and that is that this campaign is not about me. not about hillary clinton. it's not about jeb bush. it's not about any other candidate. this campaign is about you your kids, and your parents. [ applause ] >> it is about creating a political movement of millions of people who stand up and loudly and proudly proclaim that this nation and our government belong to all of us and not just a handful of billionaires. [ applause ]

>> people throughout our history have fought and died to defend democracy. and democracy means today that we need a political movement of millions of people who come out and vote, who educate and who organize. democracy is not about the last election in which 63% of the american people and 80% of young people did not vote. that's not democracy. democracy is when people from one end of this country to the other stand up and say that there is nothing that a great nation cannot accomplish.

now is not the time for thinking small. we have been thinking small for too many years. we are the wealthiest country in the history of the world. now is the time to think big and to understand all that we can accomplish for all of our people. [ applause ] >> this country today in my view faces more serious problems than at any time since the great depression. and if you add to that the

planetary crisis of climate change, it may well be that today, in our time, we face more challenges than any time in the modern history of this country. and what we are here tonight for is to lay those problems out on the table and to talk about how, in fact, we are going to solve those problems. [ applause ] >> today we live as i mentioned, in the wealthiest nation in the history of the world. but most americans don't feel that and don't know that. and the reason for that is that almost all of the wealth rests

in the hands of a tiny number of people. america now has more income and wealth inequality than any major country on earth and the gap between the very, very rich and everyone else is wider today than at any time since the late 1920s. in my view, the issue of wealth and income inequality is the great moral issue of our time. it is the great economic issue of our time. it is the great political issue of our time. [ applause ] >> and let me be as clear as i

can be. there is something profoundly wrong when the top one tenth of one percent today owns almost as much wealth as the bottom 90%. there is something profoundly wrong. when today 99% of all new income created goes to the top 1%. there is something profoundly wrong. when we have seen a proliferation of millionaires and billionaires at the same time as millions of americans are working longer hours, for low erwageer wages and we have by far the highest rate of childhood poverty of any major country on

earth. there is something profoundly wrong. when one family in america the walton family, owns more wealth than the bottom 130 million americans. this grotesque level of wealth and income inequality is not only immoral it's not only bad economics, it's not only unsustainable, it is not what the united states of america is supposed to be about. [ applause ] >> and you know what?

together we're going to change that. [ applause ] >> now, it ain't going to be easy. billionaire class controls much of the economy. they control much of our political life. they control much of the media. but what we are doing tonight is sending a message to the billionaire class, and that is you can't have it all. [ applause ] >> you cannot get huge tax breaks when children in this country go hungry.

you cannot continue to send our jobs to china when millions of people in this country are desperately looking for work. [ applause ] >> you cannot hide your profits in the cayman islands and other tax havens while there are massive un massive unmet needs on every corner of this country. the unquenchable greed of the billionaire class is destroying this nation and it has got to end. [ applause ]

>> and what we say to these extraordinarily wealthy and powerful people is you cannot take advantage of all of the benefits of america if you refuse to accept your responsibilities as americans. but when we talk about our economy, we're not just talking about the grotesque level of income and wealth inequality. what we are also talking about is the tragic reality that over the last 40 years not six years, not ten years, but over

the last 40 years the great middle class of america, once the envy of the world, has been disappearing. and i want you to appreciate this. because we don't talk about it great often enough. all of you are aware that in recent years we have seen an explosion of technology. and all of you are aware that almost every worker in america is now far more productive than workers were ten or 20 years ago. and yet despite that increase in technology, and the increase in productivity, the fact of the matter is, is that millions of people are working longer hours for lower wages. and median family income today is almost $5,000 less than it

was in 1999. that is the reality. and that's the reality that we have got to put on the table and we have got to discuss that. and we have got to turn that around. i can tell you that in my state of vermont and i doubt that -- that's right -- and i doubt that it is any different in colorado or any place else we have people who are not working one job, they're working two jobs, they're working three jobs trying to cobble together an income and some healthcare. that is not what the american economy should be about.

now, when we talk about the economy, and when you ask people what's on their mind they talk about job and unemployment. let me just tell you this. when you read in the papers once a month that real unemployment with an official unemployment in america is 5.4%, don't believe it. because the way the government determines unemployment rates is kind of complicated. if you throw in the fact that we have millions of people who are working part-time when they want to work fulltime. and when you add to that the millions of people who have given up looking for work, real unemployment today is close to 11%. let me tell you something else which is not discussed at all. one of the fun things about running for president, is you

can talk about the issues that other people don't talk about. [ applause ] >> a report just came out a few weeks ago from the economic policy institute which is an excellent think tank in washington. and what they said should scare every single american. and that is that youth unemployment in this country has reached crisis proportions. if you include those people who have given up looking for work people working part-time, young people working part-time when they want to work full-time. if you're looking at high school graduates from age 17 to 20. the unemployment rate for white and hispanic young people is

over 30%. and for young african-american kids, 17 to 20, that number is 51%. now, maybe, just maybe we should start investing in jobs and education rather than incarceration and in jails. [ applause ] >> when we talk about the economy, we're also not just talking about income and wealth inequality, we're not just talking about unemployment we are talking about wages.

and what we're talking about is that millions and millions of people in vermont in colorado, all across this country are working at totally inadequate wages. al i was in des moines iowa a week ago talking at some people. they were at a farmers market. it was a church related organization. they were collecting food that was not sold at the farmer's market and donating it to an emergency food shelter. what they said is in des moines and i expect it is true all over this country. 90% of the people who went to those emergency food shelves were people who were working and working full-time. one would think that if somebody worked full time you would earn enough to be able to feed your family. [ applause ]

>> and let me state as clearly as i can that the current federal minimum wage of $7.25 an hour is a starvation wage and must be raised to a living wage. city of los angeles a couple weeks ago did exactly the right thing. they raised the minimum wage. they raised the minimum wage over a period of time of a couple of years to $15 an hour. that's what we should be doing nationally.

and when we talk about work and when we talk about wages we have got to end the disgrace of women making $0.78 on the dollar of the men. [ applause ] >> we need pay equity for women workers in this country. equal pay for equal work. now, a couple of weeks ago, i announced a series of proposals that were a lot of fun to talk about. i'll tell you why. as you know, many republicans talk about family values. oh they just love families.

and they just love children. they just can't get enough of families and children. but when they talk about family values, you all know what they're talking about. what they are saying to every woman in this event, you cannot control and have destiny over your own body. what they are saying to women -- and this is quite incredible hard to imagine -- that women cannot buy the contraceptives they want. and what they are saying to our gay brothers and sisters is you cannot get married. well, i have -- and i think you have a very different vision of what family values should be about. [ applause ]

>> let me tell you what i think family values means. it means that the united states must end our international embarrassment of being the only major country on earth the only one, which does not guarantee workers paid medical and family leave. which does not guarantee paid sick time or paid vacation time. now, let me tell you about a family value as deep and as

strong as one can imagine. today in america a working class or low income woman gives birth to a baby. and that mom and that father want the opportunity to get to know their newborn baby. that is pretty natural and that is what a family is all about. but if that working class woman does not have enough money she will have to go back to work in four days, five days, one week time. and that is why we need family and medical leave which says to that mom and that dad, you have one month to spend with your baby paid for. [ applause ]

