U.S. GOVERNMENT PUBLISHING OFFICE

26–840 PDF WASHINGTON : 2019

S. HRG. 115–470 

STABILIZING PREMIUMS AND HELPING INDIVIDUALS IN THE INDIVIDUAL INSURANCE MARKET 

FOR 2018: STATE INSURANCE COMMISSIONERS 

HEARING 

OF THE

COMMITTEE ON HEALTH, EDUCATION, 

LABOR, AND PENSIONS 

UNITED STATES SENATE 

ONE HUNDRED FIFTEENTH CONGRESS 

FIRST SESSION 

ON

EXAMINING STABILIZING PREMIUMS AND HELPING INDIVIDUALS ON 

THE INDIVIDUAL INSURANCE MARKET FOR 2018, FOCUSING ON 

STATE INSURANCE COMMISSIONERS 

SEPTEMBER 6, 2017 

Printed for the use of the Committee on Health, Education, Labor, and Pensions 

( 

Available via the World Wide Web: http://www.govinfo.gov 


HELPN-004 with DISTILLER
COMMITTEE ON HEALTH, EDUCATION, LABOR, AND PENSIONS 

LAMAR ALEXANDER, Tennessee, Chairman 

MICHAEL B. ENZI, Wyoming 

RICHARD BURR, North Carolina 

JOHNNY ISAKSON, Georgia 

RAND PAUL, Kentucky 

SUSAN M. COLLINS, Maine 

BILL CASSIDY, M.D., Louisiana 

TODD YOUNG, Indiana 

ORRIN G. HATCH, Utah 

PAT ROBERTS, Kansas 

LISA MURKOWSKI, Alaska 

TIM SCOTT, South Carolina 

PATTY MURRAY, Washington 

BERNARD SANDERS (I), Vermont 

ROBERT P. CASEY, JR., Pennsylvania 

AL FRANKEN, Minnesota 

MICHAEL F. BENNET, Colorado 

SHELDON WHITEHOUSE, Rhode Island 

TAMMY BALDWIN, Wisconsin 

CHRISTOPHER S. MURPHY, Connecticut 

ELIZABETH WARREN, Massachusetts 

TIM KAINE, Virginia 

MARGARET WOOD HASSAN, 

New Hampshire 

DAVID P. CLEARY, Republican Staff Director 

LINDSEY WARD SEIDMAN, Republican Deputy Staff Director 

EVAN SCHATZ, Democrat Staff Director 

JOHN RIGHTER, Democrat Deputy Staff Director 

(II) 


HELPN-004 with DISTILLER
C O N T E N T S 

STATEMENTS 

WEDNESDAY, SEPTEMBER 6, 2017 

Page 

COMMITTEE MEMBERS

Alexander, Hon. Lamar, Chairman, Committee on Health, Education, Labor, 

and Pensions, opening statement ....................................................................... 1 

Murray, Hon. Patty, a U.S. Senator from the State of Washington, opening 

statement .............................................................................................................. 4 

Murkowski, Hon. Lisa, a U.S. Senator from the State of Alaska ........................ 6 

Casey, Hon. Robert P., Jr., a U.S. Senator from the State of Pennsylvania ...... 7 

Enzi, Hon. Michael B., a U.S. Senator from the State of Wyoming .................... 38 

Paul, Hon. Rand, a U.S. Senator from the State of Kentucky ............................. 41 

Franken, Hon. Al, a U.S. Senator from the State of Minnesota .......................... 43 

Collins, Hon. Susan M., a U.S. Senator from the State of Maine ....................... 45 

Bennet, Hon. Michael F., a U.S. Senator from the State of Colorado ................. 47 

Baldwin, Hon. Tammy, a U.S. Senator from the State of Wisconsin .................. 50 

Cassidy, Hon. Bill, M.D., a U.S. Senator from the State of Louisiana ............... 52 

Murphy, Hon. Christopher S., a U.S. Senator from the State of Connecticut .... 54 

Burr, Hon. Richard, a U.S. Senator from the State of North Carolina ............... 56 

Hassan, Hon. Margaret Wood, a U.S. Senator from the State of New Hampshire ....................................................................................................................... 58

Kaine, Hon. Tim, a U.S. Senator from the State of Virginia ............................... 62 

Young, Hon. Todd, a U.S. Senator from the State of Indiana ............................. 65 

Roberts, Hon. Pat, a U.S. Senator from the State of Kansas .............................. 69 

Warren, Hon. Elizabeth, a U.S. Senator from the State of Massachusetts ........ 71 

Whitehouse, Hon. Sheldon, a U.S. Senator from the State of Rhode Island ...... 73 

WITNESSES

McPeak, Julie, Mix, Commissioner, Tennessee Department of Commerce and 

Insurance, Nashville, TN ..................................................................................... 7 

Prepared statement .......................................................................................... 9 

Kreidler, Mike, O.D., Washington State Insurance Commissioner, Olympia, 

WA ......................................................................................................................... 13 

Prepared statement .......................................................................................... 15 

Wing-Heier, Lori K., Director, Alaska Division of Insurance, Anchorage, AK ... 19 

Prepared statement .......................................................................................... 21 

Miller, Teresa, J.D., Insurance Commissioner of Pennsylvania, Harrisburg, 

PA .......................................................................................................................... 25

Prepared statement .......................................................................................... 27 

Doak, John, Commissioner, Oklahoma Department of Insurance, Tulsa, OK ... 33 

Prepared statement .......................................................................................... 34 

(III) 


HELPN-004 with DISTILLER
(IV) 

ADDITIONAL MATERIAL 

Statements, articles, publications, letters, etc. 

September 5, 2017, letter to Hon. Lamar Alexander and Hon. Patty 

Murray ........................................................................................................... 80 

September 5, 2017, letter to Hon. Mitch McConnell, Hon. Chuck Schumer, Hon. Paul Ryan, and Hon. Nancy Pelosi ............................................ 81 

September 1, 2017, letter from Mental Health Liaison Group ..................... 82 

August 10, 2017, letter to Hon. Patty Murray ............................................... 84 

Response by Mike Kreidler to questions of: 

Senator Alexander ............................................................................................ 87 

Senator Burr ..................................................................................................... 87 

Senator Young .................................................................................................. 87 

Senator Roberts ................................................................................................ 88 

Senator Whitehouse ......................................................................................... 88 

Senator Franken ............................................................................................... 88 

Response by Mike Kreidler to questions of Senator Whitehouse ................. 89 

Response by Lori Wing-Heier to questions of Senator Alexander ................ 92 

Response by Julie Mix McPeak to questions of Senator Whitehouse .......... 94 

Response by Miller, Teresa, J.D. to questions of Senator Whitehouse ........ 95 


HELPN-004 with DISTILLER
(1) 

STABILIZING PREMIUMS AND HELPING INDIVIDUALS ON THE INDIVIDUAL INSURANCE 

MARKET FOR 2018: STATE INSURANCE COMMISSIONERS 

WEDNESDAY, SEPTEMBER, 6, 2017 

U.S. SENATE, COMMITTEE ON HEALTH, EDUCATION, LABOR, AND PENSIONS, Washington, DC. 

The committee met, pursuant to notice, at 10:05 a.m. in room 

SH–216, Hart Senate Office Building, Hon. Lamar Alexander, 

chairman of the committee, presiding. 

Present: Senators Alexander, Murray, Enzi, Burr, Isakson, Paul, 

Collins, Cassidy, Young, Roberts, Murkowski, Scott, Sanders, 

Casey, Franken, Bennet, Whitehouse, Baldwin, Murphy, Warren, 

Kaine, and Hassan. 

OPENING STATEMENT OF SENATOR ALEXANDER

The CHAIRMAN. The Senate Committee on Health, Education, 

Labor, and Pensions will please come to order. 

This morning, we are holding our first hearing on stabilizing premiums and ensuring access to insurance in the individual health 

insurance market for 2018. 

We have five State insurance commissioners. Thank you for coming from long distances, some of you, to be with us to give your testimony on how to enable the 18 million Americans in the individual 

insurance market. 

To give an idea of how many people are interested in this, Senator Murray and I invited senators who were not on our committee—which about a quarter of the senate is on this committee— 

to come to a coffee with the five commissioners that we have just 

completed for an hour. We had 31 senators there. That is a remarkable level of interest. 

Senator Murray and I will each have an opening statement and 

then we will introduce our five witnesses. After their testimony, 

senators will have an opportunity to ask witnesses questions and 

we will do it in 5 minute rounds. 

As I mentioned, this committee includes 23 United States senators, nearly one-quarter of the members of the senate. It includes 

senators with the widest divergence of views. It has a republican 

majority of only one. 

Yet, working together during the last 2 years, we have been able 

to agree on big steps on big issues about which we have big differences of opinion such as fixing No Child Left Behind, which 


HELPN-004 with DISTILLER
2 

President Obama called a Christmas miracle; 21st Century Cures 

Act, which Senator McConnell, the Majority Leader, said was the 

most important piece of legislation that passed Congress last year; 

the first overhaul of mental health laws in a decade; and in early 

August, after 2 years of work—and I want to thank the staff for 

that 2 years of work especially—we passed new agreements to help 

speed safe drugs and devices into medicine cabinets and provide $9 

billion in funding for the Food and Drug Administration. 

I congratulate Senator Murray and democratic, as well as republican, members of the committee for those accomplishments. This 

is the way Americans expect the U.S. Senate to work. 

Those were big steps. This hearing is about taking one small 

step, a small step on a big issue which has been locked in partisan 

stalemate for 7 years, health insurance. It is a step Congress needs 

to take by the end of this month. 

This step is not so small to 18 million Americans—the songwriters, the self-employed farmers—those who do not get their 

health insurance from the Government or on the job. These 18 million buy their health insurance in the individual market, and about 

half of them have zero Government support to help buy that insurance. 

Eighteen million is only 6 percent of those who have health insurance in America. That is the individual market. Nearly 300 million Americans have health insurance. Eighteen million buy it in 

the individual market. That is 6 percent of all the insured and 9 

million of those 18 million have no Government help to buy their 

insurance. They are the ones most hurt by higher premiums, and 

higher co-pays, and deductibles. 

Let us take a hypothetical Tennessean, a 35 year old making $48,000 a year in Lynchburg would receive no tax benefit to cover 

her $7,100 per year premiums. She has an estimated take home 

pay of $39,000 after taxes, which means almost a fifth of her take 

home pay is spent on health insurance premiums, and this does not 

include deductibles or co-pays. 

Next year, the Tennessee Department of Insurance says premiums are going to go up by an average of 21 to 42 percent. That 

is an increase for her of between $1,500 and $3,000 more in premiums next year, and that does not include increases in 

deductibles and co-pays. 

She ought not to have to pay one fifth of her income for health 

insurance. 

Tennessee’s Insurance Commissioner, who is here today, has described the State’s individual market as, ‘‘Very near collapse.’’ At 

the end of September last year, Blue Cross, our largest insurer, 

pulled out of the individual market in Knoxville, Nashville, and 

Memphis. Not just for Tennesseans with Affordable Care Act subsidies, but for everybody. 

That could happen again at the end of this September if Congress does not act. And if it happens again, up to 350,000 Tennesseans and millions of Americans could literally be left with zero 

options to buy insurance in the individual market. 

Last year, only 4 percent of American counties had one insurance 

company on the exchange. This year 36 percent have one insurer 

on the exchange. For 2018, one-half of the counties will have one 


HELPN-004 with DISTILLER
3 

insurer only on the exchange. In Tennessee, it is 78 of our 95 counties. 

If we do act, we can limit increases in premiums next year, 2018. 

We can continue support for co-pays and deductibles for many lowincome families. We can make certain that health insurance is 

available in every county and lay the groundwork for future premiums decreases. 

I would suggest we do this by taking two actions, although there 

may be others that come from these hearings. 

One, is appropriate cost-sharing payments through the end of 

2018 to help with co-pays and deductibles for many low-income 

Americans. 

Two, amend the Section 1332 Waiver already in the Affordable 

Care Act so States can have more flexibility to devise ways to provide coverage with more choices and lower costs. 

On the first, cost sharing payments are extra subsidies—or discounts, really—for many low-income individuals who receive premium subsidies under the law. They help these individuals pay for 

out of pocket costs like co-pays and deductibles, but their overall 

effect is to lower premiums in this individual market. 

On the second, the Section 1332 Waivers, as I said, are already 

written into the Affordable Care Act. Under some circumstances, 

they allow a State flexibility from certain elements of the law, such 

as Essential Health Benefits. But they do not in any way reduce 

the patient protections most of us support, including protections for 

those with preexisting conditions, and ensuring those under 26 

may remain on their parents’ insurance and have no annual or lifetime limits. 

Right now, 23 States have begun steps to apply for a Section 

1332 Waiver; 7 States have applied; 2 States, Alaska and Hawaii, 

have received the 1332 Waivers so far. 

To get a result, democrats will have to agree to something—more 

flexibility for States—that some may be reluctant to support. Republicans will have to agree to something—additional funding 

through the Affordable Care Act—that some may be reluctant to 

support. 

That is called a compromise, a much smaller but similar agreement to the compromise that created this U.S. Senate in 1789. 

When the Founders created a Senate with two members from each 

State and a House of Representatives based on population; that 

was a compromise. 

This is a compromise that we ought to be able to accept. Temporary cost sharing payments were included in both the Senate and 

the House republican bills to repeal and replace major parts of the 

Affordable Care Act. The Section 1332 Waiver is already in the Affordable Care Act, it just has not been very appealing to States because it is a difficult tool to use. We hope to hear more about that 

from our witnesses today. 

If we were able to take the big steps I mentioned earlier—fixing 

No Child Left Behind and passing the 21st Century Cures Act— 

we ought to be able to take this small, limited, bipartisan step on 

health insurance. If we do not, millions of Americans will be hurt. 

Timing is a challenge. So I propose that we try to come to a consensus by the end of next week when our hearings are complete so 


HELPN-004 with DISTILLER
4 

that Congress can act on what we recommend before the end of 

September. Otherwise, we will not be able to affect insurance rates 

and the availability of insurance for next year. That is because the 

Department of Health and Human Services requires insurance 

companies to submit their final rates by September 20, and the Department plans to put those rates on healthcare.gov by September 

27. 

I believe we can do it here because we are plowing very familiar 

ground. Our goal is a small step and so many Americans will be 

hurt if we fail. 

If we do not do it, it will not be possible for republicans to make 

political hay blaming democrats, or democrats to make political hay 

blaming republicans. The blame will be on every one of us, and deservedly so. 

Let me conclude with a word about process. We will have four 

hearings. We are hearing from State insurance commissioners 

today. We are hearing from five State Governors tomorrow. We will 

hear from various experts on State flexibility next Tuesday, and a 

variety of helpful perspectives next Thursday, including representatives from doctors, hospitals, insurers, patients, and insurance commissioners. 

This is what we call a bipartisan hearing. Most of our hearings 

are. That means that Senator Murray and I have agreed on the 

hearings, on each topic, and on who the witnesses will be. 

This committee has a clear jurisdiction over the rules that govern 

the individual insurance market, which is what we are discussing 

today. We have jurisdiction over private insurance, over the exchanges created by the Affordable Care Act, and over the Cost 

Sharing Reduction payments. 

The purpose of the hearings is to provide a forum and create an 

environment for reaching a consensus that we can act on quickly 

during the month of September. 

Note that we do have neither jurisdiction over taxes, including 

the Affordable Care Act tax credit subsidy, nor over Medicaid nor 

over Medicare. Those belong to the Finance Committee although 

there are at least nine members of that committee on this committee. 

There has been such great interest in this effort that senators 

who are not members of our committee are being invited to coffee 

before each of the four hearings. As I said, 31 senators came to the 

one today. Senator Murray and I have invited them to do that and 

to participate in this process. 

My goal is to get a result on a small, bipartisan, and balanced 

stabilization bill. Where it makes sense, we will work with other 

committees and members to get that result. 

Health insurance has been a very partisan topic for a very long 

time, but the bottom line is 18 million Americans need our help, 

and I hope we can stay focused on getting a result. 

Senator Murray. 

OPENING STATEMENT OF SENATOR MURRAY

Senator MURRAY. Thank you very much, Chairman Alexander. 

I do want to start by expressing my appreciation for your leadership in holding these hearings. It is refreshing to have an opporVerDate Nov 24 2008 13:39 Mar 05, 2019 Jkt 000000 PO 00000 Frm 00008 Fmt 6633 Sfmt 6633 S:\DOCS\26840.TXT CAROL

HELPN-004 with DISTILLER
5 

tunity for frank and bipartisan discussions on the healthcare system, and is consistent, as you said, with longstanding tradition of 

working across the aisle on this committee. Thank you very much. 

I am also very grateful to each of the State insurance commissioners who have come a long way to join us today. Your perspective is incredibly valuable in this discussion. I am looking forward 

to hearing from each of you. 

I particularly want to acknowledge Commissioner Mike Kreidler, 

who came all the way from Washington State today. Good to have 

you here as well. 

We are beginning these conversations at an important moment 

for patients and families. There is a lot of work that needs to be 

done to undo the damage this Administration has caused within 

the healthcare system because this Administration is still trying to 

create Trumpcare by sabotage. 

Our healthcare system is more stable than President Trump’s 

tweets would have you believe, but it is weaker as a direct result 

of some steps that have been taken. 

Unfortunately, the President has undermined outreach and consumer assistance efforts, and put forward Executive Orders seemingly designed to inject uncertainty into the markets. 

Just last week, this Administration cut funding for outreach by 

90 percent and funding for consumer assistance by over 40 percent. 

Another pressing example is the threats to cutoff payments to reduce coverage costs for low-income people. 

Should these out of pocket cost reductions be discontinued, independent analysis suggests that premiums could be an average of 20 

percent higher next year for the most popular plans on the exchanges. There will be even more uncertainty in the markets, and 

patients and families likely will have fewer options when they go 

to pick their plans. 

That is unacceptable and it is avoidable. 

Congress can act right away to confirm once and for all that outof-pocket cost reductions will continue, and we have a very narrow 

window to do that, as the chairman said, before insurers finalize 

their plans for 2018 later this month. 

I am very glad that there are members on both sides of the aisle 

who agree that we do need to take this step, and I believe it is critical we work toward a multiyear solution in order to provide the 

kind of certainty that will have the most impact on families’ premiums and choices in the marketplaces. 

It takes plans months to develop their rates. If we do not find 

a multiyear solution, we are just going to be back in this room trying to patch the same problem a few months from now. And that 

is simply not what certainty looks like. 

This kind of discussion around strengthening our healthcare system is exactly what democrats have hoped for over the last few 

years. We have put forward a number of ideas that would help stabilize markets and lower costs in the near term. 

As I have said before, as we work together, I am more than 

ready to consider additional ideas from the other side of the aisle 

to make our healthcare system work better for our families and for 

patients. 


HELPN-004 with DISTILLER
6 

But to be clear, that means moving forward, not backward, on affordability, on coverage, and quality of care. Families have rejected 

the damaging approach taken in Trumpcare, which would have 

raised families’ costs and gutted critical protections like those for 

preexisting conditions and Congress should listen. 

I think we are all aware that threading this needle will not be 

easy. But I do believe an agreement that protects patients and families from higher costs and uncertainty, and maintains the guardrails in our current health system is possible. 

This kind of agreement would not only make a real difference for 

the patients and families that we serve, but it could provide a bipartisan foundation for future work. I have said many times before 

this work did not end when the Affordable Care Act passed. It is 

certainly true today. 

There is much more we need to do to strengthen the healthcare 

system, to lower costs, to expand coverage, and improve quality of 

care. These are the issues we should be able to work together on 

in a bipartisan way. 

I hope with today’s conversation, we can continue to turn the 

page away from Trumpcare and partisanship that we have seen 

way too much of, and instead, start working on healthcare policies 

to help our patients and families afford the care that they need because that is the goal that we should all be focused on. 

I am so glad we have seen the interest on both sides of the aisle 

for coming together and working to find common ground on these 

issues. 

I want to, again, thank all of the commissioners and all of our 

colleagues who are joining us today. 

I will turn it back over to Chairman Alexander. 

The CHAIRMAN. Thank you, Senator Murray. 

Our first witness is Julie Mix McPeak. She is Commissioner of 

Tennessee’s Department of Commerce and President elect of the 

National Association of Insurance Commissioners. She has testified 

here before. Welcome, Commissioner McPeak. 

Our second witness is Mike Kreidler. Senator Murray has already welcomed him and acknowledged him. He is Washington’s 

eighth Insurance Commissioner, the State of Washington’s, and the 

country’s, longest-serving commissioner. 

I will ask Senator Murkowski to introduce the next witness. 

STATEMENT OF SENATOR MURKOWSKI

Senator MURKOWSKI. Thank you, Mr. Chairman. 

It is a pleasure to introduce to the committee an individual who 

has been before us before. Director Lori Wing-Heier is Alaska’s Director of Insurance. She has been in that position since 2014 and 

has done an exceptional job. 

We recognize not only her service there, but she is also the Chair 

of the American Indian and Alaska Native Liaison Committee on 

the Association of Insurance Commissioners. 

As you have noted, Alaska is one of two States that has received 

a 1332 Waiver, and it has been under the guidance of Director 

Wing-Heier that we have seen that come about. 

I thank her, not only for being here today, but for her leadership 

and her persistence in working, not only with the Obama adminisVerDate Nov 24 2008 13:39 Mar 05, 2019 Jkt 000000 PO 00000 Frm 00010 Fmt 6633 Sfmt 6633 S:\DOCS\26840.TXT CAROL

HELPN-004 with DISTILLER
7 

tration, but with the Trump administration in getting that final 

sign off. 

The CHAIRMAN. Thank you, Senator Murkowski. 

Senator Casey, would you like to introduce the next witness? 

STATEMENT OF SENATOR CASEY

Senator CASEY. Yes. Thank you, Mr. Chairman. 

I am pleased to introduce Teresa Miller who is Pennsylvania’s 

Acting Secretary of Human Services and former Pennsylvania Insurance Commissioner. Secretary Miller served as Insurance Commissioner from 2015 through August of this year, when she was 

nominated by Governor Wolf to serve as Secretary of Human Services. 

In her role as Insurance Commissioner, she has been a vocal supporter of Pennsylvania’s health insurance marketplace, demonstrating a deep understanding of the insurance industry while 

advocating for polices in the best interests of Pennsylvanians. 

I congratulate her on being nominated to serve as Secretary of 

Human Services and happy to welcome her to the HELP Committee today. 

Secretary Miller, thank you for your testimony today. We are 

grateful you are here. 

The CHAIRMAN. Thank you, Senator Casey. 

Our fifth witness is John Doak. We welcome you back Mr. Doak. 

You were here before to help us understand the issues. 

He is Commissioner for Oklahoma’s Department of Insurance. 

He is well known for hosting healthcare innovation summits within 

his State, which seek to offer cutting edge solutions to the country’s 

healthcare challenges. 

As you already know from the meeting we have had earlier, 

there is a lot of interest here among senators. So if you could 

please summarize your remarks in about 5 minutes, we will then 

turn to a series of questions from senators. 

To follow that up, let us begin with you, Ms. McPeak. 

STATEMENT OF JULIE MIX McPEAK, J.D., COMMISSIONER, 

TENNESSEE DEPARTMENT OF COMMERCE AND INSURANCE, 

NASHVILLE, TN 

Ms. MCPEAK. Thank you. Good morning, Chairman Alexander, 

Ranking Member Murray, and members of the committee. 

I am Julie McPeak, Commissioner of the Tennessee Department 

of Commerce and Insurance. 

Today, I plan to highlight Tennessee’s history with the ACA and 

discuss some immediate solutions that Congress can consider to 

stabilize the individual insurance market. 

Before I get started, I would like to thank you for holding today’s 

hearing and for inviting so many of my State regulator colleagues. 

In an interview last year, I characterized Tennessee’s individual 

health insurance market as very near collapse. In the 12 months 

since, thankfully, our market has not collapsed, but our market is 

not any more stable and probably less so. 

Tennessee in 2017 has continued to see health insurance carriers 

flee the market due to the tremendous uncertainties surrounding 

the 2018 plan year, as well as year-over-year of substantial losses. 


HELPN-004 with DISTILLER
8 

As of today, and subject to change until QHP agreements are 

signed later this month, Tennessee consumers across the State will 

have at least one option for coverage, but only one in the clear majority of our State. 

While we feel very fortunate that Tennesseans will have an opportunity for coverage, I do not think that many people believe that 

having a single choice in 78 of 95 counties represents ideal market 

competition. 

To summarize, Tennessee’s experience over the last 4 years, our 

consumers have seen premium prices skyrocket while their plan 

choices have diminished. Tennessee had around a dozen carriers offering individual health insurance coverage in 2010, reduced to 

only three companies offering ACA-compliant plans in 2018. Tennessee’s current ACA trajectory, quite simply, is not sustainable. 

Today’s hearing could not be timelier as we are approaching a 

September 20 deadline for final determinations on 2018 rate filings. Tennessee’s carriers filed rates assuming the CSRs are not 

funded, with each carrier attributing approximately 14 percent of 

their average rate increase to CSR uncertainty. 

According to CMS data, approximately 120,000 Tennesseans are 

enrolled in CSR plans representing almost 60 percent of our FFM 

market. The CSR funding issue is the single most critical issue you 

can address to help stabilize insurance markets in 2018. To be 

clear, this issue is not an insurer bailout. 

CSR funding ensures that some of our most vulnerable consumers receive assistance for co-pays and deductibles that are required to be paid under Federal law. It has the effect of reducing 

proposed premium increases and has a direct impact on the 

amount of subsidy assistance provided by the Federal Government. 

In fact, as you know, last month the CBO reported the Federal 

deficits would increase by $6 billion in 2018 if CSR funding is terminated. 

But on the other hand, should the Federal Government agree to 

fund CSRs and CMS works with the State, in Tennessee, we could 

see proposed increases for 2018 be reduced. 

Beyond CSRs, Congress should also establish a reinsurance 

mechanism that would stop losses for individual claims at a specified amount to increase market participation by carriers. For the 

most immediate impact, this backstop mechanism must be Federal 

as it would be impossible for many States to develop such a program for the 2018 plan year. 

States should have the option and flexibility to set up their own 

programs to reflect our unique dynamics and market conditions, 

but the Federal Government should set up a default mechanism to 

stabilize markets during any transition to a State-run program. 

Following these immediate measures—CSR funding and reinsurance—Congress must address broader ACA reforms, such as benefit design, rating restrictions, and the underlying cost of 

healthcare. 

As the cost of healthcare services increase, so too must the cost 

of health insurance. This causal relationship is simple to understand, yet it is too often not discussed in conversations of health 

insurance reform. 


HELPN-004 with DISTILLER
9 

Health insurance rate requests are subject to review by State insurance departments and in FFM States by the Federal Government. 

In Tennessee, the rate review process is an entirely public one. 

As soon as a rate is filed, it is publicly accessible to anyone interested. Rates are filed and approved on a plan year basis that prohibits rate changes during the year, and provides consumers’ notice 

before a rate increase for the following year. 

These parallel protections are nonexistent in the pharmaceutical 

industry and this level of transparency is lacking in determining 

appropriate costs for medical services. These issues cannot remain 

to be unaddressed in our focus on health insurance rates and accessibility. 

In conclusion, consumers around this country need, and deserve, 

access to quality health insurance coverage at affordable rates. 

Working together, we can get back to a place of vibrant, competitive markets where insurers look to expand, rather than contract, 

their operations. 

Congress should focus on two critical elements to make that possible: CSRs and reinsurance. After addressing these issues, Congress should focus its attention on a broader conversation of our 

Nation’s health and strategies to improve health outcomes while 

reconsidering tenets of the ACA that have led to challenge and potentially unsustainable markets across much of the country. 

Thank you again for your time. I look forward to answering your 

questions. 

[The prepared statement of Ms. McPeak follows:] 

PREPARED STATEMENT OF JULIE MIX MCPEAK, J.D. 

SUMMARY

Highlight 

The ACA as it stands today is not sustainable in Tennessee. Our market remains 

‘‘very near collapse.’’ Congress and the Administration have a tight window to enact 

bipartisan legislation that can provide immediate relief and stability for 2018 as 

Members continue to work together on longer-term solutions. 

Tennessee Experience 

Tennessee’s individual health insurance marketplace is no stronger today than it 

was a year ago. In fact, in 2017 we continued to see carriers with significant market 

presence flee the market due, in large part, to the tremendous uncertainty surrounding the 2018 plan year as well as to substantial losses in recent years. Today, 

Tennesseans in 73 of 95 counties only have one FFM option. That number will increase to 78 counties in 2018. Tennesseans have also seen their premium prices increase substantially since 2014, and those rate requests have been fully justified by 

medical claims. Tennessee has gone from having premiums among the lowest in the 

country in 2014 to among the highest for 2018. We have three carriers remaining 

in the marketplace selling ACA-compliant plans, and carriers have introduced narrower networks. 

Immediate Stabilization 

Congress can strengthen insurance markets by fully funding CSR payments 

through the 2018 plan year and by establishing a reinsurance mechanism. CSR 

funding ensures that some of our most vulnerable consumers receive assistance for 

copays and deductibles and has the effect of reducing proposed premium increases 

that would otherwise increase the amount of advance premium tax credit assistance 

provided by the Federal Government if done expeditiously. Reinsurance will effectively stop losses for individual claims at a specified amount, providing more stability to the claims evaluation and projection process. The program should provide 

an immediate Federal backstop and then flexibility for States to set up their own 


HELPN-004 with DISTILLER
10 

programs in the future and ultimately reduce premiums and bring carriers into the 

market. 

Health Care Costs 

Health insurance helps consumers shoulder the costs of health care services. As 

the costs of health care services increase, so too must the costs of insurance. This 

causal relationship is simple to understand, yet is too often not discussed in conversations of health insurance reform. 

Future 

Congress must first focus on these critical stabilization measures. After addressing immediate stabilization measures, Congress should focus its attention on a 

broader conversation of our Nation’s health and health insurance systems and the 

long-term sustainability of these systems. 

INTRODUCTION

Good morning Chairman Alexander, Ranking Member Murray, and members of 

the committee. Thank you for inviting me to testify this morning. I enjoyed meeting 

with this committee in February and I look forward to today’s conversation. 

As you know, I am Julie Mix McPeak. I am commissioner of the Tennessee Department of Commerce and Insurance (TDCI) where I also serve as the State’s Fire 

Marshal. In addition to my responsibilities at home, I also serve as president-elect 

of the National Association of Insurance Commissioners (NAIC), as an executive 

committee member of the International Association of Insurance Supervisors (IAIS), 

and as a member of the Federal Advisory Committee on Insurance (FACI). I have 

spent most of my career in insurance regulation, previously serving as the executive 

director of the Kentucky Office of Insurance, and have a strong affinity for the country’s State-based system of insurance oversight. 

My testimony today will highlight Tennessee’s history with the Affordable Care 

Act (ACA) before discussing some immediate and longer-term solutions that Congress and/or the Administration can consider to stabilize the individual insurance 

market. Before I get started, I would like to thank you for holding today’s hearing 

and for inviting so many State insurance regulators as we have all spent a significant number of days working in our States and working together to ensure stability 

in the health insurance markets of this Nation. 

TENNESSEE’S INDIVIDUAL MARKET

In an interview last year discussing 2017 filings and rates, I characterized Tennessee’s individual health insurance marketplace as ‘‘very near collapse.’’ In the 12 

months since, our marketplace has not collapsed. Unfortunately, however, our market is not any more stable than it was late last year. 

Tennessee in 2017 has continued to see health insurance carriers flee the market 

due, in large part, to the tremendous uncertainty surrounding the 2018 plan year 

as well as to substantial losses in recent years. Humana Insurance Company and 

TRH Health Insurance Company announced this year that they would not write 

ACA-compliant plans on or off of the federally Facilitated Marketplace (FFM) in 

2018. While we added one new insurance carrier, Oscar Insurance Company of 

Texas, that company will only be writing in one of the State’s eight rate and service 

areas—the Nashville region and its surrounding counties. 

BlueCross BlueShield of Tennessee (BCBST) has tentatively agreed to offer coverage in the Knoxville region and its surrounding counties. This is noteworthy because it means that, as of today, and subject to change until Qualified Health Plan 

(QHP) agreements are signed later this month, Tennessee consumers across the 

State will have at least one option through the FFM. While we feel very fortunate 

that all Tennesseans will have such an opportunity, I do not think that many people 

would argue that having a single choice in 78 of 95 counties and a total of three 

(3) insurance carriers offering ACA-compliant coverage in the State represents ideal 

marketplace competition. 

Tennesseans will face substantial rate increases for yet another year. BCBST and 

Cigna filed rate increases that averaged 21 percent and 42 percent for the 2018 plan 

year, respectively. Those increases may be offset for the 88 percent of our FFM enrollees that receive advance premium tax credits (APTC), but for the other 12 percent of FFM enrollees and for the 37,478 individuals who purchase insurance off the 

exchange, these premium increases are substantial. And they are in addition to substantial rate increases absorbed by these populations over the last several years. 


HELPN-004 with DISTILLER
11 

Tennessee began the ACA experience in 2014 with some of the lowest rates in the 

country. In fact, our rates ranked the second-lowest in 2014 and the fifth-lowest in 

2015. During those same 2 years, Tennessee had the highest and second-highest 

risk scores in the Nation, according to metrics developed and reported by the U.S. 

Department of Health and Human Services (HHS). Tennessee is also among the 

many States that had a Co-Op experience that did not end in success. Our Co-Op 

provided coverage through the end of 2015, but due to a multitude of factors was 

ultimately placed into Supervision by my Department. We have been working with 

HHS since that time and hope to soon complete the company’s wind-down and we 

fully expect that the company will be able to repay the Federal Government a small 

portion of the Federal moneys allocated for its startup and solvency purposes. 

To summarize Tennessee’s individual market experience over the last 4 years, our 

consumers have seen premium prices skyrocket while their choices have dropped 

substantially. Tennessee had around a dozen carriers offering individual health insurance coverage in 2010, and looking to 2018, the State has a total of three companies offering ACA-compliant plans (though consumers in much of the State will only 

have one choice), and one company that sells non-compliant, underwritten plans. 

The companies’ experiences and the State’s population health, which we are working 

as a State to improve, have justified the rate increases. While we recognize that premiums for ACA-compliant plans were going to be pricier than non-ACA-compliant 

plans available before 2014 due to their more robust benefit offerings, policies that 

increase in price significantly year-over-year has been a tremendous affordability 

challenge for Tennessee’s citizens. 

Tennessee’s current ACA trajectory, quite simply, is not sustainable into the extended future. We are thankful that consumers in all counties of Tennessee appear 

to have an FFM coverage option for 2018, and we are hopeful that that remains 

the case, but for how much longer, as we are running out of carriers? I appreciate 

today’s hearing designed to create solutions to immediately inject some level of stability into the market and I encourage you to continue discussions to more broadly 

address America’s health insurance and healthcare challenges. 

TIMELINE & CSRS

Today’s hearing could not be more timely as we are rapidly approaching a September 20 deadline for States and the Centers for Medicare & Medicaid Services 

(CMS) to make final determinations on 2018 rate filings. This deadline was pushed 

back by CMS on August 10 from an original August 16 due date with a recognition 

that cost-sharing reduction (CSR) questions added a layer of complexity to the rate 

review process. The States have addressed CSR uncertainty in a variety of ways, 

including by requiring carriers to file two sets of rates: one set of rates that assumes 

CSRs are not funded and the other set of rates that assumes CSRs are funded by 

the Federal Government for the 2018 plan year. 

