hear them say that they recognize their problems with the aca, and they want us to work together to fix those problems. so i don't know how it could be a lot different than other parts of the country. my experience has been that folks want access to quality, affordable health care. and we do have a responsibility to figure out how to make that happen, and i appreciate your effort in that regard. so i'm all for fixing making tweaks making adjustments. congress member black and i are going to introduce legislation today, as a matter of fact, that falls into that category of making a tweak, making a fix. we're going to introduce a bill that would ease the reporting requirements for employers offering coverage to their employees, and it would require that the exchanges use the most recent tax data to insure that

individuals and families will not have a large tax bill at the end of the year. as i'm sure you know, covered california, in my home state of california, requires that the most recent tax data be used and it's worked well and it's been beneficial. i'm just wondering if you have any thoughts on requiring the more recent tax data to determine eligibility for subsidies/ç kyk renewals and making that apply to all the exchanges? >> i think it is in our interest, and what we want to seek to do is get the most up to date information we can possibly have which is why we encourage people to come in and update throughout the year. we continue to do that. with regard to the specifics of this piece i think we'd have to look at the legislation. i'm not sure if it sits with treasury or with us but we would work together to understand. because i think what we want is actually to have the most up to date information, and that information for some people is an evolving and changing piece

of information for those who are self-employed, their incomes change throughout the year and we do have means by which they can come in and update it. we try and encourage them to do that. so the most up to date information that we can implement is something that we do support. and so with regard to the specifics of the legislation, we'd like to have the opportunity to look at it and understand between us and treasury where we could be. >> thank you. i also had some questions regard regarding the racks and the appeals process. i understand from your staff that we're going to work together outside of that committee hearing to deal with that. so i appreciate that commitment. i assume it's shared by you. >> yes it is. i would also use this just as an opportunity to again mention the piece of legislation bipartisan that senate finance just passed this past week on this issue in terms of the strategic approach to help us get to a place to reduce that backlog of appeals. there's administrative things we can do but we do need statutory

help. senators widen and hatch have led on that, we hope we can work with you, too. >> mr. boustany had questions about the hras. we're working on that legislation. we hope that we can have the help of your agency in making sure this is the best legislation possible. >> thank you. >> we'll work with you. >> thank you. >> i yield back. >> dr. price recognized. >> madam secretary, with respect many of us here and across the land sincerely believe the principles that you hold dear, accessibility accessibility, affordability and quality are being harmed. i want to highlight the problems in the system that we believe are harming patients and in many cases destroying the ability of those working as hard as they can to care for those patients. one of them is the electronic health record and meaningful use. cms is dictating to physicians what must be documented and how without regard to what's truly important and necessary for taking care of patients.

it's wasting money wasting time, wasting resources and, sadly, wasting the expertise of physicians. leading to further disgust on the part of physicians, many leaving practice. in fact, i know two individuals who said this was the last straw. and they quit. at an age where they could be able to practice for years and years. there are positive solutions if we allow for flexibility and respect to those providing the care. icd-10, another example of cms making it more difficult for physicians to care for patients. in some cases in small rural practices, it would drive physicians out of business. so access is destroyed for those patients in those areas. the u.s. inappropriately combines and confuses clinical data. that's what's happening medically with a patient with billing data. under the guise of wanting more information and saying that everybody else in the world is doing it. well the fact is that the u.s. will be the only country to use all 87,000 codes the only country to use it in an outpatient setting, the only country to use it in a billing process and the only country to

put the costs on the shoulders of the physicians and those providing the care. this happens on october 1. it passed as prologue, sadly it holds real potential to being a significant disaster further harming docs and patients. i urge i urge cms to delay any penalty for coding errors for at least two years. it's only reasonable given the magnitude of the change coming. durable medical equipment, oftentimes the only thing that stands between a patient's quality of life and hospitalization and even death in the instance of provisional oxygen is dme and a caring provider. if cms puts into place what they call competitive bidding, it doesn't work. harming patients and driving folks who have been wonderfully providing care in vftss and communities across this nation out of business further harming those patients. i urge, i plead with cms to allow at least allow a pilot

demonstration to show that there's a much better way to save money and also provide services to patients. sadly, madam secretary the president continues to shamelessly condemn and attack those standing up for health care. as recently as yesterday he ignored reality and cynically mocked those striving for positive solutions. we know he's got a pen and a phone, what he doesn't seem to have is the knowledge or the humility or the concern or the desire to work together on behalf of those struggling to provide care and those receiving the care. madam secretary i urge you, i urge you and your team to join with us in an open-minded way to end the oppression of meaningful use, to provide for flexibility so that more practices aren't destroyed, to allow for a pilot program to demonstration competitive bidding is hurting patients and that there's a much better way and to give physicians the freedom to care for patients.

if you are sincere in your desire for accessibility and affordability and quality, that would lead to your action working with us. and i look forward to that and hope that we'll be able to move in a positive direction. mr. chairman, i yield back. >> thank you. >> mr. larson. >> thank you mr. chairman. thank you, madam secretary thank you for your service. hailing from the great state of connecticut, we are so proud of the advances of the affordable care act and it's great to have a governor that's hands-on in terms of its implementation and all the progress that we know that has been made and will continue to be made under this act. mr. chairman, i would like to submit for the record a 28-page report entitled "the language of health care 2009" by frank lutz. is there objection? mr. chairman? >> no objection.

>> i think i have a great deal of respect for mr. luntz, and he and stan greenberg also another polster and someone who spends an awful lot of time on the science of language and looking at in detail what people should say around subject matter areas. now, this is particularly of interest to me because it passed -- you know this was recommended in 2009. and basically mr. luntz describes the ten rules for stopping the washington takeover of health care, and it's informative even to this debate today. for example, one of the things he says, the arguments against the democratic health care plan must center around politicians and bureaucrats in washington, not free markets, tax incentives or more competition. so we'll hear a lot of that.

it also goes on to underscore you simply must be vocal and passionate on the side of the reform. the status quo is no longer acceptable. if the dynamic becomes president obama is on the side of reform and republicans are against it then the battle is lost and every word of this 30-page document is useless. he goes on to say this, and this is the whole point. it's not enough just to say what you're against. you have to tell them what you're for. it's okay and even necessary for your campaign to center around why this health care plan is bad for america, but if you offer no vision for what's better for america, then you'll be relegated to insignificance at best and labeled obstructionist at worst.

what americans are looking for in health care is what your solution is, what it will provide, the words of more access, more treatments and more doctors are sure winners. i agree with mr. luntz there, and that's what this subject should be about, for us providing more access. madam secretary, may i ask you, are you aware of any republican legislative proposals that reduce the number of uninsured in this country by more than 16 million and make sure that we continue to provide all the benefits of addressing pre-existing conditions, keeping your children on the plan and making sure we focus on prevention? >> i've not seen a proposal that does that. >> i thank you, madam secretary. with that, submitting this full

report for the record, i think it's worth everybody's reading, and we ought to get back to what this committee should be doing and that's to put americans first and put americans on the road to having the best access more access, more accessibility and more availability to health care. thank you. >> thank you, and time for the gentleman has expired. we are going on to enter into the two to one phase, two on our side and one on the "d" side to keep it equal. mr. buchanan. >> thank you, mr. chairman and madam secretary. i appreciate you taking the time this week to give me a call and giving me the chance to visit. my biggest concern, you made four points, and at the top of the list -- i was chairman of the florida chamber. we had 147,000 businesses we represented. most of them were 50 employees or less. so a lot of small businesses. but the biggest issue, and it's before the aca goes back 15

years, is affordability. and there was an expectation or a hope that we could bend the curb on affordability. there's no question people will get the subsidies, and they benefit. there's over a million in florida. but there's many just above that line poverty line that don't get the subsidies. i want to talk on two bases. first, small business, their cost of trying to provide health care has gone up 20% to 30% the last three or four years. i just talked to another person the other day 130 employees it went up 30%. but throughout florida, throughout our region, we're not seeing any reduction or anything in terms of affordability from that standpoint. many times, last week we had a town hall, we had one woman -- or a couple weeks ago. we had one woman that says it's $2,000 a month to get health care. she can get it for less but then she has to pay some kind of a $10,000 in terms of her health care if she has a claim.

