good morning the domestic policy subcommittee of the oversight and government reform committee will now come to order today's hearing will examine how the bureaucracy of the private health insurance industry influences the relationship between physicians and their patients this hearing is divided into two parts today the subcommittee will hear testimony from patients and health care providers with personal experiences the subcommittee will also hear from a former health insurance executive who will testify about internal practices of the industry and t individuals whose focus is on health policy tomorrow the subcommittee will hear testimony from top executives of the six largest health insurance companies in the united states now without objection the chair and ranking minority member will have five minutes to make opening statements followed by opening statements not to exceed three minutes by any other member who seeks recognition and without objection members and witnesses may have five legislative days to submit a written statement or extraneous materials for the record and observer of the public debate on reform of the health insurance industry would draw three conclusions all of which are false the first is that government does not play a role in ensuring health care today in america the truth is that tens of millions of americans get their health insurance right now through government run health insurance medicare medicaid v a and tri care the second myth is that government run health care is  inefficient wasteful compared to private insurance the truth is that government run health care has lower prices and much lower administrative costs than private insurance government run insurance negotiate harder bargains with pharmaceutical companies to get lower prices it has no multi million dollar executives no corporate jets no dividends to pay no lobbying expenses no campaign contributions no front groups to pay for and no television advertising private insur pay for all of these expensive things out of the premium dollars they collect and these things have nothing to do to improve healthcare outcomes the third myth is that bureaucracy is soley a governmental problem the truth is that for millions of americans there are layers of corporate bureaucrats standing between them and their doctors often on matters of life and death and those bureaucrats work for the private health insurance industry the hearing will hold today and tomorrow will examine the nature cost techniques and consequences of the bureaucracy of the private health insurance industry wall street considers paying for your cancer treatment a loss and they want to see health insurers keep those losses to a minimum they have a statistic known as the medical loss ratio or m l that keeps track of how effectively private health insurance bureaucrats achieve that financial objective of keeping losses at a minimum to please wall street private health insur have to deny medical claims raise premiums or both even as the rate of inflation of medical prices has increased their share of premium dollars spent on medical care has come down to around eighty three percent from over ninety percent in the early one nine hundred ninety s the state regulatory record and civil litigation dockets are replete with recent findings of wrongful denial and delay of health care by private insurance bureaucrats for instance in two thousand and eight pacific care a subsidiary of united healthcare paid a three point five million dollars fine twenty five million in waived premiums and reimbursement of medical expenses and restoration of health care to nearly one thousand patients to resolve violations of california law including wrongful denial of one hundred and thirty thousand claims incorrect payment of claims failure to acknowledge receipt of claims in a timely manner and for imposing the hassle of multiple requests for documentation already provided similar regulatory actions exist for nearly every private insured private health insurance bureaucrats playing with the lives of people are constituents and when they are at their most vulnerable when they have a life threatening injury when their children develop severe diseases when their parents are battling cancer this is when the pressure that insurance companies can bring is the greatest from an insurance perspective people who really need their health insurance to cover life saving medical treatment threaten the company with medical losses and investors want medical loss of the minimize in order to maximize profits pure and simple the fact is that in america today you don't know if your health insurance will take care of your serious medical bills until you become seriously ill or injured by then of the too late to shop around you buy health insurance on blind faith that coverage will be afforded to you when you really need it but you receive no guarantee from private health insurance especially if you get very sick and that contradicts the purpose of health insurance in the first place to spread the cost of illness especially serious illness requiring expensive care we will hear today how the private health insurance bureaucrats have become more sophisticated at the nih and expensive treatment and more effective at wearing down doctors and patients conditioning them to choose to pay for the treatment themselves or to go without rather than insisted their insurer pay in the business of private health insurance corporate  profits before people thereby becoming as noxious as disease itself such was the conclusion of the ohio supreme court when it up held the largest jury award in ohio history against an m for denying life saving treatment to esther darden chair from the court decision quote then came to  relentlessly followed its own course uncaring oblivious to what it destroyed seeking only to have its way at this time i recognize the ranking member from ohio the honorable mr jordan thank me later said thank you mr chairman i appreciate you having this hearing i want to thank our witnesses for participating and i look forward to hearing their perspectives unique perspectives on this important topic i know many of them have tragic stories to share with us and we certainly they certainly you certainly have our sympathy the ongoing health care debate is extraordinary americans who are not previously engaged in politics are now tending town halls rallies tea parties during august and september had the opportunity meet with many of our constituents in a while each and every person i talked to expressed grave concern about a government run health care system but no one denied that our current system needs reform and that's what i hope we can gather from the next two days the kind of reforms that are actually going to make sense and help families help small business owners help americans health care spending is out of control and we're not covering many of the most vulnerable medicare alone accounts for three and a half percent of the gross domestic product the congressional budget office projects that by twenty eight without intervention it will be as high as thirteen and a half percent today the total health care spending in two thousand and seven exceeded two point two trillion dollars which represents over sixteen percent of g d p in the debate there are areas of agreement between republicans and the president back last week during his speech to the joint session of congress the president said and i quote let me set the record straight my guiding principle is and always has been that consumers do better when there is choice and competition that's how the market works mr chairman on this point i agree with the president that we have co sponsored a piece of legislation h r thirty four hundred that i believe relies on free market approaches and tax credits to incentivize americans to buy their own plans instead of mandates and or taxes which are part of the current house bill that passed out of committee our bill as individuals and businesses to purchase insurance across state lines increasing their insurance choices from perhaps a dozen carrier carriers to over thirteen hundred in contrast the bill being discussed increases competition by installing a government government subsidized public option into the marketplace to crowd out the private sector real competition in the private market helps reduce prices a government run monopoly will cost all of us especially our children and grandchildren rather than a federal government serving as an intermediary my colleagues and i realize that individuals and families are best served when there is a strong relationship between them as a patient their primary especially and their primary and specially health care providers our plan strengthens strengthens that relationship by reducing the practice of defensive medicine brought about by lawsuits and acting and medical liability reform will help reduce the price of medical malpractise insurance and defensive medicine both of which are passed on to consumers through increased cost and higher insurance premiums by establishing health course capping non economic and creating best practice measures we  will emanate privileged lawsuits that harm physicians while also ensuring that justice is done to victims mr chairman i hope the commonsense solutions that commonsense solutions are not ignored i believe americans trust their healthcare professionals more than they trust politicians and federal government bureaucrats they want to keep what they like best about their current plan while addressing some of the problems with cost access and portability my trust rests in the ingenuity and compassion of the american people and the professionalism and competence of our healthcare professionals thank insurance companies are making life and death decisions every single day folks talk about government worrying about government coming in and making decisions insurance companies are making life and death decisions every day there's a gentleman in my neighborhood who had a swelling on his leg and i guess maybe about two years ago i see him almost every day i live in baltimore forty miles away from  and he went in and he found out that it was cancerous he had surgery then he had and he had radiation and then he had chemo and then the cancer apparently spread to other parts of his body and he had been a hard working american working for a city of baltimore and he had moved into to a disability status and he used to tell me about his problems in that the co pay for the chemo left him in a position where he had to choose between eating and paying the co pay and i would see him almost every day and i just think our society is better than that this is a point in time where we must put leap politics at the door and address the problems of all americans we need to keep in mind as a president said the other night over the last two years one out of every three americans have had a gap in their insurance coverage and what does that say what that says if you've got a gap in your insurance coverage that means you've got to and if you haven't gotten there yet you just keep on living and the fact is that we've got example with these preexisting conditions we've got to deal with this recession where a person gets sick they've been doing everything they're supposed to do working hard paying their premiums and when it comes time for the insurance company to help them then suddenly they find they have no insurance we've got to deal with the high cost of insurance going up the president said it and we have said it we want you people to keep what they have but guess what if it is too expensive you won't be able to afford it anyway that's a major problem and so i am glad that and i had a town hall meeting and it went well and i have listened to seen what has happened i will go across the country it's with regard to town hall meetings but i think we need to hear not only form the applaud you for these two hearings and i look forward to the testimony i thank the gentleman chair recognizes the gentleman from massachusetts mr attorney thank you chairman is for being here today you know this idea of competition is great and it's interesting to hear people say they want the corporations to be able to go class stage but i think many of them see that just as an opportunity to avoid state regulation that we have to make sure that if that happens and companies are allowed to go to the state that they do not get to avoid the state regulation just go to the lowest common denominator on this they're seeking to avoid competition with any plan that essentially will do things other than their way and that's one of the reasons that they're so avidly fighting this public option they're happy to compete with any other plan or ensures company that does the things that they do really excessive an exorbitant salaries to executives pay a lot of money for underwriting to figure out ways not to cover people with health care and give dividends that are just not reasonable but that are extremely excessive to shareholders who actually punish them when they spent too much of the premium dollars on health care delivery it's a little shocking to me as we watch what goes on around the country a all these town meetings that so many people who consider themselves out there fighting for the people willingly or unwillingly apparently out there shilling for insurance corporations prescription drug companies what they're looking for is the status quo and that's just a little bit amazing if they were really and we're making sure the competition really does work but that doesn't seem to be the message that is going around out there and all that sort of surprising when you look at this medical loss ratio that the chairman mentioned earlier especially i think with the party discusses on its abuses well companies get punished when they show the medical loss ratio too high in the one nine hundred ninety s it was common for medical loss ratio ninety five percent out of every hundred dollars spent ninety five dollars would go to health care and five dollars would go towards salaries and overhead and profits and the companies are doing well they're doing extremely well well studies now show that in some instances that medical loss ratio is fifty seven percent fifty seven percent go of your premium dollar going for care in the rest of it going to them i'd be on the streets pounding away say why isn't my government they're doing something to stop that that's what's ridiculous you want to go out and yell and scream and take the town hall meetings go where the culprit is there wasn't taking our premium dollars and what they give us a return you're in the middle of your care and they go buy a scrub your records find out there's a reason we don't have to pay the claim making sure you have a preexisting condition where you don't get coverage at all or keeping a cap on it a cap on a sixty