undermined or changed in the way they would not have chosen to do it. .. the amount of money that has gone into creating these exchanges and people that lost access to their doctors and medicare advantage, so it hasn't even produced what they said in terms of expanding coverage and i think that is something that has made a lot of folks very

frustrated when they see numbers like that. i just have a couple quick questions. for mr. lee, i read a news report where a couple sad when they signed up for a play on it antheend cover california that y got a voter registration card sent to them that had the democratic party already check are you familiar with that report? >> sim. >> how did it come to something that would be pre- checked at the democratic party is that something you have control over where is the office sending this separately from cover california? >> every voter registration form has been designated a national voter registration agency so it's a requirement under law that we send these out in california. every form is provided a secretary of state's office. this report is something we've reported to the secretary's office as being investigated.

>> i read another report on that cover california whether they are advertising to people in the country unlawfully and obviously i don't think tha that they are allowed to get obamacare subsidies but can you say how are you approaching that? that clicks are you trying to get folks that don't have a legal status to sign off on the cover california? >> absolutely not. we are trying to communicate how there are many families that might have a member that isn't a documented president and another family member who is. we want to make sure those that are eligible get coverage so we communicated the rules on how a family should still come forward and we honestly appreciated the guidance from the government to make it clear that immigration status provided to cover california is only used for that purpose to not discourage individuals as families coming forward because they would be worried the information might be

used. >> but if someone can prove legal status -- >> absolutely not. >> 's many cancellations has oregon have? >> the number i have is about 35,000 individuals who lost policies because of the affordable care act mandates. how many people have enrolled in the market in oregon as of apr april 1? >> in a qualified health plans approximately 65,000 another 140,000. >> in the 140,000 in medicaid you know offhand how many would have been eligible? >> approximately 100,000. >> so it seems to me there were more policies than in the individual market their plane you controlled the medicaid numbers a lot of states had seen increases in states that didn't

expand medicaid so i think it's important that we are able to determine those. i think i'm out of time so i will yield back. >> the drinking member of the full committee from maryland has recognized. the vendor i believe the gentle lady from new mexico. >> thank you very much mr. chairman. and i appreciate the panel tod today. before coming to congress i spent time working with our state legislature and current governor to an act legislation that got past from the single opportunity immediate we had to pass it three years three times for new mexico to get started. so why don't you are pointing out the trials and tribulations one thing we haven't discussed

is many states waited until the last minute and i think that also exacerbated some of the issues that you have identified today . i'm interested in the education outreach efforts and i would love to try to have each of you talk to me a little bit about that. going forward targeting those folks that are still uninsured in the qualifying -- clarifying the numbers looking at folks in the business in those trends working with all of the navigators and the brokers if each of you with talk to me a little bit about moving forward. >> the outreach program in hawaii has arranged sub grants of our federal funding to about 32 nonprofit organizations on all of the islands and with those organizations they are hiring people to go out into the

community to work with people from many different cultures and language groups to work with them face to face to help them understand health insurance and then the affordable care act and if they are interested in looking into up liking then they will assist with going through the application process for the enrollment. >> we work with more than 2,000 insurance brokers and inefficient we have a connect for ntt program where there are six regions each of those working with local agencies. i was out in western maryland i was meeting for another reason with allegheny health rates which is the soul of the nonprofits to get health care for many years they work with the local community up there and i was wondering -- they said we are part of the coalition that got funded so we have some great organizations in the state. it's one of the reasons we have been able.

>> as the rest of the panel answered, and i appreciate the reference to the partners but also tell me what you would do differently going forward because while some of you that the target, some other states are struggling. we could do better in mexico even though we did a good job we could do a better job in the medicaid outreach. >> i appreciated this question because one of the things i can say based on that reform experience in the past eight years the education is one of the most critical efforts. it's the most important investment area particularly the most vulnerable population. they are the hardest to reach and if you look at the massachusetts reform records, we have 97% of the residents ensured that would present the primarily low income and we are very proud to see the fact that

we are bringing 200,000 people into the subsidized coverage and that is a major step forward relative to where we were. >> we have a lot of learning to do, but we look forward to having close to 50% of those eligible for subsidies is going to get harder and harder. they often have never had insurance. insurance. there is more education about what needs to be insured and that is an outreach to be done about advertising and also the on the ground people. the other thing that has been critical of well continue to develop this is complex stuff and having person-to-person people that speak spanish -- >> since i only have 45 seconds left, we know that eight out of ten hispanics are likely eligible for one of the medicaid programs are subsidized coverage and yet we have half of the

hispanic population that isn't going to be insured and in this face-to-face process to execute the deal. >> if i can speak to that in the first three months in californ california, 18% is latino which is way off the target. in the months of march with 36% we doubled the latinos. it takes more time it takes education and people on the ground. we do a lot more to do better than that. >> we have a couple seconds into the chair man while a mile every one to do a quick and concise answer. >> very briefly, we have certainly seen the importance of working with agents and brokers on the ground. they are in every community in the vein of the community is very well. the other areas that we have been focusing heavily on is the communities working with many of the other states on the panel helping them to understand the

importance of insurance coverage of what the options are working for them and their languages. >> thank you very much into similar to other states working closely with community agents and partners and in fact many of our citizens step by step in the application process. >> i am way over but i appreciate all that and i'm very grateful to those responses. i would love for everyone to consider any future hearing i know that the importance and value is complicated information on the person-to-person touch that in my state they varied and there were too many touches into the notion of waiting for appointments and not having that work for the state that did the education and then a little more in-depth and go to the appointment with the sister and have the navigator then have you help sign we lost 50% of the

folks in that line of touches. maybe too much. thank you mr. chairman. >> doctor sharfstein, i think that you said earlier he received 180 million in federal tax great dollars. >> and you've spent approximately two thirds i think you said 120 million? >> i think that that we have spent about 100. >> okay. and i think in the earlier questions, you indicated you had to hide here because website concerns approximately 204 to answer the phones and call centers? >> that's correct. >> i also remember that when ms. spear was asking how you're doing i think you said, doctor the state of maryland is meeting our goal. i think a lot of people

disagree. >> i was referring to the enrollment goal, not the function of the website. >> th >> the unit of the enrollment as well? my understanding is that cms enrollment target number was 150,000 for the state of maryland and as of april 1 and a couple days ago un role to 60,000 people. >> the goal between medicaid and the qualified program was 260,000 if we are about 295,000. >> talking about the employees. >> for the individual market, we had independent assessments of what the estimates would be if they estimate that around 75,000. i testified we expect to get -- >> i thought they told you the enrollment number was 150,000? >> no. >> i have a document that says that, 50,000. >> if that's the case i haven't

seen it. >> where is the 75,000 coming from? >> the university of maryland baltimore county. we could provide a letter that explains that. >> and that's the target goal of the 75,000? >> the goal was for a cross medicaid and qualified health plans, but so far as how we are doing in the qualified health plan enrollment -- >> our understanding i is cms wn you took 180 million of taxpayer dollars in the federal agency involved in implementing the affordable care act they said the target should be 150 and yet you can take the money that you get someone independent to tell you what the goal is, something smaller. when was the number given to you? >> about was the estimate given by baltimore county. >> when? >> it was a report given in the