>> this is not a radical socialistic idea. this is an idea that exists in virtually every major country on earth. let me tell you about another radical idea. are you ready? i don't know about you but i go around the country and i end up eating in a lot of restaurants. i do not want somebody preparing the food who has the flu who is sick. i want to see workers in this country be guaranteed paid sick leave. let me tell you something else that nobody talks about. and that is with the collapse of the american middle class what has happened is that our people, men and women, are being forced

to work incredibly long hours. i hope some of you know that our people in this country the wealthiest country on earth, end up working far more hours than do the people of any major industrialized country. the american people are working 137 hours a year more than the japanese who work very hard. we work 260 more hours than the british. and for the french, we work almost 500 hours a year more than our friends in france. now why do i say that? is that an important issue? it is a very important issue. do you know why it is? because our people are working incredibly long hours. here's a story. i was in a grocery store outside of a grocery store in

burlington, vermont a few years ago. all right. and a woman came up to me. she said bernie i want to mention something to you. my husband and i have one kid. we would like to have more children. but i'm working three jobs, he's working two jobs. and we don't believe that we can be the kind of parents that we want to be. and that story is being told all across our country. people are exhausted. some of you may remember and read in your history books that 100 years ago in the early 1900's workers demonstrated all over this country and they held up banners and signs and posters and they said 100 years ago we are not beasts of burden. we are human beings.

we want leashierisure time. we want to spend time with our kids. we want education. we want the 40 hour work week. brothers and sisters, 100 years have come and gone. we have seen an explosion in technology and a huge increase in worker productivity. we are not today even close to a 40 hour work week. today, 85% of working men and 66% of working women work more than 40 hours a week. in my view, at the very least what we have got to do as a family value is to guarantee those workers at least two weeks a year of paid vacation.

[ applause ] >> imagine that radical idea that workers should have a couple of weeks where parents could spend some quality time with their kids. again, all over the industrialized world, they don't have two weeks in fact they usually have a lot more than that of paid vacation. when pollsters go out and poll the people and ask what are you caring about the most? the answer is almost always a four letter word, jobs. and people understand that because as i mentioned earlier not only is real unemployment close to 11%. youth unemployment off the charts. people are scared to death. if you're 50 55 years of age you're worried about working in

to your job and finding that your job has disappeared and a young person has taken it. if you are young, you are desperately trying to find a career ladder but you can't find your first job. in my view the time is now to recognize that we do have a jobs crisis in america that we need a major federal jobs program. [ applause ] >> several months ago i have introduced in the senate and we will implement from the white house a jobs program which re rebuilds our crumbling road, bridges, waste water plantss.

this is in united states of america, our roads and bridges and water systems and levies and dams should not be crumbling. our rail system should not be behind europe, japan, and china. [ applause ] >> if we invest a trillion dollars in rebuilding that infrastructure we become more productive, efficient safer and we can create 13 million decent paying jobs. here's another issue that we have got to deal with as a nation. it's not a sexy issue, but it is enormously important. and that is to understand that the trade policies that we have had in this country for decades have been a grotesque failure for the american worker. [ applause ]

>> as a member of the house and now as a senator i have voted against nafta against cafhta against train relationde relations with china. the function of these agreement was aamerica to shut down and out source our jobs to other countries. in my view in my view if corporate america wants us to buy their products the time is long overdue for them to start

manufacturing those products here in the united states of america. [ applause ] >> that is why i have helped lead the opposition in the senate to this disastrous transpacific partnership. [ applause ] >> i want to say a word about the tpp. not widely known. and we can go on for a long time. this is what i want to say. it is not just that the tpp and fasttrack would force american workers to compete against people in vietnam who make $0.56 hour minimum wage. it's beyond that. i'll tell you a story which demonstrates what these trade agreements are all about.

involved in an integerate part of this agreement is called an investor state resolution process. okay. what is that about? right. this is what's it's about. i'll tell you what it's about. tiny country of uraguay who was an oncologist. what he tried to do is work on very strong anti-tobacco legislation trying to keep the kids of his country from smoking. i think that's a good thing. okay. given the fact that smoking causes a huge myriad of diseases. i applause people who do that. philip morris on the other hand, disagreed. what philip morris did as a result of trade language which is included in the tpp is went to an international tribunal and

said to the tribunal what uraguay is doing is in violation of our trade agreement because they are harming our future profits. that's right. so philip morris said, look, we can make a lot of money by addicting children to nicotine and killing them over the years and you're taking away our ability to hook kids on cigarettes. and what this trade agreement will see how that resolves itself. it's before a tribunal. australia is in the same boat. that tells you everything you need to know about these trade agreements. the bottom line, very clearly, is what is good for future profits is what trade agreements are about. not the health not our environment, not the well-being of the people. and that is why we've got to defeat soundly this tpp. [ applause ]

>> now, let me be as blunt as i can be. in telling you, if i haven't been blunt already and tell you something i think many of you already know. and that is as a result of the disastrous supreme court decision in the citizens united case make that loud so that supreme court hears you. by a 5-4 decision, the supreme court rendered one of the worst decisions in the history of our country. and what they said to the wealthiest people in this country, they said, okay guys,

you already own much of america. we're now going to give you the opportunity to own the united states government. and people like the koch brothers and sheldon adelson, they said hey that's great. that's great. it's what we've always wanted to do. to own our government. and what citizens united allowed is these people to spend billions of dollars to buy candidates who will make the rich richer and everybody else poorer. and this issue of campaign finance reform is so important it's important because it impacts every other issue of concern. if we have a congress or

governors or state legislators that are owned by the billionaire class, we are not going to address the problems facing working families. i have so far made one promise in this campaign. one clear promise. and that is i will have a litmus test for my nominees to the supreme court. and that litmus test is that anybody i nominate will make it clear to this country that they're going to rehear citizens united and vote to overturn that disastrous decision. [ applause ]

>> i want to see a vibrant american democracy where we're not looking at 63% of the people not voting. we're looking at 90% of the people voting. i want to see a democracy. i want to see a democracy when anybody, regardless of his or her views who wants to run for office can run for office without being beholden to big money interests. [ applause ] >> and that is why after we overturn the constitutional amendment to citizens united we move to public funding of elections.

brothers and sisters american democracy and people did not fight and die for american democracy to allow a situation to arise where the koch brothers alone, second wealthiest family in america extremely right wing family, this family will spend more money on this election cycle than either the democratic party or the republican party. brothers and sisters, if you step back and you look at a situation like that what you are not looking at, you're not looking at a democracy you're looking at annole olgar kk form of

government and we have to stop that. and being at a university i now want to touch at another issue of just enormous consequence. in a highly competitive global economy, which is what we are in, we need the best educated workforce in the world. [ applause ] >> and what that means is that we have got to encourage all of our people not just young people, middle age people older people, to get all the education they can, regardless of the income of their family.

now, think about where we are right now and the absurd situation which currently exists. right now in america in our highly competitive global economy, hundreds of thousands of bright young qualified people who want to go to college or get a higher education are unable to do so not because they lack the ability but because they lack the money. now, that is grossly unfair in terms of just taking away the ladder for those young people to make it into the middle class. but it is even worse than that when we look at our nation as a whole. what kind of insanity is it that we say to these people we don't want you to become scientists or engineers or doctors or nurses?

because you just don't have the money. and that is why i have introduced legislation and will fight for that legislation as president that will make every public college and university in america tuition free. [ applause ] >> let me tell you what that means. it's not only that it's going to make life easier for kids in high school who know that they can go to college it will permeate all levels of education. kids right now -- i'm sure in

denver and burlington, vermont that are in the sixth grade have gotten the message. they're family doesn't have a lot of money. they aren't going to go to college. why should they study hard and do their homework? when we make it clear to every kid in your family where if you work hard in school you will be able to get a higher education, it will transform this nation. [ applause ] >> now, some people may think this is a radical idea. it is not a radical idea. it is the most common sense idea we can think of. right now countries like germany, countries all over scandinavia, even countries like

chile they know their future rests in their young people. we should do the same thing. but when we talk, when we talk about higher education and higher education financing we also have to understand that there are millions of young and middle age and not so middle age people who are today being crushed by horrendous student debt. a young man i know, not so young anymore, graduated law school deeply in debt. today he is still paying that debt off at 9% interest rates. now, what sense does it make

that you can go out and refinance your home today at 2% 3%, you can buy a new car at 0% 1% but because you committed the crime of wanting to get an education, you're stuck for the rest of your lives at 8% 9%? [ applause ] >> part of that legislation will allow people who have student debt to refinance their student debt at lower interest rates. and it will also do is end the absurdity of the federal government making billions in profits off of the interest rates paid by low income and working class families. [ applause ]

>> and when we do that, we can substantially cut by more than half interest rates of people who have debt today. now, my critics have said well, you know bernie it's an expensive proposition that you're proposing. they're right. this legislation would cost about $70 billion a year. that's a lot of money. do you know how we are going to pay for it? we're going to pay for it by a tax on wall street speculation. as a result of the fraud, the recklessness of wall street, this country was plunged into the worst economic recession since the great depression.

millions of people lost their jobs they lost their life's savings, and they lost their homes. the time right now is not only to pass a speculation tax on wall street, the time right now is to break up the major financial institutions in this country. [ applause ] >> if a bank is too big to fail, that bank is too big to exist. i suppose that means i won't get much money for my campaign from

wall street. but we will survive without their money. let me touch now on an issue which i think addresses our responsibilities as human beings, as parents, and i've got four kids and seven beautiful grandchildren. that is that we have the moral responsibility to make sure that the planet that we leave to our kids and grandchildren is habitable. [ applause ] >> the debate is over. maybe with the exception of fox television, but other than that

other than than that, the scientists have almost unanimously told us that a climate change is real, b, it is caused by human activity and the emissions of carbon, c, it is already causing devastating problems here in our country and around the world. this is what they have also told us. they have said that while the problems are very serious right now, they will only get much, much worse if we don't seize a short window of opportunity to transform our energy system away from fossil fuel and into energy efficiency and sustainable energy. [ applause ]

>> and what the scientific community tells us -- and this is really speaks to our responsibilities as custodians of this planet. what they say is if we continue business as usual, if we do not transform our energy system that by the end of this century the planet earth will be between five and ten degrees fahrenheit warmer. what that will mean is more and more drought, more flooding, more extreme weather disturbances more acidification of the ocean. more rising sea levels. it will also be a huge national security issue for the entire world. because when people do not have land to grow food on if they do not have water for agriculture

to drink. there will be more and war. the point is, and the pope pope francis made this point just beautifully. and what a hero. what a hero for this entire planet pope francis has been that we have one of the important religious leaders on earth speaking out in a way that nobody in congress would ever speak out about what money and inequality is doing to people all over the world. and now speaking out on climate change, god bless pope francis. [ applause ] >> when i was in college way

back when, a few years ago, the issue that motivated young people all across this country was civil rights. and at that point we had folks giving up their lives fighting in the south to desegregate the south. to fight for voting rights for african-americans. and some of those heroes got killed trying to do what they did. in my view today, one of the great issues facing our younger generation is to stand up and demand that america leads the world in transforming our energy system. [ applause ] >> and when we do that by the way, when we weatherize our homes that are leaking energy,

when we have a transportation system that is energy efficient. when we have a strong rail system, when we move efficient, when we have a strong rail system, when we move aggressively to solar, wind, geothermal, we create millions of jobs as well. [ applause ] let me say a word about another issue that we have got to finally deal with. the united states shamefully is the only major nation on earth that does not guarantee health care to all of our people as a right.

my state of vermont borders on canada. all people have health care in canada as a right. germany, scandinavia, austria, every european country has health care for all of their people as a right. today in america, despitegains of the affordable care act, we have 43 million people without health insurance, we have even more who are underinsured with large deductibles and co-payments. what we have got to do, in my view, is pass a medicare for all single payer program. [ cheers and applause ]

it makes no sense, 35 million people uninsured, more underinsured. our health care outcomes are not particularly good. we have a higher infant mortality rate than in other countries. we have a lower life expectancy than many other countries. and yet we end up paying almost twice as much per capita for health care. and that is why we got to get the private insurance companies out of health care. [ applause ] i am the ranking member which means leader of the opposition in the senate on the budget committee. and i want to say a word about

the republican budget that passed last month. i'm going to tell you this because the media forgot to talk about it. it's important that we talk about it for the following reason. i am perhaps the most progressive member of the united states senate. [ applause ] and so, you know, it shouldn't be surprising that i have disagreements with all republicans on almost every issue. not surprising. but this is what the republican budget did. and the reason i raise that to you, is i don't mind, as the most progressive member of the senate being opposed by the billionaire class, and all of their friends. i accept their hatred with joy.

[ applause ] because if they hate me and what i stand for, then i know i'm doing something right. but this is what i do not accept with joy and that is too many working class, middle class people continue to vote against their own best interests. now, i want to say to the republicans in colorado i want them to tell me whether they think this budget of the republicans makes sense, and here it is. 35 million people without any health insurance what the

republican budget did is throw an additional 27 million people off of health insurance. and when i ask, as i do, my republican colleagues, when you throw 27 million people off of health insurance how many of them will die? how many of them will become much sicker than they would have been if they had insurance? there is no response. so i say to my republican friends here, working people in colorado, you tell me if it is a good idea that millions of men, women, and children are thrown off of health insurance. we talked about tonight, the fact that working class middle class families are finding it harder and harder to pay for a college education for their

kids. what the republican budget did over a ten-year period was cut pell grants by $90 billion. and i say to republicans here in colorado and across this country, families that are struggling to send their kids to college, whether they think it makes sense to make massive cuts in the most important federal aid program for college students. the republican party in their budget at a time when millions of families are struggling to feed their kids, made massive cuts in nutrition programs. do my republican friends here in colorado think that kids should

go hungry in america? i don't think they do. i really don't think that they do. and furthermore, we've had a number of republican candidates for president who want to cut social security. cut medicare. so what our job is, to get the word out to our republican friends to stop voting for billionaire class. start voting for themselves. [ applause ] all of us are aware that in this country, we have made progress in a number of areas in terms of becoming less discriminatory. in terms of civil rights, in terms of women's rights in terms of gay rights.

but all of us know that a lot more must be done. it is not acceptable, it is not acceptable that young african-americans are walking down a street in a city in america and are being brutalized by police. that has got to end. [ applause ] i was a mayor for eight years and we worked very closely with the police department. police officers have an enormously difficult job and most of them do their job honestly and as well as they can. that's right. it's a very tough job. but when a police officer or any other public official commits a

crime, that crime must be punished. [ applause ] you have all been very patient as i have rambled on. so let me conclude, let me conclude by saying this. i'm going back to when i started. i want you to think big not small. i want you to understand that it is not utopian thinking to say that every man, woman, and child in this country should have health care. it is not utopian thinking to say that working families should have quality affordable childcare. it is not utopian thinking to say that college education should be available to all. [ applause ] we can do these things and more.

we can create the greatest nation that anyone has ever seen. if we stand together. if we do not let people divide us by race. by whether we were born in america or born in mexico. whether we're gay or whether we're straight. [ applause ] so i look forward to working with you all in creating the political revolution that this country needs. thank you all very much. [ cheers and applause ]

here's what's happening tonight on c-span 3. up next a house hearing on the effect of the health care law on insurance premiums. then a look at a story in atlantic magazine on a group called the council of conservative citizens. british prime minister david cameron takes questions from members of the house of commons. and a debate in the south carolina senate on whether to consider removing the confederate flag from the south carolina state house. local newspapers like we see here in the minnesota post are anticipating the supreme court decision on the health care law. in king v. burwell the court will decide whether language in the affordable care act prohibits the federal government from providing insurance subsidies to consumers in states that use the federally run healthcare.gov exchange instead of state created exchanges. 13 states, including minnesota,

have set up their own exchanges while consumers in 34 states which are mostly republican run and concentrated in the south and midwest, rely on the federal marketplace. on the c-span networks we plan live coverage when that ruling comes down, which could happen on any of the next three workdays, tomorrow, friday or monday. up next, a hearing on the impact of the health care law on insurance premiums held by the house ways and means committee. witnesses include legal scholars and state insurance commissioners from tennessee, maryland and washington state. this is two hours. the committee will come to order. before we begin, i'd like to make -- just take a point of

personal privilege and acknowledge the ranking member mr. lewis. you know, it's often said that people look at the united states congress today and they can be pretty discouraged and pretty overwhelmed by what happens up here. and i began to reflect on that a little bit, and i have been for the past several months sitting next to a man who brings everything that's good about this process to the forefront. that is john lewis. and when i took over the gavel of this subcommittee, i knew he was the ranking member and i knew he had an autobiography and i read it. and i was fastcinated by it. and the part that fascinated me oftentimes i put myself into the place of someone that i'm reading about in terms of time and place and i began to think, i read about what john lewis did in the summer of 1961. that is, he took on an incredible physical and moral

challenge to be one of the original freedom riders, that was to integrate the interstate bus system and all of those things around it and i was thinking, well, what was i doing in the summer of 1961? summer of 1961, i was comfortably in my mother's womb, to be born later on in september of that year. and as i've thought about it i had planned to do this before the events of charleston and now the events of charleston have come upon us and as i've thought about it, i've thought, what a privilege to sit with somebody who worked so hard to improve the world for all of us. because we are all better off every one of us regardless. our racial background we are all better off today because of the work and the netenacity and

the moral clarity, in light of physical trauma that john lewis as a very young man was willing to endure. so i bought a copy -- we have a copy for every member, "walking with the wind: a memoir of the movement movement" by john lewis. i would even go so far as to say that i bet you if you give him eye contact and corner him, he'll even sign the book for you. and i really commend it to you because it's a work that is an inspiration. it's a work that i think can guide us all. and it's an invitation basically to come with a sense of clarity to say look, we can take on these things. if john lewis was able to be a part of taking on a very broken and dangerous system that was legal segregation in the united states and was able to persevere through that then surely we can take on and deal with a number

of the challenges that are here before us. and so i am so deeply appreciative of his leadership and his clarity. and i am very anxious for my colleagues to read this. now, since you don't get a copy of your own book, i've got a gift for you. and that is this. my wife elizabeth is an oil painter. and she has painted a series of paintings, and this has not yet been published or put out anywhere. one of the paintings that she has done is called "dreams of freedom." and "dreams of freedom" is a portrayal of martin luther king king's speech in 1963 and i know mr. lewis was there. i know he was inextricably linked to that time that was so pivotal in our history, the

march of '63 and so i present this print to you of elizabeth roskam's oil painting "dreams of freedom" for you and i hope that you'll accept it with the spirit with which it's presented to you today, mr. lewis. [ applause ] >> mr. chairman, i thank you so much for those kind words. thank you for making "walking with the wind" available to our colleagues. i thank you and your wife for this lovely, beautiful painting.

portraying dr. martin luther king jr. standing at the lincoln memorial delivering that speech. i was there. i was 23 years old. had all of my hair and a few pounds lighter. i spoke number six and dr. king spoke number ten. and out of the ten people that spoke that day, i'm the only one still around. thank you for your friendship. thank you for being you. and i will cherish this. having an executive session with myself, whether i put it in my office or take it to my house. just thank you so much. >> thank you. i should show the audience the print. how's that? >> it's beautiful. >> there you go. >> well, let's get down to business, shall we?

today's hearing we're going to focus in on this discussion about big premium hikes that insurance companies are currently proposing for 2016 under the affordable care act. for five years, the administration has insisted that the law would reduce health care costs. the president said that we can cut the average family's premium by $2,500 a year and yet the nonpartisan fact checker politofact called that a broken promise. president obama pledged that insurance premiums would go down, and yet "the washington post" fact checker rated that as three pinocchios. we're five years in, the health insurance costs under obamacare aren't going down they're going up. under the house rules, the subcommittee's job is to evaluate the application execution and effectiveness of federal laws, and today we're going to do that. for the first time since the aca became law, insurers are able to

look at a full year's worth of data claims to calculate premium prices for the year ahead. that's an important distinction. so we've got real data to talk about. the proposed premium hikes tell us a lot about how much health care costs last year and what insurers calculate health care costs are going to be next year. and on june 1st cms made public proposed premium hikes of 10% or more for the 2016 plan year, and many of the proposed increases are eye-popingly huge. in maryland care first blue choice which covers approximately 80% of the individual market has asked for an increase of nearly 30%. in missouri, coventry health has requested an increase of over 22%. in north carolina blue cross blue shield has asked for an increase of over 25%. in tennessee, blue cross blue shield has asked for over 36%. in south dakota, one of the

largest insurers wellmark, has asked for premium hikes between 24% and 51%. it's noteworthy that in many states, the largest insurers are also the ones proposing the biggest increases which is especially troubling if you think about it because they've got the most data and are likely the most accurate. we could go on, but there are a number of these prices that have real consequences in the lives of real people. in other words, this isn't just about insurance commissioners and scholars. this is about what people are actually paying, and they're paying this in the context of a false narrative. and the false narrative, in my opinion, was this is going to be great, your costs are going to come down, and you're going to love it. so here's a question. how many of representative noem's constituents have gotten a 50% wage increase? i would venture very, very few, in order to pay for those. now, to be fair, these are just proposals. nothing's been finalized yet.

in 36 states, state insurance authorities must approve the increases and often after negotiating with the insurers. but there's a reason that the insurers are asking for such big rate hikes. the affordable care act isn't working to lower costs. it's actually driving them up in many circumstances. president obama said that under the aca more people would have health insurance so that the cost of costly emergency care would diminish but in order to keep costs down, these plans have relied on narrower provider networks meaning fewer doctors and limited availability. also, much of the new law's health insurance coverage came in the form of expanding medicaid. since many individuals can't get in to see their doctors and many doctors aren't taking medicaid patients, the net result is that the aca is ironically driving the number of emergency room visits up. just the opposite of what the president said and hoped would be achieved.

are these effects of the aca just growing pains? i don't think so. the law created a number of temporary programs to bail out billions in taxpayer funds during the first few years to lower the cost seen by individuals and to protect big insurance carriers against financial losses. but those programs are beginning to phase out. and as the government is slowly taking off the training wheels the affordable care act is looking pretty wobbly. even with the billions and billions of taxpayer dollars spent to reduce the sticker price of insurance for individuals, to lower their out of pocket cost to pump up big insurance companies to establish and operate the insurance marketplaces and more, all hidden and shifted cost paid by the taxpayer, even with all that, health care costs and health care insurance premiums are still going up. on its website the department of health and human services said this -- a new wave of powerful evidence points to one clear conclusion. the affordable care act is

working to make health care more affordable accessible and of higher quality for families, seniors, businesses, and taxpayers alike. but look at the facts. premiums are going up. emergency room use is rising. co-ops are failing. and there's certainly a new wave of evidence, i would argue. and that's one that's pointing in a different direction and that is that the affordable care act or obamacare is not working as promised. we're going to have a robust discussion in a couple of minutes. we will introduce our witnesses. but now i would like to recognize mr. lewis for his opening statement. >> good morning. mr. chairman, i want to thank you for holding today's hearing on the affordable care act. i would also like to thank our witnesses for being here. we are always pleased to discuss our landmark health law. i will begin by saying what i've said at countless other hearings. the law works.

the aca is the law of the land. it was the right thing to do. it was the just thing to do. it was long overdue. i believe in my core that health care is a basic human right. it should not be reserved for the select few, for the rich, or for the wealthy. each and every one of us must do all we can to make this country better for the least among us, and for generations yet unborn. we have a duty to speak up and speak out on behalf of people who have no one to stand up for them. the affordable care act responded to the desperation of countless americans who had a need a right to health care.

the law provides real benefits to american families. today, over 16 million people who did not have coverage now do. more than 100 million people with an existing health condition can no longer be denied coverage. millions of young people can now stay on their parents' insurance plan until age 26. over nine million hard working americans have received tax credits to make health insurance affordable. just as congress intended. during today's hearing, i would like to learn more about how premiums are being set for next year. many have heard or read stories in the press. but these stories may overlook future rate cuts and instead focus on proposals that still must be reviewed under the law.

although these rates are not yet final, i look forward to hearing more from my witnesses about what they think the final rates will be. again, mr. chairman, i would like to thank you for holding today's hearing. thank you very much. and i yield back. >> thank you, mr. lewis. we'll hear from our four witnesses, two of whom i'll introduce, and two of whom will be introduced by members of the panel. our first witness is al redmer jr., the commissioner of maryland's insurance administration. he'll testify about the cost of health plans within the state of maryland and the experiences with maryland's state-based exchange. then we also have seth chandler an insurance professor at the university of houston who will testify about contributing factors regarding the premium spike. and i'd like to recognize mrs. black to make an introduction.

>> thank you, mr. chairman. i want to thank you for allowing me to be here with you on committee as a non-committee member. and i'm very proud today to introduce the commissioner of my state, julie mcpeak, the tennessee department commissioner of commerce and insurance. she serves in this role under our current governor and she's been doing so since 2011 and she brings 15 years of experience with her in the legal and administrative experience in state government. i'm also extremely proud to tell you she has been a commissioner of commerce and insurance in two different states before coming to the state of tennessee. she was the commissioner there in kentucky and she is the first woman in the country who has had this title of being able to serve in two different states in this position. i really appreciate her dedication to our state. she's done a great job. she's committed to the state and we have the most robust, competitive insurance market possible under the current law.

i look forward to having her testimony today as she talks about the impact of the aca, in particular on my state's insurance marketplace, specifically on the premiums and also the laws and impact of enrollees. so it's my pleasure to have her here with us today. >> thank you. dr. mcdermott? >> thank you mr. chairman. it's my pleasure to introduce my colleague, mike kreidler. mike, before he got involved in politics was an optometrist. he could see clearly. he worked for 20 years for a group health cooperative in washington state so he understands manage care and has been very deeply involved in that on a personal and professional level. i got to know mike when i was in the state legislature. he was there in the '70s onward, and then came for a very short stay in the united states congress. he was here two years, and fate and the tides of war took him

home again. but he kept up his public service by becoming the insurance commissioner in the state of washington and has been such, i've forgotten how many years it is, but it's got to be 15 by now, isn't it? and he's a very knowledgeable man, and i commend him to the committee. he knows about both on the doing side as well as the public policy side. >> thank you. for our witnesses, your win statements are part of the record, and you've got five minutes, so mr. chandler, we would welcome the opportunity to hear from you. with the mic on. and then you get the joke on this. green, yellow, red, there's a light that will be fairly intuitive. if i have to explain that to you, it's hopeless. >> thank you very much. my name is seth chandler. i'm a law professor at the university of houston with specialization in insurance law and health care law.

i do a lot of work using mathematics to enhance legal analysis. and i'm here today to testify on some of the anticipated premium increases and their sources on the exchanges for 2016 with an emphasis on two of the famous three rs. point one, we need to be careful in looking at premium increases. there were many occasions on which the net premium increase actually seen by an insured, which i think is the most important thing will be considerably higher than the gross premium increase, a fact likely to diminish individual choice and induce policyholders to purchase lower cost silver hmo policies. second. the phaseout of transitional reinsurance and the alteration of risk corridors is unlikely in most cases to play a large role for any particularly large premium increases for 2016.

third, the major source of increases is likely to be higher than expected claims from insureds particularly in the more generous platinum and gold and ppo plans. now, for some details. net premiums. the amount paid after lawful subsidies are taken into account. not the published gross premiums are what matters to most people. and as i show in my technical appendix it is a matter of indisputable mathematics that net premium increases under the aca are not, not, not the same as gross premium increases. this fact can convert a 10% gross premium increase into a 15% net premium increase. it can convert a 10% gross premium increase into a 12% net premium increase in a way that may impel the purchaser to experience a 50% increase in

out-of-pocket costs. people on both sides of the aisle take note. the poor bear the brunt of this math. the more heavily subsidized you are, the higher the percentage price increase if you want continuity of insurers or continuity of care. based on the actuarial value continuance tables created by cms, for its regulation of the affordable care act, i have computed the reduction in net claims expenses created by the transitional reinsurance programs for 2014 2015, and 2016. the trp as retro actively modified, reduced claims expenses by 14% to 16% in 2014 depending on the mettle level. insurers large and small just received a 3% cash-back level.

for 2015, the trp should reduce insurers' net claims expenses by 3% to 4%. and for 2016, the figures are almost the same. and since the value of the subsidies has not declined substantially between 2015 and 2016, it is difficult to attribute a substantial part of the premium increases for 2016 to the phaseout. now, another source of premium increases for 2016 sometimes mentioned is the modification of the risk corridor's program. i did some research and it looks like that is unlikely again to be a source of a significant change in premiums. yes, it is true that insurers may only receive 37% or so of what they had hoped to receive on cromnibus, be many insurers

actually hope that they will make a profit under the affordable care act. therefore, the big picture is it's unlikely when we are looking at particularly large increases, the source of those increases is the phase-out of the transitional reinsurance program or the alteration of risk corridors. instead, let's look at what's going on here. standard and poors has suggested that most insurers lost money in 2014, and so it's natural to see them requesting a rate increase. but don't trust the insurers. look at the obama administration's actuarial value calculator, which it is using to regulation insurers to determine if they're providing value. if you look at that, it shows that the gross claims of insurers is going to go up by 13% to 14% in 2016 relative to 2017. let me just conclude by saying that the aca focused mostly on

insurance markets. and in the absence of better medical cost control, when should everything else hold equal, expect the federal bills for subsidies to increase. moreover, it's likely to cause an escalation of premiums, particularly for the more generous ppo plans and gold and platinum plans. and if so, we will see a diminishing choice of physicians, less continuity of care and increased cost sharing for many individuals. obviously i'm speaking here before king v. burwell is decided, a decision adverse to the obama administration would not change the concepts i'm laying out but it would change the numbers. in fact, one of the most interesting things is to think about what happens to the transitional reinsurance program if we have gridlock both at the federal level and the states. but if king v. burwell is decided adversely to the obama administration, you folks have a lot more issues to discuss. thank you very much. >> mr. kreidler.

>> thank you, mr. chairman for the privilege to be here. ranking member lewis members of the committee. my name is mike kreidler. i'm the insurance commissioner for the state of washington elected to that position. i'm the longest serving insurance commissioner in the country. and as mr. mcdermott pointed out, i'm also a former member of congress, too. as a provider assen elected policymaker, and also as a health administrator i've enjoyed working on the issues around health care reform. and i could be no closer to it than to be insurance commissioner at a time like this. as insurance commissioner for the last 14 years, i've heard many personal stories from individuals. one individual for the aca a woman from kent, washington called my office to complain

about a situation where she wanted to have a child so she wanted to do the responsible thing, she got health insurance. unfortunately, when she was expecting to deliver normally and scheduled to at the end of july, had to have an emergency c-section. because it was in the nine months -- this is pre-aca, within the nine months, it was not covered. she complained to our office. we intervened with the health insurer. got some reduction in the bill that she had voluntarily by the health insurer, but she wound up with a very large medical bill and that was through no fault of her own. what we saw before the aca was that we had almost a million people in the state of washington without health insurance. that was 14% of the state's population. we had 11 insurers in the market, which was better than most states, and pretty good, but consumers still wanted more choices. we carefully reviewed the rates that came before us but we still frequently looked at

double-digit rate increases that we had to approve pre-aca. many of the health plans also did not cover maternity or prescription drugs. the system was not sustainable. the costs were continuing to rise precipitously, and we saw the uninsured rate continue to rise. now, let's fast forward to today. the health care reform is working in the state of washington. we have an uninsured rate from coming down some 40%, down to 8.5% since the affordable care went into effect, and we looked at the numbers going back and that's the lowest numbers we can have with tracking that goes back to 1987 numbers that we're looking at. the lowest that we've seen. premiums are not soaring. the lowest rate request we've seen in decades. in fact, if you look at the plans inside the exchange now, if you paid the full cost with no subsidies, the average rate

is $384 a month. if you receive a subsidy it's $174. this year, insurers are requesting 5.4% and 3% of that is actually going to the exchange to fund the exchange. 3% of the 5.4. we had 11 insurers in the market. that's pretty good. we now have 17 insurers and 240 plans for 2016. consumers have more choices. the market is thriving. there are several things that we wound up doing that i think made a big difference. the state of washington expanded the medicaid program. we have 530,000 people through washington apple health, and the other big decision action that i took was that when the president offered to say if you keep your canceled policies i said no we need to keep one pool so you

didn't wind up with a good pool and a bad pool when it came to risk. and as a result of that it helped to stabilize the market. so we don't have the problems with legacy plans for grandfathered plans that many other states have. and second was to create standards for narrow networks. we do have standards in the state of washington with network adequacy standards that we put into effect for 2015. in fact, we're the only state that wound up doing that. it's a level playing field. insurers know what to expect. and that's one reason why we're looking at a market where we've seen a significant increase in the number of insurers going from 11 insurers to now 17. that's a 50% increase in the number of insurers after the affordable care act. the increases are some of the lowest in memory. 50% or more of the insurers more insurers are in the market, and the uninsured run numbers in the state of washington continue

to plummet. the affordable care act in washington is working. i believe it's working for the country, too. thank you, mr. chairman. >> thank you. ms. mcpeak? >> thank you. good morning, chairman roskam ranking member lewis and members of the subcommittee. thank you for inviting me to testify before the subcommittee on the impact that the affordable care act has had on health insurance premiums, and thank you congressman black for your kind introduction. i've spent most of my career in insurance regulation and i have a strong affinity for the country's state-based system of insurance oversight. tennessee has a federally facilitated marketplace. and fmm for brevity. the aca legislation was intended to have significant impact, and in that respect, it has definitely achieved its intent. the aca introduced rating and swrurnd writing requirements that fundamentally reshaped how insurance is priced purchased and administered.

they make a comparison of pre-aca policies to aca compliant policies, a significant challenge. aca requirements that are cost drivers are well-documented and include prohibitions on preexisting condition exclusions guaranteed availability and issue requirements, and new essential health benefit benchmark plans that create a floor for aca compliant plan benefits. the aca significantly impacted an insurer's flexibility to design plans to meet consumer demand. in a post-aca world plans across carriers are much more similar than they are different, and carriers compete primarily on name recognition, physician networks, and premium price. the impact of the aca on tennessee's consumers, its marketplace and rates has created significant challenges and uncertainty across the state's insurance landscape. tennessee has been fortunate enough to experience consistency among the carriers offering policies to our residents. in the first year of the ffm 2014, tennessee had four carriers total writing policies

but only one offering policies in all 95 counties. we have received filings for 2016 that show five carriers writing policies, but still only two carriers offering policies statewide. outside the fmm, the aca and its regulations have had the effect. the grandmothered plans, which were known as transitional plan remain a large block of business across our state. this often creates confusion for consumers, who know they have a policy with a certain consumer. tennessee had competitive marketplace before the aca and that marketplace remains competitive today. market competition in part gave tennessee some of the lowest priced ffm products in the country. in 2014 and 2015 tennessee plans have ranked in the top five least expensive plans when ranked based on their premium price of the second-lowest cost silver plan on the ffm.

having a competitive market however, does not isolate tennesseeans from seeing significant rate increases. carriers offering plans on the fmm requested rate increases for planned years 2015 and 2016, ranging from .4 of a percent to 36%, with the carriers comprising over 80% of the market requesting increases of 32.6% and 36.3% respectively. tdci is reviewing the proposed 2016 rate insincreases. these substantial rate increases can largely be attributed to medical trends and utilization. in fact, our largest ffm carrier reported for calendar year 2014 a medical loss ratio of well over 100%. to put that into perspective, for every $1 in premium received, the company paid out over $1 in claims operating at a net loss, not including the administrative cost of the company. the aca's strict underwriting and business requirements have

left carriers with few options to maintain a reduced cost. one option that tennessee has experienced is the use of limited provider networks. the aca also established the consumer operated and oriented plan, the co-op program, to help create new market competition. tennessee is one of 26 states to have an operating co-op. community health alliance mutual insurance company was awarded over $73 million in low-interest loans to establish itself in tennessee. these first two years of operation have been challenging for cha as the company tried to assert itself in the marketplace while also maintaining financial capacity. in 2014, cha had rates that were on the high side of the market and as a result the company failed to achieve a significant amount of volume. cha revised rates for 2015 and was very competitive with the market. in fact, cha grew too big, too quickly and approached the department with a proposal to freeze enrollment under u.s. department of health and human services guidelines. we agreed to the proposed freeze and work with hhs to cease

enrollment, thereby effectively taking cha off the marketplace. the decision to freeze enrollment remains the right decision for the company and most importantly for tennessee insurance consumers, but the process has not been as efficient as we had hoped. for 2016 cha has requested an average rate increase of over 32%. we continue to review the rate request as well as the company's frozen status for marketplace purposes. the aca and its implementation has challenged state regulators and carriers by creating and continuing consistent uncertainty. uncertainty in the business of risk nearly always drives up kate gosselin or lessens competition. in the case of the aca i think it has done both from. the early days of the aca until exchanges were rolled out in 2014, governors, insurance regular lay tors and carriers looked for guidance from the federal government on exchange structures and rules.tors and carriers looked for guidance from the federal government on exchange structures and rules. i personally was told by two

national carriers that this uncertainty contributed to their decision making processes for the ffm and their decisions not to participate. my written testimony provides more recent example of hhs guidance, introducing uncertainty into the market, released after the carriers had submitted their rating proposals for 2016. implementation of the aca has been a challenge. we continue to review policy forums and rates for next year, but anticipate that tennessee consumers will again see increased insurance costs in 2016. thank you for the opportunity to be here. i look forward to answering your questions. >> thank you. mr. redmer. >> thank you, mr. chairman members of the committee. i appreciate the opportunity to testify on proposed individual and small group rate increases in maryland, and i especially appreciate being here on the day that you chose to give tribute to congressman lewis. as some added perspective, i've been in the health insurance business my entire adult life, includeing time as a producer, time in the maryland

legislature, and time as a ceo of a regional health insurance carrier. maryland carriers were required to provide their proposed rate increases on may 1st. we are currently going through our actuarial review of those proposed rate increases and will make a final determination by the end of july. maryland does have a state-based exchange in the individual marketplace. we are seeing a low where we see a reduction of .3% by one carrier. we see an increase on the high side of a little over 30% by care first which is our blue cross and blue shield carrier, which has a significant majority of the market share. it's in part because they lost significant money last year. in part, i believe due to the

adverse selection of small employers disbanding their small group plans and those employees migrating into the individual marketplace. as a reference point, evergreen, which is our co-op, they are seeking a price increase of just under 10%. in the small group market we see a low of, again, care first our blues plan, asking for a reduction of a little over 16%. evergreen, the co-op plan, is asking for an increase of almost 15%. which is on the high side. in the small group marketplace. for the proposed increases what we're seeing as the cost drivers is an increase in the average morbidity, as high as 15%. increased medical trend. we're seeing a low of 3.5. the highest projection is seven,

with projected profit margins in the 1% to 2% space. in 2016, we will see another year of uncertainty in the marketplace. one of the unforeseen factors we just don't know what the answer is, is going to be the effect of the small group market from 50 to 100. as a matter of fact, maryland increased the minimum allowable threshold for a stop-loss, minimum attachment point went from 10 to 225 in an effort to minimize adverse selection by going into self-funded plans. in the individual market, the uncertainty in part is beginning to be the increase in the penalty. whether that's going to drive any of these younger folks into the insured marketplace or if it's just going to be the folks that have been sick in the last

year or two migrating to the guaranteed issue marketplace. also i want to bring to your attention one of the unintended consequences of the affordable care act. we have no regulatory control over it, but if you go back to january of 2014, we had thousands and thousands of small groups that wanted to delay the effects of the affordable care act, so they chose to early renew instead of renewing in january, february or march of 2014, they got in under the wire and they renewed in november or december of 2013. the effect of that at least in maryland is we have a disproportionate amount of the marketplace, both small group plans and the individual marketplace renewing at the same time, and it is an operational nightmare for both the carriers and the producers to handle that

amount of work at the same time. also, finally maryland's a little unique. there hasn't been an access issue in over 20 years. everybody in maryland, before the affordable care act, had access, whether it was medicaid for the poor or medicare for the seniors. we had underwritten individual plans. we had guaranteed issue guaranteed renewability, in the small group market for those that couldn't get an individual underwritten plan, we had a state subsidized individual high risk pool. so access was not an issue before the aca, and with that, i'll be happy to answer any questions. >> thank you all. we'll start our inquiry. mr. kelly of pennsylvania. >> thank you, chairman. and i think all of you were here today -- i really appreciate you being here. i want to make sure we get off on the right foot. this has nothing to do with us not having a heart and not wanting to help people who need health insurance.

i want to make sure we understand that. and one of the things that i think is really critical and professor i really appreciate your input, i'm an automobile dealer. we just went through the new package for our people. it's up over 30%. and we really keep it at that little bit over 30% was by working with the deductible a little bit. i've got to tell you, become home where i'm from if sustainable means capable of being sustained -- i looked it you were. because i wanted to make sure we understand. sustainable is a method of harvesting or using a resource so that resource is not depleted or permanently damaged. and so when we talk about these programs, as a private business person, your model has to be sustainable or you're on a fool's errand, you won't be able to stay in business. so as i listened to your testimony, i'm really interested, i've got to tell you a little bit of what happened to me back home. i go to this little restaurant, been there for a long time. cindy is the girl that always waits on me.

a year ago, she said, is there something you can do about health insurance? i said, what's the problem? she goes well my husband's firm used to include me. now they're not. i'm shopping right now. my monthly cost is beginning to be 700 to $800 and my deductible is $10,000 so i can get insurance, but for all intents and purposes, i'm not insured. so having an insurance policy and actually being insured against out of pocket or what it's actually going to be for you, there's two different worlds out there. and that's why i appreciate you all being out here, because i hear in some cases, it's down. in pennsylvania, it is not down. it is going up. but rather than talk in government terms that are too lofty and often leave people confused and say i don't get it i'll just walk away because i know the government at some point, they'll take care of it all. professor chandler, from a business standpoint, the model that we're on right now in the affordable care act, first of all, it's not affordable in a lot of ways. talking about people who actually have to buy it and pay for it.

and then there's others that have to help invest. so somebody has an out-of-pocket cost. nothing is for nothing. your testimony i thought was fascinating, because i think you talked in real world terms about what this means to people. ms. mcpeak, you're the same way. mr. redmer the same way. we're talking about everyday guys and gals that get up in the morning, throw their feet out over the bed go to work, put a roof over the head of their kids prepare for the future and try to make sure that they're healthy. every one of you talked in your testimony about a trajectory that is unsustainable. am i missing something there or not? >> in my opinion, representative, it is very unrealistic to think that this country can afford a situation in which 17% of our gdp goes to health care and that that starts to keep going up and keep going up, it's estimated to go to 23%. okay? think about -- yes health care

is important. but we can't run businesses, we can't run a society well in which that large a proportion of our gdp is being diverted into health care. >> see, our state's getting killed with this. ms. mcpeak, mr. redmer if you could. >> thank you for your question. it's an interesting concept of sustainability. you know certainly what concerns me are the large cost increases for premiums that have been requested in tennessee. and i will tell you, we as regulators test every one of the assumptions that is increases in that rate request, and in fact the loss experience is there. so when you're considering a rate increase in the 30% range and you know that that's going to affect people in your state you really want to see if there's any margin to assess whether or not there's anything you can do to make that less uncomfortable for the residents of our state. the problem is, under our state authority, we have to look at

the rates, whether they're unfair, di discriminatory or actually insufficient. in some instances with the experience that we have seen that have been filed in with the rate request, even the 30% increases may still be deemed insufficient and we may need to order increases above those rates in order to protect the financial stability of the company. in that regard, i don't think those rate increases are sustainable, because those insurers need to stay in business to make good on their promises that they've sold to every resident of our state. >> i think you're all here for the same reason. i think we all have the same purpose. the worst thing in your life is to make a promise that you can't keep. i think that somehow, we went so far down the road in this being affordable and accessible, that we really missed the part about it being accessible and truly being affordable. my worry is the insustainability of the model we have out there right now. it just doesn't work. the president's right. do the arithmetic it doesn't bode well in the future. thank you for your testimony. >> mr. lewis. >> thank you very much, mr. chairman. again, let me thank each of the

witnesses for being here today. you're a good-looking group. beautiful, handsome. mr. commissioner, welcome back my dear friend and colleague. thank you for being here. i want to learn more about how people gaining medical coverage help state insurance market. >> say that again? >> i want to learn more about how people gaining medicaid coverage help state insurance markets. >> thank you, mr. lewis, and the complimentary words that were directed to you were totally insufficient to recognizing your broad achievements, so it's a pleasure to be here to have an opportunity to take this question. the failure to expand the medicaid program in my opinion has had very negative impacts on those states that did not from the standpoint of their exchange

market, whether -- and most of those are going to be federally facilitated exchanges. by virtue of not expanding you wound up with people who would have been eligible for medicaid either because of virtue of not expanding, they get them into the insured market, into the exchange and as a result you see much higher claims experience, morbidity numbers from the standpoint of the exchange. it is positive to have done a medicaid expansion from a standpoint of helping to hold down the rate increases you artificially push up the rates inside the exchange by virtue of not also moving to do the medicaid expansion simultaneously. >> do you think this process could help state that is have not expanded medicaid like my home state of georgia? >> mr. lewis, i would say that one of the things that i have seen as a very positive indication is that we see a

number of states moving now to gover northerlies moving to try to address the issue of medicaid expansion and i think there's going to be a growing recognition. when medicaid was first adopted back in 1965, we wound up with at least one state arizona as i recall, held out for a number of years but finally wound up joining. we have more many states that have not made the medicaid expansion here now but i think as they look at it as they see the affects, one on the rates inside the exchange but also the affects on their citizens who would be eligible for medicaid and effectively locked out right now, we need to do something about it. >> i know that that washington has a state exchange but if the supreme court were to decide against a government, would you please describe the possible impact on those people living in states with a federal exchange? >> we actually had some experience with that and mr.

mcdermott will remember this. he was in congress then so he was away from it but in the late 1990s we actually had health care reform that had passed in 1993. it was repealed in 1995 but it left in place that you could get health insurance after a three-month preexisting waiting period. what the net result was, we effectively what would be left with the affordable care act is guaranteed issue and you would wind up with the healthy people dropping out as rates started to rise, the sick people staying and you couldn't stick with it. in the state of washington where we had a comparable situation in the 1990s the market actually collapsed. we lost our individual market. it took legislative action to see it restored just as i came into office in 2001. we would see in those 34 state that is are in a position right now to have federally facileitate

facilitated facilitated, they, in fact, could be in a position to see exactly what happened in the state of washington which is a collapse. this based of course on the failure of congress to come together with a resolution and i trust that would be the case. >> again mr. commissioner, thank you for being here. good to see you. thank you for your leadership. >> my pleasure. >> i yield back. >> thank you, mr. chairman. thank the panelists for being here. mr. redmer, your testimony you made a statement that you've seen cost generated because there's been a 15% increase in morbidity? what is that? >> that's basically the -- i'll describe it as the health status of the pool is getting sicker. so they're going to be utilizing more services. >> okay. all right. i understand. that's one of the cost drivers. mr. kridler we are sitting here

hearing testimony from two different places. we've got 30% increases on average in tennessee. mr. chandler's talked about extensive increases in texas. i'm seeing them in pennsylvania. and yet, you're saying that you're half percent increase. what's going on? >> thank you for the question. clearly there are some stark differences among the states. i think part of what i tried to point out was i think we were one, fortunate to have a competitive market in the state of washington and significantly more competitive. we have 50% more carriers in the market. not all states had the benefit of that. the second is -- >> so your starting point, i mean, the beginning line is a different place than other states? >> exactly. it's had an impact then as we wept through the process of implementing the affordable care act. whether you started made a difference. we had a strong history of rate review. by virtue of having a

competitive market we saw better rates in the state of washington than you saw in many other because of a competitive market. >> so that's a point though. that is, i think, what's lost because we don't talk about it. it was never sold as well if you are in this state it was a generalization that all americans will either benefit or the costs will go down and that doesn't seem to be occurring. as i said what's the experience you're having with your co-pays an your deductibles? >> co-pays and deductibles, i'll be frank with you. are a bit of a challenge because while you have -- >> gone up? >> you've been successful in limiting the total out of pocket expense for vinlgs. co-pays and deductibles have gone up. >> that's captured on the other end. >> it has a net effect for vinlgs. if they get really sick, they really benefit. it's a limit on the total out of pocket. do you want the insurance if you really, really absolutely need

it or are you willing to pay for some of the co-pays and deductibles before you reach the point where you achieve that out of pocket expense limit. >> let me close my questioning with mr. chandler and ms. mcpeak and mr. redmer if you have insights on these too. i made the point and this is just a very generalizations that were made this if the average american's going to save $2,500 under the plan the you liked your doctor you're gng to keep your doctor. now, we are seeing in pennsylvania as an example, the rate increases and western virginia where my colleague mr. kelly is from. 30, as high as 40% on average. and networks are narrowing, not expanding. so can you explain to me what -- what is happening in the marketplace? after in the aftermath of those promises. are we seeing the $2,500 savings

and are people keeping the doctors or are the networks getting narrower and is that a good thing? mr. chandler? >> i think that assertion deserved every pinnochio that it received. this is a predictable result. community rated plans in most jurisdictions have been subject to severe adverse selection problems and i believe we are beginning to see precisely that with the rate increases we are seeing here. >> ms. mcpeak? >> well, i certainly don't hear from consumer that is are saving any money on insurance premiums. i hear quite the opposite of consumers calling my office. what i would suggest about the transitional plans, if you can keep your policy, if you like your policy you can keep it, in tennessee we allowed those transitional policies to continue knowing that was going to segment the market because we wanted the choices available to our tennessee consumers.

the problem was that position was decided by president obama 45 days before the plan year started so the rates were already filed and approved in our office. the plans were already on the federally facilitated exchange ready to be purchase and allowing the transitional plans to continue didn't have nearly the significant effect and the insurers were locked into rates they had already seen. i think what you are seeing in the marketplace with the increased deductibles, co-pays and limited networks are insurers and consumers trying to moderate some of those claims-based rate increases not just if ied and trying to moderate the 30% into lower amounts and choosing policies that again have the payment on the back end as you describe or limited networks they don't have the provider choice as before the aca. >> thank you. mr. redmer? >> yes. two things. one, the narrow provider markets, this gives the carrier the ability to demand and

extract greater concessions from those provider that is are left in that narrow market. and i would speculate that if the markets are made broader and they have more providers that's going to result in even higher pricing increases than we're seeing now. seeing now. and when you talk about the affects on the consumer i want to throw this on the radar screen because i think it's a national issue, and that's the significant unbridled cost of air transportation, primarily helicopters, that is resulting in balance billing to the consumers. thousands and thousands and thousands of dollars. and these are folks that are not in networks. it's a significant national issue. >> what choice do you have if you're lying on a turnpike after an accident and call in a -- >> you don't. that's the problem. you don't. oftentimes the patient who has

no choice has no clue that they're going to get a $25,000 to $40,000 bill that's going to be a balance bill from a helicopter service. >> time's expired. >> thank you. yield back. >> mr. doggett? >> thank you mr. chairman. mr. chandler, i was pleased you drew attention to the fact that 17% of our gross domestic product is focused on health care and could arise to almost a fourth of our total national economic output. that was certainly a consideration in our writing the affordable care act noting that despite the fact we devote so many resources to health care we don't get the best outcomes versus some countries devoting significantly less. of course, one of the objectives and there were modest improvements in the affordable care act was to address the whole problem of soaring