U.S. GOVERNMENT PUBLISHING OFFICE

WASHINGTON : 

For sale by the Superintendent of Documents, U.S. Government Publishing Office

Internet: bookstore.gpo.gov Phone: toll free (866) 512–1800; DC area (202) 512–1800

Fax: (202) 512–2104 Mail: Stop IDCC, Washington, DC 20402–0001

23–193 2017

RISING HEALTH INSURANCE PREMIUMS 

UNDER THE AFFORDABLE CARE ACT 

HEARING 

BEFORE THE

COMMITTEE ON WAYS AND MEANS 

U.S. HOUSE OF REPRESENTATIVES 

ONE HUNDRED FOURTEENTH CONGRESS 

SECOND SESSION 

JULY 12, 2016 

Serial No. 114–FC14 

Printed for the use of the Committee on Ways and Means 

( 


ralbany on LAP520R082 with HEARINGS
ii 

COMMITTEE ON WAYS AND MEANS 

KEVIN BRADY, Texas, Chairman 

SAM JOHNSON, Texas 

DEVIN NUNES, California 

PATRICK J. TIBERI, Ohio 

DAVID G. REICHERT, Washington 

CHARLES W. BOUSTANY, JR., Louisiana 

PETER J. ROSKAM, Illinois 

TOM PRICE, Georgia 

VERN BUCHANAN, Florida 

ADRIAN SMITH, Nebraska 

LYNN JENKINS, Kansas 

ERIK PAULSEN, Minnesota 

KENNY MARCHANT, Texas 

DIANE BLACK, Tennessee 

TOM REED, New York 

TODD YOUNG, Indiana 

MIKE KELLY, Pennsylvania 

JIM RENACCI, Ohio 

PAT MEEHAN, Pennsylvania 

KRISTI NOEM, South Dakota 

GEORGE HOLDING, North Carolina 

JASON SMITH, Missouri 

ROBERT J. DOLD, Illinois 

TOM RICE, South Carolina 

SANDER M. LEVIN, Michigan 

CHARLES B. RANGEL, New York 

JIM MCDERMOTT, Washington 

JOHN LEWIS, Georgia 

RICHARD E. NEAL, Massachusetts 

XAVIER BECERRA, California 

LLOYD DOGGETT, Texas 

MIKE THOMPSON, California 

JOHN B. LARSON, Connecticut 

EARL BLUMENAUER, Oregon 

RON KIND, Wisconsin 

BILL PASCRELL, JR., New Jersey 

JOSEPH CROWLEY, New York 

DANNY DAVIS, Illinois 

LINDA SA ́ NCHEZ, California 

DAVID STEWART, Staff Director 

NICK GWYN, Minority Chief of Staff 


ralbany on LAP520R082 with HEARINGS
iii 

C O N T E N T S 

Page 

Advisory of July 12, 2016 announcing the hearing ............................................... 2 

WITNESSES 

Joel White, President, Council for Affordable Health Coverage .......................... 6 

Christopher Condeluci, Principal, CC Law & Policy PLLC ................................. 22 

Tom Harte, President, Landmark Benefits, NH ................................................... 37 

Peter Lee, Executive Director, Covered California ............................................... 51 

MEMBER SUBMISSIONS FOR THE RECORD 

The Houston Chronicle ............................................................................................ 112 

MEMBER QUESTIONS FOR THE RECORD 

Representatives Dold, Noem, Smith of Missouri, Nunes and Black ................... 121 

SUBMISSIONS FOR THE RECORD 

American Academy of Actuaries, statement .......................................................... 143 

HealthPocket, Inc., statement ................................................................................ 152 


ralbany on LAP520R082 with HEARINGS

ralbany on LAP520R082 with HEARINGS
(1) 

RISING HEALTH INSURANCE PREMIUMS 

UNDER THE AFFORDABLE CARE ACT 

TUESDAY, JULY 12, 2016 

U.S. HOUSE OF REPRESENTATIVES, 

COMMITTEE ON WAYS AND MEANS, 

Washington, DC. 

The Committee met, pursuant to call, at 10:10 a.m., in Room 

1100, Longworth House Office Building, the Honorable Kevin 

Brady [Chairman of the Committee] presiding. 

[The advisory announcing the hearing follows:] 


ralbany on LAP520R082 with HEARINGS
2 


ralbany on LAP520R082 with HEARINGS23193.001
3 

f 

Chairman BRADY. The committee will come to order. 

Welcome to the Ways and Means Committee hearing on the rising cost of health insurance premiums under the Affordable Care 

Act. 

Over 6 years have passed since President Obama and Democrats 

in Congress drafted the Affordable Care Act behind closed doors 

and forced it into our homes, our workplaces, and doctors’ offices. 

Since then, the law has been one broken promise after another, 

starting with the promise in its very title ‘‘affordable.’’ 

Millions of Americans have seen the cost of health care increase 

to astonishing levels, while quality, choice, and access have hit new 

lows. Meanwhile, the White House refuses to acknowledge that 

Obamacare is simply failing ahead of schedule and that the pain 

it has inflicted so far may be nothing compared to what lies ahead 

for millions of Americans and their families. 

So we are holding this congressional hearing today to make clear 

that Obamacare’s broken promises have real impacts on real people. And because we care deeply about providing Americans with 

access to high quality affordable health care, House Republicans 

have released a detailed credible plan for repealing the ACA and 

bringing patient focus care back to the American people. The truth 

about this law, it has never expanded access to affordable highquality health care of an individual’s choosing and it never will. 

Estimates show that increases in 2017 could be double what we 

see this year, and in several States, these costs could spike by more 

than 50 percent with no end in sight. A 50 percent increase is outrageous. Americans simply cannot afford to pay 50 percent more 

for their premiums. One reason costs are skyrocketing, enrollment 

is far lower and far more expensive to cover than projected. That 

is why, in addition to raising premiums, many insurers have 

shrunk their provider network, so for individuals and families to 


ralbany on LAP520R082 with HEARINGS23193.002
4 

purchase coverage, it costs more, and with that more expensive 

coverage, they get fewer choices and less access to doctors and providers who best meet their needs. 

Even after raising premiums and narrowing provider networks, 

many insurers are still struggling to shoulder the cost of doing 

business in the Affordable Care Act’s mandate-ridden marketplaces. Every month we learn of more insurers who decided to 

leave the flawed Obamacare exchanges altogether. In April, United 

Health Group announced that it would be forced to exit many of 

the exchanges it was participating in because it couldn’t sustain 

the crushing losses. After United leaves, 1.8 million Americans will 

have only two insurers to choose from, and over a million will only 

have one. 

And some Americans, including thousands in my home State of 

Texas, may not have any insurers to choose from at all. In fact, 

BlueCross/BlueShield of Minnesota has announced their exit from 

the State after suffering more than a half a billion dollars in losses 

over just 3 years. 

I, like many of my colleagues, have heard countless stories from 

families who are deciding it is just not worth paying the high 

prices to get Washington-approved coverage. Instead they are 

choosing to pay a stiff tax penalty rather than buy a plan they 

can’t afford and don’t want. And it is not just a few Americans. In 

States like New York, Iowa, Colorado, Arkansas, Minnesota, and 

South Dakota, more than three out of four people eligible to purchase exchange plans have found a way not to be covered in 

Obamacare. 

I have no doubt we will hear today about families getting health 

insurance under Obamacare, but the reality for many of my constituents is that now they have to worry year to year about access 

to the right plan, access to the same team of specialists, and 

changes to their out-of-pocket costs. What is the point of expanding 

coverage if you can’t afford or get access to care? 

Over the past year, I have received letters from Texas families 

that are caught in the middle of the downward pressures of 

Obamacare’s regulations and mandates. For example, especially 

hospitals my constituents rely on are being squeezed out of network. I would like to enter into the record two Houston Chronicle 

articles highlighting the struggles of families to get the specialized 

treatment they need. This is a direct result of Obamacare’s mandates and rigid rules. 

Americans have had enough of the Obamacare experiment and 

government-run health care. That is why we are dedicated to repealing this flawed law in advancing patient focused solutions that 

truly expand choice and access to high quality affordable health 

care. 

I want to thank all the witnesses for being here today. I look forward to hearing your thoughts on how we can work to make our 

healthcare system work better for the American people. 

People across our country all want the certainty of knowing they 

will have access to the care they need when they need it most. This 

is what Americans deserve, and it is what our committee will keep 

fighting to deliver. I now yield to the distinguished Ranking MemVerDate Sep 11 2014 03:26 Jul 08, 2017 Jkt 023193 PO 00000 Frm 00008 Fmt 6633 Sfmt 6602 I:\WAYS\OUT\23193.XXX 23193

ralbany on LAP520R082 with HEARINGS
5 

ber from Michigan, Mr. Levin, for the purposes of an opening statement. 

Mr. LEVIN. Thank you, Mr. Chairman. Essentially what we 

have heard is the campaign message of the Republican party 

against ACA, and that is the purpose of this hearing today, essentially bringing the campaign attack of the Republican party within 

the halls of Congress, and we look forward to that debate. 

We had a situation, 50 million people in this country without any 

healthcare coverage. We had skyrocketing costs of health care, we 

had skyrocketing increases in premiums, and essentially what was 

decided after 50 years of inaction, we decided to do something 

about it, and what we decided to do was experiment with a combined program of expanding Medicaid and other government-based 

programs with the private sector of the United States of America. 

We expanded Medicaid, and in Texas, because of the action of 

the leadership there, well over a million people did not benefit from 

the expansion of Medicaid in your State, Mr. Chairman. While in 

the State of Michigan, a Republican governor decided to take advantage of the expansion of Medicaid and brought real healthcare 

coverage to hundreds of thousands of people in this country in the 

State who needed it. 

The Republicans have never come up with a comprehensive substitute for ACA. Instead, attack after attack, repeal effort, after repeal effort, and the number now is what, well over 60, and so you 

essentially can mark up today as whatever the number is, the next 

effort in the Republican party to attack and to try to undo the 

healthcare structure that has brought coverage to millions of people in this country and also brought down premiums. 

So the experiment, as I said, was with combining public and private sector. It is controversial, even at times within the Democratic 

party. The Republicans essentially wanted to have a totally private 

system in this country, including to privatize Medicaid, privatize 

everything, and now, essentially, this hearing is being held to attack what is happening in the private portion of healthcare reform. 

Ignoring the millions of people in this country who have benefitted 

from the expansion of health care, millions, millions. 

So this debate, this hearing is nothing more than another part 

of the political debate in this presidential year. And we understand 

the need to address issues relating to premiums. Mr. Lee will give 

some background on this, and we will continue to address this 

issue. 

The Republican party has failed to take steps that would have 

been able to address the issue of premium cost where they are 

going higher, up higher in some States than in most others. They 

fail to do this, and so therefore, they essentially now are attacking 

some of the results of their own making. 

So take this for what it is worth, we welcome you. We don’t say 

that you gentleman here today are part of the political process. You 

have a distinguished background, but you should understand, the 

hearing today is part of the political debate of this year, and we 

Democrats welcome the opportunity to tackle this issue as to how, 

after 50 years, we began to address this issue while the Republican 

party, for all these years, has been bankrupt and remains bankrupt 

as to how they would undertake a major change that would benefit 


ralbany on LAP520R082 with HEARINGS
6 

millions of people who today can go to sleep knowing that they will 

have healthcare coverage. I yield back. 

Chairman BRADY. Without objection, all the members’ opening 

statements will be made part of the record. 

Today’s witness panel includes four experts, Joel White is president of the Council for Affordable Health Coverage; Christopher 

Condeluci is a principal of CC Law & Policy, PLLC; Tom Harte is 

president of Landmark Benefits representing the National Association of Health Underwriters; Mr. Peter Lee is executive director of 

Covered California. 

The committee has received your written statements, and they 

will all be made part of the formal hearing record. You each have 

5 minutes to deliver your oral remarks. We will begin today with 

Mr. White. You may begin when you are ready. 

STATEMENT OF JOEL WHITE, PRESIDENT, COUNCIL FOR 

AFFORDABLE HEALTH COVERAGE 

Mr. WHITE. Chairman Brady, Ranking Member Levin, Members 

of the Committee, I appreciate the opportunity to testify today. My 

name is Joel White. I am the president of the Council for Affordable Health Coverage, which is a broad based alliance with a singular focus, and that is, bringing down the cost of health care for 

all Americans. 

Our membership reflects a broad range of interests, organizations representing patients and consumers, small and large employers, insurers, and physician organizations. We are concerned 

that healthcare costs are too high and are rising too fast. In fact, 

costs continue to outpace GDP, the economy, and premiums are increasing about three times as fast as wages. As a result, by 2030, 

the typical American family will spend more than half their income 

on health care. 

As we all know, the ACA made massive changes to health markets, some positive and some negative. It created new consumer 

protections, corrected market imbalances, and reduced the number 

of uninsured Americans to historic lows. Yet overreach by the ACA 

has also contributed to high and growing health insurance premiums marked by average double-digit price increases both this 

year and next. 

For example, this year, average premiums for both bronze and 

silver plans, which represent 92 percent of the market, increased 

by double-digit rates. Next year, the requested weighted medium 

premium will increase 19.2 percent based on rates already filed. 

This ranges from a high of 56 percent in Tennessee to a low of 3.6 

percent in Rhode Island. 

In addition, cost sharing, including copayments, coinsurance, 

deductibles, and the use of these strategies and formularies is increasing faster than premiums. For example, in 2016, the average 

silver plan had a $3,000-plus deductible. That reflects an increase 

of about 20 percent from 2015. The factors impacting premium 

rates and cost sharing increases include rising medical costs, mandated benefits and regulatory changes, and a risk pool that is 

smaller, older, and sicker than originally projected. 

Despite the broad array of available plans on exchanges and a 

tax for being uninsured, many of those who have been expected to 


ralbany on LAP520R082 with HEARINGS
7 

sign up for coverage, even those eligible for subsidies, have not 

done so. Why? I think simply the point is people don’t want exchange plans at the prices they are being offered. They are too expensive and have too significant cost-sharing requirements. In fact, 

a study that CAHC released last month shows participation rates 

vary with the generosity of subsidies. 

Eighty-one percent of those receiving a full premium subsidy 

signed up for a plan. Just 2 percent of the nonsubsidy eligible population enrolled in exchange coverage this year. 

As a result, enrollment is only about half of what CBO originally 

projected. ACA risk pools are thus smaller and sicker. So while 

many Americans with significant health needs or lower incomes 

have greater access to coverage now, the reality is that for millions 

of others, health coverage is less affordable and more out of reach 

than when the ACA was created 6 years ago. 

The fact, this fact should spur Congress to enact bipartisan reforms to help stabilize and improve markets, making healthcare 

more affordable and accessible for all Americans. Increasing premium subsidies to encourage enrollment is not the answer in my 

opinion. This approach will shift costs, not contain them. Remarkably, some are even proposing fewer choices and less competition 

through public options and standardized benefit designs. 

The fact is, we have tried the top down approach that relies on 

mandates and penalties, and costs have increased unsustainably as 

a result. CAHC believes that it is time to try market-based solutions that expand choice and competition to lower costs. One of 

most effective ways to lower premiums on the exchanges is by 

broadening and improving the risk pool. Greater participation rates 

in exchanges would lower average costs by spreading risk across a 

bigger population. 

In my written statement, I outline 13 policy proposals to help 

achieve these goals. Briefly, these approaches would create competition across public and private exchanges, allow subsidy portability so consumers can use their support for plans they want and 

need, allow more flexibility for plans and employers, address medical cost growth, and promote transparency for plans and providers. 

I look forward to responding to any questions you may have. Thank 

you, Mr. Chairman. 

[The prepared statement of Mr. White follows:] 


ralbany on LAP520R082 with HEARINGS
8 


ralbany on LAP520R082 with HEARINGS23193.003
9 


ralbany on LAP520R082 with HEARINGS23193.004
10 


ralbany on LAP520R082 with HEARINGS23193.005
11 


ralbany on LAP520R082 with HEARINGS23193.006
12 


ralbany on LAP520R082 with HEARINGS23193.007
13 


ralbany on LAP520R082 with HEARINGS23193.008
14 


ralbany on LAP520R082 with HEARINGS23193.009
15 


ralbany on LAP520R082 with HEARINGS23193.010
16 


ralbany on LAP520R082 with HEARINGS23193.011
17 


ralbany on LAP520R082 with HEARINGS23193.012
18 


ralbany on LAP520R082 with HEARINGS23193.013
19 


ralbany on LAP520R082 with HEARINGS23193.014
20 


ralbany on LAP520R082 with HEARINGS23193.015
21 

f 


ralbany on LAP520R082 with HEARINGS23193.016
22 

Chairman BRADY. Thank you. Mr. Condeluci, you are recognized. 

