[House Hearing, 113 Congress]
[From the U.S. Government Publishing Office]
PROTECTING AMERICA'S SICK AND CHRONICALLY ILL
=======================================================================
HEARING
BEFORE THE
SUBCOMMITTEE ON HEALTH
OF THE
COMMITTEE ON ENERGY AND COMMERCE
HOUSE OF REPRESENTATIVES
ONE HUNDRED THIRTEENTH CONGRESS
FIRST SESSION
__________
APRIL 3, 2013
__________
Serial No. 113-24
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Printed for the use of the Committee on Energy and Commerce
energycommerce.house.gov
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COMMITTEE ON ENERGY AND COMMERCE
FRED UPTON, Michigan
Chairman
RALPH M. HALL, Texas HENRY A. WAXMAN, California
JOE BARTON, Texas Ranking Member
Chairman Emeritus JOHN D. DINGELL, Michigan
ED WHITFIELD, Kentucky Chairman Emeritus
JOHN SHIMKUS, Illinois EDWARD J. MARKEY, Massachusetts
JOSEPH R. PITTS, Pennsylvania FRANK PALLONE, Jr., New Jersey
GREG WALDEN, Oregon BOBBY L. RUSH, Illinois
LEE TERRY, Nebraska ANNA G. ESHOO, California
MIKE ROGERS, Michigan ELIOT L. ENGEL, New York
TIM MURPHY, Pennsylvania GENE GREEN, Texas
MICHAEL C. BURGESS, Texas DIANA DeGETTE, Colorado
MARSHA BLACKBURN, Tennessee LOIS CAPPS, California
Vice Chairman MICHAEL F. DOYLE, Pennsylvania
PHIL GINGREY, Georgia JANICE D. SCHAKOWSKY, Illinois
STEVE SCALISE, Louisiana JIM MATHESON, Utah
ROBERT E. LATTA, Ohio G.K. BUTTERFIELD, North Carolina
CATHY McMORRIS RODGERS, Washington JOHN BARROW, Georgia
GREGG HARPER, Mississippi DORIS O. MATSUI, California
LEONARD LANCE, New Jersey DONNA M. CHRISTENSEN, Virgin
BILL CASSIDY, Louisiana Islands
BRETT GUTHRIE, Kentucky KATHY CASTOR, Florida
PETE OLSON, Texas JOHN P. SARBANES, Maryland
DAVID B. McKINLEY, West Virginia JERRY McNERNEY, California
CORY GARDNER, Colorado BRUCE L. BRALEY, Iowa
MIKE POMPEO, Kansas PETER WELCH, Vermont
ADAM KINZINGER, Illinois BEN RAY LUJAN, New Mexico
H. MORGAN GRIFFITH, Virginia PAUL TONKO, New York
GUS M. BILIRAKIS, Florida
BILL JOHNSON, Missouri
BILLY LONG, Missouri
RENEE L. ELLMERS, North Carolina
Subcommittee on Health
JOSEPH R. PITTS, Pennsylvania
Chairman
MICHAEL C. BURGESS, Texas FRANK PALLONE, Jr., New Jersey
Vice Chairman Ranking Member
ED WHITFIELD, Kentucky JOHN D. DINGELL, Michigan
JOHN SHIMKUS, Illinois ELIOT L. ENGEL, New York
MIKE ROGERS, Michigan LOIS CAPPS, California
TIM MURPHY, Pennsylvania JANICE D. SCHAKOWSKY, Illinois
MARSHA BLACKBURN, Tennessee JIM MATHESON, Utah
PHIL GINGREY, Georgia GENE GREEN, Texas
CATHY McMORRIS RODGERS, Washington G.K. BUTTERFIELD, North Carolina
LEONARD LANCE, New Jersey JOHN BARROW, Georgia
BILL CASSIDY, Louisiana DONNA M. CHRISTENSEN, Virgin
BRETT GUTHRIE, Kentucky Islands
H. MORGAN GRIFFITH, Virginia KATHY CASTOR, Florida
GUS M. BILIRAKIS, Florida JOHN P. SARBANES, Maryland
RENEE L. ELLMERS, North Carolina HENRY A. WAXMAN, California (ex
JOE BARTON, Texas officio)
FRED UPTON, Michigan (ex officio)
C O N T E N T S
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Page
Hon. Joseph R. Pitts, a Representative in Congress from the
Commonwealth of Pennsylvania, opening statement................ 1
Prepared statement........................................... 2
Hon. Michael C. Burgess, a Representative in Congress from the
State of Texas, opening statement.............................. 3
Prepared statement........................................... 5
Hon. Henry A. Waxman, a Representative in Congress from the State
of California, prepared statement.............................. 6
Witnesses
Susan Zurface, on Behalf of the Leukemia and Lymphoma Society.... 7
Prepared statement........................................... 10
Mary Taylor, Lieutenant Governor, State of Ohio.................. 21
Prepared statement........................................... 23
Sara R. Collins, Vice President, The Commonwealth Fund........... 44
Prepared statement........................................... 46
Ron Pollack, Executive Director, Families USA.................... 70
Prepared statement........................................... 72
Thomas P. Miller, Resident Fellow, American Enterprise Institute. 76
Prepared statement........................................... 78
PROTECTING AMERICA'S SICK AND CHRONICALLY ILL
----------
WEDNESDAY, APRIL 3, 2013
House of Representatives,
Subcommittee on Health,
Committee on Energy and Commerce,
Washington, DC.
The subcommittee met, pursuant to call, at 1:00 p.m., in
room 2322 of the Rayburn House Office Building, Hon. Joe Pitts
(chairman of the subcommittee) presiding.
Members present: Representatives Pitts and Burgess.
Staff present: Gary Andres, Staff Director; Sean Bonyun,
Communications Director; Paul Edattel, Professional Staff
Member, Health; Julie Goon, Health Policy Advisor; Sydne
Harwick, Legislative Clerk; Katie Novaria, Professional Staff
Member, Health; John O'Shea, Professional Staff Member, Health;
Andrew Powaleny, Deputy Press Secretary; and Heidi Stirrup,
Health Policy Coordinator.
OPENING STATEMENT OF HON. JOSEPH R. PITTS, A REPRESENTATIVE IN
CONGRESS FROM THE COMMONWEALTH OF PENNSYLVANIA
Mr. Pitts. The subcommittee will come to order. The Chair
will recognize himself for an opening statement.
During the last several years, there have been few areas of
agreement between Republicans and Democrats on how our health
care system should be reformed to better serve patients. From
the beginning, however, one area that both sides have
designated as a top priority is coverage for those with
preexisting conditions.
In the Republican alternative to Obamacare, we proposed $25
billion over 10 years to aid Americans suffering from
preexisting conditions through new universal access programs
that reformed and expanded state based high-risk pools and
reinsurance programs.
Obamacare, unfortunately, provided only $5 billion in its
Preexisting Condition Insurance Plan, PCIP, we will call it,
for this purpose until January 1, 2014. At the time of the
health care law's passage, Republicans argued that the funding
level was too low and would not cover all of those it was meant
to help.
The first real signs of trouble for the federally
administered high-risk pools came in August 2012, when CMS
reduced payments to providers treating a high number of high-
risk pool enrollees, hitting hospitals especially hard.
Additionally, the agency cut the number of participating
pharmacies that provided certain types of drugs to program
enrollees. Next, on January 1, 2013, CMS increased the maximum
out-of-pocket costs for program enrollees by $2,250 and
mandated greater use of mail-order pharmacy. Finally, on
February 15, 2013, CMS announced that it was suspending
enrollment in PCIP altogether, due to financial constraints.
All of these actions were taken despite the fact that
enrollment in the high-risk plans was less than 30 percent of
what had been expected. Original estimates were that 375,000
people would sign up for the federal high-risk pools. In fact,
only approximately 110,000 individuals have joined.
CMS is now trying to stretch what is left of the initial $5
billion to cover those already enrolled in the program until
January 1 of next year. What will happen to those people who
had pending applications for PCIP when CMS cut off new
enrollment? What about those, by some estimates 40,000 people,
who would have enrolled during the remainder of this year? They
are left without options and without coverage.
On March 5, Speaker Boehner, Leader Cantor, Whip McCarthy,
Conference Chair McMorris-Rodgers, Chairman Upton, Dr. Burgess
and I sent a letter to the President asking that he redirect
funding from other Obamacare accounts to PCIP to allow the
program to continue accepting new enrollees.
Although we still hope for a full repeal of the health care
law and replace it with other reforms, we have reached out to
President Obama and asked him to work with us to help those
most in need get coverage and care. We are still waiting for
his response.
I want to thank all of our witnesses for being here today.
I look forward to your testimony. I would like to conclude my
statement at this time.
[The prepared statement of Mr. Pitts follows:]
Prepared statement of Hon. Joseph R. Pitts
During the last several years, there have been few areas of
agreement between Republicans and Democrats on how our health
care system should be reformed to better serve patients.
From the beginning, however, one area that both sides have
designated as a top priority is coverage for those with pre-
existing conditions.
In the Republican alternative to Obamacare, we proposed $25
billion over 10 years to aid Americans suffering from pre-
existing conditions through new universal access programs that
reformed and expanded state based high-risk pools and
reinsurance programs.
Obamacare, unfortunately, provided only $5 billion in its
Pre-Existing Condition Insurance Plan (PCIP) for this purpose
until January 1, 2014.
At the time of the health care law's passage, Republicans
argued that the funding level was too low and would not cover
all of those it was meant to help.
The first real signs of trouble for the federally-
administered high-risk pools came in August 2012, when CMS
reduced payments to providers treating a high number of high-
risk pool enrollees, hitting hospitals especially hard.
Additionally, the agency cut the number of participating
pharmacies that provided certain types of drugs to program
enrollees.
Next, on January 1, 2013, CMS increased the maximum out-of-
pocket costs for program enrollees by $2,250 and mandated
greater use of mail order pharmacy.
Finally, on February 15, 2013, CMS announced that it was
suspending enrollment in PCIP altogether, due to financial
constraints.
All of these actions were taken despite the fact that
enrollment in the high-risk plans was less than 30 percent of
what had been expected.
Original estimates were that 375,000 people would sign up
for the federal high-risk pools. In fact, only 110,000
individuals have joined.
CMS is now trying to stretch what is left of the initial $5
billion to cover those already enrolled in the program until
January 1 of next year.
What will happen to those people who had pending
applications for PCIP when CMS cut off new enrollment?
