bit slow and not get our ideas way out of the technology we have. by the way, i just noticed david was sitting in the room. david kearns is sitting in the back row. he is a 241st airman of the year.

say hi in you get a chance. he's a c-17 engine guy. maybe he could build a new launch platform or something. he could probably build anything. yes, sir, john. >> yes, sir. your title here is strategic agility, and you talk in here about taking advantage of different points. the lesson, though, of acquisition programs in the last few years seems to be don't change the requirements because that causes a lot of expense. so how do you reconcile the two? are you going to have more frequent overhauls of the program? how do you take advantage of new technologies as they come along without dhachanging the requirements and changing the technology assertion? >> our best in this is with the new programs. they are what they are and we have to do the best we can with the new technologies over the years. to the extent we built open air

modulars, architectures and the like, this is a way we can plug in different types of capability, different types of technology as technology changes over the years. we can only do what we can do with the strategies that have been created in existing programs in the past. >> we're talking about -- if they say you can, in fact, create systems that save you 25 to 30% in fuel costs, we should be building every fleet we have for implement that go new technology and engine competitions to replace existing engines, because it will pay for itself very quickly. i just think we have to be able to take advantage of things as they change . it may not be a mission change overnight, but we should be able

to take advantage of technology. >> what kind of programs are coming up that will reflect these new programs? >> we have a new trainer that will be coming up upon us within the next few years, so that definitely leaps to mind. yes, louie? >> can i ask about the recent incident in africa with the c-130 that never returned from a tour there? due any developments on stothe stowaway? and did that incident raise red flags on the security? this goes to the readiness issue you were both talking about. >> i think it raises security flags for everyone involved. u.s. and africa command have raised control while it's in the aor. the usp command makes sure the crews are trained properly on how to do this. the latest i heard on the

incident itself is the usp command have now told us the young man died of asphyxiation and they believe there are indications that he boarded, entered, i don't know how you would phrase this, but he got on the plane in mali. i don't know if he is from mali or not. all we know is they believe he got on board the airplane in mali. the only other thing is that he was discovered on a post-mission inspection, which is a little more detailed inspection of the airplane than a post flight or through flight as an airplane lands, gets gas and turns. he was not in a position he could be seen from there. in fact, they had to remove an outside fuselage panel to remove his body. so how he got in there is a huge question mark, and the u.s.-africa command and the ucomm will conduct this investigation. as they have facts, we'll share them, but we don't have any more right now. >> the readiness issue, is this one of the things you're talking about full spectrum, that there

might be full security across the board? >> i would say it's full spectrum security. as cheethe chief said, it's a standard of what was the security, what is the protocol? obviously something here fell through the cracks that this boy was able to gain access to the aircraft. >> i wanted to sort of pick up on amy's question and your point about those pivot points and being able to be more agile in your decision making. i guess there's no point in asking about water under the bridge, but do you now, looking back on it, think it was a mistake to create and put so much faith into a program like the f-35 that has three very complex challenges? and to what extent are you able to, going forward, create opportunities to insert more competition benefits, sustainment and a potentially new engine, all those things as

you go along because you're going to be flying this for so many years. i guess it's sort of like a looking back, looking forward question. >> i think what's important at the end of any program, you start to feel the program. you should learn anything you can learn from the process that got you from the idea to the actual production line. i think we've learned a lot from f-35. we learned some good lessons and some things we might do differently in the future. the important thing is not to look back and be critical, it's to figure out what does it mean in the way forward? i think this idea about strategic agility in everything we do is one of the lessons we're learning from this. we're not the only ones involved in the process, and the process has to become more agile. everyone involved would agree with that, and how you would get from there to here is the problem. that's why this is a 30-year document. this isn't going to change overnight. but everything we do in our master plan as we look at how we move forward in the acquisition

process, acquisition strategy and development of programs, we should consider this idea of how to become more agile consistently and constantly over time. and it's got to include all the partners to do this with us. >> one of the big criticisms early on was the way that this incident was handled and the inability of some of the key players, i.e., the jco to actually gain access to the airplane and start that process quicker. what are you doing about that to sort of prevent that from happening again? >> i have a little bit different view of that, just so you know. the problem with an accident scene is someone has to be accountable instantly for making sure you control the evidence. that's really important in any kind of major safety investigation. that's the first responsibility of the interim safety board present who is appointed as soon as the incident occurred. they taped off the area, they began isolating the evidence

field so they wouldn't be destroyed, pieces wouldn't be lost. so the evidence that would help you determine the problem isn't affected in a negative way. it takes about a day and a half to get the full-time board president on board at the site and have experts start to show up to help form the board. that's actually very fast. it happened very quickly this time. something that happened that doesn't normally happen this time and that's on the morning of the second day, the jena prov -- general approved to have the flight safety data removed from the plane. because before that's available, trying to piece together what happened is virtually impossible. that was actually removed from the airplane and sent to the contractor the second day, which is way, way ahead of a normal timeline. the confusion got to be what we had not done is put together, among the three services in the department of defense, an agreement that if we had a serious incident, we were going to bring representatives from

all the right places together to be part of the process so everyone would have access to kea the key data quickly so they could make certification decisions so the engine company could have the data to start working the root cause analysis so jc o could have the information to know exactly how it affected their test program. people are there at eggland. they were there all the time and they were there with the interim safety board, but nobody knew who officially was the connection to the navy or the marine corps or the jco. next time this happens, there will be a very quick response and everybody knows exactly who is authorized, who can get information quickly, how are we going to manage it. we'll fix it. this won't happen again. yes, ma'am. i'm sorry. >> i'm sorry, you go ahead. >> a year ago we were being told about the problems in the

readiness of the air force and the combat force was not ready to fly and it was a big conflict at the time. secretary james said congress is potentially going to take money out of your readiness accounts to pay for these other programs and potentially sequestration is going to be back in 2016. so are we going to go back to that place where half the force was not going to be ready to fly, or what kind of measures are you taking now to prevent that and what options do you have? >> so, of course, congress hasn't completed its work yet, so the message we're putting forth to congress, and there are people who are very, very interested in this so please don't misunderstand what i'm saying. as congress shifts priorities and decides that yes, this will happen or no, that won't happen, they're working with the same top line numbers under the budget control act that, of course, we had to budget

against. so as they're doing this, what we're saying is please don't carve money out of readiness, because readiness is too important to us and we need to recapture some of that loss readiness, which, by the way, one year won't allow us to recapture all of it. i would also say something i have learned and have a great appreciation for now seven months into my job is that -- i'll just take flying as an example. there is flying and there's flying. flying is not quite like riding a bicycle. you can't stand down for three months and totally get back into the cockpit and be able to do all of the same capabilities with the same level of efficiencies. you might be able to get back into the cockpit and fly the plane, but there are very, very dilfficult maneuvers. this is very high-tech equipment which is why we put the emphasis on the full spectrum of readiness training, this is the high-end difficult type of flying, again, simulated threats

that we could face in the most difficult parts of the world. so it's particularly that type of flying that we feel like we've got to have more of, we've got to focus on that. so these are the messages we're putting forth to congress continually. >> so are we going to have another crisis in a few months when skrequestration hits again? will half the force not be able to fly until you get money from congress? what's your prediction of what might happen? >> of course, the law of the land right now says that the so-called sequestration level budgets will return in fy-16. so we know what that means for defense. but we're in discussions, and it is quite possible that the president's budget requests that goes to capitol hill could be higher. we're not sure yet, but it could be. and so in the most recent years, what we have done is we have created several versions of budgets as we did this past

year. as you will recall, we have a president's budget level and then we have a lower level. so i would predict we will go through something like that again for the next budget submission. we'll put forth what we feel we really need and then we'll put forth, if we had to live with it, here's how we would manage after sequestration. i saw julian before. >> question for you, secretary james and a question for the general. secretary james n your answer on the rg-180, it sounded like you had a solution there. spend down the stockpile, build more deltas, use space x while you're developing another engine. is that correct, are you ready to do that, and why not do that now to put more pressure on the russians? and for the general, in your framework document, when you think about agility, in your mind is it more important for future air frames to build them and design them more quickly, build, design and field more

quickly or build and design platforms that can evolve over time in the last 60 years? what's the future in your mind? >> so on rg-180, there are no solutions yet. in my earlier answer i was trying to paint the picture of some of the options that are on the table, and i was also trying to paint the picture that the situation with russia is serious, we are quite reliant on the rg-180 but we're not exclusively reliant, so we have options here. so we're taking some time, not a huge amount of time, but some time to think through the way forward. but if there's one underpinning that there is great agreement on is we don't want to have this kind of reliance going forward on russian engines, so we do need to develop these alternatives. >> i believe two things. i think both are true. it depends on what you're building and designing. for example, platforms that have proven we're going to keep for long periods of time because

they cost a lot of money we should design for longer life, insist on things like open architectures and be able to grow them over time whether that's tankers, bombers, fighters over the last 50 years, whatever it might be. we should also look at acquisition programs, things like weapons, things that have a shorter shelf life that we know are going to change and that we'll be looking for different solutions for. i think it's a combination of the two. that's where the agility comes in. we don't need to have the same process for everything. >> laany update? >> any update? no. congress has the inputs and they're doing their work. [ inaudible question ] >> it's a good platform for lots of things. so are the other ones we have. >> do you think terrorism will go away in the next ten years? >> no, but the a-10 is about balancing an air force that we provide to a combatant commander.

