit that data to an independent actuary who then we had segregated claims from the highest to the lowest based on conditions so we could see what we are dealing with, what was causing the market for our increases to be 40% two years in a row. we then made the determination that if we remove the top 10, top 20, top 30 we could put a correlation to how that would impact the market as far as how
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our rates would stabilize or decrease. >> why pick conditions rather than say $100,000 per claim or a more numerical -- >> looking at the biggest impact we could have to stabilize e markets down to one insurer. and stabilize to the greatest extent we could and removing the entire claim or entire person from a small pool had the ggest impact or bang for our buck. >> what happens the year-to-year when someone goes to a new enrollment period. or shifts their carrier? does the new carrier know that -- because they have the diagnosis will follow them, or do they have to stay?
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>> if we had a second carrier based on the conditions that person would be seeded the first of every year, containing the diagnosis. >> so the reimbursement, reinsurance for the carrier follows the individual year to year for as long as the diagnosis or condition remains in place? >> as long as they are treating. senator whitehouse: did you consider setting up a risk pool rather than a reimbursement system for those individuals? >> yes, we did. senator whitehouse: why did you choose t reimbursement system rather than the risk pool? >> we chose the reimbursement system to have the biggest pact on a very small market. whitehouse:te
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so the administrative problem of setting up a sarate pool would've been a problem for a small -- >> we feel we had a pool to begin with and with a 20,000 who re in at the time were sought succeeding. to create a pool within apool we need to get those high cost claimant out of the pool so the entire individual market we could reduce the rates, and people could afford the premiums. senator whitehouse: got it. my time is running out, but i would like to ask the question to each of you. this would be a question for the record given the timing, but if an insurance company came to you, to your organization, proposing to sell health insurance in your state, i'd like to know what steps such,, particularly as setting up a provider network, you would expect or require ofthat that insurer. and conversely, what concerns would you have about an inch or -- insurer showing up in your
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state purporting to offer health insurance who was not prepared to create a provider network and go through whatever other steps you would require? with that i'm out but i would really be interested in your answer to those questions. thank you. >> thank you, senator whitehouse. it's been a very good discussion. both the hour before we started . i want to ask senator murray had concluding remarks. senator franken do u have some , concluding remarks? senator franken i was going to : ask a question about prescription drugs but you want us to conclude and i -- >> go ahead if you would like. senator franken: i just want make, as a rhetorical question about e cuts by hhs in advertising for the exchanges. mr. doakes and insurancecompanies advertise at every football game we watch. of those insurance companies st stupid? or maybe insurance advertising
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works. that's the rhetorical question. i think there's a reasonho insurance companies advertise, and i think that, guess the question is are they funded by the federal government. does that make sense or not? i think the issue is, does advertising work? if you are cutting it by 90% you're probably cutting the effectiveness of the advertising,hoever pays for it. >> we have thousands, millions of licensed agents and brokers all across the united states,senator, that it been doing a great job in health insurance market before obamacare. and could be doing the same after. senator franken: i meant it as a rhetorical question, which i said, but good luck with that is right. the point is that they advertise for a reason whether or not they sell to brokers are not ,advertising does work and
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that's why the advertise. i had a question on pharmaceuticals what it really don't want to eat up time. although would like to think the chrman. we had a hearing on pharmaceuticals, and i think, i think as you all have said in one way or another that pharmaceical spikes in the last three years or so has been one of the things responsible for the premiums going up. and i would love to hear your thoughts on how we can get those under control, and maybe we can do that in a written answer so that the chairman andthe ranking member can conclude. one other, my favoritemoment in the hearing so far was senator -- my favorite moment in the hearing so far was senator thinking ms.
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wing-heier coming from alaska. my favorite moment was seeing senator murkowsk expression when he did that. [laughing] >> thank you, senatofranken. senator murray, do you have any concluding remarks? >> you are easily entertained, mr. franken. i wanto thank all of our witnesses today. this is been an extremely important first step. i know we ve three more hearings. we do have a very short time frameithin which to do this. and we need to seize this opportunity. i know my site looks forward to working with you and i appreciate the opportunity. >> thank you, senator murray. we have d maybe half the senate involved. pretty unusual. mostly on our best behavior. we welcome that.