What about those, by some estimates 40,000 people, who
would have enrolled during the remainder of this year?
They are left without options and without coverage.
On March 5, Speaker Boehner, Leader Cantor, Whip McCarthy,
Conference Chair McMorris Rodgers, Chairman Upton, Dr. Burgess,
and I sent a letter to the president asking that he redirect
funding from other Obamacare accounts to PCIP to allow the
program to continue accepting new enrollees.
Although we still hope for a full repeal of the health care
law, we have reached out to President Obama and asked him to
work with us to help those most in need get coverage and care.
We are now waiting for his response.
# # #
Mr. Pitts. Since we do not have any of the minority members
here, I will recognize the vice chairman of the committee, Dr.
Burgess, for 5 minutes for his opening statement.
OPENING STATEMENT OF HON. MICHAEL C. BURGESS, A REPRESENTATIVE
IN CONGRESS FROM THE STATE OF TEXAS
Mr. Burgess. I thank the chairman for the recognition. I
also want to thank the witnesses for being with us today. I
appreciate you making the effort to be here because this is an
important issue. Some of you I have met before. For others,
this is the first time, but welcome all.
We hear a lot that Republicans don't have alternatives or
other ideas for the replacement of the President's health care
law. I know this is untrue. Many of you on the panel know it is
untrue. If anything, our party has a multitude of ideas. But
one overreaching aspect of policy that there seems to be
general consensus is, we do need to address the needs of
Americans with what are called preexisting conditions. As the
chairman said, the Affordable Care Act created the new
Preexisting Condition Insurance Plan, affectionately known as
PCIP. I think I will refer to that as the federal plan so it
won't be confused with State plans. But it was arguably
duplicative of actions taken by 35 States prior to 2010 that
were operating high-risk pools, and they served an estimated--
well, over 200,000 Americans. It has been shown that State-
based programs do play an important role in lowering the costs
across markets and providing coverage options for those who are
faced with a preexisting condition. In some States, the federal
preexisting program was merged with the State's existing high-
risk pool, and in others, like my home State of Texas, the PCIP
plan operates parallel to the State's pool. However, the
federal preexisting plan is providing coverage to 100,000
individuals, well short of the 375,000 that CMS estimated, but
still a significant and compelling group of people who all have
stories and deserve protection.
As a physician, insuring those with preexisting conditions
and assuring that they have access to affordable health
insurance is a top priority for me. As much as I believed that
the President's Affordable Care Act stretched the bounds of
constitutionality, and in fact, I still believe that, I was
concerned that if the Supreme Court felt as I did that day and
said look, this thing is outside the bounds that the
Constitution places on the legislative branch, folks are going
to have the rug pulled out from under them who had been in the
federal preexisting program and then could be barred from
merging into a State's pool because the federal program had
previously provided them coverage. That is why to ensure that
that did not happen, I was prepared to answer that challenge
and introduce the Guaranteed Access to Health Insurance Act of
2012 prior to the Court's decision to provide States with the
financial backing to decide how best to provide coverage for
their populations who would be in this risk pool.
I will also note that unlike many of the complaints that
the federal preexisting program has faced, the bill did not
require those with preexisting conditions to jump through hoops
or to remain uninsured for some unreasonable period of time
before being eligible for coverage. There are always stories of
those who have done the right thing, insured themselves and
then for reasons kind of beyond their control fall out of the
system--they lose their job, they get a tough medical diagnosis
and then find themselves forever frozen out of coverage. Those
were the stories that people thought of, and people did come to
us with that concern. In the summery of 2009, many of you
remember the rather tense town halls that were held across the
country, and what did people tell us? Yes, they were worried
about people with preexisting conditions. They didn't want us
to mess up what was already working for arguably 65 or 68
percent of the country, and they sure wanted some help with
costs, and it turns out, we failed on all three counts with the
Affordable Care Act.
How many people have aged into the 6-month exclusion since
the Centers for Medicare and Medicaid Services made the
announcement that the federal program was now closed. Someone
who said well, I am going to start the clock in October and I
will be able to enroll in April now find themselves frozen out
of the system. Was it because that the federal preexisting
program was designed poorly, because its costs were too high?
Was it because maybe the problem of serious preexisting
conditions existing in a population that wanted to purchase
insurance was lower than estimated? We will never know, but it
would have been nice to think these things through prior to
adopting the Affordable Care Act.
I will admit that many of the current State-based programs
are underfunded and lack the ability to meet their needs. It is
costly to deal with these issues. These people are sick. They
have multiple medical conditions.
I was prepared to authorize $30 billion. Five billion was
what the federal program allowed. I was prepared to authorize
$30 billion. I got people back in my district who say, Dr.
Burgess, $30 billion, that is way too much money, we don't have
the money. Well, I will tell you what: it is a lot cheaper than
the $2.6 trillion that this thing is going to cost, and we
wouldn't have had to blow up the whole system in order to take
care of those people that arguably are going to need help. If
we are serious about funding these programs and dealing with
these issues, these costs are but a drop in the bucket as to
what the Affordable Care Act will cost our Nation.
Mr. Chairman, I see you have already been generous with the
gavel. I have consumed the time that you yielded back and my
time as well. I have considerably more, and I will provide that
for the record, and I am anxious to hear from the witnesses, so
I yield back.
[The prepared statement of Mr. Burgess follows:]
Prepared statement of Hon. Michael C. Burgess
Thank you Mr. Chairman,
For far too long, Republicans have been accused of not
having alternatives to the major parts of President's health
care law.
Although we can all attest that this is simply untrue--if
anything our party has a multitude of ideas--one overreaching
policy we all agree on that requires action is addressing the
needs of Americans with pre-existing conditions.
The Affordable Care Act created the new Pre-Existing
Condition Insurance Plan (PCIP) which was arguably duplicative
of actions taken by 35 states prior to 2010 that were operating
high risk pools which served an estimated 207,000 Americans.
It has been shown that state-based programs play an
important role in lowering costs across markets and in
providing coverage options for those with preexisting
conditions.
In some states PCIP was merged with a state's existing high
risk pool and in others, like Texas the PCIP plan operates
parallel to the state's pool.
However, PCIP is providing coverage to over 100,000
individuals--well short ofthe 375,000 CMS estimated--but still
a significant group of people who need protection.
As a physician, ensuring those with pre-existing conditions
have access to affordable health insurance is a top priority
for me.
As much as I believed that the ACA stretched the bounds of
Constitutionality and still do, I was concerned that had the
Supreme Court invalidated the law that those in PCIP would have
the rug pulled from beneath them and could be barred from
merging into a state's pool because PCIP had previously
provided them coverage.
That is why--to ensure that did not happen I was prepared
to answer that challenge had it arisen by introducing The
Guaranteed Access to Health Insurance Act of 2012 prior to the
Court's decision to provide states the financial backing to
decide how best to provide coverage for this population through
a high risk pool, reinsurance program or other innovative
method.
I will also note--unlike many of the complaints that PCIP
has faced--this bill did not require those with pre-existing
conditions to jump through hoops or remain uninsured for 6
months before being eligible for coverage.
There are always stories of those who have done the right
thing and insured themselves, who then fall out of the system--
usually because of a job loss--get a medical diagnosis and even
when their employment status changes can find themselves
forever locked out of coverage.
Those were the stories that people thought of when they did
say they wanted something done about this issue--they also said
they wanted us to address cost and not screw up the rest of the
system for everyone else.
We obviously failed in both those respects when it comes to
the ACA and as of February 15th of this year when CMS announced
it would suspend enrollment in PCIP--the Administration has
failed in implementing an area that conceptually was
bipartisan.
How many people have aged into the 6 month exclusion since
CMS'sannouncement? How many were awaiting coverage but now are
told--especially in states where PCIP is the only option--
you'll just have to wait until 2014? And why was enrollment so
low? Was it because of PCIP's design or because the costs were
still too high, or was it because maybe the problem of serious
pre-existing conditions existing in a population that wanted to
purchase insurance was lower than estimated? We will never
know, but it would have been nice to think these issues out
prior to adopting the ACA.
I will freely admit that many of the current state based
programs are underfunded and lacking the ability to meet their
needs. It is costly to deal with this issue--I was prepared to
authorize $30 billion--House Republicans supported $25 billion
in our substitute to the ACA. We are serious about funding
these programs and dealing with this issue. And those costs are
a drop in the bucket to what the ACA will cost our nation.
But these efforts recognized that for those who do need
insurance and are truly uninsurable in the market--it will be
costly and yet while PCIP's spending has consistently exceeded
expectations the ultimate solution was not to prepare for
needing more money, or transfer funds from other parts of ACA
implementation or even to approach Congress for funding--it was
to tell people tough luck.
I cannot underestimate how important that approach by CMS
and the Administration is to this conversation. If that is the
attitude, what happens if ACA costs exceed what is expected?
What about Medicaid expansion? Is there really a question as to
why states are nervous about seeing exchange subsidies reduced
or the Medicaid FMAP paired down for new populations?
The Administration says that will never happen but yet they
are perfectly willing to turn away sick people--not healthy
childless adults--currently not categorically eligible for
other programs. I think that point is worth hovering on for a
moment. The Administration is saying this is all the coverage
we can afford so no more is available?
So again I ask--what happens if subsidies get too
expensive? What about Medicaid? Already many in Medicaid cannot
get care because he programs reimbursements drive providers
from the program. What about Medicare--we actually know the
answer there too--IPAB. Seems like this could be a trend in
approaching these tough issues.
And there are some who will still say that concerns about
rationing are not based in fact? They will look at us and with
a straight face and say, coverage without access, isn't
something we have to be worried about?
Really? Because I think every single person who is left in
the void between PCIP's enrollment suspension and 2014 is a
testament to these being VERY real concerns that are worth
asking of the Administration and seeing how far they are
willing to take an ideology that prioritizes coverage over
lowering costs or ensuring access to care.
Thank you.
Mr. Pitts. The Chair thanks the gentleman, and we do have
statements from the ranking members, Pallone and Waxman, and I
will ask unanimous consent to enter those into the record.
Without objection, so ordered.
[The information follows:]
Prepared statement of Hon. Henry A. Waxman
Today's hearing is focused on a critically important topic:
protecting America's sick and chronically ill. This is a
concern that has driven much of my work on this Committee for
more than three decades. It has driven my work to make
prescription drugs safer and more affordable, it has driven my
work to expand access to Medicaid, and it was a driving force
behind the passage of the Affordable Care Act in 2010.