last couple months. >> what was the initial number? >> about 150,000. >> that's the number i said. when did you get the revision? so you're not coming close to the 150,000 then you get a revision. >> how convenient. the federal government gives $180 that you need to meet and south you get someone to give you a revised number and suddenly now we are close defining the standard down is what it sounds like to me. >> you can look at the letter but i don't consider it to be invisible. it gets revised by the federal government about by the agency maryland goes to to get the money that they like. if you don't have to take my -- i'm not the only one that doesn't think that you're doing

the right job, i have four letters from congressman john delaney from the state of maryland two of them are sent to you where he says this thing is such a mess we encourage you to switch to the federal exchange so iwithso if you are a congresn saying i care about our constituents. with all the headlines in all the problems associated have a democratic congress in maryland say you are such a mess we should go to the federal exchange. >> i testified it didn't work. i don't disagree that we had a problem, but the goal of 295,000 -- >> but you haven't hit the goal you are at 60,002 is supposed to be at 150. that is short from your goal. >> that was an estimate, never a

goal it was an error and you can judge from the university of maryland -- >> it was the number that you were given by the federal government that gave you the same 180 million of taxpayers money. here's what the president said it. when did you let the federal government know you were going to come short of the 150,000? do you have to figure out a report of where? >> we've been working closely with the government to hold time. so we've been providing weekly public updates on where the enrollment is. >> i am over my time and i will get to the chairman. how many people in your state lost insurance because of the affordable care act blacks >> i think very few. there weren't that many cancellations.

there were notices of nonrenewal and the carriers allow people to renew for 12 months if they want to. >> according to our reports, what's been press accounts for 73,000 folks to individuals in maryland were going to lose their insurance because of the act and what you're telling me is the revised goal is approximately the same number, 75 thousandths of a goal of people you're going to sign up is we are going to sign up for people who were kicked off the affordable care act. >> there is also a market outside the exchange and we are going to see the overall individual market in and outside the exchange including the people that renew the policy to be far more than we had in 2013 so you have probably as many people outside the exchange as

inside the exchange plus people that renew it early and are still in those plans so they predicted more. >> all i am saying is according to the press accounts, 73,000 are going to be kicked off because of the affordable care and your goal that you were supposed to meet by april 1 was only 75,000. >> you're comparing apples to orange is. >> i can. the number you said you were going to sign up in the exchange which is below half of what the initial number. >> i think an apples to apples comparison would be the size of the market before and after. whether people have coverage of the individuainthe individual me january 1 or after because some people don't need subsidies and we are seeing not only just the exchange at the outside exchange which is going to be at least fast plus the fact people could renew early we are going to see a bigger market. >> that the fact that you're leaving out the calculation you

went through, those that were kicked off. they were kicked off their plan. >> they were in the individual market. >> of the apples to apples would be the individual market before and after and we are going to see an increase. >> but the number you're saying is 75,000 youth have people kicked off and people who didn't have insurance before even though you are woefully short and we are back to the original point cms said here's $180 million, maryland. your goal is 150,000 that gets revised in the last few months and we have a congressman from your state who says this is a mess you should have switched to the federal exchange long ago. >> we investigated the

possibility. there is no disagreement whether the website worked like we wanted it. >> the president said back just days before in late september that he gave a speech in maryland days before the launch promising that obamacare would be smoother in places like maryland where the governors are working to implement rather than fight. you even indicated it was a mess when it started we could make that commitment. we have seen a democratic member of congress saying what is he basing that on.

we were communicating that publicly the government was communicating that publicly. >> the government's didn't get the memo he said it would be smoother in places like maryland where they are working to implement. >> we were surprised by the problems that we had after october 1. >> a whistleblower gave us from this high-level diagram this was a report and let's go to page -- and this is difficult to read but this is important. you have a copy? what it says it is problems associated with significant delay or risk this was a report given back in february of 2013

and it shows you knew there were going to be some problems if you didn't communicate that with the government giving you 180 million in taxpayer dollars. >> of a receiveand they receivet from our internal team. >> so the president had access before he made that statement he for the launch of the affordable care -- >> we are communicating with the agency we worked with but subsequent to that tired we were able to make progress but the team that was working on different parts of this -- >> of course you were going to make progress. when you are this bad you have no place to go but up. >> in june of 2013 that probably gave us a little bit for optimism than it was deserved at the time that we were obviously disappointed for how it went.

>> i am over and appreciate the chairs indulgence. >> i would like to have my 12 minutes like mr. jordan. i listened to mr. jordan and it would be interesting to hear how many people get enrolled and helping people who were trying in fact i sponsored. i'm glad we didn't take the attitude that because the

website had a problem that we would throw up our hands and say throw everything around. i talked to those people and waited all day to try to enroll. and i don't know what you say to somebody when they come up to you and say this is the first time i've been able to get insurance in years. i don't know what my colleagues would say to that person. don't apply for the affordable care act? when it is the law? i'm not sure. we can go around.

but i go back to what i said from the beginning. this isn't all just about a website. and as i understand it, the figures were adjusted and were referred to a february 23, 2014 article. maybe you can help me with this. if said that the new number is 70,000. after it was corrected by the institute in university of maryland baltimore county a nonpartisan organization that discovered its error weeks ago and sent a letter dated februa february 21 the health secretary it was a footnote to one chart

that also included open and will the targets beginning next fall for 2015 coverage. does that refresh your recollection? do you have that letter? >> i have that letter here. >> mr. jordan has a way of asking questions that you never get a chance to answer. but did you go speaking about? what happened? we found we had a problem. we have problems every day. they don't just throw up their hand and go and get upset and say i can't do it. they find a waif they find a wat done and sometimes we make adjustments every day of our lives. maybe the reason i have that attitude is because again my mom and dad only had a second grade education yet is they were able

to have a son that became a congressman so we do believe in the attitude in maryland. he basically said that the report where they gave the figure of 147,000 represented the second open enrollment. go into the reasonable combined enrollment woul of the 160,000 including 70,000 of the exchange and i would've no test that is higher people came to us and said there were you're going to lower that goal but we didn't even though we were way below 200,000 week and lower the goal's and they still wanted us to shoot for 260,000

anti-testified and i said even though the overall goal has been lowered by the people that we hired to do the independent analysis because they made an error we are not changing our goal and we had more than 10%. >> when i was at the convention center in baltimore all day trying to help people get insurance i had an opportunity to speak to the navigators, people who are not making a lot of money but are giving their blood sweat and tears because they want to touch somebody's future and achieved should the trajectory of their destiny and one of the things that was interesting we had so many people tried to get health care that and correct me if i'm wrong they put people in the queue and said there were so many we couldn't even get their we have

to get back to you during the week. as that's what is happening now? >> we expect the numbers to be hired within what we have now and right now people are giving outbound calls to people who were not able to enroll by the end of march id called and asked for extra help. it could be several thousand more but i do think we may be able to surpass 300,000 against the gold in the face of incredible challenges. >> the can-do attitude. so let's talk a little but more about the contractors. when i served as the ranking member of the subcommittee, we had a situation where we had

contractors that were building boats for the federal government and the boats didn't float literally. and sometimes i think subcontractors is half moved to a culture of mediocrity, and it's so very unfortunate because if we continue down that road, we would be in a situation like i think about years ago there was a saying they had everywhere that says if we are not better we will not be. ..

