however since this report analyzes data collected prior to the implementation of the aca insurance exchanges, it does not shed light on whether these changes have affected market concentration. we will be discussing a report that is a continuation of the gao fake shopper investigation in which gao used fake identities and documents to attempt to enroll in college for the health insurance marketplaces and medicaid. let me start by saying i will continue to be critical of the way gao carried out this investigation. it's inconceivable anyone would be skilled enough for motivated enough to try to fraudulently gain health insurance coverage this week, particularly since there's no possible scenario which an individual can financially gain from gaming the system. even if someone were to obtain of insurance with fraudulent information, they would still

need to pay premiums and any other out of pocket costs associated with a plan to get medical services. nevertheless, for the third year in a row gao continues with this farce. they created false identities and attempted to enroll in coverage including that the system remains vulnerable to fraud. republicans have translated this conclusion can mean the visit of fraudulent enrollment is rampant in the marketplace. i think to use this deeply flawed gao report to try to save people can get so-called free health insurance is utterly we just feel it's. -- utterly ridiculous. this report failed to answer to the important questions. is this a real problem? if it is how can we fix it? these are questions democrats are interested in answering. yet once again geo has not prided cms with information in the fake identities it created. this could help the agency learn from gao's work and fix potential vulnerability in the system. democrats care about program

integrity and oversight but once again i suspect this hearing is not about oversight but about headlines. as i've said it seems entirely unrealistic some of the most vulnerable individuals would have the desired time, money and expertise to fraudulently gain coverage the way gao get in the study. ngla goes like the recommendation is very disappointing. we ended ministers rely on gao for unbiased reports and recommendations and these fake shoppers provide me the. let me talk about the success of the aca because republicans would make you think the health care system was better off before the aca. we can't forget that thanks to the aca the uninsured rate is at all time low, 20 million people more now have health coverage and that's what you are satisfied with their coverage. kids can stay on the pair split up to 26 and there are no lifetime or annual limits on coverage. since the enactment of the aca

the solvency of medicare trust fund has been extended for 13 years. in addition i miss her hospital bed missions in medicare have fallen for the first time on record resulting in 100,000 fewer regulations in 2015 alone. the marketplace of our new. the aca is consumer protections or news as with almost every new law they would be nicer changes and adjustments but what's different about this law is we've not been able to make those changes. instead of working together to

make sure the law works for everyone by colleagues on the other side of the have tried repeal this law more than 60 times and we have met resistance at every turn. there are ways we can improve upon the aca's successes. expand access to affordable coverage and reduce the number of uninsured. unfortunately, no one on the republican side wants to improve anything. but here's my colleagues on the other side is negatively. my colleague from tennessee who i'd love us to talk about 10 care. i don't even know, i don't think exist anymore. of it does it's not what it was. this is what we get. we just get the constant hearings, after say a thing is to overcome everything is fake whenever we have any suggestion from, i think the other side of the band whatever has been proposed that would've we tried to do to change the system and make a better which to has been successful. needs to be repealed, thrown out without any suggestion of any alternative that is meaningful. so obvious i'm not happy with this hearing today, mr. chairman, but nonetheless we will continue. >> the chair thanks the gentleman for his opening statement as usual all the members written opening statements will be made a part of the record. at this point i'll introduce our panel. we have one panel and i'll introduce them in the order their presentation. first mr. andy slavitt, acting administrator of the center for medicare and medicaid services,

cms. ms. gloria jarman, deputy inspector general for audit services and the office of audit services within the office of inspector general, u.s. department of health and human services. and mr. seto bagdoyan, director of the forensic audit and investigative service for the u.s. government accountability office. thank you for coming today. we look forward to your testimony, your written testimony will be made a part of the record. you will each be recognized for five minutes for a summary. you are aware that the committee is holding an investigative hearing, and when doing so has had the practice of taking testimony under oath. do you have any objection to testifying under oath? responses are no. the chair then advises you that under the rules of the house and

the rules of the committee, you are entitled to be advised by counsel. do you desire to be advised by counsel during your testimony today? the response is no. in that case if he would please rise and raise your right hand, i will swear you can. [witnesses were sworn in] >> the response is i do. you are now under oath, and subject to the penalties set forth in title 18, section 1001 of the united states code. you may now give a five minute summary of the written statement. the chair recognizes mr. slavitt for five minutes. >> chairman pitts and murphy, ranking members and members of the subcommittee's, thank you for the invitation to this

hearing to discuss the progress we've made as a country under the affordable care act, as well as key priorities for improvement. with the enactment of the law we've taken a significant step together as a nation to provide for the first time access to quality care to all americans, regardless of their health or financial status your for millions of americans this represents the largest shift in our health care system works since the creation of medicare more than 50 years ago. as you all know well, medicare, which is lifted millions of seniors out of poverty, was launched amidst great uncertainty. it has succeeded by continually evolving to reflect the needs of our seniors, adjusting to cover prescription drugs, new modes of treatment and payment which support high quality care delivery. i continue to appreciate congress' leadership on medicare's latest evolution, and

hope we can continue to work together to fulfill your vision of a payment program that is focused on affordable high quality patient care. undertaking fundamental change is really easy. from the outset we knew like medicare the implementation of affordable care act would be a multi-year process. as look to the fourth open enrollment we are very proud of what we've accomplished so far. more than 20 million people now have coverage because of the law. at 8.6%, the uninsured rate for americans is the lowest on record. let me turn to our priorities. first, cms is learning from the early years of implementation using data and feedback to refine our policies to build strong, sustainable marketplace. the recommendations and input of the gao and oig together conducted over 50 aca audits have been especially valuable in

our efforts to strengthen our processes and controls. in this vein we've made improvements to the marketplace so that it continues to function properly, predictably and securely. this has included changes to risk sharing mechanisms, program integrity, and eligibility rules. we are targeting bad actors were using the marketplace inappropriately, and we significantly increased compliance with the documentation requirement. our mantra is to continually learn and adjust. second, we stand ready to work with states to expand medicaid eligibility and finish the job of covering all americans. expanding medicaid not only helps low income people gain access to care that else reduce market place premiums for middle income families and data shows market place premiums are about 7% lower in states that expand medicaid. third, we know the costs are a

critical consideration both for purchasing coverage and for taxpayers. the good news for the vast majority of americans is that the trend for offer support protections to keep coverage affordable. even if dreams were to rise substantially next year. the vast majority of federal marketplace consumers will still be able to choose the playfulness and $75 per month period and the good news for taxpayers is that we've achieved these historic coverage gains at a 25% lower cost than the cbo originally projected. and this is also benefited newly covered americans. going into 2017, independent experts calculate that marketplace premiums are currently 12-20% lower than the initial predictions. there's no question that as a country where people are paying less, getting more calm and with greater consumer protections than before the aca. of course, any conversation on the cost of health insurance is actually a conversation about the overall cost of care and the

value we get for the money we spend. at cms, access and affordability for the 140 million americans we serve every day is critical. this is why we must work to keep medications affordable, prevent waste, and coordinate care, and why we have a special task force focusing on rural america where costs and the lack of competition have long created concerns. personally, it's been very rewarding to serve at cms during a time of so much transformation. for the majority, for the vast majority of my 25 years in health care, it didn't seem possible that we would ever achieve a real reduction in the uninsured rate, or see a kind of having a preexisting condition did not disqualify a person from coverage. if the market continues to grow and mature, we will continue to listen, add new capabilities to adapt to best serve americans patients and taxpayers to thank you and i will be happy to answer any questions.

