[House Hearing, 114 Congress]
[From the U.S. Government Publishing Office]




 
         EXAMINING THE AFFORDABLE CARE ACT'S PREMIUM INCREASES

=======================================================================

                                HEARING

                               BEFORE THE

                         COMMITTEE ON OVERSIGHT
                         AND GOVERNMENT REFORM
                        HOUSE OF REPRESENTATIVES

                    ONE HUNDRED FOURTEENTH CONGRESS

                             SECOND SESSION

                               __________

                           SEPTEMBER 14, 2016

                               __________

                           Serial No. 114-97

                               __________

Printed for the use of the Committee on Oversight and Government Reform





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              COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM

                     JASON CHAFFETZ, Utah, 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
JIM JORDAN, Ohio                     ELEANOR HOLMES NORTON, District of 
TIM WALBERG, Michigan                    Columbia
JUSTIN AMASH, Michigan               WM. LACY CLAY, Missouri
PAUL A. GOSAR, Arizona               STEPHEN F. LYNCH, Massachusetts
SCOTT DesJARLAIS, Tennessee          JIM COOPER, Tennessee
TREY GOWDY, South Carolina           GERALD E. CONNOLLY, Virginia
BLAKE FARENTHOLD, Texas              TAMMY DUCKWORTH, Illinois
CYNTHIA M. LUMMIS, Wyoming           ROBIN L. KELLY, Illinois
THOMAS MASSIE, Kentucky              BRENDA L. LAWRENCE, Michigan
MARK MEADOWS, North Carolina         TED LIEU, California
RON DeSANTIS, Florida                BONNIE WATSON COLEMAN, New Jersey
MICK MULVANEY, South Carolina        STACEY E. PLASKETT, Virgin Islands
KEN BUCK, Colorado                   MARK DeSAULNIER, California
MARK WALKER, North Carolina          BRENDAN F. BOYLE, Pennsylvania
ROD BLUM, Iowa                       PETER WELCH, Vermont
JODY B. HICE, Georgia                MICHELLE LUJAN GRISHAM, New Mexico
STEVE RUSSELL, Oklahoma
EARL L. ``BUDDY'' CARTER, Georgia
GLENN GROTHMAN, Wisconsin
WILL HURD, Texas
GARY J. PALMER, Alabama

                   Jennifer Hemingway, Staff Director
                 David Rapallo, Minority Staff Director
Sean Hayes, Health Care, Benefits and Administrative Rules Subcommittee 
                            Staff Director,
                 Sarah Vance, Professional Staff Member
                           Willie Marx, Clerk
                           
                           
                            C O N T E N T S

                              ----------                              
                                                                   Page
Hearing held on September 14, 2016...............................     1

                               WITNESSES

Dr. Mandy Cohen, M.D., MPH, Chief Operating Officer and Chief of 
  Staff, Office of the Administrator, U.S. Department of Health 
  and Human Services
    Oral Statement...............................................     5
    Written Statement............................................     8
Mr. Al Redmer, Jr., Commissioner, Maryland Insurance 
  Administration, on Behalf of The National Association of 
  Insurance Commissioners
    Oral Statement...............................................    18
    Written Statement............................................    20
Mr. Chris Carlson, Principal, Oliver Wyman, on Behalf of 
  America's Health Insurance Plans
    Oral Statement...............................................    27
    Written Statement............................................    29
Mr. Kurt Giesa, Partner, Head of Actuarial Healthcare Practice, 
  Oliver Wyman, on Behalf of Blue Cross Blue Shield Association
    Oral Statement...............................................    36
    Written Statement............................................    37
Mr. Topher Spiro, Vice President, Health Policy, Center for 
  American Progress
    Oral Statement...............................................    45
    Written Statement............................................    47


         EXAMINING THE AFFORDABLE CARE ACT'S PREMIUM INCREASES

                              ----------                              


                     Wednesday, September 14, 2016

                  House of Representatives,
      Committee on Oversight and Government Reform,
                                           Washington, D.C.
    The committee met, pursuant to call, at 9:03 a.m., in Room 
2154, Rayburn House Office Building, Hon. Jason Chaffetz 
[chairman of the committee] presiding.
    Present: Representatives Chaffetz, Mica, Duncan, Jordan, 
Walberg, Amash, Gosar, Farenthold, Massie, Meadows, DeSantis, 
Mulvaney, Buck, Walker, Blum, Hice, Carter, Grothman, Hurd, 
Palmer, Cummings, Maloney, Norton, Lynch, Cooper, Connolly, 
Duckworth, Kelly, Lawrence, Lieu, Plaskett, DeSaulnier, Welch, 
and Lujan Grisham.
    Chairman Chaffetz. The Committee on Oversight and 
Government Reform will come to order. And without objection, 
the chair is authorized to declare a recess at any time.
    We have an important hearing today examining the Affordable 
Care Act premium increases. There is a deep concern, I think, 
in most Americans about the cost of health care.
    Under the Affordable Care Act, health insurance premiums 
are soaring, soaring to say the least. President Obama promised 
multiple times that the Affordable Care Act would lower a 
family's health insurance premium by $2,500. We would love to 
hear from any Americans who think that their health care 
premiums went down $2,500.
    American families are still waiting for the cut in cost. 
Instead, the health care insurance premiums have skyrocketed 
under the Affordable Care Act. The New York Times this summer 
acknowledged the Affordable Care Act is causing increased 
premiums warning to its readers ``Get ready for big 
increases.''
    In Utah, health insurers in the individual market requested 
premium increases of nearly 30 percent on average. Most 
Americans are seeing even higher proposed premium increases. 
Conceding to the massive premium increase, the administration 
then relies on tax subsidies. However, regardless of the 
subsidies, Americans are feeling the full brunt of just how 
costly the Affordable Care Act is.
    Second, under the Affordable Care Act, with soaring 
premiums, many Americans then must pay massive deductibles. 
Health care costs are one of the top concerns for families, and 
even people with insurance oftentimes can't afford to use it, 
especially individuals enrolled in high-deductible health plans 
under the ACA. Again, this is no longer deniable. Another New 
York Times article reported ``Many say high deductibles make 
their health law insurance all but useless,'' all but useless.
    Third, remember the promise for the increase competition. 
According to the New York Times again, in many parts of the 
country, ``Customers will be down to one insurer when they go 
to sign up,'' hardly a choice. Insurers are seeing 
unprecedented losses on the exchange. Losses on the exchanges 
are reaching into the billions of dollars with the health 
insurance industry. As a result, several large insurers are 
pulling out of the exchanges with the concerns of even more 
insurers pulling out this year unless premiums are going to be 
allowed to be increased significantly.
    According to an analysis done for the New York Times, 17 
percent of Americans may only have one insurer to choose from, 
17 percent. UnitedHealthcare, Aetna are limiting their 
participation in the marketplace. And I know that Chairman 
Meadows is particularly concerned about that in North Carolina 
where they may face the prospect of having no insurer 
participating at all.
    This committee has been warning for almost a year about the 
collapse of the co-op program. HHS has refused on numerous 
occasions to provide us with the information about the program. 
Then, this week, another co-op failed. There are only six left, 
down from 23.
    And finally, of course, we cannot forget the ACA was sold 
on one of the biggest political lies of all times: ``If you 
like your plan, you can keep it. If you like your doctor, you 
can keep your doctor.'' That wasn't true ever. It was a 
political lie. Even the President had to apologize for that 
one.
    Today, I want to hear from industry about why premiums 
continue to increase under the ACA and hear about their 
proposed solutions and how we can lower premiums for Americans. 
I want to hear from the State regulators to learn more about 
the challenges they are facing as premiums skyrocket and more 
insurers pull out of the health insurance exchanges. And 
finally, I want to hear from HHS on the implementation of the 
ACA. I want to know what can be done to control premium 
increases and to get younger, healthier individuals enrolled in 
the health insurance.
    To our HHS Health and Human Services witness, I would like 
to point out the sad truth about the health care law. Every 
step of the way this administration--everything the 
administration has told us that would be just fine and it is 
not. It is not just fine. You can keep putting lipstick on it 
but it doesn't look good and it ain't good.
    So premiums will go down, HealthCare.gov will work, these 
are all things that they told us would be just great. Co-ops, 
they would be there. They are failing, failing, and failing. It 
is only when faced with the undeniable evidence or public 
outcry do we finally hear that maybe the ACA isn't quite so 
perfect.
    So I look forward to good discussion today. We all care 
about health care insurance. We have got an important hearing 
next week that Elijah Cummings and I have been working hard on 
to deal with some of the costs that Americans are going 
through. EpiPen in particular is something that we will be 
addressing next week. But we are here to talk about the ACA and 
the problems that are associated. We need some candid talk and 
some solutions. So it is going to be a good hearing.
    Chairman Chaffetz. I now recognize the ranking member, Mr. 
Cummings of Maryland.
    Mr. Cummings. Thank you very much, Mr. Chairman, and I want 
to thank you for holding this hearing. This is a very important 
hearing. And I thank you, all of our witnesses today, for 
testifying on this very important subject.
    I would like to start off by reading a few headlines. Let 
me start with this one: ``Anthem BlueCross dramatically raising 
rates for Californians with individual health policies.'' Here 
is another one: ``Health insurance rates soar as Oregon 
regulators nod.'' And here is another one: This one says, 
``Millions in U.S. can't afford health insurance.''
    The thing is, these headlines are not from today or this 
week or even this year. They are from several years ago before 
Congress passed the Affordable Care Act. Of course, that will 
not come as a surprise to anyone who remembers how horrible the 
individual insurance market was before Congress passed the 
Affordable Care Act.
    Insurance companies used to be able to discriminate against 
women. They could charge more for people with preexisting 
conditions from asthma to cancer. They could impose exclusions 
and caps on coverage. They could terminate policies when people 
got sick, and they could deny coverage altogether. People who 
were lucky enough to get health insurance were often stuck with 
whatever premiums the insurance companies decided to charge.
    These premiums were increasing by double digits every year, 
double digits every year. Before we passed the Affordable Care 
Act, the individual insurance market was indeed a complete 
mess.
    The purpose of today's hearing is to examine recent 
increases in health insurance premiums.
    The Republicans love to attack the Affordable Care Act even 
though it has improved the health care of millions of our 
fellow Americans and millions of our constituents. But there is 
one critical fact that they do not want you to know. Premium 
increases have actually been lower than the Congressional 
Budget Office predicted when Congress passed the Affordable 
Care Act. They are lower than we anticipated. Based on CBO's 
projections at that time, they estimated that premiums would be 
12 percent to 20 percent higher than they are today.
    Here is another key fact you will never hear Republicans 
admit: National health care spending has slowed even more 
significantly than projected when we passed the Affordable Care 
Act. That includes spending across Medicare, Medicaid, any 
private insurance market. National health care spending for 
2014 through 2019 will be $2.6 trillion less, $2.6 trillion 
with a T, trillion than CMS projected in 2010 when we passed 
the Affordable Care Act. Of course, all this is happening as 
the Affordable Care Act expands health coverage for 20 million 
Americans, offers them more comprehensive coverage, and ends 
the discrimination of the past. As a result, we now have the 
lowest uninsured rate in our nation's history.
    Unfortunately, my Republican colleagues do not want to talk 
about these facts. This is the rest of the story. They want to 
attack the ACA for political reasons without offering solutions 
of their own. From day one, Republicans have been focused on 
undoing and undermining this law. They have taken every single 
opportunity to sabotage it by any means necessary. They 
challenged the law in court, tried to defund it, and voted more 
than 60 times--hello, 60 times--to repeal or weaken it. They 
are truly obsessed.
    If we want to talk about premium increases, we need to also 
talk about drug companies that are jacking up the prices of 
their drugs. And I want all of our witnesses to talk about 
that, drug companies that are jacking up prices and how does 
that affect premiums. One of the biggest drivers in premium 
increases is skyrocketing prescription drug prices. And that is 
across the board, not just for people with plans under the 
Affordable Care Act.
    For that reason, I am very pleased that the chairman agreed 
to the request from Democrats to hold a hearing next week to 
examine the massive price increases with EpiPens, and including 
Representative Grace Meng, Stephen Lynch, Tammy Duckworth, and 
Peter Welch, all requesting a hearing. And, Mr. Chairman, I do 
appreciate you doing that and working with us to get the 
documents that we will be getting from Mylan.
    Let me be clear. I have told my staff, prescription drug 
prices and the unconscionable raising of those prices is one of 
my top three priorities in this Congress. And the reason why it 
is one of the top three priorities is because I think it is 
unfair. It is like putting a gun to a sick person's head and 
say either you pay or you go into bankruptcy, either you pay or 
you get sicker, either you pay or you die. So we cannot even 
have this discussion about premium increases unless we address 
that, and I hope that our witnesses will do that.
    So a majority of Americans--Democrats, Republicans, and 
independents by the way--believe that this is our number one 
health care priority as a nation, number one. It used to be the 
Affordable Care Act. Now, it is prescription drugs. That is 
Republicans, Democrats, independents. They are saying this is a 
major problem, and you know why? Because it is affecting them 
every single day, and they are tired of it.
    One of the reasons why I think the American public is so 
frustrated, they want us to do something about these problems. 
They don't want us to just skirt down the road and say lolly, 
lolly, have a good day. They are trying to get well. As one of 
my constituents said to me, Congressman, I can get the 
treatment but can't get the cure. I can't afford the cure.
    So I am so glad that we are having this hearing. But let's 
be clear. There is something else that goes to the bottom line 
of this. It is the health care of Americans. It is health care 
of Americans. We are all in this country right now. We are all 
on this planet right now. And it would be nice for us to do 
everything in our power to keep our nation healthy. And how do 
you keep the nation healthy? You keep the individuals healthy 
because when you keep the individuals healthy, you have a 
stronger company.
    And so with that, Mr. Chairman, again, I appreciate it. I 
am excited about the EpiPen hearing coming up. I am excited 
about possibly bringing Shkreli back. He said he wants to come 
back. That would be very nice. I hope he provides some 
testimony this time. And I thank you again and again, 
witnesses, thank you. And I yield back.
    Chairman Chaffetz. I thank the gentleman.
    I am not sure Pharma boy is coming back, but I appreciate 
your passion on it.
    We will hold the record open for 5 legislative days for any 
members who would like to submit a written statement.
    Let's now recognize our panel of witnesses. We are pleased 
to welcome Dr. Mandy Cohen, the chief operating officer and 
chief of staff to the Office of the Administrator at the United 
States Department of Health and Human Services; Mr. Al Redmer, 
Jr., commissioner of the Maryland Insurance Administration, 
speaking on behalf of the National Association of Insurance 
Commissioners; Mr. Chris Carlson, principal at Oliver Wyman, 
speaking on behalf of America's Health Insurance Plans; Mr. 
Kurt Giesa, partner and head of the Actuarial Healthcare 
Practice at Oliver Wyman, speaking on behalf of Blue Cross Blue 
Shield Association; and Mr. Topher Spiro ----
    Mr. Spiro. Spiro.
    Chairman Chaffetz. Spiro, sorry. Spiro, vice president of 
Health Policy at the Center for American Progress.
    We thank you for being here. Pursuant to committee rules, 
all witnesses are to be sworn before they testify, so if you 
will please rise and raise your right hand.
    [Witnesses sworn.]
    Chairman Chaffetz. Thank you. You may be seated. Let the 
record reflect that the witnesses all answered in the 
affirmative.
    In order to allow time for discussion, we would appreciate 
it if you would limit your oral testimony to no more than 5 
minutes. Your entire written statement will be made part of the 
record.
    Dr. Cohen, you are now recognized for 5 minutes.

