[House Hearing, 114 Congress]
[From the U.S. Government Publishing Office]
AN OVERDUE CHECKUP: EXAMINING THE ACA'S STATE INSURANCE MARKETPLACES
=======================================================================
HEARING
BEFORE THE
SUBCOMMITTEE ON OVERSIGHT AND INVESTIGATIONS
OF THE
COMMITTEE ON ENERGY AND COMMERCE
HOUSE OF REPRESENTATIVES
ONE HUNDRED FOURTEENTH CONGRESS
FIRST SESSION
__________
SEPTEMBER 29, 2015
__________
Serial No. 114-79
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Printed for the use of the Committee on Energy and Commerce
energycommerce.house.gov
______
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COMMITTEE ON ENERGY AND COMMERCE
FRED UPTON, Michigan
Chairman
JOE BARTON, Texas FRANK PALLONE, Jr., New Jersey
Chairman Emeritus Ranking Member
ED WHITFIELD, Kentucky BOBBY L. RUSH, Illinois
JOHN SHIMKUS, Illinois ANNA G. ESHOO, California
JOSEPH R. PITTS, Pennsylvania ELIOT L. ENGEL, New York
GREG WALDEN, Oregon GENE GREEN, Texas
TIM MURPHY, Pennsylvania DIANA DeGETTE, Colorado
MICHAEL C. BURGESS, Texas LOIS CAPPS, California
MARSHA BLACKBURN, Tennessee MICHAEL F. DOYLE, Pennsylvania
Vice Chairman JANICE D. SCHAKOWSKY, Illinois
STEVE SCALISE, Louisiana G.K. BUTTERFIELD, North Carolina
ROBERT E. LATTA, Ohio DORIS O. MATSUI, California
CATHY McMORRIS RODGERS, Washington KATHY CASTOR, Florida
GREGG HARPER, Mississippi JOHN P. SARBANES, Maryland
LEONARD LANCE, New Jersey JERRY McNERNEY, California
BRETT GUTHRIE, Kentucky PETER WELCH, Vermont
PETE OLSON, Texas BEN RAY LUJAN, New Mexico
DAVID B. McKINLEY, West Virginia PAUL TONKO, New York
MIKE POMPEO, Kansas JOHN A. YARMUTH, Kentucky
ADAM KINZINGER, Illinois YVETTE D. CLARKE, New York
H. MORGAN GRIFFITH, Virginia DAVID LOEBSACK, Iowa
GUS M. BILIRAKIS, Florida KURT SCHRADER, Oregon
BILL JOHNSON, Ohio JOSEPH P. KENNEDY, III,
BILLY LONG, Missouri Massachusetts
RENEE L. ELLMERS, North Carolina TONY CARDENAS, California
LARRY BUCSHON, Indiana
BILL FLORES, Texas
SUSAN W. BROOKS, Indiana
MARKWAYNE MULLIN, Oklahoma
RICHARD HUDSON, North Carolina
CHRIS COLLINS, New York
KEVIN CRAMER, North Dakota
Subcommittee on Oversight and Investigations
TIM MURPHY, Pennsylvania
Chairman
DAVID B. McKINLEY, West Virginia DIANA DeGETTE, Colorado
Vice Chairman Ranking Member
MICHAEL C. BURGESS, Texas JANICE D. SCHAKOWSKY, Illinois
MARSHA BLACKBURN, Tennessee KATHY CASTOR, Florida
H. MORGAN GRIFFITH, Virginia PAUL TONKO, New York
LARRY BUCSHON, Indiana JOHN A. YARMUTH, Kentucky
BILL FLORES, Texas YVETTE D. CLARKE, New York
SUSAN W. BROOKS, Indiana JOSEPH P. KENNEDY, III,
MARKWAYNE MULLIN, Oklahoma Massachusetts
RICHARD HUDSON, North Carolina GENE GREEN, Texas
CHRIS COLLINS, New York PETER WELCH, Vermont
KEVIN CRAMER, North Dakota FRANK PALLONE, Jr., New Jersey (ex
JOE BARTON, Texas officio)
FRED UPTON, Michigan (ex officio)
C O N T E N T S
----------
Page
Hon. Tim Murphy, a Representative in Congress from the
Commonwealth of Pennsylvania, opening statement................ 1
Prepared statement........................................... 3
Hon. Diana DeGette, a Representative in Congress from the state
of Colorado, opening statement................................. 4
Hon. Frank Pallone, Jr., a Representative in Congress from the
State of New Jersey, opening statement......................... 8
Witnesses
Patrick Allen, Director, Oregon Department of Consumer and
Business Services, State of Oregon............................. 10
Prepared statement........................................... 12
Answers to submitted questions............................... 119
Allison O'Toole, Interim Chief Executive Officer, Minnesota
Health Exchange, State of Minnesota............................ 20
Prepared statement........................................... 22
Answers to submitted questions............................... 124
Louis Gutierrez, Executive Director, Massachusetts Health
Connector, State of Massachusetts.............................. 25
Prepared statement........................................... 27
Answers to submitted questions............................... 128
Jeffrey M. Kissel, Chief Executive Officer, Hawaii Health
Connector, State of Hawaii..................................... 31
Prepared statement........................................... 33
Answers to submitted questions \1\........................... 133
Peter Lee, Chief Executive Officer, Covered California, State of
California..................................................... 40
Prepared statement........................................... 42
Answers to submitted questions............................... 135
James R. Wadleigh, Sr., Chief Executive Officer, Access Health
CT, State of Connecticut....................................... 53
Prepared statement........................................... 55
Answers to submitted questions............................... 138
Submitted Material
Subcommittee memorandum.......................................... 84
Newspaper articles submitted by Mr. Walden....................... 93
----------
\1\ Mr. Kissell's response to the questions for the record can be
found at: http://docs.house.gov/meetings/IF/IF02/20150929/
103791/HHRG-114-IF02-Wstate-KisselJ-20150929-SD003.pdf.
AN OVERDUE CHECKUP: EXAMINING THE ACA'S STATE INSURANCE MARKETPLACES
----------
TUESDAY, SEPTEMBER 29, 2015
House of Representatives,
Subcommittee on Oversight and Investigations,
Committee on Energy and Commerce,
Washington, DC.
The subcommittee met, pursuant to call, at 10:07 a.m., in
room 2123 of the Rayburn House Office Building, Hon. Tim Murphy
(chairman of the subcommittee) presiding.
Members present: Representatives Murphy, Blackburn,
Griffith, Bucshon, Flores, Brooks, Mullin, Collins, Cramer,
Upton (ex officio), DeGette, Castor, Tonko, Yarmuth, Kennedy,
Green, Welch, and Pallone (ex officio).
Also present: Representatives Capps, Matsui, and Walden.
Staff present: Noelle Clemente, Press Secretary; Jessica
Donlon, Counsel, Oversight and Investigations; Brittany Havens,
Oversight Associate, Oversight and Investigations; Charles
Ingebretson, Chief Counsel, Oversight and Investigations; Emily
Martin, Counsel, Oversight and Investigations; Jessica
Wilkerson, Oversight Associate, Oversight and Investigations;
Christine Brennan, Press Secretary; Jeff Carroll, Staff
Director; Ryan Gottschall, GAO Detailee; Tiffany Guarascio,
Deputy Staff Director and Chief Health Advisor; Ashley Jones,
Director of Communications, Members Services, and Outreach;
Chris Knauer, Oversight Staff Director; Una Lee, Chief
Oversight Counsel; Elizabeth Letter, Professional Staff Member;
and Arielle Woronoff, Health Counsel.
OPENING STATEMENT OF HON. TIM MURPHY, A REPRESENTATIVE IN
CONGRESS FROM THE COMMONWEALTH OF PENNSYLVANIA
Mr. Murphy. Good morning. The subcommittee on Oversight and
Investigation convenes this hearing today to examine the state
health insurance marketplaces established under the Affordable
Care Act.
We seek to understand the sustainability challenges these
state exchanges continue to face. The Centers for Medicaid and
Medicare Services has awarded $5.51 billion to the states to
help them establish their exchanges. Let me repeat that. The
states received $5.51 billion in Federal taxpayer dollars to
set up their own exchanges. Yet the ACA had no specific
definition of what a state exchange was supposed to do, or more
importantly, what it was not supposed to do. This is
compensation without limitation.
Since the funding for these exchanges came from the
entitlement side of the budget, there was no oversight
throughout the appropriations process. There was no budget for
state exchanges; rather, grant money flowed freely and rewarded
bureaucratic ``innovation.'' Of course, no one bothered to
ensure that more money and more innovation didn't wind up
creating more government bloat.
In fact, the states represented on our panel today--
California, Connecticut, Hawaii, Massachusetts, Minnesota, and
Oregon--were awarded over $2 billion of federal grant program
dollars. Notably, Oregon has already pulled the plug on its
state exchange, and Hawaii is in the process of doing so.
The faucet of establishment grant money finally turned off
at the end of 2014, when the states' exchanges were supposed to
be self-sustaining. Despite this enormous taxpayer investment,
state exchanges are still struggling. They continue to face IT
problems, lower-than-expected enrollment numbers, and growing
maintenance costs.
Here are just a few more recent headlines from news
articles on the state exchanges: ``Obamacare Exchanges Are a
Model of Failure,'' ``Nearly Half of Obamacare Exchanges Face
Financial Woes,'' and another one, ``Obamacare's Failed State
Exchanges.''
The alarm bells are not only being sounded in the media.
Earlier this year, the Department of Health and Human Services
Office of Inspector General alerted CMS Acting Administrator
Andy Slavitt that the state exchanges may be using federal
establishment grant funds for operational expenses, which is
prohibited by law. HHS OIG urged Administrator Slavitt to
develop and issue clear guidance to the state exchanges on the
appropriate use of establishment grant funds.
The guidance that followed, however, was still vague,
permissive and lacked real-world examples. In fact, CMS has
seemed more focused on doling out taxpayer dollars rather than
overseeing how those dollars are spent.
The U.S. Government Accountability Office just issued a
report demanding CMS conduct more oversight over states' health
insurance marketplace IT projects. GAO found that CMS did not
clearly document, define, or communicate its oversight roles
and responsibilities to the states. Further, CMS often did not
involve relevant senior executives to approve federal funding
for states' IT marketplace projects, and although CMS
established a process for testing state marketplace systems,
these systems were not always fully tested.
We have a panel of witnesses today representing state
exchanges, each with its own set of challenges and
circumstances. The State of Hawaii was awarded $205 million,
but this past June, the Governor announced that its Hawaii
Health Connector does not generate ``sufficient revenues to
sustain operations'' and will shut down.
The Commonwealth of Massachusetts accepted $234 million for
its Health Connector, but enrolled only 13 percent of its goal
the first year, temporarily placed individuals in Medicaid
because it couldn't determine eligibility, and cost
Massachusetts an estimated $1 billion in additional funds.
The State of Minnesota initially received $155 million to
launch its state exchange. Its exchange received an additional
$34 million from CMS, in part to fund ongoing fixes to the IT
system. Despite this infusion of funds, Minnesota has announced
that it would revert to an old system next year for
MinnesotaCare premiums because of the continued exchange
problems.
The State of California received over $1 billion in federal
grant dollars to establish its exchange, Covered California,
the most of any state. Despite call center and Web site woes,
California had the highest enrollment in 2014, but only
retained 65 percent of its 2014 enrollees. This year,
California's enrollment numbers reached 1.4 million, falling
300,000 short of expectations.
CMS awarded the State of Connecticut approximately $176
million in federal establishment grants, and as of September
2015, approximately 96,000 individuals were enrolled in a plan.
Only 50 percent of enrollees were previously uninsured.
The State of Oregon received $305 million in federal grant
dollars for an exchange called Cover Oregon. Despite this heavy
investment, Cover Oregon was dissolved early this year and
transferred its responsibilities to the Department of Consumer
and Business Services. The state is currently operating as a
Federally Supported State-based Marketplace and relies on
healthcare.gov.
So we are here today to understand the challenges these
state exchanges face. Why are they struggling to become self-
sustaining, especially given the extraordinary taxpayer
investment? Is it a lack of accountability or oversight? Where
has CMS been during this whole process, and is CMS encouraging
fiscal restraint, or instead, taking a hands-off approach,
which has allowed money to be spent uncontrollably? And where
an exchange has decided to shut down, has CMS tried to recoup
any of the federal grant dollars? Lastly, are the exchanges
doomed to fail? Hopefully we will get answers to these
important questions.
So I thank all the witnesses for testifying today.
[The prepared statement of Chairman Murphy follows:]
Prepared statement of Hon. Tim Murphy
The subcommittee convenes this hearing today to examine the
state health insurance marketplaces established under the
Affordable Care Act. We seek to understand the sustainability
challenges these state exchanges continue to face.
The Centers for Medicaid and Medicare Services has awarded
$5.51 billion dollars to the states to help them establish
their exchanges. Let me repeat that. The states received $5.51
billion in federal taxpayer dollars to set up their own
exchanges. Yet, the ACA had no specific definition of what a
state exchange was supposed to do, or more importantly, what it
was not supposed to do.
Since the funding for these exchanges came from the
entitlement side of the budget, there was no oversight through
the appropriations process. There was no ``budget'' for state
exchanges, rather grant money flowed freely and rewarded
bureaucratic ``innovation.'' Of course, no one bothered to
ensure that more money and more ``innovation'' didn't wind up
creating more government bloat.
In fact, the States represented on our panel today--
California, Connecticut, Hawaii, Massachusetts, Minnesota, and
Oregon--were awarded over $2 billion of federal grant dollars.
Notably, Oregon has already pulled the plug on its State
exchange and Hawaii is in the process of doing so.
The faucet of establishment grant money finally turned off
at the end of 2014, when the states' exchanges were supposed to
be self-sustaining. Despite this enormous taxpayer investment,
state exchanges are still struggling. They continue to face IT
problems, lower than expected enrollment numbers, and growing
maintenance costs. Here are just a few more recent headlines
from news articles on the state exchanges: ``ObamaCare
Exchanges Are a Model of Failure,'' ``Nearly Half of ObamaCare
Exchanges Face Financial Woes,'' and ``ObamaCare's Failed State
Exchanges.''
