we chose to try something and but it worked. the process of developing the reform measure is something i'm proud of, too and i want to touch on very briefly. in governor mitt romney, republican, working together with a democratic state legislature and democratic united states senator ted kennedy and a broad coalition of business and health care leaders, labor, patient advocates came together to invent our reform bill and then stuck together to adjust it as we have gone along to refine it. that bill was an expression of shared values of our belief that health care is a public good and that everyone in massachusetts deserves access to it. so from massachusetts the affordable care act is familiar, like a wall it improves health security for all our citizens. it takes a hybrid approach that leverages the best of the government, nonprofits and private industries and with president obama's leadership it was developed and supported by a broad coalition of stakeholders and advocates who understood

that our public health and economic competitiveness demanded action. the affordable care act is also cost-effective. according to the congressional budget office, the act would reduce the federal deficit by $124 billion through 2019, and by more than $1 trillion in subsequent decades. so the national health reform is an important piece of the responsible plan to improve our fiscal outlook for the long term. based on our experience at home, national health reform is also good for our economic competitiveness. the ceo of the small technology company and the town of sophos and bought health insurance through a program created by the commonwealth connector which is our version of the health exchange. the program called business express is an online service that helps small businesses easily shop for private health care and find the best possible value. using the map was able to help

people compare health plans side-by-side and avoid a 23% premium increase the current inter was proposing. he and his employees gave the $9,300. that may not seem like much to many of you here but it is meaningful to his company and to the thousands of small businesses like it in our home state of massachusetts. i met a young entrepreneur recently who moved his business up to massachusetts from florida. i hope i'm not upsetting anyone here from florida in saying this because of the young family he wanted to be able to start his venture without worrying his children wouldn't have health insurance. in other words universal coverage has helped our competitors. the federal reform i see my time is up, let me just rap up and i hope we can get to what i feel is at the issue which is cost control, and cost control is the challenge all over the country in places that have a universal system and those that don't. 130% premium increases over the last decade. we have some strategy is we've

put in place and that we are pursuing in massachusetts to get at that nationwide issue and frankly some elements of the affordable care that the helpless in that regard as well and i look forward to your question. >> thank you very much. >> governor barbour? >> mr. chairman and members of the committee, first of all, thank you for asking. the first thing we want to say is thank you. when they were doing the affordable care act, there was a big meeting at the white house of the members of congress from both parties and there were no governors. and so thank you to the committee for republicans and democrats for asking the governors what we think. i would like to associate myself with governor herbert's request that the case from florida and virginia on the constitutionality of the federal act be expedited. it's in our interest to the answer sooner rather than later, and the thing we fear the most is conflicting opinions from

different circuits. we've already seen conflicting opinions of the court level and from different circuits would just calmed down that problem. so for those of you that have an influence on that, we would like to get that question answered sooner rather than later. my friend the kilpatrick, massachusetts has a state health insurance program that the obviously happy with, and we think that is their right and center kennedy -- senator kennedy and romney and then patrick if that's what massachusetts once, we are happy for them. we don't want that. that's not good for us. we don't want that. we don't want extremely high mandatory standard benefits package as. supply and trying to make is different states have different problems. we give different ideas, and

1 million not believe it, some politicians obviously who act like you all look for constituents more than we do, we love our constituents as much as you will do, and we want to do -- we want to do right for them, but we will do what we can afford and can sustain. medicaid is the second-biggest item in my budget after education which has been of 63% of the state budget on education and medicaid is the next biggest thing to recover medicaid's growth before i was governor has grown to 16.5% a year and we were cutting our community colleges and cutting our universities because of the money was having to be diverted to medicate. in my seven years as governor we've reduced medicaid expenditures to go to 4%. we have not changed eligibility with one exception. the people we used to give pharmaceuticals through the medicaid program who were dual

eligibles now get their pharmaceuticals through part d. so in full disclosure want to say that. the reason i do is because of this, because we cut the flexibility to do we reduce the work pharmaceutical programs cost from $697 million annually to $279 million. a 60% reduction. a little bit of that came from part de but primarily, buy giving to generics which is 78% generics now and the meds are great for people that somebody cannot if they have to have brand names we do that. flexibility to do that kind of stuff is critical for us. that's what we -- what we need. one of the things we were allowed to do my first year is our medicaid will have gone

