emergency room visits up, just the opposite of what the president said would be achieved. are these effects of the aca just growing pains? i don't think so. the law great a number of different programs to bail out billions in taxpayer funds to in the first few years to lower the cost seen by individuals and to protect big insurance carriers against financial losses, but those programs are beginning to phase out. as the government is slowly taking off the training wheels the affordable care act is looking pretty wobbly. even with the billions and billions of taxpayer dollars spent to reduce the sticker price of insurance for individuals, to lower their out of pocket costs, to pump up big insurance companies, to establish and operate the insurance marketplaces, and more, all hidden and shifted costs paid for by you, the taxer compete with all that health care costs and health insurance premiums are still going up. ..

during today's hearing out like to learn more about how premiums are being set for next year. many have heard or read stories and press being these stories

may overlook future rate cuts and instead focused on proposals that still must be reviewed under law. all of those fees and rates not yet found i look forward to hearing more from eyewitnesses about what they think the final rates with me. again mr. chairman, we would like to thank you for holding today's hearing. thank you very much. >> we'll hear from the four witnesses two of whom i'll introduce him to hold the introduced by the panel. our first witnesses the commissioner of administration will testify about the state of maryland and experience with the state-based exchange. then we also have train to come insurance professor at the

university of houston will testify about contributing factors regarding the premium spike. i would like to recognize mrs. black to make an introduction. >> thank you, mr. chairman. i would like to thank you for allowing me to be here on committee as a non-committee member. i'm proud to introduce the commissioner of my state the tennessee department commissioner of congress and insurance. she stares in the role and has been with us since 2011. she brings 15 years of experience with her and illegal administrative experience in state government. i'm also proud to tell you she has been a commissioner in two different states before coming to the state of tennessee. she's the first in the country who had the first title to serve in two different states in this position. i appreciate dedication. done a great job and is

committed to this day. we have the robust competitive insurance possible under the current law. as we talk about the impact of the aca in my states insurance marketplace specifically on the premiums and lots and impact. pleasure to have been here today. >> thank you, mr. chairman. it's my pleasure to introduce my colleague mike kreidler. before he got involved when politics was an optometrist. he worked for 20 years for a group cooperated in washington state so he understands managed-care and has been deeply involved in that on a personal professional level. i got to know mike when i was in the state legislature. he was there in the 70s onward

and then came for a very short stay in the united states congress. he was here two years and the tides of war taken home again. he picked up his public service by an the insurance commissioner and has been such. i forgotten how many years but it's got to be 15 by now. he's a very knowledgeable man and i commend to the committee he knows about on the two inside as well as the public policy side. >> to the mac. four witnesses, you're written statements are part of the record. you've got five minutes. mr. chandler, we welcome the opportunity to hear from you. the microphone on. green, yellow, red. the light will be fairly to a disappeared if i have to explain

that to you it is hopeless. >> thank you. i am seth chandler law professor at the university of houston with investigation and insurance fund health care law. i do a lot of work using mathematics to enhance legal analysis and i'm here to testify the anticipated increases and sources on the exchanges for 2016 with an emphasis on two of the famous three hours. .1 we need to be careful looking at premium increases. many occasions on which the mac premium increase actually is the most important thing would be considerably higher than the gross premium increase come in fact likely to diminish individual choice and induce policyholders to purchase lower-cost solar hmo policies. second ,-com,-com ma the phaseout of transitional reinsurance and the crumbled

this alteration of race corridors is unlikely in most cases to play a large role for in a particularly large premium increases for 2016. third, the major source of increased is likely higher than expected claims from insurers particularly the more generous platinum and gold plans. now for some details. net premiums. the amount paid after lawful subsidies are taken into account. not to publish chris premiums are what matters to most people. as i showed my appendix it's a matter of indisputable mathematics that increases under the aca are not and not not the same as gross premium increases. this fact can convert 10% gross premium increase into a 15% net premium increase. can convert a 10% into a 12% net

premium increase in a way that may impel the purchaser to experience a 50% increase in out-of-pocket costs. people on both sides of the aisle take note. the poor bear the brunt of this map. the more heavily subsidized the higher the percentage price increase if you want continuity of insurers or continuity of care. based on the actuarial value continue its tables created by cms for its regulation of the affordable care act i have computed reduction in net claims expenses created by the transitional reinsurance programs for 2014 15 and 16. the trp as rich a radically modified last week by 14% to 16% in 2014 depending on the level.

prior to the change last week the figures were 11% to 12% and insurer is large and small received a 3% cash back rebate from the federal government for 2014. for 2015 the trp should reduce insurers that claim expensive by 3% to 4% in 2016 the figures are almost the same. since the value of the subsidies has not declined substantially between 2015 and 2016 it is difficult to attribute substantial part of increases for 2016 to the phaseout. another source of premium increases for 2016 sometimes mentioned as a modification of the race corridors program by the crumbled this bill. highgate research and it is unlikely again to be a source of a significant change in premiums. yes it is true that insurers may

only receive 37% or so but they hope to receive that many insurers hope they will actually make a profit under the affordable care act and therefore the big picture is unlikely when we look at particularly large increases the source of increases as the phaseout of the transitional reinsurance program at the alteration of race corridors. instead let's look at what is going on here. standard & poor's has suggested most insurers lost money under the 2002,014. it's natural to see them requesting a rate increase. look at the obama administration actuarial value calculator it is using to regulate insurers to determine if they provide value. if you look, shows the gross claims will go up by 13% to 14%

in 2016 relative to 2017. let me just conclude by saying that the aca focused mostly on insurance market and in the absence of better medical cost control, everything else equal expect the federal pilfers subsidies and is more likely to cause an explanation of premiums for the more generous ppo plans and gold and platinum and if so we'll see a diminishing choice of positions potentially less continuity of care and increased cost sharing from individual spirit obviously i speak here before king versus burwell is decided, a decision adverse to the abundant evisceration would not change the contents that it would change the numbers. one of the most interesting things is what happens to the program if we have gridlock at the federal level in the states.

if king versus burwell is decided in the obama administration, folks have a lot more issues to discuss. thank you are a match. >> mr. kreidler. >> thank you, mr. chairman. thank you. it's a privilege to be here. my name is mike said to come insurance commissioner for the state of washington elected to the position. on the longest-serving in the country and as mr. mcdermott pointed out i'm also a former rove congress too. as a provider, has been elected policymaker and also as a health of the straighter i have enjoyed working on the issues around health care reform. and that could be no closer to it than to be insurance commissioner at a time like this. as insurance commissioner for

the last 14 years i've heard many personal stories from individuals. one individual before the aca called my office to complain about a situation where she wanted to have a child so she wanted to do the responsible thing. she got health insurance. when she was expect him to deliver normally at the end of the july high to have an emergent d.c. section. because it was in the nine months pre-aca it was not covered. she complained to our office. reinterviewed with the health insurer and got some reduction on the bill voluntarily by the health insurer, but she wound up with a large medical bills and that was through no fault of her own. what we saw before the aca was almost a million people instead of washing and without health insurance. 14% of the state's population. we had 11 insurers in the market

better than most states and predicted that consumers wanted more choices. we carefully review the rate that came before us, but we so frequently elected double-digit rate increases they had to approve pre-aca. many houseplants also did not cover maternity or prescription drugs. the system is not sustainable. costs are continuing to rise precipitously in the saudi uninsured continue to rise. fast-forward to today. health care reform is working in the state of washington. we have an uninsured rate coming down some 40% down to a point i've% since the affordable care went into effect. we looked at the numbers going back and that is the lowest number we can have back to 1987 numbers for you to look at the lowest we've seen. premiums are not soaring. the lowest rate request in decades in fact if you look at

the plan inside the exchange if he paid the full costs, the average rate is $384 a month to receive the subsidy is $174. this year insurers are requesting 5.4% and 3% is actually going to find the exchange 3% of the 5.4. 11 insurers in the market is pretty good. we now have said teen insurers and 240 planned for 2016. consumers have more choices, the market is thriving. several dreams we wound up doing that made a big difference in the state of washington expanding the medicaid program with 530,000 people in the other big decision that i took was when the president offered to

say keep your canceled policies i said no, we need to keep one pool so you could wind up with a good pool in battle when it came to risk it as a result of that it helped to stabilize the market. we don't have the problems with legacy plans that many other states have. second was to create standards for new networks. the offenders in the state of washington. work adequacy for 2015. we were the only state the one that doing that. it's a level playing field and insurers know what to expect that is one reason we look at the market where we seen a significant increase in insurers going from 11 insurers to 17 a 50% increase in the number of insurers in the affordable care act. increase as are the lowest in memory. 50% or more are in the market

and the uninsured in the state of washington continued to plummet. the affordable care act in washington is working. i believe the works for the country, too. thank you, mr. chairman. >> thank you. mrs. mcpeak. >> good morning. thank you for inviting me to testify before the senate committee on the impact the affordable care act has had and thank you commerce and lack for your kind introduction. as mentioned and julie mcpeak. i've spent most of my career in insurance regulation and i have a strong affinity for the country state basis of insurance oversight. tennessee has a fabulous facilitative marketplace. the aca legislation would have significant impact in the respect is definitely cheap content.

