[House Hearing, 113 Congress]
[From the U.S. Government Publishing Office]
THE CENTER FOR CONSUMER INFORMATION AND INSURANCE OVERSIGHT AND THE
IMPLEMENTATION OF THE PATIENT PROTECTION AND AFFORDABLE CARE ACT
=======================================================================
HEARING
BEFORE THE
SUBCOMMITTEE ON OVERSIGHT AND INVESTIGATIONS
OF THE
COMMITTEE ON ENERGY AND COMMERCE
HOUSE OF REPRESENTATIVES
ONE HUNDRED THIRTEENTH CONGRESS
FIRST SESSION
__________
APRIL 24, 2013
__________
Serial No. 113-34
Printed for the use of the Committee on Energy and Commerce
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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 Oversight and Investigations
TIM MURPHY, Pennsylvania
Chairman
MICHAEL C. BURGESS, Texas DIANA DeGETTE, Colorado
Vice Chairman Ranking Member
MARSHA BLACKBURN, Tennessee BRUCE L. BRALEY, Iowa
PHIL GINGREY, Georgia BEN RAY LUJAN, New Mexico
STEVE SCALISE, Louisiana EDWARD J. MARKEY, Massachusetts
GREGG HARPER, Mississippi JANICE D. SCHAKOWSKY, Illinois
PETE OLSON, Texas G.K. BUTTERFIELD, North Carolina
CORY GARDNER, Colorado KATHY CASTOR, Florida
H. MORGAN GRIFFITH, Virginia PETER WELCH, Vermont
BILL JOHNSON, Ohio PAUL TONKO, New York
BILLY LONG, Missouri GENE GREEN, Texas
RENEE L. ELLMERS, North Carolina JOHN D. DINGELL, Michigan
JOE BARTON, Texas HENRY A. WAXMAN, California (ex
FRED UPTON, Michigan (ex officio) officio)
C O N T E N T S
----------
Page
Hon. Tim Murphy, a Representative in Congress from the
Commonwealth of Pennsylvania, opening statement................ 1
Prepared statement........................................... 3
Hon. Diana DeGette, a Representative in Congress from the state
of Colorado, opening statement................................. 4
Hon. Fred Upton, a Representative in Congress from the state of
Michigan, prepared statement................................... 6
Prepared statement........................................... 7
Hon. Henry A. Waxman, a Representative in Congress from the state
of California, opening statement............................... 8
Witnesses
Gary Cohen, Director, Center for Consumer Information and
Insurance Oversight............................................ 10
Prepared statement........................................... 13
Answers to submitted questions............................... 61
THE CENTER FOR CONSUMER INFORMATION AND INSURANCE OVERSIGHT AND THE
IMPLEMENTATION OF THE PATIENT PROTECTION AND AFFORDABLE CARE ACT
----------
WEDNESDAY, APRIL 24, 2013
House of Representatives,
Subcommittee on Oversight and Investigations,
Committee on Energy and Commerce,
Washington, DC.
The Subcommittee met, pursuant to call, at 10:00 a.m., in
room 2123 of the Rayburn House Office Building, Hon. Tim Murphy
(chairman of the subcommittee) presiding.
Members present: Representatives Murphy, Burgess,
Blackburn, Scalise, Harper, Olson, Gardner, Griffith, Johnson,
Long, Ellmers, Upton (ex officio), DeGette, Braley, Lujan,
Schakowsky, Butterfield, Castor, Tonko, Green, and Waxman (ex
officio).
Staff present: Mike Bloomquist, General Counsel; Sean
Bonyun, Communications Director; Matt Bravo, Professional Staff
Member; Karen Christian, Chief Counsel, Oversight; Andy
Duberstein, Deputy Press Secretary; Brad Grantz, Policy
Coordinator, O&I; Sydne Harwick, Legislative Clerk; Brittany
Havens, Legislative Clerk; Sean Hayes, Counsel, O&I; Robert
Horne, Professional Staff Member, Health; Alexa Marrero, Deputy
Staff Director; Andrew Powaleny, Deputy Press Secretary; Brian
Cohen, Democratic Staff Director, Oversight & Investigations,
and Senior Policy Advisor; Karen Nelson, Democratic Deputy
Committee Staff Director for Health; Stephen Salsbury,
Democratic Special Assistant; and Matt Siegler, Democratic
Counsel.
OPENING STATEMENT OF HON. TIM MURPHY, A REPRESENTATIVE IN
CONGRESS FROM THE COMMONWEALTH OF PENNSYLVANIA
Mr. Murphy. Good morning. I convene this hearing of the
Subcommittee on Oversight and Investigations to examine the
Department of Health and Human Services' management of the
Affordable Care Act as we approach the January 1, 2014,
deadline for full implementation.
Mr. Gary Cohen, Deputy Administrator and Director of the
Center for Consumer Information and Insurance Oversight, or
CCIIO--by the way, it is known as CCIIO--is here to testify on
behalf of HHS. Good morning.
CCIIO was responsible for implementing the Patient
Protection and Affordable Care Act's many changes to the
private health insurance market. Mr. Cohen and those at CCIIO
certainly have their work cut out for them. At the beginning of
the next year, full implementation of the PPACA will finally
take place. And on that day, Americans have been promised the
ability to purchase health insurance plans through new
exchanges. The American people have been promised good coverage
that is also affordable.
We all remember the many promises that were made in the
rush to pass the bill by any means necessary, that if you liked
your coverage, you could keep it. Yet, we see many stories
about impending doctor shortages and companies faced with tough
decisions on whether to continue providing coverage. The
decision of whether to provide that coverage is related to
another promise that will surely be broken--that the law will
lower costs. One large health insurance company's CEO has
already noted that Americans should get ready for premium rate
shock. A school district in my district has said that they are
going to see their premiums go up by something like $1 million
in cost.
Yet, there is yet another promise that we are hearing more
recently from the law's defenders: that the health insurance
exchange will be ready for enrollment on October 1 and full
implementation on January 1. Since only 18 States elected to
establish their own exchanges, CCIIO is currently preparing the
federally facilitated exchanges that will cover 26 additional
States, along with the partnership exchanges CCIIO will operate
with 7 other States. I hope we will be able to hear today about
the progress being made in building those exchanges.
Recent news reports have indicated--and even President
Obama's budget has confirmed--that the Administration is
seeking additional funding to operate the exchanges. This is
troubling considering that a substantial amount of funding has
already been expended building those exchanges and they have
yet to even begin.
Today, I expect the witnesses to provide a full accounting
of where CCIIO stands with regard to building the federally
operated exchanges and those that will be run in partnership
with States, including where CCIIO is obtaining funding for
these programs and will they ask for more.
Since passage of PPACA this committee has had many
questions about the funding being used to implement the law.
Most recently, we have heard many stories about the healthcare
law's Prevention and Public Health Fund. Most notably, that
money from this fund is being utilized to hire thousands of
healthcare navigators who will assist the public in signing up
for Obamacare.
Considering that we have also heard that funding from the
Prevention Fund is being used on many different projects, we
are concerned that it is being rated as an ever-ready piggy
bank, or slush fund, to throw money at and hide the many
problems inherent with implementing Obamacare. I hope that Mr.
Cohen will be able to address the potential overutilization
that has become so common that the Washington Post has dubbed
it ``the incredible shrinking Prevention Fund.''
We have many concerns about those navigators, including how
they will be trained and supervised. CCIIO is actively
soliciting navigators from the community and consumer groups,
yet those that receive any compensation from insurance
companies are prohibited from becoming navigators. We recognize
the need to have impartial navigators, but the realities of the
insurance market also indicate that those who have been selling
insurance for many years may have some expertise of value.
Furthermore, we have questions about what standards will be
put into place to ensure that we are not simply paying groups
chosen to be navigators to pad their membership rolls or
funding drives. In other words, someone with experience and
training is not qualified and is excluded, whereas someone
without any experience stands in front of the line for hiring.
But this only scratches the surface of many activities and
responsibilities of CCIIO. Today, I hope we will also be able
to discuss CCIIO's ability to determine whether health
insurance premiums' increases are legitimate. As I mentioned
before, one large health insurance company has already warned
of rate shock, and this is an obvious concern for many
Americans.
Obamacare has consistently promised lower costs and now we
all hear from supporters of the law that there are tax credits
and subsidies available, but a recent study showed that only 8
percent of the public will qualify for those subsidies. I hope
we can hear from the witnesses today what the other 92 percent
of us can expect.
Thank you again, Mr. Cohen, for joining us today. And now I
would like to recognize the ranking member, Ms. DeGette, for an
opening statement.
[The prepared statement of Mr. Murphy follows:]
Prepared statement of Hon. Tim Murphy
I convene this hearing of the Subcommittee on Oversight and
Investigations to examine the Department of Health and Human
Services' management of the Affordable Care Act as we approach
the January 1, 2014, deadline for full implementation. Mr. Gary
Cohen, Deputy Administrator and Director of the Center for
Consumer Information and Insurance Oversight, or CCIIO, is here
to testify on behalf of HHS. CCIIO is responsible for
implementing the Patient Protection and Affordable Care Act's
many changes to the private health insurance market.
Mr. Cohen and those at CCIIO certainly have their work cut
out for them: At the beginning of next year full implementation
of the PPACA will finally take place. On that day Americans
have been promised the ability to purchase health insurance
plans through new exchanges. The American people have been
promised good coverage that is also affordable.
We all remember the many promises that were made in the
rush to pass the PPACA by any means necessary. That if you
liked your coverage you could keep it. Yet, we see many stories
about impending doctor shortages, and companies faced with the
tough decision of whether to continue providing coverage. The
decision on whether to provide that coverage is related to
another promise that will surely be broken: that the law will
lower costs. One large health insurance company's CEO has
already noted that Americans should get ready for premium
``rate shock.''
There is yet another promise that we are hearing more
recently from the law's defenders: that the health insurance
exchanges will be ready for enrollment on October 1 and full
implementation on January 1. Since only 18 states elected to
establish their own exchanges, CCIIO is currently preparing the
federally facilitated exchanges that will cover the other 26
states, along with the partnership exchanges CCIIO will operate
with seven other states. I hope we will be able to hear today
about the progress being made in building those exchanges.
Recently news reports have indicated-and even President
Obama's budget has confirmed-that the administration is seeking
additional funding to operate the exchanges. This is troubling
considering that a substantial amount of funding has already
been expended building those exchanges and they have yet to
even to begin. Today I expect the witness to provide a full
accounting of where CCIIO stands with regards to building the
federally operated exchanges and those that will be run in
partnership with states, including where CCIIO is obtaining
funding for these programs.
Since passage of the PPACA this committee has had many
questions about the funding being used to implement the law.
Most recently we have heard many stories about the health care
law's Prevention and Public Health Fund--most notably that
money from this fund is being utilized to hire thousands of
health care ``navigators'' who will assist the public in
signing up for Obamacare. Considering that we have also heard
that funding from the Prevention fund is being used on many
different projects, we are concerned that it is being raided as
an ever-ready piggy bank to throw money at and hide the many
problems inherent with implementing Obamacare. I hope that Mr.
Cohen will be able to address the potential overutilization
that has become so common the Washington Post has dubbed it
``The incredible shrinking prevention fund.''
We have many concerns about those Navigators, including how
they will be trained and supervised. CCIIO is actively
soliciting Navigators from community and consumer groups, yet
those that receive any compensation from insurance companies
are prohibited from becoming Navigators. We recognize the need
to have impartial Navigators, but the realities of the
insurance market also indicate that those who have been selling
insurance for years may have some expertise. Furthermore, we
have questions about what standards will be put in place to
ensure that we are not simply paying groups chosen to be
Navigators to pad their membership roles or funding drives.
Yet, this only scratches the surface of the many activities
and responsibilities of CCIIO. Today I hope we will also be
able to discuss CCIIO's ability to determine whether health
insurance premium increases are legitimate. As I mentioned
before, one large health insurer has already warned of ``rate
shock'', and this is obviously a concern considering how
supporters of Obamacare have consistently promised lower costs.
Now, we all hear from supporters of the law that there are tax
credits and subsidies available, but a recent study showed that
only eight percent of the public will qualify for those
subsidies. I hope we can hear from the witness today what the
other 92 percent of us can expect.
# # #
OPENING STATEMENT OF HON. DIANA DEGETTE, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF COLORADO
Ms. DeGette. Thank you very much, Mr. Chairman, and welcome
to you, Mr. Cohen.
Thanks to the Affordable Care Act, tens of millions of
Americans who would otherwise be uninsured will receive health
insurance for the first time. Americans will enjoy protections
from the worst abuses of the insurance industry: rescissions,
coverage denials, and annual and lifetime limits that cruelly
cut off coverage for folks when it is needed most. These are
all big changes and the time to implement them is coming up
very, very fast.
In just over 5 months, citizens will be able to sign up for
health insurance through the federal or state marketplaces.
Now, while signing up for coverage should be easy come October,
implementation is going to be a complicated process over these
next few months, not because of any flaws in the law, but
because this is a new approach to providing coverage
nationwide, and these things are always difficult to implement.
And by the way, this CBO has predicted that overall
consumer costs will go down once these marketplaces are
implemented. There is no reason to think it won't work. It
worked great in Massachusetts under Mitt Romney. But we have to
educate millions of people about the marketplaces in advance.
CCIIO and the States have set up complex data systems to manage
the process.
So, Mr. Chairman, I am super glad that you are doing this
oversight, and I think we need to hear from Mr. Cohen, probably
not just today, but as we go through the summer, about how
CCIIO was doing, where there are challenges, and how the agency
expects to address those challenges. I do think, though, that
we should conduct this oversight with an appropriate
perspective.
I wish, for example, that when the naysayers raise the
specter of a potential increase in premiums for some young
healthy people, particularly young men, that they can also put
this into perspective by understanding that the tax credits and
caps on out-of-pocket costs will sharply lower overall costs
for these individuals and millions of other Americans.
And I wish that folks raising the specter of high premiums
for young men in particular could add to that perspective the
millions of women of all ages who will pay lower premiums and
who won't be discriminated against by insurers simply because
they are female or the millions of Americans who will receive
dramatically better and more dependable insurance coverage.
When people complain about the fact that the Obama
Administration is, heaven forbid, spending money to make sure
that citizens understand the new law, I wish they would take
the perspective to remember that the Bush Administration did
the same thing, even hiring blimps to spread the word about
Medicare and spending $300 million on a public relations
campaign for Medicare Part D.
And Mr. Chairman, I will say, I voted against the Medicare
Part D Bill because it didn't allow negotiation by the
Secretary of HHS to lower prescription drug costs. But even
though I voted against it, I had town hall meetings all
throughout my district and I had internet training to help my
constituents figure out how to sign up for it. And I think we
need to have that kind of bipartisan cooperation as we
implement these exchanges at the national and state level. And
so I hope that we take that appropriate perspective and I hope
that we can develop that perspective as the Affordable Care Act
is implemented over the coming months.
