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S. HRG. 113–613 

PRESIDENT’S F ISCAL YEAR 2015 

HEALTH CARE PROPOSALS 

HEARING 

BEFORE THE

COMMITTEE ON FINANCE 

UNITED STATES SENATE 

ONE HUNDRED THIRTEENTH CONGRESS 

SECOND SESSION 

APRIL 10, 2014 

( 

Printed for the use of the Committee on Finance 

COMMITTEE ON FINANCE 

RON WYDEN, Oregon, Chairman 

JOHN D. ROCKEFELLER IV, West Virginia 

CHARLES E. SCHUMER, New York 

DEBBIE STABENOW, Michigan 

MARIA CANTWELL, Washington 

BILL NELSON, Florida 

ROBERT MENENDEZ, New Jersey 

THOMAS R. CARPER, Delaware 

BENJAMIN L. CARDIN, Maryland 

SHERROD BROWN, Ohio 

MICHAEL F. BENNET, Colorado 

ROBERT P. CASEY, Jr., Pennsylvania 

MARK R. WARNER, Virginia 

ORRIN G. HATCH, Utah 

CHUCK GRASSLEY, Iowa 

MIKE CRAPO, Idaho 

PAT ROBERTS, Kansas 

MICHAEL B. ENZI, Wyoming 

JOHN CORNYN, Texas 

JOHN THUNE, South Dakota 

RICHARD BURR, North Carolina 

JOHNNY ISAKSON, Georgia 

ROB PORTMAN, Ohio 

PATRICK J. TOOMEY, Pennsylvania 

JOSHUA SHEINKMAN, Staff Director 

CHRIS CAMPBELL, Republican Staff Director 

(II) 

C O N T E N T S 

OPENING STATEMENTS 

Page 

Wyden, Hon. Ron, a U.S. Senator from Oregon, chairman, Committee on 

Finance .................................................................................................................. 1 

Hatch, Hon. Orrin G., a U.S. Senator from Utah ................................................. 3 

ADMINISTRATION WITNESS 

Sebelius, Hon. Kathleen G., Secretary, Department of Health and Human 

Services, Washington, DC ................................................................................... 5 

ALPHABETICAL LISTING AND APPENDIX MATERIAL 

Hatch, Hon. Orrin G.: 

Opening statement ........................................................................................... 3 

Prepared statement .......................................................................................... 41 

Sebelius, Hon. Kathleen G.: 

Testimony .......................................................................................................... 5 

Prepared statement .......................................................................................... 44 

Responses to questions from committee members ......................................... 50 

Wyden, Hon. Ron: 

Opening statement ........................................................................................... 1 

Prepared statement .......................................................................................... 115 

(III) 

(1) 

PRESIDENT’S FISCAL YEAR 2015 

HEALTH CARE PROPOSALS 

THURSDAY, APRIL 10, 2014 

U.S. SENATE, COMMITTEE ON FINANCE, Washington, DC. 

The hearing was convened, pursuant to notice, at 10:06 a.m., in 

room SD–215, Dirksen Senate Office Building, Hon. Ron Wyden 

(chairman of the committee) presiding. 

Present: Senators Rockefeller, Stabenow, Cantwell, Nelson, 

Menendez, Carper, Cardin, Bennet, Casey, Warner, Hatch, Grassley, Crapo, Roberts, Enzi, Cornyn, Thune, Burr, Isakson, and 

Toomey. 

Also present: Democratic Staff: Joshua Sheinkman, Staff Director; Jocelyn Moore, Deputy Staff Director; Elizabeth Jurinka, Chief 

Health Advisor; Matt Kazan, Health Policy Advisor; Michael 

Evans, General Counsel; and Juan Machado, Professional Staff 

Member. Republican Staff: Chris Campbell, Staff Director; Kimberly Brandt, Chief Healthcare Investigative Counsel; Jay Khosla, 

Chief Health Counsel and Policy Director; and Anna Bonelli, 

Detailee. 

OPENING STATEMENT OF HON. RON WYDEN, A U.S. SENATOR 

FROM OREGON, CHAIRMAN, COMMITTEE ON FINANCE 

The CHAIRMAN. The hearing will come to order. 

This morning the Finance Committee is here to discuss the 

health care proposals in the President’s fiscal year 2015 budget. 

Secretary Sebelius, thank you very much for joining us this morning. 

This discussion will undoubtedly trigger debate about the Affordable Care Act. Certainly there are going to be reasonable differences of opinion. What I would like to do is start with a handful 

of overlooked facts that are not in dispute about what has happened since the Affordable Care Act became law. 

First, with the passage of the law, health care in America finally 

is no longer just for the healthy and the wealthy. Before the law 

was enacted, insurance companies could discriminate against 

Americans with a preexisting condition. That meant those who 

were healthy had nothing to worry about. Those who are well-off 

could pay their bills, and everybody else went to bed worried that 

they could be wiped out financially. 

Second, the rate of growth in Medicare is slowing. The fact is 

that, according to the Department of Health and Human Services 

and their data, annual Medicare spending per senior grew by 1.9 

2 

percent over a 2-year period, slower than overall economic growth 

and much slower than historic growth. 

Over the past 3 decades, per-senior spending grew 2.7 percentage 

points faster than the economy, so the fact that the rate of growth 

in Medicare is slowing has the potential to be great news for seniors who want lower premiums, and for taxpayers who want to extend the life of Medicare without breaking the bank. 

Third, there are several important reforms that have been 

launched over the past few weeks. For example, building on work 

members of this committee have done—thank you, Senator Grassley, on this point—to open the Medicare database to Americans, 

the Obama administration yesterday made public unparalleled 

amounts of information that will help our people make choices 

about their health care. This is also going to help fight fraud, promote competition for Medicare services, and be a useful tool for the 

private sector. This information can be used by private employers 

and others to bring down the cost of insurance. 

Another recent and promising announcement helps provide patients with life-threatening illnesses with more choices for their 

care. For the first time, patients will have access to hospice care 

without having to give up the prospect of curative treatment. This 

puts patients and families first, and it is high time. 

Fourth, the Congress now has a bipartisan, bicameral plan for 

dealing with chronic disease. Thank you, Senator Isakson, for your 

work on this. We appreciate the input of Senator Bennet and Senator Warner. This legislation focuses on improving care for older 

people with multiple chronic conditions. This is the fastest-growing 

part of the Medicare population, and those older people deserve 

better and more affordable care. 

Fifth, there is plenty of debate about which Americans enrolled 

in the Affordable Care Act and when, but the independent data 

shows that the number of insured Americans is significantly lower 

than it has been in years. For example, a Gallup poll released this 

week shows that the rate of uninsured Americans fell to the lowest 

level since 2008. 

Finally, the Congress has made real progress on permanent repeal of the broken and dysfunctional Medicare physician payment 

formula. The reforms agreed to would push Medicare to be driven 

by the quality and the value of care. Today’s volume-driven system 

is not good for seniors, it is not good for their doctors, and it is not 

good for Medicare. The President’s budget proposal endorses a bipartisan, bicameral reform package, and we look forward to working with you, Secretary Sebelius, to get this done—get it over the 

finish line—by the end of this year. 

Madam Secretary, in wrapping up, the last time you were here— 

Chairman Baucus, of course, chaired that hearing—I compared the 

roll-out of the Affordable Care Act to the expansion of Medicare to 

provide prescription drugs to America’s seniors during the Bush administration. I focused on the bipartisanship that took place then, 

and the need for it to be repeated. And obviously, the Medicare prescription drug benefit, like the Affordable Care Act, zeroed in on 

the key concerns: expanding coverage and financial assistance to 

the needy and increasing marketplace choices. 

3 

The reality is that Medicare Part D has been an enormous success. For millions of seniors, it has been a godsend. It has cost less, 

30 percent less, than the Congressional Budget Office predicted. 

We all know it had a pretty bumpy start, and many of the news 

stories from those early days of Part D resemble the kind of news 

stories that we see with the Affordable Care Act. The Congress did 

work in a bipartisan way across the aisle, regardless of how a 

member voted on Part D, and the program was able to get off the 

ground and become the success it is today. 

Like the Medicare drug benefit, millions of Americans now have 

the economic security of health insurance they did not have just a 

few years ago. Regardless of politics or feelings about this law, that 

is something that is good for the economy and good for our country. 

I am going to turn to Senator Hatch here in just a quick second. 

I did want to tell colleagues that we have this vote at 10:30, and 

it is the intention of Senator Hatch and I to just keep this going. 

We will have Senators coming in and out and just going in the 

order of appearance back and forth. But I wanted colleagues to 

know, given the interest in this subject and its importance today, 

we are going to just keep this going. 

[The prepared statement of Chairman Wyden appears in the appendix.] 

The CHAIRMAN. Senator Hatch, we welcome your comments and 

again express our thanks to Secretary Sebelius for being with us. 

Senator Hatch? 

OPENING STATEMENT OF HON. ORRIN G. HATCH, 

A U.S. SENATOR FROM UTAH 

Senator HATCH. Well, thank you, Mr. Chairman. I appreciate 

your wanting to keep this going, both as a courtesy to the Secretary, as well as members. I am grateful that you scheduled today’s hearing. Secretary Sebelius, thank you for taking the time to 

be here today. 

Now, this discussion is long overdue. Mr. Chairman, the President’s budget was released on March 4th, 37 days ago. Typically, 

these hearings are scheduled within days after release of the budget. Indeed, it is generally considered to be routine to have budget 

hearings immediately. Yet, here we are now, more than a month 

later, finally sitting down to discuss the HHS provisions of the 

President’s budget. Now, that type of lag time is disappointing, to 

say the least. 

That said, the delay in holding this hearing is not the only delay 

that I am concerned about today. Madam Secretary, each time you 

have appeared before this committee, I have asked you to be 

prompt when responding to our communications, especially those 

dealing with the implementation of the Affordable Care Act. Yet 

numerous inquiries submitted to HHS by members of Congress 

have been ignored entirely, and we have yet to receive the answers 

to the questions submitted for the record after your last appearance before this committee on November 6th of last year. 

This committee takes its oversight responsibilities very seriously, 

and I hope that in the future we can see a more cooperative and 

responsive approach to these efforts. Mr. Chairman, given how 

HHS has responded to our past attempts to exercise oversight, I 

4 

think we may have to schedule another hearing with the Secretary 

in the near future. That might be the only way that our members 

will get answers to the questions they submit after this hearing. 

Now, Secretary Sebelius, process matters aside, I have some specific policy concerns that I hope you will be able to address today. 

For example, according to the President’s proposed budget, combined spending for Medicare and Medicaid is expected to exceed 

$11 trillion over the next decade. To me, that is simply an astronomical number. 

We are only talking about two separate Federal programs. Entitlement spending has become a generational challenge that demands all of our attention; however, the administration appears all 

too willing to continue to ignore these problems. 

The proposed budget would save a meager $414 billion over the 

next decade, or roughly 3.7 percent of total Medicare and Medicaid 

spending, and it would do so primarily through provider cuts and 

government price controls. Anyone who has spent more than 5 minutes looking at our budget has concluded that these programs are 

in serious trouble and that they are, along with Social Security, the 

main drivers of our debts and our deficits. 

The nonpartisan Congressional Budget Office, for example, has 

referred to our health care entitlements as our ‘‘fundamental fiscal 

challenge.’’ I hope that during today’s hearing we can get some answers about entitlement reform, because it is, quite frankly, one of 

the elephants in the room when we are talking about our Nation’s 

fiscal future. 

Another elephant in the room is implementation of Obamacare. 

Last week, President Obama took to the Rose Garden to spike the 

football and declare his health care law a ‘‘success’’ after it was announced that 7.1 million people had enrolled in the program. So 

far, the administration has spent at least $736 million on advertising for Obamacare, and some say more than that. 

The Healthcare.gov website has cost more than $317 million. The 

call centers have cost at least another $300 million. So, using the 

most conservative estimates, the total cost of the website and the 

advertising have, to date, amounted to just over $1.3 billion. 

That is a lot of taxpayer money, especially when you look at all 

the outstanding questions, like how many of these people will actually pay premiums? How many of them already had health insurance before the law went into effect? So far, it appears that the administration is hoping that the public will ignore these important 

questions and only focus on the number of claimed enrollees. 

In fact, Madam Secretary, in your testimony before the House 

Energy and Commerce Committee, in response to some of these 

very questions, you stated that members of Congress would have 

to go ask the insurance companies, because you and your department were not keeping track of these figures, or at least that is 

how I interpreted it. 

Now, it is my understanding that the 7.1 million enrollees touted 

by the administration and much of the press is merely a count of 

those who have selected an insurance plan through the exchanges, 

not of those who have actually purchased and paid for insurance. 

Now, that seems like a pretty odd number to celebrate. 

5 

Indeed, it is like Amazon.com taking stock of how many people 

have placed items in their shopping carts and then counting them 

as sales. In other words, it is a false metric. It is certainly not one 

that can justify the President’s attempt to declare that the debate 

over his health care law is officially over. 

There are many other questions that need answered with regard 

to Obamacare. For example, so far the administration has made 

more than 20 unilateral changes to the law. What is the cumulative cost of all those changes? While we are on the subject, how 

many more delays and changes are yet to come? 