STATEMENT OF CHRISTOPHER CONDELUCI, PRINCIPAL, CC 

LAW & PUBLIC POLICY PLLC 

Mr. CONDELUCI. Thank you, Chairman Brady, Ranking Member Levin, and Members of the Committee for the opportunity to 

speak with you today. My name is Chris Condeluci—— 

Chairman BRADY. Mr. Condeluci, could you pull that microphone down just a little bit closer. 

Mr. CONDELUCI. Yes, sir. 

Chairman BRADY. Perfect. 

Mr. CONDELUCI. My name is Chris Condeluci. I am the sole 

shareholder of CC Law & Policy, a legal and policy practice that 

focuses on issues relating to the Patient Protection Affordable Care 

Act, the ACA. Prior to starting my own practice, I served as counsel to the Senate Finance Committee where I participated in drafting portions of the ACA, including the ACA exchanges, the State 

insurance market reforms, and all of the taxes under the new law. 

In my practice, I provide legal counsel to stakeholders ranging 

from employers to insurance carriers to the ACA exchanges and 

private exchanges. I also provide policy analysis on the implementation of the ACA. 

It is important to emphasize at the onset of my testimony that 

there is no one single event or ACA implementation decision that 

has contributed to increased premium rates. Instead, there are a 

number of contributing factors that, when added up in the aggregate, can objectively be viewed as the causes for the rise in premiums. These factors include but are not limited to, first, the statutory requirements under the ACA itself. In particular, the new 

minimum insurance standards in addition to the adjusted community premium rating rules. 

These statutory requirements constrain an insurance carrier’s 

ability to develop plan designs for a specific niche of consumers in 

the market; for example, young and healthy consumers who may 

want coverage of a limited number of medical services at a very 

low price tag, along with high risk individuals with specific chronic 

illnesses like diabetes or health disease—or heart disease, excuse 

me. These statutory requirements also push premiums higher, discouraging younger healthier individuals from entering the risk 

pool. 

Second, two ACA implementation decisions that have been made 

by the Obama administration. In particular, the administration’s 

transitional policy, which segmented the risk pool in certain markets and which has prevented healthier risks from entered the 

ACA’s newly reformed risk pools. This also includes HHS’ and 

other State-based exchanges limited enforcement of the eligibility 

criteria for enrollment during certain special enrollment periods. 

Third, the failure of the individual mandate penalty tax having 

its intended effect of encouraging younger healthier individuals to 

purchase insurance coverage. These factors, when aggregated together, are resulting in an unbalanced risk pool, and the consequences of an unbalanced risk pool are increased premiums. 


ralbany on LAP520R082 with HEARINGS
23 

What does it mean to have an unbalanced risk pool? In short, an 

unbalanced risk pool arises when the pool is made up of a number 

of less healthy, heavy medical utilizers, and a smaller number of 

younger healthier individuals. Is the ACA’s newly reformed individual market unbalanced? Data from HHS indicates that only 28 

percent of individual market exchange plan enrollees are between 

the age of 18 and 34. 

Actuaries have suggested that 40 percent of exchange enrollees 

in this age cohort are needed to ensure a balanced risk pool. The 

IRS has also indicated that 45 percent of the 7.9 million people 

who paid the individual mandate penalty tax in 2014 were under 

age 35. 

Objective analysts have also observed that less healthy heavy 

medical utilizers have been attracted to the exchanges, and much 

of the increased medical claims in 2014 and 2015 came from individuals who have enrolled during certain special enrollment periods. 

One logical solution to balancing out the risk pools attracting 

more younger and healthier individuals into the market; however, 

due to the manner in which the ACA constrains insurance carriers 

in developing plan designs that may appeal to younger and 

healthier individuals, these consumers are less likely to enter the 

market. 

In addition, the three to one age variant now required when developing premium rates increases premiums for younger healthier 

individuals, which discourages these good health risks from obtaining coverage. 

Another solution is allowing the individual mandate penalty tax 

to achieve its intended result. Unfortunately, to date, objective analysts have not found that the individual mandate is causing younger healthier individuals to purchase an individual market plan, evidenced by the HHS and IRS data that I referenced earlier. And 

while the individual mandate penalty tax increased by 600 percent 

in just 3 years, the penalty tax will only be indexed to CPI in 2017 

and the 2.5 percent of income threshold will remain constant. It is 

unlikely that the slow growing penalty tax will have a substantive 

impact in future years. 

If younger and healthier individuals do not enter the market, the 

risk pool will remain unbalanced, which will cause insurance carriers to continually increase premiums. Although I have laid out 

some of the factors that have led to an unbalanced risk pool in the 

individual market, which have contributed to premium increases, 

these are solvable problems. 

I look forward to working with the witnesses who appear in front 

of you today as well as you, Mr. Chairman, Mr. Levin, and all the 

Members of the Committee. Thank you for your time. I look forward to answering any questions you may have. 

[The prepared statement of Mr. Condeluci follows:] 


ralbany on LAP520R082 with HEARINGS
24 


ralbany on LAP520R082 with HEARINGS23193.017
25 


ralbany on LAP520R082 with HEARINGS23193.018
26 


ralbany on LAP520R082 with HEARINGS23193.019
27 


ralbany on LAP520R082 with HEARINGS23193.020
28 


ralbany on LAP520R082 with HEARINGS23193.021
29 


ralbany on LAP520R082 with HEARINGS23193.022
30 


ralbany on LAP520R082 with HEARINGS23193.023
31 


ralbany on LAP520R082 with HEARINGS23193.024
32 


ralbany on LAP520R082 with HEARINGS23193.025
33 


ralbany on LAP520R082 with HEARINGS23193.026
34 


ralbany on LAP520R082 with HEARINGS23193.027
35 


ralbany on LAP520R082 with HEARINGS23193.028
36 

f 


ralbany on LAP520R082 with HEARINGS23193.029
37 

Chairman BRADY. Thank you. Mr. Harte, you are recognized. 

STATEMENT OF TOM HARTE, PRESIDENT, LANDMARK 

BENEFITS, NH 

Mr. HARTE. Good morning. Thank you, Chairman Brady, Ranking Member Levin, and distinguished members of this committee. 

As I mentioned earlier by the chairman, my name is Tom Harte, 

and my company is Landmark Benefits. I am an employee benefits 

broker. I own a small business. I deal with hundreds of employers 

throughout the year on their health insurance benefits, hundreds 

of individuals trying to access health insurance, so I come here 

today with a very unique perspective, with conversation I have 

with my clients every day, every year with regard to the continued 

challenges that they have with access to health care as well as access to affordable plans. 

I am also here representing the National Association of Health 

Underwriters, which represents well over 100,000 employee benefit 

professionals like myself that are in the trenches every single day 

trying to find these affordable solutions. 

Before I jump into some of my comments with regard to the challenges that I am seeing, I want to also share with you some of the 

successes that we have seen over the past 12 months, that are welcome from me on the frontline of marketplace, things like passing 

the PACE Act. In New Hampshire, that made a big difference. By 

allowing our State the opportunity to determine what size group is 

best for our insureds, but also avoiding, as Mr. Condeluci referred 

to, the rate grids and three to one ratios by allowing my insurance 

commissioner to determine what is the best size group for my 

State, that has significantly helped us with was with rate grade 

overload. 

Also, the moratorium on the medical device tax, the suspension 

of the health insurance tax, as well has the delay of the Cadillac 

tax, those are all very welcome from the clients that I represent 

every day. 

Ranking Member Levin, you also talked about the uninsured 

rate. We love the fact that more people are getting insured. We 

love the fact that healthcare trend is coming down. Those are all 

welcome signs to us in the industry. 

But at the same time, when I talk to my clients, what I thought 

it would be helpful for you is if I went to some of the renewals that 

we are experiencing over the past couple of months in 2016, my renewals for my clients in the past couple of months that we looked 

at have ranged anywhere from just over 11 percent to just shy of 

30 percent. Now, these are small businesses like mine. I have 20 

employees, but some of the clients that I represent have thousands 

of employees. Those 30 percent rate increases are not just for a select group of small businesses. They are also affecting large businesses that we represent in the New England area. 

In addition to that, when I look at my clients and where their 

health plans have been over the past few years, I have seen plans 

transform themselves. And in my written testimony, you will see 

that some clients 10 years ago had $1,000 deductible and today 

they have a $5,000 deductible. So when I look at healthcare trend, 

and again, I welcomed healthcare trend to continue to come down, 


ralbany on LAP520R082 with HEARINGS
38 

healthcare trend does not necessarily represent the renewals that 

I am delivering to my clients. 

So if the healthcare trend is, let’s just say it is 8 percent, because 

there is different arguments out there with healthcare trend, that 

doesn’t take into account utilization, demographic trends, pooling 

charges, risk adjustments, and many of the fees that my clients are 

paying through the passage of these premiums. 

In addition to that, every single client I sit down with, they are 

having a reduction in benefits not by their own decision. They are 

seeing primary care office copays go from $25 to $50, specials 

copays go from $50 to $100. Some are paying $500 a month for a 

30-day prescription at a retail pharmacy, and that is unacceptable. 

So what has happened is, with our uninsured rate falling, we are 

seeing a greater issue of the underinsured. 

Now, what I mean by that—and again, in my written testimony, 

I provided you several graphs, but I wanted to do, and I did this 

over the weekend for you, was to show you the growth in 

deductibles for some of my clients. Now, I took one of my account 

managers at my company and I took their book of business, and 

I said: Over the course of a 9-year period, what has happened to 

the deductibles for these particular clients. 

So I picked them at random, and what I saw was from 2006 to 

2015, over a 9-year period, the deductibles for those clients increased by 479 percent. Over a 5-year period, they have increased 

by 329 percent. Over a 3-year period, 137 percent. So I am submitting to you that a lot of the employees that we insure every single 

day could not afford, 9 years ago, $1,000 deductible, and today, 

they certainly can’t afford a $6,300 deductible. And I have to submit to you also that many of our larger clients have moved to these 

higher deductibles, putting their employees in a place where they 

can’t afford to access basic general health care. 

What I will say to you last, and that is one of the greatest problems that I have in the health insurance industry is a lack of transparency. Now, I am fortunate. On my iPhone, I have access to an 

app that will show me how much it costs to have access to health 

care from one facility to the next. But what will alarm you is that 

when you look at the statistics, and you can look at my home State 

of the New Hampshire, and all I did was a 30-mile radius from my 

hometown of Windham, New Hampshire, and I found that an MRI 

of the spine has a 436 percent difference from the least expensive 

facility to the most expensive facility. And I can name for you several different medical procedures that have similar differentials in 

healthcare costs, but one of the challenges that we need to focus 

is transparency in health care. Thank you. 

[The prepared statement of Mr. Harte follows:] 


ralbany on LAP520R082 with HEARINGS
39 


ralbany on LAP520R082 with HEARINGS23193.030
40 


ralbany on LAP520R082 with HEARINGS23193.031
41 


ralbany on LAP520R082 with HEARINGS23193.032
42 


ralbany on LAP520R082 with HEARINGS23193.033
43 


ralbany on LAP520R082 with HEARINGS23193.034
44 


ralbany on LAP520R082 with HEARINGS23193.035
45 


ralbany on LAP520R082 with HEARINGS23193.036
46 


ralbany on LAP520R082 with HEARINGS23193.037
47 


ralbany on LAP520R082 with HEARINGS23193.038
48 


ralbany on LAP520R082 with HEARINGS23193.039
49 


ralbany on LAP520R082 with HEARINGS23193.040
50 

f 


ralbany on LAP520R082 with HEARINGS23193.041
51 

Chairman BRADY. Thank you. Thank you. Mr. Lee, you are recognized. 

STATEMENT OF PETER LEE, EXECUTIVE DIRECTOR, COVERED 

CALIFORNIA 

Mr. LEE. Good morning, Chairman Brady, Ranking Member 

Levin, and distinguished Members of the Committee. It is a pleasure to be with you today. 

My name is Peter Lee, and I am the executive director of Covered California, the State of California’s marketplace implementing 

the Affordable Care Act. 

And what I would like to speak to briefly, and it is in more detail 

in my written remarks is first how the Affordable Care Act is working today; second, taking a look at what are the prospects for 

health insurance premiums in 2017; and third, some of the tools we 

are using in California to bring competition and affordability to 

California’s consumers. 

So first, the Affordable Care Act is working on many levels. Nationally, the share of Americans of all ages who are uninsured has 

fallen to the lowest level in history. 9.1 percent at the end of 2015. 

In California, 8.1 percent. 

In addition, Americans have reported that they are spending less 

of their money, less struggling to meet their healthcare expenses 

than ever before. Now, this means 16 percent of Americans say 

they have trouble meeting healthcare bills. That is still a lot of 

Americans having trouble, but it is lower than it has ever been. 

As we look ahead, it is important to remember that before the 

Affordable Care Act, consumers in the individual market regularly 

saw double-digit rate increases, saw increases that we just heard 

employers are seeing today, up to 30 percent. But in the old days, 

consumers couldn’t change, couldn’t shop, couldn’t move plans. 

They now can. 

The Affordable Care Act has slowed rate increases, creating competitive markets that are giving consumers the power to shop for 

better value. 

Now, in California, last year, our rate increase was, on average, 

4 percent. But if consumers shop to find the lowest cost plan available to them in their area at the same level, they would have reduced their cost by 4-and-a-half percent. That is the power of a 

marketplace working. 

In addition, through the expansion caused by the Affordable Care 

Act, of 10 million people having subsidies, those are generally 

healthy people lowering costs to all Americans because they are 

now part of the risk pool, as you have heard many of the speakers 

speak to the importance of the risk pool. 

So 2017, let’s look ahead. It is going to be a transition year, and 

I think that it is important to know the main factors for that. First, 

the temporary reinsurance program is going away. That has been 

a program that has helped keep premiums low the last few years. 

It will have a 1 year impact. Experts estimate between 4 and 7 percent one time, and then that goes away. 

Second, plans have had trouble pricing, and you have heard this 

from a number of the witnesses already, in particular, States that 

did not transition to a common risk pool, plans did not know how 


ralbany on LAP520R082 with HEARINGS
52 

to price, to get pricing right is difficult, and there is a number of 

plans that are adjusting this year, but by the end of next year, 

those transitional plans are going to be gone, all one risk pool. 

Third, a number of plans have struggled with understanding this 

special enrollment people coming in. We have seen that issue being 

unforeseen by plans. We have also seen new guidelines and processes, both Federal and State level that should mitigate those problems in the future. 

Trends are going up because healthcare costs are going up, and 

a key part of that, especially drug costs and pharmaceutical costs. 

But finally, what is keeping rates down is competition. Competition drives pricing. Let me speak to you briefly about what we are 

doing in California to make sure that consumers are the drivers of 

the healthcare marketplace. 

First, in California, we actually actively solicit health plans to 

participate in our marketplace, but we don’t take everyone. They 

have to agree to play and try to improve healthcare delivery. They 

need to offer standard patient-centered designs, that make sure 

when consumers have a deductible, that deductible doesn’t stand in 

front of a consumer in getting their primary care, which is never 

the case in our standard benefit designs. 

It also means, those patient-centered designs, consumers can 

truly shop for what they really care about, which is the networks, 

the prices, and which doctors are in those networks. That is what 

consumers care about. They are able to shop in California, and that 

shopping is driving plans to put better prices on the table. 

Now, I would note that, in California, we actually have from the 

most recent study from CMS, the lowest risk score, meaning we 

have the healthiest risk mix in the Nation. Risk mix is a core part 

of what we all have to be doing. That requires extensive marketing 

like we are doing, working with insurance agencies we have been 

doing, and having the subsidies that bring people to the table. But 

also, we have to be changing the underlying cost of health care. 

The fundamental issue we have is health care is too expensive 

in America. Covered California has as part of our contracts with 

our health plans, requirements that they do things like make sure 

a consumer has a doctor within 60 days. That is a new requirement 

starting this next year. Making sure that they are paying differently to align with that work to actually improve the quality of 

care, which is the real driver of health care. 

