and we believe there is tremendous opportunity to leverage that to make mail more americang for businesses. we also believe there are great opportunities for the postal service to provide digital offerings in the future. if we are able to operate with greater product and pricing flexibility under the law, and if we can do so from a strong financial position, i am confident that we can i am confident we can develop the product and services that drive growth in the economy and benefit this. there highly focused on health of america's mailing industry. it competes against digital, print, broadcast and others. very important. the postal service needs the flexibility for support and speed. we need to keep it affordable so it remains competitive and continues to deliver value for american businesses.

because our financial position , we havecarious considered to raise prices above the rate of inflation. it is important we discussed this issue today. directspects have a bearing on pricing decisions that may impact the health of our customers. quicklyic service is moving down a path to becoming a massive long-term burden to the american taxpayer. the legislation is a great starting point to get as off the path of disaster and onto the path of continued financial stability. we agree with the overall approach that provides important pricing and product flexibility and a strong framework for restructuring. meet the goal of

generating savings of $20 billion by 2017, the legislation must resolve our long-term health care costs. i believe this is achievable. i am greatly encouraged by discussions we have had on this topic which i know we will continue to discuss next week. i would like to thank the committee for tanking this. i look forward to supporting your work. this concludes my remarks. thank you very much. >> thank you. thank you for the opportunity to testify today. i am pleased to represent the regulatory commission and share its views on the important topic of postreform. we appreciate your leadership on what must be done to assist the

postal service and to assure its sustainable future. the committee has convened the hearing to explore how this can be renewed and to examine the senate bill 1486. there is broad agreement that legislative changes are needed to place the postal service on a more sound financial footing. the accountability and numerousnt act contain reforms that were a positive move for change. efforts to renew and reform the postal service need not and should not replace the many positive provisions included. my written testimony emphasizes the importance of transparency theaccountability in efficient provision of postal services and expresses the views on a variety of issues addressed

here. for example, they significantly increase the accountability of the service by mandating accurate and periodical financing reporting that is subject to public comment. will focus on an area where the commission has broad responsibility. a major focus was a rate making. to end the reliance on unpredictable price increases and concerns that this was ofsing along the cost operations through cost service rate making. they achieved these goals by introducing a relative -- regulatory price cap regime for the products over which it enjoys a statutory monopoly. rate adjustments are now at

andedicted goal interval these are cap at the rate of inflation. this has had many positive impacts in many areas. most importantly it has protected repairs from large, unpredictable increases that were permissible under the old law. the ability to accurately budget has disrupted this and permitted their programs with regulatory or -- regular liability. motivated the postal service to implement costs -- cost-saving strategies to achieve increases in efficiency. since the price cap became effective, the commission has reviewed the impact of service on many proposed changes intended to reduce the cost of mailing, processing,

transportation and energy. integrating the liability is not an acceptable way to reduce costs. they require the postal service to enhance measurements and the commission to review service reform and -- performance report. does provide an exception. an emergency rate provision. it requires that the postal service justify the price based on extraordinary or exceptional circumstances to an independent, impartial regulatory body. this has guarded them from unwarranted price increases. this protection is particularly important in a government mandated monopoly environment. paea implemented this by

providing the postal service with flexibility to set prices with in the price cap regime and requiring the commission to design an opponent and modern system of rate regulation. the commission developed a simplified process that replaced the ten-month adversarial proceeding required under prior law. the new expedited process has significantly decreased litigation related investigations. since the passage of the hase.a., the commission reviewed rate adjusted to ensure compliance with the law promptly and efficiently. excluding the one case, requests have been completed in an average of 37 days. the commission completed the one request in 86 days. i think it is noteworthy that no

mailer has piled a complaint related to a rate adjustment that was reviewed and approved by the commission. commission stands ready and willing to continue to assist the committee, congress, post service, and stakeholders to make sure the postal service can meet its challenges now and well into the future. active, theis commission will implement the new law to ensure that the postal service remains an effective part of the overall american communications network. thank you again for providing me opportunity-- the to testify. i will be pleased to answer any questions the committee members may have. >> thank you so much for your willingness to respond to the questions. we will have a number one of them. work you for the good do. >> thank you.

appreciate the opportunity to testify today. since two thousand seven the postal service has been hit with losses due to internet diversion. the decline appears to be slowing. the financial crisis of syria is leveling off. it has taken dramatic and successful actions to reduce demand. the focus today is on the revenue side. my office has conducted two studies. the first found the ability to generate needed revenue under the consumer price index price cap is largely dependent on unlikely increases in volume. this is true of any labor- intensive enterprise. the postal service obligation to deliver daily to a growing number of addresses alone ensures that it will remain labor-intensive. volume was expanding

significantly when the cpi cap was deployed. also at that time, a monopoly a lucrative asset. it suggested the need for a privacy control since they can be impervious to market forces. in 2007, male growth responded with fewer pieces going to a delivery point. each remaining piece had to pay forre revenue to the cost of delivery. sufficient revenue was unavailable under the price cap. losses combined with price cap imperil the postal service ability to provide universal service while remaining self-funded. the price cap was intended to protect monopoly customers. of theopolies lost much values. there is powerful competition for each type of mail today.

alternatives. ability is now growing liability. they're asking to take into consideration revenue generated delivery points. the second study examined how sensitive postal service are to price increases above cpi. we found for moderate predictable increases, postal products generally have low priced electricity. it's not in print -- electricity - elasticity. the revenue loss will be more than offset by revenue from the price increase. examined 20 years of data through 2012 and looked for any changes in price sensitivity including from the internet and recession. we are not saying that all postal services have a

tolerance. some remain price-sensitive as a whole. low pricedthey have electricity -- elasticity. pricing freedom through efficient market forces should be used. casting them side has been problematic. it is problematic for the postal service today. efficient forces have a long history of successfully displaying companies. if the postal service loses customers it will suffer the same punishing consequences as any other business. new innovative technologies offer many opportunities to improve core postal operations. mined forment can be operational efficiency. gps can track packages.

mobile imaging can provide customers visual delivery confirmation. can digitally, linked postal equipment and vehicles, providing real-time visibility. in this imperfect digital age, citizens and businesses face fundamental problems, loss of and confidentiality, the fragmentation of messaging. the difficulty of navigating e- mail and the risk of buying online from unknown individuals and broadband and banking access and expensive e-commerce middlemen that inhibit small businesses. the postal service can help address these problems. secure electronic messaging can preserve privacy and

confidentiality. integration services can give people tools to organize communications on a multichannel -- in a multi channel world. they can offer seamless e- government service. identities would protect against the risks of trent asking -- a transacting with unknown people and businesses. it is acting as hub for input. cash cardf single use and cash redemption of digital currency can provide alternatives for the bank, enabling their participation and commerce. post office boxes can allow citizens and foreign buyers deliveries of their packages anywhere and anytime and support businesses with backend

housing. a wire infrastructure can allow that e-commerce is seamlessly supported by powerful fulfillment services for physical goods. the attention to revenue and innovation is tremendously important. will take up pre- funding next week. it is a substantial factor in the finances. part of the need for the price increase for innovation are directly tied to the financial drains for pre-funding. thank you. >> thank you. you had a mouthful there. that was good stuff. i'm going to ask the postmaster general to react to some of what he has just said with us in terms of additional things we can do to the postal service to reduce our costs. it gives a whole laundry list of

things the postal service can do to focus on the revenue side. just be thinking about reacting to those ideas. think a lot about the problems of the postal service and what they face, i go back to another legacy industry, the auto industry. it was not many years ago when we were in the tank. we had seen our market share dropped 85% to about 45%. what are we going to do about it? give up? let everyone else take the business away from us? they chose not to. a couple of things happened there. theiry right sized enterprise. they say we have more manufacturing plants than market share. than theyre supply

need. more employees than they need. they do not just fire people. they decided to write size of the enterprise in a humane way and decided how can we use what we have to create additional revenues. they are generating a whole lot of revenues. there are some lessons to be learned here. what we are trying to do is just that. remember when people used to joke and save the big three -- and say the big three were a provider of health care to several hundred of thousands of people? when you look at the postal service, it is not that bad. in terms of being a provider of health care it delivers packages and mail. the health care costs are substantial. in the automobile industry

[indiscernible] to do it in a more cost- effective way. they have done it. it has actually worked. i know there are discussions going on with the postal service with your unions and other employee groups. i encourage you to continue to do that. ways to bring down costs. it is critically important. internetlenge from the from folks that are taking away your first-class business, that challenge is going to be there for a long time. with that challenge comes real opportunity. last week we had all kinds of stuff in the mail. last week i got an envelope for me you -- from you from the postal service. priority mail express and how the postal

day,ce will deliver one today, three-day services. you can deliver on sunday. really good stuff. this kind of thing has a huge upside potential i think. in an age when a lot of people still want to deliver stuff on saturdays and sundays, this will help. for this kind of innovation. i want to respond to some of what has been given to us. his laundry list on the revenue side. >> thank you. i appreciate the fact on the is our, 11 scans average. respond da tove. -- dave.

they have been excellent partners over the past few years. we asked them to take a look at opportunities. he and his teams have come back with a lots of good suggestions. the key thing for us to keep in mind looking forward, and we have looked forward five years, 10 years, the revenues of the postal service look to be relatively stable, about $65 billion. given a volume decrease of about 5% annual in first- class. in ourstable volumes standard mail with some package volume increase. we have experienced substantial increase. we think we will see that for the near-term future. the other thing we have to consider is the fact that even though we have taken substantial costs up in the last two years, and substantially

$16 billion,st by we are still facing substantial problems going forward. even if we get to the point where we are debt free, every year with a cost base of $61 billion that we have we will be facing inflationary costs of 2% of about 1.5 billion dollars a year. we need to figure out what we do going forward. you cannot cut your rate on this problem. i agree. i believe the postal service has taken some good actions and the last few years, not just an packages but in the areas of mail. we are spending our time in the field. i was in minneapolis yesterday. we are spending a lot of time with our customers out there talking to them about how you actually start to merge the technology of the internet with

mail so it is relevant. if you get something in the mail, it would be great that you could order boxes with one clicked off the smartphone. that is where we need to go. the comments on pricing we agree. we need flexibility. our board is responsible for the long-term welfare of the postal service and the industry. and a lot of the things they have talked about, the flexibility, speed, we arenities, digital, in full agreement. we feel we need the flexibility. your law gives us a good starting point. >> i want my staff to give me some numbers. how many plants do they have in 2008? the number 614. how many today? three 23. 19 99 about 800,000 employees.

-- 323. in 1999 about a hundred thousand employees. 800,000 employees. they way you can provide and continue to keep post offices open or use these others using real letter carriers. there are a variety of ways to continue to provide services. access to theve internet. i applaud the way you have really try to write size the enterprise. we're getting a lot closer to a sweet spot. >> thank you for your testimony. let's talkliams, about priced electricity -- ela sticity that you talked about. quantify that for us?

what are those segments? probably my heart went out goes out to the small city and town newspapers. they have a very large -- low margin. they have been hit by this wave of creative destruction. they delivered through the mail. i would say -- >> what else? >> probably at the margins it is all pretty low. organizationsofit would be another i would turn to and be careful in assuring. have thathis bill we gives pricing authority to the post office, can you imagine a scenario where they would not volumer total revenue

associated with price increases and look for that sweet spot? look at that not and try to make that determination? thehat is exactly where governors and senior management come in. i think it would go exactly the way you just outlined. >> that is exactly what most other businesses do. said, monopoly power is a hindrance now rather than an advantage. can you think of any reason why the abilityt have for pricing power based on competition inir the service and quality of what they offer/ ? believe the market forces are adequate and very appropriate to the situation. we are available to you and

others to search out any small areas. broadly, those are our picks. >> thank you. there has been some criticism of that study. can you lay out the methodology that was used in that study? do you stand behind that study as accurate? >> we do. we think it has been supported by many other earlier studies. there have been some occurrences that we try to isolate and look at to make sure that those had not changed. the 20 year period that just ended. we try to isolate the period before. we looked at the whole thing. thery to isolate before

internet, early adoption. there was also a flat period in the mature adoption. we looked at the recession. there were two large pricing increases in 2001.. we try to throw it up against the recession. it would not budge. we coulds to us that definitely stand behind the study. >> the people that the post do youcompete with, how think they determine their prices? you think fedex determined to raise the rates? do you think they did a study and looked at what the market could bear based on the quality of service they were offering? >> i am certain they did as well as their competitors. fedex and ups annually have

their increases have been about twice the rate of inflation. ours were held inside the inflation. competitiveervice side, they have their feet wet now. they increase above inflation. the areas have grown. the british just got rid of price cap for virtually everything. we are a pretty good deal. worldwide we do not charge as much as the other world posts. >> but we are also losing billions of dollars a year. the british postal service becomes privatized. you talked, about predictability for rate so mailers are not caught off guard. -- was therrent financial crisis predictable? >> yes.

cap, the current price yes. prices are predictable. crisis that we face, was it not predictable? it was not predictable. i would like to enter into the record my statements from 2007 which i will get to a clerk in the moment. it was predicted. i predicted it. only passed the last postal bill i said i would be back here. we are not setting up a competitive market for independent organizations that can respond and compete with what they have to compete with. markets ought to determine rates where they can and we do not allow the monopoly. it is no longer a force. it is an asset in terms of what the post office can do that they can deliver better anywhere in

the country. they go the last mile. that is an asset. the risk of the monopoly power in the post office is gone. front of us an organization that is price and labor controlled. i can tell you we're never going to solve those problems, the problems of the post office. of those things stay there. his fairave to have treatment for employees and flexibility for the post office to maximize their return on the service. again talking about predictability for breaks for the mailers -- four rates for the - for rates for the mailers. that is billions of dollars in losses. i would enter into the record

the number of postal employee since 1926 and the attrition that has happened because of this. the cost reduction still is not good enough because we have no pricing power. -- pricing power that is market based. i would ask that this be entered into the record as well as my statement from 2007. i want to talk to you about a touchy subject with your employees. it is called arbitration. in our bill it is presently the law that an arbitrator cannot ofsider the financial health

the post office and arbitrating a labor dispute with the post office. is that correct? >> it is correct. >> do you know any business in the world that could be successful in negotiating their labor contracts when they in fact cannot consider the financial health when they negotiate? >> in a situation where you have binding arbitration you have to consider current financials and askhave to look ahead and for the ability not only to look at it from an arbitrator perspective but to make some changes in the bill around employee retirement costs and everything else. we know the revenues will be ored at about $65 billion $66 billion. we have to control these costs. >> i'm out of time. i will have to come back. >> thank you. let me just go down to the list and welcome senator mccain, senator pryor.

next is senator johnson. he is next in line when he returns. thank you. >> thank you. i want to thank the panel for being here today. i agree. forneed a better plan flexibility. i would also say that if the goal here is to privatize the postal service than what ought to have a bill to do exactly that and move forward. i think it would be a mistake. we ought to have that debate and change the constitution and do it and move forward. my concern revolves around rural america. we have talked many times. i believe some of the best customers the postal service has is rural america. they do depend on it. 2002, they changed the delivery service for rural america. made in theere

alternative means of transportation. as a result, overnight delivery is almost impossible. -- flier tooer to but i would question whether you can overnight delivery to me on a weekday much less saturday and sunday. i do not think it is possible. many processing facilities are gone in the rural areas because of volume. you made the call. i understand that. i think it was a mistake, but the call have to be made one way or another. the postal service continues to tell me the reduction in hauling mail biplane does not live up -- up tone does not lead these practices. were any of the studies conducted before the july 1 reduction in the alternative

method of transportation service? >> we go three processing study. we take a look at everything, all of the effects, any service that we have proposed. >> did though studies indicated that it wouldate not impact rural america? >> it shows where we have to make standards in order to get the savings out of the reductions, we made those and have maintained overnight services in large portions of rural america. indicated there would be minimal impacts? >> it depends on how much of a change you're going to make. that youhe changes actually did make. the changes have been made. they are real changes. did the studies indicate that if you made those changes it would

on ruralmal impact america? >> yes. we may changes in service across the country. we started with 40% of all e- mail that we deliver would be overnight -- of all mail that we deliver would be overnight. able to maintain approximately 35%. there were some places we had to downgrade from one day to today -- one day to two-day. i go back to rural america every weekend. and traveled the state. in august we got to do some extensive traveling. i can tell you that almost with , i heard mail delivery takes three or four days, five days.

my wife and i just mailed a mortgage check and i said it will not get there. it will not get to where it needs to go by wednesday or thursday. it will be a week. we will probably get done for that. that is where my challenges are. , bringould find for that on ups and fedex. i cannot do it. do you see what i'm saying? is, there are a million people in the whole state of montana. how many people live in pittsburgh? 2 million? if you're looking at a business model based on where you are going to make your money, you will not make it in big sandy, montana. set up to service was serve people i think. is that taken into the equation?

are those taken into account? >> absolutely. what is the answer when the postal standard has changed from overnight to three or five days. the reality is she could verify north dakota. it is closer for five than it is for three. have measured has to be approved. i would share all of the data. we take our universal service responsibility seriously.

faced with a financial crisis. we are trying to figure out high above to keep our head water. >> i got you. if i'm swimming upstream in the goal is to maximize profitability at the expense of rural america, just tell me. >> it is not. it is to keep mail service affordable and not become an up -- a burden to the american and eventually to this legislation get the cloud of financial turmoil away from us. >> i do not doubt that your study say what they say they say. i do not doubt that a bit. in reality, because i live on , it ain't work in that way. not in that place. i do not get any special treatment. i do not want special treatment. i want to be treated like my neighbors.

i bring that up. take a peek at it. see what you think. as this moves forward and we get that debate, is there going to of mailer consolidation processing centers or post offices while we need this debate? >> no. as it is written put a two-year freeze on mail processing facilities. we have some scheduled for 2014. we would not advance any of those things to try to get under the wire. when i visited montana last year, people told us keep our office open, keep our local identity, if you had change the window time -- have to change the window time, do it. we have done what we needed to do for this wheel -- this year. >> thank you for your patience.

>> thanks for those questions. >> thank you so much. no big surprise here. we're just going to follow on to senator tester's testimony. i have a basic question. i do not need to be sarcastic. i need an answer from you. believe that the highly rural areas of america deserve the same level of service as suburban and urban areas of this country? >> i do. the offshore areas like hawaii, alaska, and puerto rico do. we consistently measure and stay on our mission to provide universal service. >> i believe you believe that answer. there is always a constant discussion that we have about

what your study show and the reality of what our constituents experience dealing with the post office. i want to follow up on what 's discussion was on having an expectation that if you put your mortgage check into the mailbox and it is picked up that you will in fact be able to pay your mortgage on time if it is due three days from then. i do not think that anyone in rural america believes that is it. or trusts a sense that the constitutional obligation that was recognized, the importance of this opportunity to every place in the country, is not being met. to belabor that point. i do want to tell you that you can do all of the studies in the world. that is not the experience people are having in rural

america. goesther question really to the future of the post office and the future of the postal service. you heard mr. williams relay a lot of opportunities. i have been on this committee for a few months. i do not have the extent of the experience that the ranking member in the chairman have on this debate. what seem likear good ideas that ought to be explored about how we can make the post office and more relevant. last 12ious in the months since i have heard all this discussion, what steps have you taken as the postmaster identify and recognize and begin to implement some of those good ideas? give me three examples. >> let's start with priority mail. >> it has been around a long time. i am talking about innovations.

i am talking about different kinds of things, whether it is digital. you heard williams give you a whole whitney -- litany of ideas. want to know in that space. >> can i say this for second? expanded have done is mail so they can grow revenues. >> i get that. user ofaithful you -- the mail service. it is easy. the packaging i agree with. those moves have not made the post office more lucrative or have not solved the problems that we have today. i want to know about other innovations. the postave made office more relevant. our packages alone have grown about a billion and a half dollars in the last three years. that goes a long well -- and that goes a long way.

we have just been awarded the first contract ever to be the intermediary with in the government. we are very active in the digital area around starting to work on products that would help to set a platform for authentication of who you are. in terms of getting on the internet, securing digital messaging. we think there are big applications in the health care world, the financial world, personal services. thing exploring the whole of digital volume. >> when you did those projects and you looked at them, what is the revenue benefits? ,> evan hunter $50 million

five-year. just $750 million, 5-year. we have a business plan that is established. gains we financial think we can have. a lot of work has been done. i will tell you i have not spent a lot of time publicly talking about all of those types of things. the bottom line is that we have gone to address the cost factors in this organization. billion dollars. we introduced a problem. a hundred million dollars off of a facebook zero in two years. inflation pushes costs by 1.2- one $.4 billion a year.

we have to get over growing new product. >> would you agree that some of what you would need to do in terms of looking at cost containment and business plans for what themodels new lines of revenue could be? you could be making big decisions on the cost side that would greatly eliminate your ability to be relevant. >> i spent yesterday in the city of minneapolis. we spoke with 300 customers about the growth of mail. mail has to be relevant. >> i only have a few more seconds here. close every rural post office in north dakota you will not have an opportunity. >> we do not plan to close any post offices. in your state we are expanding

some post offices because of the oil bill. we are responding to that. there's no interest and closing the post office. you have never heard me say that. us from a bottom-line perspective. a gives customers what they are asking for. rural town identity. >> thank you for your passion for these issues. of people whole have come and gone. time we all pretend we are ready even when we are not. ahead and ask go questions. >> you have never had a problem with being ready. talk about the expensive part of our infrastructure. and really what is a reality, i obviously have come out strong

for seven day delivery. i believe it is a competitive advantage we have. if we give that up it is a mistake. this is now competition. we are competing. one of the things i need clarification on is what we are charging our competitors. the growth in ups in the united states postal office will be packages. it is pretty obvious. in my life i spent a lot more clicking than i do driving. the growth area, answer this question for me. to go downng less that last mile? paying less to go down the last mile than i am? aren't they using us for the

last mile of delivery? aren't they using our competitors? >> yes. it is called parcel select. do they get it cheaper than i get it? >> there is no real access for you to have it on that product unless you actually bring it to the post office. in sending a package to a friend in rural missouri, is might cost more expensive or ive then you charge your competitors? >> different products. that takes advantage of our whole network. we process it. we transport. we deliver it. is they bring mail into the zip code, drop it with us. portion ofa small the work. you do not charge them the entire amount. i am worried that we're not

seeing them as a competitor. we are seeing them as a customer. they are surfing off the most important part of our architecture. they're using the part that is costing us so much money. feel like the agreement yet entered into with them treat them like a competitor but like how you treat every other customer. is that unfair? costed these agreements out like any other business. it is competitive. we can enter into contracts. they make money for the postal service. the package business is a very competitive business. ship is out there competing with people making $10 an hour. visibility is critical.

>> they are using you. the marketincreased share by two points. we have also secured a substantial number of customers coming in for last mile delivery that have bypassed some others. >> think you understand the point. company and telecom the people who work to do the infrastructure, they are getting a huge payoff. a huge payoff. especially in rural areas. kinds of things to insist with that. i want to know what the specifics are of the agreement. most growthe the is. i do not sense that you are exacting a competitive advantage based on the fact that we have in thee investment

delivery system they must use. why don't we have them do it themselves? >> we would be more than happy. it would be cheaper then. are cheaper. >> we are the best value out there for anybody mailing a package. >> i would like to get the specifics of the agreements that we have with our competitors. i want to make sure we are taking advantage of what we have as opposed to stuck in a mode that they are just other customers. >> i think it will be valuable to show you what we do with some .f the large contracts it would be good to see what some of the other competitors charge. it is a very competitive industry. >> having modeled out what would happen if you decided not to

carry the packages for them? economic modeln of what they would have to charge to send their packages versus what we charge? >> we have not. they make the decision based on what their prices are. >> we have the architecture. why haven't we modeled it out? >> they are driving down that road every day. we try to have as many packages on that route as possible. we try to do it at the most reasonable price. we're are not giving anything away. we want to take full advantage .f the network that is why we are here. we lost 27% of our mail volume.

>> model out what they have to do if they do not use you versus what we charge. we get more business. >> that is true. one of theextent competitors use as a model that determines whether we get the package or not based on the density of the route they have on any day. difficult -- that is how advanced itt is. our people have done an excellent job pricing and growing this business. we picked out two points in the package business. there's a very competitive environment. >> i think you're not using

every advantage you have in the competitive market. my time is up. i have a lot of other questions for the record. >> at a very minimum you should be doing the modeling of what it would look like if you no longer allow them to use our carriers. >> we will come over and sit down with you. >> that would be great. comment. little by statute you cannot sell it below your costs. that is no subsidy achieved for that that is transferred to other mailers. gravy for them. by law they cannot give them a price below their costs. i understand that. this is a market determined price. there is no subsidy.

the packaging businesses subsidizing the rest of it. >> your mic. agree, i'm not asking them to charge them less. i want to charge them or because they're using something we have and we would gain a competitive advantage by charging them more. think they have done a pretty good job in terms of pricing their product to get as much volume as they can. they are the price goes below are their volume goes. to makehem the ability a decision based on the price elasticity of the market they are in to get as much as they ine there may be some real lasticity on the price. that is what this bill is all about.

>> i agree with that. >> thank you. m, you're not getting enough questions. williams argued a few minutes ago that we could change prices without losing the volume. monopoly isn't what it was. to what extent do you believe that the postal service still has monopoly power over certain mail projects? what does that say about aboutons we ought to say retaining the system for postal rate regulation? to ask the postmaster general to get involved. >> i think it is a very important issue that you have raised. >> this was not always the regulatory commission.

they have had a very different role. >> this can be discussed and debated by many people. there's still a strong monopoly when it comes to letter mail and aose products that they have market dominant position in. you want to communicate with a paper prod duck. your option is only one. that is to go through the postal service. you do not have another option. studies that determine what the price elasticity in the future will be when we have been operating in a monopoly system are notlast 100 years

necessarily reliable. it seems to us at the postal service cannot have it both ways. it cannot say that this is a competition. we will not raise prices anymore than we need to because there's competition and we will keep it down. on the other hand, there is price inelasticity and it is ok if we raise prices. there is no concern about that. you cannot present both arguments. it seems to me if you want to monopoly the and allow prices to fluctuate and get their sweet spot, as we have done with the competitive products the postal service has done where they have raised prices over five percent a year, than you do that. if you ask first-class mailers,

if you ask people who send greeting cards, and nonprofit mailers, whether they can manage price increase, you will get responses that say they simply cannot do it and that in fact you will lose so much volume that you will not get the revenue that the postal service thinks it is going to get from that mail. we believe in the commission that the price cap regime has created the stability and transparency and accountability that has given mailers some assurance in a time of real transition, and has given the nation's users a sense of trust in the mail, which is very important to their brand and their future. >> i would welcome thoughts of the postmaster general. what is the role? it is not what it used to be. maybe it is not what it is today, but what should it be?

>> you know where we stand. we put a white paper out. the key for us, governor's perspective is this -- if you are putting the responsibility on the governors for the management of the postal service to run the organization, we should have the authority to make choices and changes on prices, service, and products and do it with absolute speed. this world has gotten faster and faster. every day that we look around, you think about the changes that happen just in the telephone and computer industry. and we're in the same exact environment. our feeling is that we have a very reasonable and responsible board of governors. they will not make decisions to put the organization out of business. we think that we should be in a situation as spelled out in your bill that has a lot of flexibility around the cap, and

the ability to have after-the- fact review with the commission. we have no argument that the commission should be there to take a look at decisions we make, like a public rate commission does today, and we would support that 100%. >> could i jsut? ust? >> and then we will go to mr. williams. >> because the postal service is a federally owned enterprise and is exempt from many state and federal regulatory laws, it includes in it a provision that there can be no refunds. the postal service is exempt from giving refunds. if they establish rates that are determined to be in some way unlawful, given the various requirements that are still in the law you propose, how does a complaint mechanisms off the problem? an after-the-fact complaint mechanism. it is a question. you may be satisfied with it, but it is a question that we hear from states. >> that could easily be added to

the bill. i appreciate that. let me go to mr. williams before my time runs out. then we recognize senator mccain. one more minute. >> i think increasingly we find ourselves in a very fast, very unforgiving environment, and we need tremendous agility. there are sudden threats and there appears to block or two and it is. the postal service needs to be able to move an agile manner to operate and navigate inside the environment or they will disappear. if they cannot do it, they should disappear. there are a lot of alternatives to messaging of all sorts today. in advertising, there has been television, radio, and newspaper, and now an aggressive internet market. personal communications, text s and tweets have fabulous features to them. bill payment companies are aggressively moving to cut back

costs by driving people to the internet. and parcels, we are the ones that are breaking monopoly. the postal service got into parcels in order to break some of the mischief that was occurring between the companies and the railroads. that inefficient market forces should always be used when it is possible -- that efficient market forces should always be used. i believe it is possible and it is the ingredient that is needed to move the postal service forward. >> thank you. welcome. thanks. and want to thank you senator coburn for this product, which i think is a very important one and an issue we have been wrestling with for a long time. obviously, and the fact that you and senator coburn have come together to craft this language with compromise, which senator coburn is very well known for, is well, senator coburn is a

model as you nkoknwow of here in the senate. of yount to thank both for putting together this legislation on a very urgently seriousemedy to a very situation in a broad friday of ways. i -- variety of ways. i look forward to supporting it in any way i possibly can. mr. williams you made a very interesting comment. five years ago that the whole means of communications in america was vastly different than it is today, which i think you could argue that five or 10 years from now it may be again very different from what it is today. argument thatthe we have to have an enormous amount of agility in order to

ever-p with these changing methods of communication. is that an argument in your mind to privatize the postal service? date, united states, to has picked a different route, -- >> the europeans have chosen a different route. >> they have in a halting manner, they are going for it as quickly as they can and they pause when they need to. the united states has joined with the private sector in a public-private partnerships and co-opetition. commentsccaskill's were absolutely fascinating. i'm not sure what the road is ahead. privatization -- >> do you have confidence in this legislation that it can accommodate the road ahead?

>> id o. do. i think it is a good piece of legislation. if i was worried about anything it would be that we do not quite have that balanced yet. we are still trying to match demand with supply. we are still, we still have a ways to go. the bill seems to want to pause that with regard to the closure of additional plants and post offices. that's the part i look at with some worry. i also see some value in it. it might be good to pause, but we are losing money. we are accumulating debt. all of our money for innovation is gone. we need to arrive as fast as we can at this balance, and then return to normalcy. >> thank you. ms. donahoe, you have earned the praise of senator coburn for all of the work you have done in helping craft this legislation with him and senator carper, and

i can assure you that is very hard to come by. so you should appreciate it. but, and i want to thank you and the panel for the work they have done, but given the fact that 80% of postal service costs are associated with labor, how important is the language in this bill that would require the financial health of the postal service to the a consideration during arbitration of labor contracts? >> i think it is very important. the key for the postal service -- >> very controversial. >> it is controversial. there are lots of things in the proposed bill that are very controversial but needed here and when you look ahead in this postal service, the whole idea is long-term, comprehensive legislation, and it cannot be halfway. if we are going to address these issues, we have to address long- term costs like retirement and some of the issues we face today from a workforce environment.

they key thing to keep in mind labor perspective is five if we deliver mail days a week and deliver packages seven days a week, we will have to have equal to do that. so labor costs will always be large. the key thing is that the percentage of labor costs. it is shrinking the total cost of the organization. that is what we aim to do. we made good progress with the unions over the last couple of years with higher rates of noncareer employees which help the bottom line. good people get jobs that are a lot more affordable. we need to continue that work to make our retirement systems more affordable. next week we will talk about health care. the need to be dramatic changes in the health care proposals for postal employees am a would should apply to all federal employees to make it more affordable. that is the way we need to go. we need to be courageous and bold, and we need to make this happen. >> you made reference to this issue of five-day mail

delivery. in your testimony, you said the american public overwhelmingly supports moving to a five-day delivery, but this legislation has a moratorium on that. matternk that is just a of compromise or do you think it is a good idea, bad idea? >> it is a matter of compromise. i would love to be in a situation where next memorial day we move to a five-day schedule. it is a perfect time. volume is low. it is a good time to make the transition and it saves us $2 building. every survey we have done has been fully in support. the lowest percentage is 70%. we have survey information that says 80% of americans think it is a good idea versus closing post offices and raising prices. >> just for the record again, you believe that the carper- coburn bill gives you the flexibility you need to achieve

the billions in cost reductions that are necessary to sustain the postal service for the long- term? >> it gives us the flexibility and the speed that we need. the one thing that is missing is the requirement to use medicare as a primary for health care for retirees. we will talk about that next week. that has got to be mandated. if not, we do not hit the financial numbers. our business plan lays this out. if we follow what we need to do, we will get this organization back and firm financial footing. >> and you agree with that? >> i certainly respect and admire and support the efforts that the post master general has made with regard to cost- cutting. levels of efficiency and savings are quite remarkable. but i do not, and my commission does not endorse all of the aspects of this particular law. >> so, would you submit for the

record the areas that you do have concerns with? >> i think our testimony -- >> i know your testimony, but it is very helpful for us to have been writing your exact concerns. >> i will be happy to do that. >> thank you very much. >> thank you for the opportunity. >> great questions. thanks so much, senator mccain, for your support. hey, man. in arkansas, they say hi to people they say, hey, man. that is what i say to him every time i see him. senator pryor, you are recognized. >> thank you. witholdway, let me start you if i may on the postal service advisory opinion. >> yes? >> process. i know there have been questions about how long it takes and why it takes so long. but let me ask you from your standpoint the value of providing a nonbinding advisory

opinion. what is the value in a nonbinding opinion? >> i think we've had many examples brought out today that postmaster general talks about the fact that they have decided to maintain the post offices in role america. -- rural america. they did that after coming to us with a proposal to close 3600 post offices. were ablesion that we to provide in the open forum of the advisory opinion process and the recommendations that we gave them suggest that they provide an alternative, adjusting hours, and that is what they have done. so i think that the point of these advisory opinions is to give the postal service a better opportunity to get an honest review of what their proposals would need to change, rather than barrel ahead with what their initial proposals are. the same could be said for the

65 day delivery. when we reviewed that and highlighted many of the problems that rural america would face with eliminating the six-day and talked about packages, particularly prescription drugs, and as a result, the postal service has adjusted what it now proposes to do with going to five day deliveryatthere are pre advisory opinion process. it can be lengthy. there are a lot of opportunities we think to streamline that process. and the commission has introduced rules to reduce the litigious nature of some of the process so that we can make decisions in a more timely fashion. we hope to do that. that the believe transparency and accountability of the postal service is maintained when you have this advisory opinion process included in the public policies of the government. standpoint, excuse

me, is there value in these advisory, nonbinding advisory opinions? >> yes, we take the advisory opinions very seriously. we also listen to our customers. with post offices, we spent some time in appeal to a number of different places, and people told us if you can keep the post office open, and make it more affordable with changing hours, but please keep it open. we balance that with what we got back from the commission. >> let me ask you to follow-up on one of senator kane's questions. -- mcain's questions. he said that 80% of postal costs are associated with labor. is that right? >> 78%. >> 78% are related to labor. is that anything in addition to just the hourly or the wages and the salaries on the benefits. is that what that is? salaries, benefits,

as well as the amount of moneys we put away for retirement and health care. now, on top of that, is the retiree health-care pre-funding that represents 5%. so if we resolve that, our percentage of employment costs in terms of total would be about 73%. >> reminded committee again about your numbers of employees. you have been tricking your workforce. let's say 10 years ago, five years ago versus today. how much have you shrunk your workforce? >> the high point of employment in late 1999, 2000, we had 8000 employees. today we have 490,000 career employee with 120,000 non- career. there have been about a 308,000 reduction in total of one. >> that is a 40% reduction? >> almost 40%.

>> also, while i am thinking about a follow-up, let me ask about some cost savings. years, we onhe this committee and in other contexts in the senate, we have talked about the possibility of you guys going to natural gas vehicles. do you all have an initiative? >> yes, we do. we are working with the starlight association as we speak. they put together a very good group of five large truck company owners, and they're working with our people to explore ways that we can move into using natural gas, especially for the long-haul fleets. what we have to figure out is how to make better win-win, and we would like to be able to compensate these companies for making these investments. at the same time, share some of the savings. we have reached out to the department of energy. we think this would be a good project for some investment,

because there is definitely opportunities to get some payback on this. >> do you think you will save money? >> we think so. we think the starlight association will save money. we think it is a good thing for the environment. >> and let me ask you, ms. gold way, if i can, you mentioned in able testimony that a "siz portion of the u.s. population depends on the mail to manage their lives and communicate with businesses, government, and social institutions." would you tell us more about that sizable portion of people and kind of what you mean and how they are going to be affected by some of these changes? many people, especially in rural areas, but in fact throughout the country who are not connected to the internet at all. while we talke about the dramatic changes that are taking 1/3 of themuch as

country is not connected or not connected at a broadband that would enable them to have the kind of interactive products and communications that we talk about. is yet, our government committed to providing universal service of communication to everyone. so we need to have a postal service that does that. as wermore, and as long do not have a national identification system and we rely on where you live to identify you, the postal service is the address master for the country. and they really need to be maintained in order for people to vote, further children to be enrolled in schools, for all range of emergency services. it's a vital network. and when we talk about balancing andneeds of the public

businesses, we have to keep that in mind. and it's difficult. it is not an easy situation when we know as other senators have pointed out that it is more expensive to serve in the rural communities, but it is something that has to be planned. it has to be watched over. and we believe that some sort of regulatory oversight that assures that protection is necessary in whatever legislation is developed to gi ve the postal service the additional financial support it needs. >> thank you. >> thank you for that opportunity. >> senator coburn, anything else you wanted to say? ok, good. before you leave, again, thanks very much. excellent testimony, thoughtful testimony, a real good discussion of some mighty important issues. mr. williams, you always bring a lot to the field. not leaving anything on the

playing field. we have a lot of good ideas out there. i thought this was a hopeful, hopeful conversation. and looking forward to our next panel of witnesses. i just want to say -- we probably do not say this often -- when folks look at the service they get from the federal government, since some cases they are very happy. some cases not happy. the postal service can do everything better as well. mind ofeed to keep in all of the government related services, and this is not entirely truly government operation, we know, but folks in the country have a high regard for the postal service. the last seven or so years, still number one compared to the rest of the services we provide. that is pretty good. we can do better. i want to make sure we do better, especially when people go into a post office around the country for services that they get from a services and prompt service. for me, that is important. i know it is for the chairman

goldway. keep that in mind. any of the folks around the country that worked for the postal service or retired, i want to say we appreciate your service. we appreciate what you do for all of us. we want to make sure that you and your descendents will be around for the long time to continue to provide that service and will be around for a long time to enjoy seeing it get better. thanks so much. >> and you, mr. chairman. >> and today in africa attacks by gunmen at a shopping mall in nairobi, kenya. the state department has released a statement condemning the attacks and saying we are following closely the attack underway at westgate shopping mall in nairobi. there are reports of american citizens injured in the attack and the u.s. embassy says it is reaching out to provide assistance. some reporters report that 10 gunmen attacked the mall in an upscale neighborhood. and some tweets about the attack. a staff writer says gunmen

killed at least 22 people in an upscale mall in nairobi today. al shaba out of somalia is expected -- is suspected. hill's find that at the website. in washington, willcall has a piece about the u.s. navy yard shooting last week, writing passant -- riding capitol police officers were among the first deployed. president obama tomorrow will be meeting with family members of the 12 victims were killed during the shootings at the navy yard. he will also deliver remarks at the u.s. navy yard memorial along with defense secretary sha chuck hagel. you can watch for live programming on c-span beginning at 5:00 p.m. eastern tomorrow. she's the first lady who started the tradition of donating their inaugural gowns to the smithsonian, who requested japanese cherry trees get planted along the tidal

basin. program and holland have at 7:00 p.m. on c- span. monday night, the series continues. >> this is a garden that ellen wilson design which he was resident of prospect house when she was in the white house. she brings the white house gardener back here to this garden at prospect house. she says to the gardener, let's re-create the rose section of this garden at the white house. this becomes the famous rose garden at the white house. ellen tragically does not live to see the rose garden completed, however. she's dying in the summer of 1914. out as she watches as the gardener works, but she does not live to see the completion of this vision she had for roses blooming at the white house. >> meet the first and second wife of president woodrow wilson monday night live at 9:00 p.m.

eastern on c-span and c-span three. also on c-span radio and c- span.org. day on theainy national mall in washington dc. book tv is out there, c-span 2. the smithsonian castle you can see in the background with the tents for different topics and authror readings. we have live coverage on c-span 2. this is the 13th annual national book festival all day today. c-span will be out there airing book readings and talking with office on the sidelines and taking your phone calls. that is today and tomorrow. and you can tune in on our companion network c-span 2 and online at c-span.org. next, a look at implementing health insurance exchanges with the director of the center for consumer information and insurance oversight. that is the agency in charge of

implementing key provisions of the affordable care act. this is about two hours. [gavel pounds] >> good morning. i convene this hearing of the subcommittee on oversight and investigation. in less than two weeks enrollment and qualified health plans under the affordable care act will begin, the law of the land. today we hope to discuss the issues that may arise over the coming weeks. most of the concerns about the law can be reduced to one question -- is the it ministration ready? since passage of the health care law, the it ministration has told us that the government will be ready when open enrollment begins in october 1 and the exchanges start january 1. thatxperience has shown

rosy predictions often give way to result of rock implantation. andlaw has many problems half of them were something done away with for a year. while individuals must comply with the requirements starting january 1 or pay a penalty, this is not so for businesses and companies who are able to delay the employer mandate for a year. despite the administration's promises about lower premiums, evidence continues to mount that some individuals will face rate hikes when the exchanges opened. double the price they're currently paying. and the administration's promise if you like your coverage you can keep it, rings hollow now with news reports every day about his mrs. moving -- busines ses moving the spouses into exchanges. if the president's promises are true, we would not hear stories about major airlines losing millions of dollars with the health care law and we would not hear about the spouses of thousands of employees losing coverage. meanwhile, any oversight over the health, remained taboo for

the lost offenders. last month, the committee sent letters to recipients of federal funding to participate in the navigator program under the law. we asked basic questions -- how many people are you hiring? what you paying them? are you performing background checks? we should expect rooms receiving federal dollars should have answers to these questions as enrollment begins in two weeks. in the course of this investigation, the committee has had many productive calls with recipients of navigator funding. i have had some personal meetings that have been very fruitful. many of the organizations were prepared to answer our questions. we believe they will be ready to properly perform their duties. yet, we have also seen that the navigator program, like many other programs created under the health care law has been impacted by the administration's delay and implement in the law. according to a gal report issued in june, the ministration issued the navigator grants to much behind schedule --according to the gao report. issuing not end up

awards until august. the administration had initially planned to start navigator training in july but they did not finalize the programs until august 29. this reduced by half the time available to begin training and preparing for enrollment. to begin training and preparing for a moment. today we will ask the director for consumer information and entrance oversight to explain how the abbreviated training schedule will affect the program. we will also ask mr.: to address some of the concerns we have identified in our review. some are going door-to-door to connect -- conduct enrollment activities. indicates the representatives are aware of problems linked to door-to-door outreach activities such as represented falsely navigators. we have learned the return on taxpayer dollars varies widely

among recipients. 312charge $80,000 to enroll people. other groupshand, clearly have high expectations. another applicant estimated they would enroll 75%, resulting in several hundreds of thousands of individuals. there is a wide difference in expectations and work load. our concerns over the safety remain as well. one navigator plans to survey attendck of those who community meetings. about payingcerns for that. one navigator told the staff that they believe background checks are important if these are not the required action. our responsibility is to identify waste, fraud, and abuse. some programst

can identify problems to taxpayer dollars are wasted. doesait and see approach not seem appropriate when the implementation has been botched by uncertainty. clinician, it was hardly ever appropriate for me or my colleagues to wait until problems were severe or critical. any claims that we are doing otherwise are inappropriate. mr.: and look forward to questions about what we can expect. to yield to mr. waxman because he has another commitment. pre-k's thank you for yielding to me this time -- thank you for yielding to me this time. the affordable care act oversight of the last three years has not been to enlighten the committee or improve the

law. it appears to be part of the efforts by the republican party to engage in partisan attacks on this law. and even sabotage the affordable care act. i released a report releasing the republican campaign to undermine the law. 41 repeal votes. the imminent threat to shut down the entire federal government or force a catastrophic government default if the law is not repealed. there is no legitimate purpose to 51 by the letters navigators who are community manys, food banks, and similar nonpolitical organizations tasks which trying to help inform the public about the affordable care act benefits. serious ill-timed and a

mistake. i find amazing to hear the chairman talk about how they have not had enough time to do their job. now we are trying to divert them from doing their job by answering all sorts of questions. this is without this. my staff released an navigator program. millions ofve health insurance coverage. it is assisting individuals with federal and state benefit programs. they have effective privacy protections in place. -- ofure the public and

the republican attacks on the program are unjustified and inconsistent with the facts. it is hard to escape the conclusion that it was designed to intimidate these groups and discourage participation in the program. thanks to the affordable care act, millions of americans will be able to get high quality, affordable insurance. the worst abuses have been ended. this republican approach i believe is bad for the country. balance ofield the my time. >> thank you for yielding time. thank you for your extraordinary leadership. if you got this through the committee. to announce that tens of thousands of my constituents have already benefited from the affordable care act. arethousand seniors eligible for preventative services. would he thousand children can no longer be considered.

it has been a long path. less than two weeks away we will be one step closer to helping many americans receive affordable and quality health care. there is the outreach. it will help directly enroll 1.1 million uninsured people and ensure-- assist more to and relief health insurance. this is a touting the success of having every american insured. they have forced more than 40 votes to defund the act. they have funding solely for the purpose of this program.

you know it and i know it. it helps families to access health insurance. goingay many will be door-to-door. i hope they will be going door- to-door to enroll every uninsured american. one of my north carolina republican colleagues who served on this committee said that she that this guyed means this. she is quoted in the article as saying that this ended up recovering in a delay i would not be unhappy about it. i would hope that we would american getry access to affordable health care. we need to bring this debate to a close. thank you. i will yield back to you. is nowgentleman recognized for five minutes. recommendciate the

ation. morenot know a whole lot than i do the last time he was here. i have been told time and time again by officials for health and human services the white house and even you when you were here that the exchanges would deftly be ready to go live on october 1, 2000 -- 2000 13. not madeal hub we have available to any of the testing dad said that reportedly has been done. that is an important aspect that many of us continue to have. federal officials have assigned much of the responsibility for the education and outreach. delays,er

they began training in july. they were issued on august 15 and the training program was not available until the end of that month. yet 67 million dollars, 13 million dollars than originally budgeted. moneyllion of taxpayer taken by threat to the iraq us irs. it has been given not to navigators across the nation. articleo reference an from august 4, 2012. this is over a year ago. the article says federal officials are looking for private contractors to provide in person assistance. a contractor will also help the government decide who gets federal subsidies, expected to average $6,000 a person and who

is exempt from the tax penalties that will be imposed on people without insurance. it is not like the agency did not know this was happen. it goes on to say the director of the federal office of health reform says the exchanges will operate essentially in the same but planning for the public exchanges has been done almost entirely behind closed doors. i think that is one of the problems that many of us on this committee have with that. a research professor at georgetown, said the federal exchanges were much more opaque than the state exchanges. you have to wonder what value is there in opacity in that situation from an administration

who said a value transparency? morning people who receive their copy of the wall street journal were greeted with the headline "burden shifts on insurance." the health care law was sold by the president. it was sold with the admonition if you like what you have you can keep it. if you like your doctor if you can keep your doctor. if you like your health plan you can keep your health plan. apparently not. we get criticized because of attempts to rein in the affordable care act. no apology for the number of times legislations contribute floor of the house to try to pull this to the house. become increasingly clear how dangerous this law is how to our economy.

seven times the president has signed one and the bills into law. gone are the 1099 provisions. gone are several class acts. times the president has decided himself that parts of the law were unimportant. the law he signed was not going to indoor. what about the pre-existing condition program? it was sold on the backs with people with pre-existing conditions across this country. up onomeone showed february 1 at this year to enrolled in the program they were told sorry, the program is closed. for 11 months people with pre- existing conditions are just wandering the country. removing the reporting

requirements and relying on self attestation. removing the employer mandate. no premium information. this was promised to me by the administrator in july. but i would have this information by september 15. we are going the long way to september 15. if you go to the website today, it says come back and see us in a few weeks we are busy trying to get it ready. thank you. >> thank you very much. before i make my opening statement, i would like to recognize the newest member of the energy and commerce committee, congress -- en ofessman john yarmut kentucky. he does not have subcommittee assignments but we know he will be on this fabulous subcommittee very soon. >> without objection. oure have spent more than

share of time on the affordable care act talking about implementation. it is our seventh hearing this year. we have not seen any problems coming up. fornt to thank mr. cohen coming back during a busy time in his schedule as the exchanges open. it is our job to unearth the fact in a nonpartisan manner. a moment talk for about what we have seen this year. we conducted extensive investigations of health insurance programs under the aca. going to allow millions of americans to obtain affordable insurance for the first time ever. hhs released a new report 10wing that nearly 6 in uninsured americans would be eligible to get insurance

coverage for under $100 a month. foundationmily released earlier this month concluded that premiums are generally lower than expected. a new study reached similar conclusions. also show they are already benefiting from the act. six point 8d that million customers saved an estimated one .2 billion dollars on their premiums in 2012 due to review provisions. this committee conducted an investigation into the contractors responsible. this is one of my favorite hearings. what did the facts show? the contractors will be ready on october 1. they are taking appropriate steps to protect consumer privacy. aren added benefit, they creating thousands of jobs. last month you opened and it--

an investigation. that is what we're here today for. of sent letters to dozens community groups that received grants to help their neighbors signed up for aca benefits. waxman expressed his concern that this investigation was concerned not to enlighten the committee but intimidate the navigators. i kind of agree with those criticisms. there seems to be little reason to put these on the navigators just as they were starting to get their work going with the public. basis forhere is no the allegations about the navigators. yesterday they released a supplemental memo summarizing the navigator documents. i would like to ask that this be made part of the record. >> they found that navigators would help millions of people obtain health insurance coverage that have extensive coverage.

nonprofit,tors are nonpartisan community service providers and they have effective privacy provisions in place. those are the facts. you talk about these navigators that are going door to door. that is a concern. that is why we have to have the real navigators and play so they can sign people up. hhs and the ftc announced a massive anti-fraud efforts. i suggest we all work together to stop any kind of fraud in the system. i want to yield the balance of my time. i wanted to relate today the enthusiasm i am hearing back home from so many of my neighbors, particularly when it bar against

discrimination for our neighbors that have pre-existing conditions. over the past few weeks i met with leaders and communities with multiple sclerosis, diabetes. hiv/aids. cancer. they now see hope. they have hope because they will be able to get insurance for a be discriminated against. childrentember 2010, with these chronic conditions have been able to get insurance and the greater tampa bay area. childrenmeant 237,000 have been able to get insurance were before they couldn't. 1, this willuary apply to adults. they are particularly enthused. at the same time they are very troubled by the sabotage. they do not understand why now people are going to block access

to the doctors office and affordable care. i look forward to discussing this today. to recommend the chairman of the economy. thank you for being here. i will now elsewhere in the witness. the recent service is for general counsel. you are aware the committee is holding an investigative committee. do you have any to testify? >> under the rules of the house you are entitled to be advised by counsel. you swear the testimony is the truth, the whole truth, and nothing but the truth? you are subject to the penalties by the code.

you may now please get a five minute summary of your written testimony. >> good morning. i look forward to answering your questions regarding the ongoing navigatording the program. as we approach the beginning of open enrollment, we are focused on helping people sign up for affordable health care coverage that begins on january 1. we're seeing that competition works. this is encouraging insurers to offer plans at competitive rates. lessminary rates are 19% expensive. states are using their improved powers to help keep rates affordable. rates, many recent may be able to pay $100 or less per person per month in coverage in 2014. when open enrollment began it is one more step to ward putting in place one of the core promises

of the affordable care act, affordable coverage that begins next year. we're working hard to make sure consumers have the information they need. health care has received more than 3 million unique visits and this was launched. overhave awarded grants to 100 organizations. these are organizations with a proven ability to reach out to likely marketplace consumers. the pennsylvania association of community health centers. it has been supporting health centers across the state in their mission of providing primary health care. this is the nation's largest system. a nonprofit the martin luther king health center which has been serving the people in shreveport since 19 86. the university of mississippi medical center. the united way which will be collaborating with 17 other

organization and assisting residents and which has been helping people in the fort worth and arlington areas for 90 years. and the university of georgia which is founded in 1785 as the nation's first university. i find the suggestion that these organizations are going to prey on people by stealing their identities to be utterly without foundation. the reasonple is that these organizations exist. prepared tore provide impartial assistance to consumer coverage. they will be required to adhere to strict standards including how to safeguard a consumer's personal information. toy will be required complete approximately 20 hours to be certified. they will renew this yearly. the work is similar to work that has been done to help them understand their options.

unfortunateally that many of these organizations are facing distracting scrutiny as they prepare. withdrew fromon the program as a result of this scrutiny. this type of scrutiny they -- large stateks universities in chapters as having done something inappropriate before they have spoken to a single consumer. they're trying to do the same type of work they have done in their communities for years and in some cases decades. it is unfortunate that they are the subject of inquiries that suggest they are doing something wrong by helping people enroll in coverage. their feeling obligated to spend time responding to insinuations that they are hiring unqualified staff is is a beginning the task of helping people in their

communities. it is disappointing that the attention has been diverted at this critical time. i have been asked countless times whether we will be ready for day one. it brings to mind the implementation of medicare part d. i understand there were some serious challenges. seniors not enroll correctly, beneficiaries turned away. solve these programs and now this is strong and successful. this helps me for my medication. the people actually benefiting from the law will not be talking about what happened on october 1 or january 1.

they will talk about how their child can get health coverage even though he has a pre- existing condition. they will talk about how they no longer have to pay for premiums .ecause they are women they will talk about the security of not having to face of bankruptcy due to a diagnosis. we may encounter some bumps. we will solve them because that is what we do. we are here to help people get health insurance. thank you. i'm happy to answer your questions. >> and recognize myself for five minutes. i want you to understand the function of this committee. lack of readiness on your part does not constitute a reason that congress gives up its responsibility to have oversight. you have previously been here. you told us everything was fine. it was like a scene in animal house. let me ask you a few things. on july 20 second, members wrote

to secretary stability --ommending ever mention recommending information. they're still not announced the premium prices. am i correct? >> that is true. be available to consumers in the federal exchanges? when will this information be made public? >> consumers will be able to go online and see what plans are available on october 1. >> be able to provide any information on availability for federal exchanges? putting out some information on rates soon. >> it is important for the navigators to know what kind of products they are selling. >> they will not be selling any products. advising and providing information impartial information about a consumer's through the marketplaces.

>> it advises them of the things they can choose. to reason it was intended show 54 million. opportunity for 53 million. >> he ended up spending 63 million, correct? >> we provided more outreach. to spend 54expected million in the program. are you familiar? july 21 the administrator wrote to this committee answering some questions we had about navigator programs. she stated the program would cost 54 million. they announced the grant would total 67 million. make the decision? do you have any idea the day?

>> i do not. >> you have no idea. >> i know that we have had an ongoing interest in making sure we can do as much outreach as possible. >> yesterday the administration announced new initiatives to prevent fraud by a call center to address cyber security issues. can you address what these will entail? >> we have a call center now. there will be a way for people to report any instances of fraud. we are working with the ftc to make sure that the appropriate people get that information. >> you agree it exists? actually been brought before the affordable care act. this is not the program -- first

program subjected to fraud. i expect there will be fraud that occurs. >> you are aware that it is a possibility and you will watch it carefully. >> we are. >> privacy is extremely important. are the navigators bound by the hip of -- hippa laws? >> they will have no access to personal health information. they may get that. laws binding any them to confidentiality? >> the terms of the grant and agreement that we have spells out very clearly their obligations. >> i know. i talked to one navigator who i a good jobdo because he is bound by hippa law s. there any laws in place to prevent people from maintaining

or sharing information that may be health care related? inthe health care act particular charges a fine for using the information. >> will navigators be going door-to-door? >> we will be giving instructions to navigators that they should not go door-to-door. they can't be enrolling anyone now because no one can be enrolling now. in terms of going door-to-door to solicit people to enroll in coverage, they will be instructed not to do that. no one can be going door-to-door and enrolling anyone because no one can enroll today. >> thank you. what is the purpose of the

navigator program? >> to educate people with respect to their benefits under the affordable care act and provide objective help to them if they want it in finding out what they are eligible for. >> can you move your mic closer? thanks. who decides who these certified navigators are going to be? much had a grants process like every grant process -- >> we had a panel that vetted the applications and they tried to choose people who had experience and presence in the community, correct? >> they were screened by the office of grants management, then there was a panel. >> to receive a navigator grant, the applicants have to demonstrate they have existing relationships or could establish relationships, is that correct? >> yes. >> navigator awardees have to

complete a training program, including 20 to 30 hours, correct? >> yes. >> they have to pass an exam, is that right? >> correct. >> part of that exam is understanding privacy and affordability programs? >> yes. thatey have to certify they're going to comply with any privacy or if -- of hip -- hipaa, correct? >> correct. >> when somebody signs up before the aca, when they sign up for health insurance, someone would have to fill out applications as long as 35 pages. is that correct? >> correct. allhat included divulging kinds of personal medical information because that was necessary for the insurance companies to figure out what the insurance rate was, because they could discriminate on pre- existing condition and gender, right? >> right. of that the aca, none

pre-existing condition information is even relevant, isn't that right? >> that's true. are not going to even have to divulge that kind?? >> >> of information, is that right -- of information, is that right? >> that's true. >> they would not have to get that information from somebody, right? >> it's not part of the application. somebody offhandedly talked about their information, the navigator would be trained that is private, correct? >> correct. >> i want to ask you questions about the marketplaces. are the marketplaces going to be up and going on october 1? >> they will. >> will the federal exchange be going on october 1? >> it will. >> people can go on that marketplace to sign up for a six-month period? >> correct.

>> if a member of congress wanted to go on the federal marketplace and look and see what plans were available, they could go on october 1, right? >> they will. >> but then they will have additional time to sort through those plans, is that right? >> yes. up, their do sign coverage starts january 1, 2014. is that right? >> that's the earliest they can start. are either running their own marketplaces, or they are doing a marketplace in partnership with the federal government. is that correct? >> yes. >> will those states be ready for the start of coverage? >> my understanding is that all of them will be open for open enrollment on october 1. >> can you give me a sense of the milestones and benchmarks the subcommittee should be looking at to measure progress?

we keep calling everyone in here, everyone says they are ready. what are the benchmarks we should be looking for? >> there are two types of benchmarks. benchmarks,internal how is the call-center response time working, how was the website working, those kinds of things. then there are the external, how many people are getting enrolled -- we don't anticipate a huge amount of enrollment in october. coverage starts in january. people have until december 15 to pay their premium. >> i guess you are prepared if there are glitches to address those glitches quickly, is that right? >> absolutely. but when this before, we did medicare part d, even though i voted against it, i did outreach to my constituents. i have my newsletter that i sent

out to everybody. i will let you look at it. everybody onst to both sides of the aisle, it is incumbent upon all of us to try to get as many people enrolled in this program as we can who don't have insurance now. i hope it works. thank you. beenl the people who have cut from their insurance plan will be able to look at that . i now yield to mr. burgess. >> thank you. correctly,if i heard you said the navigators would not be going door-to-door. is that correct? will beederal grantees getting instructions that navigators are not to go door- to-door for the purpose of enrolling anyone. >> you have an evidence binder next to you. i ask you to turn to dub of o of binder -- to page tw

that binder. in that abstract summary -- i assume this is the summary that the company or the group provided you in their application to receive moneys from the navigator grant program . the second paragraph of that summary reads, the proposed row graham will deploy 25 exchange navigators in each of the targeted counties. eligible residents will be sought out by going door to door. is that consistent with your statement to chairman murphy that the navigators would not be going door-to-door? >> were going to tell them they should not be going door-to- door. >> if they applied for a grant and told you they're going to seek eligible individuals by going door-to-door, did you read the application? >> i've never seen this before.

i had no role in the grant award process. i'm seeing it for the first time now. i understand that's what they said. i see those words. they're going to be instructed from us. we have an agreement with them not to go door-to-door. i'm confident they will obey that instruction. >> do you know how much money they receive in their grant? >> i will have to look it up. >> $1.2 million. can we have the money back? they provide an application to you which was approved. yet they outlined an activity which you set will be expressly prohibited. >> -- said will be expressely prohibited -- expressly prohibited. >> i am confident they will be a wonderful grantee. >> i am confident that the taxpayer would like to have their taxpayer money back if the

application was approved based on information that would make them ineligible for approval. >> i did not say that. going to ask for a yes or no response. will the enrolled that be ready october 1 of this year? >> consumers will be able to go online. they will be able to get a determination of what tax subsidies they are eligible for. they will be able to look at the plans available where they live. they will be able to see the premium, net of subsidy they would have to pay, and they will be able to choose a plan and get enrollment coverage beginning october 1. >> will the enrollment process be ready by october 1 of this year? >> i have nothing further to add to my answer. >> your answer sounded as if it could be a yes, but left room for a no. downll market down -- mark and equivocal answer. willie exchanges be ready --

will be exchanges be ready? >> it's the same answer. >> consumers will be able -- >> to go online, get a determination of what they are eligible for, find out what the subsidy amount is. they will be able to look at the plans available to them where will be abled they to -- they will see the premium that of subsidy and they will be able to choose a plan and get enrolled in a plan. 1 and i will be ready january -- that will be ready january 1? >> it will be ready october 1. that is my understanding. >> full implementation of the law come a will it cause employers to alter or drop coverage for their employees? >> i don't know the answer to that question. employers make lots of decisions for lots of reasons. some having to do with the affordable care act, some not. >> willful implementation result

in reduced costs for all american -- willful implementation -- will full implementation result in a reduced cost for all americans? petition is causing competitive rates to be available. bewill all american still able to keep their current coverage if they like it, as promised by the president. grandfather plans are allowed to continue to exist without change. it is up to private insurance companies what products they offer in the market. >> an open have time for additional questions. -- i hope we have time for additional questions. i yield back. mr. dingell, you are

recognized for five minutes. >> it is important that we have proper, friendly, sympathetic and intelligent oversight to get this program off its feet and going in the direction we want it to go. the subcommittee has a long and successful record of conducting such oversight, and this has informed the congress of critical facts. oversight will lead to much good for the american people. fearful that this current investigation might be turning into something less desirable. i hope we will work together to avoid it. a community-based social services organization i have worked with for more than 40 years. there is no one who knows our communities better than them. this is the type of group we

should be empowering to help people sign up for health coverage. the institution serves all parts of the society. all racial and religious groups. it does so without discrimination. my questions are regarding protections that exist in the navigator program and implementation. my questions will elicit yes or no answers. i'm assuming that all of your navigators meet all of the standards of any federal government contractor, is that right? >> it's a grant program, yes. >> in regards to discipline and integrity and proper behavior, is that right? >> yes. >> i hope you will submit additional answers and responses to the questions for the record.

the grants cms recently awarded to navigators required by the affordable care act? >> yes. >> is the training navigators must go through comparable to the training of agents and brokers who currently sell health insurance? >> yes. tois information included as how to protect consumers? >> yes. >> are navigators subject to the same scare full-screen in -- careful screening? >> yes. >> will the navigator grantees be overseen in the same way as other cms grantees are overseen and held to the terms? >> yes. i would like to move to talk more about the opening of the new marketplace, which is less than two weeks ago. in 2012, were insurers much less likely to request rate increases

of 10% or more? >> yes. >> would you submit for the record why that is so? >> yes. believe the rate review provision in the affordable care act is a factor which led to this behavioral change on the part of insurers? >> yes. >> do you believe the marketplaces are working as intended i'm making insurers compete over price? >> yes. >> is it your expectation that the consumers will have more and better information because of the structure of the marketplaces? >> yes. >> would you submit additional thoughts on that, please. in the 16 states for which we have data, our preliminary rates for health insurance in the marketplace, 19% less expensive than predicted. >> yes. >> would you submit additional

comments on that point, please. submitted itsrers to participate in the marketplace only to revise these bids and reduce prices when other insurer's rates came in? >> yes. >> would you submit additional information on the question, please. we'll nearly half of consumers $100 ore able to pay less per person for coverage in 2014, yes or no? >> yes. >> would you submit additional information for the record on that point, please. eight and 10 that marketplace consumers are expected to qualify for subsidies to make health coverage more affordable? >> yes. >> will you submit additional comments on that, please? we are a few days away from

seeing the full implementation of the affordable care act. i know there may be bumps in the road, but were headed for the right direction. america's people are eager to work together for the common good. i hope we will take this as an opportunity to work together in a bipartisan manner. our constituents expect nothing less than that. one thing happened the other day. for our goodn friend tom coburn, now in the senate, said, a government shutdown would be committing ritual suicide on the order of bad strategy. the idea that we can fully defined obamacare through the continuing resolution is a washington gimmick to advance political funding goals. i yield back the ballot of my time -- balance of my time. >> thank you, mr. chairman.

welcome,, mr. cohen. since the last time you appeared before this committee, i have been home, talking to the people of texas about pending obamacare enrollment on october 1. most have not heard of open enrollment. theirave not heard if employer will continue to provide health care under obamacare. and now the ones were working 40 hearing theyk are may get their wages cut by 25%, down to 30 hours or less per week. they have heard about navigators. they are scared. they have a lot of questions, as

you can imagine. responseve me a direct and not a filibuster. the first question, there are now 104 entities that are navigators, correct? >> it is more than 100. that sounds right. >> how many of these navigators have hired people or currently have people in place to be navigators to fulfill these requirements? >> i don't have the answer to that. i'm sure we can get you that information. >> we are seven business days away from this rolling out, and we have no idea how many navigators have been hired? >> i said i don't know. we have officers who are in contact with the navigators on a regular basis, and at least weekly. i'm sure we have that information and would be happy to get it to you. >> about the ones who have been they began to be

trained yet? >> i do not know yet. >> can you tell me the details about their training? i understand it is a 20 hour syllabus with an exam at the end. is that multiple choice? 20 hour-- it's a course. as you go through the course, you are asked questions about the material. you have to score 80% on each section in order to pass and get .ertified >> is there a background check? the organizations went through a very rigorous scrutiny process in order to receive the grants. we have not required -- the federal government has not

required background checks for individuals be given, but some states have adopted that as a requirement. >> and so the people on the street are not required a background check? ,he people knocking on doors giving information out, are not required to have background checks? >> there is no federal requirement for there to be background checks. check for many years by the federal government. how about a drug test? how about a navigator? >> there is no requirement that individual navigators be subject to a drug test. >> how about guidelines? how much do navigators get paid? determined by each of the grantees.

it's part of the budget they presented, and the budget proposals were subject to review by the office of grants management at cms to make sure that the amounts being paid were reasonable. >> does the program have quality assurance such as a so-called secret shopper? do you have some program like that? >> we will be doing ongoing monitoring and oversight of the navigator program. .t could include secret shopper >> as a panelist on the chamber of commerce board back home, talking about the role of obamacare -- we have a couple of state representatives with me. one said he has heard that the navigators in the streets will have voter registration cards. is that true? >> federal voter registration law requires a public program like medicaid, in the

application, people be offered information about voter registration. because the application covers subsidies under exchanges, we are required to provide in formation about voter registration to people. >> thank you. i yield back. thank you, mr. chairman. ohen, we are not even in yetmonth of halloween and the republicans, one of their favorite scare tactics we hear regarding the aca is that the affordable care act is going to lead to higher health insurance .remiums and rate shock well my republican friends made every effort to convince americans that everyone's health insurance premiums are going up on january 1, now we have the data that demonstrates that that

is not true. these assertions that health insurance rates are going up is not borne out by a number of analysis. let's talk to the information on .he affordable care act when people shop for coverage through the marketplaces, they will be able to compare plans and then select a plan, sign off for the either private insurance, or if they have a state expanded medicaid, medicaid, is that correct? >> that's right. >> if they have a household income below 400% of the poverty of four at about $94,000, on a sliding scale, you will be eligible for tax credits, is that correct? >> correct. >> this week, hhs released an announcement on the 41 million

uninsured americans. 25% of floridians are uninsured. you can see why these new marketplaces will be a godsend for them. 41 million uninsured americans will be eligible to enroll in coverage. can you tell us in broad terms what the analysis said? >> it said that about eight in 10 will be eligible. will bet say 23 million able to purchase coverage for less than $100 a month? >> that's correct, including the subsidy. >> did you have an idea that the coverage would be that affordable? >> there were lots of predictions about what rates would be. we have been enormously pleased that the marketplace and competition is working, and we are seeing the availability of low-cost, affordable plans in many places throughout the country. beenese findings have

echoed in recent studies by the nonpartisan rand corporation, and the nonpartisan ties or family foundation, two of the most respected nonpartisan organizations. are you familiar with brandon kaiser? >> -- rand and kaiser? estimated that in ,pecific geographic locations they talked about a premium for a four-year-old, a planting $320 a month nationally. -- plan being $320 a month nationally. in the marketplace, are they a good deal for the quality of coverage being offered? >> that's one of the most important things. these plants have to have the

essential health benefits that are required by the affordable care act. they cannot have annual or lifetime limits. they're going to be there to provide coverage when people need it. >> at the beginning of the anding, i shared with you my colleagues at the enthusiasm at home, especially among many of our neighbors who have chronic conditions who have been barred from insurance coverage. -- i talkediabetes to a gentleman with multiple sclerosis. hiv, aids. we all have neighbors or family members that have been barred from coverage because of these pre-existing conditions. hope that theym can finally obtain coverage. this high quality coverage that is available for the same price, will it be available for the same price even for many of those neighbors who have those

pre-existing conditions? >> that is right. every republican analysis of premiums under the aca, they ignore these key facts that .overage has gotten better the tax credits. in my state of florida they said, let's conduct a study and we will show you it is not affordable. they did not build into the study the tax credits that are available for families and neighbors and small businesses. the one that really takes the state -- wehome need help when it comes to health care coverage. one of the things they did probably wins the award for obstruction and sabotage. insuranceaway the commissioner possibility to

regulate rates and negotiate rates. -- commissioner's ability to regulate rates and negotiate rates. do you know of any other such instances? >> no. is unfortunate that their authority was taken away. >> thank you very much. >> we now go to mr. johnson. >> thank you, mr. chairman. mr. cohen, good morning. thank you for being here today. responsiblement is for overseeing and administering these grants to the navigators? >> it's a combination of my office and our office of grants management, both within cms. >> you are responsible for overseeing that process, correct ? the grant process? >> the process of selecting, or

overseeing grandes? >> -- grantees? >> both. >> i had no role in the selection process. >> but you oversee it, correct? >> i had no role in the selection process. >> who oversees the grant process? what is your role in the grant process? >> i had no role in the grant selection process. >> what is your role in the grant process? >> my office is responsible for overseeing the grantees' performance. >> did you review the criteria for the grant applications to be reviewed? >> i did. >> earlier, when you were asked you said, i don't know. repeatedly you said, i don't know. didn't have anything to do with that. >> that's not what i said. i did not review the applications.

i was part of putting together what the program would be. >> the criteria for reviewing the grants. you stated in your answer to dr. ask you,hat when he could we get the money back for those that are doing processes like door to door that are going to be prohibited, you said you were confident that they would find other activities. i find this an odd way of going about spending the taxpayer dollars. if you don't know where you are going, any road will get you there. this is consistent with the theme of, let's pass the health care law so we can see what is in it. you are trying to tell the american people we ought to award millions of dollars in grants and then find out how they're going to spend it. i would submit to you that that is exactly the kind of irresponsible governance and

irresponsible administration that the american people have become so frustrated with. leaders who purport themselves to be directors, heads of agencies, saying, i don't know and trying to shrug our shoulders and say, i didn't have anything to do with that -- it is disingenuous. reclaiming my time, let me ask you a question. when you were evaluating the navigator grant program, were their standards on the amount of grants printing per and royally -- enrollee? were there any standards about that? >> i was not involved in the budget discussions with each grantee. -- youhe grant process

told me you review the criteria. were there any standards on the appropriate amount of grants spending per enrollee? >> i don't recall. >> a goes back to my first statement. any standards or minimum on the number of health fairs attended or individuals contacted via advertisements? >> i doubt that the funding opportunity -- >> summit what you know about the criteria. -- tell me what you know about the criteria. >> we put out an announcement that describes the program -- >> what is the criteria for a grant? >> i don't know how to answer your question. >> you don't know. >> no. >> that is appalling to me. turn to exhibit one, please.

i think it's reprehensible that you would come before the american people as a director of a department and you don't know. you sit there and tell me that you review the grant process, you review the criteria, and yet you don't know. you can't give the first sentence about the criteria. turn to exhibit one, please. >> i have it. >> this is a navigator grant application provided to the committee by the administration. it shows the navigator applicant who expects to facilitate enrollment of 312 people into qualified health plans. you awarded this organization approximately $80,000 of taxpayer money for only 300 people. i acknowledge you said you did not have anything to do with the grant award. but you set up the criteria. do you believe this is an efficient use of taxpayer dollars? i can do the quick math. >> your time has expired.

>> sorry, mr. chairman. i literally have not seen this before today. i'm happy to go back and look at it and answer your questions. i just can't do that today. >> i not surprised -- i'm not surprised. >> i was not part of the grant application and award process, for reasons i'm sure you will understand. do you approve the budgets of the navigators? >> i did not. >> do you? >> i don't. >> your agency does it? >> yes. did is help establish the criteria for awarding these grants to navigators, who will help people know what insurance options are available to them and help them

sort through a new law that they have heard a lot of negative things about from partisan republicans who want to demonize the idea that people will be able to get insurance. i think the questions you just had were off the mark and not appropriate for congress. i don't think we should beat up on people. peopleteria is to select who can do the job as navigators, right? >> yes. >> and you had something to do with that? >> correct. we have a process with the office of grants management, the same as every grant. every grant goes through a screening process where they review the application, review the management of the applicant, review the budget.

an independentto review committee that makes the selections based on the criteria and purposes of the program. one has a basis for criticizing you for what an independent grant committee reviews and besides, isn't that correct? >> i agree with you. >> i don't even know at this hearing is about. we have had so many hearings by the republicans to beat up on the affordable care act. they don't like it. they could've have gotten the message by asking us to vote five times. it is because they have nothing else to do but attack this affordable care act. why do they want to do that? they want to confuse and scare people. that is what this hearing is all about. the people who are doing the work of navigators are now being intimidated by the republicans who are getting a long list of

questions, asking them, did they do something wrong? that seems to me so unfair. you've got a clinic, you've got people who work in a homeless shelter, you've got people who work with an ethnic community, people who are there in the community and know the community well, and they have been selected and had to go for tests and classes to be good navigators, and they're going to do their job. they get letters from members of congress asking them to fill out answers to long lists of questions. do you know how many questions they been asked? >> very detailed questions about the application process and what their plans are for what they're going to do before they have even started work or hired their staff. >> this is nothing but intimidation by this committee. congress has a lot of power. getsthe chairman or member

the chance to ask questions, that's a lot of power. we need to restrain ourselves from abusing that power. i have not seen much restraint around here. i understand one navigator has dropped out of the program because they said, we don't have the work of to do answering questions from congress as well as reaching out to the community. isn't that right? >> that is true. i have heard from others who are concerned and don't know what to do in response to these inquiries. >> i think this is such an abuse of power, to intimidate navigators who are going to explain the new law to people. in california, we are running the program. we license people who sell private insurance. the state has taken over the responsibility of approving the navigators, hasn't it? >> yes. >> they have a job to do.

they have been checked out to make sure they are people capable of doing the job. we don't call in private insurance salesman to ask them about of questions. they're trying to get the community to understand something new, this committee abuses its power and wants to ask all sorts of questions at a time when they are trying to run this program. a couple weeks left, before the opening of the exchanges. >> any state that wanted to run their navigator program had the ability to do that i operating its own market lace or by being a consumer assistance partner. >> my state is doing a great job. we're going to have great success in california and around the country, unless republicans intimidate people, whether it is at the state or federal level, to scare them about the idea that they can get insurance that

has been denied them in the past. republicans said nothing about it -- >> your time has expired. >> i don't know what this hearing is about except to intimidate people. and inted, mr. chairman, resent the questions that our witness has just been subjected to by my colleague. reference to -- california has laws for insurance agencies. are you saying they would be under the same guidance of rules and regulations? it,s i understand california is going by the standards set by the federal government -- when you answer that -- why don't you answer that? >> california is operating its own marketplace and have its own navigator program.

it's not requiring navigators to be agents and brokers. we have issued regulations saying states may not do that. it put in additional requirements, as states may do. have rules about continuing education, fingerprinting, licensing, tests for agents. under the california program, they will not be part of those rules? >> i'm not 100% familiar with what california is doing. i believe california is requiring background checks and fingerprints. >> can you let us know on that? >> sure. >> mr. scalise, for five minutes. i will do my best to get through the questions i have. i want to thank you for having this committee. i think it's important that we have oversight over a program involving $67 million of taxpayer money, and a new

program where these navigators -- people will be going throughout america, trying to sign people up for the president's health care law. for somebody to insinuate that we should not be asking tough questions -- the american people have tough questions, that is why they sent us here. here to the you are questions that people have, and anybody that thinks that sunshine and transparency will undermine the law -- maybe they are right. that is not our fault. that is the fault of such a bad law that the more people find out about it, they don't like it. >> i will do my best to answer the questions. >> do you think any of these are unfair questions? >> i think i better not respond to that one. [laughter] the president that you work ran on apresident

campaign promise that he would be the most transparent president ever. we start asking questions, and people are feigning that we shouldn't be asking tough questions. it might make the president's law look bad. the seventh time i have testified before a congressional committee or subcommittee. i have always done my best to answer the questions and provide additional information -- >> i just want to make sure -- >> the concern i have -- any questions you have for me, the concern i have is for the scrutiny that these navigator groups were put under even before -- >> let me ask you -- i would ask the committee to give you the name of any navigators who dropped out of the program does of scrutiny during -- because of scrutiny. if any navigator dropped out because they did not want to be held responsible, they ought to

get out of the program. >> that was not the reason. >> we are asking real questions. they ought to be providing answers. i want to ask you about criminal background checks. why is it that you did not choose to include background checks on people who will be going around, asking people for very secured, personal information about their health? >> do not going to be asking people information about these health -- >> these people will be having conversations with navigators about health care. won't they be asking for a device about their options? --they will not be asking >> will they be asking them health care questions? >> they will not be asking them for information about their health that is not part of the application. >> if somebody just got released for a conviction on

identity theft, would that person be eligible to be in navigator? yes or no. >> i am confident that the organization so we have given grants to -- >> are they eligible? it's a yes or no answer. am i incorrect in saying that a person who was just released from prison on identity theft can be in navigator? >> we have had -- >> your rules allow someone who committed identity theft to be eligible to be in navigator? if i'm incorrect, correct me right now. >> we have had experience with the program. there was no federal requirement for background checks. >> if you correct me, i will stop saying it.

i just made a statement. if i said anything inaccurate, please correct me. >> there is no federal requirement for background checks -- >> was there a -- >> excuse me -- >> no, this is my time. >> give the gentleman the courtesy to answer. >> he will be given the courtesy. >> i ask for your support in being able to answer these questions. >> were you concerned that invoking criminal background checks might limit the amount of applicants? >> you may answer the question. we had a number of factors. it was not clear to us that we to requirethority the criminal background checks, and we wanted -- we left it up to the states to determine whether that was a requirement they wanted to impose. >> i would just ask if you can give a yes or no answer to a yes or no question.

that invokingrned criminal background checks might limit the amount of people who would apply to be navigators? >> the cost and difficulty of doing background checks, yes. >> the gentleman's time has expired. you provide us information -- you said some states have in some states don't. >> i would be happy to. >> thank you, mr. chair. thank you for returning to the committee and for your diligent work thus far in trying to implement probably the biggest reform to our nation's health care system in our history. this is no small task. we all appreciate -- i would hope we all appreciate the commitment and grace you have shown in taking on this work. i have questions, and i will allow you to answer them and not talk over you.

we have heard a lot about the exchanges, which are the most visible piece of the aca. i went to ask you about some of the other insurance reforms under aca that your center is responsible for. under the aca, the center is charged with providing support to consumers when insurance companies deny payment for a service or treatment. one such example of a guaranteed benefit is genetic counseling for women meeting certain risk criteria for hereditary rest and ovarian cancer. -- breast and ovarian cancer. i have heard several reports of women being denied testing despite meeting the criteria for testing, and receiving medical advice to have the testing done. thisderstanding is that should not happen, and your center is charged with ensuring it does not happen. what resources and assistance is offered to consumers who need to appeal health insurance claim

decisions, and where can consumers gain easy access to these resources? >> there's a requirement under the affordable care act for an external appeal process after someone goes through the process . probably running that appeals process. i have to go back and look. in some cases, the federal government is doing it. we work for a closely with the state department. when we learn of something that is a systemic problem, not just one particular individual or two , but it looks like a particular carrier or all the carriers and therket are not abiding by provisions of the affordable care act, we work with state insurance departments to make sure that they do. >> if you could look more

closely at that specific situation, i would appreciate it. >> we would be happy to. >> the implementation of the affordable care act will extend protections from mental health parity to more than 62 million americans. given the delay in issuing final parity regulations, it is doubtful the american people will enjoy the full protections consistent with the spirit of that legislation as the aca goes into full effect in 2014. another tragedy unfolding in need for a robust commitment to mental health has been highlighted again. we heard from numerous officials that mental health regulation would be finished by the end of the year. can you provide us with any more details on when to expect any such final parity rule? >> we have committed that there will be a rule by the end of the year. i'm confident there will be. work is ongoing.

i'd been to meetings where we have been reviewing the provisions of the final rule. it's moving through our process. i can't give you an exact date of when it will be coming out. >> ok. >> can you describe the current investigation and process that your office goes through when it -- violationle complaint? >> many federal law provisions and mental health parity -- the states are the principal, primary enforcer. when wetypically do hear about problems -- we do have a hotline where people can tell us about problems they're having with their insurance company. we will first reach out to the state department grade there have been instances -- department. there have been instances where we have dealt directly with the insurance companies to make sure they are complying. we have also done outreach and education.

the requirements of the mental health parity law are not as well known and understood. we have been doing some outreach and education to make sure they understand the provisions of the law. when these investigations are conducted, are the results of these investigations made public? >> it depends. normally we try to get compliance. if we are able to get compliance and there is no administrative action that has begun, typically that would not be public. if we go to the point of actually beginning administrative action and civil monetary penalties, that would be public. >> my five minutes are up. thank you. andhank you, mr. chairman, mr. cohen. four for just a

moment. exhibit four. if you look at that, you will see that number 14 says, incentives for quality connections. the second sentence states, navigators have the opportunity -- $200 additional per quarter if they meet a standard of 300 enrollments or screenings during the quarter. do you see that? >> yes. >> do you believe it's appropriate to pay navigators for the amount of its rituals -- individuals who are enrolled? >> we are not permitting that. >> what are they getting? a straight salary? so they get paid the same, you are saying? >> this is an application. in the federal program, navigators are not being paid by the number of enrollees.

>> didn't you approve this application? >> i did not. >> somebody approve the application. >> there is a budget process that goes through before a grant is awarded. i don't know the specifics of this particular application, but i'm confident that the budget was worked out did not include payment per enrollee. >> can you check that and get back with us in writing on that? >> i would be happy to. >> is there another form we should be looking at? >> there's a grant award, there's a cooperative agreement between the grantee and cms. >> let me ask you this. true, would you believe that we should be incentivizing navigators to enroll as many people as possible? >> in the federal program, we made the decision not to permit compensation based on number of enrollees. >> this is a document that you

provided to us. >> it is an application. >> that's what i'm referring to as the document. just so i'm clear, are you saying that no navigator is being paid additional money or bonus money by the number of people signed up? >> in the federal program, correct. >> what about any other program or entity? states that be some are paying some portion of compensation per enrollee. >> you would know which state those are correct? >> yes. >> if they're pay navigators a bonus based on that, i would want to know that. typeou going to issue any of statement or standards for navigators or to the states directing them not to do this? >> no. we have left them in the state''

-- throughout the affordable care act, we have given the states flexibility. we are not telling states they cannot do it. in a federal program, navigators are not being paid per enrollee. >> minder standing of what you're saying is that navigators are not subject to a criminal background check. >> there is no federal requirement for a federal background check. some states are imposing a background check requirement on navigators. >> the navigators are going door to door, correct? >> navigators will be told they should not go door-to-door to solicit people to enroll in coverage. >> they're being told not to? >> not to. >> do you know if they're doing that on the state level? >> i don't. >> can you let us know that too, please? >> i can try to find that out. >> please turn to exhibit number

eight. forbit eight is a workplan one approve navigator. to will see it promises complete 24,000 robo calls in , 72,000 roborter calls in the second-quarter, another 72,000 in the third and 72,000 more in the fourth quarter. do you see that document? >> yes. >> do you believe that navigators should be using taxpayer dollars to fund robo calls? >> i'm going to have to check to see what our instructions are going to be about that. my understanding generally is that our expectation is that when it comes to enrollment assistance, we're expecting people will come to the navigators rather than the navigators going to them. >> this is an application that was approved.

this was an approved application . >> this grantee was awarded a grant. that doesn't mean everything on the application ended up in the final -- >> that application did call for robo calls that you saw. i yield back. >> thank you, mr. chairman. very urbani have a district in houston and it has some of the highest rates of uninsurance in the country. the numbers in my district, one of the poorest in the county. know my navigators are not going door to door, they are prohibited from doing it. but enroll america, a nonprofit group, is doing that. that in mym to do district. i want them to let people know that this law is available. what you are hearing about today is folks who do not like the law.

they're trying to keep it from actually working. in a district like i have, this is the way those folks can have insurance for their families. it's frustrating to me when they're talking about fingerprinting. under state law, maybe my insurance agents are it is not in the federal law to do that. in the state of texas, that is not an issue. insurance agents may be able to, but we do not hold these navigators to a higher standard than the federal law is. their complaint is they do not want the navigators to do their job to sign people up. i would be offended if somebody asked -- if i had to ask my insurance agent, do you have a background check? that is just amazing that some of my colleagues would do that. their point is they do not like the law, and they are trying to stop it, using any way they can to discredit it. it is working. we are doing more events in our district. we want that outreach to be there. oneme ask you something --

of the questions about navigators team paid, i'm looking at exhibit number four on page 10 -- navigators are paid a base wage of $10 an hour with the expectation of meeting basic guidelines. i had the opportunity they have the opportunity to earn $200 more per quarter. federally qualified health center employees, they have positions to be able to sign people up. we are talking about some of the folks who make some of the lowest wages that we can imagine. it sounds like to me it would be a republican thing to incentivize them to go out and do it correctly. that is what i think is welcome in congress. let me talk a little bit about one of the issues that has come up, and i have heard it a lot. on the floor last week, we were forced to vote on a bill that would force the hhs ig to take on the president's role in

certifying marketplace verification systems before people can get financial assistance. ofant to ask you a series questions about that. when an individual applies for financial assistance through the marketplaces, what steps are taken on the front end to verify that they are not under reporting income in order to get financial assistance? >> we checked against sources of data, including internal revenue service data, including social security administration data, and if necessary, private employer data through a database that is also part of that system . >> you have access to the irs database, and you also can check it against act without -- aga inst equifax? verification.nt if an individual's taxes indicate at the end of the year they are not eligible for the financial assistance, what do they have to do? requirers is going to that they reconcile that at the end of the tax year.

they might have to pay money back. >> i know most folks, the last thing they want to hear is the irs is going to audit you because you claimed less income than you actually earned, and you are going to pay this back -- is there a penalty for them under irs regulations? not only to the back taxes, but to the penalty. >> the information they provided, it says right in the application, is being provided under penalty of perjury, and there are penalties for cementing false information, if it is done intentionally. have assertedans the aca would be rife with fraud. he suggested people would be running up -- lining up to get financial assistance. the financial assistance provided to the marketplace can only be used to purchase health insurance. >> that's right. >> it is not correct they get direct cash assistance or sent to people's homes -- that is incorrect? >> the money goes directly to the insurance company. >> since they won't even see the

money, it seems unlikely that people are out there waiting to profit from this program and to put money in their pockets. they will not even see the money. can you tell us about the uninsured who are using the exchanges in particular, and again come in the state of texas, we need to have the national exchange. i appreciate the other states who have taken incentive -- taken the initiative on their own. address the allegation i heard that people who buy insurance in exchanges are fraudsters and deadbeats. is there any information on that? all people are looking oh -- looking for is to be able to cover their families with health care. >> they just want to take care of themselves and their families, that's right. >> thank you, mr. chairman. >> you are recognized for five minutes. >> thank you, mr. chairman. thank you, mr. colin for being

with us. i think you said this is the seventh time, is that correct? >> not before this committee, but this is the seventh time. >> on the hill, ok. i do want to go back to one of the comments that you made about how you believe that there is competition that is being created amongst the insurance companies with the exchanges. very recently, i believe as recent as last week, in north carolina, in my district, first carolina care insurance company announced that they will not be part of the exchange. they supply health insurance to thousands in my district. this means less options for my constituents. now for north carolina, i believe there are only two insurance companies. how does this provide competition? >> the results are different state to state. in many states, we have seen new entrants coming in and a lot of choice. in other states, we have seen less. i think you probably know the

existing market is extremely highly concentrated in some states. reclaiming my time, for my north carolina constituents, they will have less competition. >> i don't know what is available to them off the market. >> let's move on. i would like for you to move to exhibit seven. this is part of the approved application process. says that seven, it the applicant basically is going to spend money on participant incentives by purchasing and giving out gift cards to obtain consumer feedback on assistance provided and consumer knowledge from the satisfaction of the event. do you believe this is an appropriate use for the navigators to entice individuals with gift cards? >> it doesn't sound as though it is enticing trade it sounds like they want to get feedback in order to encourage people to get

feedback. >> are you sure that the idea of the gift card -- you know for sure that they would be basically given the information, and then you do not see that as an enticement? >> that is what it looks like to me for -- from here. >> you do not believe this is an enticement? >> it doesn't look like it, no. >> i would like to go back to a couple of the other issues. repeatedly that there are many questions based we put out,r that asking the navigators, and of course, those on the other side of the aisle are saying that .his is intimidation certainly, they have quoted me, as well, and i do not believe that the congress asking questions and doing oversight is intimidation at all. making sureed with

that taxpayer dollars are utilized correctly. i know that oversight is very important for you as well. i would like to also speak to in point where it says response -- i would like to submit this for the record -- basically hhs reported that we trust that our responsibility addresses your questions about the navigator program, and the are innes and controls place. there are a number of situations where you are going to be getting back to us with answers. is that correct? some of the different applicants, the questions posed to you, it is unclear at this point how it is being implemented, and you have repeatedly said that you would get back with information and written statements. >> right, and i have no objection or question whatsoever about that directed to us. >> do you not see that as a basis for delay at this point, that we would continue to move on with this process, even though it is very unclear as to

how these applicants are really going to be utilizing good, hard-earned taxpayer dollars? >> no, i don't. >> you believe we should continue as is? >> absolutely. >> regardless of being able to report back to congress, so we can make sure the taxpayers of this country know that their dollars are being utilized? >> i do not think that your questions are a basis for delay. >> i am a taxpayer, obviously. if you are speaking to one of my constituents right now, a little lady that lives down the street from me, would you say, based on all of these questions that have been posed, that her taxpayer dollars are being utilized well. >> absolutely. >> thank you. you have answered my questions. i would also like to submit for the record to the point about andissue of undermining being aggressive in this effort -- there is an article in "the business journal," and i would

like to submit this for the record. reached outtually to randolph hospital, a navigator applicant. -- from my a quote perspective and the hospital's perspective, we just see this as they're doing due diligence and making sure organizations that receive these funds are going to funds and thehe manner in which they were intended. we do not foresee this as being a problem. thank you very much. i yield back. member, mr. yarmouth, is recognized for five minutes. >> i appreciate the courtesy of the committee. i am very honored to be a part of the committee, even though it appeared i just joined a game of trivial pursuit, worried about $10 gift cards when we are talking about a lot that will affect 300 million americans. before i get into one line of questioning, i would like to plug my home state of kentucky.

kentucky has embraced the affordable care act. our governor has taken the opportunity to provide insurance to 640,000 kentuckians who are currently uninsured. -- wee an exchange that have an exchange that is a model for the country. one of the great ironies of this debate is that during our state our exchangeth, had a boost. a lot of people were curious as to what was available to them under the law. many of them walked away saying, this is a lot better than obamacare. that is kind of what we are dealing with. a couple comments earlier today that related to moves that certain corporations have made -- republicans have pounced on them, making an argument that they are somehow precipitated by the affordable care act and somehow resulted in a negative outcome. ups is not is ups --

based in my district, but the global hub is there. they are our largest employer. when i heard about the fact that they were asking those employees who had spouses who are eligible for coverage through another employer to take their coverage there, they were going to stop dividing dependent coverage to them, that this was somehow something that the affordable care act force them into, republicans pounced on that. my senator, mitch mcconnell, did. i talked to ups executives about this. they actually said, no, we are upset about the way republicans have used this, because what the affordable care act did is to allow us to make this business move, which a number of companies have done, and preserve our coverage at current rates, current contributions for our employees, about 15,000 of them out of the 770,000 they insure.

it was nothing the affordable care act did. , before theis affordable care act, would ups have done what they did? >> you know, i'm not familiar with that particular circumstance, but i do not believe so. >> ups could have dropped their coverage and taking it away? ups could have made any changes it wanted to, provided inferior coverage, anything they wanted to? >> correct. that when us know president obama said, if you like your coverage, you can keep it, what he meant was that nothing in the affordable care act would force an employee -- employer to change the coverage. not that there might not be changes -- in fact, some might be improvement. the issue of walgreens was mentioned earlier today. walgreens has decided to set up a private exchange for its employees, not shoving them into and exchanges, government

exchanges, but they have chosen to make an alternative arrangement for providing insurance for their 160,000 employees. >> that is what i understand. >> they said the reason they were able to do that was because of the private exchanges. we can expand the options that are available for our employees. right now, they said there were only two high deductible plans. we can improve their situation. you can actually make an argument, and i will make the argument, that because of the affordable care act and the creation of exchanges and the success that the exchanges seem offered in terms of increased competition and lower costs, that this gave walgreens an opportunity to improve the situation with their employees. you could make that argument? >> i agree. i think it is important to recognize that for many years employers have been struggling with the ever-increasing cost of health care and health insurance. double digit increases year

after year. what we have seen in the last few years are significantly lower increases in the cost of health premiums. i think we will continue to see that even more when the affordable care act is fully implemented. there is a lot less uncompensated care that offices have to pay for because more people will have coverage. >> as a reminder, when we go back to the year when this law was being debated in 2009, premiums for businesses were going up in many places as high as 38%. i think california, blue cross blue shield said everybody is getting a 38% increase. we have seen a dramatic improvement. i thank you very much for your testimony, mr. chairman. i yield back. >> the gentleman yields back. we will not go to dr. gingrich. -- now go go to dr. to dr. gingrey. >> i'm going to read you some

statistics that you may or may not agree with. a number of years ago, united date census bureau -- united states census bureau came out with an estimate of 47 million people in this country without health insurance. they got this information basically by calling insane -- and saying, do you have health insurance, yes or no? if they had just lost their job and had been off of health insurance for one week, the answer was no. if the call had been received two weeks later, the answer very well may have been yes. people without health ifurance is one thing, but it were for a full year without health insurance, that would be a horse of an entirely different color. in that 47 million, let's just assume there really were 47 million people who went uninsured for a full year. makellion of those people

more than $50,000 a year. 18 million of the 47 million. 10 million, it is estimated, of those 47 million are in this country illegally. for alion are eligible safety net program. they just do not bother to fill out the paperwork, or maybe they do not know. maybe they have not been informed. but when you get right down to it, there are probably no more than 8-10,000,000 people in this 10 million people in this country who do not have health insurance because they are nearly poor. they are not eligible for medicare or medicaid. the number was so grossly inflated. when i hear from the other side of the aisle that we republicans are totally opposed to this bill

, well, yeah, we were. reasonsone of the main we were. theher statistic -- 1950, average individual spent $500 a year in health care. that i, the latest year have statistics for, the average individual probably spent $7,000 a year for health care. but look at the life expect and see -- the life expectancy. in the lateectancy 1950s was the late 50s. the life expectancy in 2006 2006, 2007, -- indeed today, is 80 years old practically. costs in this country are too high. we need to constantly fight to lower it, find ways to eliminate waste, fraud, and abuse. anything we can do to bring it down.

what is the value of each additional year of a person's life because of what we have done? is costly, but that is because of research and development, durable medical equipment, medical devices, well-trained submissions -- physicians, outstanding drugs, of course, we were opposed to this bill. now look, let me get directly to a question for you -- in two weeks, the rules say that the sign-up period on the exchanges commences. will individuals be able to sign up for a health insurance plan on october 1, 2013? >> yes, consumers will be able to sign up for health plan beginning on october 1. >> they will actually be able to pick a plan, whether it is

sigma, aetna, blue cross blue shield, or platinum, gold, silver, bronze -- they will be able to do that on october 1? >> that is my expectation. >> thank you. this will be my last question because i am running out of time. most of obamacare is based on the premise i -- that by forcing younger people into the market, they will help lower the cost for the older and sicker individuals. but because the penalty is so problem if is a real all the young people do not show up. i'm afraid that they won't. in my home state of georgia, the insurance commission announced that for the average 27-year-old no longer on their parents policy, out of the basement, living on their own, premiums are set to rise anywhere from 85%-195%. it seems a $900 penalty would do little to incentivize younger

people to purchase coverage. a lot of the premise of obamacare is based on getting these young people to enroll. to help broaden the pool, lower the cost for the older and sicker. have you heard any concern that the penalty for obamacare is so weak, young people may stay out of the program in the first year, and if they do opt out, what will this do to the cost for the others? >> yes, i have read things. the speculation that the penalty is low and will not be a reason for people to sign up. i think our research shows that most people want health care, and the barrier has been the cost. with subsidies, coverage will be affordable and high-quality care, and we are looking forward to people, including young people, enrolling in coverage. >> thank you. mr. chairman, thank you for your indulgence. >> mr. griffin is next, but he will yield his first two minutes

to mr. shimkus. i thank you. i think my colleague. i want to thank the chairman for letting me sit in. i want to thank the ranking member. welcome. you are trying to do the job presented to you. this is a tough committee. so, let me ask a couple of questions. i have been trying to get my -- regardless of how we feel on the law, if nothing changes and it gets enacted, members of congress are going to be, we are going to have to address our constituents' concerns. what i have tried to do is a couple things -- i have tried to meet with my grantees. i have met with one. some are now making themselves available to me. i'm not doing it -- i'm just trying to do it to get information. i don't know what we can do from the administration's perspective to encourage the grantees to

talk to the elected members of congress in the regions they are going to represent. i would personally appreciate it. i am trying to develop a relationship, because constituents are going to come to us. i do for medicare, medicaid. they do for social security. veterans affairs. that is part of our job. i just need help. i say that as a member appealing to the administration could >> i think we would like to work with you on a process for getting information that you want. that won't be disruptive of the work that needs to be happening, particularly at this critical moment when they are just getting ready to start their work. >> i get it. i did meet with one. he was very helpful. the other request i have is, we have asked if we can get, especially our staff member who

deals -- most of us have constituent service people in our congressional districts, i have one, and she is an expert on medicare and medicaid -- i have another one who is an expert on veteran's affairs -- we have put forward a request saying, can we get this person trained? can they sit through the training? >> yes. >> we were told no. >> you were told no by? >> i can get you the answer. we were told they would not allow us to be trained. >> that doesn't sound right to me. >> that is fine. i want my staffer to know as much information as they can, as they are going to have to do with this. >> absolutely. >> my guess is they might have to do with this. when i talked to the one grantee, this was the point they made -- they've got 33 navigators, they are all dispersed throughout health care. today.ed that out

they only have two slots for training. there is an on off -- an online training. i am from illinois. there is a two-day training, probably overnight, and that is kind of where we were researching to get our staff are involved in both those trainings. >> is that state required training? >> that is what i am trying to figure out. is, this one grantee, before the operational date of october 1, we'll only be able to get to individuals through the training. -- will only be able to get to individuals through the training. i would be glad to talk to. >> i would be happy to look into that. >> they also raise the issue that getting a clearance for , it would be the

state of illinois providing clearance, they will not be ready to handle this information because of the clearance process. i'm just using this opportunity to show you some concerns that i have. i am very concerned. i do not like the lot. i voted against the law. but i know i'm going to get calls about how we can help my constituents. i want to be ready to do that. >> i appreciate that very much. i have to say that i am concerned that some states have put in requirements, which they are entitled to do, but that are making it a little bit more difficult for the navigators to get ready in time for october 1. maybe we can work with you and try to work through some issues. >> i would appreciate that. it wasal question -- based on listening to the testimony today about whether you are going to go door-to- door. i do not have a dog in that fight. i am concerned that as we have

people who are trained and processd that we have a someone -- a process so someone can go back to a government website and say, they are legitimate and they are not legitimate. have you put a list of the navigators on a website? >> we are working through that. ishink the latest discussion that we will provide the list to the state insurance departments. there will be a local place people can go to make sure that folks are who they are supposed to be. >> it is up to them if they put it online or not? >> right. >> chairman, thank you very much. i yield back the time. >> i think the gentleman from illinois. many offices would love to know how our staff can walk on and get the training. finally, mr. griffin is recognized for five minutes. >> thank you, mr. chairman. let me follow up on that. it might be good to get some of these ids.

an article about door- to-door scammers looking for prescription drug information. i know you cannot stop all the bad actors out there, we have a group running around in virginia pretending to be part of the appalachian agency for senior and even though you're telling folks they are not supposed to do door-to-door, the word out there is that some people are going to do door-to- door. toould draw your attention exhibit 2. you will notice in that proposal, in the second paragraph, it says that they propose going door-to-door. even some of the proposals and some of the people who are supposed to be doing this have a misunderstanding. one of the other questions i have for you, and then i will thatback to exhibit 2, is the state corporation commission in virginia bureau of insurance approved or certified as ofeptable plans at the end

july. it was their assumption they might have some information by now. morning, do not know if that is ok. virginia is not doing its own exchange. they haven't heard anything back as of this morning. they do not know whether these plans are going to be approved or not. i would ask you to check on that, please. get us some help. we have seven business days left ago. the state of virginia doesn't know which plants are going to be approved. >> that surprises me. i know we have been in contact with the state. i will follow through on that. >> we checked with them this morning. another concern is -- this happens in a lot of rural areas -- there is not going to be competition in 10 of the jurisdictions ever present. shop are either only one plan, or only one individual plan, and five of those , there is only one

shop plan, and one individual plan. a lot of my constituents do not have a whole lot of choices to choose from. obviously, there is a monopoly --if there is a monopoly a monopoly, that might inflate prices. now back to exhibit 2 -- you will see in the first page, the navigator will call to -- will cover two counties in florida and texas. on the next page, you will see that there will be 50 exchange navigators. you have to follow through. we did some of the math for you. i will lead you through some of this and ask you to comment. on the next page, you will see the enrollment goals, and they state in the second bullet point that they want enrollment, 75% of those they are trying to reach. 288,000icate a total of

will be targeted. what we've got is we've got a navigator and their statement saying that somebody in your office approved -- they are going to enroll 577,000 people, plus by the end of the year, and that works out to 11,500 enrollees per navigator. when you take that 577,000 number and divide it by 50 navigators, and these are the folks who are not only going to be doing fairs and so forth, but they might be going door-to-door -- do you really believe that one navigator can enroll 11,500 people? taking the time they had originally when this was done until the end of the year -- it looks like 31 people at day, counting weekends and holidays. it is not very realistic, is it?

i have done doorknocking before. dayeach that many people a and actually get them to say yes is not an easy account bush went. >> -- an easy accomplishment. >> this is a proposal. it was approved. this grantee was approved. they got a grant. there is a budget process that happens as a part of that approval. to find outt to you more information about this grantee, if you would like, but i cannot tell you whether this is how it ended up or whether there were any changes. i do not feel comfortable commenting on it, because i literally am just seeing it now. >> i understand that. if you could give me some comments later, i would appreciate that very much. these are concerning numbers. obviously, there are some people out there at least thinking they are supposed to go door-to-door. because whencern, people go door-to-door, it makes it much easier for senior citizens to be victims of bad actors.

not the real navigators, i'm not going to describe that to the and real navigators, but folks going out there and people are coming by, and the next thing they know, they are finding out whether or not they have prescription drugs. what they are doing in that audi -- that county is they will go back and rub the house, and they are more interested in getting the drugs than the tvs. they are try to figure out which ones are the prime targets. that is a concern. i'm not sure whether this falls under your jurisdiction, but we are having a real problem with the doctor shortage in the commonwealth of virginia. i will tell you that recently one of my hospitals closed. their number one reason was obamacare. medicare, the scissor where the states under the original plans were supposed to, but didn't have to with the supreme court ruling, expand medicaid, and then the final , lessfor this hospital

insured people, and the final straw was they couldn't get doctors to staff a hospital in an adequate faction. now folks will have to travel one hour or one hour and a half to get cardiac care. i'm worried about the people in my district and whether or not they will be able to get adequate health care. like others, i hope you will educate us on how to enroll people. we will get calls. >> the gentleman's time has expired. with that, we appreciate you coming before this committee again today. i ask unanimous consent that the written opening statements be introduced into the record, and without objection, those will be entered into the record. i also asked to enter the document binder into the record. i also ask for unanimous consent to put an article into the record from "the business journal."

without objection, that is so ordered. thank you so much for coming. we appreciate your timely responses. for the testimony that you and other members have had here, and the devotion of members of his hearing, the committee rules provide that members have 10 days to submit additional questions to the record. this hearing is now adjourned. [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2013] >> the senate returns monday. votes will not begin until tuesday when senators face confirmation votes on a judicial nomination scheduled for just before noon. the senate is expected to take -- to take up the bill for -- the bill passed in the house. republicans are also preparing to debate a bill next week that ties a one-year increase in the debt limit to a one-year delay of the federal

health care law. we wanted america to be better. towanted america to live up the declaration of independence, live up to our creed, make real our democracy, make it real. when i got arrested the first i said, i feel free. i feel liberated. today, more than ever before, i feel free and liberated. >> that the civil rights leader and congressman john lewis from last year's national book festival. he will be our next guest on "in-depth." he will take your calls and comments live for three hours. also scheduled for "in-depth," kitty kelly. then january 5, radio talkshow host mark levin. we continue this month with

"this town." read the book and leave your comments on our facebook page and twitter. host: joining us is the founder and executive editor of the hagstrom report joining us to talk about the farm bill. where do we stand on the farm bill? guest: well, we now have all the legislation almost that is necessary to actually go to conference between the house and the senate. this week the house passed a nutrition title which would cut food stamps by $39 billion and so they'd already passed the farm program section of it. now there's only one thing left. they still have to pass another measure to put the two bills together and send them to the senate and we're expecting that that will happen next week. host: and that will happen easily, in your estimation? guest: that's what i wonder, because the conservative groups have said the bill should be permanently split. they want one bill for the farm program, one bill for the -- for

the food stamps, and, quite frankly, they want to cut both programs. but i think that the house leadership is probably going to whip this pretty strongly and they might even attach it to another piece of legislation so that it does go through. host: how did we get to the point where the house separated food stamps from the farm bill itself? guest: well, the -- the house tried to pass a comprehensive farm bill in june. the -- the nutrition portion of the bill and the farm program have always been in one, since the 1970's, in order to make sure you could get both rural votes and urban votes. and this year it didn't work. the democrats found the cuts in the -- in the nutrition programs too -- too big and only 24 of them voted for it. but a lot of the republicans still thought the cuts in nutrition were too small so the bill failed. and so then they brought up the farm bill by itself, the farm program, and now they brought up the nutrition program alone, but

they still have to put them together in order to have a conference on the comprehensive bill. host: but will the food portions be the sticking point? guest: i think that will be -- i think that will be the major thing. although, frank lucas, the chairman of the house agriculture committee, says in the end on the food stamps, it's going to have to be an agreement between president obama, house speaker john boehner, and senate majority leader harry reid. they're going to have to decide on a number and that's what the rest of the congress will accept. host: overarching issues of the day such as the debt ceiling and everything else, could this affect negotiations between those three men? guest: well, it certainly -- it certainly could. because if they're looking for cuts, if they're looking for money to save, then it's possible that they -- that they would look to the farm bill for part of those cuts. but it's also possible that the farm bill could be attached to one of these pieces of legislation and that would make it easier to get it through congress. host: 40 -- i'm sorry, $74.6 billion when it comes to the snap program, as it's called,

food stamps as it's commonly called, about 46.6 million people on it, about 22 million households. the average benefit per person, $133. per household, $278. jerry hagstrom, that figure today, how does it vary from years past in terms of the amount of money we spend on foot stamps? guest: it's a lot more than it used to be, double from some years ago. but the fact is we've had a recession and a lot of people are getting food stamps who didn't get them in the past. and this is particularly true of, let's say, suburban people, who have lost jobs. and one of the things that happened under the recovery act is that people were allowed to get food stamps even if they -- if they had assets. in the old days, if you had a fairly expensive car, you would have had to sell it and you don't have to do that now. because the argument is, well, these people need cars in order

to be able to go to job interviews, et cetera. and so the -- it's been -- it's easier to get on food stamps now than it has been in the past and so people with more assets are doing it. but it's understandable. host: we're talking to jerry hagstrom about the food stamp program, the farm bill overall. we've divided our lines differently this morning in terms of location. if you live in urban areas, call 202-585-3880. if you live in rural areas, 202- 585-3881. if you're a farmer specifically, 202-585-3882. and you can give us a call or tweet us as well if you want to ask questions via twitter. about those breakdowns, urban, rural, farmers, they all farm under a farm package, so to speak. guest: that's right. and it's interesting you've divided them this way rather than republican and democratic, because it -- really the farm bill usually has not been a split between republicans and

democrats. the battles in it have been -- have been regional. and there has been a bipartisan agreement to support nutrition programs, especially food stamps, but that kind of broke down this year in which you didn't have a single democrat vote for the bill that would cut the food stamps so much. and you only had 15 republicans also vote against it. the bill passed on republican votes. host: taking a look at the house bill, specifically when it comes to food stamps, it would cut $40 billion from the program. it would allow states to require work requirements for able- bodied recipients. they wouldn't receive the benefits indefinitely. what's the difference on the senate side when it comes to cuts? guest: on the senate side, they're only cutting $4 billion. and they have -- they're only doing things like taking -- requiring the states to provide more money in heating assistance if you're going to qualify people for food stamps.

they're taking them away from any lottery winners, making a few other small -- small changes to the food stamp program. host: let's hear from rick who is in massachusetts, defines himself living in an urban area. rick, you're on with jerry hagstrom on "national journal." good morning. caller: good morning, gentlemen. this problem drives me nuts. there are a lot of abuse. people trading them in for cash, drugs. they should be kicked out permanently. but the main reason i'm calling, which drives me even more nuts, is why are we paying for farm supports to farmers? almost a hundred years. farming is a business. the commodity crop farmers -- not all farmers get subsidies, as you know, they should stand or fall on their own. and for any republican that calls himself a conservative, free market person, they're hypocrites. and if you're not, please tell me how you're not. that's my commented on this issue. guest: well, the argument about

why we have a farm program is basically that farmers are people who manufacture outdoors and there is so much about their production situation that they cannot control. they can't control the weather and they can't control world prices. and so since the 1930's, at least, they have had a safety -- a safety net program. and just last year, there was an incredible drought in the country and the crop insurance program paid out $17 billion in rural america and there was no uproar over this drought. if there had not been that program, you would have had farmers marching in washington demanding what we call ad hoc disaster assistance and congress probably would have passed some kind of special bill. so that's basically why the -- the farm safety net exists. and you can argue a lot about the details of it but that's the basic reason. host: jen offers this scenario. how about the farm subsidies given to rich people who own

land in new york city. much farming going on there on fifth avenue? guest: [laughter] no, there isn't farming on fifth avenue. the number of people -- there are, of course, a few people -- a few people like that but there aren't actually very many people in new york city getting the subsidies. most of the subsidies that go to people in urban areas actually go to cities that are near the farmland. and now it's kind of gotten complicated because about 50% of the farmland in the country today is rented often by the heirs to the farmland. let's say somebody's grandparents or great- grandparents were homesteaders and maybe the next generation farmed, maybe even two generations, but now the -- another generation owns the land and there are fewer people farming, the farming operations have gotten bigger and those people rent their land to another farmer in the community but they still may get some subsidy.

host: is there a definition of a farm when we're talking about these issues? guest: well, there are actually definitions of farms in terms of the fact that commodities are protected by these -- by direct subsidies. and by commodities, we mean things like corn, soybeans, wheat, cotton, rice, peanuts. while specialty crops -- and that would be fruits and vegetables and tree nuts -- do not get direct subsidies. they get other things to help them out like grading standards. and -- for example, you notice you never see an ugly apple in your grocery store and that's because the system created by the government does not allow those fruits to be sold in the stores. the ugly ones, the damaged ones, go to canning and go to freezing. but this to some degree props up the price of the -- of the beautiful fruit in the stores. host: pittsburgh, pennsylvania. this is cecil, lives in an urban area. hi.

caller: hi. i've got a problem with history. i'm eight decades being a veteran of korean war, and i find that every 10 years we have a different problem with our veterans with the general public. and here we've got this food stamp thing. and we didn't have any problems food stamps out of the second world war and korean, which i got caught up in that. now, the only thing i object to is, why is it that the veterans, along with the general public, is plagued with things that are -- like a gas tax at the gas pump. it's actually a tax, they're paying more. and there's not a thing like gas rationing when we had the great war, world war ii. people sacrificed a lot, came back and they had schools and things to their advantage.

and we're giving subsidies to the farmers. and the problem i have with it is that, what is it? is it corporate farms? because the small farmer is kind of crowded out by people like monsanto and their seeds. there's all kinds of things going on there. host: thank you. guest: the gentleman has brought up a whole lot of issues. i'll try to address a few of them. when he talks about corporate farming, most crop farming is actually not in the hands of corporations. it's still in the hands of individual farmers or family farm corporations in which there may be a son and a father or brothers, something -- or also these days more likely husband and wife. they buy the seeds from monsanto but monsanto is not directly involved in farming except for its own seed plots. now, when he raises the issue of veterans and whether they're getting a proper treatment, one of the issues that's coming up in this proposed cut to food

stamps is that this category of able-bodied adults without dependents, it includes a lot of veterans, particularly those people who may come back from iraq and afghanistan and who are troubled. technically, they're able-bodied but they're not mentally or emotionally able. and under the current rules, if the program operates exactly as it's supposed to, they can only get food stamps three months out of every 36 months. but the states have asked waivers for these what they call abawds, able-bodied adults without dependents. and so this new rule -- new law which, of course, it was only passed in the house, it would take away the states' ability to get waivers for these people. host: vivian asked, can you tell us how much the members of the committee gave themselves in subsidies? guest: i don't have a figure on that. it varies. there are a few members who do.

i would say most members of the house agriculture committee don't get subsidies but there are some -- there are some who are farmers and there are other members of congress who are not on the committee who are also farmers and have gotten subsidies over the years. host: so frank lucas is the chairman of the house agricultural committee. what's his life like in the next couple days as they're trying to resolve this thing? guest: well, he's the one who's responsible. he's got to get the house to pass this rule that would allow the bill to be sent to the senate and then a conference to be called, and then he's got to convince john boehner, the house speaker, to appoint these conferees. the senate's already appointed its conferees. it will have to reappoint them with -- when they merge the two bills, but that probably won't be a complicated process. and another question for mr. lucas now is whether he can convince boehner just to put members of the house agriculture committee on that conference or

whether he'll have to bow to pressure from the conservatives and put somebody who's outside the committee, who may not favor farm subsidies or food stamps. host: is there a deadline to the current farm bill? guest: well, the bill technically expires on september 30 but that's a complicated statement because individual farm programs expire according to crop years, so it depends on the wheat crop year, the cotton crop year, et cetera. so it's just -- technically the bill expires then. the biggest issue with the -- with the bill is that on the 1st of january, the old dairy program from 1949 would go into effect, which would cause the government to buy milk at very high prices and then cause milk prices to go up. this was the issue that came up last year and that's why the dairy -- why the fiscal cliff bill also contained an extension of the 2008 farm bill and what

we called the dairy cliff legislation that made sure that the -- that milk prices would not go up. host: jerry hagstrom from "national journal" is our guest to join us to talk about the farm bill. also the creator of the hagstrom report, which is what? guest: the hagstrom report is a daily report on agriculture. the subscribers get a -- what we call a pushed e-mail about whatever has been going on that day or maybe some feature stories. and then there's also an archive of it at www.hagstromreport.com and that's available to the public. guest: the "national journal" puts out information about this as well. can people get access to this information? guest: if they go to nationaljournal.com, it's also open to the public now. host: joining us to talk about these issues, there's a map that you'll find, by the way, in that "national journal" the politics

of food stamps and jerry, what is this map telling us as far as information is concerned? guest: well, it is showing the percentage of the population in each of these states that's -- that's getting food stamps. and it's interesting, that varies depending on the poverty level in the states. for example, there's -- the -- there's a higher percentage of people in most of the southern states who get food stamps. it also depends on what effort the state makes to inform people of their food stamp benefits. one of the big controversies at the moment is whether the government should advertise the availability of -- of food stamps. some years ago, actually during the bush administration, the government began an advertising campaign because they were afraid that people were not aware of their right to food stamps. and so that played a role in the increase in the number of people who are getting the -- who are getting food stamps, actually now called snap benefits, and they get them through electronic benefit transfer cards which are like credit cards.

but that's now controversial. some of the republicans do not think that the government should encourage people to sign up for this program. host: here is jared from minnesota, lives in a rural area. good morning. caller: good morning, how are you doing today? host: fine, thank you. caller: i had a question just kind of related real timely to the map you put up. my question is related to the individuals that make up those areas that -- you know, that have that dark blue because oftentimes, you know, we hear that barack obama is the food stamp president and giving food stamps to, you know, minorities to buy votes or to get votes. so my question is: what is the actual data on the percentage of individuals receiving food stamps in are they classified as minorities or nonminorities? guest: well, the country is mostly white so most of the people who get food stamps are white.

also but i would say, most of the people who -- who get food stamps are women, children, disabled people. oddly enough in this category of able-bodied people without dependents, about 60% of those are -- are men, and that's where this question of the war veterans comes in. we don't know exactly who those people are, but one of the controversies is if it would cut them off, this might upset a lot of people in republican areas. host: we have a viewer who's interested in learning more about those members of congress who receive benefits. he asked the question, have him expend on the rich celeb members. congress benefiting from the farm bill. guest: [laughter] well, i find it -- i find it difficult. you know, i'm going to direct you to a web site called the environmental working group, and they -- they keep lists of various types of lists of

members of congress who get food stamps -- excuse me, not food stamps but farm subsidies. and that's also where you can look up the -- the subsidies that individual farmers -- farmers have gotten. host: barbara joins us from little rock, arkansas, urban area. good morning. caller: good morning. host: you're on, go ahead. caller: oh. i just recently seen on the news about the food stamps where they was -- they're talking about start testing -- drug testing people that's getting food stamps or other government programs. and i want to know this -- why were they talking about testing -- drug testing --

i'm in arkansas where you have a lot of farmers. a lot of people are receiving checks for many, many years to not to farm. and they call this subsidy but it's just another thing for welfare. and i want to know, why wasn't they talking about testing those people -- drug testing those people for receiving those checks they've been sending them? i had opportunity to see some of them checks and a lot of those people that are receiving those checks are marijuana growers, users and a lot of -- of -- a lot of meth in this area. host: caller, thank you. guest: she raises the question that other people have asked. if you're going to ask the food stamp beneficiaries to go through drug testing, then why not -- why not the farmers?

and the only answer i would have is, that just wasn't part of the bill. and i think you'd have a very hard time organizing a campaign to test all the -- all the farmers for drugs. but she raises -- she raises a point that has been brought up in washington, a question of fairness. host: she said people receiving checks to not to farm. guest: i think what she's referring to is the conservation reserve program which takes land out of production, land that is considered to be marginal. but the program started in the 1980's when we had a surplus of agricultural product. so there was -- there were two reasons for starting it. one was that -- to -- to take marginal land out of production on the theory that if you have this land in production, it causes pollution problems, for example, runoff -- runoff of pesticides into streams, this

kind of thing, hilly land. and so -- and the other was that there were -- that there were simply too -- there was too much wheat in the world, too much corn, et cetera. well, now that there's more demand for agricultural products, a lot of it has to do with the increasing wealth in china and china's desire for food. another part of the demand is the ethanol program. farmers are taking some of that land out. but in these years, farmers have been receiving checks, there has been as much as 370 million acres out of the 400 million of crop acres in this program, but the new farm bills would reduce the amount that can be in that program to 24 million acres. host: one of the articles in the "national journal" is the two sides of crop insurance. for those who don't understand what is crop insurance, how does that affect the debate going on on capitol hill over the farm

bill? guest: okay. crop insurance is a program in which the government pays part of the cost and the -- the farmer pays a part of the cost. the government pays about 62%, the farmer paid about a third. and under this program, farmers get insurance against both weather risk and price risk. and it has become the most important farm subsidy -- subsidy program. compared with the others, which have made direct payments, for example, to farmers. there is -- there are arguments about this program. i mean, it's been very successful, especially that was the one that paid out the $17 billion last -- last year, and there would have been chaos in rural america if you hadn't had those payments. but some people question why very rich farmers should get this much of a subsidy for their for their premium -- premium payments. they wonder if this encourages marginal land to be in