As you can see, there are a number of important matters to discuss today, both with regard to the President’s budget and the implementation of Obamacare. I just hope we can have a serious discussion about these critical issues. 

Madam Secretary, I do know that you have one of the most difficult jobs in Washington. I have worked with HHS all these years, 

and it is not an easy job. I appreciate you being here, and I know 

that you have been back and forth and sometimes not treated as 

well as maybe you should be. But we are grateful to have you here. 

Mr. Chairman, I am grateful that you are holding this hearing. 

The CHAIRMAN. Thank you, Senator Hatch. 

[The prepared statement of Senator Hatch appears in the appendix.] 

The CHAIRMAN. Secretary Sebelius, we want to welcome you. It 

is pretty evident that the topic of health care reform is not exactly 

for the faint-of-heart. We very much appreciate your working with 

us. 

I particularly want to note this morning your focus on the reform 

of the delivery system of American health care. You have been 

working on this since the days when you were a Governor, and we 

are very appreciative of it because it is important today. It is going 

to be even more important tomorrow as we repeal and replace the 

flawed SGR system for reimbursing physicians, and then particularly zero in on chronic care. 

So we appreciate your efforts, and why don’t you proceed? We 

will make your prepared remarks a part of the hearing record in 

their entirety, and you can tell you are going to get a fair amount 

of questions. Thank you. 

STATEMENT OF HON. KATHLEEN G. SEBELIUS, SECRETARY, 

DEPARTMENT OF HEALTH AND HUMAN SERVICES, WASHINGTON, DC 

Secretary SEBELIUS. Well, thank you so much, Chairman Wyden, 

Ranking Member Hatch, and members of the committee. I appreciate the opportunity to join you here today. I want to start by 

thanking members of the committee for your commitment to improving Medicare Advantage. Today, over half of all enrollees receive benefits from 4- or 5-star rated Medicare Advantage plans, 

thanks to our collaborative work together. 

Our department’s mission is to help our fellow Americans secure 

the opportunity to live happier, healthier lives and reach their fullest potential. Although the hard work of our employees is oftentimes unheralded, their efforts benefit millions of Americans. 

6 

Our Nation’s seniors, for example, benefit from the hard work of 

employees at CMS and the Administration on Community Living, 

children benefit from the ACF-administered initiatives like Head 

Start, and all of us benefit from SAMHSA’s work on mental health 

and substance abuse treatment, and from the efforts of employees 

across all our departments, operations, and staff divisions. 

Another area that is benefitting all Americans is the implementation of the Affordable Care Act. Even prior to open enrollment in 

the marketplace, millions of Americans and their families obtained 

new rights and new consumer protections. Now, during these past 

6 months, millions have obtained the security and peace of mind 

of affordable health coverage. Many of the people I have met have 

told me that they have been able to get coverage for the first time 

in years, and some have insurance for the first time in their entire 

lives. 

Last week, we announced that 7.1 million Americans have signed 

up for private insurance through the marketplace. As of this week, 

400,000 additional Americans have signed up, and we expect that 

number to continue to grow. Between October and the end of February, an additional 3 million Americans enrolled in Medicaid coverage. A total of 11.7 million people were determined eligible for 

Medicaid and CHIP. Now, we know that if more States move forward on Medicaid expansion, more uninsured Americans will be 

able to get covered. 

Affordable health coverage, accessible health care, mental health, 

substance abuse treatment, food safety, early childhood care, and 

health security—all of these issues connect to President Obama’s 

goal for expanding opportunity, strengthening our security, and 

growing our economy. The budget before you would move these priorities forward. 

These investments create jobs and strengthen our primary care 

workforce by expanding the National Health Service Corps. We add 

to our mental health workforce by increasing the number of licensed behavioral health professionals, peer professionals, and 

mental health and addiction specialists. We protect the security of 

our seniors by investing in elder justice, and we invest in prevention efforts to protect the health of patients in nursing homes, primary care practices, and other health care settings. 

The proposed expenditures also advance new approaches to some 

of our Nation’s most vulnerable children, those in foster care. We 

are proposing investing in a new $750-million CMS/ACF partnership to encourage the use of evidence-based screening, assessment, 

and treatment of trauma and mental health disorders, all with the 

goal of reducing the over-prescription of psychotropic medications. 

I want to particularly thank Senator Grassley and other members 

of this committee for expressing interest in the administration’s 

focus on this area, and I look forward to working with the committee to address this need. 

The budget also strengthens and expands important birth-tokindergarten initiatives with strategic investments in priorities like 

the Child Care and Development Fund, home visitation, and Early 

Head Start partnerships. 

President Obama’s total child care request will enable a total of 

1.4 million children to receive assistance. If you move forward with 

7 

the President’s Opportunity, Growth, and Security Initiative, we 

will be able to provide an additional 100,000 children with access 

to high-quality early education through the expansion of Early 

Head Start partnerships. 

Now, we know that these investments work. They pay dividends 

throughout a child’s education and development, and they are proven to return an estimated $7 for every $1 we invest. I would say, 

Mr. Chairman, there are a lot of traders on Wall Street who would 

be envious of that kind of return. 

In addition to a profound and lasting impact on children, these 

investments would also save lives, because most of the Early 

Learning Fund for partnership with States is paid for by increasing 

the tobacco tax, which we know is one of the most effective ways 

to prevent smoking, especially among young smokers. Today we 

will have 3,200 American children trying their first cigarette each 

and every day, and each day 2,100 of those children and young 

adults become daily smokers. 

Now, it is no surprise that these early childhood investments 

have broad bipartisan support from Governors, CEOs, leaders in 

military and law enforcement, parents, and health care providers. 

Our global competitors are financing similar opportunities for their 

children. 

Finally, this budget not only invests, but also saves. We will contribute a net $369 billion toward deficit reduction over the next 

decade. When you take all of these factors into account, it is clear 

that the budget before you is a security budget, an economic 

growth budget, and an opportunity budget which puts us on a 

pathway to a healthier and more prosperous Nation. 

Thank you again, Mr. Chairman, for having me here today. I 

look forward to your questions. 

The CHAIRMAN. Thank you, Madam Secretary. 

[The prepared statement of Secretary Sebelius appears in the appendix.] 

The CHAIRMAN. Let us start with Medicare because of its special 

importance. Madam Secretary, as you know, for millions of Americans, Medicare is a guarantee. It is going to be there. Americans 

do not have to worry about seniors and their families. Of course, 

our challenge is to protect the Medicare guarantee while dealing 

with what has historically been an escalation in costs. We have the 

demographics—more older people. We have the technology. 

I am particularly interested in starting today by having you analyze the role of growth in Medicare spending, and particularly its 

slow-down. The Congressional Budget Office has said that Medicare spending is at a historic low and is projected to stay there. 

Just this week, we got additional news. The independent actuary 

for the Centers for Medicare and Medicaid Services said the same 

thing. This was part of the release on the Medicare Advantage announcement. 

So what this suggests is the Medicare guarantee is being protected, costs are being held down, and the needs of seniors are not 

being compromised. So this certainly strikes me as encouraging for 

seniors who want lower premiums, and for future generations who 

want Medicare to be around when they need it. 

8 

So I think I would like you to really unpack why you think we 

are seeing this slow-down, and then, can it be anticipated to continue in the days ahead? Why don’t we start with that? 

Secretary SEBELIUS. Mr. Chairman, I think you are accurately 

reporting what has happened. In the 9 years between 2001 and 

2009, the spending on average for Medicare enrollees was growing 

at about 6 percent a year. That was above the national GDP, and 

that had been traditional. What has happened in the subsequent 

4 years is pretty dramatic. Between 2010 and 2012, expenditures 

grew per capita at about 1.6 percent, significantly below that 6 percent average. In 2012, it grew at 0.7 percent. 

What the actuaries said in the recent statement regarding Medicare Advantage pricing—and this will be confirmed when the trustees meet later this spring—is that they are now adjusting the 

trend line once again. They think the growth trend will be a minus 

3.4 percent. This is the lowest growth ever seen in the history of 

the program in 50 years. 

At the same time, I think that seniors are enjoying additional 

benefits. They now have preventive services benefits with no outof-pocket costs. They have more choices with Medicare Advantage. 

They have had a reduction in prescription drug costs, including 

closing of the donut hole, which is happening over time, averaging 

about $929 of senior savings for those in the donut hole. 

We have done unprecedented work in waste, fraud, and abuse. 

We have increased competitive bidding, and we are improving quality and value. So I would say, all in all, it is very, very good news 

for seniors. 

The CHAIRMAN. Let us go then to another important issue for 

seniors, and that is Medicare Advantage. During the course of the 

Affordable Care Act debate, we heard repeatedly that the legislation would be the ruin of Medicare Advantage as the country 

knows it. The evidence suggests just the opposite. 

Since the Affordable Care Act was signed into law, Medicare Advantage premiums have fallen by almost 10 percent and enrollment 

has increased by 38 percent to an all-time high of over 15 million 

seniors, so we are almost now nationally at about 30 percent of 

seniors in an MA plan. 

This is particularly important, as you know, to Oregon, because 

we have some of the best MA in the country, and we were pleased 

now that finally we are rewarding those high-quality plans, the 4- 

star plans, as well. Tell us what you think is ahead in terms of 

Medicare Advantage, and particularly how we might build on this 

progress. 

Secretary SEBELIUS. Well, again, Mr. Chairman, I think that it 

was definitely predicted throughout the debate in 2009 and 2010 

that any proposal to bring Medicare Advantage payment rates in 

line with fee-for-service would destroy the program, would make 

seniors give up their plans, and would harm Medicare Advantage. 

Medicare Advantage, just by reminder, was put in place as a 

choice for seniors, and initially the private plans were going to be 

paid 95 percent of fee-for-service cost, because the promise was 

that Medicare Advantage would deliver better care at lower cost, 

and the competition would be good, and seniors could have a 

choice. Over time, by 2009, Medicare Advantage plans were being 

9 

paid 114 percent of fee-for-service, so they went from 95 percent to 

a much higher rate. According to a number of independent reviews 

of quality, the quality was not improved. It was, on average, delivering similar benefits. 

What has happened with the framework put in place, again, 

within the Affordable Care Act, is those costs for Medicare Advantage have gradually come down, so what was at 114 percent is 

more like 106 percent now. Quality has improved. More seniors 

have chosen the 4- and 5-star quality plans, and more plans are 

migrating in that direction. Rates have come down. Seniors are 

paying about 10 percent less than they did 4 years ago. 

The access is, throughout the country, 99.1 percent of seniors 

have many choices for Medicare Advantage plans. Ninety percent 

of them have access to a zero-percent Medicare Advantage plan. So 

what we have seen is more competition, more plans, lower costs. 

Frankly, all seniors benefit. Thirty percent choose Medicare Advantage plans. The 70 percent who do not choose Medicare Advantage plans were subsidizing those higher costs through their premiums. That has, again, decreased, and the seniors who choose 

Medicare Advantage plans are no longer paying $1,280 more than 

their colleagues who were choosing traditional Medicare. 

The CHAIRMAN. Thank you. 

Senator Hatch will go next. Senator Rockefeller will be here by 

10:40, colleagues, and we are just going to keep this going through 

the vote so that everybody is going to get a chance to ask their 

questions. 

Senator Hatch? 

Senator HATCH. Well, Madam Secretary, today the administration has made at least 20 unilateral changes to Obamacare without 

consulting Congress. The most recent was the announcement on 

March 31st, the enrollment deadline, that the enrollment deadline 

would be delayed for those who merely claimed to have technical 

difficulties signing up. 

On March 12th, you testified before the House Ways and Means 

Committee and were asked by Representative Kevin Brady, ‘‘Are 

you going to delay the open enrollment beyond March 31st?’’ Your 

response was, ‘‘No, sir.’’ Barely 2 weeks later on March 26th, you 

announced that the March 31st deadline would be indefinitely delayed. So, clearly there is some disconnect on this point, so let me 

ask you two questions. 

One, will there be any more unilateral changes or delays to any 

part of Obamacare? ‘‘Yes,’’ ‘‘no,’’ ‘‘I do not know’’ are all acceptable 

answers here, but I need a very clear response from you on this 

one. Two, if you do expect more changes or delays to Obamacare, 

what exactly might they be, or will they be? 

Secretary SEBELIUS. Well, Senator, I need to start my answer 

with clarifying what you have already stated. We did not extend 

the open enrollment period. What we said was that people who 

were in the system, who were trying to get enrolled by the 31st, 

could finish the process. 

I believe in customer-friendly operations. What we had was 2 

million visits over the weekend and 380,000 calls to the call center, 

and then on Monday the 31st we had 4.8 million visits to the 

website and 2 million calls. A number of people were given the opVerDate Mar 15 2010 17:04 Apr 03, 2015 Jkt 000000 PO 00000 Frm 00013 Fmt 6633 Sfmt 6633 R:\DOCS\93936.000 TIMD
10 

portunity to return to the site, giving their e-mail and their call 

number, and they are doing that. The site has said very clearly 

from midnight on the 31st that open enrollment is closed. 

We also have some paper applications which are being processed. 

States are processing applications. But we did not extend the open 

enrollment period beyond the 31st. We are giving people a chance 

to finish their purchase. 