if i ask a combatant commander today, because i've done it, if you had the money to spend, would you prefer to buy isr or other things? i now have a list of 15 things they prefer us to spend the money on. we don't make up our requirement, we build to support the joint fight, the commanders build the requirement and we build the support for it. >> in afghanistan we'll probably be in these areas, and madam secretary, you said we're not drawing out from war, we're coming out from the 13 years of war. we couldn't predict facebook. how do we know what the next 20 years will be like? if you look at iraq, you will get a look at the world. we're still going to be in these battles and more to come. >> my answer to that would be, it is possible we will need, after we wind down the combat operations in afghanistan, it is possible. as you say, we can't predict.

it is possible where we could get into something else where we would need higher levels of close air support in the next year, two or three, and if that is the case, we've got it. we've got the f-16, we've got the f-15e, and there is other platforms as well. additionally, with respect to the a-10, this was designed to be a five-year gradual retirement plan. so it's not as though we ever suggested that the a-10 go away overnight, it was a more gradual thing. so the close air support mission is a sacred mission and we got it. >> can we add one more question? we have a patient gentleman in the front row, but i want to add one more comment on the a-10. the question is, what do you want to give up instead? sequestration is the issue. we have to come up with a plan that has 20 billion less per year than the plan we had three years ago when we last did our house budget. 20 billion a year. if anybody else has a solution that balances air force

capability missions, we'd love to hear it, but we sure haven't found it yet. yes, sir. thanks for your patience. >> can you elaborate on what this strategic framework says about the services aspirations in cyberspace? what capabilities are you lacking now that you might want to acquire over the next months and years? and as a corollary, the air force recently put out a request for favors on the moving target defense, trying to control capability? i wonder what that says about your goals in cyberspace, too. >> let me answer the second part first because i don't know anything about it. i don't know what it means about our goals. i'm not familiar with the details of the papers we put out the requests for, other than i know we put out a white papers asking for information on it. that didn't come through my office. i don't know what we're looking

for exactly. but we can find out more about that and i'll see if i can give you a better answer and we'll get it back to you. as far as the framework document goes, what it really calls for is for us to get our act together in what we're going to do in the cyber domain in the future. we are making a big change in cyber from an air force perspective. from a group of technologies that grew up supporting very focused, very narrowly focused technical support to human operations, that's where cyber began. and there's lots of organizations in our goth whove who do that. they do that very well. our air force commanders are worried about big effect on our battlefields. our first witness, the director for medicare and medicaid services, this is mr. slavitt's first testimony before the subcommittee. you might remember he appeared

last october to talk about the site. the concern about healthcare.gov is the reason we're holding this hearing today. exactly one year last week, members may remember we heard from governor tabiner that healthca healthcare.gov would be working. our reviews on the website were brushed aside, but we know how our fears were well foupdnded. the rollout was a disaster. i think all would agree with that. mr. slavitt, we're here to talk about how things are progressing. we hope we get the same candor as you had last year.

mr. slavitt's new role comes at an inopportune time that led to the healthcare.gov disaster. today the geo has revealed a review of the failed laurcnch o healthcare.gov. considering what this committee learned, they didn't have expertise, couldn't meet deadlines and didn't have the organizational skills to amass this massive undertaking. a broken website that the president prolsmised would be a easy to use as any website cost the taxpayers $1 billion. it took a lot of taxpayers' money and their hard-earned paychecks to come up with $1 billion. my colleagues may want to complain that we're spending too much on the failed launch.

i'm not surprised, they don't want to talk about it, but the impact to this falls on the roman period. we are still unsure that the web security or the cms will ever put in place a functioning payment system. when asked today about the healthcare.gov's contracts, the geo will report that as we head into open enrollment this fall, patients' families need to know how this law will affect them, because each day acs is making our health care system more expensive, fragmented and more restrictive. earlier this summer they were required to notify the health care plans of premium rates in 2015. we hope the public will know them in time to plan for their purchase and whether the public will ever see $2,005 in savings the president promised. we want to know if americans

were able to keep their doctor or keep their plan in they liked it. this year we heard testimony from representatives of the insurance industry who knew that requirements in the health care law required cancellations of millions of policies. we hope the administration tells us if they plan on cancellations again this fall. last week the irs finally began releasing information related to the enforcement of the employer mandate. this may be surprising to many. the administration has, after all, delayed this several times. but it certainly raises questions of what happened when one of the law's controversial pieces finally go into effect. finally, i remain concerned about the overall impact of this law. millions of americans had their health insurance canceled because of the law only to find the plans they are now forced to buy are more expensive in premiums, deductibles or all of the above. some may qualify for subsidies and others do not. at the same time, the law's

massive cost and destruction to the economy will continue to be felt for years. i again thank both witnesses for testifying and now recognize the ranking member for five minutes. >> thank you so much, mr. chairman. well, i've got to say i don't really think we could go on august recess without having another hearing on the affordable care act because this is now the 12th one we've had in the last 10 years. as i've been saying the last couple years, the aca oversight is a really important topic. but i would feel a whole lot better if we were actually doing oversight with what's happening now on the aca instead of rehashing issues over and over again. you are right, we will stipulate the rollout of the aca was an unmitigated disaster, but i guess i'd like to know how long we're going to keep beating this drum. because if you look at what happened since the unmitigated disaster of the rollout, things are actually improving. and just about every prediction

mafs ma that was made about the law turned out to be wrong once we got going. so i think we should figure out how to make the law work even better for the millions of americans who are now enrolling and getting health insurance. so in the last year, we've had hearings where the majority n z insisted that americans would be hit by insurance rate shock. instead the majority of new enro enrollees in aca coverage are paying less than $100 a month. they said the healthcare.gov website would never be fixed, but thank god it was, and millions of americans used it to sign up for health coverage. they insisted people would not sign up. but the insurers came in and said that's not correct, that people were paying. they said the rates would skyrocket, but that's proving not to be true. in fact, in many cases,

enrollees will be able to reduce their premiums next year. they insisted that americans did not want or need health insurance coverage, but over 20 million americans have received coverage over the aca and the uninsured rate has dropped precipitously since january. the vast majority of new enrollees are happy with their plans. these are facts, and in the interest of making this hooeari as fact-based as possible, i want to add, with unanimous consent, each of the fact sheets of the committee into the record. >> without objection. >> thank you. i just want to talk about some of the benefits of the law in my home state of colorado. in colorado, there are 240,000 state residents who were previously uninsured but who now have quality health coverage because of the affordable care

act. in colorado, our uninsured state resident -- uninsured state residence has declined by about a third. almost 2.1 million people in colorado, including 460,000 children and 860,000 women now have health insurance that covers preventative services without any copayments or deductibles. 50,000 young people in colorado retain health care through their parents' plans. 1.8 people in colorado are protected by aca provisions that prevent insurance companies from spending more than 20% of their premiums on profits and administrative overhead. because of these protections, over 210,000 individuals in the state received approximately

$41.7 million in insurance company rebates. up to 294,000 children in colorado with preexisting health conditions can no longer be denied coverage by insurers. so even if you disagree with the law, it's important to note that the aca is helping our constituents. i hope we can end these relentless attacks and we can help more constituents obtain coverage under the law. we should look at the example for medicare part d. i can attest to it because i was here. many democrats, including me, did not vote for the law and had real concerns about how it was implemented. but we still had town hall meetings and other events so that our senior coverage could cut their drug costs. i hope next year we can look in a bipartisan way to make aca even better rather than find ways to undermine it and repeal it. i know witnesses are coming

forward today. i know they are going to propose contracting for healthcare.gov. anything we can do to improve that contracting is good for me. i hope they have learned from the website's flawed launch and i want to know the plan to make sure they do better moving forward. and i want to welcome you, mr. slavitt. you're new to cms. you'll have primary responsibility for the website, so i hope you can tell us what you plan to do in 2015. >> we'll recommend dr. burgess for five minutes. >> thank you to the chair and thank you, mr. slavitt, for joining us again. our subcommittee throughout development and the rollout of healthcare.gov, this subcommittee had repeated assurances that the systems were and would be ready to go and that implementation was on track. we had a hearing in september

lifrl literally days before the launch of healthcare.gov. we had repeated assurances from the director of consumer information oversight, mr. gary cohen. he said unambiguously that on october 1st, americans would be able to go on line, would be able to see premium net of subsidy and would be able to sign up. we all know now that those assertions were fact challenged. the center for medicare and medicaid services undertook this mammoth project without effectively planning for its development or its oversight. this has led to hundreds of millions of taxpayer dollars being wasted. again, gary cohen, other hhs officials told us time and again that the website was working. that was factually incorrect. it was not working and it still may not be working because the back end systems, those systems that are responsible for

actually paying providers, have not been built. consumers may believe the website is fixed because some of the front end problems have been addressed. but there is no way to verify inaccuracies about things like citizenship and income level or ensure that the correct subsidies are being paid for insurance premiums. thanks to this investigation, we now have definitive proof that the department of health and human services was fully aware that these systems were not ready for prime time. their own contracting documents shows that they only expected 65% of the federal exchange to be ready on october 1st. and then, of course, we're continuously reminded that the promises made by the administration simply couldn't be kept because the groundwork had not been done and the website was not prepared.