>> that chair thanks the gentleman and now recognizes ms. jarmon, five minutes for your summary. >> did more than chairman pitts and murphy, and ranking member green and ranking member degette and other members of the subcommittee's. thank you for the opportunity to testify today about the office of inspector general's oversight of the health insurance marketplaces. as part of the strategic plan to oversee implementation of the affordable care act, we've completed significant body of audits and evaluations addressing federal and state market places and other aca aca provisions. are markedly's oversight work focuses on payment accuracy, eligibility systems, management administration, and security and data systems. my testimony today focuses on our most recent work which is the consumer operate and oriented plans our co-ops and state market places. regarding our co-op work, we recently looked at the conversion of startup loans into surplus notes. these notes are bond like

instruments issued to provide capital. we conducted this review to assess whether the co-ops complied with essential medicare and medicaid services guidance and applicable accounting principle. we found the co-ops generally complied with this guidance and applicable accounting principles when converting startup loans and surplus notes. however, cms did not adequately document the potential impact of the convergence on the federal government's ability to recover the loan payments if the co-ops were to fill. based on our findings we recommended a cms improve its decision-making process for any future conversions of startup loans to surplus notes and document any potential negative impact from changes in distribution priority and to quantify the likely impact on the federal government's ability to recover loan payments. following up on these recommendations, we are currently processing the co-ops financial condition to determine if any improvements were made in 2015 and 2016.

we are also monitoring the actions made by cms to address underperforming co-ops. this work is expected to be issued during fiscal year 2070. regarding our state marketplace at work we completed a series of reviews to determine whether marketplaces had effective intro controls in place to ensure that individuals signing up for health insurance and receiving financial assistance through insurance affordability programs are eligible. we reviewed the first open enrollment period as seven state market places. we found certain internal control for effective. however, most of the state marketplaces have something effective intro controls for ensuring the individuals were enrolled in a qualified health plan in accordance with federal requirements. with respect establishment grant funds we are in the process of completing a series that state marketplace refused and their use of these funds. this work primarily focuses on whether marketplaces allocated cost to the establishment grant in accordance with federal

requirements. recently issued reports that determined some states reviewed allocation percentages based on outdated estimated enrollment data instead of updated data that was available. basin these funds would recommended states refund ms. allocated amounts or work with cms to resolve the ms. allocated amounts. with respect to privacy and security of state market places with completed reduced of data and system security in five states that are close to completing reduced that to others. all of the states for which we completed reviews have implemented some security controls to protect personally identifiable information or pii. vulnerabilities exist in in those states and each had at least one from the building that if exploited could have exposed pii and other sensitive information to states if you agree with our recommendations to improve security come enemy instances reported taking action

to correct identified moment of us. in closing, we appreciate the committee's interest in this important issue and continue to urge cms to fully address our recommendations related to improving oversight and financial sovereignty of the walk program and state market places. oig is committed to providing continued oversight of these programs to open sure that the operate efficiently, effectively and economically. this concludes my testimony. i would be happy to answer questions. thank you. >> that chair thanks the gentlelady yield and now recognizes mr. seto bagdoyan, five minutes for your opening statement summary. >> thank you and good morning, chairman pitts and murphy, ranking member green, ranking member degette and members of the subcommittee's. i'm pleased to be here to discuss three recently issued gao reports on health issues. this morning at the subcommittee's request i will focus my remarks on the results of undercover testing of enrollment processes and related controls used by the federal

marketplace and the california state marketplace under the aca for coverage year 2016. i note these results are not definitive regarding the entire application population. our work focused on identifying indicators of potential implement fraud, vulnerability and risk for further review as i will highlight shortly. we discussed our results with cms and the california exchange, and their responses are included in our final report. entrance of what's at risk, aca coverage is a substantial financial commitment for the federal government. about 11 million enrollees have coverage, of which up to 85% receive subsidies. we estimate subsidy cost of fiscal year 2017, at about 56 billion, totaling 866 billion for the next 10 years.

in this regard i would note that while subsidies are paid directly to insurers, they nevertheless represent a financial benefit to enrollees in the form of reduced overall cost, that is, premiums and deductibles. turning to our coverage or 2016 results, we initially obtained subsidize qualified health plan or medicaid coverage for all 15 fictitious applicants. in doing so we successfully worked around all primary enrollment process checks. name, identity proofing, submitting documents to clear inconsistencies and filing tax returns to reconcile subsidies. besets coolly maintained coverage for 11 applicants to the present. that is will into the coverage year. even though someone not filed tax returns or submitted documentation to clear information inconsistencies as required. our subsidies totaled about $60,000 on an annualized basis.

we failed to maintain coverage for three applicants because of payment issues and for one applicant whose coverage was eventually terminated because of intentional failure to submit requested documentation. these results, combined with those from our earlier work involving coverage years 2014 and 2015, form a consistent pattern of three and will enter related fraud risk indicators which we are pursuing further during our ongoing aca related work. first, no year on year changes in the and all the processes and controls are readily apparent, suggesting that these remain fundamentally vulnerable to fraud at multiple points along their entire spectrum, front, middle and end, raising the overall program integrity risk for aca. second, applicants attempting to act foolishly took been covered in which they're not otherwise

entitled, such as our fictitious applicants, could exploit the global process and its various accommodations such as deadline extensions and relaxed standards for resolving inconsistencies to their advantage, and maintain policies virtually through the entire coverage year. third, even if such applicant subsequence our flag and lose their coverage for administrative compliance issues, they are able to apply for new coverage the following open season as allowed by program rules, thus engaging essentially in a form of health coverage arbitrage. in closing i would underscore that a program of the scope and scale is inherently at risk for fraudulent activity, and accordingly it is essential that a high priority is placed on implementing effective preventative implement processes and controls up front to help narrow the window of opportunity for such risks, and safeguard the governments substantial investment. in this regard cms told us that it's responding to eight

recommendations we make in our february 2016 report, and if executed well and been sustained, this represents a major opportunity to address the vulnerabilities we identified, reduce risk and enhance program integrity. chairman pitts and murphy, this concludes my remarks. i look forward to the subcommittee's questions. thank you. >> that chair thanks the gentleman. i will begin t the questioning d recognize myself five minutes for the purpose. me say in the beginning, gl has been a great government watchdog for taxpayers, involving undercover enrollment testing for the exchanges is for and helpful. troubling to learn just how bad the vulnerabilities of the aca exchange is running. mr. bagdoyan come in your testimony offered preview of your agencies fighting into space. let's examine the numbers and talk about the fictitious news. as i understand that this is the first year that coverage eligibility must be verified to determine whether an applicant who previously received an exchange plan filed federal tax

returns, is that correct? >> yes. >> gao tested fictitious applicants that you previously used for planning your 2014. now, of the 15 applicants that you attempted to gain coverage for, all 15 were initially enrolled in plans. it's my understanding that stupid date, 10 of these fictitious applicants are receiving monthly advanced premium tax credits, about 1100 a month, and all didn't qualify for co-sharing reduction, or csr payments. are an any of these things addin to enrollees falls applicants using 2014 who never paid federal taxes. four of those, mr. chairman, are essentially revised identity from our 2014 work. >> administrator slavitt, cms announced that a ptc and css of the movie ended with enrollees

who received in 14 but did not reconcile these payments on the federal taxes are in one of these dishes cases a federal marketplace represented initially told the enrollees they were not approved for subsidies. but after the fictitious enrollee verbally tested have filed a return to represent approved the subsidize coverage, even though it was a false attestation. why does cms about applicants to self attest to this safeguard designed to protect taxpayer-funded premium credits? >> thank you, chairman pitts. and thank you to mr. bagdoyan for the work that you all have done. i think with respect to the people who come we call the people who have failed to reconcile, who have received an advanced premium tax credit but haven't yet filed.

many of those under work with the iris to be people are filing taxes for the first time. and what happened is when they came back to get coverage in 2015 if the iris didn't have a file for them, that they felt they are not able to get coverage. we did allow people to attest if they had an extension or a pedophile taxes and the claim that the iris at not receiving it. but that's not we stop. i think to the heart of the question we have 19,000 people who so tested, and many of them have since there said that they paid their taxes. as of this month those that have not yet demonstrated that, those people will be terminated from advanced payment tax. >> how many individuals have had their coverage due to violating this safeguard? >> as of this month there will be several thousand i don't have the exact figure within. >> the iris expressed concern to the agency about this approach

and also point out that if ever 2016 report from geo recommended cms conduct a risk assessment, potential exchange fraud. has cms conducted a risk assessment of the application eligible anaerobic process? >> i'm not entirely sure what you're referring to. i do know the gao gave us a recommendation earlier to create a risk assessment framework through which we assessed all of the potential risks to the exchanges, and we have indeed implement it that. it's actually extremely helpful to us. >> can you provide the committee with a copy of that report? >> the report from the gao? >> the recommendation. >> we will get that. >> we now have three years of undercover testing. the results have not improved, beaver taxpayers across pennsylvania and our country when i say this is frustrating and alarming. i would yield to ask my time to cathy mcmorris rodgers.