the aca introduced underwriting requirements to fundamentally reshape how health insurance is price, purchase and then mr. requirements make the policy a significant challenge. aca requirements that are cost iris and premium prices are well documented and include prohibition on create wasting condition exclusion from the guaranteed availability and essential health benchmark things that create a fuller or aca compliant plan benefits. aca impacted ensure flexibility to design plans to meet consumer demand. in a post-aca world complaints are more similar than different can compete primarily on name recognition, physician networks and premium price. the impact on the consumer marketplace emirate has created significant challenges and uncertainty across the insurance landscape.

tennessee has been fortunate enough to experience consistency among carriers offering policies. the first-year 2014 tennessee had four carriers but only one offering policies in all 95 counties. we've received filings for 2016 the show five carriers writing policies but still to carriers offering policies statewide. outside the aca and implementing regulations have had the effect of segmenting tennessee's marketplace. so-called grandfather plans which we were known as transitional plans remain a large block of business across ours day. the segmentation creates confusion for consumers to know that the policy that do not understand the policy. tennessee had a competitive marketplace and that remains competitive today. market competition gave tennessee the lowest price in the country.

in 2014 and 2015 tennessee fans have ranked the top five least expensive plans based on premium price for the second lowest cost playing on the fsn. having a competitive market does not isolate tennessee from seeing significant rate increases. insurance carriers offering plans requested rate increases for 2015 and 2016 ranging from four tenths of a percent to 36% with a carriers comprising 80% of the market requesting increase of 32.6% and 363% respectively. reviewing the proposed 2016 rate increases according to federal guidelines will need to improve race by the middle of august. substantial increases can largely be attributed to utilization. our largest carrier reported calendar year 2014 a medical loss ratio of well over 100%. in per spec that for every 1 dollar premium received the company paid 1 dollar claims

operating and net loss not including the administrative costs of the company. the aca requirements have left cares to auctions to reduce costs. one option tennessee has experienced is the use of limited provider networks. dac established the oriented plant program to help create market competition. tennessee is one of 26 states have an operating powwow. the company was awarded $73 million in low-interest loans establishing the tendency. the first years of operation have been challenging as the company try to insert itself in the marketplace while maintaining financial capacity. 2014 cha raise a high-fat of the market in the company failed to achieve a significant amount of volume. cha revised rates for 2015 and was competitive with the market. cha are too big to quickly

approach to quickly approached apartment with a proposal to freeze enrollment under health and human service guidelines. we agree to the proposed freeze and effectively take cha out the marketplace. the decision remains the right decision for the company and most importantly tennessee insurance consumers. the process has not been as efficient as we hope. for 2016 cha has requested over 32% to work at the request as well as to satisfy marketplace purposes. aca in implementation has challenged carriers by creating and continuing conflict and uncertainty lessens competition. i think it is done both. from early days of the aca until exchanges were bowled out in 2014, governors insurance regulators and carriers looked for guidance from the federal government on structures and

rules and later and clear guidance light to set out of market places in the first two years to better understand the market. i was told by two national carriers the uncertainty contributed to decision-making processes and decisions not to participate. i written testimony provides an example of guidance introducing uncertainty in the market after the carriers submit the reigning proposal for 2016. implementation of the aca has been a challenge in the review policy rates for next year but anticipate tennessee consumers. again thank you for the opportunity to be here. i look forward to your questions. >> thank you good mr. redmer. >> thank you, mr. chairman. they appreciate the opportunity to testify in the small group rate increases in maryland and i especially appreciate being here on the day you chose to give tribute to congressman lewis.

ask him how to perspective i've been in the health insurance business my entire adult life including time as a producer, time in the legislature and time is a ceo for regional health insurance carrier. maryland's carriers were required to provide proposed rate increases may first. we are currently going through our actuarial review of those proposed rate increases that will make a final determination by the end of july. maryland does have a state-based exchange in the individual marketplace. we are seeing a low where we see a reduction of 0.3% by one carrier. we see an increase on the high side of a little over 30% by carefirst our blue cross blue shield carrier which has a significant majority of the market share. it is then part because they

lost significant money last year. in part i believe you to be a verse selection of small employers disbanding their small group plans said those employees are migrating into the individual marketplace. as a reference point evergreen which is our co-op are seeking a price increase of just under 10%. in the small group market we see a low of carefirst, our plan asking for a reduction of over 16%. evergreen the co-op plan asking for an increase of almost 15% which is on the high side. in the small group market place. for the proposed increases, what we see is the cost rivers is an increase in the average morbidity as high as 15%.

increased medical trend we see a low of 3.5, the highest projection with projected profit margins in the 1% to 2% space. in 2016 we will see another year of an urgency in the marketplace. one of the young for same factors we know what to do there is the effect of the small group market from 50 to 100. maryland increased the minimum allowable threshold for stop-loss friend can do 20 to five in an effort to minimize at her selection by going into the self-funded plans. in the individual market the uncertainty in part is the increase in the penalty, whether that is going to drive any of

these younger folks in the insured marketplace or if it is just the folks that have been sick in the last year or two migrating to the guaranteed issue marketplace. also i want to bring your attention to the unintended consequences of the affordable care act. we have no break of the tory control over it. if you go back to january 2014 we had thousands and thousands of small groups that wanted to delay the effects of the affordable care act so they chose to early renew. instead of renewing january february, march the 2014 they got in under the wire and renewed in november or december december 2013. the effect of adding maryland is a disproportionate amount of the marketplace though small group plans and the individual marketplace renewing at the same

time is an operational matter for the carriers and producers to handle the amount of work at the same time. also maryland is a little unique. there hasn't been an access issue in over 20 years. everybody in maryland before the affordable care act had access whether its medicaid for the poorer medicare for seniors. we had underwritunderwrit underwritten individual plans, guaranteed issue guaranteed renewal ability and the small group market for those who couldn't get an individual underwritten plan we had a state subsidized individually high-risk pool. so access was not an issue before the aca. but i'll be happy to answer any questions. >> thank you all. mr. kelley pennsylvania. >> thank you, mr. chairman.

all of you here today appreciate you being here and want to make sure we get off on the right foot. this has nothing to do with not helping people. one of the things that is critical and i appreciate your input for what you're talking about. i'm an automobile dealer. we just went through the new package up over 30%. we keep a little bit over 30% by working with the deductible is little bit. back home where i am from it if sustainable means capable is to be existing. i want to make sure we understand the harvesting so they are not depleted or permanently damaged. as a private business person your model has to be sustainable for you won't go to stay in

business. as i listen to your, really interested. i go to this little restaurant. been there for a long time. cindy is to cindy is the growth away from me. a year ago she said is there something you can do about health insurance. she says my host is for use to include me. not a knock. and shopping right now. my monthly cost is $700 to $800 in the deductible is $10000. i can get insurance but for all intents and purposes i'm not insured. having a policy indian insured on what is going to be a disarray for you is two different worlds. i hear in some cases in pennsylvania it is not down. it is going out. rather than government turns who scratch their head and say i'll just walk away because the government will take care of it all. >> the model we are on is not

sustainable. the model right now in the affordable care act is not affordable in a lot of ways. people who have to buy and pay for it and others who have to help invest in subsidies to make it more affordable. somebody has an out-of-pocket costs. your testimony was fascinating because you talk in real world terms about what this means to people. we talk about everyday guys and gals who through their feet of the debate, go to work and put a close on their back and prepare for the future and make sure they are healthy. everyone of you typed in your testimony about a trajectory that is unsustainable. am i missing something there or not? >> in my opinion, representative, it is very unrealistic to think this country can afford a situation in which 17% of our gdp goes to health care and that starts to