In January 2006, when we implemented the Medicare Part D
program, Time magazine described a ``initial nightmares of
implementation,'' noting snafus that have resulted in many low-
income seniors being turned away by the compounding new
prescription drug program. In Vermont, the implementation of
the law was described as a ``public health emergency.'' Now,
those problems are almost forgotten until today. Ultimately,
the Part D program got off the ground and even those who
initially voted against the bill, like me, took a stake in it
and worked to fix the problems. The biggest problem, the donut
hole, was eliminated by the Affordable Care Act.
So I think, Mr. Chairman, as usual, there is a lesson to be
learned in this history. I hope that the implementation of the
Affordable Care Act goes smoothly. I certainly hope it goes
more smoothly than the implementation of the Medicare Part D.
But I am not naive enough, and no one should be, to think it
will be completely wrinkle-free. What I do hope is, as problems
arise, we can work together to identify and fix them instead of
using them to simply score political points, because we all
have a stake in providing quality, affordable health insurance
coverage for all Americans.
I hope this hearing and our future work on this subject
represents an effort by everybody to truly work together to
implement this law. I thank you for having the hearing and I
yield back.
Mr. Murphy. The gentlelady yields back. I now recognize the
chairman of the full committee for 5 minutes, Mr. Upton of
Michigan.
OPENING STATEMENT OF HON. FRED UPTON, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF MICHIGAN
Mr. Upton. Thank you, Mr. Chairman.
Today's hearing continues this committee's rigorous
oversight of the Obama Administration's implementation of the
healthcare law. Since the law's passage, we have had CCIIO
before this subcommittee three times, and during previous
hearings, we uncovered that the promises made about the
Affordable Care Act didn't quite match up with reality.
In 2011, we learned that CCIIO was granting waivers from
the law to individuals and companies that would face large
premium increases or the loss of coverage because of Obamacare.
We also found that, through its implementation of the Early
Retiree Reinsurance Plan, CCIIO had handed out millions of
dollars to certain corporations, unions, and state governments.
Even more troubling was the fact that the Early Retiree Plan
burned through the $5 billion allocated to it so quickly that
it actually stopped accepting applications in May of 2011, more
than 2 years before the program was supposed to and. Yet, this
is the same amount of money that was given to the Preexisting
Condition Insurance Plan.
This bill has been the law of the land now for over some 3
years and we are just 8 months away from the full
implementation, and by all accounts, the Administration still
doesn't have its act together. It doesn't bode well when just
last week a top supporter of the President and leading Senate
architect of the law publicly warned the HHS Secretary that he
sees a train wreck coming. Will the exchanges be ready? How
will families be able to prepare for it? Will they be able to
rely on the promises that if you like your coverage you can
keep it? Will young adults be able to afford higher costs?
The alarm bells over how Obamacare will unfold are getting
louder by the day. Costs are going up, insurers are warning
about premium increases, and small businesses are indeed
struggling with the choices about whether they can provide
employees with coverage. Patients need certainty. Employers
need certainty. And I hope that HHS and CCIIO will always show
us what they are doing to implement the law by the deadline.
Finally, last week, this committee marked up a bill that
targets the Prevention and Public Health Fund to give that
money to those who need it most: Americans with preexisting
conditions who were promised coverage by supporters of
Obamacare, only to find that the program was closed to new
applicants a few weeks ago. The Preexisting Condition Insurance
Plan has been an unfortunate example of the problems of
Obamacare. The promises don't match reality, and I think that
it is unacceptable that this is going to happen, and I look
forward to the vote this afternoon to fix it. And I yield the
balance of my time to Dr. Burgess.
[The prepared statement of Mr. Upton follows:]
Prepared statement of Hon. Fred Upton
Today's hearing continues this committee's rigorous
oversight of the Obama administration's implementation of the
health care law.
Since the law's passage, we have had CCIIO this
subcommittee three times. During previous hearings, we
uncovered that the promises made about the Affordable Care Act
didn't match up with reality.
In 2011, we learned that CCIIO was granting waivers from
the law to individuals and companies that would face large
premium increases, or the loss of coverage, because of
Obamacare.
We also found that, through its implementation of the Early
Retiree Reinsurance Plan, CCIIO had handed out millions of
dollars to certain corporations, unions, and state governments.
Even more troubling was the fact that the Early Retiree plan
burned through the $5 billion allocated to it so quickly that
it stopped accepting applications in May 2011-more than 2 years
before the program was supposed to end. Yet, this is the same
amount of money that was given to the Pre-Existing Condition
Insurance Plan.
This bill has been the law of the land for over three
years. We are just eight months from the full implementation
and by all accounts the Obama administration does not have its
act together. It does not bode well when, just last week, a top
supporter of the president and leading Senate architect of the
law publicly warned the HHS Secretary that he sees a ``train
wreck'' coming. Will the exchanges be ready? How will families
be able to prepare for this? Will they be able to rely on the
promise that if you like your coverage you can keep it? Will
young adults be able to afford higher costs? The alarm bells
over how Obamacare will unfold are getting louder by the day:
costs are going up, insurers are warning about premium
increases, and small businesses are struggling with the choice
about whether they can provide employees with coverage.
Patients need certainty. Employers need certainty. And I
hope HHS and CCIIO will always show us what they are doing to
implement the law by the deadline.
Finally, last week this committee marked up a bill that
targets the Prevention and Public Health Fund to give that
money to those who need it most: Americans with pre-existing
conditions who were promised coverage by supporters of
Obamacare, only to find that the program was closed to new
applicants a few weeks ago. The Pre-Existing Condition
Insurance Plan has been an unfortunate example of the problems
of Obamacare: the promises don't match reality. I think it's
unacceptable that this is going to happen, and I look forward
to voting to fix it today.
# # #
Mr. Burgess. I thank the gentleman for yielding.
Mr. Cohen, thank you for coming back to our humble little
subcommittee.
Of course, my interest in CCIIO actually predated CCIIO
when you were OCIIO, right after the Affordable Care Act passed
and Mr. Angoff was good enough--I didn't get a hearing on that.
We were in the minority but Mr. Angoff was good enough to come
to my office and talk to me at least. Mr. Larson has been in a
couple of times, and you have been in before us at least one
time before. But I have got to tell you, it has been very, very
difficult to get information out of the Center for Consumer
Information and Insurance Oversight, the basic budgetary
information.
Now, the ranking member says that we all ought to be in a
posture of working together. It is difficult to do that when
the most basic questions remain unanswered. So we got October
1, it is coming fast, 5 months away, and it seems like there
are more and more questions about the readiness of your office,
and indeed, the Administration to get the answers that people
want. I mean, you yourself went to AHIP, the American Health
Insurance Plans conference this month and, ``it is only prudent
to not assume everything is going to work perfectly on day
one.'' I agree with that, but I think we at this committee need
to hear from you, where are the concerns? Where do you see the
lights blinking on the dashboard? What are you doing to prepare
yourself and your agency and your center for that day in
October that dawns and everyone goes online on the federal hub
that may or may not exist to be able to sign up for these
programs? Senator Rockefeller actually said it pretty well the
other day. People are going to get a bad impression and it is
going to stay with them.
I think the references to Part D are reasonable to make.
But remember, that they happened after 2 years of preparation.
You have had 3 years of preparation. The 6 weeks of turmoil
with Part D could likely turn into many more weeks and/or
months, or even years of turmoil when this program is unfolded
next year.
So the application process is lengthy and complex. People
are asked to estimate whether or not they think their employer
will provide insurance next year, what their earnings are going
to be next year. I mean, these are tough questions that need
answers and we hope we get some today, and certainly, we will
be adding additional questions in writing in the period that
they are allowed.
So I thank you for being here today and look forward to
your answering questions.
Mr. Murphy. The gentleman's time has expired. I now
recognize the ranking member of the full committee, Mr. Waxman,
for 5 minutes.
OPENING STATEMENT OF HON. HENRY A. WAXMAN, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF CALIFORNIA
Mr. Waxman. Thank you very much, Mr. Chairman.
The Republicans on this committee and our Health
Subcommittee have held 5 hearings since December on the
Affordable Care Act, and each of these 5 hearings repeats the
themes that they expressed when they opposed the bill. And they
certainly never expected this to become law. Republican members
can't accept the health reform is working and it is now the law
of the land. They opposed it from the beginning, and until the
day the President signed the bill into law, they insisted it
had no chance of passing. Until the Supreme Court ruled it
constitutional, the Republican said, oh, it is not
constitutional. Until the day President Obama was reelected,
they insisted the American people would vote him out of office
so they could overturn this law. None of that happened.
And now, they call this an oversight hearing because they
predict all these terrible things to happen. They are not
predicting; they are wishing bad things to happen. This is not
a hearing to be constructive; it is a hearing to attack the law
and hope that it doesn't work. Well, the Affordable Care Act
will go fully into effect and Americans will never again have
to worry about their ability to get affordable, high-quality
health insurance. So the Republicans are saying, well, the
implementation is not going to go smoothly. Well,
implementation of any new big program has its kinks.
But the Affordable Care Act is proceeding on schedule and
it has done a remarkable amount of good for people. Over 3
million young adults now have health insurance. Over 100
million Americans have received free preventive health
benefits. More than 6 million seniors have saved $6.1 billion
in the Medicare Part D drug program. And beginning next year,
tens of millions of Americans, who would otherwise be without
health coverage, will have dependable, quality health
insurance.
My Republican colleagues said people want certainty. Well,
the certainty they would have if there was no Affordable Care
Act is that millions of people would be discriminated against
because they had preexisting health conditions, because they
offer a risk to the insurance companies. They have to pay more
money for their care. They would have the certainty of knowing
that insurance companies would do everything they could to keep
them from getting coverage if it is going to cost the insurance
companies money. And that is what we wanted to change.
Republicans still oppose the Affordable Care Act. They are
not taking a constructive approach. They are not saying, what
can we do to make this law and its implementation work more
smoothly? They are saying, what can we blame people who
supported this law about the problems that may come up?
While I am pleased that we have at this hearing today again
Gary Cohen, who was here in December answering many of the same
questions I am sure he will be addressed today. The Center for
Consumer Information and Insurance Oversight has made huge
progress in implementing the Affordable Care Act. Success
doesn't change the opinions of my colleagues on the Republican
side of the aisle. It makes them even more determined to look
for something they can criticize. And today on the House Floor,
we are going to vote on a bill that they produced, because
under the Affordable Care Act, we had a high-risk pool for
people with preexisting conditions who are waiting until
January to be able to buy health insurance without being
discriminated against, without being charged more money because
of those preexisting conditions.
We have spent $5 billion on a program to precede that to
help people with preexisting conditions to be in a high-risk
pool and we ran out of money. Republicans don't mind that we
run out of money for everything that the government does
because they supported the idea of sequestration happening. And
we are running out of money in all sorts of places where the
government has an obligation. But we have run out of money for
that preexisting medical problems pool until the last few
months of this year.
So the Republicans are suddenly concerned about people with
preexisting conditions decided to make sure that fund has
enough money to go on for the rest of this year. But they
funded by taking away the Public Health Prevention Funds until
2016. It makes no sense whatsoever. We are happy to support the
continuation of that preexisting pool to the end of this year,
but certainly, we could have found a better funding source and
the Republicans have denied the opportunity for any other
source to be offered on the House Floor today.
You have to question how sincere they are about wanting to
help people with preexisting conditions, how sincere they are
for wanting to see a smooth implementation of the bill now that
it is law. They want this bill to fail. They want to go back to
the time when millions of people had no chance for insurance.
That is the certainty they want to offer and it is a certainty
that led us to have the Affordable Care Act passed into law.
I congratulate Mr. Cohen and his agency for doing all that
they are doing. It is an important service to make sure the law
succeeds. And that is what we should all want to see happen now
that it is the law and they lost the last election and their
last chance to repeal it.
Mr. Murphy. The gentleman yields back. All right.
For our witness, Mr. Cohen, you are aware that this
committee is holding an investigative hearing, and when doing
so, has the practice of taking testimony under oath. Do you
have any objections to testifying under oath?
Mr. Cohen. No, sir.
Mr. Murphy. The chair then advises you that under the rules
of the House and the rules of the committee you are entitled to
be advised by counsel. Do you desired to be advised by counsel
during your testimony today?
Mr. Cohen. No, sir.
Mr. Murphy. In that case, if you would please rise and
raise your right hand; I will swear you in.
[Witness sworn.]
Mr. Murphy. Thank you. You are now under oath and subject
to the penalties set forth in Title XVIII, Section 1001, of the
United States Code. You may now give a 5-minute summary of your
written statement, Mr. Cohen.
TESTIMONY OF GARY COHEN, DIRECTOR, CENTER FOR CONSUMER
INFORMATION AND INSURANCE OVERSIGHT
Mr. Cohen. Thank you and good morning, Chairman Murphy,
Ranking Member DeGette, and members of the committee. I
appreciate the opportunity to tell you about CCIIO's
accomplishments over the past year. A lot has happened since
your last hearing on implementation of the Affordable Care Act,
and I would like to describe to you some of the progress we
have made and explain how I know that we are on track for open
enrollment this October.
We achieved a major milestone earlier this month when we
opened the window for issuers to begin submitting plans to be
sold through the federally facilitated marketplace. We said
that would happen on April 1 and it did, right on schedule. We
have had a very encouraging response and we expect to see
robust competition for the business of millions of Americans
who will be shopping for health insurance in this new
marketplace. States that are operating their own marketplaces
had begun accepting submissions from issuers as well.
It is also important to understand the ways in which we
have continued to improve our process since the window opened
on April 1. We have gotten feedback from States and issuers as
they have accessed the system, and we have addressed whatever
issues have come up. We have a helpdesk that responds by email
to anyone with questions about how to submit information to us.
We hold regular phone calls and we regularly publish answers to
frequently asked questions. At last count, there were over 200
answers to frequently asked questions in connection with this
process that have been provided to issuers and States. I am
extremely proud of the work that the team is doing to make sure
that we will have products on the shelves by October 1.
Another key element of this process is the federal data
hub. As you know, consumers will be providing certain
information in order to determine whether they are eligible for
tax credits to help pay their premiums for the commercial
health insurance that will be offered in the marketplaces. This
data will be transmitted to the data hub in real time to be
checked against information that is available regarding income,
citizenship, incarceration, and so forth. The hub will not
store any individual's data. It is a conduit from the agencies
where this data is kept such as the IRS, Social Security, and
Department of Homeland Security. This will enable real-time
electronic verification of information needed to determine
eligibility and will reduce, to the greatest extent possible,
the need for people to submit paper documentation.
States that are operating their own marketplaces will also
have access to the data hub. We have recently begun testing the
connection between state systems and the hub and have succeeded
in transferring data back and forth. This is another major
milestone that has been achieved on schedule. Testing will
continue and the hub will be fully operational in time for open
enrollment this fall.
Another key element is the single streamlined application
the consumers will use in order to find out whether they are
eligible for Medicaid or CHIP on the one hand or tax credits to
purchase commercial insurance plans through the marketplace on
the other. We have gone through an extensive consumer testing
process since the draft of the application was published and we
have continued to work to make it as simple as possible. The
results have been encouraging. Highlighted messaging will help
answer questions, alleviate concerns, and direct consumers to
where they can get additional help. We found that most
applicants will need to complete less than \1/3\ of the total
number of items included in the entire physical form.