The alarm bells are not only being sounded in the media.
Earlier this year, the Department of Health and Human Services
Office of Inspector General alerted CMS Acting Administrator
Andy Slavitt that the state exchanges may be using federal
establishment grant funds for operational expenses, which is
prohibited by law. HHS OIG urged Administrator Slavitt to
develop and issue clear guidance to the state exchanges on the
appropriate use of establishment grant funds. The guidance that
followed, however, was still vague, permissive, and lacked
real-world examples.
In fact, CMS has seemed more focused on doling out taxpayer
dollars rather than overseeing how those dollars are spent. The
U.S. Government Accountability Office just issued a report
demanding CMS conduct more oversight over states' health
insurance marketplace IT projects. GAO found that CMS did not
clearly document, define, or communicate its oversight roles
and responsibilities to the states. Further, CMS often did not
involve relevant senior executives to approve federal funding
for states'' IT marketplace projects. And although CMS
established a process for testing state marketplace systems,
these systems were not always fully tested.
We have a panel of witnesses today representing state
exchanges, each with its own set of challenges and
circumstances. The State of Hawaii was awarded $205 million,
but this past June, the Governor announced that its Hawaii
Health Connector does not generate ``sufficient revenues to
sustain operations'' and will shut down.
The Commonwealth of Massachusetts accepted $234 million for
its Health Connector, but enrolled only 13% of its goal the
first year, temporarily placed individuals in Medicaid because
it couldn't determine eligibility, and cost Massachusetts an
estimated $1 billion in additional funds.
The State of Minnesota initially received $155 million to
launch its state exchange. Its exchange, received an additional
$34 million from CMS, in part to fund ongoing fixes to the IT
system. Despite this infusion of funds, Minnesota has announced
that it would revert to an old system next year for
MinnesotaCare premiums because of the continued exchange
problems.
The State of California received over $1 billion in federal
grant dollars to establish its exchange, Covered California,
the most of any state. Despite call center and Web site woes,
California had the highest enrollment in 2014, but only
retained 65 percent of its 2014 enrollees. This year,
California's enrollment numbers reached 1.4 million, falling
300,000 short of expectations.
CMS awarded the State of Connecticut approximately $176
million in federal establishment grants, and as of September
2015, approximately 96,000 individuals were enrolled in a plan.
Only 50 percent of enrollees were previously uninsured.
The State of Oregon received $305 million in federal grant
dollars exchange, Cover Oregon. Despite this heavy investment,
Cover Oregon was dissolved early this year and transferred its
responsibilities to the Department of Consumer and Business
Services. The state is currently operating as a ``Federally
supported State-based Marketplace'' and relies on
healthcare.gov.
We are here today to understand the challenges these state
exchanges face. Why are they struggling to become self-
sustaining, especially given the extraordinary taxpayer
investment? Is it a lack of accountability or oversight? Where
has CMS been during this whole process? Is CMS encouraging
fiscal restraint, or instead, taking a hands-off approach,
which has allowed money to be spent uncontrollably? And where
an exchange has decided to shut down, has CMS tried to recoup
any of the federal grant dollars? Lastly, are the exchanges
doomed to fail? Hopefully, we will get answers to these
important questions today.
Mr. Murphy. And I now recognize the Ranking Member from
Colorado, Ms. DeGette, for 5 minutes.
OPENING STATEMENT OF HON. DIANA DEGETTE, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF COLORADO
Ms. DeGette. Thank you, Mr. Chairman.
I think we can all stipulate that some states have
struggled with the technological hurdles of setting up their
own marketplaces. We all knew that the Affordable Care Act
would face challenges in some aspects of implementation, and I
have been saying for a long time that it is this committee's
role to conduct oversight and to improve that process, and so I
am glad that we are having this hearing today, and I hope we
have that goal in mind. I hope we are not hoping that the state
exchanges fail. I hope we are hoping that we can improve it and
we can make it better.
I think that despite the fact that we had a rough start in
many places, the ACA is working and has greatly improved access
to affordable, high-quality health insurance coverage.
In the last 5 years, we have made tremendous progress in
helping millions of Americans throughout the country gain
access to quality healthcare. Here are some notable statistics.
Since passage of the law more than 5 years ago, 17.6
million previously uninsured individuals have gained health
coverage through the ACA's various provisions. Nearly 10
million consumers have enrolled in state and Federally
Facilitated Exchanges. About 2.7 million of those individuals
use state exchanges to select private plans. According to newly
released data, the uninsured rate fell from 13.3 percent to
10.4 percent from 2013 to 2014, representing the largest single
year reduction in the uninsured rate since 1987.
In 2014, hospital uncompensated care costs were $7.4
billion lower than 2013 levels as a result of exchange coverage
and Medicaid expansion. The ACA also improved healthcare
delivery systems, hospital readmissions are down, and
indicators of patient safety like hospital-acquired conditions
have improved significantly.
All of the states before us today have taken significant
steps to improve health coverage for their residents. Their
uninsured rates have plummeted due to their efforts to
implement the Affordable Care Act.
Despite the technical and financial challenges that
confronted Hawaii's exchange, for example, its uninsured rate
has fallen and it now stands at only 5.2 percent. In just a few
years since 2013, Minnesota has reduced the number of people
without health insurance by more than 50 percent. Their
uninsured rate is now one of the Nation's lowest at 4.6
percent. Massachusetts, which already had one of the Nation's
lowest uninsured rates in the country, is down to just 3
percent in 2015, which is a 38 percent decrease since 2013.
Connecticut, which now has a robust state-based marketplace,
cut its uninsured rate by more than 60 percent since 2012. In
Connecticut, the uninsured rate is 5 percent. And California,
which also had one of the highest uninsured rates in the
country--it was 21.6 percent--has also managed to drop its rate
by 45 percent since 2013. Now the uninsured rate in California
is 11.8 percent. And finally, Oregon, which had one of the
Nation's highest uninsured rates of 20 percent in 2013, also
reduced its uninsured rate by 55 percent to 8.8 percent today.
How did this all happen? How did states manage to insure so
many millions of people? The Affordable Care Act has really
provided these tools.
So as we discuss call centers, Web-based portals, and all
these other things, let's not forget that the Affordable Care
Act is really working to achieve its goals, and let's work
together to try to make it better.
I want to thank you for having this hearing. I want to
thank our Californians for joining us, Mr. Chairman, and I want
to yield the balance of my time to Ms. Matsui from California.
Ms. Matsui. Thank you very much for yielding.
Peter Lee, thank you for coming here to testify today. And
let me reiterate, the Affordable Care Act is working.
California is an early adopter in so many areas, not the least
of which is healthcare.
We have embraced the opportunities provided by the ACA to
move our system from paying for volume to paying for value, and
to reform our system to ensure that everyone has access to
quality, affordable healthcare. Covered California has been an
integral part of that, and I am happy to say that as of the
most recently released census data, over 41,000 in my district
of Sacramento and nearly 2 million Californians obtained health
coverage from 2012 to 2014. That is an average of 5 percent
reduction in the rate of uninsured. In Sacramento in 2012, 18
percent of the population was uninsured. In 2014, it was down
to 12 percent. That rate is likely to be lower in 2015.
We need to continue to work to bring those numbers of
uninsured down by supporting the advancements made by Covered
California and other exchanges, not by moving backward.
Thank you, and I yield back.
Mr. Murphy. The gentlelady yield back.
And now on our side, if any members want to speak, I know
Mr. Walden, who is not a member of this committee who wanted to
sit in on this hearing, has the right to do so if you would
like to be recognized for 2 minutes. Or first a member first
and then you can yield to Mr. Walden for 2 minutes. Thank you.
Mr. Bucshon. Hi. I was a practicing physician before, and I
want to just talk about the focus on insurance rates, people
getting insurance. Coverage does not guarantee access to
healthcare.
Deductibles are up. Premiums are up. The cost is being
shifted to the people. The uninsured rate may be down but the
access, I would argue, has not improved dramatically. If you
are a schoolteacher, a factory worker or other middle-class
employee, if you have a $5,000 family deductible, maybe as high
as $10,000, do you have affordable health insurance? I would
argue that you do not.
In many states, physicians aren't taking new Medicaid
patients. I know this because I am a physician and I talk to
physicians all the time. In fact, many physicians aren't taking
new Medicare patients, let along Medicaid patients, so I just
wanted to clarify that in focusing only on uninsured rates is
not the only parameter to look at when you are looking at the
ability of our citizens to access quality, affordable
healthcare, and I yield to Mr. Walden.
Mr. Walden. I thank the gentleman, and I thank the
committee for letting me participate in this hearing.
When I was in the state legislature, the Oregon Health Plan
itself was passed, and when I became Majority Leader, we
realized there had to be a lot of work done to implement the
Oregon Health Plan, and I put together a select committee that
did that, and I chaired it, so I concur with those who think we
need to do more to reform delivery of healthcare and access to
it. I have a pretty good record on doing both.
Mr. Chairman, I want to thank you for holding this hearing
on this issue, though. Mr. Allen, thank you for coming out from
Oregon to attend, and as you know, Oregon received $305 million
in federal grants to build Cover Oregon. Only California and
New York, states with about nine and four times the population,
respectively, received more. So we have got a lot of money out
there.
The exchange was launched with much fanfare. As an
Oregonian, I heard the sort of kitschy ``Long Live Oregon''
jingle to encourage Oregonians to sign up. The problem was,
when the lights came on and the curtain went up on Cover
Oregon, it failed to sign up a single person online in one
sitting. Not one person was able to sign up that way.
Oregonians were forced to sign up using paper applications. The
state then decided to abandon the state-run exchange IT
platform and move on to healthcare.gov, the federal exchange.
Eventually, the legislature voted to shut down the entire
program, which it did on June 30th. Hundreds of millions of
taxpayer dollars apparently down the drain.
Last February, Chairman Upton, Chairman Pitts, Chairman
Murphy and I requested an independent federal investigation
into the failure of Cover Oregon. While the GAO did some good
work on state exchanges generally, many questions about Oregon
remain unanswered. How did this happen? Who was in charge? What
could be done to make sure this never happens again anywhere in
the country? We are still awaiting the answers, frankly.
Moving forward, the move to the federal exchange poses a
whole new set of questions. Mr. Allen, I understand you weren't
there running this thing so, you know, we are not here to point
fingers; we are here to get answers to how this happened and
what we do now and how we are going to fund the next phase of
this. I still don't have a clear understanding what happened to
$305 million establishment in grants, and did CMS even try to
recoup this? What was the role of CMS in all this to observe
how this money, taxpayer money, was being spent? Did they do
their due diligence?
In spite of your repeated assurances that the Oregon
exchange is financially self-sustaining, I think there are
still questions over how the state will pay the Federal
Government for using healthcare.gov when it is required to do
so in 2017. There are also concerns with significant insurance
rate increases. I know in your testimony you state the rate
increases are a result of the market rebalancing itself.
Whether or not it is rebalance or whether it is indicative of
future rate hikes, I think remains to be seen.
The collapse of Cover Oregon, though, is clearly an epic
disaster for Oregonians and for taxpayers across the United
States. Frankly, the aftermath hasn't inspired additional
confidence in our state government or CMS. I am deeply
disturbed about the role of the former governor, who has had to
resign, and the role of his campaign consultants in calling the
shots.
So I hope the hearing will help us learn more about what
happened, why it happened, and what steps can be taken to make
sure that this sort of debacle never happens again.
Thank you, Mr. Chairman. I yield back the balance of my
time.
Mr. Bucshon. I yield back.
Mr. Murphy. The gentlemen yield back.
I now recognize the Ranking Member of the full committee,
Mr. Pallone, for 5 minutes.
OPENING STATEMENT OF HON. FRANK PALLONE, JR., A REPRESENTATIVE
IN CONGRESS FROM THE STATE OF NEW JERSEY
Mr. Pallone. Thank you, Mr. Chairman.
Over 5 years ago, we passed the Affordable Care Act and
fundamentally changed the health care system in this country.
We expanded access to healthcare for millions of Americans and
ensured that no individual could be denied coverage for
arbitrary or discriminatory reasons. We guaranteed that
insurance companies were in the business of making our citizens
healthier, not just making a profit. And we strengthened
Medicare and put the program on sounder financial footing to
preserve and protect it for generations of Americans to come.
Today, my Republican colleagues will tell a different
story. We will hear a lot about technical glitches,
inefficiencies, and broken IT systems. If we just listen to the
Republicans' side, we are led to believe we have poured money
down the drain and seen no benefit.
The reforms of the Affordable Care Act are a complex
undertaking and no doubt there are lessons to be learned from
its implementation, and we should learn those lessons and use
them to improve going forward. But that doesn't mean we should
lose sight of the bigger picture.
Make no mistake: the Affordable Care Act is working. We are
seeing its successes throughout the country, and the data is
there to prove it. Recent census data shows that the uninsured
rate has significantly declined in every state. Seventeen point
six million Americans who didn't have coverage before the law
went into effect now have insurance. States that chose to
embrace the full measure of the law and expand their Medicaid
programs and establish state-based marketplaces have seen the
greatest gains for their citizens, and this success is true for
the six states we have joining us here today.
Despite early technological challenges in some of these
states, everyone here today has expanded access to care and
significantly lowered their numbers of uninsured.
Now, it is of course also important that we look at how
state-based marketplaces could be run more efficiently and
effectively, and how we can continue to enhance the health care
delivery system in this country. But let's do this with an eye
for improvement. Let's not use this hearing merely as an
opportunity to score political points. Let's have a discussion
about how to reach our remaining uninsured, how to continue to
improve the consumer experience in year three of exchange
enrollment, and how to best address the challenges that remain.
With that, I would like to yield my remaining time to split
between Congressman Kennedy and Representative Capps. I will
initially yield to Mr. Kennedy.
Mr. Kennedy. I want to thank the Ranking Member for
yielding.
