. >> new mexico has received approximately $7.2 million in total grant funding from hhs. that allowed them to pass legislation for approved transparency, so new mexico filed theirs on lines. the state also plans to use its

cycle 3 grant funding for a more in-depth of co pays and deductibles and also analyze pricing data in coordination with premium and rate filing information. >> david, could i just ask you to clarify the difference between the rate information and the pricing information? >> right. that's a great question. so the rate information is the information that the carrier files to justify the underlying -- to justify the ultimate premium that's charged in the market. so if you pay, just making up numbers. if you pay $500 a month in premium, that's what the issuer charges you, the rate filing supports all the data of how they get to that price. so in terms of the interplay between the departments of insurance and the state and federal marketplaces, the departments of insurance are solely responsible for reviewing and approving rates. except for those five states that hhs has determined do not have an effective rate review program, in which case hhs is

reviewing rates in that state. so when gu o on line for the ste and federal marketplaces, the rates offered support the department of insurance. so while the exchanges or the marketplaces do not have direct input or approval review authority over the marketplace rates, the marketplaces do support competition between insurance. thank you. >> you are on. >> i just want to thank everyone for letting me be here and join you as part of the panel and the discussion to have some insurer perspective on what is going on, how we set our rates, how the market has been working over the transition. and let me start by really talking about who wellpointe is.

we are a large national insurer. we serve customers in every single state. we do business in many of our states, particularly in individual and small group markets. and you'll see on this map the states in which we do business. we are generally known as anthem blue cross or anthem blue cross & blue shield. we do business in georgia as blue cross of georgia. it is through those subsidiaries that we are participating in the ep exchanges. we are also the largest medicaid/medicare program, and the map also shows those folks. however, anything in the health insurance sphere we participate in, we are also a third party administrator for many large self-insured employers. we offer medicare coverage, medicare advantage, medicare part d, medicare sup, so we are the largest individual and small group market insurer, so we have

a lot of experience in this space. when you think about the aca, this is simply an overlay where we're doing business in the market as well as individual and small group markets and an overlay with the aca impacts. so states that are doing medicaid expansion, states that are doing dual administrations. where we are participating right now, we are actually actively participating in two of the duals demonstrations in virginia and california. we're also working with the states of texas and new york who are putting together their duals demos. we're also in six states that are expanding medicaid, and then we're participating in 14 exchanges. those 14 exchanges line up with our 14 blue cross/blue shield plans. it's a little bit of a messy slide, but if you spend time studying it, it's pretty straig straightforward. we are in six state-based exchanges. we are in california, colorado, new york, connecticut and nevada. those represent varied and very different experiences.

we're also in nine federally facilitated market places. that is maine, new hampshire, georgia, missouri, ohio, wisconsin, indiana and virginia. that's a long way of saying that we've got a lot of experience with a lot of different regulatory schemes. we have a lot of experience with a lot of different rules in terms of what is required under the essential health benefits. varied and different demographics of the population. so i think i was asked to participate because we've got a great breadth of experience. one of the things i think is very clear from the other presenters is that context is very, very important. so one point i would like to make is as we look at 2015 rates, we cannot forget where we were in 2014. and going into the 2014 market, we were looking at, for the most part, a very different regulatory structure than most individual market insurers had

experienced previously. in most of our states, we were allowed to rate based on health status, based on age, based on gender, and we used those mechanisms and those tools to try to price our products to encourage people to come into our plans. we were also looking at our risk profile and looking at how we maintain affordability and balance affordability with risk. coming into 2014, that had changed very significantly. the market rules had changed. we could not rate our products based on health status, gender. there is a limit of 3 to 1 in the age bans, so it's a very, very different environment in which you're pricing your products. that was just one major factor. second major factor is new requirements of what you had to cover. the essential health benefits and some of the other requirements. a third factor that i will mention is that we did not know who the uninsured were and how the uninsured act.

we had a good sense but we did not know that. so in wellpoint or our anthem company, anthem and blue cross companies, started pricing our products, we started by doing our research. we looked at, one, our broad individual market experience. who was already in the insurance market? and we drilled down particularly in the three states in which we did business that had experience in a guarantee issue community rated setting. so we are in new york, we are in maine. both of those issues were guarantee issuer related. we were also in kentucky that had that ac -- under the aca had it back in place. the third thing we did, and i believe it's our biggest product, although our competitors haven't really talked about what they've done, we went out and did a simulated experience with about 60,000 americans. it was a web-based experience.

we walked them through a number of questions asking them what would motivate them to purchase experience, what was important to them, looking at network and looking at formulary and trying to understand what they would purchase and how they would behave in the marketplace. in massachusetts, we did not do business, but we did not have subsidies in the marketplace, either. so trying to figure out how to make decisions particularly when they have subsidies to purchase coverage. we took all that and factored it into our 2014 rates. one of the things we found as we did our research was we thought our individual market under these market rules with subsidies was going to behave like a tradition market would look. we actually followed our rate process like we did in the past and try to look at those and modify from there. really, what you end up with for

2014 is a guess. it's an educated guess. we tried to make it as well as we could, but it is a guess. then you fast-forward to today as we're looking at and filing our 2014 rates, and you have to ask yourself what additional information do you have? corey did a great job of talking about you have information about medical trend. you also now have some demographic data. we know who are in our plans, who selected our plans, what their ages are, what their genders are, what their geography is, where they live in each individual state. but that really is the most concrete additional information that we have. she also mentioned we've got some medical claims data and some pharmacy data, and i want to caution everybody that it's difficult to draw broad conclusions based on that data, and i want to tell you why. medical claims data generally has up to a three-month runout period. that means that it can actually take up to three months from the

date that you are provided a service by a provider before your insurer gets the claim. often it doesn't take that long but it can take up to that long. so if you think about the open enrollment period and how far we are after the end of the open enrollment period, many people actually did not start having effective coverage if they applied up through the april 15 deadline until may 1st. so we don't have a lot of medical claims data, and the medical claims data that we have today is going to tend to be heavy on those who utilized services right away. those who had a pent-up demand, those who needed services were those who really worked hard to get enrolled as of january 1st. we do have a more up-to-date pharmacy data. pharmacy data is more realtime. again, it's hard to draw broad conclusions about how the entire -- our entire enrollment population is going to behave through the end of the year because it is early data. so we're analyzing that. we use it a little bit, but we

won't really fully use that claims experience data until we price for 2016. so another point that i'd like to make is this really is a transition. and so to one of jonathan's points, looking at context, think about this not as a one-year or even a two-year process. you really have to think about this as a potential three or four-year process until we get full data, full experience that we can factor into our pricing. so long story short, it's very difficult to draw broad conclusions about pricing for 2015 based on 2014 pricing. every company had different information, every company was making their best educated guess. similarly for 2015, they tried to enhance that but it still is very much an estimate. you also can't generalize, as we said, the averages over what an individual's experience will be. so at risk of now contradicting myself, one resource that i want to point you all to as you look at materials that are coming out

about rates is some work that mckenzie is doing. it is on their website which is on the slide, and it is available to anyone in the public. they've actually -- i just went on today. this is a summary from a couple of days ago, but they've actually added two additional states. as states make information available, they're putting it on their website. as i think you can see from this slide is there is a great deal of variety in the experience across the board. so, again, don't draw individual conclusions about an individual person or individual state from this slide, but i think it does point out a few interesting things. one, you've got individual players coming into the marketplace. up here in the top corner they talk about carrier participation and there are 55 carriers coming back into the markets from a total of 56 across all of those 10 states, and there are an additional 18 who are coming into the market. so, again, while we, starting out from the beginning, because we wanted to go where our customers were, make sure we

were serving our customers and trying to limit disruption as a limited market insurer, there are people who didn't get into the market right away that will come into the market. that will impact pricing and rates. similarly, there are additional products. so we all learned who bought our products, did they like our products, are we introducing new ones, different ones. so there is a change in the number of products that are going to be available. when you look at the premiums, and again, this is across all 10 states. don't draw broad conclusions based on the data, it's up side and down side. you see when you look at individual bronze plans, silver plans, both the lowest and the second lowest, there are both changes downward and rates and changes upward in rates. people made educated guesses. they're now adjusting based on additional information and they'll have to do it again next year. and then the most interesting aspect of this slide that i'll point out to you all before i pass it back for questions is really that the premium alone in

a market that is 80 to 85% subsidized is not enough to look at. you also have -- if you are trying to understand the impact on the individual consumers. you also have to look at how that pricing impacts the subsidy, which is a totally different element to this entire marketplace that didn't exist before. and so it's very, very interesting. on this slide it shows that about 78% of consumers, and this is 175% of the federal poverty level, male, 40 years old, non h- non-smoker. so, again, it depends on your background and age whether or not you will see an upward or downward trend, but for this population, they're saying about 78% of the population will see their subsidized rate go up and about 20% will see it go down. interestingly enough, when you look at states, you can see states that look like the a decrease in rate that still have an increase in the amount the

subsidized individual will pay. similarly, you've got states where you actually see increases in premiums overall, but you see a reduction in the premium a subsidized individual may pay. so don't draw broad conclusions. we're still learning about this population, we're still growing, we're still changing,sti still evolving and it's still fun and we're really glad to be providing subsidies for our consumers. >> when, typically, in the various states that wellpoint operates in did you have to file or are you going to have to file the 2015 rates? >> so thus far in all of our 14 states, we have had to file. in one case we filed first with the exchange before we file with the insurance regulator. so in that case we have filed with the exchange but not yet with the insurance regulator.