Tennessee’s marketplace carriers filed one set of rates assuming the CSRs are not 

funded. We asked carriers to identify the percentage of their rate request that is 

due specifically to uncertainty surrounding CSR funding. BCBST reported that 14 

percent of its overall 21 percent average rate increase is due to CSR uncertainty, 

while Cigna reported its impact at 14.1 percent of its overall 42 percent average rate 

request. According to CMS data, approximately 120,000 Tennesseans are enrolled 

in CSR plans, representing almost 60 percent of our FFM market. 

There is still potentially time for the Congress and Administration to provide stability to health insurance markets across the country by agreeing to fund CSR payments at least through the 2018 plan year. Such a stability measure could result 

in an immediate reduction in proposed premium rates for 2018 following coordination between the States and CMS. 

The CSR funding issue is the single most critical issue that you can address to 

help stabilize insurance markets for 2018 and potentially bring down costs. And to 

be clear, this issue is not an ‘‘insurer bailout.’’ CSR funding ensures that some of 

our most vulnerable consumers receive assistance for copays and deductibles that 

are required to be paid under Federal law AND has the effect of reducing proposed 

premium increases that would otherwise increase the amount of APTC assistance 

provided by the Federal Government. In fact, as you know, last month the Congressional Budget Office (CBO) reported that Federal deficits would increase by $6 billion in 2018 if CSR funding is terminated. 

Should the Federal Government refuse to fund CSRs, premium rates will increase 

at rates that are otherwise unnecessary based on medical trend, inflation, and other 

cost considerations. This increase will impact the second-lowest silver plan rates, 

which in turn will increase the amount of available subsidy to FFM consumers. On 

the other hand, should the Federal Government agree to fund CSRs, and CMS 


HELPN-004 with DISTILLER
12 

works with the States, we could see proposed increases for 2018 be reduced by substantial margins. Those reductions could also result in the Federal Government paying out less in APTC than they would pay should currently filed rates be approved. 

Please act now to fully fund CSRs and provide that necessary certainty to our insurance markets. 

INDIVIDUAL MARKET REFORMS

Reinsurance/Stop-Loss Mechanism 

In addition to providing certainty regarding CSRs, the Federal Government can 

take additional action to stabilize markets. To stabilize markets, we need to grow 

risk pools with healthy individuals. To attract new, healthier risk to the market, 

we need to calm rates and backstop losses relative to the most expensive claims. 

Along these lines, Congress should consider establishing, at the very least, a shortterm reinsurance mechanism that would effectively stop losses for individual claims 

at a specified amount. For a most immediate impact, this backstop mechanism must 

be Federal as it would be impossible for many States to develop such a program 

for the 2018 plan year and a significant challenge for States to implement a mechanism for 2019 and perhaps 2020. States should have the option and full flexibility 

to set up their own programs to reflect their unique dynamics and market conditions, but the Federal Government should set up a default mechanism to stabilize 

markets during any transition to a State-run system. 

In Tennessee, TDCI recently issued a data call to our health insurance carriers 

to better understand the frequency of high cost claims. We requested claim cost 

numbers in specified increments beginning at $50,000 claims and extending beyond 

$5 million. Preliminarily, and on the aggregate as we issued this data call under 

our confidential market conduct authority, we have identified that between 85 percent and 95 percent of claims incurred and reported in 2015 and 2016 respectively, 

fell between the $50,000 and $200,000 range. We are continuing to review the data. 

Rate Bands 

When I was here in February, I highlighted providing more flexibility related to 

rate bands as one area that Congress and/or the Administration could address in 

trying to bring younger, healthier individuals into the individual insurance marketplaces. In Tennessee, the majority of our FFM population is 45 years of age or older. 

We need younger, healthier risk to enter the market and balance the currently insured business that, as HHS has indicated, has resulted in a higher risk score than 

almost every other State’s insured population. 

As you know, the ACA has a 3:1 age band that requires premiums to differ based 

on age by no more than a 3:1 ratio. I said in my February statement: 

Providing more flexibility to insurance regulators and carriers in how individuals are rated, even while keeping prohibitions against discrimination based on 

preexisting conditions, may help stabilize insurance markets. Ratios closer to 

5:1 or 6:1 would provide more rate flexibility in the market and when coupled 

with EHB flexibility may have the ultimate impact of growing the individual 

insurance pool in Tennessee. 

I stand by that statement today and would add that a 5:1 or 6:1 ratio should be 

a ceiling rather than a requirement. Before the ACA, we saw rates that often provided a 5:1 age ratio in Tennessee. These rates were actuarially justified and allowed for more variability in rates for younger consumers. Should the ACA be 

amended to provide more flexibility, it is possible, if not highly likely, that younger 

consumers who today want to purchase insurance but decide to instead pay the individual mandate penalty due to higher prices would come back into the markets to 

give themselves a sense of comfort that insurance provides should they need medical 

services. 

Yes, greater flexibility in age rating would mean lower prices for younger consumers. Yes, it could also mean higher prices for older consumers; but that’s not 

necessarily the case and it is a situation that Congress could simultaneously address by adjusting APTC formulas. However, there is simply no denying that a bigger risk pool with a greater percentage of low risks will outperform a smaller risk 

pool with concentrated high risk. We should do what we can to grow our risk pools 

for the benefit of the many, including by expanding the range of individuals qualifying for an APTC to apply to those individuals falling below 100 percent of the Federal Poverty Level (FPL) who may not otherwise have access to affordable insurance 

coverage as well as by opening up access to catastrophic plans to everyone, rather 

than for only individuals aged 30 and younger or those who can otherwise qualify 

under special circumstances. 


HELPN-004 with DISTILLER
13 

HEALTHCARE COSTS

Health insurance helps consumers shoulder the costs of health care services. As 

the costs of health care services increase, so too must the costs of health insurance. 

This causal relationship is simple to understand, yet is too often not discussed in 

conversations of health insurance reform. While recognizing that today’s focus is on 

immediate strategies to stabilize health insurance markets, I would be remiss if I 

did not urge the committee to also begin a conversation about health insurance cost 

drivers, and specifically the costs of health care services. 

Health insurance rate requests are subject to review by State insurance departments and in FFM States, the Federal Government. Health insurance rates are 

among the most highly regulated financial products in the country as they must be 

related to risk and are prohibited from being excessive or inadequate or discriminatory. In addition, Federal law specifies ‘‘loss ratios’’ for health insurance products 

that require carriers to provide rebates to consumers if the carriers spend too much 

of their premium revenue on administrative costs. In Tennessee, the rate review 

process is an entirely public one. As soon as a rate is filed through the Department’s 

electronic system, it is publicly accessible to anyone interested. Objections to the filings, and questions from the Department, are also publicly accessible, as are responses from the companies. Insurance consumers go on healthcare.gov to view a 

menu of policy options, complete with monthly premium prices. Rates are filed and 

approved on a plan year basis that prohibits rate changes during a year and provides consumers notice before a rate increase for the following year. Are there parallels to these protections applicable to the pharmaceutical industry? Is this level 

of transparency achieved in determining appropriate costs for medical services? 

Medical and particularly pharmaceutical costs and transparency, balance and surprise billing, and air ambulance costs, services, and billing, contribute to the cost 

of health insurance. As we continue our conversation on stabilizing health insurance 

markets, I would encourage you not to lose sight of key cost drivers and to look for 

incentives and wellness programs that may help improve the overall health of our 

shared constituents. 

CONCLUSION

Thank you for the opportunity to visit again with this committee. Health insurance markets remain ‘‘near collapse’’ in several States and are certainly challenged 

in many others. But insurance regulators are a resilient group, and we stand ready 

to work with you to provide immediate and long-term stability to our markets. 

Consumers around this country need and deserve access to quality health insurance coverage at affordable rates. Working together we can get back to a place of 

vibrant, competitive markets where insurers look to expand, rather than contract, 

their operations. The Congress should first focus on two critical elements to make 

that possible: CSRs and Reinsurance. Fully funding CSRs will provide immediate 

certainty to our markets, and very possibly bring requested rate increases down, 

and a Federal backstop for high-dollar claims will calm troubled markets. After addressing these issues, the Congress should focus its attention on a broader conversation of our Nation’s health and strategies to improve health outcomes while reconsidering tenets of the ACA that have led to challenged and potentially unsustainable 

markets across much of the country. 

Thank you again for this conversation. I look forward to your questions. 

The CHAIRMAN. Thank you, Ms. McPeak. 

Mr. Kreidler. 

STATEMENT OF MIKE KREIDLER, O.D., WASHINGTON STATE 

INSURANCE COMMISSIONER, OLYMPIA, WA 

Mr. KREIDLER. Good morning, Mr. Chairman, and Ranking Member Murray, and members of the committee. 

My name is Mike Kreidler and I am the Insurance Commissioner 

for the State of Washington. I want to thank you for your bipartisan commitment to address the challenges that we, as insurance 

commissioners, are facing, but also you are facing in the coming 

months. 

This is especially true for the individuals and families who buy 

their own health insurance, some 330,000 people in the State of 


HELPN-004 with DISTILLER
14 

Washington. The health of that market is really the canary in the 

coal mine. If there is a problem in the individual market, it is a 

problem for all of us. 

This is made up, as you pointed out, Chairman Alexander, of 

early retirees, self-employed people who work for employers who do 

not offer health insurance. The individual market is clearly a very 

critical safety net. They are relying on us to find a path forward 

that offers a great deal more certainty than what we have right 

now. 

Washington State has fully embraced the Affordable Care Act 

from the very beginning. We have a very stable market since 2014. 

Our uninsured rate has plummeted from 15 percent down to under 

6 percent in the State of Washington, but this year, there has been 

a serious jolt to the system. 

Initially, we had two counties in the State of Washington that 

did not have any health insurers. We solved that problem, thankfully, but I am nervous about what is going to happen next year. 

Because of the growing uncertainty and actions by the Administration, our individual health insurance markets are in serious peril. 

The proposed average rate increases that we have seen for 2018 

are 23 percent. In years past, it has been under 10 percent. Nine 

rural counties have only one insurer. One major insurer largely 

pulled back in our State completely from western Washington 

where most of the people live. 

The next 2 weeks are going to be very telling. Insurers will be 

making their final decisions as to whether they are going to participate in the health insurance marketplace or not. Congress must act 

quickly to address these growing uncertainties. 

You must permanently fund the Cost Sharing Reduction payments. That is something that is going to help a great deal in our 

marketplace. It affects some 72,000 people in the State of Washington. For a low-income family in the State of Washington, the deductible is the difference of being $1,200 with the CSRs or $14,000. 

I urge you to create a Federal reinsurance program this year. 

Doing this would show your commitment to stabilizing the market. 

It worked very well in the State of Washington for the first 3 years 

that we had a reinsurance program. We would like to see it continue and go forward. 

It is another way of reassuring the insurance market and insurance carriers. It does not help them financially, but it gives them 

predictability and helps us hold down the rates. 

Make sure that you maintain the coverage and affordability 

guardrails in the 1332 Waivers. We are willing to play by the rules. 

What we do not want to see is Essential Health Benefits and the 

guarantees on out of pocket costs eroded away. Those are consumer 

protections that nobody wants to see leave the marketplace. 

In closing, let me say that you must take bold action now to 

shore up these markets. Millions of hardworking families and individuals are counting on us. In Washington State, we have firsthand 

experience with what can happen when violating basic insurance 

principles are allowed to occur, and they are occurring right now. 

We tried this in the 1990s and we saw the individual market in 

the State of Washington totally collapse. Believe me, that is something no one wants to go through. 


HELPN-004 with DISTILLER
15 

Let me be a harbinger here and say this. It can and will happen 

if you do not take action now. That is how critical it is out there 

in that insurance market and to make sure we do not have that 

kind of collapse we saw in Washington happen for the whole country in the individual market. Lives depend on it. Our lives rest on 

your bipartisan efforts. 

Thank you, Mr. Chairman. 

[The prepared statement of Mr. Kreidler follows:] 

PREPARED STATEMENT OF MIKE KREIDLER, O.D. 

SUMMARY

Washington State’s individual market insures 330,000 people. Most of these people are self-employed, early retirees, or work for employers who don’t offer coverage. 

This is a vulnerable population of individuals who have no negotiating power, and 

the market is increasingly unstable, especially in today’s regulatory climate. 

Washington State successfully implemented health reform, and until this year, 

has had a stable individual health insurance market with many insurers and lowerthan-average rates. 

This year was a jolt to our system. We’re seeing higher proposed rates, fewer 

plans being offered, and a major insurer pulling back from Western Washington. 

All of these actions are a direct result of growing instability in the individual market and the lack of predictability for insurers. 

To stem this trend, Congress must take swift, bipartisan action in three areas: 

• Permanently fund cost-sharing reduction subsidies. • Create a Federal reinsurance program. • Maintain coverage and affordability guardrails of 1332 waivers. 

Washington State has firsthand experience with the dangers of ignoring signs of 

instability in its insurance market. 

We passed reform in the 1990s that ignored basic insurance principles and saw 

a total collapse of our individual market in only a few years. 

Let our experience be your warning. This can and will happen on a national level 

if Congress does not take appropriate action now. 

Chairman Alexander, Ranking Member Murray and committee members, thank 

you for the opportunity to testify today regarding the challenges facing our individual health insurance market and possible solutions to address those challenges. 

I welcome the commitment of the Health, Education, Labor, and Pensions Committee to work on a bipartisan basis to address this critical issue. 

In Washington State, approximately 330,000 people (or about 5 percent of our 

population) purchase their own individual health insurance coverage. Most work for 

employers who don’t offer health insurance, are self-employed or are early retirees. 

People who buy individual insurance often have no other option for coverage; the 

individual market is their safety net. 

As Washington State’s insurance commissioner, it is my responsibility to do everything in my power to ensure that these Washingtonians have access to a stable insurance market. But I cannot do it alone—my success depends upon a strong partnership with the Federal Government. Now, this month, critical Federal actions are 

needed to stabilize the individual health insurance market in Washington State, 

and in the country. This burden rests on you. 

It is with the well-being of my State’s residents clearly in mind that I offer my 

testimony today. 

Following enactment of the Federal Affordable Care Act (ACA), Washington State 

launched a bipartisan effort that fully embraced all aspects of the new law. We 

acted quickly to establish our own State-based marketplace, the Washington Health 

Benefit Exchange (Exchange), and to implement Medicaid expansion. I strongly believe that these early decisions are why we have cut our uninsured rate by 60 percent. Today, the percentage of people in our State without health insurance is at 

a record low of about 6 percent. 

There are several additional reasons for our success. We are fortunate to have 

‘‘home grown’’ local insurers who have made a strong commitment to our State. We 

have the benefit of being a lower health care cost State—our use of hospital services 

is among the lowest in the Nation. And in 2014, I, along with 22 other States and 

the District of Columbia, made the difficult decision to not allow legacy or non-ACAVerDate Nov 24 2008 13:39 Mar 05, 2019 Jkt 000000 PO 00000 Frm 00019 Fmt 6633 Sfmt 6621 S:\DOCS\26840.TXT CAROL

HELPN-004 with DISTILLER
16 

compliant plans to continue to be offered in the individual market so that our individual market risk pool could be as large and as healthy as possible. 

As a result, since 2014, Washington State has enjoyed a stable and competitive 

individual health insurance market. Before this year, we have experienced an average annual premium increase of near or below 10 percent. For 2017, we had 13 

health insurers offering 154 plans in our individual health insurance market. 

Let me be clear, the Affordable Care Act is not perfect even in Washington State. 

I am concerned about bringing as many healthy, young people into coverage as possible. And, like other States, we have seen a recent trend to narrower health plan 

networks. Deductibles and cost-sharing are growing, presenting real affordability 

challenges for some consumers. We share the national challenge of rising pharmaceutical costs. Yet, despite all this, the ACA has had a major positive impact on our 

overall market, providing life-saving benefits to many of our most vulnerable citizens. This year, our progress forward is threatened by uncertainty around the fate of 

the ACA, including continued payment of cost-sharing reductions, weakened enforcement of the individual mandate, and Federal investment in outreach and marketing to promote enrollment in health coverage. 

For plan year 2018, this uncertainty has caused a serious disruption to our individual health insurance market in these ways: 

• Insurers have proposed rate increases averaging 23 percent. • After evaluating proposed filings in June, we discovered two ‘‘bare’’ counties 

without any individual plans offered for sale. Working closely with our health insurers to see who was willing to step up to this challenge, we ultimately achieved statewide coverage. • We anticipate having nine rural counties with only one insurer offering coverage on the Exchange. • One major insurer left all counties in Western Washington, the most populous 

part of our State. • Eleven insurers filed 74 plans for the 2018 individual health insurance market. • The number of proposed health plans offered through our Exchange dropped 

substantially. Two insurers will no longer offer bronze plans on the Exchange. 

These 2018 filings cause me grave concern for the fundamental stability of our 

individual insurance market. 

The next 2 weeks will be telling, as insurers decide whether to follow up on their 

proposed filings for 2018 and commit to actual participation in the Exchange and 

in all of the counties they have proposed to serve. Congress must act quickly to address the uncertainty in the individual health insurance market. Clear opportunities 

are readily available to substantially strengthen it. 

COST-SHARING REDUCTIONS

First, and foremost, Congress should bring certainty to cost-sharing reduction 

payments by making a permanent appropriation for them. Cost-sharing reductions 

are not insurance company bail-outs; they benefit lower-income people and families 

by directly reducing their health care costs. For those who struggle to meet basic 

needs such as food and housing, cost-sharing reduction payments will make a difference in whether they decide to purchase insurance. These payments also make 

a difference in whether they can afford to see a doctor, even when they do have insurance. The reduced cost burden will literally make the difference between their 

seeking care or not. 

To illustrate this impact, I offer the following chart showing cost-sharing reductions by income level for various services. Consider a 40-year-old man living in 

Pierce County, Washington earning wages at 150 percent of the Federal poverty 

level, around $23,000 per year. Suppose he chooses to buy a silver plan with the 

lowest premium. With cost-sharing reduction payments, his annual deductible is 

$2,000. Without them, it increases to $7,050. With cost-sharing reduction payments, 

he can visit his primary care provider without having to make a copayment. 

40-Year-Old Non-Smoker in Pierce County Selecting the Lowest Cost Silver Plan* 

Income Deductible 

Primary care 

visit to treat an 

illness or injury 

copay 

Specialist 

visit copay 

Urgent care 

centers or facilities copay 

150% FPL ..................................................................................... $600 No charge $5 $50 

200% FPL ..................................................................................... $2,000 No charge $5 $50 

250% FPL ..................................................................................... $5,250 $15 $40 $75 


HELPN-004 with DISTILLER
17 

40-Year-Old Non-Smoker in Pierce County Selecting the Lowest Cost Silver Plan*—Continued 

Income Deductible 

Primary care 

visit to treat an 

illness or injury 

copay 

Specialist 

visit copay 

Urgent care 

centers or facilities copay 

400% FPL ..................................................................................... $7,050 $30 $60 $100 

* Ambetter Balanced Care 4 (2017). 

Here and around the Nation, States have been spending countless hours during 

the last several months trying to find an approach to rate setting in 2018 that does 

the least harm to consumers if cost-sharing reduction payments are suddenly curtailed. I can assure you there is no solution that doesn’t hurt consumers, especially 

those who do not receive advance premium tax credits. 

FEDERAL REINSURANCE PROGRAM

Congress should enact a Federal reinsurance program with a minimum duration 

of 3 years. This level of clear and sustained commitment by the Federal Government 

is necessary, and will significantly help stabilize the individual health insurance 

market. In Washington State between 2014–16, we experienced the benefit of a Federal reinsurance program. We have concrete evidence of the impact that a reinsurance program can have on premiums and insurers’ willingness to participate in this 

market. 

Some have asked whether enactment of a Federal reinsurance program in late 

2017 can impact rates in 2018. Health insurance rates for plans that will be sold 

in late fall open enrollment are filed in the spring and approved by late summer. 

At this time in the year, 2018 rates have been filed and approved, and a Federal 

reinsurance program enacted now would not change them. 

However, it would have a strong effect on insurer participation in the 2018 market. As I stated earlier, insurers have filed proposed rates but have not yet committed to participate in the Exchange and the counties they have identified. If insurers know that a Federal reinsurance program will be in place for calendar year 

2019 and beyond, there will be greater confidence and certainty related to market 

participation in calendar year 2018. Insurers will be motivated to participate in the 

market. And in calendar year 2019, a Federal reinsurance program would positively 

affect both premium rates and participation. Insurer confidence means more insurers participate in the market, which means more competition among insurers on 

price and quality of care. Fostering healthy competition among insurers is good for 

consumers. 

In the short term, a Federal reinsurance program modeled on a Federal transitional reinsurance program would provide the most stability. Insurers are familiar 

with the program and can adapt quickly to its implementation. They will have certainty regarding the level of Federal funding available and the likely payment parameters, given their previous experience with the program. This experience will 

translate directly to lower premiums beyond plan year 2018. 


HELPN-004 with DISTILLER26840-1.eps
18 

If Congress has an interest in offering States more flexibility in the Administration of market stability funding, I strongly urge you to choose a funding allocation 

approach that fairly distributes funds across States, without regard to the approach 

selected. States can be valuable laboratories of innovation, and even-handed funding 

will ensure the widest array of methods. I remind you that implementation of a 

flexible option will require considerable lead time; States will need time for stakeholder discussions to determine the appropriate use of funding, to enact State legislation authorizing policy and spending authority, and to implement program parameters. States will also have to take into account the long lead time necessary for 

insurers to incorporate new options into their planned filings. 

Like several other States, Washington is currently exploring reinsurance as a policy option to help stabilize our individual insurance market for 2019. We will determine, given the number of insurers in our market and our lower premium costs, 

whether use of a 1332 waiver would be viable in our State. Any program that we 

develop—if viable and if the necessary State funding is available—would supplement and enhance a Federal reinsurance program. 

1332 WAIVER APPROVAL PROCESS

As an elected insurance commissioner, I believe that coverage and affordability 

guardrails in the current 1332 waiver statute set an appropriate national coverage 

benchmark. These guardrails ensure that a 1332 waiver will not result in reductions 

in the number of people covered, the scope of their benefits, or affordability. By creating a level playing field, they promote competition among insurers based upon 

quality and choice in a more stable market. They also promote improved population 

health. 

I do agree that flexibility and efficiency could be improved in the 1332 waiver approval process. I believe that a 10-year economic analysis is not necessary. In addition, given that proposed insurance plans and rates are filed more than 6 months 

in advance of the plan year, the current 9-month period for the Centers for Medicare 

and Medicaid Services (CMS) to determine completeness and to review an application creates too much delay for the States. This is compounded for those States, like 

Washington, that have a part-time legislature. 

It is my understanding that CMS is working to develop an expedited process for 

review of 1332 waiver applications, and I strongly support those efforts. 

FEDERAL INVESTMENTS IN OUTREACH AND ENROLLMENT MARKETING

A key to a stable individual health insurance market is maximizing the number 

of people enrolled, especially those who are young and healthy. As noted earlier in 

my testimony, Washington State has its own Exchange. Yet the effectiveness of our 

own outreach and marketing is greatly magnified by the Federal Government’s outreach and enrollment activities. 

In the past, we have enjoyed an effective collaborative effort with the Federal Exchange in the months leading up to the start of open enrollment. Yet this year, that 

activity among the Administration, other States and major stakeholder groups is not 

occurring. These informative discussions included sharing of best practices, 

leveraging community infrastructure, developing consistent enrollment messaging, 

and sharing plans for marketing and advertising buys. 

Pre-open enrollment emails and outreach support reports, newsletters and social 

media announcements suitable for sharing with our partners or socializing on our 

media channels are no longer being prepared. These resources support the larger 

message at a national level of the importance of having insurance, and for many 

of our most vulnerable—those who have English as a second language or live in 

harder-to-reach rural areas—they are a critical source of information. 

Federal marketing and advertising of open enrollment on broadcast, print and social media channels is a critical element of outreach nationally. These ads provide 

essential open enrollment messages that keep the need for finding, selecting and enrolling in health insurance front and foremost during the busy holiday season. For 

many people, these ads may be the only time they may see information on open enrollment. Removing this key part of the strategic engagement strategy is damaging 

not only to the Federal marketplaces but to all marketplaces nationwide and, ultimately, come at the highest price for our consumers. 

WASHINGTON STATE’S PAST INDIVIDUAL MARKET FAILURE

In Washington State, we know firsthand the consequences of an unstable individual market. Following passage and partial repeal of health reform legislation in 

the 1990s, our individual health insurance market went into a death spiral. By 


HELPN-004 with DISTILLER
19 

1998, we had no individual health insurance options in the State other than a costly 

high-risk pool. 

The failure of our individual market was caused by three factors: 

• Health insurance rules requiring guaranteed issue and prohibiting pre-existing 

condition exclusion periods of more than 3 months. 

• Repeal of an individual mandate. 

• Lack of premium and cost-sharing subsidies to make coverage affordable. 

I make my recommendations to you today to ensure that other States do not experience the same market failure that we did in Washington. Millions of people—hardworking families and individuals—are relying upon us to ensure that the individual 

health insurance market will be there for them now and in the future. Yet uncertainty related to payment of cost-sharing reductions, high premiums, and weakened 

enforcement of the individual mandate have placed our individual health insurance 

markets at serious risk. There are three concrete steps that Congress must take to 

address this crisis: 

1. Fund cost-sharing reductions for at least 3 years. 

2. Establish a Federal reinsurance program with a duration of at least 3 years. 

3. Invest in enrollment outreach and education. 

Thank you for this opportunity to share my recommendations with you. 

The CHAIRMAN. Thank you, Mr. Kreidler. 

Ms. Wing-Heier. 

STATEMENT OF LORI K. WING-HEIER, DIRECTOR, ALASKA 

DIVISION OF INSURANCE, ANCHORAGE, AK 

Ms. WING-HEIER. Thank you for the opportunity to testify today 

about the health insurance market in Alaska and the need for congressional action to help the people in the individual insurance 

market in 2018 and beyond. 

Alaska has amongst the highest cost of healthcare in the Nation 

due to low population density and limited healthcare provider or 

facility competition in much of the State. While the individual 

mandate reduced the number of uninsured Alaskans, an unintended consequence was that the high cost of the individual health 

insurance premiums increased even further. 

Premiums in the individual market in Alaska have increased by 

203 percent since 2013. On average, an Alaskan in 2013 was paying a monthly premium of $344 per month and in 2017, that premium is $1,041 per month. 

To stabilize this volatile market, the Division of Insurance 

worked with Governor Bill Walker to create the Alaska Reinsurance Program. The 29th Alaska State Legislature passed the Governor’s bill in 2016 with overwhelming bipartisan support. 

The Alaska Reinsurance Program is intended to provide stability 

to the individual health insurance market, mitigating rate increases by removing high cost claims. As planned, this had an immediate impact on rates. 

Prior to enacting the Reinsurance Program, indications were that 

the rate filing from the single insurer in Alaska would be close to 

40 percent in 2017. After enactment, the rate increase was a moderate 7.3 percent. 

An independent actuarial analysis estimates the Reinsurance 

Program will increase enrollment in the individual market by 1,650 

individuals. Modeling also indicates that the program may attract 

healthier members to the individual market further reducing premiums. 


HELPN-004 with DISTILLER
20 

After enacting the Reinsurance Program, Alaska then applied, 

and was subsequently approved, for a Federal ACA Section 1332 

State Innovation Waiver. 

Alaska waived the requirement of a single risk pool and proposed 

that the Federal Government provide pass through funding for a 

period of 5 years to secure the State’s Reinsurance Program. The 

pass through funding is based on the savings generated as a reduction in the Advanced Premium Tax Credits. 

It is estimated that the Alaska Reinsurance Program will save 

the Federal Government $51.6 million in Advanced Premium Tax 

Credits in 2018 relative to what would have been the tax liability 

had the Program not been put into place. 

After the Federal pass through funds are accounted for, the State 

will be responsible for providing approximately 15 percent of the 

$55 million Program cost necessary to stabilize the individual market. 

As you consider congressional action to stabilize premiums across 

the country in 2018, we offer the following perspectives. 

We would urge Congress to not disrupt the health insurance 

market, but instead, focus immediately on stabilization. Any decision made after the filings are approved could cause unintended, 

unfavorable disruption to insurance markets. Uncertainty destabilizes the market. 

Committing to funding Cost Sharing Reduction payments 

through at least 2019 will keep premium rates from increasing at 

an even higher rate. 

We support collaborative reforms developed in consultation with 

State regulators that strengthen markets with a goal of health insurance not only being accessible, but affordable. Programs that 

allow States to address the unique needs of their citizens, such as 

the Section 1332 Waivers, are vital to the long-term stability of 

health insurance markets. 

Further deliberation on health insurance taxes is needed. In particular, citizens of States like Alaska that already face extremely 

high healthcare costs may be unfairly penalized by the Cadillac 

Tax. 

Additionally, exempting insurers from health insurance tax in 

counties or States served by one insurer may be an effective way 

to increase the choice or competition that will benefit citizens, but 

should be considered for all States as a moratorium. 

Please consider continuing and funding the Navigator and Assister Programs. In rural areas of Alaska, insurance brokers and consultants are hard to find. These programs reduce the number of 

uninsured citizens and maximize market participation. Media and 

public announcements are vital to open enrollment being successful. 

A review of regulations may reveal some that are unnecessarily 

burdensome and costly to both medical providers and insurers. 

We are also interested in coordinated efforts with healthcare providers to address the underlying drivers of healthcare spending. 

Even under the extreme tight considerations you face to address 

2018 premiums, please make your decision in a bipartisan manner 

after thorough analysis. 


HELPN-004 with DISTILLER
21 

We are here to assist you in any way we can and I look forward 

to your questions. 

Thank you. 

[The prepared statement of Ms. Wing-Heier follows:] 

PREPARED STATEMENT OF LORI K. WING-HEIER

SUMMARY

An unintended consequence of the Affordable Care Act was that the already extremely high cost of health insurance in Alaska increased even further. Premiums 

in the individual market in Alaska have increased by 203 percent since 2013, the 

year before the ACA was enacted. 

To address the critical situation and stabilize the volatile market, the Division of 

Insurance worked with Governor Bill Walker to develop the Alaska Reinsurance 

Program, which the 29th Alaska Legislature subsequently passed with overwhelming bipartisan support in 2016. The Alaska Reinsurance Program provides 

stability to the individual health insurance market, mitigating rate increases by removing high cost claims from the individual market. The program had an immediate impact on rates. 

• Prior to the enactment of the program, indications were that the rate filing 

from the single insurer in Alaska’s individual market would include an increase of 

close to 40 percent. After the enactment, the 2017 individual rates had an average 

increase of just over 7 percent. 

• Independent actuarial analysis estimates the reinsurance program will increase enrollment in the individual market by nearly 1,650 individuals relative to 

what enrollment would be absent the program. Modeling also indicates that the program may attract healthier members to the individual market, further reducing premiums. 

To solidify the Alaska Reinsurance Program, the State was awarded an ACA Section 1332 State Innovation Waiver. Alaska waived the requirement of a single risk 

pool and will receive Federal pass-through funds for 5 years. The funding is based 

on the savings generated as a result of the estimated $51.6 million reduction in the 

Advanced Premium Tax Credits liability to the Federal Government in 2018, relative to what it would have been absent the reinsurance program. 

As you consider congressional action to stabilize premiums across the country in 

2018 and beyond, we offer the following considerations from the perspective of the 

Alaska health insurance markets, 

• We urge Congress not to disrupt health insurance markets, but instead to 

focus on stabilization. 

• Any decisions made after the filings are approved next week could cause unintended, unfavorable disruptions to insurance markets. 

• Committing to funding Cost Sharing Reduction payments through at least 

2019 will keep premium rates from increasing at an even higher rate. 

• Until a viable alternative is proposed on the national level or via State waivers, the individual and employer mandates are necessary in the short term to 

keep markets stable. 

• We support collaborative reforms, developed in consultation with State regulators, that strengthen markets with a goal of health insurance not only being 

accessible but affordable. 

• Programs that allow States to accommodate the unique needs of their residents, such as the Section 1332 State Innovation Waiver, are vital to the longterm stability of markets. 

• Further deliberation on the health insurance tax is needed. 

• A review of regulations may reveal some that are unnecessarily burdensome 

and costly to both medical providers and insurers. 

• We are also interested in coordinated efforts with health care providers to address the underlying drivers of health care spending, considering all aspects including pharmaceuticals, air ambulance, inpatient, and outpatient. 

Even under the extreme time constraints you face to address 2018 premiums, 

please make your decisions in a bipartisan manner after thorough analysis. My fellow insurance directors/commissioners and I are here to assist you in any way we 

can to inform the difficult decisions before you. 


HELPN-004 with DISTILLER
22 

ALASKA’S INDIVIDUAL HEALTH CARE INSURANCE MARKET

The cost of health care is very high in Alaska, and access is limited compared to 

other States, particularly for specialty services. Low population density and limited 

healthcare provider and facility competition in much of Alaska are primary contributors to Alaska’s high health care costs. With a population of 738,432 spread across 

570,641 square miles, Alaska has a small population and is the largest and one of 

the most geographically isolated States in the Nation. 

Access to care has long been a challenge in Alaska due to its large geographic 

size, rural population, and insufficient health care provider competition. Because of 

these challenges, common managed care practices such as legislated network adequacy levels, closed network plans, and the development of Health Maintenance Organizations have not been successful. Alaska has among the highest cost of health 

care in the Nation; correspondingly, Alaska also leads the States in the cost of 

health care insurance and workers’ compensation insurance. 

As intended, the Affordable Care Act’s individual mandate increased health care 

insurance enrollment in Alaska. Prior to the ACA’s enactment in 2014, Alaska’s uninsured population was estimated at approximately 134,000 residents, mostly non 

elderly adults. After 2 years of expanded ACA enrollment opportunities, the number 

of uninsured residents in Alaska was estimated to be approximately 100,000 people. 

However, the unintended consequence was that the already high cost of health 

insurance in Alaska increased even further. Many Alaskans who do not qualify for 

the Advanced Premium Tax Credits or subsidies are unable to afford plans offered 

in the individual market. According to data from the Division of Insurance and the 

Department of Health and Human Services, as reported by the Office of the Assistant Secretary for Planning and Evaluation in May 2017, premiums in the individual 

market in Alaska have increased by 203 percent since 2013, the year before the 

ACA was enacted. On average, the increase means that an Alaskan in the individual market who was paying a monthly premium of $344 per month in 2013 is 

paying $1,041 per month in 2017. 

The high costs do not only affect those in the individual market. Participants in 

group markets are not eligible to receive the subsidies or tax credits available to 

those in the individual market. Even though many Alaskans are covered by employer’ sponsored plans, employer contributions typically only apply to the employee’s premiums; costs to dependents are still prohibitive. 

Therefore, many Alaska families in the group market are unable to afford employer-sponsored insurance. 

The Alaska Reinsurance Program Stabilizes Rates 

To address the critical situation and stabilize the volatile market, last year the 

Division of Insurance worked with Governor Bill Walker to develop the Alaska Reinsurance Program (ARP). 

The legislation (HB 374) received overwhelming bipartisan support from the 29th 

Alaska Legislature. 

The ARP is intended to provide stability to the individual health insurance market, mitigating rate increases by removing high cost claims from the individual 

health market. By removing high cost conditions from the risk pool, the benefits of 

the ARP are shared by the entire individual health insurance market regardless of 

income, age, race and ethnic group, or any other demographic characteristic. 

As anticipated, the program had an immediate impact on the rates in the individual market. Prior to the enactment of the ARP, indications were that the rate 

filing from the single insurer in Alaska’s individual market would include an increase of close to 40 percent. After the enactment of the ARP, however, the 2017 

individual rates had a moderate average increase of just over 7 percent. Still, it 

should be noted that Alaskans who had to switch insurers because their carrier left 

the market in 2017 experienced increases of over 35 percent from what they were 

paying in 2016. 