It is always nice to see a familiar face among our
witnesses at hearings, and I am pleased to have a chance to
welcome Louis Gutierrez this morning. Mr. Gutierrez throughout
his career has championed the use of technology to help
government do its job better, smarter and more efficiently
whether it is as our Commonwealth's Chief Information Officer,
Principal of the Exeter Group, or now as the Executive Director
of the Massachusetts Health Connector. He has pursued
innovative strategies to improve the delivery of critical
services to people who need them most, particularly when it
comes to health care.
In his latest role, he has worked diligently to ensure that
Massachusetts maintains its proud status as a state with one of
the lowest uninsured rates in the country. As our Nation's
uninsured rate continues to fall nearing single digits, thanks
to the Affordable Care Act, I believe it is critical that we
replicate the successes we have seen in our Commonwealth across
the country.
I am looking forward to hearing more about your efforts to
make our system more effective and more efficient, sir, as well
as any best practices that you have encountered that could be
applied across this country.
Thanks very much for being here. Yield back.
Mr. Pallone. I yield the remaining time to Mrs. Capps.
Mrs. Capps. Thank you to the Ranking Member for yielding
and also letting me waive on to this subcommittee today for
what I know to be a very important discussion.
I wanted to come and personally welcome Mr. Lee, the
Executive Director of Covered California, which is my state's
health insurance marketplace, which has helped connect so many
of my constituents with health insurance. California made a
conscious decision to be an active player with the Affordable
Care Act implementation, and when there are problems, they have
been responsive, holding insurance companies accountable and
focused on making Covered California a national leader. Thanks
to their efforts, we have cut our state's uninsurance rate by
28 percent, pretty remarkable, in my opinion.
California shows that when a state is invested and buys
into the goals of the Affordable Care Act, prices can be held
under control, and quality plans can be made available for
purchasers.
I look forward to hearing more about how Covered California
could perhaps serve as a role model for other states looking to
get the best value for their residents while promoting high-
quality care, and I'll yield back to the Ranking Member.
Mr. Pallone. I yield back.
Mr. Murphy. Thank you. The gentlelady yields back.
I now ask unanimous consent that written opening statements
of members of the subcommittee will be introduced into the
record. I know Mr. Upton will have something. We will leave it
open for other members if they wish to do so. So without
objection, the documents will be entered for the record.
To our witnesses, you are aware that the committee is
holding an investigative hearing, and when doing so has the
practice of taking testimony under oath. Do any of you have any
objections to testifying under oath? All the witnesses say no.
The Chair then advises you that under the rules of the
House and the rules of the committee, you are entitled to be
advised by counsel. Do any of the witnesses desire to be
advised by counsel today? And all the witnesses declined.
In that case, would you all please rise, raise your right
hand, and I will swear you in.
[Witnesses sworn.]
Mr. Murphy. You are now under oath and subject to the
penalties set forth in Title XVIII, section 1001 of the United
States Code. We will have you each give a 5-minute summary of
your statement. We are not trying to rush you.
We will begin with Mr. Allen. You are recognized for 5
minutes. Please make sure your microphone is on. Pull it very
close to you so we can hear you. Thank you.
TESTIMONY OF PATRICK ALLEN, DIRECTOR, OREGON DEPARTMENT OF
CONSUMER AND BUSINESS SERVICES, STATE OF OREGON; ALLISON
O'TOOLE, INTERIM CHIEF EXECUTIVE OFFICER, MINNESOTA HEALTH
EXCHANGE, STATE OF MINNESOTA; LOUIS GUTIERREZ, EXECUTIVE
DIRECTOR, MASSACHUSETTS HEALTH CONNECTOR, STATE OF
MASSACHUSETTS; JEFFREY M. KISSEL, CHIEF EXECUTIVE OFFICER,
HAWAII HEALTH CONNECTOR, STATE OF HAWAII; PETER LEE, CHIEF
EXECUTIVE OFFICER, COVERED CALIFORNIA, STATE OF CALIFORNIA; AND
JAMES R. WADLEIGH, SR., CHIEF EXECUTIVE OFFICER, ACCESS HEALTH
CT, STATE OF CONNECTICUT
TESTIMONY OF PATRICK ALLEN
Mr. Allen. Thank you, Chairman Murphy, Ranking Member
DeGette, members of the subcommittee. My name is Patrick Allen,
and I'm the Director of the Oregon Department of Consumer and
Business Services. We're the state's largest consumer
protection and business regulatory agency. Our mission is to
serve and protect consumers and workers in Oregon while
supporting a positive business climate in the state. My agency
is responsible for regulating the financial services industry
including banks, credit unions, mortgage lenders, and other
non-depository programs; all aspects of insurance including
life, health, property and casualty; our system of worker
health and safety including Oregon OSHA and the state system of
workers' compensation insurance; as well as statewide
construction standards.
As of 90 days ago, after a brief transitional period, the
department assumed responsibility for Oregon state-based health
insurance marketplace. I appreciate the opportunity to be here
today and to talk to you about the marketplace services in
Oregon and my agency's plans going forward.
You have my written statement so I will just briefly
summarize with three points. First, Oregon's marketplace is
successful. Nearly 70,000 Oregonians enrolled in coverage
during open enrollment for 2014 despite needing to navigate a
hybrid paper and automated system. Using healthcare.gov, that
number increased to over 100,000 for 2015 open enrollment.
Between those private health insurance results and expansion of
the Oregon Health Plan, our state's Medicaid program, the rate
of uninsured in Oregon declined from over 14 percent to under 9
percent, one of the largest decreases in the country.
Second, Oregon's health insurance marketplace is healthy,
competitive, and sustainable. For 2016, 11 companies will offer
Oregonians 120 individual plans at various coverage levels.
Oregon's individual insurance market was one of the lowest
priced in the Nation in 2015. We're in the process of
rebalancing that market to ensure its long-term sustainability,
and while the percentage increases in rates have been
significant, the resultant rates are very comparable to those
available in neighboring markets in California and Washington
and remain very affordable.
Third, the marketplace is run by the State of Oregon is
efficient, financially sustainable, and subject to ongoing
oversight. Because of economies of scale and other
efficiencies, we as a state agency are able to operate the
marketplace with about 60 percent fewer staff than the previous
organization. We're completely financed by an assessment on
participating insurers with no state taxpayer or federal grant
funding involved. While we have access to the federal platform
currently at no direct cost for the 2015 and 2016 plan years,
we have adequate financial capacity to pay a reasonable
technology cost to the Federal Government, another state in a
partnership arrangement, or to a private vendor should that be
necessary.
I'd be happy to answers questions that you might have.
Thank you very much.
[The prepared statement of Mr. Allen follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Mr. Murphy. Thank you.
Now, Ms. O'Toole, you are recognized. I am sorry I didn't
introduce you before, Mr. Allen, the Department of Consumer and
Business Services, the State of Oregon, but this is Allison
O'Toole, the Interim Chief Executive Officer for MNsure, State
of Minnesota. You are recognized for 5 minutes. You know the
drill with the microphone.
TESTIMONY OF ALLISON O'TOOLE
Ms. O'Toole. Thank you. Good morning, Chairman Murphy,
Ranking Member DeGette, and distinguished members of the
subcommittee. My name is Allison O'Toole, and I'm the interim
CEO of MNsure, which is Minnesota's online health insurance
marketplace. Thank you for inviting me here today. I'm honored
to have this chance to share with you some of the success we're
seeing in Minnesota.
Let me begin with an update on how MNsure is positively
impacting Minnesotans. Building the MNsure marketplace was no
easy task. However, we've made tremendous progress providing
hundreds of thousands of Minnesotans with affordable,
comprehensive coverage.
For the purposes of background, I want to provide the
committee with a full picture of where we are today. Since
October 1st of 2013, more than 500,000 Minnesotans have used
MNsure to shop, compare and enroll in quality, affordable
coverage. As a result, Minnesota has the lowest rate of
uninsured in state history. In our first year, the state's
uninsured rate dropped by a whopping 40 percent, and now,
nearly 95 percent of Minnesotans are covered, and they're
saving money, more than $31 million in premium payments through
tax credits in 2014 alone.
And I'm pleased to report that MNsure is financially
sustainable. We have a balanced, conservative, sustainable
budget that's based on real numbers and real experience.
And we've come a long way since our launch 2 years ago. The
last 18 months have brought measurable progress along with a
deep commitment to transparency and accountability. And most
importantly, we're making a difference in the lives and the
health of Minnesotans. Minnesotans like Richard Handeen, a
cattle farmer in rural Minnesota, who with his newly purchased
coverage through MNsure went to the doctor for the first time
in years, discovered he had cancer, and was able to
successfully treat it. Today, Richard's cancer free. And
Minnesotans like Jake Sanders. Jake is a small business owner.
He and his wife have three small children, one who's had a
preexisting condition since birth. MNsure allowed Jake to find
a lower-cost policy for his family, and today he knows his son
will be covered.
Covering more Minnesotans has always been our foundational
goal since day one, and MNsure's technology performance has
improved dramatically since then. After lots of hard work,
there is a night-and-day difference between the first and
second open enrollment periods. Call center wait times dropped
dramatically in year two. Minnesotans were able to complete the
enrollment process with relative ease, and our dedication to
improving MNsure continues today.
This is important to us because we think no one should
struggle to find a health insurance plan that fits their needs.
It's also part of making sure that Minnesotans can live their
lives and focus on the important things like going to work,
taking care of their families, and starting a business instead
of worrying about how they're going to pay for big medical
bills.
As we approach MNsure's third open enrollment period,
there's plenty of work ahead. Our IT teams are hard at work
adding functionality, improving Web site performance, and
ensuring a positive consumer experience. There is also a strong
focus on improving MNsure's functionality for Medical
Assistance and Minnesota Care.
One final point that sets us apart. In Minnesota, our state
recently created a 29-person bipartisan healthcare task force
of healthcare and community leaders who will help address
questions like access to care and financing. Minnesota is
taking oversight and accountability seriously, and I am
thankful to these people for their thoughtful approach to
addressing many tough questions that remain for our healthcare
programs.
Thank you again for inviting me here today. As MNsure's
Interim CEO, my eyes are squarely focused on preparing for the
third open enrollment period, improving the consumer experience
for Minnesotans, setting and implementing a smart budget, and
making sure as many people as possible take advantage of the
products MNsure has to offer. We want to see people like
Richard and Jake and their families get the care they need and
deserve. I look forward to your questions, and thank you again
for having me.
[The prepared statement of Ms. O'Toole follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Mr. Murphy. Thank you, Ms. O'Toole.
And now we recognize Mr. Louis Gutierrez, Executive
Director of Massachusetts Health Connector from the State of
Massachusetts. You are recognized for 5 minutes.
TESTIMONY OF LOUIS GUTIERREZ
Mr. Gutierrez. Chairman Murphy, Ranking Member DeGette, and
distinguished members of the subcommittee, good morning. Thank
you for the opportunity to testify regarding the Massachusetts
Health Connector Authority, our state-based marketplace. My
name is Louis Gutierrez and I have served as the Executive
Director of the Health Connector since February of this year
following the election of Massachusetts Governor Charlie Baker.
As the new State Administration took office this year,
Massachusetts was partway through a second attempt to implement
a health insurance eligibility and enrollment system to enable
Affordable Care Act access to our residents.
While a proficient eligibility determination front-end was
completed for this year's open enrollment, a range of back-
office enrollment functions remained under development. Much of
this year has been devoted to stabilizing operations and
completing the system foundations to support Massachusetts'
state-based marketplace.
Upon taking office, the Baker Administration moved to
effect several substantial changes in approach to the Connector
Authority. First, it altered the governance structure, placing
its Secretary for Health and Human Services as chair of the
Health Connector Board of Directors. The Secretary for Health
and Human Services also oversees the state's Medicaid
organization, and this change reflects the importance of
successful coordination between the exchange and the state
Medicaid agency. Second, it replaced executive management at
the Health Connector, hiring for experience in large-scale
systems implementations along with a new Chief Operating
Officer, a woman distinguished in Massachusetts payer
operations. Third, it appointed an outstanding program
management lead to lead the combined health insurance exchange/
Medicaid integrated eligibility systems implementation effort.
Fourth, because the health insurance exchange and integrated
eligibility initiative is shared between the Health Connector
and the state's Medicaid organization, it reestablished a
formal governance structure for the project, led by the state
Medicaid agency, the Health Connector, and the state's central
Information Technology Division. Fifth, it undertook a 6-week
intensive examination of operational processes to assess the
state of Health Connector operations, and to lay a path for
resolving existing problems; and finally, it completed the
process for transferring individuals from temporary coverage
where they had been placed in 2014 to appropriate placement in
either Qualified Health Plans or Medicaid.
The Health Connector is now better situated to service the
needs of the residents of Massachusetts. For 2016, we have 11
issuers presenting 83 Qualified Health Plans on the Connector
and 25 plans across five issuers with Qualified Dental Plans.
Our enrollment totals over 175,000 Qualified Health Plan
enrollees, and 40,000 Qualified Dental Plan enrollees.
Massachusetts, as noted earlier, is one of 5 states with less
than 5 percent underinsured. We have significantly expanded
customer service components for this fall's open enrollment
period, with 200 additional customer service hours, including
later evenings, Saturdays and Sundays, four additional walk-in
centers, and new access to online customer self-service so that
users may update their applications and make changes to their
accounts without needing to call the call center.
Massachusetts believes that states need flexibility to
continue to innovate in healthcare reform and meet local needs.
We could not continue to provide Massachusetts-specific
benefits to low-income populations without the flexibility of a
state marketplace. For example, our ConnectorCare program,
which adds subsidies for individuals earning less than 300
percent of the federal poverty level. We desire the ability to
recognize local market conditions and the definition of small
business size.
Going forward, there are potentially more seamless ways to
integrate Medicaid and exchange eligibility and subsidies. It
is important that states be offered that chance to make this
law work better for everyone. Massachusetts remains committed
to making sure that those who need health insurance can obtain
it both now and in the future with the state-based marketplace
as one component of that strategy. Thank you.
[The prepared statement of Mr. Gutierrez follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Mr. Murphy. Thank you, Mr. Gutierrez.
We now turn towards Mr. Jeff Kissel, the Executive Director
of the Hawaii Health Connector from the State of Hawaii. You
are recognized for 5 minutes.