that is the state of california where there is an active negotiation that takes place with the exchange before the rates go to the regulator. but in all of our states thus far we have filed, not all of them have made them public yet. the other thing i would point out is the other piece for folks to keep in mind when it comes to rates is that we often have to provide a certain amount of notice to our existing customers about the impact on their individual rate, and that varies state-by-state based on state requirements. in the state of new york, we actually have to send a letter when we file our rates as to what that filed rate request is. but in most states, once they are approved, we have to provide somewhere between 60 to 90 days' notice on the individual rates. >> hence, very few data on which to base those filings. thank you. you served your prerogatives, but we're now at a point where you are able to join this conversation. we have microphones that you can use to ask your question orally,

in which case i would ask that you keep it brief, identify yourself and your institutional affiliation if you have one. and as i mentioned, there is a green card in each of your packets that you can use to write a question, hold it up and it will be brought forward. rachel, do you have any questions you want to get to before we go to the audience? >> sure. i've got one thing to get us started. thanks to the panelists for laying the foundation for a really great discussion. several of you talked about variation among states both in the rates that are being released pre-aca as well as in 2014, but also on how states regulate and how they operate their private insurance market. but there's also quite a bit of variation within states. in fact, there's been some reports out this summer that suggest that maybe a variation within states may even be increasing.

i was just wondering if you could each take a few minutes and kind of explain what you think is going on there, what contributes to that, to the variation within states and what questions should folks or other folks in the press be asking themselves when they see one published rate for a state to really have a better sense of what that represents. >> go ahead, corey. >> start things off? i think one thing to kind of keep in mind when we're looking at how rates may change for a particular insurer or in a state and how things vary within the state is where were they in 2014 and then where are they in 2015? because you might see some convergence in rates. i know i've seen somewhere that there's actually divergence in some states with new players coming in. that can affect some of the comparisons of rates. but maybe if some insurers were really expecting a very

unhealthy population in 2014 and now they're seeing some things like, well, maybe we overstated that and we're going to come down a little and vice versa. every insurer started off at a different place, and it shouldn't be surprising, then, that their rate changes are different because they were starting off at different places. >> i'll also add that the -- a lot of health care is still very local. as a blue cross/blue shield plan, we serve everyone within the entirety of our service area. so most of the states in which we do business, we are actually in the exchange of every geographic area. i think amongst all the insurers, many of them are within the same number of states but not in the same number of geographic rating areas. what that brings is different behavior and different dynamics, so in an urban area, and i know georgia is a state of ours that has gotten some attention. in an urban area like atlanta

metro area, you've got a lot of different providers, a lot of different providers competing, you've got a lot of choice and variations. it's a very competitive marketplace for providers as well as for plans. in other parts of the state, we may be the only insurer and there may be only one hospital or one hospital network, one provider network. and so a lot of the variation for us, at least, within the states has to do with the provider networks, has to do with the formularies, has to do, really, with the underlying cost of care which gets automatically reflected in the rates, and we cannot lose sight of that, that ultimately our rates are based on the cost of care and the care utilized within the pool. that's one of the places we see a lot of variation. >> david? >> i would just add to that, too, the point that from a rating perspective, carriers can include a geographic rating

factor. you'll have a different rating factor depending on the pricing in that particular area, so you end up with variability across the state because they can price based on geography. >> if i can state three quick things. the first point is it's important to emphasize we have to look at aggregates instead of anecdotes here. some folks are going up a lot, some folks are going down a lot. we can't draw broad conclusions from any one filing. the second point is to emphasizemphasize so important what liz said. this is how long it took us to get to, that's what cgo predicts is the phase of this law, so not to make too much of one-year results. we're really only a little bit through a three-year process. and the other thing is different companies have different views as to what extent this is an opening bid and to what extent this is really where they want to end up, and that could draw some variation as well.

>> a non-expert can jump into this. i want to draw attention to something rachel said in her opening remarks which is this is the first time we've had the kind of transparency, and, therefore, the availability of the data, and that that may, in fact, have an impact on the ultimate rates, as jonathan alluded to just now. so let's go to the microphones, as they say on tv. >> i'm dr. carol poplin. i'm a primary care physician. my question is for jonathan for before 2014 and for the lady from wellpoint after 2015. it has to do with benefits, so for john, what did you do about the fact that the benefit packages were totally different? you could have a very thin plan at a low premium, and you could have the whole nine yards executive program that would have a higher premium. and how much -- the aca mandates

the 10 required benefits or whatever. how much variation is there in benefits going forward? i mean, we know about the bronze and the silver, and that has to do with the degree of coverage, the premium. but in terms of actual benefits, how much variety is there still? >> let me say for the before period, that's a great point. there is a huge amount of variation. that's why the rates i'm giving you here are the rates for a given product. so these are what's the increase average for a given product and it a mix of all of them, so it's a representation of all the different kinds of products that were offered in this market beforehand. what was the average holding the characteristics constant? so that's what we're trying to get at. >> and then for your question after 2014, the variability in benefits, i think you're correct. there is a much lower

variability in benefits where you see more variability is, again, amongst the levels of co-insurance and deductibles as well as in provider networks and in the formularies. what you're going to see, i think, from insurers is that we're competing more on customer service, we are competing more on value added things that we can do, our ability to help keep you healthy, help keep you engaged in your health care in a more active manner, but the variability based on benefits is greatly, greatly reduced. >> do you still offer gym memberships? is that an added value? >> i have to go look at what we offer in our individual market plans. i know that we continue to offer gym memberships in some of our medicare advantage plans. again, sort of looking at those value add, how do we keep people engaged and try to keep people healthy. >> thank you. >> yes, go ahead.

>> bernadette fernandez, my question is about provider networks. from where we sit at cis, we see a lot of reports and maybe anecdotal that some of the premiums we saw in 2014 were artificially low, and that's my phrase, so please do not attribute that to crs. but they are low because of networks and we're a little puzzled because we're not sure this was truly what was in the marketplace and we had reporters that were new to the insurance and they had no concept of what a network was. so if anybody could provide some insight as to this issue, whether or not it's, for lack of a better word, real, that would be helpfuhelpful. and then a specific question to elizabeth also related to provider networks. in the march letter to issuers

that cns sent out, they said they were going to scrutinize accuracy to a greater extent for 2015 and 2014. i don't believe any additional information has come out from cms unless there is somebody here that would like to speak on that? okay, no takers. >> before you go, i did want to put in a commercial. we are actually going to be holding a briefing july 21st -- is that right -- no. we're going to be doing a program on july 11th in which we look at some results from a survey that the comwell fund had put together about the experience and exchanges and what's been going on there. then later in the month, we'll be doing an explicitly focused program on narrower networks. so stay tuned. >> bravo. so as the one who represents

those who is putting together the networks, i'll chime in, but please feel free to -- i'd like my fellow panelists to add on. i think that a lot of focus around provider networks is that for many people, value networks are something new, particularly from a blue cross/blue shield plan where you're used to a very, very broad network. what i would say in terms of pricing is we would never go in pricing artificially anything. we feel very strongly that we have to price based on all of the information that we have, we have to price appropriately, we have to price accurately, and we as a policy and as a company do not go after, quote, unquote, market share at a loss purposefully, which then ultimately impacts the consumer in a negative manner because you have to increase prices later. so that's not something that we

would do, and i would say that our pricing is scrutinized very heavily through the regulatory process, including having our networks scrutinized by our regulators. so i can't speak to us pricing artificially low. we aren't doing that. you're correct that we have not gotten additional guidance on scrutinizing our networks, but we're very conscious of the scrutiny that is on our networks, and generally even in our smaller network products, we are still covering around 80% of the hospitals in our states and at least around 70% of the primary care providers in our states. so even though the network is, in some cases, smaller than it has traditionally been for us as a company, it still is a rather broad network, and we go above and beyond the network adequacy standards in most of our states. most of our states have them, to make sure that we're also

ensuring that we have adequate specialists, obgyns, oncologists, et cetera, for key conditions. >> yes, lynn? >> thank you. lynn quincy from consumers union, and my question is for the whole panel. we talked about providing context, but i think even more than year over year increases in rates, don't we want to know if the rate that's been requested reflects the robust efforts of regulators, insurers and provider to keep costs low for consumers? the institute of medicine would claim that 30% of health care spending is waste. even if they're off by 50%, that suggests rates are 15% too high. and i think in terms of figuring that out, that thing that we really want to know -- i'm sorry for this echo -- that there is a driver that corey didn't mention, which is rate review.