keep going up and it's estimated to go to 23%. think about health care is important, but we can't run businesses. we can't run a society in which that large proportion of our large gdp is being diverted into health care. >> united states is getting killed with this. this redmer if you could. >> thank you for your question. certainly what concerns me at the large cost increases for premiums requested in tennessee. i will tell you we as regulators test every one of the assumptions included in the rate request. the loss experiences there. when you consider rate increase in the 30% range and you know that will affect people in your state you want to see if there's any margin to assess

whether there is anything you can do that to understate authority, we have to look at the rate whether unfair, discriminatory or the fish does have filed with the by a spirit of 30% increase is a need to order increases of those states in order to protect the financial stability of the company go because they stand us crash >> i think we all at the same purpose. the worst thing in your life is to make a promise you can't keep. there was so far down the road and being affordable and accessible accessible that we missed the part. the sustainability right now that does the work. you are going to find that it

doesn't go above the future. appreciate your testimony. >> mr. lewis. >> thank you, mr. chairman. let me think each of the witnesses for being here today. a good-looking group. beautiful, handsome. mr. commissioner, welcome back my dear friend and colleague. again, thank you for being here. i want to learn more about how people gain medicaid coverage have state insurance market. >> say that again. >> i want to learn more about how people gain medicaid coverage, help state insurance markets. >> thank you mr. lewis. complimentary words directed to you were totally insufficient to recognize your broad achievement so it's a pleasure to be here to have an opportunity to take this

question. the failure to expand the medicaid program in my opinion has had negative in tax on most state that did not from the standpoint of their exchange market in most of those will be federally facilitated exchanges. a virtue of not expanding committee wound up of people eligible for medicaid or the family members of the insured arcade and as a result you seek much higher claims experience morbidity numbers for the standpoint of the exchange. it is very positive to have done the medicaid expansion for the standpoint of helping to hold down the rate increase is an push up the rates inside the exchange by virtue of not also moving to the medicaid expansion simultaneously. >> do you think this process that is not expanded medicaid like my home state of georgia?

>> mr. lewis, one of the things i've seen is a very positive indication as a number of states now moving -- governors moving to which i too address medicaid expansion. there is growing recognition when medicaid was first adopted in 1965 we wound up with at least one state arizona held out for a number of years but finally we have many more states that have not made the medicaid expansion here now. i think as they look and see the effects one of the rates inside the exchange, but also affects noncitizens who would be eligible if medicaid were locked out right now. we need to do some thing about it. >> i know washington has this data exchange. if the supreme court were to fight against the government

would you describe the possible impact of those people living in states with federal chain. >> we had some experience with that. mr. mack dermot will remember this. he was in congress then that in the late 1990s we had health care reform bill passed in 1993 and repealed in 1995 the last health insurance after a three-month preexisting waiting. the net result we effectively have what would be left with the affordable care act is guaranteed issue and you would wind up with the healthy people as states started to rise you couldn't stick with it in the state of washington where we had a comparable situation in the 1990s. the market actually collapse. we lost our individual market that took legislative action to

see it restored as i came into office in 2001. we would see in those 34 states in a position right now to a federally facilitated could be in position to see what happened in the state of washington which is a collapse based of course on the failure of congress to come together for satisfactory resolution and i trust that would be the case. >> again mr. commissioner, thank you for being here. good to see you. thank you for leadership. >> mr. meehan of pennsylvania. >> thank you, mr. chairman. mr. redmer in your testimony made a statement using cost generated because of a 15% increase in morbidity. what is that? >> épée as i'll describe it as the health status of the pool is getting thicker. they are going to be utilizing more for service.

>> i understand that is one of the cost drivers. we are sitting here staring testimony from two different places. they've got 30% increase is in tennessee. mr. chama has talked about extensive increase in texas. i see them in pennsylvania and you say that 10% increase. what is going on. >> thank you for the question. chloe there start differences among the states and the part i tried to point out was who had a very competitive market than the state of washington before the aca cavemen and it's become more competitive with 15% of marketers in the markets. not all states have the benefit of that. >> your starting point the beginning of mine is a different place. cpac exactly.

he went to the process of implementing the affordable care act. where you started made a difference. with a strong history of rave review and by virtue of a competitive market in the states of washington and many others because of the competitive -- you might we don't talk about it was never sold in the state. it was a generalist nation -- generalization that all americans will benefit are the cost will go down and that doesn't seem to be occurring. what is the next. to have it co-pays and about the bulls? >> co-pays ended up both i will be frank or a bit of a challenge. you have been successful limiting the total out-of-pocket expense for individuals. co-pays and deductibles have gone up. >> it winds up how winds up

having the net effect for individuals. if they get really sick they benefit on the total out-of-pocket. if you really absolutely needed we are willing to pay for the co-pays ended up of those before you reach the point with the out-of-pocket expense limit. >> let me close my question with ms. chandler and ms. mcpeak. i made the point of this is a very generalization made that the average american could save $2500 under the plan. if you like your doctor, you'll keep your doctor. we see pennsylvania as an example of the rate increase in western pennsylvania where my colleague is from 30 40% on average. networks are narrowing, not expanding. can you explain to me what is happening in the marketplace in

the aftermath of those promises? are we seeing $2500 savings center people keeping doctors were networks getting narrower and are narrower networks a good thing? >> i think that assertion deserved every pinocchio data received. what you see is an entirely predictable result. community rated plans in most jurisdictions have been the object to severe adverse selection problems and i believe we are beginning to see precisely that with the rate increases we are seeing here. >> ms. mcpeak. >> i certainly don't hear from consumers. i hear quite the opposite from consumers calling my office. what i would suggest about the transitional plan if you like your policy you can keep it calm

in tennessee we allow transitional policies to continue knowing i was going to further segment the market because he wanted to have choices available to tennessee consumers. the problem was the position was decided by a president obama said the rates were filed and approved in our office. the plans were on the federally facilitated exchange rate to be purchased. allowing transitional plans to continue didn't have a significant effect and insurers reluctant to raise their dirty scene. what you see in the marketplace with the deductibles -com,-com ma co-pays and networks are insurers and consumers trying to moderate some claims based rate increases i justified to moderate or a percentage to lower amounts because the choosing policies on the payment on the backend are such limited network said on other provider provider choice before the aca.

>> mr. mcpeak redmer. >> two things. number one, this gives the carrier the ability to attract greater concessions from those providers left in the narrow market and i would speculate at the markets are made broader and have more providers, that will result in higher price increases then we say now. when you talk about the effects on the consumer and i want to throw this on your radar screen because it is a national issue. that is the significant unbridled cost of air transportation, primarily helicopters resulting imbalance to building to the consumers thousands and thousands of dollars and these are folks nodded networks as a significant

national issue. >> what choice you have if you're late on the turnpike? >> you don't. oftentimes the patient who has no choice has no clue that they are going to get a 25 to $45000 bill that is a balanced bill from a helicopter service. >> the time has expired. >> thank you, mr. chairman. thank you to all of our witnesses. mr. chandler, was pleased to do attention to the fact 17% of our gross domestic product is focused on health care and could rise to almost a fourth of our total national economic output. it was certainly a consideration of writing the affordable care act coding despite the fact we devote so many resources to health care that we don't get the best outcomes versus the countries devoting significantly last. of course one of the objectives

and modest improvements was to address the whole problem of soaring cost. one of the major omissions of the affordable care act has said the soaring pharmaceutical costs and a particularly in the last year the cost of -- the soaring cost of cancer drugs has been almost inconceivable to see those facing a diagnosis of death facing not only that but a diagnosis of personal bankruptcy on co-pays for drugs that are costing tens of thousands of dollars over 100000% having the impact of personal bankruptcy but threatening insurers and medicare given our inability to negotiate medicare drug prices. one of the modest steps taken in

the affordable care act was to set up an independent panel given the inability of congress to address the soaring health care costs and said the action taken yesterday we repealed the modest cost containment provision that won't take effect for another nine years and paid for the repeal by limiting the prevention and designed to encourage preventive steps such as treating diabetes preventing diabetes instead of paying for amputations. all of this is done without any alternatives being offered as to how rising health care costs with the address. today we are speculating on an incomplete set of proposed premium increases that will not be finalized for months but some states have the ability to deny or limit in the rate review

process in many states do not. against the speculation, we have a certainty and that is tomorrow at 10:00 or one of the next two days the united states supreme court provides an adverse decision in king against burwell provides the result that chairman ross gunn, chairman bryant, my two texas senators have sought to deny tax credits from families to live in our state, that those folks will see an extraordinary increase in out-of-pocket costs. 6.4 million people living in states refuse to set up insurance marketplaces that the state level will lose their tax credits. that is a cumulative loss of $1.7 billion every month. in texas, that would mean an average 305% premium increase by