percent of the bankruptcies in this country are directly or indirectly related to medical expenses families are experiencing eighty five percent of those families had health insurance that's what we should be on the streets protesting about and that's why this bill should directly look in there and say look we need to put in some regulation no more resurgence no more on reasonable caps no more incredibly high deductibles and co pays no more telling people preexisting conditions going to keep them off and no more getting away with spending less than a reasonable amount of our premium dollars on actual health care services you know you can have a decent profit you can have a decent salary but eighty thousand dollars a day is some executives were getting and millions of dollars plus bonuses plus stock options is not a good way to spend our premium dollars and that's why this health care reform package ought to be as much about health insurance reform as anything else we have to move in that direction and yes there should be an option out there were people say i don't want to go to that private company that gives us that kind of bad coverage i'll take another option a public option maybe is that these people to do the right thing maybe when they see that the somebody's not playing their game that we're not just going to let people into the game who do it the way they do it that they'll have to behave a little better and that's what this is about and hopefully that's what the american people going to understand it's about it will move in that direction thank you it's a challenge i thank the gentleman we're now going to hear testimony from the witnesses and the first two witnesses sharing a personal narrative with us which i think that when we in congress tend to expound matters we're always much more informed when we hear what people have to say about their own experience and so two of our witnesses will provide us with information about their personal experience this is important that we that we pay careful attention now there are no additional opening statements so we will receive testimony from our witnesses i would like to introduce our first panel mr mark gender now like that children his daughter said he suffers from a rare neurological disorder known as ms aron ackley is a resident of montana where she lives with her husband and their daughter in two thousand and six ms ackley assisted her father william ackley in his struggle to obtain approval from his private health insurer for prescribed medical treatment dr melvin stern has been in solo practice as a primary care pediatrician and highland maryland for the last twenty years in addition to direct patient care dr stern has been continuously involved in teaching the medical students pediatric residents and physician extenders such as physician assistants dr stern has served on the medical factor faculty of the marrow chapter of the american academy of pediatrics and is also previously served as the chairman of the maryland state medical societies legislative committee dr linda peeno and de is a physician and medical ethicist who consults an educator on issues related to health system operations managed care and ethics dr peeno has worked in executive positions in a variety of health care organizations and as a physician reviewing hospital requests for admission at the insurance company humana dr peeno is now a nationally recognized expert on various issues related to health system operations and ethics particularly managed care and insured and consumer insurance practices and finally mr wend potter mr potter is served since may two thousand and nine as the center for media and democracy's senior fellow on health care previously mr potter spent twenty years in a variety communications positions for private health insurance companies mr prado was the chief corporate spokesman for cigna insurance company i want to thank each and every one of the witnesses hearing before the subcommittee today it's the policy of the committee on oversight and government reform to swear in all witnesses before they testify i would ask that at this time if you could rise and now want to ask each of the witnesses to give a brief summary of your testimony i want you to keep in mind that it's helpful to have this summary no more than five minutes and aeration your complete written statement will be included in the hearing record so if you're worried about not getting in a certain word just know it's going to be a record of the hearing and all members will have access to that we're going to start with m you're going to be our first witness and we'd like you to proceed at this time and i will before you begin i would like to recognize and welcome the distinguished gentleman from california congressman watts and thank you for being here you may proce mr chairman members of the committee i want to thank you for inviting me here today to share my daughter story with you i hope you will inform you about the human side of the business of health care in america as an american it is an honor to be a part of this democratic process in such an important time and like many americans i'm unashamedly guilty of a swagger that comes with that heartfelt feeling that i live in the best country on earth unfortunately that's why there was a little thin when we don't deliver when we come up short and health care is one such area where we are not the best in the world most literary we are paying far too much for health care and getting far less than we entitled to far less than the american people deserve far less than my daughter sydney deserves and that less has consequences real consequences for people especially my infant daughter s early one afternoon when sydney was just three months old as i walked down the steps to the living room my home sony's arm suddenly struck out that awkward angle her head cocked over the side her eyes looked odd and distan she's three months old i was concerned but not alarmed at that point i thought well that's all i'd and then we had a few more a few more we went saw the pediatrician and we started what was going to beginning of what may be said in his life long struggle we're here today to not only help my little girl but the families who have to fight beyond exhaustion just to receive the care that their hard earned dollars were supposed to have provided them when they bought their insurance company's medical group denied the medical center he was to center to which was u c l a children's hospital she was then sent to an imaging center which pretty much a storefront operation to just does x rays m r i s images their staff  incapable of injecting my small daughter with the dye necessary to create the contrast to give my neurologist the images he needed the end result was my neurologist didn't get the images he needed to accurately diagnose my daughter but the medical group got to index of symptoms we sent out for second opinion just to be prudent we ordered a second order second opinion insurance company authorize children's hospital a to conduct a second opinion then refused to authorize the neurologist there to do any of the diagnostics they didn't have room for us we were sent there on a loss leader by the insurance company's telephone agent say hey go there they're ready for you your authorization has been faxed they were ready for us my wife my daughter spent the day without food other than the hospital snacks in emergency room when i finally got off work they were able to tell us i joined in dos later i will tell us that they were able to service my daughter that day they had no beds they know we were coming when they finally were able to administer two days later they immediately did their panel i living with my daughter in the hospital room the doctors came in and said we're going to have to discharge you we can't get any response from your insurance company from your medical group after trying i got angry i tried calling the insurance companies myself i was hung up on twice for only asking first supervisor in a tone of voice like i'm speaking you today finally i called the state regulatory agency they looked in on my behalf and we were able to mysteriously get authorization number telephone to u c l a and my wife no explanation no written documentation no anything clearly their plan was to exhaust us to wear us out my time is coming to an end here i have to just conclude with a final statement of your adultery so this mom and i have spent so much time fighting to ensure her proper care that all too often i feel like her medical manager instead of her daddy i need you people to let me be a daddy i understand is a lot of talking a lot of ideas the consumers union is here today with their own ideas on ways we can put consumers back into this competition scheme i hear about because we're disenfranchised right now all i want to do is go home and be a dad mr chairman members of the committee thank you for inviting me to participate in today's hearing on health reform i am honored to have the opportunity to convey my family struggle with the administrative measures and protocols used by my father's private health insurer and their links we went through to obtain his doctor perscribe treatment in the form of a bone marrow transplant with our rules and previous version of our emotional journey as my dad fought for his life when his insurance company set up one bureaucratic roadblock after another my father bill ackley dedicated thirty one years of his life to the children of montana as a public school teacher and a hundred to florida trust in his group health insurance through blue cross blue shield of montana will continue to pay as they had for sixteen years for the medically necessary treatment of his chronic lymphocytic leukemia in two thousand and five my dad's doctor determined that he needed a bone marrow transplant because his chemotherapy regimen was no longer effectively managing his cancer my father was accepted into a transplant program and on december first of two thousand and five and i'm related donor match was found in january of two thousand and six my dad began two rounds of intensive chemo to suppress the disease in preparation for his transplant four and a half months after finding a donor and we were euphoric on april fourteenth when my dad's transplant doctor gave him the news that his disease had responded well to the treatments and he was ready proceed to proceed with a mini transplant however we mark this as day one of our unexpected and emotional struggle with blue cross blue shield of montana because his insurance had paid for all of the treatments leading up to the transplant including the donor search and testing you can imagine how shocked and heartbroken we were a week later when he was insurance notified the hospital not my parents that it was denying them any transplant claiming the procedure as investigational for the next sixty days we continued to run around in circles with the insurance company never actually speaking to a human who could discuss my dad's case to obtain approval for my father's prescribed treatment while his body was still receptive to a transplant on the surface this might not seem like a long time but when a loved one is going through a life or death struggle you can hear the clock ticking every minute my dad's doctor submitted a different request for a full transplant which had been performed for nearly twenty years but that too was denied on grounds that it was investigational it was important to know that both transplant calls were approved treatments under medicare major the too time consuming and peals processes my dad went through in an effort to overturn the denials were completed in the promised timeframe and during this agonizing time we reached out to the montana insurance commissioner's office who persisted in keeping the insurance company in compliance we enlisted the help of countless friends and family to hold insurance company accountable on my father's behalf and we even consulted an attorney who had experience litigating transplant denial cases i'm forty eight my dad was readmitted for another round of intensive chemo as his cancer was growing rapidly again because we were waiting for transplant approval we were emotionally exhausted frustrated and devastated that we had to continue focusing our time and energy on hold the most insurance company accountable instead of spending quality time with my father and concentrating our efforts on his care due to his persistence and refusal to accept that unreasonable insurance company denials would be the deciding factor in his life and death struggle with the disease lived with for twenty years my dad was finally transplanted with the stem cells of a selfless anonymous donor on august seventeenth one hundred twenty six days after the first transplant request what would have happened if the first transplant request had been approved we will never know we do know that he never returned home we spent christmas with him in his hospital room and he did make it to the new year my dad passed away on january third two thousand and seven at the age of fifty nine leaving behind a grieving widow and daughter and missing the chance to share his joy of life with his only grandchild eliza born seventeen months later my written testimony includes a very detailed timeline of our struggle with my father's insurance company and i sincerely hope that you will read it and consider the implications of how an agonizing and bureaucratic denial and appeal process changed the course of my father's treatment and effected his chance for a successful life saving transplant thank you thank you chairman senate members of the committee for this opportunity here before you today i'm here on behalf of the patients and families that i take care of the american academy of pediatrics the maryland chapter and the national physician alliance as it's already been noted been in practice in primary care pediatrics for approximately thirty years in maryland and have spent a fair amount of that time advocating for my my patients my family's in the public policy arena and one of the templates that i utilize for reviewing public policy is if it makes sense for children it makes sense for the community if it doesn't make sense for children we better go back and re examine it and based on that go forward with the remainder of my evaluation here we've discussed the bureaucracy the bureaucracy of both the private insurer the for profit as well as the not for profit in two thousand and three step wall handler observe that thirty percent of our healthcare budget thirty percent of the dollars that we sent in is now spent on ministration and that's in the private sector as an example of what goes on and how that impacts and has resulted in what happens in the private office when i started private practice over thirty years ago were two full time equivalents that were