Actuarial modeling indicates that the ARP will continue to help reduce the rates 

necessary for insurers in the Alaska individual market and thus the premium 

amounts charged to Alaskans. The slowing of the growth of rate increases (and potential for rate decreases) due to the ARP may also draw additional Alaskans into 

the market. Independent analysis estimates the ARP will increase enrollment in the 

individual market by nearly 1,650 individuals relative to what enrollment would be 

absent the program. Modeling also indicates that the ARP may attract healthier 

members to the individual market, further reducing premium rates. 

Additionally, there is potential that the ARP will encourage competition in the 

State’s insurance market. In 2014, Alaska had three national insurers and one regional insurer participating in the individual market. In 2015, two insurers deVerDate Nov 24 2008 13:39 Mar 05, 2019 Jkt 000000 PO 00000 Frm 00026 Fmt 6633 Sfmt 6621 S:\DOCS\26840.TXT CAROL

HELPN-004 with DISTILLER
23 

parted the Alaska market, cutting the number of insurers in half. In 2016, the insurer covering approximately two-thirds of those enrolled in the individual market 

also exited the market, leaving only one insurer to serve Alaska’s individual market 

in 2017. There is optimism that in subsequent years there may be interest from 

other insurers to provide health care plans if the market remains stabilized. If additional companies move into the Alaska individual market, consumers will benefit 

from natural market forces. 

State Funding of the Alaska Reinsurance Program 

Historically, like many other States, Alaska had a high-risk pool to provide access 

to health insurance to those who were unable to purchase insurance in the commercial market because of pre-existing conditions. Unlike many other States, however, 

Alaska did not dissolve the pool when the ACA was enacted because there were a 

few hundred people that purchased Medicare supplement policies, which are not 

sold in Alaska by a commercial insurer. The Alaska Comprehensive Health Insurance Association (ACHIA) is financed by an assessment on health insurers in the 

market and the State of Alaska. 

HB 374 amended current statute, expanding the responsibilities of ACHIA to include the ARP. The ARP legislation also appropriated $55 million from various premium taxes to stabilize the health insurance market in 2017. Before being appropriated, these taxes would have been forwarded to the State’s general fund and used 

for other obligations of the State, including matters such as education, economic development, infrastructure, and public safety. 

Alaska is using the funds to reimburse the one insurer in the individual market 

for incurred claims from high-risk residents. The high-risk residents are defined as 

people who have been diagnosed with one or more of the covered conditions identified in regulation. The insurer still administers the claims; ACHIA receives the 

State funding, audits the claim requests, and upon acceptance of the claims, disburses the funds to the insurer on a periodic basis. 

Due to the State of Alaska’s ongoing fiscal concerns, the State legislature gave no 

assurances that the ARP would be funded beyond 2017, putting the sustainability 

of the ARP and the stabilization of Alaska’s individual health insurance market in 

jeopardy if longer term sources of funding were not identified. 

Federal Support of the Alaska Reinsurance Program 

In early January of 2017, Alaska submitted an application to the Department of 

Health and Human Services (Centers for Medicare and Medicaid Services) and the 

Department of Treasury (Internal Revenue Service) for a Section 1332 State Innovation Waiver. As authorized under the ACA, an innovation waiver allows State-byState amendments within specific parameters. For instance, coverage must be at 

least as comprehensive and affordable as what existed prior to the waiver, the number of State residents covered must be comparable to the baseline without a waiver, 

and the scenario must not increase the Federal deficit. 

Alaska’s application waived the requirement of a single risk pool and proposed 

that the Federal Government provide pass-through funds for a period of 5 years to 

stabilize the ARP. The pass-through funding is based on the savings generated as 

a result of a reduction in the Advanced Premium Tax Credits (APTC). It is estimated that the ARP will save the Federal Government $51.6 million in APTC in 

2018, relative to what the tax liability would have been absent the program. 

Premium tax credits associated with the ACA will continue to be paid based on 

Federal methodology, but the growth of such payments is slowed by the ARP. Independent actuarial analysis showed that the amount in APTC paid by the Federal 

Government to Alaskans was significantly reduced when the ARP went into effect 

in 2017: 

Calendar year Baseline–No ARP APTC with ARP Difference 

2017 ........................................................................................................... $185,716,278 $185,716,278 $00 

2018 ........................................................................................................... $233,898,461 $182,260,689 $51,637,772 

2019 ........................................................................................................... $258,351,449 $202,372,542 $55,978,906 

2020 ........................................................................................................... $279,343,570 $219,162,267 $60,181,304 

2021 ........................................................................................................... $312,617,789 $247,210,983 $65,406,805 

2022 ........................................................................................................... $342,289,634 $272,477,673 $69,811,961 


HELPN-004 with DISTILLER
24 

There was also difference in APTC paid during calendar year 2017, but the waiver 

is not applicable until 2018; the ARP is wholly funded by the State of Alaska in 

2017. 

In July, Governor Walker was notified that Alaska’s waiver had been approved. 

Director Seema Verma’s letter to the Governor indicated that the State will receive 

an estimated $322,652,234 to fund the ARP over the next 5 years: 

Calendar year Estimated funding 

2018 ............................................................................................................................................................... $48,362,287 

2019 ............................................................................................................................................................... $61,536,998 

2020 ............................................................................................................................................................... $65,716,251 

2021 ............................................................................................................................................................... $71,177,767 

2022 ............................................................................................................................................................... $75,858,931 

Total ...................................................................................................................................................... $322,652,234 

After the Federal pass-through funds are accounted for, the State will be responsible for providing approximately 15 percent of the funding needed to stabilize the 

individual market through the ARP. In 2018, Federal funds will cover $48,362,287 

and State funds will cover $6,637,713 of the $55 million program costs. 

Actuarial modeling shows that, at least in part due to the ARP, Alaska’s 2018 premiums are expected to decrease by approximately 20 percent. While the premium 

decrease may not directly affect those currently receiving tax credits, Alaskans who 

do not receive Federal tax credits will benefit from the premium reductions. Additionally, if Federal funding of the Cost Sharing Reduction payments continues, the 

decrease could be as high as 25 percent, bringing the cost in the individual market 

back to within reach of many Alaskans. 

The State will continue to pursue programs that would benefit Alaskans both in 

the individual and small group markets, possibly including a second Section 1332 

State Innovation Waiver. 

NEED FOR CONGRESSIONAL AND ADMINISTRATIVE ACTION

The ACA was a well-intended piece of Federal legislation that brought insurance 

to millions of Americans. The expectation was that as provisions of the ACA alleviated insurance underwriting restrictions that previously made it impossible for 

many people with pre-existing conditions to obtain insurance, millions of uninsured 

Americans with chronic or severe illnesses would become eligible for health insurance. Through mechanisms such as the Advanced Premium Tax Credits and Cost 

Sharing Reduction payments, low and moderate-income individuals who would otherwise not be able to pay monthly premiums would also be able to obtain health 

insurance. The insurance markets would be stabilized by the 3Rs-risk adjustment, 

reinsurance, and the risk corridor. 

The idea was that millions would enroll and that the premiums generated would 

support the expenses of the whole. However, this well-intended fundamental concept 

failed in most States, forcing insurers to either withdraw from entire counties/States 

or increase the premiums in the individual market to a point that ACA plans were 

not affordable to consumers. The 3Rs had mixed impact on the markets and have 

not stabilized the ACA as they were intended to do, which has also led to some of 

the turbulence the health insurance markets are now facing. 

As you consider congressional action to stabilize insurance premiums across the 

country in 2018 and beyond, I offer the following considerations from the perspective 

of the Alaska health insurance markets, 

• We urge Congress not to disrupt health insurance markets, but instead to focus 

immediately on stabilization. 

• Rate filings are to be approved next week. Any decisions made after the filings are approved could cause unintended, unfavorable disruptions to insurance 

markets. 

• Uncertainty destabilizes the market. Committing to funding Cost Sharing Reduction payments through at least 2019 will keep premium rates from increasing at an even higher rate. 

• The individual and employer mandates keep the markets stable. Eliminating 

the mandates would most likely result in fewer individuals participating in the 

market, resulting in a smaller health care pool and higher costs to all enrollees. 

Until a viable alternative is proposed on the national level or via State waivers, 

the mandates are necessary in the short term to keep markets stable. 


HELPN-004 with DISTILLER
25 

• We support collaborative reforms, developed in consultation with State regulators, that strengthen markets with a goal of insurance not only being accessible 

but affordable. • Amendments to the ACA must be carefully vetted with State regulators to examine whether expectations of the States are reasonable and how the structure 

of potential programs may adversely impact States. Program costs should not 

be shifted to the States, creating undue financial burdens. 

• Programs that allow States to accommodate the unique needs of their residents, such as the Section 1332 State Innovation Waiver, are vital to the longterm stability of health insurance markets. 

• Further deliberation on the health insurance tax is needed. In particular, citizens of States like Alaska that already face extremely high health care costs 

may be unfairly penalized by the current structure of the Cadillac tax. Additionally, exempting insurers from the health insurance tax in counties/States served 

by only one insurer may also be an effective way to increase choice/competition 

that will benefit citizens. 

• Consider continuing the navigator and assister programs. In rural areas of 

Alaska, insurance brokers are not always available. These programs reduce the 

number of uninsured citizens and maximize market participation. 

• A review of regulations may reveal some that are unnecessarily burdensome 

and costly to both medical providers and insurers. 

• We are also interested in coordinated efforts with health care providers to address the underlying drivers of health care spending, considering all aspects including pharmaceuticals, air ambulance, in-patient, and outpatient. Last year, Alaska 

established a health care authority feasibility study to begin to look at cost controls. 

With the support of the Federal Government, a similar national effort could go a 

long way toward addressing the underlying market dynamics that are driving 

unsustainable increases in health care costs. 

We are down to days to address the number of insurers, the cost, and the subsidies for 2018. Even under such extreme time constraints, as you consider congressional action to stabilize premiums to help people in the individual insurance markets, please make your decisions in a bipartisan manner after thorough analysis. 

Any decision that you make, large or small, will affect access to health care insurance, an extremely important and deeply personal subject to all Americans. 

My fellow insurance directors/commissioners and I are here to assist you in any 

way we can to help inform the difficult decisions before you. 

Thank you. 

The CHAIRMAN. Thank you, Ms. Wing-Heier. 

Ms. Miller, welcome. 

STATEMENT OF TERESA MILLER, J.D., INSURANCE 

COMMISSIONER OF PENNSYLVANIA, HARRISBURG, PA 

Ms. MILLER. Good morning, Chairman Alexander, Ranking Member Murray, and members of the committee. 

I am honored to be here today and want to applaud the committee for hosting such an important conversation at such a critical 

point in time. 

I am not going to sit here this morning and tell you that the ACA 

is perfect. I think we all know that it is not. But the narrative that 

the ACA is failing and imploding is just false and ignores the coverage requirements that the law put in place. 

Millions of Americans have benefited from the ACA. The employer markets, where the majority of people get their insurance, 

have actually seen a moderation of costs since passage of the ACA. 

Pennsylvania’s uninsured rate is now the lowest it has ever been 

thanks to improvements in the individual market and Governor 

Wolf’s expansion of Medicaid in 2015. 

Pennsylvania has about 426,000 people on the individual marketplace and about 80 percent of these enrollees receive subsidies to 

help them pay their premiums and more than half benefit from 

Cost Sharing Reductions to help them pay their out of pocket costs 


HELPN-004 with DISTILLER
26 

like co-pays and deductibles. So for most individuals in this market, the ACA is working well. 

The ACA has resulted in millions of Pennsylvanians no longer 

being denied coverage due to a preexisting condition, or facing financially devastating annual or lifetime limits, and benefiting from 

quality, comprehensive coverage because of preventative care and 

Essential Health Benefit requirements. 

Pennsylvania’s market has experienced difficulties, but our individual market is not collapsing. Our individual market insurers 

filed for an average increase of 8.8 percent for 2018, assuming no 

changes to the ACA. 

I am pleased to report that our insurers are finally seeing improved experience with this market and that is reflected in their 

rate increases. But I am also very concerned that that stability is 

on fragile ground because of the ongoing uncertainty surrounding 

the future of the ACA and, in particular, payments for Cost Sharing Reductions. 

I cannot stress enough how difficult this uncertainty is on our 

markets. These payments have a significant impact on rates and 

failing to make a long-term commitment will do nothing but drive 

up costs for consumers. This will further hurt the 1 to 2 percent 

of Pennsylvanians, roughly 125,000 people, who do not receive subsidies because those who do will be shielded mostly from these premium increases if their insurer stayed in the market, that is. 

Ultimately, rates have to be finalized based on finite assumptions. Pennsylvania consumers will be left to bear the burden of 

premium increases or lessen choices necessitated by continued uncertainty. 

Congress should allocate money for these payments through at 

least 2019 to give insurers the predictability they so desperately 

need. 

We also must make sure that we are properly encouraging enrollment in the individual market. The health of any insurance 

market depends on the strength of its risk pool and reduced enrollment strains the risk pool and contributes to rising costs for all of 

those in it. I worry steps the Trump administration has taken 

could further erode the risk pool. 

Just last week, we found out the extent of cuts to outreach and 

enrollment efforts funded by the Federal Government. Health and 

Human Services will spend just $10 million advertising 2018 open 

enrollment compared to the $100 million spent for 2017. 

In addition to this, funding granted to health insurance Navigator organizations to help people enroll was almost halved from 

the levels given under the previous administration. 

Reducing outreach efforts at the Federal level, combined with a 

shortened enrollment period for 2018, will do nothing but leave 

more people without coverage and could raise rates for people left 

in the market. 

In Pennsylvania, we are implementing our own outreach program. We are working alongside insurers, healthcare providers, 

consumer advocates, and other stakeholders to reach our common 

goal of increasing covered Pennsylvanians. 

Encouraging enrollment helps everyone. People have access to 

coverage, insurers have a more robust risk pool, and providers are 


HELPN-004 with DISTILLER
27 

more likely to receive compensation for care they provide. Over 

time, a more robust risk pool should also result in lower premiums 

for consumers. 

As we work toward providing stability in the market, we should 

consider all options to moderate the premium increases caused by 

market instability. A $15 billion reinsurance program in the context of a careful, bipartisan approach to improving our healthcare system would be a 

great place to start, especially if the individual mandate were preserved and outreach was boosted to increase enrollment. 

The ACA’s Reinsurance Program successfully moderated premiums while it was in place and a reintroduction of a long-term reinsurance program could be an effective way to scale back the premium increases that we currently see. 

Finally, I do think we need to have a serious national conversation about healthcare costs in this country. These costs are constantly growing and even if we bring stability to our markets, we 

must still address healthcare costs if we want to ensure that our 

current system is sustainable in the long-term. This is a national 

issue and even as States work to address rising costs in our own 

markets, we are not going to be able to fix this completely on our 

own. 

While the healthcare reform debate has been, without question, 

partisan the goals that we are trying to achieve are not and neither 

is recognizing the real problems that exist in our system. We all 

want Americans to have access to the care they need and be able 

to afford that care. We all want them to have choices and that 

means supporting a competitive health insurance marketplace that 

provides that choice. 

I am grateful for your leadership, Chairman Alexander, and I am 

so thankful that we are finally moving in the direction of working 

together to find real solutions to ensure all consumers have access 

to quality, affordable care. 

Thank you. 

[The prepared statement of Ms. Miller follows:] 

PREPARED STATEMENT OF TERESA MILLER, J.D. 

SUMMARY

As we discuss the importance of stabilizing the individual market, we must recognize the impact the Affordable Care Act (ACA) has on Pennsylvanians. Before the 

ACA, people often couldn’t get health insurance due to a pre-existing condition. If 

they did they often paid significantly more, and these polices did not always cover 

their pre-existing condition. Individuals faced financially devastating annual and 

lifetime limits, and women could see higher premiums than men and not have contraception or maternity care covered. Critical services like mental health and substance use disorder treatments were often difficult if not impossible to find coverage 

for. 

Governor Wolf has been an active participant in a group of Governors working 

to ensure Congress’s approach to health care reform is bipartisan and strengthens 

our Nation’s health insurance system. Additionally, the Governors urge Congress to 

take steps to make coverage more affordable and stable in the interim. Governor 

Wolf and I applaud the committee’s efforts to work toward a solution on this important issue. Because of the ACA, more than 1.1 million Pennsylvanians have accessed 

comprehensive coverage through the ACA. We need to buildupon this foundation 

and make targeted, common sense changes that will improve the ACA. 

Pennsylvania’s market is on a path to stability and will not implode unless the 

Federal Government takes adverse action. If cost-sharing reductions payments are 

not made, this stability will be jeopardized. These payments have a significant imVerDate Nov 24 2008 13:39 Mar 05, 2019 Jkt 000000 PO 00000 Frm 00031 Fmt 6633 Sfmt 6621 S:\DOCS\26840.TXT CAROL

HELPN-004 with DISTILLER
28 

pact on insurers’ rates, and failing to make a long-term commitment will increase 

prices for consumers in the individual market. Making these payments is the simplest way to ‘‘fix’’ the ACA that I can offer. It will very soon be too late to avoid 

rate increases for 2018, so Congress must act quickly. 

Improvements to the ACA’s 1332 State innovation waivers and how they are obtained could be made, but greater State flexibility should not come at the cost of 

the baseline coverage improvements that the ACA has made. Doing so would only 

create more plans that offer very little coverage and have high out-of-pocket costs 

when care is accessed. 

Both ACA replacement proposals considered by the U.S. House and Senate did contain reinsurance programs for 2018. A $15 billion reinsurance program in the 

context of a careful, bipartisan approach to improving our health care system would 

be something I would view favorably, especially if the individual mandate were preserved and outreach was boosted to improve enrollment in individual market plans. 

The ACA’s reinsurance program successfully moderated premiums while it was in 

place and the reintroduction of a long-term reinsurance program could be an effective way to scale back the premiums we currently see. 

The health of any insurance market depends on the strength of its risk pool, and 

reduced enrollment strains the risk pool and contributes to rising costs for those in 

it. I worry about some steps the Trump administration has taken that could further 

erode the risk pool, such as shortening the open enrollment period and making substantial cuts to funds used to advertise the open enrollment period and support enrollment efforts coordinated by health insurance navigators. In Pennsylvania, we 

are working alongside stakeholders to increase covered Pennsylvanians and inform 

them of important changes to this year’s open enrollment period so people are covered, insurers have a robust risk pool, and providers are more likely to receive compensation for care provided. 

While the health reform debate has without question been partisan, the goals we 

are trying to achieve are not, and recognizing the real problems that exist in our 

health care system should not be either. I am hopeful that we can move away from 

proposals that would jeopardize the health and financial security of millions of 

Americans, and focus on solving real problems with common sense solutions like 

these. 

Good morning Chairman Alexander, Ranking Member Murray, and members of 

the U.S. Senate Committee on Health, Education, Labor, and Pensions. Thank you 

for the opportunity to be here today to speak about an issue that is so critical for 

residents of the Commonwealth of Pennsylvania. 

I am pleased to have been recently chosen by Governor Wolf to serve as acting 

secretary for the Pennsylvania Department of Human Services after having been insurance commissioner since shortly after Governor Wolf took office in 2015. 

Governor Wolf has been an active participant in a group of Governors working 

to ensure Congress’s approach to health care reform is completed in a bipartisan 

manner that strengthens our Nation’s health insurance system. Additionally, the 

Governors urge Congress to take steps to make coverage more affordable and stable 

in the interim. 

Both Governor Wolf and I applaud the committee’s efforts to work toward a solution on this important issue. As we begin to talk about the importance of stabilizing 

our individual health insurance markets under the Affordable Care Act (ACA), we 

should first recognize the impact that the ACA itself has had on Pennsylvanians 

and why it is imperative that we fix the law rather than undoing the progress we 

have made. Before the ACA, sick people often couldn’t get health insurance due to 

a pre-existing condition. If they were able to get coverage, they often paid significantly more for it than someone without a pre-existing condition. In some cases, 

these individuals would be offered a policy, but it would not include coverage for 

their pre-existing condition. Individuals with chronic medical issues or anyone who 

underwent a costly procedure like a transplant could face financially devastating annual and lifetime limits. Women could see higher monthly premiums than men and 

perhaps not have contraception or maternity care covered. Other critical services 

like mental health and substance use disorder treatment services and prescription 

drugs were often difficult if not impossible to find coverage for. Most importantly, 

more than 10 percent of Pennsylvanians and 16 percent of Americans nationwide 

went uninsured. 

Since the ACA’s passage, the national uninsured rate has fallen to 8.6 percent 

and Pennsylvania’s uninsured rate has dropped to 6.4 percent—the lowest it’s ever 

been. More than 1.1 million Pennsylvanians have accessed coverage through the 

ACA, and that coverage is much more comprehensive than what was previously 


HELPN-004 with DISTILLER
29 

available. There are 12.7 million Pennsylvanians, and more than 40 percent of 

them—5.4 million—have pre-existing conditions and cannot be denied health insurance coverage due to the ACA. Today, 4.5 million Pennsylvanians no longer have 

to worry about large bills due to annual or lifetime limits on benefits, and 6.1 million Pennsylvanians benefit from access to free preventive care services. In addition 

to this, more than 175,000 Pennsylvanians have also been able to access substance 

use disorder treatment services through their exchange and Medicaid expansion coverage. These services are critical as our commonwealth and other States around the 

country strive to combat the overwhelming impact of the opioid epidemic. 

The positive impact of the Governor’s efforts to expand Medicaid and help Pennsylvanians access treatment services for substance use disorder have become even 

more evident to me as I’ve taken the helm at the Department of Human Services. 

These are expansions that are making a significant difference in people’s lives. 

While the ACA has not been perfect, it is critical that we level set and talk about 

the issues that exist and who those issues really impact. The ACA has had minimal 

impact on the Medicare program and enhanced the already very popular Medicaid 

program by expanding access to millions more around the country. Further, since 

the passage of the ACA, the employer markets, where small and large businesses 

can purchase insurance products for their employees, have been stable and even 

seen costs grow at a slower pace than before the ACA. The individual market, where 

we see problems, is a very small market relative to these others, covering only about 

5 percent of Pennsylvanians. However, this market is very important because it is 

where individuals and families who do not have access to coverage through their 

employer or public programs go to purchase insurance. 

This market is heavily subsidized because of the ACA. About 80 percent of Pennsylvanians who purchase their coverage through the exchange receive tax credits to 

help pay their premiums. Because of the way the tax credits are structured based 

on income, these consumers do not feel the full impact of premium increases. Currently more than half of Pennsylvania consumers who enroll in the exchanges are 

also eligible for cost-sharing reductions, additional financial assistance that helps 

them pay for their out-of-pocket costs like deductibles and co-pays. The payments 

the Federal Government makes to insurers to cover the costs of this additional financial assistance are in jeopardy because President Trump has not committed to 

making them longer than a month-to-month basis. I am seriously concerned about 

the destabilizing effect failing to commit to these payments could have on both 

Pennsylvania’s market and others around the country and how this will impact premiums for people in the individual market, but I will address this at length later 

in this testimony. 

I believe we need to buildupon the foundation of the health care system we have 

and make targeted, common sense changes that will improve the ACA and make 

it work better for the people it is not working perfectly for today. We still have a 

serious affordability problem in the individual market, especially for the 1–2 percent 

of Pennsylvanians who rely on the individual market for coverage but are not eligible for financial assistance and those facing rising deductibles. Their concerns are 

legitimate and must be addressed, but starting over or moving backwards will not 

better serve Pennsylvanians or Americans throughout the Nation. I applaud this 

committee’s efforts to work together to strengthen this law so it may better serve 

everyone rather than undoing the good it has accomplished around the country. 

With that context, I would like to offer Pennsylvania’s thoughts on the issues we 

currently face and what reasonable bipartisan solutions that would improve the 

ACA for all could look like. 

GUARANTEEING PAYMENTS FOR COST-SHARING REDUCTIONS

While the individual market is facing issues, in some States more than in others, 

I can tell you that Pennsylvania’s market is on a path to stability and will not implode unless the Federal Government takes adverse action. Our market saw some 

issues last year and lost two carriers, but I worked closely with our remaining insurers to ensure that we did not have any bare counties for 2017. For 2018, our 

individual market insurers filed for a statewide average increase of just 8.8 percent, 

assuming no changes come from the Federal level. An analysis on the drivers of 

2018 premium increases puts our requests at or below what we would expect based 

on trends in annual medical costs and a Federal tax on health insurance plans that 

comes into effect for the 2018 plan year. I am very happy that our insurers are finally seeing improved experience with this market and that is reflected in the rate 

increases they filed, but I am very concerned that this stability is on fragile ground 

because of all the uncertainty here in Washington. 


HELPN-004 with DISTILLER
30 

When rates were initially filed, I asked our insurers to provide information on 

what they would need to request if cost-sharing reduction payments were not made 

or if the individual mandate was not enforced. The differences are stark. If costsharing reductions are not paid, they estimated that they would need to request a 

statewide average increase of 20.3 percent. If the individual mandate is not enforced, they said they would seek an estimated 23.3 percent increase. If both 

changes occur, our insurers estimated that they would seek an estimated increase 

of 36.3 percent, assuming they continue to participate in the market at all. I’d be 

lying if I said these numbers didn’t worry me, especially as we prepare to finalize 

rates. At this point, we have no more certainty on cost-sharing reductions than we 

had in April when I, along with executives from all five of Pennsylvania’s on-exchange insurers, first wrote to Secretary Tom Price on this issue. 

What’s most frustrating about the situation we are in is that it is entirely avoidable. I have sent multiple letters to Secretary Price asking the administration to not 

take steps to undermine the progress we have made and the pathway to stability 

that we put our market on. I reiterated this urgent need for stability in an answer 

to a request for information on how to stabilize the individual market issued by the 

Centers for Medicare and Medicaid Services in June. Governor Wolf and a bipartisan group of Governors have asked congressional leaders to address stability, too. 

And, yet here we are, 2 weeks out from when States need to send final rates for 

2018 to the Department of Health and Human Services (HHS)—a deadline that was 

already extended—and the Trump administration still refuses to make anything 

longer than a month-to-month commitment on these payments. 

I cannot stress enough how difficult this uncertainty is on our insurers. These 

payments have a significant impact on their rates, and failing to make a long-term 

commitment will do nothing but drive up prices for consumers in the individual 

market. This will further hurt the 1 to 2 percent of Pennsylvanians—roughly 

125,000 people—who do not receive subsidies as those who do receive subsidies 

would be shielded from most of the increases—if their insurer stayed in the market 

at all. At the end of the day, rates have to be finalized based on finite assumptions 

and insurers will sign contracts to participate on the exchange or they won’t participate at all. Pennsylvania consumers will be left to bear the burden of premium increases or lessened choices necessitated by this instability. 

Failing to make payments for cost-sharing reductions does not serve any goal 

aside from trying to make markets fail. According to the Congressional Budget Office’s analysis on the matter, doing so would result in higher premiums, more counties without individual market coverage options for 2018, and would increase the 

Federal deficit by $194 billion through 2026 due to the payment of additional premium subsidies because of higher premiums. The Congressional Budget Office further estimates that premiums would rise an additional 20 percent in 2018. This will 

undoubtedly create more problems, especially for individual market consumers who 

are not eligible for financial assistance. 

If the Trump administration is not going to do the right thing for consumers and 

stabilize the law, Congress should allocate funds to ensure payments for cost-sharing reductions continue for 2018. Making these payments is the simplest way to 

‘‘fix’’ the ACA that I can offer. I fear that it will very soon be too late to avoid rate 

increases for 2018, so Congress must act quickly. 

SUPPORTING OPPORTUNITIES FOR STATE INNOVATION

Under Section 1332 of ACA, States have the opportunity to obtain waivers on portions of the law as long as they do not increase the Federal deficit, reduce affordability or quality of coverage sold in the State, or have a negative quantitative impact on the State’s insured population. States currently must offer a public notice 

and comment period, hold public hearings, and pass legislation outlining the State’s 

intent to pursue and implement a Section 1332 waiver. Governor Wolf and I join 

the sentiments outlined in the bipartisan plan presented by Governors Hickenlooper 

and Kasich to streamline the waiver process in order to improve State flexibility. 

Changes that permit States to easily buildupon waivers obtained and successfully 

implemented by other States, coordinating the waiver submission and approval 

process, and easing the process of applying for waiver extensions would be viewed 

favorably. We would value the ability to pursue a waiver without requiring action 

from our State’s legislature. If States are making small, targeted changes to stabilize the market like what is needed now, the current process can be too long and 

cumbersome when you consider a State’s budget cycle and legislative process. An 

extensive process should be in place if States were to make significant changes to 

the structure of their market, but streamlining the current process would allow 

States to use Section 1332 waivers to make incremental changes as issues arise. 


HELPN-004 with DISTILLER
31 

The Wolf Administration would also look favorably on the opportunity to combine 

multiple waivers into a coordinated effort and consider deficit neutrality across the 

comprehensive plan. 

However, we strongly believe that the baseline coverage improvements that must 

be maintained during the waiver process must be preserved. Eliminating these provisions—often called ‘‘guardrails’’ would likely result in a race to the bottom. Insurance companies would sell plans that offer less comprehensive coverage at a lower 

monthly cost, leaving consumers vulnerable to large out-of-pocket costs when care 

is accessed—something we all do at some point. These protections exist to ensure 

that Americans around the country have access to equitable, quality coverage regardless of the State in which they reside. The baseline protections contained in the 

ACA and the coverage improvements that have resulted should not be jeopardized 

as we consider opportunities for greater State flexibility. 

PRESERVING THE INDIVIDUAL MANDATE

Since the ACA was passed, the individual mandate has historically been an unpopular feature of the law. However, it is imperative to making sure the law functions as it was intended. 

The ACA included a ‘‘three-legged stool’’—the individual mandate, non-discrimination requirements for people with pre-existing conditions, and subsidies and costsharing reductions that helps insurers balance the added risk of individuals with 

pre-existing conditions while avoiding the risk of adverse selection where people 

only enter the market when they are sick and need care. Proposals to replace the 

ACA have eliminated the mandate in exchange for a continuous coverage requirement. Because purchasing insurance would no longer be mandatory under a continuous coverage requirement, the people who seek coverage during the open enrollment period will likely be a less healthy population and the risk pool would deteriorate, thus driving up premiums for those who need coverage the most. 

I know that the individual mandate is not popular, but we must have adequate 

incentives to encourage people to purchase coverage and bring healthy people into 

the market. Over time, this should help stabilize and even lower premiums for everyone as more young and healthy people enter the market and help offset the cost 

of sicker enrollees. 

ADEQUATE FUNDING FOR RISK STABILIZATION PROGRAMS

When the ACA was passed, it contained three premium stabilization programs to 

help insurers experiencing higher than anticipated claims as they adjusted to the 

new market. Two of these programs—risk corridors and reinsurance—were designed 

to be temporary and have expired, but many insurers around the country, including 

those in Pennsylvania, are still owed significant risk corridor payments. Last year, 

Highmark, one of the Pennsylvania insurers, sued HHS for these payments, and the 

Pennsylvania Insurance Department filed an amicus brief in support of their suit 

because insurance companies who entered this market under a set of expectations 

should be made whole for payments they were anticipating. Many of these insurers 

experienced significant losses in the first few years, and making these payments 

would be a good way for the Federal Government to demonstrate good faith and a 

long-term commitment to the success of this market. 

Both ACA replacement proposals considered by the U.S. House and Senate contained reinsurance programs for 2018. Implementing a reinsurance program would 

be another effective way to demonstrate a long-term commitment to the health of 

this market for insurers and consumers who rely on this market for coverage. A $15 billion reinsurance program in the context of a careful, bipartisan approach 

to improving our health care system would be something I would view favorably, 

especially if the individual mandate were preserved and outreach was boosted to improve enrollment in individual market plans. The ACA’s reinsurance program successfully moderated premiums while it was in place and the reintroduction of a 

long-term reinsurance program could be an effective way to scale back the premiums we currently see. Increasing participation in the individual market would 

create a more stable, healthy risk pool, while the reinsurance program would help 

off-set the costs of enrollees with abnormally high claims costs. Together, these 

steps would moderate premiums for all while retaining the critical protections and 

robust benefits required by the ACA. 

CONTINUING ENROLLMENT OUTREACH PROGRAMS

Encouraging people to enroll in this market through active outreach programs is 

extremely important to ensuring the market’s success. The health of any insurance 

market depends on the strength of its risk pool, and reduced enrollment strains the 


HELPN-004 with DISTILLER
32 

risk pool and contributes to rising costs for those in it. I worry about some steps 

the Trump administration has taken that could further erode the risk pool, such as 

shortening the open enrollment period and ending HHS’s contracts to support outreach and enrollment efforts for the marketplace. In total, the Trump administration intends to spend $10 million nationwide on advertising for 2018 open enrollment compared to $100 million spent last year. The Administration also recently announced that funding granted to health insurance navigator organizations to help 

people enroll was almost halved from levels given under the previous Administration. I worry that these decisions will result in fewer people enrolling and relatively 

fewer healthy people enrolling, exacerbating the issues that already exist in the risk 

pool. 

Pennsylvanians are accustomed to having 3 months to enroll in coverage. In the 

past, December 15 has been an important deadline because it was previously the 

last day to enroll in coverage that was effective January 1, but enrollment still continued for the remaining 6 weeks of open enrollment. During 2017 open enrollment, 

more than 130,000 Pennsylvanians enrolled in coverage after the initial December 

15 deadline. That is roughly one third of our market. I am extremely concerned that 

a shortened open enrollment period coupled with low outreach from the Federal 

Government will catch consumers off guard and result in people who want or need 

coverage being left out of the market because they missed the enrollment window. 

In Pennsylvania, we are working to ensure that our marketplace population and 

potential enrollees understand this change through our own insurance outreach program. We are working alongside insurers, health care providers, consumer advocates, and other stakeholders to reach our common goal of increasing covered Pennsylvanians and informing them of important changes to this year’s open enrollment 

period. Encouraging enrollment helps everyone—people have access to coverage, insurers have a more robust risk pool, and providers are more likely to receive compensation for care provided. Overtime, a more robust risk pool should result in 

lower premiums for consumers. I hope the Trump administration ultimately sees 

the value in this outreach too, but for now Pennsylvania will work to fill the gap 

created by the Administration. 

ADDRESSING UNDERLYING COSTS OF HEALTH CARE

Stabilizing the individual market is an important first step to addressing cost concerns we hear from consumers, but we still need to get to the root of what really 

drives insurance costs: the cost of health care. To put it simply, insurance is expensive because the health care it pays for is expensive. Unfortunately, it gets more 

and more expensive every year, which means premiums will continue to rise every 

year even if there are no detrimental changes to the market. 

We need to have a serious national conversation about how we can moderate the 

unsustainable growth in health care costs, especially in areas experiencing astronomical growth in cost like we currently see with pharmaceutical costs. There is no 

silver bullet to reduce the cost of health care and the conversation is not easy, but 

it is essential as we look to the future and the long-term viability of our health care 

system. We continue to look for solutions to these problems at the State level, but 

these are national problems that I believe merit national solutions. So, I am hoping 

all of you and your colleagues in Congress will work alongside the States in tackling 

this complex and multifaceted issue. 

THE NEED FOR BIPARTISANSHIP

While the health reform debate has without question been partisan, the goals we 

are trying to achieve are not, and recognizing the real problems that exist in our 

health care system should not be either. I am very thankful that we are finally moving in the direction of working together, and I am optimistic that the ideas shared 

today will be a strong foundation moving forward. We all want Americans to have 

access to the care they need and be able to afford that care. We also want them 

to have choices, and that means supporting a competitive health insurance marketplace that can provide that choice. Let’s start by recognizing where consumers may 

not have that access or affordability, and let’s understand where we are not supporting the competitive market we need. Then, taking a lead from Governor Wolf 

and the group of bipartisan Governors, let’s look for solutions that can solve those 

problems, both in the short-term and in the long-term. 