rate review, contrary to the promise of the affordable care act, is actually not very transparent. in most states, with a few exceptions, the public cannot see the detailed justification for the rate increase. in the few states where that happens such as oregon, they have, despite the entire justification being public, they have robust competition and the extreme scrutiny that those rates are given suggest that they are trying to keep them low by every means possible. so i would like for the panel to comment on the value of greater publicity of the entire rate filing in terms of keeping rates low and get to that thing that we really want to know which is, are we actually keeping it as low as possible? thank you. >> i think in terms of -- no, i did not specifically mention rate review, but i think part of

this is going on to the greater transparency of if not the complete rate filing which, as david said, there are some proprietary things in there that i think is appropriate to not divulge all of those details. but there is greater transparency in the rates that that itself, i think the goal is for having that more information does put more pressure on the insurers to better manage care, maybe provide networks that have those high-value providers in them that can, you know, keep the pressure on to keep spending low. so i think part of the idea behind the competition and the transparency is to try to get it there to some extent. >> if i could jump in, i would just add to that. i think the rate review process is much more transparent, and as

a lot of folks have mentioned in the panel, there is going to be data out there to use. i think we have to be realistic that that great rate review does not give a chance to bring down the level with providers, so what you're seeing with carriers is one way to try to get at price. but there is no ability for the department of insurance to actually regulate what a provider charges a carrier. and i think what you're seeing, particularly, and maybe jonathan could speak to this, in massachusetts they're trying to actually address pricing as issues and tie reimbursement and health care spent to, you know, the increase in the consumer price index, so there is a lot of discussion around how do we manage costs generally? i think the rate review process is a good way to get the data out there, but i think the next step is to look at it more globally and engage all the stakeholders. >> yes, go right ahead. >> i have a question.

i'm rebecca adams. i have a question fiore lor eli, but if anyone else wants to jump in, that would be great. i wanted to ask what the average rate increase is for your companies, if you could share that with us, and if you could tell us a little of the impact of the three rs program. and separately, i wanted to ask about your levels of enrollment. are they about the same as they were at the end of open enrollment? are you retaining all your members and are you getting a lot of people through special enrollment periods? >> rebecca, what was the name of the program in the second part of your question? >> the three rs. >> i will try to do my best. we are not actively talking about our rates unless they are released publicly. what i will say some are up, some are down. some are up more than others.

and so i am happy to talk off line about any of the specific states where it is public and any of the particular increases or decreases that you might be interested in. with regard to the three rs, that is, the three risk mitigation tools that are in the aca, the reinsurance risk adjustment and risk corridors, what i would say in terms of, you know, impact on pricing and how it's reflected in our products, reinsurance very clearly, you can see it in our filings. it is something that i think all insurers factor into the pricing. reinsurance is designed to help transition the individual market from that underwritten market to a community-rated market. and so for many individuals just simply the elimination of health status rating could result in a very significant premium

increase. and so the reinsurance program is really designed as a transition payment of sorts to the plans to help mitigate some of those increases, help the market transition. so that is very clearly included in our rate filings, and i'm pretty sure included in all insurers' rate filings. at this point in time, we don't have enough information on reinsurance -- excuse me -- risk adjustment. they are the three rs and i often use the wrong one at the wrong time. the risk adjustment program, we don't have enough information, there isn't enough public information to know how we did compared to our competitors. the risk adjustment program is really intended to spread risk amongst carriers. so if one carrier receives all of the very high-risk individuals, there would be a distribu distributeive payment plan that was received, lower risk individuals. then there is the risk corridor

program. and again, both risk corridors and risk adjustment, we will not know what our payments are, we will not have enough information, we do not actually sea any payments until probably summer of next year. we won't actually go through the full reconciliation process until late in the spring of 2015 and then payouts would come once that process is completed. and, again, it's very difficult to know under the risk corridor program exactly where we sit. again, when we've said this very publicly, we did not price for the risk corridors. we did not price our products purposefully to make or lose money through the risk corridor program. i think that we said in our last earnings call, which there will be another one upcoming, i think we said in our last earnings call that we have booked a very, very small payable. but at this point in time, we

did not price for it, we won't know where we come out until next year at the earliest. and then i think the last question on that was our levels of enrollment. and again, i'm happy to talk to you off line about overall levels of enrollment. we did just revise upward to say that we believe we'll have about 750,000 enrollees through the exchanges by the end of the year. we continue to see through the special enrollment process a small number just like we would outside of an employer's open enrollment period for people who either have lost coverage or had another type of life change, so we do see a small steady level of enrollment since. >> yes, corey. >> i just want to highlight something that liz said because i think it often gets lost. because the risk adjustment program is shifting funds between insurers, insurers, when

they are doing their estimates of what their costs are going to be for their enrollees, they also have to be figuring out, what's the market going to be like as a whole? what's the enrollment not only for my plan but for the market as a whole? what's that going to look like? that's exacerbating uncertainty that carriers are having when they calculate the rates. they have to think about not only their particular experience but the experience in the market as a whole. >> corey, you mentioned in your remarks that when the risk roles are being constructed, it includes both the exchange plans and the non-exchange plans, and we actually had someone ask about what changes that might have contributed to in that off exchange aca compliant market. is there a difference, and does it affect that calculation? >> just to clarify, when i'm

talking about the single risk pool and having to combine experience on and off the exchange, i'm talking specifically about the aca compliant plans. so when developing the rate for aca-compliant plans on and off the exchange, it's those aca-compliant plans. the non-compliant plans in those states that allow the transition role, they're treated separately. but what can happen is, because now consumers will have a choice in certain states by renewing their non-aca-compliant coverage or purchasing compliant coverage, they can decide what makes most sense for them. and it's more likely that someone who is a high-cost person could benefit more by moving to a compliant plan whereas the low-cost people could stay with their old plan. that could just mean the risk pool of the compliant plans, whether they be in or outside the exchange, could be a little

worse than maybe what was expected. >> ed, if i can just add on as well, anything we base estimates on today can change dramatically before we get to the end of the year. because, again, remember we have that very limited medical and pharmacy data as is. so as we get more experience, what we see today could change drastically. so it's difficult, and if you do follow some of the wall street analysis, it's difficult to draw long-term conclusions based on what we're estimating today for various purposes. i just want to put that disclaimer on it. >> good afternoon. my name is carol sardita, i'm an independent health care consultant, and i have two quick questions. for elizabeth, but feel free to chime in. you're really getting the questions, elizabeth. you talked about prices

evolving. i wonder to what extent you can comment on the role of specialty pharmaceuticals in possibly driving up premiums as we go forward. i'll ask one question first, make it easier. >> it's an excellent question, and there is no doubt that the cost of -- that the high price of many specialty pharmaceuticals is a major driver. we have said that it's going add a $100 million or more impact on us this year, and it's only going to continue to go up particularly as there are several drugs in the pipeline. i think we've used sovali as an example in the past. in many ways it's a cure for hepatitis c, which is a fantastic thing. at the same time, it comes at a very, very high price point for a potentially very large population where the science and the medicine has really evolved faster than clinical experience has evolved.

so it's difficult in this environment to know exactly what the cost impact is going to be but not have to estimate that it could be very, very significant. so, yes, it's definitely been a driver. it's definitely something that we factored into our rates. and that the point we don't see a mitigating factor for that right now. >> thank you. and my second question is to what extent you can comment on whether some of the dynamics we're seeing in the individual market may be carrying over to the traditional group insurance market? i know they're separate lines of business, but i think some of this up and down and uncertainty has to be having some ripple effects over pricing and coverage on the commercial side. if that's something you can comment on, i would appreciate hearing your thoughts. >> i think that's a really, really good question and probably something we're going to have to watch over the next few years. i think as we went into the exchange marketplace and into a

world where, again, individuals were subsidized, i think one of the big questions that was around during the aca debate as well as since then is how will employers respond? will they increase their offer of coverage? will they pull back on their offer of coverage? i think it's a little early to draw conclusions, but it's something we're watching closely. right now i can't say it's factoring into our prices but i can go back and ask our team, but it's definitely something we're watching. >> thank you very much. >> rachel has some green cards, i've got some green cards. do you want to trade questions on a green card? >> you bet. >> i should say we have less than 15 minutes left, so let me just ask you to keep those blue evaluation forms at hand so you can fill them out as we finish the program and also take advantage of the opportunity to ask the questions at the microphones. >> so i'm going to move to a

question for dr. gruber. most of us have talked about transparency, the importance of it in the market. there is a question that although there is a push for increased transparency, there is also a lot of regulatory barriers for entry into smaller, innovative new firms, so how do you see that balance between regulatory barriers to entry and the transparent pricing requirements, and what do we think at the end of the day the impact could potentially have on prices going forward? >> yeah, i guess i view them as two separate issues. they're both important issues. the transparency issue is obviously critical. i think that, you know, the affordable care act can promote the entry of small insurers. there's other regulatory barriers that exist, but we're setting up an environment where before there wasn't a way to

effectively compete because no one could shop. we set up our market with shopping. we saw it in massachusetts. after a couple years we had a major new entry into our market for the first time in 20 years and it significantly brought rates down. i think a lot of the innovation is going to happen over our networks. if you're a new insurer, you're just coming off the same thing wellpoint is offering, you're going to stay with wellpoint. they're the biggest person in town. i think you're going to have to figure out how to innovate, and i think that's going to speak to the other alliance briefings on this. this is going to speak to how policymakers react to the stores. we're going to start hearing about narrower network. this is not the first time the health care costs have grown slowly. from 1980 to 1990, they did not sell because of hmos. then there was a backlash because people didn't like their networks being restrict and the