The Affordable Care Act does more to protect America's sick
and chronically ill than any piece of legislation in the last
50 years. It bans insurance company discrimination on the basis
of pre-existing conditions--protecting tens of millions of sick
and chronically ill Americans from being priced out of or
excluded outright from the health insurance market. It has
already made preventive care available to over 100 million
Americans with no cost sharing--helping prevent people from
getting sick or becoming chronically ill in the first place. It
makes critical investments in our health care workforce and
community based prevention that will allow millions of
Americans to lead healthier lives. And it makes comprehensive
reforms to the health insurance market that will reduce the
number of uninsured by 30 million people and lower costs by
offering generous premium subsidies and promoting competition
among insurance companies.
Starting in 2014 the Affordable Care Act bans insurance
companies from discriminating on the basis of health status or
a pre-existing condition. This is a straightforward, fair
solution to an insurance company practice that has hurt
millions of Americans for years. As temporary bridge program to
full implementation of these reforms, the Affordable Care Act
created a high risk pool called the Pre-existing Condition
Insurance Program (PCIP).
The program was always designed to be a temporary solution
to help some of the sickest Americans who had been locked out
of the insurance market get coverage. It was given a fixed
appropriation of $5 billion and was set up to offer an
affordable option of comprehensive coverage to a population
with high health needs. It was also set up to be more
accessible than the many state high risk pools that charge high
premiums, have long waiting lists, or are closed to new
enrollees--as Florida's has been for more than twenty years.
Republicans have done a complicated dance in their position
on the PCIP program. They proposed spending $25 billion on high
risk pools as part of a plan to ``replace'' the Affordable Care
Act. But despite proposing five times as much spending on high
risk pools, they criticize PCIP for being too expensive. They
attack PCIP for getting up and running too quickly. But then
they criticize it for not enrolling people fast enough. They
embrace high risk pools as a way to make quality coverage
available to people with pre-existing conditions. But they
ignore the fact that state high risk pools have been
underfunded, oversubscribed, and unaffordable for years. And
most egregiously, they claim that they want to protect
America's sick and chronically ill while working tirelessly to
undermine the Affordable Care Act's ban on pre-existing
condition discrimination, its critical investments in
prevention, and its landmark expansion of coverage.
PCIP has been able to help 135,000 of the sickest Americans
get treatment for costly and life threatening conditions like
cancer and heart disease. CMS was prudent with the $5 billion
Congress appropriated for this program and suspended new
enrollment last month. This is not ideal but it is not entirely
unexpected. The agency was working with an imperfect, temporary
policy solution to an intractable problem. I am pleased that
the agency has guaranteed that current enrollees will not lose
their coverage, which is far more than the private insurance
industry would have done for these patients.
The shortcomings of the PCIP program are a sign of just how
dysfunctional the health insurance market was prior to reform
and how urgently we need the comprehensive reforms in the ACA.
Expanding access to coverage and efficiently spread risk across
the market is a far better solution to the problem of rampant
un-insurance and pre-existing condition exclusions than locking
sick Americans into increasingly expensive coverage through
high-risk pools.
In a few short months applicants who were not able to
enroll in PCIP will have access to quality affordable coverage
because of the Affordable Care Act. If my Republican friends
truly share the goal of caring for sick and chronically ill
Americans they will work with us to ensure a smooth transition
to 2014 rather than attacking PCIP for demonstrating how much
we need comprehensive reform.
Mr. Pitts. We have one panel today, and I will introduce
them at this time, and I would like to thank them for taking
time to come and share their expertise with us today. First is
Ms. Susan Zurface on behalf of the Leukemia and Lymphoma
Society. Secondly, the Hon. Mary Taylor, Lieutenant Governor
from the State of Ohio and Director of the Ohio Department of
Insurance. Thirdly, Dr. Sara Collins, Vice President of the
Commonwealth Fund. Fourthly, Mr. Ron Pollack, Executive
Director of Families USA. And finally, Mr. Thomas Miller,
Resident Fellow of the American Enterprise Institute. Thank you
all for coming.
Your written testimony will be made part of the record. We
ask that you summarize your testimony and opening statement of
5 minutes each, and Ms. Zurface, we will start with you. You
are recognized for 5 minutes for your opening statement.
STATEMENTS OF SUSAN ZURFACE, ON BEHALF OF THE LEUKEMIA AND
LYMPHOMA SOCIETY; HON. MARY TAYLOR, LIEUTENANT GOVERNOR, STATE
OF OHIO; DR. SARA R. COLLINS, VICE PRESIDENT, THE COMMONWEALTH
FUND; RON POLLACK, EXECUTIVE DIRECTOR, FAMILIES USA; AND THOMAS
P. MILLER, RESIDENT FELLOW, AMERICAN ENTERPRISE INSTITUTE
STATEMENT OF SUSAN ZURFACE
Ms. Zurface. Thank you. Mr. Chairman and members of the
Health Subcommittee, as a patient with blood cancer, it is my
honor to share my experience and those of other blood-cancer
patients as they have attempted to utilize the Preexisting
Condition Insurance Program.
I am a 42-year-old single mother with a full-time legal
career. I live in rural southern Ohio in an area that has been
clearly affected by the economic recession. I am a solo
practitioner with a modest law practice, a sizable portion of
which is dedicated to serving indigent clients.
I have two children, who thankfully have health coverage
under their father's medical plan. I am active and I strive to
keep myself healthy. For the last 13 years, I have rarely been
ill and I have not needed health insurance coverage.
After my mother's death in September of 2012, I became ill,
and after nearly 8 weeks, I ultimately saw my family physician
and a series of tests were ordered. A week and a half later, on
January 9, I received the first test results confirming a
diagnosis of chronic lymphocytic leukemia, CLL, one of the most
common types of adulthood leukemias. The bill for that analysis
alone was $7,600. After follow-up tests and a three-day stay in
the MICU at Wexner Ohio State University Medical Center, I
received over $50,000 of medical bills that I could not afford.
Thankfully, the social workers at the hospital immediately
enrolled me in Ohio's Hospital Care Assurance Program, HCAP.
Because my income met the threshold for eligibility, I
currently have 100 percent medical coverage. Eligibility for
HCAP is reviewed quarterly. I have been working full time since
the beginning of February, so I will likely lose eligibility
for this program.
In late February, I learned about the Ohio High Risk Pool
program. Just before sending in my application, I learned that
the program was no longer accepting new patients due to lack of
funding. My options are limited. I cannot qualify for Medicaid
unless my income is low or I become disabled by my CLL, and I
cannot afford a high-premium or high-deductible plan. If I am
working at a normal capacity, I will almost always exceed the
level to maintain continuous assistance through HCAP but not by
enough that makes health care affordable. Even without costly
treatment, my CLL requires regular medical care, blood
screenings, and screenings for secondary cancers. Without the
benefit of coverage, I have three options: do nothing at high
financial and health risk, declare medical bankruptcy or enroll
in clinical trials out of financial, not medical, necessity.
The Leukemia and Lymphoma Society has identified three
barriers that exist in this program. First, the 6-month wait
without health insurance that a patient must endure before
becoming eligible to enroll; second, premiums that are
prohibitively high; and third, the lack of portability across
networks.
I have submitted a representative sample of stories from
patients who have been working with LLS as part of my written
testimony.
When seriously ill patients are forced to go uninsured for
6 months, they risk deeper illness or death, bankruptcy, and/or
the potential loss of their homes. This barrier cannot be
changed through the regulatory process. We urge Members of
Congress to work together to remove this barrier legislatively.
A second significant barrier is the relatively high cost of
coverage. Nearly 80 percent of the uninsured with high-cost
chronic conditions are individuals with incomes less than 400
percent of the federal poverty level who will likely find PCIP
premiums unaffordable. Future enrollees in the exchanges will
be provided subsidized premiums and out-of-pocket spending
caps. However, that is not the case with PCIP enrollees.
Furthermore, a small subset of States including Pennsylvania
and several others have exacerbated the problem by prohibiting
third parties from assisting patients by covering the cost of
PCIP premiums. We urge Members of Congress to enact commonsense
reforms to the PCIP program including providing premium support
for those patients who may need assistance and by allowing
patients to receive third-party non-government assistance.
One final barrier that patients experience in PCIP is a
lack of portability across networks. For many patients, once
they have begun their care within a network, it is emotionally
difficult and cost-prohibitive to reestablish relationships
with new providers. The PCIP allows patients to visit providers
outside of a participating network. However, the out-of-pocket
deductibles are double those within the network. There is no
out-of-pocket cap, and a 50 percent coinsurance is added to any
services obtained. We urge Members of Congress to provide
patients with the flexibility needed to obtain the health care
they require.
On behalf of the Leukemia and Lymphoma Society, myself and
the over 1 million patients living with or in remission from
blood cancer, thank you for the opportunity to speak with you
today. We urge Congress and the Administration to work together
to ensure continuity in the program as well as policy fixes
that could make it even more helpful for patients who so
desperately need it.
[The prepared statement of Ms. Zurface follows:]
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Mr. Pitts. The Chair thanks the gentlelady, and especially
thank you for sharing your personal experience and for these
recommendations.
The Chair recognizes Lieutenant Governor Taylor for 5
minutes for an opening statement.
STATEMENT OF HON. MARY TAYLOR
Ms. Taylor. Mr. Chairman and distinguished members of the
committee, thank you for the opportunity to testify this
afternoon regarding Ohio's experience with the High Risk Pool
program under the Affordable Care Act. My name is Mary Taylor,
and I am Ohio's Lieutenant Governor and also the Director of
the Department of Insurance.
States have regulated insurance for decades based on the
specific needs of their populations, economies and insurance
markets. Under the leadership of different Administrations,
Democrat and Republican, over the past 60 years, our department
has managed and regulated a competitive insurance market for
consumers and job creators. Because of our regulatory
environment, Ohio has a very competitive health insurance
market with 60 companies writing health insurance business from
which Ohio's consumers can choose.
In order to determine the impact of the ACA on Ohio's
vibrant market, my department commissioned a report conducted
by Milliman Inc. in 2011. This report projected premiums would
increase in the individual market in Ohio between 55 and 85
percent. In addition, the report projected a substantial shift
in how people get their coverage, and as a result, the size of
the individual market in Ohio is projected to more than double
with the employer-sponsored insurance market decreasing.
In addition to these impacts, the ACA does little in the
way of reducing the underlying cost of care that has
historically driven the increasing cost of health insurance
coverage. This law is a one-size-fits-all national approach to
health care that removes the flexibility from States and is
laden with very narrow and rigid regulations.