we are all still wondering what happened to the promised $2500 in premium savings that every family in america could look forward to? we're all wondering what happened to the ability for people to keep their doctors? we're all wondering what happened to the ability for people to be able to keep their insurance plan? mr. slavitt, mr. cohen also was asked in his last appearance here in january about the issue on the risk corners and the risk sharing. the question came up about what if there is not enough money in the risk corridor to actually cover the premium shortfalls that the insurance companies are experiencing? and would he look to -- that was mr. cohen -- would he look to supplementing those funds from general revenue of the treasury of the united states? he couldn't answer the question.

i asked him if he could provide us with a legal memorandum upon which he relied to obtain the ability to get funding from other sources if the internal funding was not enough to cover the cost of the risk corridors. that was january. i'm still waiting. i would like to know if i'm going to receive an answer to that question, and if so, when that answer might be forthcoming. fact of the matter is, both the department of health and human services and the white house failed to heed internal and external warnings about the lack of readiness of the exchanges. now we have the genera general accountability office report, and it is astounding to see that all the money that was spent, and not wisely, the organization continues to ignore recommendations and continues to

pump money into what seems to be a futile effort. we're well on track to sink $1 million into the wealth of this website. we have very little to show for our money. i'm eager for the testimony of the witnesses today and thapg t -- thank the chairman for the recognition. i now yield back the remainder of my time. >> mr. waxman, five minutes. sdplz thank y >> thank you very much, mr. chairman. this is the 12th hearing this committee held on the health care act since enrollment began on october 2013. these hearings, if you look at them, all have one purpose. to undermine the affordable care act regardless of the facts. the hearings have misled the public and i think squandered t taxpayers' dollars. in fact, the affordable care act is an historic success. it has made comprehensive health care reform a reality for the american people. more than 8 million people have

signed up for private health insurance plans through the public and private marketplaces, exceeding efforts by over a million people. an additional 7.6 million people have enrolled in the chip program. 3 million people under the age of 26 have enrolled in their parents' health care plans. in my district alone, if i can be parochial, 17,000 residents who were previously uninsured now have quality affordable health coverage because of the affordable health care act. so i'm giving you some perspective that the law has been a success. it is accomplishing what congress and president obama intended. instead we have another hearing of this committee or another subcommittee of this full committee trying to say how the

affordable care act has problems and did things wrong, and presumably they think it should be repealed. well, in a lawsuit there is a world called stipulate. we can stipulate to what the ga has reported. and they have reported some things for which we ought to be concerned. because despite the success of the law, the initial rollout of healthcare.gov has serious flaws. i'm glad we're going to hear from gao, government of accountability office, on their investigation of healthcare.gov contracting. we should always try to learn from mistakes. not dwell on them but learn from them, and i'm glad mr. slavitt is here to tell us what the administration has learned and what is being changed as a result. i've had experience with flawed

contracts. i was chairman of the oversight committee and we released a report that identified nearly 200 contracts worth over a trillion dollars that involved significant waste fraud abuse or mismanagement. the fbi had a contract created virtual case file system that had to be canceled after spending over $100million. the contract to build a high-tech border fence, that was to keep out all these immigrants, and that had to be wasted after spending a billion. a deep water contract built boats that would not float. now, my point is not to excuse the healthcare.gov problems but to put them in context. with the exception of tom davis, congressional republicans showed little interest in these enormous wastes of taxpayer

dollars when george w. bush was president. i think we should care about waste, fraud and abuse no marttr who is president. i'm glad to the health care act was fixed. not exactly quickly but fixed nonetheless, and in time to help millions of americans apply for health care coverage. i want to know what to do different next time. see, we told you so. there are problems. we told you there would be problems. okay. and then their conclusion is, repeal it so they could replace it, but they've never given us a replacement. people are getting insurance who couldn't get it in the past because they had previously medical conditions. people are finding that their insurance can't be canceled just because they got sick. women are not discriminated against.

people who can afford it can now get insurance because we give them tax breaks in order to pay for it. so i'm eager to learn what the agency is doing, so involved in 2015 goes more smoothly. we have unequivocal proof that health care reform is a success. we now need to make the 2015 enrollment period as smooth as possible so we can build on this success. let's go for trying to make things better, not dwell on things that were wrong, especially if you learn the lessons and fix the problems. >> gentlemen, the time has expired. just a message to members and to our folks giving testimony today. we're expecting votes around 10:30, 11:00 -- 10:25, 10:40, i should say. we'll try to get through this. i would ask that members really stick to their five minutes as we go through this or i'll really bang it hard.

and we will move forward. if we need to be interrupted by votes, we'll come back right after votes to complete things. i now introduce the witness on the panel for our first hearing. deputy administrator for the centers of medicare and medicaid services. in his new role, he will be responsible for nationwide policy and a coordination program as part of a new management instructor that comes in response to lessons learned in the rollout of healthcare.gov. i'll now swear in the witness. are you aware that the committee is holding an investigative hearing, and when doing so, it has the practice of taking testimony under oath? do you have any objections to testifying under oath? >> no,i don't. >> and i would advise you under the rules of the house and of the committee, you are able to be advised by counsel? do you wish to be advised by counsel during this testimony? then stand up and i'll swear you in. [ witness was sworn ]

>> the witness answered the affirmative and you are now under oath in title section 1001 of the united states code. you may now give a five-minute summary of your written statement, mr. stalavitt. i'm andy slavitt, principal administrator of cvs. i spent the last 20 years working with health plans and employers on solution to health care costs, quality and access. in the private sector i started my own health care technology business and ran larger scale health service organizations with more than 30,000 employees. in late october of last year, i began my involvement with the affordable care act implementation when i joined a group of people helping the cms team on the turnaround effort of the health insurance

marketplace. i'm very pleased to be here with you today, and we'll briefly walk through the progress of the affordable health care act to date. there is growing evidence that suggests the affordable health care act is making a difference in the millions of lives of americans. in the first full year, millions of americans selected a private insurance plan through the state or federal health exchange marketplace and millions more have retained kovcoverage on th parents' policies or applied for aide in chip. we're seeing an overall growth in our health spending which has continued into 2014. this is good news for consumers with a typical premium paid in a policy purchased under the marketplace under $100. good news for taxpayers as the recent medical fund trust report shows. and importantly, this success is not being achieved by government policy alone but in partnership with the private sector as

insurers grow by competing to provide better access to quality affordable services. now, as we move into our second year of marketplace limitation, we must build on the progress that's under way and heed the lessons of the last year. let me outline for you our highest priorities. first, we are focused on increasing value of our plan in the marketplace. this means increasing the shopping experience. secondly, we have technical and operational priorities. we must continually add automation that has begun with critical releases this summer and will continue this year and following years. while the consumer website is, of course, live, we are adding functionality to allow consumers to easily renew their coverage. whether on the consumer facing side or the back end, our

technology improvements will be more continuous and more incremental. we have a very strong sense of our critical path. our software releases so far have been on time and we are managing these deliverables daily. third, let me address our management priorities to include execution. as part of the turnaround team, i experienced firsthand the challenges of the first year of marketplace implementation. at cms, i'm now helping to oversee a series of changes to improve the management of the marketplace. as secretary burwell announced in june, we have created clear, top-down accountability. we have also improved the management of and with our key contractor, revenue-driven contract reviews. we have built more testing into

the schedule. even as we address the major concerns for the last year, new ones will emerge, and our management structuring team must service and address issues if a disciplined manner just as we did during the turnaround. this coming year will be one of visible and continued improvement, but not perfection. we are in the early stages of a program newly serving millions of consumers and are still learning about the best ways to support their unique needs. and we are setting up and testing new processes and new technologies along the way. from my experience at this stage, businesses begin to see how closely their design matches the battle-tested needs of the market. good organizations focus, prioritize and learn and continuously improve their operations and the services they provide. it is not always easy but we understand what we need to do and are making the right

progress to have a successful open enrollment and continue to deliver on the promises of the affordable health care act, to improve health care access, cost and quality of all americans. thanks and i look forward to your questions. >> thank you. i appreciate your comments and appreciate your candor here. in fact, my very first job as a young man was mucking out horse stalls, and i felt like the difference -- what i got to do was i got to ride the horses so it was a nice reward. the difference between that job and this job is i don't get to ride the horses. so i appreciate your honesty and candor in this and want to ask you questions along those lines. you may recall a year ago congress was told repeatedly the healthcare.gov website was fine, it was ready. in the months and days leading up to it, everything is ready to go. and the president said it would mirror the public's use with other web sites. so i have to ask, will healthcare.gov be fully ready this fall?