hmo fell apart. the question is will we have that backlash this time or will policymakers let their networks flourish, and i think that's what's going to determine if small engines come in and compete. i think that's the way competition can happen. >> i just want to add one point to that, too. in terms of new entrance, i think what you may also see is that generally speaking for a lot of the larger carriers, they have independent contractual relationships with their provider networks, so over time you may see providers saying, hey, this carrier is doing a narrow network. he has a provider, i can do that myself. so you may actually start seeing, you're seeing some movement now, where provider networks are actually entering the mark as an insurer because then they can manage both sides. they manage the pricing but they also manage the care. so over time, you may see more provider organizations potentially move to the carrier side. >> i'll just make one follow-up

comment which is less about what you might see coming into the market but as a cautionary point on just looking at network alone, a lot of the work that we are engaged in as a plan right now is truly delivery system reform. and the network size is just one minor aspect of that, looking at the way that the contracts are setting up, looking at the quality indicators, looking at the measurements, the motivat s motivators. we, i think, have the biggest patient center primary care initiative in the country going on right now. we're really trying to both pay primary care providers to support them to both stay in the primary care field but also to be able to expand their reach, expand their hours, put together care plans for our members, for their patients. so there is a lot beyond just network or, you know, how many providers you have in your network and a lot more that goes to how meaningful is that

relationship with the provider, are they doing the right things for the patient at the right times, is it a medical home for the member and for the patient. so there is a lot of focus, and i hope you'll talk about this in the next panel or the next briefing. there is a lot of focus on the size and the number, but again, it's also the real value and the quality that you're getting out of the relationship. >> we actually go back to you if we can, john. at least the initial question is triggered by something that you said, and that is that people have traditional switched plans in the individual market to avoid premium increases. how do you anticipate this translating now in the 2015 exchange market where people are going to see their premiums changing, especially in relation to the benchmark plans that their subsidies are tied to? >> first of all, and i think what happened before, not necessarily people switching

plans but the plans themselves becoming less generous, certainly i think what's going to happen to plant switching is an important question. cns just switched their auto enrollment, people being enrolled in the same plan if they don't actively seek a new plan. i think we've seen transparency switching. the individual market, the data is less clear. i think it's really critically important that we promote important decision support tools as much as possible, decision support techniques for individuals so they can every year re-evaluate this. people hate choosing their insurance company, they hate filing taxes, but it's really an important decision. a couple hours can make a big difference in their financial well-being, and i think we need to set up tools that if they don't want to pay attention, just rolling forward, but we need to enhance people's choices

in shopping, because it's going to be a dynamic market, lots of new entrances, lots of ways to look at things, new networks, new delivery mechanisms, and i think it's important that we promote the ability the right information and make active choices. >> and i'm going to add this. i know this is what john meant but didn't say it out loud, so i will. you know, the importance of looking beyond just the premium amount and looking at the cautionary. so having these decision support tools that combine the premium plus maybe expected out-of-pocket cost sharing, that's really what's important here. >> what she said. i -- i think actually it's -- i want to emphasize in my research we've looked at medicare part d, where we first doing these exchanges, and found only 12% of seniors when you factor in the premiums and out-of-pocket costs, only 12% of seniors chose the lowest cost plan. the typical senior left about 30% of the dollars on the table

mostly because they paid premiums and not to add out-of-pocket costs. that's an important factor. >> aren't there very high rates of gentlemre-enrollment in old ? >> very high. once people make a mistake, they stick with the mistake. it's a matter of promoting the original choice, considering the factors, and having people re-evaluate as life circumstances changes. >> rachel, do you have any others that you'd like to throw in? okay. john? >> hi, john greene with the national association of health underwriters. of course, i represent agents and broker who i think are a great decision and support tool to help people navigate through the difficult system. it's not -- it is an important decision, and it's more than just picking on prices. you said there's risk tolerance and -- and your health status. and agents and brokers do know what the networks look like.

some people choose a network for a lower price on purpose. it isn't necessarily a terrible thing that they would choose a more narrow network in exchange for a lower premium. but i hated coming -- the thought of the decision on health insurance coming down to a tool. sounds like you press a button. i think that this is something that should be evaluated each year to see if it's the right fit. with all these new plans coming in, it would be malpractice not to look at other plans. >> i think -- you know, i agree that it's important that people shop carefully. i do think that, sure, in a perfect world everyone had their handheld, you know, and carefully walked through choices. some people don't have the time or financial resources to do that. and i think that computer-based tools can help a lot in at least

avoiding very poor decisions. might be hard once you're in a narrow subset to choose the best among those. but there are a lot of people potentially making poor decisions. people choosing gold plans and the silver plan dominates, thing like that, that a tool could help avoid those problems. >> okay. had a question here that i guess would initially at least go to liz hall. the questioner writes that insurers no longer have the administrative cost of underwriting. additionally with the marketplace in place, advertising costs presumably could be lowered. how much do these changes affect the rates that insurers are calculatin calculating? >> i think what i would say is that for years now we have been -- put a real focus on reducing our overall administrative costs, and year over year the trend amongst the industry as a

whole is downward on all of those things. so how you parse that pie may have changed. you may be spending less on, for example, underwriting, but that doesn't mean that you aren't spending those administrative dollars, haven't shifted though administrative dollars to a very important part of your operations in the aca world. let me give you a very, very concrete example that we've talked about publicly. in the first two days of january, we had almost a million calls total just for our exchange products. just for our exchange customers. and the average length that those calls took in talking to people about their benefits, about their coverage, helping them get to the end place where they made it to go because of less familiarity, less experience with the individual

insurance marketplace took a lot longer. so yes, we might maybe be spending a little less on some of those underwriting dollars, but we've probably shifted those dollars to working with our customers and helping them navigate the system. just we talk about, you know, choosing plans and having tools to help people choose plans. we're really focused on helping -- focused on helping our customers use their plans, making sure that they understand that. i think the other thing i'd say on marketing dollars is don't assume that we've reduced those. we have a lot of people to reach. we have a lot of people who may not be native english speakers. we have a lot of people who may not have traditional -- may not be watching traditional television or receiving traditional mail as an advertising tool. so we have had to get very creative in how we reach potential customers. so overall, we are very, very focused on reducing our e

administrative costs, but more than that make sure we're spending wisely. >> i would add that the medical loss ratio requirements in terms of having had a certain amount of premium dollars collected go to medical spend, that excludes a lot of administrative costs that liz was talking about. in terms of the correlation between admin and premium, it's not there because that's been stripped out through the medical loss ratio requirements and the requirement to pay rebates. >> i think we've got time for just one or two more questions. "don't we go to the microphone. >> hi, i'm an intern at the national association of community health centers. elizabeth, you mentioned delivery reform. i was wondering if there's been any data collected around payment reform? for example, bundled payments. and if that has had any effect in the states that are working on payment reform on the insurance also says of yet? or i know it's new, so i'm not sure if it's been collected or not. >> i am not aware of anything

that's done the correlation back to the underlying premium. i'm not sure we're going to see a reflection in the underlying premium yet. again, i don't think that health care cost of growth has gone down. that is the ultimate goal. i don't know that it will reduce the premium, but whether the rate of increase will be as significant i think is something that should be reflective of the overall cost of care. and if we're successful, we can bring down the overall cost of care and improve outcomes. there's a ton of data on improved outcomes. a little on reduced cost growth. i'm just not sure if we've linked it back to any premium. >> i think, you know, whenever we talk about cost control -- the two words i think people should keep in mind to be humble and patient. to be humble about how little we know, and be patient it how long it's going to take to learn it. this is a long process. we're really moving up that

learning curve. we're running hundreds of experiments now. the aca promoted them. we're going to evaluate them, but it's going to take time. unfortunately, humble and patient, i imagine, are not two words you all use to describe your bosses. that's just something important to take from this today. while we want to know the answer tomorrow, when it comes to health care costs, growth, and things of that nature, it's going to take time before we figure it out. >> that sounds like a pretty good place to stop. reminding ourselves that we should all be patient and humble. we will be patient until the next time we take up an exchange-related topic which will be july 11th. we ask you to be patient enough to fill out the evaluation forms while you listen to me ask you to hear my thank you of the commonwealth fund for its support and active participation in shaping this program. and ask you to join me in thanking the panel for handling

a really complicated top nick a really good way. [ applause ] there were some updates and changes to slides. we will have the updated versions on our website at allhealth.org, if not by the end of the day first thing on monday. thank you. we're live now on capitol hill for a senate hearing looking at child trafficking and the impact on victims and communities. the senate health subcommittee will discuss ways to identify and prevent a practice known as rehoming in which parents transfer custody of their

adopted children over the internet, bypassing the government's child welfare system. this hearing just getting underway. good morning, everyone. the senate subcommittee on

children and families will now come to order. today's hearing is titled "falling through the cracks: the challenges of prevention and identification in child trafficking and private rehoming." i want to thank all of our witnesses whom are here today to testify, and i look forward to hearing your testimony. i know many of you have traveled many miles to get here. i do appreciate your attendance. i also want to thank our ranking member, senator insee, for joining me today to address the important issues that we'll be addressing in the hearing today. we are here to discuss the significant challenges that we face in the effort to prevent child trafficking and private remoment ir rehoming. and to identify and support the children who have been victims of these type of abuse. too many child victims today are going unidentified, misidentified or underreported,