We do not anticipate at this point, Senator, additional delays. 

Most of the policy issues are out. What we have tried to do over 

the course of the 4 years of implementation is do a gradual transition into a new marketplace strategy and, as we issue rules and 

regulations, make them work for people as much as can possibly 

be done. We will continue to do that, but I think the basic policies 

are now in place, and we anticipate moving forward. 

Senator HATCH. All right. As I mentioned in my opening statement, a conservative estimate of how much the administration has 

spent to date on efforts relating to enrollment total over $1.3 billion. These amounts are in addition to the millions spent by Enroll 

America and others that you yourself helped to raise. 

Now, I see that, in your fiscal year 2015 budget, you have requested an additional $774 million for consumer information and 

outreach. By my calculation, that adds up to over $2 billion that 

we spent in a little over 2 years. As of now, HHS has reported that 

7.1 million people have enrolled in private coverage. 

Now, these are enormous sums of money to be paying for such 

a small fraction of the population, especially considering that preliminary estimates show that well over half of these enrollees already had health insurance before the law went into effect and that 

most of them will also obtain advanced premium tax credits, which 

further drives up the cost to taxpayers. 

Now, given that you propose to spend more than $2 billion in 

outreach and enrollment, let me ask two questions of you today. 

One, can you tell us today how many of the 7.1 million enrollees 

the President has touted already had health insurance before the 

Affordable Care Act went into effect and how many were forced to 

give up their insurance due to mandates under the law? ‘‘Yes’’ or 

‘‘no’’? 

Secretary SEBELIUS. I do not know what I am saying ‘‘yes’’ or 

‘‘no’’ to. You asked a question about how—— 

Senator HATCH. Well, how many of those 7.1 million enrollees 

that the President has mentioned have had health insurance before 

the Affordable Care Act went into effect? How many were forced 

to give up their insurance due to mandates under the law? Were 

there any forced to give up—— 

Secretary SEBELIUS. Senator, there were a lot of plans that were 

adjusted to come into compliance with the law, and there were certainly people who were transitioned into new plans and given options of new plans. I do not have data to give you right now in 

terms of who exactly was previously uninsured. We are collecting 

that. 

The recent independent Rand study that just came out this week 

says that, before even the final surge at the end of March, by midMarch, there were an additional 9.3 million people with health insurance thanks to the Affordable Care Act. 

11 

I can tell you that those numbers are going to be much more significant by the time we tally the newcomers. But the insurance 

companies are presenting us with that data, and we will continue 

to collect that and give it to you as fast as we get it. 

Senator HATCH. All right. If you do not have these numbers 

today, I might understand that. I just really need to know when 

you are going to make them available. Do you think—— 

Secretary SEBELIUS. Well, again, Senator, over 2 million people 

have signed up since the 15th of March. We are getting that information from insurers. We do not have individual names and numbers of who exactly was insured prior and who was not, so we will 

be feeding you information as soon as we get it from the companies. 

Senator HATCH. All right. Thank you. 

Thank you, Mr. Chairman. 

The CHAIRMAN. Thank you, Senator Hatch. 

Senator Stabenow will talk, and I am going to run and vote and 

hopefully be back. Senator Rockefeller is on his way, so, colleagues, 

we will just go back and forth. There are 5 minutes left in this 

vote. 

Senator Stabenow? 

Senator STABENOW. Thank you very much, Mr. Chairman. Welcome, Madam Secretary. 

The ongoing debate on health care reminds me very much of the 

old saying, it is a lot easier to tear down a house than to build one. 

I remember under Medicare Part D, I voted ‘‘no’’ because I did not 

support the structure. I did not shut down the government afterwards because I did not get the approach on Medicare Part D that 

I wanted. 

We are at a point now where we need to be talking about how 

we move forward and strengthen and make better something that, 

as you have indicated, 7.5 million people are now using to get their 

health insurance, many for the first time, for themselves and their 

families. It does not count the 3 million young people on their parents’ insurance under age 26, and it does not count the millions 

under Medicaid. 

I have a question, but first just a comment in comparing differences in values between the President’s budget, the Affordable 

Care Act, and the Ryan budget that the House will be voting on. 

I think it is stark when we look at, under Medicare alone, in addition to costs going down, as you have said, we have seniors with 

about $1,200 more back in their pocket because we closed the gap 

in Medicare Part D. That was one of the things we needed to fix 

after we passed that, and we did fix it. Chairman Ryan’s budget, 

the Republican budget in the House, would block-grant Medicare, 

turn it into a voucher, and tell folks to go back and figure it out 

with private insurance companies. A big difference. 

The Affordable Care Act—we are looking, in Michigan alone, at 

upwards of 400,000 people who have never had insurance before, 

a lot of those working minimum-wage jobs, 40-hours a week, 

minimum-wage jobs, still in poverty, getting care and being able to 

get health insurance. 

In the House budget, they will block-grant Medicaid and cut it 

by $732 billion over 10 years, a big difference in values and views. 

12 

If I understand right, the majority of those on Medicaid, in terms 

of the costs, are seniors in nursing homes, so this is a huge cut 

there. 

Finally, I would just say that the Affordable Care Act—7.5 million people being able to get health care for themselves and their 

children, many for the first time—the Ryan budget repeals that 

and basically takes that back to zero and puts the health insurance 

companies in charge of whether or not they drop you for a preexisting condition. So a big difference. I hope that we are going to 

really debate how to move forward rather than move backwards to 

that system. 

I have a couple of questions on two different topics, actually. I 

talked to you a little bit before about a real victory for community 

mental health that we were able to achieve with support from the 

committee on a bipartisan basis in the Medicare, as we call it, Doc 

Fix bill. 

We now have a demonstration project that will be taking place, 

rules that need to be written, and I just want to make sure that 

HHS and CMS and SAMHSA, who will be charged with drafting 

the regulations, will work with us, Senator Blunt and I and others 

who care deeply about moving this forward as quickly as possible, 

so that the States can apply for these demonstration projects and 

we can strengthen community mental health care. So I would like 

to have you comment on that. 

Secretary SEBELIUS. Well, Senator, first of all, I want to thank 

you for your leadership in this area. You and I have worked on this 

for a while. I think this is a big step forward to find out how we 

can structure programs and actually develop some best practices 

that could be used then to take it to scale. 

So we look forward to working with you, Senator Blunt, and others to fashion the rules and regulations, to get the Requests for 

Proposals out the door quickly, and to actually get those best practices from States around the country to figure out how to make 

sure that the mental health system, which is in definite need of assistance, really is grown and fostered in various regions of the 

country. 

Senator STABENOW. Right. Thank you. 

Another area that is critically important, if we want to talk 

about cost as well as saving lives and supporting families, is the 

area of Alzheimer’s. I wonder if you might speak for a moment 

about the President’s budget. We have had the Alzheimer’s Association in town, and I met with people, again, as I have in the past, 

from Michigan. 

We all are touched by this issue, and, as we grow old and have 

a chance to live longer, it becomes more and more of an issue. One 

in five Medicare dollars is spent on someone with Alzheimer’s, and 

that does not count the caregiver responsibilities and challenges to 

the families. 

Despite the shocking cost to the health care system, only .25 percent is spent on research. So I wonder if you would speak to this 

and how we might work together to really focus in on research and 

caregiving support for those with Alzheimer’s. 

Secretary SEBELIUS. Well, Senator, the Alzheimer’s Action Plan, 

which was put together with a lot of stakeholder input, has a numVerDate Mar 15 2010 17:04 Apr 03, 2015 Jkt 000000 PO 00000 Frm 00016 Fmt 6633 Sfmt 6633 R:\DOCS\93936.000 TIMD
13 

ber of features in it. Certainly, research is at the heart of it. I think 

that the NIH proposal for brain mapping will have a significant impact on Alzheimer’s. Trying to identify exactly what is going on at 

what stage would be helpful to try to identify people who may be 

prone to being diagnosed with Alzheimer’s and whether or not 

there are any effective strategies for real recession, much less cure. 

I think that there is an increase and a variety of ways in not 

only the brain mapping strategy, but NIH is proposing to spend an 

additional $63 million to continue to implement the components of 

the national plan to address Alzheimer’s disease that was put in 

place and has a scheduled spending plan up until 2025. 

A total of $2.8 billion is in our budget for 2015 on Alzheimer’s 

disease, which is an increase. Some of that is for caregivers and 

hospice. That is run under the umbrella of the Administration for 

Community Living. Some of it is within NIH. There are other strategies in place. So, we share the concern that this is a growing 

issue. As seniors live longer, frankly, we are going to have significantly more diagnoses along the way. So I think both the President’s budget calls this out, and certainly NIH has identified this 

as a key concern moving into the future. 

Senator STABENOW. Thank you very much. 

I turn it now to Senator Enzi. 

Senator ENZI. Thank you, Madam Chairman. 

Secretary Sebelius, I appreciate you being here today. I see that 

a new health care workforce program is promoted in your budget, 

like the expansion of the National Health Service Corps, which is 

$4 billion in new funding, and then the new targeted support for 

graduate medical education. They are included under the purview 

of the Health Resources and Services Administration. However, according to recent GAO analyses of Federal health care workforce 

programs, there are already over 90 programs in the Federal Government, including more than 50 within HHS, dedicated to improving the health care workforce. 

Did the Department assess whether or not the proposals for new 

programs would be duplicative of existing efforts before including 

them in the budget and, if not, why not? Are there programs that 

should be reduced or eliminated as a result of the proposed expansion of the Health Service Corps or the new funding for the graduate medical education? 

Secretary SEBELIUS. Well, Senator, we definitely did an analysis 

and looked across the Department. Frankly, the bulk of the workforce training efforts are in the Health Resources Services Administration, which is why we are proposing that the additional effort 

also be designed and promoted by HRSA. HRSA also is the umbrella agency over the Community Health Centers, where a lot of 

the National Health Service Corps members end up practicing, so 

it was a logical combination. 

What we are doing is, I would say we are not decreasing funds 

in some of the earlier programs, so we are certainly targeting those 

funds. The focus of a lot of the workforce goals is focusing on more 

physicians to work in primary care and under-staffed specialty 

areas. 

14 

Senator ENZI. Well, I appreciate what they are aimed at doing. 

Did you find anything duplicative that you are going to eliminate 

that would help us out in this budget situation? 

Secretary SEBELIUS. Well, again, I do not think it is necessarily 

duplicative; it is shifting. What we have been doing for a couple of 

years, for instance, is changing some of the research slots, the residency slots, to focus on primary care, collecting them, if you will, 

from institutions that were not doing that and refocusing them. 

So it is not that they have been eliminated, because I think everyone would agree that, with the population that we have and the 

health needs that we have, we are going to need more providers, 

not fewer providers. So we have not eliminated anyone, but I would 

say we are much more strategic about the way money is being 

spent. 

Senator ENZI. So we will have 92 programs instead of 90. 

The administration announced that it was going to begin open 

enrollment for the exchanges for the 2015 plan year on November 

15, 2014. Conveniently, that date falls after the election day this 

year and is over a month later than the traditional beginning of 

open enrollment season for health insurance plans, including the 

exchange. 

Can you explain why the administration elected to begin the enrollment so late in 2014, and can you assure the committee that 

this decision was based on input from insurers, consumers, and 

other stakeholders, and not simply made to provide political cover 

for vulnerable members? 

Secretary SEBELIUS. Yes, sir. I think that the date was very 

much in collaboration with the insurers, looking at their calendar. 

Frankly, you cannot bid on the new plans until you know who is 

in their pool. Given the fact that that pool is currently being tallied, this is a multi-month process where they will then be able to 

assess who is in, what their pool looks like, and be able to compete 

and offer bids for the following year. 

There is no traditional open enrollment. This will be the second 

year. We had a 6-month open enrollment the first time. We always 

knew that the second time around and in subsequent years we 

would have a shorter open enrollment, so choosing a portion of that 

window to move forward is exactly what we have done. 

Senator ENZI. Thank you. Thank you. 

A number of my colleagues and I sent a series of letters to OMB 

expressing significant concerns with the administration’s treatment 

of certain self-insured plans under the rules for the reinsurance 

program. Specifically, we were concerned that the administration 

would exempt certain insurance plans from paying the reinsurance 

fee. 

Many of them were union-sponsored plans, which would create 

the appearance of political favoritism. Sure enough, the administration has done just that. Can you please explain why the administration believed it was necessary to exempt those plans from paying the fees and not others? 

Secretary SEBELIUS. Well, the policy decision was that plans that 

are administering their own insurance going forward, and do not 

rely on an insurer, were not covered by the reinsurance fee. There 

are some union plans that are in that. There are a whole lot of selfVerDate Mar 15 2010 17:04 Apr 03, 2015 Jkt 000000 PO 00000 Frm 00018 Fmt 6633 Sfmt 6633 R:\DOCS\93936.000 TIMD
15 

funded employer plans that are also included, and that was just a 

policy decision that was possible under the law. We got a lot of 

input from stakeholders along the way and made that call. 

Senator ENZI. Thank you. My time has expired. 

Senator ROCKEFELLER. Who is up? Is it Cardin? Senator Roberts. 

Senator ROBERTS. Mr. Chairman, I am going to yield my time to 

Mr. Grassley, who has a very important commitment. 