supporting me one was a nurse who was fully involved in patient care did nothing in terms of administration and the other was a secretary receptionist who basically handles the scheduling and the billing today i'm still a solo practitioner i have four full time equivalents in the office i am the only one who is exclusively involved in patient care the other individuals are involved in chasing after insurance companies doing things like for old prior authorizations and arguing for benefits for my my family's certainly a dramatic increase in bureaucratic meddling as it were in the office procedures for the bureaucracy that we see in the private sector the impact as you've already heard and i'll give you a scenario in my office of a newborn with a tumor this baby was born with a tumor at a world class hospital in baltimore and was insured by a for profit insurer from the time the baby was born and sure required referrals now recognize i had never seen this baby i was not medically in charge of this baby for me to begin to refer this baby for additional services at an institution that had world authorities in regards to what should be done and how this touma should be handled was just sheer nonsense and an obstruction for the care it obstructed it to the point where there were therapies and evaluations that were missed were not obtained on a timely manner but in the end those therapies went micheline the administrative burden was very real the institution itself had people working in conjunction with my office to get the referrals to do the paperwork not to do the medical care but to do the paperwork to get this child the care that they she needed following the impatient treatment which required surgery child underwent began outpatient chemotherapy it was at that point that the insurance company became obstructionist and utilizing the milliman and robertson criteria for evaluation of whether this service should be paid for denied inpatient chemotherapy services for this infant now you need to understand there are no millman in robertson criteria for infants with tumors but they refused to recognize that and proceeded to say no they were not going to permit this baby to have in patients services the only reason that we were able to move forward with that is bluntly told them look either provide with what are clearly standard treatments in the hospital or we will have to go public there's a beautiful baby it will attract a great deal of attention you can either deal with this in the media or deal with this appropriately  and they chose at that point to say ok we'll get things organized that's not the way we need to run the health care system that's not the way i need to be spending my time this invasion and obstruction not very productive and finally i'd like to leave you with the notion of the issue of two things one this is not really an issue of insurance coverage please understand this is an issue of access to quality health care and mr cummings is painfully aware of the youngster in our community de'monte a driver who had coverage but did not have care and died in this very city as a result of lack of care because providers weren't available the last thing is the current at the current rate we know the liability that we're generating in the health care area are being left at the feet of our children let us make sure mr chairman members of the committee and staff i appreciate the opportunity to be here i am a former company doctor who made those kinds of life and death decisions mr cummings referred to in fact one of my prior appearances here was in hundred six to talk about how company doctors cause harm and death to patients and the fact that little has happened is evidence by the fact that that clip of that hearing has resurfaced and has is very timely still after nine hundred ninety six i continue to work on health care issues and i've worked in more than a hundred fifty legal cases on behalf of patients and assisted patients in appeals  have a wealth of acquired information about the inner workings of the health insurance company the one thing that i think in summary my experience which i detailed in my written comments is that this is never been a more deadly time for patients in terms of insurance practices they become more sophisticated and more expert in achieving the cost cutting and saving goals the four areas that i would like to talk about specifically at least to address it make you aware of the first has to do with claims and i see a lot of insurance rhetoric this says that they're kinder and gentler and they deny fewer claims but a recent study in california show that that at least in that study as much as as many as forty percent were denied but the more interesting thing is what we don't know because the evolution of managed care has been to shift the process of limitation denial and substitution more prospect of lee so that if you can co op the treating physician in the office or the bedside or you can create conditions like we've already heard today where you obstruct and delay and wear people down then those are things that are never required recorded there's no data or statistics we can go to to show the amount of care that has been altered through those processes the second thing is that  the shift and healthcare has been to move everything more technical so the goal over the past decade has been to eliminate the independent medical judgment of physicians and the health care professionals coinciding with that is the attempt to make other agents the denial factors by one co opting positions and altering their medical ethics to achieve the goals of the company but more disturbing is making patients themselves the agents of their own denials through economic changes the fourth one i think kind of been touched on already by several remarks here and that is the expert use of terms like medical necessity and thus to gauge known experimental actually testified in the case that you mention mr senate the dart in your case which was a very interesting case because the definition of experimental changed as it went through layers of review in order to constantly shift and justify the denial and in fact part of the e mail communication that came out in that case was that the health plan employees were deliberately delaying because they knew mrs darden sure was going to die soon so they were avoiding making a decision in order to avoid the even dealing with the issue of paying for it and hope that she would die before they would have to address that the the recent attention on medical criteria and of a evidence based medicine it sounds wonderful to talk about best practices we should we should be focused on that but there's a layer of rhetoric there that hides what goes on underneath companies you know for example the the criteria for the appropriateness of a hysterectomy should be the same whether it's and you know boston or los angeles it should be the same whether it's humana or cigna and yet these tools are used and wielded their proprietary a company would never purchase criteria that would cause it to be more generous and to spend more money so these criteria are used deliberately to justify denials and to limit care and and these these  being developed using public research and should be transparent and should be publicly available there are so many things that i could go into that i have seen in all the cases and as i said i went into detail in the written  remarks but i think the last two things i'd like to sum up is that patients are not mere anecdotes and that's the way the insurance company would like to dismiss any claims of adverse effects patient wellbeing or or health and the last thing is that they operate in a medical and an ethical and legal void there's no medical ethics when you're working on behalf of stockholders and the legal situation is that most americans have no legal recourse because of ricin and other complications holding these companies accountable so i personally believe we will have no health reform and last we the idea of a government bureaucrat in that space but the alternative has proved much more fearsome the status quo for most americans is that health insurance bureaucrats stand between them and their doctors right now and maximizing profits is the man that is simply overtaking this industry as members discuss the various compromises that undoubtedly will be floated in the coming weeks i encourage you to look very closely at the role of for profit insurance companies in particular and the role they play in making our health care system both the most expensive and one of the most dysfunctional in the world i know this hearing and others you're holding will help members of congress look beyond the misleading and destructive rhetoric making the rounds and the headlines and help provide a real sense of what life would be like for most of us if the kind of so called reform the insurance a lobbying for insurers are lobbying for isn't acted and estimated twenty five million americans are now under insured for two principal reasons this is an additional forty five million people who are uninsured first the high deductible plans that many of us have been forced to accept require us to pay more out of our own pockets for medical care whether or not we can afford secondly the number of under insured people has increased has far more have fallen victim to deceptive marketing practices and bought what essentially is fake insurance the industry is insistent on being able to retain the so so called if it designed flexibility so insurers can continue to market these kinds of often worth worthless policies the big insurers are spent millions of dollars acquiring companies that specialize in what they call limited benefit plans an example of such a plan is marketed to one of the big insurance companies another name the star bridge select not only other benefits extremely limited but the other underwriting criteria established by this insure essentially guarantees big profits preexisting conditions are not covered under the first six months the employer must have an annual turnover rate of at least seventy percent so most workers don't even stay on the payroll long enough to use their benefits and the average age of employees must not be higher than forty and no more than sixty five percent the workforce can be you've all heard insurance executives say over the past few months that they are bringing solutions to the table this time to help you address the problems of the uninsured and the under insured if they were to be completely honest however they would tell you that the solutions they really have in mind are moving millions more of us into hided act of will and limited benefit plans if congress goes along with the solutions the bill sense of the president might as well be called the insurance industry profit protection and enhancement act that said the executive she will hear from tomorrow rarely use the term insurance to describe their businesses these days they refer to their companies now as health benefits companies or health solutions companies and for a very good reason they have been moving rapidly away from the the risk of that insurers used to assume for their customers and toward a business model that enables them to administer benefits for large self insured companies and also to shift the financial burden of health care to to individual workers if their employers are not big enough to self insure if i were a member of the subcommittee i would ask the executives tomorrow about this trend i would ask them what has been happening to their fully insured books of business in recent years if they're honest they will tell you that it has been shrinking and that they have been taking deliberate actions to make it shrink according to a recent story the wall street journal the seven largest for profit health insurance companies have seen a decline of five million members and their fully insured books of business just as two thousand and seven i would ask the executives why this is happen and if they expect this trend to continue and i would ask them what kinds of businesses are fully insured these days again if they're honest they will tell you that they are primarily small to midsize customers that are not large enough to self insure with so many that does not bode well for the future of this country or our economy as most of the job growth in the us is occurring in small to midsize businesses i would ask exactly what kind of health benefits health benefit plans are marketing that of small businesses and to businesses with a high rate of turnover among employees if they're honest they will tell you they're marketing limited benefit or high deductible plans for these businesses i would ask at the end cigna in particular why they are sponsoring the first annual bolland trade benefits and limited medical conference in los angeles next month and i would ask them what voluntary really means if they're honest they will tell you that workers in rolled in voluntary benefit plans pay the full premium as well as high as a pocket expenses their employees do not have to pay a dime their employers don't have to pay a dime toward their employees health care benefits may these plans actually prohibit employers from subsidizing the premiums as the organizers of the los angeles conference notes on its web site voluntary benefits and the medical plans are a multi billion dollar industry and one of the fastest growing segments in the health insurance industry another question you might consider asking is how much money insurance companies make from investments by delaying payments to health care providers as you know doctors now have staff dedicated solely to trying to get insurance companies to pay claims that have been denied the longer insurance company can void paying a claim the more interesting and earn from the float this is chairman and members of the subcommittee this is the current state of the inadequately regulated free market system the health care companies want to preserve we already have twenty five million americans who are under insured if the insurance industry gets what it wants out of reform that number will grow very very fast in the years ahead people you know your constituents maybe even your sons and daughters and your grandchildren will be joining the ranks of the under insured and they will be forced by law to pay private insurance companies for their lousy coverage and you and i and other taxpayer payers will have to subsidize the premiums hard to treat seizures as a hard three seizure disorder we've been through many pharmaceuticals and currently she's i would start a diet it's a medical diet designed to alleviate seizures we're having some success but she's way off her to read the exam but in particular the obituary of your dad who was obviously a wonderful person and i can imagine what it's like here to testify i have to tell