[inaudible] >> thanks. our state insurance commissioner recently approved premium increases for 2017. on average of their increasing by over 13%. rate increases like these are being seen across the country and they are far from affordable. and my steady go from 4.6%-22 points 75 want to take a moment to thank my colleagues for the efforts to come up with common sense solutions to ensure americans want access to high quality and the lowest cost possible. we must respect the sick relationship between the patient and the doctor. thank you very much. >> now recognize the ranking member of the health subcommittee mr. green five minutes for questions. >> thank our witnesses for being here today and the work you do.

let me talk a little bit of the texas experience. under the affordable care act millions were able to access vital health care resources in our communities. my state realize the following benefits during the last military over 1.3 million individuals selected a marketplace plan. 48% of those individuals were new consumers. unfortunately, 1.2 million individuals who would otherwise be covered remain uninsured because taxes refuse to expand the medicaid. as i said earlier, 50,000 of the 1.2 million are my constituents. as a 2015 the aca provide community health centers grantees in texas with over 470 million in funding to offer a broad array of primary care, extended hours of operations and hire more providers and develop clinical spaces. medicare beneficiaries in texas have saved more than $971 billion on prescription drugs because the affordable

care act and the closing of the donut hole that was created in 2003 with medicare part d. i'm proud of the progress we have in the country made with the aca and i couldn't be more pleased with these results, but congress could make it better by stopping the dozens of repeal efforts until provide more health care for our constituents. regardless of whether you support the aca six years ago when it passed into law, it's hard to deny that there's historic success. premiums before the affordable care act was passed, the injured system was broken. premiums are increasing rapidly. for example, in 2009, 2010 according to the kaiser family foundation survey, the average increase in individual market premiums for individuals were covered for more than one year was 15% under the aca system there was no protections for consumers and insurance companies to drop them anytime. administrator slavitt, before

the ac was passed good in individual with preexisting conditions be charged more for insurance than his or her healthy peers speak with yes. in most places in the country yes. >> good in church protect their lines by avoiding the sickest and costs as patients in the individual market speak with yes. in almost every state in the country. >> before the ac was passed was in his recommendation to review health insurance rates to ensure that the raids were reasonable, dickens without recourse to the premiums went up 20, 30, 40%? ..

select coverage with the contract and line oak so we had to match what the union plan had done. we negotiated and signed a three-year contract. renewal was going to open and the premiums every year. in my experience and that, every year of that three-year contract they would come in and offer, say we need 20 or 25% more. we would negotiate it down and it ended up i almost had to negotiate every year with a new company, but my experience was with 13 employees, one of our carriers on the insurance had we need to raise your premium substantially because one of your employees actually had a double mastectomy. he said what we would suggest, if if you keep your group at 12 people and by a separate plan for that 13th employee. i said i appreciate that option

but that particular lady is the owner's wife and i'll be glad to share your willing to put them out on an individual market and believe me our negotiations but got much better. that doesn't happen today because of the affordable care act and that's why it is successful and it could be more successful if this congress would do like we've done every other piece of legislation that has ever been passed. something gets past, you wait a few years and see what the problems are and you go back and fix it. we haven't had that opportunity since we tried to repeal it over the last six years, probably 60 sometimes. if you are looking for perfection in legislation, you don't come to congress. we compromise and work to get things passed. whatever we pass is to be looked

at by new congresses or next congress is to make sure we can fix it. the affordable care act has not been subjected to that because of the repeal. i would love to see a plan that would actually help expand coverage. >> thank you. i yield back. >> we now recognize the chair of the subcommittee, doctor murphy, five minutes for questions. >> first i want to ask, you had mentioned in your testimony that premiums have gone down in actuality or their less than what was estimated. i think what i said was after the second, after 2016, after current premiums between 12 and 20% lawyer, i can get you. >> there lower than estimated. >> yes, there lower than their estimated to be. >> i want to deal with reality because it's not held in highest. >> what's in cbo? >> estimate. >> have you shared this information with edna, united and humana?

maybe you have a breakthrough for them that all these companies haven't seen. it's amazing to me, health care costs have gone up. i saw one standard of question saying they have gone 69% in the last few years. insurance premiums have gone up so that people can enroll and disenrolled. co-pays and deductibles are still high so i hope you can show us the source of this. i don't want estimates, i want hard-core data with regard to our premiums going up or not. all the data we see is that they are going up. co-ops are failing because they can't handle the finances. unless something is heavily subsidized or old or problematic healthcare problem, the costs are going up and that's why people aren't signing up. i just want accurate data so we can deal with that so please get us that. the staff report released

yesterday examined federal tax dollars and the aca states that tax basics change were supposed to be self-sustaining by january 2015. they gave extensions. states basic exchanges could continue to use federal money. your staff tells me that currently as of september 2016, every state is still using federal money. is that correct? >> to clarify, no new money has been granted after that initial startup. >> there still using federal money? >> there are states they have no-cost extension which allows them to continue to complete the startup activity. >> again, when you talk about premiums being down, the fact that there subsidized is phony. it's phony. how can you have premium going down if you're still

subsidizing. if were still bailing out insurance companies, premiums are going down, it's being subsidized. when do they think the money will run out? >> i think it will differ by state. we can get you the schedule of that. >> that's one more really find out what premiums are for not bailing them out. when the money runs out, do you think the state -based exchanges will be sustainable? >> i think each state has its own calculation if people are probably aware, kentucky has decided to move off the platform and i wouldn't necessarily say that was for reasons they were sustainable. they just chose that they would rather be on the federal platform than the state-based platform platform. that's for variety of reasons. >> these are not just things of hey let's get together and switch to different platform, it's because they had financial disasters. let's go to the co-ops. you have 17 closures. hhs in just a few months ago

finding that the remaining six co-ops. do you think all the remaining six co-ops will survive the next few months? >> i think the assessment that the states will make and we will make it with them is whether or not the remaining co-op has sufficient capital to get through 2017. >> we've given them $1.8 million so when you say sufficient capital, we have to give them more sufficient capital to help them? >> there's no additional capital. congress has rescinded $6 billion of capital that was due to the co-ops so part of the issues that they have, we have given the co-ops, in trying to level the playing field, more options to raise outside capital and i think several of them do do that. >> raise outside capital so being what? it's not premiums aren't paying for the plans.

they're getting other outside sources to help bolster the plan so it's not just shouldered by people paying premium. >> it would be the risk-based capital needed to support their ability to write it. >> i go back to my original point. if they have risk-based capital coming in, what do you think about premiums going down. i doubt that's true because were not hearing that from constituents. the second thing is, if you're subsidizing it, any reduction is false. i yield back. >> thank you. we now recognize the gentle lady from colorado. five minutes for questions. >> thank you so much. i wanted to clarify about the gao undercover study that they did. as i understand it from your statement, there were 15 attempts in three states to get into the system. is that right?

>> it wasn't actually 15 people, it was 15 attempts by the gao to do this, is is that right? >> yes or no will work. >> no. >> okay what was it been? >> 15 individuals attempting. >> 15 separate individuals? i thought there was one individual that tried in three states. >> that was to test identity theft. >> but it was 15 individuals and three states. okay, these were the fake shoppers. these were actual consumers. these were people who were getting in to try to see if they could do the. >> in these types of schemes that the report discusses, these 15 fake shoppers, they pay their premiums but then they don't get any health care benefit, is that right? >> that's correct. >> in fact they didn't try to get any health care. they just wanted to see if they could get the premium rebate. >> that's correct.

>> so, i guess i'm a little unclear about why somebody would do this in real life if they'd pay the premium and then not try to get healthcare insurance. i guess i wanted to ask you, do do you know of any actual cases of real people who did this? >> i do not. >> so you are not aware of any widespread fraud of actual people trying to do this. you just know it could be done theoretically. >> we know it could be done based on the vulnerability. >> thank thank you. i want to ask you something else. i'm really supportive of efforts to root out fraud in the system, but i don't really understand how this is a useful exercise in the real world to see if someone could pay a premium, get a tax credit and then not try to get insurance. i don't think that would happen in the real world. so, what i'm wondering about is why this is useful, but i want to ask about something else.