>> thank you, chairman. i obviously wasn't here last year. it does sound like certainly from the gao report that i've seen that a couple of things happened. first the technology field was bigger than people expected, and secondly, as the gao pointed out, there were significant issues with the management of the project. >> you said it would be perfection. are there going to be some hiccups in the website implementation this fall. >> i think this year we can expect a vastly different situation. for one, we have a website that's already up and live and running, we're adding continued improvements and we're adding them in a much less risky fashion. we're doing releases frequently over the course of the summer, putting things live into production. we built in a big testing window. so everybody will remain on

their toes. they're nervous, everybody knows what they need to do but we expect to have a good rollout. >> but the gao said there are still specific risks for the enrollment period. but you think they'll be ready? >> i think we can identify the risks, service them -- >> i don't want to take out my shovel. i would love to tell the committee, here's the actions we're taking to move forward. the committee would love that so we're not caught up in this guessing game. >> i suspect it won't be perfect with millions of people. there are certainly different situations. many are enrolling in insurance in the first time and it a bumpy process at times. i think we're committed, though, to people by and large who are dog a good job, but there will clearly be bumps. >> in anticipation, how many will you enrolling in the fall? or how many will be enrolling for the first time? >> i do not know that. >> do you know in terms of your review of this, how many of

those have been enrolled the first time? >> i've only seen the media reports, but it was, i think, far greater than half, but i've only seen that in the media. >> when secretary sebelius was here, i asked questions but i'll repeat them. how many were new? how many got a pink slip and were discontinued? how many were eligible because of medicaid? and of all those signed up, how many were paying the same, less or more? and she said really the website has no way of knowing any of those things. would you agree that's true. i think we're getting an idea of what previous insurers were paying. when we see these numbers, however many signed off, including the 45 million are

served new by this. >> so the administrator has a chart in her office which she calls her prettiest picture and it's a graph of the uninsured rate over time. and it drop to a 13% -- >> is that specific of review by your office, to specifically look at people insured before and secretary sebelius told me there was no way of knowing that. >> there is no way of determining that from the website. we know the uninsured rate is down to 13%. >> have you tried to sign up for one of the plans on the website? >> now that i'm a federal employee, i'm in the fhebp blue cross plan. >> you don't have to be in the affordable care act yourself? >> no, i'm a federal employee. >> well, okay. i'm just curious, have you reviewed with people if they tried to access their physicians, the plan allows the initial visit and other preventive care, not as much as i would like, but have you surveyed persons to find out if

they have been able to see their physicians for follow-up appointments, their costs, have you reviewed their costs, payment levels, co-pay, deductibles, have you reviewed any of those things? >> i'll have to get back to you on that. i don't think we have hard data but i can look and try to follow up. >> i'll keep of track time here. mrs. degette, you're recognized for five minutes. >> thank you. i agree it is important to make the federal exchange website and also the state's work as well for people and i'm sure mr. slavitt, you agree with that too, don't you? >> yes, i do. >> we want to make it as easy as we can for people to enroll, especially as we reenroll in the 2015 plans. is that correct? >> that's correct, congresswoman. >> now, up until now, even despite the admitted problems with the website, 8 million people enrolled in the

marketplaces, is that correct? >> correct. >> and about 6.7 million enrolled in the medicaid expansion, is that right? >> that's right. >> so obviously people were able to utilize those websites to get health insurance, is that right? >> that's correct. >> now, i was looking at the part of the gao report, and the gao made five recommendations in the report. are you aware of that? >> yes, i am. >> and what is your opinion of those recommendations? >> we agree with most of those recommendations. >> which ones don't you agree with? >> i think the only thing in the gao report that i think needs a little further clarification, not that i don't necessarily agree with it, it is the characterization of the eccentric contract and i think it was characterized as ballooning in cost when in fact i think the eccentric contract was there was initial contract before the work was completely

scoped -- >> let me stop you, because that was one of their findings, but that wasn't one of their recommendations. their recommendations -- >> correct. so i agree with all of their recommendations. >> you agree with all five of the recommendations. and what steps are you taking to implement those recommendations? >> so we are doing a number of things. first of all, in the contracting front, it is very clear now who can give work to eccentric, how work gets approved, how that contract gets managed and frankly, importantly, they have skin in the game to make sure they deliver. there is -- again, i wasn't here last year, so i can't speak to precisely how the project was managed. but now there is daily intensive management of the project, risks, issue and concerns are surfaced and dealt with. we built early warning indicators so there is an -- there is an accountability

difference that i think is very significant. >> are you looking at the interoperability issues as well? that's one of the problems we had before. >> this is, as you point out, congresswoman, many different pieces of this project in order to go out. the coordinations and systems integration is something that was missing last year and is in place this year. >> are you doing anything that goes beyond the recommendations in this gao report? >> yes, well, fortunately or unfortunately the gao report wasn't news to the people at cms. i think the people at cms who worked hard but lived through that nightmare don't want to go through that again. so i think actions were under way well before seeing this report and i think they fall under the categories i've talked about, contracting reform, technical and managerial oversight, focus and discipline project, management. >> we keep hearing about how

expensive the cost overruns and everything else and setting up healthcare.gov were. as an aside, i would like to know how much this lawsuit against the president is going to cost, but be that as it may, mr. slavitt, i want to ask you, do you think we're going to be protected from cost overruns for the 2015 enrollment period? >> so, again, i wasn't here last year, but the two things that went wrong last year, one of them actually was simply the inability for anybody and quite reasonably so and in private sector to estimate how big this project is and how complex it is. we have got a better handle on that now and i don't expect those overruns. secondly, to the point of the gao report, the contractor wasn't managed tightly with clear deliverables and requirements. that's been put to bed as well. those two things are in much, much better shape. >> and were you -- one last

question, were you aware that the uninsured rate in this country dropped 25% after the implementation of healthcare.gov and the full implemention of the aca. >> yes. that sounds right. >> i'll yield back. >> i'll recognize mr. harper for five minutes. >> thank you, mr. chairman. and thank you for being here today. and i have a couple of questions i'd like to ask. first of all, who is performing the role of systems integrator now? who is doing that? >> optimum. >> i'm sorry. >> my prior company. >> who has that role now? >> optimum, the firm. >> okay. i got you. some questions i'd like to ask about some reports. earlier this summer we learned there were nearly 4 million

inconsistencies in the applications submitted via healthcare.gov. those inconsistents are for citizenship status or income. the failure to calculate these property could mean that millions of americans could have to pay back incorrectly calculated subsidies. so earlier this summer it was reported that there were millions of these, first of all, how did this happen? and can't the website check for accura accuracy. >> sure. so appreciate the question. inconsistencies occur because of the changes that occur in people's lives. and people that end up having more current information than government databases, so we have run last year during open enrollment hundreds of millions of checks against government databases to check on income and citizenship status and so forth. and some occasions where people particularly are in low wage jobs, in seasonal work, and other kinds of circumstance,

their income is unpredictable, or in other cases they haven't filed taxes before because they haven't made enough money. what happens when that happens, just to give you a perspective on this, for a typical family of four there are 21 records searched through automated process. if one of those records turns up not to be a match because of income or some other thing, we have to pursue documentation and we do indeed pursue documentation to try to ensure that these people are, in fact, telling the truth. as we have done that -- >> how could a person on a forum be a citizen or not be a citizen? isn't that something that you can verify? >> there is documentation status, there is -- whether it is a naturalization status and so forth, those are sometimes not as current in the government database as what the individual resident has, in fact, done in their life. >> so in an application on one

application could have multiple inconsistencies. >> that's correct. >> and do you have a number of how many americans were affected by this problem? >> so i think there were a couple of million people who had inconsistent information that needed to be matched of some form or another about i would say roughly half of those are income changes. these are people who will have to have -- come back to the website and we're urging people to do that, make some adjustment because it will spill out, of course, on their tax form. of the other half, we have cleared as of july 1st 425,000 inconsistencies, and 90 -- greater than 90% of those are indeed in favor of the individual consumer who had more up to date information than we did. >> and this is obviously something we want to make sure doesn't continue, so what assurances can you give us today that we won't see these problems during the next enrollment period?