TESTIMONY OF JEFFREY M. KISSEL
Mr. Kissel. Thank you. Good morning, Chairman Murphy,
Ranking Member DeGette, honorable members of the Oversight and
Investigations Subcommittee. It's a pleasure to come before you
to report on the activities of the exchange, but before doing
so, I'd like to explain the healthcare environment in Hawaii to
help you understand the context of my remarks.
Yes, Hawaii has among the lowest insurance rates in the
Nation. This is, however, because of the passage of the Hawaii
Prepaid Healthcare Act of 1974. At that point the state
undertook as a matter of policy the responsibility for
providing access to healthcare and wellness resources for
virtually every employed resident of our state. Over the past
half-century, both Democratic and Republican administrations in
Hawaii have not only supported the provisions of the Act,
they've developed substantial resources and focused on leading
the insurance and healthcare industry to actually delivering
these services to an ever-increasing percentage of our
population.
The evidence of our success is clear. Hawaii is not ranked
among the states with the lowest rates of diabetes, obesity,
infant mortality, and other critical public health metrics. Our
population; however, enjoys a longer lifespan, and, by any
measure, healthier outcomes from the diseases and other health
issues faced by a diverse ethnic and cultural mix. I believe
that this is a direct result of our community's ability to
develop excellent healthcare access and secure its viability
through the Prepaid Healthcare Act with its employer mandate to
provide insurance.
In this context, the passage of the Affordable Care Act was
widely viewed as an opportunity to extend access to healthcare
and wellness resources to even more of Hawaii's population. For
the most part that effort has been successful. Taken together,
the expanded Medicaid program and the Affordable Care Act
insurance policies have reduced the Hawaii uninsured rate,
already low, by more than half.
Unfortunately, however, a lack of planning, unclear
business process design, and utterly inadequate program
management as the technology systems were implemented, resulted
in both excessive spending and delays in delivering these
important services to the people who most needed it in our
state. Since I became Executive Director, however, the team at
the Hawaii Health Connector have come a very long way toward
achieving the goal of harmonizing the benefits of Hawaii's
forward-thinking Prepaid Healthcare Act with the provisions of
the Affordable Care Act.
Our business processes now utilize technology to support a
well-trained outreach team of workers as they assist our
customers with the enrollment process. This change in approach
converted our computer systems to a resource rather than a
barrier to entry.
In December of 2014, we produced a comprehensive 10-year
strategic business plan, a copy of which is attached to this
testimony. It detailed a report on our condition, the
activities, and sustainability required by both the Affordable
Care Act and state enabling legislation. It also presented both
the advantages and the challenges as the Exchange commenced its
second full year of operations. In that plan we explained to
CMS and our State Administration how we would meet the
sustainability and other important requirements of the
Affordable Care Act. We recommended a financial approach that
relied on debt financing and generating enrollment--revenue
from about 70,000 enrollees at the rate of about $12 million a
year.
I'm pleased to say that our enrollment in 2014 and 2015
increased by more than 400 percent. It is nearly now 40,000.
Moreover, the Hawaii Health Connector was able to add thousands
of individuals to the expanded Medicaid program, further
reducing the impact of uncompensated costs in our community.
Even though we were able to overcome first-year technology
challenges, it became clear to all of us that the cost of
maintaining, upgrading and ultimately replacing the technology
had the potential to exceed its initial cost. While the Federal
Government funded the initial costs, the people of Hawaii are
responsible for the ongoing costs. After consulting with CMS,
our State Administration elected to migrate to healthcare.gov
as a supported state-based exchange to assure continued access
to Qualified Health Plans for our residents. I fully understand
the basis for that decision as the risks of operating
independently are greatly mitigated by the assistance of
Healthcare.gov technology and support from CMS.
We're continuing to work to harmonize the provisions of the
Affordable Care Act with Hawaii's legislative framework to
continue to provide outstanding access to healthcare and
wellness resources to virtually every resident and, when
necessary, any of the many millions of visitors we welcome to
our state each year.
Honorable members, we thank you for your time, dedication
and your interest in improving the quality of life in our
country by addressing this important issue before the people of
the United States. I look forward to any questions you might
have.
[The prepared statement of Mr. Kissel follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Mr. Murphy. Thank you.
I now recognize Mr. Peter Lee, the Executive Director of
Covered California from the State of California. Mr. Lee, you
are recognized for 5 minutes.
TESTIMONY OF PETER LEE
Mr. Lee. Good morning, Chairman Murphy, Ranking Member
DeGette, and distinguished members of the committee, and the
members from California, Matsui and Capps, who were able to
join you. It's an honor for me to be here in front of you
before the subcommittee to speak about the success we've had in
California in implementing the Affordable Care Act.
This landmark legislation has dramatically changed
healthcare in California and the Nation by expanding needed
coverage but also by putting in place new protections that
benefit all Americans. Today I'm pleased to address how Covered
California is working, what we consider to be the keys to our
success, and how we are actively working to improve what we are
doing in California.
First, let me note that California is a state that embraced
the Affordable Care Act from day one. We were the first state
to establish legislation to establish a state-based exchange.
That legislation was passed with a Republican Governor and a
Democratic legislature.
Since then, some of the tools we put in place to build on
are being an active purchaser. Covered California chooses which
plans to participate. We negotiate with them to make sure the
rates, their quality, their networks provide the best value to
consumers.
Second, we provide standard benefit designs. Covered
California sets the benefits so they benefit consumers. In
California, in the individual market, you will not see
consumers surprised by not getting access to primary care
because they need to pay a deductible first. That's a standard
that we have in place that primary care access is not subject
to a deductible for any Californians at Silver and above. We
have tools, but that also means that the health plans are
competing on an apples-to-apples basis.
Third, California has expanded its Medicaid program. Under
Governor Jerry Brown and our legislature, deciding to expand
Medicaid has meant that millions of Californians have had the
benefit of coverage they would not otherwise have.
So in California, the Affordable Care Act is working.
Covered California is working. Sixty-eight percent of
California's voters recognize that and say that they've seen
the Affordable Care Act working in our state. First and
foremost, that's because of strong enrollment. Today we have
over 1.3 million Californians covered by Covered California but
there's an additional 500,000 that had coverage in the last
year and a half that aren't covered today. That's not because
they're uninsured. They're now with employer-based coverage or
Medicaid or Medicare coverage. But exchanges across the Nation
are providing a safety net and a way station of individuals
moving into the employer-based coverage with other options they
did not have before. This is part of why all of us will have
about one-third of our population turn over every year. We are
now the glue that is holding together the employer-based system
and public programs.
In California, insurance rates are under control. For 2016,
the average rate increase in California will be 4 percent. In
2015, the average rate increase was 4.2 percent. Two years in a
row, we've proven the naysayers wrong. This comes on the heels
of years of double-digit rate increases in the individual
market.
Now, let me make clear that in California, the
beneficiaries of those low rates are not just those in Covered
California but the entire individual market. We have about 1
million individuals that buy insurance not through Covered
California. They benefit from our negotiating on behalf of
consumers.
How did we get there? We have a good risk mix. We have a
young mix, a diverse mix that reflects the population of
California, and we take that data and we meet with our health
plans to the tune of $300 million of premium savings by showing
the plans the data that there's a good risk mix. They've
demonstrated that in the rates they've put before Californians.
Coming forward in 2016, there's going to be more plan
choices. We're going to be expanding from the 10 plans we have
today to 12 health plans. We're adding Oscar and
UnitedHealthcare. This means that for virtually every
Californian, they will have at least three health plans to
choose, and the vast majority will have four, five, six plans
to choose. But we don't think more is always better. We pick
plans. We make sure that they're delivering value and they're
building on the platform that Congresswoman Matsui noted of
making sure that we're changing the delivery system and
lowering costs for everybody over the long term. That's the
future that we all need to be looking for of building a
delivery system that puts patients first, that makes sure that
care is delivered when they need it. Covered California is
delivering on that promise.
We still have work to do, and I look forward to taking your
questions as we talk about our path forward in the future.
Thank you very much.
[The prepared statement of Mr. Lee follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Mr. Murphy. Thank you, Mr. Lee.
And now, finally, we turn to Mr. Jim Wadleigh. Am I
pronouncing that correctly?
Mr. Wadleigh. Yes, you are, sir.
Mr. Murphy. The Chief Executive Officer of Access Health
Connecticut for the State of Connecticut. You are now
recognized for 5 minutes.
TESTIMONY OF JAMES R. WADLEIGH, JR.
Mr. Wadleigh. Good morning, Chairman Murphy, Ranking Member
DeGette, and members of the subcommittee. Thank you for this
opportunity to offer testimony as you examine the condition of
several state-based health insurance marketplaces.
My name is Jim Wadleigh, and I'm the Chief Executive
Officer of Access Health Connecticut, one of the Nation's best
and healthiest state marketplaces.
Access Health Connecticut was established in 2012 by
Governor Malloy, Lieutenant Governor Wyman, and the Connecticut
General Assembly to expand access to health insurance. Their
leadership, and the support of our Board of Directors and many
public and private partners, has been critical to our success.
So, too, has the commitment of the Access Health Connecticut
team.
Since we launched our state-based marketplace 2 years ago,
we've worked together to meet the unique needs of our citizens
while staying focused on innovation, collaboration and expanded
coverage.
Today, I am pleased to report that 760,000 state residents
and small business owners have used the exchange to enroll in
qualified health plans and Medicaid. We have exceeded federal
enrollment goals by more than 200 percent. We've cut
Connecticut's uninsured rate in half, from 8 percent to less
than 4 percent. That's 128,000 people who are now more likely
to go to a doctor.
We have worked with Connecticut's Insurance Commissioner to
keep costs down. Rates for our most affordable plans have
remained flat for the last 2 years. We have become a self-
sustaining exchange well ahead of next year's deadline, and we
no longer use state or federal funding for our operating costs.
How did we achieve this success? We heeded the old adage:
``An ounce of prevention is worth a pound of cure.'' From the
very beginning, we kept things simple and stayed true to our
mission. Our exchange is considered a national model because of
its straightforward design and ease of use. Over 96 percent of
Access Health Connecticut customers say they are satisfied. The
development of this stable, user-friendly Web site was overseen
by an executive leadership team with a passion for health care
and decades of experience in the industry. We set priorities,
established clear business requirements, and tightly managed
the scope of this project.
To reduce the number of uninsured residents, we conducted
extensive research and partnered with numerous state- and
community-based organizations. This helped us better understand
and reach those individuals and families most in need. We used
creative, award-winning marketing tactics, while sticking to a
simple enrollment message.
In addition to putting feet on the street, we opened a
store on Main Street. It's actually one of two brick-and-mortar
storefronts we operate. Taking a page from Apple's customer
service playbook, we provide free, professional guidance and a
personal touch to help consumers navigate the complexities of
health insurance.
The success of these stores has exceeded expectations. Not
even the blizzard of 2015, which dumped two-and-a-half feet of
snow across the state, could keep people away. Our year-over-
year foot traffic in the month of January more than doubled.
Access Health Connecticut is the first state-based exchange
to implement a mobile platform that integrates closely with our
backend systems. This nationally recognized, award-winning
mobile app allows customers to create accounts, comparison
shop, submit documentation, and purchase plans all from the
palm of their hand.
Our ability to collaborate across boundaries and streamline
the enrollment process for both health insurance and state
human services has also been recognized by our peers. Last
year, Access Health Connecticut and the Connecticut Department
of Social Services were honored for creating a multi-channel,
``no wrong door'' experience for consumers.
Solid technology and a commitment to exceptional customer
service have made Access Health Connecticut a model for other
states. As one Forbes columnist wrote, ``Connecticut isn't just
ahead of every other state; it's in its own league entirely.''
We intend to strengthen and grow that league. We will
continue to collaborate with other state-based exchanges, as we
did with Maryland, to share our expertise, business practices,
and technology. We will continue to innovate and develop new
strategies that expand access to health care, promote health
and wellness, and eliminate health disparities. We will
continue to explore new opportunities to reduce costs,
safeguard our long-term financial stability, and keep premiums
affordable for all consumers.
And we will never lose sight of why we do this. It's for
hardworking people like Walter Gualteri, who operates a small
tailoring and dry cleaning shop in Newington, Connecticut. Once
Walter hit 50 and developed a chronic health issue, his
insurance company began raising his rates on a regular basis.
Month after month, year after year, Walter lived in fear of
losing his coverage. Through Access Health Connecticut, Walter
found a cheaper plan that lets him keep his own doctors and
afford his prescriptions. Today, at age 60, Walter says he's
living the American dream and has the peace of mind that comes
with knowing he can't be dropped because of age or preexisting
condition.
Thank you for the privilege of appearing before this
subcommittee. I welcome the opportunity to answer any questions
you may have.
[The prepared statement of Mr. Wadleigh follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Mr. Murphy. Thank you, Mr. Wadleigh.
I now recognize myself for 5 minutes of questions. I'm
going to ask a number of questions, so please answer them
quickly if you could.
First, I want to ask each of you if your state has spent
any federal establishment grant dollars on operational costs
this year for your state exchange.
Mr. Allen?
Mr. Allen. We do not believe so.
Mr. Murphy. Ms. O'Toole?
Ms. O'Toole. No.
Mr. Murphy. Mr. Gutierrez?
Mr. Gutierrez. We have----
Mr. Murphy. Microphone, please.
Mr. Gutierrez. We have not spent outside any written
authority from CMS.
Mr. Murphy. Mr. Kissel?
Mr. Kissel. We have one item that we are trying to
reconcile with our auditors before engaging in spending it.
It's in a segregated account.
Mr. Murphy. Mr. Lee?
Mr. Lee. We are spending establishment funds to continue
the final establishment of our exchange, federal dollars but no
operational funds.
Mr. Murphy. Mr. Wadleigh?
Mr. Wadleigh. No.
Mr. Murphy. Can I ask each of you what your operational
costs are this year for the exchange?
Mr. Allen?
Mr. Allen. For the current state fiscal year, which began
July 1st, our operational costs are about $12 million.
Mr. Murphy. Ms. O'Toole?