that is, about this gao report that was released by your agency on monday. we are handing you a copy of that right now. what this report did as it looked at enrollees experiences during the first year of the aca exchanges and it collected consumer satisfaction and information. it is entitled, and i'm quoting, you can see it most enrollees reported satisfaction with their health plan although some concerns exist. do you have that? >> are you familiar with that report? >> yes i am. >> okay, so then, you know that the main finding of the report is, most qualified health plan enrollees who obtain their coverage through the exchanges reported overall satisfaction with their plan. is that correct? >> that's correct. >> thanks. mr. chairman i would like to

enter this report into the record. >> without objection, so ordered. >> so ordered. >> thank you. and others another piece of evidence that shows what exactly we are trying to do here. we have one gao report that shows 15 people, fake shoppers in three states trying to do something that no real person would do in real life and then we have reports from the same agency on the same day about enrollees satisfaction taken from large national surveys but that's not the subject of this hearing today, only the the other thing that is not likely to happen in real life. so i just think we have to keep the record clear. we also, again, have to focus as we move forward on fixing the aca. i just want to ask you administrator, about a? this new report about the cdc data that both show that

uninsured rates are at his store) the census showed that the uninsured rate fell to 9.1% in 2015 down from 13.3% inch 2013. is that correct? >> yes. >> now the cdc data showed a drop in the uninsured rate to 8.6% down from 16% down from 16% in 2010. is that correct? >> so it really shows that there are now 20 million americans who have health insurance because of the various coverage provisions. is that accurate. >> yes. >> thank you, i yelled yelled back. >> we think the gentle lady and now recognize gentleman from illinois and five minutes for questions. >> thank you. >> welcome to our witnesses. we know this is a contentious issue. facts are important and data and customer satisfaction viewed by our constituents is what drives

a lot of this. under the affordable care act, if you like your health care plan, will you will you be able to keep it? >> if it continues to offer, yes >> okay so no, you can't. the plan that you had prior to affordable care act is no longer available to americans. >> the plan is available. >> let me ask the second question, if you like your doctor you will be able to keep it with no changes prior to the affordable care act and now now. >> i think it's always been true that physicians and health plans continually change the relationship. >> our premium lowers by $2500 for a family of four? >> i think if you're referring to the promise by the president when he campaigned for this, i

believe that analysis is it is lower than it otherwise would have been. >> the answer is really no, premiums have increased. they haven't decreased. the promise was, premiums on average would decrease by $2500. family. obviously premiums have gone up. for, the other promise was 80 or 90% of all americans, americans, the insurance will be stronger, better, and more secure. do you think that's true? >> yes. >> let me read you two notes from constituents of mine who obviously are living it. these are follow-up meetings i had before the august break. before this terrible bill, i paid $78 $78 a month for my child. healthcare coverage premium and now i pay $167.44 a month and have much worse plan with high out of pocket costs. he recently got tubes in his ears, a common procedure and it

cost us over $5000. that's why this is real to us and that's why we continue to have problems with the affordable care act. another constituent wrote, he's retired senior, doesn't qualify for medicare yet, my my wife and i pay 100% of the premium cost for the browns planned we purchased through healthcare.gov. we had a similar plan in 2015 but the cost of 2015 but the cost of the plant increased roughly $400 a month. that's premium increase. so we downshifted. although retired we do not yet qualify for medicare and our investment income is too high to qualify us for subsidy assistance. on the surface that would seem to be a good thing but we aren't that far above the income cutoff and without a subsidy assistance, these premiums are taking large percentages of our income and is getting worse over time. in 2015, we paid $14000, almost

15 which is 20% of our adjusted gross income. this year year our premiums will total $15369 which i estimate to be about 23% of our income. we understand our 2017 insurance companies in illinois are requesting premium increases of about 30%. that would on amount to $19980.32 for blue cross bronze plan that will be almost dirty% of our incomes for premium alone so to follow up on the comments of my colleagues, we have a challenge and premiums are up and if you make the statement that the premiums are not up then you disregard the fact that co-pays and deductibles are way up. premiums are going up, that's not disputable. you don't talk about deductibles

or co-pays which are unaffordable for average income americans. what you consider to be competitive market? what's your definition of competition? >> i grew up in illinois. >> that's a good point, before the affordable care act. we had a robust market that we were proud of. without intervention of the negotiated agreement between buyer and sellers. it has dropped from about 15 and

a half% down to 8%. >> i yelled my time. i now recognize the ranking member for questions. >> i have to say i continue to be amazed by republican attempts that things were better before the acp a. despite attempts to undermine, it is making healthcare a reality reality for many americans didn't have coverage before for the first time, more

more than 90% of all americans have health insurance and that's without the expansion of medicaid in texas mentioned by our ranking member mr. green. can you put this production in historical perspectives, how significant is this drop and can you comment on the different provisions have operated together to operate in these gains in coverage? >> thank you for the coverage. >> my entire career which was in the private sector has not seen any meaningful reduction in the uninsured rates. seeing the kind of numbers you talk about occur, they are incredibly gratifying and i think a sign of progress. as you say, we have more progress to make. there are still millions of people who lived in states that haven't chosen to expand medicaid, and if they did the

uninsured rates not a lot i think any question that we made great progress, as the number shrinks, the remaining remaining individuals who are eligible may be harder to reach and it's incredible to me how many people are still not aware of the fact that they can go on the exchange and have subsidies. i know most people are going to believe this but within the last six months, i had one of my constituents come up to me and say, they asked me, when the federal government was going to make available health insurance to those who don't get it through their job. i was like, well we have the affordable care act, you can go on this exchange and you're eligible for a subsidy and this was less than six months ago. it's just incredible. according to some experts, many, many of the remaining uninsured

are actually still unaware or confused about how federal subsidies are available to help them purchase insurance. could you tell me, how are they recalibrating their outreach and enrollment strategy in order to communicate with these harder to reach populations. also, am i correct in stating that more than 80% of the individual market consumers are aware of the tax credits as are the majority of the remaining? what are they doing to communicate? there is a marketplace that they can get a subsidy, so you're exactly right. >> there are still several million individuals in this country who are eligible for health insurance. many of them, most of of them below $75 a month in premium and are still not aware. we are extremely excited about open enrollment for this upcoming open enrollment season that begins november 1 and we have a significant effort to make sure we figure out how to

reach these new people and educate them. a lot of it requires in-person assistance. health insurance, insurance, if you've never had it is very complicated, we do find as has been noted earlier. once people are covered their satisfaction is high and they can start to afford their prescription medicines so really we need to enlist people at the local level continually if were going to do that at this open enrollment. >> i don't want to put words but i think it was mr. murphy who said something about state exchanges. maybe that's not the pot of money that you use for outreach, but it disturbs me because i don't want to see the gop efforts that say we have to cut back on this or that to reduce

the money for outreach. you do have that money available, right? that's not going to run out, the money you use for this outreach. >> that's right. that is indeed what exchanges are accountable for. >> so they will continue to have that money available. >> that's right. they charge user fees typically or have other appropriations and they use it for that purpose. >> okay. >> more is better. >> thank you very much. >> the chair thinks the gentleman and recognizes the gentleman virginia. >> thank you. i think i'm going to address my remarks primarily here. last fall, i asked you if you could get back to us on why the premiums are so high in west virginia. we have the seventh highest premium rate in the country. we have not heard back from you since last fall. almost a year ago and we are still waiting for that call about it. we only have one exchange in the

state. we have seen the premium increases would rhythmically continue to increase so i need that answer. i'm expecting that answer but i'm also saying that, look, this past past year we had 24% hike in our premiums. excuse me, that's what we have. then this this year, there was approval of 32% increase in this coming year, we've had a small group trying to penetrate to give us a second option to west virginia and they're asking for a 49.8% increase and from what we understand they will likely get it. my question in part to you is, what is the incentive for the regulators in west virginia or any other state to hold down premium increases if we are going to be subsidizing so many of them? >> thank you.

i'd say on the one hand, great news in west virginia is that the uninsured rate has dropped from 17% down to 17 and half percent. on the other hand, as you point out, our concern with the cost of healthcare, particularly particularly in rural america, it has always been the case, this is not an aca phenomenon, the lack of competition in some parts of the country are areas that we need to address. i think some of the protections in the aca do help. >> guest: the issue that you raise, for example, if if an insurance company were to charge too much, they are obligated to give back in rebates,. >> i don't know how that breaks down because they're continuing to make these hikes and i don't think there's an incentive for the regulators to pull that down. especially if they're going to grant an increase of 50% hike with it. let let me give you an example. maybe i can work my way through this. he's going to have to have a subsidy, again which falls back

into why keep it down if you're going to give a subsidy. 60-year-old lady is working, her husband just lost his job and she was covered under his insurance policy. she was covered under his so now she doesn't have insurance coverage and in the past, which you would've done, he's retired and went on medicare, she doesn't have coverage. when we spoke to her she said i would've gotten catastrophic coverage but i can't do that. i'm not permitted to under the aca so now i have to go out and buy coverage and it's going to cost her the cheapest rate she can get was $800. that means it's $9600 a year she is going to have to pay and i guess what you're going to say is that we are going to provide a premium. i'm glad to look into it, for most people in america, who are in that situation, there just

tired of the aca guaranteeing access to insurance, particularly if they were one of the 129 million americans who had a pre-existing condition. we think it's a critical advanced and we know that cost matter and subsidies are important. we think they are a critical part of the law. >> i appreciate it pretty hope that we can do something because at $10000 a year, that's after taxes with how much would be dedicating to her income with what she's making is not a lot of money. let me switch horses entirely and i hope that you can get back to me. that is that we are site neutral. we have a hospital complex in west virginia that has been trying to get a permit for numbers of years, they, it took them several years to get this permit to build an ancillary hospital facility nearby. as a result of it being held up because of the government, for for water permits and road