Our job is not done. I look forward to taking your questions now, 

but I also look forward to the work that we are all doing to improve 

on the Affordable Care Act. Thank you very much. 

[The prepared statement of Mr. Lee follows:] 


ralbany on LAP520R082 with HEARINGS
53 


ralbany on LAP520R082 with HEARINGS23193.042
54 


ralbany on LAP520R082 with HEARINGS23193.043
55 


ralbany on LAP520R082 with HEARINGS23193.044
56 


ralbany on LAP520R082 with HEARINGS23193.045
57 


ralbany on LAP520R082 with HEARINGS23193.046
58 


ralbany on LAP520R082 with HEARINGS23193.047
59 


ralbany on LAP520R082 with HEARINGS23193.048
60 


ralbany on LAP520R082 with HEARINGS23193.049
61 


ralbany on LAP520R082 with HEARINGS23193.050
62 


ralbany on LAP520R082 with HEARINGS23193.051
63 


ralbany on LAP520R082 with HEARINGS23193.052
64 


ralbany on LAP520R082 with HEARINGS23193.053
65 


ralbany on LAP520R082 with HEARINGS23193.054
66 


ralbany on LAP520R082 with HEARINGS23193.055
67 


ralbany on LAP520R082 with HEARINGS23193.056
68 


ralbany on LAP520R082 with HEARINGS23193.057
69 


ralbany on LAP520R082 with HEARINGS23193.058
70 


ralbany on LAP520R082 with HEARINGS23193.059 23193.060
71 


ralbany on LAP520R082 with HEARINGS23193.061 23193.062
72 


ralbany on LAP520R082 with HEARINGS23193.063 23193.064
73 


ralbany on LAP520R082 with HEARINGS23193.065 23193.066
74 


ralbany on LAP520R082 with HEARINGS23193.067 23193.068
75 


ralbany on LAP520R082 with HEARINGS23193.069 23193.070
76 

f 


ralbany on LAP520R082 with HEARINGS23193.071 23193.072
77 

Chairman BRADY. Thank you all for your excellent testimony. 

We will now proceed to the question and answer session, and I will 

begin. 

I know it is sort of common to just claim Republicans are fighting 

against Obamacare, but in our view, we are fighting for patients 

and local businesses who have been hurt by this law. I have a constituent in Huntsville who purchased coverage for his family on the 

Federal exchange. He wrote to me: My health insurance costs $989 

a month. That is almost a 1,000 percent increase in healthcare 

costs. So much for being affordable, but what can we do? 

Another constituent from the Woodlands where I live writes: The 

second year in a row, BlueCross/BlueShield is canceling my policy. 

Further, for 2016, no insurance carrier in Texas is offering individual PPO policies. So much for choice. My insurance premiums 

for the closest of coverage to what I have now, going up $200 a 

month after going up $900 a month in 2015. So much for insurance 

rates going down. So much for more choice. 

Now, look, many of my constituents are worse off now than they 

were before this law was passed. Certainly those who like their 

healthcare plan, many of them couldn’t keep to them at all. Mr. 

White, some of the work your organizations have been done, I 

think it is worth highlighting, when the ACA was being debated, 

we were told by CBO that over 20 million people would want to enroll in the individual exchanges. That has not proven to be true at 

all. It is less than half of that number who actually enrolled. 

We also were told young healthy people are signing up at much 

lower levels than expected. As you pointed out, only 37 percent of 

people, of those who enrolled, were under the age of 34. 

So why are so few people enrolling in these plans? And in New 

York, one out of five that could get help in those exchanges are in 

the exchange, one out of five are in there. 

Mr. WHITE. I believe it is a combination of factors, but we believe the primary factor is cost. These are just not producing the 

value for people in ways that they want to sign up for these plans. 

They are very high deductibles, very high cost-sharing amounts, 

and coupled with the premium, I mean, in your example, the $900 

a month, that individual is spending more than $10,000, right, a 

year on the premium, probably with a significant deductible. Some 

of what we are seeing in the marketplace is 5, 6, 7, $10,000 

deductibles. So if you are paying $10,000 on the premium and a 

$10,000 deductibles, you wonder does that actually make sense, or 

would I just pay the individual mandate tax penalty and self-insure 

us, in effect. 

Chairman BRADY. Yeah. Thank you. Mr. Condeluci, do you 

think—are you surprised enrollment was so much lower than predicted? Do you see any change? 

Mr. CONDELUCI. I think there are two reasons for the lower 

than anticipated enrollment. One is the transitional policy that I 

cited, as Mr. Lee spoke about. In short, the transitional policy allowed not only individuals in the individual market but employees 

of small employers to stay on nonACA compliant plans. 

So while the Congressional Budget Office, for example, expected 

a number of smaller employers to drop coverage, those small employers did not drop coverage and send their individuals to the inVerDate Sep 11 2014 03:26 Jul 08, 2017 Jkt 023193 PO 00000 Frm 00081 Fmt 6633 Sfmt 6602 I:\WAYS\OUT\23193.XXX 23193

ralbany on LAP520R082 with HEARINGS
78 

dividual market exchange market due to the fact that they could 

stay on their nonACA compliant plan. 

Now, not every State has adopted this transitional policy, but for 

my count, there are about 35 to 40 States that have indeed adopted 

a transitional policy both in the individual market as well as the 

small group market. So I think that is one of the reasons why you 

are not seeing as much enrollment. 

The other is, we touched on it, I spoke about it in my testimony, 

is the younger and healthier folks are not finding insurance appealing, and the minimum insurance standards and the adjusted community rating rules, while consumer protections that were arguably needed in the marketplace are carrying with them higher 

costs. It is just the nature of how it works. If you have a health 

plan that is covering more benefits for medical services, that is 

going to become more expensive. So the carriers, in an effort to try 

to develop premium rates that are reasonable, had to increase the 

cost sharing, so shift more costs onto the policyholder, as well as 

narrow the networks by pushing out some of the providers or reducing the provider payments for those doctors and hospitals that 

are in that network. And those actions are making insurance unattractive, in addition to the cost increases that you might see. 

The last point is, I do recognize that the premium subsidy for 

those folks who are subsidy eligible, between 100 percent of the 

Federal poverty level and 400 percent of the poverty level, do get 

a premium subsidy if they are purchasing an individual market 

plan through an exchange, and that does blunt much of the premium increases. 

But younger folks are still paying a percentage of income out of 

their own pocket for a policy. That is what the statute requires, 

and that also is not enough to convince a younger, healthier individual to purchase a plan when you are balancing that or balancing 

that up against a fairly low individual mandate penalty tax. 

Chairman BRADY. Thank you. Mr. Harte, you looked at trends 

with your real world people that you are trying to cover in their 

plans. So do you see anything changing? I mean, do you see costs 

continuing to increase? Do you see networks continuing to narrow 

going forward? 

Mr. HARTE. Even if we just looked at medical trend and just 

said that premium increases were a direct correlation to medical 

trend at 8 percent, that means that health insurance premiums 

will double in about 7—I am sorry, 9 years. That is unacceptable. 

So I have always preached from the choir. I have talked so much 

about it. Health insurance is expensive because health care is expensive. 

Now, within the ACA, medical loss ratio is built in there, and it 

was a safeguard from insurance companies, from taking and collecting too much in premium and not paying enough out in health 

care. So when I talk to folks all over the country, I say, well, why 

don’t we start focussing in on, as ACA determined, the 80 to 85 

percent of premium dollars that go to pay for health care. 

So when I talk about transparency or when I talk about wellness 

initiatives and other ways to reduce the cost of health care, that 

is the real solutions for us to start considering in having a longterm impact on employer solutions. 


ralbany on LAP520R082 with HEARINGS
79 

So in answer to your question, Chairman Brady, I don’t see any 

light at the end of the tunnel based upon current regulations, current legislation, current environments, and on all the issues that 

this panel has talked about today with losing carriers and increased premiums, I, myself, see my clients continue to be faced 

with double-digit rate increases for the next 5 years. 

Chairman BRADY. Yeah. Well, we were promised that families 

would have lower premiums by $2,500 a year. I haven’t found one 

family in my district do that. When medical trend costs are 8 percent but some States are facing 50 percent increases in premiums, 

there is a deeper problem here, in my view. 

So I now recognize the distinguished Ranking Member from 

Michigan, Mr. Levin, for your questions. 

Mr. LEVIN. Now, Mr. Chairman, remember that 85 percent of 

the people in the marketplace are receiving some assistance to obtain health care. So for them, their premiums are lower than it otherwise would be. 

Mr. Condeluci, you are shaking your head yes. I mean, look at 

the whole picture. Look at the whole picture. You don’t want to do 

that, including in Texas. And you said the number of people in the 

marketplace is less than expected. There were various estimates. 

But how many people are in the marketplace who otherwise would 

not be? We are talking about what, 10 million? And the majority 

sat here for years in the majority and never did anything at all to 

address the disgraceful fact in this country, 50 million people going 

to sleep every night without any healthcare coverage in terms of 

insurance. 

And how much were premiums going up before ACA, Mr. Harte? 

How much were they going up annually, before ACA? 

Mr. HARTE. Before ACA, double digits every year. 

Mr. LEVIN. Okay. So you just do that over your 5-year period. 

So you had premium increases before ACA, double digit, they were 

something like 14, 15 percent a year on average, right? 

Mr. HARTE. Yeah. 

Mr. LEVIN. And yet the Republican majority sat here doing 

nothing. So let’s, Mr. Lee, talk a bit about the risk pool issue, because we all knew it was a factor, and in fact, when we had whatever you want to call it, the penalty or the provision, there was debate as to where it would set to try to stimulate people to be covered. 

We also should remember, in terms of younger people, how many 

people are now covered through their parents’ insurance who were 

not covered before. Anybody know, on the panel, the number of 

people covered as a result of that? Mr. Lee. 

Mr. LEE. I believe about 2-and-a-half million? Under 26-yearolds are on their parents’ policies. 

Mr. LEVIN. So Mr. Lee, you want to comment on this issue in 

terms of the risk pool and others, because my guess is, at least in 

terms of some of you, you might be willing to sit down and discuss 

how we make ACA work even better. I am not sure how much you 

are part and parcel reel of this repeal or rip up ACA effort by the 

majority here. So let’s talk for just a minute. I have just under 2 

minutes. 


ralbany on LAP520R082 with HEARINGS
80 

Mr. Lee, how do we address the issue of more and more younger 

people coming in? There has been some discussion, eliminate the 

minimum standards. I don’t think you want to do that entirely. 

Right, Mr. Condeluci, you don’t want to do that? 

Mr. CONDELUCI. Yes, sir. I am not suggesting that you eliminate the minimum insurance standards, but from at least my perspective, my opinion, of course, those minimum standards are a bit 

constraining. The essential health benefits, for example, and the 

actuary value requirement, which is tied to the essential health 

benefits, essentially require plans to cover benefits and services 

that many policyholders don’t want or need, depending on the type 

of individual, but those individuals still have to pay for those services. 

Mr. LEVIN. Okay. So as we continue to improve ACA, we will 

discuss that. Mr. Lee, you want to comment? 

Mr. LEE. Yeah, a couple of things. One is it is really important 

for, in the marketplace, where we are providing subsidies, as you 

know, to California, about 90 percent of the people that enroll, it 

is about affordability, and we are still new in this venture of educating and doing outreach. We spend, in California $100,000,000 to do marketing and outreach. We are selling insurance. Because even with the subsidy, 

people are making a choice to use some of their hard-earned dollars 

to buy insurance. 

And the issue about the penalty has come up, but I want to be 

clear. We have done a lot of market testing, surveying, the big 

issue is can people afford it on a day-to-day basis, and the penalty 

is part of the equation, but I think the issue about affordability is 

critical, the issue about doing effective marketing and outreach is 

vital. 

In California, last year, 38 percent of our enrollment was in that 

targeted age range. It takes time to change from a culture of people 

just coping and thinking they cannot get coverage to having a culture of coverage, and that is what we are moving into, and it is 

going to take ongoing effort. 

Mr. LEVIN. Thank you. 

Chairman BRADY. Thank you. All time is expired. 

Mr. Johnson, you are recognized. 

Mr. JOHNSON. Thank you, Mr. Chairman. You know, thanks to 

Obamacare, my constituents are facing rapidly rising health insurance premiums, as well as, problems accessing care. 

Earlier this year, NBC 5 in Dallas ran a story about a Plano couple by the name of Cris and William Lyle who bought health insurance through healthcare.gov. Their plan cost $435 a month, but 

here is the thing. The Lyles had a problem finding a doctor according—and that is happening again today. According to the news 

piece, they reached out to about 20 doctors, but not one of these 

docs took their insurance. Ultimately they were able to find a doctor, and they were also concerned about finding a specialist. 

Mr. Condeluci and Mr. White, the Lyle story is becoming all too 

common as health insurers are narrowing their networks in an attempt to keep costs down. In fact, a recent study found that over 

half the plans on the exchanges were narrow network plans like 

HMOs. 


ralbany on LAP520R082 with HEARINGS
81 

So first with you, Mr. Condeluci, doesn’t that make it harder for 

consumers, such as the Lyles, to actually see the doctors they want 

and get the care they need in a timely manner? 

Mr. CONDELUCI. I will answer your question, sir, and say yes, 

generally speaking. The other kind of caveat to that is, you know, 

some folks don’t mind, let’s say, handcuffing themselves to a particular provider or a particular health system. So in that case, 

maybe that consumer is okay with having a narrow network which 

does carry with it lower cost. But there are other policyholders, and 

as we all know, everyone has different needs, different desires, different aversion to risk, and those individuals might not want to 

handcuff themselves to just that particular health system or 

healthcare provider, and that limits the choice for that particular 

individual, which then, I would argue, makes insurance unappealing. If you add the added cost, as we have discussed, and just as 

a followup to Mr. Levin’s question, with these minimum standards, 

again, they carry with it increased cost. 

There are new premium rating rules that actually increase cost 

for younger healthier individuals. It is those type of new minimum 

standards, while very good consumer protections, are a bit constraining that if they were loosened up, could allow an insurance 

carrier to let’s say offer more broad networks at a reasonable price 

point as opposed to being forced into the position to narrowing that 

network in order to lower cost to offer it to consumers. 

Mr. JOHNSON. Mr. White, do you agree with that? 

Mr. WHITE. I do agree with that. I think this is a logical response to the constraints of the law. The Affordable Care Act basically says you have got to cover all these benefits, you have got to 

offer it within these metal tiers, and you can’t use the premium 

rating tools that you would normally use pre-ACA. And so there 

are only a few places that the insurers could go to compete based 

on a premium price point, and that was largely on a cost-sharing 

side and then on the narrow network side. 

And so they tried to use those tools to negotiate rates through 

the narrow networks, and that was an important tactic, I think, 

early on in the ACA. 

What we are seeing now is fewer PPOs on the exchanges, so 

there are more narrow networks definitely emerging, and then off 

exchange, we are seeing a lot more broader networks, a lot more 

access to specialists and other types of providers. 

So this is a logical response to the law. It is unfortunate, but you 

know, we believe it can be addressed through additional flexibility 

on the exchanges. 

Mr. JOHNSON. Is it true, in your opinion, that some people may 

only have access to one insurer or access to a plan with limited networks? 

Mr. WHITE. Yes, sir. What we are expecting, according to a Kaiser analysis, is about 650 counties, maybe more, with only one 

plan. One plan is not a choice of plans, and so that is very concerning. As competition decreases, we see premium rates increase. 

Mr. JOHNSON. Is that getting better or worse? 

Mr. WHITE. Excuse me, sir? 

Mr. JOHNSON. Is it getting better or worse? 


ralbany on LAP520R082 with HEARINGS
82 

Mr. WHITE. That is a worsening development. We are seeing 

these counties with one plans emerge, largely in rural areas, and 

is not good for consumers. It is not good for competition. It is its 

not good ultimately for costs for subsidies, and for the U.S. Treasury. 

Mr. JOHNSON. Thank you, sir. 

Chairman BRADY. Thank you. Mr. Rangel, you are recognized. 

Mr. RANGEL. Thank you so much, Mr. Chairman, and thank 

you for calling this hearing. 

I was wondering why we were having this, but then I recognize 

we are about to have our national conventions, and so I assume 

this is to sharpen up our skills for the convention. 