Senator ROCKEFELLER. Did he tell you that specifically with any 

detail? [Laughter.] 

Senator ROBERTS. Something about ethanol. [Laughter.] 

Ethanol and pork producers, I think were the two top things. But 

I may be mistaken. Anytime the distinguished Senator says he has 

a very important commitment and could I yield, I would be more 

than happy to do so. 

Senator GRASSLEY. Thank you. 

Senator ROBERTS. And I hope you will recognize me later. 

Senator ROCKEFELLER. Yes, I certainly will. 

Senator GRASSLEY. Can my 5 minutes start over again, or do 

I—— [Laughter.] 

Senator ROCKEFELLER. Yes. You have 5 minutes. 

Senator GRASSLEY. There are two things I would like to discuss 

with you. One is sunshine, and the other one is kind of an obscure 

part of Obamacare, but something I have brought up with you before. 

So I welcome you, and I am glad to have you here, because I 

wish we could see you more often. Yesterday, your department 

began the process of releasing Medicare payment data. This is 

something Chairman Wyden has already spoken about, but he and 

I have been working on that for years. 

No one should be—this is before I get to your question. No one 

should be afraid of this data coming out. No one should be afraid 

of explaining their payments or defending the existing payment 

structure. Certainly we in Congress benefit from asking tough 

questions about the data and considering policy changes as needed. 

I believe transparency works, and with transparency you get accountability. I hope people will now accept that and work to improve the system instead of fighting it. But context is critical. 

So now I want to bring up the Physician Payments Sunshine Act. 

That kind of fits in. It is also a form of payment transparency. I 

remain concerned that the database collected by CGI will provide 

appropriate context. Many providers have raised concerns with me 

about journal article reprints being reportable. I want to know if 

the database will make clear to the readers what specifically a provider accepts is reportable. 

So I would like to have you tell me that providers can have confidence that the data made publicly available through the Sunshine 

Act will have explicit context providing details about items accepted and not just dollar amounts. 

Secretary SEBELIUS. Well, Senator, I am not sure I can answer 

that specifically. I will definitely check on that. As you know, we 

are doing the data collection. We are on track to have publication 

this fall. We are doing the data collection—first aggregate data and 

then secondly with more granularity. We believe like you do, that 

transparency is very important. But I will double-check on what 

16 

exactly will be part of the display when it is out. I agree with you 

that people should be able to put it in context. 

Senator GRASSLEY. I wonder if, before you answer us, you could 

have somebody on your staff talk to my staff—— 

Secretary SEBELIUS. Sure. 

Senator GRASSLEY [continuing]. So we get some idea where you 

are headed, so, if we think you are not headed in the right direction—I am not saying that you are responsible to us, but we want 

to make sure this Sunshine Act works. 

Secretary SEBELIUS. Well, I know your leadership, Senator, along 

with Senator Kohl and others, on this Sunshine Act was critical. 

We share your concerns. So we would be happy to come in and do 

a briefing on exactly what is being collected now and what the second phase looks like, because the worst of all worlds is to put data 

out that is inaccurate or interpreted inaccurately. 

Senator GRASSLEY. Sure. Yes. I do not think it would be inaccurate. 

Secretary SEBELIUS. Yes. 

Senator GRASSLEY. But I think the latter part of what you said 

is possible. 

Secretary SEBELIUS. Yes. Right. 

Senator GRASSLEY. Now to this next issue. I think I have discussed it with you before in this context, or maybe written you a 

letter or something. I would like to turn to the Anti-Kickback Statute and its application to qualified health plans under the Affordable Care Act. 

I have three questions that I hope you can give me a short answer to, and they are kind of hypothetical. Would a hospital or 

other third party be allowed to pay insurance premiums for individuals without payment being considered a kick-back? Well, let 

me ask two other hypotheticals. When I say ‘‘hypothetical,’’ it 

seems to me like these are things that could actually happen. 

Would a hospital or other third party be allowed to pay insurance co-pays and deductibles without the payments being considered a kick-back? Or a third example: can a drug company provide 

direct discounts to a patient for them to use in purchasing prescriptions without the payment being considered a kick-back? That is 

the end of my questions on that subject. 

Secretary SEBELIUS. Senator, I do not want to try to give a legal 

answer, because I am not a lawyer, to those three very specific 

questions. I can tell you we have made some guidance available so, 

for instance, not-for-profit plans, a Ryan White plan, could help 

purchase insurance coverage. That has gone on for years. That 

would continue to go on. 

In terms of the hospital situation, we have weighed in and said 

they would not be able to do that, but the kick-back determination 

really is a Justice determination. The reason we, I would tell you, 

interpreted that the Federal health care program applicability is 

not able to be applied to the qualified health plans is that these 

are private insurance plans operating in a private market with customers paying their premiums, not connected to the trust fund like 

Medicare Advantage, not connected to a government program. So 

it was a determination that we wanted to make clear, that this was 

a private market. 

17 

Having said that, we know that it is important that we look at 

the entire fraud statute. They are not immune from that in any 

way, shape, or form and have in fact asked our Inspector General 

and others to look at the False Claims Act and other applicable 

statutes so we make sure that we hold them equally accountable. 

Senator GRASSLEY. Mr. Chairman, can I have just 10 seconds for 

a summation, not a question? 

The CHAIRMAN. Sure. 

Senator GRASSLEY. I want to say to you, Madam Secretary, that 

with the release of the rule regarding qualified health plans in the 

anti-kickback statute, it is very unclear to me what the Federal 

policy is regarding the anti-fraud provisions available in statute 

and whether they would prevent false claims and kick-backs for 

qualified health plans. So this is something that probably I hope 

I can continue to have a discussion with you on. Thank you. 

Secretary SEBELIUS. I look forward to that. 

The CHAIRMAN. Let us do this, colleagues. I think we have clear 

sailing on the floor, so what we can do is just get every Senator 

who is here their 5 minutes. 

Senator Thune is next. 

Senator THUNE. Thank you, Mr. Chairman. 

Madam Secretary, not too long ago HHS finalized a rule—and I 

think Senator Enzi touched on this a little bit, but I want to just 

get you on the record on this—that will exempt certain selfinsured, self-administered plans from paying the reinsurance tax in 

2015 and 2016, which, as it turns out, means that there are going 

to be a number of union groups that will not have to pay the tax, 

which would appear on the surface to be sort of a political favor. As you know, that tax is designed to raise $8 billion in 2015 and $5 billion in 2016. There was a question posed of an HHS official 

recently in which that person, when asked for clarification on how 

the change would affect other plans, rates, and fees, said it is true 

that fees will be higher for plans that do have to pay the fee in 

2015 because some plans are exempt. 

I am wondering if you agree with that statement that those 

plans that did not get an exemption are going to have to pay a 

higher fee because the White House—I guess you could say, favored groups got a favor. 

Secretary SEBELIUS. Well, Senator, I would say that what we did 

was look at the statutory language and made a determination that 

the best interpretation of the statute was that any plan that did 

not have an insurance component or use a third party administrator should be exempted. Our legal counsel felt that was by far 

the best interpretation of the statute. This was not a union issue; 

it was a broad-based issue about self-funded employer plans also. 

In order to put out the rule, we determined who would be applicable and who would not be applicable under the rule. 

Senator THUNE. The question, though, is a very straightforward 

one. I mean, we can dispute—— 

Secretary SEBELIUS. Well, there is a dollar amount in the statute—— 

Senator THUNE. Right. 

Secretary SEBELIUS [continuing]. That will be collected from 

those to whom the law applies. 

18 

Senator THUNE. Right. Correct. Meaning that those who did not 

get exempted will pay higher fees. 

Secretary SEBELIUS. Well, there have never been any higher or 

lower. There were no fees; it was just a definition of who the pool 

is, who is obligated to pay the fees. 

Senator THUNE. But, if you distribute that among a certain number of people, and that number of people has now shrunk because 

of the exemption, is it not true that those who are left in are going 

to have to pay more? 

Secretary SEBELIUS. They will pay the fee as obligated. But 

again, there was no interpretation of who was in and who was out. 

We put out guidance, and that is who will pay the fee. 

Senator THUNE. That is a very straightforward question that 

could result in a very simple answer. I think the answer is ‘‘yes.’’ 

I want to ask a question about the 340B program. This last year, 

Congress has engaged in more active oversight of the 340B program. I think that all the parties that are engaged in that program 

want to see it improved and maintained, that there is integrity in 

the program. It is vital to ensure that that program can continue 

to benefit the covered entities, as well as, ultimately, patients. 

To that end, the Consolidated Appropriations Act provided an additional $6 million in funding to implement new program and integrity efforts in that program. I am wondering how these funds 

are being used. Can you provide information about HRSA’s intentions to use the additional appropriations funding? An example of 

that, I guess: HHS has already undertaken audits of covered entities. Are there plans to extend those to manufacturers as well? 

Secretary SEBELIUS. Well, Senator, I would say that Dr. Wakefield, who is the head of HRSA and the umbrella agency under the 

340B program, is very much engaged in making sure that the program operates in a more stringent fashion to adhere to the rules. 

There are audits, as you say, already under way. 

She has done a couple of briefings for me, and she looks forward 

to working with Congress to make sure that we are not allocating 

funds inappropriately and that the programs entitled to receive the 

340B discounts are the ones in fact receiving the 340B discounts. 

So that landscape is being reviewed right now. 

I cannot tell you specifically about manufacturers, but I would be 

glad to follow up with Dr. Wakefield and come back to you on that. 

I think it is safe to say it has expanded beyond its bounds, and we 

look forward to the opportunity to make sure that we are following 

the rules, because it is a vitally important program. 

Senator THUNE. It is. 

Very quickly, CMS’s 96-hour rule regarding patient reimbursement at critical access hospitals—can you comment on that? There 

are a lot of physicians whom we deal with in a State like ours, 

where we have a lot of critical access hospitals, who do not think 

it is fair to impose that kind of a requirement and require essentially physicians to predict the future. 

Secretary SEBELIUS. Well, I would say, Senator, this is one issue 

that we are getting a lot of feedback about and having a lot of conversations on. I do come out of a rural State. I absolutely know the 

vital health care needs that people have and how important it is 

19 

to have critical access hospitals operate in a profitable manner and 

stay in the community. 

So I think the rule was put in place in terms of trying to define 

an appropriate boundary. But Jon Blum is having ongoing conversations about whether or not that may be too stringent or too 

rigid, so we would appreciate your input and feedback as we look 

toward the future. 

I do not think the intent from anybody is to damage the opportunity for critical access hospitals to remain in place, but trying to 

define what is appropriate in terms of a patient’s stay, I think, was 

the attempt. 

Senator THUNE. All right. Thank you. 

Thank you, Mr. Chairman. 

The CHAIRMAN. Senator Thune, I just want to let you know, I am 

very sympathetic to what you are talking about and am interested 

in working with you. It is evident that the administration will work 

with us as well. 

Next in order of appearance would be Senator Isakson, and he, 

as so many Senators are doing this morning, is juggling. Senator 

Isakson, would you like to go next now? 

Senator ISAKSON. Thank you. 

Madam Secretary, thank you very much for your appearance 

today. 

As a former Governor of Kansas, I have a question for you. It is 

not a loaded question; it is a question of great concern around the 

country in various States. In the Affordable Care Act, there is an 

opportunity for States to expand Medicaid eligibility. In that, there 

is a promise for the Feds to hold harmless the States for a period 

of time, but not forever. 

In 1978 in the Carter administration, when we passed IDEA for 

handicapped children, there was a 40-percent Federal mandate of 

increased money flowing to under-privileged children and disabled 

children, with a promise that the Feds would fund their fair share. 

But in all the years since 1978, the Feds have not, and the cost 

of education in the States has gone a lot higher. 

As a former Governor, do you fear at the end of the hold harmless period on the Medicaid expansion, that States that have taken 

it will be burned with an amount of money they cannot afford to 

pay on Medicaid? 

Secretary SEBELIUS. Well, I certainly was the recipient of the 

IDEA promise that was never fulfilled, so I watched that very carefully. I could tell you that at least for the decade that ACA is funded and in place, the funds are there to, in fact, fully expand Medicaid for all the States, which is what was anticipated when the 

law was passed. 

I do not know the window beyond that 10 years, but I can tell 

you that that funding is there. It is part of the law. So, unless 

pieces of that funding are repealed along the way or Congress decides to change the law, that will be done. 

Senator ISAKSON. A second question. I was one of eight Republicans who met for a series of 8 weeks with Denis McDonough and 

on two occasions with the President in an ad hoc fashion, if you 

will, to try to find some common ground on deficit and debt reducVerDate Mar 15 2010 17:04 Apr 03, 2015 Jkt 000000 PO 00000 Frm 00023 Fmt 6633 Sfmt 6633 R:\DOCS\93936.000 TIMD
20 

tion. This was last year, dealing with last year’s recommendations 

by the President. 

In his recommendations were significant cuts in terms of Medicare to help reduce the growth rate of the debt and the deficit. One 

of those was chained CPI, which at the time in the budget last year 

was included by the President, which has not been included this 

year. 