permits, it didn't occur until after november 2015 and now as a result of that, by virtue of them having to invest $30 million in this, they will lose four and a half million dollars in revenue for the hospital. i'm asking if you can get back to us or have conversation with us about how much more flexibility we can have to go beyond that because it was not of their doing. this was an arbitrary date of november 2015 that it was established and i really would like to hear this because it's going to have an impact. that four 1/2 million dollars half million dollars is going to be borne by someone else. that is once again in rule america what is going to impact

the cost shifting and it doesn't have to happen if we could just have a little flexibility in dealing with that site neutral deadline. can you get back to me? >> i think as you're aware, we are in the middle of a rulemaking process. i'm glad to get back to you and listen to comments, particularly in this situation to make sure we understand all the details. yes, we yes, we will get back to you. >> very soon. i thank you. >> the chair thinks the gentleman and recognizes the lady for five minutes. >> thank you mr. chairman. i want to thank the witnesses for being here today. the affordable care act makes significant investment to improve the health of our nation and california spirit i would like to highlight a few of these benefits. since last november, 1.5 million individuals have gained coverage through the health insurance marketplace. because of the aca, there are 78,000 children in thousand children in california that cannot be denied for coverage because of their pre-existing health condition. :

all or they have to issu issue a refund. as of 2015 more than 490,000 californians private insurance coverage benefited from more than $11 in refunds. the affordable care act is doing great things in california. i'm proud to see that. we see how medicaid expansion has held to bring the uninsured rate to its current historic low. gallup data from earlier this year found seven of the 10 states was the largest reduction in uninsured rates were medicaid expansion states. now up also found that states that are not expanded medicaid were less likely to see improvement in uninsured rates

compared to states that expanded coverage. unfortunately, we are seeing a widening gap in the uninsured rate between expansion states and not expansion states. administrator slavitt, do you expect that trend will continue in the states that continue to choose not to expand medicaid? >> yes, i do. >> administrator slavitt, if all states chose to expand medicaid do you imagine that we will see the uninsured rate dropped even lower than where it is now? >> yes, i think there's three to 4 million people easily that would be covered. >> thank you. we also know many of the benefits of expanding medicaid, for example, premiums on the individual interest market are on average 7% lower in states that expanded medicaid. i'm hopeful we can see the uninsured rate continued to draw. il-4 states do right by their citizens by choosing to expand medicaid. now, every time one provision of

the aca has a bump in the road we have from our republican colleagues that this is the end of health reform. but the fact is the laws are benefiting millions across the country and it's important to put these issues in context. administrator slavitt, we have heard that 2017 is a transition year for the marketplace. why might we be seeing higher premium increases in 2017 than we saw in previous years? >> i think there's two principal reasons. both of them are one-time event. the first is the law created a three-year reinsurance pool that expires this year. by definition that will increase premiums pretty meaningfully. secondly, it's a fact in the first couple of years of the exchange, the insurance price without having data on what the claims cost would be, they now have the data. i think in many cases come in many states they found they are

priced too low and i think asking for and receiving some just a great increases. the good news is medical costs trends across the country are very low. once these one time effects kick in, i think our expectoration is we will see a very normalized continue low rate of growth. >> as the insurance market just in the aca has other measures like tax credits to keep premiums affordable and provide choices for consumers. my understand is the majority of consumers benefit from these financial assistant measures. administrator slavitt, how will these mechanisms including tax credits and the opportunity to shop around for different plans help consumers find affordable coverage as the market stabilize the? >> when consumers learn the vast majority of them are able to purchase coverage for $75 a month or less in premium, it's actually astounding to them given the amount of financial security and health security that they've never been able to obtain before in their life.

so we think doing the fourth open enrollment we are really eager for people have not yet heard about the marketplace and understand the benefits to come back. >> i think and i yield back. >> the chair thanks the gentlelady. now recognizes the gentleman from virginia mr. griffith five minutes for questions. >> thank you, mr. chairman. administrator slavitt, on friday last cms issued a five paragraph memo underscored or payments for 2015. several insurance companies are suing the administration over 2014 payments because they only collected 12 points 6% of what the industry requested to be made whole. in the last paragraph of the memo, your agency wrote and i quote, as in all cases where there is a litigation risk we are open to discussing resolution of those claims. we are willing to begin such discussions at any time. does cms take the position that insurance plans are entitled to be made whole august court or payments even though there's no appropriation to do so, yes or

no? >> we've always said is that the risk court or payments are not efficient of the federal government everything -- >> yes or no? >> it standard practice. >> so it is just? >> in the race to rephrase the question? >> does cms take a position insurance plans are entitled to be made whole on risk court or payments even though there's no appropriation to do so are expected to enter as a yes, am i correct speak with this is the obligation of the federal government spent so it is a yes? >> that's how you interpret that, yes. >> seriously? all right. do you intend to use the judgment fund to make the risk payments to risk insurance plans, yes or no? >> you know, i would say for the questions are, i've got a couple commenting on any current legal proceedings and i would prefer -- >> you get an invitation to settle but. there's no appropriation for the

funds. are you continue to use the judgment fund, yes or no? >> i would be more comparable not talking publicly spent which racing issue turns over justice and to talk to the justice department about very suits speak with i personally have not. >> you have not. you can you give me the names by the 16th of september? this is time sensitive. can you give me the names of those people who have spoken to justice about the spread? >> sure. >> which insurance plans are suing indicated they intend to sue cms or the nastiest relationship to the risk corridor payments? >> i don't have a list with me. >> again this is time sensitive. can you give me a list by september 16 speak was absolutely. i appreciate that very much. you indicated you haven't spoken to justice but do you know anyone in your department that

has discussed settlement plans with the department of justice? >> i know our general counsel speaks to justice regularly so i assume that they have wanted a any details. >> i'm assuming you authorize the memo i quoted earlier we greater than invitation to settle. i would assume that you know there were some discussions with justicjustice prior to making invitation to settle these companies? >> that is correct. >> so there have been discussion by somebody with justice about how you would do so if you don't know where the money is going to come from but you soon summer it will come from? >> they are representing us so we have, in fact, talk to them, yes. >> i am curious have had any conversations about the lawsuit with your predecessor who is there a top representative for the interest industry about the risk corridors situation, yes or no? >> no. >> and prior to issuing the memo, and i touched on this brings about what to make sure i'm clear, prior to issue the

memo to the justice department approved the memo be released on friday which you had an invitation to settle the lawsuit? >> i believe they reviewed the language, yes. >> have cms spoke with any insurance plan radically or indirectly about some of the risk corridor lawsuits, yes or no? >> cms has had inquiries from insurance companies which we have been referred over to justice. >> do remember which insurance companies they were? >> i can get you that. >> if you can give it to me by september 16 i would greatly appreciate it. with the last few seconds i have am going to switch gears a little bit, and after a lot of folks talk about the uninsured. one of the problems i'm having, i get complaints in my district about obamacare is underinsured. that with the co-pay and the deductibles, in order to afford the insurance because the rates have gone up my folks are having to pay high deductibles are they

in essence don't have significant enough insurance and with a catastrophic illness or injury occurs they are finding that they're having to sell off assets that they've had to work for for years, including homes, et cetera. i'm just wondering does anybody keep numbers on those who i would call the underinsured? and they have a plan but not one that keeps them from being financially crippled should have a catastrophic illness or injury? >> the most recent numbers i've seen, despite the headline show in 2015 in an exchange the meeting deductible is $850 which was a decrease from the prior year where it was $900 spent all i can say is that when folks come up to me at the new river valley fair your average hard working folks in a relatively poor district, as the other telling me. i yield back. >> a chair thanks the gentleman. now recognizes the gentleman from kentucky for five minutes.