but what's your thought on the affordability where we're at as relates to people in terms of subsidies, that don't get subsidies? >> when we think about the affordability, we think some progress has been made. and we were seeing raising deductibles and growth and a slow in the program. the things we have seen slow down is the premium growth across a couple categories. we've also seen that medicare savings that i mentioned earlier, the over 300 billion terms of where we are in our medicare pricing the other thing that's indicative is we've seen the per capita health care gross cost because we've seen so many people coming into medicare, the cost will go up because we have more elderly. we do focus on that -- >> let me just -- we are short on time. we are not seeing the discounts, per se. i would love to have you come to florida and talk to small businesses. most of it is 20 to 30%

increases. the last couple of years. they're hopeful but they're not seeing it. unfortunately a lot of the cost gets pushed to the employee. >> that's right. >> so many of the employees that were maybe picking up a couple hundred bucks a month and now paying 500 to $600 out of their pocket. if they don't get a subsidy many of them are being gutted. so we like to talk up here a lot about the middle class, but a lot of this is putting the middle class at risk in terms of health care costs. and what's your thoughts on that? >> so i think this is why one of the things that we need to focus on now deeply is delivery system reform. that's the idea of better, smarter, healthier. by that, it's both about quality and i think we have to be careful when we talk about this topic because people hear it and we need to make sure we preserve quality and improve quality. why in our country do we have some of the lowest levels of quality offerings for health care? it's about improving quality and affordability. right now one of the things that we did in january, we committed the federal government, that

medicare payments 30% of them by 2016, 50% by 2018 will be based on value instead of volume as a part of working on this overall issue. because we want to hear what you're hearing and that's important to us. that's a part of why we think this is so important. . let me close with the idea, because i have a few seconds. i hope we can focus more on affordability, all of us, because it's bankrupting a lot of people that don't get subsidies, and that's the reality in florida for small businesses and individuals. the focus needs to be on affordability and find a way to bend the curve on health care cost. thank you, madam chair. >> i look forward to the opportunity to actually work with you on these delivery reform issues. >> mr. smith? >> thank you, mr. chairman, and thank you madam secretary for being here today. limited time and a lot to cover here. as you know, as we spoke earlier about the consumer operated oriented plan programs which were the alternative to the public option. i would argue these are perhaps

somewhat quasipublic options. to date i believe hhs has award $2 billion in federal loans to establish the plans or one plan as you know, co-opportunity, which served over 100,000 people in nebraska and iowa was seized by the state of iowa and has since been liquidated. folks on the plan have been left confused frustrated and again looking for other plans. i sent a letter on january 23rd asking specific questions, did receive a response on may 21st. i would like to request unanimous consent to submit both of the letters for the record. thank you. now quickly some questions. it received $146 million in federal loans, and will any of the dollars be paid back to the federal government? >> with regard to that that's a

question i will follow up on. >> appreciate that. my understanding was iowa and nebraska were told they could not suspend enrollment in co-opportunity and have it remain a qualified health plan yet tennessee was later allowed to do so. do you know why that policy changed? >> per our conversation, i did follow up with cms. we didn't have the record of that request in any way coming in. i'd love for our team to be able to follow up and understand if there was miscommunication. based on your comment, it was something concerning to me when you mentioned it and i went and followed up. if we can work with your staff to understand what your staff understands happened, that would be helpful. >> recent reports claim only one co-op did not have an operating loss in 2014. is that accurate? >> i would have to go co-op by co-op. >> are there any concerns about possible liquidation of any plans in the near future or not too distant -- >> with regard to the co-ops, they are new businesses and

start-ups like the small businesses we were just talking about before, we're going to have failures in terms of the co-op system. that's part of the money that congress gave but then went to $1 billion. there will be co-ops that have challenges and issues. we're working closely with state insurance departments to make sure we get in front of them and do the kinds of things that we attempt to do in the co-opportunity situation. it was important that we engage in supporting communication, offering a special enrollment period and working with the state insurers to use our and any authorities we had to make sure that those consumers were taken care of. >> will any of the consumers that lost coverage from the failed co-op be penalized by the individual mandate? >> i do not know how many are not still in systems, but i will check and follow up on that. my understanding is no but i can't to confirm that.

>> in that vein i have introduced hr 954 who would exempt anyone who lost health insurance from the failed co-ops from the individual mandate. could the administration support that approach and that piece of legislation? >> what i'd love to do is have the opportunity to see if that is something that has already happened or not and then review the bill. >> in the bigger picture of obviously large sums of money being offered to these consumer-operated oriented programs, what is the likelihood of those dollars being paid back? >> with regard to the loans that have gone out? i this with regard to a number of the co-ops, that will happen in terms of the successful co-ops and those that are gaining traction and working. as i said there are maybe some that are not. and we'll get back on that specific question. >> seems to me also that various states relevant to this issue

might have a different approach for paying on the claims that were submitted by -- how on top of this are we? because it's -- in nebraska there is a fall back and yet it hurts more people. i apologize. my time expired. >> state insurance law as you know, is a big part of how that gets determined, but we try to work and support the states with different options. >> time for the gentleman has expired. mr. blumenauer. >> thank you mr. chairman. madam secretary, i appreciate your reluctance to deal with hypothetical legislation that has not yet been written to deal with a legal decision that hasn't yet been rendered. i think that's prudent. but if this current takes place by the court, it would seem to me that it would not be rocket science, as some of my colleagues have mentioned, to

make relatively minor changes to conform statutes to the intent and text of the bill and move forward. i think the committee could take one weekend and fix it and move on. i would like to shift gears slightly. we have had an ongoing series of conversations. it's been six years since a provision i authored was approved unanimously by this committee. not just part unanimously by this committee dealing with end of life care. that provision despite a kerfuffle and certain rhetorical flourishes remained in the legislation. unfortunately, it fell victim to the reconciliation process. and six years later we're still trying to achieve those objectives, although the world's moved on.

best-selling book by bill frist, billy graham all agree that this is necessary. you recently received a letter from 65 notable national organizations calling on you to have medical reimburse -- medicare reimbursement for advanced care planning. as you know the ama did the coding. its all teed up ready to go. we thought the administration was going to be there, and yet it lingers. published peer-reviewed research shows that advanced care planning leads to better care better patient and family outcome, fewer unwanted hospitalizations. the list that you personally know is compelling for this service. is the administration prepared to finally move forward and authorize it?

>> with regard to, as i think you just mentioned the ama has given us the coding and we are in the process of reviewing that. and as we indicated in a recent rule making we indicated in our preamble, that's something we're working on reviewing the coding. >> it has been six years since congress embraced it, and this committee approved it unanimously. we have had the research clear -- the iom dying in america, i'm trying to understand what is it that is so hard to figure out whether or not this is part of the legacy of the obama administration which has done some good things with health care. this seems to be a really terrific thing that is really simple that would make a huge difference in people's lives. private insurance is moving. what it is that's hanging this up? why can't we just get to yes? >> congressman as we have said and in our conversations and our

team's conversations with you, this is an issue we're going to continue to work on. because we want to make sure if we move we do make the progress that we would intend to make. >> i find it mystifying that the rest of the world is aligned. this is one of the few things that this committee agreed to unanimously. and that we see the difference it makes in human lives and the administration continues to study. i'd really hope that this could be part of the legacy and that it's part of the 2016 reimbursement. i find it frustrating beyond my ability to express. i'm happy to -- i've walked the plank for this administration on things before. and this is really troubling. >> thank you. time for the gentleman has expired. ms. jenkins. >> thank you, mr. chairman and thank you, madam secretary, for being here today. i want to echo the comments of chairman ryan and others on the committee regarding the supreme

court decision later this month on if constitutionality of the president's health care law. many kansans are poised to lose their subsidies which are the only thing that makes them affordable. my constituency is facing increases of 30% next year, which in addition to the loss of their subsidies will make their insurance unaffordable. i'm extremely frustrated because i had an exchange with your predecessor, secretary sebelius, three years ago on february 28th of 2012 when she was a witness here before the committee. and on that day i expressed my concern that i did not see anything in the present's health care law that would allow federal subsidies to flow through non-state based exchanges. and i told her the administration did not have the authority to allow the subsidies to flow through the federally facilitated exchanges even

though the irs at the time was telling congress that the distinction didn't matter. because in the law there is no mention of the term "federally facilitated exchanges." but even though secretary sebelius promised me that hhs would give me a detailed answer in writing defending her interpretation of the law, she never did. obviously this issue didn't go away, and now the supreme court will finally weigh in on it. i'm equally concerned when you suggest the decision before the supreme court is just about the subsidies because it isn't. we have research from the american action forum which talks about all of the positive outcomes from a decision by the supreme court against the administration. over 11 million individuals freed from the individual mandate? over 260,000 businesses freed

from the employer mandate. thousands -- hundreds of thousands of new jobs. 1.2 million workers added to the labor force. but with limited time, what i'd like to do is turn my attention to a different topic. i've introduced legislation the past three years along with my colleague representative kind from wisconsin who repeal a provision in the health care law that allows folks to go to their doctor to get a note to purchase over-the-counter medicines with their ssas or sfas. this presents massive red tape that they need to purchase over-the-counter medicines whose use saves the health care system money. additionally, it presents physicians with the bizarre scenario of unnecessarily seeing patients in order to prescribe over-the-counter pain relievers or allergy medicines.