More specifically to the High Risk Pool. The High Risk Pool
concept can be a useful tool to address access to health
insurance coverage if done well. However, implementing them as
mandated in the ACA is problematic. The federal government's
poor management and oversight of the program led to its
unsustainability and ultimately the untimely decision to close
enrollment in the program for new participants, leaving a very
vulnerable population without access to insurance coverage.
Ohio's High Risk Pool was organized in 2010 and is
administered by an Ohio-licensed private health insurer but it
is funded by HHS. Our department retained its general
regulatory authority over the High Risk Pool, including the
right to review premium rates and resolve consumer appeals.
Even though the program administered by Ohio was among the most
efficient and cost-effective in the country, the federal
management of the High Risk Pool program quickly caused
disagreements between the two agencies.
In 2011, the High Risk Pool submitted rates to both HHS and
the Ohio Department of Insurance for review and approval. The
Department of Insurance approved the rates that were
actuarially justified for the two High Risk Pool plans using
our normal processes. However, HHS refused to approve the rates
and directed the Ohio High Risk Pool Administrator to
artificially reduce rates for those in the lower-deductible
plan and artificially increase rates for those in the higher-
deductible plan. As regulators, we must ensure that each block
of business is solvent and that one pool of individuals isn't
subsidizing the cost of another pool of individuals. As a CPA
and insurance regulator where a primary concern relates to
company solvency, forcing a company to artificially set rates
causes serious solvency concerns and potentially puts the
company at risk where it can't pay the health claims incurred
by those individuals and families who have insurance coverage
under the plan. Eventually HHS and the Department were able to
come to an agreement on rates, but of course, this caused
consumer confusion and pushed back renewal dates.
Shortly after the problems with the rates were resolved, we
began having eligibility disputes with HHS. As the primary
regulator, the department reserved the right to make final
determinations on eligibility, but in these cases, HHS demanded
the Ohio High Risk Pool Administrator ignore the department's
determination and instead follow HHS's directions. Ohioans who
were clearly eligible for the High Risk Pool according to our
department's review were forced out of the program by HHS,
causing them to lose their only available source of coverage.
After protracted discussions between the department, the
Ohio Administrator and HHS, it became clear that HHS would not
recognize the department's authority. The Ohio Administrator
was then forced to file a lawsuit against both parties seeking
clarification from the courts as to which party they were bound
to follow. An agreement was eventually reached in which the
department's regulatory authority was upheld but this several-
month-long ordeal demonstrated the federal government's
propensity to overreach and disregard State regulation of
insurance that resulted in harm to consumers in the process.
While our pool has come with challenges, to say the least,
we feel this tool is not without merit. However, as you seek
additional funding to allow this program to continue through
2013, we encourage you to ensure States are given control and
flexibility. Just as with the High Risk Pool in Ohio, when a
federal agency steps into a role in which they do not have the
experience or expertise to properly understand the issue, it
can have severe consequences for the market and consumers.
Knowing the challenges that lie ahead, I encourage Members of
Congress to continue working toward a better solution. We will
continue our work to improve quality of care in Ohio, reduce
costs, and truly inform Ohio's health care system.
Thank you for allowing me the opportunity to testify before
you today, and I would be happy to answer questions that you
have at the chairman's request.
[The prepared statement of Ms. Taylor follows:]
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Mr. Pitts. The Chair thanks the gentlelady for her
statement and recognizes Dr. Collins for 5 minutes for an
opening statement.
STATEMENT OF SARA R. COLLINS
Ms. Collins. Thank you, Mr. Chairman, for this invitation
to testify on the Affordable Care Act's Preexisting Condition
Insurance Program.
The major coverage provisions of the Affordable Care Act go
into effect in January 2014, providing new insurance options
for people without health insurance and sweeping new insurance
market reforms to protect people who must buy health plans on
their own. The Congressional Budget Office projects the
combination of new federal subsidies for insurance and
consumers protections will newly insure at least 27 million
people by 2021.
The PCIP program was one of several provisions of the law
that went into effect in 2010 aimed at providing a bridge to
2014 for people who have been particularly at risk of being
uninsured or poorly insured. About 135,000 previously uninsured
people with health problems who are not able to gain coverage
in the individual market because of their health have enrolled
in the PCIP program since 2010. The program has succeeded in
providing transitional support for thousands of people who were
uninsurable in the individual market. The 50-State program
provided more affordable coverage than people could gain in
most existing State high-risk pools which operated in only 35
States and, unlike most State high-risk pools, the PCIP program
offered immediate coverage of preexisting conditions.
But the program's limitations were expected from the outset
and demonstrate why high-risk pools in general are an
inadequate substitute for the comprehensive insurance market
reforms and expanded health insurance options to go into effect
under the Affordable Care Act next January. The PCIP's low
enrollment relative to the millions of uninsured Americans with
serious chronic health problems reflects the program's lack of
premium subsidies. This means that its potential benefits are
out of reach for the vast majority of the population. Seventy-
nine percent of the estimated 7 million people who have a high-
cost health problem who have been uninsured for at least six
months have annual incomes of less than 400 percent of poverty.
Half have incomes of less than 200 percent of poverty. In the
Texas PCIP program, the annual premium for a plan with a $2,500
deductible is about $3,800. For a person with an income of
about $11,000, the premium would comprise one-third of his
income and the deductible 22 percent of his income.
Like the existing State high-risk pools, premiums in the
PCIP have run well short of claims cost. Jean Hall and Janice
Moore found that medical claims relative to premiums or the
medical loss ratios in both State high-risk pools and the PCIP
program exceed 100 percent but that the PCIP medical loss
ratios are as much as seven times that of high-risk pools in
some states. This difference in medical spending between the
two risk pool programs is likely because the PCIP program
provides immediate coverage of people's health problems.
Combined with the fact that people must be uninsured for 6
months, this has likely led to an overrepresentation of people
in the program with serious health problems that have gone
untreated for a long period of time. The top four diagnoses or
treatments in the federal PCIP program are cancers, heart
disease, degenerative bone diseases, and follow-up care after
major surgery or cancer treatments. These conditions comprise
more than a third of claims costs in the federal program.
The experiences of both the PCIP program and the State
high-risk pools demonstrate the profound inefficiency of
segmenting insurance risk pools. Without the benefit of a broad
and diverse group of insured people, both programs operate at a
considerable loss and depend on federal and State financing to
fund the enormous gap between premiums and claims cost. Still,
because of the high premium costs, both programs suffer from
low enrollment.
The Affordable Care Act's insurance market reforms take
effect next year, making it possible for people with health
problems or who are older to purchase a health plan with a
comprehensive benefit package. The expanded eligibility for
Medicaid and premium tax credits for private plans sold through
the new insurance marketplaces means that people with low and
moderate incomes with health problems will face far lower
premiums than they do now in the PCIP program. For example, a
50-year-old man with an income of $23,000 would contribute
about $1,400 annually for a private plan offered through the
State insurance marketplaces next year. In contrast, annual
premiums for 50-year-olds at this income level in the PCIP
program exceed this contribution by nearly two times in
Virginia, which has the lowest PCIP programs, to more than 10
times in Alaska.
Starting in January, enrollees from both the PCIP program
and the State high-risk pool will join millions of new
enrollees in the new State insurance marketplaces with a
diverge age and health profile, which will help spread the
costs of care across a much broader risk pool.
One of the central goals of the Affordable Care Act is to
pool risk in insurance markets far more broadly than is the
case today. Extensive segmentation of risk in insurance markets
has fueled growth in the number of uninsured Americans over the
past several decades. The experience of both the PCIP program
and the State high-risk pools underscores why a shared
responsibility for health care costs across the population and
the lifecycle is essential for an equitable and efficiently run
health insurance system. Thank you.
[The prepared statement of Ms. Collins follows:]
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Mr. Pitts. The Chair thanks the gentlelady.
Mr. Pollack, you are recognized for 5 minutes for an
opening statement.
STATEMENT OF RON POLLACK
Mr. Pollack. Thank you, Chairman Pitts. Thanks for your
graciousness in hosting this hearing, and thank you, Mr. Vice
Chairman, Dr. Burgess, for this hearing.
Preexisting conditions obviously are a very important
matter with respect to what we should do for the large number
of people who are affected by it. I took a look at the
statistics for Texas and Pennsylvania to get a sense of how
many people have preexisting health conditions. I looked at the
totality of them. So in Pennsylvania, more than one out of four
people from birth through 64 have a preexisting health
condition. In Texas, it is 22.5 percent. Obviously, the older
you get, those between 45 and 64, in Pennsylvania, it is 48
percent; in Texas, it is 46.4 percent.
Now, we are obviously not talking about all these people in
this hearing, and that is because most of them get protection
because they have employer-sponsored insurance, and we think
that is good. So what do we do with respect to employer-
sponsored insurance and what can we learn from that?
Well, in employer-sponsored insurance, we do not deny
coverage to people because they have a preexisting condition,
and we think that is good. Employers don't typically ask new
employees, do you have diabetes, do you have a history of
cancer, do you have heart problems, and they don't charge
discriminatory premiums based on health status, and we think
that is good. We don't deny coverage for clinical care that may
relate to one's preexisting condition, and we think that is
good. We don't charge a prospective woman employee a higher
premium because she is more likely to be pregnant than one of
her male colleagues, and we think that is good. We don't charge
those of us who have a few gray hairs a whole lot more in terms
of premiums because of our age, and we think that is good. And
for workers who have difficulty paying for premiums, say, a
middle-class worker who might be getting a salary of $60,000
and yet family health coverage now averages over $15,000, one-
fourth, we provide them with help. Employers provide and pay
for a substantial part of the premiums, and we think that is
good.
Well, as more and more people lose employer-sponsored
insurance, either because employers are finding it too
expensive or more employees are going into part-time work or
functioning as contractors, I think there is a lot we can learn
from that, and the Affordable Care Act helps us do that because
in the individual marketplace, what the Affordable Care Act
will say just like we do with employer-sponsored insurance, you
are not to deny coverage due to a preexisting condition. You
are not to charge a discriminatory premium because of your
health status. You are not supposed to deny clinical care to
somebody that fits with their health care problems. We will not
charge women a discriminatory premium. We are going to limit
the differential in what is paid and what people who are older
have to pay as premiums compared to younger people. And we
provide premium support for those below 400 percent of poverty.
And by the way, with respect to premium support, in
Pennsylvania there will be 896,000 people eligible for premium
support come January 1. In Texas, it will be 2.6 million
people.
