[House Hearing, 113 Congress]
[From the U.S. Government Publishing Office]
EXAMINING OBAMACARE'S PROBLEM-FILLED STATE EXCHANGES
=======================================================================
JOINT HEARING
before the
SUBCOMMITTEE ON ECONOMIC GROWTH,
JOB CREATION AND REGULATORY AFFAIRS
and the
SUBCOMMITTEE ON ENERGY POLICY,
HEALTH CARE AND ENTITLEMENTS
of the
COMMITTEE ON OVERSIGHT
AND GOVERNMENT REFORM
HOUSE OF REPRESENTATIVES
ONE HUNDRED THIRTEENTH CONGRESS
SECOND SESSION
__________
APRIL 3, 2014
__________
Serial No. 113-115
__________
Printed for the use of the Committee on Oversight and Government Reform
Available via the World Wide Web: http://www.fdsys.gov
http://www.house.gov/reform
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COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM
DARRELL E. ISSA, California, Chairman
JOHN L. MICA, Florida ELIJAH E. CUMMINGS, Maryland,
MICHAEL R. TURNER, Ohio Ranking Minority Member
JOHN J. DUNCAN, JR., Tennessee CAROLYN B. MALONEY, New York
PATRICK T. McHENRY, North Carolina ELEANOR HOLMES NORTON, District of
JIM JORDAN, Ohio Columbia
JASON CHAFFETZ, Utah JOHN F. TIERNEY, Massachusetts
TIM WALBERG, Michigan WM. LACY CLAY, Missouri
JAMES LANKFORD, Oklahoma STEPHEN F. LYNCH, Massachusetts
JUSTIN AMASH, Michigan JIM COOPER, Tennessee
PAUL A. GOSAR, Arizona GERALD E. CONNOLLY, Virginia
PATRICK MEEHAN, Pennsylvania JACKIE SPEIER, California
SCOTT DesJARLAIS, Tennessee MATTHEW A. CARTWRIGHT,
TREY GOWDY, South Carolina Pennsylvania
BLAKE FARENTHOLD, Texas TAMMY DUCKWORTH, Illinois
DOC HASTINGS, Washington ROBIN L. KELLY, Illinois
CYNTHIA M. LUMMIS, Wyoming DANNY K. DAVIS, Illinois
ROB WOODALL, Georgia PETER WELCH, Vermont
THOMAS MASSIE, Kentucky TONY CARDENAS, California
DOUG COLLINS, Georgia STEVEN A. HORSFORD, Nevada
MARK MEADOWS, North Carolina MICHELLE LUJAN GRISHAM, New Mexico
KERRY L. BENTIVOLIO, Michigan Vacancy
RON DeSANTIS, Florida
Lawrence J. Brady, Staff Director
John D. Cuaderes, Deputy Staff Director
Stephen Castor, General Counsel
Linda A. Good, Chief Clerk
David Rapallo, Minority Staff Director
Subcommittee on Economic Growth, Job Creation and Regulatory Affairs
JIM JORDAN, Ohio, Chairman
JOHN J. DUNCAN Jr., Tennessee MATTHEW A. CARTWRIGHT,
PATRICK T. McHENRY, North Carolina Pennsylvania, Ranking Minority
PAUL GOSAR, Arizona Member
PATRICK MEEHAN, Pennsylvania TAMMY DUCKWORTH, Illinois
SCOTT DesJARLAIS, Tennessee GERALD E. CONNOLLY, Virginia
DOC HASTINGS, Washington MARK POCAN, Wisconsin
CYNTHIA LUMMIS, Wyoming DANNY K. DAVIS, Illinois
DOUG COLLINS, Georgia STEVEN A. HORSFORD, Nevada
MARK MEADOWS, North Carolina
KERRY BENTIVOLIO, Michigan
RON DeSANTIS Florida
Subcommittee on Energy Policy, Health Care and Entitlements
JAMES LANKFORD, Oklahoma, Chairman
PATRICK T. McHENRY, North Carolina JACKIE SPEIER, California, Ranking
PAUL GOSAR, Arizona Minority Member
JIM JORDAN, Ohio ELEANOR HOLMES NORTON, District of
JASON CHAFFETZ, Utah Columbia
TIM WALBERG, Michigan JIM COOPER, Tennessee
PATRICK MEEHAN, Pennsylvania MATTHEW CARTWRIGHT, Pennsylvania
SCOTT DesJARLAIS, Tennessee TAMMY DUCKWORTH, Illinois
BLAKE FARENTHOLD, Texas DANNY K. DAVIS, Illinois
DOC HASTINGS, Washington TONY CARDENAS, California
ROB WOODALL, Georgia STEVEN A. HORSFORD, Nevada
THOMAS MASSIE, Kentucky MICHELLE LUJAN GRISHAM, New Mexico
C O N T E N T S
----------
Page
Hearing held on April 3, 2014.................................... 1
WITNESSES
Mr. Tom Matsuda, Interim Executive Director, Hawaii Health
Insurance Exchange
Oral Statement............................................... 12
Written Statement............................................ 15
Joshua Sharfstein, M.D. Chairman, Maryland Health Benefit
Exchange Board, Maryland Health Insurance Exchange
Oral Statement............................................... 107
Written Statement............................................ 109
Ms. Jean Yang, Executive Director, Massachusetts Health Insurance
Exchange
Oral Statement............................................... 119
Written Statement............................................ 121
Mr. Peter Lee, Executive Director, Covered California, California
Health Insurance Exchange
Oral Statement............................................... 125
Written Statement............................................ 127
Mr. Scott Leitz, Interim Chief Executive Officer, Minnesota
Health Insurance Exchange
Oral Statement............................................... 143
Written Statement............................................ 145
Mr. Greg Van Pelt, Advisor to the Governor, Oregon Health
Insurance Exchange
Oral Statement............................................... 147
Written Statement............................................ 148
APPENDIX
Letter from Rep. John Delaney to Dr. Sharfstein, submitted by
Chairman Jordan................................................ 200
Feb. 23, 2014 Sun Sentinel article by Rep. Deutch, submitted by
Rep. Cummings.................................................. 202
Feb. 21, 2014 Letter to Ms. Carolyn Quattrocki from S. Hamid
Fakhraei, The Hilltop Institute, Director of Economic Analysis. 203
Letter from Gov. John Kitzhaber dated May 15, 2014, answers to
questions for the record, submitted by Chairman Issa, Chairman
Jordan and Chairman Lankford................................... 205
Responses from the Hawaii Health Connector in response to
questions for the record from Chairman Jordan and Chairman
Lankford....................................................... 220
Response from Dr. Sharfstein to questions for the record,
submitted by Chairman Jordan and Chairman Lankford............. 232
Response from Ms. Yang, to questions for the record from Chairman
Jordan and Chairman Lankford................................... 243
Response from Mr. Lee to questions for the from Chairman Jordan
and Chairman Lankford.......................................... 257
Response from Mr. Leitz to questions for the from Chairman Jordan
and Chairman Lankford.......................................... 266
EXAMINING OBAMACARE'S PROBLEM-FILLED STATE EXCHANGES
----------
Thursday, April 3, 2014
House of Representatives
Subcommittee on Economic Growth, Job Creation and
Regulatory Affairs, joint with the Subcommittee on
Energy Policy, Health Care and Entitlements,
Committee on Oversight and Government Reform,
Washington, D.C.
The subcommittee met, pursuant to call, at 10:00 a.m., in
Room 2154, Rayburn House Office Building, Hon. James Lankford
[chairman of the House Subcommittee on Energy Policy, Health
Care and Entitlements] presiding.
Present from Subcommittee on Economic Growth, Job Creation
and Regulatory Affairs: Representatives Jordan, DeSantis,
McHenry, Gosar, Meadows, Bentivolio, Cartwright, and Connolly.
Present from Subcommittee on Energy Policy, Health Care and
Entitlements: Representatives Lankford, Gosar, McHenry, Jordan,
Walberg, Massie, Speier, Norton, Cartwright, and Lujan Grisham.
Also Present: Representatives Issa, Cummings, Maloney, and
Hanabusa.
Staff Present: Brian Blase, Majority Professional Staff
Member; Molly Boyl, Majority Deputy General Counsel and
Parliamentarian; Caitlin Carroll, Majority Press Secretary;
John Cuaderes, Majority Deputy Staff Director; Adam P. Fromm,
Majority Director of Member Services and Committee Operations;
Linda Good, Majority Chief Clerk; Meinan Goto, Majority
Professional Staff Member; Christopher Hixon, Majority Chief
Counsel of Oversight; Michael R. Kiko, Majority Legislative
Assistant; Mark D. Marin, Majority Deputy Staff Director for
Oversight; Emily Martin, Majority Counsel; Laura L. Rush,
Majority Deputy Chief Clerk; Jessica Seale, Majority Digital
Director; Matthew Tallmer, Majority Investigator; Sarah Vance,
Majority Assistant Clerk; Tamara Alexander, Minority Counsel;
Jedd Bellman, Minority Counsel; Aryele Bradford, Minority Press
Secretary; Susanne Sachsman Grooms, Minority Deputy Staff
Director/Chief Counsel; Jennifer Hoffman, Minority
Communications Director; Elisa LaNier, Minority Director of
Operations; Una Lee, Minority Counsel; Juan McCullum, Minority
Clerk; Suzanne Owen, Minority Senior Policy Advisor; Mark
Stephenson, Minority Director of Legislation; and Cecelia
Thomas, Minority Counsel.
Mr. Lankford. The committee will come to order.
I would like to begin this hearing by stating the Oversight
Committee's mission statement.
We exist to secure two fundamental principles: first,
Americans have the right to know the money Washington takes
from them is well spent and, second, Americans deserve an
efficient, effective Government that works for them. Our duty
on the Oversight and Government Reform Committee is to protect
these rights.
Our solemn responsibility is to hold Government accountable
to taxpayers, because taxpayers have the right to know what
they will get from their Government. We will work tirelessly in
partnership with citizen watchdogs to deliver the facts to the
American people and bring genuine reform to the Federal
bureaucracy. This is the mission of the Oversight and
Government Reform Committee.
Good morning, everyone. This is a conversation today about
the Affordable Health Care Act and about, specifically, the
State exchanges. Four years ago the President's health care law
was passed. In selling his law to the American people, the
President made several promises. He promised the people they
would be able to keep the coverage and doctors they liked; he
promised the premiums for the average family would go to about
$2,500.
Four years later reality is setting in. Over 5 million
Americans have received cancellation notices from their
insurance companies and millions more have found out the
doctors they liked were no longer covered by that plan. Rather
than premiums going down, premiums for family has increased in
many areas of the Country since passage of the law.
Just this week, the Bureau of Economic Analysis reported
that health care spending growth hit a 10-year high. We were
also told that ObamaCare would be good for the Nation's
economy. The truth is that in order to minimize the negative
exposure to ObamaCare's costly mandates and taxes, employers
were forced to lay off some workers and reduce some full-time
workers to part-time.
The Congressional Budget Office estimated that within a few
years ObamaCare would reduce employment and activities in
employment by 2.5 million full-time job equivalents. ObamaCare
dramatically increases Federal Government spending at a time
when the Federal Government continues to run a massive deficit.
According to the CBO, ObamaCare spends nearly $2 trillion over
th next decade. To pay for all this, there are 20 new taxes and
significant cuts to the Medicare Advantage program.
Despite the Federal Government spending all this money,
more than 80 percent of the people who were uninsured before
ObamaCare took effect are still uninsured today.
In addition to the negative economic effects of the law,
the Administration has implemented extra legal fashion 21
different parts of the law changes. For example, in response to
public anger over the President's broken promise about health
insurance, the Administration unilaterally allowed insurers to
renew non-grandfathered policies for an additional year. Last
month, the Administration extended this policy until after the
2016 election. This change by the Administration is just part
of a pattern of extra legal actions aimed at insulating the
law's supporters from unpopular and inconvenient parts of the
law at the expense of taxpayers.
While I welcome policy changes that reduce the burden of
ObamaCare's costly mandates and give consumers greater choice,
the Administration set a dangerous precedent by going around
Congress to rewrite parts of the law that are politically
troubling.
The Obama Administration's rewriting of the law has
introduced even greater uncertainty in the health insurance
market and may lead to higher premiums in 2015 and beyond.
Recently, WellPoint, one of the largest insurers participating
in ObamaCare's exchanges, predicted double-digit premium
increases in 2015. Just this week, analysis at Moody's
predicted that premiums will continue to increase because of
the way the Administration has carried out the law.
While there are many issues we can and will explore about
ObamaCare in the days ahead, the topics of today's hearing are
State exchanges. Representatives from the States of Hawaii,
Maryland, Massachusetts, Minnesota, Oregon, and California are
here today. Residents in these States were forced to use an
error-ridden Website. Many people who thought they had
successfully enrolled found out that the insurance plan they
had chosen had not received any enrollment information from the
exchange.
State residents were also working through the same issues
that are on the Federal side. And while States have worked
incredibly hard, and we are grateful to your service to the
people of the States that you represent, you are also
struggling with some of the Federal regulations and some of the
delays that are coming down as well.
Multiple problems with the ObamaCare Websites built by
different States and by the different exchanges raise several
questions: How is it possible, after three and a half years and
spending hundreds of millions of dollars of taxpayer funds,
that so many different exchanges had an incredibly difficult
time putting together a Website? Second, what was the effective
delay in changing guidance from the Obama Administration on the
construction of the State exchanges? Third, where was Federal
oversight of the projects? How could so many State exchanges
have such a difficulty all at the same time? And, finally, how
many more taxpayer dollars will be requested to bail out any
troubled State exchanges in the years ahead?
Congress has an important oversight role: to ensure that
taxpayer funds are spent wisely and effectively. I welcome the
witnesses here and I really do appreciate you coming, being a
part of this conversation. You have things to be able to
contribute to this conversation that we cannot know until we
get a chance to be able to hear from you, so glad to be able to
have that conversation with you.
I now recognize the distinguished ranking member, the
gentlelady from California, Ms. Speier, for her opening
statement.
Ms. Speier. Thank you, Mr. Chairman and to all the
witnesses who have traveled long distances to be with us today.
Now that we have surpassed the goal established two and a
half years ago for enrollment, with more than 7 million
Americans enrolled in the ACA, Republicans are as determined
today as ever to try and rip it apart. Seven million Americans
must be wrong.
The reality is that the latest enrollment numbers prove
that there is a genuine demand amongst the American people for
affordable health care. This 7 million doesn't even include
enrollment surges that took place in the 15 States, including
California, running their own exchanges.
Republicans today won't be focusing on these successes, or
even conceding that their predictions thus far have been as
reliable as a fortune-teller at a carnival. Many Republicans
have voiced their certainty that the ACA would fail. They said
that the 7 million goal was impossible. Several months ago,
Chairman Issa said, ``It is time for the President to finally
acknowledge ObamaCare isn't working and to delay the law in
fairness to families and individuals.''
Today is the committee's twenty-sixth hearing on the ACA,
and this week, on the floor, we voted for the fifty-second time
to repeal it.
Like all historic and transformative pieces of legislation,
the rollout of the ACA has been challenging and far from
smooth. But Republicans have contended from the beginning that
there is no meaningful role for the Federal Government in
health care.
Let's remember, though, how the market has handled health
care in the past. The market allowed insurers to rescind your
coverage if you got sick and deny you coverage if you had a
preexisting condition. The unregulated market also allowed
insurers to charge women more just for being women.
Let's all remember how the market determined premiums.
Before the ACA, with the exception of the recession, premiums
grew by double digits year after year. Since the law has gone
into effect, we have seen dramatic declines in the rise of
premiums. This is the real story of the impact of the ACA, and
I ask you to look at this chart. This is profound. And if
anything speaks to the importance of the ACA, it is that
premiums have declined dramatically as a result of this effort.
I agree with my colleagues on the other side that the ACA
should be the subject of scrutiny by Congress and the oversight
of this committee, but the consistently partisan and one-sided
approach has been all about tearing the program down, not
fixing it. The preparation for this hearing only provided the
latest example of how this committee seeks to undermine the
efforts of States and the Administration to implement the law.
Today we will hear testimony from Ms. Jean Yang, Executive
Director of the Massachusetts Health Insurance Exchange.
Massachusetts has experienced its own set of Website issues and
requested to send Ms. Yang's highly qualified colleague to this
hearing instead of Ms. Yang so that she could stay in
Massachusetts and continue her work in fixing the Website.
However, upon hearing about the change in witnesses, the
chairman of the full committee threatened to issue a subpoena.
I would like to apologize on behalf of this committee to
you, Ms. Yang, and to the people of Massachusetts for the
actions to bully you into testifying today.
What this committee should be focusing on is what we have
to do in the future to contain costs and how we can share the
best practices by successful States like California,
Connecticut, Kentucky, and New York with the States that are
still struggling. A truly balanced hearing would have looked at
more than just one story of State-based exchange success. If
someone from Kentucky's exchange had been invited to testify, I
am sure they would have wanted to tell the committee that a
preliminary analysis found that approximately 75 percent of
their enrollees were previously uninsured before signing up
through the exchange, and that 49 percent of their enrollees
are under the age of 35, or that by the end of the enrollment
period over 370,000 Kentucky citizens now have health insurance
that didn't have it before.
To that end, I am so glad to have Peter Lee, the Executive
Director of the California Exchange, Covered California, here
to testify as Minority witness and to bring some good news and
balance to this discussion.
At the end of March 31st, over 1.2 million Californians
have signed up for private health insurance through the
exchange. This number greatly surpassed California's baseline
projection of 580,000 and the enhanced projection of 830,000
for the entire open enrollment period. California's Medicaid
Program, Medi-Cal, enrolled approximately 1.93 million, and an
additional 800,000 were found likely eligible. This brings the
total of all Californians enrolled through Medi-Cal and the
exchange to almost 4 million people, and insurance companies in
California are reporting that 85 percent of the enrollees have
paid their first month's premium.
California has refused to accept the exchange's current
success as the now continually updating policies such as
efforts to increase enrollment in the Latino community.
Mr. Lee, I look forward to hearing more from you today
about the improvements that California plans to make and how
you can help other States.
Mr. Chairman, as you know, I value our relationship. We
have common interests that we have discussed many times, and I
know we can put our heads together and come up with new hearing
topics that conduct real oversight. For example, I sent a
letter to Chairman Issa yesterday requesting that the committee
investigate and hold a hearing on the alleged Medicare,
Medicaid, and Tricare fraud perpetrated by Health Management
Associates, a for-profit hospital chain that allegedly ripped
off taxpayers for more than $600 million. That should be the
work of this committee.
I look forward to hearing the testimony of all the
witnesses present today, and thank you for being here.
Mr. Lankford. I ask unanimous consent that our colleague
from Hawaii, Ms. Hanabusa be allowed to participate in today's
hearing. Without objection, so ordered.
I would like to recognize the chairman on the Subcommittee
on Economic Growth, Mr. Jordan, for his opening statement.
Mr. Jordan. Thank you, Mr. Chairman. I would, if I could,
just ask unanimous consent my opening statement be put in the
record.
Mr. Lankford. Without objection.
Mr. Jordan. We have several witnesses. I want to thank you
for having this hearing.
Let's just remember all the false claims that have been
made about the Affordable Health Care Act. I think sometimes it
is good just to go back and put some context on this.
If you like your plan, you can keep it. False.
If you like your doctors, you can keep them. False.
Premiums will go down. False.
Premiums will go down an average of $2,500, the
Administration said. False.
The Website will work. False.
The Website is secure. False.
We have had countless hearings to dispel all these claims
made by the Administration and now, today, Mr. Chairman, we are
going to hear about the dismal performance of the State
exchanges, again underscoring how poorly this law has operated,
how bad it is, and why we need to change it.