Does that indicate a reduction in the interest of the administration to find ways to reform entitlements so, without cutting people’s 

ability to get those entitlements, we manage them on a basis that 

makes sense for the future? 

Secretary SEBELIUS. Senator, I would say that the President still 

is very interested in the possibility of some global approach to deficit reduction and revenue enhancement, but he has said, I think 

from the very beginning—and I assume he said it inside the room 

where you were—that he feels a balanced approach is very important. 

I think there are a whole series of ideas that he put forward as 

part of that balanced approach, where in some cases cuts are made 

and in other cases revenue is raised. But in that context, which did 

not go forward, as we know, I do not think it is a lack of interest. 

He would be eager to engage in that discussion again but not make 

cuts where there is not a balanced approach. 

Senator ISAKSON. Well, the actuarial clock is ticking on our country in terms of debt and deficit, and all of us in both parties are 

going to have to sit around a table and talk about some very difficult discussions. One of those is going to have to be reforms to entitlements. 

I personally think calling Social Security and Medicare an entitlement is a little bit wrong, because I have paid 1.35 percent of 

my income for Medicare since 1968 and 6.2 percent of my income 

for FICA taxes for Social Security. People should expect them, but, 

if we continue to promise more than we can deliver and do not reform the system, one day the game is going to be up and the American people are going to be left holding the bag, and I do not want 

to be a part of that. 

And your department has probably more to do with the rate of 

growth—not because of anything you are doing but just because of 

the demands of health care in Medicare and Medicaid—of debt and 

deficit of any other single entity whatsoever. So I look forward to 

working together with you and the administration in the years 

ahead to try to find some way to find common ground so we can 

begin to do that. 

Secretary SEBELIUS. Well, I would very much look forward to 

that opportunity. Circling back to Chairman Wyden’s point at the 

beginning of this discussion, I think that there was an enormous 

amount of entitlement reform in the Affordable Care Act around 

Medicare, and it is working. 

It is working in a way that was difficult to predict at that point, 

but it is happening. I think that it is continuing on into the future. 

I think the recent prediction of the actuary—if we could just keep 

Medicare spending at the rate that we have seen the last couple 

of years, we would have an enormous change in the overall cost 

growth. 

21 

So I think there are some features in place, some ways to shift 

from a volume payment to a value payment, some different reforms, as the chairman referred to, the delivery system reforms 

that are beginning to show very promising results. So I think that 

we would very much look forward to talking about a structural 

change that really is on the delivery system payment side and 

keeps benefits in place for seniors. 

Senator ISAKSON. Well, I agree with that comment. I just do not 

want us to substitute provider cuts for reform. We can reach the 

point where you can cut too far, and then it is not reform, it is disastrous for the program. 

Thank you very much. 

Secretary SEBELIUS. Yes. Thank you, sir. 

The CHAIRMAN. And, Madam Secretary, I would just say, we 

talked about chronic disease earlier. Senator Isakson and Senator 

Toomey on that side of the aisle, Senator Warner, and others have 

a great interest in working with you on that, and we want to follow 

up there after the hearing. 

Senator Cardin is next. 

Senator CARDIN. Thank you, Mr. Chairman. Secretary Sebelius, 

thank you very much. 

Let me just make one comment about the Affordable Care Act. 

We now know millions of people who have directly benefitted from 

the Affordable Care Act, from the Medicaid expansion that you 

talked about, which has been a great success in my State, to the 

insurance reforms that have protected families, to Medicare filling 

in a lot of the coverage gaps that we had for preventive care and 

prescription drugs, to now people having affordable options through 

the exchange to get quality insurance products. 

I just want to make one observation. It would be, I think, a lot 

easier for you if we in Congress took a look at the law as to how 

we could help you in dealing with many of the challenges that you 

have had in implementing the law, but instead we are still stuck 

in this repeal/non-repeal mode, particularly in the House of Representatives. 

That is not doing a service to the people of this country, because 

we should be working together to give you the budget support that 

you need and to take up the law as to what we need to do to improve it, make it stronger, and make it easier for the American 

people. I hope that as we talk about a bipartisan budget, for my 

friend Senator Isakson, whom I admire greatly, that we also talk 

about working together to make our health care system work in 

this country. I think the framework of the Affordable Care Act is 

proven to millions of Americans, and I can give you many, many 

letters that I have received from people whose lives have been 

changed because they now have quality insurance coverage. 

On the budget, and I think we are here on the budget, I will 

start with a ‘‘thank you.’’ That is, the Holocaust survivor assistance 

that is in this budget for the first time will provide direct help to 

Holocaust survivors, Americans who are very vulnerable, with a 

real fear of institutionalization and getting help to access governmental services, and I thank you for including that in the budget. 

On the other side, the realities of the budget hit home, I think, 

with the National Institutes of Health. The budget there, to me, is 

22 

entirely too low. I am extremely disappointed that several of the 

Institutes get no increase in their budget at all, including the National Institute on Minority Health and Health Disparities that you 

and I have talked about in the past. 

I know your commitment to that Institute and to the departments and agencies that are directly responsible for dealing with 

minority health and health disparities. I just encourage you to do 

everything you can within the budget restraints to continue to 

make that a top priority. 

Let me ask a question as it relates to the therapy caps in the 

SGR. I am strongly in support of Chairman Wyden’s and Senator 

Hatch’s efforts to get a permanent fix, a replacement, to the SGR 

and the therapy caps and the other issues. To me, that makes the 

most sense. We are very close, and I hope that we can continue to 

work on it. 

But in the meantime, we are still in that mode of dealing with 

a temporary extension through March of next year. In the therapy 

caps, which make absolutely no sense whatsoever from a point of 

view of health policy, we now have the manual medical review 

issue on those that hit the cap at $3,700 that could prevent access 

to timely payment. 

It is my understanding that you are considering some payment 

review rather than looking at it and holding up those who are in 

need of care, wondering whether their services will be covered or 

not. Can you just give us an update as to the implementation of 

the therapy cap under the existing law, how you envision that during this period of time? 

Secretary SEBELIUS. Senator, what I would like to do is come 

back to you with a much more descriptive answer of what our folks 

are looking at for, as you say, what may be this interim period of 

time. I know there has been a lot of discussion. 

I do not want to give you incorrect information about the direction that is likely to go, but I do know it is of great concern in 

terms of patient care and how it is interpreted, so I will circle right 

back and give you kind of an updated answer from our Medicare 

team on how they anticipate going forward. 

Senator CARDIN. Thank you. I yield back. 

The CHAIRMAN. Thank you, Senator Cardin. 

Senator Roberts is next. 

Senator ROBERTS. Well, thank you, Mr. Chairman. 

Madam Secretary, I have a couple of news articles here that 

maybe you could help us clarify as to exactly what is going on. 

Rather than me trying to explain this, I am just going to read it. 

‘‘Americans thinking about buying health insurance on their own 

later this year or maybe switching to a different insurer are probably out of luck. The policies are going off the market as a littlenoticed consequence of the Affordable Care Act. With limited exceptions, insurance companies have stopped selling until next year the 

sorts of individual plans that used to be available all year round. 

That locks out many of the young and healthy, as well as the sick 

and injured, even those who can afford to buy without the government subsidy. Now they are stuck, according to an independent insurance broker in Los Angeles, who says she warned her customers 

last year the change was coming. It just closes everything down. 

23 

The next wide-open chance to sign up comes in November when enrollment for 2015 begins. Companies are following that schedule 

even for the plans they sell outside the Federal/State exchanges.’’ 

There are other news articles that say the same thing, and I am 

not going to take the committee’s time to read them. 

Could you clarify that, because I think there has probably been 

some misunderstanding, or perhaps you can shed some light on 

that. 

Secretary SEBELIUS. Certainly, Senator. As a recovering insurance commissioner, I would tell you that the rules that you just described are really set at the State level. You quoted an article from 

Los Angeles, and they have decided in California that they will not 

allow off-market plans to be sold. They want to encourage people 

to buy during open enrollment inside Covered California. This is a 

State-by-State decision. 

I think Kansas has made a very different decision. So those determinations about what the off-market plans will be and how robust that market will be are made by individual insurance commissioners throughout the country. 

Senator ROBERTS. Well, we have an expert at the Kaiser Family 

Foundation, and he says it is highly unlikely—he is talking about 

nationwide now, not just State-by-State—that companies will offer 

such coverage after the deadline window fully closes. 

Some still offer temporary plans lasting from a month to a year, 

but those plans do not cover pre-existing conditions, do not get buyers off the hook for the law’s tax penalty, and there is a window 

for life-threatening situations. 

I know you are stating that is up to individual States and their 

insurance companies and they are all different, but I think that 

this is a national concern. Am I wrong on this? Help me out here. 

Secretary SEBELIUS. Well, again, it is my understanding that it 

is very different State to State, that a lot of States will have robust 

off-market plans that will actually have a number of the consumer 

protections and features that are in the market. 

But it is a State-by-State decision. I think that reference, Senator, may be to the accepted plans, the kind of mini-coverage plans, 

and those will be less available. But again, the companies are making that determination, not the law. 

Senator ROBERTS. Well, I think the companies are making the 

decision due to the law, but we will get past that. 

I want to go back to the 96-hour rule, because it gets to the 

President’s budget, which is the same question that I asked you 

last year about the proposals included in the budget that caused 

disruption to the critical access hospital delivery. You are extremely familiar with that, in that you designated some of these 

hospitals in Kansas. 

So I am concerned that the proposals are once again in the President’s budget. They set the mileage limits and they reduced the reimbursement for critical access hospitals. We all know the value of 

the critical access hospitals. We have 83 in Kansas, as you know. 

I would like to know if we could get some regulatory relief. In 

that regard, one of the more problematic decisions is based on a 

letter that I wrote, if I can find it. But at any rate, it was to CMS 

24 

and indicated that—here it is. And the reply was that they are 

‘‘statutorily obligated to enforce the new requirements.’’ 

I do not know where we came up with 96 hours. I mean, you 

could do 120, 72, 48 hours, whatever. Then, if you have a patient 

come in to that hospital, they can keep them for those number of 

hours, and it seems to me that it was not statutorily designated. 

When I asked if they could waive that in certain conditions or be 

of help, they said, well no, it was statutory. It is not. That is just, 

once again, something that we could do. 

Could we get 1 year’s relief from that? I understand you said 

that Mr. Blum, or maybe Marilyn Tavenner, could be of help on 

this. What happens is, the patient comes in, they are monitoring 

that patient, and then these hours go off. The doctor does not get 

any Medicare reimbursement so they would have to go to another 

hospital which could be miles and miles away, or just out of the 

hospital. You know about hospital readmissions; you cannot do 

that. Help me out on that. 

Secretary SEBELIUS. Well, Senator, what I would like to do is 

maybe get a copy of the letter that you are referring to, and I will 

personally follow up with Marilyn Tavenner and Jon Blum and get 

back to you. I do not know exactly what the questions were in the 

letter, and I do not know exactly what statute they were referring 

to, but I will definitely circle back and get you a response. 

Senator ROBERTS. I appreciate that. 

Secretary SEBELIUS. I agree that we do not want to make it more 

difficult for patients to access care or for doctors to be reimbursed. 

Senator ROBERTS. I appreciate that. I will provide the letter as 

soon as possible. 

Secretary SEBELIUS. Thank you. 

The CHAIRMAN. Thank you, Senator Roberts. 

Senator Casey is next. 

Senator CASEY. Thank you, Mr. Chairman. 

Madam Secretary, thank you for your testimony and for your 

service. I was not here during your testimony regarding the number of folks who have taken advantage of the exchanges, and I 

guess we are up to 7.5 million. That is good news. 

I wanted to ask you about two questions, the first regarding children. On the one hand, I cannot say enough about the commitment 

the administration has made to our children on a whole host of 

fronts—a very substantial commitment on programs and on prioritization. I commend you for that, and I commend the President. 

Where I have kind of a fundamental disagreement with the administration, and where I think we will probably continue to be— 

and I hope not—unalterably opposed to the administration’s policy 

as it relates to children, is graduate medical education. We fortunately passed, and the President signed into law, a bipartisan reauthorization. I was very happy about that. We have worked very 

hard on that. 

But I know going forward that the position of the administration 

is to eliminate that funding for that program. I do not agree with 

that, and I wanted to ask you about it. We have right now about 

1 percent of all hospitals train nearly half, about 49 percent, of all 

pediatricians. 

25 

So you have a program that works. It delivers tremendous results. It solved a big problem, meaning pediatric care, or the shortage of that if we did not have the trained specialists. It is bipartisan. It is not expensive. I do not understand the opposition to it. 

So I would ask you about the position the administration has 

taken, why that is, and whether or not there is some way we can 

reconcile our differences. 

Secretary SEBELIUS. Well, Senator, I know your commitment to 

this area, and, as you say, I think the administration also has a 

commitment to, not only children, but to training providers in 

needed areas. The budget proposes that there is $100 million in 

new, targeted support for children’s hospital GME programs and 

additionally, with a bigger bulk of money, the $430 million, a competitive opportunity where I would suggest that I think it is possible that children’s hospitals receive even a larger amount than 

was in the directed program of the past, because there is a floor 

kind of set automatically and then an opportunity for more slots. 