The point of all this is that the Affordable Care Act
creates systemic change starting January 1 that is truly
responsive to the needs of those people who have preexisting
conditions, and while we support changes that would enable
those people who right now during this transition period cannot
get into the PCIP program, that should not be done by
undermining the more permanent changes that should be made and
will be made under the Affordable Care Act.
Ms. Zurface talked about two different changes in her
testimony, about there no longer being a 6-month wait and the
need for premium assistance. We agree with her. Of course,
those things would occur starting January 1. So our hope is
that there will be clear recognition that come January 1, we
have a much better way to deal with those folks who have got
preexisting conditions and it will work in a way that is truly
helpful to them.
[The prepared statement of Mr. Pollack follows:]
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Mr. Pitts. All right. The Chair thanks the gentleman for
his opening statement and recognizes Mr. Miller for 5 minutes
for your opening statement.
STATEMENT OF THOMAS P. MILLER
Mr. Miller. Thank you, Chairman Pitts, Vice Chairman
Burgess and members of the subcommittee for the opportunity to
speak today on protecting America's sick and chronically ill.
Preexisting condition insurance plans, or PCIPs,
represented a poorly designed, halfhearted gesture within the
Affordable Care Act. It was aimed primarily at minimizing
political risks rather than addressing a serious problem more
immediately and comprehensively. PCIP coverage served more as a
cosmetic match to cover the consequences of slow implementation
of complex coverage provisions scheduled to begin nearly 4
years after enactment of the ACA.
The program never received sufficient funding to do its job
seriously. The relatively small amount of funding and limited
attention to the program's structural details appeared to
conflict with the exaggerated rhetoric of the Obama
Administration in claiming that the extensive problems of lack
of coverage for tens of millions of Americans with preexisting
health conditions were the primary political rationale for
enacting the ACA's regulatory coverage and financing
provisions.
The political ideology behind the core policies of the ACA
to install guaranteed issue, community rating, mandated
coverage, richer standard benefits and federal regulation of
health insurance trumped targeting the smaller but significant
problem of several million Americans with limited or no
insurance coverage due to serious preexisting health conditions
and addressing it more effectively.
The PCIP program managed to solve less of the problem,
enrolling fewer Americans than traditional State high-risk
pools had enrolled but at a higher per-person cost while still
running out of money. Pretty good for government work. At the
same time, it discouraged continuation beyond 2013 of better
tested State alternative mechanisms, the better-funded high-
risk pools. By setting its premiums for all at no more than
standard rates, contrary to the better practices of the older
State high-risk pools, or HRPs, and also imposing a 6-month
spell as uninsured to qualify for coverage, PCIP only succeeded
in mostly enrolling very desperate high-cost individuals who
had no other alternatives for coverage.
Now, States administering pre-ACA HRPs did a better job by
charging enrollees somewhat higher premiums, offering less
comprehensive coverage and focusing on those individuals who
presented the most serious and costly medical conditions.
However, they too still need more robust sources of funding to
do their job more thoroughly and effectively. But remember,
simply trying to average or hide the same total health care
claims costs across a somewhat wider base--that is the ACA
approach--it may redistribute them but it doesn't reduce those
costs. If the forthcoming health exchanges are plagued by
premium spikes, implementation misfires, limited enrollment and
adverse selection, they may end up more closely resembling
somewhat larger versions of State-level PCIPS than more
competitive alternatives to the current private insurance
market.
Policymakers should consider the following ten points. One,
recognize that health care markets are local, not national. So
too are problems for persons with high-cost conditions. Two,
the rhetoric of delegating administration of sensitive health
policy provisions to State governments needs to be matched by
the reality of federal officials letting go of tight reins and
trusting State officials with more discretion over eligibility,
benefits and appeals issues, within much broader outcome-
oriented federal parameters. Three, be very cautious about
imprecise estimates, and they are often guesses, regarding the
scale, scope and costs of the medically uninsurable and others
with inadequate resources to handle very high-cost/high-risk
health conditions. Four, we should commit a generous amount of
a series of capped annual appropriations to support continued
operations of state HRPs and/or restructured PCIPs, to be
revisited upon subsequent evidence of larger enrollment demand
or higher but medically necessary costs. Five, publicly
subsidizing the high-cost tail of health risks can strengthen
the rest of the private health insurance market. Six, raise
unsubsidized premiums charged for most enrollees in high-risk
pool plans to at least 150 percent of standard rates, but then
provide income-based subsidies for lower-income people.
Separate the issue of income support from that of protection
against losing or lacking coverage solely due to elevated
personal health risk. Seven, complementary policy reforms can
help such as better portability from group to individual market
provisions with creditable coverage, no requiring exhaustion of
COBRA benefits, retargeting premium subsidies, and building
information transparency mechanisms that reward better patient
choices and provider practices. Eight, keep as many older state
HRPs as possible in business after 2013, as an insurance policy
against major problems in exchange implementation and
individual mandate enforcement or compliance. Allowing such
coverage to be considered qualified insurance under ACA would
minimize post-2013 disruptions in the continuity of coverage
and care. Nine, if the overall costs of health care don't rise
more slowly, and individual incomes don't rise more rapidly in
the near future, no amount of subsidized insurance tinkering
can keep up with the larger problem. Finally, the preexisting
condition issue is still a largely limited, modest problem.
Solve it instead of using it as a political excuse to
politically hijack the rest of the private insurance market.
Thank you.
[The prepared statement of Mr. Miller follows:]
[GRAPHICS AVAILABLE IN TIFF FORMAT]
Mr. Pitts. The Chair thanks the gentleman and thanks all
the witnesses for their opening statements, and I will now
begin questioning and recognize myself 5 minutes for that
purpose.
Mr. Miller, let us just continue with you. You have given
us a great list. When Obamacare was enacted into law, you wrote
that the program was designed in a way that would lead to
inevitable problems. What are the principle features, if you
could name a couple, of PCIP that led you to believe that the
program would run out of funding?
Mr. Miller. The program was weighed down by the larger
overall program, but within the provisions of PCIP, the two
core provisions, of course, are designing it with the 6-month
requirement for uninsured coverage, which created a flaw in it
from the start, and secondly, the massive underfunding relative
to what the potential range of the problem was. The only reason
why some budget estimates said, well, we might get under the
wire on this, CBO simply said, well, they will close down the
program when they run out of money, and the actuary who
readjusted a little bit of the original program from HHS
basically said the same thing. They have provisions written
into the law for the PCIP administrators or HHS to carry out
the worst practices of the private insurers they blame, which
is as soon as we run out of money, we hollow out the benefits,
we close the doors, and therefore we have met our budget, and
it is not surprising that we got there. Maybe we got there a
little later because it was a slow take-up but in essence it
was a program designed to have an early expiration date on the
coverage.
Mr. Pitts. Thank you.
Governor, you mentioned a number of administrative problems
and litigation. Are you still having administrative problems
with the feds or with HHS regarding the administration of your
pool? Is all the litigation solved?
Ms. Taylor. The most recent lawsuit has. We have come to an
agreement on the resolution of that. As I did say in my
testimony, we are pleased that the Department of Insurance
continues to be seen as the regulatory arm of health insurance
in Ohio, at least as it relates to the High Risk Pool, so at
this point the two major issues that we face, both the rate
issue in 2011 and protecting consumers and protecting
consumers' coverage in Ohio have both been resolved.
Mr. Pitts. Thank you.
Ms. Zurface, can you describe your thoughts at the time
when you found out that PCIP was not an option due to HHS
closing the program to new applicants?
Ms. Zurface. I can try. It was sort of an interesting
experience for me. I had, as I indicated in both my written and
my oral testimony, started in February trying to figure out how
I would now begin to finance this very expensive health
venture, and one of the things that I came across was the Ohio
High Risk Pool insurance. I saw my specialist at the end of
February, and at that time my specialist indicated to me that
he would like for me to enter into a clinical trial that is
having very good results for lenalidomide in the treatment in
my specific chronic lymphocytic leukemia, which is chemotherapy
resistant and a bit more aggressive due to chromosomal
mutations. So he had suggested that I go ahead and enter into
that clinical trial at this time. I actually took some time to
step back from that, being basically healthy at this point, and
said I think I want to take a little bit of time and watch my
numbers and see exactly what this cancer is doing inside my
body and what I need to do to manage it at this time. It was
within about a week and a half, 2 weeks from that point in time
that I found out that maybe I don't have the time to step back
and do that because if I don't enter into that clinical trial
sooner rather than later, then it is likely that that trial
will fill up and there won't be any type of reasonable,
affordable treatment option available for me. So I really had
to step back and assess what I am going to do with regard to my
health care condition at this time.
Mr. Pitts. Now, because you are self-employed and not able
to work at this time, as I understand it, your treatments are
covered by Ohio's Hospital Care Assurance Program. Is that
correct?
Ms. Zurface. At this time, as long as I take my care
through Ohio State Medical Center, I do qualify under their
regulations for the HCAP program, and in fact, there is a
separate program administered for OSU physicians. So as long as
the part of my care that is managed at OSU Medical Center is
actually covered on a quarterly review basis, so each quarter
they will flag my status and I will have to resubmit income,
profit and loss information for that.
Mr. Pitts. So long as your income remains below a certain
level, this program will cover you?
Ms. Zurface. Yes, sir.
Mr. Pitts. And are you saying that it would be more
beneficial for your health to not work and be covered by HCAP
than to work full time and surpass the income minimum and have
no coverage at all?
Ms. Zurface. I would argue that it is never more beneficial
for my health for me to not be working. Both mentally and
physically, it is better for me to be as active as I possibly
can be. From a financial standpoint, it may look like at least
on paper that it would be more beneficial for me to choose not
to work or at least not to work at a full capacity in order to
maintain health care.
Mr. Pitts. My time is expired. I have a lot more questions
for you but let us go to the vice chairman, Dr. Burgess, for 5
minutes for questions.
Mr. Burgess. Thank you, Mr. Chairman.
Ms. Zurface, let me just ask you, you are an attorney. I
actually am a physician in my previous life. So we both are in
professions that are--we went into them to help people, and if
I understand your testimony correctly, you in fact function as
a public defender at some point. Is that correct?
Ms. Zurface. Somewhat. The program that we have in my
county is called court-appointed counsel. All of the attorneys
in our area that practice criminal law actually serve as court-
appointed counsel, but it is very similar to the public
defender program.
Mr. Burgess. And you of course are paid for that work, are
you not?