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i like to conclude with these remarks. what the right amount of money is but according to cms, 2016 navigators received 62 million federal money, less than 1% of the total enrollees. of $5,000 per in royally. spendst costly navigators 2.7 million to enroll 314 million people. only 22% of all navigators own performance goals. maybe it is an area that needs some oversight. for seven years we have been in
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stalemate on health insurance with most of about 6% of americans who their insurance on the individual market when we really should have been spending more time on the fundamental problems with the american health care system that have gdped it to grow from 9% of in 2015two nearly 18% and 2 in 2025. , we have thisme phenomenon of 5% of those who receive health care consume 60% of the cost. we should be doing more on the larger question about addressing health care costs. looking at what we paid to visit the doctor, how to get a test at
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the hospital. what we spend on prescription drugs. how much excessive paperrk and administrative burdens increase costs. encouragee done to wellness? that is the w hanging fruit. what can be done to prevent more serious illness and disease and the high cost of being ill? we should be looking at real ways to bring down the cost of health care which is the bestway to reduce the co of health insurance. what i have heard has been heful. focused hearing on a narrow part of the market. most of the problems, 6%, the people with insurance. and what we ask you to do is focus on what can we do especially this month that might affect 2018. i heard threthings mostly. reinsurance, cost-sharing reductions, and more flexibility
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from 1332. reinsurance,one way to do reinsurance of course is the way minnesota and alaska did it, to use some federal money you are getting to do that. i'm not suggesting that is the long-term solution. reinsurance has broad support. it is not a complicated idea. take this narrow market, a small market and recognize some are very sick and we need to create a fund to pay for the cost of some of those people. there are a varie of ways to do that. charge everybody something on their premium. clearly reinsurance is one part of the solution to a long-term fix for the individual market. term, in time to
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have an effect on 2018, may be a that makein any way it easier to create your own short-term reinsurance year. that may be hard. suggestions for improving 1332. ,he six-month waiting perio if washington put something in that is approved why can't tennessee sawe want to do what washington did with one change? the idea of letting the process go ahead would just be application of the governor or insurance commissioner and not wait for legislature to have to
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meeta lawince some only every two years. alaska submitted a list of reforms. i thank you for mentioning those. planning funds. this miller mentioned that. do toeems odd thing to give money to a balanced budget state government but i understand the problem of quick providing of funds to make your application for a longer-term plan. i was intrigued with the abouttion, what can we do the budget neutrality requirement? i make sure that doesn't keep you from doing what you would to make a long-term plan. is there any way to inclu the savings that you have in medicaid with what you are doing in the individual market? thetwo different waivers
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federal government has. new hampshire has tried to do some things in that area. the governors both support it. they are not able to do it. that is a short list of some things that might make some real difference in the 23 states that have actually started the process for applying for a waiver. i'm hopeful that may be some combination of continuing cost-sharing, we can discuss what that time is, and significant changes in flexibility for states, mostly through amendments to stion 1332, might provide a basis for action we can take this month. we will count on the house of representatives and the president to take advantage of that. my hope is they would.
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juan.ould only be step then we would go -- step one. then we would go to a strong vibrant market. i hope we can begin to spd most of our time on the larger issue of health care costs. comments youther would like to give to us we would like to have them in writing. we are moving pretty quickly. the record will be open for comments and questions. tomorrow our committee will meet to hear from five governors to discuss marketplace stability. we have two more hearings next week. and we will see what we think we can complish. thank you for being here. the committee will stand adjourned.
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[indiscernible conversation]
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[captioning performed the national captioning institute, which is responsible for its caption content and accuracy. visit ncicap.org] [captions copyright national cable satellite corp. 2017] >> there is a great deal. a rapid pace that we will have to make a recommendations to the full senate and come up with something democrats support. hopefully senator murray and i can support it. and get a consensus within the senate. have republicans
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and democrats who are members of the finance committ. >> a temporary bringing back would be useful until states have time to put together year. >> that would take new money. that would be hard to do. things they can do to support open enrollment. what i said is on it is. >> thank you. [indiscernible conversation]

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