800,000 texans in terms of what they're out-of-pocket premium costs are. our concern about what is happening with rising premiums commissioner kreidler is the increase in premiums start with the passage of the affordable care act or do we have some issues concerning rising health care premiums before that ever became law? >> thank you. the issue of rising premiums with us for a long time since i've been serving for 14 plus years now, i can tell you it's a real problem looking better right now with the affordable care act than what we saw. we were seeing people who were sick of buying health insurance. if you try to buy when you're sick there's a very negative impact on the market. now a mandate has had the effect of helping to hold down the rate

increases. we need to do more of that. one of the issues you mentioned was the issue of pharmaceuticals we see a major transition to generics and i'm supportivsupportiv e of the health insurers who want to make sure they go generics first, but they need to go to brandon at the appropriate time. they can't discriminate unfairly against consumers about health insurance. when it comes to the issue of narrow networks, that is not new. that was there before health care reform went into effect. it was something the large employers were instituting in the past. the south insurance plan which we as speculators don't regulate that if they came into the regulated market inside the exchange starting in 2014. if it is done right, that is why if it is done right it can

improve quality and outcomes and lower the cost but you need to make sure you are holding carriers accountable and let them make the determinate roles for themselves. >> thank you very much. >> mr. renacci. >> thank you mr. chairman. it's an honor to serve it to you. i look forward to reading the book and witnesses i appreciate you being here. i was in business for 28 years. before i came here i was in the health care business and health care business in guest premiums to go out. if i ever saw premiums go up more than a percent or 9%, it was a shock. today my district are your 62% increase 48% increase 39% increase, it shocks me when i hear premium costs coming down or new statistics coming down. that is not the real world is telling me when i get in my district to go to these employees. when i go to employers it is

interesting because it's a requirement. i ask every one of them tell me if your health care costs are coming down. i realize people are afraid of putting their hand up. i've only had one person tell me the affordable hair care act is enough. maybe i'm going to the varbusiness is. i go to business after business and talk to employees and i had a similar situation mr. kelley had. i had an individual to local restaurant state to meet congressman, i'm now part of the affordable care act but can you help me because my husband and i work 40 hours a week and we can afford the deductible so they don't have insurance. it is shocking when you hear those stories as well. been in health care moisture and find out what the affordable care act has done. i asked the question has the emergency room visit increase. at the same time we learn about insurance premium increases. i've been hearing without

objection i like to enter the may 5th 2015 "wall street journal" article entitled u.s. emergency room visits quake climbing into the record. the article collects plaintive and the people of insurance they can't find providers or get appointments with providers they can find so they are still going to the emergency room. for the panel i think you would all agree that doesn't greater emergency room use lead to higher costs were lower cost? each one of the panel members. higher costs are lower cost for the emergency room. >> certainly higher. >> i would also say definitely higher. in the state of washington we've seen a 10% reduction in emergency room visits. >> washington must be the only state. >> if you go into an emergency room, but they wind up telling

you is that it is not an emergency situation, but urgent care down the street. it will cost you a lot less. has had a germanic impact. >> i would say higher. >> mr. chandler. >> once you're in the emergency room, there's a wide number of tests performed. insurers are capable of exercising utilization review and as a result the cost could be higher. >> is amazing because i thought the purpose of the aca ,-com-com ma specially subsidized insurance was to reduce emergency room visit. again, that is what i see in ohio. mr. mcpeak, you mentioned changes on networks to limit providers people can see. what is your state experience been? >> we are just now beginning to see them and it now works attached to rates and plans for the 2016 plan year.

as i've mentioned before, that is an attempt by the insurers to moderate the rate increases that have been requested and provide choice to consumers so you could have a skinnier network can potentially reduce zero cost. if you're willing to take a risk you may not have full access to the network to which are accustomed. >> what is the president's promise that you can keep your doctor in tennessee? >> that is about the same for the primacy can keep your policy if you like it. that is not working out well. we are hearing from consumers who have difficulty navigating the federally facilitated marketplace to see where the provider lists are maintained and whether providers are included in the make it into a product that does not have the doctor they like. >> same thing in ohio. this is an important point. having insurance card gives immediate access to care. i think you all agree.

>> i would agree. for economic reasons, accessories and then utilization, certain way. >> thank you, mr. chairman. i yield back. >> mr. carli of new york. >> thank you, mr. chairman. thank you for the boat. i appreciate your kindness in giving it to all of us and we can never say enough about what an honor it is to serve with john lewis in the house of congress and especially what to place in the south an obvious link for and put his life on the line for. the events of last week have left a scar in our nation and no windows of more than john lewis. you're a great man. i am a little bit baffled by what my colleagues think they are going to accomplish it by holding this hearing.

yes the affordable care act has tried numerous tactics to scare people away from the lot that is nothing new. i seem to think if they keep on shouting premium increases obamacare, death panels, people will avoid getting insurance which is somehow a victory for them. that is no victory for anyone. commissioner cries there that is part of the concept of insurance, isn't it? a healthier pool of employees spread so cost of premiums can stay steady. is that not the case? >> definitely the law of large numbers. if you don't get good risk and bad risk and have large pools it is hard to control rays. >> so all of a sudden the average of premium increases will have the effect of scaring people away from the aca insurance markets make it harder to prevent premium

increases. aside from that i don't understand the nostalgia for the way things used to be before the affordable care act was in place when insurance companies could do what they wanted for however much they wanted to charge as if they were never premium increases, never problems with health care in the past. that is not what constituents experienced in new york. constituents in queens in the bronx saw their bills go up every year with no explanation. there were families buying insurance on the individual market or couldn't shop run after getting hit with a double-digit increase because they had an old injury that would get called a preexisting condition and they would be denied new coverage. ..

>> it is in the gaming that was employed in the past. >> is also affordable care act requires 80% of the premiums go directly to better care. if consumers to get a rate increase notice they are left to just a then look to shrug their shoulders. that's just the way it is. that's not the case anymore is it? >> that's correct. we are fortunate because we have a very competitive market we had none that had problems meeting the 80% rule. that wasn't true for many other

states. now because of the federal law they have to meet that standard. standard. >> what can regulators and state like new york or washington do when they see exorbitantly high rates, or the request, what can they do now? >> want is them an opportunity to shop. if they have a carrier before he got a preexisting condition you could move to another insurer because they would want to ensure you because of your pre-existing medical condition. now you have guaranteed issue. you can make choices. you can make decisions as to which glenn how much out of pocket expense, what kind of coverage of do you want, he also want to make sure your doctor and hospital. i will agree this has been one of the challenges making it a lot more transparent so it's easier to identify to hospitals and doctors at any particular carrier's network when you make the decision. but you have those choices you

did before. >> in new york state we have consistently the authority to encourage, those encouraged by the aca to fight premium increases. the state has come to the rescue and to stop the. so mr. chairman, i just want to say i would suggest three out of the four panelists would be opposed to the aca. taking a guess and won't be in favor of it. with that i yield back the balance of my time. >> it was a rhetorical question but i will answer. what are we trying to accomplish? what we're trying to calm which is the work of the subcommittee under the house rules which is to evaluate federal programs. we haven't had a bigger federal program since the passage of the affordable careaffordable care act. there's nobody this nostalgic about the past. the irony is when president obama won his election overwhelming majority of americans agree to do things. agreed health care calls were going up at a rate which is unsustainable and are basically scandalized by not being able to