As my testimony outlines, I believe some of those short-term strategies must be 

to provide clarity and stability of the rules in the market by appropriating funds 

to ensure payment of cost-sharing reductions and robustly enforcing the individual 

mandate while enhancing outreach and enrollment efforts to get more healthy people into the market and improve the risk pool. A reinsurance program could also 


HELPN-004 with DISTILLER
33 

contribute to stability and the moderation of premiums and show insurers that the 

government wants to work with them for the benefit of consumers—your constituents—to make this market an attractive place to do business. In the long-term, it 

is imperative that we begin to look for ways to moderate the growth of health care 

costs to ensure our health care system is sustainable and will meet the needs of 

those that need it now as well as those that will need to rely on it in the future. 

I am hopeful that we can move away from drastic proposals that would jeopardize 

the health and financial security of millions of Americans, and focus on solving real 

problems with common sense solutions like these. 

Again, thank you for allowing me to speak with you today. I would be happy to 

take any questions that you might have. 

The CHAIRMAN. Thank you, Ms. Miller. 

Mr. Doak, welcome. 

STATEMENT OF JOHN D. DOAK, COMMISSIONER, OKLAHOMA 

DEPARTMENT OF INSURANCE, TULSA, OK 

Mr. DOAK. Thank you, Senator. Good morning, Chairman Alexander and Ranking Member Murray. 

One of the things, before we get started today, our hearts and 

prayers are with those folks that are in the line of the hurricanes. 

We want to keep them in our prayers today. We would ask for 

speedy consideration of the Flood Reauthorization Act with all that 

on our minds. 

Good morning. I appreciate the opportunity to testify today to 

provide an Oklahoma perspective on stabilizing the individual 

health insurance market for 2018. 

For years, Oklahoma has been dealing with the negative consequences of Obamacare. I have been warning about spiking rates, 

narrowing networks, rising deductibles, general market instability 

for too long. My warnings have been ignored at the Federal level. 

I look forward to seeing how Congress will finally address these 

problems in time for carriers to meet their 2018 deadlines. 

The implementation of Obamacare in Oklahoma has been a failure. It has created severe market disruptions without meaningful 

reductions in the number of uninsured in our State. 

In 2014, our citizens chose plans from five different carriers on 

the federally facilitated marketplace. Those carriers sustained 

heavy losses and by 2017, that number had dropped to only one 

carrier. What is happening now cannot be sustained and we can expect eventually Oklahomans will have no market and no options. 

Not only do Oklahomans have one marketplace carrier to choose 

from this year, but over the past 4 years, rates in our marketplace 

have increased by 130 percent. Studies estimate that approximately 30,000 individuals, who do not quality for premium assistance, exited the non-group market in Oklahoma between 2016 and 

2017. Small business owners and self-employed individuals, who 

are the backbone of Oklahoma’s economy, are suffering. 

As premiums have spiked, enrollees have experienced deductible 

shock and cannot afford the coverage. Many people in Oklahoma, 

where the average per capita income is just above $25,000 annually, are being forced to pay higher premiums for a policy they cannot afford to actually use. 

Further, as carriers have sustained large losses in the marketplace, they have responded by narrowing their provider networks. 

It turns out, you cannot always keep your doctor. 


HELPN-004 with DISTILLER
34 

Many other States are facing similar issues. Unfortunately, all 

recent efforts to repeal and amend Obamacare have failed and 

States like mine have been left holding the bag. 

I am encouraged by the Trump administration’s priorities, particularly in encouraging State flexibility and autonomy. In Oklahoma, Obamacare gives us no other options at this point. 

Oklahoma has submitted a 1332 Waiver application under the 

Obamacare framework. This application focuses on the creation of 

a market stabilization program using Federal pass through funding 

and State-based assessments. This would create a reinsurance program for carriers operating in the marketplace. 

This initial plan is estimated to reduce premiums and increase 

enrollment in the marketplace in 2018. Subsequent Waivers will 

regain State control over other Obamacare requirements. However, 

I am not convinced that Obamacare Waivers are going to be the solution to our problem. 

What we really need is an innovative, long-term solution that 

truly returns powers back to the States to implement ideas tailored 

to fit each State’s specific needs in health insurance. 

That is why I have been encouraged that proposals that are out 

there, like ones from Senators Graham and Cassidy, which would 

repeal the individual and employer mandates, and allocate block 

grant dollars to the State. This is the kind of leadership and flexibility to the long-term stability of our markets. 

If some States want to keep their regulations from Obamacare, 

that is great if that works for them. But that is not working for 

Oklahoma and we should have the opportunity to do something different, or else we face an uncertain and difficult future on this current flawed path. 

In conclusion, former senator, Dr. Tom Coburn, recently said, ‘‘If 

you want to fix healthcare, fix the markets.’’ I do not think government will ever fix healthcare. Only markets will. 

For more information, please see my written testimony, which includes letters I sent in January to House Majority Leader McCarthy and Chairman Alexander. These letters outline several other 

innovative solutions to our insurance problems. 

Thank you very much, Mr. Chairman. 

[The prepared statement of Mr. Doak follows:] 

PREPARED STATEMENT OF JOHN D. DOAK

SUMMARY

Insurance commissioners across the country have been dealing with the consequences of the Affordable Care Act (ACA) on State markets since its inception: 

rising rates, constricting networks, rising deductibles, fewer consumer choices, and 

market instability. What we have now in our individual market is the consequence 

of encumbering a functional market with the burdens of becoming a Federal tax distribution system. 

The consequences of the ACA on Oklahoma’s individual market have been severe. 

We have seen a reduction in competition down to only one carrier on the marketplace, drastic rate increases, constricting networks, higher deductibles, and market 

instability. These problems were not caused by uncertainty about cost sharing reduction (CSR) payments, but have all occurred while CSR payments have been 

made to insurers. 

The construction of the ACA intentionally left States like mine with limited ability to affect any real and lasting changes to these Federal programs. However, I am 

encouraged by the shift in priorities from a new Presidential administration and a 


HELPN-004 with DISTILLER
35 

focus on State flexibility and autonomy. We are continuing to look for solutions 

while we await a more comprehensive change at the Federal level. 

Over the last few years I have worked on several State initiatives in an effort to 

improve our health insurance markets. In 2012, the Oklahoma Legislature passed 

a bill allowing small employers to purchase group health insurance through an employer association. In 2017, the Oklahoma legislature passed a bill creating a framework in which insurers licensed in other States, such as those sharing geographic 

borders and communities with Oklahoma, can sell health insurance policies across 

State lines. These types of State innovations should be encouraged by Congress, not 

preempted. 

For the last year, Oklahoma’s 1332 Waiver Task Force has been working to formulate a number of recommendations for modernizing Oklahoma’s health insurance 

market. The first waiver application submitted on August 16, 2017, focuses on the 

establishment of the Oklahoma Individual Health Insurance Market Stabilization 

Program, which proposes to utilize Federal pass-through funding and State-based 

assessments to create a reinsurance program for carriers operating on the FFM. I 

remain unconvinced that this Program is a long-term solution to Oklahoma’s health 

insurance problems. 

While I would advocate for greater State flexibility and a return of authority over 

health insurance regulation to the States, there are many things that Congress can 

do within its existing authority to help us, including: repeal all fees and taxes that 

increase the price of health insurance; repeal the individual and employer mandates 

and replace them with a meaningful continuous coverage premium discount or a 

surcharge and waiting period for interrupted coverage; eliminate the use of Navigators in the distribution of health insurance; allow States to define what qualifies as 

a short-term medical plan not subject to the requirements of the ACA; and adopt 

a series of proposals intended to reduce the cost of health care and give individuals 

more control over their health care dollars, including expanding the use of HSA’s, 

addressing the cost of prescription drugs, and supporting transparency in pricing for 

the delivery of medical services. 

INTRODUCTION

Chairman Alexander, Ranking Member Murray, and members of the committee, 

thank you for the invitation to testify today. My name is John Doak, and I am the 

elected Insurance Commissioner for the State of Oklahoma. On behalf of my State, 

I appreciate the opportunity to provide you with information regarding Oklahoma’s 

experience with the Affordable Care Act (ACA) as well as my recommendations for 

the future of individual insurance markets. 

Insurance commissioners across the country have been dealing with the consequences of the ACA on State markets since its inception: rising rates, narrowing 

networks, rising deductibles, fewer consumer choices, and market instability. Since 

my election in 2010, I have opposed the type of top-down Federal intrusion into our 

health insurance markets we have experienced with the ACA because this system 

removes the traditional understanding of health insurance as a transfer of risk. 

What we have now in our individual market is the consequence of encumbering a 

functional market with the burdens of becoming a Federal tax distribution system. 

OKLAHOMA’S EXPERIENCE

The consequences of the ACA on Oklahoma’s individual market have been severe. 

During the first 4 years of federally facilitated marketplace (FFM) activity, Oklahomans have seen a drastic decrease in competition, leaving them fewer choices each 

year. In 2014, Oklahoma consumers seeking coverage on the FFM could choose 

plans from five carriers. This number dropped to four in 2015, two in 2016, including a new entrant to the market, then finally to one in 2017. While the one carrier 

remaining has indicated its continued commitment to the market in 2018, the lack 

of competition limits plan options for consumers. 

Oklahoma’s FFM enrollees have also faced numerous significant rate increases for 

their dwindling plan options. The last carrier left standing endured over $300 million in losses for its first 3 years of FFM business leading to a 76 percent average 

rate increase for 2017 qualified health plan (QHP) enrollees. Over the past 4 years, 

rates have increased for Oklahomans on the FFM by 130 percent and approximately 

30,000 Oklahomans exited the non-group market because of unaffordability. These 

increases are especially harmful for individuals with QHPs who make too much 

money to qualify for Advanced Premium Tax Credits (APTCs) or Cost Sharing Reductions (CSRs), or who purchase an individual policy off the FFM. These people— 


HELPN-004 with DISTILLER
36 

1 A video recording of the Healthcare Innovation Summit is available online at https:// 

www.youtube.com/user/okinsurance411. 2 A copy of the Task Force’s concept paper can be found at https://www.ok.gov/health/documents/1332%20Waiver%20Concept%20Paper.pdf. 3The 1332 waiver application can be found at https://www.ok.gov/health2/documents/ 

1332%20State%20Innovation%20Waiver%20Final.pdf. 

often small business owners or self-employed individuals—are bearing the brunt of 

these increases. 

These rising premiums impact consumer decisions about other policy provisions, 

like deductibles. As premiums have risen, enrollees have been pushed to accept 

higher deductible levels in order to offset the cost of coverage. These higher 

deductibles have frustrated the intention of health insurance for many customers 

who cannot afford to pay the out-of-pocket costs for their health care. 

Further, as carriers have suffered losses on FFM business they have responded 

by narrowing their provider networks, which can result in a disruption in the primary care relationship for many consumers. In some instances, all of the specialists 

involved in a procedure may not be in the same network, resulting in surprise bills 

for the consumer. This uncertainty only adds to the affordability and accessibility 

problem the consumer already faces. 

The question is frequently asked whether Congress should expressly fund cost 

sharing reduction (CSR) payments to insurers. It should be noted that the instability in Oklahoma’s market, the spike in premiums, the rise in deductible levels, 

and the constriction of networks have all occurred while CSR payments were being 

made to insurers. While the nonpayment of CSRs would exacerbate Oklahoma’s numerous individual market problems, CSRs are not the source of those problems. 

Oklahoma’s market instability is the result of the ACA’s foundational flaw: it is a 

top-down Federal Government intervention into health insurance regulation that 

distorts natural, cost-controlling market forces and stifles innovation in a sector in 

need of new ideas. 

OKLAHOMA’S RESPONSE

The construction of the ACA intentionally left States like mine with limited ability to affect any real and lasting changes to these Federal programs. However, I am 

encouraged by the new outlook and shift in priorities from a new Presidential administration. It is clear that President Trump and Health and Human Services Secretary Price want to provide each State more flexibility and autonomy to develop 

solutions to fit its particular needs. In Oklahoma, we are continuing to look for solutions while we await more comprehensive change at the Federal level. 

In the last few years I have worked on several State initiatives in an effort to 

improve our health insurance markets. In 2012, the Oklahoma Legislature passed 

Senate Bill 1621, which allows small employers to purchase group insurance 

through an employer association. The bill requires associations to meet the requirements of a ‘‘bona fide’’ association. In 2017, the Oklahoma Legislature passed Senate Bill 478, which creates a framework in which insurers licensed in other States, 

such as those sharing geographic borders and communities with Oklahoma, can sell 

health insurance policies across State lines. Allowing for increased State control 

over the benefits required in health insurance plans through broader legislative 

changes could lead to greater competition and stability in the individual marketplace. These types of State innovations should be encouraged by Congress, not preempted. 

This April, I held a Healthcare Innovation Summit during which presenters at the 

cutting edge of their fields discussed price transparency and medical care value, innovative insurance product design, health insurance underwriting, Project ECHO, 

digital delivery models, and government participation in the health insurance and 

health care markets, along with other current issues. These discussions are available online to watch any time and I encourage the committee to review these discussions as a part of your study on these issues.1

Other agencies and groups in Oklahoma are looking for solutions as well. For the 

last year, Oklahoma’s 1332 Waiver Task Force has been working to formulate a 

number of recommendations for modernizing Oklahoma’s health insurance market.2

The first waiver application submitted on August 16, 2017, focuses on the establishment of the Oklahoma Individual Health Insurance Market Stabilization Program 

(‘‘the Program’’).3 The Program proposes to utilize Federal pass-through funding and 

State-based assessments to create a reinsurance program for carriers operating on 

the FFM. The impact of the Program is unclear at this point, and several groups 

have expressed their interest in submitting legal challenges to stop its implementaVerDate Nov 24 2008 13:39 Mar 05, 2019 Jkt 000000 PO 00000 Frm 00040 Fmt 6633 Sfmt 6621 S:\DOCS\26840.TXT CAROL

HELPN-004 with DISTILLER
37 

4 A copy of this letter can be found at https://www.ok.gov/oid/documents/McCarthy 

percent20Letter%20Draft%20Final%20clean.pdf. 

tion. I remain unconvinced that this Program is a long-term solution to Oklahoma’s 

health insurance problems. 

If the initial 1332 waiver is approved, the Task Force’s focus will shift to developing the next 1332 waiver to pursue its additional recommendations. While wellintentioned, the Task Force’s proposals will always remain constrained by the overarching regulatory scheme constructed by the ACA. States would only be able to exercise the authority they once held through a system controlled by the Federal Government. As I have stated repeatedly in my time as Insurance Commissioner, this 

is authority that should have been left to the States all along. What we really need 

is an innovative, long-term solution that returns power back to the States to implement ideas tailored to fit each State’s specific needs. I have been greatly encouraged 

by the recent proposals I have seen from Senators Graham and Cassidy, which 

would allocate block grant funding to States to be used as each State sees fit. 

RECOMMENDATIONS FOR CONGRESS

While I would advocate for greater State flexibility and a return of authority over 

health insurance regulation to the States, there are many things that Congress can 

do within its existing authority to help us. On January 18, 2017, I sent a letter to 

House Majority Leader Kevin McCarthy outlining my recommendations for reforming this sector.4 An identical letter was sent to Chairman Alexander’s office and 

shared with every Representative and Senator from Oklahoma. I won’t reiterate 

every recommendation I made in the letter, but I would like to emphasize a few key 

points. 

First, Congress should repeal all fees and taxes that increase the price of health 

insurance, including the Patient-Centered Outcomes Research Institute (PCORI) 

fees, the Health Insurance Tax (HIT), and FFM user fees. Second, Congress should 

repeal the individual and employer mandates and replace them with a meaningful 

continuous coverage premium discount or a surcharge and waiting period for interrupted coverage. Third, Congress should eliminate the use of Navigators in the distribution of health insurance because the program has disrupted the longstanding 

vital role of agents and brokers in the marketing and sale of health insurance. 

Fourth, Congress should allow States to define what qualifies as a short term medical plan not subject to the requirements of the ACA. 

Finally, Congress should look beyond health insurance and adopt a series of proposals that would help reduce the cost of health care and give individuals more control over their health care dollars. We should expand the use of health savings accounts to allow people to choose more affordable high-deductible health plans, work 

to address the skyrocketing cost of prescription drugs in America, and support 

transparency in pricing for the delivery of medical services like the model instituted 

by the Surgery Center of Oklahoma so that market forces can work as intended. 

CONCLUSION

Oklahoma is facing the collapse of our individual health insurance market. We 

are down to only one carrier on our FFM and we have seen a rise in premiums of 

130 percent over the last 4 years. While many in my State are taking steps within 

the existing regulatory framework to hopefully stop some of the damage the ACA 

has caused, we still need help in the form of regulatory rollback and clarity to establish a more solid long-term footing. In addition, Congress should take steps to encourage price transparency in the delivery of medical services and to reign in the 

high cost of prescription drugs. It is time for serious leaders to make serious decisions to help out the people of every State as we move into 2018. I appreciate the 

committee’s focus on this important issue and I thank you for the opportunity to 

present this testimony. 

The CHAIRMAN. Thank you, Mr. Doak. And thanks to each of you. 

We will now begin a round of 5 minute questions. We will begin 

with Senator Enzi. 

Senator ENZI. Thank you, Mr. Chairman. 


HELPN-004 with DISTILLER
38 

STATEMENT OF SENATOR ENZI

I want to thank the panel for, not only what you have said, but 

what is in your testimony. It will be helpful to us in a number of 

solutions. 

I will begin with Ms. Wing-Heier. I know that Alaska has been 

faced with some dramatic premium increases in the country and 

potential loss of carriers on the exchange. You set up that Reinsurance Program to address premiums and working through that Section 1332 Waiver now that also includes several market reforms. 

Can you talk about what you are seeing from the Waiver, and 

what you might look for, and what some of the impediments might 

have been to getting the Waiver? 

Ms. WING-HEIER. The Waiver process is somewhat onerous in the 

fact that there is not a defined application to submit. 

So the States that are applying are hoping that they are providing the data requested by CMS including the actuarial analysis, 

the economic impact, and proving that they are staying within the 

guardrails to be given the Waiver. 

After that is done, the part that is stifling States right now is 

the 6-month waiting period before they receive final approval. 

The first part of the Waiver, as far as the application, the actuarial analysis, and such can be done in a period of a couple of 

months. But then you wait—after CMS has given the first approval—for up to 6 months to know if you will receive final approval, your funding, or the ability to go forward with any State 

innovation that you may find would benefit the citizens in your 

State. 

I will tell you that CMS was very helpful to us, but it still was 

a rather lengthy process. 

Senator ENZI. So you can probably provide us with some suggestions as you just did for simplifying that process. 

Ms. WING-HEIER. We submitted and worked with CMS on some 

reforms that we thought would help. I do not believe they have 

been adopted. I am quite sure they have not been adopted. But we 

did submit some comments to CMS on things that could improve 

the Waiver process. 

Senator ENZI. Thank you. 

Mr. Doak, Oklahoma faces some similar challenges to Wyoming. 

We are practically neighbors. We have only one insurer offering individual coverage on the exchange. 

Can you talk about the challenge that it creates with one carrier 

holding all the risk? I know that Wyoming’s Blue Cross sustained 

some real losses last year—and I might talk about those later—in 

their first year as the only carrier offering coverage. 

What changes would you suggest that could encourage more competition in the individual market for States like Oklahoma and Wyoming? I know you had some of that in your testimony, if you could 

share that with us. 

Mr. DOAK. Yes, sir, Senator. Thank you very much for that question. We do share some of the similarities with your State. Our 

Blue Cross had a huge amount of losses, much like yours. 

One of the things I think that we can do is as long as we are 

under the current framework that we are operating under, under 


HELPN-004 with DISTILLER
39 

Obamacare, the 1332 Waiver—and funding the CSRs—is the right 

way, the path to go ahead unless we make other, dramatic changes 

in the future. In my letter as you have stated, I see many options 

for Oklahomans in the future to be able to—— 

Small businesses in Oklahoma are really bearing the brunt of 

many of these unintended consequences. I think the associational 

health plan bills, other types of vehicles that can be used. 

I, for one, believe that buying across State lines is a possibility. 

But again, also offering maybe more catastrophic type plans, as we 

talked about earlier this morning, for Oklahomans to be able to 

have choices for what types of carriers, and services, and 

deductibles they have. 

The more choices we can give consumers, in my opinion, is the 

right thing to do for my State and others. 

Senator ENZI. Thank you. 

I noticed that Ms. McPeak mentioned a stop loss of a specific 

amount. Mr. Kreidler mentioned a Federal stop loss. And unusual 

market changes were mentioned by virtually all of you. 

I know in Wyoming, we had a carrier that found out that two 

boys each had a $30,000 prescription each year, but that was 

bought out by the primary company. The generic went away and 

it went to $1.3 million each. They had a $2.6 million hit from just 

one family. 

I appreciate your comments on that and my time is about to expire here. I will be asking in writing for some suggestions from you 

on ways to do that stop loss, a specified amount, and how the Federal Government ought to have a role in it, and what the States’ 

role should be. 

Senator ENZI. Thank you. 

The CHAIRMAN. Thank you, Senator Enzi, and thank you for 

staying within 5 minutes and setting a good example. We have lots 

of senators here today. 

Senator Casey. 

Senator CASEY. Mr. Chairman, thank you. I want to thank the 

chairman and Ranking Member Murray for making this hearing 

possible and the subsequent hearings, as well as the roundtables. 

When I was going across Pennsylvania in August, I was in 32 of 

our 67 counties, and when I could announce that we were having 

bipartisan healthcare hearings, there was an audible sigh of relief. 

So we are grateful for the opportunity. 

Secretary Miller, I wanted to ask you in particular that we have, 

I think, a broad consensus emerging, at least, about the importance 

of the Cost Sharing Reduction payments, the so-called CSRs. I 

think more discussion now, as well, about 1332, the Waiver. 

You said in your testimony that you felt that the 1332 Waiver 

process could be streamlined to minimize administrative burden— 

I am paraphrasing here—while also protecting the guardrails of 

the Waiver program. 

Can you walk through that? In particular, the concerns you have 

about maintaining those so-called guardrails. Explain that. 

Ms. MILLER. Thank you, Senator Casey. 

I think from Pennsylvania’s perspective, as we think about potentially looking at a 1332 Waiver, the current process is very cumbersome. We would have to pass legislation. We would have to go 


HELPN-004 with DISTILLER
40 

through public hearings and then go through the process that, I 

think, Alaska is familiar with in terms of working with CMS. So 

it is a long process to get there. 

I think the more we could streamline that process, the better off 

it would be. I think if States have the opportunity to submit a letter from their Governor—as opposed to having to pass legislation 

to move forward on a 1332 Waiver—that would be very helpful in 

allowing us to respond to market changes and trying to make sure 

our markets are stable going forward. 

I do not mean to sound greedy, but if we could have some planning funding available to help us really think through how this 

would work, I think, that would also be very helpful. 

Also, having flexibility around the 1332 Waivers and 1115 Waivers, the Medicaid waivers, to think about those in conjunction with 

the terms of the budget neutrality requirements, as opposed to 

looking at them individually for those requirements. But I think as 

we move forward trying to make—— 

The CHAIRMAN. Could you explain what you mean by that, 

please? 

Ms. MILLER. Sure. The 1332 Waivers and the 1115 Waivers, each 

have requirements for budget neutrality. I think for States, if we 

want to be even more innovative, being able to think about those 

Waivers together instead of having to think about them separately, 

and having the overall budget neutrality requirement looked at as 

a pool. From just a strict, ‘‘Is this budget neutral together?’’ would 

be very helpful and would allow States to be more innovative in 

thinking about that. 

To your point, Senator Casey, I do think that the baseline coverage requirements are really important in ensuring that whatever 

we do does not result in fewer people covered or does not erode the 

coverage. 

I think a lot of us up here hear from consumers on a regular 

basis about high deductibles and concerns about other out of pocket 

costs that maybe they do not expect when they go to use their care. 

I think we want to keep those baseline coverage requirements intact as much as possible, but the more we can streamline that process, make it easier for States to respond to market dynamics, that 

would be helpful. 

Senator CASEY. The other thing I wanted to ask you about is 

what happens to folks in the age category of 50 to 64? 

We know, for example, that the rate of uninsured adults ages 50 

to 64 dropped by some 47 percent from 11.6 to 6.1 percent between 

December 2013 and March 2015. Obviously, good news there of a 

huge drop by almost 50 percent. 

In the context of your experience in Pennsylvania, how has Pennsylvania stabilized its marketplace while also protecting older 

Pennsylvanians who are not yet eligible for Medicare, meaning that 

50 to 64 age category? 

How have we done in terms of accessing more affordable care? 

Ms. MILLER. I think the current system protects older Americans 

and older Pennsylvanians. I think the 3-to-1 age band that we currently have in the ACA helps makes sure that older Pennsylvanians can afford that coverage. 


HELPN-004 with DISTILLER
41 

I think a lot of us, as we think about stabilizing these markets, 

are really focused on getting more young and healthy people into 

the risk pool. And I think if we can find ways to do that that are 

not on the backs of older Americans, that is the way to do it. 

I think a lot of us have talked about expanding enrollment, funding, advertising, and funding Navigators so that we have assistance getting people enrolled. All of those are ways that we can 

boost enrollment without doing it on the backs of older people. 

Senator CASEY. Great. Thank you, Mr. Chairman. 

The CHAIRMAN. You have some time, if you have another question here? 

Senator CASEY. I am good. 

The CHAIRMAN. Thank you. 

Senator Paul. 

STATEMENT OF SENATOR PAUL

Senator PAUL. I think the Chairman has done a good job at focusing on the problem and so has the panel. We have problems in 

the individual market and it is 6 percent of the marketplace. 

I think, though, that we have ignored where they are and what 

is working in the insurance market. If there are parts of the insurance market that are working, maybe we should look at those and 

try to figure out how we get more people into the parts of the marketplace that are working and how we get them out of the marketplace that is not working. 

Six percent of the people are in the individual marketplace, 36 

percent of the people are in the large group self-insured marketplace. This is the ERISA marketplace and I think you can make 

the argument that it works better than anything else. 

It probably has the lowest increase in rates over time. People are 

protected. They have large groups. They can have leverage to get 

cheaper prices. They have a pool of people that they are a group 

of, where they are protected against one person getting sick. 

I would argue that the worst place, an impossible place in the 

whole world to be is in the individual market. You should not want 

to be there. 

My question is a more fundamental question: can you fix it? And 

is it morally or ethically right to take money from the taxpayer and 

give it to insurance companies to subsidize people in the individual 

market? 

Maybe we ought to give people an exit. Let us let people get out 

of the individual market. 

Mr. Doak has talked a little bit about this with the health associations in his State. I would go a step further. 

There are 2 million fast food restaurants in our country. About 

15 million people work in the fast food industry. These are our 

lower wage, working class citizens. These are the people who are 

struggling. These are the people who are still not even insured 

under Obamacare. These are the people we should want to help. 

Let us let them become part of the ERISA plans. Let us have nationwide health associations. 

What if one person was negotiating for 15 million people, fast 

food restaurant workers? You are bound to get a better price. It is 


HELPN-004 with DISTILLER
42 

the phenomenon of Wal-Mart. Wal-Mart gets a better price because 

they are a bigger purchaser of things. 

Let us legalize that. It would cost the taxpayer nothing. Let us 

just say, ‘‘People can associate with other people and buy insurance.’’ Get the heck out of the individual market. 

I would prefer there be no individual market. I think it is an artificial construction of attaching insurance to your taxes. When we 

did that, we created the individual market and then we have Big 

Insurance come to Washington with their hands out. They made $6 billion a year in profit before Obamacare. They now make $15 billion a year. CSRs are money you are giving to the 

insurance companies. All this money is being given to Big Insurance. Do not give it to them. 

Let the individuals get into the group marketplace and guess who pays for that? It comes out of the $15 billion in profit they 

make in the group market. 

What a scam. They come here and they make billions of dollars 

in the group market, but then they whine that they cannot make 

it in the individual market. They cherry pick. They love the group 

market, and they stay in it, and they say, ‘‘We are not going to sell 

in the individual market.’’ 

Let us equalize the individual and give them the power to negotiate with the insurance company. It does not cost anything. All we 

are doing is legalizing collective bargaining for consumers. We 

should like it on this side of the aisle. 

While Senator Sanders and I do not often agree on things, if 

there are a few people left that are uninsurable or have a preexisting condition, I would rather buy them healthcare than give 

money to the insurance companies. It makes no sense to try to buy insurance for people who cost $1 

million a year who we already know what is wrong with them. Put 

$1 million in for somebody and buy them healthcare. Do not buy 

them insurance. 

You can do all these fancy reinsurance things and all these backstops. They do not work. We are subsidizing an individual market 

that does not work. It just is nonfunctional. You can never get 

there. 

People say it is too expensive. New cars are too expensive. Why 

do we not subsidize it? You can have a stabilization fund for new 

cars, for iPads, for iPhones, college education; anything that costs 

too much. We can just put a bunch of taxpayer money in and say 

we are going to make it lower by giving money to the people who 

provide these things; people who make the iPhones, people who 

supply college. 

I think we ought to look at it a different way. Let us do not try 

to fix the individual market. Let us try to give people an exit ramp 

to get out of the individual market completely. For those who cannot or who do not that we have to provide healthcare for, why do 

we not look at actually buying healthcare for them rather than 

buying insurance for them? 

Mr. Doak, if you want to respond. If you have any numbers on 

what your health associations have done and whether or not it has 

put a little bit of a dent in helping people from the individual market get into the group market, I would appreciate it. Thank you. 


HELPN-004 with DISTILLER
43 

Mr. DOAK. Yes, sir. Thank you. 

At this current time, the Oklahoma health, we have the legislation in place at the State level, but there are some frameworks 

around the bona fide, the actual definition of an association which, 

I think, needs a closer scrutiny to be to open up. 

I do agree with you that associational healthcare plan bills, while 

I may differ from my colleagues respectfully, but I do think that 

there is, that could be a very viable market for folks to band together. Whether they are, as you mentioned, folks in the restaurant business, or whether they are from the flower industry, 

wherever that might be to band together to purchase coverage. We 

know that there are folks that can facilitate that in the marketplace. 

I do agree with you on that, Senator. 

Senator PAUL. Thank you. 

The CHAIRMAN. Thank you, Senator Paul. 

Senator Franken. 

STATEMENT OF SENATOR FRANKEN

Senator FRANKEN. Before I begin, I want to thank you, Chairman 

Alexander, and I want to thank the Ranking Member, Senator 

Murray, for holding this series of hearings on the individual insurance market reforms. 

Healthcare is such an important personal issue that affects millions of Americans. That is why I am heartened that we are having 

these bipartisan hearings to discuss common sense reforms that 

will stabilize markets and lower healthcare costs for consumers. 

I just wanted to spend a moment on the correct pronunciation of 

insurance, which is insurance not in-surance. 

[Laughter.] 

Thank you. 

Whether the commissioners here today pronounced it correctly, I 

think you all agree that we should have reinsurance or reinsurance. I believe that all but Mr. Doak who, by the way, mispronounced it, spoke explicitly on the importance of continuing the 

cost sharing and all of those who talked about cost sharing for multiple years. 

Mr. Doak, are you for continuing the cost sharing? 

Mr. DOAK. Is that Franken or Frank-en? 

[Laughter.] 

Senator FRANKEN. I cannot mispronounce Doak. 

Mr. DOAK. That is good. That is good, sir. 

My position is that under the current Obamacare network, we 

must continue under the current framework we are working under 

unless it is changed. We do need to continue the cost sharing 

agreements. 

Senator FRANKEN. Right. 

Mr. DOAK. So I think we have consensus. 

Senator FRANKEN. Good. We all have consensus on this panel of 

actual people—who are the heads of insurance in their States— 

that we should continue cost sharing and that we should do reinsurance. 

Commissioner McPeak, it is nice to see you again. As you know, 

Minnesota has applied for a 1332 Waiver to set up a Federal-State 


HELPN-004 with DISTILLER
44 

reinsurance program to help reduce health insurance premiums. 

My hope is that the Administration will approve this Waiver quickly. 

As documented in a ‘‘New York Times’’ article that ran this past 

weekend, my State insurance program has bipartisan support and 

passed in the State legislature, bipartisan support. If approved, it 

would reduce health insurance premiums by about 20 percent. 

As the article notes, this reduction would help all Minnesotans 

buying health insurance on the exchange, not just those with the 

most costly healthcare needs. Other States like Mr. Doak’s Oklahoma are considering similar proposals. 

Senator Alexander, I would like to ask unanimous consent that 

this article from ‘‘The New York Times’’ be submitted for the 

record. 

[The New York Times article referenced above may be found at 

https://www.nytimes/2017/09/02/us/politics/minnesota-healthcare-reinsurance.html.] 

The CHAIRMAN. It will be. 

Senator FRANKEN. Commissioner McPeak, in your testimony you 

talked about the importance of a Federal reinsurance program. 

What advantages does a Federal reinsurance program offer compared to a State-based approach? 

Ms. MCPEAK. Thank you for the question and I will try to pronounce insurance correctly, but I am from the south, so I do not 

have any guarantees there. 

[Laughter.] 

I will say the Federal reinsurance program has a benefit for 

States like mine. It may not have the ability to upfront the seed 

money to get our own program started, even in a 1332 Waiver process. 

Then, to use the Waiver process to create our own State fund 

would require the legislative approval that can sometimes be very 

difficult to obtain, even when your legislature in the State is in session, which ours is not again until the first of the year 2018. 

I see the additional benefit of the reinsurance program, not only 

to reduce premiums for consumers, but I think that it would add 

market competition. It would entice insurers back into the market 

because it would provide the economic certainty about a stop loss 

attachment point for a reinsurance program, so insurers could better estimate the risk of entering the market. 

Senator FRANKEN. Would anyone else care to—Ms. Wing-Heier, 

I know that Alaska has a reinsurance program. You have had the 

1332 Waiver. 

Would anyone care to talk to the wisdom of a permanent Federal 

reinsurance program like the one that was established under Medicare Part D? 

Mr. Kreidler, I see you nodding. I like people nodding when I say 

something. 

Mr. KREIDLER. Certainty is one of the things that we are really 

looking for, for 1332. Tell us if our application is going to be accepted. Do tell us whether it meets the criteria. Speed is what we are 

really interested in. 

In answering it, we are exploring it right now as one of our options in the State of Washington. We are also looking at a public 


HELPN-004 with DISTILLER
45 

option particularly in counties where there are not any other insurers that we could make available, either through our public employees, or expansion of the Medicaid program, or we have a high 

risk pool; some other way of being able to guarantee it. 

But when it comes to the 1332, because of the 6-month waiting 

period that we have right now in filing the application, because we 

have to go back to the legislature, it really compresses. 

We are trying to make a difference and see if we can make a 

change for 2019. We will not be able to do it for 2018, but we are 

pretty confident in our State that things are going to be stable for 

2018. We are really worried about what is going to happen in 2019. 

Getting the CSRs funded will help in 2018 because it starts to 

restore their confidence. But give us some certainty on the 1332 

Waivers. 

We do not want to see our backs turned to the issues of the Essential Health Benefits or the protections on out of pocket expenses. 

Senator FRANKEN. The guardrails that—— 

Mr. KREIDLER. The guardrails. 

Senator FRANKEN [continuing]. Ms. Wing-Heier talked about this 

morning. 

Mr. KREIDLER. Exactly. And you have heard that from other commissioners too. We are concerned about the guardrails, that they 

are not eroded away. Thank you. 

Senator FRANKEN. I am out of time. 