510,000 to 750,004 years. forgive me to thinking maybe that wasn't the way that it should have been. so, we found out that the previous administration hadn't followed the federal rule that you have to require people to reestablish eligibility annually. they weren't doing that. we require our beneficiaries to reestablish their eligibility annually in person. and a lot of people who probably had once been eligible for medicaid but were not any more didn't come to try to requalify. we make exceptions for people in nursing homes, for disabled children, people who are homebound because we are sick but this is the benefit on the average is worth between six to 7,000 this is a burden once a year to about 70 places to reestablish eligibility for this program. we do that for everybody. we would like is the devotee

while they are there to mandate that they take a decision. we offer at this meeting every mississippi medicaid beneficiary a health assessment and hardly any of us take up on it. we would like to be allowed and we don't think we have to ask for permission to make it mandatory. but there are a lot of things we have to get permission to do. waivers are a problem you will hear from many people but i want to tell you state plan amendments can be just as big a problem. we have a plan within it the 180d requirement to improve the state plan amendments and then it took than a year to improve the contract that was going to be part of the state plan amendment. that doesn't help. let me just make one other point about this, and i know that my time is up but i think it's important.

we have $7 million in medicaid that comes from clients to buy nursing homes that had some violations. we have to get the cms permission to spend that. we ask for permission to spend it to build a facility for the 2225 very sick children that right now we have to put in a hospital, very expensive care, or send them out of state, because the regular nursing homes are really not set up to half 79 senior citizens and 15-year-old. we were told you can do that if you remodel an existing building, but you can't do it if you build a new building on our university medical center's the hospital campus. those kind of things we should not be a required to ask permission to those kind things

whether it's to save money or provide better care. my time is up and i would be glad to take any questions. >> thank you. we will ask questions alternating between sides until you all have to get on your plans to go back here again, we appreciate your being here. governor herbert, you mentioned you tell you have nearly 100 different exchanges folks are able to participate in. has your state examined how many of those would still be around when the affordable care act would be fully implemented? >> well, it is uncertain. my hope is we would be able to maintain our exchange even during the implementation of the affordable care act as a part of the discussion right now for the states to do their own exchange for the federal government would come in and do one for you. i think because we have an early run on this we are probably going to be able to maintain. we have 100 plants and a number of different providers and it's growing and small businesses for

the first time are finding a way to provide a benefit package of health care. our exchange is working the way that it would work. it's costing five to $600,000 to set it up, and so, we only have about three people on staff that are running it so it's a very different approach than governor patrick's and i'm not saying it is the approach, it is an approach and i echo what the governor haley barbour sit all t to have opportunities to solve the problem and the flexibility is probably what we need and i think we will find solutions for the health care issue that represent the demands and the needs of our respective states. >> as understand many of the plans or health savings accounts, hsa. does your state anticipate seeking a waiver to try to keep alive then? >> we don't have health savings accounts that have been put into place orders placed in any dramatic form right now for the health exchange. we've provided really a defined

contribution as opposed to the defined benefit where the small business people now can identify how much money you put towards health care than the consumer takes that money, goes to the point of information and then shop for whatever is best for them in their own individual interest and reduces private competition as people search for their business and try to compete. and it puts the consumer in control of that money and so it allows the consumer to spend the money as they see fit as opposed to how the insurance company sees fit or the business sees fit. there isn't a third-party purchaser now and it is not a one-size-fits-all for the individual. >> last question, governor herbert and governor barbour, as you look at expanding the medicaid population of 130%, how is your state going to be put to pay for your state's share of the expansion? >> again, the requirement going

up is going to cost my state an additional 1.2 to $1.3 billion over the next ten years and for a state the size of utah, that is really serious money. the only way we can afford to do that is we have to cut from some other program whether it be education or health and human services and other areas or transportation means we have in a fast-growing state raise taxes which will probably have a dampening effect on our recovering economy. so, the options are not good for us with that request. >> of america how would you respond to that? >> it's going to take a very big tax increase. the federal act would require us to increase the role by about two-thirds come from about 600,000 people, 20% of the population, to a million, one third of the population, and because the costs or ' did the first few years there's very little cost, 1,000,000,000.3 over seven years but by year tenet will be $443 million is

the estimate. $443 million is a gigantic increase in our taxes, but that is what it cost us. >> i yield back my time. >> thank you mr. chairman. that is the question i was going to go for, just three years ago i was a state legislator trying to meet the budget balanced. if you look at kentucky's plight medicaid kept getting a bigger piece and we have to take it out of higher education. other things are harder in kentucky because the growth of medicaid and now the governor has said essentially what you said, have no idea how we're going to pay for it. that is a quote. and further what is this going to do to education or other issues? i know the governor herbert touch on that but can we just have a few seconds of what this is going to do to your state budget if we don't give you flexibility -- >> because we can't run a deficit, you know, we either have to raise taxes and cut spending for other things or,

