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21–120 2017

THE STATUS OF THE AFFORDABLE CARE ACT 

IMPLEMENTATION 

HEARING 

BEFORE THE

COMMITTEE ON WAYS AND MEANS 

U.S. HOUSE OF REPRESENTATIVES 

ONE HUNDRED THIRTEENTH CONGRESS 

FIRST SESSION 

AUGUST 1, 2013 

Serial No. 113–FC12 

Printed for the use of the Committee on Ways and Means 

( 


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COMMITTEE ON WAYS AND MEANS 

DAVE CAMP, Michigan, Chairman 

SAM JOHNSON, Texas 

KEVIN BRADY, Texas 

PAUL RYAN, Wisconsin 

DEVIN NUNES, California 

PATRICK J. TIBERI, Ohio 

DAVID G. REICHERT, Washington 

CHARLES W. BOUSTANY, JR., Louisiana 

PETER J. ROSKAM, Illinois 

JIM GERLACH, Pennsylvania 

TOM PRICE, Georgia 

VERN BUCHANAN, Florida 

ADRIAN SMITH, Nebraska 

AARON SCHOCK, Illinois 

LYNN JENKINS, Kansas 

ERIK PAULSEN, Minnesota 

KENNY MARCHANT, Texas 

DIANE BLACK, Tennessee 

TOM REED, New York 

TODD YOUNG, Indiana 

MIKE KELLY, Pennsylvania 

TIM GRIFFIN, Arkansas 

JIM RENACCI, Ohio 

SANDER M. LEVIN, Michigan 

CHARLES B. RANGEL, New York 

JIM MCDERMOTT, Washington 

JOHN LEWIS, Georgia 

RICHARD E. NEAL, Massachusetts 

XAVIER BECERRA, California 

LLOYD DOGGETT, Texas 

MIKE THOMPSON, California 

JOHN B. LARSON, Connecticut 

EARL BLUMENAUER, Oregon 

RON KIND, Wisconsin 

BILL PASCRELL, JR., New Jersey 

JOSEPH CROWLEY, New York 

ALLYSON SCHWARTZ, Pennsylvania 

DANNY DAVIS, Illinois 

LINDA SA ́ NCHEZ, California 

JENNIFER M. SAFAVIAN, Staff Director and General Counsel 

JANICE MAYS, Minority Chief Counsel 


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C O N T E N T S 

Page 

Advisory of August 1, 2013 announcing the hearing ............................................ 2 

WITNESSES 

Gary Cohen, J.D., Deputy Administrator and Director, Center for Consumer 

Information and Insurance Oversight, Centers for Medicare & Medicaid 

Services, U.S. Department of Health and Human Services ............................. 10 

Daniel Werfel, Principal Deputy Commissioner and Deputy Commissioner 

for Services and Enforcement, Internal Revenue Service ................................. 25 


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(1) 

THE STATUS OF THE AFFORDABLE CARE ACT 

IMPLEMENTATION 

THURSDAY, AUGUST 1, 2013 

U.S. HOUSE OF REPRESENTATIVES, 

COMMITTEE ON WAYS AND MEANS, 

Washington, DC. 

The Committee met, pursuant to notice, at 10:01 a.m., in Room 

1100, Longworth House Office Building, Hon. Dave Camp [Chairman of the Committee] presiding. 

[The advisory announcing the hearing follows:] 


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ADVISORY 

FROM THE COMMITTEE ON WAYS AND MEANS 

FOR IMMEDIATE RELEASE CONTACT: (202) 225–3625 

Thursday, July 25, 2013 

No. FC–12 

Chairman Camp Announces Hearing on 

the Status of the Affordable Care Act 

Implementation 

House Committee on Ways and Means Chairman Dave Camp (R–MI) today announced that the Committee will hold a hearing on the current status of the Obama 

Administration’s efforts to implement the Affordable Care Act (ACA). The Committee will hear testimony from Daniel Werfel, Principal Deputy Commissioner and 

Deputy Commissioner for Services and Enforcement at the Internal Revenue Service 

(IRS) and Gary Cohen, Deputy Administrator and Director at the Center for Consumer Information and Insurance Oversight within the Centers for Medicare & 

Medicaid Services at the U.S. Department of Health and Human Services (HHS). 

The hearing will take place on Thursday, August 1, 2013, in 1100 Longworth House Office Building, beginning at 10:00 a.m. 

In view of the limited time available to hear from the witnesses, oral testimony 

at this hearing will be from the invited witnesses only. However, any individual or 

organization not scheduled for an appearance may submit a written statement for 

consideration by the Committee and for inclusion in the printed record of the hearing. 

BACKGROUND: 

On October 1, 2013, open enrollment is scheduled to begin in 51 new healthcare 

exchanges. While the majority of Americans will continue to obtain qualified coverage through an employer, others will seek coverage through the exchange. The 

ACA requires that the exchanges perform multiple functions, including coordinating 

and sharing information across several Federal agencies. The ACA tasks both HHS 

and the IRS with extensive new responsibilities that must be carried out in order 

for the exchanges to properly function and efficiently enroll millions of Americans 

into private healthcare plans offered in conjunction with the ACA’s requirement 

that individuals purchase government-approved insurance. Alternatively, those that 

choose to remain uninsured will pay a tax. 

The building of the exchanges represents one of the largest information technology projects in U.S. history. The success or failure of implementation will determine, in part, on whether Americans face higher or lower premiums, whether individuals understand how or if they need to purchase coverage through the exchange, 

whether subsidies are administered accurately and efficiently, and whether the exchanges are prepared to properly handle the personal information of millions of 

Americans. 

While the Administration has testified that implementation is on schedule, recent 

regulatory announcements have raised concerns about readiness of a program that 

is a hallmark of the law. On Tuesday, July 2, 2013, a posting on a U.S. Treasury 

tax blog announced that the employer reporting requirements and the employer 

mandate tax penalties ‘‘will not apply until 2015.’’ On July 5, 2013, HHS regulations 

revealed that for 2014, the Administration would rely extensively on self-attestation 

of an individual’s income and offer of employer-sponsored insurance when enrolling 

in an exchange. The announcement raises new questions about whether the decision, reached in part because the employer reporting requirements have been delayed, could expose individuals to new penalties resulting from unintentional reporting mistakes. The announcements follow a June 2013 Government Accountability 

Office report about the status of the exchanges which warned, ‘‘much remains to be 


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accomplished within a relatively short amount of time . . . [and] suggest a potential 

for implementation challenges going forward. . . . Whether CMS’s contingency planning will assure the timely and smooth implementation of the exchanges by October 

2013 cannot yet be determined.’’ 

This hearing will examine the status of efforts of both HHS and the IRS to implement the provisions of the Affordable Care Act under their jurisdiction. The hearing 

will seek answers to why delays are occurring, if any additional delays should be 

expected, and whether in fact the exchanges will be ready to fulfill all of their required functions on October 1, 2013. 

In announcing the hearing, Chairman Camp stated, ‘‘Members of Congress, 

from both sides of the aisle, have raised concerns about whether 

Obamacare will be ready and will work on October 1st. The Administration’s repeated promises that ‘we’ll be ready,’ is simply not a sufficient response. Amidst growing, independent evidence that the Administration is 

far behind schedule, Congress and the American people need specific answers. The American people want to know how much their health insurance plans will cost, how and where to accurately comply with the new 

law, and assurance that this massive new data collection is safe, secure, 

and will protect their personal information.’’ 

FOCUS OF THE HEARING: 

The hearing will focus on the status of the Obama Administration’s implementation of the Affordable Care Act. 

DETAILS FOR SUBMISSION OF WRITTEN COMMENTS: 

Please Note: Any person(s) and/or organization(s) wishing to submit for the hearing record must follow the appropriate link on the hearing page of the Committee 

website and complete the informational forms. From the Committee homepage, 

https://waysandmeans.house.gov, select ‘‘Hearings.’’ Select the hearing for which you 

would like to submit, and click on the link entitled, ‘‘Click here to provide a submission for the record.’’ Once you have followed the online instructions, submit all requested information. ATTACH your submission as a Word document, in compliance 

with the formatting requirements listed below, by the close of business on 

Thursday, August 8, 2013. Finally, please note that due to the change in House 

mail policy, the U.S. Capitol Police will refuse sealed-package deliveries to all House 

Office Buildings. For questions, or if you encounter technical problems, please call 

(202) 225–1721 or (202) 225–3625. 

FORMATTING REQUIREMENTS: 

The Committee relies on electronic submissions for printing the official hearing record. As always, submissions will be included in the record according to the discretion of the Committee. 

The Committee will not alter the content of your submission, but we reserve the right to format 

it according to our guidelines. Any submission provided to the Committee by a witness, any supplementary materials submitted for the printed record, and any written comments in response 

to a request for written comments must conform to the guidelines listed below. Any submission 

or supplementary item not in compliance with these guidelines will not be printed, but will be 

maintained in the Committee files for review and use by the Committee. 

1. All submissions and supplementary materials must be provided in Word format and MUST 

NOT exceed a total of 10 pages, including attachments. Witnesses and submitters are advised 

that the Committee relies on electronic submissions for printing the official hearing record. 

2. Copies of whole documents submitted as exhibit material will not be accepted for printing. 

Instead, exhibit material should be referenced and quoted or paraphrased. All exhibit material 

not meeting these specifications will be maintained in the Committee files for review and use 

by the Committee. 

3. All submissions must include a list of all clients, persons and/or organizations on whose 

behalf the witness appears. A supplemental sheet must accompany each submission listing the 

name, company, address, telephone, and fax numbers of each witness. 

The Committee seeks to make its facilities accessible to persons with disabilities. 

If you are in need of special accommodations, please call 202–225–1721 or 202–226– 

3411 TDD/TTY in advance of the event (four business days notice is requested). 


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Questions with regard to special accommodation needs in general (including availability of Committee materials in alternative formats) may be directed to the Committee as noted above. 

Note: All Committee advisories and news releases are available on the World 

Wide Web at http://www.waysandmeans.house.gov

f 

/. 

Chairman CAMP. Good morning. The hearing will come to order. 

Just a few months ago in testimony before this Committee, Secretary Sebelius repeatedly told Congress and the American people 

that the Obama Administration was, and I am quoting, ‘‘on track 

to meet the October 1 deadline’’ for the new healthcare law. 

However, over the past 2 months, the evidence shows just the opposite is true. In June, the Government Accountability Office released two reports which raised serious questions about whether 

the Center for Medicare and Medicaid Services, CMS, would be 

able to have federally run exchanges up and running by October 

1, 2013, noting numerous reasons for their concerns. 

In late July, the Treasury Inspector General for Tax Administration stated that testing for the exchanges would be difficult to complete before the October 1 date, and as a result, Americans will see 

significant delays and errors. 

Right before the July 4th holiday, the Administration announced 

by blog post the delay of a major provision of the law, the employer 

mandate, giving employers relief, but doing nothing to aid hardworking Americans. 