and as we will see, one of the reasons for this is the lack of education and training for our educators who many times are on the front line and see these children, health care providers who see these children as they present for a number of reasons, and social workers. however, with appropriate guidance, these dedicated professionals can play a critical role both by helping to prevent these practices and by offering potentially lifesaving assistance to those children who made it it the most. there are thousands -- need it the most. there are thousands of children, some accounts up to 300,000, being trafficked here in the united states. these young victims are often hidden in plain sight. and in many cases, they're actually still attending school which makes it particularly important that our educators can recognize the signs of a trafficking victim and then respond accordingly. this can be hard to fathom. it was really hard for me

personally. but the average age of a child trafficking victim in the united states is between 11-years-old to 1 4 years old. these are very young, vulnerable children. girls at this age are particularly vulnerable. they may face trouble at home and then become susceptible to pressure from their peers or by manipulation by a trafficker. this happened to a young girl from a town in coastal north carolina. she was attending school during the day. but in the evenings, a man whom she believed was her boyfriend was actually selling her to other men for second, often multiple times each night. it was not until she was actually questioned at school one day that authorities found lingerie in her bookbag, and her story then came to light. that is why it is so critical

that our educators understand this horrific problem and recognize the signs in youth that they work with every day. they can help make students aware of the danger and then educate them so they are not so vulnerable. similarly, our health care providers need to have appropriate guidelines and screening practices to recognize trafficking victims in their care. as we're going to hear today, the health care response needs to be further developed to address the shortage of education and training for our providers. even if professionals are aware of the problem, they face additional challenges when working with trafficked patients. these victims are often hesitant to disclose their experiences for fear of repercussions by the individuals who are their traffickers. this also happened to a 14-year-old girl that has been reported to me. her trafficker had branded this young girl with a tattoo as if she was his possession and then advertised her services on

backpage. when authorities found her hiding behind a dumpster, she had been severely raped and traumatized. when she was finally brought in to receive care, she was so afraid of her trafficker that she recanted her story and was referred to law enforcement for prosecution. instead of receiving the health care services that she so desperately needed. unfortunately, these instances are not unique. child trafficking is prevalent in all of our communities. and it will take all of our community stakeholders to come together to address this problem. we need leadership from the federal government to help raise this awareness about the issue and to lead the way in developing the practices and procedures that will increase the prevention efforts and help improve the identification of our trafficked youth. last december i introduced

bipartisan legislation to address this growing problem of child trafficking with senator rubio. that bill is called the strengthening the child welfare response to human trafficking act. this legislation would fill some of the gaps in the current system by providing professionals with the tools they need to identify, document, educate, and counsel child victims of sex and labor trafficking. it would also amend the child abuse protection and treatment act to ensure child welfare agencies properly identify, serve, and report trafficked children and allow law enforcement to be better able to track them. there are many ways in which this problem needs to be addressed. but this hearing will be the first to explore how educators and health care providers can respond to child trafficking. then the second topic of this hearing is the issue of private rehoming of adopting children. that was a new word for me in the last year or two. i'm pleased to hold this hearing

as it is the first hearing in the senate on this topic. the practice of rehoming first came to light last september when megan touhy, who is here with us today, a reporter for reuters, she published her findings with an investigation during which she examined more than 5,000 messages posted over five years on a yahoo! group site that was titled "adopting from disruption." through her research, she identified 261 adopted children who were "advertised on line" by their new families and, in many cases, rehomed into the care of adults who too often had a history of neglect, abuse, or sexually exploiting other

children. the document circumvents the protections of our child welfare system and jeopardizes those children's safety. not surprisingly, many of the children involved in this unregulated transactions suffered from behavioral, emotional, and health issues. these are heartbreaking stories and involve children that too often had come into contact with our school employees or with health care providers when despite their best efforts were unable to offer these children the help that they made in because these individuals had not been trained to recognize these warning signs. and i'm hopeful that our discussion today is going to shine a light on this growing problem so that we can work together to ensure that professional andin education an health care who are in contact with these children are prepared to offer them the help that they need with. with adequate training these dedicated individuals can help begin to identify the signs and symptoms in children and then to

help report them as potential victims. and to make sure that at-risk children do not slip through these cracks and become victims in the future. to help us understand the challenges of prevention and identification of the victims of child trafficking and private rehoming, we're going to hear from a group of distinguished panelists this morning. they're going to share with us their stories and their insights and the work that they've done on these issues to help both prevent the proliferation of these type of abuse and then also obviously to help these children and young people who have been the victims. it our panelists, i ask you to keep your oral statements, opening statements to five minutes. and i thank you for your excellent written statements which have been submitted to the record. senator insley, would love it hear your opening comments. >> thank you madam chairman, and thank you for holding this

important hearing surrounding identification and prevention of child trafficking and rehoming instances in our country. most of have us to say how can this possibly happen in america. we often talk in congress about policy decisions in terms of wanting something better for future generations for our children and our grandchildren. i believe these sentiments hold true particularly for those of this future generation whose outcomes are in danger. i think we can all agree there's no greater bipartisan issue than the mutual desire to keep children safe and healthy ain protective and loving homes. to that end, committees will take up issues of concern in the child trafficking and rehoming spheres. i'm eager it tackle the issue by discussing issues under the purview of this subcommittee including discussion of what processes are currently in place in our schools and health care sector to identify children who may be victims of trafficking and start talking about how we can increase the number of children who are preventively

identified. one of our witnesses today is from a school in san diego that's practicing a plan that has worked. dating back to my days as mayor of the city of gillette, wyoming, i've learned and always believed that folks at the local level can best solve most of the problems we face. i'm eager to hear how schools and states can better address children in danger of becoming or are already trafficking victims. rehoming is also a relatively new topic of discussion in congress. today the focus will averagely be on education and taking a look at this issue, its prevalence, and engaging in dialogue about what the federal role is in this space. at the end of the day, our goal is to have better outcomes for our nation's children and youth. that's my goal, and i know it's the goal of many of my colleagues. i'm hopeful that we can use this opportunity to gather and share information, learn from states while encouraging state collaboration and work together on substantive issues. thank you, madam chairman.

>> thank you, senator enzi. i am so appreciative of the work that we have done together on these issues. and i thank you for your help and support. now we'd like to hear from our witnesses, our first witness is miss ju yung chang, the associate commissioner of the children's bureau within the united states department of health and human services. and then our next witness is miss abigail english. she is from my home state of north carolina. she's a lawyer, researcher, and advocate, and is currently the director of the center for adolescent health and the law at the university of north carolina at chapel hill. recently miss english was a member of the institute of medicine and the national research council committee which issued the report titled "confronting commercial sexual exploitation and sex trafficking of minors in the u.s." following miss english is miss jenae lasttrell, assistant

principal at the gross mont union high school in san diego county, california. after recognizing that children in her school district were being subject eed to child sex trafficking, approximately four years ago, miss lattrell and her colleagues partnered with local law enforcement, developed training for teachers so that professionals in the classrooms are now able to recognize the warning signs and connect the at-risk students to the critical support services that they need. and then finally we have miss megan touhy. miss touhy is investigative reporter for reuters in new york who i mentioned earlier, actually wrote the investigative series that first highlighted the practice of private rehoming. so we're going to begin with miss chang for your testimony. and once again, please limit your opening remarks to five minutes. once each of you have concluded, then we'll begin the question-and-answer period of the hearing. miss chang?

>> thank you, chairwoman hagan, ranking member enzi. thank you again for inviting me to testify today. i'm the associate commissioner of the children's bureau where i oversee the federal foster care and adoption assistance programs, as well as a range of prevention and post permanency initiatives. i'm pleased to have this opportunity to share with you the department of health and human services' response to two very serious issues confronting the field of child welfare. the practice of adoptive parents rehoming their adopted children and human trafficking. i'll start with my comments on rehoming. many of the stories highlighted in miss touhy's roieuters serie described parents unable to meet the complex emotional and behavioral needs that emerged from their children post adoption. these parents turned to online forums to advertise and facilitate the placement of their children without the benefit of safety and criminal background checks or a home study to determine the

appropriateness of the placement. the reuters article suggests that children advertised on these message boards are often placed in unsafe environments and are highly vulnerable to exploitation. parents have a legal responsibility to protect and care for their children. delegating responsibility for a child to a potentially unfit and unsafe individual through a power of attorney does not insulate parents from state laws regarding imminent risk of serious harm. i want to be clear. the practice of rehoming is unacceptable. it is clearly an act of abuse and neglect, and it should receive the full attention of child welfare agencies. many of the key legal requirements related to child abuse and neglect, guardianship and power of attorney, as well as adoption, are determined by states. federal law requires states have a process to receive and respond to all allegations of bass and