>> thank you very much, mr. chairman. this does sound a lot like the movie groundhog day. we been to all of these arguments before and it becomes very frustrating. this hearing has a new title, the affordable care act on shaky ground. i was a bit if it's on shaky ground is because republicans both in congress and across the country where they have the authority are planting dynamite in the ground under the system. i think that's what all of my colleagues have talked about the fact that we continue to ignore the incredible progress that's been made under the transport. not only the number -- the transport. also the people of been protected now against significant financial loss or even unnecessary death because they have coverage. i want to talk about my state. in the chairman support, the cms regulations of exchanges and so forth, it makes statements about

kentucky's exchange that i think dramatically mischaracterize what's going on there. you hear the last that i asked your question because i knew our new governor at the time had promised to dismantle our state exchange during his campaign. i asked you if you think of any way in which any kentucky resident would be better off in the federal exchange been in state exchange and answered you couldn't, correct? >> that's right. >> do think anything happened in kentucky between that answer and the time governor actress admitted his request or notification to use it is going to disconnect kynect speak was not to my knowledge. >> the reason he did that was not because of any reason that made sense is economically or in terms of providing service for our citizens but because he has an ideological opposition to

kynect and promised to bring the campaign. you don't have to answer that. that's my character vision. what he's doing is even worse because while we have the most successful exchange arguably in the country that he is basically dismantled, and also one of the most dramatic increases in reduction to a reduction in uninsured because of expanded medicaid. more than 400,000 kentuckians now have coverage who did not have before. what become has done is made a proposal for a waiver to change a lot of the medicaid system in kentucky. is made a proposal to cms which he counseled with you before you enter staff, before he made the proposal in which you told them what might be acceptable, what might not be acceptable under the proposal, is that not correct? >> we did have a dialogue, yes. >> in spite of that he has had a proposal to you which i think

according to the law you almost are obligated to reject it on page 15 he says if this decision project is not approved i will dismantle kynect. i will dismantle the medicaid expansionistic. what he's doing is setting up for you to reject the proposal and he's going to dismantle medicaid expansion in kentucky, take insurance away from 400,000 of our citizens, jeopardized many providers who are now being compensated for the care they provide. and he's doing it again for ideological reasons. the point i want to make is that there are a lot of problems, a lot of things going on in this country right now that may call into question the affordable care act but the things that are going wrong are things the republicans are doing to sabotage the functioning of the act, the law. that's why we are so frustrated, that instead of offering suggestions to improve the aca,

which was good in many, many ways, we all agree on that, the republicans in congress again have held hearings like this both time and time again, though it's more than six against repeal the aca and but never propose an alternative that is anything but go back to where we were before the aca we insurance companies control the system. they want to throw back in the private system. that's what matt bevan says he wants to do in kentucky as if that's a noble objective. the reason did not proposed a viable alternative to the aca other than going back to the pre-aca situation, i'm convinced is because the only other alternative is single-payer. if you listen to virtually every complaint that raised during this hearing today and every other hearing, those complaints would not exist under single-payer system. i don't think anybody is ready to go there right now. we are going to end up there eventually but i think we ought to start being honest with the american people about what the

options are available and how important the aca's success is to them as well to i yield back. >> the chair now recognizes the gentleman from missouri, five minutes for questions. >> thank you, mr. chairman. administrator slavitt, is it true that the current ceo of the federal exchange health care.com is kevin to enhance? >> yes, sir. >> is also my understanding and i'm sure you know where he was invited to testify here today but did not come. do you know why he is not your? >> he is on travel today. i believe he is in south carolina. >> south carolina? >> that's my understanding. >> any idea what he was back on september 6 or 7th, whenever arizona comes into aracoma blue cross blue shield is to see decided to sell plans question o you know if he would've been in arizona at the time speakers item is schedule spirit can you tell me if this had ever

stationed with blue cross blue shield of arizona or connecticut after the deadline to sell plans on the federal exchange? >> out of a tiny but i'm sure he's had conversations with most of the major -- >> what was the first part speak with i can tell you the dates sure he's had conversations with many of the plans, many of the major health plans. >> but do you think of your the weather not he's had conversations after the deadline speak with i let any knowledge of the dates he's had conversations. >> you yourself had conversations with blue cross blue shield of arizona or connecticut care after the deadline to sell plans on the federal exchange? >> no. >> no negotiations after the deadline has passed? >> i have not. >> okay. is it fair to say both carriers were allowed to sell plans after your own deadline? >> i'm not sure.

i don't, i don't know. >> you are not sure if they were offered -- >> i'm not sure which plan but i'm happy to investigate and get back to you. >> i would appreciate it if you would. so you are aware or not a with the deadlines have been passed and then plans were offered after the deadlines passed the url where of that are not aware of that? >> i have to understand what deadlines you talking about. we give cash but we certainly give states dates which were like to see things. sometimes if we don't receive them on the states i'm sure we extended those deadlines i don't know that in this particular situation that has occurred, but that certainly would not be absolutely out of the question. >> okay, but do you have any idea why they would be deadlines if the deadlines are not all? >> typically our team has to be worked like a loading plans and loading data and would like to have enough time to do that and do it right. certainly would always been to do it in the best interest of the consumers and the americans

and the seats to make sure that the coverage options available so if a team has to work a little harder or work over the weekend and over to do that, that's the kind of dedication we have on our team. >> thank you. in my district in august i the opportunity to visit with a large school board there in the district, and i was kind of surprised at the end of the meeting when the chief financial officer of the school district had been a 33 years, look at me and volunteered that she said i was thinking last night if i could ask you to do one thing for me as congressman, that one thing would be to get rid of obamacare. and that, honestly, shocked me. two of the more interesting problems with the law that you refer to wit with a 30 hour work week and a 26 week break for retired teachers. 30 hour work week also known as employer mandate requires all businesses or organizations with

50 or more employers provide health insurance for their employees who work more than 30 hours per week. this particular school district has 921 full-time staff, but a 26 week break is required for educational organizations that are unable to provide health insurance to faculty that recently retired. if ignored the retired teacher would be seen as continued employment which retired to require them to offer health. these are the teachers, retired teachers that know the children and schools. they know the school. they know the system. they know the teachers and their to take a 26 week break because of this law. and mr. chairman, i ride past the i write a weekly column called long's short report and it just happened that today in our local paper, the gannett paper, the springfield news leader, published my latest column on this are subject about my trip to the school district.

so without objection i'd like to offer that into the record and i would encourage everyone to read that, get more of the details of how this law has affected school systems and small businesses. >> without objection, so ordered. >> i yield back. >> the chair thanks the gentleman and now recognizes the gently from florida for five minutes for questions. >> thank you, mr. chairman coming thank you to the witnesses for being here today. the progress that we've made since the adoption of the of for the booker act has been very significant. and people return to questions i want to focus on how meaningful it has been to my neighbors back home in the state of florida. florida we're fortunate we have a very competitive marketplace, so families and consumers have a lot of choices. they have a good affordable option. in fact, it looks like in the coming year, that 82% of marketplace consumers affordable be able to purchase coverage for

less than $75 or month. during the last open enrollment period, 1.7 million floridians signed up for comfort in the health insurance marketplace, including over 1 million women and children. and this is important because we have very serious and growing concerns in florida because of the spread of the zika virus. decorate zika infection count in florida is 800 individuals, including 86 pregnant women that we know of the. so this is very concerning. and what is especially troubling now is that florida hasn't expanded medicaid. so even though we have over 250,000 women ages 18-34 in my state to gain quality, affordable coverage in the

marketplace, we've got more than that that should be covered, could be covered if the state expanded medicaid. so you can see why this is particularly come at a time of a growing public health crisis. but there's a lot of good news, too. over 3.1 million seniors are eligible for free preventative health services with no deductibles or co-pays, and they're taking advantage of it. in 2014 alone over 346,000 seniors in florida received medicare part d prescription drug discount with over $306 million, or on average $884 back into the pockets of the fisheries. it's interesting -- beneficiaries. it's interesting that more than 38% or about 383,000 returning healthcare.gov consumers last year switched plans.

intand this is something which e caught in a bipartisan way. it's very interesting, i guess we knew that americans love to shop and compare, and they're doing that. but we've got to work together to maintain the competitive marketplaces so they have the ability to do that. when they switch they saved on average about $34 per year. and then for the vast majority, it's about 60% of floridians already have health insurance through their employers, and i thought it was quite interesting that the insurance premiums in florida now, are now growing at the slowest rate on record. this is also something we've got to continue to analyze and make sure that this is the case over all. i'd like to return to the medicaid expansion challenge, because in the state of florida we've got so many that are falling into the gap.