Ms. O'Toole. Thank you, Mr. Chair. Sorry, I'm having
trouble with the microphone.
Mr. Murphy. OK.
Ms. O'Toole. We are about the same, and I'm happy to
provide the committee with a full balance sheet on the project.
Mr. Murphy. Thank you. We'll get that.
Mr. Gutierrez?
Mr. Gutierrez. We are still in very much a build year. Our
operation and build expenses within the Connector are on the
order of about $65 million.
Mr. Murphy. Mr. Kissel?
Mr. Kissel. A little over $8 \1/2\ million.
Mr. Murphy. Thank you.
Mr. Lee?
Mr. Lee. Our current fiscal year total budget is about $330
million. Segregating which part of that is operational versus
establishment, I don't have off the top of my head.
Mr. Murphy. And Mr. Wadleigh, would you know?
Mr. Wadleigh. Our total budget for the year is $28 million,
and roughly $18 million of that is dedicated to operational
costs.
Mr. Murphy. So with all this--and this committee would
appreciate if we got more detailed audited information in terms
of what your costs are for establishment and operational.
I am curious. Have any of your states worked out what its
costs per enrollee, which you have done in terms of operation
and establishment?
Mr. Allen, do you know?
Mr. Allen. Yes. Our exchange is funded entirely through an
assessment on----
Mr. Murphy. No, I mean in terms of how many enrollees does
your state have now?
Mr. Allen. Yes, right now we have about 107,000.
Mr. Murphy. A hundred and seven thousand, and how much have
you spent so far for operational and establishment expenses,
state and federal money?
Mr. Allen. Are you referring to since the beginning of the
program?
Mr. Murphy. Yes.
Mr. Allen. I believe that's on the record at $305 million--
--
Mr. Murphy. And Ms. O'Toole?
Mr. Allen [continuing]. In federal grants, and there's a
bit more now in the assessment----
Mr. Murphy. If you added state to that as well, you could--
--
Mr. Allen. I would have to add state to that as well.
Mr. Murphy. You could get that information for us?
Mr. Allen. We can.
Mr. Murphy. Ms. O'Toole, do you know?
Ms. O'Toole. Thank you, Mr. Chairman.
Mr. Murphy. You have to keep your microphone on. It's OK.
Ms. O'Toole. I'm very sorry.
Mr. Chairman, I'm happy to provide you a balance sheet. We
can send that to the committee right away.
Mr. Murphy. Mr. Gutierrez, would you know what you spent
for establishment and operational costs per enrollee? How many
enrollees?
Mr. Gutierrez. Not offhand. We'd be happy to provide that
in written response.
Mr. Murphy. Mr. Kissel, do you know?
Mr. Kissel. I do. It's a very large number. It's over
$50,000. But I want to point out with respect, Chairman Murphy,
it's like saying that the first year's use of a freeway is only
for the people--the cost of the entire freeway is only for the
people who use for the first year versus a----
Mr. Murphy. I got that.
Mr. Lee?
Mr. Lee. We have not done a per-enrollee cost but I note
that we have managed over $10 billion of premiums in the first
year and a half and we anticipate over $7 billion in premiums
next year, and the $1 billion received from the Federal
Government have established the infrastructure----
Mr. Murphy. Right. So I need to know in terms of your
establishment operational costs and per enrollee. Do you know
that number offhand?
Mr. Lee. No, I do not.
Mr. Murphy. Mr. Wadleigh?
Mr. Wadleigh. No, I do not.
Mr. Murphy. But if you could get that information for us--
and I understand different costs up front but now, of your
states, who is keeping it and who is turning it over to the
federal? Who is turning it over to--who is maintaining your
state exchange? Oregon, you are getting rid of yours, right?
Mr. Allen. We're operating the marketplace in Oregon and
using the federal platform as----
Mr. Murphy. You are using the federal platform?
Ms. O'Toole, are you using the federal or are you keeping
Minnesota?
Ms. O'Toole. We're keeping Minnesota.
Mr. Gutierrez. Retaining Massachusetts.
Mr. Murphy. Retaining?
Mr. Kissel. Moving to healthcare.gov.
Mr. Murphy. OK. So you're switching.
Mr. Lee?
Mr. Lee. California is managing our systems in all facets.
Mr. Murphy. And Mr. Wadleigh?
Mr. Wadleigh. Connecticut is keeping our system.
Mr. Murphy. But over time, what happens is, you are getting
less and less federal subsidy, right? So that will mean more
and more to the states, and so that's going to continue on.
Mr. Kissel, I want to ask you, in your testimony, you were
critical of project management of Hawaii Health Connector. Can
you be a little more specific?
Mr. Kissel. Yes. When I joined the Health Connector in
October 2014, I examined the project which had had a miserable
track record, and I admit that, and I looked at the project
management tracking tools, and they were virtually nonexistent.
The project was not tracked with a project plan that had a
critical path. It didn't have hours tracked. It didn't really
define what the end game and goals were, and I was very
disappointed because I came out of the infrastructure business,
and I worked for companies that built projects. We built roads,
bridges, bases of bombs for the Departments of Transportation
and the Department of Defense, and these departments had
extensive resources for tracking, monitoring and verifying
project progress.
Mr. Murphy. I just want to say, and I read the GAO report
on this too, clearly there were a lot of problems. I mean, from
some of the testimony, it sounds like it is all rainbows and
unicorns. And look, one of the things this committee thrives on
is just honest testimony. It is not rainbows and uniforms.
There was a mess, and Mr. Kissel, I appreciate your honestly.
Mr. Gutierrez, the Governor came in. He made some
substantial changes. I appreciate that too. That is what we
want to hear.
There was some mess-ups here, some big ones that cost
taxpayers billions of dollars, and we would much rather hear
from people that say yes, let me tell you the problems and here
is how we addressed it. That helps us a great deal.
I now yield to Ms. DeGette for 5 minutes.
Ms. DeGette. Thank you, Mr. Chairman.
Mr. Allen, yes or no. Are you denying that your exchange
had problems?
Mr. Allen. No.
Ms. DeGette. Ms. O'Toole?
Ms. O'Toole. No, I'm not.
Ms. DeGette. Mr. Gutierrez?
Mr. Gutierrez. No, I am not.
Ms. DeGette. Certainly not you, Mr. Kissel.
Mr. Lee, did your exchange have problems?
Mr. Lee. Absolutely. Our exchange had some problems along
the way.
Ms. DeGette. Now, Mr. Wadleigh, I don't know, it might be
rainbows and unicorns for you but have even you had problems?
Mr. Wadleigh. Yes, we did.
Ms. DeGette. Everybody has had problems. What we are
thinking about here is how did we recognize those problems and
then move forward to try to fix it, and so I guess I would
start with you since you are our model student, Mr. Wadleigh.
If you want to talk about what Access Health Connecticut very
briefly, what problems you saw and what you have done to move
through those, I think that would be very instructive for us.
Mr. Wadleigh. Thank you for the question. So I think as we
looked at the challenges from the onset of this very large
project, which it really was, we saw some of the challenges
being tight timelines. We saw some of the challenges being
management of scope, could we deliver everything that we needed
to deliver for me in a 10-month period? No, the answer was we
couldn't. And so we went back to the drawing board a number of
times to review everything that we needed to implement for the
October 1st, 2013, time frame and deferred functionality out to
later months for us that we knew would not impact our
customers, and ultimately that came back around as some of our
key decisions that we made. Unbeknownst to us, that's really
where we----
Ms. DeGette. And are you continuing to try to refine and
improve the efficiencies in your system?
Mr. Wadleigh. Every day we look to do that.
Ms. DeGette. Thank you.
Mr. Lee, I only have 2 minutes and 57 seconds left so could
you answer the same question?
Mr. Lee. Yes, very briefly. First, very tight timelines for
a big IT build that we addressed by being focused on----
Ms. DeGette. Timelines were a big issue, weren't they?
Mr. Lee. Absolutely, a huge issue.
Ms. DeGette. Were they a big issue for everybody else?
Ms. O'Toole. Yes.
Ms. DeGette. Mr. Allen?
Mr. Allen. Yes.
Ms. DeGette. Mr. Gutierrez?
Mr. Gutierrez. I was not there but it's my understanding,
yes.
Ms. DeGette. OK.
Mr. Lee. The other big issue that I know we all had to
address is consumer misinformation and disinformation. Is it
the fact of the availability of affordable subsidies that makes
care affordable is a huge challenge, one that we are continuing
to address because many Californians are now informed but some
still are not, and so this is an educational message. I think
it's a huge challenge. We're working with literally 12,000
insurance agents, faith-based groups, clinics, but that
outreach challenge is something we address, but it continues to
be a challenge.
Ms. DeGette. That is true in my State of Colorado too, by
the way.
Now, Mr. Kissel, you have been there, what, about a year
now?
Mr. Kissel. Yes.
Ms. DeGette. And what did you do before that?
Mr. Kissel. I was in the infrastructure business. Most
recently I ran the gas utility in Hawaii.
Ms. DeGette. So have you ever seen a utility or a system
like this that didn't have issues that continually had to be
addressed and updated?
Mr. Kissel. Absolutely not, and the way you do it is, you
take the Connecticut model and perhaps the California model and
you roll it out gradually. You increase functionality.
When we first started to make airline reservations, we
couldn't even get a seat assignment online. Today we can order
everything down to an umbrella in our drinks.
Ms. DeGette. It costs extra for those umbrellas, I just
want to tell you.
Mr. Gutierrez, your state had a lot of issues. What are you
doing to remedy those issues and move forward?
Mr. Gutierrez. Partly because of my background, I have a
belief that large IT projects really need strong governance,
and we really tried to address governance not just for the
project but for the overall business.
Ms. DeGette. Ms. O'Toole?
Ms. O'Toole. Thank you. Some of the same things that you've
heard already. We actually in Minnesota early on took on two
self-evaluations to make sure we identified problems and could
focus resources where they needed to be, and we have made
tremendous progress in 2 years, and hundreds of thousands of
Minnesotans have enrolled with relative ease now.
We also put a much stronger governance process and
procedure in place.
Ms. DeGette. Mr. Allen?
Mr. Allen. Thank you. As I mentioned earlier and as
Congressman Walden observed, I've had direct responsibility for
the exchange functions in Oregon for about 90 days, and----
Ms. DeGette. So you fixed the whole thing?
Mr. Allen. Right.
Ms. DeGette. Perfect.
Mr. Allen. Really, the assignment of those functions,
transferring them from a public corporation to a state agency
was, I think, the single most significant step policymakers in
Oregon did to put this on a different path. We're now laser-
focused on delivering marketplace services in an efficient and
functional way and moving forward that way.
Ms. DeGette. Thank you.
Thank you very much, Mr. Chairman. I yield back.
Mr. Murphy. Mr. Griffith, you are recognized for 5 minutes.
Mr. Griffith. Thank you, Mr. Chairman. I appreciate it. I
know we are talking about state exchanges today. About this
time 2 years ago, we were arguing whether the federal system
was ready to be unrolled with its plan and so forth, and I
noted with some interest, Mr. Kissel, in your written
testimony: ``I'm pleased to say that as of June 2015, according
to Turning Point, our independent validation and verification
contractor, we were the only state-based exchange to have
successfully passed its IT blueprint testing scenarios
providing third-party validation that we have a working IT
system.''
Mr. Chairman, we might want to get the federal folks in
here and see if they can pass that same kind of test, and I do
think it is interesting that Hawaii is the one that has passed
it.
Notwithstanding that success, notwithstanding a 10-year
plan to get the finances in order in June, the Governor decided
to shut down Hawaii Health Connector and also notwithstanding,
I should note, $205 million in federal establishment grant
dollars. Now, for folks back home who may not have been paying
attention to the whole hearing, that is the money that gets
started on the program. Isn't that correct, the state health
exchange?
Mr. Kissel. That is correct. Now, we've committed or spent
only $140 million of that and don't have plans to spend the
full $205 million, of course.
Mr. Griffith. OK. So as of June, you had spent about $140
million of the $205?
Mr. Kissel. That is correct.
Mr. Griffith. And you are not going to spend the rest of it
on establishment. Where does the money go? Does it go back to
the Federal Government?
Mr. Kissel. Some of it we don't plan to spend. About $5
million to $7 million will be spent in decommissioning and
shutting down the system, and then we'll spend some additional
money on new enrollments for policy year 2016.
Mr. Griffith. For enrollment?
Mr. Kissel. It's establishment, the outreach for
establishment to greater increase the enrollment as we use
healthcare.gov.
Mr. Griffith. And how much do you anticipate that will be?
Mr. Kissel. I'll provide the exact amount, but it's about
$7 million.
Mr. Griffith. OK. So you are going to have tens of millions
leftover. What happens to that money? Does that come back to
the Federal Government or the State of Hawaii?
Mr. Kissel. That remains unspent. It's not drawn from the
Federal Government.
Mr. Griffith. It's not drawn from the Federal Government?
All right. I appreciate that. Thank you very much.
Is Hawaii undergoing a rate increase for health insurance
plans?
Mr. Kissel. Yes, they are. The two main providers, the Blue
Cross Blue Shield provider has announced a rate increase for
Qualified Health Plans of about 46 percent.
Mr. Griffith. Wow.
Mr. Kissel. And Kaiser has announced an 8 percent increase.
Mr. Griffith. So one has a 40 percent and one has got an 8
percent. Which one is dominant in the market?
Mr. Kissel. Blue Cross Blue Shield has about an 85 percent
market share.
Mr. Griffith. And do they cover the entire state?
Mr. Kissel. Yes.
Mr. Griffith. Does Kaiser cover the entire state?
Mr. Kissel. Virtually the entire state. Some of the rural
areas, they don't.
Mr. Griffith. And do you have any other players in your
marketplace? Because we have had previous testimony that,
except for some rural areas, and I guess Hawaii would qualify
as a rural area for most of it, there just aren't that many
players.
Mr. Kissel. That's correct. Now, the Medicare Advantage
people are all there, but for the normal health plan for the
average working person, it's those two players.
Mr. Griffith. Do you know of any states that have people
higher than a 46 percent increase?