you you know when i was listening to her testimony i'm sure this is true of other members i could it would just hearing the word i could feel my heart and and this is the kind of testimony i think that can move the country and you know i  question with mr potter who as i said earlier is the former head of corporate communications for cigna in philadelphia the first i want to ask mr potter about the business profit model of the private insurance industry what is the business model of the insurance companies how do they make money they make money  avoiding as much risk as possible and often by ducking and dumping people who are sick and they do this through a variety of means one is delaying or denying care another is to rescind policies that we've read about in the news and it has been the subject of some committee hearings in which people have been paying their premiums for many years when they get sick and have high medical bills the insurance company will review their regional applications and if they find any reason to cancel it they will and claims are higher than they are right is expected and and they will jack those rates up the premium rates when those books when those customers accounts come up for renewal and they'll jack them up so high that these businesses have no alternative but to drop their insurance coverage they can't afford that's why we've had such a drop in the numbers mall businesses over the years it's declined from sixty seven percent in the ninety's to just about thirty eight percent now and then you've talked about the deny or reduce reduction of coverage would you explain to the subcommittee what is policy recession and how widespread was that practice while you were in the industry policy rescission happens this is in the individual market not so much in the a market in which people get their coverage from through their employer many people don't have the option of getting their coverage their employer and you have to fill out an application if you want to get coverage of course and you have to include on that application for not you've been sick in the past why you go to the doctor if you've been hospitalized in other words what preexisting conditions do you have that we should know about and if you are a in many cases a preexisting condition will mean you can't get coverage at any cost and also children who are born with birth defects ultimately will not be able to get coverage in this system we have now so it is a means of being able to again the sick to avoid paying claims and if you fail to disclose something and you get sick and there are high medical bills that are sent for payment to your insurance company they'll look at your application and they'll look to see if maybe you've inadvertently or even purposely not disclose something to give you one of the things that we've been hearing in the past few weeks is how private insurance in the private insurance industry uses special interest groups yes to craft market and send a message that the industry wants to send can't could you explain how this happens and  can you can you comment on how the industry watches to believe that they're there to help us to get healthier what do they think they're doing and  his p r campaign from one level duplicitous one is i call the charm offensive in which they will come here and they'll tell you that they're in favor of reform and be working with us good faith partners and with the president and they'll say the same thing there they they do that consistently that they do they are to sicily they say what they think you want to hear and that's the charm offensive that they that they carry out and they talk about how much they are in favor of bipartisan reform for example behind the scenes they will be conducting  these covert p r campaigns and they work through big washington based p r firms or new york based p r firms that set up front groups for them like in the ninety's a group called the health benefits coalition was set up it was presumably a business coalition but the funding came largely from health insurance companies and the sole purpose was to kill the patients bill of rights when you say front groups you mean these are groups that they then mobilize to try to present  themselves as representative of public opinion that's right and they employ a lot of p r tactics and they work also with the media and with members of capitol hill but with the media they the p r people who have connections with producers and reporters will feed messaging messages to them talking points and and there are a lot of reporters and producers and pundits who are very sympathetic to them i'm looking forward to having a chance to ask mr go through the harassment and the things i mean this is coming from as you know conservative republican says what happened there is wrong americans seems this whole health care debate is unfolding here the last several months americans hate being told what to do and this idea that somebody is going to get between them and their family their doctor whether it's the insurance company or frankly whether it's a government it's just something that just doesn't sit well with them so i think there are things we have to focus on that empowers the family and doesn't have what you describe you know take place i like what i think dr stern said earlier i'm old enough to remember as well when i was a kid going into the family doc and there was typically one person out front and in those days it was typically a lady taking care of things in the reception work and maybe she was there that individual is a nurse as well today there are more people out front complying with all that bureaucracy whether it's government or insurance there are more people out front than there on the back trying to get you well and that's that's a problem and that's what's so frustrating to so many so many americans let me just walk through some of these outline and in my opening statement just see and i'll i'll go to dr stern if i could do you think we need do you think we need some liability reform in in our current health care system you think that's appropriate the short answer is very definitely yes do you think there's there's been the need for more empowerment say help saving accounts association health plans i can remember just two weeks ago i was given a speech before i even talked to the group had a husband and wife walk up to me small business owners they're in the business and they have two employees and they said you know congressman we would love the ability to pull together with other similar scituate other small business owners and use the economies of scale to you think that that makes sense in our health savings accounts so she's health plans as part of a way to empower people and help with our cost and help with our system there is a conflict there the issue of pulling together and generating much larger insurance pools makes an infinite amount of sense and in fact in maryland we do have a small business pool the issue of the health savings account and the notion that the consumer can be empowered to spend that dollar more wisely just flies in the face of what the actual market is medicine is not a free market that no way a free market demands the free flow of information both ways and i was going to go there so how do we get there how do we get that transparency how do we get to where and there's a great piece i leased i read on the plane flying in this week in the atlantic about a  business businessman talks about the experience his father went through getting an infection in the hospital and he outlines what he thinks needs to happen in health care and he talks about the fact that it's not a free market and it's always somebody else is paying the bill and that's the fundamental problem so tell me what you think needs to happen so we do get the transparency we need to have the right kind of market out there the transparency has to be within the health care system itself to have the broker or the insurance companies are not in the health care business the broke i'm in the health care business i deal directly with the patients the university of maryland is in the healthcare business they deal with the patient johns hopkins is in the healthcare business they deal with the patient to have the broker into a seat in that interaction is simply not productive and you have in my written testimony some very specific actions that we've had to take  one of those is a bill that i worked on in the maryland general assembly and move fortunately move forward on the on the national scene was the issue of the mandated benefit for maternity care  way to enter have the private insurer intercede and make that determination that a child and a mother should be going home at such and such a time that's a medical decision should be left to the medical authority if there  are now if there is malfeasance in that the medical profession that should be taking care of and we do ok but to assume that this is a marketplace issue i think simply isn't going to fix the problem that's how we've been dealing with it it's not a free market and we don't have the consumer doesn't have the information that they need to make that analysis even if they had the information they don't have the understanding i mean i went to medical school i did additional trail i need to be able to make i don't know i don't know that's always the case i'll use my we have a health savings account our family high deductible health savings account i did what i so many my colleagues do our insurance doesn't cover it but i also know that you know forty five years fifty is kind of the the time i did it so i could have depleted our account where i can just wait and we decided to wait so there was a situation where we made the decision as a family that i made  decision that we would really just wait so i do think it can work and has a place but when i'm i'm interested in a as is a more what we need to do so that we empower the patient the consumer the family as much as we can reimbursement policies with respect to prosthetics so i want to acknowledge your presence and see the young man in the front row you we're glad that you're here maybe some day you'll be on the other side of this  companies the media you complain about the media seems to bend in the direction of saying that you're beating up on them and it really bothers me because when i listen to your testimony and i can tell you as a lawyer that things that you've talked about to me are it not fraudulent very very close and are criminal in other words when you say that you are going to when a person or an insurance company has people paying say for sixteen years and when it comes time they are loyal in paying their payments but when it comes time for them to get what they are due and that's a simple concept of contract law you bargain for something and you get back something but when they come to get it what they are  listening to the testimony here when you hear dr stern basically what he said is that he had to fight to get what he needs was patient and not everybody's a doctor sir and i know there are ninety nine million great doctors but he has to fight and he has a double double the number of employees in the fight so i'm trying to figure out do you think it's an unfair statement  obviously when i say you beat up on insurance companies absolutely not is part of the p r campaign of the industry to to protest that they're being demonized and and i as a so one who is in p r for the industry for twenty years as part of what i did when i was there they want you to see them as again good faith partners and working with with congress in the with the president not behind the scenes doing all they can through a lot of ways of the simply laundering money through firms and setting up groups that they don't want anyone to know that they have any so shaken with the which they're funding to to try to to gut reform or to shape it in ways that would benefit them more than americans one thing that's happened over the years and i saw this from my role and this was a journalist and later as a p r guy our media's changed a lot the newsrooms are shrinking there's very little investigative reporting and reporters are so stressed for time and that they would often just  of corporate public relations you know i'm wondering you know when i listened to the testimony here and then i watched some of the town hall meetings where people  reasons that have been given for these protests but i get the impression that part of it must be what i call it won't happen to me syndrome in other words people assume that oh that happened over there in the end it happened over there in baltimore that happened but it won't happen to my family it won't happen to my friends i won't have a similar experience as i'm exactly and so i mean so how  that this the things that you're talking about a pretty widespread absolutely and and i think you're you're right i mean people say that this isn't going to happen to me until you know something tragic does but i can tell you as one of those doctors that sat there and put the nod on pieces of paper that it did not make any difference what somebody is income level was whether they were democrat or republican rich poor  black white yellow green or whatever the only thing that made a difference was what they were costing and how quickly we could avoid any cost or claim that was going to to her profits i mean that's you know i was told when i was after i quit one company before i got my bonus because we were put on a bonus system but then when i went to another company you know my job evaluation depended upon you know the number of denials and how much cost savings generated and then you know the hundred fifty cases that i've worked on as an expert witness you know i have read deposition and seen documents internal documents that will never see the light of day because they're sealed that show the the reward system of the compensation one anything that you've seen in your present work that would indicate that things are better in that regard did you just talk about oh absolutely not it's it's far worse everything is more evolved more sophisticated more technical the the methods the difference between the methods i use to deny care and the methods that are used now is like the difference brain surgery with a kitchen knife and a laser gamma knife now it's just that much more expert thank you other the way our system is set up not everybody in my district certainly not even a majority of my just can afford to put money into an account of some sort if they do they're still going have an insurance company somewhere involved and that's not the answer that we're talking about where the public option comes in is that if you don't have something like that we're never really going to get at the crux of this absolutely there is some competition but this far less now than there was back in