Three days later, Health and Human Services announced they 

would rely on self-verification when it comes to who gets subsidies, 

and just this week we learned that by delaying the mandate another $12 billion will be added to the deficit. It will also increase 

Federal spending by a total of $3 billion in new exchange subsidies 

because the delay will result in fewer employers offering coverage. 

With these facts at hand, you will have to forgive me if I am 

skeptical of the claims that everything is ‘‘on track.’’ It has been 

over 3 years since the law was passed, and in just 60 days the exchanges are due to be up and running, but we still do not have answers to many crucial questions, and worst yet, neither do the 

American people. 

How is the average, hard-working taxpayer expected to navigate 

the Obamacare exchanges in just a few short months when the Administration has provided no information as to what the real cost 

will be or what their health insurance will look like? 

To quote one of my Democratic colleagues, when is the White 

House going to actually get up and go? 

As though the concerns and questions about implementation 

were not enough, almost daily we are reminded of the effects the 

law is having on the economy. Businesses are struggling to figure 

out how to comply with the law, how it will affect their business, 

and how and whether they will have to cut hours, wages or jobs 

in order to comply. 

After the Administration announced the employer mandate 

delay, one small business owner testified before this Committee 

that ‘‘as a business owner, I worked on the 4th of July and I worried about it and I fielded calls from other franchisees asking what 


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this meant on the 4th of July.’’ Our job creators and their employees deserve better. 

The uncertainty is growing all over the country, and the American people need answers to the questions that millions of families 

and individuals are asking: why are my premiums skyrocketing? 

How can I expand my business, hire new workers, give employees 

a raise when I am being hit with all of these new mandates, regulations and red tape? Why am I losing the insurance I have and 

like? 

And as if college students were not already struggling with dim 

job prospects upon graduation, the healthcare law is placing an 

even greater burden on the young. Central Michigan University, a 

university in Mount Pleasant, Michigan, just announced that they 

will have to limit college student work hours to 25 hours a week. 

As one student said, ‘‘Students use that money to pay for finance 

and school, and I think it is going to become increasingly harder 

for them to pay for school when we can only work 25 hours.’’ 

And as if Americans did not have reason enough to fear the IRS, 

we now know that it is in no position to implement the 47 new 

powers and authority given to it under the healthcare law. In fact, 

it is likely Americans will be at even greater risk of having their 

identity stolen or private taxpayer information leaked as a result 

of the law. 

Even the Treasury’s Inspector General less than 2 weeks ago 

stated, ‘‘The IRS will struggle to complete all required testing.’’ The 

Inspector General is not confident about the IRS’ ability to protect 

confidential taxpayer information or to prevent fraud, and neither 

am I. 

This law is becoming increasingly unfair, unworkable, and untenable for Americans. With just 3 months left, patients, doctors, 

and hard-working taxpayers will have more questions than answers. I look forward to hearing an honest, straightforward assessment of the status of this law from our witnesses this morning. 

And with that, I will yield to Mr. Levin for his opening statement. 

Mr. LEVIN. Well, welcome to the two of you. We look forward 

to your testimony to dispel so much of what has been said. 

Today the Committee is holding a hearing entitled ‘‘The Status 

of the Affordable Care Act Implementation’’ under the pretense, the 

pretense that House Republicans are interested in implementation 

of the landmark law. The truth is just the opposite. It is evidenced 

by what House Republicans plan to do in just 24 hours. They are 

going to push a bill through the House entitled ‘‘Keep the IRS off 

your Health Care Act.’’ It would prohibit any funding, any funding 

for the IRS to implement the Affordable Care Act. I do not know 

how more negative, more destructive you can be than that. 

House Republicans have made plain over the last 3 years that 

their sole interest, their sole interest is to disrupt the law’s implementation. Tomorrow is what will be their last action, their last action before adjourning for a 5-week recess, a fitting signoff for a 

conference whose singular obsession with the health law’s repeal 

over the last 3 years has come at the expense of so many other 

issues that are critically important to American families and the 

overall economy. 


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By the time they leave here Friday for summer recess, Republicans will have voted no fewer than 40 times to repeal Obamacare. 

The Republican mission is clear. Do not implement; destroy. 

How else can Republicans explain why they have occupied so 

much time and wasted countless taxpayer dollars on 40 repeal 

votes that stand no chance of being enacted, while refusing to go 

to conference to enact a budget into law? 

How else can they explain why they have leaned on outside organizations, including the National Football League, to discourage 

them from helping to educate Americans about current law, health 

insurance opportunities, and assistance that will be available 

through the marketplace? 

And how else can they explain why they have worked so hard to 

discourage States from expanding their Medicaid programs even 

when fully federally funded, which will prevent millions of the most 

vulnerable Americans from gaining access to healthcare coverage? 

At every turn, Republicans have chosen the path of disruption, 

and it is so vividly on display this week as they have sought to 

deny the Obama Administration funding needed to implement. 

How can you say you are interested in implementation when you 

try to destroy the funding? 

If Republicans were truly interested in the Affordable Care Act’s 

implementation, they would inform their constituents that a simple 

three-page application awaits single Americans purchasing insurance on the exchange, and that neither—and I emphasize this and 

I hope the witnesses will speak to this—and neither the IRS nor 

the Department of Health and Human Services will have access to 

medical records or other personal history. 

Instead, what do we see? Scare tactics and other misguided efforts to convince constituents that applying for healthcare coverage 

will be time consuming and cumbersome. 

We have known for quite a while the Republicans have no interest in ensuring that Americans understand what even Speaker 

Boehner himself has acknowledged, and that is ACA is the law of 

the land. Their only interest is to misinform, misconstrue and mislead the American public about ACA. 

Even conservative Republican Senator Ted Cruz chastised the 

Republican effort in the House this week. He said, ‘‘There are a lot 

of politicians in Washington who love empty symbolic votes. The 

House has voted what, 39, 40, 41 times—I cannot keep track—to 

repeal Obamacare? Those votes were by and large empty, symbolic 

votes that had zero chance of passing.’’ 

The problem is, in a sense, they are not symbolic. They are part 

of a destructive mission. 

So thank you to both of you for coming today, and all of us look 

forward to your testimony. We are sure that you will tell the facts 

and tell them emphatically. 

I also want to ask unanimous consent that the following article 

from the American Enterprise Institute’s Norm Ornstein be inserted in the record. 

Chairman CAMP. Without objection. 

[The submission of The Honorable Sander Levin follows:] 


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Chairman CAMP. Thank you, Mr. Levin. 

Now it is my pleasure to welcome our two witnesses, both of 

whom bring a great deal of experience and hopefully a good 

amount of answers from the Administration. First, I would like to 

welcome Gary Cohen, the Deputy Administrator and Director for 

the Center for Consumer Information and Insurance Oversight, or 

CCIIO, at the Centers for Medicare & Medicaid Services; and second, we will hear from Daniel Werfel, the Principal Deputy Commissioner and Deputy Commissioner for Services and Enforcement 

at the IRS. 

Again, thank you both for being with us today. The Committee 

has received each of your written statements, and they will be 

made part of the formal record. Each of you will be recognized for 

5 minutes for your oral remarks, and then we will go to questions 

from the Members of the Committee. 

And, Mr. Cohen, we will begin with you. You are recognized for 

5 minutes. 

STATEMENT OF GARY COHEN, J.D., DEPUTY ADMINISTRATOR 

AND DIRECTOR, CENTER FOR CONSUMER INFORMATION 

AND INSURANCE OVERSIGHT, CENTERS FOR MEDICARE & 

MEDICAID SERVICES, U.S. DEPARTMENT OF HEALTH AND 

HUMAN SERVICES 

Mr. COHEN. Thank you. 

Good morning, Chairman Camp, Ranking Member Levin, and 

Members of the Committee. 

Since the Affordable Care Act became law, CMS has been hard 

at work implementing the law’s strong consumer protections that 

hold insurance companies more accountable, give consumers more 

coverage options, and improve the value of that coverage. And, of 

course, it is not just CMS that is hard at work implementing this 

law. Thousands of people all across the country are hard at work 

to make sure that Americans will receive the benefits of a transformed health insurance market. 

They are employees of health plans who are designing new products that provide great value and security to consumers. They are 

the staff at State Insurance Departments who are reviewing those 

products to make sure that the rates charged are fair and reasonable. They are people and communities in every State all across the 

country who are preparing to help people enroll in coverage beginning in October. 

Most Americans receive health insurance in connection with 

their jobs, and for those Americans, particularly those who work for 

larger employers, the system has worked well. But for the approximately 15 percent of Americans who do not have coverage through 

their employer or Medicare or Medicaid or CHIP or some other government program, the system has been broken. Before the Affordable Care Act, many young people and those with low incomes 

could not afford health insurance, leaving millions without coverage. Women could be charged 50 percent more than men for individual insurance policies. 

Insurance was not affordable for many small employers because 

of the type of work that they do or because they have one worker 

with high medical costs. 


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Now Americans are benefitting from some of the Affordable Care 

Act’s insurance reforms. More than three million additional young 

adults under the age of 26 are covered under their parents’ plans. 

Nearly 18 million children with preexisting conditions now cannot 

be denied coverage. 

New scrutiny of health insurance rate increases has saved Amer- icans an estimated $1 billion on their health insurance premiums, 

and in 2014 being a woman will no longer be a preexisting condition. 

Two months from today the marketplaces will provide a new way 

to shop for coverage for the uninsured, those with preexisting conditions, and individuals who currently buy coverage at high costs. 

On October 1st, Americans will begin shopping in the marketplaces, and they will be able to fill out one application to purchase 

private insurance, qualify for premium tax credits and reduced cost 

sharing or obtain Medicaid or CHIP coverage. 

Many of the Americans who will shop in the marketplaces have 

never had health insurance. So the process of selecting, applying, 

and enrolling in health coverage will be unfamiliar to them. To 

reach these populations CMS is providing outreach, education, and 

enrollment assistance in a variety of ways. 

In June, we re-launched a new consumer focused Healthcare.gov 

website and a 24-hour-a-day call center to help Americans prepare 

for open enrollment and ultimately to sign up for private health insurance. Since then, thousands of consumers have contacted us via 

live Web chat or our toll-free number, and Healthcare.gov already 

has had over 1 million visitors. 

Consumers in the marketplaces will also be able to get in-person 

help from navigators, in-person assisters, trusted people connected 

to their community who can help them walk through the process 

of applying for coverage. They can also work with insurance agents 

and brokers, as is true in the market today, to select a qualified 

health plan. 

These insurance plans in the marketplace will be affordable. In 

fact, we are already seeing evidence that the marketplaces are encouraging insurers to compete for consumers on price. For the thoroughly facilitated marketplaces, CMS has received qualified health 

plan submissions from more than 120 issuers. In 11 States, preliminary rates are lower than expected, 18 percent less than what 

the CBO estimated. In some cases rates are lower than the current 

premiums consumers are paying today. 

Some States have released initial bids only to have insurers request to amend those bids to make them lower in order to be more 

competitive. This is good news for consumers, many of whom will 

be able to afford health insurance for the first time, and many consumers will be eligible for help with premiums and their out-ofpocket costs through advanced payment of premium tax credits and 

cost sharing reductions. 