>> well, i think we're learning is that a certain amount of these data discrepancy problems will be a fact of life because of the fact that we have people who do have variations, high variations in their income levels. and so that's going to occur in the coming years. what is going to be different next year is we have now just released software that allows us to get at those inconsistencies much more quickly. what is important, though, is that people who we reach out to, we need additional documentation from, get in touch with us and get them back to us. >> thank you, sir. i'll yield back. >> mr. tonko for five minutes. >> thank you, mr. chairman. mr. slavitt, welcome. and you earlier went through some national stats and i received information out of my district, we have been waiting to get info and in the 20th congressional district in new york, 11,000 residents who were previously uninsured now have

quality affordable health coverage because of aca. the number of uninsured residents in my district declined by some 23%. 214,000 individuals in the district including 137,000 women and 54,000 children now have health insurance that covers preventive services without any co-pays, co-insurance, or deductible. and 260,000 individuals in my district now have insurance that cannot place annual or lifetime limits on their coverage. and up to 37,000, 37,000 children in my district with pre-existing conditions can no longer be denied coverage for health insurance purposes. i think that's a tremendous bit of improvement. we obviously want to continue to grow those numbers. but it is comfortable to know that that kind of success is coming the way of our district. and so mr. slavitt, part of the promise of creating the one stop

marketplace was the ability to shop for health plans, side by side, and apply in an apples to apples comparison. while the federal healthcare.gov site has done a good job in this regard, in displaying the premiums and deductibles of various plans, it has been more difficult to assess differences in health plan networks or whether a particular doctor is in network for a given plan. could you tell us what cms is doing to make it easier for consumers to access this information in advance of the upcoming open enrollment period? >> thank you, congressman. so you're indeed correct, and in fact, last year i believe the typical consumer had dozens, several dozens of options to choose from in health insurance. and our job is to try to continue to grow that. as you point out, we have to make the information people are looking for more readily apparent, more easy to see, so

we are asking the insurance companies this year to put direct links to the provider directory that fits the individual plan, but i would also ask consumers to do and ask if you talk to people in your district is that those directories that the insurance companies keep, they're not always up to date. they try to keep them up to date, but it is always good to call the insurance company or to check with your -- if there is a physician you want to see to make sure that they're in the network, because this is really important information for people to choose from. >> okay. and in terms of allowing a consumer, for example, to search only for plans in which their doctor is covered, could -- >> we don't have that ability. that's the kind of thing that might come in future years. >> what kind of obstacles stand in the way of that happening? >> you know, i think one of the lessons learned from this project is to take disciplined incremental steps to making progress, not trying to do too

much, and, you know, this -- our schedule is pretty much filled with things that are important to make sure we're executing well. and i think those are the kinds of innovations that i could really see us getting excited about adding in future years, but didn't make the cut this year. >> if i could just ask you a quick question about the medicare trust fund, the trustees report as you know, came out on monday, and they're talking about the fund being secure through 2030. that's 13 years longer than was projected in 2009 when the aca was passed. the report noted that these changes may be due to the cost saving provisions of the aca. do you believe that to be correct? >> well, i'm not going to say i'm an expert, but it sounds logical. >> and in fact since passage of the aca, the medicare costs have

grown at or near record lows, is that not correct? >> that is correct. >> so would you anticipate any continuing or additional benefits coming via medicare? >> yes, i would. >> okay. well, we appreciate the leadership that you have borne with the aca and we thank you for the improvements and i know on behalf of the district that i represent, the numbers are very encouraging. i share them with you here this morning. and we're going to continue to work to further improve so that one of these fundamental rights that the affordable and accessible quality health care for all is continued. and strengthened. with that, i yield back and thank you, mr. chair. >> i recognize mr. griffith for five minutes. >> thank you, mr. chairman. i do appreciate that. mr. slavitt, thank you for being here this morning. you indicated and testified you're previously employed by

optimum qssi, correct? >> that's correct. >> i think i heard you say you left there three weeks ago, is that correct? >> a little longer than that, that's correct. >> how long? >> i could get you the exact date. >> i don't need the exact date. between three and four weeks. >> something in that nature, yeah. >> here's the question. you now work for cms. and from what i understand you're very talented individual and that's a good thing for cms. but if i understood your testimony as well, you indicated that your previous employer is managing the website as the systems integrator, is that correct? >> that's correct. >> okay. so then the natural question as an oversight committee is how are you able to manage your former employer and doesn't this create a conflict of interest? >> sure. yeah. thank you for the question. so congressman there is, as you know, an ethics pledge i signed

and along with that disposed of all of my stock basically that i had in the company, completely -- >> you disposed of all of your stock? you said basically. >> all of, yes. >> okay. >> yes, i'm not trying to qualify that. >> i didn't think you were. but i wanted to make sure on the record you said you got rid of all of your stock -- >> got rid of all my stock and any other ties as appropriate. i have signed -- not as appropriate, as is appropriate, so now as a public servant, i have a very clear set of rules to follow. i have an ethics pledge and within that ethics pledge, i have a limited waiver, which allows me for the purposes of health reform implementation only on the website to be able to interact with all of the contractors, including optimum as it solely befits the

implementation of the project. i do that and exercise that very carefully and very prudently. but that's publicly available waiver that i can make sure to get to you if you like. >> if you would, that would be great. >> okay. >> i would like to talk about that waiver process. because normally in my experience, when you move from the private sector to the public sector, there some kind of period of not dealing with your former employer that is usually a year or more and if you could explain that process, how they came to this and you said it was limited waiver and we'll look at that later. if you explain that process, i'd appreciate it. >> it is a 15-page document, which is -- i can get you the details. >> i'd appreciate that. >> it is a two years is the waiver and i think the only exception -- sorry, two years is the agreement, not to communicate with my old employer and there is this narrow exception for interaction relative to this implementation

proce process. >> all right. i appreciate that. let me ask you questions about your former employer because optimum qssi is a subsidiary of united health group. isn't that correct? >> that's correct. >> and in their earnings call, the united health group president and ceo stephen j. helmsley recognized employees and said we try to move our employees around in different divisions of the company, and so i'm a little concerned about how much of a firewall is built between optimum qssi and united health group because united health group is participating in some exchanges and the federal exchange and so we have a situation where again there is an appearance of a conflict, or impropriety because if you're shifting folks around, i said to one of my staffers, they have a

machine like they did on men in black and they zap their memories and they remember nothing they saw because it would appear that the folks at qssi who then report to united health group and in fact larry renfro has an office a title or hat in both companies. if that's the case, aren't they able to gain information on competitors by participating in the process and all of the meetings and then get an advantage over their competitors in the health care websites. >> let me clarify two things. >> okay, please. >> first, nobody on the healthcare.gov project is permitted to go back and to go outside of the project and transfer into united health care. that's expressly prohibited. secondly, just an important clarification because it is a little confusing, united health care and united health group are two different things. united health care is the parent

company, has two different divisions. and so i don't want anybody to have the impression that optimum is a part of this insurance company, it is actually a sister company, a separately run entity. >> but a wholly owned subsidiary, correct? >> correct. >> i have follow-up questions that i'll present for answers after the meeting. >> okay, thank you. thank you. i recognize mrs. castor for five minutes. >> thank you, mr. chairman. good morning. throughout the country everyone is seeing the benefits of the affordable care act. as of today, americans who are interested can access new fact sheets that provide statistics based upon each congressional district. so i encourage you to go to the democratic website of the energy and commerce committee and -- or call your member and we can provide those. i want to share some facts about the benefits of the law in my florida district and the tampa bay area. there are over 24 how individ,0

individuals in my district who were previously uninsured and now have coverage because of the affordable care act. the number of uninsured in my district has declined by 15%. that could have been higher if the republican-controlled legislature and our governor would have expanded medicaid in florida. in fact, almost a million additional residents could have health insurance. that's 43,000 of my neighbors in the tampa bay area who could have been covered, but they remain uninsured because florida refused them medicaid. but over 40,000 people in my district were able to purchase coverage through the new health insurance marketplace. and nearly 10,000 young adults were able to retain coverage through their parents' plans. 43,000 of my older neighbors received medicare part d prescription drug discounts worth $8.2 million. that's a great shot in the arm

and terrific money back into their pockets. so as we plan for the second year of open enrollment, we all want to make sure that we don't have the computer problems that we had last go round. i want to ask you some questions about premiums, especially for the 2015 period. now, open enrollment begins in november. is that correct? >> correct. >> november -- >> 15th. >> so folks need to at some point -- when will the website be ready to compare plans? >> so we're going to be sending out notices to people starting in october to come back to the website, update their information, and letting them know that on november 15th, they'll be able to either -- if they choose, come back to the website, shop for a plan, compare premiums and choose the plan they want, or as happens with medicare part d, medicare advantage and most employers, if

they choose to do nothing, they'll be able to oautomaticaly reenroll. >> the deadline is in february. >> february 15th. >> february 15th of 2015. republicans predicted that premiums would skyrocket for the next go round, increasing by 50%. we can now test those numbers because the new rates are rolling out across the country. are there any signs of out of control rate increases that the republicans have predicted? >> so far the rate increases have been publicly available from rhode island, washington, delaware, have all been in the midsinal di le midsingle digits. california will come out with their numbers today. so i think that will be closely watched because of the size of the state. colorado's has been steady, by and large. while this isn't going to be true for every single individual and every county in america, by

and large the early results look positive, very positive. >> great. and is it accurate to say that there are more choices in the marketplace this go round or will it depend upon the state? >> there will be more choices this year than last year. >> so what does competition tend to do when you have -- when consumers have more choices? >> better prices, better value, better services. >> does that mean that if you have greater competition that puts pressure on the insurance companies to keep their premiums low? >> i think this is one of those win-win situations where the private sector can grow by providing more value to consumers and that appears to be what is happening. >> and what else -- what else helps keep premiums low under the affordable care act? >> well, certainly the preventive visits do, the ability for people to qualify for tax credits.