this provision makes care less affordable, more confusing, clogs doctor's offices and makes patients less likely to use over-the-counter medicine. so madam secretary, i was just wondering if you think that this is good policy and if you would support us in repealing this provision? >> so as i have articulated, one of the things we are focused on is this idea of how we can improve quality and move forwards affordability. this specific piece of legislation, i'm sorry i'm not familiar with and not familiar in terms of the issue that i think you're trying to resolve. so this is one that i would want to understand. i also do want to return to where you began. >> okay, but in theory, would you support this if we can convince the chairman to mark up the bill and move it over to the senate? because we've done that once. it's already passed with

bipartisan support out of this committee and out of the house once before. >> congresswoman, i would want to look at the substance of the issue before i could comment on that. it's not one i'm familiar with. >> all right. >> thank you so much. mr. paulson. >> thank you, mr. chairman and ms. secretary, thank you for being here. in the limited amount of time i want to address a couple things. maybe first i'll just talk absent about, in minnesota unlike many states, we had a pretty low uninsured rate prior to the president's law kicking into effect. and we had a high risk pool for people that had pre-existing conditions. it was existing since 1976. it wasn't perfect but worked pretty well. then high risk pool was closed making way for the new exchange program set up. a lot of the headlines, and similar to what we heard from the colleagues and the concerns about premiums rising the headlines over the last few week in minnesota in our papers showed the experience under the

new exchange under the president's health care law has been affecting their pocket books. so it got here. eight minnesota health care plans propose premium hikes from 11% to 74%. we've got another story here, blue cross and blue shield of minnesota which is the largest insurer in the individual market, which you mentioned earlier about having the marketplace work, they now propose average increases of 54%. so certainly this is a pocketbook issue for family individuals, small businesses alike and that's why i really do hope, regardless of the court decision and how that goes, that we'll be able to work with the administration on addressing some of these affordability costs. because when you're talking about premiums this goes to the heart of affordability as opposed to talking about, you know per capita health care costs being lowered in medicare and other areas like that. just some commentary there where we hope this cooperation will be coming forward. because we need a whole host of issues if we're to solve some of the challenges rather than just digging in and protecting every provision of the loss as it is

intact right now. i'll just mention this. my interests with medical devices and medical technology which we talked about last week is very important in my state. america has been a leader in developing these technologies and cure. innovation that happens at a really rapid pace but often the regulatory process does not keep pace. i don't think it's acceptable that american-made technology is available to citizens in our kens and not available to our patients here at home. the number one concern that i hear now, patient groups from doctors, investors and new companies and manufacturers isn't the fda. the biggest hurdle they now face is cms and the lack of certainty surrounding coverage and coding and reimbursement. these decisions can take two or three years. and that's after the devices have already been approved. this creates a lot of uncertainty for doctors and manufacturers that want to use the best available technology for their patients. my question is what can hhs do

to oversee cms, right which is under your authority, to make sure that we're bringing certainty to the coverage, to the coding and the reimbursement process for medical technology that can lead to less invasive procedures and a whole host of areas of health care needs and save money but it is definitely an impediment right now. >> on the issue of the dme and the cms we'd like to work -- we'd like to get that balance between making sure -- we've all talked a lot about growing health care costs. so making sure that the evidence-based decisions in terms of cms saying they'll pay for it. fda determines its safety, then cms determines if we'll pay, if the benefits are such that it should be part of a payment scheme. we'll continue to move things through quickly but we'll try to figure out the ways that we balance it about if there are places and things that you have ideas about faster that's something we'd welcome in terms of what you're hearing from the companies. the other is the touch on the

premium issue. it's part of a ac ashes's effort to make sure that we have transparents ets and downward pressure on premiums. what's been in the news is any premium increase that's above 10% has to be reviewed by state insurers. so what you're seeing in the space right now in many of the articles, i'm not sure of all the headline that you read, but a number are about the fact that these are their first submission. last year we saw those come down because the review process works. because there are conversations like this in public that it creates downward pressure on those premium increases. so it is a part of the process and it doesn't reflect the whole base. most insurers are saying that the majority of their people that they think they'll enroll next year in 2016 will have premium increases less than 10. so we agree with you on the importance of that downward pressure. >> thank you. mr. kind. >> mr. chairman madam secretary, thank you for being here.

obviously there's a lot of attention and focus on keen versus burrell and where that comes down. how quickly could this congress if it wanted to enact legislation language to fix that overnight the if it is an adverse decision from the supreme court? >> i think i wouldn't -- i'd be hesitate for me to say how quickly the congress can act. >> no, assuming there's a willingness. >> but i think the question of the issue if it is ruled that it is about the subsidy that's a relatively simple solution that one can do legislatively with regard to subsidies or those in the federal marketplace. >> i come from a state wisconsin, i'm very proud of but i've never seen a greater act of physical malpractice by the current governor than what's been perpetrated the last few years in his denial of the medicaid expansion money. in his budget this year he's proposing over $300 million of cuts to our university system but if he took the medicaid expansion money over the next

two years that would bring into the state $350 million over the next two years. it just seems to be basic math. and his denial of that is not only denying people that are tough to cover to begin with but also get that money into the state where it can do some good in wisconsin. i know you, especially and hhs have been working very closely with many other republican governors throughout the nation to figure out a path forward on waivers and modifications. i would encourage you to continue those lines of communication because we need help in wisconsin. he rejected the ability for us to form our own exchange. we're in that box right now looking at the supreme court. we could have done it the wisconsin way and created our own health insurance exchange. he chose not to. if we do get an adverse decision, 166,000 wisconsinites would lose their premiums and insurance would be rendered unaffordable to them too. there's a lot riding on this decision.

hopefully we'll be able to continue to work with the states and convince them to do the right thing, especially in wisconsin where we need help. i appreciate your sustained focus not only on delivery system reform but payment reform, getting to a quality based reimbursement system. i agree with my colleague, mr. buchanan, that more needs to be paid to cost containment. there are some good news, but you set up the new network on quality collaboration and i hail from the land of integration coordination, quality measurements, best practice, value-based medicine and that, but if your estimation how quickly can we pivot to a quality-based reimbursements system? >> when one considers that medicare dollars are a large portion, we believe that we can move to 50% by 2018. the goal for 2016 being 30% we set out because obviously i won't be here and so we need to set a goal and achievement. at the point at which 50% of

medicare is based on value and what we're trying to do is make that passed by this network. i'm meeting with the insurance ceos as well as ceos of companies because those are the other payers. in new york state actually, medicaid has committed to do the same thing we are. so i think the path that we have medicare on is close to the trajectory for the nation in terms of moving towards more value. >> you mentioned new york. why do you think more states aren't taking up this challenge and converting medicaid to that type of payment system too? >> i think that more states are interested, and in our conversations with states, i think a number of states are not wanting to have the public commitment. and so a number of states are a part of that network and across all states. i can look around and have talked to governors from a number of your states that are willing and thinking about this because they believe getting the value-based payments in medicaid, which is a large expense for the states is a very important thing. there are states that are interested that are not at the

point of public committal. >> thank you, mr. chairman. >> we are now going to move to thee minutes a person. in order to try to fit in as many people as possible. mr. marchand. >> thank you mr. chairman. secretary burwell, in the time that the affordable health care act was being adopted. for probably the most unpopular aspect of it and most debated in my districtt were the ipab panels. many names were given to those panels. i was able to cast a vote publicly that would abolish that panel. yet there's talk about strengthening the panel, there's talk about expanding the panel.

could you give us an explanation of what this talk is all about and what the purpose of it is. >> with regard to the changes in our budget around ipab, it is to strengthen and increase the medicare savings. because as we have all discussed health care costs and the issue of health care costs and medicare being a core element of that is a very important one. what we're hopeful and in the budget the $423 billion of medicare savings that is specific in specific ways that we can all have a discussion about -- i know there are those who disagree with us about the balance we have a provider and beneficiary approaches to getting that money but i think what we believe is that ipab as a tool and a tool that the congress would still engage with because you all would approve anything that was suggested by ipab, the congress would have the opportunity to give it a thumbs up or thumbs down is an important tool to keep the pressure on all of us. i think we all know medicare expenditure is a tough issue.

