emergency room. i'll close with these words. in a couple of months, americans will go to the polls to elect a new president and members of congress. i talk almost every day with delawareans who await with anticipation for that day to arrive. some of my colleagues feel that way, too. once that day has arrived of the adding of congress as well as the new president have taken their oaths, we need good work to make a good idea even better. like we did with part d, like we did with medicare advantage. we can do that. ..

we found that our enemies are our friends as well. >> thanks for keeping track. chairman mccain is stepping away from armed services hearings. he would like to say a few words. >> we appreciate if a brief statement could be made part of the record. i must say i was entertained by the statement of my dear friend from delaware. to somehow now call upon the republic to work with you to fix this mess after on the floor, the united states senate, we could not have a single

amendment for the republicans that were allowed. that's the first time and entitlement program has ever been enacted on a strictly partisan basis. you had 60 votes a new ran those votes down our throat. now that it's been a failure, you want us to help you bail it out. we want to replace it. we don't want to fix it, we want to replace it because it has been a complete failure and my state is probably the best example we know of. we now have 14 of our 15 counties with one provider. remember, if you like your doctor, you can keep your doctor. if you like your health plan you can keep your health plan. no one will take it away, no matter what. that turned out to be a lie. ever since americans have been hit by broken promise after broken promise met with higher

choice and less quality of care. let me tell you, my home state of arizona is hurt. we are talking about next november 1 being as much as 65% increases in premiums for our average citizens. we are now talking about young people who are opting to pay a fine rather than to see these dramatically increasing costs and of course, the the cost of healthcare continues to skyrocket. this was all done on appear partisan basis. i remember the victory dance that you performed after passing obamacare without a single republican vote. now the chickens have come home to roost so now the answer is, won't the republicans join with us and fix this problem, give me a break. we we need to replace it, we need to fix it and we need to go

back to the fundamental principles of economics which is not take money from healthy young people in order to take care of unhealthy older people. that was the fundamental broken premise and now i guarantee, the next step will be that you guys are going to want to go to a government run healthcare system. that will be your answer. that, in europe is a system between those who are wealthy and can afford their own healthcare and those who are not will have a substandard level of care. >> mr. chairman, i would would like to have my statement included in the record. people in my state are hurting. the people in my state are hurting. we have 15 counties, 14 of them, there's only one provider. we had a county with no provider for a while. now blue cross blue shield has moved in. is what is happening in my state, is that, if you like your policy you can keep your policy, if you like your doctor you can keep your doctor, no one will take away your healthcare, of course we have people scrambling

all the time. understandably, these providers have hundreds of millions of dollars in losses. they can't afford to stay in the affordable healthcare business. i think you for holding this hearing. i think the witnesses and if the senator from delaware and his democrat friends want to join together with us, yes, let's throw it where it belongs, in the trashcan and start all over and give people an affordable healthcare system that they can live with and will not be the situation that existed my home state of arizona. thank you. >> it is a tradition of this committee to swear in witnesses so if you would all rise and raise her hand. >> do you swear the testimony will give to this community will be the truth, the whole truth, and nothing but the truth, so

help you god? thank thank you, please be seated. >> our first witness, mary taylor would like to introduce the lieutenant governor. >> thank you, mr. chairman. i am really thankful we have mary taylor with us because she is an expert. she is a cpa first and has had years of private sector and decided she wanted to get started here and she became our state auditor and the first state auditor to be a cpa. she transformed that office. she was acknowledged nationally as having put together a cutting-edge 21st century auditing office in ohio. then in 2011, she was sworn in as our lieutenant governor of ohio. she has had two other jobs. she had the common sense initiative which is making our regulations smarter and second,

she is the director of the department of insurance. you have a cpa with private sector background and government background and is in charge of our ohio department of insurance and has gotten very involved in the affordable care act. you will hear from her on this. she has interesting statistics. specific numbers as to what has happened with our premiums and the individual market with regard to obamacare changes it is a 13% increase increase. who can afford that. she will have an opportunity to talk about that. what it was before, the affordable care act and what has happened since. i'm glad she's here. thank you for allowing me to introduce our. >> lieutenant governor. >> thank you very much. ranking members, chairman and distinguish members of the committee, thank, thank you for allowing me to testify before the homeland security and affairs committee. my name is mary taylor and i'm

the lieutenant governor of ohio and the ohio department of insurance. i will discuss ohio's experience relating to this topic. as the director of the ohio department of insurance i am responsible for regulating the insurance market. the seventh largest in the united states. ohio is home to more than 200 insurance companies representing $76 billion in annual premium. for years, we have taken great pride in the competitive insurance market we have in ohio across all lines of insurance. under the leadership of both democrat and republican administration, the ohio department of insurance has been a fair and thoughtful regulatory agency providing the certainty and predictability, to be successful which in turn benefits consumers. in fact, because our our market

is so competitive, the most recent data shows ohio's auto and homeowner insurance programs are below the national average and are ranked 12th and ninth. i am here to focus on health insurance and what is happening in ohio. prior to implementation of the aca, ohioans benefited from a large selection of insurance carriers with more than 60 companies selling health insurance products in ohio. they could buy plans with a wide variety of coverage options and the corresponding premiums to go with that coverage. unfortunately, since before the law was implemented, i and many others across the country, including members of this committee pointed out that the aca would not work as promised. studies conducted in ohio at my request to show the premiums would go up, consumers would lose choice and the market would suffer from turbulent changes. fast-forward to today and the new aca era we live in. in 2016, 17 health insurers sold

products on the federal exchange during open enrollment. next year in 2017, assuming all companies are proved to sell on the exchange enter into contracts with hhs, only 11 companies will offer exchange products. this change can be put into better perspective when looking at a county by county perspective in ohio. in 2016, every one of the 888 counties 888 counties had at least four insurers selling exchange products during open enrollment. in 2017, 19 counties will have just one insurer selling exchange products and 28 counties will have just two. you are often options give them less opportunity to get that coverage they need. increasing premiums makes the problem even worse. based on the final rates approved, the average premiums for individuals buying on ohio's

federally run exchange has gone up 91% since 2013. recent statements from hhs indicate everything is fine. premiums around the country are increasing but the response is that consumers are being shielded by tax subsidies that will offset the cost. the cost of those subsidies will continues to rise as premiums continue to increase and the american taxpayer must shoulder that burden. i think most of us agree americans should be able to purchase health insurance without facing barriers because of pre-existing conditions. we agree more can be done to improve the system to improve accessibility and better outcome. the aca is not living up to the promises made. in ohio, less than 250,000 people purchase health insurance

through the program in 2016. if you consider there are 11.6 million people living in ohio, the means, that means we have completely up ended the health insurance market, forced consumers to buy coverage they don't want or need and placed burden on job creators all to offer backed insurance to 2.1% of our population. we need to increase access by reducing costs instead of forcing everyone to buy more expensive coverage that, in many cases, they don't need and they don't want. we need to empower states to design systems that are suited for their population instead of working a one-size-fits-all mandate across the country. we need to decentralize the power of washington who quite frankly, they don't understand insurance or how to regulate it as my colleagues and my predecessors across the country do. in ohio, we have ideas to help improve our health system without destroying the free

market and they have done. we believe there is a better more inclusive way that increase access without driving up costs. it is my hope with the help of congress, states can have the power to implement positive change. thank thank you for the opportunity to testify before the committee today and i am happy to answer questions. >> thank you lieutenant governor. the next witness is jp y ski. he is deputy insurance commissioner for the great state of wisconsin. he has served as a deputy insurance cut since 2016. >> thank you chairman and ranking members and distinguish members of the committee.