i think there is a whole host of things that -- >> one of my favorite ones, what we did in the affordable care act is the 80/20 rule, the medical loss ratio that says when a consumer purchases a policy, they have to get something meaningful and insurance companies can't spend too much on profits and administrative costs. and when they do, they have to rebate the money back to consumers. and for -- i represent the state of florida, we're really happy that our consumers are going to receive $42 million back this summer. i've already heard from many of my neighbors and sometimes those rebates go back to the employer, so you do need to keep an eye, isn't that right? >> yes, the number i've seen are that something like $9 billion has been returned and saved to consumers in that process. >> that's been very important. thank you very much. >> the time has expired. now recognize mr. johnson for five minutes. >> thank you, mr. chairman. mr. slavitt, good to see you

today. you and i have had chances to interact before. and i appreciate you being with us. i agree with mr. griffith based on your background, looks like cms is going to be the beneficiary of your experience and background. >> thank you. >> you've talked about your many years in the private sector. could you give a very quick summary of your years of experience and expertise and what it primarily focused on? >> sure. so i started my own health information technology company back in the '90s. a small business that ended up serving consumers and ended up selling that business. i worked with optimum for a number of years. oversaw the health information technology business and grew that. worked very closely on building lots of industry wide capabilities around things like revenue cycle management,

population health management, worked closely with hospitals, with physician groups, with health insurance plans, state governments, all really focused on quality cost and access issues. >> okay. and to summarize, i think when you were responding to mr. griffith griffith's questions, you led the team that made healthcare.gov usable in october, correct? >> that's correct. >> i want to ask you, you have all of those years of experience and expertise in information technology specifically in the health care arena. how much should healthcare.gov have cost? >> that's a really good question. and i'm not sure i know the answer to it. it is a -- it is not unusual for large scale health projects, for example, i can think of big

project kaiser permanente when they installed records, cost a billion dollars to put in place. it is hard to know what the benchmark is to build a consumer facing website instead of back end systems that connect to 50 states, to medicaid plans, to insurance companies. so i'm not quite sure. >> let me help you a little bit because i don't know if you remember or not, but my background is a 30-year information technology professional. i have been through the lessons learned and the trial by error of trying to project costs of complex it systems like this. the gao says we spent nearly a billion dollars on this, with the cost climbing. do you believe that taxpayers have received a good return on their investment thus far? >> congressman, i think two things happen and it is hard to know how much fits into each category. one thing that happened is clearly this was a more complex

project and needed a lot more work than people expected and for that part -- >> that goes -- that goes back to the genesis of some of the questions we got into the last time we were here. if you have a firm set of requirements. and if you have a systematic life cycle design process, it is much easier to project those costs. i know when i was doing large scale program management on large it systems, the general rule was in the life cycle of a complex system that the implementation part, the design, the building, the implementation part is only about 25% of the cost, the life cycle cost of a system. the rest of the cost is in maintenance, operations, and further on down the road. so if this thing is already cost the taxpayers a billion dollars or more, to get to where we are today, we can reasonably expect

that this is going to cost billions, billions more over the life cycle of this thing, correct? >> yeah. i couldn't put an estimate on that. >> but you do agree with the concept in general that maintenance and operation costs a heck of a lot more over time than the initial implementation does. >> i think there will be an ongoing operating cost. i don't know if it will be greater. i have to look at the budget request which i don't have with me. >> okay, the budget request has nothing to do with how much it is going to cost. you understand how the industry works, you understand life cycle software development. you understand that. but i appreciate it that you don't really want to answer -- >> i don't know the answer. >> gao says ultimately more money was spent to get less capability. do you agree with that? >> i think there were clear inefficiencies -- >> a lot of it is still not working. >> there were clear

inefficiencies of how this was managed. did i also say, in the real world, it is not always possible to know your scope going in. in an ideal world, you can. but i think the estimates proved it, they needed to do more -- >> thank you, mr. chairman. i agree it is not always possible to know the scope, but it is possible to fence the scope and therefore knowing that what you're going to pay for is what you're going to get, which is clearly not what happened here. >> please keep it in the time frame, because we're expecting votes in a few minutes. i want to be fair to everybody. mr. yarmuth, you're recognized for five minutes. >> thank you very much, mr. chairman, mr. slavitt, thank you for your testimony and your work. one of the -- i want to talk about some of the things that happened in kentucky since we're doing an update and i'm proud of the experience we had so far in my state. but there was actually some pretty astounding news early whier this week regarding the trustees of medicare coming from them about the prospects for viability of the medicare trust

fund. are you familiar with that information? >> yes, i am, congressman. >> could you tell us what has happened? as i recall, when we passed the affordable care act in 2010, the trustees were projecting the trust fund would be insolvent by 2017. >> i believe if i'm not mistaken that the -- in summary the projection is that the trust fund was -- life expectancy extended to 2030. >> that's pretty astounding in four years the projection extended the life -- the viability of medicare by 13 years. and there is also some really fascinating and i think impressive data about expenditures they essentially were flat year to year, no increase when historically they have been running at somewhere between 5% and 10% annually. is that correct? >> that's correct. >> all right. thank you. one of the things that i know we spent a lot of time talking about, people who signed up for insurance, the private

insurance, in -- under the affordable care act, this is data that has come about from the commission of medicaid in kentucky. and i think this is so impressive. if you look at the top map, that is the 120 counties of kentucky color coded by the amount of percentage of uninsured citizens in those counties prior to the aca. and red and orange, which are most of the counties in kentucky, i think, all but probably a dozen, were rates of 17% to 20% and then more than 20%. this is the bottom map is the current situation. and it is staggering to me because the green is under 11%, 8% to 11% and blues, 5% to 8% and dark blue, less than 5%. we have counties in appalachia, in southeastern kentucky that went from having the highest

uninsured rate in the state, over 20%, to the lowest uninsured rate, under 5%. and that, to me, is a staggering accomplishment. in kentucky, we essentially have insured about half of the previously uninsured population of the commonwealth, in the state that has very poor health historically and currently, and people who are desperately in need of health care. what is even more important, i think, than that, is that the report of the commissioner, again, medicaid, in kentucky, talked about how preventive service utilization has increased dramatically. almost 16%, an annual dental visit, which they weren't doing before, adult preventive services increased by almost 37%. breast cancer screening by 20%. colorectal by 16%.

very, very important health measures that i think will pay off for the commonwealth economically, but also for the life of these citizens going forward. and also what is very important to note is how much reimbursements went up for providers in the commonwealth. totals of -- let's see, reimbursements for those now covered under medicaid expansion went up by $284 million. manufacture the hospital many of the hospitals and doctor and providers who were providing uncompensated care for kentucky residents are now being compensated and that also is a benefit to the taxpayers and the treasury of the commonwealth. i just mention those things because it is very clear to me that states that embrace the affordable care act and committed to making it work are having very, very positive experiences. the adverse experiences were

coming in states where the administrations of those states, the governments decided in some cases just not to participate in and other cases to try to sabotage the law. i thank you for your work and for the information you brought to us today. i yield back. >> gentleman yields back. mr. gingrey is recognized for five minutes. >> because of the medical loss ratio, i think they were talking about the state of florida, how much money was returned to the consumer of health insurance through the plans. let me start out by specifically asking you this, because this is also been reported. if an individual ended up receiving an incorrect subsidy, that they were not entitled to, what will be done to rectify this issue, specifically will they be sent additional funding, if the subsidy was too low? or will they need to pay back the money if the subsidy was too

high and when will consumers know if they owe the government more money? >> thank you for the question, congressman. so if individuals have changes in their income, the best advice is they should come back to the website and update that information so that their tax credit and premium can be updated. for those adjustments that are not made when it comes to tax time, they'll either receive a refund or they'll have additional that they'll owe. >> well, i think we need to get some specific answers on questions like that because this pay and chase model as we know in the past absolutely in regard to let's say pay and medicare claims that were fraudulent and then you have to go chase them down and try to get them back, you never do. you are aware of this gao report that came out, i guess today, and it states that in january, cms awarded a new company, a

contract to continue work on the federal marketplace for $91 million, right? >> correct. >> gao says the cost now has ballooned to more than $175 million, is that correct? >> that's what the report says, yes. >> and the investigation, of course, ended a few months ago. do you know if the cost, the estimated cost of $91 million that is now $175 million, that's in the report, has it gone up even further since the report? >> no, i think the estimate of the total contract and, again, not what's been paid, this is what is being budgeted, is about $170 million, that's correct? >> that's pretty big area, $91 million versus 175. how is it you can offer a contract for $91 million and have it grow that much over such a short period of time? >> so i think the proper characterization of that contract is that the scope of

the contract was completed after the initial contract was awarded. so i don't -- i wouldn't characterize the cost as ballooning, i would characterize it as the proper scope with the contractor accenture was determined after they got going. and the reason for that, if you don't mind me saying, is because they needed to be brought in an urgent situation to take over for a contractor that was leaving and so they agreed to an initial amount, and this was before my time, and then agreed they would come back after they got started, started the transition from cgi and then would come to terms with how much the scope ought to be. >> mr. slavitt, in my remaining time, let me ask you this, you've been with cms for three weeks. and you're the number two guy there, right? >> correct. >> back in 2009-2010 time frame when we marked up this bill, a lot of us on this side of the

aisle felt like if the american people were going to have this affordable care act, unaffordable care act forced down their throat, that members of congress and members of the administration, the president, cabinet members, political appointees like yourself, you're not a career bureaucrat -- >> that's correct. >> you've been appointed by the president to come into this important position. we felt, and still feel, many of us still feel that you ought to eat your own dog food. and members of congress, i think it is appropriate, we are doing that. we had to come off the federal employee health benefit plan and get on the d.c. health link, and yet you members of the administration, the president, and his family, really ought to be doing the same thing. i know you worked in it, but let's say if you worked for ford motor company, would you drive a chevrolet? i kind of doubt it.