we know it's fiscally irresponsible not to extend medicaid. we do the most important thing we can do for mental health coverage is to expand medicaid, but there's a new piece of data that administrator slavitt, i'd like you to address. medicaid expansion brings down marketplace rates. you said it brings down premiums by 7% is that just in the marketplace or over all? what's behind them what's going on pressuring the market? >> that 7% is in the market place and i think for everyone here wasn't interest in helping all of your constituents and all of their concerns about affordability, that's really one of the top most important things that can be done is to eliminate all those places where people are not covered and a lot of people who don't get coverage through medicaid sometimes find their way onto coverage in the market place and that drives up

costs needlessly. if i think a critical priority that we complete the job and expand medicaid whatever we can. >> one of the things that drives a lot of businesses and the folks at the florida chamber crazy is we are sending so much money up to the federal government because medicaid is a state, federal partnership. we are not bringing those dollars back and putting them to work, creating jobs and taking care of people. what happens to those dollars? >> face early go to the states that have chosen to expand medicaid. i will add one thing to congressman yarmuth raised kentucky. there was an interesting study in kentucky couple years ago which i think showed kentucky saw 40,000 new jobs in something defective $30 billion improvement to the state economy through 2021 with the expansion of medicaid. you can imagine the economic benefits on top of what you

offer talking about are quite large. >> thank you very much. >> gentlelady yield back. the chair now recognizes the judgment from indiana dr. bucshon five minutes for questions. >> thank you for being you. on mandates in the affordable care act communistic using a fight when racial before twenty-ninth most expensive plan can only cost five times more than the least expensive plan when it comes to patients ages. in my hosted india and we didn't even have an age rating mandate. the praises plan moved this 31 for all state regardless of the unique patient needs. this has led to stick her insurance pools and driven patients with in workplace in my view. the baseline has increased so the argument that three to one ratio saves money may not be true. in fact, i don't think it is true. it has just increased cost for younger people. my question would be with moving the racial back to five will

have any impact on the cost do you think for many people who would potentially and rolled? >> i think this would have to be studied based on two factors. what does it do to the economics with the cost, and what does it take to the coverage and who benefits and who doesn't? i think it's the kind of proposal that should be thoughtfully evaluated. i have not done that. >> we -- with moving the racial back attract younger patients? according to cbo, average spending among people who are 64 or older is about 4.8 times higher. that's cost of health care system. to me it would make sense if you could get cut if you could shift the baseline back into the cost of for your people, get more people in the plant and that might help balance the demographics speak was that could be one of the benefits. i haven't seen in these days on the topics spent i would encourage you to look at that because i have legislation to

allow states to do that. because that's the premise. a couple of the question. on global surgical payments in replacement for the sgr, our language offers the misuse the representative sample of docs for porting data on 10 and 90 day code for the most recent physician fee schedule is required all of docs to perform relative procedure to report under the claims analysis section. this is not in line with the intentions of congress. what we need is an appropriate representative sample, how the data is collected must change. the 10 minute reporting instruments i can tell you as if searching for research and, therefore, it's impossible. what i'm asking for is for cms to give time to work with surgical suicides and other stakeholders to determine what is an accurate represent a sample of a this is will import.

what i'm asking is can you commit or whoever i see ministers responsible for this to working with office and others, stakeholders to work this through? >> absolutely. we've not a lot of feedback on this proposal. it's a proposal that i think we are still working through the comment period but we are absolutely need the input and we are committed to coming out with a final rule which does get that right. >> that's really important because what we want is accurate data. at the end of the day we want accurate data. one final question on the proposed rule for medicare part b model. i'm very concerned by statements from the physician community, the practices may be forced to send patients to hospitals to receive cared particularly oncologists. particularly because hospital-based care to be more costly for beneficiaries.

i think estimates that suggest even 15% of cancer treatment shifted to the hospital would cost medicare an additional $200 million. the intent was to try to get down drug costs for people and understand that. dares bipartisan concerns to this rule as you know. what i would suggest it i would urgency must hold off until we can resolve some of these issues. the question i have is did seem as fact in the potential cost increase into its estimate of savings for the program when it developed the proposed will? >> i think putting the proposal together we were looking for that, in fact, type of feedback relative to consequences and unintended consequences of anything. we've gotten a lot of feedback. we will take that feedback including specific feedback that you mentioned which we have heard into account when we finalize it. >> i really appreciate that. if you do have an analysis of

that differ from what i suggested, on the increase cause because the shifting care to hospitals, if you could share that with the office i would appreciate it. >> we look into that. >> i yield back. >> no, recognize the gently from illinois, ms. schakowsky for five minutes. >> thank you, mr. chairman. i want to apologize to members of the panel. i was at and at the subcommittee hearing and was able to just arrive but i thank you for being here to testify. ..

since november of last year, 200,000 women gained access to preventive healthcare services, with no cost sharing, and, domestic violence counseling and screening for cancer. despite the challenges, that we're facing this law is doing

incredible things and i'm encouraged by the progress that we're seeing. i wanted to talk to you, about the increase in the cost of a prescription drugs. how does, how have rising drug costs, prices led to increases in insurance premiums and should we be doing more to control growing the cost of pharmaceuticals. >> this is an important question. because, when people are concerned, as they should be, about the cost of health insurance, because the law requires, that a maximum of 85% of the cost be actual cost of healthcare, what they're concerned about is the cost of the underlying healthcare system which is a top priority for us, and prescription drugs and the

insecurity that both seniors as well, as people in lower incomes face, and, it's a really significant issue and it's only getting worse and we are troubled when we see large increases, in prescription drug costs and we are, we have proposals for as you know to attempt to find ways to begin to control those costs, in ways that still allow us to create cures expirntion no vegases, and also allows those cures to be accessible to everybody in the country who needs them. >> i also, cms has taken action, to increase transparency for the price of drugs. they released the medicare drugs, dashboard which details the price paid for many drugs, and, dashboard also includes the average annual price increase of

each drug and the averagenul cost, and the state is helpful for policy makers, and providers to gain a better understanding of how drug prices are impacting consumers. why is increased transparency for important. highway will this allow us to better protect medicare, and, medicaid and, the beneficiaries. >> well, first of all, these are federal dollars, that we're spending and so, these, are people that are contractors to the federal government. so it's important to taxpayers have insight into what we're spending our money on, and because we are not as you know able to negotiate prices, we think it's important at least there's vis ability, into what things cost, and, tickly, when there's cost increases because,

in effect that's at the heart of many of the concerns at this hearing today, is some of those underlying costs go up and people see their insurance primo us go up and so we're trying to bring more visibility to the root cause. >> chair thanks, and now recognize the gentleman from florida. >> put your mike on please. >> the o.i. g. released a report, that, it do not ensure the tax credit payments made under the affordable care act and the report, o.i. g. stated that cms was paying tax credits, based on the insurance companies without verifying on

an individual level of monthly premiums were being paid. they recommended that they institute a policy based payment process, to verify premium payment's a monthly or realtime basis. yes or no, please. has cms instituted, payment process, with insurers for the federal marketplace? >> yes. >> thank you. are the state base good changes using an automated policy process. >> i'd have to check. >> please check. does cms have any plans of running the process against prior years to find if individuals who may have improperly claim costs and sharing reductions and tax credits, when they were not current on their payments. >> i'm not sure if that's possible. >> please get badges o back us o

us. >> so, please, get back to me. does cms have a legal obligation to recoup advance tax credits or sharing reductions that were claimed or paid? >> do you have a legal obligation? >> i think it depends. but some of this is under the province of the irs. >> well again, i want more clarification on that. miss jar min, has the o.i. g. tested the policy process. >> it is part of our follow up on that, on the open recommendations we'll be looking at that. >> when will you be looking at it. >> as part of our work in 2017. >> right. but we're looking. >> it will be reported in 2017.

>> early part. >> probablely sometime during the first part, yes. >> i'm going to keep track of that. when cms instituted this for the federal marketplace, how much did you find enrollment reduced? >> i don't know. i don't know that it was material. but i'll be glad to get back to you. >> well, again, i want to follow-up, so, let's get together soon. i need these answers. >> thank you very much. i'll yield back. >> now recognize mr. mullin. >> thank you. thank you for being here. we visited before. the last time we visited, it was in front of the o. and i.

committee and we were visit about the repayments, that comes to it for the reinsurance. are you recalling that? >> it was, risk adjustment -- oreinsurance. >> okay. >> at that time, in the opening statement you said this year we'll add approximately 500 million to the u.s. treasury from the program as collections and we'll exceed the target amount to reimburse high cost claims for 2015, that was a quote from you. >> sounds right. >> have you made any payments to date to the treasurer on those. >> i think our collection date, is either november 15 or december so we'll make it after that next collection. >> have you made any payments? >> no that will be the payment we make -- >> have you made any payments to anybody.

>> to any companies? >> yes. >> this year? >> i have to check. >> i believe, according to the information, we received, you have made several payments to carriers, and, in fact, this was the payments were made right before the open enrollment period. >> last year. >> i believe so. >> yes. >> so, has any payments to date been made to the treasure on this reinsurances program. >> as i said, the payment will be, made after our next collection which is either november or december 15th. >> the reason why i ask this, is, because there's been a discussion of how much is supposed to be paid to the treasure, and the federal law which says that the treasure should receive 5 billion, and not 500 million, are you on target to hit the 5 billion

dollar mark. >> i recall the conversation, from that hearing. i believe, that, that's not our understanding of the law. >> i know, and i believe there's a, it seems pretty clear and you guys decided to change that without notice. >> we went through notice, a proper formal notice. how do you interpret the law. >> it was not clear in case he is. >> dove read it. >> do you have it? where you could read it, because it seemed clear us to. >> the law stated that , what to do in cases where 12 billion was collected and the law was silent on what happened, if less than was collected. >> did you ask for guidance from congress. >> and the general public by making this an open rule making.