get access to intracouple based on a preexisting condition. the loss and regret is we are focused in entity is to say we should've focused in on those things, concentrated there, but instead the administration went a different direction. the false claim and the false narrative was it's all going to be great. duty to keep your doctor premiums are going down. it's not is -- that's not as if we are scaring people away from the affordable care act. the affordable care act is gearing people away from the affordable care act. recognize the job from north carolina. >> thank you, mr. chairman. it's somewhat striking to me that there are many insurers out there that appear to have paid out more in claims than they are collecting in premiums. for example, blue cross blue shield of texas has reported a collected 6.1 billion in 2014 but paid out 2.5 billion in

claims. so does anyone on the panel think that is sustainable for an insurer to pay out more in claims than it collects in premiums? kind of the -- >> no, it's not sustainable. and of, and observation is, our blue cross plan has lost money in the last couple of years and we've seen a reduction in their reserves. one of the reasons that they're coming back with a large rate increase obviously is because they have lost money. the gentleman from new york mentioned that if carriers don't have a certain loss ratio they pay rebates back to the consumer. so we got a phenomenon where if you lose money, it stays lost, but you can only make it up incrementally because if you make too much it goes back to

the consumer. we could debate whether that's good or bad but you can only incrementally making losses back. you can make it up in one or two years. >> if you're in an insurer losing money this scenario, and your options are need to raise your rates, racial premiums, just -- raise your premiums, stopped insuring people leave the state. now, this year we all very complete set of numbers because without a year that the program thing in place and insurers have good idea of what they're doing. so what impact on is the review for the upcoming year having on the rates? >> certainly you can see, we've had one carry that actually came

in and is asking for a small reduction in the individual rates and carefirst, our blues plan is asking for 30% rate increase and is anywhere in between. so that's a result of increased cost. it's also a result of though of having a lot of uncertainty in the marketplace. you know with the open enrollment last year you did know who you're going to get and what that experience was going to be. if you go back to my testimony, i speculated that blue cross blue shield our large carrier they saw a phenomenon that because of the disparity between the individual market prices and the small group prices, there were a lot of small employers. thousands in maryland who just threw up their hands they canceled the plans disbanded them, and those folks moved and

migrated to the individual marketplace. i believe that, and this is my speculation, that a lot of those folks were already sector and utilizing care and they were with carefirst. they migrated to carefirst with a lower individual premiums and those that were young and healthy, they were buying based on price and they went to some of the other carriers. so i think they were victims of adverse selection when thousands of these small employers just disbanded their plans. >> representative, could i speed she was raising her head first. >> thank you. figure of data has been extreme helpful from the 2014 calendar you do as i mentioned our loss ratios were extremely high for the year. one of the functional challenges though is that because of the time schedule arranged by hhs, we were required insurers to

file their 2016 rates before they very clear picture of their enrollees for 2015. because of the expanded open enrollment period and a 90 day grace period to pay premiums, insurers were filing rates for 2016 without knowing who they had for 2015. we ought an effective rate review date. we take a socially. we are asking for supplemental information on a month by month basis as real data comes in but it's still very very new and we haven't actually seen a large uptick in a positive trend on the loss ratio yet. >> mr. chairman does mr. channel have a 32nd response? >> he does. >> thank you. by. >> thank you. i which is in the following. don't trust my numbers. trust the obama administration's numbers at least on this. on their attack to their shows a 14% increase in claims experience projected for 2016.

yes, of course insurance commissioners kennedy rates and if insurers are being greedy they can strike that down but if they strike down rates that are, in fact, reasonable due to claims increases, i'd expect easy exit from the market. it is not sustainable to an insurer to keep losing money. >> thank you, mr. chairman. >> mr. smith of missouri. >> thank you, mr. chairman. i want to thank the witnesses for being here. the president campaigned aggressively on the promise to lower out of pocket expenses for families by roughly $2500 a year. however, insurers that cover my constituents just in the last two years we have seen an increase by one insurance provider of 22.9% in 2014 issue the requested an additional 22.7% increase because of the one size fits all approach under obamacare of all the different

burdens and regulations, rules, everything that is coming into place. in my opinion this administration cannot continue to believe that obamacare will reduce costs for families and individuals throughout my district. that's not what i'm hearing back home, not what i do with israel the. the families my district need a health care system with more choice more access and that is more affordable. but what i see in the to be read on a daily basis instead more choices we are getting fewer. the burden on insurers is so high that they are consolidating consolidating. providers are also consolidating for the same reason. the extra costs and bureaucracy caused by the health care system from this administration has created a patty supreme court decision makes both another broken promise by the president and the congressional democrats to my constituents who may be required to get health care may lose their subsidy. my question, mr. chandler, why do you think these premiums are

increasing across the country and in my district? >> i think the reason, first of all, is the continued escalation of health care costs of underlying health care costs, and the affordable care act did very little, yes, it did of few things that it did very little to address about. and in some sense by providing insurance without effective utilization review to a larger number of people in a yet more strain on the system. the second reason is the adverse selection story which is perfectly foreseeable, where you have inadequate controls built into the law. the people who are going to purchase insurance are, as has been experienced, disproportionately bill and that is one of the reasons that you see premium increases going up -- bill. the phaseout of subsidies is a factor but it is not the primary factor in my opinion. >> so do you think that with the

increase in all the premiums i gave example 22.9% last year and my district and then an additional 22.7 requested do you see that my constituents are getting increase in benefits, or is it the same care or less? >> i am not aware that insurers are providing additional benefits pursuant to these policies. >> okay. so they are just getting the same kind of care for more expensive, probably. mr. kreidler, my concern is you made a statement earlier that you felt like things were looking a little bit better when it comes to premiums and decades. how do you feel like it's looking at individuals who are 27 years old? >> thank you for the question. it does come i think from the standpoint of somebody who is a

younger, they are not immortal. they run the risks and by virtue of having insurance is a lot better for them. if they are under age 26 frequently they can stay on their parents policy. at the same time you know if you look at the health care spending as a foster going to actually reduce it in this country, i think that would be unrealistic both because of an aging population but also because of changes in health care delivery. those costs are going to go up. will we have to do is bend the cost curve do so doesn't go up as rapidly as it has. >> that's my concern is the cost per. i and the second youngest member of congress when i look a 27 year old come and according to the manhattan institute that their premiums have increased since the obamacare has came in by 97% as the some managing the cosgriff for the younger americans. vacuum he says about they are not going to purchase insurance

if they're going to be 97% increase prior to the ac. what's your thoughts on that? doesn't look like it is looking better to me as a young american. >> i'm not for me with any numbers like that from the standpoint speed is what numbers are you for me with? >> i'm not saying it's not true. i'm saying i am not familiar. might actuaries are not familiar with seeing those numbers in my office. >> do you have any numbers on individuals in their late 20s other premium increases speak with yes, we would come and do spent do you know them off and? >> no, i don't. >> i would be interested to see which are numbers are. >> sure. it's clear i think the real challenges of the real challenges we face right now is bend the cost curve down as a nation. we have to do it fairly and equitably but leaving 27 year old without health insurance is going to be a problem. the test is going to be making sure we be making sure we're bend the cost curve down to the getting adequate health insurance so that they don't

cost impact the rest of us when bad things happen. >> i would totally agree but i think the cost curve causes us to lose more people that would have health insurance. mr. chairman, thank you for time. >> dr. mcdermott. >> thank you, mr. chairman. i appreciate you letting me be an adjunct member to the committee. there's a recent article in "the wall street journal" talking about the conglomeration or the merging of health care providers, insurance companies. and they are talking about what's happening in a variety of markets around the united states. and talking about antitrust questions come and the whole question, our fraud laws are based up to this point on a fee for service system. the stark law and other aspects of it are really designed to do with the fee-for-service system.

now we have managed care in all these things going on. i would like to talk about where you think health care is going in terms of the mergers in these estates where you're going to have if the free enterprise system is based on competition it means you've got to have more than one, or maybe more than to do anything that could be called we'll competition. i mean, if it's just to guerrillas dividing up the pot in a state of whatever, it becomes not very competitive. and so i'm interested in hearing your anticipation of what you think this king of affordable care act is going to go in the future. so anybody can pile it on. >> i think your instincts are correct. i think mergers and a reduction

of the number of carriers in and of itself is bad for the consumer and it is probably bad for provided as well as the larger entities can extract greater concessions from the providers. another observation though in addition to that is the art number of provisions of the affordable care act -- encouraging and resulting in these hospital owned provider organizations where physicians are becoming employed by hospitals. and i don't know about your states but i can tell you in maryland that market has come and gone a couple of times in the last 30 years. at least in maryland, these hospitals really haven't shown a lot of talent in running efficiently and cost effectively physician practices. so i'm concerned that's going to lead to greater inefficiency and greater cost in the long term.