Ms. Zurface. I am.
Mr. Burgess. And where does that payment come from?
Ms. Zurface. That money comes out of the county fund. Our
county commissioners establish an hourly rate for our court-
appointed counsel.
Mr. Burgess. Well, wouldn't it be better if the federal
government just took that over and we paid you for that?
Ms. Zurface. Oh----
Mr. Burgess. You don't have to answer.
Ms. Zurface. I was just going to say----
Mr. Burgess. It is rhetorical.
Ms. Zurface [continuing]. It is a rhetorical question. I
wonder how the federal--where that money would come from with
regard to the federal government and why would it be better if
the federal government----
Mr. Burgess. The same place all of the money comes from.
Take it from someone else at the point of a spear and they give
it to us willingly after we threaten them with lifetime
incarceration and the impounding of all their personal
property.
But Lieutenant Governor, your discussion of how difficult
it is to work with Health and Human Services and the Centers
for Medicare and Medicaid Services, to me, that would be an
argument against the federal government taking over that
program that the county is so ably administering and taking
care of those people who get into trouble with the law but are
too indigent to afford their own lawyer. Would that be a
correct assumption?
Ms. Taylor. Mr. Chairman, Dr. Burgess, yes. Our experience
specifically with the High Risk Pool working with HHS, working
with the federal government, has proven to be less than
rewarding. I think States are well prepared to regulate
insurance as we have done for, you know, decades, and I think
that these types of issues are best addressed closer to home
where you can react quicker and in a more thoughtful way with
regard to market changes, economic conditions, the needs of
your citizens. It is a long way of saying yes.
Mr. Burgess. Yes, you can react quicker, and that is
important, and you know the people with whom you are dealing. I
mean, your State is arguably a little different from my States,
and the needs and the things that would need to be met for the
constituents might be different in the two States, and you are
in a position and your counterpart in my State would be in a
position to have the facility to be able to make those
decisions on a much more real-time basis.
I just have to tell you, I sat down with your counterpart
in my State on Monday, and of course, this is a little far
afield from what we are talking about today but the Medicaid
expansion, which is being much discussed, and the litany of
complaints that come forward from the State folks about trying
to deal with the Centers for Medicare and Medicaid Services.
They have created a regime over there which is almost
impenetrable. So it is any wonder that no one at the State
level wants to buy--they don't want to buy any more of that.
They have had enough of it, and I certainly understand that.
Mr. Miller, I remember back to 2008, and we actually talked
about this issue of the State risk pools a lot back in that
year, as I recall. I don't remember why we discussed it but we
did, and I got to tell you, I was a little bit encouraged after
the summer town halls of 2009 that I alluded to, and those were
somewhat rough events, but we came back to Washington in
September and the President was going to address a joint
session of the House and Senate, and I thought, oh, good, they
have realized the error of their ways and they are going to put
the pause button on here and we are going to hit the reset
button, but alas, I was mistaken. It was fast forward, if
anything.
But one of the things the President said that day that
really got my attention or that night and it really got my
attention was that Senator McCain was right with his approach
to helping people with preexisting conditions and this
expansion of the State pools and reinsurance, that might be the
way to go, and I thought for a brief moment there was a glimmer
of understanding but what do you think happened?
Mr. Miller. Well, they had some of the music but not all
the lyrics. Consensus is often a mile wide and an inch deep in
those type of things, and that was in a compromise moment to
try to get some type of legislation through while bowing in the
direction of temporary bipartisanship. There are always seeds
of agreement between the two sides and then we kind of get
overpowered by broader imperatives to get it all and to
implement your program and get it, you know, comprehensive. You
can find Republicans and Democrats agreeing we need to help
people who are in desperate straits, who can't help themselves.
We need to be generous and kind and compassionate as a good
society. But there is a difference between doing that and
running everybody else's life in micro detail, and that is what
we got as kind of--you know, the loss leader was, well, we will
do some things for some people we can give you an anecdote
about, but meanwhile, look at the rest of what the law is going
to do. It is turning upside down what are the arrangements that
people are quite happy with and would like to continue and you
are going to be in a different world within a year. All these
ideas that somehow waves of happy, young and healthy people
will be ready to pay twice as much in their insurance premiums
and everyone will come out ahead and everybody will be
subsidized, it is not going to work that way, and that is the
problem in trying to shoehorn people into theoretical
arrangements that don't match their preferences and practices.
Mr. Burgess. Thank you, Mr. Chairman.
Mr. Pitts. The Chair thanks the gentleman. We are going to
continue with another round. We have got lots of questions
here.
Let me continue with you, Ms. Zurface. What do you plan to
do now that funding for the new enrollees in the PCIP program
has been pulled by HHS?
Ms. Zurface. I am going to take it one day at a time. I
have no choice but to continue with my medical care, so I am
going to continue making my appointments and managing my care
as best I can, do my very best to not incur great expense to
myself and see what is available for me, and I will take
advantage of the HCAP program and any similar program that is
available. I will take advantage of whatever the Leukemia and
Lymphoma Society is able to offer. I will just take it one step
at a time.
Mr. Pitts. The added burden of not knowing if your CLL
treatments will be covered must add unneeded stress to your
life as a single mother, does it not?
Ms. Zurface. It sure does.
Mr. Pitts. Mr. Miller, after HHS's announcement that new
applicants would be shut out of the preexisting condition
program, we sent a letter to the President asking to work
together to redirect funding in the President's health care law
to ensure that no sick American is turned away, and as I
mentioned, 1 month later we have yet to hear from the
President. My understanding is at the time of enactment,
roughly 18 programs in PPACA received greater or comparable
funding than the preexisting condition program. Couldn't this
funding such as the mandatory appropriations in the Prevention
and Public Health Fund provide the resources to help enroll new
individuals in a high-risk pool program?
Mr. Miller. It could certainly help contribute to it. The
Administration apparently has broader priorities which look
more at 2014 than what people are going through in 2013. I know
some of the money has been taken out of the Prevention and
Public Health Fund for the doctor fix, so it is a bit of a
basket that gets raised several times. There might be, I think,
$8 billion or $9 billion, depending on how you want to count
it, for the remaining authorization. That could certainly make
a contribution to provide real relief of a tangible nature. A
lot of the stuff in the Prevention and Public Health Fund is a
little bit more on the exotic side. It could be done in the
right way but we don't have much evidence that is actually
working in that manner. It is a little bit more of a political
slush fund. So that would provide some means of a contribution.
We will need more money than that if you wanted to do this
on a longer-term basis, and I think there have been previous
proposals for more enhanced funding in a different environment,
and I am not sure if the votes are there to get that right now.
But when you are looking at people who have a very identifiable
condition--you know, these are the folks who you would want to
put into a special-needs plan. We know they have got a serious
condition. They need actually more intensive medical
management. You would like to coordinate. You have already
identified the population. It is going to cost money to
subsidize them. That is something we should do and that should
be a higher priority perhaps than subsidizing everyone's
insurance all the way up to 400 percent of the federal poverty
level. But that is a different political agenda than helping
the most unfortunate people right now in ways that can help.
Mr. Pitts. Dr. Collins, in your opening statement you said
that PCIP provided immediate coverage for preexisting
conditions. However, this leaves out an important context.
Didn't the ACA require patients to be uninsured for 6 months
before they became eligible for PCIP?
Ms. Collins. Right, so the intent of the PCIP program was
to provide immediate coverage for people who had been uninsured
for a long period of time, or at least 6 months, and to
immediately cover their preexisting conditions. As Mr. Miller
pointed out, most State high-risk pools do not cover your
preexisting condition right away, so the intent of the law was
to cover people's conditions immediately. The intent was also
to provide insurance coverage to people who didn't have health
insurance coverage, so that was very clear in the law. It was
designed as a transitional provision so that people who are
uninsured who had immediate health care needs could get
coverage over this 3-year period.
Mr. Pitts. Well, Ms. Zurface's testimony indicates that
this requirement had real effects on patients desperately
seeking coverage for a preexisting condition. Didn't this
requirement essentially force patients to let their conditions
deteriorate while they waited for the ACA's arbitrary 6-month
waiting period to run out?
Ms. Collins. It was certainly difficult for people who had
to wait to get coverage. It is one of the characteristics of
our current insurance system that will go away next year where
people are prevented from pursuing careers like Ms. Zurface is
right now in terms of having more flexibility in their jobs,
their educational pursuits because they have to not make above
a certain amount of money to maintain their health insurance
coverage. All that goes away in January so that people don't
have restrictions on what they can do anymore in their careers
just to maintain their health insurance coverage. So this was
again a transitional provision. There were several transitional
provisions in the law. This wasn't the only one--the ban on
lifetime benefit limits, the phase-out of annual limits on what
health insurers can place on your benefits, so this was part of
a large number of provisions that went in right away that did
provide coverage to a lot of people who really needed them--
young adults. About 6 million young adults came on to their
parents' policy over the last year. So they were in no way
designed as the endpoint in the provisions but as really a
beginning point.
Mr. Pitts. I wanted to get one more question in. Mr.
Pollack, does it concern you that the Administration has cut
off funding for this program?
Mr. Pollack. Obviously I would like to make sure that
everybody who has a preexisting health condition can get
coverage, and it is very concerning that people who have a
preexisting condition like Ms. Zurface are right now without
the opportunity to get the coverage they need. But what is very
important in terms of the compassion that we have all talked
about with respect to people with preexisting conditions is
that come January 1, all these problems are a thing of the
past. People are not going to have to wait 6 months in order to
get coverage. People are no longer going to be put in a totally
different pool just because they have got a health problem.
People are no longer going to be charged a discriminatory
premium because they have got a health problem. So to the
extent that you, Mr. Chairman and Mr. Vice Chairman, are
interested in fixing this temporary problem with additional
funds, we support that, but not by undermining the long-term
architecture of the legislation which is going to be far more
effective than this temporary measure.
Mr. Pitts. Thank you. My time is expired. Dr. Burgess, you
are recognized for another 5 minutes, second round.
Mr. Burgess. Undermining the long-term architecture. Well,
that is an elegant of talking about something when in reality
what we should have been told 3 years ago before this thing was
signed was the dog ate my homework so I am going to turn in the
rough draft, and Ms. Zurface in her testimony talks about how
this particular provision was not in the bill that passed this
very committee on the House side in July of 2009 but it was
added. The Senate Finance Committee staff added it. In fact,
most of this was written by the Senate Finance Committee staff.