                       WITNESS STATEMENTS

                    STATEMENT OF MANDY COHEN

    Dr. Cohen. Thank you so much. Thank you, Chairman. Thank 
you, Ranking Member Cummings and members of the committee. 
Thank you for the invitation to discuss CMS's continuing work 
to implement the Affordable Care Act and provide consumers with 
affordable access to high-quality health coverage.
    The changes to the Affordable Care Act has made our health 
system--are providing countless Americans the security that 
comes from knowing that they'll have access to health coverage 
when they need it. At the same time, this fundamental shift to 
a health insurance market that serves all consumers regardless 
of their health history requires all of us--consumers, issuers, 
State regulators--to work together to build and test new 
businesses, coordinated care systems, and reform payment models 
in order to provide the care people need.
    We're making historic gains in coverage. As of earlier this 
year, an estimated 20 million more Americans have coverage 
because of the law, and 8.6 percent of--and an 8.6 uninsured 
rate for Americans is the lowest on record. We believe these 
remarkable results are at a lower cost than the Congressional 
Budget Office originally projected with coverage provisions 
costing 25 percent less than the original estimates.
    But we do expect 2017 to be a transition year for the 
marketplace with several one-time factors putting upward 
pressure on premiums. Because the individual market previously 
operated by excluding sick people, no one knew how much it was 
going to cost to start covering everyone. As a result, some 
marketplace issuers initially priced below the cost of new 
enrollees and now they need to catch up.
    As evidence of this fact, independent experts have 
estimated that marketplace premiums are currently 12 to 20 
percent lower than what CBO predicted when ACA was passed. This 
year also marks the end of some of ACA's premium stabilization 
programs, which were designed to support the new market in its 
early years.
    However, with high consumer satisfaction, more people 
getting care, and an improving risk pool, data shows that the 
future of the marketplace is strong and we're confident issuers 
will continue to participate given the growth opportunities.
    Nonetheless, we know that premium increases have real-life 
consequences for families. That's why it's so important that 
the marketplace has built-in protections for consumers. The 
marketplace provides tax credits that mirror premium increases 
so consumers are always protected. Even with significant rate 
increases, the majority of consumers can access coverage for 
less than $75 per month.
    And we continue to work in partnership with State 
Departments of Insurance, who remain the primary regulators of 
health insurance in the States to help support their efforts to 
effectively enforce ACA's rate review provisions. Rate review 
ensures that in every State proposed rate increases are 
evaluated by experts to make sure they are actuarially sound 
and justified.
    It's also important to remember that for the roughly 150 
million Americans who get coverage through their employer, 
premium growth has slowed. Four out of the five last years have 
seen the slowest growth rate on record, saving families 
millions of dollars.
    Since the ACA was passed, health care prices have risen at 
the slowest rate in 50 years, but we know more needs to be 
done. Just as in the private sector, rising health care costs 
impact all of CMS programs, and we work every day to control 
health care costs for the benefit of taxpayers, beneficiaries, 
and consumers.
    We're working to improve affordability and quality for all 
consumers whether they get their coverage--no matter where they 
get their coverage by rewarding health care providers for the 
quality of the care that they deliver, not the quantity.
    Many health plans are meeting the challenge of providing 
quality coverage to all with marketplace serving as a 
laboratory for those innovations and strategies that are 
helping build a better health care system overall. Innovative 
insurers are succeeding in serving these new consumers, and 
it's paying off for the marketplace as a whole. Per-member, 
per-month costs in the ACA individual market actually fell 
slightly by .1 percent from 2014 to 2015, which is a positive 
sign to the long-term health of the individual market risk 
pool.
    States that saw above-average growth in enrollment also saw 
an above-average drop in costs, showing that growth of 
enrollment is leading to a broader, healthier risk pool that 
brings down costs.
    We're also using the tools at our disposal to make the 
marketplace even more attractive for consumers and issuers 
alike. Over the past several months, CMS has moved aggressively 
on things like special enrollment periods. We've made 
improvements to the risk adjustment program, which could bring 
more certainty to the marketplace and help issuers account for 
the risk of all enrollees. And we're reaching out to 
marketplace consumers turning 65 helping them successfully 
transition to the--to Medicaid coverage, among many other 
actions we've taken.
    CMS is committed to strengthening the growing marketplace 
as it matures. We have heard suggestions from stakeholders, 
issuers, States, Congress, and others, and we have responded. 
Working together, I know we can further our shared goal of 
improving the health care for America and making sure American 
families continue to have access to quality, affordable health 
coverage. Thank you.
    [Prepared statement of Dr. Cohen follows:]
    
    
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    Chairman Chaffetz. Commissioner Redmer, you are now 
recognized for 5 minutes.

                  STATEMENT OF AL REDMER, JR.

    Mr. Redmer. Thank you, Mr. Chairman, Ranking Member 
Cummings, and members of the committee. My name is Al Redmer. 
I'm the appointed commissioner of the Maryland Insurance 
Administration. I want to thank you for the opportunity to be 
here today representing the National Association of Insurance 
Commissioners.
    I'd like to begin my comments by offering a short 
historical review of the health insurance market in Maryland, 
which I believe will add some context to our discussion 
regarding rate changes coming in January of next year.
    In the early 1980s and early '90s, Maryland's health 
insurance market had conditions similar to those discussed 
during the debate of the Affordable Care Act. In 1993, the 
Maryland General Assembly passed small group insurance reform, 
which included provisions similar to those contained in the 
ACA, including such things as guaranteed issue, a ban on 
preexisting condition limitations, a standard benefit plan, and 
adjusted community rating. Initially, those changes created 
disruptions to the market, but it has evolved into a 
competitive market that is seeing moderate, single-digit 
premium increases. Given that experience, we knew that there 
would be considerable instability in the individual market when 
the ACA was enacted, but hopefully eventually that there would 
be some equilibrium to the small group market.
    Unfortunately, due to a variety of factors, the instability 
in the individual market created by the ACA has now extended 
into the fourth year of implementation, and corrections are 
long overdue.
    I recently attended a national NAIC meeting where 
regulators across country expressed serious concerns about the 
condition of the individual market in their States. Major 
insurance carriers have pulled out of the exchanges citing 
substantial losses in the individual markets, and some carriers 
have closed their doors or failed to meet solvency 
requirements. This means thousands of consumers will need to 
reenroll in a new health plan from a different carrier by 
December 15 or they will not have coverage on January the 1st.
    In addition, in too many counties there are only one 
insurance carrier offering individual coverage on the exchange, 
and there could still be one or two without any plans at all on 
the exchange. Furthermore, many insurance carriers are only 
offering the HMO-style health benefits with very narrow 
provider networks in the individual market, which dramatically 
reduces the coverage options available for consumers and 
increases the pricing.
    Finally, my colleagues have reported that individual market 
carriers are requesting premium increases of 30, 40, and in 
some cases more than 50 percent.
    I and my colleagues take very seriously our responsibility 
under State law to ensure all rates are actuarially justified, 
nondiscriminatory, and sufficient to ensure solvency. Proposed 
rate increases are thoroughly reviewed, and under the ACA, they 
are more transparent than ever. In Maryland, for example, we 
had two public rate hearings. But individual market premiums 
continue to rise, and for too many consumers, is still 
unaffordable and consumers want to know why. Rising health care 
costs remain the driving force behind rising health insurance 
premiums, and this must be addressed if health insurance 
coverage is ever going to be truly affordable for the broadest 
possible group of policyholders.
    Another key factor we are seeing, as a result of the ACA 
and its implementation, is uncertainty. And as any actuary will 
tell you, insurance hates uncertainty. And the ACA has been--as 
implemented, has considerable uncertainty in three areas: risk 
pools, funding, and regulations.
    The fact that far fewer younger, healthier consumers are 
enrollees than expected, even with increasing penalties means 
the risk pools are sicker than either we or the policy carriers 
expected. Other contributing factors at work are the 
uncertainty of Medicaid, abuse of special enrollment periods, 
which contributes to adverse selection.
    We would urge Congress to consider legislative proposals to 
improve the risk of the pools and act before the market 
deteriorates further.
    As far as funding, carriers receiving less with the--I'm 
sorry, the risk corridor payments have higher-than-expected 
risk adjustment bills and potentially receiving less 
reinsurance payments than expected.
    And finally, to wrap up, I would like to point out that if 
the Department of Justice is successful in seeking precedence 
over policyholders, we will see even more carriers fail as 
regulators are forced to step in sooner to preserve those 
dollars for the benefit of policyholders. And I'll look forward 
to any questions you might have.
    [Prepared statement of Mr. Redmer follows:]
    
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    Chairman Chaffetz. Thank you.
    Mr. Carlson, you are now recognized for 5 minutes.

                   STATEMENT OF CHRIS CARLSON

    Mr. Carlson. Thank you, Chairman Chaffetz, Ranking Member 
Cummings, and distinguished members of the committee. Thank you 
for the opportunity to testify today on the premium rate 
increases for 2017 in the non-group health insurance market.
    My name is Chris Carlson, and I'm a principal in the firm 
of Oliver Wyman Actuarial Consulting. I'm testifying today on 
behalf of America's Health Insurance Plans, the national trade 
association representing health insurance plans and the 
millions of Americans they serve across the country.
    My testimony will focus on three main issues: the evolution 
of the premium rates on the exchanges, the current factors that 
are being considered in calculating premium rates for 2017, and 
policy options for making health insurance premiums more 
affordable in the long term.
    The Affordable Care Act changed many of the rules regarding 
premium rating that existed prior to 2014, which has allowed 
for a broad increase in the number of individuals with health 
insurance and has significantly reduced the uninsured 
population.
    As health plan actuaries, we were preparing the rate 
filings for exchange products back in 2013 and had limited 
information available to support the estimates for premium 
rates due primarily to the considerable amount of uncertainty 
about the characteristics of the population likely to enroll in 
the exchange market.
    Further, the premium rates for 2015 were developed by 
actuaries in a manner consistent with 2014. In both cases there 
was limited amount of data available for the pricing 
assumptions. Premium rates for 2016 also followed a similar 
pattern. While there were a wide range of rate changes, both 
increases and decreases, the average increase for the second-
lowest-cost silver plan was 7.5 percent, consistent with 
underlying medical trend.
    To put it simply, health insurance is a reflection of 
medical care delivery and is priced accordingly. Underlying 
medical trend has always been the primary driver in the 
increased cost of health insurance. When costs of delivering 
medical care go up, so too does the cost of health insurance.
    More specifically, some of the key components of the 
premium rate calculations being considered in developing rates 
for 2017 include: the underlying medical trend, the risk pool 
composition, the expiration of two of the three premium 
stabilization programs, and special enrollment periods.
    Actuaries use the experience of the risk pool in setting 
the premium rates. However, as discussed earlier, the risk pool 
was relatively unknown when premiums were priced for 2014 and 
2015. In general, the actual composition of the risk pool has 
been less healthy than originally expected.
    Another significant factor is the expiration of the 
transitional re-entrance program, which forces insurers to 
build these costs into their premiums. Moreover, the temporary 
risk corridor program has not worked as designed and has led to 
upward pressure on premium rates.
    Oliver Wyman reviewed the impact of special enrollment 
periods on health insurers and found that individuals that 
enrolled during SEPs had claim costs that were 24 percent 
higher during the first 3 months of enrollment than those that 
enrolled during the open enrollment period, leading to higher 
health care costs than were anticipated by insurers.
    While health insurers are trying to utilize their best 
estimates of cost to provide health insurance, this continues 
to be a market in transition. To make health insurance premiums 
more affordable in the long term, additional action must be 
taken to address the factors that are driving underlying health 
care costs.
    My written testimony discusses several areas where there 
are opportunities for legislative and regulatory action to 
provide relief from rising health care costs and to stabilize 
the market. I will just name a few, though: strengthening the 
risk adjustment program to promote greater payment accuracy, 
improving verification of special enrollment periods, and 
providing further relief from the health insurer tax. These 
changes and others will help deliver more affordable coverage 
and more choices in the marketplace. That's what consumers 
deserve and that's what health insurance plans are committed to 
delivering.
    Thank you for this opportunity, and I look forward to 
answering any questions.
    [Prepared statement of Mr. Carlson follows:]
   
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    Mr. Meadows. [Presiding.] Thank you, Mr. Carlson.
    Mr. Giesa, you are recognized for 5 minutes.

                    STATEMENT OF KURT GIESA

    Mr. Giesa. Chairman Chaffetz, Ranking Member Cummings, and 
distinguished members of the committee, thank you for allowing 
me to be with you this morning to provide testimony related to 
the rising premiums in the Patient Protection and Affordable 
Care Act.
    I'm here today on behalf of the Blue Cross Blue Shield 
Association. The association is a national federation of 36 
independent community-based and locally operated Blue Cross and 
Blue Shield companies that collectively provide health care to 
more than 107 million members. Blue Cross and Blue Shield plans 
have an 85-year history of providing individual health 
insurance coverage in local communities across the United 
States.
    Issuers and their actuaries face extraordinary challenges 
in setting premiums in the non-group market, which I described 
in my written testimony. Two thousand seventeen will be the 
first year that issuers are setting premiums in the non-group 
market based on a relatively thorough understanding of the 
health of that market, meaning the makeup of the people they 
are insuring.
    But issuers have come to understand that the people they 
have enrolled are older and sicker than they had initially 
assumed. In its report titled ``Health of America,'' The Blue 
Cross and Blue Shield Association found, for example, that the 
prevalence of HIV is four times higher and the prevalence of 
hepatitis C is twice as high as the prevalence of these 
diseases in the employer group market. Inpatient hospital 
admissions are 40 percent higher, and allowed costs per member 
are 22 percent higher.
    In my written testimony I present data showing that almost 
half the enrollees in the exchange are ages 45 or older. That 
was in 2014, and that situation persists today in spite of the 
growth in the non-group market.
    In order to create a viable and sustainable marketplace, 
younger, healthier individuals will need to enroll, which will 
require changing the value equation for younger people 
purchasing coverage. Congress and the administration could take 
steps to ensure the long-term viability of this market by 
improving the verification of eligibility for special 
enrollment provisions and making other changes to encourage 
continuous enrollment. In addition, Congress should make 
changes to the age band structure and the premium tax credits 
to encourage more and younger, healthier people to enroll.
    Again, thank you and I look forward to the discussion this 
morning.
    [Prepared statement of Mr. Giesa follows:]
    
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    Mr. Meadows. Thank you.
    Mr. Spiro, you are recognized for 5 minutes.

                   STATEMENT OF TOPHER SPIRO

    Mr. Spiro. Thank you.
    When evaluating the status of ACA markets, context is 
important. Before the ACA, the individual market was volatile, 
and people in rural areas do not have much choice. The 
difference is that this market did not work at all for anyone 
who was sick. Even as the ACA put in place consumer 
protections, the average benchmark premium in 2014 was 10 
percent lower than the average premium in 2013. The rate of the 
uninsured is now at historic low, giving more peace of mind to 
an additional 21 million Americans.
    Contrary to popular perception, the ACA risk pool is stable 
and improving. From 2014 to 2015, the cost per enrollee in 
exchanges actually fell by .1 percent. So this begs the 
question, why are insurers increasing premiums substantially? 
Well, when the new markets launched in 2014, insurers 
significantly under-priced premiums. There was a lot of 
uncertainty about pricing, and some insurers under-priced 
premiums to establish a foothold. As a result, the average 
benchmark premium came in 15 percent lower than the CBO had 
projected.
    Congress also constrained the risk corridor program, which 
was designed specifically to address pricing uncertainty in a 
new market. Congress did so after insurers had already priced 
their plans for 2015 and 2016. The resulting shortfall is 
responsible for about two-thirds of the financial losses 
incurred by insurers in 2014.
    Premium increases in 2015 and 2016 were not sufficient to 
close the gap from 2014. Compounding the problem, the 
reinsurance program began to phase out in 2015. So it is not 
surprising that the markets are due for a correction in 2017. 
Although this correction will be significant, the ACA's subsidy 
structure will act as a stabilizing force. Even after the 
correction, premiums will still be 11 percent lower than 
average premiums would have been in the absence of the 
Affordable Care Act.
    Even though ACA markets are not in crisis, policymakers 
should take additional actions to accelerate the transition to 
equilibrium. The administration should err on the side of 
caution, acting as urgently and proactively as possible.
    First, the administration should verify eligibility for 
special enrollment periods, and in my written testimony I 
detail several important conditions and consumer protections 
that would be necessary.
    Second, the administration should quickly prohibit 
providers from steering high-cost patients from Medicare and 
Medicaid to the exchanges.
    Third, States should establish their own reinsurance 
programs. Under innovation waivers, the administration should 
offer States the Federal savings that would result from lower 
premium tax credits to help pay for this reinsurance.
    Fourth, the administration and States should expand rating 
areas to cover larger geographical areas. In States that have a 
mixture of rural and urban areas, this policy option would 
provide greater choice in rural areas.
    Fifth, States should require all plans to be sold through 
the exchange. Although there is a single risk pool for each 
insurer, insurers that sell plans only outside of the exchange 
steal enrollees who might help broaden the risk pools of other 
insurers.
    Sixth, States that have not done so should expand their 
Medicaid programs. In States that expanded Medicaid, ACA market 
premiums are about 7 percent lower than in States that did not.
    Seventh, the government should use active purchasing to get 
the best deal from insurers for all programs. Insurers that 
profit from participation in Medicaid and Medicare Advantage 
should be willing to participate in the exchanges.
    Eighth, Congress should create a guaranteed choice plan. In 
perhaps less partisan times, Congress created a fallback option 
in the Medicare prescription drug program.
    Ninth, Congress should tackle the high cost of specialty 
drugs, as Mr. Cummings mentioned. This is one of the biggest 
factors cited by large insurers for leaving ACA markets.
    Tenth, Congress should increase cost-sharing subsidies to 
lower deductibles and increase premium tax credits for young 
and middle-income people.
    But most of all, the administration, Congress, States, 
insurers, and other stakeholders should act in a constructive 
spirit to fix any problems that arise rather than root for 
failure or cut and run. Thank you.
    [Prepared statement of Mr. Spiro follows:]
    