CMS has already finished developing most of the services required to support open enrollment, including the data hub, a routing tool that helps verify income, citizenship status, and other information consumers provide against existing data sources. 

The marketplace will be up and running on October 1 when millions more Americans will have access to high quality, more affordVerDate Sep 11 2014 07:09 Jan 23, 2017 Jkt 021120 PO 00000 Frm 00015 Fmt 6633 Sfmt 6602 I:\WAYS\WAYSPS\21120\21120.XXX 21120

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able health coverage. By making coverage more affordable, improving the value of insurance coverage, and protecting consumers, 

CMS is paving the way for fairer, more transparent, and more accessible health insurance marketplaces. 

I thank you for the opportunity to discuss CMS’ important work 

to improve access to affordable health coverage for all Americans 

and look forward to your questions. 

[The prepared statement of Mr. Cohen follows:] 


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Chairman CAMP. Thank you, Mr. Cohen. 

Mr. Werfel, you are recognized for 5 minutes. 

STATEMENT OF DANIEL WERFEL, PRINCIPAL DEPUTY COMMISSIONER AND DEPUTY COMMISSIONER FOR SERVICES 

AND ENFORCEMENT, INTERNAL REVENUE SERVICE 

Mr. WERFEL. Chairman Camp, Ranking Member Levin, and 

Members of the Committee, thank you for the opportunity to appear before you today to discuss the work the IRS has been doing 

to fulfill our responsibilities under the Affordable Care Act. 

The IRS is charged with implementing the tax related provisions 

of the ACA. Our most substantial implementation effort in this regard involves the delivery of the premium tax credits that will help 

millions of American families afford health insurance starting in 

2014 when the new health insurance marketplace, also known as 

Affordable Insurance Exchanges, will begin operating. 

The Department of Health and Human Services is the lead agency on defining the structure and operations of the marketplace. 

Open enrollment for insurance purchased through the marketplace 

will start October 1, 2013, with coverage beginning as soon as January 1, 2014. 

When an individual seeks to purchase insurance through a marketplace and seeks financial assistance, the marketplace must determine what assistance, if any, the applicant may qualify for, such 

as Medicaid or the premium tax credit. To make that determination, the marketplace will request Federal taxpayer data from us, 

and we will provide for each applicant some limited tax data from 

the applicant’s most recently filed Federal income tax return. 

It is important to understand exactly how this information will 

be transferred from the IRS to the marketplace. The ACA designates HHS as the conduit for information being shared with the 

marketplace. The taxpayer data supplied by the IRS will be transmitted over secure encrypted channels to the HHS Federal Data 

Services Hub, which was developed to facilitate these data transfers. 

This data hub will not be storing taxpayer information, but 

merely routing that information to authorized users. At no time is 

the tax data to be displayed to anyone outside of the marketplace 

itself. 

The IRS also is responsible for providing a computational service 

if the marketplace determines that the applicant is eligible for and 

interested in advanced payments of the premium tax credit, which 

are sent to the individual’s insurance company. Without identifying 

the applicant, the marketplace will submit a few data elements, including income and family size, for the IRS computational service 

through the HHS data hub and receive back a single figure. That 

figure represents the maximum advanced premium tax credit resulting from those data inputs. Nothing in this computational process identifies individuals or contains tax data. 

While the focus for October 2013 is on preparing for the marketplaces to begin operating, the IRS has also been preparing for the 

2015 filing season. Beginning with 2014 tax returns filed in 2015, 

eligible individuals will be able to claim the credit on their returns 

and will be required to reconcile any advances already paid to their 


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insurance company on their behalf. In regard to these taxpayers, 

the IRS must balance the need to promptly process accurate returns with the need to identify and stop any erroneous claims for 

the credit. 

To facilitate this process, the marketplaces will be sending to the 

IRS enrollment information for individuals purchasing coverage 

through those marketplaces. This transactional information will be 

transmitted over secure encrypted channels. It will include the fact 

and cost of coverage and information on any advance payments of 

the premium tax credit made during the coverage year to the taxpayer’s insurance company on their behalf. 

While certain identifying information, such as name and Social 

Security number, is required to support the processing of returns, 

no personal health information will ever be provided. The IRS will 

reconcile the information with what the individuals report on their 

tax returns so that the IRS can verify whether they received the 

proper amount of credit, are owed more, or must repay any excess 

advance payments. 

This information will help the IRS speed processing of returns 

and spot erroneous credit claims. It is important to note that the 

IRS already routinely receives third party information that helps 

it verify the accuracy of tax returns, and we have longstanding 

policies in place related to the safety and privacy of this information. We will use this experience to guide us in making sure that 

any ACA related taxpayer information we receive is properly safeguarded. 

In addition to the data, tools and systems that the IRS uses to 

battle tax fraud of all kinds, we have some particular tools for enforcing proper payments of the premium tax credit. As mentioned 

above, the marketplaces will be providing the IRS with key 2014 

transactional data prior to the beginning of the 2015 tax filing season. Having this pre-positioned enrollment data will allow the IRS 

to more effectively detect erroneous claims for the credit. 

Chairman Camp, Ranking Member Levin, that concludes my 

statement. I would be happy to take your questions. 

[The prepared statement of Mr. Werfel follows:] 


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Chairman CAMP. Well, thank you both very much. 

Mr. Werfel, as you know, the Committee has long been concerned 

about the integrity of the use of taxpayer dollars and the IRS’ ability to control abuse of those dollars. In fact, one of the Treasury’s 

Inspector Generals, and that is obviously the independent, nonpartisan watchdog of the IRS and the Treasury, has previously reported massive amounts of improper payments, and those are payments under the IRS’ authority. 

In fact, a report last year by this nonpartisan Inspector General estimated the IRS will issue over $21 billion in fraudulent tax refunds over a 5-year period, and more recently the Inspector General found that the IRS allowed $46 million in fraudulent tax 

refunds to go to a single mailing address in Georgia. 

Now, this comes on the heels of a 2010 Inspector General 

report—so this is not a new development—that reported the IRS 

would issue $55 to $65 billion in improper EITC payments before 

it could enact efforts to stop this fraud. 

These are issues I have raised with your predecessor for a number of years as well, and obviously these facts are very troubling. 

Now, that same nonpartisan Inspector General testified, ‘‘The 

IRS’ existing fraud detection systems may not be capable of identifying ACA or healthcare refund or fraud schemes prior to the 

issuance of the tax refunds.’’ Obviously, this is completely unacceptable, and I guess I would ask: How do you expect the American 

people to believe that their hard-earned tax dollars are going to be 

protected, and what are you doing about these longstanding, ongoing problems and obviously the potential in the future, given the 

Inspector General’s testimony? 

Mr. WERFEL. Thank you for the question. I have a few responses. 

First, I think we could have a separate discussion about fraud 

and improper payments and other parts of the tax code like the 

earned income tax credit, but let me spend some time on the Affordable Care Act. 

There are some differences with the way the Affordable Care Act 

and the IRS footprint works from EITC that I think is important 

to point out because it actually is helpful in reducing the incidence 

of fraud, and there are two key things I want to share with you. 

First, when an individual comes in to get premium tax credit assistance, so when they’re getting their tax credit under the ACA, 

no funds are actually shared directly with the taxpayer. That 

money goes to the insurance company. So that individual is never 

receiving the money. They are getting an economic benefit, access 

to insurance and less expensive premiums, but different from EITC 

where they are actually getting the money, here—— 

Chairman CAMP. But whether they qualify for the benefit will 

be up to them, right? Because now HHS has said they will selfauthenticate or self-verify. They will say whether they qualify, correct? 

Mr. WERFEL. Well, as I mentioned in my opening remarks, we 

provide HHS and then they provide the marketplace taxpayer information about those individuals and their income level. So 

that—— 

Chairman CAMP. But at the time—— 


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Mr. WERFEL [continuing]. Information will help validate what 

their income may be in the future based on having that historical 

information of what their taxpayer data says now. 

Chairman CAMP. But I am correct on the self-authentication or 

self-verify, that taxpayers will determine whether they qualify. 

Mr. WERFEL. I will leave that question for Mr. Cohen, but let 

me add one—— 

Chairman CAMP. Mr. Cohen, am I correct on that? 

Mr. COHEN. No. We are going to verify the income of every person who applies for subsidies through the marketplaces, and we 

are going to do that through—— 

Chairman CAMP. But wait. Just stop for a second. HHS announced that there is going to be a self-verification system. Did 

they not make that announcement? 

Mr. COHEN. We are actually going to be coming out with some 

additional guidance today, I think, or tomorrow. 

Chairman CAMP. Okay. But they did make that announcement. 

Mr. COHEN. We said that we were going to be doing a sampling, 

and we are now going to be announcing that we are going to be 

sampling 100 percent. We are going to be requesting documentation—— 

Chairman CAMP. So there is new information that—— 

Mr. COHEN. There is new information, correct. 

Chairman CAMP. And can you elaborate on that for us? 

Mr. COHEN. I can. I can. So the way it is going to work is people 

say, ‘‘This is how much my income was or is going to be,’’ and what 

the person puts on the application is checked against the available 

data sources from IRS, from Social Security in the event that they 

have disability income, and from Equifax, which is a well known 

private company. 

Chairman CAMP. But you are not going to have their current 

taxpayer information until after they file. 

Mr. COHEN. No, this is so they will be looking at the prior 

year’s tax return. 

Chairman CAMP. Yes. 

Mr. COHEN. If we cannot match, if there is not a match, if we 

cannot verify, then we are going to ask for further information and 

documentation, such as pay stubs, from every applicant. 

Chairman CAMP. All right. And I want you to continue. 

Mr. WERFEL. There was just one other thing I wanted to add. 

In addition to the fact that the taxpayer itself does not receive 

funds, just receives the economic benefit because the money goes 

directly to the insurance company, the other point is that the 

IRS—— 

Chairman CAMP. But they do get the subsidy. 

Mr. WERFEL. They get a subsidy, but they never get cash in 

hand. They get a cheaper—— 

Chairman CAMP. No, but in terms of the American taxpayer 

being protected from improper or fraudulent subsidies, that still is 

an outstanding issue. Whether the individual gets a cash payment 

or not, there still is a—— 

Mr. WERFEL. I completely agree. If there is a mistake there—— 

Chairman CAMP. Thank you. 


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Mr. WERFEL [continuing]. It is a loss to the Treasury, but here 

is another—— 

Chairman CAMP. Which is the American people. 

Mr. WERFEL. Right, absolutely. I agree, but if I can make one 

more point, which is the IRS will have a report from the exchange, 

and that report will have detailed information that will let us validate does this individual have a relationship with the exchange. 

We will know whether they have made their premium payments. 

We will have more information to reconcile that individual’s tax return than we have in EITC and other cases. So there are some 

mitigating elements that will help us reduce the incidence of potential erroneous payments in this case. 

Chairman CAMP. Will the IRS enforce the mandate that businesses offer acceptable coverage next year? 

Mr. WERFEL. So here is how that is going to work. I think what 

you are referring to is that we in future years after the 2015 filing 

season will rely on an employer report, and that employer report 

will not be provided in this first year. 