last week at church, we had the prodigal son parable was discussed. i think one of the concerns we have, in wisconsin, we did take care of lost sheep. we took care of our folks. our high-risk school provided those subsidies for the sickest as well as those who have significant medical conditions and they can choose any doctor. unfortunately obamacare and did that. that was 20000 people who were thrown into the marketplace. in the individual market, it has grown, however, the 200,000 we had in the market prior did not include our high risk pool or

folks who are in our existing medicare problem. it had not extended beyond the requirements. in addition we had a number of reforms in wisconsin so we didn't need obamacare. in fact, we had to move back our delta dependence to age 26 because we had expanded it to 27 in the state of wisconsin. our small group market has dropped by 30,000 people. our large group market has dropped from 1 million, 1.25 million people down to 1 million people. most of that large group market has moved into the unregulated space. i think we have a number of concerns with the way our market has been hit. on top of that, we have seen a number of frustrations from our consumer standpoint regarding the rollout of obamacare in the

continuing problems for consumers as we regulate this market. we actually had to delay the end of our high-risk pool because of the disastrous rollout. we had to delay the movement of folks off of the medicaid because of the disastrous rollout and on top of that we are consistently getting calls from consumers and consumer complaints division that talk about the interference of the health care exchanges with folks in the private coverage. when people want to terminate the coverage, we make changes or we add folks to their insurance plan, they no longer are able to just do that and call the insurance companies and make those changes. have to call up a bureaucrat and ask for permission in order order to get that done. that takes time and it creates errors and problems. i will highlight one other issue. we had a consumer contact us

when the federal government asked them to take money out of all of their consumer accounts. they had made a mistake. they had under charged consumers. at christmas time, the federal government had ordered them to take money out of the accounts of these consumers, pull it out of their account in order to pay that premium. as a matter of course, insurance regulators don't let insurance companies charge back consumers when they under charged them. we actually had to issue an order to prevent the bank account information from consumers. on top of that, we are seeing this next year, this auto reenrollment process which is illegal in the state of wisconsin, we indicated letters and had 64000 people losing their coverage not because of

market withdrawals but because of service area changes. those people will be auto reenrolled, forced to have information sent to another carrier without their permission, the private information will be sent to another private medical insurer, from one to the other without their permission by the federal government. it is going to be a hugely, potentially problematic area for our consumers who can see these numbers change. in short we've seen a number of issues in the state of wisconsin and we felt we did an excellent job protecting consumers. prior to the aca we continue to protect them from the damage of aca. when we roll to 2017, i will highlight there will be approximately 200,000 people who will be on obamacare who are on transitional plans so the damage is not yet done.

in short, wisconsin believes the damage hopefully isn't permanent and we are hoping for a solution that moves this problem back to the states for us to fix it. >> thank you. >> thank you. i believe senator ernst would like to introduce the next expert. >> thank you, mr. chairman. is my honor to introduce i went insurance commissioner nick gerhart. he has served our great state of commissioner since february february 2013. we appreciate your service, commissioner. he also serves on the national association of insurance commissioners executive committee. the commissioners legal and health administration credentials and professional background make him an excellent witness for us today to talk about this important topic. thank you commissioner for traveling to washington d.c., to share your expertise with this committee and the audience members and your perspective on iowa's health insurance market. thank you commissioner.

>> thank you, it's an honor to be here to share our views from the state of iowa. i really want to focus on a couple of things in my short time. i want to focus on the duty of the insurance commissioner, the rates of what's happening at the kitchen table to members of our state and really a couple highlights to fix some of these issues and i did submit written testimony to outline some of those potential fixes. we are pretty vocal. we have about 3 million people and we know the 75,000 islands were getting rate increases up to 43%, i know these people. i see them at church in the grocery store and a lot of them are friends. the want to share a story of a good friend of mine. he had a mine. had a good corporate job. he left that job, his name is gregory bailey and he started a company called denim labs in des moines iowa. he has two children in third grade and second grade and a lovely wife. when he got notice, he called me

and was not very happy. i hope we are still friends, but at the end of the day, he understands what's happening here and his wife, they are looking at making a significant decision around do they downsize their home, go without coverage. these are impacting all of our constituents. i hope we can have some productive dialogue on some potential fixes. in our state, we recently and approved rate increases from 19% up to 43% affecting 75,000 people. in a state of three million, that's a significant impact. cumulatively impact. cumulatively it has about about 100% since the affordable care act. i'm not saying it was working that great before. rates were going up before as well, but we have some ideas and solutions to make it better. what we are seeing is a high concentration of risk and the risk pool. we had a risk pool that was functioning pretty well and a lot of the folks in this population, we have commercial

insurers working to ensure and one claim in well mark is generating about $18 million in cost, even with the discounts for the providers at about $12 million. that one claim is 10% of the 43% increase. that one claim in that risk pool cost about $808. member of the risk pool. that's a catastrophic claim. that claim in a few of our regional carriers would put them almost and solve it. we had to, we were the first to take over one of the failed co-ops on christmas eve day, 2014. we had a take over a co-op that was the first one to fail. that caused a disruption for a hundred 20000 members in iowa and nebraska. folks are skeptical about the market. we will have 23 counties with

one provider, half the counties with two providers in the exchange and there are issues of less choice. products that are seeing the most traction in the market, the narrow network, you have a a concentration of one group of doctors that you could use and again those plans are fine. i think my family would buy one if we had the option but it is a narrow network plan. we have deemed those to be appropriate and were waiting for cms. we really don't know who is going to side on the 23rd of this month to be in the exchange or not. we will know that in a couple months. i want to highlight a couple fixes. we talked a little bit about the three rs, risk, readjustment and risk adjustment. there are some new rules that were put out and nails look encouraging. we think this is a provision that actually worked pretty well

and it helped stabilize the market a little bit. finally we want to encourage members to look at the high-risk pools and push it back and say we want to look at the waiver to try to make iowans -- if you've seen one health market you've probably seen -- we feel pushing it back to the state makes more sense. i would like to conclude that it's an honor to be here and i would answer your questions up the right time. thank you. >> thank you commissioner. our final witness is the honorable mike kreidler. he served as the commissioner of the state of washington. he previously served in the congressional district. >> thank you very much.

ranking members, chairman and members of the committee, i am the longest-serving commissioner of insurance in the country currently. it's a position that means that i have served ten years before the affordable care act and six years now and because it is the law of the land, i have been working diligently to implement it to the fullest ability in my state. it has a positive impact on the state of washington, not without problems come untran, but overall very positive. we really need to look back at what it was like in that environment before healthcare reform. there are approximately 7 million people in the state of washington. nearly 1 million of them were uninsured. that was 14% of the population. we were experiencing something like $2 billion. year in uncompensated care. that is care care that's being

paid for but is coming at the expense of other payers that are absorbing those costs. we also had a robust market before the affordable care act. some 11 insurers in the individual market. if you looked at the products out there, none of them covered maternity or prescription drugs. for many people they would find that serious shortcoming. today, we are down to 7.3% of uninsured, that's nearly a 50% drop since the affordable care act came into effect and we have taken the 2.3 billion in uncompensated care and knocked it down to one point to billion. almost 80% of the people inside our exchange and we are looking at approximately 300,000 people. 170,000 people inside the exchange. the comparable number on the outside. of outside. of those outside the exchange, 80% of them now receive a subsidy.

today we are looking at 13 insurers in the market, 154 plans that will be offered in 2017. the rates that came in were higher than what we had anticipated at 13.5%, their request, not what i approved. we will know better in october what that final number will be. it is higher and it certainly something that was not unexpected when insurers started in 2013 in submitting their plans, they had no idea just exactly what they should wind up charging. it was a dramatic change. now they cover maternity and drugs and they didn't before so it was a real change. we are still in the learning phase here. the double-digit rate increases are no surprise, it certainly certainly something we saw very common and much more so before the affordable care act.

2014 was just a guess at that point in time. no one wants to see rate increases going forward, east of all if you are statewide elected like i am and have direct accountability of the state of washington. one of the things i really look at other changes going forward, as commissioner gerhart was talking about. one of the things we want to make it work better and i would say we need to make sure the premium is something that is there and perhaps even more so than we have currently. we also need to stabilize the health insurance markets going forward. the number one task for us was to get ever be covered. that was the first up. the second stop is we have to do a better job of working to hold

down healthcare cost. as i look at changes that could make a profound difference in helping to stabilize that health insurance market, one of them would certainly be to hold down the cost increases we are seeing in prescription drugs. that's the number one driver right now and the plans that came forward to us for 2017. another from a national perspective, make sure those 19 states that expanded medicaid do store in so in the state of washington. we have people who are insured that previously did not have insurance to the medicaid program. i would also say we've got to make sure that those states that have nonconforming plans out there, you break up the risk pool, they all need to meet that same standard. washington is working, as i said, diligently to make sure that we full embrace the

affordable care act reforms and provide those to the people of the state of washington. holding down premiums is the next big factor to stabilize the private market. immediate steps need to be taken to accomplish this if we want to make this sustainable in the future. we have to address the second part. get them covered and then stabilize the market. >> thank you. let me start with you. you said 18% increases is what's been requested on average. >> 13.5. >> you said that was not an expected, no surprise, you are certainly in that position, you heard them say that his health care plan would be reduced by $2500. family. did you believe that? >> i have to admit there were a number of claims that were made during those discussions that as a professional regulator i didn't necessarily embrace in totality.