we would just be able to configure it very easily. we have, this has been a big point of discussion, some of our state discussions. we've shared with the state legislature the parts of the bids that related to this and some other advertisements from ibm. and in fact, the software did not work as advertised or even come close to it. it was defective and deficient on the launch and created a

whole range of problems that we had not anticipated and, you know, i think that the states that did more of the building themselves for this particular goal were more able to be successful, particularly the states that work with deloitte and, california, new york, and we, in the end because we can reuse a lot of the software and hardware, are going to go with a particular solution that deloitte built in connecticut. >> now does the state of maryland plan on recouping some of the costs paid to for the development of the flawed product? >> we do intend to seek recoupment of the fund, absolutely. >> so now you're going with deloitte, is that right? >> correct. >> and what are deloitte's plans for fixing and operating the website? >> the basic plan is to take the system that was developed in connecticut and has been very

successful and move it into maryland, with minimal changes. and basically plug it in. we have to build the interfaces to the maryland systems and change certain elements of the website and then use it in maryland for the fall open enrollment session. >> and, so, who is going to fund that, and how will maryland fund the new costs of deloitte's work? >> so we will be putting our plan in corrective action plan for the i.t. challenges we face to the federal government and we'll be seeking to have the same model of partnership we've had so far. >> i want to say to you, and i said in your introduction, and i, you know, i know what you've done for maryland. i know what you have done for baltimore and, i know the dedication of you and i'm sure of all the other people sitting there. you know, when dr. sharfstein,

when we had medicare part-d, medicare, we had problems and when you go back and you look at some of the comments that were made back then, we had folks who said on both sides of the aisle, said you know, we've got a problem we'll work through it. we're going to get there. and we got there. now you don't even hear about the glitches. like ancient history. and i can recall when medicare part-d came through and i think you were around then in baltimore. if you will recall, what we did was we held the same kind of events. we went and members of the congress went from senior citizens house to, and all kind of meetings, town halls, most of us, hadn't even voted for it but it was the law. and we wanted to make sure that

it worked. and you know, i just, i just, i hear all of this, and i do wonder, i really wonder, and i know that there are problems with the affordable care act. nobody has denied that. but i wonder what it would be like if we could just join in, together, to address those issues? because as my father used to say, when you're dead, you're dead. you're gone. and so what we're talking about is trying to save people's lives. we're trying to, trying to make sure that we keep people healthy. we want to make sure that we give people a sense of, a peace of mind. and i want, i want that for, i want that for my colleagues, constituents and i want it for mind because i think that we

have "one life to live." this is no dress rehearsal and this is that life and i think we ought to be about the business of trying to help each other live the very best lives that we can. i will yield back on that. >> would you yield to mr. jordan for a moment? >> yes. >> i thank the gentleman for yielding. my point was real simple. in essence what happened is, the federal government enters into a contract with the state of maryland. the initial term of contract was 150 you 50,000 enrollees in the individual market and $180 million going to the state of maryland. dr. sharfstein they will go after some. contractors that didn't fulfill their end of the deal. they will recoup funds. the question is simple, will you return some. money? you get $180 million. you said you will sign up 150,000 people, all of sudden a new study, made a mistake. only get to 75. that was my point, plain and simple. the question is real simple, are you going to return some of the

money? >> thank you. i will, turns out i want to say, just having looked at this document, i'm not exactly sure what this document is, so i'm not sure exactly who this document was shared with. so if we can, you know -- >> i'm going with you, 147,000. the number you gave 147,000 people, right? >> no. i was referring to the document that was handed to me. i want to be clear. i thought it may have been a different document. to your point, we will follow all the applicable laws and extent we're able to recoup funding i expect i had to be refunded -- >> the state of maryland, will you return federal taxpayer dollars? contractual agreement, cms, 150,000 enrollees, approximately, you get $180 million. you didn't meet that you changed it. but when they issued the money, when all set out that was the goal. are you going to return any money. >> we'll follow all applicable laws in terms of funding. >> but you will go after contractors who you think didn't

fulfill their indof the contract with the functionality of the website. >> that's correct. >> it is okay to go after them but not okay for the federal taxpayers to get back some. money. >> federal taxpayers should get back money that we get from the contractors. >> unanimous consent for one minute. >> mr.-- time but i don't assume there is problem. >> dr. lee, why are you shaking your head, mr. lee? did you have something you want to say. >> just, the hhs, cms document prepared in september, was prepared not as matter of contract between us and cms but, they pulled from a range of things and i will note the california estimate used in that document, which i saw it many months hence, took the end of two rounds of open enrollment and misconstrued and thought that was the goal for first round of open enrollment. our numbers, for our independent, california hadn't estimates developed. we have been public about them

consistently those independent estimates in california i noted earlier are open enrollment period, high-end estimate was 800,000. at the end of two rounds of open enrollment it was 1.2 million. i think you're alluding to a september cms internal memo that was never part of our contract, never part of our receipts. they got numbers wrong -- >> was not talking about california. focus on maryland where the gentleman had 147,000. it was revised in february down to 73 that is all i alluding to. ask unanimous kent put letter in the record from congressman john delaney, dr. sharfstein suggest they switch to federal. >> i would ask unanimous consent that the paper article date the february 23rd, 2014 and hilltop institute letter to, interim executive director of the maryland health benefit exchange dated

february 21st, 2014, be interred into the record. >> without objection. >> thank you very much, mr. chairman. as a school teacher i thought my students there were three branches of government, legislative, judicial, executive branches, kind of a checks and balances system, right? they should have taken my course and they keep writing checks and my constituents are bet getting balances. i taught my students, bills are brought to the floor, went to committee, and brought to the floor for debate and passage, considering and passage. the aca was passed before debate and reading the bill. shame on congress that allowed this to happen. shame on those congressional procedures long established alonged respectful debate before open and passage after law. billions of dollars spent and

the division it has caused in this country is inexcusable because congress passed a bill before it was read and debated. this is shameful. it seems here, listening to all these debates, the good, the bad and the ugly, the money that was spent and all we have is billions spent and division in this country. i keep hearing well, let me just say this, in congress we're the fiduciaries of public interest and i think few attorneys or citizens would sign a blank contract based on hopes and dreams and today, after hearing your testimony and reading this testimony, all i see is more money wasted for failed systems, cover ups. that's what i anticipate. lawsuits will be filed. and every citizen knows somehow, something and someone, it's going to be swept under the rug.

more money spent. it is unacceptable and we need to have accountability for the money already spent and ashes are taken as we move forward. with that i just have a few questions. mr. lee, how many uninsured people are there in the state of california? >> at this moment, i do not know that. i look forward to knowing it at end of this year when we do a statewide survey which we do every year in california to assess the status of people's insurance. >> do you know the population? >> 335 million. >> 35 million people. how many people in california enrolled through the state exchange. >> approximately 1.2 million in covered california products and another approximately 2 million are currently enrolled in medi-cal. >> so we have 35 million people in the state. 1.2 million signed up. if it was a good product, you think people would be beating a path to your door. does the website have the ability to show of those who have enrolled in the state exchange who has paid for their insurance premiums to date and those who have not paid their

premiums yet? no. after people enroll. they directly with the health plan they select pay their premium and our plans in california approximately 85% of those individuals paid their premium. >> 85%. >> okay. do you believe it is important to know how many people will receive insurance through your exchange? >> absolutely. >> thank you very much. with that i yield back, mr. chairman. >> miss norton. >> thank you, very much, mr. chairman. i want to ask a question of the contractors. i don't think there has been in all the hearings that have been had enough of a focus on the contractors. congress is so busy fighting off the affordable care act itself, but i must say that the number of state exchanges have problems , when you combine that with the problems we have in the federal exchange, really does

show that technology is overrated. i must say it also shows that since this has not been found just in the federal exchange. this rollout problem. problem with technology in this state or that state but rather much through a wide cross-section of states that we're dealing with a new problem with, with, and, that we ought to approach it that way. now, that means, if it was new to the government, state and federal alike, it is certainly looks likes what we did not anticipate is how new it would be to those contractors. and that was perhaps overreliance, overreliance faith put in the contractors. now i know that one of them, cti, has, has, had its

fingerprints on a number of the states, as well as the federal exchange. and i can't believe that, that that's accidental. let me just ask you who use cti. did you look to see what its record had been, for example, with massachusetts? and i see the massachusetts no longer uses cgi. so those of you who used cgi and there were several of you who did, would you speak up and, and indicate whether you checked to see whether cgi's, what cgi's experience had been in doing precisely this kind of work, at least in massachusetts? >> thank thank you, congresswom. so the question, first of all, let me say that aca implementation has many components.