First of all, if there is a problem with the Affordable Care Act 

as it relates to premiums, it would just seem to me, it would make 

a lot of sense to have the administration here to explain why we 

have this problem, but since you saw to select three witnesses that 

are not a part of the administration, let’s find out who they are. 

Now, Mr. White, you used to work for the leadership in the Senate, the Republican leadership doing what? Mr. White, did you 

work for the House, the Senate or—— 

Mr. WHITE. I worked for this committee for 6 years, sir. 

Mr. RANGEL. Under whose—what committee? 

Mr. WHITE. The Ways and Means Committee. 

Mr. RANGEL. Who was the chairman? 

Mr. WHITE. Chairman Bill Thomas, from 2001 to 2007. 

Mr. RANGEL. Okay. Now, what did you do before you came to 

work for the Ways and Means Committee? 

Mr. WHITE. Before that, I worked for 2 years with Congressman 

Jim Greenwood from Pennsylvania, and before that, I worked for 

Congressman Chris Shays for 4 years from Connecticut. 

Mr. RANGEL. All Republicans, right? 

Mr. WHITE. All Republicans, correct. 

Mr. RANGEL. Okay. Now, you are in charge of a—president and 

counsel for Affordable Health Coverage? 

Mr. WHITE. Yes, sir. 

Mr. RANGEL. Is that a for-profit organization? 

Mr. WHITE. It is a nonprofit 501(c)(6). 

Mr. RANGEL. And how long did it take before you left the Congress that you head up this organization? 

Mr. WHITE. I left in January of 2007, and I became president 

of CAHC in December of 2008, so that was—— 

Mr. RANGEL. So it wasn’t you went from the Congress to this 

organization. 

Mr. WHITE. Right. 

Mr. RANGEL. Now, Mr. Condeluci, is your outfit a for-profit or 

not-for-profit? 

Mr. CONDELUCI. I run my own practice, sir, which is a for-profit legal and policy practice. 

Mr. RANGEL. What did you do before you ran this outfit? 

Mr. CONDELUCI. Prior to that, I was an attorney with a law 

firm, and prior to that, I was counsel to the Senate Finance Committee. Prior to that—— 

Mr. RANGEL. How long were you with the Senate Finance Committee? 


ralbany on LAP520R082 with HEARINGS
83 

Mr. CONDELUCI. April of 2007 to September of 2010. 

Mr. RANGEL. Who was the chairman? 

Mr. CONDELUCI. Chairman Baucus was—or Max Baucus was 

the chairman at the time. I was on the Republican professional 

staff, and at the time, Senator Grassley was the Ranking Member. 

Mr. RANGEL. So okay. You worked for Republicans. How long 

was it before you left the Congress that you joined the PLLC in 

Washington? 

Mr. CONDELUCI. When I left the committee in September 2010, 

I went back to the law firm to practice law. 

Mr. RANGEL. How long was it before you went from the time 

I am talking about leaving the Congress and—— 

Mr. CONDELUCI. I started my CC Law & Policy practice in—— 

Mr. RANGEL. How long was it? 

Mr. CONDELUCI [continuing]. September of 2014, so 6 years. 

Mr. RANGEL. Thank you. Mr. Harte, you were president of some 

National Association of Health Underwriters. 

Mr. HARTE. That is correct. 

Mr. RANGEL. Is that insurance agents? 

Mr. HARTE. Yes. 

Mr. RANGEL. Brokers? 

Mr. HARTE. Yes. 

Mr. RANGEL. So you represent the insurance business, right? 

Mr. HARTE. We like to say that we represent the American consumer for health insurance, but our membership is predominantly 

agents, brokers, and consultants who represent corporations. 

Mr. RANGEL. But you were lauded for what you were doing for 

the brokers and insurance company when you got elected, right? I 

mean, for—— 

Mr. HARTE. I believe I received recognition for addressing the 

escalating cost of health care. That is what I am known for is dealing with health insurance premiums. 

Mr. RANGEL. Well, anyway, with all due respect to you gentlemen, I really don’t see how we can get to the core of the problem 

we face as a Congress and as a Nation. 

Mr. Chairman, it would seem to me that these are qualified people respecting their constituency, but our constituency are not insurance agencies, they are not employers, it is the people that are 

trying to gain access to health care. If for any reason we find higher premiums than we expected, I really don’t expect these gentlemen to have the answers to the problems. 

The answer has to be with who made the mistakes and how can 

we correct it, and it would seem to me it is done by law and not 

by those people that are engaged in for-profit for good reason and 

mature-ish reasons, efforts. So I am ready for Philadelphia, I hope 

you are ready for Cleveland, but I just don’t see what relationship 

this hearing has for improving the quality of care for American citizens. Thank you. I yield back whatever balance of the time I have 

remaining. 

Chairman BRADY. Thank you for establishing the credentials of 

our witnesses, and God forbid we hear from real people about real 

problems in health care because they are serious ones. 

Mr. Tiberi, you are recognized. 


ralbany on LAP520R082 with HEARINGS
84 

Mr. TIBERI. Thank you, Mr. Chairman. And thank you for having this hearing today. You know, if I am back home watching, I 

can’t imagine what our constituents think. 

It would have taken us back to when we were the majority and 

then in the minority, and you all passed the Affordable Care Act, 

I sat down there, and we talked about those 40 to 50 million people 

who didn’t have health care, we talked about the fact that they access the most expensive coverage by walking into an emergency 

room, and that the Affordable Care Act was going to help them. We 

also talked about, or the President talked about if you like what 

you have you can keep it, okay. And I sometimes get frustrated because I know in my heart that when the Affordable Care Act was 

passed, it was done with good intentions. I really believe that. 

But I also know and have seen that a lot of Americans actually 

like the health care they have—they had and now don’t, and we 

simply have a difficult time communicating with each other to recognize the challenges of what the new law created to try to help 

the 40 to 50 million people who didn’t have health care. 

The irony is, as chairman of the health subcommittee in visiting 

hospitals in is my district, there are still people who are accessing 

the emergency room as their primary care, which is the most expensive care. 

We have a building boom of emergency room departments freestanding in America today, which is a whole other discussion. But 

I want to associate myself with the chairman’s remarks because 

real people are experiencing problems in their health care who 

didn’t have problems before. You have created new problems because of the health care bill, all maybe unintentionally, by the way. 

Let me tell you about Mr. and Mrs. Dean Wagner of Westerville, 

Ohio. They worked their entire lives. They both retired, and since 

the Affordable Care Act has passed, they have experienced 75 percent—75 percent increase in premiums, 75 percent. Ms. Dianne 

Smothers in Johnstown, Ohio sacrificed higher premiums in order 

to keep the doctor she wanted to keep, and then she finds out that 

her doctor was suddenly canceled with no warning when a coop in 

my district, and now a majority of coops have failed, coops created 

by the Affordable Care Act. When that coop failed, she and her 

husband’s out-of-pocket expenses were $16,500 more than they had 

ever been before the Affordable Care Act had passed. These are 

regular middle class folks. 

Unfortunately, for the Wagners and the Smothers, they are not 

the only constituents that I have talked to who have contacted my 

office that are facing outrageous premium increases, outrageous 

out-of-pocket expenses like they have never experienced before, and 

now going to a doctor that they didn’t want to go to because they 

can’t go to the doctor they had, which they were promised over and 

over again. 

Mr. White and Mr. Condeluci, I wanted to ask you about a specific failure of the ACA that has been reported widely now. The 

coop program. I was here when that was discussed, and it was a 

nod to the public option for some Democrats who wanted the public 

option. I believe 8 of the 23 that began remain, and one of those, 

as I said, was InHealth that failed in Ohio. 22,000 lives were covered, and these people were left devastated. 


ralbany on LAP520R082 with HEARINGS
85 

So instead what was supposed to happen with these coops was 

to create competition. It seems that the coops badly mispriced premiums, artificially creating a lower market, underpricing the market, and in doing so artificially, did it hold down premiums initially? Meaning, you know, there was a lot of ballyhoo about premiums didn’t go up immediately. Is that because the coops provided this artificial floor? 

Mr. WHITE. I will take the first shot at this, I guess. 

So according to the Government Accountability Office, they did 

a report, they looked at the premium rates and basically said that 

in about half the rating areas the premium rates were substantially below market rates. So they were coming in with a below 

market rate. Of course, they had significant taxpayer support in establishing the coops and getting off the ground, but were trying to 

attract enrollment through those lower premium rates. 

And I think what happened was the premium rate, the experience, cost experience, quickly outpaced the premiums that they 

were charging, and the vast majority of the coops, as you know, 

have since failed. And the insurers that remain in the markets had 

to pick up and cover those folks who lost their coverage through 

the coops. Significant problem in Ohio, Iowa, other areas, as the 

committee knows. 

Chairman BRADY. Thank you. Dr. McDermott, you are recognized. 

Mr. MCDERMOTT. Thank you, Mr. Chairman. I always love to 

come to these propaganda hearings before the elections, and it is 

obvious we are trying to hold the insurance companies harmless 

here. Premiums go up because of the Affordable Care Act, that is 

why they go up. 

But I lived for 45 years with a father who was an insurance underwriter, so I know a little bit about what goes on. 

Mr. MCDERMOTT. And if you look at why the premiums go up, 

it is either because the company misjudged and made a bad rate 

to charge people or the costs of the medical profession have gone 

up uncontrollably. 

Mr. Lee, what percentage of those two things do you think is 

bringing the premiums up? Is it misjudgment by the insurance 

companies or is it that medicine is jacking up the costs? 

Mr. LEE. I think it varies by locale. I think in much of the country, it is because the plans, whether co-ops or for-profit or nonprofit 

plans, got their risk mix wrong, and they underpriced and are now 

jacking it up to catch up on the real costs. 

But underlying this, and we have heard this from all the witnesses, the driver of healthcare costs is the underlying cost of what 

it costs to deliver health care to Americans. And that is one of 

things I think the Affordable Care Act provides some tools for, but 

we need to be focusing on. 

In California, we have not seen consumers whipsawed by big 

price changes. They have been pretty constant. But costs are still 

going up and we need to address those with tools of transparency 

and others. 

Mr. MCDERMOTT. Let me take an example, because we hear a 

lot of examples given up here. They give these horror stories of Mr. 

Johnson or Mrs. Williams or whatever and her problem. 


ralbany on LAP520R082 with HEARINGS
86 

Let’s take Texas. Now, if you were an insurance company in 

Texas and you were trying to set the rates for Texas, and you had 

1,314,000 people uncovered by insurance in your market who have 

access to the emergency rooms, and they go in, they get sick, and 

they get taken care of and their costs are unpaid for by any insurance company, how does an insurance company factor in that number of people? I mean, the Governor of Texas said: I don’t care 

about those people. I am not going to take Medicaid for them. They 

are floating around in Texas. 

How does the insurance company take that into account? 

Mr. LEE. Again, how insurance companies I believe take that 

into account is by what they are going to get charged by providers. 

And what happens with uncompensated care is hospitals or doctors 

make it up on the other side. So those costs for the uncompensated 

care is right now being paid in Texas by employers, by individuals, 

et cetera, where those costs are being spread. 

Where you have expanded coverage, like in California and the 35 

other States or more that have expanded Medicaid, is every American is benefiting by having coverage, because you aren’t then having the cost shift, which it is called, of everyone, employer-based, 

people, individuals, picking up the costs of the uncovered, which 

hospitals pass that through to the health insurance companies and 

their rates. 

Chairman BRADY. Mr. Lee, you might be confused. Dr. 

McDermott asked about those who would be covered by Medicaid. 

They aren’t in the exchanges. Why would an insurer plug that in 

if they are covered by Medicaid? 

Mr. MCDERMOTT. Reclaiming my time, Mr. Chairman. 

Mr. LEE. My point is, as I was understanding the example of 

Texas of a million people that do not have coverage, when they 

show up at an ER at a hospital, they are uncompensated care, and 

that cost is passed on to insurance companies or employer-based 

coverage, et cetera. 

Chairman BRADY. But you agree those who aren’t covered on 

Medicaid are not in the exchanges, they are not factored in. 

Mr. LEE. Absolutely right. Absolutely right. That is what I understood the question to be. Did I get the question wrong? 

Chairman BRADY. We will give you some more time, Dr. 

McDermott. 

Mr. MCDERMOTT. I think the chairman has really put a sharp 

point on it. The Governor of Texas decided he didn’t want health 

care coverage for 1.2 million or 1,314,000 people. So they still get 

sick, and their costs are factored into the system, and the insurance company jacks up the prices to cover for what isn’t paid for 

in other places. 

Chairman BRADY. That is not accurate, Dr. McDermott. 

Mr. MCDERMOTT. I mean, hospitals do that. They add a couple 

of dollars on the room rate to cover for their unaccounted costs. 

Now, I have another question, though. We have in the Part D, 

we had risk corridors to control the costs for the drug companies 

or the people who were putting out the drug coverage. We had it 

also in the ACA. In the Part D, it is still working. In Part A they 

have cut it out. It seems to me that we have undermined the ACA 

by cutting out that money in those risk corridors. 


ralbany on LAP520R082 with HEARINGS
87 

I yield back the balance of my time. 

Chairman BRADY. I just want to clarify, those who are in Medicaid are not in the exchanges, they are not factored in the insurance premiums. Now, the more than a million Texans who decided 

to pay the tax rather than go to a plan they don’t want and can’t 

afford, that is another story. 

Mr. LEVIN. Can he answer that since you took the time? 

Chairman BRADY. Sure. Are those who are covered in Medicaid 

factored into the insurance exchanges? 

Mr. LEVIN. Of course they are factored in. 

Mr. LEE. The cost of uninsured are basically borne by everyone, 

both in marketplaces and in employer-based coverage, because the 

hospitals pick up those costs and others can—— 

Chairman BRADY. We are not taking about employer-based. We 

are talking about the exchanges and the insurance premiums. They 

are not covered in that package? Are they reflected in the Medicaid 

rates? 

Mr. LEE. The uninsured that have uncompensated care, hospitals, other providers, build that into their rates that are charged 

to people in marketplaces or in employer-based care, and that is a 

factor in terms of raising costs. 

Chairman BRADY. You are confusing the Medicaid populations 

with the insurance agents. 

Mr. LEVIN. No, he is not. You are the one who is confused, Mr. 

Chairman. 

Chairman BRADY. Mr. Reichert, you are recognized. 

Mr. REICHERT. Thank you, Mr. Chairman. 

So let’s deal in some facts. ObamaCare has proven time and time 

that promises made were not kept. The President promised affordability, yet the law continues to drive up premiums and deductible 

costs. 

We need to look no further than my home State for evidence. Insurers in Washington have requested an average of 13.5 percent increase. That is for individual plans for next year, with at least one 

insurer requesting increases of almost 20 percent. 

The President promised Americans that if they liked their plan 

they could keep it, if they liked their doctor they could keep their 

doctor. Well, that turned out not to be true. 

And I was in a meeting 6 years ago, as were a lot of the Republicans, when the President was asked to come and speak to us, and 

he was asked the question: Can you keep your health plan? Can 

you keep your doctor? And he said: Well, you know, there might 

have been some language snuck into the bill that runs contrary to 

that promise. The President said that. 

Premera Blue Cross and LifeWise Health Plan of Washington, a 

subsidiary of Premera, announced that they will completely withdraw from Washington Health Benefit Exchange in 12 counties in 

Washington State. The result is thousands of my constituents will 

lose their health plan and be forced into another whether they like 

it or not or they will be taxed for failing to sign up for a healthcare 

plan. 

So my question is for Mr. White. What do you think is causing 

insurers to exit the market? And how do you think that will impact 


ralbany on LAP520R082 with HEARINGS
88 

the choice and access to care for constituents like mine, especially 

in rural communities? 

Mr. WHITE. I think your experience is not unlike other State experiences in terms of the double-digit premium increases and the 

exit of certain insurers from the marketplace. I think the insurers 

are leaving the marketplaces because they are losing money. And 

probably the most prominent example of that is United Health 

Group. But there are other insurers in the marketplace who are 

looking at various geographic-based markets and saying: We can’t 

afford to stay there. 