neglect. and although the federal law provides a minimum definition, stated laws determine what constitutes abuse, neglect, abandonment, or exploitation of children. the reuters article brought to our attention the need to provide guidance to states on how to respond when parents place their children in dangerous situations. and it also highlighted the need for enhanced preparation, support, and post-adoption services for all adoptive families. the children's bureau released new guidance to states on may 30th of this year in the form of an information memorandum to help support children and families affected by disrupted adoptions. through the i.m., we encouraged states it to review laws that f earn these issues to ensure the issues that arise through the practice of rehoming are adequately addressed. we also encouraged states to promote the availability of post adoption services and resources through various means of

outreach and information sharing to the adoption community. most importantly, to provide support before families are in a state of crisis. the children's bureau has also issued two funding opportunity announcements this spring related to the enhanced development and availability of post-adoption services that would be available for all adopted children and youth. i'd like to now turn my focus to the issue of child trafficking. hhs is committed to ensuring that victims of all forms of human trafficking have the access to the services and support they made it to foster health and well-being. abused and neglected children are unfortunately vulnerable to trafficking. some trafficked children have had contact with child welfare in some form, and some are current or previous wards of the state. in order to better understand and serve child victims of human trafficking, child welfare agencies are strongly encouraged to build their capacity to work

with victims of human trafficking. capacity building should include such areas as institutional education, staff training, supporting policies and procedures, appropriate screening and assessment tools, resource development and data collection and analysis. with coordinated efforts in these areas, we hope to decrease vulnerability in trafficking among children and youth, and to equip systems and services to identify and intervene early to address the needs of victimized young people. the children's bureau is committed to providing information to states and service programs to build greater awareness and better response to the problem of child trafficking. in september of 2013, we published a guidance to states. and this year we will award grant that-- grants designed to response of human trafficking through infrastructure building and a multisystem approach with

schools, law enforcement, juvenile justice, courts, run away and homeless youth programs and other necessary service providers. the administration looks forward to working with you to address both of these crucial issues and improve services to some of our most vulnerable young people. again, thank you for the opportunity to testify today. i'd be happy to answer any questions. >> missenlish. >> -- miss english? >> good morning and thank you for the opportunity to testify this morning. my name is abigail english, and i'm director of the center for adolescent health and the law in chapel hill, north carolina. the sex trafficking of children and adolescents represents profound violations of their human rights. the physical, emotional, social, and legal burden on the victims and survivors is severe and can have lifelong, even life-threatening consequences.

in 2012 and 2013, i was privileged to serve as a member of an iom institute of medicine and national research council committee which published its comprehensive report in september, 2013, confronting commercial sexual exploitation and sex trafficking of minors in the united states. in 2010 and 2011, i was a fellow at the radcliffe astronaut for advanced study at harborviat ha university on the exploitation and trafficking of adolescents. the committee's deliberations were guided by through fundamental principles. one, commercial sexual exploitation and sex trafficking of minors should be understood as acts of abuse against children and adolescents. two, minors who are commercially sexually exploited or trafficked for sexual purposes should not be considered criminals. three, identification of victims and survivors and any

interventions should do no further harm to any child or adolescent. the iom committee also concluded that efforts to prevent, identify, and respond require better collaborative approaches and must confront demand and hold accountable the individuals who commit and benefit from these abusive acts and crimes. although accurate nationwide prevalence estimates based on reliable evidence are not available, the iom committee concluded that the available evidence does suggest that commercial exploitation and sex trafficking of minors has been reported in every region and state and that victims come from diverse backgrounds in terms of geography, income, race, ethnicity, gender, and sexual orientation. nevertheless, some populations of children are likely to be at heightened risk for

victimization. these include children who have been sexually abused, youth who lack stable housing, sexual and gender minority youth, youth who have used or abused drugs or alcohol, and youth who have experienced homelessness, foster placement, or juvenile justice involvement. the iom committee found that health care professionals can play an important role in the prevention and identification of children and adolescents who are victims or who may be at risk of commercial sexual exploitation and sex trafficking. however, numerous barriers exist to limit identification. these barriers include a lack of understanding and awareness, the lack of disclosure by victims, and a lack of established screening practices, policies, and protocols to guide health care professional. such practices, policies, and protocols do exist for child

abuse and domestic violence which could provide a basis for developing ones for sexual exploitation and trafficking. health care professionals also have a role to play in treatment in order to provide effective prevention identification and treatment for victims and survivors, health care professionals require specific training and tools. educators and school personnel also can play an important role in the prevention and identification of children and adolescents who are victimized by our at risk for commercial sexual ex-pploitation and sex trafficking similar to the ways in which school-paced health education initiatives have been used, for example, to promote physical activity, reduce tobacco use, promote healthy sexual behaviors, reduce dating sel violence, and reduce alcohol-impaired driving, schools could develop prevention education initiatives directed

to the reduction and remediation of commercial sexual exploitation and sex trafficking. in order to ensure that prevention and identification efforts do no harm, appropriate services must be available to which victims and survivors can be referred if and when they are identified. more thorough evaluation of the use of trauma-informed care is warranted, and emergency shelter and short and long-term housing are particular ly scarce. without appropriate services, victims and survivors are at risk for reexploitation and repeat trafficking. finally, in a majority of states, it is still possible for prostituted, exploited, and trafficked children to be arrested, prosecuted, detained and incarcerated for sexual offenses such as prostitution or for related offenses such as loitering or drug offenses even if they were being exploited or

trafficked. a growing number of states are enacting laws often referred to as safe harbor laws to redirect exploited and trafficked children and adolescents out of the juvenile and criminal justice system and into the child welfare system or to other services. the iom report recommend that's all injures -- recommends that all jurisdictions take part in this process. thank you for this opportunity for testimony, and i look forward to your questions. >> thank you, miss english. miss lattrell? >> thank you, senator hagan, senator enzi, and members of the committee. i'm currently an assistant principal at an alternative school in the gross mont union high school scad. i've spent my career implementing and developing programs and services to address the social and emotional needs of students, especially most vulnerable, and working to create policies, services, and learning environments that support the physical and emotional safety of all students. for the past six years, much of

my focus and attention, both personally and professionally, has been on the issue of child sex trafficking, and it is an honor to be here today to testify about the prevention and early identification work we've done in gross mont union high school district. schools should be safe havens for students, and more so for some whose lives are arkansas triesed by instability and lack of safety and stability. in these cases, school personnel are uniquely well positioned to identify and reported suspected abuse and connect students to services. actions that can prevent trafficking and even save lives. everyone who is part of the school community, administrators, teachers, bus drivers, maintenance personnel, food service workers, resource officers and others, has the potential to be an advocate for child victims of human trafficking, but first they must learn the indicators of the crime, its warning signs, and how to respond when a student is an apparent victimvictim, we ha

developed a program to accomplish the task. includes four components. one, increased staff awareness and the indicators on the nature of the crime. two, increased student awareness of the risks and realities of trafficking. three, clearly articulated district policy and protocol for identifying a suspected victim or responding to a disclosure from a suspected victim. and four, strong working partnerships with law enforcement, child welfare, probation, and social services. in february, 2008, committed to the concept of effective interagency information sharing, our community worked with dr. bernie james, pepperdine law professor and nationally recognized expert, to create an information sharing agreement. this agreement allowed for sharing of information across our systems and helped us to identify our first student victim of child sex trafficking. since that time, our partnership has identified countless victims and survivors of child sex

trafficking. we have educated and protected numerous potential victims. we have learned the magnitude and scope of the problem is greater than any one of our systems realized, and it is definitely more challenging than any one system can address al e alone. we have also learned that schools play a critical role in protecting students and need the proper training and support in order to do so. beginning in the fall of 2010, we developed a comprehensive staff training for all school personnel about the dynamic of child sex trafficking, the scope of the crime, warning signs, campus impact, and a clearly defined course of action on how to respond. along with our partners, we developed a protocol for response when a staff member confirms or suspects a student is a trafficking victim. we have trained our counselors on how to provide trauma-specific services and when to bring in outside experts to support a student impacted by sex trafficking. we have also partnered with national and local experts to develop a prevention curriculum for students. and most importantly, we

developed cross system mechanisms and infrastructure for collaboration among public agencies and other stakeholders, we are building upon the successes and structures, processes already in place. in closesing, i would like to share quotes from sex trafficking survivors when asked their opinion about how schools should address this issue. "i know that my teacher knew that something was wrong with me. on a few occasions, she saw me getting out of my pump's car before school. i would catch her looking at me as if she was trying to figure out what to do with me. i wish she had done something." quote, "watch it and address, it we know you are aware it's happening." quote, "educate all staff about the warning signs. if i knew i had someone to turn to, i would have done so." quote, "don't give up on us when we get in trouble. work with us to figure out why things are happening." student victims need schools to be trained on identification and response. in many cases the adults on campus are the last responsible adults to touch these young people's lives before they are

victimized or left to this crime. thank you for the opportunity to speak today. i look forward to your questions. >> thank you, miss lattrell. miss touhy? >> thank you, chairwoman hagan and ranking member enzi, for inviting me to testify today. starting in 2012, i began examining what are called disrupted adoptions, cases in which parents conclude they cannot successfully raise an adopted child. during my research, i discovered a clandestine online world where some of these parents solicited new families for children they no longer wanted. in internet forums on yahoo! and facebook, the post from these parents were striking. quote, "i'm totally ashamed to say it, but we do truly hate this boy," one woman wrote of the 11-year-old son she had adopted from guatemala. "i would have given her away to a serial killer, i was so desperate," said another parent of her adopted daughter. these parents weren't simply venting, they were actively