i.t. implementation is one of them. we work with a wide range of different contractors. some of them have been delivering excellent performance, insuring our overall success. >> i'm asking about cgi in particular. >> sorry about that. cgi was involved in massachusetts aca implementation specifically with the website development and it was, we engaged them through a competitive procurement process, consistent with guidance, applicable to us, but unfortunately, cgi's performance has been disappointing. they were behind schedule in delivering a required functionality. >> did you use them from the beginning? did you use cgi from the beginning? >> i'm sorry, i didn't catch that. >> had you used cgi before? >> no. >> i see. >> we, the health connector was engaged in cgi for the first time with this contract. and so -- >> when you rolled out your own program, did you use cgi?

>> no, we did not work with cgi. it was a very different, much simplified website development. we worked with a local vendor. >> what led you to use cgi? >> why did we use cgi? >> uh-huh. >> we went through a competitive procurement process to identify -- >> what about cgi, i don't want to know about your process, what about cgi led to its selection. >> it was selected through a procurement. >> you're tell mooing he, everybody was selected through a procurement. >> i'm sorry, i was just trying to answer why -- >> i have only so much time. did they have experience? did they have some other factor that made them stand out among those who competed for your contract? >> it was best member among the respond ants. >> in what way, miss yang. >> demonstrated experience. >> in this kind of work? >> yes. >> mr. matsuda, you used cgi. what made you use this company which has had this bad

experience across a number of states? >> i was not with the hawaii health connector at the time the decision was made. >> sure you know the answer. >> my understanding we went through a full procurement and major factor in the decision that cgi had been selected for federal exchange. >> do any of you know whether cgi had experience doing this kind of work before? who else used cgi at the table? anybody else at the table? had cgi had experience comparable to this experience? that you engaged them to do? to your knowledge? miss yang and mr. matsuda? >> congresswoman, as you know aca implementation is a new project for all of us. so i wouldn't say cgi was engaged in identical projects but in terms of comprehensive system integration cgi -- >> mr. lee, did you consider cgi? you had a successful experience. did they apply it in central

california? >> i actually don't think as i recall cgi did or was not one of the finalists for us. i don't know if they were a bidder but the folks that did bid didn't have direct experience. it was doing something new and you needed to look at general track record, cost, staff they provided factors like that we would endorse the selection. >> you know the district had a real heavy burden because congress in the spite amendment made members of congress and their staffs go to the exchange. took them out of the federal program. well it worked pretty well. now i got to go back and make sure they didn't use cgi. i think we have to look at these contractors and see what was the difference in the experience with contractors in particular. when you're doing something entirely new which congress is not taking into consideration in criticism of this process, it does mean that you probably are

asking contractors to do do something that they haven't done either. the problem with this is, we assumed that contractors do something much bigger. you know, we, we talk about the big parts of the private sector. and we're assuming these must be the same contractors who have done, who handled things in the country so surely they can do health care exchange for a particular state or for that matter in the united states. mr. chairman, i say one thing, note for the record, that mr. de santis from florida, put up a, a graph which, he said showed and questioned with witnesses on the theory that it showed that these contractors and others, including the federal exchange, had in fact performed below cbi expectations considerably. please note for the record that

his state, and now, and a great many other states are directly responsible for that because they have failed to allow poor and middle class and disabled people to get health through expansion of the medicaid exchange. that had happened, i have no doubt that the goals would have been met. so to use such a especially coming from a state, to use such a graph without taking responsibility for why there is reduction in the, in the uninsured americans take as lot of chutzpah. thank you, mr. chairman. >> i would only say one thing with that. in my state, we also have that. some of those individuals were covered by our insure oklahoma program, prior to that, and they lost it. and part of the waiver issue was, we had to remove that, as a

safety net. >> mr. chairman, that doesn't take care of those, where you have not expanded medicaid. >> that's what i meant. those individuals -- >> did you have expanded medicaid. >> we do not have expanded medicaid but we had coverage with our insure oklahoma program. >> mr. chairman, my remarks were limited to those who failed to expand medicaid and had no other way obviously of assure suring them. >> right. mr. mchenry. >> thank you, mr. chairman. i ask this question of the whole panel. you all in charge of your exchanges and your respective states. i will go down the line and, yes or no. have you enrolled through these exchanges that you're in charge of? mr. matsuda? >> excuse me. yes,. >> okay. mr. sharfstein? >> no. you me personally? >> yes. >> not personally. >> i'm a state employee. >> i'm sorry, i don't understand the question. >> are you enrolled through the very exchange you're in charge

of enrolling others? >> through state coverage. >> congressman, through state coverage. >> okay. thank you. two things. first i need to apologize and correct a statement i made earlier. >> you can use somebody else's time for that. >> i can grant you unanimous consent. >> go, right ahead. >> mr. de santis asked about the enrollment of our qualified health plans of april 1st. the correct number is 57,000. with respect to your question, congressman, i'm not an employee of the state. i'm not. jon: i'm self-employed and did not apply for insurance through cover oregon. >> okay. so, the question, and so i asked this because you know, this is one of the questions that my constituents ask about the laws that we live under and those implementing the laws whether or

not they're complying with them or living under them or going through the same process. and so i would ask you, there's a concern i have about personally identifyiable information. folks that are putting information into the exchange and the safety of that information. would you personally guaranty that personally identifiable information is safe through your respective exchanges? mr. matsuda? >> what i do know since i've started in this position is that i have verified that the exchange was given full authority to connect to the federal hub after passing all necessary steps. >> yeah. but we've got concerns with the federal hub as well. so you're sharing perhaps some concern? >> no. because. >> so let me ask you again, would you personally guaranty, that personally identifiable information is safe through your exchange? >> i believe it is secure, yes.