It wasn't even written by legislators. And the thing was rushed
through on Christmas Eve. There was a big snowstorm coming to
town and the Senators wanted to get home for Christmas so they
had to vote on it. And they voted, and they got 60 votes for
the Affordable Care Act.
Now, everybody felt--I am sure Chairman Waxman if he were
here would tell us that he was working on the conference
committee even before Christmas and New Year's that year, and
he was preparing himself for the conference committee. The
President came to the Democratic retreat that year and all the
discussion was how we are going to get this ironed out even
before the conference and we will get a bill that both the
House and the Senate can support. But it didn't happen, did it?
Because there was a special election in Massachusetts. Scott
Brown was elected, the first time a Republican was elected from
Massachusetts since the Earth cooled the first time, and there
were no longer 60 votes in the Senate. So Harry Reid told Nancy
Pelosi this is it, this is what you get, I can't change it. So
most people don't realize this. H.R. 3590 was the bill that was
voted on on Christmas Eve. Thirty-five ninety was passed by the
House of Representatives in July of 2009 but it wasn't a health
care bill then, was it? It was a veterans' housing bill. A
veterans' housing bill passed the House. I don't think many
people voted against it. It went over to the Senate, sat in the
hopper, and then it was amended, and the amendment read
``Strike all after the enacting clause and insert'' and this
was what inserted.
So here you had a bill that had passed the House in a
different form, passed the Senate, came back over to the House,
and if you don't change anything, you can sign it into law, and
that is what the next 3 months was all about: how to convince
enough Democrats to vote for really what was a rough draft. It
would never have done what this thing has done to Ms. Zurface
if it had been fixed but there was not the ability to fix it
because there weren't 60 votes for any type of fix in the
Senate. It was the very worst type of process that gave rise to
the very worst type of policy and then for reasons that I will
never understand got signed into law, and we are having to deal
with it, and we can see it affects real people in very profound
ways.
Now, I would submit that the letter that the chairman
referenced to the President, and I realize it is just a band-
aid on a problem, Mr. Miller, but the Prevention and Public
Health Fund, yes, we have raided it for a lot of things--trade
promotion authority, doc fix--so let us raid it for this as
well. I mean, goodness knows, it is a political slush fund. It
was added, again, by Senate Finance staff for reasons that I
certainly am not privy to. I think, Mr. Chairman, perhaps we
can submit again to the President that he reconsider his
inaction on this because we have heard testimony from
compelling witnesses today that something needs to be done
before we can all lay down in the Elysian Fields of the
Affordable Care Act on January 1, 2014, we are going to have to
deal with this, and the Prevention and Public Health Fund I
think is the logical place to go. If there is not quite enough
money there, then certainly let us go to the Patient Center for
Outcomes and Research Initiative. There is another place where
a lot of dollars are just sitting. The Center for Medicare and
Medicaid Innovation, a lot of dollars are just sitting. There
is no reason to have them just sit there. Let us them let them
help real people and help real people today.
Now, Mr. Pollack, in your testimony you said in your
calculation 68 million people have preexisting conditions, and
100,000 are now covered under the federal PCIP program. There
is a bit of a discrepancy between those two numbers, isn't
there?
Mr. Pollack. Of course there is, and I explained that. The
reason that----
Mr. Burgess. And I accept your explanation.
Mr. Pollack [continuing]. There is a discrepancy with
respect to that----
Mr. Burgess. Let me ask you the question, sir----
Mr. Pollack [continuing]. Explained right at the
beginning----
Mr. Burgess [continuing]. Before my time runs out----
Mr. Pollack [continuing]. Is that most of those folks are
in employer-sponsored insurance, and it has the same attributes
and protections----
Mr. Burgess. And those very folks begged us----
Mr. Pollack [continuing]. That will not be provided in the
individual market.
Mr. Burgess [continuing]. Begged us not to disrupt what
they were receiving, and it looks like we have. But let me ask
you a question. If you thought that this was a serious problem
that it was, was the Administration wrong in only putting $5
billion toward this problem?
Mr. Pollack. Would I favor more money put into this as the
temporary measure? Of course I would. And I certainly would
like to see the temporary problems that are significant
problems that they be fixed but not by undermining, as I said
before, the key architecture of the Affordable Care Act,
whether it is a prevention care fund, which is very important
to promote good health care. It shouldn't be sickness care; it
should be health care.
Mr. Burgess. Sir----
Mr. Pollack. And I don't think that we should be
undermining----
Mr. Burgess. Reclaiming my time.
Mr. Pollack [continuing]. With respect to clinical
guidelines.
Mr. Burgess. The architecture underlying the Affordable
Care Act is anything but elegant; it is bizarre. It would be
the nicest way to describe it. It is macabre.
And honestly, I cannot--if the money is there in other
programs, Mr. Chairman, I cannot see why the President and the
Secretary have not responded to what is a very reasonable
request that this committee has submitted in written form, and
I will just reiterate that I think they should respond, and if
they don't, I believe we should ask the question again as
nicely as we possibly can. I will yield back, Mr. Chairman.
Mr. Pitts. The Chair thanks the gentleman. We are going to
go to another round, if that is OK. I still have some
questions. I think you do.
Governor Taylor, in your testimony you state that Ohio
commissioned a study to estimate the effects of PPACA on
premiums when the law is fully implemented. It found that
premiums will increase by as much as 85 percent. Recently, the
Society of Actuaries issued a report with a similar finding,
estimating that Ohio's individual market could see premium
increases as high as 80 percent. Do these estimates lead you to
believe that many will forego coverage because of the ACA's
costly requirements?
Ms. Taylor. Mr. Chairman, we are clearly concerned by the
changes that will be implemented starting in 2014 that are
going to very severely negatively impact the cost of premiums
in Ohio. Both studies are somewhat consistent in that premiums
in our individual market will rise by as much as 85 percent. Of
course, from a State perspective, yes, I am concerned. I would
prefer to have more flexibility to come up with individual
State solutions that solve Ohio's problem and Texas, solve your
problem the way it best suits Texas, and I think given some
flexibility, our goal would be to use a more market-based
approach and help make the cost of insurance more affordable
and more accessible using free-market approaches rather than
providing federal subsidies that I think the High Risk Pool
must somewhat look at what we might expect in the future where
you have premiums being artificially held down by companies who
are pressured by HHS and then ultimately premiums aren't
covering the cost of the type of care that is being provided,
and as a regulator, one of our primary concerns is, of course,
solvency of the companies. Consumers are severely harmed if
companies don't have enough capital or reserves to stay in
business to pay those claims and ultimately it is the consumer
who will suffer. So my preference would be back to a market-
based approach that reduces the cost of premiums for everyone
and makes it more affordable and more accessible that way.
Mr. Pitts. Would you continue to elaborate on what efforts
Ohio is undertaking to reform health care in Ohio?
Ms. Taylor. Yes, Mr. Chairman. Well, as I stated in my
testimony, unfortunately, a lot of what we see in the ACA is
not dealing with the root of the problem which is how you
actually drive down the costs of health care. Really, it is
more just insurance regulation or changes in insurance
regulation. In Ohio, we have our Medicare and Medicaid groups
working together so that they are coordinating the coverage of
individuals that are eligible under both plans in order to save
money. We have an office of health transformation that is
working with individual providers, hospital providers across
the country to help better coordinate care between those that
receive services for mental health, for example, and then also
how they receive services for physical health, doing a better
job of coordinating those services to help drive down costs
using technology to look at how we provide better care for
patients, higher quality at lower cost. So working both on the
Medicaid side but also then working on the private-sector side
by partnering with providers across the State. And ultimately
it has allowed us to hold down the increases that we would have
otherwise seen in Medicaid so that we can have more flexibility
with how we manage the Medicaid program and also the Governor
has broken out in this most recent budget separately identified
our Medicare director as a cabinet-level director versus
working for a different agency.
Mr. Pitts. Now, based on the problems you have dealt with
already, could similar regulatory problems occur? Do you
foresee your State having additional problems with the
implementation of the Affordable Care Act once the law is fully
implemented?
Ms. Taylor. Mr. Chairman, I guess if we look back at our
experience with the High Risk Pool, and I guess the statement
is pretty much true that if you want an indication of the
future, look at the past. Of course, we are concerned about
disagreements with federal regulators both as a State regulator
but then how does that impact consumers? Ultimately it impacts
consumers, impacts companies, creates uncertainty in the
market, which makes it much more difficult from an
administrative perspective for all of us to deal with the
difficult issues.
Of course, we are concerned about the premium increases and
the costs that that will bring. If you look at Ohio's High Risk
Pool just as an example, we have about 3,500 people covered in
our High Risk Pool and the costs ultimately we are projecting,
costs being paid for by the federal government, somewhere
between $135 million and $140 million to provide subsidies for
that care. So of course, we have a cost issue. And then of
course, I have already stated the concern we have with
artificially holding down premiums that ultimately puts at risk
the companies that are there to pay the provider claims and pay
the claims for consumers.
Mr. Pitts. Thank you. I want to sneak one more question in
here.
Ms. Zurface, your situation is not a special case. Can you
talk a little bit about the number of patients who you
reference in your written testimony who are facing the same
government barriers as you do?
Ms. Zurface. My situation is not a special case, and I
think that is why I am here is because it is becoming almost
the rule as opposed to the exception, especially now that there
is not the funding available for this preexisting condition
insurance program available right now. I believe that we
submitted about eight different testimonies in the written
transcript that was provided to you. Each one of those people
is obviously too sick to be before you today, which is why I am
representing those people as well. The problem that we have in
trying to identify how many people are being affected is, we
are only aware of the people who are being affected when they
contact us directly, so we don't know who is having trouble,
who got kicked out of the program, who applied too late to be
permitted into the program. We don't know those numbers right
now. I do know that the Leukemia and Lymphoma Society is
working on making sure that we can have additional data to
submit to the committee and we would be happy to provide more
written information to you, but at this time the only people
that we have direct information on are the ones whose stories
are already in the record.
Mr. Pitts. Now, how did you hear about the Leukemia and
Lymphoma Society and how have they helped you through this
trying time?