Mr. Kissel. I do not, but the reason for this is, we have a
really well-balanced insurance community and it's been 50 years
in the making, and when the Affordable Care Act policies were
introduced, the insurance companies experienced a lot of
negative selection. The sickest people enrolled first. We're a
tiny little state with a very fragile economy. Many of our
businesses--and we don't have national players in Hawaii--need
that extra protection to provide the safety net that we have
against SARS outbreaks and other--the swine flu and other kinds
of things that are devastating to a small economy like ours.
Mr. Griffith. I appreciate that.
I noticed in the testimony, I believe Mr. Wadleigh, that
you had indicated that the rates for our most affordable plans
have remained flat, and that raises a question in my mind as a
former practicing attorney, if your most affordable plans had
remained flat and you don't tell me about the others, does that
mean everybody else is getting a big increase?
Mr. Wadleigh. So all of our plans both on and off the
exchange have to have the same rates so the benefit the state-
based marketplace has created has allowed for the off-exchange
plans to fall in line and have to be more competitive as well.
Mr. Griffith. OK. So your affordable plans have remained
flat but you have some other plans that have not remained flat?
Is that what I'm reading? Because that's the way I read that.
Mr. Wadleigh. Sure, sure. So there are always going to be
plans when you get into the Platinum Group that are much
richer.
Mr. Griffith. And I apologize, because I see that my time
is up, but I will note that you are not claiming that the plans
went down $2,500 from what people were paying before.
I yield back.
Mr. Murphy. The gentleman yields back.
I now recognize Mr. Yarmuth for 5 minutes.
Mr. Yarmuth. Thank you very much, Mr. Chairman, and I thank
all the witnesses for their testimony.
I am not going to talk about rainbows and unicorns. In
Kentucky, we prefer to talk about thoroughbreds. So I am going
to talk about rainbows and thoroughbreds because Kentucky has
had one of the truly successful and mostly problem-free
experiences with the Affordable Care Act and our exchange
called Kynect, and our Governor, Steve Basheer, and his team
deserve an awful lot of credit.
We had a glitch the first morning of the operation of the
exchange for about 2 hours, and access was limited. Beyond
that, we have been pretty much problem-free. And our experience
is that we have insured now more than 500,000 people under the
Affordable Care Act through our exchange and expansion of
Medicaid in the 2 years of operation, and that's in a state of
4.4 million. We have reduced the uninsured rate by 50 percent
statewide. In my district, we have reduced the uninsured rate
by 81 percent. There are only slightly less than 20,000
uninsured citizens in my community of 750,000, which is a
little less than 3 percent uninsured rate.
So how has that happened? It is because of the outreach
that we all talked about. Kynect had people at every county
fair and every neighborhood association meeting, at the
community health centers, you name it, where people gathered.
They were there explaining and helping people enroll.
So I am very proud of that. As a matter of fact, it has
been so successful in Kentucky that one Republican state
Senator has suggested that we try to expand the exchange to
other states. So we may be coming after your business pretty
soon.
Additionally, just since I get to act like a witness here
and talk about our experience. We do have this year three new
insurance companies coming in to the exchange, which is
positive. Now our consumers will have, I think, either six or
seven choices of providers. There are three new insurance
companies in the private marketplace so the market is actually
expanding in a lot of ways.
And I think most importantly, earlier this year our
Governor commissioned the Deloitte firm to do an assessment of
what the economic impact of the Affordable Care Act would be
over the next 5 years, and Deloitte came back and said that
over the next 5 years, the Affordable Care Act would create
40,000 new jobs in Kentucky, would have created additional
economic activity of $32 billion, and have a positive impact on
the state budget of over $800 million.
So I think in virtually every sense of the word, the Kynect
operation and our experience in Kentucky has been very, very
positive. We are getting an incredible increase in preventive
medicine. We have had screenings for breast cancer increase by
111 percent, cervical cancer screenings by 88 percent,
colorectal cancer screenings 108 percent, and physical exams
are up 187 percent.
But all of this is really not as important as the human
impact, and as Ms. O'Toole mentioned, a couple of her clients.
I would like to read a letter from one of my constituents, a
woman named Kim Atkins, and she wrote, ``My daughter, Sarah
Atkins, is one of the several young adults that are on our
insurance policy until she is 26 years old. She is still
unemployed and looking for employment. On January 9th, 2011,
that bill, the ACA, saved her life. One of her kidneys shut
down and almost went septic. If she wasn't on our insurance,
she would have waited or not gone to the hospital at all. The
doctor told her if she would have waited an hour later, she
would have lost a kidney or died.'' And that is what this is
all about. This is providing quality, affordable care to our
citizens, and I think--I am very proud once again of Kentucky
and the experience we have had there, the progress we have
made, and I thank you for the work that you all are doing in
your respective states as well because this is one of our, I
think, can ultimately be one of the true success stories of
Congress and the Federal Government that we have created this
new way to insure Americans.
So I thank you all for your work and your testimony, and I
yield back.
Mr. Murphy. The gentleman yields back.
I now recognize Dr. Bucshon for 5 minutes.
Mr. Bucshon. First of all, I would like to thank all of you
for doing what you can on behalf of the citizens in the state
that you represent. I think all of us want everyone to have
access to quality, affordable care. That is not in question.
And I also agree that states have should more flexibility.
Indiana used Healthy Indiana plan as a way to cover our low-
income Medicaid patients, and using a combination of federal
funds as well as state funds from hospitals across the state
that agreed to kick in so that we could expand coverage in a
state-based program that is actually HSA-based that is working.
Mr. Allen, the State of Oregon was awarded $305 million in
federal tax dollars, correct?
Mr. Allen. Yes.
Mr. Bucshon. And did they spend all the money?
Mr. Allen. A little bit less than the full amount but there
was some unused grant funding at the end of Cover Oregon's
term.
Mr. Bucshon. OK. And all of that went for Cover Oregon? All
the money spent went for Cover Oregon?
Mr. Allen. All of the money was used to establish the
health insurance exchange in Oregon, which was actually--the
grants were partially to Cover Oregon and partly to the Oregon
Health Authority.
Mr. Bucshon. OK. So none of the money was spent on anything
else other than attempting to establish Cover Oregon?
Mr. Allen. Correct.
Mr. Bucshon. OK. So could you provide us with an itemized
accounting of all the expenditures, the $305 million that was
spent? Is that possible?
Mr. Allen. I can.
Mr. Bucshon. So let it be noted, he has agreed to provide
the committee with an itemization of expenditures, and from
past history frequently we get one page from people with about
four things on there. We would like to have a really in-detail
itemization of where the money went. That would be great.
Also, there are a lot of good things happening out there,
and a lot of things that need to be changed.
Mr. Lee, what percentage of your people are on Silver plans
or above, approximately?
Mr. Lee. About 75 percent.
Mr. Bucshon. OK. So 75 percent of the people then have no
deductible for primary care and 25 percent still have----
Mr. Lee. But even at the Bronze plan in California,
everyone in Bronze, which is a 60 percent actuarial value, have
three visits to primary care or specialty care starting in 2016
not subject to a deductible in addition to the preventive care,
which is never subject to a deductible.
Mr. Bucshon. OK. Thanks for that clarification because in
your testimony you said Silver and above, and so that was
interesting.
And also, I would like to point out that I understand that
the private sector plans are still there but federal
subsidization of healthcare plans competing with the private
sector makes it pretty hard for the private sector to compete.
That is part of the issue.
Mr. Wadleigh, in May, the board of Connecticut's health
insurance exchange approved a 22 percent hike in the fee it
charges insurers to help fund its operations. Is that correct?
Mr. Wadleigh. Yes, it is.
Mr. Bucshon. OK. So insurance companies got a higher fee.
Mr. Gutierrez, is it true that at some point Massachusetts
had to temporarily put 300,000 people on the Medicaid program
are all those people still there when you were working to
establish the exchange, that there was a template--your Web
site had issues, and I am assuming all of that has been
resolved and the people that went into Medicaid temporarily CMS
approved are now out of that?
Mr. Gutierrez. All of those temporary Medicaid members have
been redetermined into either Qualified Health Plans or
Medicaid.
Mr. Bucshon. Great.
And Ms. O'Toole, do you still have a backlog of about
180,000 public insurance renewals in the system?
Ms. O'Toole. Thank you for the question, Congressman. We do
not. That has been resolved.
Mr. Bucshon. OK. And it says despite additional funds,
MNsure--you do continue to struggle some obviously, and again,
I applaud all of you for what you are doing. The goal of our
committee is to find out where we can make improvements, right?
But Minnesota announced that they are going to revert to
the old system for MinnesotaCare because of MNsure's problems.
Is that true?
Ms. O'Toole. Congressman, that is true just for a short
period of time and we have prioritized that functionality for
the very beginning of 2016.
Mr. Bucshon. OK. Great.
And in Hawaii, I guess you have totally turned yours over
to the federal exchange now because it says in the information
I have, you extended it until October of 2016. You originally
announced Health Connector would shut down due to insufficient
funds but recently has extended it through October 2016. Is
that true or not true?
Mr. Kissel. The outreach will extend through open
enrollment and then the corporate affairs of our independent
nonprofit will wrap up and it'll take until October to do the
accounting and the like.
Mr. Bucshon. OK. Great.
Mr. Chairman, I yield back. Thank you.
Mr. Murphy. Mr. Tonko, you are recognized for 5 minutes.
Mr. Tonko. Thank you, Mr. Chair. And let me thank all of
our witnesses for joining us today and presenting good
information.
I know that some state-based marketplaces have faced
challenges in building and managing their IT platforms. These
challenges are well publicized. What is less well known perhaps
are the efforts that state-based marketplaces have been
implementing and tailoring the ACA to their own citizens. So I
would like to ask our witnesses, what is your state-based
marketplace doing to ensure that consumers in your state are
receiving culturally and linguistically appropriate outreach as
well as healthcare?
Mr. Allen, we might start with you and we will go across
the table.
Mr. Allen. Thank you for the question, Congressman.
That's--in taking over responsibility for the marketplace, that
was exactly the number one question that landed with us was,
given the success we've had in Oregon in driving down the rate
of uninsured, the remaining population is relatively small but
relatively harder to reach, and so we have made the decision to
move from a wide media broadcast advertising kind of an
outreach approach to something that is much more tailored that
works through community partners, organizations that work in
communities of color, and other areas, much more targeted kinds
of technology outreach to try to work hard to get to those
geographic and demographic populations that are amongst the
hardest to get insured.
Mr. Tonko. Thank you.
Ms. O'Toole, please?
Ms. O'Toole. Thank you, Congressman. I'm happy to answer
that. And hat we've learned in Minnesota is that with the
remaining uninsured like Mr. Allen said, they're harder to
reach. We have 26 statewide grantees who work in every
committee around Minnesota to help reach out to these
populations and enroll them. We're really proud of that. And we
pair them also with enrollment centers around the state that
are sponsored by brokers and so we're trying to come at it from
all angles, and we've learned this is not an easy decision for
people, so they need help and they need in-person assistance,
so we focused resources there.
Mr. Tonko. Thank you.
And Mr. Gutierrez?
Mr. Gutierrez. Three principal items. This year our media
strategy is very focused on ethnic media dealing with the
Hispanic, Portuguese, and Asian communities and pockets
throughout the state that are underinsured. Secondly, our
selection of navigators and walk-in centers for this fall is
specifically targeted toward underinsured communities. And
thirdly, there's an innovative program where because
Massachusetts has a state insurance mandate, our Department of
Revenue knows who does not have insurance. Now, they would
never share data with us. That's out of bounds. But they are
able on our behalf to notify uninsured residents of their
opportunity to become insured through the state-based
marketplace.
Mr. Tonko. Thank you very much.
Mr. Kissel?
Mr. Kissel. We changed our outreach model from a media-
driven model to a personal model. We added marketplace
assisters to speak the 15 or 20 languages and dialects of the
people of the nations of the Pacific Rim in addition to the
cultures of America. We went from a call center to a personal
outreach, although we still operated the call center, and we
went into the areas where, for example, there are people who've
lost their homes due to economic conditions. We find that more
than half of those families have one or two working members,
and we help them enroll in coverage. We also moved forward with
essentially what was a--I'm not a rocket scientist--with the
Social Security model where you have multi layers of aid
depending on the needs of the individual. You can call, if
you're sophisticated, you can log on to the computer, and if
you need help, we in fact make house calls. My telephone number
and personal contact information is on the Web site.
Mr. Tonko. Wonderful.
Mr. Lee?
Mr. Lee. From day one, we've done outreach which is
anchored in local communities in a wide range of languages. We
continue to do that. The other thing, I want to appreciate your
question. It's not just about outreach. It's about making sure
care is delivered that is culturally appropriate and addresses
health equity. We have contract requirements in our
negotiations with the plans to hold the plans to account. Three
of our 12 plans are among nine nationally recognized by NCQA
for providing culturally appropriate care. It's something we're
going to hold our plans to account to.
Mr. Tonko. Thank you so much.
And finally, Mr. Wadleigh, please.
Mr. Wadleigh. Thank you for the question. We too have been
focusing all of our outreach into our communities where we know
that from--in Connecticut that our uninsured reside in
basically 10 zip codes and so we can go right into those
communities and work with those residents.
Mr. Tonko. Thank you very much. I yield back.
Mr. Murphy. Thank you. The gentleman yields back.
I now recognized Mr. Flores for 5 minutes.
Mr. Flores. Thank you, Mr. Chairman. I just wish we had
invited the D.C. exchange because it still shows I am
ineligible for coverage.
Anyway, states continue to opt out of setting up their
state exchanges and they are migrating to the federal exchange,
as we all know. We need to try to understand the impact on
that. In order to do that, we need to know how sustainable the
state exchanges are that are still in existence.
So Ms. O'Toole, would you tell me what taxpayers can expect
from your state exchange over the next 5 to 10 years, and will
it be sustainable somewhere during that time period?
Ms. O'Toole. Congressman, thank you for the question. I'm
happy to answer it.
Like I said in my opening testimony, we are financially
sustainable at this point. Our budget is balanced. It's based
on real numbers and real experience, and the board of directors
in March of this year has passed a 3-year financial plan that
looks out. So we keep a close eye on this. It's something we're
concerned about. And our board and our team is committed to
living within our means. So if we have to--you know, revenue
has to match expenditures, and we have to make hard decisions,
we will.