I just want to thank you for putting this hearing together.
I look forward to hearing from our witnesses. More importantly,
I look forward to asking questions of our witnesses about these
six State exchanges and the overall impact this law has had on
the American people.
With that, I would yield back.
Mr. Lankford. Thank you.
I recognize the ranking member of the Subcommittee on
Economic Growth, Mr. Cartwright, for an opening statement.
Mr. Cartwright. Thank you, Chairman Lankford, and Chairman
Jordan as well.
This marks the twenty-sixth hearing this committee has held
on the ACA. Over the course of 25 hearings you would think that
every member on this committee on both sides of the aisle would
have been working tirelessly to guarantee that each and every
one of their constituents had access to affordable health care.
You would also think that these hearings would have consisted
of a bipartisan effort to find ways to fix Healthcare.gov and
that actual oversight would eventually take place. This is the
Oversight Committee.
It saddens me to say that in 25 hearings none of these
things actually happened, and I am afraid that today isn't
going to be any different. In this committee, and throughout
this Congress, health care has become a divisive, partisan
issue. Instead of offering solutions to ensure that
constituents have access to universal health care, this House
has, instead, held 54 votes to repeal the Affordable Health
Care Act. Some of my colleagues have also run misleading and
oftentimes outright false advertisements designed to frighten
their constituents from signing up on the exchanges, as opposed
to educating them on the realities of the ACA.
I am very proud that congressional Democrats have held more
than 400 events in their districts at home in an effort to
educate constituencies on the ACA. I have had five of them
myself in my district. I would also like to commend my fellow
Democrats for all their efforts in ensuring that their
constituents are afforded this same kind of information.
This hearing has been called in order to examine the State
health insurance exchanges under the ACA. California has one of
the most successful State exchanges, with more than a million
individuals having signed up for private health insurance plans
through its exchange. Other States such as New York, Rhode
Island, and Connecticut have also experienced success with
implementing their State exchanges. I am very grateful that Mr.
Peter Lee is here with us today to speak regarding California's
State exchange and provide much needed balance to this hearing
today.
I do wish that New York, Rhode Island, and Connecticut were
also included today so we could hear about their best
practices. I also wish that Pennsylvania had its own State
exchange so that my constituents could have had the same
tailored access that these States have. While I wish the
governor of Pennsylvania had originally accepted the
Administration's generous offer for Medicaid expansion, it is
my hope that the two sides can still agree on a plan and expand
Medicaid for the more than 520,000 Pennsylvanians that would
benefit from that kind of expansion.
The high demand for the quality affordable health care
available under the Affordable Health Care Act is real; it is
evident by the recently released enrollment figures showing 7.1
million people have signed up for the private health insurance
plans using both the Federal and State exchanges, beating both
the Administration's own goal and popular expectations. If the
market demand isn't enough evidence the health care bill is
more popular than ever, about half of all Americans now support
the law, despite the misinformation being disseminated over the
last four years.
And I want to say I am glad that many, many more people in
places like Oregon, Maryland, California, Massachusetts,
Hawaii, and Minnesota have health insurance than they did prior
to October 1, 2013, and I am interested in hearing about how
these States did this despite glitches with the rollout in each
of those States. And I look forward to hearing about the best
practices from the State of California, from which I think we
can all learn a lot.
I welcome our witnesses and thank them for taking the time
to be with us today.
I yield back, Mr. Chairman.
Mr. Lankford. I would like to recognize the chairman of the
full committee, Mr. Issa, for his opening statement or any
statement that he would like to make.
Mr. Issa. Thank you, Mr. Chairman. Congressman Lankford, I
want to thank you for the work you have done on the details of
the flaws in Healthcare.gov and in the overall legislation.
I ask unanimous consent that my entire opening statement be
placed in the record.
Mr. Lankford. Without objection.
Mr. Issa. Mr. Lee, I welcome you here. It is particularly
important, as a Californian, to have California represented
here because both the best and the worst, perhaps, will be seen
in looking at the largest State in the Union.
We often turn divisive, partisan legislation into divisive,
partisan oversight. Mr. Cartwright, Ms. Speier have made that
clear by talking about Republicans this, Republicans that. I
have called or authorized every one of those many hearings they
alluded to, and I am proud we did it and I am only sorry we
didn't do more and sooner. Ultimately, about half of America's
Federal spending will be related to health care, Medicare,
Medicaid, Medicaid do eligibles for our seniors, and obviously
the growth related to subsidizing the Affordable Health Care
Act represent the largest single bulk of the budget today, and
that over a trillion dollars is the area in which we have no
real control over the rise in those costs unless we implement
changes that drive the cost of delivery down.
Long before President Obama became a Senator we had
problems with health care. I think Republicans and Democrats
need to recognize that Medicare and Medicaid have been part of
the problem, not just part of the solution.
Just a few days ago, by voice vote, almost a cowardly act
in many ways, we did what was called the doc fix. The doc fix
is based on a decade, well, 1997, I guess, old mandate that
somehow we were going to lower costs through some congressional
magic and fiat. Every year we recognize that it doesn't work
and that if we don't suddenly come up with billions of dollars
of new money, our doctors will be underpaid by, now, about 25
percent of what apparently we believe is fair.
And I use that as an example of a Clinton era Republican
House and Senate attempt to fix health care, and I do it
because this committee has a solemn responsibility to deal in
real facts, in real costs, and in real savings. That has not
been the case for people on both sides of the aisle for
decades.
The Affordable Health Care Act is well-intended, I believe,
but it has had many flaws. One of them that we will see today
is fairly straightforward: instead of doing a single Website in
which everyone fed in, spending $700 million, $800 million, $1
billion, $1.5 billion, $2 billion, some enormous amount of
money to create a network, what we did is we issued out large
grants. In the case of California, the number I have in front
of me is $1,065,212,950 in grants. In the case of Hawaii I am
told it is about $200 million just to establish the Website.
Let's understand something here today. Whether you voted
for the Affordable Health Care Act or you didn't, redundant
programs throughout most of 50 States that issued hundreds of
millions of dollars per State to do the same thing again and
again, sometimes with success or, in the case of Maryland, I
believe, today some would say failure, in the Website. That
alone was billions of dollars of unreasonable, unnecessary,
redundant in the planning. For the States to all come together
and use a common platform and common software was common sense.
To divide it into contracts in which each State may or may not
have chosen the same good vendor or, in some cases, the same
bad vendor that the Affordable Health Care Act federally used
is self-evident today.
Let's get passed the petty arguing about who voted for it
or against it, whether we voted to repeal it or change it.
Republicans and Democratic members are in fact, today,
regularly talking about necessary change. I know the 7 million
figure is big as of yesterday, and I know, as a Republican, I
am told to say that very clearly that figure represents a great
many people who lost their plans and, in fact, simply picked up
and got the 7 million. Mr. Lee will undoubtedly, quite frankly,
have to tell us that because California mandated to get onto
the exchange, that you get off of programs that was necessary
and deliberate cancellation of all kinds of programs in
California because vendors had to choose whether to keep their
old program or participate in the exchange. I am not holding
anyone accountable; it probably seemed like a good idea at the
time. But the fact is we have not driven down the cost of
health care to the individual except when the taxpayer picks up
the tab.
So all of us today should begin looking not just at
mistakes like thirty-some different Websites all paid for with
Federal dollars, all essentially asking many of the same
vendors to simply duplicate the software, but bill us twice,
three times, four times for reinventing it. But we also should
look at the question of, since we have not succeeded in the
past in driving down the cost of health care through CMS's
efforts, but, rather, repeatedly have simply said we will pay
less and cost-shift as the Affordable Health Care Act is
implemented and more and more people are under a federally
subsidized program, where do we cost-shift to? We are running
out of people we can cost-shift to, which means, by definition,
everything we do will be something we have to pay for.
Mr. Chairman, this was long and I apologize for going over,
but I, like you, are passionate about efficiency; and not just
the Affordable Health Care Act, but all the Federal spending
has to really be looked at.
Ms. Speier, I received your letter. I have taken note of
the fact that corruption by vendors using Federal dollars is
rampant and I believe that we do need to go after it, and I
look forward to holding a hearing in which we look at both
sides, vendors who sought to enrich themselves by getting more
than they deserved and Government oversight agencies that let
it happen until it piled up to hundreds of millions of dollars.
Mr. Cartwright, I want to thank you for something you did
that you may have forgotten. You voted for FITARA. You voted on
a bipartisan basis for a major change in how we procure IT. And
the Senate, Senator Udall has a companion bill. When that
becomes passed, we will become more efficient as a result of
our oversight and legislation created on a bipartisan basis in
this committee.
So I know we started off on a partisan basis. Hopefully, we
can switch the tone to realizing that we are all living with
increasing health care costs, and whether we voted for
affordable care or not, we have a major role to try to drive
down the future increases in health care if we are going to, in
fact, be competitive around the world in commerce.
So I thank you.
Mr. Chairman, I thank you for your indulgence. Yield back.
Mr. Lankford. Thank you
I now recognize the ranking member of the full committee,
Mr. Cummings, for his opening statement. Also, if you would
please take time to introduce Mr. Lee of California, as well. I
am sorry, of Maryland. Sorry, you are a representative from
Maryland. Apologize.
Mr. Cummings. You just moved me clear across the Country.
Mr. Lankford. I know. That is quite a shift. Sorry. I just
shifted your time zones. I apologize.
Mr. Cummings. Thank you very much, Mr. Chairman.
Today is April the 3rd, just three days after the deadline
for Americans to sign up for health insurance under the
Affordable Health Care Act. A lot has happened in the past six
months since the Federal and State exchanges opened for
business. It has not always been pretty, but we should take a
moment to reflect on what we have accomplished.
More than 7 million residents of our States have signed up
for affordable health care. Millions of people who could not
afford health insurance and were one accident or illness away
from financial ruin now have health insurance. This is very
significant. This is something that we all should be proud of.
And that is not all. We hear talk about what it didn't do,
but under the Affordable Health Care Act insurance companies
are no longer allowed to discriminate against people with
cancer, diabetes, or other preexisting conditions. They are no
longer allowed to discriminate against women. That is happening
now. Millions of our residents receive free preventative care
so they can stay well. We all know that it is cheaper to keep
somebody well than to treat them when they are sick, if you
want to talk about driving down the cost of health care.
Millions of kids can stay on their parents' plan until they are
26, and billions of dollars in rebate checks have been sent to
consumers across the Country. That has happened and it is
happening now.
Ladies and gentlemen, put simply, the Affordable Health
Care Act saves lives and it prevents people, from going through
pain, and it allows people to live longer, like the gentleman
who is probably watching us right now with colon cancer,
knowing that he has a way to be treated and he will be able to
walk his daughter down the aisle; or the person who just wants
to survive long enough to see their child graduate from high
school. That is what the Affordable Health Care Act is all
about.
Sometimes I think we get so caught up in the problems that
we are going through that we forget the big picture. Emerson
said it best, he said do not be pushed around by your fears and
your problems; be led by your hopes and your dreams. That is
what this is all about, hopes and dreams.
So to the witnesses here today and to the State and Federal
employees who are working tirelessly to implement the law, I
want to say thank you. I look at Dr. Sharfstein of Maryland,
the head of our health department. This is a man who has given
his blood, his sweat, and his tears trying to make life better
for people when he was the commissioner in Baltimore, and now
with our State. And I can probably say that if I knew all the
people there, I know that you all are doing the same thing. And
you don't do this for the money; you do it because it feeds
your souls. You do it because you want to make a difference.
You do it because you want to affect generations yet unborn.
And that is what we are all about, we should be about, making a
difference so that people can live the best lives that they
can.
The road we took to get here today was rocky for the
Federal Government. It has also been challenging for some
States, including my home State of Maryland. I cannot fully
express how frustrated I was with the troubled rollout of the
Maryland Health Connection. In my State, as in many of yours,
people have a desperate need for quality, affordable health
care. We needed the system to work. Let me say it again, we
needed the system to work. Lives depended upon it. And when it
did not, unnecessary obstacles were put in the way, which is
completely unacceptable.
Now, let me say this. Sometimes you have contractors that
advertise more than they can produce, so they sell you a bill
of goods. Maybe those are the folks that we need to be looking
at. But let's be clear. This is not just about a Website. It is
not just about a Website. This is about making a difference for
people so that they can be the best that they can be and be all
that God meant for them to be.
The answer to the problems is not to decimate the
Affordable Health Care Act. The solution is not to eliminate
health care for millions of people, to gut the funding for the
ACA, or to return to the days when insurance companies could
discriminate against us based on our medical conditions.
I have said it before and I will say it again, we are
better than that, to let insurance companies do that to us. The
remedy certainly is not to try to scare people away from
enrolling in health care they have a right to under the law.
When you scare them away from enrolling, you have scared them
away from having health care, from having insurance for being
able to take care of their child when the child gets sick or
prevent the child from getting sick. We are better than that.
Unfortunately, our Republican friends have voted more than
50 times to repeal, de-fund, and undermine the Affordable
Health Care Act. And my friend Mr. Issa, the chairman of the
committee, I agree with him, we need to move not to common
ground, but to higher ground, what this Nation is all about.
Higher ground, where we come together to try to figure out what
is wrong and correct it and move forward.
So when history is written, when that man is able to walk
down that aisle with his daughter, when that mother is able to
see her child graduate from college, when that person lives
long enough to see their first grandchild born, they are not
going to be worried about whether a Website failed. They are
not even going to be talking about that. They may not even know
that it was the Affordable Health Care Act that saved them and
gave them a life. All that will matter to them is they had an
opportunity to live and live in dignity and have a moment of
happiness.
So I am hoping that, as we move forward, since this is the
law, by the way, that we move forward to make the law better,
and not try to destroy it. And the only reason I mention these
past efforts with regard to the numerous hearings is because I
have not seen in these hearings one effort to improve the law,
not one. If we could move to that, then we could move to higher
ground.
With that, I yield back.
Mr. Lankford. Members will have seven days to submit
opening statements for the record.
I would like to recognize our panel.
Mr. Cummings, would you like to introduce your guest from
Maryland, as well?
Mr. Cummings. Yes.
Dr. Sharfstein is the head of our health department in
Maryland. As I said before, he has also served--by the way, he
was a staff member on this committee, Mr. Chairman, some years
back. Then he came to Baltimore and he was our commissioner of
health there, where he brought all kinds of innovative projects
to Baltimore, and now he is head of our health department for
the State of Maryland; and I am very pleased to have him.
Mr. Lankford. Ms. Speier, would you like to introduce
anyone?
Ms. Speier. I am delighted to introduce Mr. Peter Lee, who
is the Executive Director of Covered California, who has had a
storied career in health care both in the private and public
sector, and formerly was the Deputy Director of the Center for
Medicare and Medicaid Innovation at CMS, among many other
places.
Welcome. We are very glad you are here.
Mr. Lankford. Thank you.
Mr. Matsuda, you definitely have the longest time zone
change here of any of the folks that are here. We are glad you
are here. He is the Interim Executive Director of the Hawaii
Health Insurance Exchange.
Ms. Jean Yang is the Executive Director of the
Massachusetts Health Insurance Exchange.
Mr. Scott Leitz is the Interim Chief Executive Officer of
the Minnesota Health Insurance Exchange.
Mr. Greg Van Pelt is the Advisor to the Governor of the
Oregon Health Insurance Exchange.
Pursuant to committee rules, all witnesses are sworn in
before they testify, so if you would please stand and raise
your right hand.
Do you solemnly swear or affirm that the testimony you are
about to give will be the truth, the whole truth, and nothing
but the truth, so help you, God?
[Witnesses respond in the affirmative.]
Mr. Lankford. Thank you. You may be seated.
Let the record reflect all the witnesses answered in the
affirmative.
In order to allow time for discussion, I ask you to be able
to limit your testimony to five minutes. Your entire written
statement, which all of you have submitted, will be a part of
the permanent record as well.
Mr. Matsuda, you are batting off the beginning here, to do
a little spring baseball conversation there. So you are first
up. If you press the talk button, we would be glad to be able
to receive your testimony for five minutes.
WITNESS STATEMENTS
STATEMENT OF TOM MATSUDA
Mr. Matsuda. Thank you, Chairman, ranking members, and
members of the subcommittees. My name is Tom Matsuda, Interim
Executive Director of the Hawaii Health Connector, speaking on
behalf of the Connector and its board of directors.
Hawaii has long been a leader to ensure that our residents
have access to quality, affordable health insurance. In 1974
Hawaii enacted a groundbreaking State law, the Hawaii Prepaid
Health Care Act. This law requires that most employers in
Hawaii provide health care coverage to employees who work more
than 20 hours per week for at least four consecutive weeks.
Hawaii's Prepaid Health Care Act requirements are generally
stricter than those of the Federal Affordable Health Care Act.
As a result, Hawaii has a low uninsured rate, estimated at
about 8 percent, or 100,000 individuals. Because the State law
is so strongly supported by the people of Hawaii, the Aloha
State authorized the establishment of a State-based marketplace
to harmonize the ACA with the Hawaii Prepaid Health Care Act.
My written testimony provides detail about the Connector
and I would like to focus on some specific issues.
First of all, enrollment. As of March 31st, 2014, we have
7,596 individuals enrolled in commercial plans through the
individual marketplace, 265 people enrolled through the SHOP
small employer marketplace, and 24,641 completed applications
in our system.
The Connector does not handle Medicaid eligibility or
enrollment for the Medicaid population; that is handled through
the Department of Human Services, or DHS. DHS had over 28,800
Medicaid enrollments from last October through February this
year, for a total of over 36,661 enrollments across the entire
Hawaii marketplace.
We launched our online marketplace on October 15th and
accepted initial application forms between October 1st and
15th. The system has been operating since then, but it was very
difficult to use at first. As of now, we have made significant
improvements. The system is better today than it was back in
October. Our system is working from end-to-end, but more
improvements can be made.
Sustainability. As a State-based marketplace, we must be
self-sustaining by January 1st, 2015. Last year, the Connector
board approved a 2 percent premium assessment for plans sold on
the Connector. Our board is now engaged in a sustainability
planning process. The key is to reduce operating expenses while
supplementing enrollment, especially in the SHOP exchange. The
Federal and State decisions to give small employers the option
to remain with their existing insurance plans through 2016 have
reduced the volume of participants in SHOP.
Hawaii has received four Federal grant awards. While Hawaii
is a small State, we are subject to the same Federal
requirements as all other States to establish the
infrastructure to operate these State-based marketplaces. The
establishment costs will be comparable from State to State to
ensure that the structural components of the marketplace are
compliant and secure. Our small population and low uninsured
rate mean that Hawaii has a smaller market to support our
operating costs. As of December 31st, 2013, the Connector has
spent about $57 million of the total $204 million in Federal
grant monies awarded to us and we have an operating system.
For our priorities going forward, we have roughly 11,000
incomplete applications. These individuals' enrollment is not
yet complete. We have increased staff to complete this process.
We are also working on extending our outreach into island
communities that are underserved to help educate these
populations about the services available to them.
On behalf of the Hawaii Health Connector, I appreciate the
opportunity to discuss these issues with you today. We have
much left to accomplish, but we believe in the mission of the
Connector and are fully committed to contributing our part in
Hawaii's long history of providing access to affordable,
quality health care coverage to our residents. Thank you.
[Prepared statement of Mr. Matsuda follows:]
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Mr. Lankford. Thank you.
Mr. Sharfstein.
STATEMENT OF JOSHUA SHARFSTEIN, M.D.
Dr. Sharfstein. Thank you, Chairman Lankford, Chairman
Jordan, Ranking Member Speier, Ranking Member Cartwright, and
other members of the committee. I appreciate the opportunity to
testify today. It is true that I used to staff this committee,
I used to be one of the people sitting along the back wall. I
think I can say that every staffer wonders what it would be
like to sit on this side of the microphone, and after the
hearing I will be able to tell them.