>> it's very difficult to try to figure out exactly what these average increases are. i know manhattan institute has done a national study by state and i've looked at that, six different demographic groups in the state of wisconsin. our big biggest cost increase within the first year. as i put put the numbers together, based on the expected increase for this year, the lowest increase is about 1.8 times. if you're paying a dollar, now you're paying a dollar 80. the highest is over $3. i want to go to the point in terms of what happens in the state of wisconsin. i kinda raised the issue on a national level. in the office of the commissioner, what would you do? i know we have laws in wisconsin

that you are authorized to engage in unfair marketing practices and that's defined as misrepresentations, unfair inducements, which i guess is kind of a tax penalty that would be an unfair inducement, what about restraint of competition? i think obamacare has definitely restrained competition. choice of insurer. we've definitely seen that and extra charges, things like like cadillac tax attempt to unduly influence employers in unfair use of position. that really describes obamacare. again, going back to the question i asked, there's an insurance company that made that claim. what would you do as the insurance commissioner of the state of wisconsin. >> i think it would be a couple

things. first, upfront, i don't know that we without the insured do that because they would go insolvent and would be able to meet their obligations. those promises are not deliverable. i think we have a concern if the insurer filed those with us. if they found from an advertising standpoint, i think we would consider that an unfair trade practice and we do have concerns take actions against the insurer. >> unfair trade practices, that would be another term for consumer fraud. >> it would be a fraudulent advertisement. >> in the private sector, that is unlawful. >> cracked. >> i guess when it's passed by the federal government that becomes legal consumer fraud. >> i was kind of shocked by a couple of your stories. can you describe again, the federal government forced you to recover premiums.

>> there was a particular insurer, and we actually have the order that we can get you a copy of. they made a mistake in their rate system. when people got their rates and they were charged, when i was pulled out of their account, a lower amount was pulled out. >> so again, had that occurred with a private company, with that private company have been allowed to go back in and pull money automatically out of those accounts? >> they wouldn't have even asked most companies are good companies, they certainly wouldn't ask their regulator if they could come back six or eight months and pull money out of consumers account. they wouldn't even affect western. >> i also want to talk about auto enrollment. when i first got involved, i called this.

[inaudible] talk about individuals without their approval, what is going to happen. >> if they are exiting the market it in the entirety, they will have their information sent by an insurer chosen by the federal government and enrolled in that plan that will get an 834 transaction and that information will be sent to the insurer who will then contact the insurer and asked them for premium. >> aren't there laws against unauthorized transfer from medical information from one to another. >> we have made that argument to our friends at the federal government. we indicated all the legal arguments including federal laws that we feel are broken in sending people's private medical

information from one insurer to another private insurer. >> so without the coercion of the federal government you would not be allowed to pass that information to another insurer without the insureds permission. >> absolute not. >> that would be breaking the law. >> absolutely. >> so once again, this is legal. >> we don't think it's legal. >> the federal government is doing it on their own account. >> correct. >> lieut. governor taylor, i want to talk about the reduction in choice because that's pretty start. sixty companies down to 11. that wasn't supposed to happen under the aca. wasn't competition supposed to flourish? i come for a free market. i would love to have been able to compete.

repetition is best realized when you have a lot of competitors. that's not what's happening here we see consolidation in the industry across the board. in your state you have an example of that. >> absolute. unfortunately we are seeing consolidation nationwide. we know there are a couple cases pending regarding mergers of large insurance companies but even more than that, when you look at who is still left in the market, we had 60 companies who prior to, you could choose any individual could purchase from them. we are going down to 11 and 2017. i stated, the starker fact is when you look county by county, one of the counties will have one insurer.

i don't call that a choice. it's one insurer. >> and no competition. >> no. and to have person, i met with a lot of different audiences in crowds and it seemed to me that everyone knew that is what was going to happen under obamacare starting in 2017. they are very concerned. one gentleman asked me, isn't there there something you can do or your national association which we are all members of and unfortunately, no, the answer is no. >> do you have an overall average amount since obamacare, your insurance has increased? >> 91%. >> thank you, mr. chairman let me start by saying a number of states, many states may have demonstrated have fully embraced the healthcare law and have seen

a significant benefits for most of their residence. we have request from several states including rhode island, virginia, and more that would like it added to the record. the affordable care act is working in their state law lowering the uninsured rate and improving their marketplace. the second point would be made in these statements is medicaid expansion has been critical to lowering the cost of private insurance and improving the health of their residence. that's the point i don't think we have made very well and i will return to that later. a little bit later i'm going to do what my friend said.

i just like to ask a couple questions if i could. first of all, congratulations on being the longest-serving commissioner in the country. what percentage of your population was uninsured before 2010 when the when the affordable care act was first passed? >> at that time, as we look back over time, over a decade or two that we have the information, at the time we were at 14%. we have have reduced that down by nearly 50% reduction in the number of uninsured in the state of washington. >> were individuals with pre-existing conditions able to purchase insurance for reasonable cost? >> no, there was a high-risk pool that was available to them

there was a pre-existing condition waiting period. if you had been diagnosed with cancer and wanted to treat it right away, you would have to wait for up to a year until you would have coverage. >> in those days with a b charge more for insurance based on their gender and if so, by how much. >> in the state of washington, we have a state a state law that prohibits it unlike a number of other states. there could not be a difference in the rates charged between men and women. >> my republican colleagues have introduced legislation to roll back the individual mandate. how would this change affect the risk pool and premiums in your state? >> it would devastate those pools because you would have the healthy holding out until they got sick and then opting in or hoping they could when they started to become ill.

they are in a real problem until there's open enrollment that rolled around again. for the rest of the individuals, it would be one where you would have a very sick pool of individuals, very dependent on health insurance. insurance doesn't work very well when you are only ensuring the people who need it and allowing them to come in at some later date. >> one of my guiding principles in life is to find out what works and do more of that. the national government association for best practices. my cabinet in delaware, some other states, other governors dealt with the issue successfully. let's find out who did it, how they did it and whether or not the idea is transferable. in massachusetts, when they launch the problem, my reckon election was in terms of, a lot

of people got coverage. what they didn't do well out of the starting gate was a just cause. you have mentioned this a timer to in your statement. one of the things i remember, i would ask you to share what the lessons were. my son, those who didn't sign up, it took some while and he said i might as well go up and get coverage. the other thing is you had people who didn't have help in massachusetts and frankly in our state who haven't had healthcare for years. they are not in good shape. once they have healthcare, for the first time in their lives, they are using it. that has had an impact on

utilization and cost for insurers and they are trying to recover those. they didn't have much expense but they didn't know what it would be like figuring out what the rates would be like with any real insurance. anything you can share with us, lessons learned in massachusetts that might titus as we go forward? >> and a good number us have looked here at massachusetts and they had a running start with the affordable care act under governor romney. one of them was having adequate penalties so you incentivize people and they didn't hold out until they needed healthcare. the other thing is you have to limit them getting into it after the enrollment period. you don't want to have to wait

months before you have the coverage you need. that was an important part. we wound up also finding it interesting in massachusetts and that was there was a prediction that the emergency rooms would be overruled run with the expansion of medicaid expansion in the respected states. the actual impact was it was the opposite. we had a 10% reduction in people entering emergency rooms in the state of washington and that was also reflected in massachusetts. the reason is when you go in there with a nonemergent issue, you're told if you go down to the clinic down the street, and get your care there but it's gonna cost you a lot less than getting it from us. it's remarkable how people were sensitive to that price indicator. there were a number of lessons like that that were learned. >> lastly, you've mentioned in your testimony the need to promote competition.