Chairman CAMP. But next year, yes or no? 

Mr. WERFEL. Next year we are working on solutions to look at 

other alternative reports and information to help validate the employer offer, and that is under development right now with the employer community, with the business community in light of the fact 

that the employer report is not going to occur until filing season 

2016. We are working with employers now to look at alternative 

ways to validate their offer of coverage. 

Chairman CAMP. Well, did I not read the blog post properly that 

the employer mandate was delayed? 

Mr. WERFEL. Yes, there is what we are calling the transition 

relief period, and in that case, the—— 

Chairman CAMP. Which means it is delayed for a year. 

Mr. WERFEL. Yes, and the employer—— 

Chairman CAMP. So—— 

Mr. WERFEL. Right. The employer report that was due in filing 

season 2015 is now going to be due in filing season 2016, but that 

does not mean we are not going to continue to work with businesses to understand what types of offer of health coverage—— 

Chairman CAMP. But next year the employer mandate will not 

be enforced. 

Mr. WERFEL. That is correct. 

Chairman CAMP. That is the conclusion. Thank you for that. 

Mr. WERFEL. That is correct. 

Chairman CAMP. But I do believe the IRS will enforce the individual mandate that average Americans have acceptable coverage 

next year; is that correct? 

Mr. WERFEL. Yes. The individual mandate is still in place. 

Chairman CAMP. So, I mean, one of the comments from the Inspector General for Tax Administration said that the IRS will need 

to ensure that tax returns accurately claim the various applicable 

ACA provisions and, above all, that taxpayers are treated fairly. 

And I guess my question for you is: Is it fair that businesses, big 

businesses are off the hook while the average taxpayer is going to 

be required to buy federally defined acceptable coverage through an 

individual mandate? How fair is that? 


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Mr. WERFEL. You know, my role in the IRS is to implement the 

laws. I rely on the Treasury Department to make certain decisions 

that are of a policy nature. I think the decision here and the issue 

of fairness and equity is a policy call that the Treasury Department 

made. 

I believe there is a balancing that goes on in terms of making 

sure that we are implementing the law as effectively as possible. 

The employers and the business community reached out, indicated 

a need for more time, and there was a balancing decision made 

that we should provide them more time. 

Chairman CAMP. All right. Thank you. 

And, Mr. Cohen, I appreciate your openness about what HHS 

may be doing, and I think it just underscores how important this 

oversight hearing is on implementation as we are seeing new developments on a daily basis in this area. So I think any concerns that 

this is an unnecessary hearing are certainly waved away by your 

comments. 

But let me just say that you have seen the rate filings for the 

plans being offered in the 34 Federal exchanges, have you not? 

Mr. COHEN. We have had submissions from the issuers that will 

be offering in the Federal—— 

Chairman CAMP. And they have come to you because that is 

your responsibility. 

Mr. COHEN. They have come to my office, yes. 

Chairman CAMP. Yes. But we obviously have not seen them and 

the American people have not seen them. So my question to you 

is: Will the average family in mid and northern Michigan see a 

$2,500 reduction in the premiums they pay? 

Mr. COHEN. You know, we have not released any data on the 

rates that have come into the Federally Facilitated Marketplace. 

We are very careful at CMS just as we are with the Part D program and the Medicare Advantage program. We only release that 

information once we have an agreement. We do not want to affect 

the market. 

Chairman CAMP. Well, the President promised that we will 

lower premiums ‘‘up to $2,500 for a typical family per year.’’ Is that 

going to happen? 

And obviously we are a couple of months away from this being 

implemented. People are concerned about the costs, how they are 

going to be able to meet these obligations. Is the average family in 

mid and northern Michigan going to see that kind of rate reduction? 

Mr. COHEN. I think that the average family in northern Michigan will have in a marketplace more options and far better coverage at an affordable price once the Affordable Care Act is—— 

Chairman CAMP. So they will see a $2,500 reduction. 

Mr. COHEN. I cannot say. We are not releasing any information 

about the—— 

Chairman CAMP. Well, certainly you can understand why citizens are concerned on what is going to be a very large expense for 

their families that we cannot even have any sort of prediction in 

terms of where this is going to be after several years of so-called 

implementation. 


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Mr. COHEN. I actually think that predictions have proven not 

to be very useful. I think it would be more useful to look at the 

rates that States have actually released, which have in the 11 

States—— 

Chairman CAMP. But given the numbers you have seen, have you seen on average a $2,500 reduction? 

Mr. COHEN. We have seen a reduction if you compare apples to 

apples coverage in a number of cases, yes. We have seen a reduction in rates. 

Chairman CAMP. So for the average family you have seen a $2,500 reduction? 

Mr. COHEN. I cannot speak to $2,500 specifically. 

Chairman CAMP. I mean, that is what the President promised. 

Mr. COHEN. Well, I am not sure that is exactly what the President said, but—— 

Chairman CAMP. I am quoting from him. Are you suggesting I 

am not quoting him accurately? 

Mr. COHEN. I am not suggesting anything. 

Chairman CAMP. I certainly hope not. 

Mr. COHEN. I am not suggesting that at all. I am just saying 

I am not—— 

Chairman CAMP. All right. 

Mr. COHEN [continuing]. Sure what the President said. 

Chairman CAMP. All right. With that, I will turn it over to Mr. 

Levin. 

Mr. LEVIN. The President, I think, talked about ‘‘up to.’’ 

As long as you have raised Michigan, let me just tell you what 

is happening. Fourteen insurance carriers have now submitted to 

be participants in the marketplace in Michigan, 14. Blue CrossBlue Shield has had 60, 70 percent, a dominant role in the insurance industry in Michigan. That is a fact. 

And for Republicans who say they believe in competition, essentially that is what this marketplace is going to bring about for the 

citizens of Michigan, including in central Michigan. 

Mr. Werfel, if 2009 is passed tomorrow and becomes law, would 

IRS be able to implement the Affordable Care Act? 

Mr. WERFEL. From my understanding of the law, we would not 

because we would not have the ability to expend any resources to 

do our implementation efforts. 

Mr. LEVIN. It is totally destructive. It will not happen. 

Let me ask each of you, if I might. Will your agency be ready to 

go on October 1st? Mr. Cohen. 

Mr. COHEN. Yes, we will. 

Mr. LEVIN. Mr. Werfel, assuming 2009 does not pass? 

Mr. WERFEL. Yes, we will. 

Mr. LEVIN. Will consumers be able to begin enrolling in the exchange or marketplace coverage on October 1st? 

Mr. COHEN. Yes, they will. 

Mr. LEVIN. Will that coverage start on January 1, 2014? 

Mr. COHEN. Yes, it will. 

Mr. LEVIN. Mr. Werfel, there has been a lot of scare tactics 

about taxpayer data, and I just want to read to you from your testimony. ‘‘At no time is the tax data to be displayed to anyone outside 

of the marketplace.’’ 


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Is that your assurance? 

Mr. WERFEL. Yes. I mean, there is a set of procedures that 

we have put in place to make sure that there is clarity on when 

and how the taxpayer information is transmitted. It is transmitted 

over encrypted channels. There are all types of safeguards and 

procedures that we have put in place when we share taxpayer information outside of the IRS, which happens now for programs like 

Medicaid and other programs. We are using those same set of procedures, which have historically proven effective. They are not perfect, but they have proven historically very effective in mitigating 

the risk of any taxpayer information being used or accessed for unauthorized purposes. 

Mr. LEVIN. And thank you. If either of you could comment on 

this, describe how this bill will affect millions of middle-class individuals and families who have been waiting for premium assistance 

when the marketplace opens on October 1st. 

Would you like to answer that? 

Mr. COHEN. Thank you. 

So I would say in two ways. I think one very important way is 

that today for anyone who has an illness or has had an illness in 

the past, it can be difficult or impossible to get health insurance 

coverage because they either will be ineligible for it or it will be 

much too expensive because they will be rated up because of their 

existing medical condition. 

That cannot happen with coverage beginning January 1st. 

The second way is that for many people it has simply been 

unaffordable because of their income level, and for those people, 

there will be both, as Mr. Werfel has explained, advanced premium 

tax credits that will go directly to the insurance company to offset 

a portion of the premium, and there will also be a reduction in 

what they have to pay in cost sharing in terms of deductible and 

copays that will be paid directly to the insurance company to make 

the coverage affordable. 

Mr. LEVIN. Thank you. I yield back. 

Chairman CAMP. All right. Mr. Johnson is recognized. 

Mr. JOHNSON. Thank you, Mr. Chairman. 

Mr. Cohen, the Supreme Court stated very clearly ‘‘Americans 

have a choice. They can either buy government-approved health insurance or they can choose not to and instead pay a penalty.’’ 

That choice is never mentioned in the application, is it? 

Mr. COHEN. No, the application asks people whether they want 

to apply and whether they want to get financial assistance purchasing coverage. So—— 

Mr. JOHNSON. But it never says they do not have to do it if 

they do not want to. 

Mr. COHEN. Well, it does not say that they have to do it either. 

It just is available to people who choose to come to market. 

Mr. JOHNSON. I think you need to look at that. 

The website, www.Healthcare.gov, does not alert Americans that 

the Supreme Court says they have a choice. I do not think your 

website does that either, does it? 

Mr. COHEN. I am not aware, but it does not surprise me if it 

does not. I do not think it tells people that they have to either. I 

think it offers opportunities for people to purchase insurance—— 


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Mr. JOHNSON. Will navigators be required—— 

Mr. COHEN [continuing]. In a private market. 

Mr. JOHNSON [continuing]. To inform individuals that they do 

have a choice, that they do not have to take the insurance if they 

do not want it? 

Mr. COHEN. I think our goal is to get as many Americans insured in health coverage as we can, Congressman, because I think 

that provides security to their families and help if they become ill. 

Mr. JOHNSON. Well, how are Americans going to be told they 

do not have to do this if they do not want to? 

Mr. COHEN. Well, I think there are folks out there who are 

probably telling them that, but I am not sure that is my job. 

Mr. JOHNSON. It is your job. 

Now, Mr. Werfel, last week your employees who are a member 

of the National Treasury Employees Union sent a form letter for 

union members to send in to ask they be exempt from the exchanges. Why are your employees trying to exempt themselves 

from the very law that you are tasked to enforce? 

Mr. WERFEL. Well, I do not want to speak for the NTEU, but 

I will offer a perspective as a Federal employee myself and a Federal employee at the IRS, and that is we have right now as employees of the government, of the IRS, affordable healthcare coverage, 

and I think the ACA was designed to provide an option or an alternative for individuals that do not. 

And, all else being equal, I think if you are an individual who 

is satisfied with your healthcare coverage, you are probably in a 

better position to stick with that coverage than go through the 

change of moving into a different environment and going through 

that process. 

So for a Federal employee, I think it is more likely, and I can 

speak for myself, I would prefer to stay with the current policy that 

I am pleased with rather than go through a change if I do not need 

to go through that change. 