We estimate that the new targeted support will be about 13,000 

new residencies between 2015 and 2024. I will tell you that with 

the discretionary program in the past, about 26 percent of those 

slots were for non-pediatric residents. So even though it was a directed program, that is not how at least a fourth of the slots were 

filled throughout the hospital. 

So we would love to work with you on ways to make sure that 

the financing that is going in is really directed to training more pediatricians, training more child specialists. I think, looking at this, 

there is an opportunity to really then target the funding. 

Senator CASEY. Well, I hope we can, because we have in our 

State—and I can say this, I think, without contradiction—two of 

the best children’s hospitals in the world in Philadelphia and Pittsburgh, in addition to St. Christopher’s in Philly. So we have two 

in Philly, one in Pittsburgh. They are very happy with the program, and we are very concerned that it would not get reauthorized. So I hope we can continue to work together. I know I am 

short on time, and some of this we can do for the record by way 

of written response if we run out of time. 

Medicare Advantage. I was grateful for the administration’s recent determination as it relates to Medicare Advantage. We know 

that premiums are down 10 percent and enrollment is up, and that 

is good news. But there are still some concerns about the near term 

and the long term. I just want to ask, and you can amplify it in 

writing if necessary, what steps you plan to take to help the program remain as strong as possible. 

The CHAIRMAN. Secretary Sebelius? 

Secretary SEBELIUS. Yes? 

The CHAIRMAN. If you could do that briefly and then get to Senator Casey in writing. Colleagues, if we sprint we can get everybody in before Secretary Sebelius has to leave, and that is my goal. 

Senator CASEY. That is a good goal. 

Secretary SEBELIUS. Why do I not get it—— 

The CHAIRMAN. Is that all right with the Senator? Great. Thank 

you so much. 

Senator Warner is next. 

26 

Senator WARNER. Thank you, Mr. Chairman. Great to see you, 

Madam Secretary. 

Let me first of all say, with the numbers you report today at 7.5 

million, I hope this will start to change the nature of the debate, 

from some of us on our side of the aisle who do not want to change 

a word of the ACA to some of our friends on the other side who 

simply want to repeal. 

I know they are not here, but I want to commend Senator Hatch 

and Senator Burr. I do not agree with the framework they have 

laid out, but they have laid out some alternatives. There are a 

group of us who have laid out a series of, I think, targeted changes 

to the ACA that I think will improve delivery. I would like, in my 

time, to touch on one of those. 

One of the areas—I know you are aware that the Treasury Department recently finalized reporting rules that will help enforce 

the employer and individual mandates. We have this challenge, 

where Treasury does the reporting and HHS provides the subsidies, of trying to make sure they are correct amounts. 

I continue to hear from a number of employers that are concerned that some of their workers who are offered employer plans 

might erroneously still apply through the exchange to try to get individual tax credits. What this is setting up is potentially, at the 

end of a year, a contentious dispute between the business and the 

IRS, with the IRS kind of being the referee. I think this could actually be prevented if there was more accountability on the front end 

between Treasury and HHS. 

I think there are ways our legislation—we have eight co-sponsors 

at this point and would welcome others looking at this—would basically allow employers who would be willing to provide that information up front some ability to be forward-leaning rather than 

having this monthly reporting requirement that, for small enterprises, is going to be an enormous burden, to give them, not completely a safe haven, but by having this kind of up-front collaboration between HHS and Treasury, we might be able to remove one 

of the administrative burdens that quite honestly in a system does 

not need to be there. I do not know. 

Our legislation is S. 2176. It is one of six or seven different 

pieces of specific legislation that we would like to advance, that 

hopefully will move the debate to, how do we keep what is good 

and fix what is wrong in ACA? I would just like to solicit your opinion—I do not know if you have had a chance to look at this—about 

whether you would be willing to work with us on this and other 

areas where we can streamline the process. 

Secretary SEBELIUS. Well, I would very much like to work on 

streamlining the process. Anything that we can do up front that reduces confusion and certainly reduces administrative burden on 

businesses—we, as you know, Senator, took a number of your ideas 

in terms of how implementation and the administrative exchange 

of paperwork should work. The last thing I think the administration wants is to burden people who are already in the system providing insurance, trying to get accurate reporting. So yes, very 

much I would like to—— 

Senator WARNER. This is one area, again, where we have your 

shop doing the subsidies, Treasury doing the reporting requireVerDate Mar 15 2010 17:04 Apr 03, 2015 Jkt 000000 PO 00000 Frm 00030 Fmt 6633 Sfmt 6633 R:\DOCS\93936.000 TIMD
27 

ments. If we could set the standards up front and provide employers a little more guidance, we could eliminate what is right now I 

think, for particularly small to mid-sized firms, this monthly reporting that I think will prove to be a burden. 

Secretary SEBELIUS. I look forward to it. 

Senator WARNER. Now let me hit two other items very quickly. 

One, I know Senator Stabenow has already mentioned this, but let 

me say ‘‘amen,’’ as one of the co-chairs of the Alzheimer’s Caucus, 

to trying to move forward on the National Alzheimer’s Plan, making this a higher priority, thinking more creatively. I would echo 

what Senator Cardin has said as well about overall cuts to research. 

But we all know, every one of us has family members, myself included, who have either passed from Alzheimer’s or who are going 

through the scourge of Alzheimer’s. This is a human tragedy, as 

well as obviously one of the fastest-growing expenses in the 

Medicare/Medicaid combined budgets. 

Secretary SEBELIUS. Yes. 

Senator WARNER. So we would urge your work on that. 

The final point I just want to make in my 44 seconds, recognizing 

the Senator’s goal to get us all through, I would commend this to 

my colleagues. Last Sunday, 60 Minutes did a feature on a clinic 

called ‘‘The Health Wagon,’’ which is in southwest Virginia. It was 

started back in the 1980s by Sister Bernie Kenny in an old VW, 

very close, Senator Rockefeller, to West Virginia, and she would 

travel around and provide medical services. 

There was a certain Governor early in the decade who actually 

included this program in the State budget. It has now grown dramatically. She serves six counties, has nine folks, and has assisted 

11,000 folks in an area that has dramatic poverty. 

HRSA grants are very important in this innovative service delivery model, and I would simply commend, again, the remarkable, remarkable story that 60 Minutes documented. I think it is a demonstration of really stretching dollars. For every dollar of Federal 

money, we get $100 back in health care services. That is a rate of 

return that, even as a venture capitalist, I would love to see. So, 

I commend that to you. 

The CHAIRMAN. You Governors all stick together. 

Senator Toomey? 

Senator TOOMEY. Thank you, Mr. Chairman, and thank you, Secretary Sebelius, for joining us. 

Let me just briefly echo Senator Warner’s comments about Alzheimer’s. I too was absent when Senator Stabenow first brought 

this issue up. But as you know, and I really think it bears repeating, we have made so much progress on all of the chronic diseases 

that threaten and take people’s lives, especially in their older 

years—heart disease, cancer, stroke. Many of them are frequently 

not fatal. They can be fatal, but they are not always. They are 

much more treatable. We have so much better survival rates. 

The glaring exception is Alzheimer’s, for which we do not understand the cause. We have no treatment, we have no cure. So, as 

people live longer and longer, because fortunately they are no 

longer dying from these other diseases, increasingly they are being 

afflicted by Alzheimer’s. So I, for one, cannot think of a more worVerDate Mar 15 2010 17:04 Apr 03, 2015 Jkt 000000 PO 00000 Frm 00031 Fmt 6633 Sfmt 6633 R:\DOCS\93936.000 TIMD
28 

thy cause than finding the cause and cure for Alzheimer’s. I appreciate your interest in this and your commitment, and I hope we 

will make this a very, very high priority. 

I do have a technical issue that I want to raise with you. This 

arises—I am still trying to frankly wrap my brain around the many 

ways in which we have socialized the individual and small group 

health insurance market. We have the mandatory payments between the insurers that have to cross subsidization based on the 

risk parameters that the various firms have. 

We have the famous belly button tax that covers the cost of paying for the high-risk patients that we have. Then of course we have 

the risk corridors, by which the government gets 80 percent of the 

upside and taxpayers get hit with 80 percent of the loss beyond certain parameters, which CMS gets to define. 

What I found curious is that in the 2015 budget, my understanding is that OMB has moved the account into which and from 

which funding will go, depending on whether the government is 

making money or losing money in this joint venture, if you will. It 

has moved the account to a CMS general program management account, and that is an account into which other sources of funds go 

and from which and toward which other expenses are covered. I am 

wondering why that was done. 

Secretary SEBELIUS. Senator, I would tell you that the CMS 

budget and a lot of the employees who are in administrative work 

dealing with the marketplace issues are also dealing with a range 

of other issues. There is no way that a lot of these programs are 

not intertwined with Medicare and Medicaid. They are implicated 

across the board, but why exactly that budget design is there any 

more than for the efficiencies of making it clear that that is what 

workers do—— 

Senator TOOMEY. All right. Well, my concern is this. Previously, 

including in the current fiscal year, under the budget that we are 

now operating under, any payments from insurers into this fund go 

into an account that immediately goes to the Treasury general fund 

and is used to reduce the size that the deficit would otherwise be. 

Since it is reclassified into this more general program management fund, it remains available to CMS to spend on other things 

rather than to be used exclusively to diminish the deficit as it is 

now. I am concerned that, (A) it might be spent on other things, 

and (B) since this is commingled with other sources of revenue and 

it can be spent on other things, it could be harder for us to understand exactly what is happening here. 

Secretary SEBELIUS. My experts tell me, because I did not want 

to give you an incorrect answer, that it can only be used for the 

risk corridor program. 

Senator TOOMEY. But the account is a general program management account that has revenues that come from other sources, and 

there are expenditures that can go to other directions. So how will 

we be able to properly monitor this and know—— 

Secretary SEBELIUS. We can give you direct reporting on what is 

coming in and what is going out. But my understanding is, it can 

only be used on the risk corridor program. 

Senator TOOMEY. All right. 

29 

Secretary SEBELIUS. We have user fee authorization in that umbrella authority, so we are using that, but it can only be used for 

the risk corridor. 

Senator TOOMEY. So can you assure us that any surpluses that 

come into this account by virtue of the government’s take on insurance companies’ profits, or any taxpayer bail-outs of insurance companies that have losses, any of that will be precisely quantified, 

and we will be able to track that? 

Secretary SEBELIUS. Yes, sir. 

Senator TOOMEY. Thank you. 

Thanks, Mr. Chairman. 

The CHAIRMAN. Thank you. 

Senator Nelson? 

Senator NELSON. Madam Secretary, first of all, I want to compliment you. You have been through about one of the roughest 

patches that any department head could go through, and it is 

working, so congratulations. 

Secretary SEBELIUS. Thank you. 

Senator NELSON. It is working in our State as well. We are starting to see, there is beginning to be a realization, that there are a 

lot of young people who were included because they could be on 

their parents’ policies. Now there is a realization of what is going 

on with the significant number that you enrolled in the exchanges. 

In addition, people are catching on to Medicaid expansion. Now, 

unfortunately, in our State they took the position, nyet, no Medicaid expansion. Now they are starting to feel the heat from the 

Chamber of Commerce and the hospitals, and starting to realize 

that this means more out of ordinary Floridians’ pockets, because 

people will still go to the emergency room uninsured. 

So I want to thank you for your flexibility. What we are trying 

to present are some ideas for flexibility that the State of Florida 

could propose to you, CMS, Ms. Tavenner, and so forth. So what 

I have done is sent a letter to Ms. Tavenner that would entertain 

a new plan if the State were to suggest this—and I understand it 

has to come from the State—to allow for Medicaid expansion using 

inter-governmental transfers which would supply the State’s 10 

percent part in the 4th year, when the Feds will provide 90 percent 

and the States 10 percent. 

Now, I thank you for setting the table for flexibility. There is, 

compounding on this, what is now going on in a State legislative 

session where the appropriators are meeting, which is the extension of the Medicaid waiver for managed care. 

It is my understanding that there is a basic agreement of 1 year. 

Of course, if this can be done, if they can get that out now, it would 

be helpful to the State appropriators for the agreement to come in 

time for the legislature to incorporate it into their appropriations. 

I do not expect you to have the details on this, but do you have 

any comment on this? 

Secretary SEBELIUS. Well, I can tell you, Senator, we are working 

very, very closely with the Florida team, and my understanding is 

that those sessions have been very productive. We are very much 

aware of the legislative deadline. While I would tell you that there 

is not any final resolution, I am confident that we are going to get 

30 

to a productive answer. But those discussions are very much under 

way as we speak. 

Senator NELSON. On Medicare Advantage, we have had some 

complaints about insurance companies suddenly obliterating a 

whole bunch of doctors from a plan and obliterating hospitals from 

a plan. So the question is, the definition of ‘‘significant change.’’ 

What I would like is to call to your attention to remind CMS that 

when they are planning network changes that an insurer deems 

significant, there needs to be some communication of this fact to 

the poor insureds, as you and I, as colleagues, as insurance commissioners decades ago, would try to look out for—— 

Secretary SEBELIUS. It was not that many decades ago. 

Senator NELSON. Believe it or not, it was almost 2 decades ago. 