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    Mr. Meadows. Thank you, Mr. Spiro.
    I am going to go to the gentleman from Michigan, Mr. 
Walberg, for a series of questions, but I would like to 
comment, Mr. Spiro. Some of your comments in your opening 
remarks defy reality, and so I look forward to some robust 
questioning as you make your premise and see if you can back 
those up.
    So I will go to Mr. Walberg for 5 minutes.
    Mr. Walberg. Well, thank you, Mr. Chairman. I think you 
said it as well as I was going to say it. But it started with 
Dr. Cohen, as well as Mr. Spiro, some comments that defy 
credibility and reality. I mean, I know positions have been 
taken and we have to sell certain things, but my gracious, it 
is not dealing with reality and I am expecting Toto in the Land 
of Oz and we are not in Kansas yet.
    And in Michigan I read in the Detroit Free Press, not an 
organ of conservatism, health plans sold on Michigan's 
insurance exchange could see an average 17.3 percent increase 
next year, and we are a Medicaid expansion State. It goes on to 
say that rate increases would mean a financial hit for 
taxpayers in general and the 345,000 Michiganders who buy their 
health insurance on the HealthCare.gov Web site.
    It goes on to point out that of the 14 insurers with 
individual market plans, 10 are seeking increases exceeding 10 
percent. They include a proposed 13.9 percent average increase 
by Priority Health, 18.7 percent by Blue Cross Blue Shield of 
Michigan, 16.8 percent by Health Alliance Plan, and 39.2 
percent by Humana. The Avalere health analysis of 2017 rate 
increases for individual plans in 14 States, including 
Michigan, found that the average silver plan, the second-
cheapest classed after bronze, would rise 11 percent in 2017.
    We have got a problem, and we have to admit that. And I 
appreciate the hearing today to do that very thing and get away 
from simply selling something that was doomed to fail. And one 
of the providers says it has failed 2 years ahead of time and 
it is getting worse. And when I talked to my ratepayers back in 
my district, people who say yes, I have insurance but I don't 
have health care because when I go in to take care of my 
health, I find out that my out-of-pocket expenses, it precludes 
me caring for my health.
    Having got that off my shoulder, Mr. Carlson, what impact 
has the rate filing process had on competition and insurance 
premiums?
    Mr. Carlson. Well, I think that the industry as a whole is 
fairly highly regulated, and certainly premium increases that 
are being requested are higher than anybody would like to see. 
And, you know, from the health plan perspective, you know, we 
certainly want to be able to justify the rates that are being 
asked for. And the regulatory process puts somewhat of a 
barrier but it--you know, it also puts a, you know, an 
opportunity for everyone to see exactly what is being 
requested.
    And, you know, as far as making it more--you know, limiting 
the choice in the marketplace, you know, I can't speak directly 
to any specific plan but, you know, it is--you know, does make 
it more difficult for a health plan to make sure that they, you 
know, maintain their solvency to be able to get these rate 
increases that are necessary for that fact.
    Mr. Walberg. Okay. Mr. Redmer, can you explain the rate 
process?
    Mr. Redmer. Certainly. In--the law around the country is 
pretty specific. The law requires us to approve or disapprove 
rates to make sure that those rates are adequate to protect 
solvency. They cannot be excessive, they have to be actuarially 
justified, and they cannot be discriminatory.
    So what happens is the beginning of May we receive the 
proposed rate increases from the carriers, along with all the 
supporting actuarial data. We have a team of actuaries. Some 
States use outside actuarial consultants to scrub the data, to 
challenge the data and the projections of the carriers.
    In Maryland, we had not one but two separate rate increases 
where different stakeholders, consumer groups come in and 
provide their feedback and information, and at the end of the 
day we come out with our final rates. In Maryland as an 
example, if you look at the aggregate price increases and you 
look at what we ultimately approved, we approved aggregate 
rates that were about $24.5 million less than were ----
    Mr. Walberg. Let me ask a question quickly in the remaining 
seconds here. Some State regulators have said that they are put 
in the position of having to decide between agreeing to the 
price increases or have plans withdraw from the markets 
entirely. Is that what you are finding?
    Mr. Redmer. Well, no. The end result is we're required to 
approve adequate rates, so if--the problem that some carriers 
have is they can't get the rates that they believe are 
sufficient to operate their business. Insurance 101 is you have 
to collect revenues to pay the claims, the administrative 
expense, and the reserves that government requires. The key is 
not necessarily the approval process but carriers being able to 
get sufficient rates in order to run their organizations.
    Mr. Walberg. Thank you. I yield back.
    Mr. Meadows. I thank the gentleman.
    The chair recognizes the gentleman from Tennessee, Mr. 
Cooper, 5 minutes.
    Mr. Cooper. Thank you, Mr. Chairman. I would like to 
welcome this distinguished panel of experts.
    And for most viewers of this hearing, it is about as 
exciting as watching paint dry, so let me try to put the 
cookies on a low shelf and simplify some of these issues.
    Here, we have a distinguished panel of experts, and none of 
them are really echoing the political outrage that my friends 
on the other side of the aisle are trying to express. You know, 
we do not have the real chairman of the committee chairing this 
hearing, and the hearing is very sparsely attended, so they are 
not getting the political impact that apparently they were 
expecting.
    I think the testimony is best summed up by the NAIC witness 
Mr. Redmer when he concludes in his final paragraph on page 7 
and says this: ``It has been over 6 years since the ACA was 
signed into law, and the time is long past due for State and 
Federal policymakers to move past the politics and come 
together to make substantive corrections to the law to bring 
about more stable risk pools, dependable funding, and 
reasonable regulations for the individual health insurance 
markets. The markets are suffering. Let's roll up our sleeves 
and fix them.'' Well put.
    Mr. Redmer. You said it better than I could.
    Mr. Cooper. But here, we have a committee that literally 
has no jurisdiction over any fix. We are purely an 
investigative committee. And oftentimes that translates into 
pure political theater. Members of this committee, if they 
wanted to study the issues, couldn't do anything about them.
    So let's review the bidding. The American Enterprise 
Institute, a conservative think tank, reported in their journal 
just last year that there still is no substitute Republican 
plan for the ACA. Now, there are band-aids here or there but 
really there is no alternative so it is not a question of if we 
had only done the Republican plan.
    I was one of the supporters of the bipartisan plan, the 
alternative to ObamaCare, the so-called Wyden-Bennett plan, 
that would have solved many of these problems, but we had 
difficulty getting people to be constructive, to be for 
something. It is much easier to criticize.
    So as you deal with these important issues and the most 
important lesson to learn is like who is hurt? Where are the 
victims?
    Ms. Cohen pointed out in her testimony that still the vast 
majority of folks who are getting marketplace insurance are 
paying less than $75 a month. That is a pretty awesome deal.
    With marketplace subsidies, a lot of these large-looking 
rate increases in terms of percentage translate into $2 or $3-
a-month increases in cost. And while that is regrettable, as 
Ranking Member Cummings pointed out in his opening testimony, 
spiraling insurance costs have been happening to America for 
some 40 years. And the costs under the ACA are actually less 
than expected. Let me repeat that for some of my friends who 
prefer not to live in a fact-based world, less than expected.
    Now, no one knows if these trends will continue, but this 
is astonishingly good news, and yet we live in a political 
culture in which people don't want to talk about the facts, 
especially if they include good news for what might be 
happening.
    So this is a time, I think, to focus on the details, 
understand how this is done. Most folks back home don't 
understand that Congress gave away jurisdiction on insurance in 
1947 with the McCarran-Ferguson Act. Most of the regulatory 
power is really at the State level, and some States do a good 
job managing this, some not so much. So there is really not 
even a committee in Congress that has jurisdiction over 
insurance per se as most of the work is properly done at the 
State level.
    But the fundamental issue of controlling rising health 
costs is a challenging one. And my friend from the State of 
Michigan, who has now already departed the hearing, when the 
big three automakers have their very nice health plans, some of 
those folks were considered to be one of the instigators of 
high health costs because when you have first-dollar coverage, 
no one questions pricing.
    And I think it was former HEW head Joe Califano who pointed 
this out, that medical prices in the Detroit area were far 
higher than the rest of the country because nobody was 
questioning the bills.
    So we are moving into an era in which people are 
questioning the bills, they are paying close attention to 
deductibles and copays and coinsurance, and that is a good 
thing. And when you are comparing silver plans with bronze 
plans and things like that, we already have more clarity in the 
market than we had in previous generations, and most important, 
a better benefits package.
    I am proud of Maryland for having instituted some of these 
reforms as far back as 1993, a guaranteed issue ban on 
preexisting conditions, things like that, that are necessary 
elements of a decent insurance market.
    So there are ways to solve these problems, and let's all 
echo Commissioner Redmer's call for bipartisan action. Let's 
roll up our sleeves and fix the glitches that remain.
    Thank you, Mr. Chairman.
    Mr. Cummings. Mr. Chairman?
    Mr. Meadows. Yes.
    Mr. Cummings. Just one moment. I want to associate myself 
with everything the gentleman just said, but I also want to 
make sure, in all fairness to Chairman Chaffetz, of course he 
was here, and the fact that he is not here at this moment does 
not mean that he doesn't consider this very important.
    Chaffetz and I have been in a lot of hearings and rarely 
does he or I miss one moment, but he has a bill on--a major 
bill that he is--his bill testifying in another committee. So I 
didn't want to let that--I wanted to make sure that is clear to 
all of us that he rarely misses a moment, but he does consider 
this an important hearing. We have talked about it many times. 
And I just wanted to straighten that out.
    Mr. Meadows. I thank the gentleman. And as we go to the 
gentleman from Tennessee, Mr. Duncan, I do want to clarify one 
quick thing. Mr. Cooper said you are not outraged. Dr. Cohen, 
do you by your health insurance from HealthCare.gov?
    Dr. Cohen. No. I'm a Federal employee.
    Mr. Meadows. Okay. Commissioner, do you by your health care 
from HealthCare.gov?
    Mr. Redmer. No, sir.
    Mr. Meadows. All right. Mr. Carlson, do you buy your health 
care from HealthCare.gov?
    Mr. Carlson. No, I have employer coverage.
    Mr. Meadows. Okay. Mr. Giesa, do you by your health care 
from HealthCare.gov?
    Mr. Giesa. I have employer coverage as well.
    Mr. Meadows. You have employer--and, Mr. Spiro, do you by 
your health care ----
    Mr. Spiro. No.
    Mr. Meadows. No? Well, so perhaps they are not outraged 
because they are not having to use the system.
    I will recognize the gentleman from Tennessee, Mr. Duncan, 
for 5 minutes.
    Mr. Duncan. Well, thank you very much, Mr. Chairman.
    I want to read just a tiny portion of some of what I have 
received. Linda Mays, a registered nurse for 30 years, who 
decided to retire this year at the age of 63, she says she was 
shocked at the price that she was quoted. The cheapest plan was 
$586.23 and covered nothing with a $4,000 deductible and $6,350 
out-of-pocket expenses and no medication coverage. She says, 
``I'm still looking for the affordable part of health care.''
    Les Gotto of Knoxville--and I don't know any of these 
people personally--sent me this email. ``Blue Cross Blue Shield 
of Tennessee up 62 percent''--that is the percentage increase 
that Blue Cross Blue Shield requested in Tennessee. ``Blue 
Cross Blue Shield of Tennessee up 62 percent after going up 39 
percent last year, and these plans pay for nothing.'' And he's 
got ``nothing'' in all capital letters. ``Where am I supposed 
to get another 6,000 bucks next year? I paid $10,000 this year 
for premiums and four wellness exams? I also paid at least 
$6,000 out of pocket for health care.''
    Christopher D. Bush, an average--it says an average, 
healthy 30-year-old male, and he said that his policy that he 
got 2 years ago, it is going up--it is now four times the 
original cost of the premium. Blue Cross Blue Shield cites 
ObamaCare as the cause for the increase.
    Ann Kovaleski, a 61-year-old from Knoxville, is paying $761 
a month now, which was nearly a 63 percent over her prior 
premium the year before and included a $3,000 in-network 
deductible, $6,000 out-of-network, and said this is quite 
expensive since she will have paid down more than $9,000 in 
premiums and $3,000 in deductible before their policy pays out 
a cent. Now, she has been notified for the 62 percent Blue 
Cross Blue Shield increase. She said, ``This would bring my 
monthly premium to $1,234 a month, $14,794 annually, this much 
out of pocket plus the $3,000 deductible.'' And she says, ``The 
President promised on many occasions that the average family's 
health insurance premiums will be lowered by up to $2,500.''
    And finally, Mr. William H. Power of Knoxville sent a 
message about his premium increases, and he says ``In reality, 
I feel what we are experiencing is the sellout of the Federal 
Government to pass along the issues that we were told would not 
happen as a result of the ACA.''
    My late mother was from Iowa. There was a public hearing 
out there where one individual testified that his policy would 
increase by $4,000 from $15,000 a year to $19,000 a year.
    That is what we are hearing not only from all over my 
district but all over Tennessee and all over the country. And I 
tell you, the people are really up in arms about this and we 
are going to have to make some major changes.
    I went to a reception in the mid-1990s where the doctor who 
delivered me came and brought my records, and I asked him, I 
said, how much did you charge back then? He said he charged $60 
for 9 months of care and the delivery if they could afford it. 
Medical care was cheap and affordable until the Federal 
Government messed it all up, and the few people who know how to 
manipulate the system have been getting filthy rich.
    And it makes no sense whatsoever because we have got more 
doctors, more nurses, more health care workers per person than 
any country in the world by far. And I really sometimes think 
that the people who foisted this so-called unaffordable care 
plan out on us knew that it wouldn't work but that it would get 
so bad that people would then demand that we go to a single-
payer plan, and then we will end up with shortages, waiting 
periods, lower quality of health care, and we will have this 
Russian/Cuban type of medical system.
    I was on a congressional CODEL a few weeks ago, and the 
front page of the largest newspaper in Ireland had a front-page 
story while we were there and said they had 530,000 people on 
waiting lists in Ireland for medical care. You multiply that 
times 70 for the United States, you see where we are heading.
    Thank you, Mr. Chairman.
    Mr. Meadows. I thank the gentleman.
    The chair recognizes the gentlewoman from Michigan, Mrs. 
Lawrence, for 5 minutes.
    Mrs. Lawrence. Thank you, Chair.
    In the 6 years since Congress passed the ACA, we have found 
ourselves in this hearing again and again as it is being 
debated in some would call obsession with undoing and 
undermining this historic law. There has been more than 60 
times that we voted to repeal and undermine the ACA. There have 
been lawsuits filed. They have cut critical funding. And the 
majority have held hearing after hearing just like today's 
using overheated rhetoric and claims that seem to be 
exaggerated.
    It is not productive. It is really tiresome. Because when I 
came to this Congress, I recognized that the ACA was not 
perfect, and I am willing to work with the other side of the 
aisle to make it better. But I never get a chance to have that 
conversation on what to do to make it better because it is 
continuous, continuous attacks to repeal it.
    So, Dr. Cohen, how many Americans have gained quality, 
affordable insurance coverage since the ACA has passed in 2010?
    Dr. Cohen. Twenty million.
    Mrs. Lawrence. I'm sorry?
    Dr. Cohen. Twenty million.
    Mrs. Lawrence. Twenty million. Twenty million people have 
gained insurance coverage. The ACA has also cut the uninsured 
rate nearly in half. It is now at a historic low of 8.6 percent 
according to the National Center on Health Statistic. Dr. 
Cohen, what was the primary goal of ACA?
    Dr. Cohen. To increase access to affordable, quality 
coverage.
    Mrs. Lawrence. Then I would say we are well on our way to 
reaching that goal. Just imagine how much we could accomplish 
if Republicans and Democrats would work together instead of 
against this. I can understand differences of opinion, but it 
is unacceptable to have a stalemate on an issue that is so 
important to the American public. And if we can sit here today 
and clearly identify the areas that we should address so that 
we can make it better, then why don't we do that? Why don't we 
come together and work to make this plan? Because we have 
changed 20 million people in America? We have affected 20 
million people, and we have increased--the goal of ACA--we are 
on our way and we have increased that number.
    And I am speaking today--the facts are the facts, and I 
will not say the ACA is perfect, but I can tell you it is the 
foundation for us to build on. And we waste time hearing after 
hearing after hearing where we refuse to come to the table and 
say let's fix what is wrong with this so we can continue to 
make this country competitive with other countries who are 
providing health care for all of the citizens of that country 
to make it affordable.
    With that, I yield back my time.
    Mr. Meadows. I thank the gentlewoman.
    The chair recognizes the gentleman from Arizona, Mr. Gosar, 
for 5 minutes.
    Mr. Gosar. Thank you, Mr. Chairman.
    Now, before being elected to Congress, I owned and operated 
a dental practice in northern Arizona for more than 25 years, 
so I know a few things about health care and how it really 
works in the real world. In fact, one of the primary reasons I 
ran for Congress in 2010 was out of the frustration in the way 