As has been widely reported, Maryland has faced
considerable IT challenges in establishing our State-based
exchange. On October 1st the system barely worked at all. For
weeks we struggled with a range of software and hardware
problems. But we did not give up. We now expect to hit our
enrollment goal. In fact, we expect to exceed it by 10 percent
or more. We expect the number of enrollments in qualified
health plans to come within 10 percent of what was predicted by
independent experts and to exceed our expectations for Medicaid
enrollments. By the time the dust settles, we could see
enrollments more than 300,000 in Maryland.
Maryland's story includes decisions we wish we could make
again, failures by multiple vendors, and too many IT
frustrations to count. But Maryland's story is also about an
exchange that is a lot more than a Website; it is about a State
that is battling back and is looking towards the future. I have
submitted detailed written testimony, so I will just make some
key points.
First, the exchange is a lot more than the Website. It
includes our close partnership with more than 2,000 brokers; it
includes a very competitive market with four carriers offering
45 plans; we have some of the most competitive insurance rates
in the Country, including dental plans; we have a Website that
has a physician at work for each carrier and a community-based
Navigator program that includes more than 30 grassroots
organizations.
Second, we did face serious Website problems. We made a
major misjudgment, in retrospect, initially in adopting a
strategy of trying to buy commercial off-the-shelf software
that could be configured for the purpose of the Affordable
Health Care Act, instead of building something specifically for
this purpose. The products that were advertised as being ready
actually were defective and deficient. This caused immense
frustration for consumers and at certain points made us wonder
whether anyone would be able to enroll.
Third, rather than give up in the face of these IT
challenges, Maryland tackled the problem head-on. Changes
included new leadership, including when the governor asked the
secretary for IT to step aside from her job and be the single
leader for all IT development; hiring a general contractor,
Optum/QSSI, the same company that helped fix the Federal
Healthcare.gov; implementing hundreds of critical IT fixes;
collaborating closely with carriers to allow for special types
of enrollment for people who had trouble on the Website; manual
workarounds which allowed us to process certain types of
eligibility by hand; elbow grease by the gallon and the
incredible tough work of hundreds of consumer assistance
workers; and, finally, a strong finish, with as much enrollment
in the last two days as in the first 10 weeks or so.
As a result, as I said before, we expect not only to meet,
but to exceed our enrollment goals. Quality and affordable
health coverage is providing peace of mind and access to
lifesaving care to families across Maryland, and is also going
to reduce the hidden tax that all of us pay for poorly managed
and uncompensated care under our unique system in Maryland of
rate-setting for hospitals, which not only, I think, to
Chairman Issa's point, is going to reduce the costs for
uncompensated care within that system, but also we are using
across all payers with no cost-shifting to address the
fundamental challenge of cost in health care.
Let me finally say talk to next steps. In addition to the
significant work and the hundreds of fixes that it took to get
us to the point where we could exceed our enrollment goals, our
secretary of information technology has led a process of
figuring out the future for the Website, and after an extensive
analysis the board, this week, voted to leverage the
Connecticut IT solution in order to upgrade our Website. This
is a model that has proven very effective and allows us to use
something that works very well in time for the second open
enrollment period.
As the chair of the board of the Maryland Health Benefit
Exchange, I deeply regret the frustration that many Marylanders
have experienced. I am also proud of the efforts of so many who
have worked tirelessly to overcome the IT challenges and help
their friends, neighbors, and fellow citizens gain access to
affordable and quality health coverage.
Thank you for the opportunity to testify and I look forward
to your questions.
[Prepared statement of Dr. Sharfstein follows:]
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Mr. Lankford. Thank you.
Ms. Yang.
STATEMENT OF JEAN YANG
Ms. Yang. Thank you, Mr. Chairman. Chairman Jordan,
Chairman Lankford, Ranking Member Cartwright, Ranking Member
Speier, and members of the subcommittees, good morning. Thank
you for the opportunity to testify about our experience
implementing the Affordable Health Care Act in Massachusetts.
As you know, Massachusetts is very familiar with the
framework of the ACA. In 2006, former Governor Mitt Romney
worked with our State legislature to fashion an approach to
expanding health coverage that drew ideas from both ends of the
political spectrum. Once he took office in 2007, Governor Deval
Patrick worked to bring the statutory framework to life, in
close collaboration with our State's legislature, our health
care providers, our business and labor leaders, our insurers,
our consumer advocates, and countless others.
We are extraordinarily proud of the results we have
achieved together over the past eight years. Virtually all of
the Commonwealth residents are now ensured, at 97 percent.
Ninety-one percent of our residents report having access to a
primary care physician and 88 percent having seen their
physician in the previous 12 months. On a whole host of
measures, we are healthier.
At the same time, more employers are offering coverage and
our State's budgets have been consistently balanced.
One of the most important lessons we have learned in the
years since 2007 was that health care reform takes time. We
refined our plan as we learned new lessons in collaboration
with our partners, including the Bush and Obama
Administrations. It has not always been easy, but we kept our
eye on the goal of getting people adequately covered. As
Governor Patrick has remarked, we learned early that health
care is not a website.
We support the Affordable Health Care Act because it
embodies the principles of our Massachusetts reforms and
because it gives our State new tools to sustain and expand on
our success. We know that it is already helping to put
affordable coverage and care in the hands of Americans across
the Country. In Massachusetts itself, since the ACA took full
effect in January, over 200,000 more people have signed up for
subsidized coverage. Almost 30,000 people have purchased
unsubsidized ACA-compliant plans through our health connector.
The health connector is also offering dental policies for the
first time, with over 2,300 plans purchased to date by
individual shoppers.
Even so, while implementing the ACA, we have experienced
Website challenges. These are mainly due to failures of our
system integrator. But with our new team in place we are on a
path to go live with a functional, reliable exchange Website
for the next open enrollment period.
Challenges with our system integrator and project
management shortcomings impeded our progress in achieving our
full vision for the Website by October 1st of last year. On
that account, we decided to deploy only parts of the new system
on that date. Given these constraints, and with many people
encountering errors and wait times even with the parts that
were deployed, we have developed alternative pathways to
support enrollment. These mechanisms have enabled us to protect
and expand coverage with strong cooperation from our health
insurers, providers, and consumer advocates. Many residents of
the Commonwealth have experienced difficulties with some of
these processes and we fully share their frustration. But we
have not allowed Website problems to prevent us from meeting
the ultimate goal of the ACA: getting people covered so that
they can enjoy health and economic security.
Though the website challenges are mainly the result of an
underperforming IT vendor, we are holding ourselves accountable
for fixing them, and we are making progress. We have stabilized
our system, eliminated a backlog of paper applications, and
substantially reduced call center wait times. We continue to
maintain strong data security protocols that meet Federal
standards and have kept personal information of applicants safe
from data breach, and we have a detailed plan to open up new
parts of the Website only when we know they are ready for
users. In the meantime, through the creativity and flexibility
of our team, people are getting covered.
We have an unwavering commitment to ensuring quality,
affordable health care for the people of Massachusetts, a
commitment that kept us moving forward through both the peaks
and the valleys of our State reforms, a commitment that keeps
us moving forward today as we strive to realize the ACA's full
potential for improving care and improving lives.
Thank you for your time. Look forward to your questions.
[Prepared statement of Ms. Yang follows:]
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Mr. Jordan. [Presiding] Thank you, Ms. Yang.
Mr. Lee.
STATEMENT OF PETER LEE
Mr. Lee. Good morning and thank you to Chairman Issa,
Jordan, and Lankford, and Ranking Members Speier, Cartwright,
and Cummings. I want to appreciate also the other distinguished
members of the committee having us here. I am Peter Lee from
Covered California and I am glad to share with you our early
implementation lessons in California in launching the
Affordable Health Care Act.
I think it is important that we are excited in California
to, across a whole range of constituents, whether they be
insurance agents, county workers, health care providers of a
range of political positions who have come together in
California to launch this to expand coverage. We are seeing the
fruits of that effort today.
California is one of 15 State-based exchanges, and when we
started we looked to the data and said that somewhere around 4
million Californians could benefit from Federal support, either
expanded Medi-Cal or subsidies through Covered California. In a
very few short years we have gone from being a 10 person
organization to an organization with over 1,000 people. We are
a very, very fast startup that is working to change history.
So how is it going so far? Well, you have heard some of the
numbers: 1.2 million Californians now have coverage directly
through Covered California. An additional 1.9 have coverage
through Medi-Cal today, and over 800,000 are signed up for
pending eligibility. This is close to 4 million Californians.
Every single one of them went through CoveragedCA.com, our
Website. Many of them were touched by humans in the enrollment
process. And I really can't agree too strongly; again and again
exchanges are about more than Websites. And I want to talk a
little bit about what they are about.
But I also want to underscore when we think about State-
based exchanges, there are five exchanges out there that, as of
a month ago, had already covered more than 30 percent of those
eligible. Those States included California, Rhode Island,
Vermont, Washington, and Connecticut. Other States have done a
very good job as well: Kentucky, New York. As of three days
ago, California had brought coverage to more than 50 percent of
those subsidy-eligible in the exchange. That is a remarkable
number when you think about what it takes to grow a brand new
and historic program.
So let me talk briefly about what it takes to make a State-
based exchange work. And I would note that when we say work, we
do not mean perfect. It has been rocky, it has been bumpy, and
it will continue to be rocky and bumpy. This is historic. This
is a very big change to the health care system. But, all in
all, we feel good about the progress we are making. It takes,
in our mind, three things for an exchange to work: it takes
having affordable health plans delivering quality care; it
takes effective marketing and outreach; and it takes effective
enrollment.
In the area of affordable care, Covered California has been
what is called an active purchaser. Thirty-three health plans
originally expressed interest in participating in our
marketplace. We selected 11. Covered California specifically
went through a process of standardizing our benefit designs to
give consumers better tools to make choices and understand what
they were choosing between their plans. We ended up getting
very competitive rates and we are optimistic those rates will
stay very competitive and affordable. Right out of the gate, we
have been giving consumers information to choose. That is
having affordable plans that consumers can use their
information to make the right choice for them.
Second element of success is effective marketing and
outreach. Covered California has been reaching out to
Californians across demographic mix, across languages through a
whole range of marketing channels; through TV, through radio,
through newspapers, but as, or more importantly, through over
250 groups anchored in local communities doing outreach and
educating people about the importance and opportunities of
enrolling in Covered California.
Finally, effective enrollment. It is more than about an IT
system and it is a complex IT system. The enrollment system
that we have, like the other people testifying with me here,
has to connect with more than 11 different major databases,
including the Federal Government, but also State systems. We
have our system up and running. It has been up 91 percent of
the time in the scheduled running time. It has served more than
12 million unique visitors.
It is working well but, more importantly than it working
well, the over 25,000 Californians, these are county workers,
these are licensed insurance agents, these are certified
enrollment counselors in every community in the State have been
helping literally millions of Californians get enrolled. That
is why we think it is largely working in California, because
Californians have stepped up. They have stepped up to talk to
their neighbors, members of their churches, members of their
schools to get them covered.
We do have lessons learned we can share. Those are in my
written testimony.
And I look forward to responding to questions from the
committee. Thank you very much.
[Prepared statement of Mr. Lee follows:]
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Mr. Jordan. Thank you, Mr. Lee.
Mr. Leitz, you are up for your five minutes.
STATEMENT OF SCOTT LEITZ
Mr. Leitz. Chairman Jordan, Chairman Lankford, Chairman
Issa, Ranking Member Speier, Ranking Member Cartwright, Ranking
Member Cummings, and members of the Oversight and Government
Reform Committee, good morning. Thank you for inviting me to
come here today to talk about Minnesota's experiences in
establishing MNsure, our online health exchange.
I want to start by telling you about Corey and Kate
Needleman, who live in Minneapolis. Corey is a teacher. For
years the family had health insurance through his job. But over
time the family's out-of-pocket costs grew. After welcoming
their third son, Irving, into the family, they had to choose
between paying their mortgage or paying their health bills.
Last fall, when MNsure opened, her three boys qualified for
medical assistance with no premium or deductible, and she was
able to purchase a plan for herself that is less than $200 a
month without tax credits. In her words, I was thrilled. It
blows my mind that we are going to be able to be cared for and
we are not going to lose our house.
Today, I am proud to say MNsure is stable, secure, and
successful; and, because of our efforts, the Needlemans are
just a few of the nearly 170,000 people in Minnesota who now
have access to affordable, comprehensive coverage because of
MNsure.
Of that 170,000, nearly 88,000 have enrolled in Medicaid,
over 34,000 have enrolled in MinnesotaCare, our State's basic
health plan for people between 133 and 200 percent of the
Federal poverty line. In other States, these individuals or
enrollees would be in private plans with tax credits. The
remaining over 47,000 have enrolled in private qualified health
plans.
It is also worth nothing that in Minnesota 95 percent of
the people enrolled in health coverage have paid for it. And as
we continue to process applications, we expect our numbers to
grow even higher.
It isn't news to this committee that MNsure's rollout was
rocky. Our initial launch in October was plagued by software
errors and technical glitches. I was appointed interim chief
executive officer on December 18th, after the resignation of
MNsure's first executive director. In recognition that more
must be done to ensure Minnesotans have access to a functioning
Website and comprehensive affordable health coverage, I took
immediate action. In January I commissioned an end-to-end
review of our exchange by Optum Health. They recommended we
make a number of enhancements to customer experience to help
boost enrollment and to improve customer satisfaction.
Working in close partnership with our vendors, we were able
to stabilize our system. Our eligibility software is now
operating with an over 99 percent success rate, compared to 70
percent in mid-December, and our online marketplace has been
stable enough to process more than 2,000 enrollments a day.
December's software problems caused our call center wait
times to climb to over an hour, and up to 70 percent of
consumers were simply giving up before they could be helped. We
resolved this issue by more than doubling the size of our call
center and by bringing stability to our software system.
Average wait times for the month of March were dramatically
less.
Moving forward, we are planning our budgets for 2015. I am
happy to say that next year's calendar year budget is balanced
and does not seek additional State or Federal funds to operate
MNsure.
In the longer term, we are in the process of selecting a
lead vendor that will help MNsure assess the larger
architectural software issues that were identified in the Optum
report. The goal is to not just make the 2015 open enrollment
period a better experience for consumers, but to have a
comprehensive roadmap for continuously improving MNsure and
enhancing the exchange for consumers in every open enrollment
period to come.
I had the opportunity to meet Kate Needleman and her son
Irving recently. She told me that having affordable insurance
has opened the door for her family. Health reform is indeed
more than a Website; it is about getting real people and
families into affordable comprehensive health coverage. This is
something we are doing well in Minnesota.
Thank you for the opportunity to testify, and I look
forward to your questions.
[Prepared statement of Mr. Leitz follows:]
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Mr. Jordan. Thank you, Mr. Leitz.
Mr. Van Pelt, you have been patiently waiting. You are up.
STATEMENT OF GREG VAN PELT
Mr. Van Pelt. Thank you very much. Mr. Chairman, ranking
members, and other members of the Oversight and Government
Reform Committee, thank you for allowing me to speak before you
today about Oregon's health reform efforts. My name is Greg Van
Pelt. I recently retired as chief executive officer of
Providence Health and Services in the Oregon region. Throughout
my career I have had direct experiences with the challenges of
expanding access to quality health care while managing costs.
Last year, Governor Kitzhaber asked me to step in to help
navigate the challenges around the launch of the State's health
care exchange. Currently, I serve as the president of the
Oregon Health Leadership Council and voluntary advisor to the
governor and Dr. Bruce Goldberg, acting director of Cover
Oregon, for whom I am appearing today because he recently
suffered a broken leg.
While the launch of the ACA in Oregon has been different
than we hoped, over 300,000 individuals have enrolled in health
insurance plans since October 1st. Governor Kitzhaber, two
weeks ago, released an independent assessment of Cover Oregon
produced by the company First Data. The report, which I also
request to be included in today's record, was based on 67
interviews with stakeholders from Cover Oregon and Oregon
Health Authority employees to the governor and legislators from
both sides of the aisle and a review of more than 3,200
documents. It assesses the technical problems with the
development and rollout of our health exchange Website.
Members of the committee, I want you to know that in
response to First Data's findings, the governor announced
numerous steps he has taken or will take to improve
performance, accountability, and oversight. These steps are
detailed in my written testimony, which also has been shared
with you.
We do know that some things have worked very well. We have
used our technology investment to roll more than 300,000
Oregonians in health care coverage since October thanks to
Cover Oregon and the Oregon Health Authority. We continue to be
proud of the work we have done to improve Oregonians' lives,
and we know that that will endure.
I welcome your questions and the opportunity to discuss
with you Oregon's ongoing health care transformation work, as
well as the progress that we have made to secure the public
trust to make good on Cover Oregon's promise to enroll more
Oregonians in affordable, high-quality health insurance. Thank
you very much.
[Prepared statement of Mr. Van Pelt follows:]
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Mr. Jordan. Thank you, Mr. Van Pelt.
We will now turn to questioning. We will start with the
gentleman, the vice chair of the committee, Mr. Gosar, the
gentleman from Arizona.
Mr. Gosar. Well, thank you very, very much.
Mr. Leitz, I want to start off with you. You talked about
the rocky start for your exchange earlier. So my first question
is, in the three months leading up to the botched Website
rollout, 14 managers of the sites received bonuses for work
they did on the exchange. Is that accurate?
Mr. Leitz. Congressman, it is.
Mr. Gosar. Now, why would the State pay people a total of
$27,000 for a botched Website? Usually, bonuses go to
exceptional work. Botched doesn't seem to meet exceptional.
Mr. Leitz. Congressman, those bonuses were approved by the
previous executive director.
Mr. Gosar. Oh, I am glad you said that because have you
done anything to claw back those bonuses?
Mr. Leitz. Congressman, not to date, no.
Mr. Gosar. Interesting. Now, in January, United Health's
Optimum division released a report stating that the exchange's
current program management structure and process is
nonexistent, and management leadership decision-making is
occurring via crisis mode. That report also concluded that the
exchange might be so badly flawed that MNsure might have to
scrap all of it. In the same article you were quoted as saying,
we do intend to take actions--in fact, I thought I heard you
speak about this in your comments--we intend to take actions as
result of the report.
Have you fired anyone in the State government for the
bungled launch and the massive loss of taxpayer dollars?
Mr. Leitz. Congressman, we have made changes within the
organization.
Mr. Gosar. I asked you a question. Have you fired anybody
for----
Mr. Leitz. Congressman, personnel actions have been taken.
Mr. Gosar. People have been fired?
Mr. Leitz. Congressman, I am not----
Mr. Gosar. Or they have just been reassigned, like here in
the Federal Government, and given a new title?
Mr. Leitz. Congressman, individuals are no longer with the
organization who previously had been.
Mr. Gosar. Are they still in the State government?
Mr. Leitz. Congressman, no.
Mr. Gosar. So you did make some changes.
Mr. Leitz. Yes, Congressman.
Mr. Gosar. Now, last week the Los Angeles Times reported on
how Governor Dayton referred to the Minnesota exchange as the
black hole, where he was referencing consumer applications that
were frozen or had vanished. Did you ever find out where those
vanished applications went?
Mr. Leitz. Congressman, yes, we did.
Mr. Gosar. You have a total accounting of all those
vanished?
Mr. Leitz. Congressman, yes, we are able to identify any
applications that had previously been in the system that we
weren't able to track during the fall rollout.
Mr. Gosar. Will you provide that to the committee? I mean,
a lot of the folks back in Minnesota don't know that story.