Secretary SEBELIUS. Well, that is a couple, you know. It is not— 

I agree with you, Senator. We were concerned when this issue 

arose, first, I think, in Connecticut. We are watching it very carefully. It is my understanding that we have provided some formal 

communication with insurers that a notification is indeed a part of 

their responsibility, and that we are going to be watching that a 

lot more closely to make sure that, if a plan institutes changes, 

beneficiaries can then make other choices based on that plan decision. 

Senator NELSON. And of course I would have to mention, on behalf of our seniors in Florida, the special enrollment period for 

them, particularly if they need to make sure that they have the 

specialists that they want. 

Secretary SEBELIUS. Yes. 

Senator NELSON. Thank you, Mr. Chairman. 

The CHAIRMAN. Thank you, Senator Nelson. 

Senator Rockefeller? 

Senator ROCKEFELLER. Thank you, Mr. Chairman. 

Welcome. 

Secretary SEBELIUS. Thank you. 

Senator ROCKEFELLER. I join very much with what has been said 

by several Senators, starting with Ben Cardin. It is extraordinary 

that we have a program here which is the first of its kind in history to have actually worked, to have actually been passed, and it 

is working. All they can do, those who oppose it, is to take out 

newspaper clippings. That was very smart when you said, well, 

that was from the Los Angeles Times. 

But that is what they do. That is what they make a living out 

of. That is what they do on Fox News. It makes life very difficult 

for you. But always know that there are many of us who have been 

for the Affordable Care Act from the very beginning and will stay 

that way until it is absolutely perfect. That is just simply the way 

things happen in America. It is just, we are at a very bad patch 

in terms of getting stuff done or to be helpful to the American people right now. 

I have a couple of questions, one on the Children’s Health Insurance Plan. That is always my top priority. It has to be. I am worried about two things. One is that I cannot recall the President 

talking about it. Now, why would that be important? It probably 

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31 

ing runs out at a most inconvenient time. So we are funded 

through this year and part of next, and then it just stops. 

So I have to, in the President’s budget, understand if his feeling, 

and the feeling of HHS, is that we are talking about keeping this 

thing going for a period of years and years, because right now it 

is strange that he has not mentioned it, he has not talked about 

it. He has talked about so many social programs. 

This is one of the most important for West Virginia and everybody—the 8 million Americans involved. So can we look forward to 

this being a continuing program, because it does not necessarily reflect itself in the budget because the budget is out of sync, so to 

speak, with other parts of the budget? 

Secretary SEBELIUS. Well, Senator, I first of all know your passion in this area and also your incredible leadership. We would 

look forward to working with you on what the future looks like. 

I would tell you that one of the great things I think that is going 

on for children around the country is, with the simplified Medicaid 

and CHIP application and with literally millions of people coming 

forward who may have been in the past eligible but not really enrolled, I think we are going to see more children gaining benefits 

than ever before—who probably should have been signed up in the 

first place, but they just were not because States were not taking 

down some of the blockades and barriers. States are now making 

it far easier for people to be engaged in that process. I think that 

is all very good news for the children of America. 

Senator ROCKEFELLER. I would agree with that. But I would really be happy if the President, in one of his press conferences or 

something, just mentioned it. It is just odd to me, knowing him and 

his commitments, that he just simply has not mentioned it at all. 

Secretary SEBELIUS. Well, I will share that. 

Senator ROCKEFELLER. Thank you. 

Secondly, black lung. Obviously that is most important for West 

Virginia. What you have is, HRSA has imposed a new requirement, 

and it is abstract, so to speak. It puts a limit of $900,000—and 

then it is capped—that any one State can get for that. West Virginia, last year, spent $1.4 million for a very simple reason: we 

have an awful lot of coal miners, and we had an awful lot more coal 

miners before, so the black lung back-up is huge. 

There are various ways we are trying to, through the reduction 

of ambient air pollutants in coal mines—you cannot treat or you 

cannot cure black lung, but you can prevent it, but only by having 

a clean coal mine, which operators are loathe to do. 

But nevertheless, I am stuck with this West Virginia problem. 

We are the only State which is affected by this HRSA initiative. 

As far as I am aware, we are the only State. That is not pleasing 

to me, because we worked very hard on it, and we have an awful 

lot of people, because that has been sort of our history. What I 

would like you to do is waive West Virginia, but somehow we need 

to solve this problem. 

Secretary SEBELIUS. Well, Senator, it is my understanding that 

the HRSA cap is not for a State, it is for an entity. In fact, in many 

States there are multiple entities who are receiving funding for 

various support services. So we would like very much to work with 

you about what is going on. 

32 

Senator ROCKEFELLER. Well, but that raises—— 

Secretary SEBELIUS. I think West Virginia could get significantly 

additional resources, and probably should, given the level of disease in the program. 

Senator ROCKEFELLER. That brings up a further thought, that 

one of the effects of the HRSA rules and regulations would be we 

would have to sort of divide black lung clinics up into different 

lumps. We have nine of them in the State, and what would happen 

administratively to black lung clinics is very untidy and unhelpful. 

If you could just go look at that problem. 

My final point is, Senator Isakson wanted to reduce the deficit, 

and we all want to do that. What I am going to bring up probably 

has no chance of passing, because the power of the pharmaceutical 

companies is very, very strong on the Finance Committee, which I 

regret to say. But the easiest way to do that is to simply go back 

to what we were doing with the dual-eligibles, 9 million of them, 

when they were under Medicaid and it was all rebated pricing. 

There was an enormous amount of money saved. The pharmaceutical companies now say, well, we would have to stop doing research and all the rest of it. But of course back then when it was 

in effect under Medicaid, they were doing fine. They were doing 

just fine, thank you. 

Now all of this, the dual-eligibles, is under Medicare. We made 

that switch in Medicare Part D, but we did not switch the rebated 

pricing part. If we were to do so, we would save $141.2 billion over 

10 years. 

Secretary SEBELIUS. Senator, that is why we need to pass the 

President’s budget, because that recommendation is in the budget. 

Senator ROCKEFELLER. Yes. Yes. Yes. 

Secretary SEBELIUS. I agree. 

The CHAIRMAN. Let us do this. We are going to rush to get all 

Senators in. Senator Carper is next, if that is all right, Senator 

Rockefeller. 

Senator ROCKEFELLER. Sure. 

The CHAIRMAN. Senator Carper? 

Senator CARPER. Thanks. Welcome, Secretary Sebelius. It is very 

nice to see you again. Thank you for your stalwart stewardship and 

leadership in these troubling, trying, but ultimately encouraging 

months. Thank you. 

One of the things I look forward to seeing every Thursday in my 

clips is a report from the Department of Labor, and every Thursday 

we get from the Department of Labor, on Thursday morning, the 

number of people who filed for Unemployment Insurance the previous week. 

The week that Barack Obama and Joe Biden were inaugurated 

as President and Vice President, that week the number of folks filing for Unemployment Insurance was 628,000 people. When I read 

the news today in my clips, that number for this past week, announced today, was 300,000 exactly, right on the money. 

When you think about job creation in this country, any time that 

number is under 400,000, we are creating new jobs. What we do 

is, as the number bounces up and down, as you probably know, we 

take a 4-week running average and keep updating that. That number is running at about 320,000, and we are at a point where we 

33 

are creating significant jobs. We need an economy that creates even 

more. 

One of the keys to doing that, according to Alan Blinder, who 

used to be Federal Reserve vice chairman but is back to teaching 

economics at Princeton—he sat right where you are sitting less 

than 2 years ago, and I asked him a question about deficit reduction, what we need to do. 

He said the 800-pound gorilla in the room on deficit reduction, 

and on growing the economy, is to get our arms around and our 

heads around the health care costs and to be able to wrestle them 

to the ground so we can get essentially better results for less 

money. 

I am encouraged when we look at the growth of health care costs 

as a percentage of GDP, which has gone up, up, up forever. Last 

year, it actually came down a little bit. Hopefully with all the 

smart things we are doing—not just in the Affordable Care Act but 

just by health care providers, companies, employers, just a lot of 

smart stuff, moving from a sick care system to a health care system and focusing on prevention and wellness and making better 

use of technologies—this is morning in America on this front. 

A question, if I could. Alan Blinder said to us that morning, 

when I said, what do we need to do to continue to make progress 

on reducing health care costs as a percentage of GDP: find out 

what works and do more of that. I said, do you mean, find out what 

does not work and do less of that? He said ‘‘yes.’’ 

But in terms of finding what works—as you know, obesity and 

costs that relate to obesity are just eating us alive. We are trying 

very hard in this country to reduce not just the size of our deficit, 

but reduce the size of our girth and lose weight and be able to start 

ratcheting down those costs. 

But I just want to ask, in the President’s budget with respect to 

obesity, the need to do more there, the costs that run from that, 

and also medication adherence—we know that we can save a lot 

more money if folks actually take the medications they are supposed to take and to continue to take and so forth. Just those two 

points: in the budget, how do we address obesity and continue to 

bring it down; how do we address medication adherence and continue to improve that, please? 

Secretary SEBELIUS. Well, I would say, on the first front of obesity, there are a whole variety of programs under at least our umbrella that offer support for the First Lady’s entire initiatives, 

which actually are making a significant difference. There are the 

efforts to work with our partners at the Department of Education 

to revamp everything from school lunches to exercise programs. 

The new FDA rules and requirements and more are coming on nutrition facts, giving consumers the tools they need to make good 

choices. Menu labeling is under process and will be out shortly. 

Then there needs to be ongoing research on what exactly works. 

In addition to the Prevention Fund, there are efforts around community projects, what really works. We know a lot about smoking; 

we do not know a lot about obesity, what actually is the most effective thing to get people engaged and involved and actually have 

them make different decisions about exercise and eating. So there 

34 

is a lot in various agencies in our budget and through the CDC 

that is working on the obesity front. 

I would say on medication adherence, it is one of the key targets 

of the Partnership for Patients, which has been a very effective effort involving over 3,000 hospitals and doctors’ offices. It also is a 

piece of what the electronic medical record effort is about, which 

is collecting the data. 

It is stunning how many patients with high blood pressure are 

not monitored on a regular basis—leading to heart attacks and 

strokes—to see who has high cholesterol that is not being followed 

up on, who is actually not taking their meds. 

So part of becoming a meaningful user in the electronic record 

world is that a provider not only has to collect data, but then demonstrate that there are actual changes being made and patients 

being monitored, which I think can be enormously effective, and 

tying pay to those quality outcomes is going to be enormously effective. 

Less than a third of the people in this country diagnosed with 

high blood pressure are on any kind of strategy to reduce that 

blood pressure. And our folks feel you could save a million hearts, 

as they say, a million heart attacks and strokes by just collecting 

data, focusing on the ABCs, and making sure that a piece of that 

is management of chronic conditions. 

Senator CARPER. Great. Thanks. 

Thank you. 

The CHAIRMAN. Thank you. 

Senator Menendez? 

Senator MENENDEZ. Madam Secretary, thank you for your service and for performing an extraordinary job under a landmark law’s 

implementation. 

One of the main goals of the Affordable Care Act was to provide 

access to health care coverage to all Americans, and the expansion 

of Medicaid eligibility was a fundamental step towards achieving 

that goal. I am pleased that New Jersey is among the States that 

expanded their program, but I am also concerned by some reports, 

including one in this morning’s National Journal, about how Medicaid applications are being processed in several States, including 

New Jersey. 

Specifically, I am hearing about extensive backlogs caused by the 

New Jersey Medicaid Department’s need to input the applicant’s 

information by hand in the 21st century. I am not quite sure. Despite the ‘‘no wrong door’’ policy that allows Medicaid enrollment 

via the State or the marketplace websites, the online applications 

are apparently just being printed out and manually input into the 

system. 

In Camden County, NJ, for example, there is a reported backlog 

of 10,000 Medicaid applications and only about 6 data entry personnel, meaning it would take nearly a year and a half to clear the 

backlog. So that is clearly an issue of concern as people are waiting 

for their enrollment verification so that they can see their doctor. 

What steps will be taken to address the current backlog and to 

prevent more from happening in the future applications? 

Secretary SEBELIUS. Well, Senator, we share your concerns. 

Frankly, it is not just States like New Jersey expanding Medicaid, 

35 

but it is States across the country that really have been on notice 

since the law was passed 4 years ago that they needed to update 

and upgrade their eligibility systems to make it seamless and easy 

for people to enroll. We are still finding a number of States like 

New Jersey that are not ready to receive automated data. 

We are working closely with States around the country and 

frankly share your frustration that there are people waiting. There 

are also people probably in that line who may think they are 

Medicaid-eligible who are really marketplace-eligible and they do 

not even know that yet, so that is an additional problem. 

But in terms of the automated system, the Federal system is 

ready to send automated reports and receive automated reports to 

try to seamlessly do this. We are actually kind of ramping up the 

pressure on States, and we will look at potentially some administrative reductions in payment if people do not pick up this pace, 

because having a backlog that is not being processed in a timely 

fashion is just keeping way too many people from the health care 

that they are entitled to. 

Senator MENENDEZ. So in essence, States that have this backlog, 

it is because of their own lack of performance? 