the ninety's that's one reason why the medical loss ratio has been able to drop so much there is such power concentrated in the hands of now seven very large for profit insurance companies that one out of every three of us is enroll in some kind of benefit plan managed by one of those seven big companies there they establish in the marketplace there is no government benchmark they set the rules they determine what what kinds of policies will be able to have what kinds of policies your employer will offer to you they run the show they have an enormously tight grip on our health care system far far more now than did ninety three ninety four and they're richer and stronger more powerful and more influential than ever before a public option is absolutely absolutely vital i would think that people in the pundits talking points and she came out to me she said no one paid me to come here and i said i was thinking well no one had to you don't get the money is not where the money goes the money goes into the big p r firms who have the influence to manipulate public opinion that's how it happens and i did ask  o congressman cummings point are you absolutely certain that tomorrow your insurance is going to be there that your son or daughter is going to be enrolled in a benefit plan that provides protection and she didn't have a good answer that because there is no guarantee you do not know if you're going to have your insurance coverage tomorrow you do not know if you're going to be losing it because you lose your job or you're going to be forced into a plan that makes you pay so much out of your own pocket that you might  american people are very very proud to serve with you i wanted to say to the panel that i view my job of defending our citizenry against those who might harm or exploit them or our republic and these are very important hearings today as i've listened to your testimony i keep thinking about pharmaceutical companies being the third most profitable sector in our economy in the district that i represent you can't watch turn the t v on know if you have a doctor what do you need all those ads for on the television it's very curious what's happened that wasn't true twenty years ago it's true today and i can see with the kind of profits they're making where they're putting some of those dollars yet i  people from my district canada northern ohio and i can't tell you how many people from my district have to go to canada because they cannot afford medicine in the united states of america yet i see television i'm thinking what doesn't fit here how are these dollars being used versus what the need is the insurance companies are the ones most profitable industry in this country and mr potter i think you talked about seven companies now having a third of the market and we heard that yesterday at a hearing by the former head of cigna corporation who i believe will be before this committee this week  i remember back to our beloved uncle skip from our family and he used to confide in me and as he became older and had infirmities here's all my insurance this is a man that was on medicare and he emptied out  that are duplicative and even with our offices and so forth we can't reach every citizen to help them make wise insurance choices so my questions really are the bill that the president has proposed as language that only encourages for the pharmaceutical companies price negotiation for the cost of prescription drugs within the v a within the department of defense we actually negotiate it is mandatory i want to ask your you to comment on the language that is in the bill that merely encourage negotiation a he got his care to the v a and he needed medication that cost him a modest amount of money but he knew that in private insurance he would have to pay about three hundred dollars this medication he was able to pay to the v a a small fraction of that so it makes a big difference in the lives of people who are the median household income in this country fifty thousand dollars the average price of the premium that you get to the workplace for a family is twelve thousand five hundred dollars if you're shifting more of  burden for either drugs or matter or care for the doctor or whatever there's not much money left over to pay the rent or buy the groceries your point about the seven large companies that control the industry it has to ha ve become so big through mergers and acquisition i was here and i've not been a part of a lot of satire or managing communications around them there are far fewer companies than there used to be there's not nearly as much competition as the industry would like you to believe they say on the website and they'll say in testimony that there are three hundred insurance companies that compete there's nothing like that if you look closer on the web site you might see if you can count up to two hundred eighty seven and then that includes vendors to these companies so there is a fabrication there's been so much consolidation the industry that last year alone two hundred fifty billion dollars flowed through these seven just seven companies in revenues so you've got enormous concentration of power it's really a cartel of large companies and they are so big that small companies and there's been talk about a maybe a co op there's not a chance that a co op  they did with their pricing doing my parental diligence i went online to look up what this drug was they were going to put it my child stumbled across investment journals online investment journals where one of the corporate officers from questcor was freely to investors so he wasn't speaking i wasn't the intended off of audience his remarks were that the drug was an underutilized asset and because they were the sole manufacturer they could change their pricing strategy and significantly increase the company's portfolio which they would then be able to put in do try to cast a noble light on other f d a approvals and such the drug went in july of two thousand and seven from roughly a thousand dollars a vile to over twenty three thousand dollars a vial based on published reports my insurance company to let me see what the actual costs are so published reports multiple published reports had it at that point when my daughter needed it in december of two thousand and seven twenty three thousand dollars a vile and just to get to how ludicrous this is we had ordered from out of state we had to inject it ourselves to one trained people had to inject our daughter nightly with this we had a syringe explode we thought how many thousands of dollars just exploded over dad's face they had a delivery man in a beat up nissan is probably making a bucks an hour deliver for vials of the stuff to my house and i went wow does he know what he has he quit this job and drive across to mexico and sell this stuff clearly we've had our brush the pharmaceutical industry my solid opinion is that they delayed service to my daughter because the hit they were going to take now that's the h m o medical group the pharmaceutical many other hand new buy orphan drug status they had the leverage there was no competition in the marketplace this drug that serves a minority of people very few children reflect with my daughter's disorder their primary markets that drug or m s patients and therefore they leverage it as the man was candidly speaking in investment journals up to twenty three thousand other published reports after my daughter's required time period on a drug were on it for four months i don't know estimated cost a hundred thousand dollars the drug went up to over forty thousand dollars of absolutely exacerbat questions of the witnesses before we go to our second panel and given the fact that we are going to be holding a hearing tomorrow with top insurance executives in this  same subcommittee the fact that we have to distinguish individuals who had direct experience working inside the industry we're going to hopefully be able to engage a little bit more in the second round i want to start evidence based medicine is supposed to rely as nature public peer reviewed journals for example but the detailed standards of care used by private health insurance companies are proprietary meaning that i their business and our ours if the coverage decisions are based on publicly available evidence why doesn't it follow that the standards these companies use to determine care should also be public why aren't they and what is the reason well the main reason is that their basic purpose is to be able to deny or limit care so what what happens and this is been a part of the evolution of managed care is twenty years ago one of the real difficulties for an insurance company back when i was functioning as a medical director was having you know some sort of objective grounds to deny something so for example if we want to design a hysterectomy we needed criteria to do that and that was very labor intensive a company to develop so these companies emerged that would actually develop criteria like we've heard mehlman and roberts and dr stern referred to them which is now mehlman usa and other companies that have gotten into the business of developing criteria specifically for health care companies to have it's like a filter you know in the tighter the threads of the filter the more you can limit or or deny care has been accorded the criteria set up on that i care right i mean that's now i'm just like i said in my testimony you know you don't purchase criteria in order to provide more care or more generous care you know the reason these companies spend millions and millions of dollars to buy the criteria to set up the computer system is to the naval as as a request are made for the more costly or the more frequent and costly services is for nurses upfront or not even nurses them time to be able to to say well this doesn't you know meet our criteria we can well they're loosely based on evidence i mean there's you know material it's available in research it comes out of academic centers and so you take this information that is public and has been developed using public funds and then you tweak it as an insurers contractors to do utilization review as well as handle specific appeals of denials of coverage do insurance companies carve out any specific disease for internal special reviews or for outside contractors to management you know where you could carve out the amount of premium that was used for mental health and you subcontracted out to a for profit mental health management company you capitated them so you fix your cost and then they have to take care of all of the the medical conditions within that around trying to figure out how to lessen the amount of claims exactly this is i'm just going to say i've got a limited time here just ask one final question person signs up with an insurance company to receive a policyholders book that describes all the procedures and costs that are supposed to be covered there's this mean an insured person will then be covered for all the things listed in the book yes or no now and is there one standard of medical necessity across the industry no company and the same plan is there any one standard of medical necessity within each company now ok i my time's expired i'm going to now go to mr jordan thank you mr chairman let me ask mr jenner now like in this  ackley the harassment you went through dealing with the insurance companies are you in favor of a single payer system government run system the public option that's received so much discussion of late or do you think that that just replaces one you know instead of having the insurance companies give you harassment you know have the government we know from many countries that have this at least from what i've read there are waiting lists there are difficulties there are rationing of care eventually when you go that so do you want to fix what happened in your says will make the insurance and we do what they said they were going to do when you bought the policy and paid your premiums did everything right or are you in favor of like throwing it all out and going to it to a single pair government system  and i mean you obviously know where i'm coming from a i look at this the most recent example of government starting a big program and i just talked with a cardioid the other day still waiting on seventy five percent of the dollars that the cash for clunkers program supposed to get to him so system but as from our experience things that would have been beneficial with the private industry would include possible federal oversight of that it's you know that appeals process that we went through supposedly once my dad's appeals went to the reviewing foundation and we were supposed to get a decision within forty eight process the hospital received the decision six days later and then my dad received a decision nine days later on the second appeal process then surance commissioner's office received a decision ten days later and then my parents received it thirteen days later so but there was nothing to hold them accountable for th that some other things we encountered was you know the foundation who was reviewing my dad's case is getting paid directly by the insurance company so to provide a baseline i think as a member of the republican party myself i think we talk out of both corners of our mouth when we express concerns about government inefficiencies on one hand not being able to get it done and on the other hand we say but if the government public option we would undercut lowball the price in health care and run the private sector out which is one way or the other it isn't vote unless we're not dealing direct i think there's a desperate need for regulation so that the consumer end consumer the end user has recourse we have none now the way it's set up now our employers largely negotiate with a limited pool of providers to figure out what choices we have the employer gets to select from that menu and then we get a sub selected doctor who's covered under that and i did it backwards i found good doctors and i went up the chain of command i'm fortunate i work at a huge bureaucracy of eighty thousand employees and the employees pick our contracts if i worked a small mom and pop was nice enough to give us coverage i wouldn't had that luxury are we've been audited repeatedly and we've got some the most effective policies in this country thanks to the employee union negotiated that all said my doctor is handcuffed because they do they determine through their best judgment what the proper proper care is and it's constantly meddled in interfered with by people who are looking at one thing how can they do this less expensive i don't believe that the united states of america a single payer government system is what would be best at this point in history i do believe that it's incumbent upon all of you to survey the world just like a business what if you want to continue on the business model and i want