Mr. Leitz. Congressman, I would be very happy to provide an
accounting of those individuals, in the aggregate, of course.
Mr. Gosar. Thank you very much.
Now I am going to go to everybody, so we are going to try
to go fairly quickly. How many people did you have to hire to
process paper applications because of the problems with your
exchange Website? Start with you, Dr. Matsuda.
Mr. Matsuda. In our contact center, recently we increased
staffing to handle the backlog that I mentioned in my remarks
by a total of 80 people.
Mr. Gosar. How much did that cost?
Mr. Matsuda. I will have to supplement that to the record.
I can get the exact number for you.
Mr. Gosar. We would like to know how it was paid for, too.
So let's go to the next. Mr. Sharfstein?
Dr. Sharfstein. About 200 more people through the call
center and fulfillment center, about $6 million.
Mr. Gosar. And how was it paid for?
Dr. Sharfstein. Through our grants through the usual rules.
Mr. Gosar. Through the Federal Government?
Dr. Sharfstein. Federal and State government, right.
Mr. Gosar. Okay.
Ms. Yang?
Ms. Yang. Congressman, we have leveraged the workforce of
about 300 individuals through an intensive work period in the
past four weeks, and we are happy to report that the paper
application backlog has been eliminated.
Mr. Gosar. And how much did it cost?
Ms. Yang. I do not know the precise number for that period.
We can get back to you on that.
Mr. Gosar. And how it was paid for.
Mr. Lee?
Mr. Lee. We have a customer service staff that we expanded
by about 250 people that do both phone and mail, but we also
have shared into the paper processing work with county partners
throughout the State of California and additionally did some
extra contracting of vendors to help us get through the paper
backlog. I am not sure the exact number; I will happily follow
up with you on that number, but it was absolutely paid for out
of our Federal establishment grants.
Mr. Gosar. Okay.
Mr. Leitz?
Mr. Leitz. Congressman, approximately 50 individuals were
added for that purpose. We also paid for that out of the
establishment grant.
Mr. Gosar. Gotcha.
Mr. Van Pelt?
Mr. Van Pelt. Thank you. Oregon also leveraged workforce
from different State agencies, but I will have to get back to
you on the precise number and payment source.
Mr. Gosar. I am going to come right back to you real
quickly, Mr. Van Pelt, because when did the State first alert
CMS that the exchange was not going to be operational?
Mr. Van Pelt. That is all in the first data assessment, and
I would have to defer to that report, congressman.
Mr. Gosar. So you can't address the oversight?
Mr. Van Pelt. My particular role was such that I was called
in shortly after the governor and the Cover Oregon determined
that this was not working or going to work, and, that being the
case, my time focused on setting up the paper application
process and steps going forward.
Mr. Gosar. And my point was that CMS had very, very poor
oversight. In fact, your predecessors were talking in regards
to their lackluster questions and how they had impressed CMS
with unimpressive answers. So I would like to have a detailed
report on that.
Mr. Van Pelt. Be happy to do that.
Mr. Gosar. I yield back.
Mr. Jordan. I thank the gentleman.
Gentlelady from California, the ranking member, is
recognized.
Ms. Speier. Mr. Chairman, thank you.
And thank you again for your really outstanding testimony.
It is really a tribute to you as executives in each of your
programs that you have turned lemons into lemonade.
I would like to start by quoting the speaker when he
referenced the rollout as horrendous and a launch was anything
but smooth. Representative Barton called it a huge undertaking
and there is going to be glitches.
Now, those were comments made by the speaker and by
Congressman Barton on the rollout of Part D, Medicare Part D,
which was seen as full of problems with the initial rollout;
and, yet, Republicans at that time were all about fixing it
because it was in President Bush's Administration. I would like
to see the same kind of frankness and willingness to fix the
system now that it is in President Obama's Administration and
we are undertaking a much, much larger effort.
Now, what is good about everything I have heard here this
morning is that you have fixed the initial problems. You are
all optimistic about the success of your programs. Can I just
have each of you indicate whether or not you believe that you
have met your goals or will meet your goals?
Mr. Matsuda. Thank you, Ms. Speier. We do believe we are
going to reach our goals. Our system is working, as I testified
earlier, and, really, our goal now for the short-term is to
improve the functionality and the usability of our system.
Dr. Sharfstein. Maryland has exceeded its enrollment goal.
Ms. Speier. Ms. Yang?
Ms. Yang. Congresswoman, as you have heard in my testimony,
we are proud of the fact that we are achieving the fundamental
goal of the ACA, which is expand coverage on top of an already
solid ground on Massachusetts. Our work is not done, but we are
on a very solid path.
Ms. Speier. Mr. Lee?
Mr. Lee. Well, we actually have never had specific goals.
We have exceeded all expectations and all independent
projections. Our goals are to insure every single Californian,
so we still have work to do.
Ms. Speier. Mr. Leitz?
Mr. Leitz. Congresswoman, Minnesota is solidly on track and
we feel very good about the future of what is ahead of us.
Ms. Speier. Mr. Van Pelt?
Mr. Van Pelt. Thank you. Oregon is very much on its way to
achieving its enrollment goals and feels confident in the steps
we have taken to improve our technology.
Ms. Speier. Great.
Mr. Lee, California is a great sunshine story here and we
are proud of that. Would you tell us what some of the reasons
for the success were?
Mr. Lee. Congresswoman, I would be happy to, and some of
these are highlighted in my testimony, and I would highlight
just very briefly five things.
One, leadership across the State focused on consumers. We
put politics aside and said let's make this work for consumers.
We had very effective collaboration both between State
agencies, the Medi-Cal agency, which I partner with, but also
with the regulatory agencies; Department of Managed Health
Care, Department of Insurance. This has changed the entire
insurance market. It is not just about exchanges, it is about
changing the marketplace. That coordination is critical.
Partnerships. This has worked because it has worked on the
ground in communities, with community clinics, with counties,
with insurance agents. That partnership collaboration has been
vital.
Finally, that we have had a culture of both transparency
and learning. We have had bumps along the way, and we have
adjusted our course continually, and will continue to do that.
This is the beginning of a very long road and we look forward
to learning and improving as we go forward.
Ms. Speier. Dr. Sharfstein, you are going to implement the
Connecticut IT solution. I don't know how many other States
are, but they seem to have made it work very well. What do you
think the key is to the Connecticut system?
Dr. Sharfstein. Thank you, Congresswoman. There are several
things that are very attractive about the Connecticut solution.
First of all, it is a very simple and elegant design both for
consumers and the consumer assistance workers. It also has very
good functionality for insurance brokers, and we have a lot of
insurance brokers that we are working with in Maryland, so that
was very good. It also uses some of the same software, not the
specific software for the Affordable Health Care Act, but some
of the general software pieces that we already have licenses
to, and it runs on the same kinds of computers that we have
already purchased. So there is a lot of overlap and allows us
to reuse some of the initial investment.
So those are some of the reasons. And we were able to
demonstrate it at our board meeting recently. We have gotten a
lot of positive feedback around Maryland for that.
Ms. Speier. All right. Thank you all.
Mr. Jordan. We will now go to the gentleman from Michigan,
Mr. Walberg.
Mr. Walberg. Thank you, Mr. Chairman, and thank you for
holding this hearing to look at a program that is being panned
as just an exceptional opportunity to, I guess, carry on an
approach that takes away freedom, competition, opportunity, and
I think great health care continuation for our Country simply
because we are unwilling to deal with the costs and increase
that competition.
But let me ask a question of Mr. Lee. Thank you for being
here. A July 2013 State auditor's report that called the
Covered California plan a new high-risk entity. That was the
auditor's statement. The report stated that under all
enrollment scenarios Covered California will not have
sufficient revenue to cover its operating costs in fiscal year
2015-2016. Specifically, it said it would be losing $73
million. You told State finance officials in September that
``the long-term sustainability of the organization'' is its
greatest weakness.
What did you mean by that?
Mr. Lee. Well, a couple things. One, we are very
appreciative to receive Federal funding to get going. In
California, after we are going, we will be running 100 percent
on our own steam, supported by premium dollars. We, by State
law, cannot go to the State of California for general funds, so
making sure we are fiscally well managed is a critical
important factor for being an ongoing organization.
The auditor's report also noted, I believe, and our
budgeting has always planned to have a couple years of what are
called deficit spending to then be operating in the black. In
2016-2017, we plan to be operating in the black and put money
in the bank----
Mr. Walberg. You still believe that you will be?
Mr. Lee. Pardon me?
Mr. Walberg. You still believe that you will be operating
in the black?
Mr. Lee. Absolutely. Absolutely. We are actually in the
process of developing our next year revised budget now based on
our current enrollment figures that we will be taking in draft
to our board actually this next month, and we will be able to
adjust every year our operations both on the revenue and the
expense side to be fiscally well managed for Californians.
Mr. Walberg. Well, let me follow up that with, again, the
State auditor's report noted that premiums in both the
individual and SHOP markets ``generally would provide the
revenue required to operate the exchange.''
Mr. Lee. That is right.
Mr. Walberg. But you shut down the SHOP market earlier this
year.
Mr. Lee. No, we did not, Congressman.
Mr. Walberg. You didn't shut it down?
Mr. Lee. Absolutely not. Our SHOP market is running. We
have more than 6,000 individuals enrolled and over 600
businesses. We turned off the online enrollment functionality,
which is generally not used----
Mr. Walberg. Of the SHOP market.
Mr. Lee. Of the SHOP market. But that is generally not how
small businesses enroll anyway, using online functionality. But
we are enrolling people today and continue to in our SHOP
program.
Mr. Walberg. So you don't plan any taxpayer bailout in the
future?
Mr. Lee. Absolutely not.
Mr. Walberg. You are certain of that?
Mr. Lee. By State law, in California, I want to be clear,
we cannot be dependent on general fund money, and we expect
that we are going to be converting to----
Mr. Walberg. Federal taxpayer bailout as well?
Mr. Lee. We have been supported by the Federal support to
get launched.
Mr. Walberg. But you don't expect any more Federal support
or bailout.
Mr. Lee. I do not expect any more.
Mr. Walberg. We will hold you to that.
Mr. Lee. Okay.
Mr. Walberg. I hope that is the case.
Mr. Lee. Me too, Congressman.
Mr. Walberg. We both do.
Let me move on to ask several of you questions.
Let me start with Dr. Sharfstein. In total, how much has
been paid to your State to develop and operate its exchange?
Dr. Sharfstein. So far, our exchange has spent, for all
costs, including the website, about $129 million.
Mr. Walberg. That is what has been paid in total to your
State to operate this exchange?
Dr. Sharfstein. No. So our Federal grants I think in total,
if I am correct, are about $180 million. Oh no, I am sorry. Let
me get the exact number for you here.
Mr. Walberg. Ms. Yang, you can get prepared for that same
question.
Dr. Sharfstein. Yes, it is about $180 million in grants. We
haven't spent all that, though.
Mr. Walberg. But that is what has been paid to you thus
far.
Dr. Sharfstein. Those are the Federal SSI grants that we
have been awarded.
Mr. Walberg. Who are the contractors and how much have they
been paid?
Dr. Sharfstein. There is a long list of contractors, so I
could submit that for the record.
Mr. Walberg. I would appreciate that. Were they bid
competitively or sole-sourced?
Dr. Sharfstein. For the major IT procurement we did a
competitive procurement.
Mr. Walberg. Any other contracts sole-sourced?
Dr. Sharfstein. There were a couple much smaller contracts
that were sole-sourced.
Mr. Walberg. Appreciate that on the record as well. How
would you rate the contractors' performance under contract?
Dr. Sharfstein. Well, we let go our prime contractor; we
did not think that they performed well. We were particularly
disappointed with how some of the software worked. As I
mentioned before, it was sold to us as out-of-the-box it would
be able to do a lot of things that in fact it could not do out-
of-the-box, and we wound up with some of the same problems that
Minnesota had.
Mr. Walberg. Mr. Chairman, if I could ask, for the record,
if I could get also information to us that would clearly state
whether you will seek further Federal funds to fix your
mistakes.
With that, my time has expired.
Mr. Jordan. I thank the gentleman.
Ranking member, the gentleman from Pennsylvania, Mr.
Cartwright, is recognized.
Mr. Cartwright. Thank you, Mr. Chairman.
And thank you to all the witnesses who have joined us here
today and thank you for your tireless efforts to get people
signed up for affordable health care. Unfortunately, I come
from a State that did not start its own exchange, Pennsylvania,
which I think the failure to do that in Pennsylvania was an
abdication of the responsibility of Governor Corbett on behalf
of Pennsylvania's citizens.
In the last five yeas we have seen 12 hospitals in
Pennsylvania close and I see the ACA and enrollment as a way to
strengthen America's hospital system, and that includes
Pennsylvania. Governor Corbett's decision back in 2012 to
decline to establish an exchange was announced in a peculiar
way: it was first celebrated in a press release by Americans
for Prosperity, the Koch brothers'-funded enterprise. Twenty
minutes later the Commonwealth of Pennsylvania itself made the
same announcements in a press release.
The timing of that announcement, to me, certainly raised
questions as to how the Koch brothers influenced that decision
in the first place. Even more disappointing I want to say is
Governor Corbett's decision not immediately to expand Medicaid
for the more than 520,000 Pennsylvanians who could be covered.
The Federal Government would have paid 100 percent of those
costs for the first three years, phasing it down to 90 percent
by 2020.
I have had a health care CEO in my district, in
Northeastern Pennsylvania, confide to me that if Pennsylvania
doesn't accept the Medicaid expansion, he is going to have to
close one of his two hospitals. That is how important this is.
Instead of accepting Federal funding to expand a highly
successful Medicaid program, Governor Corbett, in Pennsylvania,
submitted a waiver proposal that would impose premiums, work
search standards and limits to benefits for Medicaid
recipients. According to the Kaiser Family Foundation, the
governor's delay will cost Pennsylvanians hundreds of millions,
if not billions, in Medicaid dollars this year and will leave
hundreds of thousands of low-income residents without health
care coverage in 2014 in Pennsylvania. It is unconscionable to
me. It is time to quit playing politics, as Ranking Member
Cummings has pointed out, with people's lives, with people's
health. I urge Governor Corbett to reconsider his wrong-headed
decisions.
With that, I would like to turn to the panel today. The
citizens you represent, ladies and gentlemen, are fortunate
that all of your States have made the decision to accept the
Medicaid expansion.
Mr. Lee, I want to start with you. California has enrolled
more than 1.5 million new applicants into Medicaid since
October 1. Am I correct in that?
Mr. Lee. That is correct.
Mr. Cartwright. Could you tell the committee about what the
Medicaid expansion means for those California residents and for
the State as a whole?
Mr. Lee. Absolutely. I appreciate the question. We have
been, in California, in very close partnership with our Medi-
Cal agency; it is an arm-in-arm enrollment process. And people
don't know what they are eligible for. We have had literally
thousands of people break down in tears at the idea they have,
for the first time in their lives, affordable coverage that is
being provided to them. That is both for Medi-Cal coverage and
for the subsidized coverage in Covered California. I have
talked to many of them myself personally and our people on the
front lines, whether they be insurance agents or customer
service people, relay these stories constantly. It is touching
many, many lives.
Mr. Cartwright. Thank you, Mr. Lee.
What about you, Mr. Leitz? Can you describe the impact of
the Medicaid expansion on your residents and your State?
Mr. Leitz. Congressman, we know in Minnesota that about 60
percent of our uninsured population is eligible for the
Medicaid program, so as our numbers have grown through MNsure,
we know that we are reaching the uninsured by enrolling them
into Medicaid; and what that has enabled them to be allow them
to do is to access services, oftentimes for the first time, to
get preventive screenings, to care for issues that they might
have had not cared for in the past. So it has been a very, very
important thing both for them, as well as the caregivers that
they seek.
Mr. Cartwright. Thank you, Mr. Leitz.
What about you, Dr. Sharfstein? Same question to you.
Dr. Sharfstein. Sure. The Medicaid expansion is extremely
important in Maryland. We have done an analysis that there are
well over $150 million in uncompensated care reductions that we
expect as a result of the expansion, and it matters a great
deal. I am a pediatrician. I met one mom who was telling me
this story about a very sick baby who needed a heart surgery
that the Medicaid paid for, and then out came the daughter to
give me a hug. They are real people in Maryland. My patients,
when I see them in clinic, how the Medicaid expansion changes
their lives.
Mr. Cartwright. I thank you, sir, and I yield back.
Mr. Jordan. I thank the gentleman.
Ranking member of the subcommittee, the gentleman from
Florida, Mr. DeSantis, is recognized.
Mr. DeSantis. Vice chairman, not ranking member. I am on
your team. That is all right.
Mr. Jordan. You have been called worse, I am sure; you are
in politics. But vice chair. Excuse me.
Mr. Connolly. Not a bad thought, though, Mr. Chairman.
Mr. DeSantis. Thanks to the chairman. I appreciate this
hearing. I have to tell you, when I hear things like that this
law is causing premiums to decline sharply for Americans, I
don't know what to say after having dealt with so many
disappointed constituents in my district. The question is who
are you going to believe, those who are defending this law or
your own lying eyes. And I think that the American people will
make that determination.
Some of the things that are said are just factually not
true. We keep hearing that this has led to expansion of
coverage for 3 million young adults, but the people who have
looked at that most recently have debunked that number and said
it is probably less than 1 million. And oh, by the way, that is
imposing a cost on families between $160 and $480 per policy.
And, of course, some of the numbers back and forth are fine,
but the central promise of this law was that if you liked your
arrangements, this law would not negatively affect you and,
indeed, it would benefit you with lower costs, and that central
promise clearly has been broken.
If people like their plan, they may not be able to keep it.
People are losing access to their preferred doctors. I don't
have any constituent who has come to me and said their policies
that they had have declined in premiums by $2,500, as was
promised. Also, we don't talk about the increase in
deductibles. People are paying higher premiums and seeing their
deductibles go up, so they are spending way more out of pocket
than they used to.
Can we put the slide up on the board?
[Slide.]
Mr. DeSantis. So you have all of those things which we were
told were not going to happen, but then we see a lot of people
have seen their existing arrangements undermined or changed in
a way that they would not have chosen to do it.
So what was the promise of this? It is constantly said
everyone now has health insurance, but if you look, the CBO,
when the law initially passed, they said it would be 37 percent
of Americans right now who are uninsured would be covered, and
then they said, well, actually, it is going to be closer to 40
percent of all the uninsured by this point in 2014. And the
actual number is about 12.5 percent; and that is not just
including these exchanges, that is including the Medicaid
expansion and, of course, the age 26 rule.
So you have about 12.5 percent of the uninsured that have
now been covered and, of course, at a great cost. We are seeing
the cost here, just the amount of money that has gone into
creating these exchanges. We are seeing the cost of people who
have lost access to their doctors, people on Medicare
Advantage. So it hasn't even produced what they said in terms
of expanding coverage, and I think that that is something that
has made a lot of folks very frustrated when they see numbers
like that.
I just have a couple quick questions for California.
Mr. Lee, I read a news report where a couple in La Mesa had
signed up for a plan in the Covered California, then they got a
voter registration card sent to them that had the Democratic
party already checked. Are you familiar with that report?
Mr. Lee. Yes, I am.
Mr. DeSantis. And how does it become to where they would
get something that would be pre-checked as the Democratic
party? Is that something that you have control over or is the
elections office sending this stuff separately from Covered
California?
Mr. Lee. Covered California has been designated a national
voter registration agency, so it is a requirement under law
that we send these out in California. Every voter registration
form is provided to us by the Secretary of State's Office. This
report is something we reported promptly to the Secretary of
State's Office and is being investigated.