I just want to say one thing, which is all of these things—cost 

sharing, reinsurance—have virtual cycle that bring down the costs 

of premiums and ultimately bring healthier people in. So does enforcing the mandates. So does more advertising and more people to 

help you navigate. 

That is what I am for. 

The CHAIRMAN. Thank you, Senator Franken. 

Senator Collins. 

STATEMENT OF SENATOR COLLINS

Senator COLLINS. Thank you, Mr. Chairman. 

Commissioner McPeak, it is good to see you back again. I want 

to followup on the reinsurance issue as well. 

Since the soaring costs of premiums in the individual market is 

a major concern of mine, and I would say of all of us, we heard 

today of the success of the reinsurance pool that Alaska has set up. 

Similarly Maine, between 2012 and 2013, had a reinsurance pool 

that was successful in lowering rates in the individual market by 

20 percent, on average. I think if you look at the experience of 

those two States alone, it shows the benefit of reinsurance pools. 

As a practical matter, however, many States are simply not in 

a position to immediately stand up a reinsurance or a high risk 

pool. Therefore, I have two questions for you. 

One, do you see a role for the Federal Government in the short 

term in either establishing a high risk pool or assisting States in 

doing so? 

Second, the analysis that I have seen by Milliman has suggested 

that the cost to replicate the kind of reinsurance pool that Maine 

had would be about $15 billion annually. 


HELPN-004 with DISTILLER
46 

Does the NAIC agree with that and could you comment on both 

of those issues? 

Ms. MCPEAK. Certainly. Thank you for the question. 

I do believe that the reinsurance mechanism, or a high risk pool, 

either one, has the effect of removing from the risk pool the highest 

cost claims, which provides certainty to the insurers. It helps them 

actually price products for those other individuals in the risk pool. 

It should bring premiums down remarkably. 

Plus, as I said, I think it would also entice insurers to write in 

areas where you have very limited options because you have an 

idea of what your ultimate risk might be for writing in that area. 

As for the Milliman report, I do not know that we have provided 

any analysis on that figure. Fifteen billion dollars does seem like 

that would be a good place to start to set up a Federal mechanism 

until States could get on their feet to have their own system, which 

might be a reinsurance program or it could be a high risk pool, depending on the individual State needs. 

I think in Tennessee, we would be more interested in creating a 

reinsurance program. But as you mentioned, we do not have the 

ability to set that up immediately and certainly not to affect the 

2018 rates. 

Senator COLLINS. Thank you. 

Ms. Wing-Heier, thank you for being here and sharing your experience. One of the keys to driving down rates in the individual market is to broaden the market and to get as many people as we can 

enrolled. Let me ask you about two ideas and one comes from conversations that I have had with insurance experts in the State of 

Maine. 

Right now under the Affordable Care Act, if you are over age 29, 

you cannot purchase the Copper Plan and get the subsidies that 

would be available even if your income would warrant that subsidy. 

And if you do not qualify for the subsidy, you are also prohibited 

from buying the Copper Plan unless you are under age 29. 

Should we change that, is my first question to you? 

Ms. WING-HEIER. We believe that being able to have a catastrophic or a Copper Plan available for a younger population is 

beneficial to growing the market; getting the healthier individuals 

in. 

We also think that it should probably be combined with a Health 

Savings Account. It will be somewhat of a learning experience for 

the younger population, the healthier population, to come in, and 

purchase insurance that they are not now doing mostly because of 

the prohibitive cost. 

So we are in support of finding, if you call it the Copper Plan 

or a catastrophic plan, bundled with an HSA for the younger population. 

Senator COLLINS. That is a great combination because then the 

HSA can be used to help pay the out of pocket costs. 

Ms. McPeak, I have only 8 seconds left, so you may have to answer this for the record. But another idea, which Senator Cassidy 

and I proposed many months ago, was auto-enrollment instead of 

an individual mandate where someone could opt out. But we know 

from the experience with 401(k) plans that if people are automatically enrolled, they are likely to stay enrolled. 


HELPN-004 with DISTILLER
47 

Do you have any thoughts on that as a way to help broaden the 

individual market? 

Ms. MCPEAK. I will just say very briefly. I do think that autoenrollment could assist people in staying enrolled. 

The issue is if we have more than one carrier, which I hope that 

we return to that competitive environment some day, I would like 

to have the ability for consumers to choose because there are such 

detrimental options with provider networks and drug formularies 

that I would want to have some ability to make sure that you are 

enrolled in a plan that works for your family. 

Senator COLLINS. Thank you. 

The CHAIRMAN. Thank you, Senator Collins. 

Senator Bennet. 

STATEMENT OF SENATOR BENNET

Senator BENNET. Thank you, Mr. Chairman. 

I also want to thank you and Patty Murray, the ranking member, for holding this hearing. It is long overdue that we begin to 

approach this in a bipartisan way. I was so pleased to see so many 

senators at the session this morning that you held. It suggests very 

strong bipartisan interest in trying to figure out how to fix this. 

I also think it is important to underscore something you said at 

the beginning of the hearing, Mr. Chairman, because it is an important perspective for people to have. We are talking about 6 percent of the folks that are insured in America. If we can solve these 

issues for that 6 percent in a bipartisan way, that would be a very 

important book of business for us to take care of, but it is not the 

end of what needs to be done. 

When I hear from people in my State whether they support the 

Affordable Care Act or whether they oppose the Affordable Care 

Act, they are deeply dissatisfied with the way their lives intersect 

with America’s healthcare system. 

I think it is because they know they are being forced to make 

choices that people in other industrialized countries do not have to 

make about healthcare, about their business, about the predictability of being able to go to a doctor. A lot of that has to do with 

the underlying costs in our healthcare system and a lack of transparency in our healthcare system that we still have not found a 

meaningful way to address. 

My hope, more than a plea, is that once we get this piece of work 

done that we will continue to work in a bipartisan way to try to 

deal with the root causes of what this panel is talking about today, 

which is that we spend too much money on our healthcare without 

getting the result that we should have reason to expect. 

The question that I would like to ask the panel is that to me the 

most solid critique of the Affordable Care Act, as opposed to our 

healthcare system generally, is when people say to me, ‘‘Michael, 

you are forcing me to buy something, insurance, that costs too 

much because there is no competition in my area.’’ This is very 

often in rural parts of the State, in mountainous parts of the State. 

‘‘The deductible is so high that it is of no use to my family.’’ 

I think that is a legitimate criticism of the Affordable Care Act. 

I was somebody who supported the Affordable Care Act, but I am 

willing to take criticism. 


HELPN-004 with DISTILLER
48 

The question is, how do we solve that problem? How do we introduce more competition into these rural areas than we have to drive 

the price down? 

Mr. Kreidler, maybe I will start with you just because you were 

saying that Washington State was considering the possibility of a 

public option for some of these counties. I would be interested in 

other thoughts that other folks on the panel have as well. 

I understand the backdrop of reinsurance and all of that. We 

probably do not need to revisit all of that. But just specifically talk 

about what has happened in rural areas. 

Mr. KREIDLER. Thank you, Senator Bennet. 

Something to remember is that rural counties were a problem before the Affordable Care Act. They have been historically a challenge for every State. 

We have nine counties right now that have only one insurer in 

them and they are all rural counties. 

Mr. BENNET. We have 14 and it is the same. 

Mr. KREIDLER. Yes. I think what we can wind up doing is offering some incentives for carriers to go out there, but then there is 

always the potential of looking toward a public option. That is what 

we are considering right now in the State of Washington on a very 

broad group of insurers and providers. 

Our health insurance exchange is working very closely with us 

and we are doing a joint effort here as to how we can analyze the 

various options. The 1332 Waiver is one of them. I do not know if 

it will work for the State of Washington. 

But we do have the opportunity here to take a look at a public 

option that might exist for those counties so that we are offering 

them something, which is, right now, not acceptable to be in a position either with very limited competition or no competition. 

Senator BENNET. Do you need the 1332 Waiver to do the public 

option or are those two separate ideas? 

Mr. KREIDLER. These are two separate ideas. 

Senator BENNET. Thank you. I have 1 minute left if there is anybody else who would like to answer. 

Ms. MILLER. I would just say there was a bipartisan group of 

Governors that sent a letter to Congress last week and in that letter, they have some recommendations around offering choices in 

underserved counties. 

One of the proposals, which I thought was interesting, was allowing residents in underserved counties to have access to or to buy 

into the Federal Employees Health Benefits Program. 

I think ideas like that would be great places to start. 

Senator BENNET. Ms. McPeak, do you have something quickly? 

Ms. MCPEAK. Thank you. 

I would just like to suggest that if we could provide some flexibility to States to provide maybe a less robust schedule of benefits 

still within the EHB categories, but providing first dollar coverage 

for things like preventative care, but on a lesser scale than what 

is currently in the market in the Silver Plan. 

That could really attract a lot of folks into the market with a 

more affordable option because we hear the same thing that you 

do is that, ‘‘I am forced to buy something that, at the end of the 

day, I really cannot use to access healthcare.’’ 


HELPN-004 with DISTILLER
49 

Senator BENNET. I am out of time, but I just would respond to 

that by saying also that it is really important for Americans not 

to be forced to buy lousy insurance. Insurance that no one else in 

the industrialized world has to settle for. It needs to be real, but 

I appreciate the desire for flexibility. 

Thank you, Mr. Chairman. 

The CHAIRMAN. Thanks, Senator Bennet. 

Senator Murkowski. 

Senator MURKOWSKI. Thank you, Mr. Chairman. 

I want to follow-up with some of the comments that Senator Bennet has just made, also, to thank the chairman and the ranking 

member for this very important beginning of a good, constructive 

dialog. 

Speaking to the issue of how we deal with those in our rural 

areas and, of course, Alaska is always the Poster Child when it 

comes to real rural. 

When we are talking about our individual market, it is a group 

of 18,000 people. We cannot construct a market off of 18,000 people. In Alaska, we have been looking at where could they fit? 

I was actually pleased to read the letters from the Governors in 

suggesting that maybe it might be a workable idea to have residents in underserved counties to buy into the Federal Employees 

Health Benefits Program. I do not know if that is the place. 

[Applause.] 

I do not know if it is the State employees program. I do not know 

if it is the other programs that we have out there. 

We have a big V.A. population in Alaska. We have a big population of our Native people that are served through IHS. So trying 

to construct something for 18,000 people, to me, just does not seem 

like a measure that works. 

Another proposal that has been out there a lot, and Mr. Doak, 

you raised the opportunity for purchasing across State lines and 

Ms. Wing-Heier, I would ask you to address that as a viable alternative for us in Alaska. 

As people have asked me, I have said, ‘‘We are not attractive to 

anybody. We are high cost. We are high risk. Why does anyone 

want to adopt Alaska into their pool?’’ 

But is that something that has merit, even for a State like ours? 

Ms. WING-HEIER. It could possibly have merits. There is some 

concern with consumer protections in selling across State lines, 

which we have discussed. 

But Alaska is unique in the fact that when insurers look at us, 

as we are right now, I do not know that it is going to matter if we 

are joined with a Wyoming or an Idaho. I mean, we have looked 

at possibly doing a co-op or an arrangement with other western, 

rural States to see if we could come up with the numbers that 

18,000 here, 20,000 there, if we could develop our own co-op, so to 

speak, of enrollees. 

But we still have not come up with the numbers and right now 

our experience has been so bad that you are exactly right when we 

have talked. No one has wanted us because of our cost of 

healthcare and what that translates, then, into insurance. We 

would be bringing the rest of the market down and that is not a 

position that we want to be in. 


HELPN-004 with DISTILLER
50 

It is just the fact of living in Alaska. Very rural, limited facilities 

in very rural areas that are hard to access. There is no magic answer for us. 

But selling across State lines is certainly something we could explore, but right when we have talked prior to insurers and when 

we have talked to other States, we have not been an attractive 

risk. 

Senator MURKOWSKI. Let me ask about the issue of cost sharing. 

It has been raised by everyone. I think we recognize that uncertainty within the market is deadly. You cannot move with accuracy. 

There have been some that have suggested, I believe it was the 

chairman in his remarks, said that we need to extend the cost 

share subsidies through 2018. Another date that has been out 

there is 2019. I think the Governors, in fact, ask for extension at 

least through 2019. 

If we were to do it just through 2018, does that provide sufficient 

certainty, or does it need to be a longer year, 2019, or even beyond 

to give the certainty? Right now, we are going month-to-month and 

we know that that does not work. 

Can you all speak to that? 

Ms. WING-HEIER. I believe it has to be at least 2 years. I think 

that right now there is enough consternation in the market that 

the insurers looking to remain are looking for more than a 1-year 

commitment. 

Senator MURKOWSKI. I am seeing two head nods; at least 2019? 

Mr. KREIDLER. Senator, I would say it even needs to go further 

than that because insurers right now are already planning the 

2019. So we are, so to speak, 2 years out already. 

In order to give them that predictability, you have to give them 

a little bit more certainty going into the future that it is going to 

be there so that they do not bolt and leave the market. That is the 

biggest concern that I have is that somebody will yell, ‘‘Fire!’’ in a 

crowded theater and they will all leave. 

We have seen it happen in Washington State in the 1990s and 

it should not be replicated for the rest of the country. 

Senator MURKOWSKI. Thank you, Mr. Chairman. 

The CHAIRMAN. Thanks, Senator Murkowski. 

Senator Baldwin. 

STATEMENT OF SENATOR BALDWIN

Senator BALDWIN. Thank you, Mr. Chairman. 

I want to underscore what many of my colleagues have already 

said that I am deeply grateful for your bipartisan leadership, both 

of you. 

I really believe we can find common ground to stabilize the 

health insurance markets, to improve coverage, and to reduce costs 

for the constituents we represent. 

Yet, while this committee is working together to achieve this 

goal, the Administration continues to play dangerous political 

games that are destabilizing the market and causing premiums to 

rise. 

Wisconsin insurers are requesting between 10 and 46 percent 

premium increases. They are pointing to President Trump’s failure 


HELPN-004 with DISTILLER
51 

to provide certainty in the markets and the threats to end the Cost 

Sharing Reduction payments as they announce these plans. 

I would also note, in addition, it has gotten a little bit less attention, although some of you did raise it in your testimony. The 90 

percent reduction in funding for enrollment programs that get the 

word out, especially to young people and healthy people to help 

with the enrollment process. 

The cuts to the Navigator programs that in my State have provided such useful assistance to those enrolling; the shorter enrollment period; all of these add up. Beyond that then the issue of 

whether the individual mandate will be enforced at all. 

I want to focus a little bit more deeply on some of those today 

and invite my republican and, frankly, my democratic HELP colleagues to partner as we explore policies to enhance enrollment, 

again, particularly among young and healthy people. 

Mr. Kreidler, why is it critical to market stability and affordability, particularly in this upcoming 2018 enrollment period, to 

boost the coverage of younger and healthier individuals? What do 

we need to do in this stabilization effort that we are talking about 

on a bipartisan basis to achieve that right now? 

Mr. KREIDLER. Yes, Senator. It is critically important that you 

have good risk along with bad risk in the insurance pool. 

If you only have bad risk, no one can afford the insurance. You 

have to have good risk. Typically, the younger individual is going 

to represent better risk in the overall market as opposed to somebody who is older. One part of that is certainly doing that kind of 

outreach effort. 

We are a State exchange. I think I am the only one who does 

have a State exchange here at the table. So I am not in the position of really having to rely on the Federal Government. But there 

are a lot of help to come because of the marketing approaches that 

they have taken at the national level. We are in the slipstream. We 

pick up benefits even though we have our own State exchange. 

I would certainly encourage that we continue to have a very 

strong outreach that it allows us to really get the message out to 

individuals. There are problems with individuals to sign up for it 

if they are younger and healthier. 

We need to make sure that they get health insurance. They need 

to listen to mom on these issues and that, ‘‘Health insurance is 

something you should not be ignoring.’’ To the extent that that 

message is being delivered, it becomes much more effective. 

Senator BALDWIN. That is great. 

Ms. Miller and Mr. Doak, for both of you, I would like to hear 

your comments on this because, as noted, Washington has a State 

exchange. You are working in a different context. 

Ms. MILLER. Thank you. 

I think from Pennsylvania’s perspective, we are very concerned 

about the decrease in funding for advertising for the exchange, 

which we rely on, for the decrease in funding around the Navigators, and the critical assistance they provide to get people enrolled. 

All of those things, I think, we are very concerned about the mandate and the enforcement of that mandate. That has an impact on 

premiums. 


HELPN-004 with DISTILLER
52 

Even if we get Cost Sharing Reduction payments paid into the 

future, which is critical, I think there is still a lot of concern. We 

hear from our insurers in Pennsylvania that because we are not 

sure how effective that mandate is going to be going forward because of all the conversations about eliminating it, I think we are 

going to see that uncertainty built into our rates going forward. So 

that is a major concern for us. 

Senator BALDWIN. Thank you. 

Mr. DOAK. Senator, I would just like to make a comment regarding a couple of your earlier statements. 

We are here because many things have failed. We have had increases in Oklahoma even while we have had cost sharing in place. 

Your other comment about Navigators is I would ask for the full 

senate committee to do an audit of the Navigator program to find 

out are they doing the job that they are supposed to be doing? 

Where are the checks and balances there for the millions of dollars 

that have been spent in that area? Has it achieved the outcomes 

that you thought it did? Navigators are not incentivized regarding 

healthcare. 

I fallback to the position of that always should have been handled by licensed agents and brokers in the United States and, in 

particular, in Oklahoma because I have been in every county of 

Oklahoma, all 77 counties. There is an insurance agent on every 

corner that is readily available and they are the insurance professionals that should be helping folks. 

I think that the Navigator program needs some oversight. That 

is one of the things we are going to be looking at in Oklahoma is, 

where those dollars were spent and were they worthwhile? 

The CHAIRMAN. Thank you, Senator Baldwin. 

Senator Cassidy. 

STATEMENT OF SENATOR CASSIDY

Senator CASSIDY. I had the privilege of being with you this morning, so some of what I say will be built upon that. 

I am going to set a context, and layout three questions, and ask 

you all to respond very quickly and concisely to that which you 

pick. 

We spoke this morning, Ms. Miller, regarding the individual 

mandate. Jonathan Gruber, the so-called architect of Obamacare, 

has an article both in the ‘‘New England Journal of Medicine’’ and 

the ‘‘NBER,’’ which says that the individual mandate really does 

not do anything. It is actually Governors. If a Governor gets engaged, my gosh, things happen, but the individual mandate? Minimal effect. 

Then, as I have learned about this, Maine and Alaska have done 

great things, innovative things as regards the reinsurance program 

which, in turn, have lowered costs and a potential to increase coverage. 

I say that and here is the first of my three questions. In the Cassidy-Collins plan, in the Graham-Cassidy-Heller plan, we want to 

give States flexible block grants allowing States to do what they 

wish to do. That is an overview, and my colleague from Maine may 

say, ‘‘Well, wait a second. There is a nuance here,’’ and she is absolutely right. 


HELPN-004 with DISTILLER
53 

But the reality is we allow States to innovate. That is No. 1. 

Commissioner, you had said earlier, that you want to make sure 

the money is there. As much as possible, we know the money for 

Obamacare is there, but maybe not because I can tell you it is already a little bit threatened. 

Let us just assume the money is going to be there. Would you 

prefer a flexible block grant? Could you do more with it? You have 

to spend it on healthcare. 

Second, I am concerned about Oklahoma. My State, Louisiana’s 

ability to afford a 10 percent match on the Medicaid expansion, 

that 10 percent match on the Medicaid expansion is going to be 

huge in my State, $310 million. We are an oil State. Revenue is 

down. We are sucking wind right now. Can we afford that? 

Third, even aside from expansion versus non-expansion, there 

are some States that have dramatically increased costs of care relative to others. Washington State has done such a good job in controlling costs; others not so good. How do we compensate for that? 

Should we attempt to equalize the payment that goes to States 

or should we prejudice toward high cost States, frankly, as opposed 

to those which manage costs well? 

Take your pick. You have 2 minutes 45 seconds. Try and be concise. 

Ms. MCPEAK. I will begin. I will say that your comments on the 

individual mandate really reflect the experience in Tennessee. I do 

not know that it has driven a lot of our consumer behavior. 

We see a lot of our individuals being willing to risk the penalty 

for not having ACA-compliant coverage, actually accessing other 

products available in the market, both non-ACA compliant plans or 

other cost sharing mechanisms which would still require a penalty 

to be paid if the mandate were enforced. 

I also ask our insurers to break out a provision on 2018 rate increase requests attributable to non-enforcement of mandate and it 

was negligible. It was about 5 percent increase where the CSR uncertainty was about 14 percent. 

Senator CASSIDY. So really, it is the State getting engaged. 

To my other points, what do you all think about it? 

Mr. DOAK. Senator, I might just respond to your comment about 

the cost of the expansion is that there is, and I was trying to find 

some notes, and we will get it sent to you. 

Former Oklahoma Governor Frank Keating wrote a really good 

article on the ultimate cost to the State of Oklahoma, which is 

something that needs to be taken into account. 

On your other point, I am 100 percent in favor of all the funds 

coming to the State of Oklahoma, giving the State of Oklahoma, 

our legislature, our Governor, and the people of Oklahoma the ability to put together the best plan. 

If California wants to come up with universal healthcare, let 

California do that. If Washington, my friend from Washington, if 

they want a different type of policy. 

I think the laboratory of democracy and the success we could all 

learn from each other, but get those moneys back to the State 

where we can take care of Oklahomans. 

Senator CASSIDY. Amen, brother. Anyone else? 


HELPN-004 with DISTILLER
54 

Mr. KREIDLER. Senator, I would certainly hope that the block 

grants would not vary from one State to another just because—— 

Senator CASSIDY. On a per beneficiary basis; you would have to 

do it per enrollee. Correct? 

Mr. KREIDLER. We do a good job in the State of Washington holding down spending on healthcare better than most States. It is 

really not appropriate that we should wind up being essentially 

punished for doing a good job. 

Senator CASSIDY. Equity across States, you think would be important? 

Mr. KREIDLER. Equity and make sure that it is guaranteed going 

forward so that we do not wind up seeing a diminishment as opposed to an entitlement program, as we have to today. 

Senator CASSIDY. Ladies, I have 20 seconds left. Any comments? 

Ms. WING-HEIER. I would add that in the block grants, we would 

ask that you take into consideration the cost of healthcare and the 

rural-ness of Alaska because of our cost of healthcare and the diminished facilities that we have just due to what Alaska is. 

Senator CASSIDY. Simple answer: we do. 

I yield back. Thank you. 

The CHAIRMAN. Thank you, Senator Cassidy. 

Senator Murphy, good entrance. 

STATEMENT OF SENATOR MURPHY

Senator MURPHY. My timing is never going to get better than 

that. 

The CHAIRMAN. That is right. 

Senator MURPHY. Thank you very much, Mr. Chairman. 

Ms. McPeak, I wanted to ask you to expand a little bit on your 

opening comments, in which you talked about predicting last year 

that your marketplaces were on the verge of collapse, and as you 

testified today, they have not collapsed during that time. 

I guess it speaks to a worry that I have about how the rhetoric 

gets overheated with respect to the stability of these exchanges and 

the overall stability of the Affordable Care Act. 

I am so appreciative of the process that both Senator Alexander 

and Senator Murray have begun. I acknowledge the fact that we 

need to make some changes. Changes the democrats want and 

changes the republicans want in order to provide some certainty. 

Maybe you can talk a little bit about what happened over the 

last year. You said you were on the verge of collapse. You did not 

collapse. What does that say about how these marketplaces are, 

and have been holding together? 

Just tell us a little bit about that story. 

Ms. MCPEAK. Thank you. 

Certainly, I am very grateful that the market, in fact, in Tennessee has not collapsed. But I would still say that we are on the 

verge of being in a very difficult situation and probably still on the 

verge of collapse. 

What we have experienced is carriers fleeing the market year 

over year. We did have one of our nine rating areas that did not 

have any options when Humana decided to withdraw from the exchange earlier this year. 


HELPN-004 with DISTILLER
55 

We did, in fact, receive coverage for that area through one of our 

other carriers. But still, 78 of 95 counties having one option on the 

exchange is not a place where I like to be. We need to have a competitive environment so that our consumers actually have choice 

and we can do something to address premium rates. 

When you have one insurer that is threatening to pull out of rating areas, it is very, very difficult to really challenge the rate increase requests that we are receiving on a lot of different factors. 

The worse possible situation would be for a carrier to flee the market and our consumers not have any choice in the market. 

We are still very much concerned about that possibility until the 

QHP contracts are signed at the end of this month by the carriers. 

Senator MURPHY. Thank you. Yes, I just think it is a caution for 

everybody to be a little careful about how fast we declare that the 

sky is falling. Here the popular phrase is ‘‘death spiral.’’ And yet, 

during the period of time that we have been debating the bill, there 

have been less and fewer bare counties rather than more. So I appreciate that explanation. 

Mr. Kreidler, I wanted to talk to you about the importance of advertising and marketing. I think Senator Baldwin raised this question. You are an interesting State because you have pretty much 

every type of population that exists: rural communities, suburban 

communities, communities with easy access to information resources, places where it is a little bit hard to get the word out. 

There is a study out of Kentucky that looks at what happened 

when the marketing efforts effectively stopped. You had a democratic Governor who is doing robust marketing and then the new 

republican Governor has effectively shut down funding for ACA advertising. 

What happened there was that there were 450,000 fewer page 

views per week on the website for the State marketplace. There 

were 20,000 fewer unique visitors per week to the website. And 

guess what? ACA enrollment fell by 100,000 people to 94,000 people in 2016 to now 81,000 people. 

So there seems to be a pretty direct correlation between telling 

people that these options exist and people actually going and taking a look at the information that would lead them to get coverage. 

That speaks to what is happening right now with a 90 percent reduction in Federal funding. 

I just would love to hear you talk about how you communicate 

effectively and how instrumental those communications are in 

making effective marketplaces that insurers want to be a part of. 

Mr. KREIDLER. Senator, actually we saw an increase in the number of people who were signing up through our health insurance exchange even while the Federal exchanges were showing a slight decrease, we were actually showing an increase. 

I think part of that is we do have a very active website through 

our health insurance exchange. It makes it very convenient and 

easy for people to go there and shop. It was not as robust an increase as we had anticipated. 

That really is because of the effect that you have when they are 

doing it on a national basis, the kind of sharing of information and 

strategies going forward. That really assists us a great deal and 


HELPN-004 with DISTILLER
56 

helps to address the issues around language, which are a particular 

issue for many of us. 

I think that is where we can really make a difference from the 

standpoint of getting people to sign up for health insurance if you 

have that kind of outreach out there. It helps to offset the enforcement of the individual mandate, though I would argue quite 

strongly that you need an individual mandate that is effective. If 

it is not the one we have now, then you have to come up with 

something that is comparable. 

Senator MURPHY. I support the Chairman’s goal of getting a narrow package that can pass quickly. 

But I hope that we do include in our discussion this dramatic reduction in advertising and marketing funding which, I think, does 

have a fairly, just positive effect on the health of these exchanges. 

Thank you, Mr. Chairman. 

The CHAIRMAN. Thank you, Senator Murphy. 

Senator Burr. 

STATEMENT OF SENATOR BURR

Senator BURR. I have listened intently to this discussion and I 

am reminded, as we talk about how to bring healthcare costs down, 

that each State is unique, but healthcare cost reduction is a function of a change in outcomes. Change outcomes, you change the 

cost of healthcare. So let us not lose focus on what the most important thing is. 

Ms. Miller, I have to admit that I was moved by a statement you 

made that everybody should be able to buy into FEHBP that cannot fit in a box. I came from the private sector, and my experience 

in Government is my healthcare went up and my benefit went 

down. 

Then the ACA came and I am now a participant in the DC exchange. My premium costs went up, my deductible went up, and 

my benefits went down. I would love to buy into FEHBP as a Member of Congress again, wholeheartedly. 

I am not sure that is the answer, though, for a population that 

is scattered, most of it rural, most of it without the delivery system 

that is needed to change the health outcome. 

This is not just about coverage. This is about placing them in 

some type of delivery system. I am going to start at this end and 

I am going to go up to Mr. Doak. 

All I want to know, yes or no, are you supportive of your State 

having control over how your healthcare plan looks in your State? 

In other words, you have a 1332 Waiver, or a 1215 Waiver, you can 

decide exactly how it is going to look. We will figure out the financing. 

Yes or no, Ms. McPeak? 

Ms. MCPEAK. Absolutely. I think Tennessee can better mange 

our health outcomes for our consumers. 

Senator BURR. Mr. Kreidler. 

Mr. KREIDLER. I would very much like to see, the answer would 

be yes, but let us make sure we protect consumers and not take 

away their protections. 

Senator BURR. You would have full control over that, so you 

would be the one to be held responsible. 


HELPN-004 with DISTILLER
57 

Ms. Wing-Heier. 

Ms. WING-HEIER. One State size does not fit all and Alaska 

needs to be in control of its health insurance program for its residents. 

Senator BURR. Ms. Miller. 

Ms. MILLER. As long as we are not talking about reduced Federal 

funding and requiring States to come up with that funding, which 

Pennsylvania could not do, then yes. I think we are in a great position to regulate our markets. 

Senator BURR. All right. So we have agreement that one of the 

things we should look at is to empower States to design their 

healthcare, to structure their healthcare system to meet the unique 

delivery system capabilities within their States. 

I think we have made tremendous progress. 

The CHAIRMAN. What about Mr. Doak? 

Senator BURR. He already answered that they were supportive of 

it. That is what I played off of. 

Ms. McPeak, in order to solve the healthcare crisis facing our 

country today, we need to think of ways to leverage all of the new 

tools provided through innovation in healthcare. 

The insurers have access to tremendous amounts of data on the 

individuals enrolled in their plans in a way that was not imaginable just a decade ago. With this new information, healthcare insurers have the opportunity to design plans that incentivize the 

best possible health outcomes for their customers. 

As an insurance commissioner, have you had an opportunity to 

review plan designs for your State? 

Ms. MCPEAK. No. Unfortunately in the individual market, the 

carriers are limited by the ACA to the plan design and underwriting factors in the law. 

Senator BURR. Do you believe that should be also a function of 

the commissioner in the State? 

Ms. MCPEAK. Absolutely, I do. 

Senator BURR. Is that, in your estimation, a way to leverage 

healthcare data to offer more health insurance? 

Ms. MCPEAK. I do and actual benefits that are accessible and usable by our consumers. 

Senator BURR. Do you believe you have the tools you need to review innovative plan designs working to keep pace with the new 

capabilities of healthcare data? 

Ms. MCPEAK. I believe we do because we review those plans and 

rates for the employer markets and small group market already 

today. 

Senator BURR. I am reminded that we are headed for a decade 

of disruption, where technology is going to impact every sector of 

our economy; probably healthcare as big, if not bigger, than anywhere else. 

Some of the challenges we are trying to build into our construction of policy today will be trumped—for the lack of a better word— 

by our capabilities of connecting an individual in a rural or noncovered area where there is not a hospital, not a doctor. 

But because every American has this device that there is going 

to be software that enables them to send their own vitals that are 


HELPN-004 with DISTILLER
58 

needed to a lab that will give them a reading without a hospital, 

without a doctor, without a nurse. 

How do we take advantage of this incredible innovation if, in 

fact, we have constructed in concrete what insurers can and cannot 

do? 

Mr. Doak. 

Mr. DOAK. Yes, sir. Great question and you are absolutely right 

with the mobile phone devices the innovation is definitely taking 

on. 

One of the things, we just held an Innovation Summit in Tulsa 

in partnership with Oklahoma State University and the University 

of New Mexico. They presented on a Project ECHO which actually 

has dramatically helped and assisted rural outcomes across the 

country. 

I think when you take a look at this program, it is in my report, 

and see what they are doing and the partnerships that they are 

doing. They are able to drive great healthcare sent through programs to rural America. The innovation is happening at such a 

quick level that you are absolutely right. 

I think that is why the NAIC, and the leadership under President Ted Nickel from Wisconsin, formed the Innovation Committee 

that we really have to stay ahead of the curve. So you are on the 

right track, sir. 

Senator BURR. Mr. Chairman, could I ask all of the witnesses to 

provide, in writing for the committee, thoughts that they might 

have on offering multiyear access to plans? 

In other words, for individuals in the individual market, not 

signing up for 1 year, but signing up for 5 years or longer. So that 

we can truly see the benefits of the investment by the insurer to 

get people healthy, to keep them healthy, and to eliminate the risk 

that drives up these premiums so drastically. 

Senator BURR. Thank you, Mr. Chairman. 

The CHAIRMAN. Thank you, Senator Burr. That would be very 

helpful if you could do that. 

Senator Hassan. 

STATEMENT OF SENATOR HASSAN

Senator HASSAN. Thank you, Mr. Chairman and Ranking Member Murray for holding this hearing and the hearings we are going 

to have. 

I know I share with what Senator Casey said. People around 

New Hampshire, when I said we were going to have bipartisan 

hearings and listen to experts who actually deal with the nitty-gritty of how health insurance and healthcare works, there was a real 

sigh of relief. So I am very grateful for the hearings. 

I am very grateful for a panel that pronounces insurance in all 

different ways because I am the daughter of a southerner and a 

New Englander. You sound like my family to me. 

[Laughter.] 

I also think it is really important that you are all here because 

it is essential that we really drilldown to how things actually work 

as opposed to just talking about big concepts. 

One of the concerns I have from when we talk about letting people buy into ERISA or employer sponsored plans is, that sounds 


HELPN-004 with DISTILLER
59 

great, but most people have their employer subsidize the plans. Remember when we enacted COBRA, so people who terminated their 

employment could still buy their plan, a lot of people could not afford it once the employer subsidy went away. 

It is really important as we have these discussions that we hear 

from all of you about how things work. 

To that point, Secretary Miller, I would like to just start with 

you. Right now, about 5 percent of people who buy health insurance coverage in the individual market represent almost 60 percent 

of healthcare claims’ costs. 

We have talked about reinsurance. We have talked about the importance of what a Federal reinsurance plan could have as kind of 

the biggest bang for the buck idea. 

I wanted to ask you a little bit about how the temporary reinsurance program that the ACA had at the beginning of the program, 

how did it successfully moderate premiums in your State? 

Ms. MILLER. Senator, in Pennsylvania in the last year of the program, we saw between a 4 and 7 percent increase because of the 

end of the program. In other words, it moderated premiums by 4 

to 7 percent and that is when we saw an increase happen between 

2016 and 2017 was when that program went away. 

Senator HASSAN. Thank you. 

That brings me to another question which is for Commissioner 

Wing-Heier. When you talked about using the 1332 Waiver to establish Alaska’s reinsurance program, as I understand it, the 1332 

Waiver program initially was not really to help States establish reinsurance. It was to help them innovate within the insurance market in their State in ways that could really help move us forward, 

and gain efficiencies, and really tailor the insurance programs to 

the State. 

The question I have is if we had a Federal reinsurance program, 

could the States then turn to 1332 Waivers to do some of the other 

work that we all need to do and that States need to do to tailor 

their insurance to their State? 

Ms. WING-HEIER. You most certainly could. The flexibility should 

be great within the Waivers. It should be only limited by the innovation that the State can come up with. 

At the time, Alaska was down to one insurer, as we still are. 

Senator HASSAN. Yes. 

Ms. WING-HEIER. And we felt that we were in enough of a crisis 

mode that we took the appropriate action at the appropriate time. 

Our legislature agreed to fund for 2 years the reinsurance program, which led us to then apply for the Section 1332 Waiver, 

which will allow us for a 5-year funding mechanism for this. 

We will certainly be looking at other waivers in the future to 

benefit our citizens and to make sure that our program is uniquely 

designed for Alaskans and our conditions. 