Now, no matter how simple and straightforward we are able
to make the application process, we know that buying health
insurance is not like buying a book on Amazon or shoes from
Zappos. Many of the people coming to the marketplace will never
have had commercial health insurance before and will need help
in choosing the plan that is right for them and their family.
During the past year, we have been putting in place a
variety of ways for people to get that help. On healthcare.gov,
people can learn about the Affordable Care Act, review health
insurance basics in order to understand what their coverage
costs, and interact with a checklist on how to prepare for
shopping for coverage in the new marketplace. There are several
short videos explaining how shopping for Qualified Health Plans
in the federally facilitated marketplace will work.
In addition, healthcare.gov will have a chat capability so
that people can get their questions answered quickly as they
use the site. The call center will begin operating in June, and
during open enrollment, it will be answering questions 24 hours
a day, 7 days a week.
On April 9, we announced a funding opportunity for
recipients to operate as navigators for the federally
facilitated and partnership marketplaces. Navigators will
provide fair, accurate, and impartial information to help
consumers use the marketplace and select a Qualified Health
Plan. Meanwhile, licensed agents and brokers, compensated by
the issuer and regulated under state law, may enroll consumers
in coverage through the marketplace in every State.
As you can see, CMS has been hard at work over the past
year improving the health insurance market for all Americans.
This work and these achievements make me confident and excited
for the future health insurance market. Soon, consumers will
have better access to health coverage that best fits their
needs.
So I thank you for holding this hearing and I would be
happy to answer your questions.
[The prepared statement of Mr. Cohen follows:]
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Mr. Murphy. I thank you very much, Mr. Cohen. Let me
recognize myself for 5 minutes here.
Regarding the navigators, I believe the law says that if
they have received compensation from an insurance company, they
are not eligible to be employed as a navigator. Is that
correct?
Mr. Cohen. That is what we have said in our regulations. If
they have received compensation from an insurance company in
connection with enrolling people in health coverage, they are
not eligible to be navigators.
Mr. Murphy. So let's say Mary Smith is an insurance agent
in Pennsylvania, 20 years in the field. Now, she has received a
license to sell insurance in the State of Pennsylvania. In
order to do that, she had to have 24 credit hours of training.
Then, she takes a test. She passed the test, must continue to
take 24 credit hours of training every 2 years to maintain her
license. Let's say she has sold a wide range of insurance for
multiple companies for profit and nonprofits to perhaps
thousands of individuals. She would like to apply for a job as
a navigator. There is also John Doe who is applying for a job
as a navigator with a high school degree and zero experience
selling insurance. Who is eligible to be hired?
Mr. Cohen. So I think it is important to understand that
there really is a difference between what a navigator does and
what an insurance agent does.
Mr. Murphy. I understand.
Mr. Cohen. Mary Smith----
Mr. Murphy. But I just want----
Mr. Cohen. Mary Smith----
Mr. Murphy [continuing]. To make sure I understand. Mary
Smith is not qualified? Or she is----
Mr. Cohen. Mary Smith is qualified to offer insurance in
the marketplace as----
Mr. Murphy. But not as a navigator. She is prohibited----
Mr. Cohen. She is not eligible for a navigator----
Mr. Murphy. But she is discriminated from being a navigator
because she has experience in the field that is paid. Am I
correct?
Mr. Cohen. But she is welcome to help clients obtain
coverage in the marketplace as an agent.
Mr. Murphy. I understand. But someone who has actually done
this for a living is prohibited from being hired to advise
people to buy insurance under the exchanges or to be advised on
how to buy insurance in the States. Am I correct?
Mr. Cohen. Well, she could choose no longer to be selling
insurance----
Mr. Murphy. But if----
Mr. Cohen [continuing]. Like half of issuers, and be a
navigator. That is her choice.
Mr. Murphy. So as long as she is no longer taking any money
from insurance companies----
Mr. Cohen. She is eligible. Correct.
Mr. Murphy. Now, let me ask you this because some of this
still I am still puzzled about. In terms of the time frame
here--because a lot of employers are saying to me I have got to
make decisions now. They are not going to start budgeting, or
having budget decisions on December 31st but want to make
decisions now. How soon will the information be available to
them in terms of what is going to be in these exchanges? Do you
have some date of that?
Mr. Cohen. Yes. The plans are being submitted now. They
will be reviewed both by us and by the state insurance
regulators that have to approve the plans. And then issuers
will have an opportunity to make any changes----
Mr. Murphy. Just give a date in terms of when those will be
available.
Mr. Cohen. September.
Mr. Murphy. In September. Now, the navigators are going to
have complete final training in August, so that seems a bit odd
according to your calendar. They can't really get final
training before they see the exchanges, so I hope you would
adjust that date.
Mr. Cohen. Well, the primary function of the navigators in
the early period will be outreach and enrollment. And then once
open enrollment starts in October, then that is when they will
be helping people----
Mr. Murphy. So these things will be available to look at in
September, but then sales of these plans will start in October,
a month later?
Mr. Cohen. Correct, for coverage in January.
Mr. Murphy. And you feel you will be ready with everybody
fully trained and people fully informed of what is available in
that month?
Mr. Cohen. Yes.
Mr. Murphy. All right. Now, I want to ask you also another
thing with regard to navigators because there are some concerns
I have heard that people who--are people who are involved in
some community groups or political groups, they can apply for
jobs as navigators?
Mr. Cohen. So the requirements for applying for a grant are
set forth in the funding opportunity, not to mention----
Mr. Murphy. But I am just wondering if there are
prohibitions in terms of involvement in other activities that
they would not be----
Mr. Cohen. We are hoping that groups that have a
demonstrated history of serving their community and serving the
people in their community that we are trying to reach will
apply for navigator grants.
Mr. Murphy. So ACORN members could?
Mr. Cohen. I can't speak to any particular group----
Mr. Murphy. Well, but they wouldn't prohibit them, right?
Mr. Cohen. They can apply----
Mr. Murphy. OK.
Mr. Cohen [continuing]. And their application will be
reviewed and we will be making decisions----
Mr. Murphy. Well, given that they are community groups, I
am concerned about data confidentiality and HIPAA laws, et
cetera, certainly, if they are discussing their own health with
navigators. What assurance do you have in place and what
penalties will there be to make sure they do not keep that
data, it is only, for example, on government computer systems,
they cannot use it for any other purpose? Could you address
that issue?
Mr. Cohen. Certainly, thank you. So navigators will be
trained on the importance of privacy and security and will be
subject to all of the laws and regulations that protect
people----
Mr. Murphy. Are there other specific criminal penalties if
they use this data for their own purpose?
Mr. Cohen. There are.
Mr. Murphy. And are they allowed, as community groups, to
accept donations from insurance companies and other private
groups?
Mr. Cohen. The prohibition is against receiving
compensation for enrolling people in coverage.
Mr. Murphy. I understand. But if they get donations in a
general sense, are they permitted to do that?
Mr. Cohen. I think----
Mr. Murphy. You are not sure?
Mr. Cohen [continuing]. I would need to understand better
what the--what type of donation and what the purpose of it
would be----
Mr. Murphy. Could you look into that, please, and get back
to us?
Mr. Cohen. I would be happy to.
Mr. Murphy. I understand your concern. That is an important
concern for all of us on those things, too.
I also have a final question with regard to do you think
you have enough funding at this point, not future budgetary
things, to take care of your enrollment of people in these
exchanges?
Mr. Cohen. For fiscal year 2013 we have enough funding and
we have--the President's budget requests additional funding for
fiscal year 2014.
Mr. Murphy. Thank you. My time has expired.
I will now recognize Ms. DeGette for 5 minutes.
Ms. DeGette. Thank you very much, Mr. Chairman.
Mr. Cohen, the chairman talked to you about this
hypothetical person, Mary Smith, who is a registered insurance
broker or something. And she can't be a navigator while she is
selling insurance. That is because it would be a conflict of
interest, correct?
Mr. Cohen. That is right.
Ms. DeGette. But if she, with all her qualifications,
decided not to represent any insurance companies and not to do
that, she could become a navigator, correct?
Mr. Cohen. She could.
Mr. DeGette. Because then she wouldn't have a conflict of
interest, right?
Mr. Cohen. That is right.
Ms. DeGette. Now, what about these community groups? On the
community groups, as I recall when we did the Medicare Part D
prescription drug benefit, we also had a number of community
groups helping sign seniors up for that. Is that right?
Mr. Cohen. Correct.
Ms. DeGette. And that was kind of a similar situation
because it involved asking citizens--in this case, senior
citizens--to sort out a number of plans and then apply online,
right?
Mr. Cohen. That is true.
Ms. DeGette. And so really you did have to have trained
individuals, whether from community groups or other places,
helping folks do this, right?
Mr. Cohen. You did.
Ms. DeGette. OK. Now, I am glad that you have a lot of
confidence that on October 1, 2013, consumers are going to be
able to sign up for these exchanges. I want to ask you about
the States, including my State of Colorado, which are going to
either run their own marketplaces or their marketplace in
partnership with the Federal Government. There are 24 of them.
What is your view about the state marketplaces, how are they
coming along?
Mr. Cohen. So I am very encouraged by the progress the
States have been making. We work with them on literally, you
know, a daily and weekly basis. We are in close contact with
the people at the exchanges and also at the state Medicaid
agencies because that is a very important part of this as well.
I think it is fair to say that there are some States that
started earlier in the process and some States that started a
little bit later. So we are looking very carefully at the
progress that each of the States are making and our commitment
is that there will be a functioning marketplace in every State
on October 1. So we have been working with the States to make
sure that we provide the support that is needed to make that
happen.
Ms. DeGette. And what about the States that got a late
start? Are you giving them extra effort to help them get their
exchanges up and going?
Mr. Cohen. That is correct.
Ms. DeGette. OK. Now, can you give us a sense--the Chairman
and I have talked a lot about the importance of doing this
oversight--what are the milestones and benchmarks we should be
looking at to measure CCIIO's progress over the next few
months?
Mr. Cohen. So I think--and we provided you, I think, with a
timeline for what is supposed to be happening and what will be
happening over the next several months. I think the keys are
that we are on schedule and on track with the IT build that
were doing, which is clearly an important part of this. And as
I mentioned, we have achieved a big milestone earlier this
month with the QHP Submission process. The federal data hub is
going to be moving--is in testing now but will be continuing
testing through the summer. And so I think it is just important
to take a look at each of the steps along the path and make
sure that we are on track. But I am very optimistic and
confident of where we are at this point.
Ms. DeGette. Now, Mr. Cohen, a couple of months ago at a
conference you said, ``it is only prudent to not assume
everything is going to work perfectly on day one and to make
sure that we have got plans in place to address things that may
happen.'' You also said that as we get closer to October 1,
``we will be in a position to better know which contingency
plans we actually have to implement.'' That seems a little in
contrast to what you are saying this morning. Can you explain
what that comment meant and if that means that HHS is not going
to be ready to implement the law?
Mr. Cohen. I would be happy to, and I think, you know,
sometimes when things get reported, the context gets a little
lost. So----
Ms. DeGette. I have never noticed that before.
Mr. Cohen. I was speaking specifically not about whether we
would be ready and in operation October 1; I was speaking
really, Congresswoman, to some of the comments that you made in
your opening statement, that we know that when big programs
begin, sometimes things aren't perfect on day one and you have
to make improvements. And it is only prudent to be prepared for
the things that might happen that you could do better. And we
are, like all federal agencies, subject to guidelines that are
published by the National Institute of Standards and Technology
for when you do an IT project. And so you have to be prepared
with mitigation strategies in case something doesn't work
exactly the way you expected. But we will be up and operational
October 1. I don't have any question about that.
Ms. DeGette. Could you tell us about how you are developing
those mitigation strategies and are those coming along?
Mr. Cohen. Yes. So it is really a constant process of you--
as you do the build--and I am not the expert on IT--but as you
do the build, you do testing, you see how things are going, you
come up with strategies for how you are going to deal with--for
example, suppose we get a lot more applications that come in on
day one than we planned for. So you have to have redundancy;
you have to be prepared for that eventuality.
Ms. DeGette. Right.
Mr. Cohen. So those are the types of things that we are
doing.
Ms. DeGette. Thank you.
Mr. Murphy. OK. The gentlelady's time has expired.
I now recognize the gentleman from Texas for 5 minutes, Dr.
Burgess.
Mr. Burgess. Thank you, Mr. Chairman.
So Mr. Cohen, let's go back to AHIP quote about which
contingency plans you actually have to implement now. The
Secretary was here last week and I asked her about contingency
plans and she said there are no contingency plans. Everything
will be ready. So which is it? Everything will be ready or you
are planning for contingencies?
Mr. Cohen. Everything will be ready but we are also
planning for anything that, when we go into operation, if the
situations come up that we need to address, we will be ready to
address those situations and make sure that the experience for
American consumers is as seamless and as good as it can be.
Mr. Burgess. Well, the Committee would benefit, actually,
from seeing some of those contingencies. Let me just ask you
this: would it be fair to say that closing the enrollment on
the Pre-Existing Condition Insurance Plan, was that a
contingency?
Mr. Cohen. Closing enrollment on the Pre-Existing Condition
Plan was something that we did because it was the prudent thing
to do in light of the fact that we had a certain amount of
money, $5 billion, to spend on that program----
Mr. Burgess. So that was a contingency plan to close
enrollment in PCIP that this committee was unaware of last
year?
Mr. Cohen. I think we were looking very carefully at the
expenditures of the program and we were committed as careful
stewards of the money that had been appropriated us to do
whatever was needed to live within the money----
Mr. Burgess. Yes, but here is the point: I mean the
Secretary comes in and says there are no contingency plans; you
are telling me that a year ago there was a contingency plan to
deal with the Pre-Existing Conditions program. We need to know.
Mr. Cohen. Well, I didn't say that. I didn't say that. I
said----
Mr. Burgess. Well, it sounded like you said that. And if we
take a context, which we will, that is how it will be reported
by your friends in the press over here.
Look, we have got to level with each other. I mean people
are going to be counting on you to do your job on January 1.
And you have raised questions; your main health IT guy at the
same AHIP conference where you spoke, he raised questions about
whether that federal hub will be ready. And then you look at
what happened in the Pre-Existing Condition Plan, there is a
word that goes around. I learn new words in this town all the
time. Some of them I can say here in committee; some of them I
can't. But the word that keeps coming up is de-scoping. So are
you actively discussing de-scoping, reducing the scope of the
Affordable Care Act when the rollout occurs?
Mr. Cohen. No.
Mr. Burgess. I mean I am reminding you, you are under oath
so----
Mr. Cohen. Yes.
Mr. Burgess [continuing]. When we call you back in here
next year to talk about this, there is no plan to narrow the
scope of the Affordable Care Act?
Mr. Cohen. We intend to implement fully the Affordable Care
Act. We have announced already some portions that will be put
off to 2015. But at this point, I don't anticipate any de-
scoping of the Affordable Care Act now.