>> recognizing that nothing is 100% safe, i believe the maryland exchange has done what it needs to do -- >> about 80 mers safe, 90% safe? >> if you look what happened in the private sector there are a lot of things that can happen. we have had no known incursions. to your point, my personally identifiable information is in there. i did start an application. i put in my social security number. i had no qualms doing that. >> were you able to complete your application. >> i didn't complete application. because i had coverage. i was testing it. >> you were testing. okay. >> congressman, this is one of our highest priorities in terms of protecting people's private information. we have not had a data breach and i wouldn't be comfortable, i wouldn't be letting the exchange operate without having confidence that personal information is protected. >> similarly, the safety of personal information is our top priority. we are very confident that that

information is being kept secure. we've had no data breaches and we have no instances that we know of individuals financial or personal health information being breached in any way. >> similarly, congressman. safe, security is a top priority for us. we certainly do everything we possibly can to protect the information that goes in. >> will you guaranty that. >> congressman, we, it is very much a top priority and we do everything we possibly can -- >> i take that as modified possible yes. or no? however you want to see it. >> cover oregon also meets the cms security requirements which have been validated by cms and we're not aware of any security breaches with respect to connecting to the hub. >> okay. so, all right. i wanted to at least ask that. so, in terms of lost applications and, you know, incorrect subsidies, it is not error-proof system we have.

obviously. there have been faults and failures obviously. but, you know, i've got a story for you, mr. sharfstein. so in your system in maryland i've got a staffer who's mother was given a notice by her insurer that due to the affordable care act her insurance was discontinued. so she had to go into the exchange. and she began a three-month long process to enroll in your exchange. i know that you've have about 4,000 applications in your state that were given incorrect subsidies or lost applications, is that about the right number? >> we reported subsidy problems about that number, right. >> similar to that, okay. so her experience is one that i know very well, through her daughter and through her telling me the story so, when you're talking about the first

roadblock for her in filling out the application was a question of her citizenship, which she could not verify. she calls the help line. the help line obviously is very helpful in all your states as you all will attest to. people have problems with the, with the website and they have been noted. i don't have to recount this but in her situation she was told through the hotline, to fax her, i believe it was her driver's license and social security number to this open fax line. and, in, she asked, well, do i put it to your attention? put it to someone's attention. no you fax it to this number. is that concerning to you, you have somebody's drivers license and social security number given to a random fax number in order to proceed with the application? >> it, not just like a fax in the corner that people wander by. >> i would hope not. i would hope not.

>> it isn't. >> not at local truck stop or something. a little better than that. >> it is fulfillment center. they have an approach to secure personal information too. we have to verify things like, whether people are able to purchase coverage under the law. >> so those folks privy to that fax machine, or, whatever the technology is, you use, privy to that? are they vetted? is this, is there some safety and security that i can tell her that there was for her information? >> yes. you can. and, you know, particularly for the fulfillment. >> describe that for me. >> well, we work with maximus, which is a company that secures a lot of personal information. they do, for example, an enrollment broker for medicaid program. they work in many states. they're a very big company that has extremely strong policies around protecting private information because they do it

in a whole bunch of states. they're the ones who are staffing the fulfillment center that the faxes go to. >> okay. mr. chairman -- >> the call center. >> mr. chairman, the final question they've, i you all have in your metrics the number of enrollees. as a part of your measurement of this success of your respective exchanges, do you have a cost per enrollee? for instance, state of maryland has spent, what about, 100, 100 million, 150 million in that range to build the website and exchange s that about right? >> right. so far about 129 million. >> 129 million. so about $2,000 per enrollee? . .

>> i don't think so. it's helped people on medicaid. but they could have had access. >> they couldn't. >> not at all. the vast majority of people in maryland, single adults for example did not have coverage. now they have coverage -- >> the majority of adults did not have coverage? >> even if they were very poor --

>> mr. chairman i don't object to my colleague having extra time i just want to make sure = is granted. >> have you seen me be unfair before? >> know i just want for the record -- >> if i may ask one final question and if the gentleman was here to see mr. cumming was i being a little less greedy than he was with time and as members of congress we are a little greedy with the time. mr. cummings is coming back and. he was appropriately useful with his time. >> would've the gentleman yield? >> i do i >> iq ii'd used the exact amounf time that the gentleman -- >> i will yield back -- i certainly appreciate. mr. chairman thanks for the generosity. i appreciate the kindness of my

colleagues and i will show you the same. >> for the record i was not objecting i was trying to make sure that the reward he was granting equal time. >> i'm going to do something out of order. you have been seated for two and a half hours. would you like a moment to stand in the stretch? she's great to get the next questions or would you like to stay up for just a moment? we will take a short recess to be able to stand.

thank you mr. chair. on behalf of the people i want to thank you again. you are the manager that allowed us to name a post office after the former congressman. thank you again for that. and i would like to thank you inverse of the committee for the unanimous consent for allowing me to participate. mr. chair, one of the reasons i asked to participate is because the people were also very concerned about the reports of the money spent on our connect

connector. mr. matsuda i want to say up front i know that you've inherited this and it went into effect in july specifically if you came on board in november and you can address some of these thoughts i would appreciate it. first one of the thoughts that fundamentally it is truly different. i know everybody says that we are the only state that has the only prepai pre- paid healthcarw that went into effect in 1974 and that is part of the issue that we have to understand as we look at these numbers. i saw the letter sent to the governor and it speaks to $205 million going to the connector and i think they computed it had about 44,000 per person. so mr. matsuda 205 million was the graph that you were entitled to. how much money did the state actually use?

>> at the end of the year we spent 57 million out of that amount. >> and it's my understanding that there was a request to extend so that you could spend the remaining amount that the state has been the night that is that correct? >> the operations maintenance cannot be used in this calendar year. >> for the 205 million people understand how much money would either be returned to the federal government or do you want to answer that way or how much do you continue to use? >> in addition to the money that's already been spent we have obligated under the contract and additional 57 million so that means we have 100 million roughly of the federal grant money that is yet to be obligated or spent. the amount of data that is related to the operations and

maintenance versus development money that can be extended as yet to be determined. we are working to figure that out because we just got to the decision recently. obviously we want to be careful about how we use taxpayer dollars so the development money will be used to the extent necessary to fit the unique marketplace. >> what you testified before the state legislature and i think i misheard you speak earlier is that the connector cannot self sustained and if you base it on the amount of money coming in in terms of premium percentage is that correct? that was in line with a request by the state funds to continue the connector. it may be less because of the number but that and i correct in

that? >> we are going to figure out how we can reduce those below 15 million. >> it is to cover the cost of the connector. >> it's important to put it into the context. because of the pre- paid healthcare act of virtually all small businesses in the state already have insurance from their employees so there is little incentive to leave the system that they have been accustomed to for almost 40 years. to reduce the cost of the operations as much as possible. there is said to be 100,000 total uninsured in hawaii of which about 58 almost 60,000 are

going to be covered by medicaid expansion so it's about 43,000, is that about right? because we have some that are ineligible because of the immigration status. >> if you are looking at the uninsured but now there are people that currently have insurance that might appeal to find lower-cost insurance through the exchange so the potential under the marketplace is probably bigger than the 33,000. >> if i could have a little bit of the way -- >> of the thin things i really d to get to. the predecessor and whoever was there i was here when we voted however i did notice they had an exemption for hawaii. it is 15 to 60 which is

anticipated in the original law because of the pp healthcare act. what have you done or what does it mean if we haven't gotten a response of that. i do also know and it was an exemption from the provisions and it's supposed to be for the lack of a better description it's called the reason for state innovation and we like to think we are the major innovators in any kind of health care but that doesn't kick in until 2017 so the question is why haven't the state or the connector looked at this because the problem is the fact that pre- paid health are

not mixing well. that is the reason the connector doesn't work and why we can't go on the federal system because it doesn't take into account. what you agree that is the fundamental problem isn't working? >> that's correct. we are anxious to take advantage of the innovation in 2017 and we wish it would occur earlier. >> what about the exemption in the wall that exist law that exh is a section 1560? why haven't we availed ourselves of that or is there a way that you can go to the secretary we have this waiver in the wall that you qualified why haven't we done that? >> i'm not an expert on that but my understanding is it only refers to preserving the

exemption that we have. there are other areas of the lawsuiloss of it is a complicatd evaluation that seems to be made to take advantage of it. >> and we haven't done that yet. >> it's under consideration by ththe legislature and the administratolegislature and theg to assist with that. the people at home are very frustrated and they are very embarrassed that people are saying that we have all of this money and we've only enrolled less than 8,000 people into the emerald and is a function of the existing law and to keep us apprised of that there is always a question that we have constantly asked.