I also mentioned in my testimony that we have a task force,
a bipartisan task force, in Minnesota that's looking into some
of these issues that took it out of the legislative arena to
have a more in-depth conversation throughout this fall, and we
look forward to that work continuing.
Mr. Flores. OK. Mr. Gutierrez?
Mr. Gutierrez. Our current expense profile, because it's
still a buildout year, is high and we'll need to reduce it,
making some hard choices along the way. But Massachusetts is
fortunate in that the Connector Authority was initially
instantiated with a reserve fund. It also has dedicated revenue
sources from our cigarette tax and from the state insurance
mandate penalties as well as the carrier administrative fees.
So we have a very diverse set of funding sources and bipartisan
commitment to the effort.
Mr. Flores. Mr. Lee?
Mr. Lee. From day one, Covered California has been putting
money in the bank from our plan assessments while we were going
through establishment funds. We have over $200 million in the
bank, a very strong balance sheet. We have a wholly sustainable
model over the long term.
Mr. Flores. You talked about these assessments. What impact
has that had on premiums in your state?
Mr. Lee. Well, it's actually--compared to what health plans
were spending to enroll people in the individual market
previously, we think it reduces overall effect on the premium
dollars. It's about 3 \1/2\ percent of premium. But enrolling
people in the individual market is very expensive, and prior to
the exchange coming along, plans were spending as much as 12
percent on commissions and a whole range of acquisition. I like
to think we're the cheapest date in town, Congressman.
Mr. Flores. Mr. Wadleigh?
Mr. Wadleigh. We too have a fully balanced budget that also
right now we have about $12 to $15 million in reserves within
our budget as well.
Mr. Flores. OK. And what has the impact been on premiums in
your state?
Mr. Wadleigh. The impact on our premiums related to the
assessment has been similar to California. We feel that it has
allowed the marketplace to level off and compete evenly across
the state.
Mr. Flores. Mr. Kissel, what has been the impact--excuse
me, not Mr. Kissel. Mr. Gutierrez, what has been the impact on
premiums in your state from the assessments?
Mr. Gutierrez. If I made a statement on that, I think I
would be speaking without firsthand knowledge, so I'd like to
respond to that more fully in writing.
Mr. Flores. That's fine. OK.
Ms. O'Toole?
Ms. O'Toole. Thank you, Congressman. Last year we saw rate
increases on average of about 4 percent. Our Department of
Commerce in Minnesota reviews that so that we don't--that's an
independent review process aside from our organization. They
have not released rates for this year. That happens later this
week.
Mr. Flores. OK. Would you advise us after that happens?
Ms. O'Toole. I'm happy to do so.
Mr. Flores. OK. Thank you.
Given the short amount of time, I don't have time for
another question so I will yield back the balance of my time.
Thank you, Mr. Chairman.
Mr. Murphy. The gentleman yields back and I recognize Ms.
Castor for 5 minutes.
Ms. Castor. Well, thank you, Mr. Chairman, for calling this
hearing on the substantial reductions in the rate of uninsured
Americans under the Affordable Care Act, and thank you to all
the witnesses here today and what you are doing for families
across the country.
When I think of the Affordable Care Act, I think it is
helpful to break it up into its pieces. First, you have the
consumer protections the Affordable Care Act brought. You have
a piece on Medicare--we strengthen Medicare. And then you have
the policies and strategies to reduce the rates of uninsured
all across the country. So for consumer protections, the ACA is
working. We no longer have discrimination based upon a
preexisting condition like a cancer diagnosis or diabetes. That
has been a godsend to families. The consumer protections that
allow young adults to stay on their parents' policies, I've
heard directly from many friends back home what a benefit that
has been. And then insurance companies can no longer cancel you
if you get sick, and there are others, but that is an important
piece.
Then under Medicare, Medicare is stronger. We invested
savings into lengthening the life of the Medicare Trust Fund.
We also are closing the donut hole, put money back in the
pockets of our parents and grandparents through less costly
prescription drugs, and then Medicare is undergoing reform so
that care is provided in a smarter way.
But then it comes to the rates of uninsured, and it is
pretty remarkable, and this is important as well when you think
about it for people who already have insurance because what the
Affordable Care Act has done is helped people take personal
responsibility for themselves and make insurance more
affordable. That way you don't have this cost shifting to
people that do have insurance.
So the recent Census Bureau report said that since the
passage of the Affordable Care Act 5 years ago, 17.6 million
Americans have gained coverage, and that from 2013 to 2014, we
have had the largest reduction in the uninsured rate in America
in 25 years, and it is important to note that at the same time,
the rate of employer-sponsored health insurance has remained
constant because that was kind of a--that was a question mark
going on, so, so far, so good.
And I would really like to thank you all for--I heard today
a little healthy competition among the states, how proud you
are of some of the things you have been able to do. I certainly
heard it from my colleague, Mr. Yarmuth from Kentucky, where
they have done a fantastic job.
Mr. Lee, congratulations. Since opening of the exchanges,
California has provided a lifeline to so many families in
California through Covered California, Medi-Cal. What has
happened to the uninsured rate in California?
Mr. Lee. The uninsured rate, depending on census figures,
has dropped to about 12 percent, a huge reduction, one of the
fifth largest reductions in the Nation, but it's also, if I
may, Congresswoman, your note that it's also for people that
have insurance are seeing the benefit of lower rates. A million
Californians in the individual market that don't buy through us
benefit from our 2 years holding rates down, so I think your
note on those benefits aren't just for the uninsured but it is
also for insured people that are in jobs, that have insurance
that have now rates kept in check.
Ms. Castor. Well, I am glad Mrs. Capps came in at this
point so she can hear that directly after she worked so hard on
the Affordable Care Act and passage.
How are you working to ensure that coverage remains
affordable from this point forward and meaningful for families?
Mr. Lee. Well, one of the things we are doing at Covered
California as an active purchaser, we are working with our 12
health plans to say how do we actually affect care where it's
delivered. In the end, affordability is about delivering the
right care at the right time every time, and the movement that
we've seen in Congress, a common movement, a moving from volume
to value is something we are working with all of our health
plans to change payment to promote primary care to make sure
people with chronic illnesses get the right care at the right
time, and that needs to be the focus I think all of around this
table have is, as one of the other Congress people noted, it's
not just about giving people an insurance card; it is making
sure people get the right care and that right care is delivered
at the right time, and that's going to be the key for all of us
in reducing costs over the long term.
Ms. Castor. Thank you.
Mr. Wadleigh, on behalf of Access Health--you are here on
behalf of Access Health Connecticut. Congratulations, and thank
you for what you've done in lowering the rate of uninsured.
Tell us what has happened to the uninsured rate in
Connecticut and what this has meant for your citizens.
Mr. Wadleigh. Thank you, Congresswoman. The uninsured rate
in Connecticut has been cut in half just in the last 2 years.
We see that it will continue to go lower, so that has been very
exciting.
What I would also say is, it's really what our next step,
so similar to Mr. Lee had said, it really comes down to, how do
we start working through health disparities, wellness, access
to primary care physicians. Those are some of the goals that we
are working on right now with the residents of Connecticut.
Ms. Castor. Thank you very much, and I yield back.
Mr. Murphy. The gentlelady yields back.
We are in agreement that Mr. Walden will be able to go
next, so without objection. Thank you, Mr. Walden.
Mr. Walden. I thank the chairman. I thank my colleagues for
that.
I know Ms. DeGette asked each of you if there were trouble
with your exchanges, and you all wisely answered ``yes''
because it is never easy to roll one of these out. I have just
got to go to an Oregon-specific issue, though, but I am going
to ask each of you to put a highlight on this. Did the
Governors in your states use their paid campaign political
advisors to craft official communication and management
strategies for the rollout or the termination of your exchange?
Yes or no.
Mr. Wadleigh?
Mr. Wadleigh. I don't know the answer if our Governor did
that or not.
Mr. Walden. All right.
Mr. Lee?
Mr. Lee. I have no information about how my Governor uses
his staff.
Mr. Walden. All right.
Mr. Kissel?
Mr. Kissel. Not to my knowledge, but the Governor has very
courageously taken on the burden of this exchange by embedding
it in all of the departments.
Mr. Walden. Mr. Gutierrez?
Mr. Gutierrez. Not under the current administration.
Mr. Walden. Ms. O'Toole?
Ms. O'Toole. Thank you, Congressman. I have no information
about that.
Mr. Walden. I think Mr. Allen knows potentially the answer
to this question in Oregon.
Mr. Allen. Well, Congressman, I was not directly involved
in the management or operation of the exchange at that point
and have no direct experience with that kind of involvement.
Mr. Walden. All right. Good answer on your part. However, I
want to introduce into the record, Mr. Chairman, a series of
newspaper articles that were acquired, investigative reporting
that was done that clearly indicated that our Governor at the
time used his outside political campaign staff to manage and
coordinate the messaging on Cover Oregon. It may be worse than
that based on e-mails that have been made available from FOIA.
I just think it is important for the committee to know as we
investigate what happened to this money what happened behind
the scenes apparently in our State of Oregon, and so Mr.
Chairman, without objection, I'd like to have those entered
into the record. I will be happy to provide them.
Mr. Murphy. Without objection.
[The information appears at the conclusion of the hearing.]
Mr. Walden. Mr. Allen, do you know how close to completion
Cover Oregon was when they pulled the plug on it?
Mr. Allen. Congressman, I don't have direct knowledge of
how close it was to completion. There is on the record a
technology assessment report provided to the Cover Oregon Board
at the time that the decision was made whether to move forward
with that infrastructure or move to the federal marketplace
that indicated that were they to choose to maintain the
existing infrastructure, it was already failing to meet
benchmarks necessary to be available for open enrollment in
2015.
Mr. Walden. So my understanding is, it was about 90 percent
done.
Mr. Allen. I would have no knowledge of that.
Mr. Walden. You don't know? You haven't asked? OK. How did
Oregon inform CMS of its decision to migrate to healthcare.gov?
Do you have any knowledge of that?
Mr. Allen. Sorry for this to be a theme, but I don't have
direct knowledge. My understanding----
Mr. Walden. No, I know you have only been on it 90 days,
but I assume at some point these--well, then, do you know who
Oregon worked with or is currently working with at CMS either
during this transition?
Mr. Allen. Sure. We've been mostly closely working with
Myra Alvarez, who just recently departed CMS. I've been in
close contact with Kevin Counihan as we've dealt with this
transition issues, updating them on transition as well as
dealing with site visits and those kinds of things.
Mr. Walden. And what did CMS require of Oregon before
allowing it to migrate to healthcare.gov? Do you know that?
Mr. Allen. I don't know the answer to that.
Mr. Walden. Did CMS conduct any forensic analysis on Cover
Oregon or are they now? Did they conduct an audit of their own?
Mr. Allen. We did recently have an audit on the ground by
CMS about 3 months ago, and I should make a comment. In that
context earlier, I said we have not used grant money for 2015
operations. There are actually two very minor elements that
were identified in that audit that we are working to resolve
with them now. I would not be able to characterize anything
that I'm aware of as forensic.
Mr. Walden. All right. And will that audit be made public
by the state when it is completed or by CMS?
Mr. Allen. I believe it will be made public by CMS.
Mr. Walden. All right. I am sure the committee would like
to have access to that either from CMS or Oregon.
Do you know if CMS required Oregon to return any of the
$305 million originally awarded for the establishment of the--
--
Mr. Allen. Other than the potential couple of minor items I
just mentioned that we're in discussions with them about, no,
I'm not aware of that.
Mr. Walden. OK, and did Oregon incur any additional costs
when it migrated to healthcare.gov? Do you know that? Or do you
want to get back to me?
Mr. Allen. I can get back to you on that.
Mr. Walden. I realize you have only been at that--but this
has been going on a long time, and it has, as you know,
dominated certainly the minds of Oregonians out there.
Now that Oregon has elected to switch over to the federal
exchange, will there be an attempt to recoup any of the money
that was granted to the state to establish the state exchange?
Are you in any discussions about that?
Mr. Allen. To recoup from whom by whom? I'm not----
Mr. Walden. Well, the $305 million.
Mr. Allen. Well----
Mr. Walden. Is CMS going to come back on the state?
Mr. Allen. Yes. What I am in a position to know is that
we've been able to review the grant documents. The $300 million
went for the entire operation of setting up a health insurance
exchange. Technology is certainly a piece of that. I think you
have a GAO report----
Mr. Walden. Right.
Mr. Allen [continuing]. That identifies $78 million of the
$304 of that function. It is my understanding that we are in
compliance with and have delivered the deliverables required
under the terms of the various grants for the $305 million. So
I don't think there's discussion about a return because we've
complied with the terms of the grant.
Mr. Walden. Wow. Even though the exchange never was
functional or on----
Mr. Allen. Congressman, the technology didn't launch but we
were able to cover 70,000 people in the first year despite
that, 100,000 people most recently----
Mr. Walden. Did you actually use the exchange behind the
curtain with paper input?
Mr. Allen. It was a hybrid paper-automated process.
Mr. Walden. I am sorry, Mr. Chairman. I have gone over
time.
Mr. Murphy. I do want to know as a follow-up in terms of an
audit, Mr. Allen, I want to know, does HHS or CMS require an
audit of any of you in terms of how you spent the money?
Mr. Allen?
Mr. Allen. We're required----
Mr. Murphy. You are required to report?
Ms. O'Toole? Is any of you required by the federal plans to
do an audit of how you spent the money?
Mr. Gutierrez. It's my understanding that we are required
in Massachusetts. We've had three straight years of clean,
third-party audits----
Mr. Murphy. I am just curious. Are you required by the
state or the Federal Government? Is it the Federal Government?
Ms. O'Toole?
Ms. O'Toole. Congressman, we are subject to comprehensive
oversight both in Minnesota by our state----
Mr. Murphy. No, no, I just want to know, yes or no.
Ms. O'Toole [continuing]. And the Federal Government.
Mr. Murphy. And Mr. Gutierrez, yes.