Now, Congressman McDermott made the comparison to Part D 

and having risk corridors and risk adjustment and reinsurance, 

and I would note, in the Part D market, where the model is based 

on a competitive model, there are 800 or so plans available nationwide. In the average marketplace you have approximately a choice 

of about 34 plans. The ACA experience is opposite that. It is 

marked by fewer plan choices, plans exiting markets, and premiums that are not stable but are going up significantly. 

Mr. REICHERT. So you said there were 600 counties in the 

country that will be down to one choice? 

Mr. WHITE. According to a Kaiser Family Foundation analysis. 

Mr. REICHERT. Three of those will be in the district that I represent. What is the answer to—— 

Mr. WHITE. Well, it raises interesting questions, right? Like the 

subsidy is supposed to be tied to the second-lowest-cost Silver plan 

under the law. And if there is only one plan, what is that secondlowest-cost option? The other thing is that having a choice of one 

is no real choice at all, right? 

So in my opinion, flexing up the market, allowing some competition in the exchanges, and perhaps allowing consumers to take 

their subsidy, make it portable, and allow them to leave the ACA 

exchanges to buy a plan off exchange, I think Chairman Brady has 

called this concept like a subsidy backpack, but being able to carry 

that outside to really use that subsidy and that assistance off the 

exchange we think is a very important reform that would generate 

competition and hopefully encourage more insurers to get back in 

the market. 

Mr. REICHERT. Current law doesn’t allow that to happen. 

Mr. WHITE. Current law does not allow the subsidy to be used 

off exchange. There is some flexibility—— 

Mr. REICHERT. I am sorry. The ACA, then, is in violation of its 

own law which requires that you have at least two choices. Is that 

what I heard you say? 

Mr. WHITE. I would defer to maybe Chris or, you know, a legal 

opinion on that. But it creates some interesting questions, let’s say, 

in the various marketplaces. 

Mr. CONDELUCI. Sir, in the exchanges, if a carrier is participating, the statute does require the carrier to offer a Silver-level 

plan, as well as a Gold-level plan. So that is just a requirement 

that a carrier wanting to participate in the exchange has to meet. 

But when it comes to other carriers being a part of that market, 

there is not that similar requirement. Carrier Chris might say: 

Hey, I am fine, I will offer a Silver and a Gold. Carrier Joel might 


ralbany on LAP520R082 with HEARINGS
89 

go: You know what? I don’t want to enter the market for a myriad 

of reasons. 

So that, I hope, is an explanation of that. 

Mr. REICHERT. All right. Thank you. I yield back. 

Chairman BRADY. Thank you. 

Mr. Lewis, you are recognized. 

Mr. LEWIS. Thank you very much, Mr. Chairman. 

Mr. Lee, 20 million people have been covered by the Affordable 

Care Act and we have a historically low number of uninsured 

Americans. How does reducing the number of uninsured impact 

premiums in the employer-sponsored insurance market? 

Mr. LEE. The relationship there is that providers, in particular 

hospitals, will take uncompensated care and build that into the 

rates they charge individuals or people that have employer-based 

coverage. And so that raises the cost of insurance, whether it is in 

an individual market or in employer-based coverage. So the expansion of coverage that we have seen through both exchange coverage 

and through the Medicaid expansion has been a factor in lowering 

what premiums would have been otherwise. 

Mr. LEWIS. Mr. Lee, could you tell us what is the impact of competition on insurance rates in your State, the State of California? 

Mr. LEE. Yeah. We think competition is vitally important. I 

think everyone up here on this panel would agree with that, is that 

for the 90 percent of Americans that have three plans or more to 

choose from—and in California it is far more than 90 percent—plan 

competition is what drives premiums. The plans know that consumers want the lowest price plan, and they will shop for that. And 

that is the main driver of keeping costs down. 

And so I think everything we can do to foster a competitive marketplace and to give consumers an ability to make informed decisions between plans is vital. In California, we have had both of 

those. We have had a vibrant competition across the vast majority 

of the State. And consumers know when they are choosing plan A 

versus plan B it is not because of some quirk on deductibles. It is 

because of a different network. So they know what they are buying. 

We think that has contributed to our good risk mix. 

Mr. LEWIS. Mr. Lee, in my district, in the city of Atlanta, HIV 

infection rates are very concerning. From your testimony, it seemed 

that you have experience in reducing healthcare and insurance 

costs to consumers. What action or policies can make it easier for 

people, especially those living with HIV and AIDS, to access and 

afford the medication they need? 

Mr. LEE. Well, I think one of the most important things the Affordable Care Act has done is change the rules of the game for insurance companies to not be about avoiding sick people, but now 

getting people who are sick the care they need when they need it. 

Part of what we have done in California is have in our patientcentered benefit designs limits on cost of high-cost specialty drugs, 

which are a major concern into the drive in expense, but we want 

people that have to get specialty drugs to not have their copay be 

a barrier between them and getting those drugs. 

So we both require for people with HIV a mix of drugs at lower 

formulary tiers, but also for the most expensive drugs, that may 


ralbany on LAP520R082 with HEARINGS
90 

cost $60,000 a year, that a consumer would only have $250 a 

month they would need to spend for their share of the costs. 

And this is part of the balancing act we need to wrestle with as 

a Nation, is we need to be addressing the rising costs of pharmaceuticals, the rising cost of specialty drugs. But let’s not do that in 

ways that don’t give lifesaving drugs to consumers because of their 

high cost. And that is a balancing act we have struck in our patient-centered designs in California. 

Mr. LEWIS. And, Mr. Lee, I for one want to thank you for all 

of your great and good work, and for your vision in helping to provide health care, not just for the people of California, but for the 

people of our Nation. 

I yield back, Mr. Chairman. 

Chairman BRADY. Thank you. 

Dr. Boustany, you are recognized. 

Mr. BOUSTANY. Thank you, Mr. Chairman. 

Mr. White, I am going to step back and ask some very, very basic 

questions. Do you believe we have a functioning market in health 

care today? Is it a functional market? 

Mr. WHITE. I believe there are a lot of warts in the market. It 

functions for some people and I think it doesn’t work for a lot—— 

Mr. BOUSTANY. Okay. So it is a poorly functioning market. 

Mr. WHITE. Poorly functioning would be the phrase I would use. 

Mr. BOUSTANY. Poorly functioning market. 

I noted that the President just within the last 24 hours, I believe, 

admitted that it is a poorly functioning market as a result of this 

law, ObamaCare, when he called for a renewed effort to put forth 

a public option and to raise subsidies. I think that is a pretty tacit 

admission that the market is failing. Is that correct? 

Mr. WHITE. I think it highlights some of those warts. And I 

think other people have suggested that we need to expand costsharing subsidies to fill in these very large cost-sharing requirements on the exchanges. And that also is a recognition that these 

things are growing like crazy. 

Mr. BOUSTANY. And just a moment ago you referenced the fact 

that we are seeing significant consolidation in the insurance marketplace, which means fewer choices, correct? 

Mr. WHITE. It may mean fewer choices. It may not. So what we 

are seeing in the exchanges right now is there are choices of plans 

available in most markets. I think the average is somewhere 

around six or seven. It may be different in California. 

So there are still choices. What I am suggesting is that there is 

consolidation on both the insurer side and the provider side—— 

Mr. BOUSTANY. Correct. 

Mr. WHITE [continuing]. And that those raise trend on medical 

costs questions in different directions. 

Mr. BOUSTANY. Exactly. And if you have a functioning market, 

there are certain characteristics that are required—information, 

transparency about provider quality, about cost, about insurance 

coverage. I see contraction in what is going on there as a result of 

fewer choices, less information. We still don’t have the kind of information we need to really have a good functioning market, both 

on the provider side and on the insurance side. 


ralbany on LAP520R082 with HEARINGS
91 

And then information choice and control ultimately. Shouldn’t 

the consumer decide and have the information to be able to make 

decisions to have a really truly functioning market? 

Mr. WHITE. Yeah. I think information is the lifeblood of a functioning marketplace. We don’t see those on exchanges today. In December of 2015, we did a report card on exchanges and graded the 

exchanges from A to F. We looked at all the State exchanges in 

healthcare.gov, and healthcare.gov was solidly at a C level, which 

hopefully they will improve next year. But they are not providing 

basic information on is the provider in the network, is the drug on 

the formulary, how much is the patient facing out of pocket for that 

formulary drug, is there is a smart plan sorting tool, et cetera, et 

cetera, et cetera. 

So we need better information on the exchanges. For example, 

with these very high deductibles, can we say the plan is HSA qualified or not. We need better information on the providers as well. 

Are they high quality? Are they efficient? Can I pay lower costs if 

I go to provider Chris versus provider Boustany. 

Mr. BOUSTANY. So the trend lines in all these areas are very 

disturbing, in my mind, as a physician who has been around health 

care for quite a long time. And if you agree that coverage, for whatever it is worth or whatever it is, is the gateway to the service, 

high-quality health care, and I think the focus needs to be on quality, then we have a poorly functioning market that is rapidly failing. And I think the President’s admission just in the last 24 hours 

sort of verifies that in my mind. 

We have to take substantive steps to change this. Less choice, 

less information, less control. This is disastrous for health care. I 

think it is truly pathetic. I am really upset. I am angry about what 

is happening to my beloved profession, medicine. And at the same 

time, as a patient, the husband of a patient, the father of patients, 

I am really worried about what this is doing. 

And we are seeing the costs going up. And of course what the 

President is proposing is higher taxpayer liability on top of this, on 

type of higher premiums, higher copays, out-of-pocket expenses. 

We are going in the wrong direction. This is a failure. And we 

better recognize it as such and take steps. 

Mr. WHITE. I agree, Congressman. We have presented 13 different policy options in our testimony to you today. We want to 

work with both sides of the aisle to see if we can make some improvements here, because the market is not working the way it 

should. 

Mr. BOUSTANY. Thank you. I yield back. 

Chairman BRADY. Thank you. 

Mr. Neal, you are recognized. 

Mr. NEAL. Thank you, Mr. Chairman. 

Just quickly a response to my friend, Dr. Boustany. I think there 

is general agreement from all the panelists here that conventional 

economics don’t work when applied to health care. People age, people get sick, and sometimes they get sick in a catastrophic manner, 

and the rest of the system, in terms of implied shared risk, is what 

is supposed to absorb some of those costs. That is the whole notion 

of the ACA. 


ralbany on LAP520R082 with HEARINGS
92 

And I think that one of things that is left out conveniently in the 

argument is the ACA was really a compromise in the sense that 

you were going to try to keep the private sector alive to discipline 

price. That was the idea. And I think just to discuss that with the 

suggestion that somehow that it is a poorly functioning market, 

how would we have described it before the ACA? An efficiently 

functioning market? 

I mean, the reason that we have Medicare and Medicaid is because conventional economics don’t apply to health care. People 

simply get old and they get sicker as they get older. That is part 

of the challenge that we face. 

But in any event, Mr. Lee, when Massachusetts implemented our 

State-level healthcare reform plan, or as we fondly called it those 

days, RomneyCare, we recognized that that consumer education 

and outreach were key to the success of the program. Community 

assistance programs made this work. It was not just getting consumers in the door, but having them find value in the insurance 

product and to use the healthcare system in a new, thoughtful way. 

The State partnered with the Red Sox, as one example, to educate residents about the new law and to entice them into enrollment. Then the State partnered with issuers and local organizations to educate newly covered individuals about how to use coverage and access services with the new plan for insurance. 

Just before you talk about how California has done this, Mr. Lee, 

in terms of educating its citizens, in Massachusetts it really was 

Governor Romney, the whole notion of the Heritage Foundation’s 

mandate. I mean, David John’s picture is at the end of that photograph. Governor Romney signs the legislation. Ted Kennedy is 

standing behind him. But it was the business community in Massachusetts that put the plan together with Governor Romney. 

So perhaps in the 21⁄2 minutes you have in response to my question, Mr. Lee, could you talk about what California has done to 

educate citizens about these opportunities? 

Mr. LEE. Thank you very much. I just do need to underscore 

your initial comment, if I may, about the prior market failures in 

health care. Because before the Affordable Care Act, remember, the 

individual market was one where insurance companies could and 

did turn people away regularly. And once you were in, you couldn’t 

shop and choose. It is absolutely an imperfect market today, but I 

think it is a vastly improved one that needs to be built upon. 

And California did a lot of learning from Massachusetts, actually, 

and I think we learned from other States, we learned from the Federal marketplace. We are seeing across the Nation efforts to make 

sure we get everyone enrolled. 

And a couple of examples I would give are, first, in California 

there are more than 500 storefronts, huge stores with our logo, 

Covered California, on it. Those aren’t State stores. Those are 

stores run by insurance agents who are members of CAHU, I mean 

the California Association of Health Underwriters. These are individual small-business people who are members of their community 

saying: We want to use this platform to sell insurance, to make insurance available. 

Because it is about not just signing people up for insurance. It 

is then helping them understand how to use it. And I think that 


ralbany on LAP520R082 with HEARINGS
93 

question is spot on, because what we have seen from many of the 

people coming into exchanges across the Nation is getting in is only 

the first step. 

And this is why we in California believe patient-centered designs 

are so important. If you have not had insurance before or you are 

a young healthy guy and you show up at the doctor and say, 

‘‘Sorry, you have got $3,000 you have got to spend before you get 

this as a covered benefit,’’ are you going to leave coverage? Absolutely. 

Patient-centered design is part of the education to say, when you 

get sick, you go see a primary care doc, it is a covered benefit right 

out of the gate. And that is part of the reason we have patient-centered designs, because we think educating people about how to use 

insurance is also having an insurance design that works for all consumers. 

Mr. NEAL. Thank you, Mr. Lee. 

Thank you, Mr. Chairman. 

Chairman BRADY. Thank you. 

Mr. Roskam, you are recognized. 

Mr. ROSKAM. Thank you, Mr. Chairman. 

A quick word about today, a quick look back, and then a question. 

Mr. McDermott suggested that this is a hearing today about 

holding the insurance companies harmless. That hearing was last 

week when the administration came before the Oversight Subcommittee and essentially was arguing for subsidies through the 

Cost Sharing Reduction Program for the insurance companies. So 

the administration was here advocating for insurance subsidies last 

week. 

A word about maybe why we don’t need to hear from the administration on every problem and that we can hear from four fresh 

voices is this. Last week at the same subcommittee meeting on 

Thursday, we heard from the administration. Mr. Mazur, the 

Treasury assistant secretary for tax policy, said this about a very 

controversial thing that they are doing. He said this: If Congress 

doesn’t want the money appropriated, they could pass a law that 

specifically says don’t appropriate the money from that account. 

So that is the wisdom and constitutional insight. Of course that 

runs completely counter to the explicit language of the Constitution 

that says: ‘‘No money shall be drawn from the Treasury but in consequence of appropriations made by law.’’ 

So, look, the administration has a very big microphone, and they 

can fend for themselves. 

A quick look back. 2008, the country had made up its mind, I 

think, after President Obama was elected, around two things as it 

relates to health care. The first was that health care was too expensive. And the second thing, we were scandalized, basically, as 

a country with the fact that preexisting conditions precluded people 

from having access to an insurance pool. That, I think, was the opportunity. That is where the national consensus was, to move forward on that basis. I think it would have been the smart move all 

the way around. And I think the nature of the discussion that we 

would be having to day would be fundamentally different. 


ralbany on LAP520R082 with HEARINGS
94 

But the administration made a different decision. It is their prerogative. But they decided to go basically all in on the Affordable 

Care Act. And that is where the problem happened. 

Now, this business never works when an expectation is created 

here and the result is here. So the chaffing, the level of anxiety, 

and the feeling that people have right now is like: Oh, no, no, everyone said this was going to be great. So when Mr. Lewis is talking, for example, about HIV problems in the inner city of Atlanta, 

no, it was basically ObamaCare was the remedy, this was all going 

to be great. 

And I think, Mr. Lee, part of the challenge now is you talked 

about something like a culture of coverage. Even a culture of coverage is a suggestion that somehow this gets better the longer we 

wait. So I am not encouraged by that. 

And I want to get to the coverage question. I actually have a 

question for Mr. Harte. So there is an illusion here, and I think the 

illusion is that coverage is the goal. Well, coverage is simply: I will 

do this. You can get a library card that says: Here is a library care. 

But you walk in to try and check books out of the library and there 

is no books. 

Can you speak to this notion of coverage versus access and give 

us some word about how we should be evaluating the concept of 

coverage as opposed to actual access to health care? Mr. Harte, do 

you have an insight on that? 