that Washington was damaging health care with ObamaCare.
    Now, sadly, another ObamaCare failure is hitting Arizonans. 
Ms. Cohen, I am coming right at you. Last month, health 
insurance provider Aetna pulled out of the growing list of 
insurers that have announced their intention to pull out of 
Arizona due to the heavy losses introduced by ObamaCare 
regulations. This move is leaving my constituents in Pinal 
County without access to any--without any insurance place 
marketplace plan. The Pinal County marketplace is the first, 
but I am afraid it won't be the last to be abandoned and 
wrecked by the ObamaCare regulations.
    So, Dr. Cohen, was leaving Pinal County residents with zero 
marketplace options, exactly what President Obama meant when he 
told them that if you like your plan, you can keep your plan?
    Dr. Cohen. I think you may have seen last week Blue Cross 
Blue Shield of Arizona did announce that we--they will be 
staying in that county.
    Mr. Gosar. Good. Once again, you can keep your plan?
    Dr. Cohen. So, again, I think what the Affordable Care Act 
is meant to ----
    Mr. Gosar. There is absolutely no ----
    Dr. Cohen.--do is to give access to affordable coverage by 
providing financial ----
    Mr. Gosar. That is not what he meant. That is not what he 
meant.
    Dr. Cohen. Okay.
    Mr. Gosar. The President's health care law is a quagmire of 
bureaucratic red tape, regulatory hoops, and cost-shifting tax 
increases that has left tens of thousands of Arizonans 
scrambling to find health care insurance for 2016. So, Dr. 
Cohen, the administration seems to know the bill is inherently 
flawed and unworkable as it was passed. As a result, the 
administration has decided to delay many aspects of the law, 
isn't that correct?
    Dr. Cohen. We have said, as we do with the Medicare 
program, we want to continue to make improvements ----
    Mr. Gosar. Once again ----
    Dr. Cohen.--to the marketplace ----
    Mr. Gosar.--answer the question. Answer the question.
    Dr. Cohen. Yes, it's ----
    Mr. Gosar. You have delayed implementation? Thank you for 
answering.
    How many individual changes have been made in the law since 
it was passed to try to make it workable?
    Dr. Cohen. How many congressional actions have been taken?
    Mr. Gosar. How many actions have you taken ----
    Dr. Cohen. To make improvements to the ----
    Mr. Gosar. Seventy.
    Dr. Cohen.--to the ----
    Mr. Gosar. Let me answer that for you. Seventy. Now, in my 
first three terms, I have now represented over 85 percent of 
the geography of Arizona, most of the rural aspects. So for 
every person I hear that has been helped by the program, I can 
give you two that have been hurt. You can make statistics say 
anything you want to make statistics. I have got a pretty good 
background in statistics.
    So, Mr. Giesa, I am going to come back to you. So if we 
took this highly regulated industry and we streamlined the 
process, we have money to people for their ability to buy in 
the marketplace and came up with the industry coming up with a 
different idea and competitive advantage, do you think that we 
could actually come up with a fairly--industry solution to this 
problem?
    Mr. Giesa. I'm afraid, Congressman, that question is a 
little beyond what I'm prepared to talk about today. It's 
certainly possible, but I can't say with any sort of certainty 
that the answer is yes.
    Mr. Gosar. So when you are looking at this marketplace, I 
mean, we are seeing fewer and fewer options. Is the whole 
intention a single payer?
    Mr. Giesa. I can't, again, speak to the intention, but I 
can say that with certain changes, the changes that we've--that 
are in my written testimony, I think the marketplace can 
continue and can continue to improve.
    Mr. Gosar. A vibrant marketplace has lots of entries and 
opportunities and options, is that true?
    Mr. Giesa. That is true.
    Mr. Gosar. So are we shrinking in options and 
opportunities?
    Mr. Giesa. We are shrinking in options and opportunities 
going into 2017, yes.
    Mr. Gosar. Now, you know, I want to make a comment. You 
know, we also made it even worse in health care. So my wife on 
election day in Arizona ends up being in the emergency room 
with a neck injury that we can't figure out. It is going to be 
3 months before she sees her primary care doctor. She has been 
in the emergency room twice, and they won't take an MRI because 
she doesn't have her authorization from her primary care 
doctor. It is pretty incredible that that is what exists today 
in Arizona. It is pretty incredible that that is what is 
happening.
    So it is causing a deformation of the marketplace. It is 
causing a deformation in regards to the way care is being 
applied. And I think the marketplace and the industry has an 
opportunity that we could reset that bar. I am one of the 
people that has looked at different options outside that in an 
evolutionary process, and I have got to say I am pretty sad 
with what I see my folks on the other side of the aisle 
complaining about.
    So I yield back.
    Mr. Meadows. I thank the gentleman.
    The chair recognizes the gentlewoman from the District of 
Columbia, Ms. Eleanor Holmes Norton.
    Ms. Norton. Thank you very much, Mr. Chairman.
    Mr. Chairman, it has been 6 years since Congress passed the 
Affordable Care Act, and the majority has been the majority for 
that entire time. All they have done is to propose to repeal it 
60 times. They could have come forward with their own bill. The 
closest they have come is no bill at all. It is a recently 
unveiled proposal from Speaker Ryan that he calls the ``Better 
Way.''
    It is terribly short on specifics after all this criticism 
of the ACA, but it does recycle a lot of bad ideas. For 
example, it rolls back the ACA's vital consumer protections, 
and if you can imagine this, would allow companies once again 
to discriminate by charging higher premiums based on race and 
sex and health status. I cannot believe that any Member of 
Congress would want to go back to those bad old days.
    Mr. Spiro, what effect would repealing these consumer 
protections have on those who have gained coverage under the 
ACA?
    Mr. Spiro. Well, in general it would shift costs to 
consumers--back to consumers. And I think the way to think 
about it is that the goal of the ACA was to spread risk 
broadly, and some of the alternatives that have been floated to 
replace the ACA, what they in effect do is quarantine the sick 
instead.
    And so what they do is repeal essential health benefits so 
you are not guaranteed coverage for prescription drugs, for 
maternity care, for mental health care, which I think we would 
all agree are essential, eliminate out-of-pocket--limits on 
out-of-pocket costs, and most critically, reduce the value of 
coverage. I mean, one Congressman was talking about how the 
constituents have written in about the high deductibles.
    So the answer is not to actually reduce the value of 
coverage back to the way it was before, to rely on health 
savings accounts and high-deductible plans. That is going in 
the exact wrong direction. And it seems to me that there are 
obvious constructive solutions to address that issue.
    Ms. Norton. Yes. Any large piece of legislation, this is a 
work in progress. It is amazing the progress that has been 
achieved on its first iteration.
    You mentioned the cap on out-of-pocket expenses. Let me ask 
Dr. Cohen. How important have the premium tax credits been in 
helping people afford health care?
    Dr. Cohen. We've seen them be essential on the marketplace. 
Eight-five percent of consumers do qualify for some sort of 
financial assistance. And we put out an analysis earlier this 
year that goes State by State so folks can see for their own 
State, even with significant increases, that consumers are 
protected because if premiums do go up, the financial 
assistance goes up as well. So the majority of consumers can 
purchase a plan for less than $75 a month.
    Ms. Norton. Imagine that, less than $75. And I know that is 
important out here. The majority of these consumers can be 
protected for less than $75 a month. If it were not for these 
tax credits, they obviously wouldn't be in the market at all. 
And Mr. Spiro's notion about what insurance is all about, 
spreading the risk, and that is essential to this or any 
insurance program.
    Which leads me to a question about the option for turning 
Medicaid into a block grant, here be the options: block grant 
program, which would say to the States do whatever you want to 
do; or imposing a per-capita cap on benefits that would not 
keep up with the growth of health care costs. So both of those 
options would leave States with less funding and take away care 
from those who can least afford it, the poor and the elderly.
    Mr. Spiro, do you think that the Speaker's proposed changes 
to Medicaid would have a negative effect on the private 
insurance market?
    Mr. Spiro. To--Medicaid would have a negative effect on the 
private insurance market? Yes, because they would roll back the 
Medicaid expansion. And as I mentioned in my testimony, States 
that have done Medicaid expansion, their premiums in the 
private markets are 7 percent lower, and that is because the 
population from 100 to 138 percent of poverty would be in the 
Medicaid risk pool instead of the exchange risk pool.
    Mr. Meadows. The gentlewoman's time is expired.
    Ms. Norton. Thank you very much. I think my questions have 
been aimed at showing the benefits and showing that the 
majority has filed on its option to not propose but to come 
forward with a bill.
    Thank you very much, Mr. Chairman.
    Mr. Meadows. All right. I thank the gentlewoman.
    The gentleman from Texas, Mr. Farenthold, is recognized.
    Mr. Farenthold. Thank you very much.
    And I can't get started without questioning some of the 
characterizations of the Speaker's and the House Republicans' 
plan. I am not sure that our panelists or the gentlelady from 
the District of Columbia has actually reviewed the very 
detailed plan outlined on the Better.GOP Web site, and I would 
encourage them to do that.
    But at this point I am going to go ahead and ask some of my 
questions. Dr. Cohen, I am going to start with you. In your 
testimony you said that the CBO estimates said that we were 
actually below the CBO estimates for what this plan would cost. 
How does that jibe with everybody's health insurance is going 
to go down $2,500? It seems like you knew with the CBO 
estimates you referred to in your testimony the time the 
Affordable Care Act was enacted we knew they were going to go 
up.
    Dr. Cohen. So I think we're talking about two different 
groups of folks. Both--I mentioned--one are the 150,000 million 
Americans, all of these panelists who get our health insurance 
through our employers. And if you look at the cost of those 
premiums, it has actually been the slowest growth in the last 
----
    Mr. Farenthold. But, ma'am, wouldn't you say ----
    Dr. Cohen.--4 or 5 years.
    Mr. Farenthold.--the benefits have gone down? I will just 
use an anecdotal example. My daughter's employer, based on the 
increased cost of coverage, was forced to take her from a very 
generous first dollar plan to a $3,000 deductible plan that 
when she had to visit the emergency room earlier this year 
wiped out her savings account.
    Dr. Cohen. So we very much agree with you that high-
deductible plans are challenging for folks, which is why the 
Affordable Care Act has limit on out-of-pocket costs, and for 
folks who have incomes below 250 percent of poverty, they have 
limits and they have ability to do cost-sharing----
    Mr. Farenthold. All right. Now, under the Affordable Care 
Act, as a Member of Congress, I am required to purchase my 
insurance on the D.C. exchange. I pay over $1,000 a month for 
that insurance. With these premium increases that we are 
talking about of double digits, I could see as much as a 
$2,000-per-year increase in my premiums. That doesn't sound 
affordable to me either.
    Dr. Cohen. So the important part about the Affordable Care 
Act is now that you know--you know what you're buying when you 
buy that insurance. It covers those essential health benefits, 
prescription drug costs, and such. In addition, if you had any 
preexisting conditions before, you have options. You can now 
have ----
    Mr. Farenthold. No, I was better off under FEHB, I will 
tell you that. And again, I am also concerned about the lack of 
coverage options that are available.
    Mr. Giesa, I am going to go to you, and I am going to go 
Texas-specific since I am a Texan. We are seeing projections 
for 2017, rate increase for your company, just phenomenal. I 
mean, what do you see going and happening with those rate 
increases for people forced to buy through the exchange? 
Microphone, please.
    Mr. Giesa. First, please understand that the Blue Cross 
Blue Shield Association that I am here representing is a 
federation of 36 ----
    Mr. Farenthold. Right.
    Mr. Giesa.--independently run plans. The strategy and 
pricing decisions of any specific plan are ----
    Mr. Farenthold. All right. I will go to Mr. Redmer for a 
second. One of the complaints I am hearing out of my hometown 
of Corpus Christi and the areas that I represent is if you 
wanted to buy a PPO plan now in cities like Houston--and we are 
getting there in Corpus Christi--there simply isn't one 
available. You are stuck with an HMO where you have things like 
with Mr. Gosar. You have a gatekeeper before you can get the 
care. Why are we losing all these choices?
    Mr. Redmer. That's one of the problems that we're seeing 
all around the country. In some parts of the country, we're 
seeing folks only have an option of a PPO. In other parts of 
the country, other counties, they may only have an option of an 
HMO. So the shrinkage of competition and carriers is a real 
problem.
    Mr. Farenthold. All right. Thank you very much.
    And, Dr. Cohen, one last question for you as my time is 
about to expire. When Dr. Gosar asked the question about was 
the intent all along to move to a single-payer system, you 
smiled. Is that because you believe that to be true or what is 
your take on that?
    Dr. Cohen. No, it is because we work so collaboratively 
with the State Departments of Insurance and the many private 
issuers to provide Americans access to affordable coverage 
through private insurance, so I think my smile was we work so 
closely with folks in the private sector that I don't see how 
that intent could be read into what we are doing ----
    Mr. Farenthold. It certainly seems to be the end result 
with premiums going so high and deductibles skyrocketing and 
choices going down. The American people are incredibly 
dissatisfied, and it seems like if you to create a system 
designed to wreck what I consider to be the best health care 
system in the world, you have done it.
    I see I am out of time, and I will yield back.
    Mr. Meadows. I thank the gentleman.
    The chair recognizes the gentlewoman from Illinois, Ms. 
Duckworth, for 5 minutes.
    Ms. Duckworth. Thank you, Mr. Chairman.
    I am very concerned about the significant premium increases 
that we have been discussing, especially the ones that are 
going to be going up in 2017 on the Illinois health insurance 
exchange. Of course, the ACA's premium tax credits will shield 
the vast majority of the 335,000 Illinois residents who shop 
for insurance on the Illinois exchange with significant 
increases in premium rates, but as the Chicago Tribune reported 
recently, even if the premiums increased by 50 percent, the 
ACA's premium tax credits would ensure that nearly two-thirds 
of Illinois enrollees could still enroll in plans that cost 
them $100 or less per month.
    I am concerned, however, about the impact of this increase 
on the 84,000 Illinois residents who don't qualify for tax 
credits, and I would like to know what steps we can take to 
empower these consumers to be smart shoppers in the exchange 
and what reforms are needed to ensure regulators effectively 
protect these people from unreasonable rate hikes.
    With that, Dr. Cohen, I would like to address this idea of 
falling health care rate increases. I understand that all 
States are required to file health care rate increases of 10 
percent or greater with CMS. Each State determines whether or 
not to reject or modify these rates, even though they have to 
file them with the CMS.
    So am I correct in understanding that the State review 
programs are not created equal? Some regulators are weak and 
some are strong?
    Dr. Cohen. I think that'd be correct in that there are a 
number of States in which we, CMS, do that process but in the 
majority of States the Department of Insurance does do that 
process. But I agree with you that--variable in terms of the 
authorities that they have.
    Ms. Duckworth. Okay. So while some States are empowered to 
provide relief from the skyrocketing rates for their citizens, 
others like Illinois, we don't have to enable regulators to 
reject these astronomical rate increases. I am hearing the term 
file-and-use for States like Illinois. So long as insurers 
properly file the rates with their regulators, they can use 
them, is that correct? Can you explain that, file-and-use term 
a little bit?
    Dr. Cohen. Yes. I mean, I think my colleague from the 
Department of Insurance can probably speak to this in addition, 
but yes, those are--depending on what State you're in that 
there are different authorities, and Illinois has one where 
they can review them but essentially can't change them.
    Ms. Duckworth. Okay. Is it Mr. Redmer who--do you have a 
comment on that?
    Mr. Redmer. I will not speak to Illinois. I can tell you 
that Maryland is not file-and-use when it comes to health 
insurance, but other parts of the insurance market are file-
and-use. But just because it's file-and-use does not mean that 
we lose our regulatory authority over those rates ----
    Ms. Duckworth. Okay.
    Mr. Redmer.--in Maryland.
    Ms. Duckworth. Okay. Back to you, Dr. Cohen. Can you tell 
me, do we need to change policies for regulators in Illinois 
and other States so they can do more to stop these rate 
increases that make the care unaffordable? Or what could 
potentially be done?
    Dr. Cohen. Well, if you look across the country--and I 
think Congress--what you're seeing in States that do have the 
ability to do rate review, you are seeing folks look at those 
rates and make changes to them.
    I think what we've been talking about for this year is that 
there are some one-time upward pressures on those rates, but we 
have been working very closely with the State Departments of 
Insurance and, you know, when they are working closely with 
their insurers to make sure that those rates are appropriate.
    Ms. Duckworth. So is this a State-by-State issue or is 
there anything that can be done at the Federal level?
    Dr. Cohen. That's correct, State by State.
    Ms. Duckworth. State by State. Is there any type of 
coincidence or matching with the States that are more file-and-
use and have less enabled regulators versus the States who, for 
example, have refused Medicare expansion?
    Dr. Cohen. So we have seen that in Medicaid expansion 
States that the ----
    Ms. Duckworth. Okay. Yes ----
    Dr. Cohen.--private market--the marketplace has seen 
premium increases that are about 7 percent less, so we 
definitely are seeing where Medicaid expansion is having an 