more likely, do both. >> senator herbert? >> governor patrick -- >> hauer increase as i mentioned earlier is for us it will be 50% increase in medicaid eligibility so it's a dramatic increase in the budget, and again, the 1.2 to $1.3 billion of additional cost has got to come from someplace to be to either raise taxes or cut services. it's that simple and you know the challenges we are all having the dillinger in the budget today. it's a very difficult time in this just adds to the problem. >> it's been a i would yield to the ring to member mr. waxman for five minutes to read estimates before mr. chairman and for your testimony. it seems to me both of your oral presentation and written presentation have some common themes of the we ought to agree on. we must continue to make medicaid a better program

benefiting we can provide better quality-of-care while also reducing cost, and i think we need to work together to achieve that goal. also nationally certain populations have greater health care needs than others. children are half of the medicaid beneficiaries 25% of the cost. adults including pregnant women make up 23% of the beneficiaries but 13% of the cost. individuals with disabilities make up 19% of the population but 44% of the cost and seniors make up 10% of the beneficiaries but 23% of the cost and this is the same for all three of your states to the children and adults need of the largest share of the medicaid enrollment but only a fraction of the cost. that's why it doesn't make sense to cut back eligibility for adults and children. first cutting back on a little the for adults and children will

save the state some money but not very much because these populations are not where the money is. second, low-income kids and adults use the emergency rooms more than they would if they were insured and have a source of primary-care. but the real problem is the cost of that care is now going to be shifted to the emergency room, the physicians staff eight, the hospitals that operate eight or the people themselves who want people to get the services. the cost like the people don't just disappear once eligibility is terminated. they just take it off the federal and state treasuries and shifted onto the community hospitals, physicians. that's really inefficient and unfair. half of the spending is for seniors and disabled and cutbacks of the disabled seniors

are unthinkable as these are the most vulnerable and medically needed in our society. so i've come to the conclusion we have to be smarter and do things better and under the affordable care act we can. the example under the affordable care act we are already helping states and providers structure and implement new delivery models to reduce cost and improve care for the dual eligibles as governor barbour pointed out. the most expensive population of seniors are disabled. governor patrick, i heard you touch on the delivery system reform in your opening statement. can you talk about why you decided that expanding coverage and improving the quality-of-care in the right direction for us to move in as opposed to cutting back on the eligibility. >> thank you for the congressman to the question, congressman. as we have implemented the expanded coverage, our universal plan over the last four years we have also increased spending on

public education every single year to the highest level in the history of the commonwealth because that is another value choice that we have made. for us, the discussion about whether to try to in sure everyone office what kind of commonwealth we want to live, and i would suggest the discussion about how to do that national is also about what kind of country we want to live in. the question of cost is a question that is with us and facing small businesses and working families with a we have the affordable care act or not and whether we have medicaid or not. and that is what we have focused on now. that is the next chapter in health care reform and frankly we get some tools to the affordable care act to help us with that. it turns out -- and i would be interested -- i know i'm not supposed to be asking the questions, but dr. burgess, i wonder -- >> please don't. >> what's that? >> please don't, you only have a minute of time to read your idea

is to hold down the cost by -- >> exactly. >> not putting people out. now governor herbert -- >> i was just going to say that what we have learned from the clinicians, from the medical professionals is that more integrated care is actually better care for the patient in terms of quality but lower-cost care as well. and so realigning the incentives so that we are paying for the quality-of-care rendered and quantity of care is where we are trying to move now. >> i have a question to ask you we have some areas of agreement as well and support for medical homes, which is also authorized by the affordable care act. but a much to focus on the eligibility cuts right now. you've promoted the idea of flexibility to allow you to cut eligibility. so my question for you is the following. do you intend to cut eligibility for the inexpensive adults and children, possibly flooding your emergency rooms without reducing

the cost substantially or do you plan to cut off the seniors and disabled since that is where the bulk of the medicaid spending is? >> thank you, mr. waxman for asking. as i've said in my testimony, i reduce the cost increase of medicaid to 16.5% per annum to 4%. we didn't do it by changing the eligibility except when the federal government set up medicare part b, there was no reason for us to have the farcical program anymore to duplicate that. some very small part of the savings. you're right. about 1,000 bucks a year. our average beneficiary costs between six to $7,000 a year. that's where the savings are. the savings are in managing. we can give these people better care at the same time, but we shouldn't have to come up here and kowtow and to the rain.