and then have to wait to 2017. it was intended to not have to address that we are truly innovative. to the colleague from hawaii i wish on the subject we could sort of move beyond the partisan talking points. if there are things to be fixed why not come together? and if there are things to be celebrated, why not intellectually be honest and to celebrate than? in the opposition you're

probably going to have the kind of problem we had in today's has hearing in the majority staff memo the hearing purposes has occurred enrollment numbers of obamacare are significantly lower than expected. it's higher than expected. they exceeded the numbers after the website pullout and 7.1 million counting. anyone on the panel can any of you think of a program in less than six months that enrolled 7.1 million people? the individual mandate that we haven't obamacare do you know where it came from where the

wellspring was? liberal democratic idea. it was a conservative republican idea. because of the philosophy for the decision-making editor for they have to have some skin in the game and thus the individual mandate no less a figure than the republican speaker newt gingrich one of the reasons that he opposed the clinton health carhealth-care initiative and 93 and 94 and yet today because of the partisan politics that individual mandate, conservative republican intellectual wellspring is not referred to as

a socialist. is it working? >> it is working very well. >> what happened to the population of the uninsured in massachusetts? >> there is very small a very sl percentage of the residents that were uninsured prior to the implementation that it was about 3% was optimistic they brought more people into coverage and expected the number to be less than 3%. >> is that not the second lowest uninsured population in the united states? >> i thought that was the first. >> than yothen you were even moe successful than i thought.

>> websites are not the same as the exchange and websites somehow do have glitches unfortunately. did massachusetts have them when they started? absolutely, congressman. i would say in 2007 it looked nothing like what we had prior even to the website of the flip through the journey both from the performance functionality perspective. it is meant to be innovative and an improved as we gain experience in the market. so when we unfortunately experience challenges with the website we were not panicking. we've gone through this before.

these are things we need to work through. it's complicated but it's not you want technology. we need to put the right team into place. >> wouldn't it be fair to say the goal for the affordable care act was never to have a perfect website but it was to get people n. rolled. it's a method, not the end. >> i would say look no further than massachusetts because we didn't have the fortune of having a state-of-the-art modern website. we have something very simple but easy to navigate. we really bring it to the next level. it does improve people's experience but there is a fundamental about coverage in

massachusetts demonstrating it. >> one of the things asserted by my friends on the other side of the aisle who are never going to give this ever a positive mark of any kind is that actually the number of people enrolled is masking the fact that it equals less than the number of people that have lost their health care coverage. >> via enrollment between 1.2 billion we don't know if this is one of the things on the discussion the number of people that enrolled directly with their health plans in the affordable care act with the defense we think for the

majority of the individual market that converted didn't come to the marketplace in the individual marketplace. >> but certainly the enrollment in california is not exceeding. people converted to different coverage. the vast majority kept coverage with their existing plans and benefited from subsidies people converted coverage under the affordable care act. people are losing their coverage into canceling their coverage. no one can turn away a knock at their door or because of health conditions. health plans canceled policies

at the whim previously so we are in a new set of circumstance but not the circumstance people changing the coverage or losing coverage. >> you have been generous and i yield back. >> is a general revenue, percentage, you mentioned of as a percentage if i would like to know how is it funded >> we are in nonprofit that is part of the state administration and we are before the state legislature right now in the funding proposal. >> so there's not a revenue stream.

i forgot to mention that we also have by the board of directors policy decision a 2% fee that is as fast against the plans in the marketplace. >> so it is what governs that and whatever general revenue is outdated. >> it is a premium assessment across all regulated insurance. >> what is the percentage? >> it's about $40 million a ye year. it's whatever works out to $40 million. >> .2%, give me a ballpark. >> it's in the one to 2% roughly but i will have to follow up. >> it had been in existence the past eight years.

we have historically funded accommodation -- combination and ensure its carrier administrative fee and if that is the reason because on the one hand we serve as a distribution channel to provide the shared for the company is at the same time we perform the policy responsibilities in service to the state. we do have an expectation of additional federal funding to support the administration. we have not made a decision at this point in terms of the d. isn't it historically. it's between 2.5 to 3.5%. >> it's going to be based on the carrier administrative fee. the current is on the basis of 1395 which is a little bit over 4% of the premium and we are going to be adjusting out of the annual basis.

>> is that the individual that holds the policy, where is that? >> we did a lot of analysis that enables the plans to lower their cost because the cost per acquisition of what it means is far less expensive than it used to be in the individual market and the plans have a reduction and no longer have the cost of the guaranteed issue. >> that is a good promoter. >> the penalty and the size of the penalty compared them to bigger factor. for some it is a small minority.

>> we are funding through the assessment of the policy sold through is and that is up to 3.5% of the assessment. >> it's everybody right? okay. >> the financing a space on a 2.5% of the premium sold through the exchange. you have the enrollment coming through and it opens up next year. if the agency sustainable, is the target they are to be able to make and i kind of go

backwards. >> right now the target is sustainable at the level that we have enrolled into the projections going forward as many of the colleagues have spoken you do have to manage the expensive side to match the revenue side. with the enrollment we expect that we can do that. >> is sustainable. >> we will be balancing both our expenses and revenue. we are very confident that we can have a very good proposition in. >> we have qualified health members and over 100,000 commonwealth members serve through the exchange and 5,000 small business in the last 138,000 subsidized members and transitional coverage we expect a meaningful than her will be exchanged as well.

>> we be leavitt will be sustainable. >> as indicated in my written testimony and discussion right now the sustainability is going to be a challenge and we are trying to figure out how to reduce expenses and look for other ways. >> are other states experiencing something similar? other states say i would assume that you are interacting having this problem do you know the other states are? >> i do not but i imagine any state that has a small population like we do in a small number of uninsured will be facing the same kind of challenge. >> i want to talk about the new intervention as well that's in the middle of the market. oregon health and health republic, both of those babes are true and receive 60 million.

are you familiar with how they are doing and functioning in the exchange? is a relatively low enrollment number but i can't give you greater detail. >> how is that working because the initiative was the perspective i wasn't here when it passed to create a nonprofit sitting out there to compete or that would go into the markets of that others wanted to go. >> we have a very good turnout in terms of interested profit. could you tell me if the discussion and analysis the impact is there any sense of cyber release and i'm glad to the co-ops are there because we wouldn't have met the goals without that? >> i don't believe that because

again the way that the market has worked with both the interest and the prophets all kinds of health plans. it has been a void that they specifically filled. >> massachusetts is correct. without them i don't know if they would have made it. how is that working and functioning because this is a new invention. >> we are glad they were interested in competing in the market. this isn't the first time that we have had them into the market. >> do you know how many they have at this point? >> several hundred we can get

back to you on that. we have all of the preliminary. the gold was 37,000. >> i would be for to you on that. >> so trying to figure out it was $156 billion given to start to hopefully go into an area that was underserved. i'd try to figure out if it was meeting the needs of underserved and where the 156 million goes. all you have to do. >> absolutely, congressman and mr. chairman we worked very collaboratively. to be very interested in the massachusetts market i would say that as you know it's already very well served in terms of the insurance companies we have great coverage and we have many carriers competing.