Senator HASSAN. And I applaud you all for doing what you did. 

I just think if we had the Federal reinsurance program, like the 

first one we had as a part of the ACA for the first 2 years, then 

you all could be doing that second stage of work that you are approaching now. 

Secretary Miller, I want to come back to another issue. I know 

that your State is grappling with the opioid addiction crisis as so 


HELPN-004 with DISTILLER
60 

many of our States are, and as you may know, New Hampshire has 

been particularly heavy hit by it. I know that you have been both 

an insurance commissioner and now, as I understand it, you are 

Acting Secretary of Health and Human Services. 

So if the Administration decided to cutoff the Cost Sharing Reduction payments, how would that affect access to coverage for people who are suffering from opioid addiction? 

Ms. MILLER. Senator, I think Pennsylvania, as all States right 

now, we are grappling with this issue and it is having such a huge 

impact on our communities. 

We need to stabilize this market so consumers have options in 

terms of quality coverage. The Essential Health Benefits and that 

requirement ensures that people have access to that coverage if 

they have ACA-compliant coverage. 

So we need to stabilize this market, keep insurers in it, and by 

doing that, we will have more competition. 

The problem right now is that it is not a very attractive market 

to be in because of all the uncertainty and that is hurting the competition. 

That is why this conversation we are having today is so important because if we can stabilize this market, we can increase the 

competition, make sure consumers have options that include that 

quality coverage that has that treatment available for people who 

are struggling with addiction. 

Senator HASSAN. Thank you very much. 

And thank you, Mr. Chair. 

The CHAIRMAN. Thank you, Senator Hassan. 

I am going to go ahead and ask my 5 minutes of questions now 

because I want to ask the whole panel about reinsurance, as all of 

you have mentioned it. 

I have two questions. I will ask them and then let you just answer them. 

One is, how can we make it easier for you to use the 1332 Waiver to set up a State reinsurance program as Alaska and Minnesota 

have done? 

As I understand it, Ms. Wing-Heier, you are not getting any 

more Federal money than you did before. You are just using it better because you are able to use some of the Federal money to pay 

for 85 percent of the reinsurance program. The State pays for 15 

percent and you lower premiums 20 percent with basically the 

same amount of Federal dollars. 

Is that basically right? 

Ms. WING-HEIER. That is correct. Our innovation waiver was 

based on the fact that the reinsurance program reduced the liability of the Federal Government to pay the advanced premium tax 

credits—— 

The CHAIRMAN. Right. 

Ms. WING-HEIER [continuing]. That would have been paid. 

The CHAIRMAN. Then here are my two questions. 

If we need reinsurance, why can States not do it? They are the 

same taxpayers. Let us take Maine, for example. Not a rich State. 

Maine set up a reinsurance program, $4 per month applied to all 

policies and insurance plans, plus insurance seeded 90 percent of 


HELPN-004 with DISTILLER
61 

the premiums of the risk given to the pool, and paid the first 

$7,500 in claims. 

The Federal Government has a $20 trillion debt. The Federal 

Government is paying an average, according to the Congressional 

Budget Office, of $4,200 for each individual in the individual market who qualifies for a subsidy. 

If a reinsurance program is such a good idea—and Alaska was 

able to set one up using some State funds and Minnesota was 

using some State funds—why do States not do it? All it takes is 

money. State budgets are balanced. The Federal Government is 

$20 trillion in debt, already contributing a lot. 

All of you could put a $4 tax on every policy, create enough 

money to take the sickest people out of your individual market and 

lower premiums for everybody else. 

So my questions are: why do you not do it? No. 1. 

What can we do to make it easier for you to use Section 1332 

to pay for it? And if the answer is, ‘‘Well, our legislature will not 

approve any more money,’’ that is not a very good answer to those 

of us in this legislature who have a $20 trillion debt. 

Who wants to answer that? 

Ms. WING-HEIER. The States that I have talked to like the concept of the reinsurance waiver and the application. But the requirement for Alaska was that we seeded the program for the first year. 

We do hear from States that they cannot get the funds from their 

legislature for that first year to show that there is an impact to the 

rates that would bring down the rates so that there is the money 

in the premium tax credits. 

It is a chicken and an egg. That they want to see the results of 

the premiums coming down so there is that savings in the premium tax credits to then put the pass through funding back to the 

State. 

The CHAIRMAN. But there is nothing to keep you from raising 

taxes or putting a charge on every policy in Alaska to help pay for 

your insurance fund. Right? 

Ms. WING-HEIER. That is true, but I would tell you that in the 

State of Alaska, we would have a hard time putting that tax 

through strictly because we are such a small market. 

The CHAIRMAN. Yes. 

Ms. WING-HEIER. We would be taxing the market we are trying 

to help. 

The CHAIRMAN. Yes. 

Ms. WING-HEIER. The 18,000 that we are trying to help. 

The CHAIRMAN. Who else has an answer? 

Why cannot States do it and what can we do to help you use 

1332 to set up your own reinsurance fund, at least initially? 

Mr. KREIDLER. Senator, what you can do is certainly make it an 

easier process than we have right now so that when you file for a 

waiver that you have a quicker turnaround time; that you get definitive answers on much shorter notice. 

We also heard the description here of saving us from having to 

wait until our legislature is in session before we have to return to 

them. The States like Washington and Oklahoma where we are 

elected as Insurance Commissioners turn it over to the insurance 


HELPN-004 with DISTILLER
62 

commissioners to make that decision and the other States can 

leave it to the Governors to make the call. 

We are not asking to increase the national debt at the Federal 

level when it comes to 1332. What we are asking for is to make 

it more predictable as to whether it is going to work or not. 

In the end, even though you might wind up having some impact 

on the Federal budget, it is one that is going to have to meet the 

budget neutrality standard and I am in favor of that. I think that 

is not unreasonable to have that standard apply when it comes to 

these 1332’s. 

We are not asking for more money. Just make the process work 

a little bit smoother than what we have right now. It is with some 

certainty. 

The CHAIRMAN. Thank you. 

Mr. DOAK. Senator Alexander. 

The CHAIRMAN. Yes, and then we will stop there. 

Mr. DOAK. I agree with my other elected colleague from Washington is that let the States make more of their decision. 

In Oklahoma, it is going to be a $2.15 charge for folks in the selfinsured market to come up with approximately $325 million, which 

is going to have the reinsurance program pick up everything from 

15 to 400,000. It is a fee. It is a tax disguised as a fee, basically, 

on Oklahomans. 

It is up to Oklahomans to decide how they should put this together and how we should actually come up with that money with 

a State that is having a very challenging time as you are probably 

going to hear from some of the other Governors’ tomorrow. That is 

kind of where we are in Oklahoma. 

The CHAIRMAN. Thank you, Mr. Doak. My time is up. 

Senator Kaine. 

STATEMENT OF SENATOR KAINE

Senator KAINE. Thank you, Mr. Chair. 

Again, to the chair and ranking member, I am so happy we are 

here in this set of hearings hearing from the people who are affected about what is good, what is bad, and what needs to be fixed 

about our healthcare system. 

I would like to make sure everybody knows what you do. You are 

expert witnesses. You are in the box and you are giving us some 

recommendations, and there is some significant consistency between you, whether you work for democratic or republican administrations. 

I am correct that each of you, Ms. Miller until your recent promotion, each of you are the chief insurance regulator of your State. 

Is that correct? 

[All nod affirmatively.] 

Senator KAINE. Are all of you active in the National Association 

of Insurance Commissioners? 

[All nod affirmatively.] 

Senator KAINE. And you are the incoming president of that. Is 

that not right? 

Ms. MCPEAK. That is correct. 


HELPN-004 with DISTILLER
63 

Senator KAINE. The NAIC has a mission statement. Each of you, 

I know, have different State laws, so there is some peculiarities 

about your States. 

But the NAIC says, 

‘‘The mission of the NAIC is to assist State insurance regulators, individually and collectively, in serving the public interest and achieving the following fundamental insurance regulatory goals in a responsive, efficient, and cost-effective manner 

consistent with the wishes of its members.’’ 

‘‘The five goals of the NAIC: protect the public interest, promote competitive markets, facilitate the fair and equitable 

treatment of insurance consumers, promote the reliability, solvency, and financial solidity of insurance institutions,’’ and 

five, ‘‘Support and improve State regulation of insurance.’’ 

Recognizing that each of your States have your own legal peculiarities, is that a mission that you generally accept in the work 

that you do as the chief insurance regulator in your own States? 

[All nod affirmatively.] 

Senator KAINE. Let me then ask this, and Ms. McPeak, you 

presaged this a little bit in your testimony. 

All of you support—Mr. Doak with a qualification—all of you 

support the CSR payments continuing. You said if we choose not 

to alter the current structure that would be necessary. 

All of you support, to some degree or another, State or Federal 

reinsurance. There are other areas of commonality. 

None of what you are proposing to us today, though, is because 

you are trying to bailout insurance companies. Correct? 

Ms. MCPEAK. That is correct. 

Senator KAINE. Because I have heard colleagues in this body, the 

other body, and outsiders say things like, ‘‘CSR payments that is 

bailing out insurance companies.’’ Or reinsurance, ‘‘That is bailing 

out insurance companies.’’ 

But as the chief insurance regulator in your State, who has 

pledged to basically follow these goals, you are not here to bailout 

insurance companies. Correct? 

Ms. MCPEAK. That is correct. 

Senator KAINE. Let me talk about one of these, reinsurance, because both the CSR and reinsurance things have been talked about 

as if they are insurance company bailouts. I am going to use my 

PowerPoint to see if I understand what reinsurance does. 

In a health market or any market, because we use reinsurance 

at the Federal level for crop insurance, flood insurance, Medicare 

Part D. We used it for the Affordable Care Act. 

But healthcare, families have different costs. Some have low 

medical claims, some have medium medical claims, some have really high medical claims. 

If an insurance company has to write a premium to cover all 

that, they are going write a premium up here. If you can provide 

a backstop on the high cost claims, they do not have to write the 

premium here; they can write the premium down here. 

Generally, reinsurance is a tool that you are all familiar with 

that, for the low- or moderate-costs, or the normal claimant, can 

have a significant effect in reducing premiums. 


HELPN-004 with DISTILLER
64 

Is that not correct? 

[All nod affirmatively.] 

Senator KAINE. Then when you get to the high claim side, by providing reinsurance, what you are doing is you are providing a backstop, Senator Enzi called it a stop loss, a backstop and that has the 

effect of providing people protection. But it also, by providing a 

backstop, keeps insurers in the market that might otherwise vacate 

the market. 

Is not one of the reasons that many insurers are vacating the individual market is because they are worried about these high cost 

claims? Is that not one of the main reasons they are vacating the 

market? 

Ms. MCPEAK. Yes, Senator, if I could respond. 

You are exactly correct. And in addition to that, when you have 

very limited carriers in a market like the majority of my State, if 

you are the one carrier writing in that market and you know that 

you have guaranteed issue, guaranteed renewability, and no ability 

to capitate risk because of no lifetime maximums, you have to rate 

everyone high because you are taking all comers and it is guaranteed renewability. 

If you are able to say this is the backstop and this is the ultimate 

level of risk that you would have for writing in this market, it does 

entice additional insurers to write in that market because they can 

better estimate the risk. 

Senator KAINE. And so the backstop ends up having a double 

benefit. It encourages insurers to stay in the market, but it also allows them to do a premium that does not have to take into account 

all of the super high cost claims. But that premium, then, is more 

favorable to the average person. 

By reducing premiums on most, because so many folks get the 

advanced premium tax credits, the subsidies, when you bring the 

premiums down on most, you also reduce the Federal premium 

payment, which has a countervailing effect. 

Reinsurance costs something, but it also brings down the Federal 

Government’s obligation by reducing the advanced premium tax 

credit. 

Is that not correct? 

[All nod affirmatively.] 

Senator KAINE. That is what you are using in your State to try 

to use that reduced Federal obligation down the road as one mechanism for paying for what Alaska is doing with its State reinsurance program. 

Correct? 

Ms. WING-HEIER. Yes, sir. 

Senator KAINE. Senator Carper and I have a reinsurance bill in 

that would basically go with what we did with the first 3 years of 

the Affordable Care Act and put a reinsurance provision back in. 

That we think would accomplish all of those goals. 

It would reduce premiums for the overwhelming majority of individuals in the individual market. It would provide a backstop that 

would keep insurers in. And by reducing premiums, it would also 

reduce the Federal obligation to pay the advanced premium tax 

credit, which would have a countervailing effect in reducing the 

cost of a reinsurance program. 


HELPN-004 with DISTILLER
65 

I know that may not be the immediate issue on the table, I understand. But I am happy to hear that, to some degree, this is a 

concept that these witnesses support. 

Thank you, Mr. Chair. 

The CHAIRMAN. Thank you, Senator Kaine. 

Next we have Senator Young, then Senator Murray, then Senator Roberts, then Senator Warren. 

STATEMENT OF SENATOR YOUNG

Senator YOUNG. I want to thank our panelists for being here 

today. 

I think each of you recognize that if we do not control the cost 

of healthcare delivery in this country, we are going to continue to 

see an increase in the cost of health insurance, whether that is at 

the consumer level, or among taxpayers, or some combination 

thereof. A number of you spoke to that in your testimony, and I 

thank you for bringing that important topic up. 

I would like to focus a couple of questions on that area for each 

of you. 

What do you think the primary drivers of healthcare cost increases are based on your professional experience? And, what are 

your ideas for actually bending the cost curve down as we head 

into the future? 

I will start with Ms. McPeak because I know in your testimony, 

you spoke to the importance of incentivizing preventative care. Perhaps you could fill in some details on that. 

Ms. MCPEAK. Thank you, Senator. 

Our experience is that our claims costs in Tennessee are extremely high. Those are real dollars going out for real healthcare 

services that are being provided. 

The majority of those seem to be going to prescription drugs and 

also to co-morbidities, real claims and issues that need to be addressed for our population. Bending the curve down is certainly 

something that can be affected through preventative care and 

wellness initiatives. 

Certainly, an examination of the reimbursement costs to see is 

there a discrepancy that is reasonable from area to area in my 

State and then also from Tennessee to surrounding States. 

Senator YOUNG. What is the best way, to your mind, to 

incentivize preventative care? 

Preventative care can be quite broad. Right? From a gym membership, to seeing your primary care physicians, what have you. It 

is a better wellness program for your life. 

Ms. MCPEAK. We would certainly appreciate the ability to manage those outcomes for Tennesseans. 

We have used some of those programs on our TennCare side that 

have been pretty effective for disease management, for health 

coaching, smoking cessation, and then certainly the physical movement and wellness attributable to the fitness activities. 

Senator YOUNG. Thank you. 

I am going to go down to Mr. Doak because in your testimony, 

you spoke to the importance of price transparency, empowering the 

consumer based on the information of services provided and the 

perceived value of those services. 


HELPN-004 with DISTILLER
66 

Is a lack of transparency to your mind a primary driver of 

healthcare costs and thus health insurance premiums? And if so, 

how do we improve the functioning of the market so that there is 

a more transparent market? 

Mr. DOAK. Great question. Thank you, Senator. 

One of the answers is—as I mentioned in my earlier discussion 

that was very near and dear to former Oklahoma Senator 

Coburn—talking about price transparency. We have seen that. 

I would ask the committee as we said earlier this morning to possibly invite the CEO of the Oklahoma Surgical Center here to testify on behalf of what he has been able to do with transparency in 

Oklahoma City and where some of those things are going. 

The more transparent we can be with our costs all through 

healthcare is that you are going to provide and empower consumers 

to be able to see the outcomes that Senator Burr was talking about 

relative to the cost expenditures. There are various places around 

the State of Oklahoma that are doing that very well. 

That is a true opportunity. 

Senator YOUNG. But you do not have particular recommendations 

here at the Federal level regarding obstacles we could remove or 

regulations we could put in place so that it would facilitate more 

transparency? 

Mr. DOAK. I think that is something worthwhile to consider. I am 

a bit hesitant to have anything further done here in Washington. 

I would rather see it done at the local and State level, quite frankly. 

Senator YOUNG. Oftentimes a health instinct from my perspective. 

I am going to give others an opportunity to speak to this issue. 

Mr. KREIDLER. Senator, I would certainly put a high emphasis on 

pharmaceutical drugs. 

That is the one area where—if you remove the shackles that are 

on the States right now as to what they wind up doing and contracting, either through their Medicaid program or other programs 

that they have at the State level—we can have a very strong impact, particularly if we joined together with likeminded States to 

take on that same approach toward bargaining when it comes to 

these drugs. 

That is the No. 1 driver in the individual market and we see it 

with our filings. It is on the cost of pharmaceuticals. 

Senator YOUNG. I am pretty much out of time here. So I will give 

others an opportunity to respond to that question in writing. 

I would just say in pharmaceutical costs, we want to make sure 

that we do not absorb an opportunity cost to future research and 

development, lives saved, and approved into the future by adopting 

some of the suggestions you have put forward. 

Thank you. 

The CHAIRMAN. Thank you, Senator Young. 

Senator Murray. 

Senator MURRAY. Thank you very much. 

This has been really great. A lot of senators are participating and 

I think they all really appreciate all of your testimony. Thank you 

for being here. 


HELPN-004 with DISTILLER
67 

Commissioner Kreidler, I wanted to ask you. In your testimony, 

you talked about the Cost Sharing Reductions are the difference 

between whether a 40 year old in Tacoma earning $23,000 per year 

has a $2,000 deductible or a $7,000 deductible. 

Consumers have really come, I think, to rely on these measures 

to lower their own healthcare costs. The same way that employer 

contributions help keep costs down for people who get insurance 

through their jobs. 

Something changed this year. President Trump has made patients, and families, and insurance companies, and State regulators 

play this guessing game about whether or not those payments are 

actually going to be made. 

We know that failing to make those payments is going to spike 

premiums for the most popular plans in the marketplace by 20 percent, leading an increase to the Federal deficit of $200 billion. So 

this is really an important issue. 

I wanted to ask you, what did you have to change about the way 

you review and approve insurance premiums this year because of 

that guessing game? 

Mr. KREIDLER. Senator, it is one where we have to sit down with 

the health insurers and really press them on it. 

But the point has been made that if you get down to just one carrier in a particular county, you do not have a lot of bargaining 

flexibility. They are in the position of saying, ‘‘Well, if you do not 

give me the rate increases I want, then we are looking toward the 

highway,’’ and then you do not have an insurer there. We are 

under a lot of pressure. 

Stabilizing the market is No. 1. You have to stabilize that market. The CSRs are No. 1 from the standpoint of what you can do 

immediately. It can have a direct impact and get away from this 

idea of funding on a month-by-month or even a year-to-year basis. 

It really has to be multiyear with some real predictability in the 

market. 

Senator MURRAY. So my additional question to you is we have 

heard 1 year, 2 years. Tell me what the difference between, if we 

just did a 1-year, what a difference that would make rather than 

a 2-year? 

Mr. KREIDLER. Clearly, 1 year is a whole lot better than month 

to month. But even 2 years is very tough because of the range of 

which the insurers are planning right now as to what the rate increases are. 

Any degree of increase in predictability that goes beyond this situation we have right now of being so tentative right now with just 

month to month is going to help. The longer we can give it, the better it will be to help stabilize. 

Senator MURRAY. The more certainty, the lower the costs of the 

care? 

Mr. KREIDLER. Absolutely, absolutely. 

Senator MURRAY. All right. 

I wanted to ask you, Commissioner Wing-Heier, because I noticed when Senator Baldwin asked about the Navigators and the 

money there that I think you testified that it is really needed in 

many remote parts of Alaska, and used across the country in really 

important ways. 


HELPN-004 with DISTILLER
68 

The budget for Navigators has been cut by 40 percent. Tell me 

what impact that is going to have on you in Alaska. 

Ms. WING-HEIER. We are very concerned it will have a major impact in our enrollment. 

I know that Commissioner Doak testified that he does have insurance brokers and consultants throughout much of his State. We 

do not. 

In most of Alaska, outside of Fairbanks, Anchorage, Juneau, and 

other cities, there is not an insurance broker or consultant to be 

found. We rely on the clinics and the Navigator programs to explain benefits and enrollment to the people living in rural Alaska. 

This will be devastating to our population to know what their options are, to understand basic things from the dates of enrollment. 

There is also a part that is very cultural in Alaska in the fact 

that we have a variety of languages. And the Navigators cross that 

bridge in being able to speak the Inupiaq language or the Native 

languages of Alaska and other languages. They provide that service. 

We do not have that very readily in the insurance community, 

unfortunately. 

Senator MURRAY. Right. 

Commissioner Kreidler, quickly, our State is looking at a 1332 

Waiver. 

When applying for that kind of waiver, States have to show that 

they are going to cover the same number of people, the same types 

of services, and the same amount of out of pocket costs for consumers. Those are the guardrails in the Waiver. 

Can you talk really quickly about how important those guardrails are as you look at the Waiver? 

Mr. KREIDLER. Senator, we have changed the environment that 

we have right now with healthcare delivery through insurance because of the ACA. We are now competing on quality and service because we have the standardize benefits, the Essential Health Benefits; limitations on out of pocket expenses. It has changed the dynamic of the game tremendously. 

If we want to go forward and have the insurers in there, we have 

to participate. It is absolutely critical that we wind up making sure 

that those guardrails are not eroded away. But to focus on what 

can really make a difference. 

For one, stabilize and then second, be in a position to allow the 

insurance companies to innovate without being punished with the 

reinsurance program to back them up. 

Senator MURRAY. OK. 

Mr. Chairman, I do want to submit four letters for the record. 

They are actually signed by hundreds of leading patients’ disease, 

physician, provider insurance, and business organizations. They 

are requesting multiple years of certainty for out of pocket reductions, and Federal investment in risk mitigation programs like reinsurance we have heard so much about, and preserving the protections for preexisting conditions including the Essential Health Benefits. 

I would like to put them in the record for today. 

The CHAIRMAN. Thank you. They will be. 

[The information referred to can be found in additional material.] 


HELPN-004 with DISTILLER
69 

Thank you, Senator Murray. 

Senator Roberts. 

STATEMENT OF SENATOR ROBERTS

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

Thank you to all the witnesses for taking time, your very valuable time out of your schedule to come and visit with us. 

As rates are filled and not filled by some plans, obviously exiting 

the marketplace like we have seen in Kansas City, an action that 

serves absolutely nobody. So thank you for holding this hearing. 

I think it is important we focus on permanent or longer term reforms so we can help slow the growth of premiums and maintain 

or increase insurance options for consumers, as opposed to simply 

patching or providing an influx of cash to these markets which has 

been touched on by the witnesses. 

I know many are focused on the uncertainty surrounding the 

Cost Sharing Reduction subsidies, but I think it is important to 

note that, at least in Kansas, we have had insurers leaving the exchange market before this Administration, or the court ruling on 

this matter, and with the CSRs in place. Premiums still doubled 

in Kansas since Obamacare has been in place. And I think that is 

only one piece to the puzzle with regards to ASR’s. 

Tighter age rating bands can be an answer. I know that is controversial. The health insurance or HIT tax, that is just a tax that 

is passed onto the consumer or the patient. Other mandates that 

you have talked about all add to the premium increases. We had 60,000 families paying $13 million in penalties in 2014. $6 billion, I think, was the figure with regards to the Nation as a 

whole. 

So as premiums continue to increase, we had something in the 

recent reform proposals that did not pass, obviously, considered by 

the House and Senate. They took two different approaches to encourage, not mandate, folks to maintain continuous coverage. 

From your position as insurance commissioners, which do you 

see as more effective, as well as which would be easier to 

operationalize a penalty on premiums for lack of continuous coverage, or a waiting period for enrollees upon returning to enroll in 

coverage, or anything else you might suggest? 

We will start with Ms. McPeak. 

Ms. MCPEAK. Thank you. 

I have a preference for the waiting period over the premium penalty for not maintaining continuous coverage because there is an 

administrative issue for our insurers that have been participating 

in the exchange market with individuals coming in and out of coverage, and really trying to catch up with premium payments 

through grace periods. 

From my perspective, a waiting period would be more effective 

to incentivize consumers to maintain continuous coverage. 

Senator ROBERTS. Appreciate it. 

Sir. 

Mr. KREIDLER. Thank you, Senator. 

I think one of the things that has really been challenging for the 

States is not all States have truly embraced the Affordable Care 

Act. 


HELPN-004 with DISTILLER
70 

The expansion of the Medicaid program had a very profound, 

positive impact; the creation of our own exchange, so we were more 

in control of our own destiny. Establishing network adequacy 

standards that reflected our values in the State of Washington is 

something that we did. 

Most States did not take those actions and as a consequence, 

they have seen more in the way of rate increases. 

Our rate increases have not gone up until this last year. We were 

under 10 percent per year, and now we have seen a marked increase. 

Stabilizing the market is going to be the thing that is really 

going to make a difference from our standpoint. 

Senator ROBERTS. Right. I appreciate that. 

Next, please. 

Ms. WING-HEIER. It is a tough call because you hate to see anyone be without insurance, but we have the special enrollment periods for a reason. And that, in itself, brings you into your waiting 

period because you cannot, in all circumstances, just go and enroll 

if you missed open enrollment. There are very few criteria that 

allow you to enroll if you miss open enrollment. 

Alaska would probably be looking more at the penalty. 

Senator ROBERTS. Yes, ma’am. 

Ms. MILLER. I think we all want to do everything we can to make 

sure our risk pools are as robust as possible. I have not seen an 

alternative to the individual mandate that would be as good an option to make sure that we have the young and healthy. 

I am not saying that the mandate has been perfect by any 

stretch, but I have not seen an alternative that would do as well 

as that in terms of keeping the young and healthy in. 

Senator ROBERTS. Oklahoma. 

Mr. DOAK. I am not in favor of a mandate, you might be surprised, but I think that there are other ways to reach plan design, 

to reach this group that does not have insurance. Avail themselves 

of more creative plan design relative to catastrophic plans for the 

young, invincible, to move them into possibly using Health Savings 

Accounts, as Director Wing-Heier mentioned. But I think there are 

ways. 

I am not sold on this marketing campaign that a few of the senators talked about either. Insurance companies have been marketing at every football game we watch. Possibly if they 

incentivized agents and brokers to sell this type of product, they 

might have a better result than use Navigators. 

Senator ROBERTS. Is that football game when Oklahoma comes 

to Kansas State? 

Mr. DOAK. Yes, sir. 

Senator ROBERTS. I appreciate that. 

I have a real quick question and I am out of time. I apologize 

for this. 

How would increasing the age rating curve to 5-to-1 or maybe 4- 

to-1 as opposed to 3-to-1, that would be an intermediate change, if 

you so choose with regards to the individual or trying to get more 

younger people into the plan. 

Are you for it, against, against it, what? Yes or no. We can start 

with Oklahoma and rundown real quick. 


HELPN-004 with DISTILLER
71 

The CHAIRMAN. We are out of time, so if you could be quick about 

it and then submit it. 

Senator ROBERTS. They could submit it for the record, Mr. Chairman. I appreciate that. Thank you. 

The CHAIRMAN. You can make a short answer. That is OK. 

Mr. DOAK. What was the question, sir? 

Senator ROBERTS. The question is on the rating band, the exchange market does not have enough of the young. 

Mr. DOAK. Yes, I would be in favor of changes. 

Ms. MILLER. I would have some concerns about increasing the 

rating band. 

Ms. WING-HEIER. We have concerns with increasing the rating 

band strictly because our rates for the older population, the three, 

are so high right now. We would price them out of ever being able 

to afford it. 

Senator ROBERTS. We say ‘‘more mature’’ in the senate. But go 

ahead. 

[Laughter.] 

Mr. KREIDLER. Washington likes 3-to-1. We have in statute 3.75- 

to-1 currently before the ACA. So we were not far off of 3-to-1 to 

even begin with. 

Ms. MCPEAK. I would be in favor of expansion to 5-to-1 to bring 

the younger, healthier into the risk pool with more affordable premiums. 

Senator ROBERT. Thank you. 

The CHAIRMAN. Thank you, Senator Roberts. 

Senator Warren. 

STATEMENT OF SENATOR WARREN

Senator WARREN. Thank you, Mr. Chairman. 

And thank you, Mr. Chairman, for holding this hearing. Thank 

you, ranking member. I think it is important that we are having 

a bipartisan conversation about how to improve healthcare instead 

of destroy healthcare in America. 

At the same time that we are having this conversation, President 

Trump is actively working to sabotage our healthcare system. He 

is using a lot of different tactics, but two of them include reducing 

Federal help to keep out of pocket costs low, and cutting 90 percent 

of the advertising efforts so that people know about affordable 

health insurance. 

We have talked some about this, so let me just see if I can do 

this first part quickly. I just want to ask about the first one, withholding the Federal dollars that keep costs lower. 

Commissioner McPeak, are American families better off or worse 

off if the President refuses to make cost reduction payments? 

Ms. MCPEAK. If those payments are not funded, the American 

consumer is worse off, certainly. Not only the individuals that are 

eligible for those reduced co-payments and deductible amounts, but 

the individuals that would have to pay the increased premium dollars from the carriers associated with that lack of funding. 

Senator WARREN. OK. 

Commissioner Kreidler, if the Government cuts advertising, 

fewer people will sign up for health insurance. But how does that 

affect the costs for the people who do sign up for health insurance? 


HELPN-004 with DISTILLER
72 

Mr. KREIDLER. You want to encourage the people that are probably the least likely to sign up, to enroll because they are more 

likely to be healthier individuals that are now protected. They do 

not become the free riders in our system that relies on uncompensated care to care of them. It adds cost to the system. 

The more accountable you make healthcare, the better it is for 

all of us. 

Senator WARREN. Very strong points on both of these. 

The President has been perfectly clear about what he is doing, 

sabotaging healthcare and driving up costs for families. It is petty 

and it is going to hurt millions of people. If he will not stop on his 

own, then Congress should stop him. 

But for me, that is just the beginning of what we need to do to 

really improve health insurance in this country. 

Secretary Miller, did the ACA put in place any sort of restrictions on how high an insurance company can raise its premiums 

in a given year? 

Ms. MILLER. Senator, I think aside from the fact that in many 

States, we approved those rates. 

Senator WARREN. I am going to ask you about the States. I am 

asking about the ACA. 

Ms. MILLER. There are no restrictions in the ACA. 

Senator WARREN. That is right. The ACA makes no restrictions 

at all. Right? But some States impose tough rules to protect consumers and they insist that the insurance companies have their 

rates approved by the insurance commissioner before those rates 

can go into effect. 

Let me ask, Secretary Miller, in the past years before all the 

chaos that has come to the markets lately, did you let insurers in 

Pennsylvania charge whatever they wanted for their plans? 

Ms. MILLER. I did not, Senator. 

Senator WARREN. You did not? 

Commissioner Kreidler, I understand that in Washington State, 

like Pennsylvania, insurance companies have to get permission 

ahead of time. 

Do insurers always come up with reasonable premiums the first 

time around? 

Mr. KREIDLER. No, they do not. 

Senator WARREN. Someone laughed out loud during that. Go 

ahead. 

Mr. KREIDLER. We have applied a very vigorous review; in fact, 

we are among those States that are the most vigorous. In fact, we 

are recognized by the Federal Government as being a State that 

can do that hard review. I think several of us are in that position. 

Senator WARREN. Hard review and I think you have some data 

on how much you pushed down one of the most recent premium requests. 

Mr. KREIDLER. We do and I cannot remember exactly which one 

that was. 

Senator WARREN. Maybe a 30 percent drop in average rates. 

Mr. KREIDLER. It was something like that, yes. 

Senator WARREN. All right. Good, good. 

I should say it the other way. Yes, a 30 percent drop in average 

rates. 


HELPN-004 with DISTILLER
73 

The reason I raise this is because letting insurance companies 

charge whatever they want opens up price gouging. Rate review 

programs among the various States have saved consumers about 

$1.5 billion in premium costs in just 2015 alone, in a single year. 

Unfortunately, not every State is stepping up on this and the difference is huge. 

From 2010 to 2013, just that short time period, premium increases in States with the weakest review programs were 10 percent higher than in States with the strongest review programs. 

That is a lot of money that a lot of families paid out. For me, it 

just shows the kind of work that we need to do. 

Right now, Medicare restricts premium increases for most beneficiaries, but the ACA does not. Medicare has high standards for 

the Medicare Advantage plans, while the ACA in many cases has 

lower standards. Medicare and Medicaid plans cover everybody 

who qualifies. ACA plans can pick and choose who they get in the 

game with. 

Let us be blunt. We can either make these markets work better 

for consumers or we can let insurance companies hold people hostage in order to maximize their own profits. 

In my view, if we were really serious about trying to make these 

markets work, we need to talk about the kind of rules that make 

them work best for consumers. 

Thank you, Mr. Chairman. 

[Applause.] 

The CHAIRMAN. Thank you, Senator Warren. 

Senator Whitehouse. 

STATEMENT OF SENATOR WHITEHOUSE

Senator WHITEHOUSE. Thank you, Chairman. 

Let me first, as a former Insurance Commissioner in my State, 

welcome our distinguished panel. 

Again, thank the chairman and the ranking member for trusting 

this committee to do a fair and thoughtful bipartisan process. We 

did it in education with great success to a unanimous, significant 

bill out of this committee, and I am confident that we can do something very worthwhile here. 

I want to open by pointing out that our health insurance commissioner in Rhode Island has written that, 

‘‘The ACA has worked in Rhode Island and we have a remarkable story to tell.’’ I am quoting a letter from this January. 

‘‘Rhode Island has enjoyed market stability, and has avoided 

dramatic increases in premiums seen in other States. Over the 

last 3 years premium increases in the individual and small 

group markets have been relatively modest. For plan year 

2017, average premium changes in the individual market will 

range from a 5.9 percent decrease to a 5.9 percent increase 

based on issuer. In the small group market, average premium 

changes in 2017 will range from a decrease of 3.1 percent to 

an increase of 3.6 percent based on issuer.’’ 


HELPN-004 with DISTILLER
74 

To my colleagues, please follow the Hippocratic Oath and do no 

harm to those of us who have States where this is all working very 

well. 

The last point I will make before I go to questions is that I hope 

that the bipartisan process that we are embarked on here, with respect to shoring up the markets, can continue and be extended into 

other areas. Patient safety and medical errors remains a huge 

issue with tens of thousands of American casualties every year. 

There is nothing republican or democrat about ending hospitalacquired infections. The wild variations in care and outcomes are 

issues that we can address. It ought to be bipartisan to find the 

best States and the best practices, and encourage those. 

There is nothing republican or democrat about high administrative overhead and continuing feuding between insurers and providers over payment. 

The care that patients want at the end of life ought to be something we can make sure that they actually get. There ought to be 

no partisan difference about honoring a patient’s and a family’s 

wishes as they near the end of life. 

Finally, payment reform so that doctors are compensated for 

keeping people healthy rather than starved on that front and compensated only when they do late stage procedures once somebody’s 

health is already compromised; another great area for bipartisan 

action. 

I hope that we will continue on those fronts. 

My questions are primarily going to be to Director Wing-Heier. 

I appreciate you coming all the way from Alaska. That is pretty impressive. I want to ask you about the 1332 Waiver process through 

which you created your reinsurance program. 

You created it, not based on hitting a financial number, a dollar 

number in claims and then having the reinsurance kick in. You 

created it based on the diagnosis, based on conditions. 

Correct? 

Ms. WING-HEIER. Yes, sir. We did. 

Senator WHITEHOUSE. Why did you make that choice and how 

did you choose the conditions? 

Ms. WING-HEIER. We did what we call a ‘‘data call’’ and had all 

the insurers that were in the market the first 2 years submit their 

claims. 

We submitted those, that data to an independent actuary, who 

then we had segregate the claims from the highest to the lowest 

based on the condition, so we could see what we were dealing with. 