Mr. HARTE. Absolutely. You will all define access completely differently. Some of you may say access is about being able to have 

access to a health insurance plan. And as Mr. White has indicated, 

in several States we have lost a lot of health insurance companies 

and co-ops are failing. So a lot of your constituents across the country are losing access to those plans. 

Some may also say: I don’t have access to my doctor, for many 

reasons. Number one, maybe it is just too expensive, maybe access 

to an MRI, they simply can’t afford it, or, as we have talked about 

earlier, these bifurcated networks. 

So I live in New Hampshire and all of the health insurance plans 

on the marketplace are limited networks. All of my health care is 

being done in Boston. All of my surgical procedures are done at 

Mass General or Brigham and Women’s. I do not have access to 

care in Boston under a marketplace plan. And that is a huge problem if you want to cross the border and get into Massachusetts or, 

quite frankly, in any other state where you may want to have access to better care. 

So in answer to your question, access to health insurance plans 

is a huge challenge. Access to affordable plans, access to affordable 

health care, and access to your own doctor is a continued problem 

in the post-ACA world. 

Chairman BRADY. Thank you. 

Mr. Doggett, you are recognized. 

Mr. DOGGETT. Thank you so much, Mr. Chairman. 

And to each of our witnesses, I believe that there are many factors contributing to these hikes and surges in health insurance premiums, and one of the major factors is the failure of this House 

and this Congress to do anything but engage in obstructionist tactics concerning the Affordable Care Act. 


ralbany on LAP520R082 with HEARINGS
95 

Whenever there is the discussion of the slightest improvement— 

how can we make the Affordable Care Act work more efficiently, 

how can we make it more fair, how can it be better—there is nothing but repeal, repeal, repeal. And that has some effect on the administration, because instead of noting an area where there is a 

shortcoming and a need for legislative action, the administration is 

placed on a defensive posture with now over 60 attempts to repeal. 

And of course the original cry in this committee when it acted 

back in January of the new Congress coming into effect was that 

it would repeal and replace. But it never offered any replacement 

in a meaningful way to address these needs. So that failure, that 

obstructionism certainly has an impact on premiums. 

The second aspect of this that has already been referred to that 

I have seen personally is the impact of the indifference of the State 

of Texas and a number of other States to the needs of its poorest 

citizens; in all, 1.3 million Texans. And this indifference and this 

refusal to take 100 cents on a Federal dollar to pay for the expansion of healthcare coverage has been a subject that has been raised 

by business leaders, by hospitals, by elected officials, all saying 

how important it is to achieve the full promise of the Affordable 

Care Act by including those citizens who would be covered through 

Medicaid. 

I have looked personally in the eyes of families who have come 

in San Antonio in order to sign up for the Affordable Care Act and 

to have to tell them: I am sorry, you are too poor to achieve access 

to the Affordable Care Act. You cannot sign up in the exchange. 

Your remedy is through Medicaid, which they have been denied. 

And anyone who thinks that denying health insurance coverage 

in the hope of getting for the first time a family doctor to these 

families means that they do not have an impact on health insurance premiums is ignoring reality. Yes, actually, in many cases 

these folks do not receive the healthcare coverage they need. And 

so eventually, when things get so bad, they are forced into the 

emergency room. 

We had estimates before the Affordable Care Act that the impact 

of the unpaid-for care of the poor was hiking insurance premiums 

for the family that has an insurance policy by over $1,000 a family. 

That has an impact for employer-provided care, but it absolutely 

has an impact on the premiums being paid through the exchanges. 

They are not excluded from the impact of the cost of covering the 

uninsured poor people, many of whom I have seen personally denied the opportunity we thought would be forthcoming, and paying 

for it both in pain and in the cost to health insurance premiums. 

There is another factor, Mr. Lee, we haven’t touched on that I 

think is really significant, you refer to it in your testimony, and 

that is the impact of pharmaceutical prices and price gouging by 

pharmaceutical manufacturers. This committee, just as with improvements to the Affordable Care Act, has refused to even conduct 

a hearing about this problem and it has been ignored. 

You referred to the discussion of Express Scripts on the impact 

on specialty drugs. But they have also reported that in 2015 alone, 

that increases in the average price of brand name drugs were at 

about 16.2 percent. That is consistent with other reports of organizations, like Kaiser Family Foundation, that prescription drug 


ralbany on LAP520R082 with HEARINGS
96 

costs now amount to 19 percent of health spending by employer 

health insurance plans. On brand name drugs, we don’t have the 

transparency or the competition that you have suggested is a problem with some health insurance markets. 

Do you believe, Mr. Lee, that pharmaceutical prices are contributing to premium increases and that more transparency and competition here would help us address premium increases? 

Mr. LEE. There is absolutely no doubt that a significant factor 

in California and across the Nation of rising healthcare costs have 

been pharmaceutical costs increasing at a far higher rate than underlying medical trend, in particular, the cost of specialty drugs, 

which in 2015 rose by about 18 percent. But we are seeing this in 

our discussion with our health plans in California. They are highlighting the fact that those costs are a major driver. And for many 

consumers, it is a very opaque market. Transparency would be a 

huge boon for consumers. 

Mr. DOGGETT. Thank you. 

Chairman BRADY. Thank you. 

Dr. Price, you are recognized. 

Mr. PRICE. Thank you, Mr. Chairman. 

Look, let’s be clear. The reason that we are here today is not because of all these wonderful stories that the other side tells. The 

reason that we are here today is because the American people are 

hurting because of the healthcare program that the Federal Government put in place. 

Twenty-six percent of the American people say they have been 

harmed by this law. If we had any other law where one out of 

every four Americans said they had been harmed by it, we would 

be having hearing after hearing after hearing and bill after bill 

after bill to fix it. Four out of 10 Americans say that they have a 

positive view of this law. That means 6 out of 10 say: No, help us. 

Now why is that? Our job as policymakers is to figure out the 

why. And let me suggest that the why is because this law violates 

the principles that every American holds dear when it comes to 

health care. We all want a system that is accessible for everybody. 

We want a system that is affordable for everybody. We want a system of the highest quality. We want a system where patients have 

choices. The fact of the matter is that this law violates those principles, regardless of what your ideological stripe is. 

Mr. White, you said that the current law has made health care 

less affordable and more out of reach than before. Affordability, accessibility, significantly harmed. 

Mr. WHITE. Yes, sir. 

Mr. PRICE. This hearing is about increased premium costs. 

Mr. Harte, you were asked a question about what the premium 

increases were before ObamaCare, and you said that there were 

double-digit increases every single year. So what was ObamaCare 

supposed to do? What was the ACA supposed to do? Stop that, 

right? That is what the President said. Costs won’t be going up, 

they will be going down. 

The fact of the matter is that the administration spent over $1 

trillion on a broken Medicaid system and on subsidies that are forcing people to buy insurance that they don’t want, raiding Medicaid 


ralbany on LAP520R082 with HEARINGS
97 

for $800 billion, increasing taxes by a trillion dollars. And what do 

we have? We have double-digit inflation in premiums. 

And it is not just premiums. The deductibles are out of site. Mr. 

Harte, you identified that. I was stunned by your figures. Four 

hundred and eighty percent increase over the past 9 years in 

deductibles, 140 percent over just the past 3 years, which means 

people have coverage, but they don’t have care. 

I used to practice orthopedic surgery. My former colleagues call 

me and they are distraught because of the patients who come into 

their office, they recommend something that needs to be done, and 

the patient says: I am sorry, Doc, I can’t afford that, my deductible 

is thousands of dollars. This is a system that is not working for the 

American people. 

A fellow in my district, Mickey Roberts, 59 years old. In 2013, 

his premium was 500 bucks a month—500 bucks a month. Now it 

is 1,200 bucks a month. Example after example after example. I 

have a cancer survivor who can’t get a screening MRI following her 

cancer because you have non-medical people making medical decisions. That is part of ObamaCare. 

Families harmed. Family of five in my district whose premiums 

just 3 years ago, premiums were 330 bucks a month. Now they are 

1,365 bucks a month. I have another family whose premiums have 

increased 30 percent over the past 2 years. Deductible went from 

6,500 to 12,500. And now their health insurance costs are higher 

than their mortgage. The highest cost that they have in their family budget is their health insurance. This is craziness. 

So what we invite our friends on the other side of the aisle to 

do is to please recognize that there are people that are hurting, and 

that they need help, which is why what we have tried to do is to 

put forward positive solutions. Our friends say we don’t have a 

plan. We have put forward A Better Way, a better way to address 

the challenges that we face in all sorts of areas, not the least of 

which is health care. And in health care, a better way means that 

patients and families and doctors are making medical decisions and 

nobody else. 

Mr. Lee, you highlighted this cost shifting that you talked about. 

Cost shifting ended decades ago. There is no cost shifting anymore. 

I am a third-generation physician. The fact of the matter is that 

cost shifting doesn’t exist. The government is setting the prices. 

Physicians, hospitals, they aren’t able to pick the prices that they 

charge. In fact, what they are being paid today for Medicaid and 

Medicaid services oftentimes doesn’t even cover the cost of the service being provided. 

This is a system that is broken, and it needs to be fixed. And I 

urge my colleagues on the other side of the aisle to join us in A 

Better Way. 

Chairman BRADY. Thank you. 

Mr. Larson, you are recognized. 

Mr. LARSON. Well, thank you, Mr. Chairman. 

And certainly I want to thank our witnesses here today, because 

I really did appreciate the comments that you made, the thoroughness, and a number of the good ideas that you are suggesting. But 

you, of course, know that you are part of theater. You are not part 


ralbany on LAP520R082 with HEARINGS
98 

of getting anything done. This is all about messaging. It has nothing to do with solving the problems that the American people face. 

This matter has been taken before the public in 2010, in 2012, 

in 2014, and it again will be front and center in 2016. Fifty-eight 

times or more in the Congress this act has been repealed by the 

House of Representatives. There is no substitute, there is no alternative, there is no score that has been given to any meaningful program that would address the issues as you have thoughtfully outlined or as California is diligently doing, because this is a farce, it 

is a play that we have all become a part of. Where is the solution? 

Yeah, there are a lot of things that are wrong about the Affordable Care Act that need correcting, and when thoughtful people put 

their minds together and are able to address these issues, you can 

make these changes. But there has been no serious attempt to 

make any change other than to message against this bill and its 

flaws, its warts and blemishes, instead of looking at the constructs 

of the bill, as Mr. Neal outlined, and how they can be successfully 

managed, as they are in California and as they were by the business community in Massachusetts, as they are being done in Connecticut. 

Instead, we are like this great ostrich with our head in the sand 

here, prevailing upon you to come before the committee so that we 

can try to convince the public that people are hurting out there. 

And they are. But this Congress isn’t doing anything about it. 

It is no different than leaving Congress this week without doing 

anything about gun violence. It is happening all around us. It is 

happening at a devastating rate. It is happening in a way that we 

should be ashamed of ourselves. We will message on it, but we 

won’t take a vote, we won’t sit down and constructively work towards coming up with a solution for the American people. 

And that is what the American people are fed up with. That is 

why the American people believe that there is a wall that is going 

to be built and the Mexicans are going to pay for it. And that is 

why people believe in these promises that are never going to come 

to fruition. 

It is long overdue that we, as Americans, roll up our sleeves and 

sit down. This committee is fully capable and talented on both 

sides of this aisle of resolving these issues in a nanosecond by coming together and working through these concerns. But it is more 

convenient to have a message that you can pound home in a campaign. Very successfully done in 2010. A Presidential campaign was 

waged on it in 2012. And ever since 2010, 2012, 2014, and now in 

2016, the American people have been told this is a God-awful plan, 

but they haven’t had one solution from the other side. 

I apologize to you for being here today, not because you haven’t 

provided thoughtful information, you have, but you must understand by now that you are just part of theater. 

I yield back. 

Chairman BRADY. Mr. Smith, you are recognized. 

Mr. SMITH OF NEBRASKA. Thank you, Mr. Chairman. 

Thank you to our panel as well. 

Listening to all of the various comments here, it is quite interesting. It is frustrating. I hear some of the messaging from my colVerDate Sep 11 2014 03:26 Jul 08, 2017 Jkt 023193 PO 00000 Frm 00102 Fmt 6633 Sfmt 6602 I:\WAYS\OUT\23193.XXX 23193

ralbany on LAP520R082 with HEARINGS
99 

league who spoke just previous to my remarks here. These are serious issues. I don’t have to tell any of you that. 

I get frustrated when we hear that competition is alive and well 

from Mr. Lee, and that is not what I hear from my constituents. 

I hear from constituents, for example, one of them, one of my constituents who has lost her coverage three times. And they had a 

plan that they wished they could have kept, and of course they 

were promised they could keep it. I won’t belabor that point too 

much, Mr. Lee, but that is one of those promises that is very frustrating. 

I know you worked for Secretary Sebelius. Is that accurate? And 

we hear various numbers of individuals who are now covered with 

insurance who didn’t previously have insurance. That makes me 

wonder how accurate those numbers are when I hear from constituents who have lost their plans, who had a plan, obviously. And 

so maybe the constituent who lost her coverage three times, has 

she been counted three different times as though the plan is wildly 

successful because she signed up for three different plans on three 

different occasions, and not by her own choosing? 

But I worry that there are fewer choices for consumers out there 

rather than more choices. I worry that there is less competition. I 

worry that we have the risk corridor issue that is out there. The 

assumptions were that there would be a balance between plans losing money and plans making money. That hasn’t taken place obviously. The co-ops, I mean, the Nebraska, Iowa CoOpportunity 

Health was the first co-op to collapse, 120,000 people. I wonder 

how many times those people have been counted in these numbers 

we hear tossed around in terms of the number of individuals covered. 

We have also seen how many insurers are choosing to pull out 

of various markets, not just the failure of co-ops, but various markets that insurers are pulling out of. 

Mr. White and Mr. Condeluci, how were the bill’s drafters and 

HHS so wrong about the risk corridor program? 

Mr. CONDELUCI. I will jump in to say, when the drafters were 

drafting the ACA it was well established that the individual market pre-ACA was dysfunctional. So the drafters endeavored to incorporate minimum standards, a guarantee issue which allows access to folks with preexisting conditions, to make the market a 

much more functional market. 

Sadly, as I think has been established by the witnesses here and 

the discussion today, it is not a functional market. It is functioning, 

but it is not a functional market, even post-ACA. 

But to your question, and the reason why I bring up the drafters, 

is due to the reforms, the drafters knew that there would be significant disruption in the individual market. So as a result, they created the stabilization programs, the risk corridor, risk adjustment, 

and reinsurance program. 

Risk corridor, the drafters did expect, and I believe, as did HHS 

expect, that there would indeed be the same amount of carriers 

asking for a risk corridor payment or making a request for a risk 

corridor payment due to their losses associated with insuring higher risk individuals, which would be balanced out by carriers that 

would be insuring younger, healthier individuals. And due to the 


ralbany on LAP520R082 with HEARINGS
100 

fact that, as we have established, younger and healthier individuals have not entered the risk pool, the insurance carriers had suffered the losses, and more significant losses compared to insuring 

those better risks. 

Mr. SMITH OF NEBRASKA. Okay. Shifting gears just a little bit 

because of the interest of time here, we now know that the President is calling for a public option. Secretary Clinton is now calling 

for a public option. 

With the wild failure of the co-ops within ObamaCare occurring, 

I mean, is there any reason we would believe that somehow that 

would be a better situation? I struggle to think that it would be. 

I mean, with the Federal backstop that was out there spending 

gobs of money, taxpayer dollars, to try to prop up these plans, I 

just fear that we would see a different kind of failure within a public option. 

My time has expired. I regret that. But if you would care to respond in writing, perhaps, I would be happy to hear each of your 

perspectives. We have folks on both sides of the issue here. I would 

love to hear more in terms of what your perspectives are moving 

forward. Thank you. 

Chairman BRADY. Thank you. 

Mr. Pascrell, you are recognized. 

Mr. PASCRELL. Thank you, Mr. Chairman. 

A couple of points before I ask the question. A, we can’t blame, 

and I don’t think any of you are, every problem in healthcare costs 

on the ACA, I think we have to make that very clear, like we came 

from a perfect system to an imperfect system. In fact, as I recall, 

your history shows that regardless of what party you are affiliated 

with, which is immaterial to me right now, that you were all advocating some changes because the system was broken. It was broken. So that is A. 