it's a very tough issue for everyone in terms of even the issues we're talking about, about payments for dme or other things. that's what drives those costs upward. we believe it's a tool in the toolbox. but we're focusing on things that the congress could review. right now it wouldn't kick in -- in the president's plan it would be 2019. if you don't do those changes it would be 2022. that's obviously another administration. >> why has the president not named anybody to the panel? >> with regard to the issue of panel members, it's something that we believe we should do in consultation with the congress. so that has been a place, and i think it's because of, as you were expressing, making sure if you are going to name a panel, that there is appropriate congressional input. and the other thing is, at this point, now that we see the numbers and we have made improvements in terms of the

trust fund's viability increased by many years the need is not for now. and it would be in another administration. the question of us naming the panel now -- >> so the president will not name a panel in his administration? >> at this point with regard to where we are in the budget, we have not yet done it. >> time for the gentleman has expired. ms. black. >> thank you, mr. chairman and thank you for being here secretary burwell. we ask for consent to submit this report. >> without objection. >> the affordable care act requires the exchanges to determine if applicants were offered health insurance by their employer, and if they were offered that comprehensive and affordable konchts -- coverage, then those individuals are not eligible for the premium tax credits. the general inspector reported in this report stated that neither the federal nor the state exchanges were able to verify most individuals'

attestation that they were not offered health insurance by their employer. this is happening despite the fact that the burden and the costly reporting requirements have been placed upon our employers. what is it that hhs is doing to ensure that people who receive these credits are legally eligible for them? >> so much of our -- this is the aptc that you're referring to, correct? >> that's correct. >> with regard to that, we have a data matching process that we are doing, and it checks both immigration status as well as income status. and that's one of the processes we are doing to make sure that people who are eligible, and we release numbers i think you saw last week where over 100,000 people came off the rolls because we were not able to verify the information. so that is a process. it's a process last year that took a longer period of time. now we improved to a 90-day period of time. >> so let me quickly go to the other part of this which involves the irs. because in their application that is individuals' application

for this coverage, individuals are asked if their employer offered them health n. and the exchanges then are required to provide the applicant's response to those questions along with the information related to the employer to the irs. in a monthly data report. this report, again found that the treasury found that neither the cms nor many of the state exchanges were able to submit this information until well after 2015 filing season was complete. so it appears that two of those state exchanges still have not provided that required information. this is just one example of the numerous delays from cms when it comes to obama care. so healthcare.gov alone took over a billion dollars to build and yet it's parent that these systems is are still not fully functioning based on this report. so cms undertook this mammoth project without effectively planning for the development or the oversight. and this has led to hundreds of

millions of dollars. these are taxpayer dollars that are being wasted. so my question is can you outline the oversight that's being conducted to ensure that the legal requirements that were set up by the law are actually met and that systems are properly developed to protect our taxpayer dollars. >> i want to check because this report, as you probably know have been over 50 audits of the affordable care act. i want to make sure that i'm focused on the right one. with regard to the one that you're speaking about, if it is the one i'm thinking about, we're now in a place where the information is going from the federal marketplace to the irs on a monthly basis. and you know with all of these audits that we've received from both igs and the gao, we continue to work their their suggestions. i think that's that one. we'll follow up if that's not the case that we're now in a monthly reporting dv. >> i would appreciate following up. >> thank you. >> thank you mr. chairman. thank you, madam secretary.

i'm pleased that during your confirmation process you expressed support for improving the safety of medical devices. a few of us have brought that up. by incorporating the fda's new unique device identifier. the udi. system into health insurance claims. myself and chairman brady talked about this in the past. i'm asking you today despite this widespread support that some in the cms -- i'm putting it mildly -- have resisted this important public health and patient safety effort. so we need the tools. could you commit to work with the committee this summer to move the policy forward? >> i do commit. and i think we have made some progress of fda and cms working together on something that will actually be more implementable. so we're working on it and something that your comments and the chairman's comments and

others are something that i recognize when i came in and we've been working on it. >> let me shift a gear a little bit here. you thingk that if my colleague ks on the other side cobbled together all the time they spent trying to undermine the aca, they would have been able to come up with an alternative to this law. they can't find anything good to say about. anything. so -- and this committee alone, we've had over a dozen hearings just on issues related to the individual and the employer mandates. many members in good faith i'm sure, brought this up today. not to mention nearly 60 floor votes to repeal or undermine the aca. make no mistake about it that's what this is about. and how many have we had on this elusive republican alternative i keep hearing about? zero. the reality is that this act is

working. it has problems. medicare has problems medicaid has problems, this is a very imperfect world, madam secretary. more than 10 million americans have health coverage through the marketplaces. 85% receive tax credits to help the cost of coverage. so while we're waiting i'm interested in one question. as the aca impacted employer-sponsored insurance offering and takeup rates? and does the aca maintain the financial incentives for employers to cover and to offer coverage? that's my questions. >> so this past week we have seen a piece of work by the urban institute with regard to number of employer base. the statistics that we have certainly cbo's changes to its numbers, most recent changes to its aca numbers have to do with

the fact that they now have lowered the number of people that they think will switch from the employer-base market to the marketplace. and the urban institute numbers that came out this week said that in a percentage basis it has been very slight. so it would call it basically the same. no decrease but a slight tip-occupytip- tip-up, but not numerically significant. so there has not been a decrease. >> thank you very much. >> mr. young. >> madam secretary thank you for being here today. the president, after the g-7 summit this week said the affordable care act is working. i mean part of what's bizarre about this whole thing is we haven't had a lot of conversation about the horrors of obama care because none of them come to pass. and he continued somewhat oblivious to some of the things i'm hearing in my own district saying, quote, it hasn't had an adverse effect on people who

already had health insurance. i'm frustrated. and i know many hoosiers are frustrated by some of the aversion impacts from diminished coverage options to ak of accessibility in their own communities for care. a lot of people are being squeezed when they go into the exchanges with price increases on premium. then there are the penalties of course, the mandate taxes that exist if they can't afford to buy health insurance. and so i just want to humanize this a little bit for you because i know you're quite conversant in the statistics and the goings on by much of this health care law. patsy from my district in jeffersonville indiana, her premium went up $135 a month. she no longer has access to the family physician that's cared for her for over 25 years. brandon from greenville signed up for health care his family can't use because his family's

deductibles are too high. and they make just enough that they don't qualify for assistance. jason from georgetown, indiana, had to seriously consider paying the individual mandate tax because he couldn't afford to pay the mandate tax because of the exchange and can't qualify for an exemption. deborah's premium skyrocketed to $800 a month, more than her mortgage payment. these are just ill lus straightustrative of problems and to use the president's own words, these horror stories haven't come to pass. they are coming to pass. they are in existence right now and i just want to know what you believe, madam secretary, i should tell my constituents who are trying to comply with this law. are they merely collateral damage? >> so with regard to the examples and stories, i think they are important and they are important to combine with the

numbers in terms of what we know that 16.4 million people in our country are no longer insured and i hear those stories and respect those stories but having traveled 22,000 miles, i heard from a woman in texas who said you want to know how to treat ms? you get sick enough and go to the emergency room and they will treat you. >> in the near term what do we do? i'm sorry for interrupting you but the time is short. what do we do for those who don't qualify for a hardship exemption. >> on a number of the examples that you talked about there is the issue of coverage to care and helping people understand how to select the right plans. the plans on the marketplace vary in terms of deductions, et

cetera. >> you said that the administration was looking for fixes and improvements of the aca. it's disingenuous if you don't help make some of those fixes. one of them deals with seasonal employees, the definition between seasonal workers and seasonal employees. i'm not sure if you're aware of the conflict with that definition and some of the difficulties it's causing people in my district but also across the country. the other is the hospital readmission program. this program was aimed at reducing unnecessary hospital readmission reduction program. the goal of the program was really something that i would support and properly many of my colleagues support. it's estimated that 18 billion per year is wasted on avoidable reemissions on medicaid patients alone however the implementation program has been problematic. evidence suggests that economic

situations for both med dare and medicaid are likely to be readmitted within 30 days of discharge regardless of physician efforts to educate them on proper post discharge care. do you believe the readmission post care program can be improved by allowing dual eligible status as well as other plan readmissions such as the falling trauma? >> agreeing with you on the difficulties that that can cause, we had a proposal and a proposed rule making and suggestion of how to make some of the kinds of changes. the remarks we received back were not the right way to go about it. the congress has given us money to do this specific study of how to work on this issue. we look forward to working with you on how to correct it because we had a proposal that others didn't. we want to understand how we can analytically account for that but know that we have more readmissions than we should, both in terms of quality and

price. getting to that is something we'd like to do. we tried to propose it. we clearly didn't get there. >> i have a bill which i introduced that does have bipartisan support which i would hope the administration would consider and support. also, on seasonal employees, i have h-63, really to clarify the conflicting definitions between seasonal workers and seasonal employers, which is causing compliance problems for both employers and individuals, interactions between seasonality and individual mandate, create opportunities for accidental noncompliance, resulting in significant tax penalties for american workers and businesses alike. that's another issue i would hope that we can work on. these are issues clarifying and fixing as you said or improving the current law. so i thank you and yield back. >> gentleman yields back.

i understand the secretary has a hard stop. i regret that every member won't be able to ask questions of the witnesses at this moment. i'd like to invite any member particularly those who did not have the opportunity to give us the committee, their questions in writing. we'll submit them to the secretary of the witness and i'd ask the secretary to respond in a very timely manner. >> i'd be happy to. and i think a number of you have my cell number. so, feel free. >> the hearing stands adjourned.