What was causing the market for our rate increases to be roughly 

40 percent for 2 years in a row? 

We then made the determination that if we removed the top 10, 

the top 20, the top 30, we could put a correlation to how that would 

impact the market as far as how our rates would stabilize or, hopefully, decrease. 

Senator WHITEHOUSE. Why pick conditions rather than, say, stop loss at $100,000 per claim or some other more numerical figure? 

Ms. WING-HEIER. We are looking at the biggest impact we could 

have to stabilize a market that was losing its—— 

We were down to one insurer. We needed to stabilize the market 

to the greatest extent we could. Removing the entire claim or the 


HELPN-004 with DISTILLER
75 

entire person from a very small pool had the biggest impact or the 

biggest bang for our buck on our rates. 

Senator WHITEHOUSE. What happens year to year as somebody 

goes into a new enrollment period or perhaps shifts their carrier? 

Does the new carrier know that your reinsurance for that individual because they have the requisite diagnosis will follow them, 

or do they have to stay with their—how does it work in terms of 

future enrollments? 

Ms. WING-HEIER. No. If we had a second carrier, based on the 

condition, that person would be seeded the first of every year or the 

first time they treated and continuing the diagnosis, be it a chronic 

condition or a new condition. 

Senator WHITEHOUSE. So the reimbursement, the reinsurance for 

the carrier follows the individual year to year for as long as the diagnosis or condition remains in place. Correct? 

Ms. WING-HEIER. As long as they are treating. 

Senator WHITEHOUSE. Did you consider setting up a risk pool 

rather than a reimbursement system for those individuals? 

Ms. WING-HEIER. Yes, we did. 

Senator WHITEHOUSE. Why did you choose the reimbursement 

system rather than the risk pool? 

Ms. WING-HEIER. We chose the reimbursement system, again, to 

have the biggest impact on a very small market: 20,000 people. 

Senator WHITEHOUSE. So the administrative problem of setting 

up a separate risk pool would have been a problem for a small 

number of patients like that? 

Ms. WING-HEIER. We feel that we had a pool to begin with and 

with the 20,000 that were in it at the time was not succeeding. So 

to create a pool within a pool, we needed to get those high cost 

claimants out of the pool. 

Senator WHITEHOUSE. Right. 

Ms. WING-HEIER. So that the entire individual market, we could 

reduce the rates and people could afford the premiums. 

Senator WHITEHOUSE. Got it. 

My time is running out here, but I would like to ask a question 

to each of you. This will be a question for the record given the timing. 

But if an insurance company came to you, to your organization, 

proposing to sell health insurance in your State, I would like to 

know what steps, particularly setting up a provider network you 

would expect or require of that insurer? 

And conversely, to turn the question to the other side, what concerns would you have about an insurer showing up in your State 

purporting to offer health insurance who was not prepared to create a provider network and go through whatever other steps you 

would require? 

With that, I am out, but I would be really interested in your answer to those questions. 

Thank you. 

The CHAIRMAN. Very good questions. Thank you, Senator Whitehouse. 

This has been a very good discussion, both the hour before we 

started and this. 

I want to ask Senator Murray if she has concluding remarks. 


HELPN-004 with DISTILLER
76 

Senator Franken, do you have some concluding remarks? 

Senator FRANKEN. I was going to ask a question about prescription drugs, but I see you want to conclude, and I respect that. 

The CHAIRMAN. No, go ahead, if you would like. 

Senator FRANKEN. I just want to ask a rhetorical question about 

the cuts by HHS in advertising for the exchanges. 

Mr. Doak said that insurance companies advertise at every football game that we watch. Are those insurance companies just stupid or maybe insurance advertising works. That is the rhetorical 

question. 

I think there is a reason those insurance companies advertise. 

Mr. DOAK. I guess the question is, are they funded by the Federal Government. Does that make sense or not? 

Senator FRANKEN. I think the issue is, does advertising work? If 

you are cutting it by 90 percent, you are probably cutting the effectiveness of the advertising, whoever pays for it. 

Mr. DOAK. We have thousands and millions of licensed agents 

and brokers all across the United States, Senator, that have been 

doing a great job in the health insurance market before Obamacare 

and could be doing the same after. 

Senator FRANKEN. I really meant it as a rhetorical question, 

which I said. 

The CHAIRMAN. Good luck with that. 

Senator FRANKEN. But good luck with that is right. 

The point is that they advertise for a reason whether or not they 

sell it through brokers or not. Advertising does work and that is 

why they advertise. 

I had a question on pharmaceuticals, but I really do not want to 

eat up time. Although, I would like to thank the chairman as we 

had a hearing on pharmaceuticals. 

I think, as you all have said in one way or another, that the 

pharmaceutical spikes in the last 3 years or so has been one of the 

things responsible for the premiums going up. 

I would love to hear your thoughts on how we can get those 

under control, and maybe we can do that in a written answer so 

that the chairman and the ranking member can include it. 

One other thing, my favorite moment in the hearing so far was 

Senator Whitehouse thanking Ms. Wing-Heier for the hardship of 

coming from Alaska. 

My favorite moment was seeing Senator Murkowski’s expression 

when he did that. 

[Laughter.] 

The CHAIRMAN. Thank you, Senator Franken. 

Senator Murray, do you have any concluding remarks? 

Senator MURRAY. You are easily entertained, Senator Franken. 

I want to thank all of our witnesses today. This has been an extremely important first step. I know we have three more hearings. 

We do have a very short timeframe within which to do this and we 

need to seize this opportunity. 

Mr. Chairman, I know my side looks forward to working with 

you and I appreciate the opportunity today. 

The CHAIRMAN. Thanks, Senator Murray. 

And I thank the witnesses too. You have been very patient. You 

have given us a lot of time. 


HELPN-004 with DISTILLER
77 

I thank the senators. We have had maybe half the senate involved this morning in this discussion. That is pretty unusual and 

mostly on our best behavior. That is pretty unusual too. We welcome that. 

I would like to conclude with these remarks; one, just these facts 

from CMS on the Navigator program. I am not sure what the right 

amount of money is for the Navigator program. 

According to CMS, in 2016, Navigators received $62 million of 

Federal money to enroll 81,000 people; less than 1 percent of the 

total enrollees. Seventeen Navigators enrolled less than 100 people 

each at an average cost of nearly $5,000 per enrollee. The top 10 

most costly Navigators spent a total of $2.7 million to enroll 314 

people in the Affordable Care Act. One grantee received $200,000 

and enrolled one person. Only 22 percent of all Navigators achieved 

their own performance goals. 

Maybe it is an area that needs some oversight. 

Let me go to a point that several senators have made including 

Senator Franken and several others. I have been thinking this especially. 

For 7 years, we have been stuck in this partisan stalemate on 

health insurance with most of the argument—not all of it, but most 

of it—about the 6 percent of Americans who buy their insurance on 

the individual market. 

When we really should have been spending more time on the 

fundamental problems with the American healthcare system that 

have caused it to grow from consuming 9 percent of the Gross Domestic Product in 1980, about 40 years ago, to nearly 18 percent 

in 2015, and a predicted 20 percent in 2025. 

At the same time, as was mentioned, we have the phenomena of 

5 percent of those who receive healthcare consume 60 percent of 

the costs. So we should be doing more on the larger question about 

addressing healthcare costs. There is no question about that. 

Looking at what we pay to visit the doctor or how to get a test 

at the hospital, that is the transparency Mr. Doak talked about. 

What we spend on prescription drugs, several of you talked about 

that. 

How much excessive paperwork and administrative burdens increase our costs. 

What more can be done to encourage wellness? That is really the 

low hanging fruit in the whole issue of health costs. 

What can be done to prevent more serious illness and disease, 

and the high costs that come from being ill? 

We should be looking at the real ways to bring down the cost of 

healthcare, which is the best way to reduce the cost of health insurance. 

What I have heard today, just to summarize, has been very helpful. It has been a focused hearing on a narrow part of the market 

where we have most of the problems; the 6 percent, the people with 

insurance. 

What we asked you to do was to focus on what could we do, especially this month, that might affect 2018. I heard three things 

mostly: reinsurance, Cost Sharing Reductions, and more flexibility 

from 1332. 


HELPN-004 with DISTILLER
78 

Reinsurance. One way to do reinsurance, of course, is the way 

Minnesota and Alaska did it, which is to use some of the Federal 

money you are already getting to do that. I am not suggesting that 

is the long-term solution. Senator Kaine has proposed a long-term 

solution. 

Reinsurance has broad support among republicans, I know. This 

is not a very complicated idea. It is just take this very narrow market, which is an odd market, a small market, and recognize that 

some people are very sick and we need to find, create a fund to pay 

for the costs of some of those people in order to lower the premiums 

for everybody else. That is what we are talking about. 

There are a variety of ways to do that, Federal tax dollars, State 

tax dollars. You can do what Maine did and charge everybody 

something on their premium. There are various ways to do that. 

But clearly, reinsurance is one part of the solution to a long-term 

fix for the individual market. 

Now, for the short term, for something we might sit down in 10 

days and say, ‘‘OK. We can agree on this much,’’ and try to ask the 

House and the Senate, and the President, and all to do it in time 

to have an effect on 2018. Maybe what I have heard is, ‘‘Adjust 

1332 in any way that makes it easier for you to create your own 

short-term reinsurance next year.’’ That may be hard. 

Several suggestions for improving 1332 that ought not to be too 

controversial; I mean, the 6-month waiting period. 

No one mentioned the ‘‘me too’’ application. That is if Washington puts something in that is approved, why can Tennessee not 

come right along behind it and say, ‘‘We want to do what Washington did with one change?’’ That ought to speed things up. 

The idea of letting the process go ahead with just the application 

of the Governor, or as you have suggested the insurance commissioner and not wait for the legislature to have to pass a law, since 

some State’s legislatures only meet every 2 years. 

Alaska submitted a list of reforms that we will take a look at. 

I thank you for mentioning those. 

Planning funds, Ms. Miller mentioned that. That would seem an 

odd thing to have to do for a bankrupt Federal Government to give 

money to a balanced budget State Government for planning funds, 

but I understand the problem of quick providing of funds so that 

you can make your application for a longer term plan. 

Then I was intrigued with the suggestion, I have heard it often, 

of what can we do about the budget neutrality requirement? And 

make sure that that does not keep you from doing what you would 

do to make a long-term plan. 

Is there any way to include the savings that you have in Medicaid with what you are doing in the individual market; the two different Waivers that the Federal Government has? 

I know that New Hampshire has tried to do some things in that 

area. And even though the democratic Governors and the republican Governors both support it, they are not able to do it, according to both the Obama and Trump administrations. 

That is a short list of some things that might make some real 

difference in the 23 States that have actually started the process 

of applying for a 1332 Waiver. 


HELPN-004 with DISTILLER
79 

I am hopeful that maybe some combination of continuing cost 

sharing for a period of time—and we can discuss what that time 

is—and significant changes in flexibility for States, probably mostly 

through amendments to Section 1332 since it is already in the Act, 

might provide a basis for action we could take this month. 

Then if we act, we will count on the House of Representatives 

and the President to take advantage of that and my hope is that 

they would. 

That would not end the process. That would only be step one, 

then we would go pretty quickly to step two on a long-term, strong, 

vibrant individual market and other changes that need to be made 

in the Affordable Care Act. 

I hope we can begin to spend most of our time on the larger issue 

of healthcare costs. 

If you have other comments that you would like to give to us, we 

would like to have them in writing pretty quickly because we are 

moving pretty quickly. 

The record will be open for 10 days for comments and questions. 

The CHAIRMAN. Tomorrow, our committee will meet again to 

hear from five Governors to further discuss marketplace stability 

and how to advance many of the topics mentioned today. 

We have two more hearings next week. Then we will see where 

we are and see what we think we can accomplish. 

Thank you for being here. 

The committee will stand adjourned. 

[Additional Material follows.] 


HELPN-004 with DISTILLER
80 

ADDITIONAL MATERIAL 

SEPTEMBER 5, 2017. 

Hon. LAMAR ALEXANDER, Chairman, 

Hon. PATTY MURRAY, Ranking Member, 

Senate HELP Committee, 

U.S. Senate, 

Washington, DC 20510. 

DEAR CHAIRMAN ALEXANDER AND RANKING MEMBER MURRAY: As providers of 

healthcare and coverage to hundreds of millions of Americans, we commend the 

HELP Committee’s leadership in efforts to develop policy solutions to stabilize and 

strengthen the individual health insurance marketplace. These bipartisan discussions come at a pivotal time for the marketplace given the timing of final participation decisions by health plans for 2018. 

As the Senate HELP Committee considers legislation to stabilize the health care 

coverage and choices for the 20 million Americans who rely on the individual market, we urge the committee to ensure that cost-sharing reduction (CSR) benefits are 

continuously funded for at least 2 years (2018–19). 

CSR benefits help those who need it most: low-and moderate-income Americans 

with incomes under 250 percent of the Federal poverty level. Nearly 60 percent of 

exchange-plan enrollees rely on CSR benefits, which translates into comprehensive 

coverage and access for nearly 6 million individuals and families. The CSR program 

makes it more affordable for patients to receive needed medical care and services 

by reducing deductibles, copayments, and out-of-pocket maximums. As a result, providers can better serve the needs of their communities and employers do not needlessly face higher costs to provide coverage to their employees. 

Persistent uncertainty about CSR funding is a significant driver of current market 

instability—pushing premiums higher and resulting in fewer choices for individual 

market consumers. According to the most recent analysis by the Congressional 

Budget Office, eliminating CSR benefits would— 

• Increase average premiums for benchmark silver plans by 20 percent in 2018 

and by 25 percent in 2020. 

• Increase the Federal budget deficit by $194 billion over the next 10 years 

(2017–26). 

• Lead to fewer plan choices for consumers and greatly increase the risk that 

some consumers would be left with no insurance options in certain States and geographic areas. 

We urge the committee to include continuous funding for CSR benefits 

for at least the next 2 years (2018–19) as part of bipartisan legislation to 

stabilize the individual market. Without 2 years of CSR funding, uncertainty 

will persist and the Congress will need to address these same issues early next year. 

In addition, without a break in funding for the CSRs, we expect that this provision 

would not contribute to the Federal deficit. By committing to CSR funding for 2 

years, it would go a long way to bring much needed stability to the individual market and promote access to more affordable coverage and choices for millions of 

Americans. 

Sincerely, 

America’s Health Insurance Plans; American Academy of Family Physicians; 

American Benefits Council; American Hospital Association; American Medical Association; Blue Cross Blue Shield Association; Federation of American Hospitals; U.S. 

Chamber of Commerce. 

SEPTEMBER 5, 2017. 

Hon. MITCH MCCONNELL, Majority Leader, 

Hon. CHUCK SCHUMER, Democratic Leader, 

U.S. Senate, 

Washington, DC 20510. 

Hon. PAUL RYAN, Speaker of the House, 

Hon. NANCY PELOSI, Democratic Leader, 

U.S. House of Representatives, 

Washington, DC 20515. 

DEAR LEADER MCCONNELL, SPEAKER RYAN, LEADER SCHUMER, and LEADER

PELOSI: The undersigned organizations representing consumers, patients, and 


HELPN-004 with DISTILLER
81 

1 Centers for Medicare and Medicaid Services, 2017 Effectuated Enrollment Snapshot, (Washington, DC: Department of Health and Human Services, Centers for Medicare and Medicaid 

Services, June 6, 2017), available online at https://downloads.cms.gov/files/effectuated-enrollment-snapshot-report-06-12-17.pdf. 2Larry Levitt, Cynthia Cox, and Gary Claxton, The Effects of Ending the Affordable Care Act’s 

Cost-Sharing Reduction Payments, (Washington, DC: Kaiser Family Foundation, April 25, 2017), 

available online at http://www.kff.org/health-reform/issue-brief/the-effects-of-ending-the-affordable-care-acts-cost-sharing-reduction-payments/. 3Letter to Senate Majority Leader Mitch McConnell and Senate Minority Leader Chuck Schumer Re: The Better Care Reconciliation Act of 2017 (BCRA), from Karen Bender, Chairperson 

of Individual and Small Group Market Committee, and Michael Nordstrom, Chairperson of Medicaid, American Academy of Actuaries, June 30, 2017 http://actuary.org/files/publications/ 

BCRAlCommentlLetterl063017.pdf. 

health care providers share the strong belief that everyone in this Nation deserves 

high-quality, affordable health coverage and care. We stand committed to building 

on the historic progress of the Affordable Care Act (ACA) and working with you to 

secure meaningful and affordable health coverage for all. 

Continued uncertainty about funding for cost-sharing-reduction payments, evidence of administrative attempts to undermine the law, and concerns about future 

congressional attempts to repeal the ACA pose a significant threat to the stability 

of marketplaces and the broader individual market. It is now time for Congress to 

move past attempts to repeal the ACA and cut the Medicaid program and turn its 

attention toward bipartisan policies that would safeguard the stability of health insurance markets for 2018 and beyond. Specifically, we urge Congress to take swift 

action in three main areas: 

(1) Guarantee funding for cost-sharing reductions (CSRs). We urge Congress to immediately enact legislation that clarifies there is a permanent, mandatory appropriation that ensures full funding of CSRs, eliminating all questions 

raised by pending litigation. CSRs provide critical financial protection for nearly 6 

million people who obtain private coverage on health insurance marketplaces.1 If 

CSRs end, premiums would rise by an estimated 19 percent, and reduced plan participation could leave many consumers without any coverage options.2 Quick action 

that guarantees ongoing CSR funding is critical to ensuring a stable individual market. 

(2) Restore premium stabilization programs. We urge Congress to immediately appropriate ongoing funding for a premium stabilization program that 

shields individual insurance markets from the volatility of high-cost claims. The potential impact of such a program is illustrated by the 10 to 14 percent drop in premiums that resulted from transitional reinsurance under the Affordable Care Act.3

An ongoing, fully funded premium stabilization program would also encourage insurers to offer marketplace coverage. 

(3) Ensure continued funding for outreach and enrollment assistance. We 

urge Congress to continue to appropriate adequate funding for Federal Navigators 

and outreach, culturally and linguistically appropriate education, and marketing activities through the Department of Health and Human Services. This funding helps 

consumers—particularly young and healthy people who will help balance the risk 

pool—learn about and enroll into available coverage. 

Thank you for considering our requests. We urge you to protect the Medicaid program and preserve the coverage gains made under the ACA as you turn your attention to market stabilization efforts. We stand ready to work with you to address 

these urgent concerns in the short term and, in the long term, to enact policies ensuring that everyone in our Nation has high-quality, affordable health coverage and 

care. 

Sincerely, 

Families USA; Academy of Nutrition and Dietetics; ADAP Advocacy Association 

(aaa+); The AIDS Institute; AIDS United; Alliance for Retired Americans; American 

Academy of Pediatrics; American Association on Health & Disability; American Federation of State, County and Municipal Employees; American Federation of Teachers; American Muslim Health Professionals; American Nurses Association; American Public Health Association; The Arc of the United States; Asian & Pacific Islander American Health Forum; Association of University Centers for Disabilities; 

Autistic Self Advocacy Network; Bazelon Center for Mental Health Law; Black 

Women’s Health Imperative; Cancer Support Community; Center for American 

Progress; Center for Law and Social Policy; Center for Medicare Advocacy, Inc.; Center for Popular Democracy; Center for Public Representation; ChangeLab Solutions; 

Children’s Defense Fund; Coalition on Human Needs; Community Access National 

Network (CANN); Community Catalyst; Congregation of Our Lady of Charity of the 

Good Shepherd, US Provinces; Consortium for Citizens with Disabilities; Consumers 


HELPN-004 with DISTILLER
82 

1 National Organizations Representing Consumers, Family Members, Advocates, Professionals, 

and Providers c/o Laurel Stine, JD, American Psychological Association at lstine@apa.org. Angela Kimball, National Alliance on Mental Illness at akimball@nami.org., and Debbie Plotnick, 

MSS, MLSP, Mental Health America at dplotnick@mentalhealthamerica.net. 

Union; CPD Action; Disability Rights Education and Defense Fund; Doctors for 

America; Easterseals; Epilepsy Foundation Family Voices; Farmworker Justice; 

Foundation for Healthy Generations; Friends Committee on National Legislation; 

The Greenlining Institute; Health Care for America Now (HCAN); Hepatitis B 

Foundation; Hep B United; HIV Medicine Association; Hogg Foundation for Mental 

Health; International Union, United Automobile, Aerospace & Agricultural Implement Workers of America, UAW; Justice in Aging; Lakeshore Foundation; Leadership Conference on Civil and Human Rights; League of Women Voters of the United 

States; Medicare Rights Center; The Michael J. Fox Foundation for Parkinson’s Research; NAACP; NASTAD; National Advocacy Center of the Sisters of the Good 

Shepherd; National Alliance on Mental Illness; National Association for Health and 

Fitness; National Association of Area Agencies on Aging (n4a); National Association 

of Perinatal Social Workers (NAPSW); National Association of Social Workers; National Center for Lesbian Rights; National Center for Transgender Equality; National Consumers League; National Council of Jewish Women; National Council for 

Behavioral Health; National Disability Institute; National Disability Rights Network; National Family Planning & Reproductive Health Association; National 

Health Law Program; National Latina Institute for Reproductive Health; National 

LGBTQ Task Force; National Partnership for Women & Families; National Patient 

Advocate Foundation; National Respite Coalition; National Viral Hepatitis Roundtable; National Women’s Health Network; NETWORK Lobby for Catholic Social Justice; Organizing for America; Out2Enroll; Planned Parenthood Federation of America; Public Citizen; Raising Women’s Voices for the Health Care We Need; Religious 

Institute; RESULTS; Sargent Shriver National Center for Poverty Law; Service Employees International Union (SEIU); Society for Public Health Education; TASH; 

Third Way; Trust for America’s Health; UnidosUS; Union for Reform Judaism; 

United Church of Christ, Justice & Witness Ministries; United Methodist Church— 

General Board of Church and Society URGE: Unite for Reproductive & Gender Equity; YWCA ZERO TO THREE. 

MENTAL HEALTH LIAISON GROUP 1

SEPTEMBER 1, 2017. 

Hon. LAMAR ALEXANDER, Chairman, 

Senate Health, Education, Labor, and Pensions Committee, 

455 Dirksen Senate Office Bldg., 

Washington, DC 20510. 

Hon. PATTY MURRAY, Ranking Member, 

Senate Health, Education, Labor, and Pensions Committee, 

154 Russell Senate Office Bldg., 

Washington, DC 20510. 

Re: Stabilizing the Individual Health Insurance Marketplace 

DEAR CHAIRMAN ALEXANDER AND RANKING MEMBER MURRAY: Thank you for leading a bipartisan effort to reform our health care system. With the HELP Committee’s hearings on stabilizing the individual health insurance marketplace under the 

Affordable Care Act (ACA) scheduled for September, the Mental Health Liaison 

Group (MHLG) writes to offer our thoughts on issues associated with market stabilization that would likely have an impact on coverage of mental health and substance use disorder prevention and treatment services through marketplace plans. 

The MHLG is a coalition of more than 60 national organizations representing consumers, family members, mental health and substance use treatment providers, 

State behavioral health agencies, advocates, payers, and other stakeholders committed to strengthening Americans’ access to mental health and substance use services and programs. 

Particularly in light of the ongoing national opioid addiction epidemic, MHLG believes that ensuring the whole health of all Americans requires maintenance of coverage for mental health and substance use disorder benefits at parity with existing 

medical/surgical benefits in all marketplace plans. Maintenance of those benefits 

has little meaning without affordable and ready access to the plans providing that 

coverage. Ensuring affordable and ready access requires retention of the ACA’s proVerDate Nov 24 2008 13:39 Mar 05, 2019 Jkt 000000 PO 00000 Frm 00086 Fmt 6633 Sfmt 6621 S:\DOCS\26840.TXT CAROL

HELPN-004 with DISTILLER
83 

hibition against denying coverage based on a pre-existing condition, as well as the 

ACA’s prohibitions against annual and life-time limits on coverage. 

We oppose eliminating or reducing the cost-sharing reduction payments (CSRs) 

made to insurers to keep co-payments and co-insurance requirements low for plan 

members. Congress should fund the CSRs on a permanent basis to ensure insurers 

do not withdraw from markets, leaving low-income enrollees who are sicker or 

older—particularly those with mental illness and/or substance use disorders—without affordable coverage. So many individuals with serious mental illness and substance use disorders have limited-incomes that eliminating premium assistance and 

cost-sharing subsidies, thereby rendering coverage largely unaffordable, would—in 

essence—eliminate coverage for these essential services for many. 

We also strongly believe, as we know you do, that Congress must act immediately 

to ensure that plans are available in each State-designated marketplace for the 2018 

benefit year. Furthermore, mental health and substance use disorder benefit coverage must be preserved in marketplace plans, and should not be subject to State 

waivers of coverage or other existing ACA limitations under an expanded § 1332 

waiver authority. We do not believe that individuals with a serious mental illness 

or substance use disorders should be denied coverage based on the State in which 

they reside, as would be the case should coverage vary from State-to-State under 

the proposed expanded waiver authority. 

As a threshold matter, MHLG believes that mental health and substance use disorder benefit coverage must be preserved in all marketplace plans, and should not 

be subject to State waivers of ACA regulations or other existing ACA limitations 

under an expanded § 1332 waiver authority. We do not believe that individuals with 

a serious mental illness or substance use disorders should be denied coverage based 

on the State in which they reside. 

In addition, the permitted range of premiums and deductibles—including the limits on age-banding of premiums—must remain as they currently exist so that plans 

cannot impose premiums so high for the provision of mental health and substance 

use disorder services that they become unaffordable to the individuals who most 

need them. We oppose reducing the Federal premium tax credits which lower income, non-Medicaid enrolled insureds have received from the Federal Government 

to maintain insurance coverage and which have, until now, averaged 72 percent of 

the cost of premiums. 

We do not believe the answer to keeping coverage costs low is the short-term 

funding of a temporary Federal fund for State grants targeted toward subsidizing 

plan coverage for individuals with serious mental illness and/or a substance use disorder, as was contained in H.R. 1628. Such a fund would, within only a few years, 

be totally inadequate in meeting need for the populations that Congress worked to 

serve with the passage of the 21st Century Cures Act and the Comprehensive Addiction and Recovery Act (CARA) of 2016. 

Moreover, it is important to remember that untreated serious mental illness and 

substance use disorders intensify and increase the number of comorbid medical conditions in individuals with those conditions, increasing total individual insurance 

coverage costs in the long-run. Those proliferating comorbid conditions and costs 

also have the potential to increase costs in the Medicaid program for individuals 

whose catastrophic health events leave them at income levels making them eligible 

for Medicaid. 

MHLG recognizes that the individual personal responsibility coverage mandate is 

unpopular among some. However, the 30 percent premium surcharge that would 

have replaced the individual mandate under H.R. 1628 for failure to maintain continuous coverage is not an appropriate solution, as it would have a disproportionate 

impact on the lowest income enrollees who would have been struggling to maintain 

premium payments for coverage. It would be particularly destructive for those enrollees whose serious mental illness or substance use disorders often render them 

cognitively impaired and thus less capable of maintaining premium payment schedules until they recover, when the sizable surcharge would leave them unable to pick 

up coverage. Similarly, the waiting period for coverage after a failure to maintain 

continuous coverage included within the Senate amendments to H.R. 1628 would be 

particularly harmful for individuals struggling with addiction or serious mental illness who are left with no way to address those issues in the absence of access to 

insurance coverage. 

We urge you to continue to protect these vulnerable Americans’ access to and coverage of vital mental health and substance use disorder treatment and prevention 

services, and to not reverse the recent progress made with the enactment of key 


HELPN-004 with DISTILLER
84 

1 Health Care Reform Principles: http://www.heart.org/idc/groups/heart-public/@wcm/ 

@adv/documents/downloadable/ucml495416.pdf. 

mental health and substance use disorder prevention and treatment reforms under 

the 21st Century Cures Act and CARA. 

Sincerely, 

American Art Therapy Association; American Association of Child & Adolescent 

Psychiatry; American Association for Marriage and Family Therapy; American Association for Geriatric Psychiatry; American Association for Psychoanalysis in Clinical 

Social Work; American Association on Health and Disability; American Dance Therapy Association; American Foundation for Suicide Prevention; American Group Psychotherapy Association; American Mental Health Counselors Association; American 

Nurses Association; American Psychiatric Association; American Psychoanalytic Association (APsaA); American Psychological Association; American Society of Addiction Medicine; Anxiety and Depression Association of America; Association for Ambulatory Behavioral Healthcare; Bazelon Center for Mental Health Law; Campaign 

for Trauma-Informed Policy and Practice; Children and Adults with Attention-Deficit Hyperactivity Disorder (CHADD); Clinical Social Work Association; Clinical Social Work Guild 49-OPEIU; Depression and Bipolar Support Alliance; Eating Disorders Coalition; EMDR International Association; Global Alliance for Behavioral 

Health and Social Justice; International Certification & Reciprocity Consortium 

(IC&RC); Mental Health America; National Association for Children’s Behavioral 

Health; The National Association of County Behavioral Health and Developmental 

Disability Directors (NACBHDD); The National Association for Rural Mental Health 

(NARMH); National Association of Social Workers; National Association of State 

Mental Health Program Directors (NASMHPD); National Alliance on the Mental Illness (NAMI); National Council for Behavioral Health; National Disability Rights 

Network; National Federation of Families for Children’s Mental Health; National 

Health Care for the Homeless Council; National League for Nursing; National MS 

Society; National Register of Health Service Psychologists; No Health Without Mental Health (NHMH); Psychiatric Rehabilitation Association and Foundation; Residential Eating Disorders Consortium (REDC); School Social Work Association of 

America; Treatment Communities of America; Trinity Health of Livonia, Michigan; 

Young Invincibles. 

AUGUST 10, 2017. 

Hon. PATTY MURRAY, Ranking Member, 

Senate HELP Committee, 

154 Russell Senate Office Building, 

Washington, DC 20510. 

DEAR RANKING MEMBER MURRAY: In March, our organizations, representing some 

of the Nation’s leading patient and provider advocacy groups, joined together to define a set of principles representing the essential components of any patient-focused 

health care reform plan.1 These principles are specifically designed to protect the 

health and well-being of the millions of individuals we represent and their unique 

health care needs. The bills recently considered by the House and Senate contained 

provisions that would have had substantial and irreversible negative impacts on patients and their families, providers, communities, and economies. As Congress continues its efforts to reform the health care system, we urge policymakers to consider 

these principles and work in a bipartisan manner to craft proposals that improve 

access to care for our patients and strengthen the Nation’s health system in the 

near and long term. 

Today, millions of Americans, including many who are low-income or live with 

pre-existing health conditions, rely on health care coverage received through the Affordable Care Act (ACA). Our organizations have long said the ACA is by no means 

perfect, but it made important gains in access to coverage. It is clear that steps 

must be taken to both stabilize the individual health insurance marketplace and 

bring down premiums and other out-of-pocket costs. These changes are critical to 

maintain and expand access to quality and affordable insurance for low- and middleincome families across the Nation. 

To this end, we believe that the current law can be strengthened by focusing on 

the following critical issues: 

Cost-Sharing Reductions (CSR) 

A top priority that must be addressed immediately is ensuring continued funding 

for the ACA cost-sharing reductions. In the absence of expedited Congressional acVerDate Nov 24 2008 13:39 Mar 05, 2019 Jkt 000000 PO 00000 Frm 00088 Fmt 6633 Sfmt 6621 S:\DOCS\26840.TXT CAROL

HELPN-004 with DISTILLER
85 

2 C. Cox., What’s the near-Term Outlook for the Affordable Care Act? (Kaiser Family Foundation, Aug. 2017). http://www.kff.org/health-reform/issue-brief/whats-the-near-term-outlook-forthe-affordable-care-act/. 3 J. Wishner, I. Hill, S. Benatar et al., Factors that Contributed to High Marketplace Enrollment Rates in Five States in 2015 (Urban Institute, Oct. 2015). See also S.R. Collins, M. Gunja, 

M. 

tion, additional insurers could exit markets very soon, leaving patients without coverage options while forcing premium increases of at least 19 percent both on and 

off the marketplace exchanges.2

Supporting Coverage in Counties Without Insurers 

Congress should identify ways to ensure insurer participation on the exchanges 

in bare counties. For instance, leveraging the Federal Employee Health Benefits 

Program (FEHBP), which offers private insurance coverage to Federal employees in 

every county in the country, could help with this issue. Requiring private insurers 

who participate in FEHBP to issue insurance on the exchanges could be required 

as a condition for continued participation at the national level. Alternatively, 

waiving the insurer tax for issuers in counties without options could also be an appropriate stopgap measure. 

Risk Reinsurance 

Other key stabilization concepts Congress might consider include development of 

risk reinsurance proposals, akin to the program implemented in Alaska. Reinsurance reduces the risk to insurers of covering high-cost patients thus creating stability in the markets. This protects Americans from significant premium increases 

by offsetting the costs of sicker and more costly enrollees. We would also urge Congress to consider other innovative and financially sustainable risk mitigation proposals at either the State or Federal level. 

Outreach 

It remains imperative that the administration and Congress devote adequate resources to State health insurance marketplace outreach and enrollment to ensure 

all eligible Americans have the opportunity to sign up for health insurance coverage. 

We know States that devote robust resources to marketing, outreach, and enrollment assistance programs experience higher rates of enrollment than those that do 

not.3 A focus on enrollment also helps ensure that more low-cost individuals obtain 

insurance on the State health insurance exchanges to help offset the costs of older, 

sicker patients. We would urge these activities also be coupled with actions to 

streamline the application and enrollment process. 

Tax Credits 

As members of both parties have noted, affordability remains a barrier for many 

Americans to purchase adequate insurance. While we recognize the challenge of increasing program costs, we would support increasing financial support for individuals and families by expanding income eligibility for health insurance tax credits. 

Many middle-income families struggle to afford coverage with increasing premiums, 

deductibles, and copays. 

Long-Term Costs 

While we agree that affordability at the individual and family levels is a serious 

hurdle to securing coverage, we would also encourage Congress to examine other 

major factors that contribute to the rising cost of health care, including the rising 

costs of many treatments. Much but not all of our Nation’s health care spending is 

on the treatment of chronic disease, much of which can be prevented through evidence-based efforts. We urge you and your colleagues to work together to evaluate 

the root causes of these growing costs and address them directly. 

Finally, while we remain ready to work on efforts to reduce unnecessary health 

care spending and costs and to improve the health insurance marketplace, this 

should not be done at the expense of ensuring access to quality care for all patients, 

including those who rely on the Medicaid program. Our organizations remain committed to retaining important patient protections including the ban on pre-existing 

conditions exclusions and premium rating, guaranteed issue, the prohibition on annual and lifetime benefit caps and continued coverage of critical essential health 

benefits. Essential health benefits must also continue as a Federal benefit and must 

include preventive benefits that help maintain and improve the health and wellness 

of millions of Americans. Finally, we urge Congress to maintain and support important health care safety net programs, such as Medicaid and the related Medicaid 

expansion. 


HELPN-004 with DISTILLER
86 

We look forward to working with Congress to ensure all Americans have access 

to affordable and adequate health care coverage. 

Sincerely, 

ALS Association; American Diabetes Association; American Heart Association; 

American Lung Association; Arthritis Foundation; Cystic Fibrosis Foundation; Family Voices; March of Dimes; Muscular Dystrophy Association; National Health Council; National MS Society; National Organization for Rare Diseases; United Way 

Worldwide; Women Heart: The National Coalition for Women with Heart Disease. 