impact on marketplace premiums. And I could get back to you 
where--I don't have at my fingertips, but I know that there are 
cities that have shown where rate--where States are effective 
rate reviewers, that there is more engagement on the rate 
process, they do these open public hearings, and they are able 
to do some additional work on understanding and justifying 
those rates.
    Ms. Duckworth. Do you have the public hearings in Maryland? 
How does that work?
    Mr. Redmer. In--I discussed this earlier. In Maryland we 
have--the rates--proposed rates are given to us May 1. We 
receive all the actuarial documentation and data. We have a 
team of actuaries that scrub the data. They challenge the 
projections and the experience. In Maryland this year, we had 
two public hearings, and then we ultimately approved rates that 
in aggregate were about $24.5 million less than was originally 
requested.
    But you bring up a great point and that is the--as is 
always the case, the vast majority of the middle class that 
does not have access to Medicaid, they don't have access to 
subsidies, and they really are being hurt by these rates. And 
my concern is that it is the business death spiral. In other 
words, as the rates increase and folks have to pay 100 cents on 
the dollar of these increases without a subsidy, it's going to 
be the folks that are healthier and younger that are going to 
choose to leave the market, pay the penalty, and the experience 
will deteriorate further.
    Ms. Duckworth. Thank you. I am out of time. Thank you, Mr. 
Chairman.
    Mr. Meadows. I thank the gentlewoman.
    The chair recognizes the gentleman from Florida, Mr. 
DeSantis, for 5 minutes.
    Mr. DeSantis. Dr. Cohen, Congress has imposed limitations 
on appropriations vis-a-vis the risk corridor program in recent 
years, is that correct?
    Dr. Cohen. That's correct.
    Mr. DeSantis. And I think that obviously reflects the will 
of the Congress who controls the purse. But I was wondering 
because this memo that CMS issued on September 9 said about 
these risk corridor payments and the prospect of lawsuits from 
the insurers ``We know that a number of insurers have sued in 
Federal court seeking to obtain the risk corridor amounts that 
have not been paid to date. As in any lawsuit, the Department 
of Justice is vigorously defending those claims on behalf of 
the United States. However, as in all cases where there is 
litigation risk, we are open to discussing resolution of those 
claims. We are willing to begin such discussions at any time.''
    So was the purpose of that to basically invite lawsuits and 
try to provide the risk corridor payments through the judicial 
process rather than through the appropriations process?
    Dr. Cohen. So I think we--as we had said last year and we 
said again this year, these payments are an obligation of the 
Federal Government. That is not new. There are ongoing lawsuits 
and DOJ represents us in those suits and continues to work 
through a legal process.
    Mr. DeSantis. Can you say whether anybody with HHS has 
encouraged lawsuit settlements for risk corridors?
    Dr. Cohen. Again, I think DOJ would be the one that would 
need to answer questions about ongoing litigation ----
    Mr. DeSantis. Well, no, I mean, if there are people in your 
department who were encouraging this either in conversations 
with insurers or others, that would be something that would be 
noteworthy. So can you say whether that has happened?
    Dr. Cohen. So what I could say is that we are--you know, 
that the process of litigation has been moving forward, and DOJ 
is doing their work as they would in any other cases.
    Mr. DeSantis. But nobody in HHS has done anything to try to 
point in this direction where you would have lawsuit 
settlements ----
    Dr. Cohen. What I ----
    Mr. DeSantis.--is that what you are saying?
    Dr. Cohen. What I think HHS has done is said, as we said 
last year, that this is an obligation of the Federal Government 
and ----
    Mr. DeSantis. I understand that, but the question is, as 
Congress has not saw fit to provide that money in the 
appropriations process. Obviously, you disagree with that, but 
the question is is knowing that Congress has expressed its 
intent and has refused to provide the funds, can you now try to 
use the judicial process to get around an expressed prohibition 
that Congress enacted? Can you provide the committee with any 
documentations on your end where people are discussing these 
lawsuits?
    Dr. Cohen. So, you know, we have just been doing at HHS is 
focusing on implementing the law and ----
    Mr. DeSantis. So you have--so there are no documents that 
we would get correspondence involving the lawsuits?
    Dr. Cohen. So the lawsuits are handled by the Department of 
Justice.
    Mr. DeSantis. So the answer to that is no?
    Dr. Cohen. So I could refer you to the Department of 
Justice ----
    Mr. DeSantis. I am not asking about the Department of 
Justice. I am asking whether you and anyone in your agency has 
correspondence about facilitating lawsuits for risk corridor 
payments.
    Dr. Cohen. So obviously ----
    Mr. DeSantis. Can you answer the question?
    Dr. Cohen. So obviously we are the client, right? They--DOJ 
is representing us. And so our general counsel does correspond 
with DOJ ----
    Mr. DeSantis. What about outside actors?
    Dr. Cohen. Our general counsel is the one that interacts 
with DOJ on our behalf because we're the client.
    Mr. DeSantis. But not outside actors?
    Dr. Cohen. Outside actors?
    Mr. DeSantis. Well, just, I mean if our--is there 
interaction between either general counsel or people at HHS 
trying to bring people along to see that the litigation track 
is the track that the administration would like to see?
    Dr. Cohen. I think it's been very public that the 
litigation has moved forward. A judge in the--one of the cases 
related to--one of the first cases moving forward asked for all 
motions to be submitted by September 23. So the--everything is 
evolving sort of in the normal ----
    Mr. DeSantis. Well ----
    Dr. Cohen.--course of litigation ----
    Mr. DeSantis.--we may do then--we may have to send a 
request for some of these documents to just see so this is 
transparent.
    Let me ask you this. Does the Department of Health and 
Human Services agree with the Department of Justice's Office of 
Legal Counsel, which has stated in analysis that judgment funds 
cannot be used to circumvent a prohibition on appropriations 
enacted by Congress?
    Dr. Cohen. I'd have to talk to my lawyers on that so I 
can't speak to that.
    Mr. DeSantis. Okay. Well, we'd like to get an answer to 
that.
    Mr. DeSantis. Do you know, did your counsel or anyone at 
HHS confer with DOJ before the September 9 memo was issued, do 
you know?
    Dr. Cohen. So, like I said, our counsel does interact with 
the Department of Justice as we are the subject of those 
litigation, and so--and DOJ ----
    Mr. DeSantis. Do you know if DOJ reviewed the memo?
    Dr. Cohen. So I know that they are working towards whatever 
legal process is unfolding, as they would in any ----
    Mr. DeSantis. Well, no, no, that is not the issue. This 
issue is this conflicts with a 1998 OLC opinion about whether 
you can use judgment funds in this way. DOJ has been on record 
as saying that is illegal and improper, and my question to you 
is was that shown to the Justice Department for their advice or 
consent on that?
    Dr. Cohen. I wouldn't be able to speak to that.
    Mr. DeSantis. Okay. So is it the position of HHS's general 
counsel that using judgment funds in that manner is appropriate 
and legal?
    Dr. Cohen. So I'd have to have our lawyers get back to you 
on that.
    Mr. DeSantis. Okay. Well, we will--but the general counsel 
of HHS did approve the memo of September 9? Do you know if the 
general counsel reviewed it?
    Dr. Cohen. They did review it, yes.
    Mr. DeSantis. Okay. Thanks. I am out of town. I yield back.
    Mr. Meadows. I thank the gentleman.
    The chair recognizes the gentleman from Massachusetts, Mr. 
Lynch, for 5 minutes.
    Mr. Lynch. Thank you, Mr. Chairman. And I want to thank the 
witnesses for helping us with our work.
    So we have this article in the Boston Globe of September 9, 
and it really does in a very concise way explain the problem we 
are having. So we have one subsidized network plan that offers 
access to the Mass General Hospital and Brigham and Women's 
Hospital, two of really the finest hospitals with the best docs 
in the country. They are a teaching hospital, do a lot of 
important research for us.
    But the neighborhood health plan that would allow enrollees 
who are subsidized to go to those hospitals has just pumped up 
their premiums by about 21 percent. So a lot of people, 
thousands of people are faced with the fact that--one of the 
big fears of the Affordable Care Act when it came out--and I 
want to confess I voted against it. I voted against it for a 
number of reasons that I will go into. And my opinion and my 
vote would not change if it were held again today.
    But we were worried that we might end up with two systems, 
two health care systems, one for the people who could afford it 
and then everybody else who is on the subsidy. They can't get 
access to the good docs. That is exactly what is happening here 
or is threatened here. We have got one subsidized network, and 
if this goes away, if people can't pay that 25 percent 
increase, then the doors are locked to Mass General, the doors 
are locked to Brigham and Women's, two of the finest hospitals 
in the country. And I am worried about that.
    The basic idea behind the Affordable Care Act was, as it 
was presented to Congress, was that since we were paying 
multiples of what other countries were paying in terms of 
trying to provide health care for their citizens, if we could 
just squeeze the cost, get that cost down, we could use the 
savings and the cost curve, use the savings to cover the people 
who were uninsured. That was the idea.
    But as we have seen and as Jonathan Gruber--I know people 
use that as a punch line, but he actually is a very smart man, 
testified before the Senate, and he even admitted, he said we 
punted on cost containment. We punted on that. We have very 
strong incentives to get coverage, very low incentives to 
actually squeeze the cost down.
    And there were several other items in the Affordable Care 
Act that caused me to vote against it. One was an antitrust 
exemption. So in the Senate version we gave back the antitrust 
exemption to companies under the Affordable Care Act so that 
they could act in restraint of trade so that one insurance 
company can cover an entire State and squeeze out competition 
because they have got everybody signed up. We allowed that. We 
put that into law. It was taken out in the House, put back in 
the Senate, and then it was part of the final bill.
    The other piece, we eliminated the public option. So we 
were relying on the public option, even a State-run public 
option to put out a bare-bones plan to compete with some of 
these private plans so that by competition, if the State put 
out a bare-bones plan at low cost but reliable and providing 
adequate health care, people would buy that, and it would be up 
to the private insurers to compete with that. We took out the 
public option, so we eliminated a lot of competition that would 
have otherwise occurred.
    And then lastly, we put in a Cadillac tax, a so-called 
Cadillac tax. So you have these good employers, a lot of them 
union employers who sat down with their employees and worked 
out a plan because health care was not taxed back then. So a 
lot of these union employees said, okay, rather than take money 
in our envelope, rather than take pay raises, we are going to 
take good health care, which would help their families. Now, we 
turned around after they did that, to those employers and those 
unions that sat down and worked together, we punished them. We 
put in a Cadillac tax. Now, Congress in its wisdom has 
postponed that.
    But what has--eliminating the antitrust exemption, the 
Cadillac tax, and eliminating the public option, Mr. Spiro, 
what impact has that had on moving forward here? And we are 
trying to meet the goals of the Affordable Care Act, the 
original goals.
    Mr. Spiro. Thank you for the question. I think if you look 
at the hospitals in Boston, that is a unique situation and we 
shouldn't judge hospital quality based on reputation alone. I 
would refer you to your ----
    Mr. Lynch. These are the best docs, though, just so you 
know.
    Mr. Spiro. Okay.
    Mr. Lynch. I live in the city. I know where the best 
doctors are. That is where my wife goes. And, look, I think it 
is generally accepted that those are the best hospitals.
    Mr. Spiro. But I would refer you to your own State's cost 
commission, which has identified growth in hospital prices as 
the main driving factor in the rise of health care costs. So 
that's an issue that needs to be addressed.
    Mr. Lynch. We are also teaching hospitals, though, right? 
So the benefit is benefitting the rest of the country by--it 
costs more obviously to deliver health care when you are a 
teaching hospital than if you are not.
    Mr. Spiro. Well, again teaching hospitals are heavily 
subsidized without much transparency or accountability. But 
that's a different issue from, I think, the thrust of your 
question, which is on antitrust and the public option. On 
antitrust, the ACA did not change the law on the antitrust 
exemption.
    Mr. Lynch. Right. We changed it in the House version. We 
did. We changed it in the House ----
    Mr. Spiro. Sure.
    Mr. Lynch. We took out the antitrust exemption but ----
    Mr. Spiro. But I just want to clarify that that was ----
    Mr. Lynch.--the ACA put it back in.
    Mr. Spiro.--preexisting the ACA, the antitrust exemption. I 
would support removing it, but ----
    Mr. Lynch. All 300 Members of Congress voted to change it, 
Republicans and Democrats.
    Mr. Spiro. I don't think it's fair to blame the ACA for 
changing the law. It didn't change the law ----
    Mr. Lynch. Well, we put it back in.
    Mr. Spiro.--it actually ----
    Mr. Lynch. It included an antitrust exemption ----
    Mr. Spiro. No, the ----
    Mr. Lynch.--so ----
    Mr. Spiro.--House bill never became law.
    Mr. Lynch. Right.
    Mr. Spiro. So the ACA--the Senate bill--the ACA did not 
change the law on the antitrust exemption. On the public option 
I said in my testimony I support--I would call it the 
guaranteed choice plan, and I think the President has voiced 
support for that idea.
    Mr. Lynch. Okay.
    Mr. Spiro. I think it's important ----
    Mr. Meadows. The gentleman ----
    Mr. Spiro.--to add to the law ----
    Mr. Meadows.--is out of time, so I appreciate it. I am 
sorry to cut you off, but as we go, we have got a few other 
members.
    So the chair recognizes the gentleman, Mr. Hice, from 
Georgia.
    Mr. Hice. Thank you, Mr. Chairman.
    I have really some comments here. I am kind of just amazed, 
shocked at some of the things I have heard here today. You 
would literally think--in fact, it has been implied that ACA 
has somehow reduced cost and increased coverage. In fact, I 
believe I heard someone actually say something along the lines 
of we now have the lowest health care cost in our nation's 
history. I am trying to wrap my head around this kind of 
nonsense.
    Now, look, it is not the Federal Government's 
responsibility to take over the health care industry in the 
first place. And I am as concerned as anyone with health care 
costs, but government intrusion is the problem, not the 
solution. And if ObamaCare is as great as it is, I am curious 
why none of our witnesses here participate. I mean, we all know 
that this is a disaster.
    And, Mr. Chairman, what sets this hearing apart from other 
hearings on the ACA is that now we have a track record that we 
are able to look back on and see where this thing has been 
taking us. We have a track record to look at what the President 
and his administration originally told us versus what has come 
to fruition, things like what has already come up today. If you 
like your health care, you can keep it. If you like your 
doctor, you can keep your doctor. We now have the track record 
to know that was totally false.
    And, you know, as we look at these kinds of things, we have 
got to face reality. Now, we are facing the fourth enrollment 
period, and this whole thing is coming off the tracks. It is a 
national disaster. It is a health care disaster. It is an 
economic disaster. We have got the--Ms. Cohen, you mentioned 20 
million people have been enrolled. You are including the 
Medicaid people. The real numbers are 12 million actual people 
enrolled in ObamaCare, just over half of what was predicted.
    And all this contributes to the problem. I mean, many of 
you know firsthand we have got insurers that are leaving. It 
wasn't long ago UnitedHealth backed away. A couple weeks ago 
Aetna backed out. And why? Why are these insurance companies--
because they are hemorrhaging in their costs. They cannot 
survive, despite the fact that billions of taxpayers' dollars 
are subsidizing this thing. Insurance companies are still 
losing their shirts, and it can't continue.
    And for those insurance companies that remain, premiums 
going up and up and up and up and up just to cover the costs, 
this year, going up again in 2017. I think looking at a 
national average, a 25 percent increase this year. My State of 
Georgia we are expecting double-digit increases, more and more 
increases. Blue Cross Blue Shield going up over 20 percent in 
Georgia this year just to cover costs.
    And, you know, we talk about all these people, all these 
millions of people, Ms. Cohen, getting insurance coverage. 
Let's face reality. We have 20 million perhaps who think they 
have insurance, but in reality--and I have heard this--if I 
have heard it once, it has been dozens and dozens of times, 
particularly rural hospitals across my district--people go to 
the hospital thinking they have insurance only to find out they 
have got 5, 10, 15 whatever thousand dollars of deductible. 
They can't even make the deductible payment. So the hospitals 
don't get paid. We have got rural hospitals on the verge of 
collapse because nobody is paying for the coverage they are 
getting.
    And the problem goes up and up. This year, what, 65 percent 
of Americans are actually going to have the higher deductible 
option in this thing. This is not affordable for anybody. It is 
not affordable for our entire nation, and yet we have people 
continuing to try to defend it.
    I think it is clear to anyone watching and anyone 
experiencing this, which none of you are experiencing it 
because none of you participate, but people who are 
experiencing the horrors of ObamaCare, they know what it is 
doing to their families, they know what it is doing to their 
health care options.
    And I think it is time, Mr. Chairman, that we get honest 
with this whole reality and face the facts that this is a 
disaster and we need to get rid of this thing and let the free 
market enterprise and individuals with their doctors determine 
what is best for them rather than government getting involved 
in this. And with that, I yield back.
    Mr. Meadows. I thank the gentleman.
    The chair recognizes the gentleman from Virginia, Mr. 
Connolly, for 5 minutes.
    Mr. Connolly. I thank the chair.