here are some of our featured programs this weekend on the c-span networks. on book tv saturday night at 10:00 p.m. eastern, fox news contributor kirsten powers says although they were once its champions, liberals are now against tolerance and free speech. on sunday night at 11:00, former deputy director of the cia, michael more michael michael morell. and on american history tv, saturday night at 9:15, author kevin mcmann on the impact he

had on the court and american politics. and sunday night at 6:00, on american artifacts, we visit the national museum of american history to restore the murals from alabama's talladega college and the founding of talladega college. get our complete schedule at c-span.org. director of clinical cardiology at bringham and women's college on the advances of heart surgery and the progress being made in the understanding of heart health. >> this actually is a valve that has been crimped onto this catheter being now positioned into the disease valve and it will be deployed here with the balloon being inflated and a new valve will be inserted inside

the old kalscalcified valve. what we've seen is replacement of a diseased aortic valve in a manner that does not require open heart surgery. so we're trying to become smarter about predicting who will get disease, as to identifying the most effective means to atenuate the disease and following up over a longer period of time. we're trying to harness the promise of the human genome research project in existence for more than a decade with everything that can be driven by the giants of the industry like google for example and information about sociology, see

og geography, what's your likely hood of getting diabetes on the basis of your educational background and likelihood of developing something like diabetes or hypertension if you live in a certain part of the city where you have less access to the right kind of food or even the right kind of instructions about sodium consumption and things like that that could have enormous impact on population health. >> dr. patrick ogara on c-span's q & a. mary todd lincoln was known to be well educated and bright. she spoke several languages fluently and took an active role in her husband ds career. she suffered a series of emotional challenges. three of her four children died before reaching adulthood and her husband was assassinated at

the theater. "first ladies, inflew wednesday and influence and images." from martha washington to michelle obama. sundays on c-span 3. tonight on c-span 3, housing and urban development secretary julian castro testifies at a committee hearing meeting. the leader of the scottish national party nicola sturgeon talks about scotland's relationship with the u.s. the scottish parliament debates a referendum on britain's membership in the european union followed by more discussion about the referendum in the british house of commons from this week's session of prime minister's questions. housing and urban and development secretary julian

castro testified today about hud programs, including initiatives to make housing more affordable. congressman jeb hensarling heads the hearing and this is about three hours. >> the committee will come to order without objection. this hearing is entitled the future of housing in america oversight of the department of housing and urban development. i now recognize myself for three minutes to give an opening statement. as we approach the 50th anniversary of the founding of the department one can't help but be struck by president johnson's boldness as he launched the great society with these words. "we have declared unconditional war on poverty. our objective is total victory." hud was established one year later in 1965 to combat poverty and making housing more

affordable by all. yet by every official measure, poverty and its consequences is as bad as 50 years ago. poverty rate today is essentially unchanged from when hud was founded. millions of more americans fall below the poverty mark including an unbelievable one out of five children. this is shameful. hud says its mission is to build quality affordable homes for all and yet according to inflation figures, the median price of new homes as doubled and median rents have gone up by more than one-third. in other words, it's not just the poor who find the cost of housing beyond their means it's almost everyone. this is unacceptable. to make matters worse to achieve this unenviable record, hud is asking for a 9% budget increase. 1.6 trillion is more than $13,000 for every household in

america, equivalent to the cost of feeding a family of four for an entire year. meanwhile, one of our greatest threats is namely the national debt clock. given the obama economy for the last six years, it's an open question whether housing vouchers and hud's mainstay is a long-term solution or simply creating a permanent underclass. for whatever good hud does it clearly has not won the war on poverty. economic growth and equal opportunity can do that. in other words, the greatest housing program in america remains a good career path and a growing economy. not a hud program. if we truly care about the least of these among us, we can no longer measure success by the number of dollars appropriated to hud. that should be obvious. instead, success must be measured in the number of our

fellow citizens who rise from lives of poverty and dependency to lives of hope self-sufficiency and pride. that's true success. it's time to bring a new focus and new ideas on how to best help the poor in our society. on this purpose which is a moral purpose, there should be no debate. i've been encouraged to hear our witness, secretary castro state that he believes in quote, evidence-based management style. directed to the goal of, quote giving every person new opportunities to thrive. to give these opportunities, again, it is time to think anew not to add 9% to programs that have failed again in the words of president johnson to quote not only relieve these symptoms of poverty but to cure it and, above all, prevent it. i now yield three minutes to the ranking member for an opening statement. >> thank you, mr. chairman and welcome back secretary castro.

today we gather to discuss the future of housing in america. but frankly if left to my republican colleagues that future looks very bleak for the population. mr. secretary, hud remains a critical part of our nation's social safety net. it is essential to ensure that families have a stable roof over their heads. but as we will see here today, my colleagues have no interest in strengthening our nation national housing system. their priorities, that is on the other side of the aisle are clearly reflected in the funding bill which drives this agency down to historic lows undercutting programs which helped families reach housing stability. hud provides critical rental and homeless assistance for our country's most vulnerable populations, makes important investments in local community

development and affordable housing initiatives and helps millions of families achieve the american dream of home ownership. all while ensuring fairness for historically disadvantaged communities, safe, decent and affordable housing is critical to ensuring that our young people are helping and successful. children who lack stable housing often fall behind. today hud is more important than ever in the wake of the foreclosure crisis. our nation is facing a significant affordable rental housing shortage, although private capital has an important role to play on this front. it cannot be leveraged without reliable federal funding. to truly address the acute need for affordable rental housing and the epidemic of homelessness, it is absolutely critical that we fully fund and expand the housing and homeless assistance programs that have been so successful at hud.

this year marks the 50th anniversary of the establishment of hud. and as i think about the next 50 years of housing in america, i believe that if we are truly serious about ending poverty and uplifting all communities we must reinvest in hud. mr. secretary i believe that the same principles also underline your vision for the future of housing in america and i look forward to hearing your testimony today. thank you and i yield back the balance of my time. >> the chair now recognizes the chairman of housing and insurance subcommittee for two minutes. >> thank you, mr. chairman. welcome, mr. secretary. good to see you again. glad you're with us today. mr. secretary, i want to thank you for traveling to our city a few weeks ago to meet with myself and industry regulateors.

i think the long-time executive director of the public housing authority put it best when he described the current state of play when he said the funding situation isn't changing and that you, mr. secretary, you take the initiative to introduce unnecessary burdens so people can do their jobs with the resources that they have been given. i visited sites run by two different public housing authorities. this last week, mr. cleaver and i held a roundtable with advocates advocates to discuss the challenges. when it comes to low-income housing, the status quo is not acceptable. anyone who says there isn't a need for reform at hud isn't listening to the advocates or residence of public houses. you've been on the job for nearly a year now and the most significant action you've taken at this point seems to be a cut of one-quarter of revenue and as i stressed with your staff earlier this week when we met, i

believe that continues to jeopardize homeowners and taxpayers. i have yet to see the changes necessary to build a stronger housing system for the american people. i know you and i have some discussions and i look forward to that as the committee continues to go on. again, i welcome and look forward to your testimony and talking with you shortly. thank you. i yield back mr. chairman. >> gentleman yields back the remainder of his time. the chair recognizes another gentleman from missouri mr. cleaver, the ranking member. >> thank you mr. chairman and ranking member waters and mr. secretary, good morning. the secretary visited the fifth district of missouri and visited the other side of our state with mr. luetkemeyer came to the better part of the state and spent time in kansas city. and so we're here today with the

hearing entitled "the future of housing in america." i think it's always important to look to the future and hopefully this hearing will deal with the future more than the past or otherwise we are like somebody trying to drive a car looking through a rear-view mirror. i think we've got to go to the future, figure out the things that we can do. that would be important. but if we look at the past i think it's important for us to think about the fact that when the economy teetered on the brink of catalysmic collapse, home sales ground to a holt and prices skyrocketed. our economy has slowly improved. the bureau of labor statics

announced that the economy added 280,000 new jobs and the 63rd consecutive month of an increase in housing. the national association of realtors stating that sales of existing homes including single family homes, town homes and kond men yes, ma'ams, roez rose from 6.1% in 2013. there are things that we can do better but i am very pleased, mr. secretary, that the department of hud is doing a lot of things well. i yield back mr. chairman. >> the time of the gentleman expires. at this time, it is my pleasure to welcome the honorable julian castro back to our committee. the secretary was sworn in as the 16th hud secretary on july 28th 2014.