Mr. Burgess. And yet, you look at the people who wanted to
sign up for the preexisting program and in their parlance they
have been de-scoped out the availability of that program, have
they not?
Mr. Cohen. Well, the Preexisting Condition program was
always meant to be temporary. And the circumstances of those
people really point to exactly why we needed the Affordable
Care Act----
Mr. Burgess. Yes, but you know what----
Mr. Cohen [continuing]. Because those people were not able
to get health insurance coverage at all----
Mr. Burgess. Building a bridge doesn't do you any good if
it doesn't get to the other side, and these people now fall
into this 8-month chasm and that is a problem.
Now, the SHOP exchanges that were much extolled as a virtue
of the Affordable Care Act and now those are going to be
delayed--well, not really delayed but you will only have one
choice because the competition that was advertised amongst
these plans.
Mr. Cohen. Well----
Mr. Burgess. And I think that is what Senator Rockefeller
was talking about. Wait a minute. This was a serious missed-at
fire.
Mr. Cohen. Let's be clear. Employers will have a choice.
They can choose among the plans that are available in the SHOP.
And we believe that employers will have more choice under the
Affordable Care Act than they did before. The 1-year transition
to--affects only employees' choice and whether employers can
offer more than one plan to their employees in the federally
facilitated marketplace.
Mr. Burgess. Again, I would just offer the observation that
sounds like a narrowing in scope to at least to me. Maybe it
doesn't to other people, but it does to me.
So let me ask you a question about taking the money from
the Prevention Fund. Did someone in your department make the
decision to take the money from the Prevention Fund to fund
these navigators?
Mr. Cohen. Within CCIIO, no.
Mr. Burgess. So who made the decision?
Mr. Cohen. The Secretary.
Mr. Burgess. So can you perhaps talk a little bit about how
your department has been using the money that the Secretary
moved from the Prevention Fund?
Mr. Cohen. The portion of the Prevention Fund money that
CCIIO is using goes to the $54 million funding opportunity
announcement for navigator grants.
Mr. Burgess. So are you going to take other money from the
Prevention Fund?
Mr. Cohen. I am not aware of that at this point, no.
Mr. Burgess. But it is the Secretary who has the transfer
authority under the law, so unless she were to level with us--
and I promise you, she didn't last week--unless she were to
level with us about what the future plans are, you would have
no way of knowing; we would have no way of knowing. That secret
is locked up with the Secretary.
Thank you, Mr. Chairman. I will yield back.
Mr. Murphy. The gentleman's time has expired.
I will now recognize Mr. Waxman for 5 minutes.
Mr. Waxman. Thank you, Mr. Chairman.
It is so amazing to me that the Republicans are complaining
that money was taken from the prevention program to help pay
for the implementation of the Affordable Care Act after the
Republicans denied the Administration funds to implement the
Affordable Care Act. It is like the kid who killed his mother
and father and then said you have to care for me because I am
an orphan. They are the ones who are impeding this legislation
from being implemented and forcing the Administration to make
these kinds of choices. But they are now making a conscious
choice to take the Prevention Public Health Fund to pay for a
short period of time for this Preexisting Condition Insurance
Program that is supposed to go out of existence at the end of
this year.
This Preexisting Condition Insurance Program, or PCIP, was
part of the Affordable Care Act. It isn't something the
Republicans authored into law; it was part of the Affordable
Care Act that they voted against. And in February of this year,
CCIIO, your agency, announced that enrollment would be
suspended to ensure that the program's funds, which were
capped, would be able to pay the claims of existing enrollees.
This is what happens when you cap a program. They want to cap
Medicare; they want to cap Medicaid. That means if you run out
of money, you run of services. Well, why was this decision
made?
Mr. Cohen. Well, you stated it, Congressman. When we had a
certain amount of money that was authorized for the program,
our number one priority, obviously, was to make sure that those
people who were already enrolled in the program got continuity
of care until the end of the year.
Mr. Waxman. So we are talking about 107,000 enrollees.
Isn't that correct?
Mr. Cohen. It is at least that many, yes.
Mr. Waxman. OK. These individuals will be able to receive
their benefits until the end of this year. Is that correct?
Mr. Cohen. Correct.
Mr. Waxman. OK. And am I correct that the PCIP program was
always meant to be a temporary bridge to full ACA
implementation in 2014 when insurers would be barred from
discriminating against people with preexisting conditions?
Mr. Cohen. That is right.
Mr. Waxman. OK. And will those uninsured individuals who
cannot get access to the PCIP program now be able to get access
to affordable quality healthcare coverage when the ACA goes
fully into effect in January?
Mr. Cohen. That is right. Insurers won't be able to turn
them away and they won't be able to charge them more just
because they are sick.
Mr. Waxman. It is to be quite amazing that the Republican
suddenly want to champion a program for a few months which is a
bridge until people get to what is a much more sane way to
handle the matter. People in this preexisting program until the
end of the year, we don't pay all their expenses, do we? They
have to buy their insurance?
Mr. Cohen. That is right.
Mr. Waxman. And is that going to be the same price as other
people's insurance, or that----
Mr. Cohen. Under the PCIP program, it is about the price of
other people's insurance today, unlike state high-risk pools
where the cost to enrollees is typically much higher.
Mr. Waxman. We talked about the Affordable Care Act being
fully implemented in 2014, but many key benefits and
protections from the law are already in place. And I want to
ask you how Americans are already benefiting from the law. The
ACA prohibits insurers from denying coverage for children with
preexisting conditions right now, isn't that correct?
Mr. Cohen. That is right.
Mr. Waxman. And how many children are there with
preexisting health conditions?
Mr. Cohen. As many as 17 million.
Mr. Waxman. Seventeen million people. We didn't have to
create a fund for them; we just said they have to be covered
right now; the others will be covered in January.
Mr. Cohen. That is right.
Mr. Waxman. Covered without being discriminated against.
The law also bans annual lifetime coverage limits, isn't that
correct?
Mr. Cohen. It did.
Mr. Waxman. And when did this ban going to affect?
Mr. Cohen. In September of 2010.
Mr. Waxman. And how many Americans are benefiting from this
provision of the Affordable Care Act?
Mr. Cohen. Approximately 105 million.
Mr. Waxman. The ACL also ends some of the insurance
industry's most harmful abuses, including policy rescissions.
Mr. Cohen, for folks who aren't experts in the insurance
industry, tell us: what are these rescissions?
Mr. Cohen. So insurance--before the Affordable Care Act,
insurers often had a policy of what is called post-claim
underwriting. So they would wait to see if someone got sick and
started having a lot of health claims, and then they would go
back to look at their application and see if they could find
something in the application that maybe was mistakenly entered
that was incorrect. And then they would say we are going to
take way your policy retroactively so that we don't have to pay
for any of those claims.
Mr. Waxman. So when Republicans voted against the
Affordable Care Act, they were voting to let the insurance
companies do this rescission, which is taking away your
insurance coverage when you needed even though you paid for it.
Mr. Cohen. That is correct.
Mr. Waxman. Thank you.
Mr. Murphy. The gentleman's time has expired.
I now recognize Mr. Scalise for 5 minutes.
Mr. Scalise. Thank you, Mr. Chairman. I appreciate you
having in this hearing.
Thank you, Mr. Cohen, for coming. Yesterday, I was in my
district before I flew back here to D.C. and there was a panel
on the healthcare law that was held at a local hospital in my
district. And, you know, I was one of the people that was
speaking on that panel. And there were a number of people in
the healthcare industry, people that have insurance. And it
just seemed to be an underlying theme that continued to go
through that room that nobody is ready for this law. Nobody
knows how it is going to work for them, and most people are
really concerned that the good healthcare they have they are in
jeopardy of losing. And again, this is something I hear all the
time when I am back in my district talking to small businesses,
talking to families who have healthcare that they are now
having real concerns about whether or not they are going to be
able keep that. I mean are you out of touch with this or do you
hear these real concerns? And I talked to my colleagues from
other States and they are hearing the same things. I mean are
you hearing these things?
Mr. Cohen. I mean I think it is important to keep in mind
that for the many millions of Americans who have healthcare
through their employer who--that employs more than 50 people,
they are largely unaffected by the Affordable Care Act.
Mr. Scalise. Well, I will give you an example. I met
recently with the owner of Whole Foods. They have something
like 30,000 employees. This is a very large company, a very
well-respected company nationally. They have healthcare that
their employees really like. Their employees actually get to
vote on the benefits. It is a very highly successful plan. They
have managed to control costs, they beat the industry average,
and yet they still provide a plan that their employees like.
And under the current law, from what they see, their plan is
not even eligible. Their 30,000 plus employees that have good
healthcare they like our right now at risk of losing that
coverage. You know the old promise if you like what you have,
you can keep it? It was broken to those 30,000. That was one
example. I mean, are you even aware of that?
Mr. Cohen. Well, I can't speak to--specifically to----
Mr. Scalise. You ought to find out about it.
Mr. Cohen [continuing]. That example. What I can----
Mr. Scalise. A real-life example of a real company that is
a well-respected company that has good healthcare their
employees really like and they are right now at risk of losing
it because of this law.
Mr. Cohen. But I can't----
Mr. Scalise. Well, I want to walk you through some specific
things that we have been seeing, you know, and start with the
Pre-Existing Condition Insurance program. You all did actually
stop taking new enrollees in that program, right, because it
ran out of money?
Mr. Cohen. We stopped taking new enrollees to make sure we
wouldn't run out of money.
Mr. Scalise. All right. So the Early Retiree Reinsurance
Program, that was supposed to last until 2014. I think it was
discontinued in 2011, is that right?
Mr. Cohen. Well, I think the success of that program showed
the great need for it and----
Mr. Scalise. So enrollments closed on it? It was so
successful that somebody can't get in it right now?
Mr. Cohen. We are paying out claims now only based on money
that is coming back to us.
Mr. Scalise. So can someone enroll in it today?
Mr. Cohen. Enroll in it today, no.
Mr. Scalise. No. So they can't enroll in it. Some
requirements for Small Business Health Options Program were
delayed, is that correct?
Mr. Cohen. The SHOP will be operating in October. The one
provision that is put off----
Mr. Scalise. But did you delay some of those provisions?
Mr. Cohen. One aspect of the SHOP, which is the employee
choice we had----
Mr. Scalise. That has been delayed. The CLASS program--that
was supposed to be Obamacare's long-term care program--that was
actually repealed by Congress, wasn't it?
Mr. Cohen. That is not one of mine so----
Mr. Scalise. No, it is not one of anybody's anymore because
it got repealed by Congress it was so bad. And hopefully, none
of this is yours anymore because we could repeal the whole
thing.
But I want to hit one more of them. The 1099 requirement
that we were hearing horror stories about that was getting
ready take effect, again, part of Obamacare. The horror stories
were so bad that Congress, Republican and Democrat alike,
agreed to repeal that, too, right?
Mr. Cohen. That is my understanding. Well, again that is
the----
Mr. Scalise. But it is not your problem anymore either
because we repealed that. So there are five examples right
there, five examples, some fairly small components, but then
you are here telling us that probably the largest component
that you are going to have to deal with, and that is these
exchanges, they are going to be ready. You think they are going
to be fine in a couple of months when it is time for them to
come online, yet I just gave you five examples of programs that
were either delayed, closed enrollment because they weren't
ready for primetime, or just outright repealed because they
were so bad. But then you are going to tell us that the biggest
part is going to be oK?
Mr. Cohen. We are on track and I can just point to the
successes that we have had so far in developing systems----
Mr. Scalise. I just highlighted five examples of failures.
In fact, I don't know if you know this, one of the lead
architects of Obamacare, Senator Baucus just last week said,
``I just see a huge train wreck coming down,'' and he is not
even running for reelection. But, I mean, he just said that
last week. I mean, do you dispute what he said last week about
the healthcare law being a huge train wreck coming down?
Mr. Cohen. We are on track and on schedule----
Mr. Scalise. On track. The problem is there is a train
coming at you on that track----
Mr. Cohen. We----
Mr. Scalise. According to one of the architects--that is
what I mean. I voted against it. Somebody that actually was
helping push this thing through said it is about to be huge
train wreck----
Mr. Cohen. We will be ready to help millions of Americans
enroll in quality affordable health----
Mr. Scalise. I hope you are ready to help the millions of
Americans that are about to be dealing with this train wreck
that is coming because again, when you talk to real people out
there in the real world--big and small--they don't know how
they are going to be able to keep the healthcare they like for
their employees. And that is a big concern of mine.
I yield back.
Mr. Murphy. The gentleman's time has expired.
I now recognize Mr. Tonko for 5 minutes.
Mr. Tonko. Thank you, Mr. Chair. Mr. Cohen, thank you for
appearing before the subcommittee today. And the Affordable
Care Act's Prevention and Public Health Fund have been subject
to ongoing attacks since their inception under the Affordable
Care Act. The Republicans have repeatedly sought to repeal or
drain those funds. They argue that it is a slush fund and that
the resources are being used inappropriately to pay for public
health lobbying efforts.
Let's take the opportunity to set the record straight on
exactly how the Prevention Fund is or isn't being used. I know
the Prevention Fund isn't under your supervision but can you
give us a general overview of the HHS agencies and public
health programs and activities that have been and will be
supported through the fund?
Mr. Cohen. So I would be happy to try, Congressman. That is
not directly my area and I would be happy to get back to you
with information on that. But I do know that the Prevention
Fund has been used extensively in tobacco cessation and
wellness programs and in other programs designed to get
preventive care to people. And with respect to the work that we
are doing, we know that when people have health insurance, they
get preventive care and they get care for the illnesses that
they do have earlier and they get better treatment and it is
more cost-effective.
So I think that the use of the Prevention and Public Health
Fund to help stand up these exchanges and make sure that people
know about them and take advantage of the benefits they have to
offer is really, you know, right within the scope of what the
fund is intended to do.
Mr. Tonko. Thank you. And do state and local governments
receive any of the dollars?
Mr. Cohen. I don't know the answer to that. I am sorry.
Mr. Tonko. Is there a way you can check and get back to us,
please?
Mr. Cohen. Absolutely. Be happy to, yes.
Mr. Tonko. And is any of the Prevention Fund being used by
its grantees to support local lobbying efforts?
Mr. Cohen. No, not that I am aware of. But again, I can
check into that and get back to you.
Mr. Tonko. And what is the Department's policy on the use
of federal grant dollars for lobbying activities?
Mr. Cohen. It is not permitted.
Mr. Tonko. OK. With respect to using this fund to help
implement the Affordable Care Act and implement the health
insurance marketplaces, I understand that you and the rest of
the Administration are in a very difficult position. Because
Republicans in Congress have refused to provide any funding to
support this critical program and help the implementation work
smoothly, HHS was forced to leverage and reallocate existing
resources to provide short-term and immediate funding. So my
question is, can you please explain to us how the Secretary has
used her transfer authority to help implement the Affordable
Care Act?