>> in a public comment period you don't have to respond back to congress. did you specifically ask for our guidance on that. >> i believe we asked for everybody's guidance. >> why, if that's the case, why is there confusing on the payments, on that 5 billion should be paid. >> because nobody in our comment periods objected to our, what we put forward. >> how long that was comment period open. >> it was a standard comment period. wasn't shorter. >> because we have objected to it. we had this conservation with you about it. so there has been a discussion on your interpretation of where the funds should go to. it seems to us, myself, that the payments made to the insurance companies, is questionable without paying it to the treasurer, in the amounts it's being repaid just to hold the premiums down and it's not working.

because in oklahoma, the only program we have left on the exchange is blue cross/blue shield. they went up 42% and they're asking to go up, 40-70% this year. we're seeing prices skyrocket across the country. when we were told that this program was going to cost bring premiums down. the question, i guess, is your interpretasting isn't working because it's still costing us more and treasure isn't receiving the taxpayer dollars that we were promised. so if it is not working, let's work together and try changing it or tax dollars could be used in the appropriate way. thank you.

>> thank you, in the six short years since its passage the affordable care act has transformed the healthcare industry and made more access expabl more secure. i would like to take this opportunity to chair some of the encouraging benefits of the law that we have witnessed in my home state of new york. >> in new york, over 450,000 individuals applied for coverage, in the marketplace during the third open enrole meant period. as of 2015, the a.c. a. has provided grantees with over 445 million in funding. that offers a broader array of primary care receives, extends hours of operations, hires more providers, and develops clinical spaces. the nationwide uninsured rate

continues to drop as the c.d.c. reported. in new york state alone, the number of uninsured dropped by over 350,000 individuals between the years 2013 and 2014, new yorkers, like all americans, have seen substantial benefits because of this law. it is indeed reassuring to know that our work has allowed for these results to impact favorably those in new york. if i could continue on, now, with the issue of premium increases that i was hearing from the last individual. ever since the republicans gained the planningty of the house they have been sounding the alarm on the potential for skyrocketing premiums, resulting from the reforms. the fact is that we have seen not seen this happen. in fact, the non nonpartisan ofe

made predictions about premiums, around the time. and so, to administrator i ask, did cb o. predict that average premiums for 2016 would be higher than what the insurers charge they had year. >> that's correct. >> why are they lower? >> i think that, in some cases, the premiums are lower because there's been good competition and good innovation and i think that's been a terrific part of the marketplace and the premiums were priced too low because no one knew what things would cost and therefore i think, as a result we'll see more increases this year, than we have in the

past. those early reports suggest we may see it in 2017. and, why, can you explain why that might be the case? >> i think there's two reasons. most of them, the good news i think is, a lot of these center on one time effects. one is that, by design, the reinshores, that is a supported the marketplace expires, january 1, 2017. so there will be a meaningful increase. and then, secondly, i think you have, now that you have insurance companies that have a couple years' worth of data on what things cost, they can use that information to price appropriately. i like to remind people that in a country, this is the very first time we have said if you're sick we will take care of you, and allow to you buy insurance. no one knew when we entered into

in, what that would cost. we're doing it. and no one likes to see costs go up and i don't think they'll continue to go up beyond this year. would you expect 2018 to be different? >> far be it for knee predict the feature. but 2018 will be more normallized year, near where past years have been. >> okay. with that -- >> mr. chairman, the gentleman yield me your last ten seconds. >> our colleague from oklahoma, i meant to try and get time.

blue cross requested 45%. has that been considered by the state of oklahoma or by cms? it's a request and into the actual increase. >> i'm not sure where that stands at this point. >> we agree except on the football field. >> before i and him a couple of questions, i would like to, for the committee, highlight some of the latest very troubling news on the affordable care act, as it impacts western new york. so, in august, a month ago, the governor's administration announced that the health insurance premiums, for those on the states, exchange will increase, this is after review,

an average of 16.6%. next year. for over 2 million people enrolled in the program. many of them in western new york. i did say average. some of the plans have been approved with a 29% increase, and, even 89% for one plan. >> they were continuing to see in our area, big increase, and insurance companies, facing multi-million losses, terminating plans. so i'm not sure how he could say he thinks, this may ab out liar year. we're not seeing any of those trends that wouldn't continue on into the future. i don't think the president, and i don't think at c. m.s. ever will acknowledge what they are living day-to-day.

that is, the act, is fundamentally flawed. it can't be fixed and it is imposing unsustainable ever increasing cost's americans, including my concity wentsds. perhaps the next administration will have a better understanding of the healthcare marketplace. the plight of the middle class and get rid of this plan. >> they were kicked off, in november. last year. >> so last october, 200,000 new yorkers were informed, out of the blue, that they would be kicked off the co-op health republic and forced to find a new plan. this was propped up by more than

265 million dollars of squandered taxpayer funding and lasted less than two years. the health republic of new york the highest enrollment numbers, in the nation. yet they lost 35 million in 2014, 53 million in the first-half of 2015. and, basically the co-op was never going to be able to operate properly. despite all these warnings and losses and cms neglected to even place it in a corrective action plan. there's a couple words, incompetence. they weren't put into a corrective action plan. what was the purpose of having something we called corrective action plans? >> so -- i'll acknowledge it's

no secret that many of the co-ops, not just new york faced significant financial challenges. these are businesses that is compete against much larger companies with limited capital. and they have little cushion for error. in new york, in the beginning of 2015, thought they were in a good position, and saw losses mount as claims cost came in. i would say even more aggressively than a, any plan we can put on paper i had a a whole team up in new york working with them, in fact, i think our authdit tors were pointing out some of the problems. >> let me just say, you can't defend the indefense able. but, even after this, what they did was more e agree gust. they forced them to take those

people, and they said they had to accept them, at the low pricing that health republic was charging in november when many had hit deductibles and then suffered millions of dollars are additional losses because cms said you have to take these people. you can only charge them what the low rates were to begin w. so, after losses and losses and not being place. it was next and incompetence which hurt taxpayers, and hurt other health insurance companies, something i call a lose/lose, lose.

>> i don't have time to speak to the tens of millions of americans who are in a better position with their access to healthcare. but, that having been said, the affordable care act has improved millions of lives, in my state. for example, we have been able to expand medicaid with over 3 million cal people gained access to it, since 2013. i am sure you are applauding inside. as of april of this year. 70% of california who were uninsured, now have quality affordable health insurance because of the act. medicare beneficiaries in california have saved more than 1.2 billion on prescription

drugs. with the medicare to access preventive care services in 2014 alone. i'm pleased with the progress that has happened in california, but yet at the same time, anytime a law is passed, the act is a product of the legislatedtive bodies, and, every time we pass laws, i have been passing laws for 20 years, and i have never written a law myself, nor have i ever seen anyone of my colleagues, that i served with, pass a perfect law that doesn't need some changes subsequent. it's unfortunate, i believe that we have a congress of the united

states, the majority parties that want to just tear down this law. it's unfortunate. what we should be doing is looking at the things that need to be fixed. i know some of my colleagues have been talking about some of those things, but it's one thing to just point out flaws and then throw up our hands and say, oh, isn't this horrible. that's not our job as legislatively elected people. they make sure that we fix things. smile changes to the act through the legislative process. i do agree there are many changes that need to be made. but i'm appalled at the idea that we take opportunities like today, to just say, this is wrong, and it needs to be repealed. that's not the case.

i in a portion of my life, when i was a boy, lived in a household where we didn't have access to healthcare. and what that meant was, that my mother would give me some aspirin, send me to bed and pray, that i would wake up the next day feeling better. fy didn't, what happened was, my family, with my hard-working father, providing for 13 people, 11 children and him and my mother everyday would go to work, but because we didn't have healthcare coverage, our only alternative was to show up in the e.r., when we thought somebody might die. because of the affordable care act now over 20 million people in this country, who were in that situation, literally are no longer that situation. and the number of people who are

getting true access to healthcare is in fact growing. that's what it is about. one life at a time. through a massive law, thousands of pages, it does have flaws. but, the atros aty is subsequent to that law being enacted, that we, collectively, are not making the necessary changes that we all can easily identify. it's embarrassing, that in the most capable country in the world, in the most powerful elected bodies in the world, that we have done almost nothing to improve the health care of americans, since this law has been passed.