he's been introduced before. at the secretary's request, before i recognize him, to give an oral summary of his written testimony, the secretary has asked to be yielded a minute in order to offer a statement of honor on behalf of a hud colleague who passed away this week. so for that purpose, mr. secretary, you are recognized at this time. >> thank you very much, chairman hensarling to representative waters and for members of the committee. thank you for giving me time to talk about one of our hud family that passed away earlier this week our chief financial officer, brad huther. brad really set the gold standard during his career for public service over a career that spanned three decades.

he was a leader whose intellect allowed him to master complex subject matter policy and whose integrity made him a champion will depend on effective government the most. after a development career that included time at the u.s. department of commerce, then the world intellectual property organization brad came out of retirement in 2014 to join us at hud and although he was only with us for a short period he made large contributions to our department and to its work on behalf of the american people. he was an administrator's administrator, a man of integrity, folks that all of us respected and had confidence in and his passing is an incredible loss for the field that he did so much over his career to contribute to. and chairman i just wanted to say that our thoughts and

prayers at hud are with mr. hurter's family and wanted to acknowledge him in front of this committee because i know he had the opportunity to work with many of you as well. >> mr. secretary on behalf of the house financial services family we issue our sincere condolences to your colleague as part of the hud family. on the gentleman's passing. at this time mr. secretary i will recognize you for an oral summary of your written testimony. please know that your written statement -- your complete written statement will be made part of the record. again, welcome. you are now recognized for your testimony. >> thank you again. mr. chairman we gather today at a very special moment for hud. this year marks our 50th anniversary. i think all of us would agree that much has changed since 1965 but one thing hasn't. the important role that quality

housing and strong communities play in the lives of the american people. where a person lives often shapes how they live, the jobs available to them the education that their children receive and the overall quality of life that they enjoyed. that's why all of us at hud come to work every day knowing that we can make a difference for others and i'm proud to say that we're making an impact in a number of ways. for example, hud along with our federal and local partners continues to make progress towards achieving the goals of president obama's opening doors initiative to prevent and end homelessness. from 2010 to 2014 we've seen a 21% drop in chronic homelessness and 33% drop in veteran homelessness. we'll keep working until we reach that day when everyone who needs housing can find it in our great nation. we continue to make important strides in helping families of all income levels secure a decent place to call home.

one example is our innovative rental assistance demonstration which has helped communities leverage nearly $1 billion in private market constructions to reduce repairs to public housing and with an additional $5 billion coming down the pipeline, it's clear that we're going to help ensure that public housing is quality housing for years to come. we're also helping more responsible families achieve their dreams of home ownership through our federal housing administration. fha served as a stabilizing force during the housing crisis and has provided access to underserved borrowers. we built on this legacy earlier this year by making responsible home ownership more affordable by lowering half a percentage point to encourage new borrowers to enter the market the next three years while trying to strengthen fha's financial health. hud is making a tremendous difference across the board and we all must continue to work to

do more. in fact under hud's current budget, we can only serve one out of four who are eligible for our assistance. we're examining our own system to see how we can effectively serve those that we serve. the deputy secretary has spent her first six months leading an operational and management review that we call deep dives which many of these findings in hand, we're now taking action to improve how we do business to build on what is working and to adjust what needs improvement. one area of focus is our procurement process which can take over nine months to complete from beginning to end. these delays are unacceptable, which is why we have embarked on an effort to transform this process and reduce procurement days by 30%. in addition, by october 1st we aim to resolve 10 out of the 11

material weaknesses out of the financial review. we're also using shared service providers to minimize our back office function so we can serve our nation's families and communities. at the end of the day we know our work isn't about program names or static tis sticks or charts. we can all agree on one ink thisthing, the work that hud does does give folks the opportunity to thrive. working with our partners we have given this opportunity for those who wanted a fresh start, veterans who needed a little support after adjusting life to after service and older americans who deserve to live in comfort and dignity. to families looking to buy their first home, put down roots and build for themselves and their children.

we continue to look for new ways to extend these opportunities to all americans. our partnership with congress is essential to this work and we look forward to working with you to secure funding that invests in proven housing initiatives to build a stronger and better hud and to help more families achieve their own dreams through the strength of our partnerships, the power of our policy ideas and our hard work, i'm confident that we can ensure that the doors of opportunity are available to americans today, tomorrow and for the next 50 years. thank you very much. >> thank you, mr. secretary. the chair now yields himself five minutes for questions. mr. secretary, i'm sure you're well aware this year doesn't just mark the 50th anniversary of hud it also represents the 50th anniversary of the moynihan report, which many historians believe provided the impetus for the creation of hud in the first place. recently the urban institute published a report, the moynihan

report revisited. are you familiar with the report or have you had an opportunity to view it? >> i have not had an opportunity to read the entire report. i did see some press about it, yes. >> mr. secretary in that report it states, after alluding to the alarming statistics of 50 years ago in the original report it goes on to say about those statics, quote, they have not only grown worse, they have grown worse not only for blacks but for whites. and hispanics as well. so you weren't even board when hud was first created but after 50 years, $1.6 trillion, you requested 9% increase specifically what is the evidence, the statistical evidence that hud has made progress in achieving its original goal of eliminating

poverty? >> yeah. thank you very much for that. let me give you two examples chairman hensarling. i see it differently. i do believe that we've made tremendous differences in the lives of americans because of the investments that hud has made. in fact, if we need proof of that, we can look at some of the question members who are here who grew up in public housing who have been very clear that the fact they grew up and had a chance to live in public housing is one of the reasons that they were able to achieve success. >> mr. secretary, i'm aware of the stories and there are inspirations to us all but the statics that i see show that poverty is essentially unchanged after 50 years. let's start off with the do you have statistical evidence that hud has actually played a role in eliminating poverty? >> yeah. i'll give you a couple of examples. one of the examples i mentioned is veteran homelessness.

we have seen a 33% reduction in veteran homelessness and a larnlge part of that is because of hud vouchers that have been funded by this congress and the president has led that effort to effectively end veteran homelessness. another event -- >> over what time period, mr. secretary? >> we've seen a 33% reduction in veteran homelessness between 2010 and 2014. another example is our jobs plus initiative. there's been research done that has shown that individuals who went through jobs plus which congress has also funded in the past and which we're requesting a significant increase because of it is effectiveness, we've seen that individuals who go through jobs plus tend to earn 14% more than individuals who do not. >> so why is the poverty level essentially unchanged in 50 years? >> mr. chairman, i believe that the answer to that is much larger than hud and its programs. >> let me ask you this, mr. secretary, in the limited time

that i have. you and i have had private conversations and i've been encouraged by many things that you and i have spoken about. but i'm still somewhat unclear, at the end of the day, as secretary, how do you measure success at hud? how success measured? >> we measure success in several ways. you and i have continued to have conversations about how not just measuring input but also measuring outcomes. one outcome is the fact that somebody has a roof over their head. that makes a tremendous difference in their lives. we've seen that, for instance, on the policy of housing first that tries to give veterans housing first so that they can stabilize themselves and then address other issues to get on the right track in life. however, i believe that we need to continue to measure when we invest in things like jobs plus,

family self-sufficiency, the extent to which those individuals that go through those programs go on and get good job training and get a job to the extent to which they get a good education and they are able to -- >> mr. secretary, my time is winding down. let me ask you three specific questions. so in tracking people's right to rise, their ability to succeed number one currently, does hud have any way of tracking when an individual leaves the assistance of one pha and moves to another does that have any way to track that? >> hud does track who is on the rolls. >> how do you track one pha that leaves to another? >> i believe we have an ability to track that, mr. chairman. >> okay. i would like you to share that with this committee. you have tracking when one

leaves pha and becomes homeless? >> do we have any way of knowing when someone leaves the hud program whether they become homeless? >> i believe we have a way to track within a continuum of care how many individuals are homeless. as to whether that person -- >> if you would share that with this committee. is there any way that hud can track when people become self-sufficient and stay that way, say, three years five years later? >> i would be glad to share with you the evidence that we have on that. >> sure. so you can track that? >> we have done some tracking of self-sufficiency, particularly on the family self-sufficiency program. >> i look forward to seeing that. i am way over my time. i yield to the ranking member for five minutes. >> thank you, mr. secretary. we are delighted that you are

here with us this morning and we thank you for the way that you have come into your position and the leadership that you have provided thus far. and i am very pleased to hear from members on both sides of the aisle how generous you have been in visiting their communities and how you have been so very very helpful. i think i want to ask you a little bit about the rental housing and home ownership crisis that we have. in the current rental housing crisis, rent has taken a larger share of income and families are facing greater challenges in saving for a down payment and being able to own a home this could have serious negative consequences for the housing market. just this week again the urban institute released a major study that predicts that the home ownership rate will continue to decline through 2030 and a major rental surge is upon us a surge

that we're truly not prepared to meet. the home ownership rate will decrease for nearly all age groups and african-americans will fall further behind all racial groups in home ownership. what is your vision for how we solve this problem and how can hud, given the proper resources enable more families in this country the opportunity to own a home or affordably rent one? >> yeah. thank you very much for the question ranking member waters. you're correct that what we see out there in the united states right now is an affordable housing rental crisis. a good example of this a good demonstration of this was in the latest worst-case housing needs assessment. what that found was 7.7 million low-income households who either are paying 50% or more of their income in rent are living in

substandard housing or both of those things. and those families, by the way, are families not on any government assistance right now. another report was released last week by the low-income housing coalition that was fascinating in what it found. it said that in no decent size city in the united states could you afford a two-bedroom apartment, a decent two-bedroom apartment working minimum wage full time. and that in the vast majority of communities, you can't even afford a one-bedroom apartment. so what is hud doing about that? that's why we have requested additional section 8 vouchers for instance because we lost 67,000 section 8 vouchers to a sequestration. it's why we seek to stretch our resources as far as we can through initiatives like r.a.d.