Mr. Cohen. The Secretary has used the statutory authority
that she has to transfer funds within HHS. She has used some
funding from the Prevention Fund, as you mentioned, and she has
used some funding from a nonrecurring expense fund particularly
for IT projects. And those are the sources that she has used in
addition to the implementation fund that was contained in the
Affordable Care Act.
Mr. Tonko. And the IT projects that you are talking about
would----
Mr. Cohen. That is the work that we are doing to get the
marketplaces ready for October.
Mr. Tonko. For October 1. And how will HHS ensure that
programs supported by the Prevention Fund won't be negatively
impacted due to the reallocation, if you will, of the funds?
Mr. Cohen. Well, I mean, obviously the President's budget
for 2014 requests additional funding for the work that we are
doing. So the hope is that going forward we will get that
funding and will be able to rely on that rather than having to
use any funding under the Prevention Fund.
Mr. Tonko. I thank you for your response. The Prevention
Fund is a significant, smart, and worthwhile investment
obviously in improving health situations for customers and
reducing costs. It is unfortunate that you had to reallocate
some of these funds to pay for implementation. I think is
unfortunate that my Republican colleagues have been so
unwilling to provide the basic funding requested by the
Administration to implement the healthcare laws.
So, you know, I appreciate the insight that you have
provided today. If you can get back to us with some of those
other concerns, that would be appreciated. But, you know, this
down payment is the effort to provide for a better outcome and
to achieve the ultimate goals of the Affordable Care Act.
So with all of that, I thank you----
Mr. Cohen. Thank you.
Mr. Tonko [continuing]. For your response here.
And with that, Mr. Chair, I will yield back.
Mr. Murphy. Thank you. The gentleman yields back.
I now recognize Mr. Harper for 5 minutes.
Mr. Harper. Thank you, Mr. Chairman.
Mr. Cohen, thank you for allowing us this opportunity on
very important issues that we need to discuss.
And I want to follow up a little bit on what the gentleman
from Louisiana just asked you about the Pre-Existing Condition
Insurance program, the fund, where you had to stop enrollment.
I was under the impression that it was stopped because the
money was exhausted, but you said that you stopped so you
wouldn't run out of money. Would you explain that in a little
more detail?
Mr. Cohen. Sure. As with any program like this, claims come
in and have to get paid out over a period of time, so we have
to project forward for the people that we have enrolled in the
program now. We need to make sure that we can cover their
costs.
Mr. Harper. Your anticipated or projected or expected
costs----
Mr. Cohen. For the rest of the year. So we look at how much
we are spending and how much we have, and obviously, we know
that we can't go beyond what has been appropriated. So that was
the basis for the decision.
Mr. Harper. Right. How much money was left when it was
closed when enrollment was stopped?
Mr. Cohen. I would have to go back and get you those
precise numbers. I don't----
Mr. Harper. Can you provide that information to us?
Mr. Cohen. Yes, I would be happy to. I don't want to
misstate it so I would like--I would prefer to go back and get
you that information.
Mr. Harper. Preexisting, I think everybody here is always
concerned about preexisting. But even before the implementation
of this, the largest insurer in my home State already provided
preexisting coverage for dependent children up to age 25, not
quite 26, but 25.
Mr. Cohen. Yes.
Mr. Harper. And those things were there and available. But
what I want to know is you said there was not enough money left
so you had to stop, but isn't this money that we are talking
about today that Ms. Sebelius has available to her under the
Preventive Care, could not some of that have been--instead of
used for navigators or something else? Didn't she have the
authority to transfer some of that money that was available to
her, the billions of dollars available to her to help prop this
program up for preexisting?
Mr. Cohen. That is not something that we have looked at,
Congressman, but I am sure we can----
Mr. Harper. Well, I don't know that I need you to provide
an answer. We know that is the truth. She has the ability; that
money is available. I mean the money is almost like a slush
fund for her to use. And so we are going to do what should have
been done, which is to take this money that is there available
to use to help these people that are sick and to help those
with preexisting. I mean some of this money has been used for a
pet neutering project. And some others we used for lobbying
efforts regarding soda taxes. I mean that is unconscionable
that we would use money for something like that but yet deny
care to those that are in most need.
So I would encourage you to, even now, as this is going
on, there are funds available within the program that could be
shifted over to preexisting but we are going to take care of it
with legislation today. It is interesting that even though some
on the other side have been very critical, there are many
health advocacy groups, patient advocacy groups that support
this bill that is going to come up for a vote later today.
Now, I would like to talk now for a minute about the
sequester impact if we could. We have had this Administration
cancel White House tours but yet have concerts that cost over
$400,000 of taxpayer money. We have had an Easter egg roll. We
are going to have, I guess, another congressional White House
Christmas Ball. All these things are done. TSA talking about
long waits at the airport even though they ordered $50 million
worth of new uniforms before the sequester kicked in.
So I think the public realizes the political gamesmanship
that is taking place in this. So I want to know what you have
done, as far as the sequester, how that has impacted you and if
there is anything there that we should expect as far as
furloughs or impact on patient care?
Mr. Cohen. Within CMS, we have been working very hard to
avoid the necessity for furloughs. We are under a hiring freeze
so I can't hire. I can't replace people who leave, which is a
serious issue for me in terms of trying to run a program. If
people move on to other jobs, I can't hire to replace them. And
there have been--we have applied the sequester according to the
advice that we have been given across the board, as we are
required to do.
Mr. Harper. OK. I am almost out of time. But are you
telling me, then, that this Administration is furloughing air-
traffic controllers vital to public safety in this country but
yet you are not furloughing anybody in your agency?
Mr. Cohen. Well, in effect we are because we can't replace
people who leave. So we are----
Mr. Harper. But that is not the same. I mean we are talking
about at least a 15 percent furlough of current air-traffic
controllers resulting in delays and perhaps safety concerns,
but yet this has been a selective political item by the
Administration.
I yield back.
Mr. Murphy. The gentleman yields back. I now recognize the
gentleman from Texas, Mr. Green, for 5 minutes.
Mr. Green. Thank you, Mr. Chairman.
And I share my colleagues' concern, but when that sequester
was passed, it was passed by a huge bipartisan vote. And, you
can't vote for something and the say, oh, I wish it weren't
happening because it is happening whether it be at CMS or TSA
or anywhere else.
But let me get to the health exchanges. I have a question
related to exchanges' important goal and I think we both share
in sharing that part of the successful implementation of the
Affordable Care Act, people have access to the care they need.
Your agency has released a series of letters to issues relating
to Qualified Health Plans, QHPs and the insurance exchanges and
the essential community partners. In your letter, you state CMS
urges issuers to offer provider networks with robust ECP
participation. Do you agree that is important that ECPs such as
community health centers be considered as an integral part of
the Qualified Health Plans networks?
Mr. Cohen. Yes. Yes.
Mr. Green. And is CMS encouraging that?
Mr. Cohen. We are.
Mr. Green. I have another related question but I will
submit that for the record.
And on the topic of premiums we heard repeatedly last month
concerns about the potential rate increases under the
Affordable Care Act, the concern that there will be some
people, mainly healthier young men, who will pay higher
premiums under the Affordable Care Act than they pay in an
individual market. I would like to understand more detail.
First, can you tell us a bit about how rates are structured for
different groups in the individual market now based on factors
such as age, sex, and health status?
Mr. Cohen. Yes. So in the market today, issuers are allowed
to vary rates depending on the health status of a person,
whether they are sick and they were expected to have higher
costs. They are allowed to charge women more than men and treat
being a woman as a preexisting condition.
Mr. Green. OK. So older and sicker people pay more and
women pay more for healthcare right now?
Mr. Cohen. That is right.
Mr. Green. How would the rates be structured under the
Affordable Care Act go into effect?
Mr. Cohen. Health status won't be able to be used as a
factor. Gender won't be able to be used as a factor. Age still
can be used as a factor but the impact is limited compared to
what it is today. And where you live is--can be used as a
factor.
Mr. Green. So under the Affordable Care Act, the risk will
be pooled insurance cannot charge more for women and those with
underlying health conditions. They are limited on how they can
charge older people more than younger people, is that correct?
Mr. Cohen. That is correct.
Mr. Green. And I know there are groups like young healthy
males that look like they might pay higher premiums. My
understanding is a number of factors that mitigate these
premium increases. First, many of these individuals may qualify
for Medicaid, so they will be able to receive coverage without
paying premium, is that correct?
Mr. Cohen. Yes.
Mr. Green. In addition, the Affordable Care Act now allows
young adults to remain on their parents' healthcare until 26?
Mr. Cohen. Correct.
Mr. Green. And that was part of the Affordable Care Act?
Mr. Cohen. It was.
Mr. Green. And as I recall, being here in 2009, there was
not a Republican vote for moving that to 26 years old. But
anyway, let me go on.
What about those who are not on Medicaid or their parents'
health plan? Am I correct that they qualify for tax credits or
premium assistance that will reduce their insurance costs?
Mr. Cohen. Correct, up to 400 percent of the federal
poverty level.
Mr. Green. OK. And to what extent will this mitigate the
impact of premium increases?
Mr. Cohen. It will be significant.
Mr. Green. OK. Finally, individuals under the age of 30 may
purchase so-called young and invincible plans on health
insurance and exchanges. I know I used to think that way when I
was in my 20s but since I joined Medicare last year, I know I
am not. Can you tell me how these plans will work and how they
will reduce cost?
Mr. Cohen. Absolutely. So that is a high-deductible plan
which means that for your typical doctor's visit, it won't
cover it, but if something serious were to happen to you--you
become ill or in an accident--it will cover you. And those
plans, we expect, will be very affordable for younger people.
Mr. Green. OK. The Affordable Care Act contains a lot of
new tools like rate review and the medical loss ratios. I come
from the State of Texas and we typically don't regulate
anything in health insurance except policies, and to be one of
the best reforms in the Affordable Care Act was the 80 percent
loss ratio. Because as an employer of small business years ago,
I was not sure that the premiums we were paying were coming
back into medical benefits. But we only had 13 employees and we
didn't have a choice. But now, that small employer will know
that 80 percent of their premiums will come back into medical
benefits.
Mr. Cohen. That is exactly right. And insurers have to pay
back over $1 billion in rebates to consumers and businesses in
2012 because of that program.
Mr. Green. Well, and again, like I said, that seemed like
one of the best reforms, although there a lot of things in
there. And again, you don't need to say this but I also know
that we tried to work on that bill in our committee and we did
have a markup. And again, I didn't expect many Republicans to
vote for it and none of them did. But there were a lot of good
things in the Affordable Care Act that people have talked about
on a bipartisan basis for decades.
And I realize I am out of time. Mr. Chairman, thank you.
Mr. Murphy. The gentleman's time has expired. I will now go
to the gentleman from Texas, Mr. Olson, for 5 minutes.
Mr. Olson. I thank the chair.
And good morning, Mr. Cohen.
Mr. Cohen. Good morning.
Mr. Olson. And I know I don't have to say this but I am
going to say it anyway. I have been elected three times by the
people of southeast Texas, my home--Texas 22--to be the Member
here in Congress, their Representative. And quite frankly, they
are frightened, and I don't use that word lightly. But they are
frightened about Obamacare and what it is going to do to their
healthcare. Will it become more expensive? Will they have
access? Will they keep it? Many promises have been made and
many have already been broken. They want and deserve answers to
my questions. So I ask you to respect them and directly answer
the questions I ask.
In a prior life, I spent 9 years as a staffer in the United
States Senate. I know what a filibuster looks like. And I
haven't seen one today, so thank you for that. But if I smell a
filibuster I will abruptly interrupt and ask the questions. So
thank you for that.
But I am confused. I mean last week right here in this room
the Secretary said that there are no contingency plans for the
state-based exchanges changes. And yet, Mr. Cohen, you today
are saying there are some plans. So are there plans,
contingency plans, or aren't there plans? Yes or no.
Mr. Cohen. We will be ready to operate October 1 of 2013.
We are preparing for the eventuality that different parts of
the system that we are building may not work perfectly and may
need to be improved, and those are the kinds of plans that we
are working on. We are doing testing and we are doing
everything that we can to make sure that everything works as
well as possible. But we know that in any large project----
Mr. Olson. OK. That is great, sir. It sounds like you are
preparing for the worst and planning for the best--hoping for
the best. Is that correct, yes or no?
Mr. Cohen. We are----
Mr. Olson. Preparing for the worst but hoping for the best.
Mr. Cohen [continuing]. We are realistic in our planning
and we will be ready.
Mr. Olson. OK. One further question, sir. I have talked to
many family businesses back home about Obamacare and its impact
on their businesses. These guys provide health insurance to
their employees, and every single one of them that I have
talked to, every single one has told me, Congressman, I provide
healthcare for my employees because it is good for my business,
it is a recruiting tool, retention tool, but I have to compete
in the market. If this thing goes down, it will cost me
anywhere between, I have heard, $5,000 to $9,000 per employee
per year. If the healthcare bill comes to pass and the
exchanges don't work out, I will dump my people in the
exchanges, because I will pay a $2,000 or $3,000 fine that is
more beneficial for business. They are not going to be the
first one to pull the trigger. They are waiting because they
want to do it for their employees. But they will have to
because the market will demand them to. Are you prepared? Have
you gotten out in American heard this complaint or concern from
small businesses?
Mr. Cohen. Yes, I have spoken to small business owners and
representatives of small business associations. I think it is
important to keep in mind that the offer rate for small
businesses of health insurance has been declining dramatically
over the past decade and more because it is not affordable. And
that was before there ever was an Affordable Care Act. I think
there are a number of very important provisions in the law that
will make coverage more affordable for small businesses, one of
which certainly is the tax credit that is for eligible
employers that can pay up to 50 percent of the cost of
providing healthcare to their employees.
Mr. Olson. Again, sir, every business I have talked to in
this situation has said they are planning to drop their
healthcare insurance. that is in stark contrast to what you are
saying here. I know what you are saying, but again, the bottom
line on Americans' minds is there are going to be changes.
People will lose their healthcare because of Obamacare.
And one final question. My State of Texas is going to go on
the federal exchange, and so obviously enrollment on October 1,
full on go on January 1. One of the problems with D.C. is our
eagerness is to impose a one-size-fits-all solution to all of
our problems. It won't work, the state exchanges. My parents
live in Vermont; they retired up there. And I can assure you
that Vermont's challenges are much different than Texas'
challenges. Heck, Texas has a one-size-fits-all problem within
the State.
I mean, the Rio Grande Valley there has a high epidemic of
diabetes. West Texas has a high epidemic of skin cancer
compared to the rest of the State. Urban environments have more
asthma, more issues in that area. So how do you address these
differences? Will the federal exchanges address the differences
between States?
Mr. Cohen. Congressman, I think you know that Texas has one
of the highest uninsured rates in the entire country. And the
Affordable Care Act and Medicaid expansion and the exchanges
offers an opportunity to Texas to get a lot of those people
enrolled in coverage. And we welcome Texas' involvement with us
and a partnership with us as many, many, many states have to
develop a marketplace that is best suited to the needs of the
people in Texas.
Mr. Murphy. The gentleman's time has expired.