B, in order to change anything here, whether you are talking 

about trade, whether you are talking about anything, you need bipartisan support to make a lasting change. We have done that in 

Medicare, we have done that in Social Security, and we have done 

it in Medicaid, with very different parties at the helm at the White 

House. It can be done. 

I didn’t hear from any of you, through the chair, that we should 

dump the ACA. Am I mishearing? Before I go on to my next question, is anyone here on the panel advocating getting rid of the ACA 

altogether as it now is? 

Mr. CONDELUCI. From my perspective, sir, no. 

Mr. WHITE. We are not. 

Mr. HARTE. I am not. 

Mr. LEE. No. 

Mr. PASCRELL. Let’s make that clear, Mr. Chairman. Let’s 

make it clear. Very important. Very significant. You not only have 

good panelists, you have honest panelists. They are dangerous. No 

question about it. 

Mr. CONDELUCI. If you will indulge me, sir, there are some caveats. 

Mr. PASCRELL. Of course. You want to have some changes and 

so do I. 


ralbany on LAP520R082 with HEARINGS
101 

Now, some of you emphasized the unbalanced risk pool. Major 

problem. How do you get those 18 to 35s into the pool? You can’t 

arrest them and put them into the pool. We need to do something 

about that. California has, and we will get to that in a second. 

So the unbalanced risk. This is something we need to take a look 

at very, very, very closely. All of you have mentioned other things 

that are contributing to the cost. There are no two ways about it. 

How do you track younger, healthier individuals? 

And the last point I would make before I ask the question is, the 

uninsured rate—Mr. Harte, you mentioned this—the uninsured 

rate is falling, but there is an increase in deductibles. That, you 

said, was one of the main reasons—many of you said this—what 

those deductibles were before the ACA, what the deductibles percentage-wise are now. We need to take a look at that. There is no 

question. Transparency, you talked about it also. 

So I would like to add just one thing, by the way, to the cost, 

and that is we have a growing emphasis in this society on consolidation and merging. In fact, there was a report out last December 

about how that is contributing to the higher cost of health care. 

So now we have 250 million people that are covered either by 

their employer, by the ACA, Medicaid, whatever. Have 250,000. 

And I want to ask this quick question. Are we simply talking 

about then, if 85 percent of the people are covered in the ACA, 

these 20 million people, they get subsidies, are we basically talking 

about the 15 percent that don’t get subsidies? Is that how I understood all of you saying? 

Mr. CONDELUCI. I would offer this, sir, that in the individual 

market there are about 20 million people. Right now there are 

about 11.1 million who are enrolled through an exchange, and 85 

percent of that 11.1 million are receiving subsidies. So that is 9 

million people receiving subsidies. 

So you take, let’s say, the 9 million people who are not in the 

exchange, and you can make an argument that that is a population 

that is experiencing these premium increases without any subsidization, and you hear the stories that you have heard. 

Mr. PASCRELL. I would be happy, and my last question is this. 

Mr. Lee, my time has run out, what I’d like you to discuss, you 

can’t do it now, some of the tactics that Covered California has 

used to limit out-of-pocket costs. I find them to be very interesting. 

Perhaps you could share them with your colleagues here and the 

rest of us in dealing with a very important issue. This is important 

for everybody. 

And, Mr. Chairman, let me conclude by asking how in God’s 

name do we have a panel without the HHS Secretary. 

Chairman BRADY. Thank you. Ms. Burwell has been invited a 

number of times to discuss the Affordable Care Act with us, including the shifting of money illegally to fund health insurance companies, which the hearing was last week. 

All time has expired. 

We will be going to two to one to make sure we can cover all the 

members here. 

So, Mrs. Black, you are recognized. 

Mrs. BLACK. Thank you, Mr. Chairman. I appreciate your having this very important hearing. 


ralbany on LAP520R082 with HEARINGS
102 

The issue of rising premium costs is something that, unfortunately, our constituents are facing every day. I certainly hear it 

constantly in my district. And across America folks are being forced 

to choose between paying more for less coverage in smaller networks or just foregoing health insurance altogether. Again, this is 

what I am hearing in my district continuously. 

And it is hard for me to believe that my colleagues across the 

aisle aren’t hearing a very similar story. And if they are not hearing any of this, I am really curious about what is going on in their 

State that is causing them not to hear from their constituents that 

the Affordable Care Act has impacted the quality of care, the accessibility, the sustainability of health insurance in this country. 

So in my home State of Tennessee, premium rates in the marketplace are expected to increase by 62 percent—62 percent in 2017. 

So for anybody to say, ‘‘Well, costs aren’t going up, they are being 

contained,’’ it just amazes me. I expect the Obama administration 

would tout this as a nonissue, however, since 80 percent of the 

marketplace enrollees in Tennessee are eligible for subsidies. 

But I have to ask, is this how we want our health care system 

to work, with costs rising astronomically for this mediocre care that 

is being given, where you can’t choose your doctor, you can’t choose 

your facility, you can’t choose your specialty? ObamaCare is forcing 

more and more Americans to accept the government subsidies to 

afford even the most basic coverage. 

Now, I want to read to you very quickly a letter that I just received this week, which is not uncommon to get this kind of letter. 

‘‘Hello, Mrs. Black. I am 32 years old. I am a married mother of 

three. I have no preexisting conditions, I don’t smoke, and I live a 

very healthy lifestyle. Why, then, with the Affordable Care Act, is 

my insurance company canceling my great low deductible, low premium multibenefit plan next year and forcing me to choose a plan 

that offers less coverage, triple the deductible, triple out-of-pocket 

expenses, with a much higher premium? 

‘‘Now it will be less expensive for me to pay a yearly tax fine, 

and I will have to give up my insurance that I have had for 7 years 

that I am happy with. I am well aware of the so-called tax credit 

available to people such as myself, but I have paid for my own insurance for many years without the government’s help, and if my 

premiums were to remain reasonable, I wouldn’t need a tax credit.’’ 

So my question is, is it the role of the government to force people 

out of the health insurance that they like and that they can afford 

and they have used for years into a plan that would require taxpayer-funded subsidies to afford the most basic coverage? Shouldn’t 

we be removing those barriers and mandates to encourage people 

to actually control their own health care and allow the open markets to keep the plans competitive and affordable and accessible? 

Mr. White, I would like to start with you. I know I only have 2 

minutes left. So if you could address those. 

And then, Mr. Condeluci, and then, Mr. Harte, if you would address those, I would appreciate it. 

Mr. WHITE. Yeah, I think the scenario that you outlined in that 

letter is exactly the scenario that a lot of people are facing in deciding whether or not to enroll in the exchanges. And a lot of those 


ralbany on LAP520R082 with HEARINGS
103 

people are saying: No, it doesn’t make sense for me financially or 

otherwise, with or without subsidies. 

So CHAC is advocating for market-based reforms that improve 

flexibility, that create additional options for consumers, using those 

subsidies on and off the exchanges to create a market for competing for those lives. 

Mrs. BLACK. And it will allow people to get what they want and 

what they need as opposed to what the government is telling them 

they want or need. 

How about you, Mr. Condeluci? 

Mr. CONDELUCI. As I have suggested, the minimum insurance 

standards, the adjusted community rating rules, the new rules that 

came in to make the individual market a much more functional 

market are driving up costs. That is just the nature of how these 

reforms have impacted the insurance market. 

I would suggest that insurance carriers be allowed additional 

flexibility to come up with more creative plan designs, creative plan 

designs that could be targeted to different cohorts of the population. As I indicated earlier, obviously the young and healthy, but, 

in addition, folks that have chronic illnesses, like diabetes, heart 

disease. 

If carriers were able to better manage that care, that helps folks 

across the board from an insurance perspective, but the drafters of 

the ACA wanting to, let’s say, require that everyone have an adequate level of coverage, has, I don’t want to use the word ‘‘overreached,’’ but it just has increased cost. 

And if you pull that back, I am not suggesting that we get rid 

of the minimum standards or guaranteed issue, for example, which 

I am a fan of, if you loosen them up, I believe you can reduce premiums. 

Mrs. BLACK. Mr. Harte, you have 15 seconds. I apologize. 

Mr. HARTE. Thank you. 

All I will say to you is, we have to look through a prism of are 

the decisions that we are making going to make health insurance 

more affordable? I don’t know if it makes you comfortable or uncomfortable, but I deal with the issues of plan changes every single 

day, and I have to share those changes with thousands of people 

every year. So you are not alone, and that is what we need to focus 

on. 

Mrs. BLACK. Thank you, Mr. Chairman. I yield back. 

Chairman BRADY. Thank you. 

Mr. Kelly, you are recognized. 

Mr. KELLY. Thank you, Chairman. 

Thank you all for being here. 

I come from the private sector, and I was not here whenever the 

healthcare law was debated and then passed, but I can tell you as 

a person who actually provides insurance for the people that I work 

with, we have seen premiums—this is for a family, a mom and dad 

with a couple children—it has gone from about $800 a month to 

$1,150 a month. That is the premium. 

Now, maybe you all can explain this, because I am just looking 

at this as a business model right now. When you take in $1 in premium and pay out $1.20 in claims, that is not a sustainable business model. So I think, rather than going after the insurance comVerDate Sep 11 2014 03:26 Jul 08, 2017 Jkt 023193 PO 00000 Frm 00107 Fmt 6633 Sfmt 6602 I:\WAYS\OUT\23193.XXX 23193

ralbany on LAP520R082 with HEARINGS
104 

panies and saying, ‘‘Hey, you guys are trying to make money,’’ I 

mean, if you don’t make money, you go out of business, I kind of 

get that from my life experience, but the copays and the 

deductibles are also part of health care. 

So when I talk to people—and with ours right now it is $3,000 

in deductibles before insurance kicks in—they have heavy copays. 

And if you go to the emergency room, that is another charge on top 

of it. So most of the folks I talk to back home are saying: Yes, I 

do have insurance, but I don’t have coverage until I go past a certain point. 

Now, I am understanding some of the people that I represent, 

some of their increases are going to be 38 to 40 percent. That is 

what they are going to ask for it. They are not going to get that, 

but they are going to get something. And then the question comes 

down to, well, that is not as big of a problem on the premiums because there are going to be subsidies that are going to take care 

of that. 

So Mr. White, Mr. Condeluci, Mr. Harte, Mr. Lee, who is going 

to pay for the subsidies? 

Mr. WHITE. Taxpayers will. And that is the problem, right? We 

are shifting costs, we are not lowering them. We need some strategies to lower the costs. 

The other issue I would say on the deductibles is that only half 

of Americans have enough liquid assets to meet higher deductibles, 

according to the Kaiser Family Foundation. 

Now, the problem with the ACA exchanges is that in many instances they are masking the availability of account-based plans 

like health savings accounts. If people knew and were informed 

that HSAs could help them fill in deductibles on a tax-preferred 

basis, we might get some help in meeting some of those 

deductibles. 

Unfortunately, we are also seeing some policies come out in the 

regulatory front that are discouraging the use of HSAs on the exchanges, either healthcare.gov or at the State level. 

And so there are tax tools that we can use to help fill in these 

deductibles. They are just not being employed very effectively. 

Mr. KELLY. Mr. Condeluci. 

Mr. CONDELUCI. Briefly, the premium subsidies, as we all 

know, shield some of the policyholders from the premium increases, 

and that has been established—— 

Mr. KELLY. If I can interrupt you one second, though. But the 

subsidy doesn’t change the actual cost. 

Mr. CONDELUCI. It does not. 

Mr. KELLY. I think that is the problem, we get into this idea 

that somehow the subsidy is going to make it okay. Because at the 

end of the day, somebody still has to pick up the tab on it. 

Mr. CONDELUCI. Right. 

Mr. KELLY. The answer is hardworking American taxpayers. 

Listen, oftentimes our hearts are willing but our wallets are 

weak. We are putting such a heavy burden on the private sector 

right now and the people that provide this, believe me, because I 

am one of them. I provide that for the people I work with. 


ralbany on LAP520R082 with HEARINGS
105 

See, the sustainable business model is the thing I think we are 

turning away from. It is not that we don’t want to make sure that 

people have health care. 

By the way, we are not talking about sick Republicans, sick 

Democrats, sick Independents, or sick Libertarians. We are talking 

about sick Americans that need help. I want to make sure that we 

don’t make it a thing about our parties, but about our people. 

So the sustainability of it is where we have to go on this, and 

that is where I am seeing the disconnect. 

Mr. CONDELUCI. Because as the premiums go up, the government shields those premium increases in the form of higher government spending, which is in the form of the premium subsidy, 

that is. So there is a tension between increased premiums, how the 

subsidy works, and how they shield consumers from those premium 

increases. 

It is not the consumer that has generally experienced that premium increase, instead it is the government, and at a point you 

might have an unsustainable situation from a spending perspective. 

Mr. KELLY. We keep using the term ‘‘the government.’’ The government doesn’t pick up the tab on anything. The government collects money from hardworking American taxpayers and redeploys 

it where the government thinks it should go. 

So we take the decision out of the individual’s hands of how they 

are going to purchase products, and we say this is how you are 

going to do it, and if it is too steep, we will subsidize it without 

saying: By the way, you are going to pay for the subsidy. 

Mr. Harte, if you could just weigh in. I am almost out of time. 

But this is critical people understand. This is an unsustainable 

business model. It has nothing to do with wanting to provide people with health care. It is to the point that it is going to reach that 

we can’t do it and taxpayers can’t be burdened every time we want 

to do something. 

Mr. HARTE. They simply can’t afford it. You are absolutely 

right. Those subsidies are coming from my business, from my employees, from your employees, and everyone across the country to 

pay for these taxes. 

But you are actually pretty lucky. For someone in your company 

to have a $3,000 deductible and a $1,100 premium, that is pretty 

good. Where I come from, where healthcare costs are soaring, we 

have to pay three times that. We have families who are paying 

over the Cadillac tax limit already for an average health insurance 

plan. So you are right, I am concerned just like you, very concerned. 

Mr. KELLY. Thank you. 

Chairman BRADY. Thank you. 

Mr. CONDELUCI. To clarify, Mr. Chairman, my reference to 

government was taxpayers. 

Chairman BRADY. Thank you. 

Dr. Davis, you are recognized. 

Mr. DAVIS. Thank you very much, Mr. Chairman. And I certainly want to thank our witnesses for being here today. 

Mr. Lee, opponents of the Affordable Care Act have been trying 

any tactic that they can think of to discredit the law or to make 


ralbany on LAP520R082 with HEARINGS
106 

consumers look unfavorably on it. One of the red herrings opponents have used is try to make consumers think that the law is 

unaffordable due to premium increases. It is my recollection that 

premiums were going up, increasing before the Affordable Care 

Act. Is that not true? 

Mr. LEE. That is definitely true. 

Mr. DAVIS. Now we have, with the ACA, what I would call a 

pretty significant improvement. For example, consumers are guaranteed critical protections when they purchase insurance, limits on 

rating based on age, requirements insurers must spend a certain 

amount on care. And also State officials have stronger tools to review unreasonable rate increases, along with transparency, so that 

the public knows which insurers are jacking up prices and why. 

Could you comment on this environment? 

Mr. LEE. Yeah. The main comment is that it is absolutely the 

case that the post-Affordable Care Act insurance marketplace is a 

reformed but still imperfect marketplace, but it is in a marketplace 

now where insurers have to compete on price to get consumers who 

cannot be turned away. It is a different marketplace, and there is 

transparency. And many consumers—not all—have many choices 

that they can exercise to make that marketplace work. 

It is also the case, if I may, that many of the problems we are 

hearing about are not Affordable Care Act problems. They are 

health care in America problems. Issues of rising healthcare costs, 

as we heard from Mr. Harte, of rising costs of up to 30 percent on 

people’s employer-based care. This is the range of what small businesses, large businesses, individuals are facing that we all need to 

get our arms around. 

Mr. DAVIS. While we laud the California experience, Illinois 

hasn’t done too badly itself, the State that I come from. What 

caused California to be able to accomplish what we all know and 

believe it has accomplished? 

Mr. LEE. I think, well, first, I want to be very clear, there have 

been a number of States that have been very effective in implementing the Affordable Care Act. You can look at the State of Connecticut, you can look at Illinois, you can look at Washington. 

There are a lot of States. 