it's why we believe in properly funding both capitally and funding for public housing and why we look to be innovative in communities with initiatives like choice, neighborhoods and proper zones. we want to take a wholistic approach to making opportunities more possible for americans and as i mentioned early on, right now we're only serving one out of every four people that qualify for hud services. so we see there is a tremendous need out there and we want to do something about it. >> thank you very much. national housing trust fund we have a deficit of over 7 million affordable available unit and we all know that barney frank worked very hard. i worked with him to get the national housing trust fund. we don't seem to have much support from our friends on the opposite side of the aisle.

we must find ways to fully capitalize the trust fund and defend against republican attacks to abolish the program including the latest attack in that house funding bill. can you speak to this issue quickly? identities.

it's the same message that we heard and what i heard again last week. regulations strangling their ability to deliver services. and let me just give you an example of some of the things that they were talking about here. i see an advocate here and i'll give you some of his ideas. number one recognize how you can use it for what you have more eefficiently.

if the program works, expand it. regulation is costing too much money. figure out how to minimize it. raise the minimum rent. another one talked about flexibility. it's going to be very important and for them to be able to utilize their assets that they have and to be able to serve the people that they are supposed to. another comment they had is there is an inconsistency of regions of hud offices especially with regard to transportation issues. it's hard for one agency, one area to look at another area and see that they are getting to do something that they are not and that's a problem within your agency. so i guess my question to you is, i know you're trying to look for some ways to improve services and so these are some suggestions that we have. are they something that you can work on with us? >> absolutely. let me say i also enjoyed the opportunity to visit jefferson city to hear from folks in the real estate industry and also

some of the advocates, including pha representatives. it was very insightful to hear from the concerns of a smaller pha. and let me say unequivocally, as i mentioned that day to you personally, we're ready to work with you and with the entire committee and congress on some of these issues. i'll give you an example of that. one of the things mentioned is the administrative burden done related to income verification. why do we require income verification every year for certain residents making the same income basically year after year? that is a good question because 56% of our households that are hud assisted are elderly or disabled. so we're supportive of a change to that that would only require income verification every three years for folks where 90% of their income is fixed income sources. and with regard to mtw and the

other issues that you mentioned, we are working on that and in this budget, for instance we've proposed an increase of 15 mtw agencies that would have greater flexibility and we're willing to look at these other issues as well. >> we're looking forward to working with you on those issues. you made a comment that there were 67,000 hud vouchers that you said were cut out of the budget. in my discussions with the individuals in the industry they talked like there were 200,000 that went unused. is that true? >> economy not familiar with that, no. >> they didn't have the funds or add menstruate tif opportunities and they couldn't utilize all of that. >> that may have been true some time ago. when we went through sequestration, phas had to pull vouchers back instead of letting them out on their feet. you can't use that voucher. so we're trying to get back to where we were before. >> these are people on the ground using these and they are

saying that they are left unused because of the problems that they have to deal with, the restrictions, lack of flexibility, whatever it is that is causing them not to be able to do that. so i think that's something that you need to look at. next question we haved a long discussion about the income that was cut back in january and again, it really concerns me because, according to your report which i have right here, you're continuing to take in or lend to a group of folks who are probably more problematic from the standpoint that you're now going to the 640 to 679 credit scores, which is fine but by doing that, exposure to more risk which means more possible

loss. if you look at the losses, i really got some problems here with some of the loss information in the report. one place it says you've lost $7.5 billion over the first half of the year. $15 billion this year and in another place it says that your loss ratio will probably go down, which is great but that number doesn't jive. but the bottom line is there seems to be a continued problem, in my mind in terms of covering expenses. i hope this all works out. thank you, gentleman. i yield back. >> the chairman recognizes mr. cleaver, ranking member of the housing subcommittee. >> thank you. thank you.

>> hit the button to the gentleman's right. >> thank you, mr. chairman. mr. secretary, i don't know how we are going to be able to erase this stereotype or the misinformation that seems to be eternally out here in the world that people who live in public housing move in and foregoes a stay for an entire lifetime. the facts don't match the stereotype. if you have children living in multifamily property the stay is about 5.14 years. that's about the time that my family lived in public housing. and that's just so dramatically different than what people seem to want to believe and how it is perpetuated. do you have any idea of how we

can erase that misinformation that seems to be all over the country and i think there is always some resentment from those of us who, in my case my father worked three jobs to save enough money to buy a lot to get a house and other people -- families were doing the same thing. but i don't know how we get that out. to my father, he's probably watching. thanks for everything. he's 92. daddy. and -- but i don't know -- it's an insult to him and a lot of other people. how can we erase this? >> it's a great question and let me say that i enjoyed visiting with chairman luetkemeyer in his district and also visiting with you in your district, ranking member cleaver. you asked a great question. what we see every day whether it's in public housing or folks

receiving a section 8 voucher, we see folks who want to work hard and want to get on the track to a better life. and we understand that our investment in public housing and in hud-assisted housing is a way to get them on that track. i reject the notion that somehow folks living in public housing are lazy or it creates a culture of dependency. the fact is that 56% of the households that we serve are headed by someone who is elderly or disabled to begin with. and of the rest a significant number of folks are under the age of 18. they are children. of the folks who are working age, a decent number of those folks are working. and if they are not working, then they are required to do some sort of community service or be in school or go through job training and so this is very much an opportunity for folks to

get onto the track of a better life that they want to get on. >> thank you. i agree obviously, with everything you've said. it's so frustrating to hear the contrary. let's talk about fha for just a moment. because it plays a major role for first-time home buyers. fha helps almost half a million people get into homes in 2014 and about one-half of them are brown and black american. do you believe fha as we're talking about the future, one of the agencies that absolutely must be preserved so we can continue to provide this kind of assistance to first time home buyers as well as others? >> fha plays an invaluable role in creating upward mobility for

people of all income levels. it's a primary vehicle for first-time home buyers to get into a em hohome. for latin americans, 50% have an fha loan. we've seen the mutual insurance fund rise by 21$21 billion. it's on the right path. yes, we need to do everything that we can to continue to strengthen fha and ensure that it's there to provide that opportunity for folks to reach the american dream. >> thank you. it may be also important to realize that those individuals qualified for the loan, that they were not just -- sure i know there's a few seconds left. we have to distinguish between the issue of affordability and access. we lowered the mortgage

insurance premium and made it more affordable. that does not in any way change who qualifies for a en loan. the average credit score out there is 687. that gives you a sense of the closeness of those numbers. >> thank you, mr. secretary. >> the time of the gentleman has expired. the chair recognizes mr. garret. >> it make it is unlawful to rent to any person because of race, color religion or sex or national origin and that is the law, as it should be. however, hud's rule based not on intent but solely statistical

outcomes and treatment the results are the cost of litigation is strangling the market, the availability of credit is cutback on lending to potential homeowners, the very same potential homeowners who are trying to help. therefore, what it does is to reduce the supply of housing as builders back away from those vulnerable and punishing the people that we are trying to help. let's take a look at your agency. in the 2014 fha annual report to congress, the status of mutual insurance fund it says fha indicated that single family endorsements for that year was 51% to as you put in your reports, to white, 17% to hispanics, 10% for blacks. statistically, is that not

disparate impact? is that not your agency discriminating? >> i reject that premise. thank you, congressman for the question. >> then -- >> but you are misguided. >> let me ask you, is that a disparate impact? >> that's not the way it's been utilized or used. i believe in disparate impact analysis and if we look at the way it's -- >> is a 40% disparate impact a disparate impact? you're lending or endorsing to only 10%. >> this issue should never be involved in that context. you're completely taking it out of context. >> no. >> that's not the context that it's being litigated about either. >> no. because you're litigating against lepdnders and the like and people in the housing industry.