give us one or two good ideas that you think might work another. >> you have to stabilize the market. beyond that you have to make sure you can consolidate the risk pool. they need stability, they need to gravitate to that. if it looks predictable they are going to be much more willing to enter a market and that's where you get more competition. unlike a number of states, we went from 11 insurers to 13 in our individual market in the state of washington. i think that is part of it. even if it meant taking part of canceled policies rather than trying to apply cpr to them. it really helped to stabilize the market and those of the kind

of changes that insurers are looking for and it gives us the predictability we would like to see. >> thank you so much. >> thank you mr. chairman. this has been a very interesting hearing. the healthcare system wasn't perfect before the affordable care act but was as indicated by almost every speaker today, i appreciate you saying this, many of the pledges and promises just haven't been kept. you can say that's because of overpromising and it still means this is an improvement, but i have to tell you, for a lot of my constituents, it's not an improvement. it has created more problems for them. it's not just higher cost. it is people losing their insurance. we haven't even talked about the co-op which is part of the affordable care act in this committee has done some good work on that but we have tens of thousands who have lost their coverage because pre-much every few weeks another co-op goes

under. this is, this has been tough for people. i have 30 specific examples that i've brought with me today because of the portable on our website were people can tell us their experience and i'm not going to go through all of them but all i can say is it's not just this theoretical issue that's a debate of healthcare policy, it's about about people's lives and their families and their inability to get insurance that covers them. i think you have done a good job outlining that. behind those numbers are people. here's chad from archibald. the plan we had was canceled. the pharmacy said we could keep our plan if we liked it and promised lower rates. our premiums have risen 92%. we keep raising deductibles to

keep it from going up more. i hear that a lot back home. they say i got healthcare. coverage but really i don't because my deductible is 5000 or $7000. that's like i don't have coverage. one thing i think we should point out is that we need to do this on a bipartisan basis. we need to figure out how to deal with this issue of not just the cost but the quality of the care. competition is going to help with that too. let's talk about the competition for second. you gave some troubling testimony today, lieutenant governor taylor, and you talked about the fact that you're seeing some big increases next year. who can afford that. these are the individual market exchanges.

>> what's going to happen if things don't change. if you look at the past couple of years, my biggest concern is that we still aren't going to have a stabilized market. as we continue to lose carriers on the federal exchange, that creates turmoil in the market or that region and that creates chaos and it's hard to price products. where that happens, it's the consumer in the end who gets hurt because they have to pay more or their shrinking provider network.

my concern over the next couple of years, the early study that we commissioned in 2011 may have predicted the market was stabilized by now. unfortunately that has not happened. i'm not certain that will happen in the next year or two. >> it hasn't stabilized in your testimony as it has gotten worse. very recently it's gotten worse. when you look at your testimony, 17 cut companies were approved to offer insurance on the federal exchanges and only 11 have decided to offer in 2017. is that correct. >> cracked. >> here we have a period of time where you expected stabilization and we got just the opposite. we have 88 counties in ohio. how many, many now only have one insurer? >> let me find my number. >> i was in the math when you're talking about it. >> i think it was about 25% of our counties.

>> 19. >> that's about 25%. >> i know it's a complicated area and there's lots of debate about what we do, but it's just a lack lack of choice and a lack of competition as it relates to cost and quality of care. recently they put out estimates on this and they are saying 19% of enrollees could have a single insurer next year by 2017. you talk about the increasing cost for people who just can't afford it. 86% were subsidized by obamacare dollars. pupil sam not on the exchange. most people weren't on the exchange and they said doesn't affect me but it does because were all taxpayers. the other thing happening in ohio and around the country,

these insurers who can't make a profit under the exchanges because of the way they were structured are doing what? they are all staying in business, leaving the exchange as you reported a few weeks ago but there also cost shifting. if you are a person in an exchange plan, bad news is your costs are going up dramatically. deductibles, co-pays, everything if you are being subsidized by that, that helps you clearly but the taxpayers are honestly paying that. also, we have a situation where if you're in an employer-based plan, which most of us are, you are seeing an increase as well because the companies are going out of business. do you have any evidence of that in ohio that there is cost shifting from the insurance companies who can't make it on the exchanges because of losing money and i assume we have numbers on those. i know anthem loses money in

ohio but these companies are aren't in trouble because their cost shifting. that's a concern that outside were talking about today. >> right. when they made their announcement, they were pulling out because of a 400 million-dollar loss on their federal exchange business. i think using that number, clearly there are some insurers that i'm finding it very difficult, the populations are thicker in the polls than they expected and they are having a hard time with the increases to keep up with the actual cost. i think one of the things that hasn't been said here, what has not been dealt with is the cost of healthcare. premiums are driven by the ultimate cost of healthcare. where we originally thought the affordable care act was going to

play some emphasis on addressing the cost of healthcare and reinforcing healthy behavior instead of only treating them when they're sick, we are not seen that happen in the marketplace. the exchange business, there are some companies that could write it in a profitable way but i think more of them than not are finding that it's a loss for them. they have to make a conscious decision, a business business decision. is it such that they can continue to offer health insurance on the federal exchange even though they are writing it at a loss and how long can they continue to bear those losses before ultimately is a decision they can't do any longer. >> my time has expired but i really appreciate your expertise and understanding how insurance work and as you say, looking at the broader dynamics in healthcare.

that's what we have to do and we have to do it on a bipartisan basis. then we had to come up with something that makes sense in the real world. you do have the ability to provide people with affordable high quality healthcare thank you. >> thank you for raising the cost shifting issue. it's been going on for decades. not just in terms of obamacare but they're taking over more reimbursement and don't reimburse providers. the other point i want to make is you talked about the hundreds of letters that we've all gotten. you've talked about individuals being harmed by obamacare. i don't know about you, but i hear more more people just taking the risk because they simply can't afford the premiums even if the high premiums on the insurance have high deductible and high out-of-pocket, they're

going what's the point. they've taken that risk on themselves. i'm not sure you've seen that in ohio but i've seen it in wisconsin. >> senator langford. >> so a year and a half ago, i talked to my daughter's and asked him point-blank why you are no longer practicing medicine after this year. why are you closing your office. to which he said, for two and half years in a row we have tried to make this work and every single month, for the past two and half years, we have lost money. i can't keep up practice open to do this for the new compliance cost, the things that are happening, we can't stay open. one of the great doctors in oklahoma city who has years of experience retired. he's not the only one. there are a lot of others.

it's not just my family, it's a lot of families. lieutenant governor, i can very much appreciate ohio experiencing a 91% increase. i can appreciate appreciate that because border to border in oklahoma, we now have one insurance carrier. one. that's the entire state. every other carrier has left. that one has requested a premium increase for next year of 75%. that is a one-year increase. 75%. if cms doesn't approve, they could just withdrawal. the hard part about it is, the dirty secret of the process in the affordable care act is that certainly cms will approve the

75% increase because increase because then we will have no carriers in the entire state and we will move from one down to none. when they approve the increase, it will change dramatically for people who are 201% above poverty. for every one above poverty, the subsidies will kick in and the taxpayers will cover the 75% increase. :

this is a direct-- very direct affect on what's happening to the families in my state and for those on the subsidies, they will not feel that affects, but those 20% of the poverty end out there is a new perverse incentive to say if you are 2150% poverty, find a way to get to 199% of poverty or where you will not yield to get healthcare here that's the wrong direction to direct our country. with only one option out there in my entire state, we are in a bad place. now, our state used it to run something called incher oklahoma we were told we could not do that anymore. we used to run a plan to take care of those in greatest need. that's being pushed out. there are other solutions out there and other ways to take care of this, supposedly the

co-ops as a senator portman mentioned were supposed to rush into that space and provide option. of the 23 started, about $17 billion in taxpayer funding, only seven are left and all seven are in trouble. no way the taxpayer real recover that money. so, we have made it incredibly difficult for people to get insurance on the insurance market in my state because it is now so incredibly expensive they can't get it on the individual market. they can't afford it, so they have to go into poverty to get healthcare insurance or find some employer, but if you are self-employed you are stuck, so it's a tough cycle that we are already in and in some ways oklahoma is the canary in the call mind. we are raising our hand and saying this is really serious for us. this is what everyone said would happen and we are experiencing it now. it's happening there. my question really is-- you