my understanding and i agree with that they come in with a low-cost model that could offer additional options for the members to shop around if we continue to believe they are able to deliver that once we have the functionality. >> i would say that it's probably too early to answer the question about the investment. >> $65 million on the co-op if there is quite a bit of competition. >> maybe not as much. i would say that it's really focused on.com go of the cost through the aggressive primary care approach that we think is promising. >> in the individual market they signed up in the order of a few read in the market leader in the

first year that they are more than a small group market and i think it is going to take a couple of years to understand and to see whether they are able to. >> when the problems came up and out you were approaching that deadlines was there a person that you were supposed to communicate with whether that be the oregon side that is a frustration on the maryland side who was the person you were to report to to say we don't know where we are working on the testing for security we are not launching well we will have to have a delay. who was the point person to keep them informed? >> we had a specific person that was our main point of contact. >> what's with the name again?

>> i think her name is amanda. >> this is a separate contractor? >> she was an employee. >> so the name was amanda? let's run through who was the point of contact? somebody had to sign off. >> similarly i believe the primary contract. >> i do not have that information with me today. >> we will follow up. >> we also had a state officer that had day-to-day responsibility for making sure all of the elements were approved and checked. >> and amanda was the point of

contact and we were in constant contact with the entire team. >> i will have to provide that on the record. >> i want to be able to follow-up with you. we have a document and i will give you a copy. it says for the policy development this is a piece to be able to walk through how you are hitting the core walking through this and i will read this to you and again i want to be able to get a copy and we will talk later this was an august document talking about what they consider the no go status. it was created applications and eligibility determination, the lock user account and the it administration, quoting the information into the select plans.

they wer were of the 17 functios only five were accessed in august at that point as they were preparing for the october launch. was there a conversation to say okay we have a lot of no go. and if so who would we go to to say we have a bunch if we are getting close to the deadline we might need extra time? >> so the couple things mr. chairman. i can explain the document. it appears to me that it was a steering committee that took place at the time. we did go through a comprehensive evaluation of the readiness of the system before we deploy the system and this was the record of the discussion that looked at each component which ultimately led to our

decision to deploy what we did deploy and also what we did not deploy. >> who did you have to report to? was there someone that you were held to account to keep them in reform? >> we were in constant communication and we still are. we have weekly discussions on all levels amanda was the director for the state exchanges and also her team that included the state officers. >> this has been a long day for you. i appreciate you coming in for the conversation. you are all working very hard. no one is trying to push back and say you are not working hard. the frustration is that this is a round peg in a square hole and what you already have in the

state trying to make that work whether it be hawaii or massachusetts or function with that we assumed we were going to get the waiver for it having to have the flip and having to go to the website that wasn't working. to work through the process to be able to serve people is honorable and th the mess that surrounds this to execute the law that has many complicated and conflicting parts is a major issue that will continue to be a major issue.

among next week's congressional hearings the government agency that secretly created a twitter communications network is expected to testify. but press reports that congressional hearing could result key questions around the program including whether the obama administration had informed the lawmakers about its plans. democrats on the congressional intelligence and judiciary committejudiciarycommittee saidw nothing about the effort. >> the unemployment rate remains the same that department says employers added 192,000 jobs

slightly below february's total. the rate was unchanged at 6.7% but half a million americans voted looking for work last month and most of them found jobs. the job matches the average total. house speaker john broder released a statement in response to today's numbers. i'm glad more americans found work that our economy still isn't creating jobs for the american people at the rate they were promised and goes on to say republicans passed what they call jobs builds that the senate hasn't considered them. democratic leaders said today's jobless numbers this continued job growth is encouraging but we need to do more to ensure everyone across the country has a fair shot at the american dream. he then mentioned that the bill coming between the senate next week and urged republicans to support. >> it's a nonprofit organization

to advance the art form in itself so it could b be bugs tht are unbound and all sorts of different structures from accordions to the tunnel books to traditional bound book is that lay flat when you open. it is a book of art and altogether it is handmade and so it is more than just the word that are in the buck but it's also the structure of the book is the part of the art and the paper. whether there is text or no text. so it's all of that and it is an unending world to discover so it is amazing. >> atelier 6,000 or a6 is one of the places we will visit this weekend as booktv in history tv look at the literary life of bend oregon saturday at 4:30 and

sunday at 2:00 on c-span three. >> as tax season comes to a close we discuss the state of the irs and the filing season as well as challenges for the tax system and the path ahead for the revenue service. the commissioner took over as the head of the irs after the agency came under fire for the targeting of conservative groups. this is about an hour. >> good afternoon. and welcome i am an adjunct professor at the george washington university school of public affairs former international bureau chief at the associated press and the 107th president of the national press club. the national press club is the leading professional organization for journalists

committed to the future through the programming with events such as this while fostering the worldwide free press. for more information about the national press club please visit our website at www.press.org and to donate to the journalism institute, please visit www.press.org/institute and all you have to do is click to find out all the information you need. on behalf of the men are as worldwide i would like to welcome the speaker and those of you attending. the head table includes guests as well as working journalists who are club members. if you hear applause in the audience, then present the general public are attending so it isn't necessarily evidence of a lack of journalistic activity. i would also like to welcome our c-span and the public radio

audience. you can follow the action on twitter using the hash tag and pc lunch. after that lunch concludes we will have a question and answer perioperiod and i will ask as my questions as time permits. now it's time to introduce the head table guests. i would like to have each of you stand briefly as your name is called. let me begin. from the right, ralph winnie euro asia business coalition. shauna, press secretary the embassy of finland and ten. peter, template sure editor. margaret sherry, irs deputy commissioner and the guest of the speaker. mark heller tax policy reporter that the bloomberg. this is pat koskinen, the wife of the speaker.

jerry, buffalo news washington bureau chief and chairman of the speakers committee and past national press club. skipping over the speaker for a moment, deborah and the speakers committee member that organized today's event. thank you. john the irs deputy commissioner and guest of the speaker. maryland, senior business editor national public radio. rick levin said executive editor aarp. and josé lopez calderon, treasury department recreation association. [applause] >> it has been called the worst job in washington. [laughter] if that's the case, running the

internal revenue service didn't get any easier after the controversy last year over the irs scrutiny of the tea party groups. the acting commissioner was forced to step down to the criticism that the irs wasn't singling out the groups in reviewing their applications for tax exempt status. in the wake of the controversy, john koskinen took the helm of the irs. it's a tough job but koskinen is no stranger to situations. he spent two decades running the business that specialized in turning around the companies before he was tapped for the government service. he has taken several challenges over the course of his career. for instance, freddie mac was shaken to its core during the financial crisis after taking on downloads but pushed it to the brink of insolvency. president bush asked him to

rebuild freddie mac. earlier president clinton called to oversee the efforts when it was the leave computers inability to recognize the year 2,000 would result in calamity. he also served as the deputy director of the office of the management and budget administrator for the district of columbia and president of the u.s. soccer foundation. he refers to it as his checkered career of interesting challeng challenges. now he embarks on the most interesting challenge yet as the commissioner agency responsible for collecting about $2.5 trillion on revenue while administering the tax code including new rules related to the affordable care act. please welcome the commissioner of the revenue service john

koskinen. [applause] thank you all for that warm welcome is in order for me to be here today at the national press club for the first time as an irs commissioner. i was here a while back as noted during my tour of duty in the y2k which was also an interesting time. you may recall the chinese curse of may you live in interesting times. they didn't need that while. i am intrigued by the deserts that seemed to be to tie into the piggy bank that reminds you that it's a little too late for this year april 15 is almost here but it's not too late to start saving for next year. more interesting are the 10-dollar cookies. they are designed to be a currency to rival the big claims