But if I am an individual that does not have affordable healthcare coverage or I am unhappy with my coverage, then it is my understanding the exchanges would offer a competitive alternative to 

look at, and that might be something someone might want to pursue. 

But the IRS employees as a whole, I think what the NTEU is 

saying is they are pleased with their healthcare coverage. They 

prefer to stay in their current healthcare coverage. 

Mr. JOHNSON. Well, do they have to pay a penalty then for not 

taking government coverage? 

Mr. WERFEL. No, it is my understanding that the individual 

mandate would only occur if they are not getting coverage at all. 

If they opt for no coverage, then they would pay the individual 

mandate. 

Mr. JOHNSON. Okay. I do not read it that way. 

Mr. Werfel and Mr. Cohen, I have a question about fairness. 

Until July 2nd, the Administration was telling individuals who 

work more than 30 hours a week they were going to make your employer provide your health care. If they do not, you can get health 

care and a subsidy in the exchange. 


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Now, that is not true any longer for 2014. An employer does not 

have to offer coverage. So the individuals will have to go to the exchange in 2014 to get coverage. Many have already seen their 

hours slashed as businesses attempt to comply with the 30-hour 

rule, and it is kind of confusing and disrupting. 

The fact is Obamacare is not ready, and it is the American people who bear the burden of you not being ready. Is that fair for employers and their employees? Either one of you. 

Mr. COHEN. Well, I would just say, first of all, that the requirement that employers provide coverage under the Affordable Care 

Act when it goes into effect a year from now only applies to larger 

employers, 96 percent of which provide coverage to their workers 

today. So the impact of that provision is actually quite small. 

Smaller employers are not subject to the employer mandate 

under the Affordable Care Act, and they will not be next year. So 

there is a lot of misunderstanding about, you know, what this provision is and who it impacts. 

So I think I would stop there. 

Mr. WERFEL. And, as I said earlier, I think on July 17th, a 

Treasury Department official, Marc Ivery, appeared here and answered these very questions. I think it is more appropriate for me 

to focus on the administration of these provisions and how effective 

the IRS can be in administrating these issues. 

Chairman CAMP. All right. Thank you. 

Mr. JOHNSON. Thank you. 

Chairman CAMP. Mr. Rangel. 

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

And welcome to the battlefield. 

People are talking about States, and I know that I am always 

overconfident about the successes of New York City and New York 

State, but it was my last reading that, as relates to the cost of 

health insurance in New York State, that it was far more favorable 

than what was perceived by our Chairman. 

Could you share with me? Are my observations accurate? 

Mr. COHEN. That is right. New York has published rates that 

have been proposed to be in effect in 2014, and they are lower for 

most people than the rates that were in effect this—— 

Mr. RANGEL. And in this great country we do have other examples of States that really want to provide services for their citizens, 

that have rates that are just as positive. Is that not true? 

Mr. COHEN. That is correct. 

Mr. RANGEL. Now, it is abundantly clear that this hearing is 

being called not to be of any assistance in this program being successful. I do not understand that concept. In the winter of my legislative years, I have never seen such partisan attacks on ideas, especially one that provides for health care for Americans. It seems 

to me that it is not only our moral responsibility, but our legal responsibility to enforce the law, and that is what you two intend to 

do. 

However, my Speaker has made it clear that this particular Congress should not be judged by our performance in enacting law, but 

rather we should concern ourselves with the number of laws that 

have been repealed. 


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So while I do believe in the good intent of my Republican friends, 

I want you to answer the question: How can this Committee help 

you to effectively do your job which you by law have to do if they 

tell you at this hearing that their position is not to help you but 

to de-fund the resources that you need to do the job? 

What is your answer? Is there inconsistency in any question that 

asks how you are performing if what they are going to produce is 

taking the money away? 

Will this Committee in good faith be improving the law or trying 

to make certain that the law does not work? 

Mr. COHEN. I would just say that the President’s 2014 budget 

requests $1.5 billion for implementation of the Affordable Care Act, 

and this Committee certainly could help us and we would welcome 

its support with respect to that request. 

Mr. RANGEL. That is very nice, but if, indeed, this ridiculous 

plan that is borne dead except for political purposes was to succeed, 

then there would be no need for your appearance before this Committee; is that not correct? 

If they repeal the funding of it—— 

Mr. COHEN. Oh, right. 

Mr. RANGEL [continuing]. You have no program. 

Mr. COHEN. That is true. 

Mr. RANGEL. And that is the publicly stated goal of the majority of the Republicans here, to not give you the resources. So you 

coming here is just establishing a blueprint of a destructive plan 

that not only concerns health care, but concerns the integrity of the 

United States’ ability to keep government running, and the first 

step that was supposed to do this is to defend the health care for 

the citizens that we have pledged to protect. 

And so I hope that soon, Mr. Chairman, we will have the Treasury here and other agencies that have obligations to see how it can 

be better understood how the Majority intends to deplete the funding for health care and to stop the government from producing and 

unfortunately not to have any plan to replace it. 

So if this is the beginning shot of the war, once we hear from 

the religious community, the health providers, the business community that we will succeed, I do hope that some of my Republican 

friends will see that passing and improving law is a heck of a lot 

better than destroying and repealing laws. 

Let me thank you for at least your attempt to show that you are 

going to do the best you can, and this Congress is going to do the 

best it can under President Obama, to provide health care for all 

American citizens. 

Thank you for your service. 

Chairman CAMP. Thank you. 

Mr. Brady. 

Mr. BRADY. You know, my family is worried that if Obamacare 

is not ready for business, is it ready for their family, for their children, for their loved ones, and there are a lot of lives at stake in 

health care. You have to be able to depend upon it, and I think 

they see that, you know, Warren Buffett gets a break from the 

White House on the employer mandate, but a single mom working 

in Texas does not. On January 1st, they are forced to buy governVerDate Sep 11 2014 07:09 Jan 23, 2017 Jkt 021120 PO 00000 Frm 00044 Fmt 6633 Sfmt 6602 I:\WAYS\WAYSPS\21120\21120.XXX 21120

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ment approved health care or pay a tax, and they are worried 

about it. 

And they have not seen it. I will tell you, regrettably, that the 

$2,500 reduction in healthcare cost the President promised my constituents is nowhere to be found. 

Mr. Cohen, we heard from the head of Medicare and Medicaid 

Services just a few weeks ago. The testing is nearly done with the 

data hub. It is almost ready to go. So I wanted to ask about that. 

Have you successfully sent a pilot application to the Social Security Administration, and have they successfully verified it back to 

you? 

Mr. COHEN. We began testing with the Social Security Administration in May. The testing is continuing, and it will be completed 

this month. 

Mr. BRADY. But you are saying you have not yet successfully 

sent a pilot? 

Mr. COHEN. I am going to have to get back to you on the details 

of exactly what has happened. 

Mr. BRADY. How about with the Department of Homeland Security? Have you sent an application there and have they checked 

prisoner status and lawful presence? 

Mr. COHEN. My answer is the same for all those agencies. We 

are engaged in testing now. It began a few months ago. It is continuing, and it will be completed this month. 

Mr. BRADY. So I’m just asking a really simple question. Have 

you sent a pilot trial application out, and received it back successfully and accurately? 

Mr. COHEN. I understand your question, and I do not want to 

get into deep water on the technical aspect that—— 

Mr. BRADY. Well, that is not very technical. It is like a person 

sends to the exchanges. They put in their application, pretty easy, 

and you have said, ‘‘We have it checked out. It is already working.’’ 

Mr. COHEN. And I am sure we can get that answer for you to 

your specific question. 

Mr. BRADY. Isn’t that your key job? I mean, are you not in 

charge of having this data hub and the exchanges ready to go? 

Mr. COHEN. I am one of the people who is working on implementation of the Affordable Care Act, along with a number of people at CMS. 

Mr. BRADY. Sure. 

Mr. COHEN. And I just do not want to give you an answer that 

is not correct. 

Mr. BRADY. I appreciate that. Have you sent an application, a 

trial application to the States that have exchanges? Because that 

is a really basic process. We are on the eve of the exchanges. So 

you have sent it to the States to verify the accuracy? 

Mr. COHEN. We are testing. My answer is the same. We have 

begun testing with the States. That testing is ongoing, and it is 

going to be completed this month, and the same is true with the 

issuers that are going to be participating in this as well. 

Mr. BRADY. Is it safe to say at this point a pilot application has 

not been sent successfully throughout the data hub system and returned accurately? 


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Mr. COHEN. I just want to be careful to give you accurate information. So I would rather make sure that I am giving you the right 

answer and supply that to you. 

Mr. BRADY. Is it more yes or more no? 

Mr. COHEN. I am afraid I just cannot say any more than I have. 

Mr. BRADY. That is just not very reassuring for families on the 

eve of this that—— 

Mr. COHEN. I am not saying there is not an answer. I am just 

saying I will get it for you. 

Mr. BRADY. There does not appear to be an answer I think our 

constituents are hoping for. 

Mr. Werfel, let me ask this. This data hub, you know, is a hacker’s dream, but I do not know who I most fear, someone from the 

outside hacking information or the way our government handles it. 

You have assured us that the IRS, despite the significant abuses 

of power we are already investigating, that the IRS has never 

shared private taxpayer information with other Federal agencies, 

but I am looking at an email from 2008 where Lois Lerner did exactly that. She shared private taxpayer information with the Federal Election Commission. 

So, one, how is she still on the payroll? 

Two, why did you tell us this did not happen? 

And, three, why should we trust the IRS to protect our taxpayer 

information under Obamacare? 

Mr. WERFEL. Sir, let me respond to each of those. First, let me 

clarify. I never assured that there are not incidences that occur. We 

share information roughly with 300 different Federal and State 

agencies as a matter of routine business, and we have procedures 

and safeguards in place to protect that information, but no procedure or safeguard is perfect. 

There are and have been historically incidences where unauthorized information has been—— 

Mr. BRADY. Sir, that is not what you told us in your last appearance before the Committee. My time has expired, but I hope 

we can—— 

Mr. WERFEL. If you want, I can answer that question on the 

record. 

Chairman CAMP. If you want to respond in writing for the 

record, we will make sure that is part of it. 

Mr. WERFEL. I can absolutely do that, yes. 

Chairman CAMP. Mr. McDermott is recognized. 

Mr. MCDERMOTT. Thank you, Mr. Chairman. 

Welcome, gentlemen. As Mr. Rangel has said, you are in war. 

This is not a hearing. This is a battle, and it is a typical political 

battle where one side is throwing up dust and trying to confuse everybody all over the country about what is happening. 

This hearing is really the culmination of months of a careful 

build-up. The Majority has been crafting a scandal narrative to 

support their truly relentless agenda to repeal the Affordable Care 

Act. For 2 months we have heard nonstop complaints against the 

IRS being corrupt and incompetent. Despite that, the only politically motivated act was the Republicans’ request that the IG focus 

only on the treatment of conservative groups. They did not ask for 


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a full study. They only asked how it affected their friends in the 

Tea Party. 

So today we are going to discuss whether or not the IRS and 

CMS are capable and competent enough to see the law through, 

and my colleagues already have thrown dust and mud at the wall 

to see if it sticks. None of it does, and what we are going to do tomorrow is the 40th fig leaf vote. 