talked a lot about state solutions and the things wisconsin has done in the past and we have done a lot of things in our state in the past and no longer allowed to do. if you were given the ability for your state to say, here are some flexibility to take care of people, is it your ascension that your state would say, know only the federal government cares about people in my state. we don't care about people in my state or is it your assumption that your state with step into that and say there are people in desperate need, give us the flexibility and we will be glad to feel that boy quivered i think the leadership governor walker has shown as well as the state legislature of the years which show that yes, we would want to take care of the state and we have done that because we have expanded, we are a different expansion state and went to 100% of poverty where the state is covering a piece of that, so for the first time in wisconsin everyone in poverty is covered under our medicaid plan, so wisconsin has started down that road and we would love more

flexibility to do it fully. >> what's with that look like, practically? went with that plans an option b? >> i think we would need to take a look at what the options were, but i think we could probably to a large part to lack to sort of high risk pools we had in the past circuit that was well functioning and did a good job of taking care of folks who had significant medical conditions in the state and it was a good procedure that brought subsidies we had a good program to provide coverage for those folks in need and i think if you look at the rates that i have in my testimony, if you move the rates back down to a reasonable level, if they 21-year old does not get a 75% increase or more in the first year and a 21-year old in milwaukee does nokia 70%, they are more likely to join and avoid the risk fall. there would be a number of things that would lower the

rates and bring more competition because we are facing the same thing that ohio is. service areas and where folks are covering has been in turbulence for the last several years and our market despite the fact that we have a competitive market with more insurers in wisconsin in most states, it's in turbulence and more carriers are offering coverage in change and that's further reflection of the fact that it just doesn't work for them. are on exchange carriers have literally lost, even the well-capitalized ones millions of dollars in value from surplus, so eventually they will be even at greater risk. >> we have dropped down as i to one carrier and at the same time several of our rural hospitals closed in the last several months and others are on the brink of that and it's a very very difficult time for them to manage what's happening right now in the requirements on them, so as we watch oral hospitals close, physicians retire early

and other physicians margin to hospitals and other hospitals merge and watch insurance committees run country merge, we are not watching a healthy future for where we are in healthcare. we can say we are sustaining where we are now, but we can see quickly where things are going and it is not a healthy market in the days ahead, so i appreciate your testimony for you being here. >> thank you. quick point. doctors in wisconsin tommy they are retiring early and worse they are telling their kids who have always wanted to follow in the footsteps of their mom and dads, don't go into medicine. some have even paid them not to do so. pretty sad state of affairs. >> thank you mark, mr. chair and her panelists, witnesses. commissioner gearhart, thank you for being here today. it's good to have someone representing iowa and representing our concerns on the panel today and i enjoyed your

testimony only because it's the same thing that i have heard over and over again traveling across iowa. what's i don't enjoy about that is the fact that the stories being shared by our wonderful iowa families are stories of hardship and with the aca has done to their families. we all have very serious concerns about's how our families will be able to continue to afford the affordable care act, insurance policy and i hate to say that i agree with you that i wins and folks across the country have been placed in a situation where the they are attempting to decide, do i pay for my mortgage or do i purchase health insurance? i have heard that time and time again. it's either a mortgage payment because the insurance costs now are so much more than previously it is a karmic-- carpino? is a truck payment?

is a tractor payment, i mean, there are several considerations that families are now making that they do not have to make a number of years ago. a family of three in qasim's county, iowa, reached out to my office to share their currently paying nearly $8000 annually for two policies. one with a nearly $6000 deductible and together with a 2500-dollar deductible per person and based on initial rates request they received a notice that one plan is expected to go up 37% and the other planned 46%, putting them over $10000 in premiums for next year and one family member already took a second part-time job off of the farm that barely covers a thousand dollars-- the 8000-dollar premium expensed out and the family has had very few medical costs so far this year and rightly asked me why as healthy participants do they

keep facing these increases. you also mentioned the shocking statistics. we know that not found 5% of spenders drive 60% of costs and can you explain a little more in detail what federal policies are driving this? >> yes. of the carriers have to have one individual risk pool for their market and again, if you have a catastrophic claim or series of them it drives the whole pool and soak in iowa at least, we have had significant claims of one family driving upwards of 10% in one individual pool and soak we had a functioning high risk pool and what happened is the industry true that high-risk pool of about $20 million annually and now that spend is put into insurance carriers and that pool is driving a lot of the rates and i heard in my public hearing on these issues, senator, where folks were upset

and to give you an idea of a family of five, soon to be six if i wanted to buy a plan in des moines iowa the cheapest plan i would find with deductibles is about $26000 a year, that's a silver plan and people have to make significant adjustments. >> absolutely and we do here at all the time as i about traveling across the state, so thank you for that. as i mentioned, iowa families are paying a lot for these premiums and they still have those high deductibles and other out-of-pocket costs, but one thing i hear commonly from folks that reach out to my office and reach out to meet is that they did not realize what their deductible meant when they bought the plan and others asked why they are paying all this money in premiums when they will likely never reach a deductible and i understand that lower premiums on the front and generally will mean higher out-of-pocket expenses and costs when accessing-- accessing services, but can we help

consumers look beyond the price and focus on the benefits and network associated with a plan in the high premium environment? is there a way we can do that? >> it's difficult and we have done a lot of consumer education around the deductible issue because i would submit to you $13000 for the average iowa family-- they don't have 30,000 dollars in their checking account to write that check, so it's a difficult issue. we tell folks to shop around and some counties there is only one option, so not a lot of choice and of the plans out there they are more narrowing network. we have new joint ventures kind of like an accountable care organization putting some of the risk into the writer and make sense where the doctors have skin in the game to keep the patient while, but we have to look at prescription drug costs. insurance was fixed through the obamacare and now a carrier has to pay out 80% or more depending on what group they are in, but

we did not look at actual cost and until we look at the entire system of healthcare we will be having this dialogue for a long time. >> yes and i know i should this story with you about a young beginning farmer that really, his plan was canceled, 300-dollar plan, which was perfectly acceptable to him. it was canceled and did not meet the requirements of the 04 book care act and replaced with a plan in the cheapest he could find was $700, so $400 difference every month, which he was angry about because that was his truck payments there and his deductible was $10000 and he said i don't have $10000 if the something should. i don't have it. so, it's hurting our families. it's hurting those just starting out in the workforce, especially if they are self-employed and it targets many of our farmers and ranchers across the state, so it's been very very difficult for us. we could go on and on.

i know you had mentioned a solution for the high risk pool. you mentioned the particular family that is about 12 million-dollar of costs, which is a significant concern. can you explain a bit more about what that risk pool, your solution to that risk pool would be? >> my idea would be if we give like giving the carrier sprint-- predict ability of pricing is critical and if a carrier with note lifetime limits and no annual limits you get it catastrophic claim like that, senator, your whole balance she could be disrupted, so what our theory is that if those folks went into some other pool whether state backed or federal backed where their coverage would still continue in some fashion and so pay the premiums and if you told the carriers you could almost pick a number and say you could pay the first

million, it almost doesn't matter what the number is spared you are in the hook for 500,000, a million dollars and after that goes to this pool that is more of a societal spend and that makes sense because in the smaller states like iowa the risk pool is not that big, so you get catastrophic claim like that in a pool of 21000 and it's really going to hurt everyone in the pool and are written testimony would target more about how that would work and i would be happy to explain that further when there's more time. >> thank you very much. >> thank you, senator ernst. let me give you the opportunity. i'm not quite sure whether other states high risk pool fund the same way and i believe wisconsin was a surcharge on everyone's insurance; correct? >> it was a surcharge paid by the insurers and in the medical providers agreed to a discount, which is a portion of the contribution and then premiums. >> rather than had the adverts affects as commissioner gearhart is talking about, you pool everyone that is basically allowed to operate insurance in

the state, paying premiums into that and the system worked great. literally worked great we had when i was running my business we would go to renewal and there would maybe be someone with cancer and they are never dropped from coverage, but they were not off the coverage, but because we have high risk pool we would immediately go there because they were not denied coverage and they would immediately be required and there is a menu of different types of coverages, different to deductibles, different out-of-pocket said we could almost always come up with one basically identical to our own group plan with copper bowl prices than it was a system that worked well with a complete risk pool sharing and no one had to raise their rates astronomically to protect themselves, so it actually worked. i went to talk about because it is true when you're facing a total cost, literally i'm talking about someone $1400 per month, you are getting up into the 15, 16000-dollar per year plus you have your deductibles