>> can i just clarify that? what do the things that happens is if you buy a doctor's practice ntcc patient into practice and now you're seeing them in the hospital, the hospital charges a facility of some sort which jacks up the price, people are very surprised that i got over your for $30 i'm not getting it for $75 having it done, the same thing stood there is some of that, but we are also seeing hospital and physician practices that are outside of the hospital setting. sometimes you just just to see the changing of the sign, and there are community-based and outside of the hospital but they are not necessarily more efficient nor cost-effective than an individual practice. >> thank you. i would agree veterans things are correct and that we're going

to see continued consolidation on behalf of health insurers and providers. in a certain sense while you all need to be concerned from antitrust issues, it makes at a distance from the injured standpoint because they are looking to consolidate and gain efficiency and administration and gain provider network. on the consumer side wind aca limits the amount of areas upon which an insurer can compete because ventures have to offer products on the health benefits platform, have to offer products on the tears that certain actuarial value percentages and a bounce, the consumers appreciate that because its transparency and it's easy to care policy that insures to have much to compete on at that point except for provider networks, administrative efficiencies and anything else that they can distortion themselves. they can no longer designate products and compete on that

basis. the aca in itself limit some of those areas of competition other than going to the consolidations we are witnessing. >> mr. mcdermott, i do know we can attribute the consolidation that we're seeing right now on the health care environment whether it is insurers or provided to the affordable care act but i think particularly in the case of the providers, that trend was well underway before the affordable care act. my concern is they are now starting to see with the insurers which may be more of a reaction provided to you. hospitals providing outpatient clinics, and as you point out they can charge higher rates, means physicians when i took office in year 2001, most of them were not employees. magazine a very large percentage of physicians who are employees because their clinics that they either sold at a clinic to the hospital or they were acquired by the hospital and now salaried. i worry about that. i also worry about what happens

with consolidation among insurers. i think that something as regulators will have a mutual concern about make sure we maintain the viability of the health insurance market whether it's her fighters or the insurers of themselves. >> -- providers. >> mr. chairman, i want to thank you for making my home state in opening comments because we do face some unique challenges in south dakota with one of our largest insurance companies. recently announcing some of the increases to premiums up to 51% with an average of about 42%. that is a lot for anyone to try to do with in one calendar year, much less try to continue to ensure the the that come and actually making the best decisions. my question wanted to specifically was if the affordable care act is requiring individuals and families to purchase coverage that they don't need. and this is one of the challenges that we've seen and

possibly has driven up costs in line with that as well. doctor chandler, i know you before anything described why premiums are increasing. could you just restate from if you believe obama to get to address of care costs and what it was especially considering some the testament of mr. kreidler earlier. i want to have it clarified what obamacare was meant to do to health care costs. what was the intention of the act and how would this impact health care costs for america's? >> i would say the problem is that obamacare or the affordable care act conceptualize wrongly the problem as one would in the insurance industry, rather than a problem primarily located within health care itself as fed back to buy insurance. so while it attempted to deal with insurance, i put unsuccessfully by and large,

really filled with one exception i can talk about, to address -- failed -- the major problem which is cost increases for medicine, more procedures, more costly procedures. as mentioned higher pharmaceutical drug prices. and so the one exception i would say is the creation of accountable care organizations which may or may not reduce costs. >> but by and large to act as graduate increased the burden on americans can you believe, since it has been enacted? >> i do. >> ms. mcpeak, you say obamacare changes requirements for health care plans. can you briefly describe some of those changes? >> i alluded to those a moment ago. the essential health benefits platform i think is required citizens to purchase coverage is that they may not necessarily need and wounded choose to pursue on over what we have legal in tennessee as i am a 27 year old male i year old male

can't want maternity coverage i do have to have a plan that includes something like that. so i do think the inability to tailor products to the needs of individual consumers has been affected by the affordable care act and insurers candelabra tailor those plans to the distinct segment of the populationspopulationspopulations they are going to serve. >> i bought a policy with fewer benefits that would cost less? >> not unless it was compliant with essential health benefits. you can certainly modify your cost-sharing annual deductible amount you can limit the providers you would agree to see under the plan but the basic benefit has to be standardized specs of the federal government is requiring my constituents divide benefits that they may or may not want at a higher cost to them speak what we do hear that from our own citizens in tennessee, yes. >> i just want to close with and without human individuals and families across my state and across the country. i would be remiss if i didn't mention that rate hikes are small businesses as well.

i'm talking about the small group market. balaklava to accept the traditional small group market lumping midsize with small businesses. this definition change would have a huge impact. in fact, studies from oliver wyman and agency for health care research and quality estimates 20,000 south dakota employees and their dependents will receive cancellation notices. most was an average premium increase of 18%. for a bomb administration bureaucrats in washington, 22000 south dakota is are not just points on a graph. there are people that will be impacted. it is the realize and with that trend to a wanted to draw like like that and to thank you for holding this hearing. i yield back. >> ms. bullock from tennessee. >> thank you of allowing me to be here as a guest and have an opportunity to ask a question. i thank you for bringing this very critical topic before the public so that those that are listening to this know that we do care about either the lack of care or the cost for them to get

care. i also want to say mr. lewis you're absolutely a giant in the civil rights movement and it is such an honor to serve with you engagingly personal. i will teach you my book so you can sign for me as well. ms. mcpeak, i want to thank you again for being here. you have in your testimony that there is a consistent uncertainty on the part of the obama administration in the aca's implementation. i can say that we've seen so many changes that the cbo has now said they are no longer able to even score the changes that have taken place. but most recently there was a change that was released in the guidance of the market withdrawal. according to the guidance of an insurance company chooses to leave an insurance arrow to change the type of product that they're offering for instance, a ppo to in bpo company company is

excluded from operating in the market for five years. the guide was apparently issued after all the plans had filed of the raids with the department of insurance commenting it was too late for any of these carriers to revise any of those filings in response to what this guidance was. can you elaborate why this guidance would potentially disrupt the market in tennessee? >> certainly. i do have a very specific information about the guidance in my written test and as well because it was a big challenge for us in tennessee. as you mentioned the carriers had already filed underserved areas and the rates for 2016 when they got into this issue. with a different service areas in tennessee and the guidance suggested that leaving one service area was going to be considered a market withdrawal and that kerry would be prohibited for five years from selling insurance in the state of tennessee. also a change in the plan. somebody from a ppo to a ppo plan was considered a market

withdrawal. injures while the risk of dignity i didn't that this interpretation was outstanding. then we received the guidance from hhs and disregard. for tennessee that means we would have lost five of our carriers for 2016 because of this guidance. we were very, very concerned. we had a lot of conversations with hhs and violent hhs agreed that the to implement this guidance for 2017 and the other was to be an issue going forward. >> could i further respond to that? is a very important development that you've highlighted representative block. i would urge the carcass covers to take a look at two things. first, is that guidance actually within the scope of the affordable care act? this is traditionally an area of state regulation and i really wonder what provision in the aca authorizes it to the second thing i would look at this whether the mccarran-ferguson act actually prohibits this sort

of federal interference in an era of traditional state regulation. so even putting the wisdom of the provision of side i actually think there's a serious question that ought to be looked into and for which for once they would be standing about about the legality of this proposed, this guidance. >> i had a very brief period of time. mr. redmer, did you want to reply to this as well? no. mr. kreidler? >> i actually agree. i think as regulars we found it very difficult action on the partpart of hhs and how they apply to do it was problematic. the real question is how is this one where hhs sees the problem, the problem would be taken with a new plan to you can totally avoid showing the rates is going up. i think almost a pompous consorting the public wants to

know that information. they can't use it as a way of obfuscating significantly increase the. make sure it's a transparent if the only tool that is available to hhs is a draconian steps they've taken, it is one where maybe this is where you could get unanimity to amend the affordable care act in congress so that they have a tool that is much more sensitive rather than saying you're out of business for five years which is the only option i believe that they have. it was inappropriate to try to do it the way they were doing it. >> thank you. mr. chairman, i yield back. >> mr. smith of nebraska. >> thank you, mr. chairman. thank you for allowing me to join the committee today. i appreciate our panel today. i wish we had more time because i think we are covering some very important topics, and i'm concerned about the consumer operated and oriented plans. it may be no surprise to you from tennessee being from nebraska we have had some