    And I couldn't disagree more with my friend from Georgia 
and his characterization. I find it ironic. Mr. Spiro, was not 
the ACA absolutely modeled on a Republican Governor's health 
care bill in Massachusetts?
    Mr. Spiro. Yes, Mitt Romney's.
    Mr. Connolly. Right. Was not the scheme here rather than 
having a single-payer system but the idea of stakeholders 
having skin in the game so they become cost-conscious, a 
Republican think tank idea?
    Mr. Spiro. The Heritage Foundation, in fact, came up with 
the idea for the individual mandate.
    Mr. Connolly. Right.
    Mr. Spiro. So a lot of ----
    Mr. Connolly. Not a Democratic idea, a Republican idea, 
absolutely heart and soul incorporated into this so-called 
government takeover my friend from Georgia just 
mischaracterized.
    Mr. Spiro. Correct.
    Mr. Connolly. Dr. Cohen, when I had to face voting, I told 
my voters there are three things I am going to measure a bill 
by: Is there a meaningful basket of reforms that protect 
consumers? Does it address the long-term cost curve so we have 
some hope of reducing the growth in costs in terms of health 
care in America? And does it address the problem, the crisis, 
the scandal of huge numbers of uninsured Americans? Does it 
reduce the number of uninsured Americans? In your opinion did 
we address those three things or not, and are they working or 
not today?
    Dr. Cohen. So let me take them in reverse. Obviously, on 
the uninsured we have talked about the historic lows in 
uninsured. On the consumer ----
    Mr. Connolly. Let's just stop there for a second ----
    Dr. Cohen. Sure.
    Mr. Connolly.--uninsured because I don't know what the 
Legislature in Georgia has done. I do know what they have done 
in my State in Virginia. The Republican majority, against the 
wishes of the Democratic Governor, have refused to take 
advantage of the provision on Medicaid. Medicaid would cover 
400,000 uninsured Virginians, and the scandal of not taking 
advantage of that has cost Virginia billions of dollars of 
Federal money that we are entitled to but we are not taking 
advantage of, and every year we have a voluntary clinic in a 
rural part of our State where thousands of people without 
health insurance line up overnight to get basic medical care, 
highlighting the need.
    My friend talked about hospitals closing. We have had 
hospitals close in rural areas because of the fact that we are 
not taking advantage of that Medicaid provision for political 
reasons, not out of concern for patients. If we really want to 
do something, that is money waiting to be taken advantage of, 
and some Republican Governors have, such as John Kasich of 
Ohio, is that not correct?
    Dr. Cohen. That is correct, sir.
    Mr. Connolly. Okay. Please continue with the other two.
    Dr. Cohen. So on the consumer protections, I think now we 
have been talking about essential health benefits so that folks 
know that they have quality health insurance when they are 
purchasing it, but also important to note the preventative 
services that everyone has access to without cost-sharing, that 
is not just in the marketplace but that is across the market 
in--that we're able to take advantage of through our employer-
sponsored coverage as well.
    Other consumer protection, given that we're talking about 
premiums today, is the medical loss ratio. That is a consumer 
protection in and of itself. We have paid--insurance companies 
have paid back $2 billion to consumers when they've overcharged 
them, and that's an important backstop for what we've been 
talking about related to costs and could--insurers increase 
their costs. Well, now there's a backstop which protects 
consumers as well.
    And on your third point about cost containment, that is 
some place where, wearing my other hat related to what we're 
doing in the Medicare world, we're really thinking about cost 
containment every day. We're moving towards alternative payment 
models, and we've been making great progress, as well as 
thinking about drug costs.
    Mr. Connolly. And final question, either to you or Mr. 
Spiro, but one of the criticisms at the time of the debate 
about ACA was we were going to kill Medicare Advantage. And my 
friends on the other side of the aisle just scared the bedevil 
out of seniors that that was going to happen.
    So what happened, Mr. Spiro, to Medicare Advantage? Did 
premiums go up or down? Did benefits get expanded? And what 
happened to enrollment? Certainly, it is dead today, right, 
Medicare Advantage?
    Mr. Spiro. Enrollment has been increasing substantially, 
despite the cuts in the Affordable Care Act to eliminate the 
subsidies that those plans were getting, the extra subsidies. 
So the system is much more efficient and is not cutting 
enrollment as scaremongers ----
    Mr. Connolly. And in fact, premiums stayed pretty stable?
    Mr. Spiro. Yes.
    Mr. Connolly. Yes. And benefits actually expanded?
    Mr. Spiro. I can't speak to that. I don't know.
    Mr. Connolly. Other than that, we killed it. I mean, at 
some point the critics have to take responsibility for charges 
they made that have in fact not been borne out. The opposite 
has been borne out.
    Mr. Meadows. All right. The gentleman's time ----
    Mr. Connolly. My time is up.
    Mr. Meadows.--is expired, so the chair recognizes the 
gentleman from Georgia for 5 minutes.
    Mr. Carter. Thank you, Mr. Chairman. And thank all of you 
for being here. And let me preface my remarks by saying that I 
totally disagree with my friend from Virginia. I am not going 
to speak for my partisan view. I am going to speak as a health 
care professional. And I want to ask you some very serious 
questions here.
    Mr. Giesa--is that correct, Giesa?
    [Nonverbal response.]
    Mr. Carter. In the State of Georgia where I have practiced 
pharmacy for the last 30 years, the regulators have approved a 
21.4 percent increase over the average premium, a 21.4 percent 
average premium increase for Blue Cross and Blue Shield for the 
2017 exchanges. Is this taking into account the fact that you 
are going to be picking up 70,000 to 90,000 more customers from 
Aetna because they have exited the market? And that, as I 
understand it, leaves Blue Cross Blue Shield as being the only 
plan that covers all the counties in the State of Georgia, is 
that correct?
    Mr. Giesa. Well, as I said, I'm here on behalf of the 
association, and I can't comment on the situation for any 
specific plan.
    Mr. Carter. Well, let me assure you that what I just said 
is true, okay, 21.4 percent because of the fact that they are 
having to pick up 70,000 to 90,000 more customers because the 
insurance plan with Aetna, they exited the market. And that is 
understandable. And before they ask for the 21.4 percent, they 
were only asking for a 15.1 percent. Do you think a 21.4 
percent increase is a significant increase?
    Mr. Giesa. I would characterize that as a significant 
increase.
    Mr. Carter. Anybody disagree with that on the panel?
    Dr. Cohen, do you think a 21.4 percent increase is a 
significant increase?
    Dr. Cohen. Yes, it is significant.
    Mr. Carter. Anyone disagree? Please shake your head no if 
you disagree.
    Mr. Spiro, you look a little bit contemplating this. You 
don't think a 21.4 percent increase is a significant increase?
    Mr. Spiro. I do. I think you have to look, though, whether 
it's the average premium or the premium for the silver plans, 
and I'm not sure--having not looked at your--the data in your 
State, I'm not sure what you're referring to.
    Mr. Carter. Well, let me assure you, it is the average 
premium.
    Mr. Spiro. Well, you'd want to look at the silver premium 
because that's what subsidies are tied to.
    Mr. Carter. You know, I don't care whose idea it was. I 
don't care if it was Republicans. I don't care if it was 
Democrats. It was a bad idea. I am just telling you. It has 
been--the one thing it has not been is affordable. Don't we see 
that? You know, one of the first things they taught us when I 
entered the Georgia Legislature over 12 years ago--I served for 
10 years--they said when you are in the hole, quit digging. 
Well, guess what? We are in the hole and we keep digging. More 
plans keep going out. And what happens? We keep digging.
    The co-ops, I mean how ridiculous can we be? Twenty-three 
and 17 have gone bankrupt? Duh. Man, we are here from the 
Federal Government and we are here to help you. Well, guess 
what? We ain't helping health care, a profession that I have 
practiced for over 30 years. We are ruining it. The Affordable 
Care Act is ruining health care in American. Don't we get that?
    Until we put the free market back into the health care 
system, until patients have control, doctors have control, 
pharmacists, health care professionals have control over health 
care decisions, it is not going to work. It is not affordable 
and it is not quality. I don't care if it was a Republican 
idea, and I don't care if it was a Democratic idea. It was a 
bad idea.
    Dr. Cohen, let me ask you a question. In July of this year 
our President said too many Americans are still straining to 
pay for their physician visits and prescriptions, cover their 
deductibles, or pay for their monthly insurance bills. Do you 
agree?
    Dr. Cohen. I think what he went on to say is that with 
increased subsidies that we could address a lot of those 
issues.
    Mr. Carter. There you go, increase subsidies, that is what 
we need to do. Haven't we tried that?
    Dr. Cohen. And it is working pretty well, 20 million new 
covered.
    Mr. Carter. It is working pretty well? What health care 
system are you practicing in? Obviously ----
    Dr. Cohen. The one that ----
    Mr. Carter.--not the same one that I am practicing in, Dr. 
Cohen.
    Dr. Cohen. Well, I'm practicing in the one where folks can 
get coverage for less than $75 a month.
    Mr. Carter. What good does it do them to get coverage if 
they are going to have 21.4 percent increase year after year?
    Dr. Cohen. I think that ----
    Mr. Carter. Some places are having ----
    Dr. Cohen.--when you look at 25 ----
    Mr. Carter.--a 50 percent increase. Dr. Cohen, some places 
are having a 50 percent increase. Whatever you do, just go back 
to your offices and say we are going to take that affordable 
part off. That is all I am asking you to do is just take the 
affordable part off. Just take that out of the title, okay? 
Just say you are doing it for this poor pharmacist from 
Savannah, Georgia.
    Mr. Chairman, I yield. I am going to take my blood pressure 
medicine.
    Mr. Meadows. I thank the gentleman from Georgia.
    The chair recognizes the gentleman from Maryland, the 
ranking member, Mr. Cummings.
    Mr. Cummings. On that note, I hope that the gentleman will 
be able to afford the blood pressure medicine.
    Let me ask this, Mr. Spiro. You said something that I think 
we need to stick a pin in. You said that in those States that 
took advantage of the Medicaid provisions of the Affordable 
Care Act, the premium increases are 7 percent lower. Is that 
what you said?
    Mr. Spiro. Yes, correct.
    Mr. Cummings. And so we have people now, Dr. Cohen, who if 
we did not have the Affordable Care Act, would not have 
insurance because of things like preexisting conditions. In 
other words, if somebody had a breast cancer scare, wouldn't be 
able to get insurance, is that right?
    Dr. Cohen. That's right. Before the Affordable Care Act, 
preexisting conditions could have a--caused you to have 
absolutely no options for ----
    Mr. Cummings. So they are just out of luck?
    Dr. Cohen. Out of luck.
    Mr. Cummings. And so they have--if they were like my 
mother-in-law, who sadly died from breast cancer, they would be 
in a treatment--I guess they would--well, what would they do? 
Have to depend on charity? I mean ----
    Dr. Cohen. Charity care.
    Mr. Cummings. That is the real deal. See, we are the United 
States of America, and this is about trying to make sure we 
take care of our own. And when I think--I tell you, I have said 
it many times. When I look at the States that do not take 
advantage of the Medicaid provisions of the Affordable Care 
Act, to me, to me that is a very, very sad thing because you 
have got a situation where literally people are left to get 
sicker and in many instances die early. That is real.
    And so when we talk about experiences, the experiences of 
being ill and not being able to get the care one needs, that is 
something that I think we need to go back to as a nation.
    Now, we know that the ACA has significantly expanded the 
individual insurance market, and 11 million people did not have 
coverage before the ACA now have marketplace insurance. We also 
know that some insurers have been more successful in adapting 
to the ACA's new marketplaces. Mr. Carlson, it seems that the 
smaller regional insurers that have more experience in the 
Medicaid market seem to be doing relatively well while larger 
legacy insurers have struggled. Why do you think some of these 
insurance members have fared better than others in adapting to 
this market?
    Mr. Carlson. Well, you know, I understand that there are 
companies that are doing well and others that are not doing 
well. And, you know, I can't speak to any specific company, but 
I can tell you that health care is a very--health care 
insurance is very local markets. So the ones that are doing 
well are probably the ones that have the ability to negotiate 
with providers and have authority over, you know, the ability 
to manage their costs well.
    And, you know, there are other factors in health care 
trends that they can't affect such as the great increase in 
prescription drugs lately ----
    Mr. Cummings. I am glad you said that. You went exactly 
where I wanted you to go. Tell me what effect does the high 
price of prescription drugs have on insurance premiums, if any?
    Mr. Carlson. Well, it is a significant issue. You know, 
the--I mean, when you look at a 40 percent rate increase that 
we've seen in some States, it's hard to pin prescription drugs 
exactly on that. However ----
    Mr. Cummings. I am not saying the whole thing.
    Mr. Carlson. Right.
    Mr. Cummings. I am saying but a contributing factor. People 
are getting rich. They are charging these unreasonable prices. 
EpiPen is a perfect example. It costs pennies to produce, 
pennies, and they go in a few years from I guess, what, about 
$100 to $600. And I was just telling my staff that in talking 
to reporters, I talked to about 10 reporters over near the 
Floor, and eight of them use EpiPens.
    Mr. Carlson. And I would add that EpiPens is not a unique 
case. There are plenty of other ----
    Mr. Cummings. Oh, believe me, I know. Martin Shkreli sat 
right in the seat that you are sitting in and thumbed his nose 
at us, called us imbeciles because we wanted to know why his 
company could raise the price of a pill from $13.50 to $750. 
And so nobody can tell me--and that is happening all over the 
pharmaceutical industry. So it has to have an impact. I am not 
saying it is everything, but it is major.
    And so what do you all suggest? You all are experts. What 
do you all suggest we do about that? Do we just sit back, Dr. 
Cohen, and just let that happen?
    Dr. Cohen. So we've definitely been taking steps forward 
there. I think you know we proposed earlier this year some 
demonstration projects to work on costs in the Medicare program 
and the Part D program, so we are certainly making sure that we 
are looking at that, as well as what we think about the total 
cost of care, the work that we're doing in trying to do 
alternative payment models. Prescription drug costs are part of 
that, so we want to make sure that all folks are thinking about 
the total costs for all the care that they're providing and 
thinking about the quantity and the quality.
    Mr. Cummings. Redmer, are we doing anything in Maryland? 
This is a great man. He is from my State.
    Mr. Redmer. Yes, I appreciate that. I'm not going to get 
into what we are or are not doing regarding pharmaceutical 
costs. That's certainly outside the ----
    Mr. Cummings. But this comment on whether it has ----
    Mr. Redmer. Oh, certainly ----
    Mr. Cummings.--an impact on ----
    Mr. Redmer.--it has a significant effect on ----
    Mr. Cummings. Would you like to see us do something about 
it?
    Mr. Redmer. Absolutely. Particularly specialty 
pharmaceuticals are having a significant increase.
    Mr. Cummings. I see my time is up, Mr. Chairman.
    Mr. Meadows. I thank the gentleman.
    Obviously, as we look at the market for affordable drugs, 
it is something that we have to address, but we also have to 
look at affordable health care. And I can tell you, as someone 
who is part of the Affordable Care Act, I have seen increased 
premiums with higher deductibles and less benefits than when I 
was purchasing in the private sector.
    So with that, we will go to the gentleman from Alabama, Mr. 
Palmer, for 5 minutes.
    Mr. Palmer. Thank you, Mr. Chairman.
    Dr. Cohen, so far Aetna, UnitedHealthcare, Humana, and 
there may be others that will likely be coming down the 
pipeline, have announced they are leaving the exchanges. We 
have all heard the clip of the President famously saying ``If 
you like your doctor, you can keep him,'' which, as it turns 
out, was completely untrue.
    Hundreds of thousands of people participating in the 
exchanges will have to find new coverage at the beginning of 
the year, and this will likely mean new doctors. What kind of 
comfort can you give these individuals and families that 
believe the President but are now experiencing the exact 
opposite of what he promised?
    Dr. Cohen. Well, what I think we've talked about today is 
that before the Affordable Care Act for folks with preexisting 
conditions, there were no options ----
    Mr. Palmer. I am not talking about the people with 
preexisting conditions. I am talking about the promise the 
President made to the people who already had insurance that 
people who were doing business with some of the companies 
represented right here who are dropping out of the exchanges, 
who are losing hundreds of millions of dollars. So if you would 
structure your answer to the question.
    Dr. Cohen. Sure. In the employer market we actually have 
seen very little change in what employers are offering in terms 
of the number of employers offering coverage. That's one of the 
reasons when folks talk about, you know, CBO projections of who 
would enroll into the marketplace are actually seeing less 
erosion of the employer market, which is a good thing ----
    Mr. Palmer. Well, that is interesting in light of the fact 
that of the 20 million people who have insurance, Medicaid's 
enrollment is now at a record level, 72.5 million, and there 
have been 15 million additional people since ObamaCare's open 
enrollment began. So it looks like the majority of the people 
who are being insured are being insured in the government plan. 
There are 4.5 million people who had private insurance, 
employer-based insurance who have lost their insurance.
    So I think for all of the political speak and the hemming 
and hawing around, the bottom line is is that it hasn't worked 
the way it is supposed to work. There are millions of--hundreds 
of thousands, not millions of people who have lost access to 
the health care that they had prior to this. And, unlike my 
colleagues across the aisle. I would like to have a 
constructive dialogue about it to reform this and correct it 