to recourse then if we don't like what what they what they decide you get you get hassled you get what's our recourse then i can tell you that the service that you get to the government my daughter we've had almost no problem with and when we do there is a clearly identified appeal process with a clearly defined timetable with a clearly identified resolution nobody is going to be happy all the time that's not realistic as the proud son of a dutch mother i can tell you th the waiting list you speak about are not a reality in the netherlands and it hurts me as a father and as an american to my relatives of offer to take my daughter and i and because we wouldn't be facing the delays and denials that we are here as the proud husband of a believe an american when we travel to billy's a third world central american country my daughter got sick on the flight over we were hospitalized for four days the bill was seven dollars seven dollars in a country where children don't have shoes to go to school a proud country a beautiful country i certainly don't take into conflicts maligning the country but clearly a poverty stricken nation four days of hospital care with medication seven dollars we'd like to hear what each other as to say mr cummings you recognize your michigan and our is that right yes i think you're saying what i'm feeling i just want us to have an effective and efficient system that also has an element of empathy the president used to talk about and i guess he still does a society where we haven't him but the deficit because we can put all of the we can put all of the rules and regulations in place but if we don't have people in in those places that see people as more than a number or know what more than statistics or not worrying about a bonus over the life of a person it won't make a lot of difference but i want to go to and i so i agree with you mr pryor what is the i mean just put you in a place in your old position and somebody walked into your office and said father we've got a problem those folks over there in the in the on capitol hill they've come up with this thing called a public option what do we do about that i mean you and them to i mean in other words i'm trying to figure out  hear the insurance companies on one hand say that they're worried about being not a being able to compete but on the other hand saying that maybe that there's certain things that they have to have obama hillary clinton senator clinton and senator edwards all had the public option as a central component of their their their their their campaign platform so the industry had a long time to develop a strategy to try to oppose  that and what we're seeing now is it being carried out and they have been saying the things that we've been leaving here in the make no sense that it'll put them out of business because it'll be run to efficiently on the one hand or that we should oppose because of the government system they want to try to make they want to defame it and make it seem as if this is a government takeover of the health care system those are the terms that they use that's part of the strategy that was developed a long time ago it's been an evergreen stay phrase that works for them every time there's an attempt to reform the health care system what are they afraid of their friend of having something that might take a little bit of revenue from them if there's no public option and if you have an individual mandate look what happens everybody has to buy their product and if that person can't afford that product then you and i and other taxpayers will have to pay the subsidies and those subsidies the premium dollars of the people will pay and the tax dollars that subsidize them will flow right into those those for profit companies or all those companies so that matter and then a lot of that will taken out be taken away and go into shareholders pockets that's what they do i want to have another it when i hear the insurance companies say we're ready to come to the table we'll get rid of the preexisting conditions we'll give it to restage and they go through all that it makes it sound as if they basically admitting that this stuff is wrong oh absolutely and they they said exactly the same thing in testimony before congress in one thousand nine hundred three and i can point you to it they know that's wrong but after the plan failed in the clinton plan fail did you see them coming here to congress and ask them to change the laws no of course they didn't they have thrived they made tons and tons of billions of dollars with the system we have now they are not sincere it's just rhetoric they would agree to it if they would they could thrive in a system in which these things are made illegal that they know how to make is because i think you know mr potter referred to them as a cartel and that's a cartel that works with very secret hidden practices that was suddenly what would possibly be disclosed if they had to compete with a real competitor so all of these methods these secret hidden methods for profit maximisation would become more public and and you know they could come to the table naked say oh well we will give up preexisting conditions we'll give up precision but that's only because they have so respond all of the other methods behind the scenes and i see this in case after case after case where i've worked as an expert witness where you know after you know all of the labor of finally getting documents that have to be judge and we see the end in our practices you know these systems are so respond and then they could give up these other things and still have the methods to to maximize profits that's why they no longer worry about possibly having all of these other persons who are uninsured because they now can control the cost of the people who are going to be costly you know that's a process that's been refined over the past decade in ways that are just unimaginable and would take you know days to explain how all these devious methods work thank you very much i would say that it would probably be  deny coverage the chair recognizes capture for five minutes thank you mr chairman mr potter do you have the ability to put on the record the profit margin of the largest insurance companies that you've been referencing sure i can i can get that how would it compare to the profits that are made by the supermarket industry food industry or  the clothing industry i mean how would from your knowledge of the industry that the profit margin is higher than grocery stores and i haven't compared all the other sectors of the economy from company to company and product to product some of these products are extraordinarily profitable and the ones they want to move us all in to these high deductible plans and plans profit margins will expand greatly they can make tons and tons of money on this so we spent on health care flow through those seven companies last year alone in revenue three percent of that is a ton of money it's a lot of money in profit so sometimes small numbers to make you think that it's in large corporations did a study of health care systems and compare our system with as broad and i think the doctor noted that thirty percent of the money we stand here is on administration that is not stand in other countries and it is not just because you have that much inside the insurance industry but it is caused by the insurance industry the monetary system we have now is an enormous amount of administrative goes on within these companies but it requires doctors and hospitals to hire big staff just to deal with them i left thirty percent i are full of the future they don't believe that what they hear your heart how much money is being wasted on that i think it would be a good a good research project i haven't seen the data myself on that because this is not so easily found that you would need to to look at the kinds of policies that the companies are selling what benefits they haven't and whether or not they are really worth a dime and then you can also look at the policies that are being spent on  fake insurance or that i've talked about the big companies are not getting into that it's not just fly the nice they're doing it and this is these are plans that people it's not just supplemental it is what is being sold as as the the choice that they have available to them that's affordable keep this in mind don't be don't be blinded by just this talk about affordable premiums because they will sell you the market something that has the premiums being affordable but the benefits will be so lousy you might as well not be in sured if you're a senior citizen listening today a medicare policy with a supplemental that is recognized by the department of health and human services do they need extra catastrophic coverage important and money is being wasted all over the country by people who are that they're buying what we really need to look at it is and it brings up a point that i'd like to make and in the inadequacy of state regulation they they do review marketing materials but they don't have the resources to do an appropriate job that's why you have stuff like this going on the regulators regulators are well intentioned but they just don't have the resources states are not wealthy enough to provide all the the resources that is needed to regulate this industry so bent on taking advantage of consumers staff and that is something that we are interested in pursuing to the level of a hearing we would work with gentle lady and perhaps we can get uncle skip here to testify thank you very well you're welcome and i just want to say panel each one of you has made a contribution to your testimony here today some of it heart wrenching and other of the testimony and serious we will continue with our investigation tomorrow but i will say that the testimony that came here today was very helpful in preparing us for tomorrow as well as to remind the american people that it's i think it's good to communicate with each other about our experience not theoretical it has real experience with the system exactly your family has some real experience with the system we need to hear those stories not anecdotes what really happened so and as dr stern told his experience as well so this experience is very important because i think frankly whatever kind of system we end up with the transformation is going to be driven by the power of the narrative which we hear from across the country so with that i want to thank each and every one of you and also to salute mr potter and dr peeno for your courage in coming forward and giving an insider's point of view that we would really get a chance to hear from  forward the staff is getting the table ready i just want to remind everyone that this is the domestic policy subcommittee of oversight and government reform the topic of today's hearing between you and your doctor the private health insurance first panel we're now going to go to the second panel we're fortunate to have an outstanding second panel of witnesses i would like to first introduce ms karen pollitz is that correct welcome mr pollack is the project director of the health policy institute of georgetown university here in washington where she's also an adjunct professor of georgetown to graduate public policy school professor p directs research on health insurance reform issues as they affect consumers and patients focusing on the regulation of private health insurance plans in markets managed care consumer protections and access to affordable health insurance policy is a member of the national academy of social insurance she's also a member of the advisory board of the california health benefits review program and has served on the board of directors of the maryland health insurance plan as well as a national committee on quality assurance previously professor  health care reform medicare medicaid and u s public health service agencies and programs mr michael cannon welcome mr cannon is the cato institute director of health policy studies previously served as a domestic policy analyst for the u s senate republican policy committee under chairman larry craig where he advised the senate leadership on health education labor welfare and the second amendment he co  keep in mind your complete written statement will be including the hearing record of professor proud to be our first witness for this panel you may proceed will get your testimony  and maybe we'll be able to hear from both of you before we go ahead thank you mr chairman members of the subcommittee i just want to open by saying i'm also from ohio i grew up in the cleveland area when you were mayor mr chairman it's very nice to be here today  and i want to thank you for holding this very important hearing i hope and expect that health care reform when it isn't acted will create rules to prohibit or at least limit a lot of the practices that you heard about this morning on the first panel but rules will not be enough there will always be a strong incentive in a competitive insurance market for insurance companies to try to avoid risks void enrolling them keeping them in rolled or avoid paying their claims and so transparency and accountability and insurance is essential and it's very important that health reform try to accomplish that as well transparency and insurance will involve a number of key changes and most important of these will be data reporting when i was invited to testify at this hearing i was asked could i provide data on how often practices like these happen and the answer was i cannot and neither can regulators or other policymakers but these the information is knowable regulators need to have ongoing detailed information about marketing in a roman practices and about how coverage is how coverage is administered so that it will be possible to see when insurers are avoiding risk that they are supposed to cover we don't do that today the federal government collects no data on health insurance consumer protections even though federal law requires certain important protections already including guaranteed renewability of coverage for the most part states don't collect a lot of data on consumer protection and health insurance either instead most data collected on an ongoing basis by state insurance departments relates to financial solvency and regulators rely largely on consumer complaints as an indicator of problems however a body of research shows that rarely do consumers watch formal complain with regulators even about serious health insurance problems that cost them a lot of money or that delay their access to care a series of hearings about health insurance rescissions that were initiated in this committee provide the sobering sobering case study of how little we know about how well health insurance works for consumers and how vulnerable they are to discrimination this committee asked all fifty state regulators what data they collect on health insurance rescissions and