Mr. Olson. And I yield back. Thank you, sir.
Mr. Murphy. Thank you.
I now turn to the gentlelady from Florida, Ms. Castor, for
5 minutes.
Ms. Castor. Well, thank you, Chairman Murphy and Ranking
Member DeGette, for calling this hearing because I think it is
very important that we have substantial oversight of the
implementation of the Affordable Care Act. The good news is
that, so far, families across America have seen vast
improvements already even before the marketplaces are set up
and people are enrolling in health insurance. You know, some of
the ones that are popular in my community, young people aged 26
now can stay on their parents' insurance. That has meant a
meaningful change to over 3 million young people across
America.
Medicare has gotten better; it has gotten stronger. Whether
it is your prescription drugs that are more affordable or those
new preventive services when you go in for checkups, that is a
very meaningful change for our parents and grandparents.
And then the one that doesn't get as much attention but
should are the rebates that have come back from insurance
companies. In the State of Florida alone, 1.2 million Florida
families have gotten an insurance rebate because of the terms
of the Affordable Care Act that say, you know, when you pay
your premiums and your copay, that money should go to actual
healthcare and health insurance rather than profits and
marketing and CEO salaries. That has brought back to the State
of Florida $123 million right back into the pockets of Florida
families at a time when they could really use those extra
couple hundred dollars. So thank you for that.
And now we are on the cusp of such a positive change for
families across America, so many that have not had access to
those important doctor visits or being able to call the nurse
and get the checkups that they need or, with a chronic
condition, get the significant health services that they need.
So, Mr. Cohen, I want to ask you about the outreach
efforts, especially the navigators. We have talked little bit
about that already today. This is going to be a very
substantial effort as HHS begins the outreach rollout, how you
inform families about signing up, how you educate families and
small businesses about their insurance options. I know that
some are concerned that some of the Affordable Care Act dollars
are going to fund these outreach efforts, but how else are we
going to educate everyone? I think it is all hands on deck. We
need the insurance companies here. We need community groups,
community health centers, doctors, nurses, and what I hear at
home is everyone is ready to join in this effort.
But could you talk about--kind of set the stage for this?
We have 50 million uninsured in this country. People are hungry
for information, wouldn't you agree? Could you talk about,
right here at the outset, what you are going to be doing in the
coming months?
Mr. Cohen. Thank you. I would be happy to. First of all, as
you mentioned, the $54 million for grants to community
organizations and church groups and Indian tribes and other
groups to serve as navigators, we are allocating that money
based on the number of uninsured in each State. So we are going
to try to put that money where we need it the most.
In addition to that, there is going to be sort of a media
campaign, just sort of to get people to understand more about
the law and the benefits that it can bring to them. And we will
be directing people to go online to healthcare.gov where,
beginning in June, the call center will be up and
healthcare.gov will have changed its focus to really be a
consumer site that will be there to provide information to
consumers and help them get ready for the steps that they will
need to take beginning in October for enrollment.
And as you mentioned, I am hearing a tremendous amount of
excitement out there in the community from foundations, from
the insurance companies that, obviously, have a real incentive
to get people to come buy their products. So I think there is
going to be a--really a multifaceted effort to make sure that
people know what is in store for them.
Ms. Castor. And looking at the States that have such high
numbers of uninsured--California, Texas, New Mexico, Florida--
in Florida we have between 20 and 25 percent are uninsured, do
not have health insurance. So these are going to be critical
areas. In many of those areas, English is not the first
language. Could you talk about American citizens that don't--
your outreach in bilingual and diverse communities?
And then, I do think it is important to have insurance
agents and brokers involved. If I have a large outreach event
with the community health centers, doctors, nurses, and I have
the brokers there, they are not a navigator----
Mr. Cohen. Right.
Ms. Castor [continuing]. But can they participate in those
kinds of outreach efforts?
Mr. Cohen. So thank you. So on the language side, one of
the qualifications for being a navigator is that you be able to
serve people, you know, in cultural and appropriate ways. And
we definitely are expecting to get applications from groups
that are specifically going to target specific groups that are
not English-language proficient.
We are working very closely with the agent broker
community. I have had a number of meetings with their trade
associations and with the agents and brokers directly, and we
have come up with a way for agents and brokers to easily be
able to enroll people through the marketplaces, and we are
definitely expecting that they will play a very significant
role, particularly with regard to small business where--as they
do today.
Ms. Castor. Thank you very much.
Mr. Murphy. The gentleman's time has expired.
I am curious, are you asking for perhaps a written
statement on that? Because I think the chair would like to know
that as well to help our people who may be in other groups.
Ms. Castor. Yes, Mr. Chairman. I think it is very
important. All hands on deck here for enrollment.
Mr. Murphy. So you will get back a written response to the
committee on that?
Mr. Cohen. Sure.
Mr. Murphy. Brief one? Thank you very much.
I now recognize the gentleman from Virginia, Mr. Griffith,
for 5 minutes.
Mr. Griffith. Thank you, Mr. Chairman. I was a little bit
surprised that you said people that you talked to, there is
excitement out there. The excitement that I am finding in my
district is kind of like the excitement that Mr. Olson found in
his district in Texas, is that people are scared and they are
concerned. And I have got businessmen who come to me and say I
don't know what I am going to do. Do I lay off some of my
employees in order to get down under 50? What do I do?
Of course, the Commonwealth of Virginia, which I represent,
has indicated that they are going to have all of their part-
time employees go under 29 hours so that they won't have to
cover them on insurance. And it is becoming kind of interesting
to see because you have people who were promised if you like
your insurance, you can keep it. But just recently, I think
within the last 48 hours, a proposal passed in the State of
Washington out of the Senate--it is probably not going to pass
the House--but it passed out of the State of Washington where
they currently cover employees down to 20 hours, but they are
going to take their state employees and move them into the
exchanges is the proposal. Under the plan, they would give them
$2 per hour bonus and pay that would help defray the premium
cost but they won't be able to keep the insurance they had. And
I wonder what your thoughts are on that, that folks are being
forced out of the plans they like because the States--and look,
let's face it. If the States can't afford it, a lot of
businesses can afford either. The States are doing things that
are pushing people away from either the number of hours they
work or the insurance that they like and that they had.
Mr. Cohen. Well, first of all, the law does provide that
grandfathered plans are not subject to most of the provisions
of the Affordable Care Act. So it is possible for employers to
keep the plan that they like. If they had a plan in place
before and it is not changed significantly, they can keep the
insurance that they have.
Mr. Griffith. Well, the employer can keep it, but in this
case, they are looking at moving the employees off of that plan
and into the exchanges because it will save the State of
Washington $120 million.
Mr. Cohen. Well, obviously I don't know specifically what
is happening in Washington. I think there are a great number of
factors that go into employers' decisions about how many hours
their employees work and how many employees they employ.
Healthcare is certainly one of those. But we know that under
the existing system, which has been broken, employers have
found it difficult or impossible to get affordable coverage,
particularly with a small employer. Just one employee who has a
serious illness can drive the cost for that employer to the
point where the employer can no longer afford to provide that
coverage. That can no longer happen under the Affordable Care
Act.
Mr. Griffith. Well, let me tell you what is going on. I
will tell you the excitement that you reference is excitement
of the negative, not excitement of the positive. And I am going
to quote now from the Olympian--their .com or their online
publication--because they go on to cite ``worker-friendly
lawmakers''--and talk about that same bill, but this person was
opposed to that bill--``worker-friendly lawmakers such as
Democratic Senator Karen Fraser of Thurston County called the
bill ``premature.'' Why you ask? Again quoting Senator Fraser,
``because the precise benefits available under the exchanges
are still unknown.'' She said there is a chance that some
workers could not afford coverage and plunge their families
into poverty.
Now, that is a Democratic State Senator in the State of
Washington who fears putting state workers into the exchanges
because they won't be able to afford the coverage. How can you
tell the American people and how can you tell Senator Fraser
that she is wrong and that she has no reason to be fearing. Is
that the kind of excitement that your hearing? Because that is
the kind of excitement I am hearing in my district, and,
obviously, Senator Karen Fraser of the State of Washington, a
member of the Democratic Party, has that same fear coming to
her from her constituents. How do you respond to that, sir?
Mr. Cohen. Well, I don't know about her particular
concerns, but what I do know is that under the Affordable Care
Act, tax credits will be available to people that will make
insurance coverage more affordable beginning in 2014 than it is
today.
Mr. Griffith. And that argument was made on the floor in
the State of Washington and Ms. Fraser wasn't convinced.
Thank you, sir. I yield back my time.
Mr. Murphy. The gentleman yields back. I now recognize the
gentleman from North Carolina, Mr. Butterfield, for 5 minutes.
Mr. Butterfield. Thank you very much, Mr. Chairman.
Thank you, Mr. Cohen, for coming to be with us today.
Hopefully, you have brought with you some very important
information that we can all benefit from.
As you may know, I represent a very low-income district in
North Carolina. In my whole State we have about 1 \1/2\ million
people who are uninsured. About \1/3\ of those, 500,000 of
those, are poor people. And about 10 percent of those live in
my congressional district. And so I have listened to the
questions and answers here today and I can tell you that in my
district--I can't speak for other districts--but in my district
there is a lot of excitement about the Affordable Care Act. The
people that I represent are looking forward to it, including
businesspeople. Those who are rational, those have taken the
time out to study the benefits of the Affordable Care Act for
their business, once they understand it, most if not all of
them are ready to embrace it.
But I want to just take a few minutes to drill down on the
navigator program, because you know and I know that that is so
critically important. I see the navigator program as community-
based individuals who will go out into the community and go to
untraditional places: barbershops, and beauty salons, and even
knock on doors to find people who would qualify for the
exchange. Is that correct?
Mr. Cohen. That is exactly right.
Mr. Butterfield. These are not elitist, these are not
people who will sit behind a desk and push some buttons. These
are people who will actually beat the pavement and go out and
find people, first of all, to inform them about the benefits of
the program.
Mr. Cohen. That is right. And ideally, people who already
have a track record and a history of helping people in those
communities.
Mr. Butterfield. Will this include knocking on doors,
canvassing neighborhoods?
Mr. Cohen. Absolutely.
Mr. Butterfield. All right. And when a door is knocked on
and an individual is found who would potentially qualify for
the program, what happens next? I guess there is an
informational session with the individual. But once the
navigator determines that this individual qualifies for
assistance for the tax credits, what happens next? Do you take
them by the hand and take them to some central location and
process a claim?
Mr. Cohen. I mean, ideally, the easiest way to get people
signed up is online. So ideally, navigators would help folks
who may not have access to a computer at home, you know, go to
the community organizations location and help them through an
online process which could be done----
Mr. Butterfield. Well, let's divide into two pieces. Let's
say the citizen has a computer in their home. Will the
navigator actually stay in the home, assist the individual with
the application online?
Mr. Cohen. They can help them walk through the application,
exactly.
Mr. Butterfield. At the request of the individual?
Mr. Cohen. Of the person, of course.
Mr. Butterfield. Yes. And if the citizen does not have
access to a computer, then the navigator will enable the
individual to go to an office?
Mr. Cohen. Ideally, or people can apply--there is a paper
application and people can apply with a paper application. So a
navigator could sit down with someone across the kitchen table
and go through the application and do it that way as well.
Mr. Butterfield. Then will the navigators see it through to
completion? Is there a procedure for making sure that the
individual follows through?
Mr. Cohen. There can be a procedure for the navigator
finding out whether--what the result of it has been.
Mr. Butterfield. All right. Now, from what I can gather, if
an individual--let's say a single, healthy, childless adult who
makes $20,000 a year--and that individual would qualify for tax
credits through the exchange. But an individual who makes
$10,000 year who is single and childless and healthy would
qualify for Medicaid. But if a State has declined the expansion
of Medicaid, the 10,000 individual will have no access to
insurance. Is that correct?
Mr. Cohen. They can still go into the exchange.
Mr. Butterfield. Even if they are under 100 percent of the
federal poverty line?
Mr. Cohen. They could then--those people won't be getting a
tax credit. You are correct.
Mr. Butterfield. But can anyone under 100 percent of
poverty go into exchange?
Mr. Cohen. Yes.
Mr. Butterfield. So if makes $50 a year in income, if they
have the capacity to pay for the exchange, they can go into it?
Mr. Cohen. Correct.
Mr. Butterfield. So if a family member wanted to assist
that low-income individual, they could do that?
Mr. Cohen. They could do that.
Mr. Butterfield. All right. All right. Thank you very much.
I yield back.
Mr. Murphy. The gentleman yields back.
I will now go to the gentleman from Ohio, Mr. Johnson, for
5 minutes.
Mr. Johnson. Thank you, Mr. Chairman. Mr. Cohen, has your
office done any analysis of the healthcare law, Obamacare's
impact on premiums?
Mr. Cohen. No.
Mr. Johnson. You haven't?
Mr. Cohen. No analysis in the sense that----
Mr. Johnson. That is great. We are going to have a fun
session here then. So are premiums going up or down for the
average consumer? You testified earlier that millions of
Americans that don't currently have insurance are going to have
insurance in October under the law.
Mr. Cohen. Right.
Mr. Johnson. For the average consumer that has healthcare
today, are their premiums going up or down?
Mr. Cohen. I think we have to wait and see when the plans
submit their rates----
Mr. Johnson. But that is not what the President promised.
The President promised that supporters would see lower costs.
So are people going to see increases or decreases in their
premiums?
Mr. Cohen. I think at this point we have to wait and see
what--how the rates come in for 2014. Over time, people
absolutely will see lower costs. As we see more competition in
the system, a broader risk pool, and if you look at the overall
healthcare costs that people have to absorb, giving tax
credits, lower cost-sharing, they will see lower costs.
Mr. Johnson. Well, who is going to see lower cost? What
demographics are going to see lower costs? Is it going to be
the young? Is it going to men? Is it going to be women? Is it
going to be seniors? Who is going to see lower costs?
Mr. Cohen. Well, we know that women today can be charged up
to 50 percent more than men just because they are women. So
yes, women will see lower costs. And we know that older people
can be charged often 5 or 6 times as much because of their age,
and that is going to be limited. So they will see lower costs.
Mr. Johnson. Are anybody's premiums going up?
Mr. Cohen. I think we have to wait and see what the rates
look like when they come in.
Mr. Johnson. That is a theme that has persisted in this
law. Wait and see. Pass it, and then let's see what happens
down the road. Well, I tell you what, that is a dangerous way
to navigate a ship like America's economy.
You know, you also write that these programs will keep
premiums in the individual and small group markets reasonably
priced. What is a reasonable price? Surely, you have got some
idea what a reasonable price is?
Mr. Cohen. You know, sitting here today, I don't have an
answer to the question. We can certainly come back. I think
what I can say is that we know that over the last couple of
years, health insurance premiums have been going up at a lower
rate than they have been for decades before. I mean, health
insurance premiums are going up by double digits year after
year after year. And that hasn't been the case----
Mr. Johnson. But the American people were promised two
things.
Mr. Cohen [continuing]. Over the past couple of years.