and 6000, $7000 in your literally talking about having to pay 20 or $20000 or more before you get any insurance and so what i am seeing in this day, people are telling me they are just dropping coverage. people that always had healthcare coverage, always responsible simply cannot afford it and they're willing to take the risk because they are saying what is the risk-- other than catastrophic event. i would like you all to talk about that phenomenon in your own states starting with the lieutenant governor. >> so, in ohio, the high risk pool that existed immediately before obamacare was fully implemented was actually subsidized by the federal government and set up in essentially run by the federal government's and was subsidized by the federal government, so it's a bit different it sounds like to me then maybe what was explained in wisconsin. >> how did you get that done? >> that was before my time. so, it's different. however, we did regulate the

insurance side of it because it was basically underwritten by an insurance committee in northeast ohio. i will to you, it was a unique arrangement, but we also had disputes with hhs. in particular, there were two disputes during the time since i have been in office, one was related to premium levels and her actuaries looked at the cost of the high risk pool and premium level necessary in order to sustain a high risk pool and hhs refused to accept what we believed was actuarially justified. we then believe that puts the high risk pool at risk in the obviously the consumer ultimately is harmed. i will tell you that the second disagreement we had with regard to the high risk pool was whether or not certain individuals would be eligible for coverage under the high risk pool. ultimately, we disagreed. the insurance committee ended up having to file a lawsuit against both of us, the department of insurance and hhs in order to

make a determination about which direction they were supposed to go. >> there are always strings attached to federal funding, but again i waited speak to the phenomenon of the individuals in the market with such high premiums and a duck to that they have just not taken insurance. how big of a problem is that an ohio, wisconsin, iowa and what-- washington? >> i spoke an individual the year and half ago, small business owner and her comment to me was the premiums are what they are. she said but if i get sick it's going to cost me $12000 out of pocket in addition to what i have already paid in premiums in order to receive coverage. i don't have $12000. i can't afford to get sick. >> by the way, we are also seen the same thing with people subsidized by obamacare because of high deductibles still don't access care because they can't afford it. commissioner wieske. >> first i would note that the uninsured rate with the

methodology used has changed and so we would not be talking about apples to oranges as far as networks is concerned and that's a concern of mine because wisconsin traditionally has had a low uninsured rate. we landed this time at six and that's where we typically land, six or higher for uninsured rates. >> real quick i have information in 2010, about 94% had insurance 89% full-time, 5% part-time. in 2004, 94% have insurance, 89% -- it hasn't changed. >> we are fortunate for that because of our competitive market, i think, which is becoming less competitive in the individual market has grown because of obamacare, but i think the scary thing is the large group market and small group market hasn't shrunk. we expect a large group market to shrink because they are moving into unregulated plans, which is their prerogative and

the small group market has shrunk by 30,000 folks and so if you factor in our changes in medicaid and the loss of a high risk pool, that's in fact probably not any gain in individual market. >> when you talk about risk plans are you talk about employers so funding. >> self-funded, yes. >> we have some real innovators in wisconsin. >> about 200,000 and we are k with that, but about 200,000 folks and fully insured plans to move from that to self fund and at the question is, why were they not fully insured before and why did they move into self-funded and obamacare is the reason they moved, so there may be a reason. we are supportive of employers providing coverage, so i don't want to imply that by any means. i think it's a concern when you see that sort of shift and is caused federal law change and i think that's where we are concerned. i think a sparse folks with self

coverage we are seeing this pretty consistently in wisconsin and hearing about it that people just can't afford coverage. we are hearing from our legislators, from consumers who call our consumer lines. we don't have any good numbers on that, but we are hearing this as a phenomenon and based on what we see we really haven't seen the individual market grow as much as you would expect given the subsidies etc. etc. that would indicate that there's an real movement and getting private coverage. >> having insurance is not the same thing as having access, bottom line. >> correct. >> senator carver. >> we are going to come and go here for a while. i think the boat has started. we will try to conclude around new nor so. thank you for joining us. i do question for the record that i will submit for you,

governor taylor. if you could respond that would be great. i'm going to ask mr. kreidler. mr. kreidler, just think out loud or a fair amount about risk pools and the steps that the state like to take. give us a short list of things that you would recommend when the election is over with the new congress and new presidents, what are some things we recommend-- you recommend we do at this end and that the states could and should be doing at your end? >> senator, i appreciate the question because i think what i have noticed even in the discussion we had been holding this morning is that there is more of a focus right now on what we can wind up doing to make the system work better and one of them certainly is the

concept here of having some form of a reinsurance risk pool that would help mitigate the risk and exposure that insurance committees would have so they don't wind up with the particularly very sick people or many of their people are much is sicker that there is more of an adjustment here between the insurers, so they can predict their exposure and have the benefits of a much larger risk pool rather than just the people that have bought their policy. i think that is a step in the right direction. that is starting to look at what we can do better than what we have right now. >> let me just ask rn or panelist are good you not your head yes or no if you think that makes sense? thank you. one to vigorously. >> senator, you also made mention about massachusetts. i think one of the areas that would help a lot and he goes to the questions raised about 40 really that we have heard and i'm-- i think everyone is very sensitive and particularly those of us were regulators because we are on the front lines when most people problems they are calling

us and registering their sentiments on the issue and that is something that massachusetts has, which is that the ability to move into what is to read-- referred to as active purchasing standardized plans, value plans. >> what does that mean? >> that means-- we were just at our national meeting and we had a professor from harvard who was on the exchange board in massachusetts, and it really is a drain to make sure this medical services that are really high value meaning you don't want people to delay where-- whether it's hypertension or diabetes whatever it might be you want to make sure they are getting those services. bring down the out-of-pocket expenses, co-pays and deductibles and make it easier to get those services because they have such a profound impact on the level of health of that individual. i think the states are in a unique position to be able to experiment along these lines. massachusetts, california is

moving in the direction and i hope i can take that issue to my state legislature this january so we have that ability to do it. we did it in-- the book of california and massachusetts have their own state exchanges and we do too and i would like them have the kind of power so we can get in there and will explore what we can do improving the value of those plans by making sure those important services are not impeded because of the out-of-pocket costs. >> give me one more good idea for the federal government, please. >> i would have to tell you from a federal perspective i would obviously strongly encourage because of the impact it had, principal medical driver of the rates that i'm looking at right now in the state of washington and as pharmaceutical. the more that can be done to address that very half, ticklish issue and i understand that profamily. at the same time, we are really out of line with other countries we really need to bring down those costs.

stabilizing the market is very dependent on bringing down and bending that cost curve down so it doesn't rise as fast as it has historically has. if we don't do that, getting everyone insured, the affordable care act won't matter. we will be back to what we had before the affordable care act. the whole system is failing. we need to bring down the cost of healthcare. >> i went to the back to something that my friend john mccain said in-- during his visit to our hearing today and john mentioned-- senator mccain mentioned that we passed the afford will care act on a partyline vote and i think what he did not say is that we had the longest markup in history on the finance committee prior to that. we voted on literally dozens i think scores of amendments republicans and democrats. he did not mention that chuck grassley and the senator spent

over a half year together, to democrats and two republicans to try to find a bipartisan compromise and three of those people, republicans had an inordinate amount of pressure not to find a compromise, not to find it, mice and ultimately felt compelled not to help find a compromise. i was there and they are three very fine republicans and democrats as well and there's a lot of pressure by republican colleagues just not to find the middle. there is a clinical help committee. they spent a full month deliberating the law on a bipartisan basis. the house held 79 bipartisan hearings and markups on the reform bill over a year. the senate held dozens of public meetings and hearings and vote the finance and health committee and accepted hundreds of republican amendments. health education committee held