i think you would probably drive a ford. what do you think of that in the few remaining seconds. respond to me. do you think it would be appropriate, a show of good faith to the american people that you guys and gals that are running this show, that forced it upon us, would be in the same plan that the american people have to be in? >> it is my understanding that the president and his family are on the exchange. i don't know this for a fact, but that's my understanding. and if it is detmined that the rest of us should be on the exchange, i would happily do that. >> if that is true, please let me know and i know we are limited in time and i yield back to the chairman. >> i thank the gentleman for yielding back. now mr. green for five minutes. >> my good friend and colleague from georgia i'm going to miss. i normally drive chevys and i'm on the plan. we had to buy ours through the exchange. so -- but i want to thank the chairman and ranking member and our witness for testifying. for decades the united states had highest rate of uninsured in

the industrialized world this drives up costs and puts families at risk of bankruptcy when they get sick. the main reason is why we have a health sick system rather than a health care system because millions of americans can't get the care they need outside of the emergency room. and our own district in texas, urban district, affordable care act enabled 20,000 people previously uninsured to get quality affordable coverage. overall, the insurance rate in our district has fallen by 8%. 52,000 in the district will have access to coverage if texas had expanded medicaid. and hopefully we'll still get to that. earlier this month the new england journal of medicine, not fox news, not left or right wing internet site, but the new england journal of medicine released two reports on coverage under the aca. would like to read a quote for them. with continuing enrollment that numbers of americans gain insurance for the first time or insurance that is better in quality, or more affordable than previous policy will total in the tens of millions.

and mr. chairman, i'd like to have unanimous consent to place that article into record. thank you. mr. slavitt, are you familiar with the reports? >> yes, at the high level. >> earlier this week, the gallup poll released their latest numbers. are you familiar with that survey? >> yes, i am, congressman. >> the similarly the urban institute and commonwealth fund conducted surveys. can you discuss that also? >> i'm familiar with those too, yes. >> okay. would you agree that the findings of both gallup and new england journal of medicine are consistent with the millions of americans sign up for health care? >> they're consistent, very encouraging. >> okay. the only thing keeping millions more americans from signing up for the coverage is the repeals of a republican governor and state legislatures to expand medicaid. if they did, another 5 million americans would be eligible for insurance. mr. chairman, i think the

affordable care act coming out of the chute, it was a problem. it has been fixed and hopefully we'll see in the renewals it happened. but it is working. a lot of us had tough times october to mid-november who supported it. mr. slavitt, what is cms doing to address the execution or the technology lessons learned from the first enrollment section? >> well, congressman, i got to this project when it was beginning to turn around at the end of october. i think what we're doing now is essentially carrying over from -- just as we did in the turn around. no magic to it. it is basic blocking and tackling, good communication, it is quite frankly a lot of the recommendations that had come out of the gao report and making sure that we have precise requirements. it is daily management. it is senior level accountability that goes all the way up to the secretary. >> you know, i advocated in

texas having served a lot of years in the state legislatures that we should have had a texas plan that we could have done. some states had good examples of their plan. some not. could you talk about that, that, like, i know the state of maryland and other states had problems. and i don't know if they're fixed or not, but were they similar to what we had on a national scale for our states that didn't have a state plan? >> in terms of the challenges? or just in terms of what they got done in their state? >> yeah, were they on a smaller scale having the same challenges that we were? >> i think it is probably safe to conclude at this point, toward the end of 2014, that it was the rare state, maybe kentucky is one of them, that didn't underestimate how difficult this would be given all of the complexities of tying into medicaid, tying into insurance companies, offering the consumer website and the first year of any new program, and in my experience, whether public sector or are private sector, sometimes bumpy. same will be true in the second

year. but those problems become more and more minor and we get better all the time. >> to the best of your knowledge, for example, if a state wanted to create their own plan now, there is nothing in law that would prohibit them from approaching cms or hhs, that or expanding medicaid coverage. >> that's correct. >> thank you, mr. chairman. i' i'll yield back my time. >> i now recognize mr. burgess. >> i want to underscore the importance to me and even though mr. cohen is no longer at cms, i would like to see that. >> we sent -- we recently sent it, so if you don't receive it, i'll follow up with your office and make sure that you have it. >> very well. it is kind of -- i was thinking, it was a year ago really right

now that your boss, marilyn tavenner was here and we talked about the upcoming launch of healthcare.gov. but, of course, it was just a little less than a month after the unilateral decision by the president to delay the employer mandate. i remember asking mrs. tavenner about was she involved in that destination and she asserted she was not. i asked her how she found out about it, she said her chief of staff told her, which i found rather astonishing, if my chief of staff came and gave me information like that, i would be curious where that came from. she seemed to lack curiosity about how that decision was reached. but let me ask you this. a year later, employer mandate is supposed to kick in about a week and a half after election day, in november. is it your understanding that the employer mandate will, in fact, be enacted in november or can we expect a further delay of

that? >> so i'm still working my way around the federal government, trying to understand how it -- my understanding and you could please correct me if i'm wrong is that that is a irs and treasury area of responsibility. so haven't been exposed to that so much yet. >> my personal belief is that we'll never see the employer mandate. i have no inside information obviously. i'm not speaking for the committee, just myself. when you look at the disruption caused in the individual market, october, november, december of last year, and remind yourself that that was only 15% of the insurance market that had that convulsion, had that happened to the entire, both the large group market, small group market, individual market, all at once, it would have been pretty disruptive. now, you heard mr. gingrey talk about members of congress and members of the administration should take same thing people have to take. i agree with that.

in fact, i did not take the bc exchange that was offer to members of congress and their staff. i said, look, i'll do what other people in my district have to do. i went to healthcare.gov, bought a bronze plan off the website, biggest mess i've ever been involved in in my life. but i finally got through, took about 3 1/2 months to do so. now i'm wondering what my rate is going to be next year. i've got the most expensive insurance health insurance policy i've ever had and enormous deductible. but what can i look forward to in the next insurance year? you talked about you wanted asea successful open enrollment? is it going to be successful? what are rates going to look like? >> so i think we're at a stage now where, and, indeed, this is one of our high measures for success, making sure there is enough choices and enough affordability and, of course, each state is going through their own process and going through rate reviews. we have seen some states

publicly now come out with their rates. i believe rhode island, washington, california today is going to have, i think, an announcement with their rates. i couldn't tell you, congressman, about texas because i don't know. but generally speaking, what we have seen are rates that are in not the double digit increase levels, but in the midsingle digit levels. that's not going to necessarily be the case in every county in america, but that seems to be what is happening on average. >> but still, i mean, you've mentioned that three or four states where we have a long way to go before renewal rates across the country are in evidence. >> no question. >> you're the principle deputy administrator. do you have any responsibility or involvement in the renewal or rate filings? >> i think these -- these rate filings get reviewed and approved at the state level. there is a process and i think it is -- we're in the midprocess. i believe right now that the --

>> let me interrupt you because my time is running out. do you receive interim reports or updates on what those state filings are? >> i think there is an initial submission and i've seen a high level report, but this is not yet final information. >> and are -- is your office going to make those rate filings public information? will we have the availability to access that? >> when they become final, absolutely. >> again, as a healthcare.gov member from the state of texas and the federal fallback, i would like to know what my renewal rates are for next year. thank you, mr. chairman, i yield back. >> i recognize miss schakowsky for five minutes. >> thank you, mr. chairman. i just wanted to tell you, mr. slavitt, i don't know if your office and your position is actually in charge, but we have gotten tremendous cooperation from cms when we have had

constituent issues. and, you know, clearly it comes up. consumers get confused, have a lot of questions have some problems. i get irritated sometimes on the other side. i feel like there is an embracing of these problems, rather than a constituent service attitude to fix the problems. and when we have tried, we have had -- we had good success. and so i just wanted to tell you i appreciate that. i also just wanted to say that the minority staff has done a district by district, the benefits of the health care reform law in all the districts in the country, and it is just wonderful to see how the number of people that in my district, 283,000 people in my district, including 51,000 children and 120,000 women now have health insurance that covers preventive services without any co-pays,

co-insurance, or deductibles. needless to say that is huge. >> very good news. >> and up to 36,000 children in my district with pre-existing conditions can no longer be denied coverage by health insurers. it is just lots and lots of good news including the new medicaid enrollees that are now being covered. but i did have a question. so we're talking somewhat about the states that have expanded medicaid and have not. 26 states, district of columbia, expanded medicaid coverage under the affordable care act. and in those states medicaid is seeing great success. enrollments increased substantially and the percentage of the population without insurance has declined dramatically. and i'm asking, you mr. slavitt, if you've seen studies that compare the decline in the number of uninsured in states

that did and did not expand medicaid. >> yes, i have seen those studies. >> can you tell me what you found? >> the states that have expanded medicaid and i'll get back to you on the exact figure, have seen significantly lower rates of uninsured than those states that did not expand medicaid. >> but we have seen a decline in any case, in most -- >> decline in any case and bigger decline in states that have expanded medicaid. >> and have you seen the estimates about the number of americans that would receive health care coverage if all 50 states expanded medicaid? do you know the size of the estimate? >> i believe that it is an additional 5 million if i'm not mistaken. >> thank you. and if that is the case, then i believe you that it is this is really an appalling number. 5 million americans who would receive health care coverage if republican governors and state legislatures took the simple step of expanding medicaid.

it is obviously good for people when more people have health insurance. but mr. slavitt, what about health care providers. how does the medicaid expansion help them? >> so, my information is anecdotal, but it appeared that with the dramatic reduction or significant reduction in uncompensated care, it appears that this is a very good thing for providers. >> and this committee has spent the last three years looking for some affordable care act related scandal and despite all their concern, they have systematically ignored an ongoing health care tragedy. the dereliction of duty by republican governors around the country who refuse to expand medicaid. for those who have not been following this closely, the affordable care act provides 100% federal funding for the first three years to states to expand medicaid coverage to millions of low income americans, right?