-- bit coins. there will cease to be currency if you eat them. [laughter] now that we've turned the calendar to april i know there are usually a couple other things that people's minds the first is spring which took a little while to get here after the snow and the second is taxes plus some of you maybe want to the final four this weekend. as the former chairman of the board of trustees we had a moment of silence earlier in the turban and but i would draw your attention that the loss was part of a long-term strategy to increase the endowment in the hopes of a substantial contribution from an unnamed major investor in the united states and recognition of the billion dollars we save him. moving on expecting to hear about the state of affairs at the internal revenue service you've come to the right place.

i was sworn in as the commissioner over three months ago. it's critical to the functioning of the government and one that touches virtually every american. at ththe last three months i've traveled to 18 of the largest offices around the country in fact i'm off to chicago and detroit right now. i've listened to almost 8,000 employees and i've been delighted to see the professionalism, skill and dedication of our employees. i'm on the journey because through my career i found the people that know the burs most e the front-line employees. they have important insights into the opportunities in organization faces and in light of all that's happened to the employees of the last four years and employees in particular opb raises for the government shutdowns into the negative

publicity you might have expected it to some extent i did that i would have heard a lot of grumbling about not being paid enough for having to work too hard instead of the response i've heard in all etd cities is the concern that we do not have enough employees to provide the taxpayer services our employees want to provide and think taxpayers deserve. i've also heard interesting observations about how we can improve the day-to-day operations of the agency and i've explained in the town halls with front-line workers and managers at each stop one of my goals is to foster the environment information flows easily from the bottom up as well as from the top down. it's critical not only to get the benefit of the observations and suggestions but to learn as quickly as possible about the problems or challenges. i've noted it is illusory to think that we will never have a

problem or make mistakes and things will always go the way the plan. we planned. we have 90,000 employees administering the most complicated tax code. instead my goal has been for us to find problems quickly, fix them promptly, make sure they stay fixed and perhaps most important be transparent about the process. i told our employees if there is a problem that is my problem and we will fix it together. if an employee makes a mistake it's my mistake as well and we will work together to remedy the situation. and if there's a problem i don't know about, it's my fault because it means that we wouldn't have built a culture that encourages information to flow up from the organization even if it is a problem. as i told the employees my theory is bad news is good news and the way problem we can solve ias though we probably don't knw about and it's important for employees to know we don't shoot the messenger but we think that.

one of the important things we have to do is restore public trust in the agency shaken by the problems that came to life last year with regards to the determination process used for applicants applying to become tax-exempt social welfare organizations under the section five o. one c. four. organizations that have the status can be everything from garden clubs to the home owners associations but that focus has been on the advocacy groups that spend part of their time and money on political campaigns. as a result of the use of an organization of load as the criteria setting the application aside for the special treatment, that has been cast by some of the independence of the irs. it is an issue that deserves our attention but it's also important to put the issue in context and perspective. they have about 800 employees in

the exempt organization of large and only a small subset of those folks in social welfare organizations in the meanwhile there are 89,000 other employees all across the country who are doing the colbert for the tax system into the nation in other areas. nonetheless, taxpayers need to be confident they will treat them fairly. it doesn't make a difference who they are, what organizations they belong to or who they voted for in the last election. none of that matters. we will do about 1 million audits of taxpayers this year some will get audited and maybe democrats and some republicans and others may be something else altogether but they will all have one thing in common they are being contacted because there was something on their return that needed a follow-up. perhaps we nee need a clear petn maybe there was an error or

there could be something wrong in the return but the return of loan is the reason for the inquiry and anyone else would receive the same treatment from the irs. if you make sure this does not recur we have done a number of things. we have accepted all nine of the recommendations of the inspector general. they were being screened using inappropriate criteria in the determination process. they are cooperating with the investigations in the manner that were launched last summer and there are six ongoing investigations conducted by the congressional committee committe by the department o department d one by the inspector general. we were asked by the members to quantify the work we've done and how much it has cost us far. working directly on complying

with the investigations and is cost morit'scost more than $15 h includes adding capacity to make sure they are protecting taxpayer information in the materials. and the testimony of the house government reform of the last week i was pleased to report that we have now provided all of the documents that we've identified as being related to the determination process which is the focus of the report last may in the house ways and means committee and 7,000 pages of documents. we are still redacting taxpayer information from the last of the documents before they can be shared with the other kennedy is with the investigations that will be included soon and reports issued sometime in the near future. i've made it clear we will

respond appropriately to the fact review and writ write emendations of the reports and move forward as an agency with whatever actions are necessary to those that we've already taken. the material has proceeded according to the priorities of all of the investigating committees. on the matters are the avenues that they want to pursue. you may have noticed during my three hour hearing before the house oversight reform committee some members are expressed on the rate that we are reducing and producing the redacted information for them and as i tried to make it clear he never indicated we were not going to respond to the documents we received in february and the we produced the documents to each of those categories. in the private sector the court would require these requests to be reduced to those relevant to

the inquiry but that's not the way they work and their arm of the limitations so the value beans we could be at this as i've noted for a long time. another recommendation is that the treasury department and irs should provide guidance on how to assess the progress of the buddy of the social welfare organizations activities. so last november that treasury proposed regulations designed to clarify the extent to which the organization can engage in political activity without and danger in its tax-exempt status while i wasn't involved in the drafting of the proposal which was released before i was commissioner is extremely important to make this area as clear as possible not only does it help the irs properly enforce the law but the regulations would also give a better roadmap for applicants and it will help those already operating as a c.

for organizations administer their organization without the fear of losing their tax-exempt status because of inactivity they are in gauge we received more than 150,000 comments. that is a comment period that in fact i'm told if you take all of the comments on all the treasury and irs regulations for the last seven years -- number they are close to the number of a single regulation we are beginning to review those and analyze them. it will take a while to sort through because we take them serious and these arseriously ae across the spectrum that have taken time to give us their views on the activities and how much you should be able to engage in and how much an organization should apply. it should take a while once we finish reviewing the comments and hold a public hearing to consider possibly repurposing an

amount of regulation and obtaining more public comment. it's unlikely we will complete this before the end of the year. before leaving the topic i want to note one other thing. last of the commissioner passed away at the age of one rated. the commission o commission aree irs from 1969 to 1971 during the early years of the administration that turned out to be a challenging time for the agency. the commissioner held firm against attempts at the time of the agency. the white house eventually fired him for his stance. i'm sure if th the commissioner fraser today he would say he was only doing his job but he was doing watch more. the refusal to let politics compromise the irs is an important reminder to all irs commissioners now and in the future of the commission is. i intended to follow his example and i want to reassure everyone listening today that the irs is

an agency of civil servants and dedicated to serving the american taxpayer and a fair and impartial manner. that's how it's been and that is how it will always stay on my watch. .. >> as we get closer to the april 15 deadline, for filing returns, i think it's important