issues. to date hhs has awarded a reported $2 billion in federal loans to establish these plans to divest hhs and questions about what the answers even still. company opportunity in nebraska and iowa, served over 100,000 individuals. and he was seized by the state of iowa after only one year and this has been liquidated as you know. people who are these plans have been less than left confused understand and frustrated as well. and once again being forced to look for other insurance. so even lost the blood they were told that the they were told to keep and so that's why they went to go opportunity and yet lost that as well. -- co-opportunity. it serves some folks. it's my understanding there have been some troubling signs and actually wrote was suspended companies that acted? that was suspended when? >> that was suspended in the

middle of january of this year. >> okay. i appreciate your work on the issue and i know that things are difficult, thanks to manage and to deal with. now, my understand was that the state of iowa wanted to suspend enrollment but we are told they cannot suspend and were forced to still offer i qualified, so called qualified health plan. can you walk me through the process of tennessee engaged in to be able to suspend the enron? >> well, certainly. thank you for the question. it was a very difficult time for us because we are first approached by cambridge health alliance that had been witnessing their enrollment increased substantial during the opening military. and, of course, middle of january was still to the open enrollment period. we did a quick examination. we shared the concern. we considered the co-op to be a financial capacity.

a few triggers in our state statute for hazardous financial condition has been met. we notified hhs. and i will tell you, our interaction was not as efficient as we told at that point with hhs. they had a differing opinion about the financial stability of the company. i took a very conservative approach i think because as iowa and nebraska experience that something occurred with the co-op, it would be my responsibility to take receivership action or the quotation or seizure of the company. we were not comfortable with the level of involvement. there was a tremendous amount of back and forth. eventually it did take about a weeks time for hhs to agree to suspend enrollment. but even that small small victory which again is a mention in my comments we think was the right decision for tennessee has been problematic for our tennessee residents. our residents that had a plan with community health alliance had extreme difficulty when hhs

froze the moment and suspended them from the exchange. there was no ability to add a child i was born or adopted or any of the qualifying event because in the might of a federal facilitated marketplace the plant ceased to exist at all of those changes had to be performed manually and it is not gone smoothly. >> very interesting. i'm curious were you aware of iowa's request to suspend enrollment? >> i was not aware of the request before the seizure occurred. i do that it was possible to stop enrollment and to essentially turn off the exchange in raleigh's but it was in my opinion and iowa and nebraska old after the seizure was ordered. >> do you have a pretty good feeling about where the community health alliance stands today? >> at our request community health alliance has a drawdown the full amount of startup loans from the federal government. we have a financial exam underway so we know exactly

where they stand. we have provided some helpful come with the helpful information about administrative expenses to the company. the rate request for 2016 that they have filed is over 32% increase. i don't know that's going to be sufficient to make the company sustainable and remove the freeze for the upcoming year. >> and to the best of their knowledge is it true that only one of the 22 plans nationwide did not have an operating loss for 2014? >> i did see a report that was consistent with that figure. >> would that maybe lead you to some concerns that may maybe the loans, calling them lonesome would be the most accurate description? >> i would agree, yes. >> thank you. i yield back. >> thank you. i've got just a question for each of you and mr. redmer, i will start with you because i know you have a hard stop at 12 noon. to go ahead. you have our permission to head

out when you need to have had. but in your written testimony one of the things you said was that there is an ensure industry predicting that apple is going to be actually older next year. could you speak to that? it's not a term of art but that seems that's a trend that is toxic, isn't it? what's the ratification? >> that's true and that will continue to drive up cost. so it's something we're concerned about. again, there's still a lot of uncertainty as to what the effect of increased penalty will be and whether that's going to drive any younger folks into the marketplace. or the flipside is the young folks will sit tight and remain uninsured, paid the penalty economic those folks that migrate into the fold will be those that were uninsured and are now sick which will probably name even a higher average age and increased morbidity.

>> so it's a ratification of adverse selection? >> correct. essentially. >> ms. mcpeak, could you give us insight into long-term trends using intimacy as relates to other things, cadillac tax and so forth? forthbut how is this playing out for you? >> in tennessee we are having a tremendous amount of feedback from large employers that are concerned about being assess what is been described as a catholic tax for having a high value health insurance plan available to their employees and executives to of particular concern, and i share this concern when i hear from the applause, i know representative black is bob herbert the very same thing the cost of on site clinics from employers is being included in the value in the cost of that health plan the high value health plan for purposes of tackling the cadillac tax and employers and that is a decision or a guidance

that is underway for the internal revenue service. employers instead of paying the cadillac tax are instead choosing to close those on site clinics. it's troubling because reducing health care costs and certainly convenience to the employees and potentially a lack of the reduced amount of a co-pay or cost-sharing for attending seeking service for an on site clinics are missing to benefit all of us and reducing costs and providing care. so including the cost of the clinic as a part of the high valley health plan for purposes of cadillac tax is problematic and winning a great deal about that in tennessee right now. >> mr. kreidler, i realized i had the benefit of having john lewis' book many copies around the come and you don't. but on page 178 of the book mr. lewis points out that one of his phrases put all your cards on the table and put them face up. when i read that that i thought bob, i've heard them say that.

i was at a meeting in the back into library behind us and had the commission of the irs at the time we've had several but one of the commissioners of the iris at the time come and mr. lewis, then chairman of this oversight subcommittee said put all your cards on the table and put them face up. just saying it would've been better if they had done that. they didn't but my cards a subpar this. i participate in the white house health care summit. this is when the affordable care act was being debated. it was the event at the blair house. you may recall it. it was an all day long sort of thing. the president was there and members of the congress and so forth. want to the point that i made to the president is contrary to the argument that you're making. and i want to get just a little bit of a better sense from you about while you're making the argument. and it has to do with medicaid expansion. i don't recall sort of chapter and verse about his interaction

but one of the points i made at the summit was loaded, isn't medicaid expansion simply an expansion of welfare? and isn't medicaid a terribly broken system? and if you have a terribly broken system why would you make that a foundation upon which you build a whole health care reform movement? a couple of minutes ago you made to you said at one of the reasons it's working in washington state is because of medicaid expansion. that i think is a problem. i think it's a problem long-term. i am from illinois. our medicaid system is really a mess. you've got huge access issues on the one point, and you've got, okay, medicaid is basically cost shifted in a lot of ways. i know it is slipped but it is cost shifted onto the federal taxpayers. isn't there a little bit of a

cautionary tale in just medicare expansion as being part of this remedy? and isn't that almost a structural weakness to the affordable care act? >> tricky one of the things i found somewhat unique that we were witnessing because we expanded the medicaid program is you are starting to drive medicaid program closer to look like what we see in the commercial market. and that means both on the issues related to the networks that they have which tended to be very different than what we saw in the commercial market. and certainly as we have all heard it here in elected positions, if you look at the kind of rates that medicaid offers to providers being considerably lower than what it is in the commercial market. we are starting to see the driven together. i think it inevitably has to. you cannot have the medicaid market synthetically underpricing what it offers to

providers, and not see that in effect almost be one with the commercial market is having to subsidize the medicaid market. public programs and the commercial market have to operate on a level playing field. we are seeing, started see that driven together in ways that we had that before. i believe the real driver here is expansion of the medicaid program. it has done it before this time. we had very limited interaction with the medicaid program operated by the state. now we have routine meetings talking about networks talking about rates and issues like that. so i think it's having a beneficial effect the kind of goes outside of just what expansion itself would have been maybe twofold the type of discussion that is not being -- make sure more people are insured and you don't have this huge problem of uncompensated care happening which obviously gets shifted them to other players. >> any insight you have on your

experience come if you or your staff would be willing to share that with us i think it would be helpful. so thank you. mr. chandler, let's close that wiki. i thought your insight as it relates, the weapon down and may not when you're talking was the affordable care act deals with a symptom but not the cost. symptomatically health insurance rates are spiraling but it doesn't deal with health care costs. what insight do you have moving forward come if you could get a reset button how would you focus in? ewart may rhetorical answer to mr. crowley when he was assigned what are we doing and are we nostalgic about the past? no. there's nobody that is defending the pass. there's nobody that is celebrating about various structural weaknesses and so forth. what you get an opportunity to