Ms. Zurface. I had a magnificent experience with the
Leukemia and Lymphoma Society. In 2005, shortly after my
grandmother had been diagnosed with non-Hodgkin's lymphoma, I
joined the Leukemia and Lymphoma Society's Team in Training and
became an advocate and a fundraiser for them through cycling,
so I did that for a season and then many of my friends that I
met through that excursion remained advocates for Team in
Training. So I was already familiar with the Leukemia and
Lymphoma Society when I received my diagnosis in January, and
they were one of the first resources that I looked up to
determine whether there would be any type of premium assistance
available in the event--as I am self-employed, one of the
things that does happen is, I can't say I have X amount of
dollars available for monthly income, so on a month-to-month
basis my income may change and fluctuate so I may have a good
month followed by a bad month, and I am sure that a lot of
people who are self-employed understand exactly what I mean by
that. So what I would need is something to fall back on, a
fallback position, to even be able to make those premiums on a
regular basis to make sure that I don't have a lapse in care
once I am able to become insured, so I was researching that
issue and came back in contact with the Leukemia and Lymphoma
Society, who actually provided a symposium in March in
Cincinnati, and I attended that symposium and reconnected with
the agency. So they do have a lot of resources available for
people in my situation.
Mr. Pitts. Thank you, and again, thank you for sharing your
personal experience and representing the other patients that
you have referenced.
Dr. Burgess, you are recognized for another 5-minute round.
Mr. Burgess. Thank you, Mr. Chairman. Are you sure you want
to do this?
Let me just ask Ms. Zurface, you are a lawyer. You followed
what happened in the Supreme Court last year, and a lot of the
argument that was brought against the Affordable Care Act was
based upon the constitutionality of using the Commerce Clause
to compel the purchase of health insurance. Now, had the
individual mandate existed 4 years ago, would you have had
health insurance?
Ms. Zurface. If the individual mandate had existed 3 years
ago, it would appear that I would have been mandated to have
insurance, so by nature, yes, I would have to say I would have
had insurance 3 years ago prior to the time that I would have
been diagnosed with this.
Mr. Burgess. Except that those things that were a barrier
for you to purchase insurance 3 years ago would still have been
a barrier. I mean, the cost. You yourself point out how your
income can fluctuate quite a bit during the year. One could
even visualize a scenario where at one point you might be
eligible for the Ohio Medicaid expansion, under 138 percent of
the federal poverty level. At another point when you get a lot
of work, you might be making too much money to qualify even for
the subsidies in the exchange. And of course, as you know,
people who then earn more income than would have allowed them
to receive a subsidy. You don't know going into a year what
kind of year you don't know going into a year what kind of year
you are going to have, do you?
Ms. Zurface. Not, not at all.
Mr. Burgess. As far as your billings and collections. So
you may be eligible for a subsidy and receive the subsidy but,
you know what, at the end of the year, we may ask for that
subsidy back because you have had a good year. So it is not
quite as straightforward as just yes, if the mandate had been
there, I probably would have had insurance. The barriers would
have still existed, I submit, that the very things that
prevented you from purchasing that insurance 3 years ago will
in fact still be there for people who are now simply required
to buy insurance, and some will because, well, it is the law, I
got to do it, and others will no, it is still too expensive, it
is still too much of a barrier, the fine is relatively modest,
at least for several years for a single individual earning
under a certain level, it is $600 or $700, and yes, if they
catch me, then fine, I will pay the fine, but otherwise, I can
make a payment on a bass boat for what I can buy insurance, and
a lot of people are just simply going to elect not to do that.
So I don't know if we changed, and Mr. Miller, you are bound to
have some thoughts on the concept of whether the individual
mandate will change the behavior of people who are looking at
the insurance market and are kept out of it because of some of
the barriers that have been discussed today.
Mr. Miller. Well, CBO relied upon a small sample size of
Massachusetts to basically make its projections on coverage
take-up, and although they have their covered their tracks a
little bit since then, they were assuming that people would
just be good Americans obeying the law, and the mandate as a
command was a big factor in its projections of the take-up, not
just the subsidies alone. They haven't really dialed back on
what those assumptions are in terms of what would be the
coverage from the mandate, which is now just seen as a tax, and
when you see things as a tax, other people have looked at this
and said well, you are going to make a financial calculation:
do I pay a small tax or do I pay a much higher premium,
particularly with those premiums for some individuals are going
much higher than what it actually cost them in insurance. So
there is a lot of skepticism as to how effective the weak
mandate as it currently exists both before and after the
Supreme Court, what it will really mean in terms of pushing
people into coverage to pay much more than they ordinarily
would pay.
Mr. Burgess. And there is still the safety net of community
rating and guaranteed issue. You can buy the insurance in the
emergency room or perhaps even in the ambulance on your
smartphone on the way to the hospital after the accident.
Mr. Miller. Correct. We have Medicaid coverage, which is
actually provided after the fact, and it has been going on for
some time. We have signed them in surgery actually. And
certainly it depends upon--all the regs aren't there as to how
they will handle the guaranteed issue under the Affordable Care
Act, whether they will have a waiting period or only an
enrollment period for a couple of months.
Let me just take a moment, because I know we are about to
finish. I sit here. I would like to stand in astonishment. Ron
means well and said a lot of nice things at the hearing. I read
his report last summer for Families USA in July of 2012. There
was no nuance in that. It was a screaming headline: nearly 65
million Americans at risk of losing their coverage but for the
Affordable Care Act. Not one word or sentence in there about
all the protections for people with employer-sponsored
coverage. This problem of overshooting the mark and saying run
for your lives, you are about to lose everything. HHS had a
report in 2009, had over 125 million people at risk. It is
marked down to 65 million in Ron's report. And another by
Commonwealth, 12.5. When the serious people look at this and
say where is the problem, you can get to about 4 or 5 million
where it actually--that is where people are not getting
coverage. Now, in some cases they may get a little bit of a
rate-up in their premiums, but we ought to talk about where the
problem is and what the dimensions are. It is a serious enough
problem without exaggerating it, and then we can deal with it
in a forceful, effective way. But it is used to leverage a
larger agenda, which is to rope everybody into something else
which we wouldn't support because you want to scare people that
you are about to be at immediate risk, when that is overstated.
Mr. Pollack. Well, it is not people----
Mr. Burgess. I am about to run out of time. In fact, I am
out of time. But Mr. Chairman, if I could, I would just like to
ask a question of Dr. Collins because the issue of cost has
come up, and of course, we were tasked to fix were preexisting
conditions, not messing up the system as it currently exists,
and then to help people with cost. It looks like we failed on
all three points, but on the aspect of cost, the Commonwealth
Fund put out a paper a few months ago from Minnesota that
talked about--I think you called it the activated patient where
the costs were lower for someone who actually was an active
participant in their care, and we had all the hearings leading
up to the Affordable Care Act and we heard from experts on
Medicaid and we heard from experts on this, experts on that,
but we never brought on, say, Governor Mitch Daniels from
Indiana, who with his Healthy Indiana plan and creating that
activated patient population found that he brought his costs
down significantly over a 2-year span.
It seems like that would be a logical way to approach
things. We are talking about States expanding Medicaid. We are
not talking about people who are already mandatory populations,
that is, people in nursing homes, people who are blind and
disabled, children. We are talking about new coverage for
basically young adults who are healthy. Why wouldn't we use
this activated patient model that the Commonwealth Fund wrote
about in incorporating that expansion?
Ms. Collins. You know, I think you raised a very good
point, and I think the discussion of costs earlier is really
important. I think the viability of the Affordable Care Act and
the coverage expansions over time will depend on the
affordability of the premiums, but half the law does address
the underlying cost drivers in the system through a significant
set of delivery system reforms, a lot of which have already
gone into place. I think the law also encourages, unlike some
of the comments that have been made here, huge innovations at
the State level, so States have enormous flexibility in
designing their insurance exchanges if they want to do so. They
also have primary responsibility for regulating their insurance
markets, and the delivery system reforms, we are seeing a
slowdown in health care costs over the last couple years. Part
of that is recession related but part of that is probably
structural, so we are seeing changes in the system that are
both being driven by innovations like going on in Ohio,
Indiana, but also some that are being driven by incentives and
new grant funding provided under the Affordable Care Act.
This is a hugely important problem for the United States.
It will determine the viability of the coverage provisions over
time. There are insurance market regulations that do address
premium growth. We have already seen a huge decline in the
number of premium rate increase requests from insurance
companies because of the rate review program that has been in
effect for the last year. The medical loss ratio requirement is
also having a huge impact, 1.5 million in rebates and
administrative cost savings last year just as a result of that
provision alone. So the Affordable Care Act is not just about
coverage. In fact, over its 10-year budget projection, it
actually reduces the overall deficit because of these
additional delivery system reforms in addition to the coverage
requirements.
Mr. Burgess. Well, Governor Daniels said in a piece in the
Wall Street Journal several years ago now, even before while we
were still debating the Affordable Care Act, that by providing
his State employees with a high-deductible policy for
catastrophic coverage and then providing them the funds to pay
that high deductible should they be required to do so, allowing
them to keep the money in those health savings account if they
didn't spend it, he came to the conclusion that something magic
happens when people spend their own money for health care, even
if it wasn't their own money in the first place, and I don't
know why there has been such a resistance to accepting that
lesson that he has shown so elegantly in Indiana and why we
won't allow it to occur in more places.
Lieutenant Governor, I will give you the last word. I
rather suspect that the flexibility that Dr. Collins spoke
about is something that you would welcome. Is that not correct?
Ms. Taylor. Mr. Chairman, Dr. Burgess, yes. I guess my
comment with regard to all of the flexibility that has
portended to be given to the States both in how exchanges are
organized, if you read the rules and regulations, if you look
at at least Ohio's history with dealing the High Risk Pool, my
definition of flexibility as it relates to dealing with HHS and
CMS is, you can have as much flexibility as you want as long as
you do it my way, and unfortunately for Ohio, we have the
experience that we have had little flexibility, and if there
was as much flexibility as is being suggested, I think you
would have less concerns or issues coming from individual State
regulators who say you tell us we can regulate our market, but
when you disagree with what we have concluded as with the High
Risk Pool and whether or not individual consumers were eligible
for coverage, it was up to us until you decided no, and that is
unfortunately the experience that we have had.
Mr. Burgess. Thank you, Mr. Chairman. My time is expired. I
will yield back.
Mr. Pitts. The Chair thanks the gentleman.
We have other questions, but we will ask the members to
submit their questions for the record and ask the witnesses to
respond promptly when you receive those questions. This has
been an excellent hearing, very, very important issue, and I
want to thank the witnesses for taking time to come present
their testimony.
I remind the members they should submit their questions by
the close of business on Wednesday, April 17. So without
objection, with thanks to the witnesses, this subcommittee is
adjourned.
[Whereupon, at 2:26 p.m., the subcommittee was adjourned.]