The thing that they have in common is—and I know this is a 

hard thing to say in this environment—but they put politics to the 

side. And in California, our working has been with Republican 

members of our State legislature, have been with every single district elected office, it is with people who have said this is the law 

now, let’s make it work. 

And so the issue of having effective outreach and education. I 

have said this a couple of times, but health insurance doesn’t sell 

itself. And we are out there spending a lot of money because people 

that need to sign up for health insurance say: Maybe I don’t want 

to. 

The ones we need to convince most are the ones who need it the 

least who will benefit the risk pool, which requires ongoing, very 

significant marketing, outreach, partnerships with agents, et 

cetera. And that is something that the States that have been most 

successful have consistently leaned in on those outreach efforts. 


ralbany on LAP520R082 with HEARINGS
107 

Because those people that get subsidies, which in California is 

about a million, and there are about a million people in the individual market without subsidies, those nonsubsidized people benefit from the people who get subsidies because they are part of the 

better risk pool, they are part of keeping premiums down for everybody. 

So it really is a win-win when we get subsidized people in to help 

keep the premiums down for those even that don’t have subsidies. 

Mr. DAVIS. Thank you very much. And I think that was part of 

the intent from the beginning that many people discount. I think 

the reality is that it is working much better than many people 

would have us believe. 

I thank you, Mr. Chairman, and yield back the balance of my 

time. 

Chairman BRADY. Thank you, Doctor. 

Mr. Renacci, you are recognized. 

Mr. RENACCI. Thank you, Mr. Chairman. 

And I want to thank the witnesses for being here with us here 

today and presenting the information. This hearing is really extremely important, and I appreciate your expertise. 

I, like one of my earlier colleagues, believe that when those that 

voted for the Affordable Care Act, they sincerely believed they were 

helping. Let’s face it, I am sure that was their thought process 

when they voted for it. But it is disingenuous today to ignore the 

fact that there are problems. 

Unfortunately, since the passage of the Affordable Care Act the 

access to affordable care has significantly dropped. There is no denying that since the ACA premiums are rising, deductibles are rising, and many people can no longer afford their healthcare plans. 

And we are hearing the proposed rate filings for 2017 on the Federal marketplace are projected to increase a median of 19 percent. 

I go back in my district and I have meetings with employees. 

Every time I meet with an employer, I want to meet with the employees. I ask the same question: Are you happy with the Affordable Care Act? Are costs okay? How are things going? I am going 

to have to bring some of my colleagues from the other side with me 

because I get very few people put up their hand and say they like 

it. 

Now, some people do. I am not going to lie and say it is not 100 

percent. But it is a very, very small portion of the people in the 

crowd, and I am talking about hundreds and hundreds of people. 

So I always ask them a question: Tell me what tissues are. Tell me 

what the problems are. I try and learn from it. 

Look, no law passed is going to be 100 percent perfect. But I go 

back to my colleague last year, John Carney. He tried to pass H.R. 

4414, which was a fix to the Affordable Care Act, and we got that 

passed. The sad thing was that the majority of Democrats, over 133 

Democrats, even came to the floor and said: We can’t change anything because if we change it, we are going to open up the doors 

to changing more things. 

So 133 people even voted against a simple change, ignoring the 

fact that there are problems, and those are the things we have to 

fix. Just last month, in my home State of over Ohio, we had the 

13th co-op, InHealth Mutual, announced it was going out of busiVerDate Sep 11 2014 03:26 Jul 08, 2017 Jkt 023193 PO 00000 Frm 00111 Fmt 6633 Sfmt 6602 I:\WAYS\OUT\23193.XXX 23193

ralbany on LAP520R082 with HEARINGS
108 

ness. This was 1 of 23 co-ops created under the ACA, had received 

129 million in taxpayer funds, had left nearly 22,000 Ohioans with 

fewer choices and, unfortunately, once again, searching for new 

health insurance. 

So again, we know there are problems out there. We can say we 

don’t, we can talk about how great the Affordable Care Act, it has 

problems, and we have to start looking at those problems. 

I have had people in my district, Brian from Westlake, saying he 

has lost his choices. I have another constituent, Scott from Dalton, 

saying his plan jumped from $314 in 2013 to $920 in 2016. He simply couldn’t afford to continue with this plan and he had to go to 

a higher deductible. I had another individual, John, a registered 

Democrat from Brewster, who said he now calls the ACA the 

Unaffordable Care Act. So these are real people, real lives, real 

things affected. 

But the saddest story I ever had was a woman walking up to me 

at a restaurant saying: Congressman, I just had my hours reduced 

to 29 hours, and now my premiums are going up and I have a deductible I can’t afford. Help me. That was the saddest moment 

when it came to the Affordable Care Act—help me—and that is 

what we need to do. 

So I want to talk a little bit about this deductible, because we 

have talked about premiums. Nobody can argue that premiums are 

going up. They are going up. Everybody knows that. They are going 

up again this year. But we are getting people insurance, and I have 

an individual in my district who has fully subsidized insurance, but 

came to me and said: Congressman, thank you for allowing me to 

get insurance. 

I said: Well, I wasn’t part of the vote for the Affordable Care Act. 

But she says: I can’t use it anyway because I have a $6,000 deductible that I now can’t use. The insurance is worthless for me. I need 

surgery, and I can’t get it done because I can’t afford that. 

Mr. White, can you talk a little bit about the deductibility, how 

this deductibility is affecting people and the size of it and how that 

hurts people getting health insurance? 

Mr. WHITE. It is massive, and it is not just the deductibles. So 

the deductibles are increasing on average by about 20 percent, or 

they increased 20 percent this year. So the average Silver plan has 

about a $3,000 deductible, the average Bronze plan has about a 

$6,000 deductible, but $10,000, $12,000 deductibles are not uncommon. 

And the reason these deductibles are at that level is that it allows the insurer to lower the price point, the premium rate that 

they sell on the exchange. A lot of consumers will shop for a plan 

based on the premium, not necessarily the deductible. 

Mr. RENACCI. So you would agree that, because of the Affordable Care Act and because premiums are going up, the only way 

to reduce the premiums is to raise the deductible, which in the end, 

who pays? The American people. 

Mr. WHITE. The consumer, absolutely. And it is not good, because, as you indicated, when you have these massive deductibles, 

you are not accessing care. So you are not getting maybe the diabetes care, the coach management, the preventive care, the well baby 


ralbany on LAP520R082 with HEARINGS
109 

care, the things that you really need to stay out of the hospital, out 

of expensive settings. It is unsustainable over the long term. 

Mr. RENACCI. Thank you, Mr. Chairman. I yield back. 

Chairman BRADY. Thank you. 

A vote has been called. We would like to finish with Mr. Meehan 

and Mr. Holding. 

Mr. Meehan, you are recognized. 

Mr. MEEHAN. Thank you, Mr. Chairman. 

I just want to say at the outset, just to comment, I know some 

of the commentary from the other side of the aisle regarding that 

part of the problem is that insurers are miscalculating. We sat here 

last week and listened to the design of a plan in which over $7 billion was illegally transferred to the insurance companies and still 

not capable of holding down these costs. That was what the record 

demonstrated. 

But I want to follow up on Mr. Renacci’s questions with the 

panel because it is really going to the issue. We hear a lot about 

people saying we have more people insured. What I am seeing in 

mid district are the underinsured. These are people who are working, who have been watching the explosion of the various factors. 

You named them. It is the copays, the higher premiums. 

And the biggest problem is, just like many seniors now split their 

medications by taking half and do away with the effect, we are 

having people that won’t use health care at certain times, and situations are getting worse. 

Mr. White, I went back through the written testimony of each of 

you. I was very impressed with lots of it. You had some things to 

say about the special enrollment periods influencing this, Mr. 

White. And can you tell me about what you see as the reforms in 

the special enrollment periods quickly, if you can, and whether 

what the administration is currently doing is going to be sufficient 

to impact that? 

Mr. WHITE. I am not sure what the administration is doing is 

sufficient. I think what needs to be done is that you need to clamp 

down on some of the abuses that are taking place because of the 

special enrollment periods. People are jumping into and out of 

these risk pools, gaming the system in effect, and the enforcement 

is not rigorous enough to prevent that type of gaming. 

So having prospective eligibility is probably—let me put it this 

way. I think you don’t automatically get the person in the plan 

until you can verify that they actually meet the requirements of 

the special enrollment period, and then you can make their coverage retroactive to cover the claims expenses. You don’t just do 

that at the outset, though. 

Mr. MEEHAN. You think it was a rush, so to speak, just to get 

numbers, but they are not appropriately overseeing the entrance 

into the program? 

Mr. WHITE. Yeah. It was a big problem. I think there were 40- 

some-odd special enrollment periods. One insurer that we work 

with quite a bit in our coalition said it, added about 3 percent to 

the premium that they have got to carry into next year. So this is 

a real impact on people. 

Mr. MEEHAN. Thank you. 


ralbany on LAP520R082 with HEARINGS
110 

And, Mr. Harte, you spent some time, you laid out a number of 

things, but again, I go back to the issue of the uninsured. And this 

was the point that was being made, I think so eloquently, by my 

colleague Mr. Renacci. 

I am watching in Pennsylvania, 21 percent reported that 

deductibles and 18 percent reported that premiums were their 

greatest financial challenge. So we are seeing that these are the 

things that are impacting people. The rate of uninsured is going 

down, but the costs associated with those that have it is skyrocketing. 

So what combination of reform should be advanced to address 

the challenges of individuals and families with insurance? They 

have insurance, but they can’t afford health care. What would you 

recommend? 

Mr. HARTE. So if I can first say, my clients, when I sit down 

with them and they are faced with a 29 percent rate increase, as 

I testified to earlier, my job with that client is to say: What can 

we do to cut costs? 

So the first thing we have to look at is: Okay, you have a $3,000 deductible today, how much can we save to go to a $4,000 deductible? And that is about 10 percent. And then we say: What is it 

going to take you to go to a $5,000 deductible? It might be another 

5 percent. 

And then we start looking at the prescription drug costs, and the traditional drug plan would be $10 for generic and $25 or $40 for 

brand name. Today, the health insurance companies have moved 

away from that entire equation, especially for small employers, and 

told the employees that they insure: Well, you are now going to pay 

a percentage of the brand name prescription cost. 

Now, this is New England, okay, but it is happening all over the 

country. Now they are having to pay 30, 40, 50 percent of the 

monthly cost of that prescription up to a monthly cost share of 

$500. That is significant. 

So when you talk about the underinsured, we are not just talking 

about access to doctor’s office visits or primary care, specialty care, 

physical therapy, emergency rooms, hospitalization, it is the entire 

healthcare equation that people are underinsured. 

So the question is, what can we do, that is your final question. 

As I said earlier, health insurance is expensive because health care 

is expensive. And as much as we talk about the Affordable Care 

Act and that the issue is all about health insurance or health insurance companies, it is really a financing mechanism. 

When you look at health insurance, we are taking 80 to 85 percent of that money and paying for healthcare expenses. So the reason why health insurance premiums continue to escalate at such 

an alarming rate is because healthcare costs continue to soar out 

of control. 

Mr. MEEHAN. Thank you, Mr. Harte. 

Thank you. 

Chairman BRADY. Thank you. 

Mr. Holding, you are recognized. 

Mr. HOLDING. Thank you, Mr. Chairman. 

First, I would like to give a little state of play in North Carolina. 

Our largest insurer in the State has been approved for an average 


ralbany on LAP520R082 with HEARINGS
111 

rate increase of 25 percent in 2015 and 34 percent in 2016 and 18 

percent in 2017. But even with these consistent double-digit rate 

increases, BlueCross BlueShield, the insurer I reference, has lost 

over $400 million in the last 2 years. 

And even though they have been given these rate increases, 

yeah, it doesn’t ensure that they are going to stay and continue to 

offer plans throughout North Carolina. And we are looking at a potential situation where 60 out of our 100 counties might be left 

without a single ACA plan offered. 

I would like to pick up where Mr. Smith from Kansas left off. 

You hear this argument that, well, the public option, if that is put 

in place, it cures all these problems. 

Mr. White, could you address the public option and whether or 

not it would cure the ills that we see with the ACA as it exists 

today? 

Mr. WHITE. I think the public option is a bad option. I think 

that it is government coming in to promote competition in a market 

in which they have basically evaporated competition. 

So this is a problem that was caused by government inflexibility 

that made insurers leave the market. They are losing money. We 

are seeing it in co-ops. We are seeing it in North Carolina. We are 

seeing it in other markets across the country. 

So the proposed solution is let’s have the government run a plan 

in that marketplace so that people have choices. Well, they had 

choices before, right? So how do we flex up the market, how do we 

create a competitive environment so that the insurers will want to 

go back in? Tennessee had a very significant experience in this in 

the Medicaid market. 

I mean, like, this isn’t necessarily rocket science. We ought to let 

the market operate in a way that fosters competition and an environment to offer products. 

Mr. HOLDING. Thank you. 

Mr. Chairman, in the interest of time, I will yield back so that 

we are not late for our vote. 

Chairman BRADY. You are kind, Mr. Holding. Thank you very 

much. 

I would like to thank our witnesses for appearing before us 

today. Please be advised, members have 2 weeks to submit written 

questions to be answered later in writing, and those questions and 

your answers will be made part of the formal hearing record. 

With that, the committee stands adjourned. Thank you. 

[Whereupon, at 12:32 p.m., the committee was adjourned.] 


ralbany on LAP520R082 with HEARINGS
112 

Member Submissions for the Record 


ralbany on LAP520R082 with HEARINGS23193.073
113 


ralbany on LAP520R082 with HEARINGS23193.074
114 


ralbany on LAP520R082 with HEARINGS23193.075
115 


ralbany on LAP520R082 with HEARINGS23193.076
116 


ralbany on LAP520R082 with HEARINGS23193.077
117 


ralbany on LAP520R082 with HEARINGS23193.078
118 


ralbany on LAP520R082 with HEARINGS23193.079
119 


ralbany on LAP520R082 with HEARINGS23193.080
120 

f 


ralbany on LAP520R082 with HEARINGS23193.081
121 

Member Questions for the Record 


ralbany on LAP520R082 with HEARINGS23193.082
122 


ralbany on LAP520R082 with HEARINGS23193.083
123 


ralbany on LAP520R082 with HEARINGS23193.084
124 


ralbany on LAP520R082 with HEARINGS23193.085
125 


ralbany on LAP520R082 with HEARINGS23193.086
126 


ralbany on LAP520R082 with HEARINGS23193.087
127 


ralbany on LAP520R082 with HEARINGS23193.088
128 


ralbany on LAP520R082 with HEARINGS23193.089
129 


ralbany on LAP520R082 with HEARINGS23193.090
130 


ralbany on LAP520R082 with HEARINGS23193.091
131 


ralbany on LAP520R082 with HEARINGS23193.092
132 


ralbany on LAP520R082 with HEARINGS23193.093
133 


ralbany on LAP520R082 with HEARINGS23193.094
134 


ralbany on LAP520R082 with HEARINGS23193.095
135 


ralbany on LAP520R082 with HEARINGS23193.096
136 


ralbany on LAP520R082 with HEARINGS23193.097
137 


ralbany on LAP520R082 with HEARINGS23193.098
138 


ralbany on LAP520R082 with HEARINGS23193.099
139 


ralbany on LAP520R082 with HEARINGS23193.100
140 


ralbany on LAP520R082 with HEARINGS23193.101
141 


ralbany on LAP520R082 with HEARINGS23193.102
142 

f 


ralbany on LAP520R082 with HEARINGS23193.103
143 

Submissions for the Record 


ralbany on LAP520R082 with HEARINGS23193.104
144 


ralbany on LAP520R082 with HEARINGS23193.105
145 


ralbany on LAP520R082 with HEARINGS23193.106
146 


ralbany on LAP520R082 with HEARINGS23193.107
147 


ralbany on LAP520R082 with HEARINGS23193.108
148 


ralbany on LAP520R082 with HEARINGS23193.109
149 


ralbany on LAP520R082 with HEARINGS23193.110
150 


ralbany on LAP520R082 with HEARINGS23193.111
151 

f 


ralbany on LAP520R082 with HEARINGS23193.112
152 


ralbany on LAP520R082 with HEARINGS23193.113
153 


ralbany on LAP520R082 with HEARINGS23193.114
154 

Æ 


ralbany on LAP520R082 with HEARINGS23193.115