Mr. Johnson. They were promised that if they like their
current coverage, they could keep it, and that cost would be
lowered. You have just confirmed to me that you don't know that
to be true anymore. You don't know. You are having to wait and
see.
Mr. Cohen. For 2014. Over time, you know----
Mr. Johnson. Well, I just asked you that. Were premiums
going up or down and you said you don't know.
Mr. Cohen. For 2014 we have to wait and see----
Mr. Johnson. OK. Let's look out longer than that. Are
premiums going up or down?
Mr. Cohen. I expect that premiums will go down relative to
what they would have been----
Mr. Johnson. For who?
Mr. Cohen [continuing]. Without the Affordable Care Act.
Mr. Johnson. For who?
Mr. Cohen. For everyone.
Mr. Johnson. For everyone?
Mr. Cohen. If not for the Affordable Care Act, they will be
going up higher.
Mr. Johnson. OK. So then you must know then what defines
some reasonable cost. If you know they are going down or you
think they are going down, you have got some idea of what that
range is. What is reasonable?
Mr. Cohen. The primary factor that goes into what a
healthcare premium is is the cost of medical care, and we all
know that. That is the primary driver of healthcare costs. So
in order to have premiums go--truly go down, we need to address
the cost of medical care. And the Affordable Care Act and the
Administration have a number of different ways of----
Mr. Johnson. Well, we have a very different----
Mr. Cohen [continuing]. Doing that. As far as my program is
concerned----
Mr. Johnson. We have a very different understanding of what
is driving the cost of healthcare, because in my opinion, what
is driving that cost of healthcare up is the bureaucracy that
has now set itself up in Washington to oversee \1/6\ of our
economy. I have only got a little bit of time left.
On the application, one of the questions that the
applicants are asked is, do you think the employer's coverage
is affordable? Do you think the employer's coverage is
affordable? Why do you ask this?
Mr. Cohen. It is----
Mr. Johnson. What is affordable healthcare in your opinion?
Mr. Cohen. It is defined in the statute. The question is
asked because it is one of the eligibility requirements and it
is defined in the statute as up to--depending on what your
income level is, up to 9.5 percent of your income.
Mr. Johnson. So affordable in your opinion is 9.5, which is
almost 10 percent of a person's income for healthcare.
Mr. Cohen. It is not my opinion. It is what is in the law.
Mr. Johnson. But what is your opinion of what is
affordable?
Mr. Cohen. I don't have an opinion.
Mr. Johnson. Well, that is good. Got you. I yield back.
Mr. Murphy. The gentleman's time has expired.
I now go to the gentlelady from Illinois, Ms. Schakowsky,
who is recognized for 5 minutes.
Ms. Schakowsky. Well, Mr. Cohen, it is not surprising that
from the Republican side of the aisle the relentless drumbeat
of opposition to the Affordable Care Act, or Obamacare as I
proudly say, goes on after 33 efforts to repeal the entire
bill.
But I would challenge my colleagues on the other side to go
out and explain to at least some of their constituents--for
example, the parents of children with preexisting conditions--
that they want to take away insurance to them, that annual and
lifetime coverage limits should be reinstated, that the
rescissions of policies should, once again, go into place, that
all the preventive health services without cost-sharing ought
to go back into effect, that the young people that are on their
parents' policies, forget it, they are off. You explain that to
them, that the medical loss ratio requiring insurance companies
to actually pay for health coverage should be changed, and tell
women that we think you should be discriminated against. That
is a good idea, that about, I don't know how many billions of
dollars we collectively pay more in health insurance.
And so, you can list 5 problems with the program and we can
list many, many more good things. And we would like to work
with each other to try and correct them rather than just
complain. No, the program is not perfect.
I wanted to ask you. We are just months away now from full
implementation of Obamacare's coverage, and the Administration
has requested additional resources to implement the law and
those requests have been ignored. And it seems to me the
refusal of my Republican colleagues to appropriate HHS adequate
resources to help implement the law is limiting our efforts to
inform Americans about Obamacare's exciting new coverage
options.
And let me just say that when the Part D was put into
effect, $600,000 was spent by the Bush Administration for
blimps to talk about--just for blimps alone. So could you
explain how CCIIO would use additional resources that the
Administration has requested to implement the law, and how
might the refusal to appropriate adequate resources hinder the
ability of consumers to know about October 1?
Mr. Cohen. Thank you, Congresswoman. We certainly would
welcome the ability to provide more grants to navigators out
there in the community. We welcome the ability to do more
outreach ourselves to--as you know, there has been a lot of
misinformation about this law. People, you know, really do need
to understand the benefits of it and what it can do for them.
And so with the President's budget request, we certainly could
use that money to do more outreach into the community and make
sure that people understand what the law is and how it can
benefit them.
Ms. Schakowsky. You know, and I would just like to say to
my colleagues, you talk about the fear in the districts. And to
the extent that there are some problems with the bill, if we
could sit down and work together and figure out how to make it
better, but a lot of that fear is the misinformation that has
been quite deliberately sent out. You watch Fox; it is hard not
to be scared about Obamacare and what it might do to you. So I
would suggest that the fear-mongering that is going on about
this law, which has now been upheld by the United States
Constitution that will bring up to 30 million people of the
United States of America to be able to have healthcare, that
will help us join the community of nations in the world that
declare that healthcare is a right of the citizens of their
countries. You know, we could use the help. All of us could use
the help. All Americans could use the help to perfect this
legislation.
And I yield back.
Mr. Murphy. Thank you. The gentlelady yields back the
balance of her time.
I now recognize the gentleman from Colorado, Mr. Gardner,
for 5 minutes.
Mr. Gardner. Thank you, Mr. Chairman.
Thank you, Mr. Cohen, for your time with us this morning.
And my colleagues said that there is fear-mongering on this
bill but I would just like to point out that I read an article
the other day that the roofers union backtracks on Obamacare
and wants repeal or reform of the bill. So I don't think this
is right wing fear-mongering. I think when you have a union
that is very concerned about Obamacare and wants its repeal or
reform, I think that is where we have significant concerns that
must be addressed.
Mr. Cohen, are you familiar with Richard Foster, the
actuary of Medicare?
Mr. Cohen. I know who Richard Foster is, sure.
Mr. Gardner. Are you familiar with testimony that he gave
before the House of Representatives Budget Committee a year ago
or so?
Mr. Cohen. Generally, but not specifically, no.
Mr. Gardner. In that testimony he talked about the two
central promises of the healthcare law that were unlikely to be
fulfilled: one, that the bill will not hold costs down; and
two, that it won't let everybody keep the current insurance if
they like it. Would you agree with that assessment?
Mr. Cohen. Well, I think, as I said, I do believe that
costs will be down relative to where they would have been
without the Affordable Care Act----
Mr. Gardner. So that is an increase then.
Mr. Cohen. Well, if medical costs increase, then the cost
of insurance is going to increase. But at least----
Mr. Gardner. So that the promise----
Mr. Cohen [continuing]. People will have----
Mr. Gardner [continuing]. Was made that it would keep costs
down.
Mr. Cohen. Well, it will keep costs down relative to what
they would have been without the law and at least people will
have the security----
Mr. Gardner. So what you are saying is that we will expect,
then, costs to increase?
Mr. Cohen. At least people will have the security of
knowing that if they have a serious illness, their care will be
paid for, which they don't have today.
Mr. Gardner. We are talking about cost increases.
Mr. Cohen. Well, for someone who has never been able to
have health insurance before, to talk about an increase----
Mr. Gardner. What about the person who has health
insurance. Are they going to experience cost increases?
Mr. Cohen. I think it is going to depend on the individual
situation. There are factors that will cause costs to go down;
there are tax credits that are available.
Mr. Gardner. Are you insured through the federal system or
do you have outside insurance?
Mr. Cohen. I am insured through the federal system.
Mr. Gardner. Has your insurance gone down or gone up?
Mr. Cohen. You know, I don't even remember what happened. I
think we had a small increase this year.
Mr. Gardner. So----
Mr. Cohen. But we have had lower increases in the last 2
years than we have had for a long time before that.
Mr. Gardner. So what kind of----
Mr. Cohen. The fact that health insurance goes up is not
new. I mean, that is--health insurance has been----
Mr. Gardner. But I think the promise that was----
Mr. Cohen [continuing]. Going up year after year after year
after year.
Mr. Gardner [continuing]. Made in the healthcare bill, if I
am not mistaken, the promise was made that this would lower the
cost of healthcare.
Mr. Cohen. Well, I think it will relative to where it would
have been without the law.
Mr. Gardner. So this is kind of like the Washington two-
step when we say we are cutting budgets but you are actually
decreasing the rate of an increase. Is that what you are saying
Obamacare has done?
Mr. Cohen. I am saying that I believe that healthcare
insurance--and if you look at the total out-of-pocket costs
that people have to absorb--will be lower than it would have
been without the law, yes.
Mr. Gardner. So that is an increase in costs because if it
is going to be----
Mr. Cohen. It may or it may not be, depending on----
Mr. Gardner. What is an acceptable increase? I mean----
Mr. Cohen. I mean for----
Mr. Gardner [continuing]. What are you anticipating under
this healthcare bill?
Mr. Cohen. For women who have had to pay 50 percent more
than men, you know, the effect will be to reduce their costs.
For people who have had to pay out-of-pocket for all that
medical care----
Mr. Gardner. But reduce their cost, even though their costs
increase from year to year? It is just what you are saying is
that, oh, it might not increase as much.
Mr. Cohen. I think it is going to depend on a number of
factors, including the underlying costs of medical care.
Mr. Gardner. Well, let me ask you this then: will Obamacare
reduce the cost of healthcare?
Mr. Cohen. It will relative to what it would have been
without the law, yes.
Mr. Gardner. But you are saying then that healthcare will
increase?
Mr. Cohen. That will depend on factors that are external to
the Affordable Care Act. It will depend on----
Mr. Gardner. Well, maybe----
Mr. Cohen [continuing]. The costs of healthcare.
Mr. Gardner [continuing]. I am not asking my question very
clear.
Mr. Cohen. Yes.
Mr. Gardner. Will healthcare costs be less next year after
the implementation of this bill?
Mr. Cohen. I think that will depend on----
Mr. Gardner. Yes or no.
Mr. Cohen. I can't answer the question. I don't know what
is going to happen next year.
Mr. Gardner. So we don't know whether or not the----
Mr. Cohen. I don't know what is going to happen to the
underlying cost of medical care.
Mr. Gardner. Well, what about insurance----
Mr. Cohen. What doctors charge----
Mr. Gardner [continuing]. That people----
Mr. Cohen [continuing]. What hospitals charge, what----
Mr. Gardner. Well, what about insurance that people like?
If they have their insurance and they want to keep it, are they
going to be able to?
Mr. Cohen. They can if they are in a grandfathered plan and
the plan doesn't change significantly, they can keep that
coverage and it is not affected by the Affordable Care Act.
Mr. Gardner. So you are saying that, right now, people
across this country who have been told they are not going to be
able to keep their insurance, they are being misinformed?
Mr. Cohen. They are misinformed if they don't understand
that if they are in a plan that was grandfathered, as many
people are, that they could keep that coverage, then yes, they
are misinformed.
Mr. Gardner. So if the employer switches the plan because
of this healthcare bill, then they get to keep their old
healthcare?
Mr. Cohen. Employers can keep their employees in a
grandfathered plan and not be affected by the provisions of the
Affordable Care Act, yes.
Mr. Gardner. Do you know which plans were grandfathered?
And if the healthcare bill requires them to change the plans,
though, doesn't that mean that they are going to lose the
healthcare?
Mr. Cohen. No, no, no, the healthcare law doesn't require
them to change the plans. That is the whole point of being
grandfathered. You don't have to change it if you are in a
grandfathered plan.
Mr. Gardner. So these employers will never have to change
their healthcare plan that they are offering?
Mr. Cohen. As long as the plan does not change
significantly in terms of the benefits that they offer. If they
keep the benefits the same----
Mr. Gardner. Or what is required by the healthcare bill.
Mr. Murphy. Time is expired.
Mr. Cohen. Then, they can keep a grandfathered plan and
they don't have to comply with the provisions of the Affordable
Care Act. That is what grandfathering means.
Mr. Murphy. Thank you. The gentleman's time is expired.
Now, I will recognize the gentleman from Missouri, Mr.
Long, for 5 minutes.
Mr. Long. Thank you, Mr. Chairman.
And Mr. Cohen, thank you for being here today. But I have
got to say that if Rod Serling walked through that door right
there, I wouldn't be surprised because he could walk in here
and say you have now entered the Twilight Zone. There cannot be
so much difference in interpretation, I don't think, other than
it is inexplicable. It is Twilight Zonish if that is a word. We
have friends of mine on the other side of the aisle, a good
friend that just spoke a minute ago, Ms. Schakowsky. She, to
paraphrase her, said on the Republican side of the aisle, there
is relentless drumbeat of opposition to the President's
healthcare plan. And my other very good friend over there, Gene
Green, said something to the effect of people across America
have seen vast improvements in their healthcare. And I think
from the questions you have seen today, that is not what some
of us are hearing.
So I want to start with a couple of yes-or-no answers if I
may on some things some Democrats have said, see if you agree
with them. Democratic Senator Max Baucus said, ``I just see a
huge train wreck coming down because of bumbling
implementation.'' Yes or no, do you agree with that?
Mr. Cohen. I do not agree with that.
Mr. Long. Let's move to another Democrat Senator. Let's
move to Tom Harkin. Senator Tom Harkin--and Mr. Cohen, yes or
no--do you agree with Senator Harkin that this Administration
should not be raiding the Prevention Fund for funding exchange
expenditures?
Mr. Cohen. Congressman, I really am not going to express a
view on that. That is not a decision I made. It is not----
Mr. Long. You can't answer a yes-or-no question----
Mr. Cohen. I can't answer----
Mr. Long [continuing]. Whether you agree with a statement--
--
Mr. Cohen. I can't answer that----
Mr. Long [continuing]. That a Democrat Senator made?
Mr. Cohen. I can't.
Mr. Long. You can't----
Mr. Cohen. I don't have----
Mr. Long [continuing]. Or you don't want to----
Mr. Cohen. I----
Mr. Long [continuing]. Or you don't know if you agree----
Mr. Cohen. I don't have a view.
Mr. Long. You don't have a view whether you agree with a
statement that a Senator made?
Mr. Cohen. I don't.
Mr. Long. I really don't know what to say. I guess I will
wait for Rod Serling to come through the door.
Mr. Cohen. That would be the second coming of Rod Serling I
think. I think he passed away----
Mr. Long. The way things have been going here, I wouldn't
doubt it. I mean I could see it happening.
This morning, according to POLITICO Pro's whiteboard,
Senator Tom Harkin blasted HHS Secretary Kathleen Sebelius at a
hearing this morning. It was after we had started this
hearing--blasted Sebelius for using Prevention Fund money to
pay for insurance navigators saying the Obama Administration is
treating preventive care as an afterthought. To quote the
Senator, ``I am sorry to say this Administration just doesn't
get it.'' And this is a Democrat. This is not the Republican's
drumbeat. First of all, it was a $5 billion raid last year on
Prevention Funds, Harkin said, referring to the payroll tax
extension Barack Obama signed into law last year that cut $5
billion from the Prevention Fund. This year, it is another $332
million raid. It is sort of like the Prevention Fund is sort of
an afterthought.