that's what you're saying. and we would be willing to make this deal with you. give us a block grant with total flexibility, and we will say limit the increase in our payment to half of the national average, but it is, and we will take that in a heartbeat. >> thank you. >> the gentleman from texas, mr. burton for five minutes. >> thank you, mr. chairman. it's good to have you three governors here. this is kind of deja vu. we did this six or seven years ago. governor barbour was a big part of that at the time. we have a new governor thompson georgia nathan deal his former subcommittee chairman of the health subcommittee of this committee, and when he was the subcommittee chairman and i was the full committee chairman, we passed an amendment that gave the states the right to actually verify eligibility, verify citizenship. we didn't say states couldn't

cover illegal aliens, but we said if he wanted to restrict benefits for medicaid to a u.s. citizens or legal residence we gave you the right to do that. our friends on the democratic side changed that verification program to basically self reformation. if you see that you're eligible, you are eligible. governor barbour, with one reform of medicaid that we should consider going back and giving states the right to actually verify citizenship before their extended medicaid benefits? >> yes, sir. >> governor herbert? >> absolutely. i think i would just make sense. >> governor patrick? >> we do it already. >> you think you do it all ready. i would like to see your program because if you do your the only seed in the nation that does. so i appreciate that. there has been quite a bit of talk in the last congress of

states beginning to opt out of medicaid because it is too expensive. what would the tipping point be if we don't change the current health care law? where would states began to seriously think about opting out? at what point of their budget is in texas for a simple 25% of the state's budget is for medicaid, and some states it's higher than that and in some states is lower. do the governors have a task force on this issue? and if so, what discussion has been about where the states are to see these began adopting a? again we will start with governor barbour and go right down the line. >> i do notice the time on governor patrick's list. i realize to to all that makes me better. >> at blease dewaal can joke about it. it's a good thing. >> i can't imagine mississippi opting out of medicaid. we are a poor state.

it's an important program. we just want to run it better. we want to run it better for taxpayers and for our beneficiaries. we can control the cost much, much better if and when the federal government would give us more flexibility or just make it where we didn't have to ask for permission to governor herbert was talking about for eight months to do something very commonsensical. we could come and it is in your budget interest, too. so i am -- i am not an opt out at and i just being forthright about it. >> governor patrick? >> as i said in my opening statement we are so far down the path, this is -- the affordable care act is very familiar to us because and it's free market because we had a reform, we have reform measures in massachusetts that are very like it so this is not so scary to us. i think there is a bigger question here that goes beyond medicaid and goes to the private

payers as well and that is as i said earlier, the escalating cost in the insurance premiums that have been with us all over the country, certainly all over the commonwealth. that is where we have concentrated our time. we get some additional tools because of the act to get at that, and i would just say respectfully it would be wonderful to work with congress on that larger issue because i think that is enormously important for our competitiveness economically. >> governor herbert? >> thank you, congressman. it's like asking the question which straw will break the camel's back? we don't know which one will break the camel's back until we keep piling it on and eventually we will have the back stream. you know, in utah we are doing pretty well with healthcare. president obama in fact has used utah as an example as he advocated for health care. we have good quality health care at lower cost in utah comparatively speaking of the states of our system has been working pretty well.

>> in your experience you don't think about opting out? >> musette of doubt of medicaid. i know. we have no plans to opt out of medicaid. our concern is the increasing cost of medicaid and the majority cost for the medicaid expansion are coming from the whole field low-income adults. >> mr. chairman, my time is about to expire. i'm going to submit for the record a question for them to expand on the constitutionality of the federal mandates that states have to pay and there are a lot of federal mandates in this medicaid expansion beginning in 2014, 2016 the states have to do it and they have to pay for it, and i would like to respond in terms of the constitutionality of that question that i put that in writing. >> thank you. if you can respond quickly and would be great. the chair would now recognize the gentleman from the great state of michigan for five

minutes for questions. mr. dingell. >> gentlemen, welcome i'm delighted to see you, been on a same side. welcome. we are proud of what you were doing up there in massachusetts. governor herbert, welcome to you too. gentlemen, very quickly, you have had firsthand experience in implementing the state level reform lobby and you support the federal law that would work well, is that right? >> of their barbour i gather you have a different view, you support to over 30 is that correct? >> that's correct, mr. chairman. >> i gather that you have also supported the affordable care act is that right? >> we joined the lawsuit in florida. >> now i want to see where we are. we have a great challenge and testing of the national will and

keep a -- capability. governor barbour, you are aware of the health care insurers can no longer discriminate against 180,000 children with pre-existing health conditions and also that as a result of the affordable care act 53,000 businesses in your state and other states would be eligible or 300 of the million dollars in new health care tax credits. governor commodore also aware that 1.5 million residents of your feinstein are benefiting from consumer protection and the affordable care act has created lifetime coverage and limits on the rescissions of safeguards against the increases. now you come governor herbert, thanks to the affordable care