in response only fourth states could provide any data on the number of rescissions that had occurred only ten could provide the number of individual insurance policies that were in force in their state and more than a third of states could not supply a complete list of companies that sell individual health insurance within their borders the any i see pulls all fifty state insurance departments and provided summary complaints data about health insurance rescissions they found a total of one hundred eighty one complaints about health insurance rescissions had been lodged over a phone excuse me a five year period by contrast when this committee asked just three insurance companies how many policies they had rescinded over the same period the answer was almost twenty thousand new approach to health insurance regulation must require ongoing and detailed reporting by insurers of data that will enable regulators to evaluate how the market works if specially for the sickest consumers that would include data on enrollment retention disenroll ment on rating practices that issue and renewal regulators must also track measures of coverage effectiveness to see what medical bills are paid and how many are left for consumers to pay on their own that means insurers also need to report data on provider participation fees ensure reimbursement levels health insurance policy loss ratios and data regarding claims payment and utilization review practices if regulators have access to this kind of information patterns of problems that affect the sickest consumers won't be as easy to hide finally mr chairman health insurance must also be held accountable for compliance with market rules and consumer protections as ms kaptur talked about her uncle buying additional policies that's illegal so it's not enough to have rules we have to enforce the rules and that requires resources for oversight and enforcement in addition it's time for the federal government to take a more proactive role in health insurance regulation current federal capacity for private health insurance oversight and regulation is practically nonexistent last year a witness from c m s testified that that agency dedicated only for part time staff to hipaa private health insurance matters for the entire nation further despite press reports alleging abuse of rescission practices in violation of federal law the agency did not investigate or even make inquiries as to whether federal guaranteed renewability protections were being adequately enforced this outcome is not surprising when you acted hip but in one thousand nine hundred six congress created important federal rights for consumers but limited federal enforcement authority instead congress opted to rely primarily on state enforcement by adopting a so called federal fall back and forth and structure federal enforcement is triggered only as a last resort once a finding is made that states have not adopted and substantially enforce federal minimum standards under this structure it's not surprising that the federal government lacks oversight and enforcement capacity it doesn't make sense to build and maintain capacity that you don't expect to use  so you rely on the states instead but unfortunately limited regulatory capacity is a problem at the state level as well insurance department staff have been cut and states are overworked it's time for the federal government to assume an active and effective role in enforcement of federal health insurance standards and to require transparency so that we can see how coverage works i think the general idea mr cannon you made for five minutes thank you mr chairman for this opportunity to share with you my thoughts about providing secure health insurance to american consumers how do we ensure that insurance plans honor their commitment to care for the sick it's a problem whether we're talking about private insurance plans or government plans private plans whether through indifference or incompetence do sometimes  on those commitments so as government in two thousand and seven a twelve year old marilyn boyd mt monte driver died because his mother could not access the care the de'monte was supposedly guaranteed under a government health plan as former senator and majority leader  acknowledges even if we achieve universal coverage some percentage of patients will fall through the cracks health care is a human endeavor that means perfection is not an option our task is to find a set of rules that least often leaves americans in the position of  driver and his family in my written testimony i cite a growing body of economic literature that finds that lightly regulated insurance markets perform actually much better than critics suggest providing secure coverage to millions of americans with high cost  expressed my concerns with the reform measures that congress is considering for example legislation before the house would compel tens of millions of americans to purchase private health insurance and would shower private insurance companies with billions of dollars in taxpayer subsidies and not i would add because insurance companies are doing a fantastic job another provision of the legislation would impose price controls on private health insurance premiums as president obama's economic adviser larry summers has said quote price controls inevitably create harmful economic distortions and an example of one of those distortions if you think insurers try to avoid the sick now wait until government price controls force insurers to sell a fifty thousand dollars policy for just ten thousand dollars it is worth noting that the insurance lobby supports both the proposal to make health insurance compulsory and the proposed price controls because they would subsidize and protect private insurance companies from competition whether we support a new government health program or oppose it i think we should all be able to agree that we don't need to further subsidize and protect private to do one of two things and it is up to you you can either respond to written questions from members of this subcommittee and they will be included in the record or you can come back  probably in about about forty five minutes at the conclusion of the vote and then we can go to a second round of questioning at the panel here so what would you what would you and we'll go to questions and i thank you for your patience we're going to go vote right now thank you the committee is in recess for the vote will be back in a half hour much committee will come to order i'd like to thank the witnesses for remaining and i'd like to begin asking by asking mr cannon u nder what circumstances do you see that making private health insurance compulsory represents a bailout to mandate in the legislation before the house and there's one in the legislation for the senate as well congress has decided it would or the legislation would offer subsidies to americans to help them purchase health insurance simply mandating that purchase health insurance doesn't mean that they'll be able to a lot of people won't be able to and to afford it and so congress would be in this legislation offering subsidies to a lot of people who cannot afford health insurance on their own and to a lot of people who can't afford health insurance on their own because the subsidies as i understand them would go up to three hundred or four hundred percent of the federal poverty level which for a family of four is somewhere around sixty eighty thousand dollars per year those subsidies offered to people who can afford health insurance already and to people who cannot would would essentially help people purchase more health insurance and and and give the insurance industry really a guaranteed customer  base and a guaranteed source of revenue so i think that essentially with what that legislation would do is is is akin to a bailout of the health insurance industry i don't think that what we should be doing is is giving more to this to the sector or to this industry i think we should be demanding more from it and i think the way to do that is preserve the freedom to choose whether or not to purchase health insurance as well as the freedom to choose what goes into your health insurance policy and the way to do that in my view is to let consumers control the money that government employers now control to purchase health insurance on their behalf and they will they will economize on health insurance they will  they will purchase most likely purchase less health insurance and they do right now and they will hold health insurers accountable in a way that they cannot when their employers are making those decisions for them so let's  let's go four years down the road a health care plan is inactive which requires that people have private insurance and say there's no public option that's of the way it looks like right now and people there will be tens of millions of americans who will be faced with a decision to either purchase a private  like to comment on that i think that what that really highlights is that this proposal for to mandate people purchase health insurance this proposal for to make health insurance compulsory in the united states amounts to a tax on a lot of middle class families if they purchase the health insurance as president obama's economic adviser larry summers acknowledges when a government forces people to purchase something that they don't value or pay more than the market would demand that is itself a tax but if they don't purchase the mandatory level of coverage and they have to pay what we euphemistically call a fine or a penalty that is that's that's a tax as well in the house legislation there would be a tax on the individual equal to two point five percent of of income of adjusted gross income and if the individuals employer does not offer them coverage there would be a tax equal to eight percent of payroll now mr summers in the congressional budget office and economists broadly acknowledged that that eight percent payroll tax would be paid for by the worker because it would reduce earnings so what you're talking about there is a ten point five percent or is that a so you're saying that if workers have a healthcare benefit in effect paying for it absolutely and i think in fact that is why i think that's the great the biggest drawback or the biggest problem with the tax preference for employer sponsored insurance the quote unquote employer contribution to the average family plan in this country mounts a ten thousand dollars that's ten thousand dollars of the workers earnings that the worker doesn't get to control the government by creating this tax preference for employer sponsored insurance essentially to take that ten thousand dollars out of the workers hands give it to the employer and let the employer make the workers health insurance decisions for the worker so so yes i think that  economist in fact there's a survey of health economists recently and the broadest area of agreement was on the question of whether health benefits actually come out of wages or profits or something else but ninety percent of economists professor i want to speak to you about how government can help the public make better choices about health insurance in your testimony you pointed out something that many people may not realize  quote the primary purpose of health insurance data collected by state regulators today is to monitor the solvency of private health insurers and that quote enforcement of consumer protections and health insurance today i they pay out on claims it's not it is not well monitored or consistently monitored today i think state insurance regulators strive mightily to protect consumers as best they can their resources are limited would you describe the state regulators as reactive to consumer complaints rather than a lot of it is reactive oftentimes in response to a complaint even as little as one complaint a state regulator may initiate a broader investigation of a company or of a pattern of practices so i don't mean to suggest that state regulators are now out there giving it their best effort but they are very strapped in terms of resources they are very broad in terms of the jurisdiction that they need to keep an eye on and with limited resources i mean if i were one and i had limited resources i would probably start with solvency myself because a company goes under then no claims will be paid for anybody so that's not an illogical place to start but there are not enough resources to monitor closely what needs to be monitored and with health insurance at the very transaction heavy task to to accomplish do private health insurers themselves keep data on complaints made against them that can be reviewed that can be what complaints are being filed and they have to keep records i mean this is why you get urge to put everything in writing when you're course but when you're communicating with your insurance company so that there will be a record somewhere my time's expired i want to go to my colleague for five minutes and then we'll go to one field increase in the market increasing competition in the first panel that there were i believe dr peeno and mr potter talked about the cartel that exists in the insurance market right now their solution was to have the government compete t increase competition by have and this so called public option the approach i prefer is this interstate market tell me your thoughts on that what the research i'll just getting this this is you know now being debated a lot and talked about as a possible improvement let me let me hear your thoughts i think that the insurance markets in most states are not unlike a cartel and i think the reason is that is because each state sets a barriers to competition to protect their domestic insurers what those are essentially state licensing laws now there's nothing wrong  with state licensing law per se but what these laws do is they say unless your insurance policy is licensed by this state say the commonwealth of virginia then you may not sell it to residents of this state and so what that means is that residents of virginia cannot purchase  health insurance policy that's available in maryland or north carolina and that's particularly cruel i think to residents of new jersey who face some of the highest health insurance premiums in the country they cannot purchase health insurance from  across the delaware river in pennsylvania where it's often less expensive so what happens so i do think there is insufficient competition insurance markets the president and other supporters of a new government program has said that they can that  a new competitor can keep insurance companies honest if that's the case and i think that doesn't new competitors would do an even better job so that if congress using its power under the interstate commerce clause of the constitution were to say look you know states can license health insurance but they cannot prohibit their residents