14 bipartisan roundtables, 13 bipartisan hearings, 20 bipartisan walk-through on healthcare reform. the committee considered nearly 300 amendments and accepted more than 160, many offered by our republican colleagues scared the finance committee held 17 roundtables and summits and hearings on health reform. our committee also held a 13 member briefings and walk-throughs, 38 meetings and negotiations for a total of 53 meetings on health reform. our committee also held a seven-day markup of the bill and i think that is the longest finance committee markup and 22 years resulting in a bipartisan vote to approve the bill and finally the finance committee markup resulting in 41 amendments to revise the belt including 18 unanimous consent without objection and as to the liability of an insurance plan i

friend of senator can did not mention the consumers regularly lost their insurance rate when they did get sick and when they needed it the most and in those days premiums to go up and in some cases bios much as 10 or 20% and i just want to put those things on the record. the-- i want to go back to the issue of competition for witnesses, if i could. one of my early mentors when i was state treasurer was a very successful businessman, older man in delaware and also the chairman of state pension plans, but his name was ernie d hannemann with three letter and then he ran a very successful fiber fabrics business in our state. he used to have a saying, competition, first it makes you sick commitment to better. then, i think what we need serious competition, not just on the entrance side, but i'm not provider side and we have heard

of some ideas as to how to do that and i think the second thing that we need is to make sure we have a purchasing pool that insurance companies can actually afford to ensure and to make sure it includes a mix of people, health and unhealthy. we have talked a bit about-- offer differ in ideas and examples, but it's good down the road if we could just on the competition. anyone particularly good idea, when good idea that you think would enhance competition either for the insurers or the providers, please click to be brief insurance perspective i would say less relation. open market and consumer choice and let insurers write the type of coverage that individual consumers want to purchase. ..

the very narrow network in the pool and they are constantly changing the area to look at. finding a way to get better competition and less regulation would free up and bring more carriers in the market. that is what we have seen in every other line in wisconsin. >> i will give you two thoughts. but states have more flexibility. what were looking at 1332 waivers in that kind of thing, the other is the care organization and the alignment of the providers in the game to keep the patient wellin health. i think we need to focus on that. >> okay thank you. >> in my state we see the formation of organizations. are you your state being

informed as well. >> we have quite a few in iowa as well. >> we see a lot in wisconsin but we see a partnership with medical provider. >> some. >> thank you. >> i think what's been talked about here is allowing insurance companies to be able to innovate and make changes without the being impeded. we need to maintain their respective standards. you don't want a company getting the healthy people at the expense of less well. that's very harmful to the market and certainly to the individual group market that we have right now. it's really starting to have some standardization.

this particular policy, allowing them to go there and go to highly manage plans that we are seeing a trend in with the marketplace. innovation can help hold down costs but it needs to make sure they don't gain the system inappropriately at the expense of the whole system. >> okay. >> i want to say again, verity said, we compete with a lot of different nations on earth. they are competitors. one of our strongest allies but very strong economic competitor is japan. for years i remember learning this when i was in my second year on the finance committee and 2009, 2010. one of the things we learned that a hearing was that in competing with the japanese, they competing with the japanese, they were spending 8% of gdp for healthcare cost. we were spending 18 or the japanese getting better results. people live longer, they had low

rates of infant vitality. they are spending less money getting better results. at that point in time, we had 40 million people going to bed at night with no health care coverage. they could go to the hospital or emergency room, something. we've had some heart wrenching stories shared with us of individuals having a hard time affording the premiums and having coverage for themselves in premiums. with 40 million people, not not just one or two, 40 million people were in a situation like that. we can't forget that.

i'm not smart enough, even my colleagues and i have we all try to figure it out together, were not smart enough to figure out how to take a good idea and make it an even better program. it's one that entails the partnership of not just the federal government, not just the states, not just the governors are insurance commissioners, but the providers and the insurers, all of this is what we call an all hands on deck moment. that moment will come sometime in january. my hope is that a lot of hope hopes, including people in this room, people will be new in the senate and the white house and go into that call as well. we will do with what we do best as a country when we prevail and

that is we work together. we need to do it again. we did it to clean up medicare damage and we need to do it in this case as well. thank you also much. >> thank you, it looks like you went over your time. [laughter] >> i appreciate you holding down the fort. >> i want to talk about people gaming the system as we've heard reports of this because under law, you sign up for and go through the open enrollment period and sign up for healthcare, never pay a premium, have coverage for three months because the government is providing the subsidies and paying for you and then quit. never pay up premium, i've insurance for three out of 12 months but is that something you

see in your states? >> i don't have a specific example of that but it's certainly a concern and i can tell you in speaking with providers and hospital organizations yesterday, one of which was a rural hospital who had recently filed bankruptcy, those kinds of issues are significant in our rule communities where they have less ability to absorb those losses. >> to see a problem with this? >> we do. we have heard from these groups consistently. >> is that a growing problem. >> yes. >> we have heard that in the special moment. as well. the claim i discussed earlier was a special claim. we are seeing the morbidity of it about 100 or 2% on average. >> if they see a system that can be gained, the the more they will try to take advantage of it

>> i'm not seeing the kind of people who come in for a few months and then get out. special enrollment has been an issue from the standpoint of being a regulator, you look at it and say if you want to stabilize your market you can't allow people to have multiple opportunities to go into the market and that is something that as an association across the country, we have spoken out and said, we do not like the idea of having special enrollments that we see because it is harmful to the quality of the overall market. you mention the term stabilize market. one of the signs of a market that is stabilizing is if the price declined over the years. we had a huge pricing cream increase that first year. they did a study in between 2015 and 2016, there were rate

increases of 12 - 13%. in 2017 they're looking at 25 and 26% increase. that's going the wrong direction. that is not the sign of a stabilizing market. does anybody want to talk about that or dispute those figures? it's so hard to get -- i thought by this point we would have a stable market. our individual purchasing insurance has actually gone down we're actually seeing fewer people buying their own coverage fewer people participate in these high-risk pools and they will self select and it makes it

a less stable system. >> that's correct. this is typical when you see certain times of reform when you look at other reforms, it's typically the third and fourth year where you see this like and what you see as the death spiral where the risk pool is getting worse and worse. >> how is the this affecting the individual market? >> from my standpoint, they have operated but not seen the cost shifting of insureds from the original market because they can't recover and shift that over to the group markets. you talked about people moving plans out of the group markets

into erisa plans. i would like all of you to talk about that dynamic between individual markets in the group markets and what's expected in 2017 and beyond. >> i don't have numbers on the exact shift, but i do think it's human nature to move to the path of least resistance and will cost me the least amount of money. we have not quite seen the trend you are commenting on however i do expect that to change. i do think we will see more of that in the future, we had a 51%

average increase in the first year. even if we thought we could get to stabilizing premiums, were still not stabilizing the market with the carrier where you have 19 counties with one carrier. you're still not stabilizing the market. i think again, i don't feel like we have the stability and the market and your point is, are you cost shifting, for all all intensive purposes, that's what uphold does. a poll does cost you from one individual to another for insurance purposes. i don't think we could give you any numbers to speak to how this is shifting. >> it was pretty obvious that the number of provisions, the more harmful provisions of obamacare were implemented in the delayed fashion. are there provisions about to kick in that will affect that market? >> i think for wisconsin, the

end of the policies, as they promised you could have your claim and keep it and just before 2014, he allowed some physician policies pretty in wisconsin we allow that. from the small group market, there's roughly twice as many individuals in the small group market in transition policies and grandfather policies that are not obamacare comply it. when we get to the end of 2017, all of all of those plans, unless they to another section will go the way of a dodo. that will create a big change in the market. >> you will see a cumulative, a price increase like we've seen since 2018. >> any of those consumers who have not participated, we have about 46000 folks in that as

well. they will see whatever the rates are in their particular counties. >> if you take a look at what i said, based on obama care, that's the kind of cumulative effect you can see in the small group market. bam, in 2018 will hit them like a ton of bricks. >> particularly those in the market, yes they will have steep increases. folks will see significant increases next year. >> that something people really need to understand. >> thank you. i have a question for the group and i want to hold you guys because you've been really patient with the spirit i appreciate all the insight that you have and we have some smart people that will help us unravel this at some point and come up with a better solution. yesterday i and it deuced my colleagues with an option about

health options act. it basically said, if you are family in an exchange as is the case as 25% of the ohio's in ohio and oklahoma were you don't have choices, you can go outside the exchange to buy insurance and to me it's not the ultimate solution because i do think the whole system needs to be reformed, but it's also the measure that's needed right now from these other states that are seeing less competition with a little bit of choice. again, cost and quality being what comes with the choice. what you think about that. i know there's potential with the tax and we need to work on that. what you think about that as a concept, to say let's help people go outside of the network to be able to get insurance when

their choices are so constrained >> thank you for the question. the more choice we can give consumers, the better. the more that we can eliminate overly burdensome regulations to allow the free market to work so they can purchase the type of plan they want with the prices they can afford to pay, i think the better off we are. i would support and option to give consumers more choice to purchase health insurance. >> i would know that governor walker is asking for this in 2013 as well, broadly, and we are very supportive. that doesn't necessarily make any sense why a consumer should have to send all their private information and run everything through a federal exchange in order to get subsidy.