Secretary SEBELIUS. Well, at this point, yes. The Federal system 

did take a while to get to the point where we could actually process 

it electronically, but we are now at the point where we are able to 

input the electronic files. What we have is a system that goes back 

and forth between the States. So, somebody comes in at the State 

level and is marketplace-eligible; somebody comes in at the Federal 

level and is Medicaid-eligible. But most of what New Jersey is seeing is actually the New Jersey system not being able to keep up 

with the numbers of people who are qualified. 

Senator MENENDEZ. Well, we would love for the Department to 

keep us apprised of how we are going to make progress. 

Secretary SEBELIUS. We would be glad to. 

Senator MENENDEZ. That is a lot of people. 

Secretary SEBELIUS. Yes. 

Senator MENENDEZ. Finally, last year CMS devised a new rule 

to determine whether or not a Medicare beneficiary would be considered an inpatient or an outpatient during their hospital stay 

solely based on whether their hospital stay spans more than 2 midnights. While it helps clarify some issues, we have all heard about 

beneficiaries spending a week or more in hospitals under observation status. 

The rule fails to acknowledge an instance where a beneficiary 

needs a high level of inpatient care for a shorter amount of time, 

even if the physician determines it is medically necessary or appropriate. I think CMS has already acknowledged that there are problems with the rule and has delayed it on a number of occasions. 

Additionally, Congress just stepped in and posed a statutory 

delay as part of the recent SGR bill, prohibiting enforcement until 

March 31, 2015. I have a bill with several members of this committee, who are co-sponsors, called the Two-Midnight Rule Coordination and Improvement Act. 

But what is more important to me is that CMS has the existing 

authority to implement the provision of this bill, which basically is 

to have CMS consult with outside experts like hospitals and physiVerDate Mar 15 2010 17:04 Apr 03, 2015 Jkt 000000 PO 00000 Frm 00039 Fmt 6633 Sfmt 6633 R:\DOCS\93936.000 TIMD
36 

cians to develop the criteria methodologies that ensure beneficiaries in need of short-stay inpatient care are able to receive it 

and to make sure we do not have those long stays when they are 

not necessary. So can you give us some sense of whether we can 

make progress here without necessarily dealing legislatively with 

it? 

Secretary SEBELIUS. Well, I think, given the fact that Congress, 

as you say, has chosen to delay the implementation, we will certainly be looking for strategies. I know there was a lot of consultation earlier, but I would love our staff to circle back with you and 

your staff to see what the elements are in the bill that we could 

perhaps move forward on an administrative basis. 

Senator MENENDEZ. Thank you. Senator Fischer—it is a bipartisan bill, so I hope we can do that. 

Secretary SEBELIUS. Great. 

The CHAIRMAN. Thank you, Senator Menendez. 

Senator Cantwell? 

Senator CANTWELL. Thank you, Mr. Chairman. Madam Secretary, thank you for all your hard work. Washington State has, I 

think, the 6th-highest rate of marketplace enrollment in the country, so we obviously have had a lot of success in getting people coverage. 

I wanted to talk about the fact that we have seen—my colleagues 

may have brought this up earlier, I am not sure—a lot of discussion in the Wall Street Journal and the New York Times about 

small segments of the physician community getting a lion’s share 

of Medicare payment and reimbursement, or I think as one said, 

a tiny fraction of doctors getting like 25 percent or something. 

So as you know, I have been very interested in the value-based 

modifier and implementation of that from the Affordable Care Act 

so that we can focus on healthy outcomes instead of the number 

of procedures performed. So I want to get an update from you on 

where we are in getting that implemented, and to also know if 

some of this other information, which is part of the mix of reimbursement that we do not have data on—things like the diagnosis, 

whether the care was necessary, the procedures performed, particularly on fewer than 10 patients, or data on durable medical equipment—whether we can make that information more transparent as 

well to help us in this effort of really focusing on outcomes instead 

of procedures. 

Secretary SEBELIUS. Well, Senator, I know your interest in this 

area, and I certainly share it. I would say that the data released 

earlier this week was a big breakthrough. That data has been 

under Federal injunction since 1979, when an attempt was made 

to put it out that was blocked, and that injunction has been updated ever since. We at the Department joined with the Wall Street 

Journal and others asking the judge to lift the injunction, and I am 

pleased to say that the data is now available. 

There is also—and we discussed this a little bit with Senator 

Grassley earlier—a portion of the Affordable Care Act which deals 

with the sunshine law and has some other data elements which 

will be collected, and we are on track to have, this fall, additional 

data sets available, because they are helpful to consumers to make 

good choices. It is also helpful to look at what providers are actuVerDate Mar 15 2010 17:04 Apr 03, 2015 Jkt 000000 PO 00000 Frm 00040 Fmt 6633 Sfmt 6633 R:\DOCS\93936.000 TIMD
37 

ally collecting. So we would love to work with you going forward 

on other data sets. 

I think the determination, at least initially, about the 10 or more 

procedures was that sometimes collecting one at a time is a pretty 

scatter-shot look at the scenario and does not give you very comprehensive data. We want consumers to know, if you are going to 

go under the knife, if you will, for surgery, I think you would want 

to know who does the most hip replacements or knee replacements 

or whatever, who is the most familiar with that. So on one hand 

it is great consumer empowerment, and on the other hand it is also 

billing information that we think should be transparent with public 

dollars. 

Senator CANTWELL. And then the value-based modifier? 

Secretary SEBELIUS. Again, that is part of the, I think, initiatives 

going forward. It is certainly one of the looks that the Medicare 

team is making in how you can allocate adjustments to payments 

based on value and setting up a series of criteria of what exactly 

the outcomes are. 

We are testing a lot of different models, including through Accountable Care Organizations. I would say that is probably the 

most promising set of tests, where not only cost is being watched 

closely, but certainly the quality outcomes for patients. 

We have some very promising early results, and I see that as 

something that could be taken to scale in terms of what works very 

well. But the Innovation Center is probably testing 15 different 

models right now, which all would lend scientific data to the valuebased modifier and give us ways that we could really change payments based on what works, to both increase quality and lower 

costs. 

Senator CANTWELL. Well, I appreciate that. I just, for the record, 

am for more information being released. We kind of feel like we 

have already been the experiment, and we have provided better 

care at lower cost and consequently get lower reimbursement rates. 

I would not say we are all fine with that, but we certainly would 

be more amenable to that continuing if the rest of the country 

would follow suit. 

Secretary SEBELIUS. And you do not want to be punished for it. 

Senator CANTWELL. Exactly. 

Secretary SEBELIUS. Yes. 

Senator CANTWELL. We would rather be rewarded. 

Secretary SEBELIUS. Yes. Got you. 

Senator CANTWELL. So I think transparency will help us on outcome, yes. So thank you. 

Thank you, Mr. Chairman. 

The CHAIRMAN. Well said, Senator Cantwell. 

Senator Bennet? 

Senator BENNET. Dead last. 

The CHAIRMAN. The best. 

Senator BENNET. No, I would not say that, but thanks for calling 

on me, Mr. Chairman. I appreciate it. 

Madam Secretary, it is good to see you again. I am glad we are 

here under these circumstances and not circumstances some had 

predicted in October. I am glad there are more than a quarter of 

38 

a million Coloradans who now have health insurance who did not 

have it before this law was passed. 

But like you, I have worked at different levels of government, 

and I do think that what we saw in the fall is a reminder that we 

may not be up to the task in the 21st century when it comes to 

certain things like IT, and procurement, and customer service. 

My hope is that, as the politics around this bill subside, which 

I deeply hope they will, because at home, health care is the farthest thing from a political issue for people. It is a day-to-day howpeople-live-their lives issue, but as it subsides, I think that any 

wisdom that has been acquired through those brutal days in the 

lead-up to it that could benefit other agencies or other levels of government, even as Senator Menendez was talking about just a 

minute ago, I think you could provide a huge service at some point 

by—I do not know whether it is leading a discussion or having an 

interagency initiative in the Federal Government. This is the work 

that no one ever gets to. You know that. 

Secretary SEBELIUS. Right. Right. 

Senator BENNET. At the State level, the local level, the Federal 

level, no one ever gets to it. What it means in the 21st century, 

with the velocity of the world we are living in, is that we run the 

risk of finding ourselves in that position again someday. You do not 

need to react to that day, or you can if you want to, but that is 

just a thought. I think it would be a shame just to let that experience, as searing as it was, just disappear and for us not to learn 

what we need to learn from it. 

The other topic I just wanted to raise at the end here is that, 

when we passed the law, CBO had some projections about what 

premiums would look like. I think that the actual premiums came 

in somewhere under 15 percent less than what CBO projected. If 

you look at the last 3 years, it has been the slowest rate of health 

care inflation in the last 50 years, which is saying something. The 

Medicare growth rate, I think we just learned, is minus 3.4 percent. 

I wonder if you could just take a few minutes at the end here 

to help us understand what is going on out there. I mean, for years 

and years and years we have talked about trying to do things in 

Congress that might actually bend the cost curve in health care. 

Are we seeing the beginning of that? I mean, after all this sturm 

und drang and name-calling and all the rest, have we actually 

done something here, or is it too early to tell? 

Secretary SEBELIUS. Well, I think there is no question, Senator, 

you have done something. I think in the early days of the Affordable Care Act, a lot of the cost reductions were attributed to recession and saying it really had to do with the economy and people 

not using health care as much, although I would argue that Medicare is a little recession-proof because you have a guaranteed package of benefits, and it really did not vary a lot with the recession. 

But having said that, now that we have crossed year 4 and we 

are seeing really a fundamental shift, I think some of it is due to 

the framework that was put in place as part of the Affordable Care 

Act, not only in directions to reduce costs and increase quality in 

Medicare and in Medicare Advantage, but also delivery system reVerDate Mar 15 2010 17:04 Apr 03, 2015 Jkt 000000 PO 00000 Frm 00042 Fmt 6633 Sfmt 6633 R:\DOCS\93936.000 TIMD
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form, the very strong signal that we needed to look at ways to 

lower overall costs. 

So what I find to be intriguing and very encouraging is that it 

is not just Medicare spending which is down, it is overall health 

expenditures. So, in the 8 years 2001 to 2009, health expenditures 

per capita rose at just about 6 percent a year, and GDP per capita 

during that time was rising at 2.9 percent a year. So, health care 

was dramatically over it. 

In 2012, GDP per capita rose at about 3.8 percent, and health 

expenditures—and this is everything, not just the public programs—were at 3 percent. So we have come from twice as high to 

underneath. Medicare is significantly underneath. Those trends, as 

you say, were just updated, going down even further. Medicaid is 

on a trend line going down, and private health insurance is on a 

trend line going down. 

So I think the news is good. What we are trying to do is capture 

exactly where those expenditures are. Some of it is hospital days, 

some of it is some of the work being done around hospital-acquired 

infections, some has to do with, I think, efforts on the preventive 

side. But what you have done in the Affordable Care Act, at least 

on the public program side, is to give us an indication that, if you 

find things that work, you can take them to scale without running 

a demonstration project and then coming back and doing them. So 

there is an opportunity really to accelerate this as we learn more. 

Senator BENNET. Well, and I know my time is up, but, Mr. 

Chairman, as we think about this on a going-forward basis, these 

trends all look good. Obviously the real question is whether they 

are sustainable over time. 

Secretary SEBELIUS. Right. 

Senator BENNET. And we ought to be watching for that. But I do 

think the committee, I hope, would be interested in getting that 

data from you in real time so we can understand what is working 

well and what is not working well so we can help people at home 

who are trying to deliver care at a lower cost, bring that to scale, 

and not just wait for the next—who knows when it is going to 

come—discussion we are going to have about health care. 

We have a bill in place. We are collecting data. We ought to be 

transmitting that data, and we ought to be surging ahead with the 

stuff that is actually out there that is working. A lot of it is in my 

State, and I know the other States around here as well. 

Secretary SEBELIUS. Well, Chairman Wyden and I have had 

some conversations about the possibility of briefing this committee 

and others about the Innovation Center, which was created as part 

of this—what is being tested and tried, what we know about, what 

those results are. Some of it is at the State level, some of it is with 

dual-eligibles, some of it is directed to the delivery system, but it 

is very promising information, and we would love to do that. 

Senator BENNET. And ultimately have that in the form of reimbursement. 

Secretary SEBELIUS. Yes. Which is exactly—— 

Senator BENNET. That is what we need to do. 

Thank you, Mr. Chairman. 

The CHAIRMAN. That is a very good point to quit on. I am just 

going to leave you with one thought as we get you out the door, 

40 

Secretary Sebelius. I have been struck over the last couple of hours 

at how often the conversation focused essentially on the nuts and 

bolts of improving health care policy. 

If you look at the issues that came up on matters like Medicare 

Advantage, the critical access hospitals, value purchasing, and children’s health care, these are all areas where Democrats and Republicans can work together and with the administration in a constructive kind of way. 

This was not about turning back the clock to the days when you 

could discriminate against people with preexisting conditions; this 

was about the opportunity for Democrats and Republicans to work 

together to improve health care. We are going to have a lot more 

conversations like that in the days ahead. We thank you for your 

patience, and we will excuse you at this time. 

Secretary SEBELIUS. Thank you. 

The CHAIRMAN. The Finance Committee is adjourned. 

[Whereupon, at 12:18 p.m., the hearing was concluded.] 

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