>> that's correct. >> and yet for some reason republican governors and dozens of states have refused to expand coverage to low income insured individuals and their states, correct? >> that's correct. >> this, to me, is a real scandal. the expansion doesn't cost states a dime, it provides quality affordable coverage for millions of americans working hard to get by. yet some republican governors and state legislatures are deliberately refusing to provide coverage to millions of uninsured americans. and, mr. chairman, that it seems to me is an issue the subcommittee really should look into. and i yield back. >> gentle lady yields back, now recognize miss blackburn for five minutes. >> overseeing the implementation, getting to the bottom of the questions is very important. and continuing to do our due

diligence, and i know that several people have mentioned the new england journal of medicine article from last week. the health reform changes and health insurance coverage. and my friends across the aisle have wanted to tout that as being something to prove their point. i think that it is important, though, to go in here and look at how the authors came to the conclusion that 5.2% more had insurance, that there was a decline in those without insurance from september 2013 to june of 2014. and then the authors mentioned the limitations of their study. they said that the study did not distinguish between persons enrolling for the first time and those changing their enrollment and i really wonder how many of those that had to buy more expensive policies, new policies that were obama care compliant,

how did that affect that number. and the authors measured improvement in access to care by asking two questions. first, did the survey participants identify a personal doctor and did they report difficulty paying medical bills? well, it seems to me a more important outcome measure would be whether a person was actually able to see the doctor because in our district we hear from people, they can't get access to the doctor. they have got access to the kwo queue because they have the card, but not to the doctor. while my colleagues across the aisle talk about how many people have insurance, i would like to remind everyone that having an insurance card is not the same as having medical care. and i continue to hear from people in tennessee who lost their health plan, they liked it, they can't keep it, i hear from people that have not been able to keep their doctor

because of the narrow networks in obama care. i hear from people who go to the doctor and need a test, but can't get the test because their co-pays and co-insurance are too high. they can't afford it. this stuff is too expensive to afford. finally, we're hearing from some of our tennessee insurance carriers, they are going to have a 19% increase in the health insurance premiums in 2015. so it's kind of like added insult to injury. you've got this stuff, you can't use it because it's too expensive to afford. the co-pays are too high. you have an insurance card, but you can't get into see the doctor and you're having to wait. i don't understand why my colleagues across the aisle continue to defend this thing. but today we are shifting our focus to oversight and the way taxpayer dollars -- i remind everyone, taxpayer dollars are paying for this and the people

don't like it. january 1, 2014, hhs certified to congress the american health benefit exchanges the marketplace were verifying their applicants for advance payments of the tax credits, cost-sharing reductions were indeed eligible. however, the gao secret shopper investigation found 11 out of 12 secret shoppers were able to obtain health insurance and qualify for premium tax credits usi usi using fictious documents. when i had my marketing business, we would run secret shopper programs for malls, shopping centers, chambers of commerce. would you identify where your problems are and you get in there and you clean them up. the problem is the system allows fraud. if you've got 11 out of 12 that something is wrong, mr. slavitt,

that is a failing grade. there have been over 30 delays in implementation. the president has made multiple unilateral changes, and we're here to learn about the contracting practices that took place at cms with the botched implementation of this law. we are looking at the gao study. this thing is not much better. let's talk about this contract. so january cms awarded a contract to a new company to continue work on the federal marketplace. it was $91 million contract, correct? >> correct. >> okay. now gao says that cost has ballooned to more than $175 million, is that correct? >> you can answer that question. >> that is what the report says. i don't agree with that characterization. >> thank you. i will smith the rest of my

questions. i yield back. >> thank you. though just called a vote. we'll go through ms. elmer's questions. you are recognized five minutes. >> thank you, mr. chairman. i would like to go back to the discussion you had with my colleague from ohio mr. johnson. you made comments where you pointed out in the real world, and you know, that things are much more realistic and that ideologically many times things seem like they are going to be better than they are. i would say to you, sir, that is exactly why i ended up running for office being a nurse because i did see and my husband as a doctor saw that the plan going forward was not going to be realistic. we have learned over time that that is the case and there were

many promises made that have not been kept. well intended, but not true for the american people. so i do share with you that same sentiment, but realize too that that is why we feel so strongly about this issue. you did have an change on the cost of health care.gov and what it should have cost. you reluctantly did not answer the question of the cost being $1 billion. is $1 billion too much for the implementation thus far? >> thank you, congresswoman. i have not seen a study yet which looks at what the appropriate costs for building the entire health care.gov system should be. of course, i do acknowledge that our colleagues at the jao

pointed out that there were absolutely inefficiencies and waste in the way the contract was managed. at the very least we know there was some. i would hesitate to say though that it was entirely waste because there was a really significant set of systems built. i think those systems have significant long-term value for the country. >> you know, there again it gets back to that same issue of what is realistic, what is achievable and you know, simply throwing money at it then looking back in hindsight to determine what did work and didn't, i think we all are learning from this experience. that of course has value. i don't know how you measure it, but the american taxpayers are still on the hook for this. and that is again why we are taking the approach we are, which is when is it going to be enough? when are we going to achieve the goals at a cost-effective measure? i want to look into some of the

issues with security breaches. are you aware at this time of any problems that the website, from the building of the website and that there are still concerns? are you aware of any right now? >> so there have been no successful malicious attacks, and certainly to the best of my knowledge, no one's individual data has ever been compromised from the health care.gov website. >> so to the best of your knowledge, and just based on the answer you gave, you are not seeing that there were any related information breaches in health care.gov or traveling through the federal exchanges that you would consider a security breach? >> we have not seen any malicious attacks that have been successful, and we've not seen anybody's personal information in any way get compromised. >> what is the definition of a successful breach? >> i'm not trying to be cagey.

other than to say that nobody has successfully penetrated the security system, to the best of my knowledge, congresswoman. >> are you aware of any companies building, operating or otherwise working on federal exchanges, obtaining access to information that they should not have? anyone who is outside of the system or working on that have? >> not to my knowledge. >> and information on enrollees or applicants, none there, as well? >> not to my knowledge. >> are you aware of any changes to site protocols or standards to address breaches to access information? >> i think it's fair to say that the security team does continuous monitoring and makes changes and puts in new patches as different security things are found out about in the industry and so forth.

it is continuous monitoring. >> can we obtain that information over time, any of the changes and updates that may have taken place for the committee? >> sure. let me figure out way can share. i don't want all the things our security team does to be well understood by the wrong people, but i want to make sure you get the information you need. >> thank you, mr. chairman. i yield back. >> they called votes. mr. slavitt, thank you for your testimony. members will have days to get questions to you. we appreciate a quick and honest response. >> mr. chairman, can i move to strike the last word briefly? i judge just want to, dr. burgess mentioned earlier hhs didn't respond to the committee's request for an analysis of its legal authority to make payments with the risk program. i've just been told hhs did respond to the request and provided a response to the committee on june 18th, 2014. in the response they also included a legal analysis. i wanted to clarify the record.

i wanted to also make sure that if dr. burgess or you or the committee staff did not receive that, we will get another copy to you. >> dr. burgess? >> in fact, i did not receive it, but would be anxious to look at it as and see if it answers the question as was asked. mr. chairman, if i could have the indulgence of a brief follow-up. >> real brief. >> when this thing went live the back end part of the system was not built. is it built and available and ready to use? the part that pays providers? >> the part that pays the issuers, the issuers are getting paid today. >> doctors and hospitals? >> they get paid by the health plans, not by the marketplace. >> the back end part of the system is up and fully functional? >> no the back end part of the system is going through continuous releases. today we are paying the issuers on an estimated basis that would

be a coming release this year where by the end of this year they'll begin to get paid and a policy level basis and next year continued automation will occur to tie everything to do with the back end of cms' systems. >> have the right people been paid the right amount of money? these are taxpayer dollars. >> we'll follow up with questions. we'll probably reconvene. our votes will probably take us to 11:30. this will be in brief recess until 11:30. and we are back. thank you very much.