i'm asking about what you're doing. is what you are doing disparate impact? >> what we need to do is preserve disparate impact analysis because it's important to determine whether there is a discriminatory impact and whether other tools can be utilized to have a better impact. >> what is a disparate impact? >> what percentage off is a disparate impact. >> i reject that notion congressman. they are applied in very fact-specific cases. >> so what are the -- >> i reject the notion of a hypothetical that would never come up in the first place to try and analyze such a serious topic. >> so you cannot define for us what percentages are disparate impact even though your agency brings those autslawsuits? >> you know very well it changes in different scenarios, in different industries and as applied to different cases. >> exactly.

isn't that the exact problem? >> i think that's part of the strength of the tool. >> no it's not a one-size-fits-all tool. >> so what you're saying is that if i'm a lender or a builder or home builder, i don't know what your charge against me is going to be because, as you just stated right now it changes from circumstances to circumstances? >> not at all. >> there is no clear definition of what disparate impact is? >> in the burden shifting that happens, if it's litigated actually gives the defendant an opportunity to show that there's a legitimate business reason for why those statics are the way they are and then when they demonstrate that, it forces the plaintiff to actually have to come back and show that no you should be doing it a different way that would be more effective. so the burden shifting involved there protects the defendant. >> well the defendant only after he's been brought to

court, hired attorneys gone through the expense of this and having to defend something that you just told me in this hearing that you don't have a definition of what it really means. >> that's not true. there are plenty of lawsuits thrown out summarily. so i'm not sure what you're talking about. >> only after the defense has to defend the charge of disparate impact. >> look at the track record and it has had a good track record. >> what i've seen is disparate impact by your very own agency. >> the time of the gentleman has expired. the chair now recognizes gentle lady from new york, miss maloney, ranking member of the market subcommittee. >> thank you, ranking member and chairman for this important hearing and thank you hud for all you do for affordable housing in america. two programs that i'm constantly

asked about is section 8 and section 202 program which does so much to provide housing for seniors and, according to your own study, seniors with low incomes are the most likely to pay more than they can afford for their housing than any other sector in our society and this program was very important not only to new york but i'd say the whole country. i'm concerned we don't have enough funding to meet the rising demand for affordable senior housing. the capital advance, the new construction, i think, has been frozen, has very little in it and, aid cording to the aarp, for every section 202 unit that becomes available, there are well over ten seniors on a waiting list. can you describe what hud is doing to meet the demand -- the riding demand for affordable housing for seniors under the section 202 program?

>> thank you very much, representative. i do appreciate the chance to speak to this because as much of a fuss is made over the idea of these millennials and young people and cities are changes these millennials, we all know that the fastest growing segment of the population are actually baby boomers turning 65 who are elderly and who are spread out in every single community out there and are a focus of the section 202 program. we are requesting an additional investment in section 202, particularly for a demonstration project in this demonstration. this would allow us to show the linkage between our investment in housing for the elderly and a reduction in health care costs because we believe that it's important to show that, that that does exist and that hopefully that will inform policy in the future because by spending a little bit for housing and supportive services on one end, you could save money on the health care system on the

other. that's the hypothesis. but more broadly as i mentioned a few moments ago, 56% of the households that we serve are actually headed by someone who 50% of the households that we all serve are headed by the elderly or disabled. that goes across hud. our service to americans is by no means limited to 202. it's also public housing section 8, and it is part of the reason that we're requesting greater levelsz3 of voucher and funding for our traditional housing programs. >> thank you. the other hud programs that i'm interested in supporting additional support for is section three, the earned income disregard in public housing. these are important tools for the department and local housing providers to help families earn more income and achieve more economic mobility. can you talk about the

importance of these programs and policies and how we can work with you and the administration to strengthen and expand them? >> i can. what we want is that we want the folks that we serve whether it is section 8 vouchers or in public housing we want -- and they're working age we want them to be able to have gainful employment and eventually not need our public assistance. i agree with folks on that point. and one tool that we can use is section 3. section 3 says that when an investment is made let's say there is construction that a pha does, that the contractors make that effort to hire low income individuals in that area, including public housing residents. so this gives folks an opportunity to get a good job, to be able to provide better for their families and hopefully to

use that to move up and out eventually. recently we promulgated a new rule on housing in section 3. this is an opportunity for low income individuals and we look forward to working with you the committee and congress to ensure that we can make the most of section three. because the fact is frankly that the track record is checkered for housing authorities out there in how much they have utilized section three, and we want there to be consistency in the utilization of section three. >> the chair now recognizes the gentleman from texas, mr. nuegubaer. >> thank you. 20 years ago president clinton announced the national home ownership strategy. and he said it and i quote i want to say this one more time,

our home ownership strategy will not cost the taxpayers one extra penny. it will not require legislation and will not add more federal programs to a growing federal bureaucracy. i think we can all agree that that vision did not turn out that way. if you recall back in february you and i had a conversation about the fact that you were about to lower your guarantee fee by 50 basis points. and the fact that you were still not meeting the federally mandated reserve ratio for the funded fha. i guess -- and i think back then the number was point 4-1% the mandate was 2%. i wonder if you could tell us today, mr. secretary, what is the current status? >> yes, thank you very much, representative, for the question. i cannot give you that information because that won't be available until the next annual report. as you know that is done by an

independent actuary. so we do not do that analysis, that analysis is done by a neutral third party. we expect to have that 2015 report in november of this year. >> mr. secretary, i want to make sure you understand it. so you don't know until the end of the period how you're doing? i mean mr. secretary you were the mayor of san antonio. and i can imagine the director of finance if you asked him you know, how are our sales tax receipts coming in line with our projected budget and he says i won't be able to tell you that for a year, would that be an appropriate answer? >> what i would say is y'all can change that. that is set by congress not by me. i mean, change it if you want to go ahead and change it. >> let's be clear by that, we do put out a quarterly report. he asked my staff to go ahead

and review the report, we would be glad to do that. however, to your question on whether or not we have an update on the capital reserve ratio the answer is no because -- >> well, let me ask you, are the premium revenues i believe what you told me by the end of february of 2015 you would be at 2% you don't have any idea where you will be at 2% at the end of the year? >> again, to correct the record, what i said at the end of february, we expected in two years we would reach the 2% capital reserve. that is what i said in february. >> well, i mean, i think the problem a lot of us have is you know, you're running an organization that has a $42 billion budget. has a trillion dollar plus contingent liability. and we don't have -- we don't have the ability to track progress other than on an annual basis.

>> that is not true at all. in fact we provided to chairman lukemeier, we do track statistics. however, you asked specifically -- >> let me ask you about the revenues. are the revenues on track to meet that goal? >> the answer to that is that they are encouraging so far. let me give you a precise example. >> i don't want to know if they're encouraging, i want to know if they are on track. are you going to meet the 2% at the end of the year? >> they are encouraging right now. >> well, see, i'll -- >> i'll give you an example of why i say that okay? when you look at march of 2014 versus march of 2015, there were more borrowers on fha loans. we've seen as the quarterly reports have indicated, a significant uptake in re-financing.

you have to understand this thing took effect january 26th. with the limited early data that we have we believe that we are on track. however, we will not get an official number on this, the assessment until around the thanksgiving time frame when that independent actuary gives us the report. >> so i think the thing that is troubling, a lot of my colleagues on the other side of the aisle talk about safety net. and you know to me, a safety net is something that provides -- to keep you from failing or falling or hurting yourself, so the safety net that we have today is just made out of string. and i think you would agree that if i had a safety net i would rather have one made out of rope. and when you have a trillion dollars of the taxpayers on the hook and you only have 4.1% equity, the taxpayers are at risk. >> yeah, that is apples and oranges, you're conflating two things. i don't know how that works.

>> mr. secretary, how is that apples and oranges? >> the capital reserve ratio is not a simple ratio on how we pay claims. we have more than enough to handle the claims the losses that we have in front of us. >> the economic present value of your liability. >> regular order, mr. chairman. >> the chairman can see the clock. chair now recognizes the gentle lady from new york, ms. velasquez. >> thank you, this could not have come at a better time they just housed the spending bill, which if enacted if enacted will severely under-fund every hot program and jeopardize the how instability of vulnerable

americans. the shortage of affordable rental housing is a huge problem in new york. under the new analysis we released this week brought the severity of the problem home. between 2002 and 2014 rent in new york city rose by 32% citywide. even after the effects of in inflation were removed. my question, mr. secretary, what will happen to working families like in new york city if we do not have public housing? in new york city we have 615,000 people who live in public housing and section 8. these are hard working people. and if we don't provide that type of resources where will they go? and people you know i don't

suffer from multiple personalities. i understand that if we want to tackle the issue of poverty it takes investment. if we want to tackle the homeless veterans it takes work to report. i am proud to report in new york city the number of homeless veterans in new york dropped by 40% last year and declined 75% since 2012. why? because of vouchers. and homeless assistant grants. and because the city is putting also resources. that is what it takes. and so we want to tackle the issue of poverty in our country.