offloading children. it's called private rehoming -- a term first used by people seeking new homes for their pets. what we didn't know, what no one knew, was how often this was happening, and what had become of the children who were given away. because parents handled the custody transfers privately, often with strangers they met on line, often through nothing more than a notarized power of attorney, no government agency was involved, and none was investigating the practice. the federal government estimates that overall 10% to 25% of adoptions fail. but no authority systematically tracks what happens to children after they are adopted domestically or internationally. to quantify the frequency of rehoming, we conducted a deep dive on one of the online forums where this activity was taking place. we meticulously examined more than 5,000 messages posted on the yahoo! bulletin board going back five years, and we built a data base to help us process our findings. we discovered that over that

five-year period in this one forum alone, a child was offered to strangers on average once a week. the activities spanned the nation. children in 34 states had been advertised. many were transferred from parents in one state to families in another. and at least 70% were said to have been adopted overseas. and many were said to suffer from physical, emotional, and behavioral problems. it was clear from the online descriptions of these children that they were among society's most vulnerable. child abuse experts pointed out it their backgrounds and the manner in which they were advertised made them ripe for exploitation. beyond the data base, we pieced together more than a dozen cases of rehoming. i traveled around the country gathering records and interviewing parents and adoptees. these are three examples of what i found -- after determining that the 10-year-old boy she adopted out of the foster care system was too troubled to keep, a wisconsin mother solicited a new family for his on a yahoo! group. "i couldn't stand to look at him

anymore," she told me. "i wanted this child gone." within hours of posting the advertisement, the mother handed the boy off in a hotel parking lot to a woman whose biological children had been permanently removed from her care and to a man who is now in prison for child pornography. this couple living in illinois at the time drove the boy home with them with the wisconsin mother having no idea who they really were. she had no idea that the illinois woman's children had been removed after officials determined she suffered severe psychiatric problems, as well as violent tendencies, or that the man had an affinity for young boys that he would later share with an undercover agent in a pedophile chat room. the woman believed their assurances that they were good people with good intentions. in another case, a russian girl named inga thought her adoption by an american couple would bring a world of happiness. my picture was, i'm going to have family, i'm going to go to school, i'm going to have friends. inga who's new 27 told me, "less than a year after bringing her home, her daptive parents gave up trying to raise her.

they turned to the internet and sent inga to three different homes over the course of six months. none wanted to keep her. in one home, inga says she suffered physical abuse. in another she says the father molested her. inga was sent to a michigan psychiatric facility at the age of 13 after her adoptive parents refused to take her back. officials characterize inga's trouble this way -- substance abuse, domestic violence, separation from parents, sexual abuse, physical abuse, emotional abuse, verbal abuse, attachment issues, and mental health issues. to inga, the situation seemed bleak. "my parents didn't want me, russia didn't want me. i didn't want to live," she told me. another girl, nita, was adopted from haiti at 13. she told me she also suffered suicidal thoughts and was passed among four families in two years. the first family to take her lived in ohio. she says she was one of 33 children and that the environment was chaotic. the third family abruptly sent her away after nita helped bring

to light allegations of sexual abuse against other children in the home. now 18, nita says the feelings of abandonment took a toll. in addition to suicidal thoughts, she also developed an eating disorder. many of the young people i interviewed told me that they had felt voiceless and alone. few had found anyone to advocate on their behalf. why does rehoming happen? parents who offer their children told us they had few options as they tried to raise children with many behavioral problems. adoption agencies refused to help. residential treatment centers were expensive. and some parents feared they would be charged with abuse or neglect if they tried to relinquish their child to the state. to be sure, many of the people who take these children in are competent and compassionate caretakers, but as our investigation showed, rehoming also allowed abusers and others who escape scrutiny to easily obtain children. what are the obligations of these websites on which this rehoming forums have taken place depends on who you ask. what i informed yahoo! of the

activity i saw on yahoo! user groups, the company swiftly took down the sites. facebook, by contrast, allowed a similar forum to continue operating after we exposed it. is rehoming legal? the answer is complicated. no state or federal law specifically prohibit rehoming. some states restrict the advertising and custody transfers of children. but those laws are confusing, frequently ignored, and rarely prescribed criminal sanctions. since our investigation, wisconsin, louisiana, colorado, and florida, have enacted new restrictions on child advertising, custody transfers, or both. the sponsor of the wisconsin bill called rehoming "a gaping hole that allows children to be placed in unsafe situations with dangerous and sometimes life-threatening outcomes." in terms of the federal response, the congressional research service issued a report recommending ways congress could restrict rehoming. and as you know, the government accountability office will begin studying state and federal

policies related to rehoming this summer. at the request of senator ron widen, four federal departments have been meeting to address ways to address rehoming. some advertise shock that advertising children on line does not seem to violate any federal laws. some child advocates say a federal law should place uniform restrictions on advertising of children and require that all custody transfers of children to non-relatives be approved by a court. they say differing state responses are inadequate to address what is largely an interstate practice. other advocates are seeking more government support for struggling adoptive families, and more scrutiny of prospective adoptive parents. thank you for the opportunity to talk about this issue. unfortunately, i can only give voice to some of the young people affected by this practice. there remain many unaccounted rehomed children whose whereabouts are unknown. >> thank you. i thank all of you for your testimony. now we'll begin a series of questions. we'll take eight minutes per

senator. and miss chang, from the personal stories that miss twohey shared concerning rehoming, it seems that families feel they have nowhere to turn. whether their adopted child -- when their adopted child requires a different amount of support and services beyond their skill set k. you tell me what hhs can do to share information about trauma informed care with adoptive parents and front line workers including health care provider and educators? >> yes, thank you, senator. i think there's a lot we can do to share information on what is

caregivers, as well as foster parents, loving families who really do provide for their children. >> certainly. and obviously we're talking about those situations where the stories that we've heard this morning and have read are just on the other end of that spectrum. miss english, i wanted to ask you from the reports that you described, one of the challenges is often the lack of data and the lack of evidence that would inform the work of the federal, state, and elderly governments trying to address child trafficking. what can be done to improve the evidence gathering, the data collection so that the federal, state, and local policyholders

can better address this problem? and then also i'm concerned about what can the health care providers and school personnel help overcome the challenges of the victims being afraid to disclose their stories? >> thank you, senator. the iom committee identified a number of different ways in which data gathering can be improved, and i'll say at the outset that there are several different kinds of data that need to be gathered and evidence that needs to be built. first of all, we do made it more data it who the -- data about who the children are who are being exploited and trafficked so that we can tailor identification tools and prevention strategies specifically to those who are at greatest risk -- >> can you give an example? >> and so the committee, while it said that trying to refine a

national prevalence estimate was probably not the most appropriate strategy, conducting research on specific subpopulations of youth is something that could be supported by the federal government and would enhance the development of appropriate prevention tools and identification tools. in addition, we do not have evidence-based tools for identification and training. and there are a few examples of training efforts and tools for identification that have promising -- are promising, but weigh need much more evaluation of those and other tools. for example, in houston, there are efforts, training efforts underway. in atlanta, there are specific

child-oriented training efforts that have been implemented by a nonprofit coalition and the governor's oeffice. and the polaris project, a nationally funded project, has an online training initiative. but all of those efforts could benefit from further evaluation, and similarly some of the tools that have been developed by places like asian health services in oakland and other health care organizations and sites would benefit from evaluationings so that -- evaluations so that they could be taken to scale and used in other settings. >> thank you. miss lattrell, you tall set up a program. you said shortly after you set it up with card nation between different groups you actually helped identify your first victim. can you talk about how

successful this program has been at your school. and what recommendations would you make to other school districts, what advice would you give them? and then sort of to wrap it up, how can the federal government help support the programs, the program that you put in place at your school? >> sure. thank you for the opportunity to clarify. actually, we developed an information-sharing agreement which was with our school district, six other school districts, child welfare, probation, and three law enforcement agencies -- >> six other school districts? >> correct. >> okay. >> once we developed that information-sharing agreement, that's when we immediately identified our first survivor of sex trafficking because now all of the partners were at the same table. all of the stakeholders, all of the agencies that were working with the same families, were now able to talk openly and collaborate and understand what part we were seeing in relation to the whole. >> one other point -- obviously these are children. so this is all private

information that is not public. >> correct. >> right. >> so it's -- what we're seeing in schools as well as what the probation officer might be seeing as well as child welfare. we're all touching that young person's life, but we weren't discussing openly and collaborating in a way that helped us understand what it was we were seeing. once we developed that information-sharing grammy, that's when we were first able to identify what was happening systematically, at least in our community, in what i've discovered across the nation was child sex trafficking. once law enforcement really alerted us to the prevalence, the scope, and how -- the age that you discussed earlier that this was happening, we started moving to action. we as a school district did not want to wait until it was happening in our schools. we wanted to be at the front line and to keep this off of our campus. we know schools are where -- we just represent and reflect what's happening in the community. unfortunately, with this happening in the community, it's also happening to our students.