RESPONSE BY MIKE KREIDLER O.D., TO QUESTIONS OF SENATOR ALEXANDER, SEN- ATOR BURR, SENATOR YOUNG, SENATOR ROBERTS, SENATOR WHITEHOUSE AND SENATOR FRANKEN

STATE OF WASHINGTON, 

OFFICE OF INSURANCE COMMISSIONER, 

OLYMPIA, WA 98501, 

September 15, 2017. 

Hon. LAMAR ALEXANDER, Chairman, 

530 Hart Senate Office Building, 

Committee on Health, Education, Labor, and Pensions, 

U.S. Senate, 

Washington, DC 20510. 

DEAR CHAIRMAN ALEXANDER: Thank you for the opportunity to testify before the 

U.S. Senate Health, Education, Labor, and Pensions (HELP) Committee last week. 

It was an honor to participate in the first of your bipartisan hearings on health care 

reform. I appreciate the Senator’s efforts to understand the priorities of State insurance regulators and to learn from our experience on the front line of the individual 

insurance market. 

During the hearing, several members of the HELP Committee posed important 

questions to me from the dais. Please consider this letter, containing those questions 

and my answers, as a supplement to the hearing record. 

I believe we can turn this market around and continue the successes we have enjoyed in Washington State. I have real hope that your committed efforts will result 

in bringing about the immediate relief all five insurance commissioners were unified 

in requesting: funding of the cost-sharing reduction payments through 2018, at the 

very least. 

I’m happy to offer you any assistance that I can to develop long-lasting solutions 

for a stable insurance market this year, and beyond. 

Sincerely, 

MIKE KREIDLER, 

Insurance Commissioner. 

SENATOR ALEXANDER

Question. How can we use the 1332 waiver to allow States to benefit from reinsurance? 

Answer. The benefit of a reinsurance program can be a solid reduction in premiums paid by the consumer. For example, in Washington State, the Federal transitional reinsurance program resulted in an 8–10 percent drop in average premiums 

(from 2014 through 2016, the years the program existed). A State reinsurance program should have the same effect, but the cost of funding it is prohibitive for many 

States. The 1332 waiver is a good mechanism to assist with the necessary funding, 

diverting realized Federal savings from advanced premium tax credits (APTC’s) into 

dollars to support a State reinsurance program. 

There are some challenges in pursuing a 1332 waiver. One is the length of time 

and the cost associated with the application process. And State legislators must 

make a commitment to fund the State reinsurance program without a specific Federal dollar commitment; this can be a political challenge, and a timing challenge for 

States with part-time legislatures. 

The success of a State reinsurance program funded by a 1332 waiver is based 

upon predicted APTC savings. Alaska’s 1332 waiver was very successful, in part because their premiums were very high, and they had only one insurer participating 

in the market. Here in Washington, we have an efficient health system with seven 

insurers in our State-based Exchange, and our premiums are significantly lower. We 

are actively working with a contractor now to analyze insurer data to predict the 


HELPN-004 with DISTILLER
87 

potential premium impact of a reinsurance program. But without significant premium savings resulting in significant Federal funds, it is unlikely our State can 

independently implement the program. 

SENATOR BURR

Question. What opportunity is there to stabilize the market with the purchase of 

multi-year plans? 

Answer. Multi-year health insurance contracts are not currently permitted in any 

State, and there are significant obstacles to this option. Consumers would have to 

be willing to give up an annual choice of plan, and would likely require portability 

across State lines. Insurers might object to the possibility of decreased competition, 

if the cost of switching plans is too high, and could find it difficult to reliably predict 

future costs within the contract time period. Plans would have to be built with incentives for healthy consumers to stick to them. 

Because of these obstacles, I would not consider multi-year health insurance contracts to be a meaningful stabilization strategy for the 2018, 2019 or 2020 plan year. 

SENATOR YOUNG

Question. How can States increase transparency? 

Answer. This year, Washington State will bring online an All-Payer Healthcare 

Claims database that will systematically collect all medical, pharmacy and dental 

claims from private and public payers, with data from all settings of care that permit the systematic analysis of health care delivery. This system will help patients, 

providers and hospitals make informed choices about care, and it will promote competition based on quality and cost. 

However, a recent U.S. Supreme Court decision, Gobeille v. Liberty Mutual Insurance Company, found that ERISA preempts State attempts to require self-funded 

plans to submit data to a State’s database. Congress could address that issue in 

Federal law; the result would be a significant increase in the data Washington could 

collect, to the benefit of consumers, providers and hospitals. 

SENATOR ROBERTS

Question. Do you support increasing the 1:3 age band and why? 

Answer. In 1995, our State set the mandated age ratio at 3.75:1. This level reflects what we believe was a fair balance of affordability for young and older enrollees. Upon passage of the Federal Affordable Care Act (ACA), we adopted the mandated average of 3:1. I would support a return to our State band of 3.75:1, but would 

not advocate for adoption of a broader band at this time. 

Prior to the ACA, most States has a 5:1 age band ratio. A major concern with 

narrowing the band to 3:1 was the impact on younger purchasers—if the cost rises 

too high, young healthy people are more likely to stay out of the market. In our 

State, the impact on premiums for young people younger people was less evident 

(shifting only .75 percent). And the impact of the rise in premium was cushioned 

by the temporary Federal reinsurance program that dropped Washington State 

rates by 8 to 10 percent. Younger enrollees, many of whom have lower incomes, also 

received significant support in the form of APTCs and cost-sharing subsidies. But 

even under these favorable conditions, the enrollment of younger people was less 

than we had hoped. 

Widening the age band might lead to incremental differences in premiums for 

younger enrollees, but I’m not convinced it will make the difference in bringing 

them into the insurance market Congress should focus on keeping and enforcing the 

individual mandate, and increasing penalties as contemplated by the ACA for those 

who stay out of the market, until the decision to enroll becomes the clearly better 

financial choice. 

SENATOR WHITEHOUSE

Question. What standards would a new insurer need to meet to do business in 

Washington State? How would you feel about an insurer who wanted to do business 

but couldn’t meet those standards? 

Answer. Washington has a business-friendly climate with a Top–10 ranking 

among States in a recent Forbes magazine survey of ‘‘The Best States for Business.’’ 

Our regulatory environment is fair and reasonable, and we use the National Association of Insurance Commissioners (NAIC) Uniform Certificate of Authority Application (UCAA) forms to review and process applications from insurance companies 

quickly. 


HELPN-004 with DISTILLER
88 

We are committed to a thorough review of potential health insurers to ensure that 

companies can provide the level of quality and commitment we want for our residents. In addition to the UCAA requirements, Washington State law requires that 

we request documentation of net worth, geographic areas and population groups to 

be served, schedules of proposed rates and charges, and detailed descriptions of almost every business process—from the enrollee complaint system to the health care 

delivery system—to ensure that services will meet State law requirements and will 

be of professional quality. 

Washington is an active rate review State; once a health insurer is admitted in 

our State to sell to Washington consumers, we review all filed plans and rates to 

be sure they are actuarially justified and meet our State requirements. 

Washington has a long history of strong consumer protections, and many of our 

requirements are not found in the laws of other States. I would not allow an insurer 

to do business here that did not meet our requirements, and the prospect of lowering the high standards for quality and service we receive from our currently admitted insurers would be a big concern. 

SENATOR FRANKEN

Question. What can we do to bring prescription drug costs under control? 

Answer. The skyrocketing cost of prescription drugs directly impacts people who 

purchase insurance, by driving up premiums and hitting their out-of-pocket expenses in co-insurance. 

One of the most important things we could do is prohibit ‘‘pay for delay’’ deals 

between dealers of name brand and generic drugs. Generics are important to cut 

costs, and consumers want them. We should not permit drug companies to keep 

them off the market. 

We should also demand increased transparency from drug companies. Purchasers 

should be able to understand the true cost of drug research and development. Consumers should be able to see prices, including those charged to Medicare and other 

countries. The current pharmacy supply chain, from manufacturer to pharmacist, 

should be clearly documented, so we can find potential savings from transactional 

costs. 

RESPONSE BY MIKE KREIDLER, O.D. TO QUESTIONS OF SENATOR WHITEHOUSE

STATE OF WASHINGTON, 

OFFICE OF INSURANCE COMMISSIONER, 

TUMWATER, WA 98501, 

October 11, 2017. 

Hon. SHELDON WHITEHOUSE, 

530 Hart Senate Office Building, 

U.S. Senate, 

Washington, DC 20510. 

Re: U.S. Senate Health, Education, Labor, and Pensions Committee Hearing—Stabilizing Premiums and Helping Individuals in the Individual Insurance Market 

for 2018: State Insurance Commissioners 

DEAR SENATOR WHITEHOUSE: Thank you for the opportunity to respond to questions you posed during the U.S. Senate Health, Education, Labor, and Pensions 

Committee hearing on September 6, 2017. 

I am pleased and heartened by the bipartisan efforts to improve health care delivery and insurance market stability in our States. Washington, in particular, has 

long embraced efforts to find innovative ways to deliver quality health care through 

stable insurance markets. 

I appreciated the opportunity to share our State’s history regarding the individual 

insurance market; your questions raise other areas where I hope Washington’s experience can be of assistance. 

Attached are your questions with my responses. I hope these prove to be helpful 

to you. I would be happy to provide additional information, should you need it. 

Sincerely, 

MIKE KREIDLER, 

Insurance Commissioner. 

Question 1. Following the HELP Committee’s work to stabilize the individual 

market, I hope the committee will move on to other efforts to address cost and imVerDate Nov 24 2008 13:39 Mar 05, 2019 Jkt 000000 PO 00000 Frm 00092 Fmt 6633 Sfmt 6621 S:\DOCS\26840.TXT CAROL

HELPN-004 with DISTILLER
89 

prove quality in our health care system. I believe the following areas are ripe for 

bipartisan collaboration: 

a. Improving patient safety by preventing medical errors and healthcare-acquired 

infections; 

b. Addressing the dramatic variations in care quality and outcomes across States; 

c. Identifying ways to reduce administrative overhead and dispute, specifically the 

bureaucratic warfare between insurance companies and providers over reimbursement; 

d. Ensuring that a patient’s wishes are honored at the end of his or her life; and 

e. Advancing payment reform to encourage prevention and primary care. 

Which of these areas should be a priority for the HELP Committee going forward? 

What strategies would you suggest to lower costs and improve quality in these 

areas? Is there innovative work in your States and communities that you would like 

to highlight? 

Answer 1. Each of the areas you have identified have the potential to lower costs 

and improve quality. We have done significant work in Washington State to improve 

patient safety and the payment system, and to reduce administrative overhead and 

reimbursement disputes. Below are illustrations of some programs that have provided good results for our State. 

IMPROVE PATIENT SAFETY

Washington has adopted several programs into law that require reporting of incidents to allow State oversight and intervention. 

Adverse Health Events and Incident Reporting System. Washington State law 

(Chapter 70.56 RCW) requires healthcare facilities to report to the Washington 

State Department of Health whenever they confirm an adverse event, as defined by 

the National Quality Forum. Facilities required to report include psychiatric hospitals, State correctional medical facilities, ambulatory surgical facilities, and child 

birthing centers. Facilities that report an adverse event are required to conduct a 

root cause analysis and identify corrective actions. This requirement is intended to 

address prevention of such events in the future. 

Healthcare Associated Infections Program. This program requires hospitals to report infection information to the Washington State Department of Health, which annually produces an interactive map and reports comparing hospital infection rates 

for central line-associated bloodstream infections, surgical site infections and ventilator-associated pneumonia. (See www.doh.wa.gov, Healthcare Association Infections). 

PAYMENT REFORM

We recognize the need for an objective comparative standard for medical service 

pricing. In January 2018, Washington State will implement an All Payer Claims 

database. (See Health Care—Price Transparency Health Care). The database will assist consumers in making informed choices about health care, promote improvements in health care performance, and enable purchasers to increase their valuebased purchasing activities. Reports will include claims data from Medicaid, Medicare, State employee health benefits, our State’s workers’ compensation medical program, and commercial health insurers regulated by my office. 

At this point, submission of claims data from self-funded employer-sponsored 

group health plans and Taft-Hartley plans is voluntary, based on the U.S. Supreme 

Court’s ruling that ERISA’s preemption clause prevents States from requiring selffunded group health plans to submit claims data to State all-payer claims databases. (See Gobeille v. Liberty Mutual). In the interests of transparency and payment reform, a bipartisan discussion on the possibility of mandating self-funded 

group health plans participation in State databases would be very welcome. 

We also recognize that, as a major purchaser, the State can be a positive force 

for system change. Currently, our State Medicaid program and our State employee 

health benefit program are integrating strategies to implement value-based purchasing and behavioral health integration goals. Our ‘‘Healthier Washington Initiative’’ has goals of building healthier communities through a collaborative regional 

approach, integrating physical and behavioral health services and financing to focus 

on the whole person, and improving how we pay for services by rewarding quality 

over quantity. (See Healthier Washington—Washington State Health Care Authority). 

The initiative is taking a multi-payer approach. We have developed a common 

performance measure set and are working to implement value-based payment reforms. Washington State participates in the CMS Medicare/Medicaid dual-eligible 

demonstration and has implemented a Medicaid State plan health home program 


HELPN-004 with DISTILLER
90 

as a key component of our duals demonstration participation. (Washington—Centers 

for Medicare & Medicaid Services). Evaluation results for the first 2 years of the demonstration show Medicare savings of $67 million. 

Last, as you know, Washington is a full rate review State, meaning that we closely review proposed health insurance premium rates to ensure that the premiums 

charged reflect the benefits that are provided under a health plan. We have seen 

continued increases in underlying health care costs, particularly with respect to prescription drug expenditures. Any bipartisan discussions related to prescription drug 

pricing would be a high priority. 

REDUCE ADMINISTRATIVE OVERHEAD AND REIMBURSEMENT DISPUTES

We have also focused on establishing uniform and streamlined administrative 

processes for the health care and insurance community, aimed at reducing the potential for error, and improving care quality and outcomes. My office partners in 

this effort with an organization called OneHealthPort, a Washington cooperative 

owned by health plans and health care providers. The goal of OneHealthPort is to 

reduce administrative burdens by making information exchange more efficient, with 

fewer errors, and to develop and recommend best practices for providers and health 

plans. This year, my office adopted rules, for example, to standardize processes 

across insurers for prior authorization. 

This year, I am re-introducing a bill designed to protect consumers from payment 

disputes between insurers and providers who are out of network. When consumers 

receive care from an out-of-network provider in an emergency or in an in-network 

facility, they can receive a bill from the provider for any balance due over what the 

insurer has paid. This ‘‘surprise bill’’ happens frequently, and the average bill is 

under $1,000.00. The solution is passing a law to take the consumer out of the middle, and establishing a predictable payment rate for the provider along with a fair 

and objective resolution process. 

Question 2. If an insurance company came to you proposing to sell health insurance in your State, what steps, such as setting up a provider network, would you 

expect or require that insurer to take before you authorize the insurer to sell health 

insurance policies in your State? 

Answer 2. We would expect all insurance companies to meet our stringent requirements. Washington State has a strong history of consumer protection reflected 

in the requirements that insurers must meet to be admitted to sell health insurance 

in our State. We have adopted the National Association of Insurance Commissioners’ (NAIC) Uniform Certificate of Authority Application. We go beyond the 

NAIC’s requirements in two critical ways central to consumer protection: requirements for financial solvency and provider network adequacy. 

Washington State’s financial solvency requirements set minimum net worth requirements for health insurers that must be met in order to sell insurance in our 

State. For example, health care service contractors (e.g. our Blue Cross and Blue 

Shield insurers) must have a minimum net worth equal to the greater of 3 million 

dollars, or 2 percent of the annual premium earned on the first $150 million of premium earned and 1 percent of premiums earned in excess of $150 million (RCW 

48.44.037). The insurer must maintain this minimum solvency standard (RCW 

48.44.039). A similar requirement applies to health maintenance organizations 

(RCW 48.46.235–.247). 

Equally important, Washington State has strong provider network adequacy 

standards. As I am sure you are aware, in the face of rising underlying health care 

costs, especially for prescription drugs, and the uncertainty facing the individual 

health insurance market overall, we have seen a trend of insurers moving away 

from preferred provider organization health plans with broad provider networks to 

exclusive provider organization or HMO plans. By design, these health plans offer 

a somewhat narrower network of providers in an effort to offer more affordable premiums and cost-sharing. A consequence of that movement is that our network adequacy rules have become even more critical. 

My agency has promulgated regulations that address both qualitative and quantitative standards for provider network adequacy. The qualitative standard is as follows: 

1. An insurer must maintain each provider network for each health plan in a 

manner that is sufficient in numbers and types of providers and facilities to assure 

that, to the extent feasible based on the number and type of providers and facilities 

in the service area, all health plan services provided to enrollees will be accessible 

in a timely manner appropriate for the enrollee’s condition. An insurer must demonstrate that, for each health plan’s defined service area, a comprehensive range of 


HELPN-004 with DISTILLER
91 

primary, specialty, institutional, and ancillary services are readily available without 

unreasonable delay to all enrollees, and that emergency services are accessible 24 

hours per day, 7 days per week without unreasonable delay. 

2. Each enrollee must have adequate choice among health care providers, including those providers which must be included in the network under Washington Administrative Code (WAC) 284–170–270, and for qualified health plans and qualified 

stand-alone dental plans, under WAC 284–170–310. 

Our quantitative standards include minimum distance and appointment time 

standards for primary care providers, as well as appointment time standards for urgent appointments and specialty services (WAC 284–170–200(13)). Washington 

State also has a strong mental health parity statute. To ensure its robust implementation, we have adopted clear standards regarding the types of behavioral health 

services that must be included in provider networks (WAC 284–170–200(11)). 

Question 3. What concerns would you have about an insurance company coming 

to your State that was not prepared to create a provider network or complete any 

other steps you may require? 

Answer 3. I would have extremely strong concerns regarding an insurance company coming to Washington State that was not prepared to create a provider network or complete other steps required for an insurance company to do business in 

our State. As described above, the Washington State Legislature and my office have 

defined minimum standards beyond those included in the NAIC uniform application. Those requirements were established to protect consumers in our State. While 

I respect the right of other States to set their own standards for insurers that do 

business in their States, our ability to maintain strong consumer protection standards is critical. 

RESPONSE BY LORI K. WING-HEIER TO QUESTIONS OF SENATOR ALEXANDER

DEPARTMENT OF COMMERCE, 

COMMUNITY, AND ECONOMIC DEVELOPMENT, 

DIVISION OF INSURANCE, 

JUNEAU, AK 99811–0805, 

October 10, 2017. 

Hon. LAMAR ALEXANDER, Chairman, 

Senate Committee on Health, Education, Labor, and Pensions, 

U.S. Senate, 

Washington, DC 20510–4704. 

Re: U.S. Senate, Committee on Health, Education, Labor, and Pensions ‘‘Stabilizing 

Premiums and Helping Individuals in the Individual Insurance Market for 

2018: State Insurance Commissioners’’ 

DEAR SENATOR ALEXANDER: Following my testimony on September 6, 2017, in the 

referenced committee hearing, Senator Sheldon Whitehouse posed several questions 

for the record to me. The questions and my responses for the record are listed below: 

Question 1. Following the HELP Committee’s work to stabilize the individual 

market, I hope the committee will move on to other efforts to address cost and improve quality in our health care system. 

I believe the following areas are ripe for bipartisan collaboration: 

a. Improving patient safety by preventing medical errors and healthcare-acquired 

infections; 

b. Addressing the dramatic variations in care quality and outcomes across States; 

c. Identifying ways to reduce administrative overhead and dispute, specifically the 

bureaucratic warfare between insurance companies and providers over reimbursement; 

d. Ensuring that a patient’s wishes are honored at the end of his or her life; and 

e. Advancing payment reform to encourage prevention and primary care. 

Which of these areas should be a priority for the HELP Committee going forward? 

What strategies would you suggest to lower costs and improve quality in these 

areas? Is there innovative work in your States and communities that you would like 

to highlight? 

Answer 1. Improving patient safety and quality care are important health care 

priorities, but the Alaska Division of Insurance’s regulatory authority does not generally encompass items a, b or d. 


HELPN-004 with DISTILLER
92 

1http://www.npr.org/sections/money/2014/03/0S/286126451/living-wills-are-the-talk of-thetown-in-la-crosse-wis. 

Addressing the underlying cost of health care insurance coverage is key to meaningful reform. Alaska experiences a lack of provider competition in many regions; 

therefore, insurance companies have little to no leverage when negotiating contracts. The goal of insurance companies in connection with these pricing contracts 

is to keep the premium levels in check so that coverage is more affordable and competitive. Through medical loss ratio standards, health care insurers are closely monitored to ensure that pricing for services is based on the actual cost of care and that 

profit margins are maintained at reasonable levels. However, health care medical 

service providers and health care providers engaged in manufacturing and distribution of pharmaceutical and other health care equipment do not have a similar form 

of cost control oversight in private markets. Establishing standards to streamline 

reimbursement between insurance companies and providers through more transparent pricing structures coupled with limitations to curb price gouging and excessive profits could help to control costs and greatly improve the affordability of health 

care insurance coverage. 

Regarding patient’s wishes at the end of life, we would refer you to La Crosse 

Wisconsin for their efforts. 1

The common theme for preventive care is that reimbursements are not focused 

on the dialog between a primary care provider and their patient. Other items that 

are not health related but can later produce costly medical expenses, especially behavioral health, include social determinants. 

Question 2. If an insurance company came to you proposing to sell health insurance in your State, what steps, such as setting up a provider network, would you 

expect or require that insurer to take before you authorize the insurer to sell health 

insurance policies in your State? 

Answer 2. The first step would require the health care insurer to apply for a certificate of authority under AS 21.09.110. In addition to financial statements necessary to evaluate the company’s solvency and financial history, the company would 

be required to file policy forms and rate approval request and receive prior approval 

from the Alaska Division of Insurance before selling health insurance policies in 

Alaska. 

Question 3. What concerns would you have about an insurance company coming 

to your State that was not prepared to create a provider network or complete any 

other steps you may require? 

Answer 3. The division’s primary concern is to protect consumers by ensuring an 

insurance company’s financial solvency to pay claims. 

Question 4. As you know, Alaska chose to base the eligibility criteria for its reinsurance program on a list of 33 specific medical conditions rather than a dollar 

amount based on claims. You stated during the hearing that using conditions to determine eligibility for the reinsurance program would make the ‘‘biggest impact’’ to 

stabilize the market. Why did eligibility based on conditions lead to a ‘‘bigger impact’’ than setting up a reinsurance program based on by a dollar amount? 

Answer 4. By establishing qualification based on 33 known significant medical 

conditions, Alaska was able to define an objective measure based upon market experience and projected risk. The focus has centered upon chronic conditions since they 

are costs that are expected to continue year after year. Random accidents that result in significant medical costs do not necessarily belong in a separate risk pool. 

Question 5. You stated that setting up a reinsurance program was better suited 

for stabilizing Alaska’s individual market than a high-risk pool. What aspects of a 

reinsurance program make it more effective than a high-risk pool in Alaska’s case? 

Answer 5. Alaska’s high risk pool administrator, Alaska Comprehensive Health 

Insurance Association, previously handled condition-based eligibility, so this was an 

easier transition than a dollar-level based reinsurance program. 

Question 6. How, if at all, does Alaska plan to reevaluate eligibility for its reinsurance program? Will the State review the effectiveness of its conditions list at insulating individual market from the highest cost patients? Is there a mechanism by 

which the conditions list can be modified in the future? 

Answer 6. Yes, the Division plans on reviewing the conditions as experience develops. The modifications would be made through State regulation. 


HELPN-004 with DISTILLER
93 

Question 7. Does Alaska’s reinsurance program absorb 100 percent of the claims 

cost for an eligible individual-market enrollee once that enrollee has been ceded to 

the reinsurance program? Is there a cap on the reimbursement provided to insurers 

for the claims of eligible enrollees? 

Answer 7. Yes, that’s correct, the Alaska reinsurance program (ARP) will receive 

100 percent of the claims for an individual who has one of the eligible medical conditions. There is no cap on individual reimbursement. The total reimbursement to insurers is based on the trended contribution from 2017 per actuarial modeling. SSSM 

trended approximately 10 percent per year is the expected allocation for the reinsurance program. 

Question 8. From a patient’s perspective, are there any differences in benefits and/ 

or cost-sharing for those in the reinsurance program and those who are not? 

Answer 8. No, the ARP consumers will not have any difference from non-ARP individuals. 

I am grateful for the bipartisan efforts of the Senate Committee on Health, Education, Labor, and Pensions to establish solutions to help stabilize individual health 

care insurance markets and ensure access to quality, affordable health care. Thank 

you for the opportunity to contribute ideas for consideration as you work to find solutions for so many Americans. 

RESPONSE BY JULIE MIX MCPEAK TO QUESTIONS OF SENATOR WHITEHOUSE

Question 1. Following the HELP Committee’s work to stabilize the individual 

market, I hope the committee will move on to other efforts to address cost and improve quality in our health care system. 

I believe the following areas are ripe for bipartisan collaboration: 

a. Improving patient safety by preventing medical errors and healthcare-acquired 

infections; 

b. Addressing the dramatic variations in care quality and outcomes across States; 

c. Identifying ways to reduce administrative overhead and dispute, specifically the 

bureaucratic warfare between insurance companies and providers over reimbursement; 

d. Ensuring that a patient’s wishes are honored at the end of his or her life; and 

e. Advancing payment reform to encourage prevention and primary care. 

Which of these areas should be a priority for the HELP Committee going forward? 

What strategies would you suggest to lower costs and improve quality in these 

areas? Is there innovative work in your States and communities that you would like 

to highlight? 

Answer 1. As I mentioned in my written testimony, a direct causal relationship 

exists between the costs of health care services and the costs of health insurance. 

After, hopefully, approving Cost Sharing Reduction (CSR) funding to stabilize individual markets, the HELP Committee should address both the short-term as well 

as long-term factors contributing to our current health care landscape. As my Governor stated in his testimony before the HELP Committee on September 7, 

‘‘ultimately making health care more affordable involves looking at a variety 

of factors which contribute to the high cost of health care, including exploring 

incentive programs which focus on the quality of patient care.’’ 

Additionally, the committee could explore strategies to contain rising pharmaceutical costs as well as review ways in which transparency of costs could contribute 

to reductions in health care costs. The HELP Committee could look at ways to 

incent wellness and prevention initiatives or transparency measures surrounding 

health care costs. 

Addressing items b and e above, Tennessee has been among the Nation’s chief 

innovators in establishing an episode-based payment structure in our Medicaid program that is expanding into the commercial market. The episodes of care model rewards high-quality care and reduces ineffective and/or inappropriate care by aligning provider payment incentives with successful patient outcomes. Payment methodologies which aim to group health care services into episodes, if implemented appropriately with timely and adequate disclosures of metrics to physicians, have the 

potential to reduce costs and improve patient outcomes. Of course, as mentioned 

earlier, incenting consumers to make healthier choices could also have a positive impact on the health of our constituencies. 

Question 2. If an insurance company came to you proposing to sell health insurance in your State, what steps, such as setting up a provider network, would you 

expect or require that insurer to take before you authorize the insurer to sell health 

insurance policies in your State? 


HELPN-004 with DISTILLER
94 

Answer 2. The most important factor that we, as insurance regulators, review 

when considering company applications is the solvency of the company; i.e. whether 

the company has sufficient resources to pay claims. Upon receipt of an application 

for licensure, the Department reviews the suitability and experience of company 

management, company risk controls, and the information technology capabilities of 

the company to ensure that the internal operations can support the complexity of 

its business. This process, which would lead to the issuance of a license, is distinct 

from the review of policy forms and rates but can be performed simultaneously. It 

is important to note, however, that a company may not write any health insurance 

business until its plans and rates have been approved by the Department. 

The Department reviews proposed policies for compliance with State and Federal 

law during the rate review process. The review of forms also confirms that a carrier 

has adequate provider networks; typically, that those networks have gone through 

the adequacy review process of a national accrediting body. At the same time, we 

work with actuaries to review rates to ensure that they are not excessive, insufficient, or unfairly discriminatory. 

Fortunately, Tennessee has experience this year with a company that came to the 

Department proposing to sell health insurance on the federally facilitated marketplace. While their coverage area is limited to one service area, this still was a bit 

of welcome news, as our consumers had previously witnessed carriers withdraw 

from offering health insurance policies throughout our State. 

Question 3 What concerns would you have about an insurance company coming 

to your State that was not prepared to create a provider network or complete any 

other steps you may require? 

Answer 3. The Department would not license a company that we did not believe 

would have sufficient resources to pay claims. Further, we do not approve policy 

forms or rates until filings satisfactorily meet State and Federal requirements, including network adequacy provisions. In theory, a company could be licensed by the 

Department but not authorized to write insurance. The company must meet both 

financial standards and regulatory requirements before it can offer health policies 

to consumers. This Department is dedicated to the protection of Tennessee’s insurance consumers, and we expect and require insurance carriers to be able to meet 

their promises to policyholders. 

RESPONSE BY TERESA MILLER, J.D., TO QUESTIONS OF SENATOR WHITEHOUSE

Question 1. Following the HELP Committee’s work to stabilize the individual 

market, I hope the committee will move on to other efforts to address cost and improve quality in our health care system. 

I believe the following areas are ripe for bipartisan collaboration: 

a. Improving patient safety by preventing medical errors and healthcare-acquired 

infections; 

b. Addressing the dramatic variations in care quality and outcomes across States; 

c. Identifying ways to reduce administrative overhead and dispute, specifically the 

bureaucratic warfare between insurance companies and providers over reimbursement; 

d. Ensuring that a patient’s wishes are honored at the end of his or her life; and 

e. Advancing payment reform to encourage prevention and primary care. 

Which of these areas should be a priority for the HELP Committee going forward? 

What strategies would you suggest to lower costs and improve quality in these 

areas? Is there innovative work in your States and communities that you would like 

to highlight? 

Answer 1. I wholeheartedly agree with you that we need to have a true national 

dialog about health care costs, and how we can rein in the unsustainable growth 

of those costs without sacrificing quality and innovation. While some of the solutions 

may be national and others may be better implemented by States themselves, this 

is certainly an area where I believe we can work across the aisle and seek bipartisan solutions. With that in mind, I want to highlight some of the steps already 

being taken by States, and particularly by Pennsylvania with these critical goals in 

mind: 

Several states have enacted and operationalized all-payer claims database (APCD) 

laws. These databases are designed to inform cost containment and quality improvement efforts by providing service-level information such as charges and payments, 

the provider(s) receiving payment, clinical diagnosis and procedure codes, and patient demographics. 

Governor Wolf included an APCD as part of his fiscal year 2017–18 proposed 

budget, and Pennsylvania’s General Assembly is currently considering APCD legislation, which has achieved support from republicans and democrats alike. PolicyVerDate Nov 24 2008 13:39 Mar 05, 2019 Jkt 000000 PO 00000 Frm 00098 Fmt 6633 Sfmt 6621 S:\DOCS\26840.TXT CAROL

HELPN-004 with DISTILLER
95 

makers, payers, providers, and patients could all use APCD data to better drive, deliver, and seek out value in the healthcare system. The committee could consider 

supporting the States in this effort to increase cost and quality data transparency 

through support of funding for States to establish APCDs and by addressing Federal 

impediments to cost transparency, in particular by working with the Department of 

Labor to ensure that States have access to data from self-insured plans, which cover 

approximately a third Pennsylvanians. 

Reimbursement and provider contracting remains a critical part of building an 

adequate network. One area of interest for many States, including Pennsylvania, is 

reimbursement for services received by an out-of-network provider, particularly in 

cases of ‘‘surprise billing.’’ A handful of States have enacted legislation related to 

out-of-network reimbursement, and, in Pennsylvania, we have been working with 

interested parties to determine how best to address the issue. In fact, a proposal 

to resolve surprise billing has now been introduced in both chambers of the Pennsylvania legislature with bipartisan sponsorship. 

Pennsylvania’s Department of Human Services is also working to move our 

healthcare system away from predominantly focused fee-for-service payment arrangements and more toward alternative payment arrangements that are focused 

on value and outcomes. These are arrangements that incentivize the healthcare system and our providers to deliver on the triple aim: better care, better health, and 

lower costs. As just one example, we have established targets for our Medicaid managed care organizations to increase their use of value-based payments, and are 

working to establish similar targets in our other program areas. 

Pennsylvania’s Department of Health is also leading an innovative initiative in 

collaboration with Medicare, Medicaid, and private insurers to transform the way 

that rural hospitals are paid for care. Participating hospitals will be paid using allpayer global budgets, which are set annually, rather than on a fee-for-service basis. 

This will provide stable financing for rural hospitals, a critical community asset, 

while allowing them to transform care delivery to increase their focus on prevention 

and care management. 

Support from the Centers for Medicare and Medicaid Innovation (CMMI) has been 

vital in this initiative, and Pennsylvania looks forward to continuing the partnership with CMMI. 

Question 2. If an insurance company came to you proposing to sell health insurance in your State, what steps, such as setting up a provider network, would you 

expect or require that insurer to take before you authorize the insurer to sell health 

insurance policies in your State? 

Answer 2. Companies must obtain a license from the Insurance Department to do 

business in the State and have their provider networks certified by the Department 

of Health as adequate. The licensure process is critical in protecting consumers and 

serving the greater public interest. Health insurance companies, along with other 

regulated entities, must provide information such as biographical data, a business 

plan, capital and surplus requirements, and proof of adequate networks to be licensed to sell insurance in Pennsylvania. We also review certain policy forms and 

rates prior to the sale of the policy. While we recognize that these requirements represent an administrative burden, we endeavor to streamline the process for insurers 

by coordinating our regulatory oversight with those of other States through use of 

NAIC models, best practices, and established national standards. To that end, the 

requirements of a health insurance company seeking to sell insurance in Pennsylvania will experience, and be able to leverage, processes that are similar to the 

States in which they already sell insurance. 

Question 3. What concerns would you have about an insurance company coming 

to your State that was not prepared to create a provider network or complete any 

other steps you may require? 

Answer 3. The steps we require for companies to sell health insurance are important to ensure consumers are protected and will ultimately have their claims paid. 

It’s not easy to be a health insurer, particularly balancing solvency (and profits) 

with consumer service and affordability. Establishing provider networks is, without 

question, the biggest obstacle for insurers who want to do business in a new State. 

It’s not easy working with all the hospitals, doctors, clinics and other health care 

providers to ensure consumers will have access to quality care and the doctors they 

want. But, it’s critically important for consumers who will be purchasing insurance 

that they have access to services they need. Access to these networks, however, 

comes at a price, and better negotiated rates in provider contracts means better premium rates for consumers. This requires that companies strike a balance with providers such that providers are given adequate and fair reimbursement (including acVerDate Nov 24 2008 13:39 Mar 05, 2019 Jkt 000000 PO 00000 Frm 00099 Fmt 6633 Sfmt 6621 S:\DOCS\26840.TXT CAROL

HELPN-004 with DISTILLER
96 

knowledgement of volume discounts, actual cost of care, etc.), and that consumers 

have access to affordable care from a network that is able to meet their needs. 

We have heard a lot about a proposal that would allow insurers to sell health insurance ‘‘across State lines.’’ Proponents claim such a proposal would increase competition and reduce costs for consumers. While these are laudable goals, this proposal simply ignores the fundamental nature of how health insurance works. It assumes the barrier to entry for companies wanting to expand their footprint into new 

States is the license they need to obtain from the insurance department. As noted 

above, through established national standards and shared best practices, many 

State insurance regulators have streamlined the process to be licensed. However, if 

you ask health insurance companies why they don’t expand their footprints (including companies who only do business in limited areas within a State), they will tell 

you how difficult it is to establish the provider networks needed to offer quality coverage. 

[Whereupon, at 12:55 p.m., the hearing was adjourned.] 

Æ 


HELPN-004 with DISTILLER