Senator Cruz from Texas calls these ‘‘fig leaf votes’’ to give people 

some cover when they go home so that people will not see they are 

absolutely naked. The truth about this Congress is that for 18 

years this Committee has been functioning. Sixteen of those years 

were under the Republicans. We have never taken a vote in this 

Committee under Republicans on comprehensive reform. 

For all their talk, nothing has ever been tabled in this Committee. Now we tabled a bill here, and we passed it out under 

Speaker Pelosi, and they have been trying desperately for 5 years 

to destroy it, and the question before us is whether the IRS is 

ready and able to collect your name, your family size, and income 

data to be used in a Federal exchange hub. They will not collect 

your health status. They will not have anything about anybody’s 

ingrown toenails in this report. There is no prescription drug history that the IRS is going to have or the healthcare provider’s 

name; just the data they collect from their average database of information for the tax system in this country: name, how much you 

make, how many people are in your family. 

As far as CMS goes, they are ready. Exchanges, Medicare expansions will be ready to go. My State of Washington, we are going to 

have 80 percent registered by the first of March. We are already 

ready to go, and we have done an aggressive awareness campaign 

all along the West Coast, California, Oregon and Washington. You 

watch. The rest of this dais is going to be looking and saying, ‘‘Why 

can we not have that in’’ wherever they are from. My constituents are already seeing an average of $500 a family 

in insurer rebates from parts of the ACA that are already working 

to hold insurers accountable for how they spend the premium dollar they take in. This is not an investigation in pursuit of better 

government. It is a desperate, 11th hour attempt to stop a law that 

will help Americans. 

It is hard for me to believe that people who have made no proposals are saying to their people back home, ‘‘Don’t you dare sign 

up for this Obamacare. It is going to be awful for you.’’ I do not 

know how you run for office telling people that you do not want to. 

And the proposal that is on the table here today is straight out 

of the Republican Party. Mitt Romney created it in Massachusetts, 

and at least one Member on this dais campaigned nationally on 

this issue, saying that they are now against Romneycare as it is 

put nationwide. 

So I would like to hear what happens to the 50-year-old, the person who has a $50,000 a year income when they go to the exchange. What will happen to them? Explain the process for people. 

Chairman CAMP. You just have a few seconds remaining. 

[Laughter]. 

Mr. COHEN. Well, I think a person with a $50,000 income, that 

is going to be too much income to be eligible for subsidies. So they 


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can buy insurance through the marketplace. They can buy insurance through the existing healthcare marketplace outside the exchange. They will have all the choices that are available. 

This is a private market solution to a pressing social problem. 

Chairman CAMP. All right. Thank you. 

Mr. Ryan. 

Mr. RYAN. I enjoy following Mr. McDermott. 

I guess the new line here is that the Majority is peddling a scandal narrative, that they are throwing something at the wall to see 

if it sticks. 

We had a gentleman from the National Organization of Marriage 

come here and testify how the IRS leaked their sensitive taxpayer 

information to their political opponents. 

We had a lady from a pro-life group in Iowa who told us how the 

IRS said if you surrender your First Amendment rights to speak 

your views, then maybe we will approve your application. 

That is not a phony scandal. That is a real scandal. No matter 

what our colleagues try to say to whisk this issue away, the government was intimidating people and targeting them based upon 

their political views. That is not phony. That is real. 

Now here I want to actually ask you a question instead of giving 

a speech for 5 minutes and then asking a question, you know, with 

10 seconds to go. 

Mr. Cohen, is an adult child, meaning someone under the age of 

26, who has a parent with affordable employer sponsored insurance 

eligible to receive a tax credit in the exchange? 

Mr. COHEN. No. 

Mr. RYAN. Okay. So let’s walk through a scenario here. Take a 

young woman 25 years old, living in Milwaukee, and her mom and 

dad live in Chicago, and they have employer sponsored health insurance. She goes to the exchange because her job in Milwaukee 

does not offer her health insurance. 

Mr. COHEN. Right. 

Mr. RYAN. And she gets the three-page application for single 

people without employer coverage. The application says specifically 

‘‘single adults who are not offered health coverage from their employer.’’ There are no further questions about employer coverage. 

So she signs up. She gets a subsidy. It could be thousands of dollars of subsidy that she is not eligible for because her parents—— 

Mr. COHEN. I may be wrong then. I may be incorrect in my previous answer. 

Mr. RYAN. My understanding of the law is that she is not eligible for a subsidy—— 

Mr. COHEN. Okay, okay. 

Mr. RYAN [continuing]. If her parents’ insurance covers this. But 

since you delayed the employer mandate, your data hub has no 

way of reconciling that record. So she is going to get a subsidy she 

is not entitled to or eligible for. 

Take a husband and wife living in Madison. The husband has 

been the person with the insurance for the family, but he is losing 

it because the company is not offering it anymore. He got his hours 

knocked down to 30 or something like that. 


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The wife works at a job, and her employer does offer credible insurance, but she did not take it because she never has before, and 

it is just another year, and she is not doing it. 

He goes and signs up for the exchange. He gets the subsidy. He 

gets Obamacare, but they are not eligible for the subsidy, but you 

have no way of verifying that. 

So what are you going to do? Are you going to make this person 

pay it back, Mr. Werfel? Because if I am not mistaken, the law requires you to do so. 

And if we are not going to reconcile this record until maybe 2016, 

as you just said, is that going to be 2 years of subsidies going to 

people that they are not eligible for? They did not get it fraudulently. They just got it through confusion. 

Then does the law not require you to put a huge tax on their tax 

bill at the end of the day, when you finally reconcile this data, and 

so then they will get thousands of dollars of taxes clawing back the 

subsidy that they were not eligible for? 

Is that not what you will have to do? 

Mr. WERFEL. A couple of responses. First, the employer report 

that is going to be very helpful in validating the state of cover, you 

are right. We are not going to get it in filing season 2015, but there 

are other ways that we can work with the employer community to 

get that information. 

Mr. RYAN. Are you going to have that up and running when the 

people start filling this out next year? 

Mr. WERFEL. We are working very closely, and I think HHS 

and the exchanges and IRS are working together with the business 

community to figure out alternative solutions. 

Mr. RYAN. Okay. So—— 

Mr. WERFEL. It is a partnership with the business community. 

Mr. RYAN. So this fall when a 25-year-old Milwaukeean signs up 

because she does not get health insurance at her job, but she is ineligible legally for the subsidy, when she actually applies for the 

subsidy because she does not know any better because the application does not say she is ineligible—— 

Mr. WERFEL. If she is—— 

Mr. RYAN [continuing]. You are going to catch that? 

Mr. WERFEL. If she is in the right income, if she is between 100 

and 400 percent of the poverty level, it is my understanding—— 

Mr. RYAN. Most 25-year-olds are. 

Mr. WERFEL [continuing]. It is my understanding that the exchange will reach out to employers at that time. It will not be the 

official report that we will be getting in filing season 2016. 

Mr. RYAN. Okay. 

Mr. WERFEL. But, again, it is not—— 

Mr. RYAN. Let’s say her parents live in Texas and she is living 

in Milwaukee. This exchange is going to see all of this? It is going 

to figure all of this out? You have delayed the employer mandate 

and you are going to reconcile this record? You are going to make 

sure she does not get a subsidy she is not entitled to? 

Mr. WERFEL. I am saying that we are working on solutions. The 

IRS is working on solutions at the back end. 

Mr. RYAN. Okay. 


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Mr. WERFEL. The exchanges are working on solutions at 

the—— 

Mr. RYAN. Let me get at it this way. Let’s say you do not catch 

it. Do you not have to hit her with a tax liability to claw back that 

subsidy that she was not supposed to get? 

Let’s just say you do not catch it, and she gets the subsidy she 

is not supposed to get. You have to hit her with a tax to claw it 

back at the end of the day, correct? 

Mr. WERFEL. Well, if we find that there is a problem, that she 

got a credit that she should not have gotten, if we do that, and we 

might be able to do that by working with the employer community—— 

Mr. RYAN. I am just saying assume—— 

Mr. WERFEL [continuing]. Then we will, but there will be a cap. 

Depending on her income level, and I can walk through that with 

you, there is protections for those individuals in those cases where 

we would cap the amount that we would claw back. 

Mr. COHEN. I would just say I do not know why anyone who 

could get free insurance, free to them, insurance through their parents’ policy, would choose instead to go on the marketplace and pay 

for insurance, even if they get a subsidy. 

Mr. RYAN. I guess we will just have to hope, will we not? 

Mr. COHEN. No, it is not a question of hope. 

Mr. RYAN. Thank you. 

Mr. COHEN. It is a question of logic. 

Chairman CAMP. All right. Mr. Neal. 

Mr. NEAL. Thank you, Mr. Chairman. 

Mr. Chairman, has the Majority devised a way that we will be 

able to vote on this during the August break? 

Chairman CAMP. If the gentleman would like us to, I am sure. 

Mr. NEAL. I mean, we could do perhaps proxy voting or Internet 

voting or early voting in anticipation of September. I think that the 

game plan here is to get to the 40th and the 100th time before implementation. Is that the strategy? 

Chairman CAMP. I think Mr. Rostenkowski was the last Chairman that allowed proxy voting. 

Mr. NEAL. It seemed to work better, by the way, than what we 

are experiencing here. I must tell you that, Mr. Chairman. 

Mr. Cohen, a followup to Mr. Rangel’s questions about what we 

are witnessing in New York and in some of the other States. Would 

you care to expound? And I will give you some time to talk about 

the trend line that you are witnessing. 

Mr. COHEN. Yes, thank you. 

HHS put out a report recently that captured the ten States and 

the District of Columbia, and since then we have seen Maryland, 

that have made public the rates, and that is a matter of State law 

and procedure that they make those rates public when they are 

filed. 

On average, they were 18 percent below what the Congressional 

Budget Office estimated premiums would be in the marketplace beginning in 2014. In all cases, they were what our analysis shows 

are affordable, particularly when you then take into consideration 

the subsidies that people will be eligible for that will help pay for 

a portion of those premiums. 


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So what we are saying is in States where there is a relatively 

competitive market with a number of carriers that are offering coverage in the market, the marketplaces are offering new opportunity, new transparency, new competition that is having a very 

positive effect on rates. 

In addition, we have seen overall health insurance costs and premiums going up at a much lower rate today than they have been 

in decades. 

Mr. NEAL. That certainly has been the case in Massachusetts, 

despite some of the acrimony that has developed in terms of the 

overall argument. There has been a stability that has settled in, 

and you read stories from time to time indicating that this has 

changed or that has changed, but by and large, the satisfaction 

rate in the State of Massachusetts based upon Governor Romney’s 

plan, working incidentally with a Democratic legislature, that came 

to the conclusion that you could, on a State-by-State experiment, 

stabilize healthcare costs. 

And I cannot emphasize enough that when you have almost 

three-quarters of the people in the State who regularly suggest 

that they are satisfied with the plan, I think you have a good 

model there to build upon. 