so because of that, we worked with our partners, the experts, to create a systemic, comprehensive training for all of our administrator, our campus supervisors, nurses. what we discovered through research and as well as our own experience was disproportion idealy this was happening to children in the foster care system. children with disabilities. so we made sure those relevant staff were trained not only on warning signs but what to do. we know that our staff and schools are -- >> why don't you walk me through a situation of what to do. >> okay. so if we suspect, if a teacher suspects that they have a student that might be trafficked, they understand some of the warning signs. they then bring that concern to a staff member, typically a counselor who has received more in-depth training on how to engage a potential victim, how to actually have discussions to hopefully have that victim feel comfortable in disclosing what's happening. we've trained our administrators so when they are in the

situation you shared earlier, when they're engaged with a student and in the case you shared they were in a backpack and discovered lingerie, when we're doing some of the standard businesses on campuses, we discovered different warning signs and flags. so if we suspect we have a victim, we work with that student as best as we can, we determine if we actually have a larger campus issue. if this student's being trafficked, if there's other students, if maybe the exploiter is approaching that student to and from school, we then, depending on the situation, work with communicateding that to the parent or guardian. we work with law enforcement, hopefully that that student will feel comfortable to share the information regarding the exploiter with law enforcement. we make sure that that student and family are getting the appropriate services in the community and oftentimes on campus. that way we can keep disproportionately the female students i'm talking about, we can keep her connected to a campus. >> thank you. my time is up. ms. twohey, i'll get you on the

next round. senator enzi? >> thank you, madam chairman. this has been fascinating re. reading the testimony was interesting and in a lot more detail. but miss chang, in your testimony you mentioned adoption disruptions and adoption dissolutions. can you explain the difference between those terms for me? >> sure, senator. so typically when we talk about adoption disruptions, we think about what happens during the process leading up to an adoption. so we think about children in foster care, the process to be adopted can take, you know, up to two years in some instances. so sometimes during that process of moving toward adoption finalization there may be a disruption that prevents that adoption from being finalized. it may be due to the child's behavior, needs that a parent

decides they aren't equipped to handle. other times, adoption disolution refers to after an adoption has taken place. that may be a foster adoption, an overseas adoption, a domestic adoption, for whatever reason a parent decides that they are no longer able to care for that child. so we talk about that as an adoption dissolution. >> thank you. miss english, you mentioned the health providers have some protections on abuse. but the protections were the same protections were not available for trafficking. could you elaborate on that a little bit more? >> thank you, senator enzi. what i was intending to clarify was that health care

professionals are accustomed to identifying children who have been victims of child abuse and also victims of domestic violen violence. that those protocols and identification tools could be useful in developing similar tools for the identification of victims of trafficking. you have, however, raised an issue which i think is of great significance, and that is that health care professionals are currently mandated to report instances of child abuse to child welfare and/or law enforcement authorities. and there is some lack of clarity in the laws around whether child sex trafficking is or is not included within that mandated reporting. in some states, mandated reporting extends only to abuse

that takes place by a family member or a caretaker and not by a third party. in some states, however, it does extend to third third parties. and a small number of states have begun to enact specific provisions to include child sex trafficking within their child abuse reporting laws. there's also some concern on the part of health care professionals that if they report young people who have been victims of sexual exploitation and trafficking, that may contribute to the distrust and reluctance those young people have to disclose their victimization to the health care professionals that are treating them. >> thank you. miss latrell, in your plan, your point number two was educating parents and students on risks

and realities. how do you go about doing that? is there reaction from the community against that kind of discussion? >> there's obviously a concern from the community when you are talking about their children and the potential harm of their children being sex trafficked. that's where our partnerships are really important. we in the schools work with law enforcement, as i shared earlier. law enforcements are really the experts in what is happening in our local community. what is the recruitmentment look like? what gangs are involved in this? how is the exploited youth being victimized? is it online, is it in certain pockets of the community? we as the schools partner with law enforcement in hosting public awareness events, hosting some educational opportunities to alert what are the warning signs, what are the risks, how to best protect their children. we in schools are ready to take in reports if they have concerns and if they are worried about their child or even one of their

child's friends or other classmates. so we felt really, really strongly that the best thing for us to do in schools is to be alerted and educated, so wherever we receive a referral, whether it's law enforcement or a family coming forward or student disclosure, we are ready to move to action and able to help that young person immediately. >> thank you. this rehoming a new thing to a lot of people. it's something pretty new to me. is rehoming limited to adoptive families or did you find people rehoming their own kids? >> that is a great question. what i can tell you is the manner by which people rehome children is not something that would be limited to adopted children. anybody can turn over a child to a stranger met on the internet

with nothing more than a not yarized power of attorney saying the child is now in this stranger's custody, whether it's for months or until the child turns 18. people can do that with an adopted child, people can do that with a biological child. we examined, investigated it for 18 months and basically combed these internet forums were children were being advertised. i didn't find a single offer of a child, of a parent offering biological child. it was primarily people who had adopted children from foreign countries, and also people who had adopted children from the foster care system. >> do you have any suggestions for people adopting kids from foreign countries as a result of your effort? >> my job is to collect the facts and report them. so what other people in the course of doing my reporting -- certain things came out with

regards to international adoption. this is something, this is an area that had been largely unregulated until 2008 when there were the first federal regulations of some international adoptions that took effect. those regulations said in order to adopt you had to undergo ten hours of training if you wanted to adopt a kid from certain foreign countries. for many of the other international adoptions there was no training requirement. so i talked to people who had adopted children from foreign countries and hadn't really undergone any real preparation. so contrast that with the training that's required if you want to adopt a child out of foster care system. that can be dozens of hours of training. as i understand it, sometimes people undergo that training and say, you know what? i've got a good hard look at what's in store and i'm not going to, i can't move forward. i think one of the things that has come up is the training

requirements. in terms of the quality and quantity of training that's required. also, the support that's available for struggling adoptive families when their adoptions go south, both internationally and domestically. >> thank you. my time has expired. i'll cover more on the training and resources next round. >> senator murphy. >> thank you very much, madam chair. miss twohey, you talked about the fact states are starting to amend their laws to provide greater protection. can you talk about what you have found in your research to be the beginnings of best practices at the state level when it comes to protecting these children? one of the easy things that would seem to be a common sense requirement would be that the family has to go to court in order to get authorization to move a child that they had to go

through the custody process in the first place to get. so what have you found to be the best ways that states can start to amend their laws to deal with this issue? >> so you are correct. the child welfare system has been largely regulated by individual state laws. in the course of my reporting, i discovered that in some states there are restrictions on who can go on the internet and advertise a child for adoption or another type of custody transfer. some states say this is, you know, you have to have a licensed agency has to do that advertising of the child to ensure there is oversight of those involved. other states there are no restrictions on the advertising of children. i would also point out that a lot of these state laws on the advertising of children, i believe, have assumed that the

children being advertised are newborns. young moms who don't want to keep their child and want to put the child up for adoption right after it's born. i don't think those laws basically were crafted with the understanding that in 2014, you'd have people advertising children who are 12 years old, who are 14 years old. the states vary when it comes to the advertising of children and also the custody transfers of children. there are now states that have, since our series came out in september, enacted new restrictions on the custody transfer of children saying if you are going to transfer -- this is another situation where you had, i think, that the laws, state laws were such that they assume if you were going to transfer custody of a child through a notarized power of attorney going off to military service or going to the hospital, you would be doing that to a trusted relative or

close friend of the family. i don't think that those state laws basically took into account that in 2014 you would have people transferring custody of their child to a stranger they met on the internet. now you've got some states saying if you are going to tr transfer custody of a child through a nonrelative longer than a year, go through the court and make sure there is oversight of that. those are two things springing up at the state level as a way to address this. as i said, there are other people, child advocates pointed out this patchwork will not work and you need uniform standards and regulations of custody transfers. >> let me ask that question of you. your testimony references the fact most all this law is at the state level. that certainly makes sense that, to the extent rehoming is happening over the internet,

that it's crossing state borders. that that necessitates, be even requires federal response what do you think about that suggestion? >> i certainly agree with ms. twohey. the situation of rehome buying adoptive parents is something that most law makers never anticipated. if we think about the rights of parents to care for their children and make decisions about where they will live, where they will be placed, i don't think anyone anticipated this. i certainly thing there is a lot of confusion about what legal custody or power of attorney documents even mean. what responsibility that infers and what responsibilities parents need to maintain. guidance from the federal level about this new type of situation is certainly important. >> is there -- we talked about the fact that there are plenty of situations in which biological parents end up transferring custody of their children for a variety of

reasons. there is no oversight at the federal or state level. is there a reason to treat adoptive children differently than biological children when it comes to the transfer of custody? >> i don't think so. it's really important for all of us to remember that a child who has been adopted is a part of that family now. they should be treated by the family and by law in the same way. i think children -- the question is how do we best protect children from parents who may place them in a dangerous situation? i think that's the question we have to think about. i don't think we want this situation to lead us to treat adoptive families, including parents and children differently. >> but what do you make of ms. twohey's investigation which suggests there is a differential in terms of how they are treated. in all the cases she found about the online advertising of children for rehoming, not a single one was a biological child. i certainly understand your