Mr. DeSantis. Okay, thank you. I also read another report
about Covered California, whether they are advertising to
people who are in the Country unlawfully. Obviously, I don't
think that they are lawfully allowed to get ObamaCare
subsidies, but can you say how are you guys approaching that?
Are you trying to get folks who don't have legal status to sign
up on Covered California?
Mr. Lee. Absolutely not. And we are absolutely trying to
communicate very clearly how a family that has mixed status--in
California there are many families that might have one member
of the family who is not a documented resident and another
family member who is. We want to make sure those that are
eligible for coverage get coverage, so we have been clearly
communicating the rules on how a family should still come
forward and we, quite honestly, great appreciated the guidance
from the Federal Government to make it clear that immigration
status information provided to Covered California is only used
for that purpose to not discourage individuals as families
coming forward to get coverage because they would be worried
the information might be used by us for immigration purposes.
Mr. DeSantis. But if someone cannot prove legal status,
then that would mean they would not get any----
Mr. Lee. Absolutely not. Absolutely not.
Mr. DeSantis. Okay.
Mr. Van Pelt, how many cancellations has Oregon had in the
individual market, do you know offhand?
Mr. Van Pelt. I do not know offhand.
Mr. DeSantis. The number I have is about 135,000
individuals who have lost policies because of the Affordable
Health Care Act mandates. How many people have enrolled via the
individual market in Oregon as of April 1st, do you have that
number?
Mr. Van Pelt. In the qualified health plans, approximately
65,000, and then another 140,000 in Medicaid or Oregon health
plan.
Mr. DeSantis. And of the 140,000 in Medicaid, do you know
offhand how many would have been eligible for Medicaid anyways?
Mr. Van Pelt. Approximately 100,000.
Mr. DeSantis. Okay. So it seems to me that there were more
policies canceled certainly than have signed up in the
individual market. And then when you kind of control the
Medicaid numbers, a lot of States have seen increases in States
that didn't even expand Medicaid. So I think it is important
that we are able to determine those.
I think I am out of time, so I will yield back.
Mr. Jordan. I thank the gentleman.
The ranking member of the full committee, the gentleman
from Maryland, Mr. Cummings, is recognized.
Mr. Cummings. Mr. Chairman, I would rather one of my
colleagues go ahead.
Mr. Jordan. Okay. Then I believe the gentlelady from New
Mexico is recognized.
Ms. Lujan Grisham. Thank you very much, Mr. Chairman, and I
also appreciate the panel today. I spent, actually, before
coming to Congress, some time working with our State
legislature and our current governor to enact legislation that
got passed by our legislature. From the immediate we had to
pass it three years three times in order for New Mexico to get
started. So while you were pointing out the trials and
tribulations, one thing that we haven't discussed today is that
many States waited until the very last minute, and that, I
think, also exacerbated some of the issues that you have
identified today.
I am really interested in some of the education and
outreach efforts and would love to try to have each of you talk
to me a little bit about that going forward, targeting those
folks that are still uninsured, really clarifying these
numbers, looking at folks and businesses and those trends,
working with all of your Navigators and Assistors and brokers.
If each of you would talk to me a little bit about moving
forward.
Mr. Matsuda. Our outreach program in Hawaii is called the
Heinola program, and we have arranged subgrants of our Federal
funding to about 32 nonprofit organizations on all of the
islands; and with those grants those organizations are hiring
people to go out into the community to work with people from
many different cultures and many different language groups to
work with them face-to-face to help them understand health
insurance, first of all, and then the Affordable Health Care
Act. And if they are interested in looking into applying, then
they will assist them with going through our application
process for enrollment.
Dr. Sharfstein. In Maryland we work with more than 2,000
insurance brokers. In addition, we have a Connector entity
program where there are six regions each with a Connector. Each
of those is working with local agencies. When I was way out in
Western Maryland, I was meeting for another reason with a group
called Allegheny Health Right, which it is the sole mission of
that nonprofit to help people get health care for many years.
They work with the medical community up there. And I was
wondering and they said, actually, we are part of the coalition
that got funded. So we have some great organizations across the
State. It is one reason we have been able to hit our goals
despite the IT problems.
Ms. Lujan Grisham. I think that is really important. And as
the rest of the panel answers, and I appreciate the reference
to your partners who are part of those grant investments, but
also looking at--tell me what you will do differently going
forward, because while some of you met the targets, some other
States are still really struggling. We could do a lot better in
New Mexico. Although we did a good job, we could do a much
better, for example, in the Medicaid outreach.
Ms. Yang. Congresswoman, I really appreciate this question
because one of the things that I can say that based on
Massachusetts' reform experience in the past eight years,
outreach and education is really one of the most critical
efforts; it is the most important investment area, particularly
the most vulnerable population, the low-income. They are the
hardest to reach.
And if you look at the Massachusetts reform records, we
have 97 percent of the residents insured. The 3 percent
remaining are primarily low-income. And we are very proud to
see the fact that we were able to bring 200,000 new people into
subsidized coverage. That is a major step forward relative to
where we were.
Mr. Lee. We have a lot of learning still to do, but I think
one of the things, as we look forward, having insured probably
close to 50 percent of those eligible for subsidies, it is
going to be get harder and harder. The people that are not
insured are folks that often have never had insurance. There is
more education about what it means to be insured, and they
don't believe that it could be affordable. That is a core
education and outreach message, and we have done it with both
advertising, but also with our on-the-ground people.
The other thing that I think has been critical for us and
we are continuing developing is this is complex stuff, and
having person-to-person support for enrollment in language;
people who speak Spanish with Spanish speakers, speak Hmong----
Ms. Lujan Grisham. And I want to actually, since I only
have 45 seconds left, really have you hit that. We know that 8
out of 10 Hispanics are likely eligible for Medicaid, one of
the Medicaid programs or subsidized coverage, and yet we have
half the Hispanic population is not going to be insured; and I
worry that we actually have too many steps in this face-to-face
process to actually execute the deal.
Mr. Lee. Well, if I speak to that specifically, in our
first three months in California, a very big State with a very
big and important Latino community, 18 percent of our
enrollment was Latino, which was way off our target. In the
month of March it was 36 percent. We doubled the rate of
insuring Latinos because it takes more touches; it takes
education, it takes people on the ground doing enrollment. We
are going to try to do better than that in our next round of
open enrollment.
Ms. Lujan Grisham. We have a couple seconds, and I think if
the chairman will allow I think everyone can do a quick,
concise answer. Thank you.
Mr. Leitz. Congresswoman, very briefly. We have certainly
seen the importance of working with agents and brokers on the
ground; they are in every community, they know the communities
very well. That has worked very well for us. The other area
that we have been focusing very heavily on is with our Hmong
and Somali communities, and also working with them like many of
the other States on the panel, helping them understand the
importance of insurance coverage, what the options are for
them, and working with them in their languages.
Mr. Van Pelt. Thank you very much. Similar to other States,
working very closely with community agents and community
partners to help get the word out and, in fact, walk many of
our citizens step-by-step through the application process.
Ms. Lujan Grisham. I am way over, but thank you. I really
appreciate all that and am very grateful for those responses. I
would love for everyone to consider, and maybe at a future
hearing, Mr. Chairman, I know that the importance and value
with complicated information on that person-to-person touch,
but in my State I went to several different enrollments and
they varied; but there were too many touches, and this notion
of waiting for appointments and not having that work for the
States who did the education and then a little more in-depth,
and then go to an appointment with an Assistor and then have an
Assistor or the Navigator help you actually then sign up, we
lost, I would say, 50 percent of those folks in that line of
touches, so I am thinking maybe too much. Thank you.
Thank you, Mr. Chairman. I yield back.
Mr. Jordan. You bet. Thank you.
Dr. Sharfstein, I think earlier you said that you received
approximately $180 million in Federal taxpayer grant dollars,
the State of Maryland received that.
Dr. Sharfstein. Through SSI grants, yes.
Mr. Jordan. And you have spent approximately two-thirds of
that, I think you referenced $120 million.
Dr. Sharfstein. I think of that we probably have spent
about $100 million.
Mr. Jordan. Okay. And I think in earlier questions you
indicated that you had to hire, because of Website concerns,
approximately 200 more people to answer phones and work at your
call centers?
Dr. Sharfstein. That is correct.
Mr. Jordan. Okay. I also think I remember that when Ms.
Speier was asking I think each of you how you are doing, I
think you said, doctor, that the State of Maryland is ``meeting
our goals.'' I think a lot of people would disagree with that.
Dr. Sharfstein. Well, I was referring to the enrollment
goal. I would absolutely agree we did not meet our goal in
terms of the function of the Website.
Mr. Jordan. Okay. But you met your enrollment goal as well?
Dr. Sharfstein. That is correct.
Mr. Jordan. My understanding is that CMS enrollment target
number was 150,000 for the State of Maryland, and as of April
1st, as of a couple days ago, you have enrolled 60,000 people.
Dr. Sharfstein. Our enrollment goal between Medicaid and
the qualified health plans was 260,000, and we are about
295,000.
Mr. Jordan. I am talking about the individual market
enrollees.
Dr. Sharfstein. So for our individual market we had an
independent assessment of what the estimate would be and they
estimated around 75,000. And what I testified is that we expect
to get at least within----
Mr. Jordan. Wait, wait, wait. I thought CMS told you your
enrollment was 150,000.
Dr. Sharfstein. No.
Mr. Jordan. We have a document from CMS that says that,
150,000.
Dr. Sharfstein. If that is the case, I haven't seen it.
Mr. Jordan. So where is the 75,000 number coming from?
Dr. Sharfstein. It comes from the Hilltop Institute at the
University of Maryland at Baltimore County. We could provide
the letter that explains that.
Mr. Jordan. And that is your target goal, 75,000?
Dr. Sharfstein. No. Our goal was for overall enrollment
across Medicaid and qualified health plans, but insofar as how
we are doing in terms of qualified health plan enrollment, the
estimate----
Mr. Jordan. Well, I guess here is what I am trying to
figure out. You took $180 million of Federal taxpayer dollars.
The Federal agency involved in implementing the Affordable
Health Care Act is CMS. They said your enrollment target should
be 150. And yet you can take the money but you can get someone
independent to tell you what your goal really is, something
smaller. When was that number, 75,000, given to you all?
Dr. Sharfstein. That was the estimate that was given by the
University of Maryland, Baltimore County.
Mr. Jordan. When?
Dr. Sharfstein. It was a revision of a report that they did
in the last couple months.
Mr. Jordan. A revision? What was the initial number, then?
Dr. Sharfstein. The initial number they gave us was about
150,000.
Mr. Jordan. Oh, imagine that, the number I just said. And
when did you get the revision?
Dr. Sharfstein. A couple months ago.
Mr. Jordan. Oh, so you are into this and you are not coming
close to the 150,000 and, shazam, you get a revision.
Dr. Sharfstein. Well, they had made an error in the report
and we can provide you their letter.
Mr. Jordan. How convenient. The Federal Government gives
you $180 million, they say 150,000 you need to meet. You see
you are not going to meet that, you get someone to give you a
revised number and suddenly, oh, now we are close. Defining the
standard down is what it sounds like to me.
Dr. Sharfstein. Well, you can judge for yourself. You can
look at the letter that they gave, but I don't consider the
Medicaid individuals to be invisible, Mr. Congressman.
Mr. Jordan. I am not saying that either. All I am saying is
the standard was here, then, suddenly, when you are not even
coming close to the standard, the standard gets revised not by
the Federal Government, who has given you the money, but by
some independent agency that Maryland goes to and gets a number
that they like. And I am not the only one who thinks you guys
aren't doing the job. You have a Democrat congressman from your
State. I have four letters from Congressman John Delaney from
the State of Maryland, two of them were sent to you, where Mr.
Delaney says this thing is such a mess, we encourage you to
switch to the Federal exchange. Right?
So it is not Republicans saying this thing is a mess; it is
your own congressman from your own State saying, look, I care
about our constituents. With all the headlines, all the
problems associated with the Federal exchange, you have a
Democrat congressman from the State of Maryland saying you guys
are such a mess, we should bag this and go to the Federal
exchange.
Dr. Sharfstein. Well, I testified that the IT didn't work.
I mean, I don't disagree that we had a major IT problem. But it
was overcoming that problem that allowed us to hit our
enrollment goal.
Mr. Jordan. No, you haven't hit your goal. We are talking
about individual market enrollees. You have 60,000; you were
supposed to be at 150,000. That is markedly short from your
goal.
Dr. Sharfstein. That was an estimate, never a goal, and it
was an estimate that was in error. And you can judge from the
University of Maryland----
Mr. Jordan. It wasn't an estimate in error, it was the
number you were given by the Federal Government, the same
entity that gave you the $180 million of taxpayer money.
Here is what the President said. When did you let the
Federal Government know you were going to come far short of
this 150,000 number? Do you have to give the Federal Government
periodic reports of where you are going to be?
Dr. Sharfstein. Well, we have been working very closely
with the Federal Government the whole time, so we have been
providing weekly public updates on where our enrollment is
since October 1st.
Mr. Jordan. Let me ask you a couple more questions. I am
over my time, and I will get to the chairman here.
How many people in your State lost insurance because of the
Affordable Health Care Act, were kicked off their existing
plans?
Dr. Sharfstein. I think very few. There weren't that many
cancellations, for example. There are some notices of non-
renewal, and the carriers allowed people to renew for 12 months
if they wanted to, our major carrier.
Mr. Jordan. According to our reports, according to our
reports, according to AP, what has been press accounts, 73,000
individuals in Maryland were going to lose their insurance
because of the Affordable Health Care Act. And what you are
telling me is your revised goal is approximately the same
number, 75,000. So your revised goal of people you were going
to sign up is we are going to sign up the people who were
kicked off of the Affordable Health Care Act.
Dr. Sharfstein. No. The problem with that is that there is
also a market outside the exchange, and we are going to see the
overall individual market inside and outside the exchange,
including the people who also renewed their policy early, to be
far more than we had in 2013. So you have probably as many
people in the individual market outside the exchange as inside
the exchange, plus you have people who renewed early and are
still in those plans. So our carriers predict significantly
more enrollment across the individual market.
Mr. Jordan. You may predict all that. All I am saying is,
according to press accounts, 73,000 Marylanders are going to be
kicked off their plan because of the Affordable Health Care
Act, and you are telling me your goal, the goal you were
supposed to meet by April 1st, was only 75,000.
Dr. Sharfstein. You are comparing apples and oranges, with
all due respect.
Mr. Jordan. I am comparing people who got kicked off
because of this law and I am comparing the number you say you
are going to sign up through your exchange, which is far below,
roughly half, of what the initial number that CMS gave you.
Dr. Sharfstein. I think an apples-to-apples comparison
would be the size of the individual market before and after. So
whether people have coverage in the individual market before
January 1st versus after, because some people don't need
subsidies, they will go right to a carrier.
Mr. Jordan. Right.
Dr. Sharfstein. So we are seeing not only just the exchange
enrollment, the outside the exchange enrollment, which is
probably going to be at least that, plus the fact that people
could renew early. We are going to see a much bigger individual
market. That is the apples-to-apples comparison.
Mr. Jordan. But I think you are leaving out the fact, your
calculations, what you just went through, those who were kicked
off. There are certainly people who are now in the individual
market; they just got kicked off their plan.
Dr. Sharfstein. No, they were in the individual market
before. It was an individual market plan.
Mr. Jordan. I understand that.
Dr. Sharfstein. So the apples-to-apples would be you were
in the individual market before, you are in the individual
market after. That is apples-to-apples. And we are going to see
a huge increase in the individual markets after. That is more
people covered.
Mr. Jordan. Right, but I am looking at the number. The
number you are saying is your goal, 75,000. You got lots of
people kicked off; you got people who didn't have insurance
before who you are supposed to try to sign up, even though you
are woefully short in the chart Mr. DeSantis brought up; and we
are back to the original point. CMS said here is $180 million,
Maryland. Your goal is 150,000. That gets revised in the last
few months, out of the blue, down to 75,000, and we have a
congressman from your own State who is in the other party who
says this thing is such a mess, you should have switched to the
Federal exchange a long time ago. In fact, clear back in
January he was calling for you to switch.
Dr. Sharfstein. We investigated that possibility. There is
no disagreement about whether or not our Website worked like we
wanted it. It absolutely didn't.
Mr. Jordan. One other thing. The President said, just days
before, late September, he gave a speech in Maryland days
before the launch, promising that ObamaCare would be ``smoother
in places like Maryland, where governors are working to
implement it rather than fight it.'' And yet we know, you even
indicated that it was a mess when it started. So what
information were you communicating with the Federal Government
that would give the President the assurance that he can make
that kind of statement in your State, that this thing was going
to work great, when in fact you said it didn't work well?
How could the President make that statement when we have
seen what we have seen since October 1st in your State, where
we have a Democrat member of Congress saying this thing is such
a mess, go to the Federal Exchange? How could the President
make that statement? What was he basing that on? Were you guys
talking with the Administration? Were you telling them
everything is going to be fine?
Dr. Sharfstein. I think that it was well known that there
were going to be glitches and bumps. We were communicating that
publicly; the Federal Government was communicating that
publicly.
Mr. Jordan. Well, the President didn't get the memo. He
didn't say there would be glitches, he said it would be
smoother in places like Maryland, where governors are working
to implement this rather than fight it.
Dr. Sharfstein. Well, I think that we were certainly
surprised by the scale of problems that we had after October
1st.
Mr. Jordan. One last thing, if I could, real quick. I want
to go to this slide. A whistleblower gave us this.
[Slide.]
Mr. Jordan. High level business and technical architectural
diagrams. This was a report. And we will give this to you. And
this is difficult to read, I see, but we think this is
important.
You have a copy there for him? Okay, good.
And what it says is all the red are problems associated
with that, here we go, significant delay or risk, all the red;
and there is a lot of red up there. Now, this was a report
given to you all back in February 2013, and it shows you knew a
year ago there were going to be some big problems. And you
didn't communicate that with the Federal Government, who was
giving you $180 million in taxpayer dollars?
Dr. Sharfstein. The Federal Government received the reports
from our internal IV&V team.
Mr. Jordan. So the President had access to this report
before he made that statement, just days before the launch of
the Affordable Health Care Act?
Dr. Sharfstein. We were communicating with CMS, the agency
that we worked with. But I would say that subsequent to that
period of time we were able to make progress that the team that
was working on different parts of this----
Mr. Jordan. Well, of course you were going to make
progress. When it is this bad, you have no place to go but up.
Dr. Sharfstein. In June of 2013, we passed an important
test. I think this probably gave us a little bit more optimism
that was deserved at the time. We were obviously very
disappointed with how the IT went.
Mr. Jordan. All right. I am way over, and I appreciate the
chairman's indulgence.
Mr. Cummings. Thank you very much, Mr. Chairman. This is my
time? This is my time, and I guess I would like to have my 12
minutes, just like Mr. Jordan.
Let me go to you, Dr. Sharfstein. I listened to Mr. Jordan
and I wonder how many people he helped get enrolled under the
Affordable Health Care Act. And I know it has been difficult.
As you know, the last three Saturdays I spent all day helping
people who were trying--as a matter of fact, I sponsored two
events all day to get people enrolled under the Affordable
Health Care Act. And I am glad we didn't take the attitude in
Maryland that because the Website had a problem, that we would
throw up our hands and say throw everything out.
I stood on Saturday and I talked to those people that
waited all day trying to enroll, and I don't know what you say
to somebody when they come up to you and say this is the first
time I have been able to get insurance in years because I had a
brush with breast cancer. I don't know what my colleagues would
say to that person. Say don't apply for the Affordable Health
Care Act, when it is the law? I am not sure.