get a reset button focus and is a how do you actually do this where would you direct the congress as it relates to dealing with health care costs? which as a foundational point, you get that under control you're well on your way to an actual remedy. >> let me talk about two points one big, let's go. at a point is that maybe some temptation on the part of congregation to regulate it more push it down push again. that's unlikely to be effective. that is adding additional complexity to the system which we already seeing is going to drive costs up. is going to lead to more gaming behavior and more diversion of resources into how to beat the federal government. but we haven't health care is a unique situation in which the consumer is basically taken out of the equation and instead health care is mediated by insurers who may or may not have the best interests of the

patient at heart and who may not have an interest in trying to figure out creative ways using technology and other means to drive down health care costs. so one of the things i would urge you to look at, and i know this is -- i believe you ought to look more at consumer driven health care so that we get probably the most powerful force that you have which is individual greed, and individual desire to take care of oneself and one's family, driving down health care costs. let me give you my second little point. you may have an opportunity for better or for worse, to renegotiate the affordable care act in the coming weeks. i would urge both sides of the aisle to take a serious look at that employer mandate. what it is doing is it is keeping people out of the individual exchanges keeping

healthy people out of the individual exchanges. if you want to stabilize them if you believe that it -- if you happen to believe in the principles of the affordable care act, those are the very people that you want in those individual exchanges so that we do not see an adverse selection death spiral. if you also believe in free market principles, you ought to think what is it that we should be forcing employers to divert resources into the provision of health care rather come in some instances into the provision of things that employees may value more like a higher paycheck with which to pay rent and buy fresh food and go to parks and engage in other activities that may be more likely to improve their health. and so it strikes me that it is an opportunity, and i grant you this is not the biggest issue on earth but there's an opportunity to do some good in an area which

if people really thought into the blind and ideology off there's some room for gain. >> mr. chandler, mr. kreidler ms. mcpeak and mr. redmer we are deeply grateful for your time and your attention today. i know i speak for every member here. we value your insight and your willingness to share it with us. and lo and behold let the record reflect that the united states congress had a hearing on the affordable care act also known as obamacare but actually happened to shed more light than heat, thanks be to god. so with that the meeting is adjourned. [inaudible conversations]

[inaudible conversations] [inaudible conversations] >> today's senate session is about to start. no legislative business today. senators yesterday finished up work on to trade bills and customs enforcement. after today they are scheduled

to begin the july 4 recess returning tuesday july 7. over in the house they were to on the trade adjustment bill which provides aid and assistance to workers in the commission affected by trade deals are cut was passed by the senate yesterday. also spending for the interior department for fiscal year 2016. live coverage of the house is on c-span, and now to the senate here on c-span2. the chaplain: let us pray. spirit of god, from generation to generation, people of faith speak of your greatness. thank you for the strength you give to all who love you and for the blessings you bestow upon our nation. today, give our lawmakers the contentment that comes from

knowing and serving you. cheer their hearts with your peace, as you bring them into a closer relationship with you. shield this land we love against all enemies foreign and domestic as you teach us to dwell in your peace. lord make us to know a constancy of your presence, to be aware of the certainty of your judgment and to give primacy to prayer in these challenging times. we pray in your sacred name. amen. the president pro tempore: please join me in reciting the pledge of allegiance

to our flag. i pledge allegiance to the flag of the united states of america and to the republic for which it stands, one nation under god indivisible, with liberty and justice for all. the presiding officer: the democratic leader. mr. reid: in less than 18 months americans all over the country will cast their ballots in the 2016 elections. this exercise fulfills one of the most basic premises of a constitutional democracy that all citizens have the right to vote regardless of race, gender, or social status. this right to vote is a guarantee that each vote counts equally. it's the foundation of our form of government. it ensures that as this country

changes and elected officials who represent its citizens will also reflect those changes. an electorate should be able to elect those who represent them, their thoughts and ideals. yet there is an ongoing effort all over america to obstruct the work of perfecting our union by hindering progress where it is needed the most. we see this in the debate about whether the confederate flag, the symbol of bigotry and racism still has a place in public lands. there should be no debate. the answer to this question is no and that matter should have been settled long ago. it wasn't and it took the death of nine innocent people perhaps to move this issue forward. we see this reflected in a debate about whether gay people have the right to marry. after all that's gone on there should be no debate in this regard. the answer to this question is, yes, and the matter should have been settled long ago. we see this reflected in the

insidious fight to keep certain citizens from exercising their constitutional right to vote by instituting voter i.d. laws. there should be no debate. the answer to this question is no poll tax or any sort of in a niewfer designed -- man maneuver should be in place at any time. that matter had been should have been set in place long ago. mr. president, the fight also is not new. it is deeply rooted in our nation's history. i finished many years or so ago now the book "freedom summer" about these courageous, brilliant young men and women and went in mississippi and spent one summer. it pointed out how people in mississippi at that time would do anything they could to prevent an african-american from voting. that's wrong. the constitution grants women and citizens all races the

rights to vote, have long been efforts to undermine that right. we see it playing out in state capitals across the country. districts are being gerrymandered to ensure minority votes have the least impact. we see it playing out in courtrooms where the voting rights act has been under attack. congress passed the voting rights act 50 years -- hard to believe but 50 years ago. historically it is one of the country's most important laws, or was an important law. it aimed to clear the path at the ballot box for all citizens that choose to vote. but two years ago the supreme court in one of their questionable decisions struck down a crucial section of the voting rights act in a 5-4 decision in the case of shelby county vs. holder. as a result of that court's decision, it is now easier for states to enact laws that make it harder for citizens to vote. and they've taken that way past

where they should. the voter i.d., shortening the time for early voting doing so many different things to prevent people from voting, it's hard to believe there would be efforts made to stop people from voting. the states where we have same-day registration, i am not aware of a single case, not a single case of any type of fraud. the voter turnout where we have same-day registration is tremendous. in the presiding officer's state and my state there's been efforts made over the years to make sure that 30 days before an election either a primary or general, no more registration. how ridiculous. i personally have tried to get that changed for decades but to no luck. no luck. the county clerks from the 15

rural counties have enough juice in the state legislature to prevent that from happening. and it's too bad. why in the world should we stop registration a month before an election? election day is when people are so excited about voting. so i'm really very disappointed in what has happened in my own state regarding keeping people from voting. the voting rights act was very, very important. but now it's harder and harder for people to vote, and there's little question that republican-controlled state legislatures are taking advantage of this decision. i repeat, in states all across this country republican-rolled state legislatures have passed burdensome voter i.d. laws that target minority voters especially. college students especially, and

many other groups, prevent them from voting. in ohio, a state that has the longest voting lines in the nation even longer than the question florida election, the republican legislature scaled back early voting hours in an effort to keep people from voting. the legislation in north carolina eliminated same-day registration when it worked so well in the turnout and helped significantly. how can we work to form a more perfect union when some states actively work to prevent our fellow citizens from voting? we have a moral obligation to protect the right to vote for every american citizen. our country is stronger when every eligible voter participates. the dean of the senate, senator leahy, introduced robust legislation to repair the damage from the supreme court shelby county decision. i'm happy to support that election -- i mean i'm sorry i'm happy to support the efforts made by the senior senator from vermont. his bill would restore the heart of the voting rights act.

it would create a new nationwide coverage formula that applies to any state with repeated voting rights violations in the last 25 years. it would also establish a targeted process for reviewing voting charges and also any changes these jurisdictions would make all around the country and have a record of discrimination against voters. this bill requires reasonable public notice for voting changes and allows the attorney general to request federal observers to present in places where a serious threat to racial discrimination may occur. we must do everything we can to restore and reestablish and defend the voting rights act. congress must act to protect one of the most important legislative accomplishments of the civil rights era and we should ensure that every american has equal access to the ballot. it's the right thing to do. as dr. king said many years ago there comes a time when one must take a position that is neither safe nor polite or politic or

popular but he must take it because his conscience tells him it is right. mr. president, to push forward under the words of dr. king is so important. let's do everything we can to have people vote. let's stand together on increasing not diminishing one's ability to vote. why? because it's the right thing to do. mr. president, i note the absence of a quorum. the presiding officer: the clerk will call the roll. quorum call: