that conflicts with hipaa. clearly when it comes to's claims underwriting protection against fraud it is important but there's evidence some insurance companies are not nearly as careful as they should be in their initial medical underwriting and relying instead on's claims underwriting to catch their mistakes later. applications for coverage may ask broad, vague and confusing questions use technical terms that make it very difficult for consumers to answer accurately and completely. or, policies that, other follow-up that should occur in the initial underwriting may not. for example, if a 62-year-old submits an application indicating absolutely no health problems or health histories, that the application may be considered in coverage issued without further investigation at the time of application. market competition and profitability create pressures on medical underwriters to do their jobs more quickly and cheaply. however if medical underwriting is allowed in health insurance, it has to be completed up front

>> if the reforms proposed by hipaa are adopted we would be glad to participate in the system but it is necessary that all -- pettis paid when they say a system where people choose we need to have the process of assessing risk at the time of the application. >> with respect reforms are not going to happen. you are going to get a plan as your chairman this morning. mr. collins, can you answer briefly would you be willing to design such a project? >> but i would respectfully have to agree with mr. hamm a guaranteed issue product that would fit all people and affordable prices is economically practically impossible. but i would suggest is hipaa also create alternative coverage mechanisms for each and every state so each state is supposed to have higher risk or alternative coverage mechanism and these high risk pools have been underfunded some of the things that could be done right now today is to increase the amount of funding going into the high-risk pools so that people that have those series of issues otherwise uninsurable on the individual market have a place to go that is affordabl

law leave it to the states and hipaa has to be enforced by the federal government cns, correct? >> that is correct. -- of the value of the lot depends on the enforcement of the law? >> yes it does and if there is a fine of $100 per day per affected individual for noncompliance with the law. >> let me ask each of the ceos this would you commit that your company would never rescind another policy unless there was intentional fraudulent misrepresentation in the application? >> i would not commit to that. >> how about you, mr. collins, would you commit to not rescind unless there is intentional fraudulent misrepresentation? >> no sir, we follow the state laws and regulations and we would not stipulate to that. that's not consistent with each state. >> how about you, mr. sassi, can you commit that you will not rescind thomas there is intentional fraudulent misrepresentation? >> i cannot, the law of the land and the majority of states. semidey think it is fair to recent somebody for an innocent mistake? >> i think that playing the knowing standard is much more objective and -- >> on t

prior to hipaa ind >>. >> prior to hipaa individuals and small employers who bought health insurance and made claims would sometimes have their coverage cancelled and hipaa thought to six that by requiring and i quote, except as provided in this section, i health insurance issue that provides individual health insurance coverage to an individual, shall review or continue in force some coverage at the hoppings of the individual, only narrow exceptions to guaranteed renew ability are permitted with with respect to policyholders behavior it can only be renewed or -- discontinued only if the individual moves out of the service area, files pay their premium or commits fraud. congress relies on states to adopt and enforce the protections and the federal government should when states don't. as states implemented hipaa they adopted the guaranteed renew ability real bull other conflicting provisions remained unchanged. in particular, laws governing contest ability periods continue to permit insurers to engage in claims under writing and rescind policies or deny claims based on reasons other t

misstatement or omission is discovered consumers may lose their health insurance, that conflicts with hipaa. now, clearly, when it comes to post claims unleaded writing protection against fraud it is important, there is evidence some companies are not nearly as careful as they should be in their initial medical under writing, and rely instead on post claims unwriting to catch their mistakes later. applications for coverage may as broad, vague -- ask broad, vague or confusing questions and make it difficult for consumers to answer accurately and dom plea or, policies, other follow-up that should owe -- occur may not, for example, if a 62-year-old, submits an application indicating absolutely no health problems or histories, that application may be considered in coverage issue, without any further investigation, at the time of application. market competition and profitability create pressures on medical under brighters -- writers to do their jobs quickly and cheaply, however if it is allowed in health insurance it has to be completed up front before coverage is issued. the recent subprime mor

all people at affordable prices is economically practically impossible and what i would suggest is hipaa also creates alternative coverage mechanisms for each and every state. so, each state is supposed to have a high risk pool or an alternative coverage mechanism and these high risk pools have been woefully under funded and one thing that could be done right now, today is increase the am of funding going into the high risk pools so people that have those serious health issues and are otherwise not insurable in the market have a place to go that is affordable and affords them the care that need. >> on the issue of high risk pools, i think the private sector is going to be required to make this contribution to that, as well. and that you all in the private sector, whether it be group insurance or individual market, there must be a product that is available to everyone regardless of their claims history and yes. they may require federal subsidy and state subsidy and yes. the private sector may have to bring something to the table as well -- >> that's it. last question, mr. burgess, are jus

. >> but the privacy rules you have been forced to the under hipaa say that medical underwriting is permissible reason for disclosure of medical records. >> you would see no reason to raise that issue? it is already permitted under current law. >> the last thing in this is more of a comment than anything else. i think the issue that dr. burgess discussed with you about those who are now being excluded because of preexisting conditions etc., i think we all know that are high risk pools that have not effectively operated answered by another assisted in states like mine for example. i think we need to be looking at a policy where we would maybe take those funds that are available for high-risk pools, some of which are not being utilized with them into an environment in which we could perhaps with the sharing of some of those costs with the insurance industry bring these individuals into the pool with the additional revenue that would be available for available sources. i just simply suggest that is something we all need to think about in thank you mr. chairman. i yield back. >> mr. burgess do you

in your testimony you point out in 1996, the hipaa revisions required individual health insurance policiesthat not only is it a guarantee of free nobility, but you say continuation enforced. now do you interpret that phrase to mean the mom cancellation that we have been talking about? >> yes. >> and if so, if that is the law that has been in place since 1996 means why are we having this discussion? >> well i am not sure if i can answer the second question, but i think i should say i am not an attorney. i just read english and the words say continue will enforce and the only exceptions among the ones we are talking about today are fraud and that is inconsistent with what these other kind of post-claims underwriting guide lines or provisions that are in state law provide for, which say fraud is the only defense or the only reason for canceling after a two year period. savitt essentially new policyholders can never quite be sure if they are really covered. the insurance industry kind of gets a do over and gets to look again. and any material omission, material just means it matters. it doesn'

and, especially in the area of hipaa we think the federal government disincentivizes bergen the area of the ability for people to pay cash rewards for folks who live healthier lifestyles we think there's this incentive in our system and we believe this bill in its present structure and i understand may be going through some mutation, moving during-- for direction of a healthy lifestyle and to allow communities of employees to participate in programs which basically give them the opportunity to live a healthy lifestyle and be rewarded in doing that. so, as the senator was saying there are groupings of amendments. there is certainly one grouping of amendments that i consider to be very important and i know many of my colleagues to. there is also a number of other issues in here. the issue of this preventive fund, i think the technical budget issues that the center is tried to address, because it was a very creative and unique hybrid, what open with a pandora's box budget wise but now becomes a question as to whether not this is the best way to pursue this. i genuinely believe that ther

however, in the health insurance portability and accountability act of 1996, hipaa, congress made very clear that an individual insurance policyholder has a right to guaranteed renewability. an insurer must renew on continue an individual's existing coverage unless some specific exception is met. those exceptions include a policyholder moving out of a network plan service area. or if the policyholder intentionally, intentionally misrepresents material facts concerning their condition when contracting with the insurer. i believe it is unfair for an individual to be denied coverage for a claim when he or she has been upfront about their condition. the play by the rules of the contract. they paid their premiums on a regular timely basis. only to be denied coverage when a health care incident arises. as described by my colleague, mr. walden, what we would call post-claims underwriting. the impact it has on patients and their loved ones can be devastating. i have actually personally experienced that in my own family. and it literally took an act of congress to change that. with these though

however, in the health insurance portability and accountability act of 1996, hipaa, congress made very clear that an individual insurance policyholder has a right to guaranteed renewability. an insurer must renew on continue an individual's existing coverage unless some specific exception is met. those exceptions include a policyholder moving out of a network plan service area. or if the policyholder intentionally, intentionally misrepresents material facts concerning their condition when ,,,,racting with the insurer.@@ with these thoughts in mind, i look forward to the testimony of our witnesses today. i want to thank the entire panel, this first panel, particularly, as well as the second panel for coming in today and sharing your stories with us. and mr. chairman, i look forward to the hearing. and to the questions. and at this time i yield back. >> mr. green of texas for an opening statement, please. >> thank you, mr. chairman. and i think all of us appreciate you calling this hearing today, because like my ranking member from texas talked about, we deal with this all the time throu

i hope that some point come a given cms-- cms's role in overseeing hipaa and perhaps we have a family to see that has a role in this to come before our subcommittee as well to find out their take on what is happening. ms. horton he stated that you think the applications are deliberately confusing and i have looked through some of those and i understand what you mean. but could be of little bit more specific to the kinds of questions that you found difficult and confusing? >> i haven't looked at the application in four years since i first buildout so i can't be soopers specific but i do remember them, you know after looking at it again with my sister and brother-in-law of the votes said he would have to be a doctor or lawyer in order to figure out the up sulfation and fill it out to 100% accuracy. >> how would each of you improve that application process because it seems to me like that is kind of the crux of the argument here, is there are things that you didn't know that or run your medical records or your loved ones medical records that they didn't know and i don't know how you ever

or the who runs hipaa?>> health and human services. >> health and human services may say, gee, we have looked at that and it is a good thing we are doing, and we may want to change the hipaa practices and laws to conform to that. but then they would say, no we can't because cdc gave it a good evaluation? i mean -- >> well, actually, if hipaa prohibits it already, they cannot even try it. >> huh? >> if hipaa prohibits it, they cannot try it. >> well, say it is not prohibited, but they are doing it. say they are doing something that is not prohibited. >> how about does not mandate? >> mr. chairman, mandate. >> how is this bearing on the earlier discussion about the 20% limitation on the variance, premium differential for a wellness program? one of the concerns that i think we had about expanding the 20% was that it be limited before it is allowed to be expanded to programs that the secretary has approved so that we know that it is not a phony effort to just run up the score so that there is some quality contr

susan fleming director of infrastructure issues hipaa gao, and tom skancke, commissioner of the national surface transportation policy and revenue steady commission, president and ceo the tom skancke company. and we thank you all for being here and it governor rendell if you would please take five minutes to summarize, i try to meet the target of weekend. >> mr. chairman, you forgot mr. joseph boardman. >> my god, i look good show. and fire that person. [laughter] that is what happens taking care of relationships. we are glad to have you, joe, you have done a great job at amtrak. i'm sorry and we thank you, governor for the reminder. we will start to offset the five minutes. >> thank you mr. chairman and ranking member and all the members, it's a pleasure to be here. i think this is a momentous opportunity for the country and i will analogized to the opportunity we had when we built the federal highway system but we need to do it right. i am here today wearing three hats as governor of pennsylvania, chairman of the national governors' association and as co-chairman of building america's