And we can nitpick and we can go ring around the rosy
today, but I go back to what I said from the beginning. This is
not just about a Website. And, as I understand it, the figures
were adjusted in Maryland. I am going to refer to a February
23rd, 2014 article. Maybe you can help me with this. I am just
going to read from it. It is the Baltimore Sun. It said the new
number is 70,000 after it was corrected by the Hilltop
Institute at the University of Maryland, Baltimore County, a
nonpartisan health research organization that discovered its
error weeks ago and sent a letter dated February 21st to Dr.
Sharfstein, Health Secretary and Chairman of the Exchange
Board. It was a footnote to one chart that wrongly also
included open enrollment targets beginning next fall for 2015
coverage.
Does that refresh your recollection? Do you have that
letter?
Dr. Sharfstein. Yes, I have that letter here. The letter
was written----
Mr. Cummings. Now, did you go seeking that? I mean, Mr.
Jordan has a way of asking questions that you never get a
chance to answer. But did you go seeking that out? How did that
work? What happened there? So we found we had a problem. People
have problems every day. They don't just throw up their hands
and just go and get all upset and say I can't do it. They find
a way to get it done. And sometimes we make adjustments. We
make adjustments every day of our lives. And I guess maybe the
reason why I have that attitude is because, again, my mom and
dad only had a second grade education; they were former
sharecroppers. Worked like slaves, but yet and still they were
able to have a son who became a congressman, so we believe in
the can-do attitude. And I am hoping that we believe in the
can-do attitude in Maryland.
Now, would you explain that to me, please?
Dr. Sharfstein. Sure.
Mr. Cummings. Since Mr. Jordan made such a big deal of
this?
Dr. Sharfstein. I think this is a letter from the Director
of Economic Analysis at the Hilltop Institute, and he basically
said that the report where they gave a figure of 147,000
represented the newly insured for both the first and second
open enrollment periods. So a reasonable estimate of combined
enrollment would be 160,000, including approximately 70,000 in
the exchange and 90,000 in Medicaid.
Now, of note, at that time we had already set the goal of
260,000, and people came to us and said, well, now you are
probably going to lower that goal. But we didn't. Even though
we were way below 200,000 at that point, we did not lower that
goal. And the governor still wanted us to shoot for 260,000.
And I testified in the State legislature and I said even though
the overall estimate has been lowered by the people that we
hired to do an independent analysis because they made an error,
we are not changing our goal, and in the end we wound up
exceeding it by more than 10 percent.
Mr. Cummings. Now, on Saturday, when I was at the
Convention Center in Downtown Baltimore all day, trying to help
people get insurance, I had an opportunity to speak to the
Navigators. These are people who are not making a lot of money,
but giving their blood, sweat, and tears because they wanted to
touch somebody's future and change the trajectory of their
destiny. And one of the things that was very interesting, we
had so many people trying to get health care that, and correct
me if I am wrong, that we had to basically put some people in a
queue and say, look, we can't--there were so many we couldn't
even get to them all and said we are going to get back to you
during the week and bring you back in. Is that what is
happening now?
Dr. Sharfstein. That is exactly right. We expect the
numbers for the first open enrollment to be higher than what we
have now, even, and right now our whole call center is doing
outbound calls to the people who weren't able to enroll by the
end of March and had called and asked for extra help. It could
be several thousand more or more than that, we will see. But I
do think we may be able to surpass 300,000, against a goal of
260,000 in the face of incredible IT challenges.
Mr. Cummings. The can-do attitude. Can-do. So let's talk a
little bit more about the contractors. You know, when I served
as the ranking member of the Maritime Subcommittee of the
Transportation Committee, we had a situation where we had
folks, contractors that were building boats for the Federal
Government and the boats didn't float, literally. And sometimes
I think some contractors have moved to a culture of mediocrity,
and it is so very, very unfortunate because if we continue down
that road we will be in a situation like I think about a trip
that I made to Israel years ago, and it was a saying that they
had everywhere, it said, If we are not better, we will not be.
If we are not better, we will not be.
Can you kind of talk about the contractual situation here,
what happened? You said that you had some bad situations that
happened. And could we have foreseen some of that, Dr.
Sharfstein?
Dr. Sharfstein. Sure. So I think that the major, in
retrospect, misjudgment, although it was hard to know at the
time, the States faced the decision of whether to try to build
a computer system from scratch with the requirements of the
Affordable Health Care Act or rely on existing products, and we
thought that it would be less risky to rely on existing
products. We procured a system that had at its base an IBM
Quorum software for eligibility and it was portrayed as out-of-
the-box being able to work; we would just be able to configure
it very easily. This has been a big point of discussion some of
our State discussions. We have shared with the State
legislature the parts of the bid that related to this and some
other advertisements from IBM.
And, in fact, the software did not work as advertised, or
even come close to it; it was defective and deficient on the
launch and created a whole range of problems that we had not
anticipated. And I think that the States that did more of the
building themselves for this particular goal were more able to
be successful, particularly the States that worked with
Deloitte, California and New York, and we, in the end, because
we can reuse a lot of the software and hardware, are going to
go with a particular solution that Deloitte built in
Connecticut.
Mr. Cummings. Now, does the State of Maryland plan on
recouping some of the costs paid to Noridian for the
development for the flawed product?
Dr. Sharfstein. We do intend to seek recoupment of the
funds, absolutely.
Mr. Cummings. So now you are going with Deloitte, is that
right?
Dr. Sharfstein. Correct.
Mr. Cummings. And what are Deloitte's plans for fixing or
upgrading the Website?
Dr. Sharfstein. The basic plan is to take the system that
was developed in Connecticut, and has been very successful, and
move it into Maryland with minimal changes; and basically plug
it in. We have to build the interfaces to the Maryland systems
and change certain elements of the Website and then use it in
Maryland for the Fall open enrollment session.
Mr. Cummings. So who is going to fund that and how will
Maryland fund a new course of Deloitte's work?
Dr. Sharfstein. So we will be putting our plan in a
corrective action plan for the IT challenges that we face for
the Federal Government and we will be seeking to have the same
model of partnership funding that we have had so far.
Mr. Cummings. I want to say to you, and I said it in your
introduction, you know, I know what you have done for Maryland,
I know what you have done for Baltimore, and I know the
dedication of you and I am sure of all the other people sitting
there. You know, Dr. Sharfstein, when we had Medicare Part D we
had problems; and when you go back and you look at some of the
comments that were made back then, we had folks who said, on
both sides of the aisle, we have a problem, we have to work
through it; we are going to get there. And we got there. Now
you don't even hear about the glitches; it is like ancient
history. And I can recall when Medicare Part D came through,
and I think you were around then in Baltimore. If you recall,
what we did is we held the same kind of events. Members of the
Congress went from senior citizens' house, had all kinds of
meetings, town halls. Most of us hadn't even voted for it, but
it was the law and we wanted to make sure that it worked.
I hear all of this and I do wonder, I really wonder, and I
know that there are problems with the Affordable Health Care
Act, nobody has denied that, but I wonder what it would be like
if we could just join in together to address those issues,
because as my father used to say, when you are dead, you are
dead; you are gone. So what we are talking about is trying to
save people's lives. We are trying to make sure that we keep
people healthy. We want to make sure that we give people a
sense of a peace of mind. And I want that for my colleagues'
constituents and I want it for mine, because I think that we
have one life to live. This is no dress rehearsal, and this is
that life. And I think we ought to be about the business of
trying to help each other live the very best life that we can.
I will yield back on that.
Mr. Lankford. [Presiding] Mr. Bentivolio, would you yield
to Mr. Jordan for a moment?
Mr. Bentivolio. Yes.
Mr. Jordan. I thank the gentleman for yielding.
My point was real simple. In essence what happened is the
Federal Government enters into a contract with the State of
Maryland. The initial terms of the contact were 150,000
enrollees in the individual market and $180 million going to
the State of Maryland. Dr. Sharfstein just said they are going
to go after some of the contractors they felt didn't fulfill
their end of the deal; they are trying to recoup funds. The
question is real simple: Is Maryland going to return some of
the money? The initial contract was you get $180 million; you
said you will sign up 150,000 people. And all of a sudden you
get a new study that says, oh, we made a mistake, you only have
to get 75,000. That was my point, plain and simple. So the
question is real simple: Are you going to return some of the
money?
Dr. Sharfstein. Thank you, I will turn to that. I just want
to say I am not--just having looked at this document, I am not
exactly sure what this document is, so I am not sure exactly
who this document was shared with. So if we can----
Mr. Jordan. I am going with you. The number you gave is
147,000 people, right? The number----
Dr. Sharfstein. No, I was just referring to the document
that was handed to me. I just want to be clear, because I
thought it may have been a different document.
To your point, we will follow all the applicable laws, and
to the extent we are able to recoup funding, I certainly expect
that it will be refunded to the Federal Government.
Mr. Jordan. No, no, no. I am talking about the State of
Maryland. Are you going to return Federal taxpayer dollars? The
contractual agreement was CMS, here is the deal, 150,000
enrollees approximately; you get $180 million. You didn't meet
that. You changed it. But when they issued the money, when it
all set out, that was the goal. Are you going to return any
money?
Dr. Sharfstein. We are going to follow all the applicable
laws in terms of funding.
Mr. Jordan. But you are going to go after the contractors
who you think didn't fulfill their end of their contract
relative to the functionality of the Website.
Dr. Sharfstein. That is correct.
Mr. Jordan. Okay, so it is okay to go after them, but it is
not okay for the Federal taxpayers to get back some of their
money.
Dr. Sharfstein. I think the Federal taxpayers should get
back some of the money as we get money back from the
contractors, yes.
Mr. Jordan. I yield back.
Mr. Cummings. Unanimous consent for one minute, Mr.
Chairman.
Mr. Lankford. It is Mr. Bentivolio's time, but I would
assume we wouldn't have any problem with that.
Mr. Cummings. Just for one minute.
I noticed Mr. Lee was shaking your head. Why are you
shaking your head, Mr. Lee? Did you have something you wanted
to say?
Mr. Lee. Well, the HHS-CMS document that was an integral
document prepared in September was prepared not as a matter of
contract between us and CMS, but they pulled from a range of
things, and I will note the California estimate used in that
document, because I saw it many months hence, took the end of
two rounds of open enrollment and misconstrued and thought that
was the goal for our first round of open enrollment. And our
numbers for our independent in California, we had independent
estimates developed. We have been public about them
consistently. Those independent estimates in California, I
noted earlier. Our open enrollment period high-end estimate was
800,000. At the end of two rounds of open enrollment it was 1.2
million. I think you are alluding to a September CMS internal
memo that was never part of our contract, never part of our
receipt. But they got the numbers wrong, with all due respect.
Mr. Jordan. I wasn't alluding to anything in California; I
was focused on Maryland, where the gentleman has had 147,000
and he said it was revised in February down to 73,000. That is
all I was alluding to.
I would ask unanimous consent to have put in the record the
letter from Congressman John Delaney to Dr. Sharfstein
suggesting that they switch to the Federal.
Mr. Lankford. Without objection.
Mr. Cummings. And I would ask unanimous consent that the
Sun paper article dated February 23rd, 2014, and the Hilltop
Institute letter to the Interim Executive Director of the
Maryland Health Benefit Exchange dated February 21st, 2014 be
entered into the record.
Mr. Lankford. Without objection.
Mr. Bentivolio.
Mr. Bentivolio. Thank you very much, Mr. Chairman.
As a school teacher, I taught my students there were three
branches of Government, the legislative, judicial, and
executive branch. Kind of a checks and balances system, right?
Except they should have taken my course they keep writing
checks and my constituents are getting the balances.
I also taught my students bills were brought to the floor,
went to committee, and then brought to the floor again for
debate and passage, considering passage. But the ACA was passed
before Congress could read and debate the bill. Shame on
Congress for allowing this to happen. Shame on those who
circumvented the congressional procedures long established that
allows open and respectful debate before a vote and passage of
a law.
The billions of dollars spent and the division it has
caused in this Country is inexcusable, because Congress passed
a bill before it was read and debated. This is shameful.
It seems here, listening to all these debates, the good,
the bad, and the ugly, the money that was spent, and all we
have is billions spent and division in this Country.
Let me just say this. In Congress we are the fiduciaries of
the public interest, and I think few attorneys or citizens
would sign a blank contract based on hopes and dreams. And
today, after hearing your testimony and reading this testimony,
all I see is more money wasted for failed systems, coverups.
That is what I anticipate. Lawsuits will be filed, and every
citizen knows somehow, something at someone, it is going to be
swept under the rug. More money spent.
It is unacceptable and we need to have accountability for
the money already spent and the actions that are being taken as
we move forward.
With that, I just have a few questions.
Mr. Lee, how many uninsured people are there in the State
of California?
Mr. Lee. At this moment, I do not know that. I look forward
to knowing that at the end of this year, when we do a State-
wide survey, which we do every year in California to assess the
status of people's insurance.
Mr. Bentivolio. So do you know the population?
Mr. Lee. About 35 million.
Mr. Bentivolio. Thirty-five million people. How many people
in California have enrolled through the State exchange?
Mr. Lee. Approximately 1.2 million in Covered California's
products and another approximately 2 million are currently
enrolled in Medi-Cal.
Mr. Bentivolio. Okay, so we have 35 million people in the
State, 1.2 million. Wow, if it was a good product, you would
think people would beat a path to your door.
Does the Website have the ability to show, of those who
have enrolled in the State exchange, who has paid for their
insurance premiums to date and those who have not paid their
premiums yet?
Mr. Lee. No. After people enroll, they then, directly with
the health plan they select, pay their premiums, and our plans
in California report that approximately 85 percent of those
individuals have paid their premium.
Mr. Bentivolio. Eighty-five percent.
Mr. Lee. Yes.
Mr. Bentivolio. Okay. Do you believe it is important to
know how many people are actually going to receive insurance
through your exchange?
Mr. Lee. Absolutely.
Mr. Bentivolio. Okay, thank you very much.
With that, I yield back, Mr. Chairman.
Mr. Lankford. Thank you.
Ms. Norton.
Ms. Norton. Thank you very much, Mr. Chairman.
I want to ask a question about the contractors. I don't
think there has been, in all the hearings that have been had,
enough of a focus on the contractors; Congress is so busy
fighting off the Affordable Health Care Act itself. But I must
say that the number of State exchanges that have problems, when
you combine that with the problems we had in the Federal
exchange really does show that technology is overrated. And I
must say it also shows that since this has not been found just
in the Federal exchange, this rollout problem, this problem
with technology, just in this State or that State, but, rather,
much to a wide cross-section of States, that we are dealing
with a new problem, and that we ought to approach it that way.
Now, that means if it were new to the Government, State and
Federal alike, it certainly looks like what we did not
anticipate is how new it would be to these contractors; and
that was perhaps over-reliance or over-reliant faith put in the
contractors. Now, I know that one of them, CGI, has its
fingerprints on a number of the States, as well as the Federal
exchange, and I can't believe that that is accidental.
Let me just ask you who use CGI, did you look to see what
its record had been, for example, with Massachusetts? I see
that Massachusetts no longer uses CGI. So those of you who used
CGI, and there were several of you who did, would you speak up
and indicate whether you checked to see what CGI's experience
had been in doing precisely this kind of work, at least in
Massachusetts?
Ms. Yang. Thank you, Congresswoman, for the question. First
of all, let me say that ACA implementation has many components;
IT implementation is one of them. We work with a wide range of
different contractors, and some of them have been delivering
excellent performance, ensuring our overall success.
Ms. Norton. I am asking about CGI in particular.
Ms. Yang. Correct. Sorry about that. CGI was involved in
Massachusetts' ACA implementation, specifically with the
Website development, and we engaged them through a competitive
procurement process consistent with guidance applicable to us.
But, unfortunately, CGI's performance has been disappointing.
They were behind schedule in delivering a required
functionality----
Ms. Norton. Did you use them from the beginning? Did you
use CGI from the beginning?
Ms. Yang. I am sorry, I didn't catch that.
Ms. Norton. Had you used CGI before?
Ms. Yang. No. The Health Connector was engaged in CGI for
the first time with this contract.
Ms. Norton. I see. When you rolled out your own product,
did you use CGI?
Ms. Yang. No, we did not work with CGI. It was a very
different, much simplified Website development. We worked with
a local vendor.
Ms. Norton. What led you to use CGI?
Ms. Yang. Why did we use CGI? We went through a competitive
procurement process to----
Ms. Norton. I don't want to know about your process. What
about CGI led to its selection?
Ms. Yang. It was selected through a procurement.
Ms. Norton. Everybody was selected through a procurement,
Ms. Yang.
Ms. Yang. I am sorry, I was just trying to answer why we
ended up with CGI.
Ms. Norton. I only have so much time. Did they have
experience? Did they have some other factor that made them
stand out among those who competed for your contract?
Ms. Yang. It was the best vendor among the respondents.
Ms. Norton. Best in what way, Ms. Yang?
Ms. Yang. In demonstrated experience?
Ms. Norton. In this kind of work?
Ms. Yang. Yes.
Ms. Norton. Mr. Matsuda, you used CGI. What made you use
this company, which has had this bad experience across a number
of States?
Mr. Matsuda. I was not with the Hawaii Health Connector at
the time the decision was made.
Ms. Norton. Well, surely you know the answer.
Mr. Matsuda. But my understanding is that we went through a
full procurement, and a major factor in the decision was that
CGI had been selected for the Federal exchange.
Ms. Norton. Do any of you know whether CGI had experience
doing this kind of work before? Who else used CGI, please, at
the table? Anybody else at the table? Had CGI had experience
comparable to this experience that you engaged them to do, to
your knowledge, Ms. Yang and Mr. Matsuda?
Ms. Yang. Congresswoman, as you know, ACA implementation is
a new project for all of us, so I wouldn't say CGI was engaged
in identical projects. But in terms of comprehensive system
integration, CGI does----
Ms. Norton. All right.
Mr. Lee, did you consider CGI? You had a successful
experience. Did they apply to California?
Mr. Lee. I actually don't think, as I recall, CGI bid, or
it was not one of the finalists for us. So I don't know if they
were a bidder, but the folks that did bid didn't have direct
experience, because it was doing something new, and you needed
to look at general track record, costs, the staff they
provided, factors like that that went into our selection.
Ms. Norton. You know, the District had a real heavy burden
because Congress, in a spite amendment, made members of
Congress and their staff go to the exchange and took them out
of the Federal program. Well, it worked pretty well. I have to
go back and make sure they didn't use CGI. I do think we have
to look at these contractors and see what was the difference in
the experience with contractors in particular. When you are
doing something entirely new, which Congress has not taken in
consideration in its criticism of this process, it does mean
that you probably are asking contractors to do something that
they haven't done either. The problem with this is we assume
that contractors do something much bigger. You know, we talk
about the big parts of the private sector, and we assume that
these must be the same contractors who have handled things in
the Country, so surely they could do the health care exchange
for a particular State or, for that matter, for the United
States.
Mr. Chairman, if I could say one thing, just to note for
the record that Mr. DeSantis, from Florida, put up a graph
which he said showed and questioned witnesses on the theory
that it showed that these contractors and others, including the
Federal exchange, had in fact performed below CGI expectations
considerably. Please note for the record that his State, and
now a great many other States, are directly responsible for
that because they have failed to allow poor and middle class
and disabled people to get health through expansion of the
Medicaid exchange. That it happened, I have no doubt that the
goals would have been met. So, especially coming from a State,
to use such a graph without taking responsibility for why there
is a reduction in the uninsured Americans takes a lot of
chutzpah.
Thank you, Mr. Chairman.
Mr. Lankford. I would only say one thing with that. In my
State we also have that. Some of those individuals were covered
by our Insure Oklahoma program prior to that, and they lost it.
And part of the waiver issue was we had to remove that as a
safety net.
Ms. Norton. Mr. Chairman, that doesn't take care of those
where you have an expanded Medicaid.
Mr. Lankford. That is what I meant. Those individuals that
would have been----
Ms. Norton. Did you have expanded Medicaid?
Mr. Lankford. We do not have expanded Medicaid, but we did
have coverage there already with our Insure Oklahoma program.
Ms. Norton. Well, Mr. Chairman, my remarks were limited to
those who failed to expand Medicaid and had no other way,
obviously, of insuring them.
Mr. Lankford. Right.
Mr. McHenry.
Mr. McHenry. Thank you, Mr. Chairman.
I would just ask this question of the whole panel. You all
are in charge of your exchanges in your respective States. I
will just go down the line. Yes or no, have you enrolled
through these exchanges that you are in charge of? Mr. Matsuda?
Mr. Matsuda. Excuse me? Yes.
Mr. McHenry. Okay.
Mr. Sharfstein?
Dr. Sharfstein. No. You mean me personally, is that what
you are saying?
Mr. McHenry. Yes.
Dr. Sharfstein. No, I am a State employee.
Ms. Yang. No, I am a State employee.
Mr. Lee. I am sorry, I don't understand the question.
Mr. McHenry. Are you enrolled through the very exchange you
are in charge of enrolling others.
Mr. Lee. Through State coverage.
Mr. Leitz. Congressman, through State coverage I am.
Mr. McHenry. Okay.
Mr. Van Pelt. Thank you. Two things. First, I need to
apologize and correct a statement I made earlier.
Mr. McHenry. No, you can use somebody else's time for that,
sir.
Mr. Lankford. I can grant unanimous consent for additional
time to be able to answer that, if he needs to, as well.
Mr. McHenry. Go right ahead.
Mr. Van Pelt. Thank you. Mr. DeSantis asked about the
enrollment of our qualified health plans of April 1st. The
correct number is 57,000.
With respect to your question, Congressman, I am not an
employee of the State; I am self-employed and did not apply for
insurance through Cover Oregon.
Mr. McHenry. Okay. Okay. So the question, and I ask this
because this is one of the questions that my constituents ask
about the laws that we live under and those implementing the
laws, whether or not they are complying with them or living
under them are going through the same process. So I would ask
you, there is a concern I have about personally identifiable
information and folks that are putting information into the
exchange and the safety of that information.
Would you personally guarantee that personally identifiable
information is safe through your respective exchanges? Mr.
Matsuda?
Mr. Matsuda. What I do know since I have started in this
position is that I verified that the exchange was given full
authority to connect to the Federal hub after passing all
necessary security----
Mr. McHenry. Yes, but we have concerns with the Federal hub
as well. So you are sharing perhaps some concern?
Mr. Matsuda. No, because----
Mr. McHenry. So let me ask you again. Would you personally
guarantee that personally identifiable information is safe
through your exchange?
Mr. Matsuda. I believe it is secure, yes.
Dr. Sharfstein. Recognizing that nothing is 100 percent
safe, I believe the Maryland exchange has done what it needs to
do----
Mr. McHenry. Is it about 80 percent safe, 90 percent safe,
95?
Dr. Sharfstein. Well, if you look at what has happened in
the private sector, there are a lot of things that can happen.
But we have had no known incursions and, to your point, my
personally identifiable information is in there. I did start an
application; I put in my social security number. I had no
qualms about doing that.
Mr. McHenry. Well, were you able to complete your
application?
Dr. Sharfstein. I didn't complete an application because I
have coverage. I was just testing it.
Mr. McHenry. You were testing it. Okay.
Ms. Yang. Congressman, this is one of our highest
priorities in terms of protecting people's private information.
We have not had a data breach and I wouldn't be letting the
exchange operate without having confidence that personal
information was protected.
Mr. Lee. Similarly, the safety of personal information is
our top priority. We are very confident that that information
is being kept secure. We have had no data breaches and we have
no incidences that we know of of individuals' financial or
personal health information being breached in any way.
Mr. Leitz. Similarly, Congressman, security is a top
priority for us. We certainly do everything we possibly can to
protect the information that goes in.
Mr. McHenry. Will you guarantee that?
Mr. Leitz. Congressman, it is very much a top priority.
Mr. McHenry. I will take that as a modified, if possible,
yes or no, however you want to see it.
Mr. Van Pelt. The Cover Oregon also meets the CMS security
requirements, which have been validated by CMS. And we are not
aware of any security breaches with respect to connecting to
the hub.
Mr. McHenry. Okay. All right. I wanted to at least ask
that. So in terms of lost applications and incorrect subsidies,
it is not an error-proof system we have, obviously; there have
been faults and failures, obviously.
But I have a story for you, Mr. Sharfstein. In your system
in Maryland I have a staffer whose mother was given a notice by
her insurer that, due to the Affordable Health Care Act, her
insurance was discontinued, so she had to go to the exchange;
and she began a three-month-long process to enroll in your
exchange. I know that you have about 4,000 applications in your
State that were given incorrect subsidies or lost applications.
Is that about the right number?
Dr. Sharfstein. We reported a subsidy problem about that
number, right.
Mr. McHenry. Similar to that. Okay. So her experience is
one that I know very well through her daughter and through her
telling me the story. So the first roadblock for her in filling
out the application was a question of her citizenship, which
she could not verify. She calls the Help Line. The Help Line
obviously is very helpful in all your States, as you all will
attest to, when people have problems with the website; and they
have been noted, I don't have to recount this.
But in her situation she was told through the hotline to
fax her, I believe it was, driver's license and social security
number to this open fax line. And she asked, well, do I put it
to your attention, can I put it to someone's attention? No,
just fax it to this number. Is that concerning to you, that you
have somebody's driver's license and social security number
given to this random fax number in order to proceed with the
application?
Dr. Sharfstein. It is not just like a fax in the corner
that people wander by.
Mr. McHenry. I would hope not. I would hope not.
Dr. Sharfstein. It isn't.
Mr. McHenry. Or a fax at a local truck stop or something.
Dr. Sharfstein. No.
Mr. McHenry. I know it is a little better than that.
Dr. Sharfstein. There is a Fulfillment Center and they have
an approach to secure personal information, too. And we have to
verify things like whether people are able to purchase coverage
under the law.
Mr. McHenry. So those folks that are privy to that fax
machine, or whatever the technology is that you use, privy to
that? Are they vetted? Is there some safety and security that I
can tell her that there was for her information?
Dr. Sharfstein. Yes, you can. And particularly for the
Fulfillment Center.
Mr. McHenry. Describe that for me.
Dr. Sharfstein. Well, we work with Maximus, which is a
company that secures a lot of personal information. They do,
for example, they are an enrollment broker for the Medicaid
program, they work in many States. They are a very big company
that has extremely strong policies around protecting private
information because they do it in a whole bunch of States. They
are the ones who were staffing the Fulfillment Center that
those faxes go to.
Mr. McHenry. Okay.
Mr. Chairman, the final question I have is you all have in
your metrics the number of enrollees as a part of your
measurement of the success of your respective exchanges. Do you
have a cost per enrollee? For instance, Maryland has spent
about, what, $100 million, $150 million, in that range, to
build the Website and the exchange? Is that about right?
Dr. Sharfstein. Right. So far, about $129 million.
Mc. McHenry. $129 million. So about $2,000 per enrollee?
Dr. Sharfstein. Well, again, we have enrolled 295,000
people, so it would be a lot less than that if you were to
divide it. But if you look, from our perspective, we are
looking over several years.
Mr. McHenry. Yes. So this is the individual market.
Dr. Sharfstein. Right. But people on Medicaid are not
invisible. This is how they get coverage in Maryland.
Mr. McHenry. But they previously had coverage.
Dr. Sharfstein. They did not. A lot of them did not have
coverage.
Mr. McHenry. A lot? How many?
Dr. Sharfstein. The vast majority of them did not have
coverage. These are people who have all gained coverage since
January 1st.
Mr. McHenry. So if this is about the individual market
getting individual folks in the market, the individual market
getting access to insurance, is that not a fair measurement for
this?
Dr. Sharfstein. I don't think so. It is also how people on
Medicaid get access to insurance.
Mr. McHenry. But they could have had access to insurance
previously under Medicaid.
Dr. Sharfstein. No they couldn't. They couldn't because----
Mr. McHenry. Not at all? I thought Medicaid was actually an
insurance program.
Dr. Sharfstein. The vast majority of people in Maryland,
single adults, for example, did not have coverage. Now they
have coverage up to----
Mr. McHenry. The vast majority of adults in Maryland did
not have coverage?
Dr. Sharfstein. Single adults did not have Medicaid
coverage in Maryland.
Mr. McHenry. Okay.
Dr. Sharfstein. Even if they were very poor.
Mr. McHenry. So how do you enroll in the individual market?
Mr. Connolly. Mr. Chairman? Mr. Chairman, I don't object to
my colleague having extra time; I just want to make sure equal
time is granted to the Minority.
Mr. Lankford. Has Mr. Connolly seen me be unfair before?
Mr. Connolly. No. I have no question about that. But I just
wanted it for the record.
Mr. McHenry. If I can just ask one final question.
Mr. Connolly. Certainly.
Mr. McHenry. And if the gentleman was here to see Mr.
Cummings, I am being a little less greedy than he was with the
time; and as members of Congrss we are but a little bit greedy
with the time. Mr. Cummings is coming back in and I would
revise that. Mr. Cummings was appropriately useful with his
time.
Mr. Cummings. Would the gentleman yield?
Mr. McHenry. I have no more time.
Mr. Cummings. I used the exact amount of time that the
gentleman----
Mr. McHenry. All right, how about this? I will yield back.
Mr. Cummings. The exact amount of time.
Mr. McHenry. If you want to quibble with this. I certainly
appreciate it.
Mr. Connolly. Mr. McHenry?
Mr. McHenry. I reclaim my time.
Mr. Chairman, thanks so much for your generosity. I
certainly appreciate the kindness of my colleagues and I will
show you the same kindness.
Mr. Connolly. And, Mr. McHenry, for the record, I was not
objecting; I was simply trying to make sure that the Minority
was granted equal time.
Mr. Lankford. I am going to do something out of order.
You have been seated for two and a half hours. Would you
like a moment just to stand and stretch? This lady right here,
Ms. Hanabusa, has also been seated two and a half hours waiting
for questions. She is going to get the next questions. But
would you like to stand for just a moment?
We will take just a very short recess just to be able to
stand.
[Pause.]
Mr. Lankford. Ms. Hanabusa is recognized.
Ms. Hanabusa. Thank you, Mr. Chair. First, on behalf of the
people of Hawaii, I want to thank you again. You were the
manager of the measure that allowed us to name a post office
after former Congressman Cecil Heftel. Thank you again for
that.
And I would like to thank you plus the members of this
committee for their unanimous consent to allowing me to
participate.
Mr. Chair, one of the reasons why I asked to participate is
because of the fact that the people of Hawaii were also very
concerned about the reports of the money spent on our
Connector.
Mr. Matsuda, I do want to say up front that I know you have
inherited this. The Connector went into effect in 2011, July
specifically, and you came on board in November. So to the
extent that you can address some of these concerns, I would
appreciate it.
First of all, one of the things that I think fundamentally
we must all understand is Hawaii is truly different. I know
everybody says that, but Hawaii is truly different. We are the
only State that has the prepaid health care law that went into
effect in 1974; and I think that is part of the issues that we
have to understand as we look at these numbers. I saw the
letter sent to the governor and it speaks to $205 million going
to the Hawaii Connector, and I think they computed it out at
about $44,000 per person. But let's begin there.
So, Mr. Matsuda, $205 million I think was the grant that
you were entitled to. How much money did the State actually
use?
Mr. Matsuda. As of the end of this past calendar year, we
have spent $57 million out of that amount.
Ms. Hanabusa. And it is my understanding that there was a
request to extend so that you could spend the remaining amount
or however amount you could justify, but the State has been
denied that, is that correct?
Mr. Matsuda. The operations and maintenance portion of the
grant cannot be used beyond this calendar year, that is
correct.
Ms. Hanabusa. So of the $205 million, so people understand
us very clearly, how much money would either be returned to the
Federal Government, if you want to answer it that way, or how
much money do you get to continue to use?
Mr. Matsuda. So in addition to the $57 million that has
already been spent, we have obligated under contract an
additional approximately $50 million So that means we have
about $100 million, roughly, of the Federal grant money that
has yet to be obligated or spent. The amount or the portion of
that that is related to operations and maintenance, versus
development money, which can be extended to next year, has yet
to be determined. We are working with CMS to figure that out
because we just got the decision recently. Obviously, we want
to be careful about how we use taxpayer dollars, so the
development money will be used just to the extent necessary to
improve the system to fit our unique marketplace.
Ms. Hanabusa. And what you have testified before the State
legislature is that--and I think I misheard you speak earlier--
is that the Hawaii Connector cannot self-sustain in terms of if
you base it purely on the amount of monies that are coming in
in terms of premium percentage of 2 percent or so. Was that
correct?
Mr. Matsuda. Yes, that is what I testified to.
Ms. Hanabusa. And I think that was in line with the
potential request to the Hawaii State legislature for State
funds of approximately $15 million a year to continue the
Connector. It may be less because of the number, but that was
about the amount. Am I correct in that?
Mr. Matsuda. Well, yes. Actually, we are going through a
process right now to figure out how we can reduce those
expenses substantially below $15 million.
Ms. Hanabusa. So the State is aware that it has to kick in,
in essence, to cover the continuing cost of the Connector.
Mr. Matsuda. Yes, but I think it is important to put it
into context. The issue for us on the revenue side is that
because of the Prepaid Health Care Act, virtually all small
businesses in the State already have insurance for their
employees, so there is very little incentive for them to leave
a system that they have been accustomed to for almost 40 years.
So I think it is incumbent on us, looking at that marketplace
reality, to try to reduce the cost of the operations of our
system as much as possible.
Ms. Hanabusa. So if we can just go through this very
quickly. So there is said to be 100,000 total uninsured in
Hawaii, of which about 58,000, almost 60,000 are really going
to be covered by Medicaid expansion. So the only number that
can be enrolled is about 33,000, is that about right? Because
we have some that are ineligible because of immigration status.
Mr. Matsuda. Yes. That is right if you are only looking at
the uninsured. But there are other people who currently have
insurance that might be able to find better quality or lower
cost insurance through the exchange. So the potential on the
individual marketplace is probably bigger than just the 33,000.
Ms. Hanabusa. If I may, Mr. Chair, if I can just have a
little bit of leeway here, if you don't mind.
Mr. Lankford. I will give you some of Mr. Connolly's time.
Ms. Hanabusa. Thank you.
So, Mr. Matsuda, the thing that I really wanted to get to
is, quite candidly, a level of frustration I have had with your
predecessor and whoever was there. You know, I was not here
when we voted the ACA; however, I do know that the ACA has an
exemption for Hawaii, I think it is Section 1560, which is
anticipated in the original law, because of our Prepaid Health
Care Act. I have always asked, okay, what have you done or what
does it mean, and we have not gotten a response on that. I do
also know that there is a movement in Hawaii that we avail
ourselves of Section 1332 of the ACA, which is really an
exemption from the provisions; and it is supposed to be because
you have a, I guess for lack of a better description it is
called the Waiver for State Innovation. And, of course, we like
to think that we were the major innovators in any kind of
health care. But that doesn't kick in until 2017.
So the question is why hasn't the State or the Connector
looked at this? Because the problem is the fact that prepaid
health and the ACA are not meshing well. I mean, that is our
problem. That is the reason why the Connector doesn't work;
that is the reason why we can't go on the Federal system,
because it doesn't take into account the uniqueness of Hawaii's
law. Would you agree with me that that is your fundamental
problem, that is the reason why it is not working?
Mr. Matsuda. That is correct, Congresswoman, and we are
very anxious to take advantage of the innovation waiver in
2017; and, in fact, we wish it would occur earlier.
Ms. Hanabusa. But what about the exemption in the law
itself that exists today, which is Section 1560? Why haven't we
availed ourselves of that? Or is there a way that you can go to
the Secretary of Health and Human Services or CMS and say, we
have got this waiver in the law and we have this waiver that we
know you probably will qualify us for in 2017? Why haven't we
done that?
Mr. Matsuda. I am not an expert on that section of the law,
but my understanding is that it only refers to preserving the
exemption that we have for prepaid under ERISA. But the scope
of the ACA is much bigger than that and includes other areas of
the law. So I think there is a complicated legal evaluation
that needs to be made to see if we can take advantage of it in
the way that you are suggesting.
Ms. Hanabusa. And we haven't done that yet.
Mr. Matsuda. I do know that it is under consideration by
both the legislature and the State administration, and we are
trying to assist with that.
Ms. Hanabusa. Thank you. Mr. Matsuda, like I said, this is
something that you inherited, but, notwithstanding, you can
imagine how people at home are very frustrated with this and,
actually, they are very embarrassed that people are saying we
have all this money and we have only enrolled less than 8,000
people. But the enrollment of the less than 8,000 is really a
function of the existing laws that we have that are not
meshing, and I would really appreciate it if you would keep us
apprised of that, because that has always been a question that
we have constantly asked, or I have constantly asked, is why
have an exemption in a law, not use it, and then have to wait
until 2017, when we are clearly, I believe, the example that
that provision, Section 1332, was intended to not have to
address because we are exempted. But we are truly innovative,
wouldn't you agree?
Mr. Matsuda. Yes.
Ms. Hanabusa. Thank you very much.
And thank you, Mr. Chair, again. I yield back.
Mr. Lankford. Mr. Connolly.
Mr. Connolly. Thank you, Mr. Chairman, and thank you for
your courtesy to our colleague from Hawaii.
Welcome to this panel. It is a fascinating panel.
You know, I wish, on this subject, we could sort of move
beyond the partisan talking points. If there are things to be
fixed, why not come together and try to fix them? And if there
are things to be celebrated, why not intellectually be honest
and celebrate them?
But if you go into a subject matter unrelentingly for four
years in opposition, then you are probably going to have the
problem we had with today's hearing. In the Majority staff
memo, the hearing purpose, and it says: The current enrollment
numbers of ObamaCare are significantly lower than expected.
Oops. Well, actually they are significantly higher than
expected; they actually met the highest stretch number CBO set
for them. They exceeded their own revised numbers after the
Website rollout, and are at 7.1 million and counting. Anyone on
the panel, can any of you think of a brand new program from
scratch in less than six months that enrolled 7.1 million
people? Anybody? No. Not even California.
Ms. Yang, Massachusetts. The individual mandate that we
have in RomneyCare and ObamaCare, do you know where it came
from intellectually? Do you know where its wellspring was?
Liberal Democratic idea?
Ms. Yang. Sorry, Mr. Congressman.
Mr. Connolly. It came out of the Heritage Foundation. It
was a conservative Republican idea enshrined in both the
Massachusetts because of a conservative Republican philosophy
that felt, correctly, people needed to take ownership for their
decision-making; and, therefore, they have to have some skin in
the game, and thus the individual mandate. In fact, no less a
figure than then Republican Speaker Newt Gingrich said that one
of the reasons he opposed the Clinton health care initiative
back in 1993 and 1994 was because it lacked an individual
mandate. And yet, today, because of partisan politics, that
individual mandate, conservative Republican intellectual
wellspring, is now referred to as socialism.
Do you have an individual mandate requirement in
Massachusetts that preceded ObamaCare, Ms. Yang?
Ms. Yang. Absolutely, Congressman.
Mr. Connolly. And is it working?
Ms. Yang. It is working very well.
Mr. Connolly. What happened to the population of uninsured
in Massachusetts?
Ms. Yang. There is a very small percentage of our residents
that were uninsured. Prior to the implementation of the ACA it
about 3 percent. We are actually very optimistic that number
has further shrunk because we brought more people into
coverage, so we expect that number to be even less than 3
percent now.