Mr. COHEN. I agree. Thank you. 

Mr. NEAL. Thank you, Mr. Chairman. 

Chairman CAMP. Thank you. 

Mr. Nunes. 

Mr. NUNES. Thank you, Mr. Chairman. 

I am a little concerned at Mr. Werfel’s inability to answer Mr. 

Ryan’s question. I want to yield to Mr. Ryan to follow up on his 

question that Mr. Werfel could not answer. 

Mr. RYAN. I will try to be brief. 

I do not think you understand the law you are in charge of executing and enforcing. The claw-back as you describe where you 

limit how much a person pays back, that is only a person who is 

eligible for a subsidy if their income changes in the year in which 

the subsidy takes place. 

But if a person—this is your law—if a person gets a subsidy they 

are not eligible for, which clearly will be the case if your major enforcement tool, the employer mandate, is not in place, the law requires you claw back 100 percent of that subsidy to which they 

were not entitled to. 

Mr. WERFEL. Yes, I apologize. I mean, the hypothetical that you 

gave had a lot of moving pieces, but you are correct. We—— 

Mr. RYAN. Okay. Somebody gets a subsidy they are not eligible 

for. 

Mr. WERFEL. The one question I have is we have discovered 

that this individual got an inappropriate subsidy. So we have made 

some connection with their employer to learn that information. 

Mr. RYAN. Which will be 2015 at the earliest. 

Mr. WERFEL. We could learn it in 2015. We will get the official 

employer report in 2016. Either way, we are going to make the efforts—— 

Mr. RYAN. All right. So 2 years. 

Mr. WERFEL [continuing]. To validate the fact of coverage for 

each individual that is receiving a subsidy. 


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Mr. RYAN. So somebody will get 2 years of a subsidy that they 

signed up for unknowingly, which they got, which the law does not 

make them eligible for. You will have to tax that back in 2 years’ 

time to get all of it. That is the law, correct? 

Mr. WERFEL. We are going to help the individual at the front 

end when they are filling out their taxes and they are navigating 

through the exchange to understand whether they have an employer plan—— 

Mr. RYAN. I think you have already answered the question. 

Mr. WERFEL [continuing]. That would have brought them—— 

Mr. RYAN. If you do not have an employer mandate and you do 

not have the tool in the data hub which you claim you need to have 

to verify this, you are going to have a lot of people getting subsidies 

they are not supposed to get, and then you are going to hit them 

with a big tax bill in about 2 years to claw it back because the law 

requires you to do that. 

I yield back to Mr. Nunes. 

Mr. NUNES. That’s free money. 

Mr. Cohen, do you foresee any additional Obamacare provisions 

that may not be ready for implementation? 

Mr. COHEN. No. 

Mr. NUNES. Do you see any more grants, granting any more 

waivers to employers or companies that come and petition for additional time or a waiver? 

Mr. COHEN. No. 

Mr. NUNES. None. 

Mr. COHEN. No. 

Mr. NUNES. You are not going to give any waivers to any companies, any unions? 

Mr. COHEN. Well, if what you mean by ‘‘waiver’’ is telling someone that they are not required to follow the law that I am charged 

with implementing, the answer is no. 

Mr. NUNES. Okay. Thank you. 

Mr. Werfel, will the IRS need to access Americans’ healthcare 

records in order to enforce the Obamacare tax? 

Mr. WERFEL. No. 

Mr. NUNES. What records will they have to go after to enforce 

the Obamacare tax? 

Mr. WERFEL. There are two key things. In order to comply with 

the law, we are providing taxpayer information through the hub to 

the exchanges, that is, income, filing status, household size, and 

the other factor that we need to know is we need to know fact of 

coverage. So we will get information about the policy itself, like the 

policy number and the insurer. 

Other than that, there is no other information. We do a computation for what the premium tax credit, the advanced premium tax 

credit is. We get information where we are blind to what the individual is. We get it through the exchange information like the plan 

that they have chosen, the cost and some of the other—— 

Mr. NUNES. Okay. So that information that you are going to 

have—— 

Mr. WERFEL. Yes. 


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Mr. NUNES [continuing]. How many other government agencies 

at this time will you be sharing that information with, the tax 

records? 

Mr. WERFEL. I do not know. I will answer the question this 

way. We currently share taxpayer information with roughly 300 

Federal and State agencies under existing laws and regulations 

without the ACA. The ACA will add additional entities that will receive this information, in particular, the exchanges, both the State 

and the federally run exchanges. 

Mr. NUNES. Three hundred different—— 

Mr. WERFEL. No, no. Right now, the baseline is 300 different 

Federal and State agencies under existing laws and regulations, 

before the ACA ever came about, received taxpayer information 

from IRS, and as I mentioned, there are a lot of safeguards in place 

to protect that information. 

Now, that number of entities will be expanded. I do not have the 

exact number at my fingertips, but it has expanded because the information is flowing through to both the Federal exchange and the 

State-based exchanges. 

Mr. NUNES. How many new IRS agents have been hired to date 

to implement Obamacare? 

Mr. WERFEL. I can get you that information. I do not have it 

at my fingertips. 

Mr. NUNES. A hundred, thousands? 

Mr. WERFEL. You know, if you give me a moment, I will get 

that information and I can get it to you before the end of the hearing. 

Mr. NUNES. Okay. And can you get not only how many have 

been hired to date, but also how many you plan to hire to enforce 

the Obamacare? 

Mr. WERFEL. I mean, we will have estimates on that for the 

2014 budget. I will say, right now, we are in a hiring freeze due 

to sequester and other budget cuts. So there has been a lot of challenge there, but the 2014 budget—— 

Mr. NUNES. Thank God for that. I yield back. 

Chairman CAMP. Thank you. 

Mr. Becerra, and then we will go two to one after that. 

Mr. BECERRA. Thank you, Mr. Chairman. 

Gentlemen, thank you for your testimony. 

Let me assure you of something. At some point we will start to 

ask you questions more and more bipartisanly on how to implement this, but for now you are witnessing and experiencing part 

of a strategy to undermine the ability for the health security law 

to actually take effect. 

Last week in the article that Mr. Levin introduced into the 

record by Mr. Norm Ornstein with the American Enterprise Institute, which is a conservative think tank, in that article titled ‘‘The 

Unprecedented and Contemptible Attempts to Sabotage Obamacare,’’ Mr. Ornstein—and let me just quote a couple of passages so 

we know what we are getting into. This was last week’s article. 

‘‘What is going on now to sabotage Obamacare is not treasonous—just sharply beneath any reasonable standards of elected 

officials with the fiduciary responsibility of governing.’’ 


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He goes on to say, ‘‘To do everything possible to undercut and destroy its implementation of the healthcare law, which in this case 

means finding ways to deny coverage to many who lack any health 

insurance, to keep myriads who might be able to get better and 

cheaper coverage in the dark about their new options, to create disruption for the health providers who are trying to implement the 

law, to threaten the even greater disruption via a government 

shutdown in order to blackmail the President into abandoning the 

law, and to hope to benefit politically from all the resulting turmoil 

is simply unacceptable, even contemptible.’’ 

And that was written just last week. If people did not believe Mr. 

Ornstein and what he was writing, then recently it was just leaked 

out that this week our Republican colleagues had a meeting where 

a strategy was introduced by the Speaker where the strategy was 

a series of targeted strikes that will fracture the President’s 

Obamacare coalition and topple this law. 

And so they go through the strategy of how to do this, and one 

of those is this hearing and this proposal, legislative proposal that 

is before us. I think at some point we will get to the nuts and bolts 

of administering the law because it is important. 

I had a gentleman write to me from my district back in 2009 

when we were trying to pass this health security law. He wrote me. 

His name was Eric. I will not give you his last name. ‘‘I am a selfemployed architect and pay monthly for a very expensive bottom 

line, high deductible policy. My wife and I are covered, but our son 

had a stroke when he was 8 years old. He is not insurable. Our 

coverage costs $750 per month. This is very expensive, beyond 

what we can afford, and there only as an emergency coverage. If 

we use the insurance, it immediately jumps in price. The last time 

it was a $250 per month increase in cost. If we incur another increase, we will have to drop the policy.’’ 

Mr. Cohen, the law passed. Eric and his wife are now under the 

new law. Is Eric’s son now able to get insurance coverage? 

Mr. COHEN. That is right. The law today prohibits insurance 

companies from denying Eric’s son coverage because of his previous 

stroke. 

Mr. BECERRA. So that little boy, who could not get coverage before the health security law today, has coverage the way every 

other child with that same kind of preexisting condition would be 

able to get coverage. 

Mr. COHEN. That is right. 

Mr. BECERRA. Let me ask about another gentleman from my 

district, Benjamin. He says, ‘‘Our insurance company retroactively 

canceled my wife’s coverage after they had approved her to get an 

MRI. She was stuck with a bill that has taken 3 years to pay off. 

They scoured her record to find any mistake they could call her on 

rather than foot a bill for a procedure that they had approved for 

her to undergo. I do not consider this insurance. It is more akin 

to gambling.’’ 

Today, because of the rescissions provisions that we put into the 

law, is the insurance company able to deny Benjamin and his wife 

payment for an MRI that the insurance company had approved? 

Mr. COHEN. They cannot. That is a practice that some insurance companies engaged in called post claims underwriting. When 


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someone came in with a claim, they would go back to see if they 

could find a reason to take the policy away just because the person 

got sick and made a claim. They cannot do that anymore. 

Mr. BECERRA. And we have also heard that this health security 

law that passed was a job killer. I remember that was one of the 

big arguments against doing this law. My understanding is, and 

you may not be aware of this, but that close to a million jobs have 

been created in the healthcare industry since April 2010 when we 

passed the law. Rather than kill jobs, it has helped create more 

jobs because people are gearing up in the healthcare industry to 

help some 30 million Americans actually have health insurance for 

the first time, like Eric and Benjamin will have for their families. 

I hope at some point we will be able to actually get to the nuts 

and bolts of how we make this law work better because there 

clearly are kinks. No one denies that there are flaws in the law. 

The implementation has to go much better than the policy and the 

written word in the law, but at some point the fever will break in 

Washington. We will get back to work here the way Americans expect us to, and we will make this law work for everyone. 

Thank you for being here. 

Mr. COHEN. I look forward to that, Congressman. Thank you. 

Chairman CAMP. Mr. Tiberi. 

Mr. TIBERI. Thank you, Mr. Chairman. 

Let me assure my colleagues on the other side that the reason 

why we have concerns is because we do not believe there are kinks. 

There are major problems. 

And let me read you a letter from a constituent whom I have 

never met before, or part of a letter. ‘‘I am a student employee at 

Miami University in Oxford working this summer in a university 

research lab. Last week’’—this was dated earlier this week—‘‘last 

week I received a notice from the university staff informing me 

that due to recently changed policy, I no longer would be able to 

work full time. I would have to stop working after reaching a 28- 

hour limit per week. Of course, I was startled and upset, and it 

was not long before I knew the culprit behind this change in policy 

was the Affordable Care Act.’’ 