Mr. Kissel?
Mr. Kissel. It's a yes but there is detailed self-reporting
and certification and auditing, but it relies on our records so
that they don't go to the next level and look at our
contractors' records to be sure that what we say has actually
been done.
Mr. Murphy. There is limits to it.
Mr. Lee?
Mr. Lee. Yes, there's reviews both by CMS as well as by
state level of our spending.
Mr. Murphy. Mr. Wadleigh?
Mr. Wadleigh. Same thing.
Mr. Murphy. Same thing. We will have to go those records.
Mrs. Capps, you are recognized for 5 minutes.
Mrs. Capps. Thank you, Mr. Chairman.
States that created and run their own state-based
marketplaces are testing new models for enrollment, insurance
market oversight and consumer protection serving as Hubs of
Innovation. The work being done there can serve as a model for
other states and the Federal Government as the ACA continues to
be implemented.
Mr. Lee, California has been a leader in the ``active
purchaser model.'' Can you explain what this is and how that
has helped Covered California ensure access to high-quality,
affordable health insurance coverage?
Mr. Lee. Great. Thank you very much, Congresswoman Capps.
Thanks for your leadership.
Three things that underscore about being an active
purchaser. First, we don't take every plan that wants to knock
on our doors and be part of the marketplace. We review them
critically and make sure they have the networks in place, the
system to deliver quality care. Second, we look very closely at
their rates and make sure that the rates align with the quality
of care we expect of them. And finally, we hold them to account
for delivering quality care, and that's all in the context of
what we have, which we think is critical, and some of my
colleagues up here have similar things, which is standard
benefit designs where right now in many parts of the Nation,
consumers may buy the lowest-cost plan and then find out they
need to spend a $3,000 deductible before they get care. That
doesn't happen in California, and that's because standard
benefit designs for both on and off exchange in the individual
market, we're reshaping the market so benefit designs are
designed for consumers, not for a health plan.
Mrs. Capps. Thank you.
Mr. Wadleigh, similar question. Does Access Connecticut
have a standardized benefit package? How does it help consumers
make informed purchasing decisions?
Mr. Wadleigh. We do. Thank you for the question. We have
standard plan designs for all of our individual metal tiers,
and what we have found is that it makes it easy for our
residents to compare apples to apples whereas prior to this it
was much more difficult to compare plans.
Mrs. Capps. Thank you.
One of the focuses of the ACA is to transform the delivery
system and improve quality of care. As a nurse, I find this
goal to be incredibly important, bottom line, really,
especially as we reach the goal of transitioning from a sick
care system to one that promotes wellness.
Mr. Lee, what efforts has Covered California taken to
improve the quality of care through better coordination,
payment reform or other initiatives?
Mr. Lee. Thank you very much for that question. When we
released our rates this year, which were only a 4 percent
increase, we didn't just release the rates, we released
background on how our 12 plans are doing better coordinated
care, using tele-health, addressing wellness and prevention,
addressing health disparities and health equity. These are
requirements in our contracts with our health plans. They
aren't just putting products on the shelf and having people get
insurance cards. They need to deliver on that promise of care,
and we think that's something that all exchanges should be
looking at to make sure it's not just a card in the pocket but
actually people are getting access to care that's being
improved over the long term.
Mrs. Capps. Let me put that to each of you briefly. If you
have something to add, just so we get it on the record, about
initiatives going on in your individual states if you want to
add, go ahead.
Ms. O'Toole?
Ms. O'Toole. Congresswoman, yes, thank you. A lot of this--
a similar experience but one thing that we're doing differently
in Minnesota this year is, we're adding a comparison tool. I
think someone mentioned it earlier about, premiums are just one
part of the cost of care and so we're trying to give consumers
a more robust picture of like out-of-pocket costs and other
costs that go into their care so they make better choices for
themselves, so that will be a new feature on our Web site for
open enrollment this year.
Mrs. Capps. Great. And the other examples of initiatives?
Mr. Allen. I would just add very quickly, I mentioned that
we have 120 different plan options available for consumers
through 11 companies in a market as relatively small as Oregon.
Mrs. Capps. Wow.
Mr. Allen. It's actually an incredible range of choice,
which actually becomes a problem for consumers.
Mrs. Capps. Yes.
Mr. Allen. We're relying quite heavily on agents and
assisters to actually help people through that decisionmaking
process so that they don't just immediately go to the lowest
price plan when in fact their own circumstances may really
dictate that a higher monthly premium but lower deductibles or
copays would be a better option for them.
Mrs. Capps. Are individuals opting to use those assisters?
Mr. Allen. Yes.
Mrs. Capps. Anything else?
Mr. Wadleigh. So I would say Connecticut very similar to
the rest of my peers. We are doing something new this year
working with all of our carriers. We've met with them to start
collaborating on how we can help improve health literacy with
all of our new customers who have previously been uninsured,
and similarly, we have found that we needed a comparison tool
to help our customers pick the right metal tier versus the
lowest price.
Mrs. Capps. In 17 seconds, Mr. Lee, what, if anything, has
Covered California done to encourage this right care at the
right time? That is such an important area.
Mr. Lee. The one thing that I'd highlight is, we have a
partnership with all of our plans to promote what's called the
Choosing Wisely Initiative, which is an initiative led by the
clinician community to help make sure patients don't get
unnecessary care but always get the right care, so that's the
one that I'd highlight.
Mrs. Capps. Thank you.
Mr. Lee. Thank you.
Mrs. Capps. I yield back.
Mr. Murphy. Thank you.
I now recognized Mr. Collins for 5 minutes.
Mr. Collins. Thank you, Mr. Chairman.
I want to thank the witnesses too. It has been very
educational. I think we all know that everything we are all
working on is a work in progress, and with differing results,
and not being from any of your states, it's interesting to hear
what you are saying.
I am from New York. We received $575 million to set up our
state exchange, but somewhat disappointedly--well, quite--the
Inspector General of HHS last week revealed that of a randomly
selected number of applicants on our state exchange that it
investigated 62 percent were either improperly granted
subsidies or the application was deficient in some other
meaningful way.
The most prevalent problems were inconsistencies in
reporting their eligibility data and their income. The Web site
didn't seem to question those, and applicants received
subsidies that frankly they weren't entitled to.
So before I get back to some questions on that, we also
just last week, an insurer called Health Republic of New York,
which is a New York City-based insurance cooperative and a very
significant player in our state exchange, especially up in
western New York that I represent, was directed by state and
federal officials to stop writing health plans, effectively
shut down because they were not solvent, which means over
12,000 people in western New York, which I represent, are going
to lose their health plans.
Here was the problem with Health Republic of New York. As a
new insurer under the ACA, that company received government
assistance to cover startup costs in return for providing more
competition in the marketplace, but as you might suspect, their
policies were not what the market could sustain. They cost too
little and gave away too many benefits. These plans sucked in
unsuspecting New Yorkers by wasting taxpayer money and
distorting the health insurance marketplaces. These New Yorkers
now have to find a new plan with staggering price increases
that reflect the real rate of coverage for the ACA-mandated
benefits.
So while I know none of you represent New York, I would
like to know, have your state exchanges been audited like New
York just was by HHS where we found this 62 percent error rate
and again subsidies being given that were not based on
eligibility or income, and if so, what did your states--I know,
Mr. Allen, you may not----
Mr. Allen. We used the federal platform so we----
Mr. Collins. We will just skip you, all right? There we go.
Sorry about that.
Ms. O'Toole?
Ms. O'Toole. Thank you, Congressman. Not to my knowledge. I
did see that report so I'm generally familiar with what you're
talking about. Not to my knowledge. I just want to note that we
obviously take compliance very seriously. We have a robust team
that's working on that, and making sure that only eligible
Minnesotans are enrolled through MNsure. So it's a focus for
us.
Mr. Collins. Well, that is what we would certainly hope
for. Thank you.
Mr. Gutierrez?
Mr. Gutierrez. Not to my knowledge on the formal audit but
we also have an in-depth validation program for our eligibility
system.
Mr. Collins. I am glad to hear that as well.
Mr. Kissel?
Mr. Kissel. We have not been audited but we have--we're a
small community, and since everybody has my phone number, we're
self-audited in that respect.
The inquiries to us went from the thousands in 2014 down to
a few dozen in 2015. We did have a problem, and I think it has
largely been resolved. The 1095 IRS reporting process for us
went very smoothly with fewer than 100 overall issues and fewer
than two dozen financial issues.
Mr. Collins. Thank you.
Mr. Lee?
Mr. Lee. Covered California has been the subject of a range
of both OIG, GAO, HHS audits and reviews of enrollment
practices. Pretty much all of them will find options for
improvement but by and large have found that we've been
complying with the rules and setting them in place better and
better each year.
Mr. Collins. I am glad to hear California is doing better
than New York.
Mr. Wadleigh?
Mr. Wadleigh. Thank you for the question. We too have had
multiple audits from the GAO, OIG, and we also take all those
opportunities to improve our system.
Mr. Collins. Thank you. I don't think I have time for my
other question, Mr. Chairman, so I yield back.
Mr. Murphy. The gentleman yields back.
So I recognize Mrs. Brooks for 5 minutes.
Mrs. Brooks. Thank you, Mr. Chairman. I apologize. I was at
another hearing.
Mr. Allen and Mr. Kissel, I guess I have a question for
both of you. Do you know whether CMS permits establishment
grant dollars to be spent on the transitional costs to
healthcare.gov, and if you could tell me what transitional
costs are? Mr. Allen?
Mr. Allen. I do not know the answer to that directly. We
need to respond directly to the committee later.
Mrs. Brooks. Mr. Kissel?
Mr. Kissel. Yes. We have submitted a transition budget, and
I've got to check on its status. I believe it has been
approved. And these are for the enrollment of new members in
healthcare.gov. It is for the decommissioning and archiving of
our existing technology and certain other items including
approximately $225,000 for the program management organization
that the state has retained to manage the transition of our
functions into both healthcare.gov and into the state
departments, the operating departments.
Mrs. Brooks. And was this a written policy, if you know,
that Hawaii is using--you are using your money, correct, from
establishment to transition?
Mr. Kissel. Correct.
Mrs. Brooks. Was this a written policy or was this
something you negotiated?
Mr. Kissel. I don't know whether it is written but I do
know that we agreed on it with CMS.
Mrs. Brooks. And do you know what was the basis for that
agreement? Why did CMS say that you could use your
establishment dollars to transition, and what was the
rationale?
Mr. Kissel. I can't speak for all of their decisions
because it covered technology, it covered outreach, it covered
a large number of issues. Insofar as outreach, it is only to
enroll new members in healthcare.gov. We are bearing the cost
of re-enrolling our 38,000 existing members into
healthcare.gov. That's coming from internal state funds.
Mrs. Brooks. And do you believe that this should be
permitted? Obviously it is beneficial to Hawaii, correct?
Mr. Kissel. Let me answer the question by saying in
hindsight, we are learning an awful lot. Had the regulations
relating to small business health options been in place then
that are in place now, Hawaii never would have had to undertake
to build the exchange to support our Prepaid Healthcare Act and
harmonize it with the Affordable Care Act. This is the kind of
issue that I think this transition will be later.
Mrs. Brooks. And I apologize if these questions were asked,
but why did your Governor choose to shut down the Hawaii Health
Connector?
Mr. Kissel. He worked extensively with CMS Administrator
Slavitt, and they came to the conclusion jointly that because
we were an independent, reliable agency relying solely on
issuer fees for revenue, we couldn't get to critical mass to be
self-sustaining. The Governor decided to embed these functions
into state departments--our Department of Labor, our Department
of Human Services--and bear the cost of essentially the deficit
because we were not financially sustainable. Administrator
Slavitt encouraged us to do this so that we could maintain
insurance for Qualified Health Plan recipients indefinitely in
compliance with the Affordable Care Act.
Mrs. Brooks. What was your role in that decision?
Mr. Kissel. Because we're not a part of the administration,
we're an independent corporation with separate board of
directors, our role was to make the Hawaii Health Connector
work, and we developed plans that did, we believe, make it
work. We fixed the technology, and we went forward with a
financing plan that we thought would be workable. CMS and the
state decided that that had too high a risk for our small and
fragile economy, and they decided it was better to continue on
the basis of moving to healthcare.gov.
Mrs. Brooks. Was there a contractor involved in that
transition?
Mr. Kissel. There are contractors involved in the
transition on behalf of the Hawaii Health Connector, the state,
and the Medicaid agency to build the interface with
healthcare.gov.
Mrs. Brooks. So how many contractors are involved and how
were those contracts awarded?
Mr. Kissel. We have two contractors involved, two principal
contractors involved at the Hawaii Health Connector, mostly in
the archiving and decommissioning of the process. There are--
there is a sole source contract with KPMG for building the
interface. That's done in accordance with state procurement
regulations.
Mrs. Brooks. Are there other contractors involved?
Mr. Kissel. Yes, there are. Health Management Associates is
providing the PMO, the project management, for the transition.
Mrs. Brooks. And do you have any sense of the transition
cost?
Mr. Kissel. I know that their initial contract is for
$400,000. The state is going to have to spend its own money to
embed these functions in the various departments.
Mrs. Brooks. Thank you. I yield back.
Mr. Murphy. The gentlelady yields back.
There will be other questions. I know, Mr. Kissel, you had
just mentioned about other costs that have been identified for
different departments. Your Governor directed the Department of
Labor, we will be sending other questions. I would love to know
about other costs and what you anticipate future costs and how
your states are going to absorb those additional costs. It is
important for us to know that.
So I want to thank you all for being here today and
participating. Members, I want to remind you, have 10 business
days to get other questions for the record, and I ask all
witnesses to agree to respond quickly and promptly to those
questions.
And with that, this committee hearing is adjourned.
[Whereupon, at 12:03 p.m., the subcommittee was adjourned.]
[Material submitted for inclusion in the record follows:]
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[Mr. Kissell's response to the questions for the record has
been retained in committee files and can be found at: http://
docs.house.gov/meetings/IF/IF02/20150929/103791/HHRG-114-IF02-
Wstate-KisselJ-20150929-SD003.pdf.]
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