Mr. Connolly. Is that not the second lowest uninsured
population in the United States?
Ms. Yang. I thought that was the first lowest.
Mr. Connolly. Well, I think Hawaii has--what is Hawaii's,
Mr. Matsuda?
Mr. Matsuda. I am happy to concede to Massachusetts.
Mr. Connolly. Oh, all right.
[Laughter.]
Mr. Connolly. Then, Ms. Yang, you are even more successful
than I thought.
Ms. Yang. Thank you, Congressman.
Mr. Connolly. So in terms of Website, I heard the testimony
here that Websites are not the same as the exchange, and
Websites sometimes do have glitches, sometimes big ones,
unfortunately. Did Massachusetts have glitches when it started,
Ms. Yang?
Ms. Yang. Absolutely, Congressman. In fact, I would just
say that the Website that we launched in 2007 looked nothing
like the Website that we had prior to the ACA. Even the pre-ACA
Website went through a journey both from a performance
perspective and a functionality perspective. Technology is
meant to evolve over time; it is meant to be innovative,
improved as we gain experience, as we react to the market. So
when we, unfortunately, experienced challenges with the
Website, we were not panicking. We have gone through this
before. These are things that we just need to work through. We
have worked through it before. ACA is complicated, but it is
not beyond technology. There are technological solutions: we
need to identify the right vendor; we need to put the right
team in place, and we can fix them.
Mr. Connolly. Wouldn't it be fair to say the goal here for
the ACA, the Affordable Health Care Act, known as ObamaCare,
was never to have a perfect Website, it was to get people
enrolled. Website is a method, not an end.
Ms. Yang. That is exactly right. And I would just say look
no further than Massachusetts, because we did not have sort of
the fortune of having a state-of-the-art modern Website. We had
something very simple, but easy to navigate. We demonstrated
the concept, but we didn't really have the benefit of the ACA
Website, which really brings it to the next level. Now, it does
bring a lot more convenience to people; it does improve
people's experience. But at its fundamental, ACA is about
coverage, and Massachusetts is demonstrating it.
Mr. Connolly. Mr. Lee, one of the things asserted by some
of my friends on the other side of the aisle who are never
going to give this, ever, a positive mark of any kind, is that
actually the number of people enrolled is masking the fact that
it equals or is less than the number of people who have in fact
lost their health care coverage. How many people are enrolled
in California again?
Mr. Lee. Well, again, enrollment first through Covered
California directly in our plans, about 1.2 million.
Mr. Connolly. 1.2 million.
Mr. Lee. We have 1.9 million enrolled in Medi-Cal plans,
and we don't know, and this is one of the things that is lost
in this discussion, the number of people that enrolled directly
with their health plans in Affordable Health Care Act-compliant
plans with essential benefits. We think that for the vast
majority of the individual market that converted out of their
plans this year didn't come to our marketplace because they
weren't subsidy eligible, so they are now in the individual
marketplace.
Mr. Connolly. Right. But surely the enrollment in
California is not exceeded by the number of people who have
lost their private insurance plan.
Mr. Lee. Absolutely not. But, again, this term that is
often used of people who have lost their coverage, people
converted to different coverage. The vast majority kept
coverage with their existing plan, or some came to the
marketplace and benefitted from subsidies. So the term of lost
coverage, people converted coverage and converted to new
coverage that now meets essential benefits protections under
the Affordable Health Care Act.
Mr. Connolly. And is this a brand new phenomenon?
Apparently, for the first time ever in history, people are
losing their coverage and insurers are cancelling their
coverage.
Mr. Lee. What is new is that no insurance company can turn
people away that knock at their door. What is new is that
people cannot be turned away because of a health condition.
Health plans cancelled policies at their whim previously, and
if people left jobs they were left potentially without
insurance, etcetera. So we are in a new set of circumstances,
but not the set of circumstances of people changing types of
coverage or losing coverage.
Mr. Connolly. Thank you.
Mr. Chairman, you have been generous and I yield back.
Mr. Lankford. Thank you.
Let me run through a few things here. The way your agency
is set up for funding stream, once we get into next year or the
next year, how is your agency funded, is it general revenue, is
it percentages? Mr. Matsuda, you mentioned it was a percentage
at some point. So I would like to just quickly know how is it
funded in the days ahead. Mr. Matsuda?
Mr. Matsuda. Currently, we are only funded by the Federal
grant. We are a nonprofit corporation that is not part of the
State administration, and we are before the State legislature
right now with a funding proposal.
Mr. Lankford. Okay, so there is not a revenue stream at
this point.
Mr. Matsuda. I am sorry.
Mr. Lankford. I am talking about trying to keep your agency
doors open next year.
Mr. Matsuda. Excuse me. I forgot to mention we also have,
by board of directors' policy decision, a 2 percent fee that is
assessed against all plans that are sold in our marketplace.
Mr. Lankford. Okay, so that 2 percent fee is what covers
that, plus whatever general revenue is allocated.
Mr. Matsuda. Yes.
Mr. Lankford. Okay.
Dr. Sharfstein. Ours is through a premium assessment across
all State-regulated insurance.
Mr. Lankford. All insurance. And what is that percentage?
Dr. Sharfstein. It is about $40 million a year. I don't
know the exact----
Mr. Lankford. What is the percentage? That is a fee on all
insurance.
Dr. Sharfstein. Yes. Whatever it is, it works out to about
$40 million. But I will----
Mr. Lankford. Three percent, 5 percent, .2 percent? Give me
a ballpark. I won't hold you to it because it is ballpark.
Dr. Sharfstein. It is probably in the 1 to 2 percent,
roughly, but I will definitely have to follow up.
Mr. Lankford. But it is on all insurance.
Dr. Sharfstein. All State-regulated, right.
Mr. Lankford. Okay.
Ms. Yang?
Ms. Yang. Mr. Chairman, as you know, the Massachusetts
Connector has been in existence for the past eight years. We
have historically been funded with a combination of State
funding, the general fund, and insurance carrier administrative
fee; and that is the reason is because, on the one hand, we
serve as a distribution channel that really provides backroom
function for the insurance companies at the same time we
perform policy responsibilities and service for the State. We
envision that model is going to continue post-ACA. We do not
have expectation of additional Federal funding to support the
administration. We have not yet made a decision at this point
in terms of the fee percentage. Historically it is between 2.5
percent and 3.5 percent.
Mr. Lankford. Okay.
Mr. Lee?
Mr. Lee. Our ongoing revenue is going to be based on a
carrier administrative fee. The current fee is on a per member,
per month basis, 1395, which is a little bit over 4 percent of
premium. And we are going to be reviewing and adjusting that on
an annual basis based on what our revenue needs are as we
adjust our expenses.
I would also----
Mr. Lankford. Could you help me real quick?
Mr. Lee. Yes.
Mr. Lankford. Per member, per month, is that the individual
that holds the policy? Where is that?
Mr. Lee. That is built into the premium.
Mr. Lankford. 1395.
Mr. Lee. Yes. And I would note we did a lot of analysis of
this, so this actually enables health plans to lower their
costs, because our cost per acquisition of what it means to
enroll an individual is far less expensive than it used to be
in the individual market; and the individual plans have a
reduction and no longer have an underwriting cost because there
is no longer underwriting, guaranteed issue.
Mr. Lankford. It is amazing that people would beat a path
to your door when they are going to be fined if they don't, so
that does help for enrollment. And that is not being critical
of you, but that is definitely a good promoter.
Mr. Lee. Well, actually, if I could, Congressman, when we
talked to thousands of them surveying, for the vast majority
the penalty is not a huge incentive. The incentive is finding
health care that is affordable. And the size of the penalty
compared to making health care affordable is a much bigger
factor. For some it is actually a factor, but for a small
minority.
Mr. Lankford. There was a deadline that we faced, as well.
Mr. Leitz?
Mr. Leitz. Chairman, we are funded through an assessment on
policies sold through MNsure, and that is up to a 3.5 percent
assessment.
Mr. Lankford. And that is per policy that is sold through
the system itself?
Mr. Leitz. Yes.
Mr. Lankford. Not all. Because Maryland it is everybody,
right? Every insurance. You all's is just what is being sold
through the system. Okay.
Mr. Van Pelt?
Mr. Van Pelt. Thank you, Mr. Chairman. Going forward, our
financing is based on a 2.5 percent on premiums sold through
the exchange.
Mr. Lankford. Okay. All right, a follow-up question on
that. As you have the enrollment coming through, obviously the
open enrollment just ended, another open enrollment opens up
next year. You are looking at your budgets based on what has
come in at this point and what you have. Is the agency
sustainable? Is the target there to be able to make? And I will
kind of go backwards through here. Mr. Van Pelt?
Mr. Van Pelt. Right now, the target is sustainable at the
level that we have enrolled and the projections going forward.
As many of our colleagues have spoken, you do have to manage
the expense side to match the revenue side. We expect that,
with the enrollment that we have, we can do that.
Mr. Lankford. Okay.
Mr. Leitz?
Mr. Leitz. Mr. Chairman, yes, it is sustainable.
Mr. Lee. Very similar. It is absolutely sustainable and we
will be balancing both our expenses and the revenue. But when
we look at the 1.2 million people that are enrolled, we are
very confident we can have a very going proposition in
California.
Mr. Lankford. Okay.
Ms. Yang?
Ms. Yang. We also believe we are going to be sustainable.
We have 30,000 qualified health member. We also have over
100,000 Commonwealth Care members currently served through the
exchange. We also have 5,000 small businesses. And, lastly, we
have 138,000 subsidized members in transitional coverage. We
expect a meaningful percentage will be exchange members as
well.
Mr. Lankford. Okay.
Dr. Sharfstein. Yes, we believe it will be sustainable.
Mr. Lankford. Okay.
Mr. Matsuda?
Mr. Matsuda. As indicated in my written testimony and in my
discussion with Representative Hanabusa, right now
sustainability for Hawaii is going to be a challenge, and we
are trying to figure out how to reduce expenses and look for
other ways to increase revenue.
Mr. Lankford. Okay. Have you talked to other States that
are experiencing something similar? Most of the States,
obviously, have found a way to be able to hit the balance on
it. I would assume you are interacting with those, saying we
are having this problem, who else is having it? Do you know of
any other States that are having issues with that as they
approach next year?
Mr. Matsuda. No, I do not, but I imagine that any State
that has a small population like we do and a small number of
uninsured will be facing the same kind of challenge.
Mr. Lankford. Okay.
Mr. Van Pelt, I want to talk a little bit about the co-ops.
That is a new invention as well. Obviously, that is in the
middle of the market. Several of you have co-ops in the market.
Oregon Health and Health Republic, both those names ring true
there. Each received $60 million to be able to start up as a
co-op. Are you familiar with how they are doing and how they
are functioning within the exchange?
Mr. Van Pelt. No. I can get that information for you. It
has been relatively low enrollment numbers, but I can get you
greater detail.
Mr. Lankford. How is that interacting with the other
companies and how is that working? Because the initiative was
the initial perspective from the group that passed this, and I
wasn't here when it passed, was to create some nonprofit that
is sitting out there that would compete or that would go into
markets that other places wouldn't go. Have you experienced
that they are good competition for the others?
Mr. Van Pelt. I think it is always, we have had a very good
turnout in terms of interest in both profit taxable not-for-
profit and not-for-profit plans. So I can't say there has been
much discussion or analysis of the impact of the co-ops.
Mr. Lankford. When you say there is not much discussion or
analysis, can you tell us if it has made an impact? Is there
any sense of sigh of relief of I am glad the co-ops are there,
because we would not have met our goals without them?
Mr. Van Pelt. I don't believe so. I have not heard any of
that conversation. Again, because the Oregon market has worked
with both the interest of the, again, the profits, all kinds of
health plans, I don't believe that it is felt that this has
been a void that they specifically filled.
Mr. Lankford. Right.
Same for Massachusetts and Maryland. Maryland has
Evergreen; Massachusetts has Minuteman. Is that correct, both
of you?
Ms. Yang. That is correct.
Mr. Lankford. Has there been a sigh of relief to say I am
really glad the co-op is there, because without them I don't
know that we would have made it? Or have you experienced any
issues or how is that working and functioning? Because, again,
this is a new invention.
Ms. Yang. We are glad that Minuteman was interested in
competing in the Massachusetts market. This is not the first
time that we have had a new entrant into the market.
Mr. Lankford. Do you know how many enrollees they have at
this point, how successful they have been in the market?
Ms. Yang. Several hundred. We can get back to you on that.
Mr. Lankford. Again, we have all the preliminary stuff.
Their goal, I think, was 37,000 is what they had hoped to
enroll.
Ms. Yang. I would defer to you on that.
Mr. Lankford. Okay. Just trying to figure out. Again, it
was $156 million given to start this co-op up to hopefully go
into an area that was under-served. I am trying to figure out
in Massachusetts if it was meeting a need of under-served, and
where that $156 million goes and how is the sustainability.
They are going to have the same sustainability all of you have
to deal with in balancing your budget; the co-ops do as well.
Ms. Yang. Absolutely, Mr. Chairman. We work very
collaboratively with Minuteman, so to my best knowledge they
continue to be very interested in competing in the
Massachusetts market. I would just say that, as you know,
Massachusetts is already very well served in terms of insurance
companies. We have great coverage and we have many, many
carriers competing.
Mr. Lankford. Right. That was my interest of why we spent
$156 million to start a co-op to compete in an area that has
quite a bit of competition already. I just didn't know how
successful they were.
Ms. Yang. My understanding is that, and I agree with that,
Minuteman comes in with a low cost model that could offer
additional options for members to shop around. And we continue
to believe that they are able to deliver that once we have the
functionality.
Mr. Lankford. Okay.
Maryland, any issues on there? Anything we can fill in the
gap on?
Dr. Sharfstein. I would just say that it is probably too
early to answer the question about the investment there.
Mr. Lankford. Sixty-five million dollars to help start up a
co-op that would stand up, and there is quite a bit of
competition in Maryland as well.
Dr. Sharfstein. Maybe not as much as in Massachusetts. I
would say that Evergreen is really focused on the control of
cost through a very aggressive primary care approach, which we
think is promising.
Mr. Lankford. Do you know how many they have signed up at
this point?
Dr. Sharfstein. In the individual market, they have signed
up on the order of a few hundred. Their prices were higher than
the market leader and I think that hurt them in the first year.
But I think that they are signing up more in the small group
market, where their prices are more competitive, and I think it
is probably going to take a couple years to really understand
their role and see whether they are able to succeed.
Mr. Lankford. When problems came up, and as you were
approaching deadlines getting to October the 1st, was there a
key person that you were supposed to communicate with or that
would give you comeback to sign off, whether that be the Oregon
site, which is great frustration on the Maryland site? Who was
the point person that you were to report to and say, okay, we
have some issues, we don't know where we are, we are still
working through our testing for security; we are not launching
well, we are going to have to have a delay, whatever it may be.
Who was the point person you were going back to for CMS to keep
them informed?
Dr. Sharfstein. I can say we had a specific person at Sacio
who was the main point of contact.
Mr. Lankford. Okay. What is the name again?
Dr. Sharfstein. I think her name is Amanda Cowley. She, I
think, has left Sacio since the launch.
Mr. Lankford. Oh, so this was a separate contractor working
for CMS?
Dr. Sharfstein. Right, she worked for CMS. She was an
employee.
Mr. Lankford. Okay.
Dr. Sharfstein. She was sort of the liaison.
Mr. Lankford. So the name was Amanda?
Dr. Sharfstein. Cowley. I just want to quadruple check the
name.
Mr. Lankford. Great. So let's kind of run through.
Who was the point of contact for you? Somebody had to do
sign-off to be able to answer questions for you. Yes, sir, Mr.
Leitz.
Mr. Leitz. Mr. Chair, similarly I believe our primary
contact administrator at the time was Amanda Cowley at Sacio.
Mr. Lankford. Okay.
Mr. Van Pelt?
Mr. Van Pelt. Mr. Chair, I do not have that information
with me today; I was not there, but I can get that for you.
Mr. Lankford. Thank you. We will just follow up.
Mr. Lee?
Mr. Lee. Amanda Cowley is the director of State exchanges
and was the endpoint. We also had a State officer who had sort
of day-to-day responsibility for sort of making sure all the
elements were approved and checked.
Mr. Lankford. Okay.
Ms. Yang?
Ms. Yang. Same thing here; Amanda was the point of contact.
We were in constant contact with the entire CMS team.
Mr. Lankford. Mr. Matsuda, you weren't there, I don't
think, at that time, as well.
Mr. Matsuda. Yes. I will have to provide that on the record
later.
Mr. Lankford. That will be fine.
Ms. Yang, at some point I want to be able to follow up with
you, as well. We have a document, and I will get you a copy of
it, that says for policy development. This is a piece that
walks through as far as how you were hitting the core as
Massachusetts was walking through this. And I will read this to
you. And, again, I want you to be able to get a copy of it and
we can talk again later.
This was an August document talking through the Website and
how things were working, and what they considered a go or a no-
go status. Browsing was anonymously a go; creating an account
was a go; submitting application was a go; eligibility
determination, no-go; shop and compare, no-go; pay and enroll,
no-go; lock user account, no-go; IT administration create
account, no-go; broker quoting information, no-go; browse,
compare, select plans, no-go. Of the 17 core functions, only 5
were assessed as a go in August at that point, late August, as
they were preparing for an October launch.
Was there a conversation at some point to say, okay, we
have a lot of no-gos here; let's stall, let's delay? If so, who
would that go to to be able to say, okay, we have a bunch of
no-gos and we are getting really close to deadline and we may
need some extra time?
Ms. Yang. So a couple of things, Mr. Chairman. I can
explain this document. This appears to me was a steering
committee minutes document, so it records the discussion that
took place at the time. We did go through a comprehensive
evaluation of the readiness of the system before we deployed
the system on 10/1, and this was a record of the discussion
that we had that looked at each component, which ultimately led
to our decision to deploy what we did deploy and also what we
did not deploy on October 1st.
Mr. Lankford. Who did you have to report to at CMS to say
we are having problems in these areas, we are not going to be
able to deploy? Was there someone you were held to account to
to keep them informed?
Ms. Yang. Yes. As I mentioned, we were in constant
communication with CMS; we still are. We have weekly
discussions with them on all levels of details.
Mr. Lankford. The who is what I am looking for there.
Ms. Yang. Similar to the other States, Amanda Cowley was
the director for, I think, State exchanges, and also her team
that included our State officers.
Mr. Lankford. Okay.
This has been a very long day for you. I have a million
more questions. We will follow up in the days ahead just to be
able to go through the process.
I do appreciate you coming and for the conversation. You
all are working very hard. No one is trying to push back and
say you are not working hard or you are not trying to make
something work. The frustration is obviously this is a round
peg in a square hole at times, and trying to work through
Federal regulations and what you already have in your State,
trying to make that work, whether it be Hawaii or
Massachusetts, and trying to function with that.
In my own State we had a plan called Insure Oklahoma that
already existed that we assumed we were going to get a waiver
for that we ended up not getting a waiver for, and having to
have that flip; and suddenly a working State plan had to be
punted to try to get into a website that then wasn't working.
We had all the chaos of that as well.
So what you are doing and what you are trying to work
through the process to be able to serve people is honorable,
and I appreciate your service on that. The mess that surrounds
all this in the law, and trying to execute a law that has many,
many complicating and conflicting parts of it is a major issue,
and I think will continue to be a major issue.
So, with that, we are grateful for your time to be here.
Thank you, and we are adjourned.
[Whereupon, at 1:10 p.m., the subcommittee was adjourned.]
APPENDIX
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Material Submitted for the Hearing Record
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