and get it back to where it works.
    Mr. Giesa, Blue Cross Blue Shield of Alabama requested a 
rate increase for small group plans of 4 percent, yet they 
requested an increase of 39 percent for individuals plans on 
the exchanges. Can you give me an idea of what accounts for 
this disparity?
    Mr. Giesa. Well, again, I apologize to answer the questions 
the same way, but the Blue Cross Blue Shield Association is a 
national federation of independently run plans, and the pricing 
and strategy decisions those plans make I am not privy to.
    Mr. Palmer. Well, I would expect that you would have some 
concern about the losses. I mean, Blue Cross Blue Shield of 
Minnesota has lost $500 million. Health Care Services 
Corporation, which owns the Blue Cross affiliates in Illinois, 
Montana, New Mexico, Oklahoma, and Texas, they lost $1.5 
billion. Blue Cross Blue Shield of Tennessee lost $300 million. 
Highmark Group, which owns Blue Cross in Pennsylvania, 
Delaware, and West Virginia, lost $266 million. Can the 
companies you represent sustain those kind of losses and stay 
in the market?
    Mr. Giesa. No, and that's the primary reason for the rate 
increases we've been seeing, I would say.
    Mr. Palmer. Well, Mr. Chairman, I would like to point out 
that not only does this impact individuals and families, it is 
impacting the economy. We now have companies that are 
restricting their expansion of employment. They have cut back 
hours. It is having a devastating impact.
    I just left a budget hearing with former CBO director 
Douglas Holtz-Eakin in looking at our economic growth and how 
overregulated the economy is, and I think the health care law 
is a major contributor to that.
    They are now projecting that over the next 10 years the 
economy, maybe over the next 30 years might only grow at 2 
percent when the 70-year average was 3.2 percent. And I 
attribute a lot to the economy being overregulated, but a 
substantial part of it has to do with what we have done with 
health care. It is having a devastating impact on the economy. 
It is having a devastating impact on individuals and families, 
and it is driving companies out of the marketplace. Employers, 
people who provide insurance--I have gotten my insurance from 
Blue Cross Blue Shield for years.
    My time is almost expired. I have one last thing. I was 
listening to Mr. Spiro's opening statement, and it reminded me 
of the old liberal view of communism, that it failed because no 
one had done it the right way, and I kind of thing that is the 
arguments for the Affordable Care Act. I yield back.
    Mr. Meadows. I thank the gentleman.
    The chair recognizes the gentleman from South Carolina, Mr. 
Mulvaney, for 5 minutes.
    Mr. Mulvaney. Thank you, Mr. Meadows.
    Dr. Cohen, I have just got a couple follow-up questions, 
nothing major, but following up on what Mr. DeSantis was 
talking about, which is this memo that CMS sent out--actually, 
it was a public memo; it wasn't sent to anybody--regarding the 
risk corridors. You mentioned a couple times, and I think you 
are right, that the DOJ is your lawyer in these disputes and 
you are the client. It makes sense. You are not a lawyer. You 
are a doctor. I get that.
    Why would you send this out? Why wouldn't your lawyer tell 
you not to talk to the people that might be suing you? It's 
general advice. Whenever lawyers advise their clients, don't 
talk to the people who are going to sue you. Let me do that. So 
why did you send this out?
    Dr. Cohen. So I think the rest of the document describes 
what was happening in this year's program, as well as 
reiterating our commitment to the program. And I think what 
it's saying there is that whenever there's litigation risk, as 
it says right there, that you can always go talk to our 
lawyers.
    Mr. Mulvaney. Right, but that is not what it says. In fact, 
you don't have to say what it says; we can read what it says. 
``We know that a number of issuers have sued in Federal court 
seeking to obtain the risk corridor amounts that have not been 
paid to date. As in any lawsuit, the Department of Justice is 
vigorously defending those claims on behalf of the United 
States. However, as in all cases where there is litigation 
risk, we are open to discussing resolution of these claims. We 
are willing to begin such discussions at any time.'' It doesn't 
say call the DOJ. It doesn't say don't call us. Has anybody 
called you on this, by the way?
    Dr. Cohen. So I think folks know that the Department of 
Justice represents us in this, and so I'm sure they're going --
--
    Mr. Mulvaney. Yes, they do. Yes, they do. So why send it?
    Dr. Cohen. Again, it is normal course of business here ----
    Mr. Mulvaney. Can you tell me, was it ordinary course of 
business?
    Dr. Cohen. Yes. So as litigation is moved through the ----
    Mr. Mulvaney. Have you all ever sent out a notice before 
saying we are getting sued and we know you all can sue us, do 
us a favor, call us now and we can talk settlement without DOJ 
here? Have you ever done that before?
    Dr. Cohen. So what I think the paper is saying is that we 
said last year, which is we have an obligation here and we have 
always said that. And ----
    Mr. Mulvaney. Did you send out a similar memo last year?
    Dr. Cohen. We sent out a similar memo, yes, with our 
obligation here, but what has ----
    Mr. Mulvaney. Did it have ----
    Dr. Cohen.--transpired ----
    Mr. Mulvaney. Did it have an invitation at the end to 
please have people call you to begin discussions on settlement 
resolution?
    Dr. Cohen. So at that point a year ago we had no 
litigation. And so what we're acknowledging this year is that 
time has evolved and folks are now suing us in Federal court, 
as it says.
    Mr. Mulvaney. All right. Then skip ahead to my other 
question, which is has anybody contacted you as a result of 
this memo going out?
    Dr. Cohen. Again, I imagine that conversations are 
happening with DOJ, but we are--I'm not ----
    Mr. Mulvaney. I imagine a lot of things, Ms. Cohen, but 
that is not really my question. Has anybody contacted you ----
    Dr. Cohen. No, has not contacted me.
    Mr. Mulvaney.--about this yet? They might have contacted 
DOJ and you wouldn't know that.
    Dr. Cohen. Correct. DOJ handles ----
    Mr. Mulvaney. But DOJ hasn't told you anybody has called 
you about this yet?
    Dr. Cohen. DOJ handles these matters on our behalf.
    Mr. Mulvaney. What is the deadline just so everybody who 
might be able to sue HHS over the risk corridor payments? When 
is the deadline for them to contact DOJ so they can file their 
lawsuits or begin negotiation discussions?
    Dr. Cohen. I couldn't answer--I don't know if there's a--I 
would have to ask lawyers. I don't believe there's a deadline.
    Mr. Mulvaney. Not the end of September or something like 
that?
    Dr. Cohen. No.
    Mr. Mulvaney. Is it the end of this term? Is it the end of 
this administration?
    Dr. Cohen. There--as we've said, this is a 3-year program. 
We've said that all along. We've said that there is an 
obligation here. I think this is, again, nothing new that we 
hadn't said last year.
    Mr. Mulvaney. I want to go back because Mr. DeSantis talked 
on this, and this would be more for the lawyers in the 
audience, not the doctors. But he mentioned briefly whether or 
not the judgment fund could be used to pay this, because I 
think that is HHS position right now is that there is no money 
in the appropriations. We got rid of that. I think that was 
Senator Rubio's amendment in the last appropriations bill. So 
there is no money left in appropriation for risk corridor 
payments. It apparently is the opinion of HHS or DOJ or both 
that the judgment fund might be available to make those 
payments.
    But I want to read what I thought that Mr. DeSantis was 
going to read and, you know, he ran out of time. And this is a 
quote from the Department of Justice. ``The judgment fund does 
not become available simply because an agency may have 
insufficient funds at a particular time to pay a judgment. If 
the agency lacks sufficient funds to pay a judgment but 
possesses statutory authority to make the payment, its recourse 
is to seek funds from Congress. Thus, if another appropriation 
or fund is legally available to pay a judgment or settlement, 
payment is otherwise provided for and the judgment fund is not 
available. This is the Clinton administration's decision in 
1998.''
    So for the folks who are watching this today who got their 
little memo who are thinking about calling you folks, I think 
they should know that it is the opinion of at least some 
lawyers, some of whom are Republicans in Congress, others of 
who were Democrats in the administration of Bill Clinton, that 
the judgment fund is not available for these payments. And in 
order for these payments to be made, folks are going to have to 
make the argument to both parties in Congress that Congress 
should appropriate that money and that it is not proper for 
this administration to be paying any awards out of the judgment 
fund.
    Thank you, Mr. Chairman.
    Mr. Meadows. I thank the gentleman.
    The chair recognizes himself for a series of questions.
    Mr. Spiro, let me come to you. I told you I was going to do 
that, so let me come to you. In your testimony you said ``There 
are signs that the insurer financial performance is 
improving.'' Do you stand by that statement that the insurers' 
financial conditions are improving?
    Mr. Spiro. Well, I was citing a Goldman Sachs report on the 
not-for-profit Blues plans, which said that their ----
    Mr. Meadows. You may be quoting that. So is the insurance 
industry improving as a result of the ACA?
    Mr. Spiro. I was just citing a report so you'd have to ask 
----
    Mr. Meadows. Well, okay. So maybe you were. That was your 
testimony and I am ----
    Mr. Spiro. Yes.
    Mr. Meadows.--asking you to clarify it. Is the insurance 
industry's financial condition improving?
    Mr. Spiro. I think it will improve after this price 
correction. As I mentioned in my testimony ----
    Mr. Meadows. So what you are saying is ----
    Mr. Spiro. There was under-pricing in 2014 and the phase-
out one time ----
    Mr. Meadows. Well, so let me ----
    Mr. Spiro.--of these transition programs ----
    Mr. Meadows. Let me go with that.
    Mr. Spiro. After that, once the ----
    Mr. Meadows. But hold on. Let me go with that.
    Mr. Spiro. I think that we will see ----
    Mr. Meadows. It is my 5 minutes, Mr. Spiro. It is my 5 
minutes.
    Mr. Spiro. I was just answering your question.
    Mr. Meadows. No, you were pontificating. You were not 
answering the question. I asked you a very simple question. So, 
Mr. Spiro, let me ask you this. If you are saying a one-time 
adjustment is what will fix the ACA, it is because they under-
priced things because of the risk corridor, is that correct?
    Mr. Spiro. Well, as I mentioned in my testimony, there will 
be a transition to an equilibrium. How fast that happens 
depends on whether Congress can take additional action, whether 
States take additional ----
    Mr. Meadows. Well, let's assume that Congress ----
    Mr. Spiro.--action and whether the administration takes --
--
    Mr. Meadows.--is not going to take additional action.
    Mr. Spiro. Why is that?
    Mr. Meadows. Because the risk corridors in the bill and the 
law that I guess you helped work on, isn't that correct? 
Weren't you part of the team that wrote the ACA?
    Mr. Spiro. I worked for the Senate HELP Committee in 2008 
----
    Mr. Meadows. Well, according to your bio that you put out, 
it says that you were part of the team that actually drafted 
the Patient Protection and Affordable Care Act, is that 
correct?
    Mr. Spiro. Correct, I worked with ----
    Mr. Meadows. Okay.
    Mr. Spiro.--the Senate HELP Committee.
    Mr. Meadows. So is it working the way that you intended it 
to work?
    Mr. Spiro. It's insuring a lot more Americans ----
    Mr. Meadows. That is not what I asked.
    Mr. Spiro.--and the costs have come down ----
    Mr. Meadows. That is not what I asked.
    Mr. Spiro.--further than expected.
    Mr. Meadows. Is it working the way that you intended it to 
work?
    Mr. Spiro. The transition to equilibrium is taking longer 
than I had expected it would take.
    Mr. Meadows. All right. Well, that is fair enough. Well, 
let me ask you, how does your statement of a one-time fix and 
an adjustment correspond with your sworn testimony that you 
gave in 2013--and I will quote you--``emerging evidence,'' 
which is the word that you just used, emerging--``Emerging 
evidence indicates that the exchanges are working as intended. 
The competition among plans and providers are already lowering 
premiums.'' Now, that was your testimony in 2013. Now, you have 
testimony now that says, well, it is not working as intended. 
We may have to do a one-time fix or adjustment. How do you 
reconcile the two of those?
    Mr. Spiro. I think what's becoming clear now is that 
actually competition was too competitive and that rates came in 
too low in the initial years.
    Mr. Meadows. All right. So you base this--you don't have a 
degree in economics, do you?
    Mr. Spiro. No.
    Mr. Meadows. Okay. So you don't have a degree in finance?
    Mr. Spiro. No, but I encourage you ----
    Mr. Meadows. Well, the reason I ask ----
    Mr. Spiro.--to ask your expert witnesses ----
    Mr. Meadows.--is because you say too much competition 
actually is what created this?
    Mr. Spiro. What's becoming clear is that ----
    Mr. Meadows. I want to find the ----
    Mr. Spiro.--both premiums ----
    Mr. Meadows.--economic principle that you are going to grab 
that would suggest that. What economic principle would you grab 
----
    Mr. Spiro. The markets were hypercompetitive, which 
encouraged insurers to under-price their premiums in 2014, so 
we're finding now that a correction is due in 2017 for that 
under-pricing.
    Mr. Meadows. All right. So you are suggesting--and so when 
the government gets involved and creates false markets with 
subsidies, that has no effect whatsoever on the financial 
viability of an insurance company?
    Mr. Spiro. I don't understand the question.
    Mr. Meadows. When you have a subsidy that comes in and a 
guaranteed of picking up and having to pay for preexisting 
conditions and having the unintended insurer that you may have 
to pick up, would that not make the market react in unusual 
ways?
    Mr. Spiro. It was a new market. There was a lot of 
uncertainty about pricing. There was a new consumer population 
----
    Mr. Meadows. And your sworn testimony here today is the 
whole reason this happened is because we had too much 
competition?
    Mr. Spiro. We had ----
    Mr. Meadows. That is your sworn testimony.
    Mr. Spiro. We had too much pricing uncertainty, and yes, 
premiums came in too low as it was also ----
    Mr. Meadows. And you base that--well, you know, you are a 
lawyer. I guess you have a degree in, what, public policy, is 
that correct ----
    Mr. Spiro. I have a law degree.
    Mr. Meadows.--from Princeton?
    Mr. Spiro. I have a law degree, yes.
    Mr. Meadows. You have a law degree from University of 
Virginia. You have an undergraduate from Princeton, is that 
correct?
    Mr. Spiro. Correct.
    Mr. Meadows. Okay. Has any of it allowed you to do Jonathan 
Gruber kind of models?
    Mr. Spiro. No.
    Mr. Meadows. All right. So most of your testimony--here is 
the reason I am concerned. UnitedHealthcare has lost over $1 
billion on exchanges in the last two plan years. Aetna expects 
to lose $650 million on exchanges and lost $475 million in 
2015. Health Care Services Corporation, which is kind of a 
bundle of some of the Blue Cross Blue Shields in five States 
has lost $1.5 billion in exchanges. Now, are you saying that 
this is caused by too much competition?
    Mr. Spiro. It's caused by under-pricing and Congress 
stepping in and constraining the risk corridor program, the 
one-time phase-out of reinsurance program, and it's all coming 
to a head in 2017.
    Mr. Meadows. All right. Now, you are saying that it is 
Congress' fault but you drafted the law?
    Mr. Spiro. Congress came in and amended the law after it 
was passed.
    Mr. Meadows. So it is whoever voted for the law's fault 
that this is happening, is that correct? Is that your 
testimony?
    Mr. Spiro. No, I said--my testimony was that Congress, by 
constraining the risk corridor ----
    Mr. Meadows. Well ----
    Mr. Spiro.--program ----
    Mr. Meadows.--for the record ----
    Mr. Spiro.--and is responsible for ----
    Mr. Meadows.--did any Republicans on the House side vote 
for that law? You were here. You know. Did any Republicans ----
    Mr. Spiro. I don't believe so.
    Mr. Meadows.--vote for it?
    Mr. Spiro. I don't believe so.
    Mr. Meadows. Okay. So is your sworn testimony that it is 
the Democrats' fault that it is not working?
    Mr. Spiro. No.
    Mr. Meadows. Then whose fault it is? You drafted it--you 
know, I am just trying to figure out where the ----
    Mr. Spiro. I think it's the--I think ----
    Mr. Meadows. Let me just tell you, your testimony doesn't 
line up with the facts and that is my concern. Are you aware 
that out there on the Internet there is a way to game the 
system that says what you do is you actually quit paying your 
premiums in the fall and then you come back and you reapply in 
January? Are you aware that that is on the Internet?
    Mr. Spiro. No, I was not.
    Mr. Meadows. Okay. Are the health insurers--Blue Cross Blue 
Shield, are you aware that some people tried to game the system 
as it relates to quit paying premiums because you are required 
to continue to cover them even though they are not paying the 
premium?
    Mr. Giesa. Yes. The Blue Cross Blue Shield Association 
plans are familiar with that problem.
    Mr. Meadows. How about you, Mr. Carlson? Are you familiar 
with that?
    Mr. Carlson. Yes. I think we would like to see some kind of 
action to prevent that from happening.
    Mr. Meadows. All right. Dr. Cohen, don't you think that 
would be a good idea to not allow people to game the system and 
actually fix that particular problem?
    Dr. Cohen. So we have a program integrity unit that is 
focused on gaming related to the marketplace in various facets, 
and so we very much are focused on that.
    Mr. Meadows. So how many people have been denied coverage 
when they applied in January under your program integrity 
program?
    Dr. Cohen. So when someone applies through HealthCare.gov, 
they ----
    Mr. Meadows. How many people? Do you have a number?
    Dr. Cohen. I'm sorry, a number for ----
    Mr. Meadows. How many people have you stopped from gaming 
the system who quit paying in the fall and go and apply at any 
of these other insurers? How many of them have you actually 
worked with the insurer to say, oh, by the way they are gaming 
the system? How many people have you found?
    Dr. Cohen. So obviously those are two different systems, so 
the issuers are the ones who know are the folks who haven't 
paid ----
    Mr. Meadows. But they can't do anything about it. That is 
the whole problem. I have talked to them. They can't do 
anything about it. What they are doing is people were getting 3 
months of free insurance and every year reapplying. And the 
problem is they can't do anything about it. They need your 
help.
    Dr. Cohen. Absolutely. And that's why through the Fraud 
Prevention Partnership we do activities like this where we have 