I am going to ask you one more time. Do you agree with
Senator Harkin that this Administration should not be raiding
the Prevention Fund for funding exchange expenditures, yes or
no?
Mr. Cohen. You know, I would have been happy if Congress
had appropriated funding for us to do the work that we need to
do and, you know, that didn't happen. And so the Secretary made
decisions under her authority. And I don't have an opinion one
way or the other as to those decisions, no.
Mr. Long. Who would you direct me to? Let's say for a
minute that I have staff that come to me and say we are a
little confused. What is our healthcare going to cost starting
2014? What government agency would you direct me to to get
their questions answered, what they are going to be paying for
their healthcare next year, my staff?
Mr. Cohen. Well, if your staff is covered by the federal
program, then I think the information that they would want to
get would be from the program that administers their
healthcare.
Mr. Long. What government agency?
Mr. Cohen. FEHB or whoever--whatever coverage they have.
Mr. Long. OPM maybe?
Mr. Cohen. Could be.
Mr. Long. Well, we have tried relentlessly because I have--
well, you laugh at it but----
Mr. Cohen. No, no----
Mr. Long [continuing]. My staff is not laughing and it is a
very serious concern for me. When you have staffers on this
Hill that have got college educations, some of them have law
degrees, and they are living two and three people to an
apartment because the cost of living up here to get by, and
they come to me with a legitimate question on what they are
going to be paying next year. They are thinking about leaving
government service. They are thinking about taking jobs other
places. It is a very serious thing so we have tried and tried
and tried to get the answer on what they are going to be
paying. OPM cannot tell us.
Mr. Cohen. No, and I don't mean to minimize that,
Congressman. I was only smiling because I can't help with OPM
obviously. I wish I could but I can't.
Mr. Long. I gave Rod Serling 5 minutes and he didn't make
it, so I yield back.
Mr. Murphy. The gentleman's time is expired.
And I recognize the gentlewoman from North Carolina, Mrs.
Ellmers, for 5 minutes.
Mrs. Ellmers. Thank you, Mr. Chairman.
And thank you, Mr. Cohen, for being with us today. I do
have to go back and just reiterate some of the points that have
already been made and get some clarification from you. Going
back to the closing of the Pre-Existing Insurance program. When
was that closed?
Mr. Cohen. It was closed for the federal program in
February and for the state programs in March.
Mrs. Ellmers. OK. And so those individuals who would be
utilizing those dollars for their preexisting condition
coverage will not be able to do so until January 1?
Mr. Cohen. The existing enrollees are unaffected but new
people who would be coming into the program will not be able to
come into the federal--into the PCIP program unless we are able
to--yes, until January.
Mrs. Ellmers. After January----
Mr. Cohen. January they can----
Mrs. Ellmers [continuing]. As it is right now.
Mr. Cohen. As it is right now, correct.
Mrs. Ellmers. OK. You know, this is the confusing part
about it because especially my colleagues across the aisle
continuously try to paint us--us meaning Republicans here on
the other side--as the ones who are interfering with anyone
getting preexisting coverage and looking at it from an
unsympathetic standpoint. However, this program has been cut
off and they support that, and here we are attempting to pass
legislation to actually help those individuals. I am just----
Ms. Schakowsky. So are we. Will the gentlewoman yield?
Mrs. Ellmers. This is my time. You had your time.
You know, I am perplexed by that and you clarified that for
me. I just want to make sure that we have clarified that we are
talking about months of time that individuals will go without
that care.
Also, for clarification purposes, in the discussion that
you were having with Mr. Johnson and then also with Mr.
Gardner, you stated that as of January 1, 2014, that healthcare
premiums will go down. Is that correct?
Mr. Cohen. No, what I think I said--what I believe is that,
first of all, we don't know yet what premiums are going to be
for coverage in January of '14 because plans are just now
submitting those rates to their state insurance departments for
approval to the exchanges of--with respect to----
Mrs. Ellmers. OK. But, sir, that was not the promise. The
promise that was made continuously when this was being
implemented, that healthcare premium costs would go down. And
so I am asking you under oath today, as you see it--you are no
longer standing behind that statement? You are now saying that
we do not know and probably more than likely we wil see
healthcare insurance premiums going up. Is that correct?
Mr. Cohen. No, that is not correct. What I think I said was
that for 2014 we need to wait to see how the rates come in, and
over time, I believe that the Affordable Care Act will result
in lower overall cost of----
Mrs. Ellmers. And what----
Mr. Cohen [continuing]. Healthcare for people----
Mrs. Ellmers. OK. Sir, what do you base that on? Because
CBO has done a culmination of studies, which showed--and I will
just cite North Carolina--that North Carolina healthcare
premium rates will go up by 61 percent. So what are you basing
your data on? And if you do have studies that show this, I
would like for you to submit them to the Subcommittee.
Mr. Cohen. I am basing it on the increased competition that
will exist in the new marketplace compared to what we have
today where, in many States----
Mrs. Ellmers. But that could exist----
Mr. Cohen [continuing]. There----
Mrs. Ellmers [continuing]. With or without the Affordable
Care Act going into effect. You know, we in Congress could
enact many pieces of legislation and are working on just that,
to help increase competition----
Mr. Cohen. Well----
Mrs. Ellmers [continuing]. Among the healthcare providers.
Mr. Cohen. Well, it could, Congresswoman, but in most
States today--in many States today, the individual and small
group markets are dominated by one carrier that has 60, 70, 80,
even 90 percent of the market. That is the reality today.
Mrs. Ellmers. And that could be----
Mr. Cohen. And that is what we are----
Mrs. Ellmers [continuing]. Easily remedied.
Mr. Cohen [continuing]. Going to change.
Mrs. Ellmers. That could be easily remedied with
legislation. We don't need this massive takeover of healthcare,
increasing rates by 61 percent for those who I represent in
North Carolina. There again, I would really hope that you would
be able to gather some data, because again under oath you are
saying, `I am incredibly unclear as to what will happen with
healthcare rates as of 2014.'
Mr. Cohen. For most Americans, the millions of Americans
who are covered by insurance through their employer that is in
a large group, they are not going to see an effect from the
Affordable Care Act one way or another----
Mrs. Ellmers. OK. Well, my time is up----
Mr. Cohen [continuing]. So that their----
Mrs. Ellmers [continuing]. And I don't understand even what
you base that on.
Mr. Murphy. If I could ask the gentleman, you asked a
question about while he was under oath about prices going up or
not going up and you didn't get a chance to answer that
question, so I am going to give you a moment to answer that
question with regard to you previously stated about prices not
going up, you said you couldn't guarantee that and you were
going to elaborate on that statement.
Mr. Cohen. I think----
Mr. Murphy. Do you recall?
Mr. Cohen [continuing]. We have lost the thread.
Mr. Murphy. All right.
Ms. DeGette. Mr. Chairman, let me ask.
Mr. Cohen, did you ever say that----
Mrs. Blackburn. Mr. Chairman, I think I am next in the
queue----
Mr. Murphy. It is.
Mrs. Blackburn [continuing]. If you don't mind before you
go to a second round.
Ms. DeGette. I would ask unanimous consent to--listen, the
previous questioner advised the witness he was under oath and
then asked him a question and refused to let him finish
answering that question, and I think that is inappropriate for
this hearing.
Mr. Murphy. No, I just asked if he would like----
Ms. DeGette. And so, Mr. Chairman, I think that the witness
should be allowed to complete his answer.
Mr. Murphy. I just did that and----
Mr. Cohen. Well, I am not sure what the question was----
Ms. DeGette. Right.
Mr. Cohen [continuing]. That is my problem.
Mrs. Ellmers. I will be more than happy to restate my
question if that will help.
Mr. Murphy. Can I ask if you could submit that question----
Ms. DeGette. I think it is----
Mr. Murphy [continuing]. For the record and----
Ms. DeGette [continuing]. Wrong for members of this
committee to try to put the witnesses in a perjury trap----
Mr. Murphy. That is why I am----
Ms. DeGette [continuing]. When they come in here----
Mrs. Ellmers. No, ma'am.
Ms. DeGette [continuing]. And they are trying to help this
committee----
Mrs. Ellmers. No, ma'am.
Ms. DeGette [continuing]. Understand.
Mrs. Ellmers. I am clearly restating that the gentleman is
under oath and that he was not answering the question was----
Ms. DeGette. Well, get him----
Mr. Murphy. Order here. What I would like to ask is if the
gentlelady would submit that question and we will ask Mr.
Cohen----
Mr. Cohen. I would be happy----
Mr. Murphy [continuing]. To submit it for the record.
Mr. Cohen [continuing]. To answer for the record. Thank
you.
Mr. Murphy. That way we will be sure what exactly what you
were asking, Ms. Ellmers, and sure of your answer.
Mr. Cohen. Thank you.
Mr. Murphy. Thank you so much.
Recognize the gentlelady from Tennessee for 5 minutes.
Mrs. Blackburn. Thank you, Mr. Chairman.
And sir, you have been patient with us and we do appreciate
it.
I want to go to your statement you made I think in response
to Mr. Harper's question about over time you thought the
insurance cost would come down. And this is something that I
always watch very closely because I am out of Tennessee, and
you are probably familiar with the program TennCare, and I know
I have worn out all of my committee members here talking about
TennCare and asked Secretary Sebelius about it repeatedly. And
I just want to let you know that it seems from what we have
found, what I have found in my research--and I have been
working on this since we got TennCare--as a test case for
Hillarycare in 1995. And bear in mind, it quadrupled in cost
over a 5-year period of time.
But sir, what we found is there is no example where these
near-term expenses are going to yield a long-term savings in
healthcare. And if you do have those examples, I would love to
see them because through all of this debate of Obamacare,
nobody has been able to show one, not with public option care,
not with guaranteed issue, not with community rating, not with
any of this in New Jersey or Tennessee or Hawaii or anywhere
else, not with any of these CMS waiver programs. There is no
example where you decrease cost, you increase access, and you
get better outcomes. So if you can prove us wrong on that,
then, you know, feel free to bring forward an example. Do you
have an example?
Mr. Cohen. Congresswoman, I think for the person today who
doesn't have health insurance coverage and doesn't know how
they are going to pay their medical bills and worries about
going into bankruptcy because their child is sick, I think for
that person, a lot of this discussion is really irrelevant. And
we--and that is what we are going to change.
Mrs. Blackburn. OK. Let me ask you this. I want to ask you
a question about the navigators. Is it true that the navigators
cannot have healthcare or health insurance experience?
Mr. Cohen. No.
Mrs. Blackburn. That is not true?
Mr. Cohen. That is not true.
Mrs. Blackburn. OK. Because that has been part of the
understanding that is out there.
Also, on your increased competition theory, I have got to
tell you, what we have seen in Tennessee when you have
government control, when it is government control, that is what
runs people out of the marketplace.
Mr. Cohen. Well, this isn't government control. This is a
commercial marketplace with----
Mrs. Blackburn. I beg to differ----
Mr. Cohen [continuing]. Private insurance carriers----
Mrs. Blackburn [continuing]. With you. Let me----
Mr. Cohen [continuing]. Providing coverage to people.
Mrs. Blackburn [continuing]. Give you a few examples of
what is happening in Tennessee. Yesterday, of course, the rate
filings in Maryland shows that small group coverage increases
are going to go up 145 percent. And we have got examples in
Tennessee that we have been polling our companies for this year
and next year. This year, they are going up anywhere from 26
percent to 132 percent. We are seeing 40 and 50 percent
increases expected for next year. In the young adult
population, the survey we have here at Energy and Commerce
Committee is looking at 145 to 185 percent. Families have
already seen their insurance go up $3,000 per family since this
law was passed. So what do I tell people that are coming to my
town halls and saying but the President promised my premium was
going to go down $2,500 a year. What do we tell these people?
Mr. Cohen. I think you tell them that they should shop on
the marketplace to find the plan that is best for their family
and is the most affordable for them. And that is what we expect
to be able to provide for people.
Mrs. Blackburn. But it is going to cost them more.
Mr. Cohen. I think healthcare costs have been going up year
after year after year long before we ever had Obamacare, so it
has nothing to do with--the fact that the costs go up----
Mrs. Blackburn. The percentage is----
Mr. Cohen [continuing]. Isn't----
Mrs. Blackburn [continuing]. Greater, and I think that you
probably are aware of that. Do you believe that the increases
are tied to the taxes and the mandates in Obamacare? Do you
believe that that is any of the driver?
Mr. Cohen. The impact of the taxes on healthcare premiums
is very small by all accounts.
Mrs. Blackburn. $165 billion is small?
Mr. Cohen. The impact on premiums of the taxes is very
small.
Mrs. Blackburn. You think that $165 billion of new taxes
has a small impact on premiums. What do you call----
Mr. Cohen. And----
Mrs. Blackburn [continuing]. Large?
Mr. Cohen. And we are going to have----
Mrs. Blackburn. How would you classify small and large?
Mr. Cohen. We have a reinsurance program that is going into
effect that is estimated to reduce premiums from what they
otherwise would have been by 10 or 15 percent.
Mrs. Blackburn. Let me ask you a little bit about that. I
would like to know if you find it odd or ironic that we are now
subsidizing insurance purchase while at the same time we are
making insurance more expensive by the mandates and taxes that
are being piled on this? Thus, we have got increasing subsidies
and we are putting taxpayers on the hook for even higher
federal spending. Do you find that odd or ironic?
Mr. Cohen. I think that Americans are paying for the cost
of uncompensated care today. When people show up at the
emergency room and they don't have coverage and they get
treatment, those costs have to be passed on to all----
Mrs. Blackburn. So you are comfortable----
Mr. Cohen [continuing]. Businesses----
Mrs. Blackburn [continuing]. With the costs going up?
Mr. Cohen [continuing]. So we are going to----
Mrs. Blackburn. I yield back.
Mr. Cohen. We are going to move to a system where we have
much more insurance coverage. We are going to spread the cost
over more people, and that will be to the benefit of all
Americans.
Mr. Murphy. I thank the gentlelady from Tennessee. I might
also add on that issue of uncompensated care, I hope that is an
area you will submit more questions for the record so we will
have those.
I ask unanimous consent that the written opening statements
of members be introduced into the record of those who wish
that. And without objection, the documents will be entered in
the record.
And in conclusion, I would like to thank all the witnesses
and members that participated in today's hearing, which would
be you, Mr. Cohen. I remind members they have 10 business days
to submit those other questions for the record, and I ask that
Mr. Cohen will respond promptly to our questions.
I appreciate you being here today. I am sure we will be
seeing you again soon. Thank you very much.
Mr. Cohen. Thank you.
Mr. Murphy. The committee is adjourned.
[Whereupon, at 12:05 p.m., the subcommittee was adjourned.]
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