from purchasing health insurance licensed by another state what that would do is it would bring new entrants into the markets and each state gives individuals and employees employers a lot more choices of health insurance plans and increase competition what it would also do is it would give individuals and employers the power to avoid unwanted costly state regulations a lot of state regulations are in fact consumer protection solvency standards that his policies talking about are i think a prime example but when you start looking at how the states require consumers to purchase forty different types of mandated benefits they might not want or need or try to impose hidden taxes on the healthy  in order to subsidize that sick they can take those those are increased those are regulations that increase the cost of insurance and make it an affordable for some people so you can't really call them consumer protections if they're keeping people from purchasing health insurance and i think it letting people purchase insurance across state lines would allow people to thank you because paul the proposal to allow sale across state lines that have been in the congress to date are really a prescription for insurance fraud there would be little practical ability of the licensing state to regulate insurance across the fifty states imagine if the ohio commissioner had to keep track of policies that were sold in california and texas and new york they're not set up for that it's the notion of escaping mandated benefits is a total red herring the reason that health insurance costs more in new jersey compared to maryland where i live which has been cited as the champion of mandated benefits those of we have more in maryland than anywhere is that in new jersey everybody has to be offered health insurance you can't be turned down because you have cancer and in maryland you can't so it's cheaper and insurance will always talked a lot about that is less and i think we have to come back to what is the basis of competition in health insurance right now and it is competition to avoid sick people and their costs and the more you written by an out of state legislature or commissioner and i think there's a fairly straightforward way of doing that you have those regulations but whatever they may be incorporated in the insurance contract which could then be enforced in the purchaser's home state in their so and then and then the domestic purchasers insurance commission could even play a role there what's important is that the individual consumer or the employer be able to choose the rules and they could be enforced at home without having to rely on an out of state insurance commissioner as for the cost of mandated benefits the cost estimates vary but the commonwealth of massachusetts recently estimated that the benefits that are mandated in with the same illness who are insured by the same private health insurer that they'll be treated differently by the insurance company a possible i believe it's possible yes and so is there any guarantee that if a person buys coverage it will guarantee coverage insurance as compared to medicare congress and the general public are able to examine and debate the reasoning behind how medicare pays for medical care but the private health insurers keep their decision making process and  books confusing terminology and other words medicare's actions are transparent private insurers are not but they provide the same service cover medical expenses now is there any justification to keeping insurance company definitions of medical necessity proprietary i don't think so now and why would the insurance company want to keep that information pr i believe they'll argue so that doctors and other providers don't try to game the system and sort of code their billing so that you know it matches up what the you know what the guidelines would be  but i think you heard testimony on the earlier panel that there is also an effort to just you know kind of try to hide the ball and try to you know create options for the insurance company to deny claims if they feel like they want to do that results of even x during all appeals programs and the data are very sparse what you can find is suggest that we need to be doing a better job and looking much more carefully and not relying on this sort of end result of a patient having to go through all of the all of the steps and appeals you know before they can get to a system where records will be kept insurance companies compete now to avoid paying claims certainly there are reasons why you know we don't want to pay for care that's not medically necessary we don't want to pay for fraud i mean there are reasons for vigilance for sure but i think we need to think from the patient's perspective about what we need to track so that we can make sure that decisions are justified that they're backed up that they're consistent and that they're in the patient's best interest and then build our data reporting requirements from that exercise i think we need a much more proactive and pro patient approach to data gathering from health insurance companies and i who believe that both the preamble to the constitution and article one section eight in describing the general welfare that as we evolve as a nation and have specified health care retirement security as part of the general welfare that a logical extension of that would be to have health care for all guided by the principle of it in th there is a difference of opinion among legal scholars about what that means i'm not a constitutional scholar but let me give you my best take on what that what that disagreement is there are some that read that as an expansive grant of power that would say give congress the power to the constitutional authority to enact a single payer system or make health insurance compulsory for all americans i think that the perspective of cato's constitutional scholars is that  if that were true if the framers of the constitution meant for the general welfare clause to be such such a sweeping broad comprehensive grant of power from the states to the federal government then the rest of the constitution would you superfluous they would have had to enumerate all the other powers in the constitution because the general welfare welfare clause would've taken care of everything so the very structure of the constitution itself i think argues against a broad sort of expansive interpretation of the general welfare clause that you suggest some of the issues that are being brought to us about conditions related health care in america are laden with moral consequences and moral overtones and there's like an underlying reality whether health care if health care is a privilege based on ability to pay or is health care a fundamental right in democratic society like this arc where you go from  meaning of the document is and also doing it within a context of what our present day needs are and what the and what the very human condition is we find ourselves in and the underlying morality of you know is that is it immoral for somebody  government can do a better i'd like your thoughts on that in light of the congressional research service said that over a billion claims are submitted each year to medicare ten percent of those claims are denied turn in general holder  have a quote here said by all accounts every year we lose tens of billions of dollars in medicare and medicaid funds to fraud so you're thoughts on it you know we met with health care professionals we did health care roundtables in our district over the recess and you know we had so many people tell us that you know government's already fifty percent health care market right now and that providers don't get compensated fully for the care they provide when they when they treat folks in our medicare medicaid system and therefore the folks  in the private insurance have to pay more to get just just where the system set up right now so i'd like both your thoughts and start mr cannon on this this premise that is been so kind of underlies the entire hearing today on somehow that the government can do better because it is as you can gather i have real reservations about that well i think congressman that the state of america's health care sector right now is pretty good evidence that the government is not do a very good job of managing health care and i give you a couple of examples you brought up the medicare program that program has it's been estimated that one third of medicare spending to does absolutely nothing to improve the health or or improve improve the health of patients or improves patient satisfaction provides no value to them whatsoever the it's often cited that we have so that's an enormous amount of waste much even larger than the estimates of fraud in medicare program it has been estimated that as many as one hundred thousand americans die every year due to medical errors in hospitals i submit that medicare is probably the biggest reason for that because medicare payment system actually penalizes doctors and hospitals when they succeed in reducing medical errors it makes it a losing business proposition rather than have competition between different payment systems that bring out different dimensions of that that would improve all dimensions of quality medicare gives us good marks on some dimensions  quality but absolutely horrible marks on another dimension one of the biggest problems of the president talks about is the problem of preexisting conditions people with high cost illnesses that who lose their coverage and there and then cannot afford the premiums that are charged on the individual market that is a problem that has been fueled by government for sixty years and the reason is that sixty years ago the government created a tax preference for employer sponsored insurance coverage that has given us the employer based system that we have right now that is so cruel and to use the chairman's words in the world that it takes insurance away from people at the moment they need it most when they lose their jobs they lose their incomes and if those people are sick then they've got a previous one that is going to get coverage if i may finish one of the one of the one of the studies that i cite in my written testimony health and high cost patients who purchase health insurance from a small employer yeah one of things we should do within the legislation because sponsored is to for the family that has to go out and buy it on their own the market they get the same tax advantage that we give to employers to provide templates and that problem has been in place accountability and there is a different level of accountability for government than there is for the private sector there just is i think we should try to enhance and strengthen accountability in the private sector with much stronger oversight and regulation and enforcement regardless of how you end up structuring health reform i think that's essential but government programs will always be accountable in a different way to directly to the voters will always be open in a different way a true marketplace and that's how my second point a marketplace of competing insurance companies will always always in health insurance compete to avoid sick people that is the overpowering incentive to beat everything and it always will and even in a more regulated marketplace even in a more transparent place you're always going to be trying to catch up with that introducing a public component to that it's it's  it's kind of a funny notion it's not like the government is going to compete to make more profits than blue cross or wellpoint it's that the government will be there offering a choice that is what we will give a dollar on that point if there's a public option eventually the public option will dominate even be congressman even congressman frank has said that a public option will lead to a single payer system but i mean that this idea that somehow it's not going to do that i just i don't think flies i mean most americans of all he figured that out and that's why they're concerned about but mr jordan i was on the board for several years of a public program in my state where i live our state high risk pool and it was administered by a private insurance company and so you know they  they know how to administer claims and that is definitely it's own art and its own skill and as the consumer rep on the board i would ask questions why do we have so many denials of preauthorization for example for mental health services that turned out to be one of the biggest services that any of our patients used even though that wasn't the major diagnosis very stressful to be sick people need help and one of our leading sources of complaints had to do with denials for mental health services and so i said why is that why are we denying all this care well it turned out it was paperwork people were supposed to jump through all these hoops and get pre authorization they had to within certain number of days and it was just a load of hoops that they had to jump through and i said well ok once they go through all these hoops how many of them were actually denied and we have thousands of denials and they said seven and i said really then why are we doing this where are we making them jump through all these  they said this is saving you a lot of money i said i don't want you to save a few hundred money we're here to pay for care where high risk pool very sick no one else will take care of them this is our job this is what the taxpayers have given us tax dollars to do doing that we did that i can't imagine that would happen in the company that is used dr peeno used to work for that it's just a different incentive it competes on a different way and i think we need to create a different standard for covering health care and if private insurance companies can't compete against that and survive the well so what i mean we took care of the patients who were sick and isn't that what this has to be about panel for their part a patient friend is leaving the room i just wanted to comment and staff can relate to that some there are some cases i suppose where a public it it needs a movement behind it that doesn't need to more strength so while some public options may lead to single payer i would just like to offer the opinion that it's unlikely that that the current status of the public option that is suggestion in h r thirty two hundred would lead to single payer the c b i oh as said in one of its studies that nine million people at most would be covered by a kind of a public option that the first iteration of that plan was to have one hundred twenty nine million people covered by it so you have nine million people that particular appreciated for the time that you spent for your patients and this committee stands adjourned i want to remind people that tomorrow we will hear from executives from six of the major health insurance companies so that we