i think conceptually this made a lot of sense. >> my principal concern would be one making sure the market isn't somehow compromised by allowing people out and what that would do to the integrity by doing that. the idea is to get everyone covered whether they are in a rural area. they weren't well served before and it's an ongoing problem and we want to make sure, as it comes from their extent that they have choices in the free market. that's a task for all of us, regulators and certain lee for them. >> we are trying to avoid them.

certainly washington is looking at the exchanges going forward but in places like ohio we are seeing fewer and fewer traces and that second class citizen you are talking about is happening within the exchanges. i will say there are some counties where it's not necessarily insurance companies who are willing to write all. we might not have one in ohio yet, but i'm told from talking to the lieut. governor taylor we might have that situation in our state too. it's getting dire. we've got to figure out a way, this is one that i think would provide people the flexibility and the care that they and their family need. did you want to comment? >> thank you very much for allowing me, i can appreciate all the information you have provided today and i hope you will stay in touch. >> senator peters. >> thank you, mr. chairman, thank you to each of the witnesses for being here and providing some good testimony as to what's happening in your states.

i certainly appreciate the comments of my colleagues here, i appreciate your comments talking about how we need to be bipartisan and figure out how to deal with some of these very complex issues and do it in a collaborative way. i hope you are at a point where we can get away from this partisan divide that has prevented us from dealing with the health care where folks think we just repeal and we are beyond that debate now. it's not going to be repealed but that doesn't mean there isn't much to celebrate. we are going to fix what's not so good and take it in a practical sense kind of way, roll up your sleeves and i think it's also important as we have that debate to remember that the healthcare system wasn't all that great before the affordable care act was passed. the reason it came out is

because of significant problems that existed in terms of access and cost, i think in my state of michigan, prior to the affordable care act, it was up to something like 15 times faster than wages. that's not a sustainable course. the healthcare system was not on a sustainable course prior to the affordable care act. at the same time you had large numbers of people who simply did not have health insurance. in this great country of ours we had folks who knew if they got sick, it might ruin their family and cause bankruptcy. that's the number one cause of bankruptcy when somebody gets sick. how can we accept that system where that existed before affordable care act. now anyone with a pre-existing condition can still get healthcare. to me that is a popular option

and they can still get healthcare. it frees up people from an entrepreneurs perspective as well. if you're not locked into an insurance plan, you can can go off in start your own business and your family is still protected. your children are protected. if i look in michigan, if you look between medicaid expansion in the marketplace, it's somewhere around 700,000 people that now have health insurance i didn't have it before. now i thing we should celebrate that we have 700,000 people thousand people that have some coverage and protection should they get sick. having said that, it's not perfect. i've never seen a perfect bill

so you have to go back and refined and try to find changes. a lot has been talked about regarding competition which i am concerned about as well and the lack of competition and how that doesn't bring prices down. governor taylor you have been outspoken about the reduction of competition. i think you've said in your testimony that we need to make sure that it continues to be robust. under your role, do you have the authority to hold public hearings? >> yes, in some cases i do. >> were you asked to hold any public hearings about the merger between humana? >> yes we were. >> did you hold a public hearing? >> i did not. >> so here we have two major insurance companies and i think you talked about how some places in ohio have just one company

and i have two major providers in your state combining which means less competition. you talked a great deal about how we have to keep robust competition. was my understanding that a number of groups in ohio did ask you to hold public hearings because there were concerns that this merger was going to reduce competition, raise costs, decrease network adequacy and hinder success to the individual market in ohio. why did you choose not to hold those hearings on the merger? >> thank you senator peters. i was referring to my health policy expert. the law on this case would not have permitted us to hold a public hearing the cause they had met the requirements under the law to proceed. there is no specific requirement , no statute that would have said that we could have or should have public

hearings in this particular situation. >> are you working to change that law in ohio? >> no i am not. >> you think it would be good to have public hearings before a major merger of the magnitude that were seeing in ohio which will limit competition? >> obviously, as you well no, each state deals with these types of acquisitions and mergers differently but they also impact states in a different way. where you may have a merger of two very large insurance companies, obviously being reviewed by the department of justice where determination will be made on its face in total, whether or not there are competitive issues, states deal with this individually. individually they may have a impact on overall competition. where ohio may be less impacted by that particular merger from a competitive perspective, you might speak to another

commissioner of another state where they would express concerns because of the nature of the market that they hold within that state and the type of business that they write and how it might impact competition. >> it sounds like it's a good reason why you should have public hearings in your state because every state is different and you want to understand how mergers would impact your state. i would think the people of ohio would be interested to have that kind of transparency. our talk about consolidation, and what's happening, i'm particularly concerned and i'm sure my colleagues have received all sorts of correspondence on what's happening with drug manufacturers, the recent epipen situation where you have a drug that really hasn't changed much in years as far as its competition and yet we've seen a 400% cost increase by the drug company. we understand the drug companies need to charge a fair price and

develop products and there has to be some return to them, but when you have a drug that has been out in the marketplace that has not changed and you see a 400% increase that is passed on to the individuals who buy it or the companies who have to cover it, i just had a group group of dermatologists in my office earlier this week and they are saying they are seeing five or 600% increases in basic premiums, things that may have cost for $5 in the past are now several hundred dollars for a tube of cream for a dermatologist. the drug companies are increasing these prices. dave opened the palace and what should we do it to rein in these outrageous price increases when there isn't even a change in their product. the only one that seems to be

rewarded are the ceos who are getting these huge bonuses. >> we will take that for the record. we are over time and can submit it for the record. >> you have a quick comment? >> could you please be given two minutes to respond. >> two minutes, matt. >> two minutes to respond to a major reason why healthcare costs are going in up in this question. >> you could've started with that. you have two minutes. >> all of us have appointments and i have constituents waiting for me and i appreciate the fact that you want to have more time in your allotted to the rest of us who have been here all morning listening to the testimony. i also appreciate the fact that you want to get an answer to your question, but you could've asked that question, rather than rather than asking a question that was totally unrelated to the hearing, to do the governor who did a traffic job answering by saying you're wrong and she didn't have the ability under

law to do it she's done. i want to state that for the record as well. i'm happy to stay and keep constituents waiting but i hope we keep to our time and members can show up and listen to the testimony and hear from these experts rather than taking their time at the end. >> if i might say, i was here and heard the testimony from these folks and i did lead to vote. i'm sorry that i went to vote, but it is one of our requirements. >> i understand that. i will give you two minutes, but let's let's go because i have another hearing to go to. >> if the department of insurance, we regulate the business of insurance. we do not regulate healthcare nor do we have any authority over the regulation of healthcare costs. >> anybody else want to comment on that. >> it's the same in our state. >> it's the same in our state, but i would agree prescription drugs, it's a major issue. >> i would absolutely agree and

i think the port and keep in mind that before the affordable care act we were seeing actual rate increases that were going up faster than what they are right now. this is not a new feature will stated by all committee members that we need to focus on how we can make this work better. >> i would suggest fda reform. it used to take about ten years from discovery to approval of a drug and now takes up 14. used to cost $1 billion and now it's too $.5 billion. there would be a good place to start with governmental reform at the fda. do you have additional questions. >> just a pretty easy one, yes or no. we talked a bit today about the value of having states increased their coverage under medicaid and the effect too can have in terms of making the marketplaces work better. as a former ohio state, i follow what's go on there.

your testimony, and i applaud him for having made the change, your testimony does not acknowledge the important role that the affordable care act played in allowing states to expand medicaid and i would just ask, do you support medicaid expansion in your home state of ohio? >> so to address the reason. >> there's no statement here because i do not regulate medicaid. at the separate agency and i support the governor in the decision he made. >> you think you have done the right thing. >> i support the governor in the decision he made. >> thank you. >> i want to thank all the witnesses. here would be my suggestion. >> eliminate the individual mandate. return the freedom to americans. let the states to find what insurance is. that's the vision of our

founding fathers. return choice to the american public. that would be my little olive branch. you want to do bipartisan reform , eliminate the individual mandate and put the states back in charge of defining and regulating insurance project :