information ----
    Mr. Meadows. That is great. How many people have you caught 
----
    Dr. Cohen. We haven't ----
    Mr. Meadows.--in fraud ----
    Dr. Cohen. We haven't ----
    Mr. Meadows.--and prosecuted?
    Dr. Cohen. We haven't gotten there yet, but we are 
definitely ----
    Mr. Meadows. So the answer is zero?
    Dr. Cohen. So--fair enough.
    Mr. Meadows. No, I am asking you.
    Dr. Cohen. Fair enough.
    Mr. Meadows. What is the ----
    Dr. Cohen. So, again ----
    Mr. Meadows. How many have been prosecuted for fraud?
    Dr. Cohen. Zero.
    Mr. Meadows. Thank you, Dr. Cohen.
    I recognize the ranking member.
    Mr. Cummings. If there is fraud, we need to get to the 
bottom of it. And I am sure we will, Dr. Cohen, won't we? Dr. 
Cohen, we will get to the bottom of that, right?
    Dr. Cohen. Absolutely. That's our--you know, we are focused 
on making sure that the market is solid for the future, and 
that includes making sure that folks are taking the rules 
seriously, and we work closely with OIG, State regulators, and 
others to make sure that folks are following the rules of the 
road. And again, the program continues to mature. We will 
continue to do that.
    Mr. Cummings. Sadly--you know, I haven't practiced law for 
many, many years. I have noticed that in all walks of life if 
people can find a way to get around something, they do. It kept 
me practicing law for many years, getting people out of trouble 
where they had tried to get around a system. That does not mean 
that the system gets thrown out.
    Dr. Cohen. Correct.
    Mr. Cummings. It doesn't mean that you deny people health 
coverage. It doesn't mean that you just allow them to get 
sicker and die. And die. So I say to--you know, I appreciate 
that, but when we find fraud, we need to go after it ----
    Dr. Cohen. Absolutely.
    Mr. Cummings.--and deal with it, and so I agree. We need to 
deal with it. All right.
    Dr. Cohen. And I would add that on other avenues of fraud 
where we've seen that in the marketplace, we have taken action 
and whether it's taken action to rescind coverage and--proper 
authorities are taking action there. Obviously, we are not that 
authority, but we pass that along to those that can ----
    Mr. Cummings. I am sure the word will get out after today, 
am I right, Dr. Cohen?
    Dr. Cohen. Absolutely.
    Mr. Cummings. All right. Thank you.
    Mr. Meadows. Dr. Cohen, I think what you are hearing is 
that in a very bipartisan way ----
    Dr. Cohen. Absolutely.
    Mr. Meadows.--we need to address this very real problem 
because it is affecting ----
    Dr. Cohen. Understood.
    Mr. Meadows.--the insured.
    And so the chair recognizes the gentlewoman from New 
Mexico, Ms. Lujan Grisham.
    Ms. Lujan Grisham. Thank you, Mr. Chairman.
    And actually, this was not my intended question but I am 
going to take the privilege of having my 5 minutes and follow 
up on the fraud issue. I mean, in fact, under the Affordable 
Care Act I can tell you one instance where we so robustly dealt 
with fraud and the credible allegations of fraud that the HHS 
and CMS allowed the State of New Mexico, by virtue of that 
provision, to cancel 100 percent of our behavioral health care 
provider contracts under Medicaid. The following AG review 
finds no credible allegations of fraud. Oh, and guess what? 
Now, we have no access to a required insurance coverage for 
behavioral health parity.
    So this is a very important question that the chairman and 
the ranking member are identifying, that we have to find how to 
root out real fraud and how to be careful that these mechanisms 
are not used by folks who really don't understand those 
provisions. And this really does lead me to my questions.
    Here is my opinion. I think that the Federal Government and 
State governments are ill-equipped to deal with insurance 
companies. And prior to the Affordable Care Act, given that I 
ran the high-risk pool and also navigated health care for 
constituents, I can tell you countless underutilization, 
overutilization, denying of coverage, narrowing of networks, 
contracts that are inappropriate, poor parity, inappropriate 
discharge and transfer, inappropriate billing, surprise 
billing, transfer billing. I could spend 20 minutes just on the 
issues that insurance companies are dealing with and have been 
dealing with, and I can tell you about lots of profits, 
including the profits on the Affordable Care Act through the 
Medicaid and Medicare components. So when we talk about losses, 
I am not so sure that we are talking about them in the context 
that is fair if you look at the entire health care system.
    The problem is is that Congress--we want to repeal it or do 
nothing to it, and in a health care system as complicated as 
this is with groups and policymakers who are ill-equipped to 
deal with the system as it is and particularly insurance 
companies, it is untenable.
    And so, in fact, I think people are paying more, and I 
think in many ways, particularly in my State, are getting less 
even though the baseline for the Affordable Care Act was to 
provide consumer protections so that navigating and providing 
access to insurance markets would be fairer, but we have just 
cost-shifted outside of premiums and subsidies to out-of-pocket 
costs and narrow networks where people don't have choice.
    So, Dr. Cohen, I do think that CMS--so take this back to 
CMS because, Mr. Chairman, they rarely hear this from me. Here 
are some things that I think have worked. I do think that 
adjusting the enrollment periods and making some changes to the 
risk adjustor were helpful. They are not enough.
    What more can you be doing without us? What more can you be 
doing?
    Dr. Cohen. I appreciate that, that we are taking steps 
within our authority to strengthen the marketplace. I think 
even just last week we announced taking an additional step 
related to special enrollment periods and that we will be 
looking at a process for pre-verification before ----
    Ms. Lujan Grisham. Got it. I want more than that. So what 
else outside of those can you do?
    Dr. Cohen. So we are also encouraging States to discuss 
with us, for example, thinking about using the 1332 pathway if 
they want to create within the State a high-risk pool, for 
example, so to come to us and have a discussion about what 
folks can do at the State level for ----
    Ms. Lujan Grisham. I actually really like that idea, and it 
is an issue because the Affordable Care Act really wanted you 
to move away from high-risk pools. And the States that did not 
do that--New Mexico didn't, although we are in trouble if you 
look at our finances, given our Medicaid expansion and related 
issues, we are in trouble. So high-risk pools, I think, are 
something that this committee, Mr. Chairman, ought to look at 
again, and I would like more information.
    Given that I have only got a minute left, I am going to 
move to Chris Carlson. If you have heard, I don't think that 
insurance companies have done their share of trying to address 
this issue in a fair and productive way, and in fact I think 
the ACA gives you many supports to do this.
    Since March 5, 2009, since we began the debate that 
preceded the passage of the Affordable Care Act, Aetna's stock 
price has increased by more than 200 percent, despite the 
increased profits that insurers are seeing in a variety of 
markets, and the fact that we don't talk about the private 
market versus the marketplace exchanges. And I keep reading 
about carriers, which is also including my State where we are 
pulling out of exchanges, leaving consumers without the 
guaranteed access that they were promised under the Affordable 
Care Act, I think that Congress did the health insurance, a 
huge industry, a huge favor giving you thousands more 
enrollees, thousands of opportunities to decide what kind of 
marketplace you want to play in, and it maintained your access 
to the Medicaid pool through managed care.
    As a result of that, I am very interested in some of the 
ideas that are emerging like in the Medicaid and Medicare 
managed care option that we might think that certain minimum 
participation is required in the exchanges if you are going to 
keep those managed care protections. How do you feel about that 
idea?
    Mr. Carlson. Well, I'm not familiar with those specific 
things that have been discussed so, you know, it's beyond kind 
of my ability to comment on them. You know, I think from a 
premium standpoint, which is what we're here to discuss, you 
know, the actuaries are setting the premiums based on what a 
cost to deliver the care under the exchanges. And, you know, 
that's what we're focusing on.
    Ms. Lujan Grisham. Well, I would like you to look at that.
    And, Mr. Chairman, I am out of time, but the reality here 
is is that our population wouldn't be as sick as they are in 
the context in which you are providing care if they were 
getting care through insurance companies in the first place.
    Mr. Meadows. I thank the gentlewoman.
    The chair recognizes the gentleman from Wisconsin, Mr. 
Grothman, for 5 minutes.
    Mr. Grothman. I remember years ago reading that the 
Japanese were the leaders in the world in consuming 
pharmaceuticals, but I look at a chart right now, and it looks 
like the Americans have blown by them like we are something 
like, what, 30, 35 percent more and Japan is second. Any of you 
guys give me a shot as to why we are spending so wildly more on 
pharmaceuticals than other countries? They are all looking at 
each other. It's like that old show ``What's My Line?''
    Mr. Spiro. I'll go.
    Mr. Grothman. Okay, good.
    Mr. Spiro. I think in this country drug companies charge 
high prices because they can.
    Mr. Grothman. Isn't part of it, though, that we are 
prescribing more drugs than other countries?
    Mr. Spiro. I think most of the increase in drug spending is 
driven by price increases.
    Mr. Grothman. Anybody else here comment on it, any other 
wildly intelligent people? And when I look at people, you know, 
the number of prescription drugs that they are taking is just 
shockingly high compared to what they took to me subjectively 
20 years ago. Is that true, all you smart people?
    Dr. Cohen. So I'll say as the one physician on the panel --
--
    Mr. Grothman. Good.
    Dr. Cohen.--that medicine has evolved and it's miraculous. 
I mean, we have cures for things that we can use 
pharmaceuticals for that we never did before. But I think 
prices for those pharmaceuticals are a real issue. I'm--I think 
we need to find a place where we can both innovate as well as 
make sure that we can have access to those lifesaving drugs 
that I want to give as a doctor.
    Mr. Grothman. You don't believe physicians are 
overprescribing drugs?
    Dr. Cohen. So I think that physicians are trying to do best 
by their patient that is in front of them. I think that prices 
are not something that are in the physician's control. I think 
they are wanting to use the tools that are in front of them. I 
will say as a doctor I want to help my patient that's in front 
of me, and pharmaceuticals are one way to do that.
    Mr. Grothman. Okay. And I will give you some more 
questions, Dr. Cohen, since you spoke up.
    Dr. Cohen. Sure.
    Mr. Grothman. All those guys were dithering and dathering 
and Dr. Cohen grabbed the mic.
    Dr. Cohen. Yes.
    Mr. Grothman. Dr. Cohen, for the Affordable Care Act-
complying plans, after a consumer pays their premium, what 
services is an insurer required to provide for no additional 
charge?
    Dr. Cohen. So with no additional charge they are certainly 
required to provide preventative services both for the 
deductible with no cost-sharing. Certain plans decide to offer 
more as sort of a benefit to the consumer, and we're seeing 
folks do that to attract different types of populations.
    Mr. Grothman. Okay. Is the Affordable Care Act required to 
cover EpiPens?
    Dr. Cohen. So formularies are decided by each of the 
individual products. Obviously, they're required to cover 
prescription drugs, but they are--you know, there are some very 
specific rules about how those things are covered. So 
epinephrine is covered. I couldn't say whether EpiPen is 
covered and how it's covered by any individual plan.
    Mr. Grothman. Okay. Well, do you know why it isn't covered, 
why it wouldn't be automatic because it seems like something 
that is pretty mandatory for people ----
    Dr. Cohen. Yes, and again, I'd have to go back and look at 
our rule. Again, epinephrine is covered. It's a matter of the 
mechanism of delivery, I think, so that I would need to--and 
I'm happy to follow up with additional details. But again, that 
would probably need to come from the plans themselves about how 
they are covering. We do set the rules of the road in terms of 
the benchmark plan and what they require in terms of 
pharmaceuticals for coverage.
    Mr. Grothman. Okay. Well, we will throw this out to the 
guys, too. Do you believe some parents would rather have the 
option of choosing a plan that provides EpiPens at no 
additional charge?
    The answer is yes. It is almost a rhetorical question, 
right? Yes.
    Would you agree that this is a good example of letting a 
consumer decide what kind of health care they need versus 
Washington bureaucrats?
    It is almost a rhetorical question, too.
    Mr. Spiro. Well, if I could just point out, Congressman, in 
the markets that existed before the Affordable Care Act, 
prescription drug coverage was not a guarantee, and I can give 
you a stat on that. About 20 percent of plans did not cover any 
prescription drugs. So the Affordable Care Act, by including 
essential health benefits and coverage for prescription drugs, 
is actually increasing access to things like EpiPen.
    Mr. Grothman. Any other comments? No. I guess not. Okay. I 
will yield the final 10 seconds to my chairman.
    Mr. Meadows. I thank the gentleman from Wisconsin. I thank 
each of you for your testimony.
    Dr. Cohen, you have been here before, and I appreciate your 
testimony. And hopefully, in light of some of the questions 
today that you see that there are a number of things that are 
bipartisan in terms of our desire to get you to address.
    Dr. Cohen. Yes.
    Mr. Meadows. The loophole as I see it, it may have been 
intentional. I don't know what it is, but the 90-day what I 
would say is it does not allow the insurers to do what they 
normally have done in the past is if you are not paying your 
premium, then your coverage quits. The ranking member and I are 
committed to making sure that you address that, and I sense 
from your comment that, other than your normal fraud 
prevention, that you are willing to address that, is that 
correct?
    Dr. Cohen. Within the confines of the statute in which we 
are required to offer folks a 90-day grace period, we 
definitely want to make sure that folks aren't gaming it beyond 
what is ----
    Mr. Meadows. But you know that they are, right?
    Dr. Cohen. So that's what we want to understand, and that 
we can't do until we put, as you're mentioning, the data 
together.
    Mr. Meadows. Okay. So let me ask it--here is my concern is 
is that the front end, whether it is under HHS or CMS, it looks 
like a car but when you open the hood, all the parts are not in 
there. You know, sometimes there is not an air-conditioning 
compressor. To give you a prime example, you know, you are 
looking at fraud. We had somebody that actually contacted us 
and said they were actually able to enroll through 
HealthCare.gov on the exchange with a birth date of October 30 
of 1124. That means that they were getting insured and they are 
891 years old. Now, if they are able to do that under our 
system right now, fraud prevention is less than robust, 
wouldn't you agree?
    Dr. Cohen. Well, so what I'd say is that fraud ----
    Mr. Meadows. How do we insure someone who is 891 years old?
    Dr. Cohen. Well ----
    Mr. Meadows. Now, that is not quite as old as Methuselah --
--
    Dr. Cohen. You know, that's pretty old.
    Mr. Meadows.--but, you know, I don't know who they might 
be.
    Dr. Cohen. You know, I think we--we're balancing things 
here. We don't want to make--we want to make sure that someone 
who maybe had a fat thumb or a fat finger when they were typing 
something in doesn't ----
    Mr. Meadows. Well, but that is what ----
    Dr. Cohen.--does not get insured.
    Mr. Meadows.--I am saying. HealthCare.gov ----
    Dr. Cohen. Yes.
    Mr. Meadows.--should say this says you are 891 years old. 
There is a high probability that you are not. Would you think 
that there is something automated ----
    Dr. Cohen. Yes. There is. There is. So ----
    Mr. Meadows. Then how could they enroll?
    Dr. Cohen. So when--well, when someone puts their 
information into HealthCare.gov, we immediately do a check to 
the data sources that we have. We go to SSA and say is this 
person's Social Security number there? Is it right ----
    Mr. Meadows. I know and I am real ----
    Dr. Cohen. And if it's not ----
    Mr. Meadows.--familiar because I am kind of dug in, Dr. 
Cohen ----
    Dr. Cohen. I know. I know you are.
    Mr. Meadows.--and you know I have ----
    Dr. Cohen. I know.
    Mr. Meadows.--and so as we do that--the problem is it 
doesn't go from you to the insurers. You know, there is this 
huge wall between HHS and CMS and the insurers when it comes to 
fraud, when it comes to enrollment. You know, there is a policy 
decision and then there is an implementation decision, and the 
two of you don't talk. And from what I am hearing, the 
insurance companies want you to talk to them, they want you to 
actually engage, and when they inquire, they get crickets. You 
know, they hear nothing.
    And so I guess in the nicest way, Dr. Cohen, I am asking 
you on that 90-day issue that if they are seeing fraud ----
    Dr. Cohen. Absolutely.
    Mr. Meadows.--or anticipating ----
    Dr. Cohen. We want to hear about it.
    Mr. Meadows.--I need you to go with the full power of the 
Federal Government and say we are not going to tolerate this.
    Dr. Cohen. Absolutely.
    Mr. Meadows. I think it is also appropriate for--perhaps 
you probably can go in and figure out who is going to these 
sites and how they are navigating the sites. You are aware that 
it is on the Internet, right?
    Dr. Cohen. We're very aligned in wanting to make sure we --
--
    Mr. Meadows. You know it is on the Internet, right, Dr. 
Cohen?
    Dr. Cohen. About how to get around the ----
    Mr. Meadows. Yes.
    Dr. Cohen.--programs?
    Mr. Meadows. Yes.
    Dr. Cohen. Isn't everything on the Internet these days? 
Yes, I believe you that it is there ----
    Mr. Meadows. Okay. All right.
    Dr. Cohen.--and I--we are aligned ----
    Mr. Meadows. But you have seen it, right?
    Dr. Cohen. We are here--we're aligned.
    Mr. Meadows. You have seen it? Somebody on your staff has 
seen it?
    Dr. Cohen. Well, so we have a partnership where folks, you 
know, and the insurers are often ----
    Mr. Meadows. Just yes or no. Has anybody on your staff seen 
the site ----
    Dr. Cohen. I don't know. I don't know ----
    Mr. Meadows. So you have not seen it?
    Dr. Cohen. I have not. I'd be happy for you to share with 
me ----
    Mr. Meadows. Well, I am shocked. We will be glad to show it 
to you.
    So with that, if there is no further business before the 
committee, the committee stands adjourned.
    Dr. Cohen. Thank you.
    [Whereupon, at 11:39 a.m., the committee was adjourned.]