That is one of many letters, phone calls, and meetings that I 

have had concerning, not kinks, real life problems with the Affordable Care Act. 

The Chairman mentioned, Mr. Cohen, at the beginning, that the 

President stated that the average family would see a $2,500 reduction. I remember that because I heard a lot about that in my district in central Ohio after he mentioned that. Have you seen the 

rate filings for the plans being offered in the State of Ohio, Mr. 

Cohen? 

Mr. COHEN. I have not. 

Mr. TIBERI. You have not, yet? I have not, either. The people 

of my State have not. However, our Insurance Department is warning that individuals in our State could face an 88 percent premium 

increase from current plans in our State. Would that be a $2,500 

reduction? 

Mr. COHEN. It would not, but most of those projections have 

really proven to be completely erroneous. So I do not know what 

they are looking at there. 


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Mr. TIBERI. Erroneous based on what? 

Mr. COHEN. Erroneous based on whether you are making a real 

fair comparison between the type of coverage that people will have, 

you know, beginning in 2014 and whatever coverage that they have 

today. 

Mr. TIBERI. So what the Insurance Department has said apples 

to apples. Basically, if you have a plan today offered by Blue CrossBlue Shield that is a standard plan, you will in the exchange see 

a standard plan that will go up about 88 percent. 

Would that not be a way to judge it? 

Mr. COHEN. Well, I have not seen those rates. So I cannot comment on that prediction. 

Mr. TIBERI. Well, I would hope you would come back after October 1st when that information is public so constituents who ask us 

why these plans are going up, then we can ask you. 

On CMS’ marketplace training slideshow from this month entitled ‘‘Understanding the Health Insurance Marketplace,’’ it specifically notes that there are 10 population centers around the country, including Ohio where there are three, including Columbus 

where I am from, that will have special enrollment assisters contracted to help uninsured young and healthy people. That is their 

quote. 

Can you tell me about what the special enrollment assisters will 

do and how they will be contracted and who will pay for them? 

Mr. COHEN. We have put out for bid a contract for people to 

help with enrollment. What you are referring to is the fact that we 

want to focus our efforts on areas where there are large numbers 

of uninsured, and those folks will be available to provide assistance 

to people. 

Mr. TIBERI. How are they different than navigators? 

Mr. COHEN. The Navigator program is a grant program, and we 

have solicited grants from community-based organizations that will 

also be helping people in getting enrolled. This is a Federal contract. 

Mr. TIBERI. So they will be doing this job, but their titles are 

different? 

Mr. COHEN. They will be doing essentially the same work, but 

one is a grant program through, you know, locally based communities. The other is a Federal contract. 

Mr. TIBERI. Also on the website, and try to clear up this confusion for me, I found references to navigators, non-navigator assistance personnel, in-person assisters, special enrollment assisters, a 

Consumer Assistance program, and certified application counselors. 

Do they have different roles? 

Mr. COHEN. The roles are similar. Some of those, the navigators, for example, will be doing, I think, more outreach and education as well as actually helping people get enrolled, but the enrollment assisters, their job will really be to help people go through 

the process of filling out an application, and the funding is different. 

So, as I said, a grant program versus a contract. 

Mr. TIBERI. I know the folks on the other side of the aisle believe that we have just a contempt for this, but there is a ton of 

confusion that comes from this website from our constituents who 


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do not understand, who are not—I do not understand—who do not 

understand the difference between those different types of programs, how they are funded. Are they agents? Are they not agents? 

How familiar are they with healthcare law, healthcare services? 

And so I would hope that—and I am going to send you a letter 

to get some other clarifications on your website confusion that has 

already come to our office. 

Mr. COHEN. Yes. My assumption is that people do not care very 

much, you know, what name or what funding source is used. They 

are going to be looking for help to get health insurance coverage, 

and they will take that help, and they will be very happy for it. 

Chairman CAMP. All right. Thank you. 

Mr. Reichert. 

Mr. REICHERT. Well, I want to just sort of repeat what my colleague here, Mr. Tiberi, said. There is a lot of confusion, and I 

think that this hearing is a forum where we can get some of those 

answers hopefully, and so we appreciate your attendance here, and 

we do have some legitimate questions. 

I was just sitting here and listening to some of the testimony and 

some of the exchanges. It is obvious to me that even you are confused about what the law says or does not say, what you have accomplished or have not accomplished or may accomplish, or what 

some of your deadlines are. Your answers are not clear, and I think 

everybody in the audience and people on the panel and people at 

home watching can see that. 

So, Mr. Werfel, I want to start out with just some questions that 

are yes or no questions. Have you been able to implement Section 

9003, which increases taxes by limiting health savings account expenditures? 

Mr. WERFEL. I will have to get back to you on that question. 

Mr. REICHERT. I think you have been. 

Have you been able to implement Section 9004, increasing taxes 

on distributions from HAS and MASAs not used for qualified medical expenses? 

Mr. WERFEL. Again, I will have to get back to you on the answer to that. 

Mr. REICHERT. And I think that is a yes. 

Have you been able to implement Section 9005, increasing taxes 

by limiting health flexible spending arrangements under cafeteria 

plans? 

Mr. WERFEL. Again, I will get you that information. 

Mr. REICHERT. I think that is a yes. 

Have you implemented 9007, putting additional requirements on 

charitable hospitals? 

Mr. WERFEL. Again, I will get you that answer. 

Mr. REICHERT. And that is a yes. 

Have you implemented Section 9008, increasing the taxes on 

branded prescription pharmaceutical manufacturers and importers? 

Mr. WERFEL. I believe we have implemented that, yes. 

Mr. REICHERT. Yes. 

Have you implemented Section 9009, which increases the medical device tax? 

Mr. WERFEL. Yes. 


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Mr. REICHERT. Yes. Are you on track to implement Section 

9010, which imposes a tax on health insurance providers? 

Mr. WERFEL. I will get back to you on that question. 

Mr. REICHERT. That is a yes. 

Mr. WERFEL. We are generally on track with all of our major 

deliverables. 

Mr. REICHERT. Have you implemented Section 9013, raising 

taxes on those who have to take an itemized deduction on medical 

expenses? 

Mr. WERFEL. Again, I believe we are on track with all of—— 

Mr. REICHERT. Probably a yes. So you are on track with all of 

these. Some of these you could not answer, but I have information 

that these are all yeses, that you have completed implementing 

these tax laws. I am disappointed that the supposed benefits of this 

law have not been seen by my constituents, and I think that is a 

frustrating part, not only frustrating, but confusing. 

I am not sure if they will ever be seen by my constituents, and 

so I find it sort of odd, too, that the employees at the IRS, including 

yourself because you just made the statement, you feel like you 

have good health insurance. You would like to keep that health insurance. So would the IRS employees. So would a lot of other 

Americans across this country, but one of the benefits in this 

health law was supposedly that we could keep our healthcare plan 

if we liked it or could keep our doctor if we liked our doctor. But 

according to the President, and I will paraphrase a quote that we 

heard him say at a conference he attended and spoke at, was that, 

you know, there seems to be some language snuck into the 

healthcare law that runs contrary to that premise, runs contrary 

to the premise that you can keep your doctor if you like your doctor, and it runs contrary to the premise that you can keep your 

healthcare plan if you like it, but IRS agents supposedly now have 

filed a waiver because they cannot keep their healthcare plan if 

they like it. They have to ask for a waiver. 

Well, you know, I know of a lot of Americans who want to ask 

for a waiver. So it is deeply disappointing that the only part of this 

bill that you have been able to implement are the provisions that 

have cost Americans and will cost Americans in their pocketbook. 

Mr. Cohen, I am really confused by your testimony about testing 

of data. You will get back to us on an answer? Is that what I heard 

you say? 

You are testing, right? 

Mr. COHEN. Yes, we are testing. 

Mr. REICHERT. What is the testing? I want to know what the 

testing is. 

Mr. COHEN. The testing is all aspects of the system that are 

going to be needed to—— 

Mr. REICHERT. Well, what are you—— 

Mr. COHEN [continuing]. Be operational on October 1—— 

Mr. REICHERT. What have you done, though? What have you 

done? 

Mr. COHEN [continuing]. Are being tested. 

Mr. REICHERT. What have you done? When you say ‘‘testing,’’ 

what do you mean? What have you done? What is the test? 


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Mr. COHEN. I am a layperson. I am not an IT person. So I am 

going to give you the layperson’s answer. They test the systems to 

make sure they are functioning as they are meant to. They run different scenarios to see whether—— 

Mr. REICHERT. And you think you are on track? 

Mr. COHEN. We absolutely are. 

Mr. REICHERT. Well, in fact, less than 2 weeks ago insurers 

warned that both they and your department ‘‘face significant operational and logistical challenges in the first 2 years at a minimum 

which are dependent in large part on a variety of technical interfaces, data exchanges, and program infrastructure.’’ 

I think you are in trouble. I do not think you are going to meet 

your deadline, and I yield back. 

Chairman CAMP. All right. Mr. Doggett. 

Mr. DOGGETT. Thank you, Mr. Chairman. 

It has come as quite a surprise this morning to learn that the 

focus and purpose of this hearing is to determine whether the Affordable Care Act is on track because the people that are conducting the hearing when it comes to health care have been very 

zealous on the derailment program for health care. They have offered no constructive suggestions. It is never how can we make 

health care work better for the American people. It is always how 

can we derail it. 

I am surprised, in fact, that they even have time to have a hearing between the repeal votes because we have had so many of 

them. 

Two and a half years ago in this very room, we had our first 

hearing at the beginning of the last Congress on the repeal of 

Obamacare, and the House proceeded to repeat it, vote number 

one. The next day it passed a two-page bill that contained 12 platitudes about health care, and that is the last time we have heard 

about those platitudes in terms of any legislative action except for 

one bill last year that provided tax breaks for Tylenol. 

The alternatives being offered to the American people to 

Obamacare is really Nothingcare when it comes to legislative action in this Committee and on the floor of the House. Now, there 

are many problems with the Affordable Care Act. I wish your efforts to try to see it effectively implemented were not day after day 

being undermined and underfunded and interfered with. But tell 

us, if you would, Mr. Cohen, on October 1st, because I never 

thought that their attacks were about denying the IRS power or denying you power; they are about denying rights to the American 

people that they are now entitled to under the Affordable Health 

Care Act. 

On October 1st, if you are among the millions of uninsured people in Texas that do not have any way to get insurance right now, 

what rights do you have then as an American citizen under this 

Act? 

Mr. COHEN. You will be able to submit an application either online or in person or over the phone or on paper. You will be able 

to determine whether you are eligible for Medicaid or CHIP, on the 

one hand, or a subsidy in the form of an advanced payment of the 

tax credit, on the other. You will be able to shop and choose a private health insurance plan that you want to enroll in, and beginVerDate Sep 11 2014 07:09 Jan 23, 2017 Jkt 021120 PO 00000 Frm 00059 Fmt 6633 Sfmt 6602 I:\WAYS\WAYSPS\21120\21120.XXX 21120

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ning in January you will have to make a premium payment, but 

in addition, the amount of that advanced premium tax credit will 

go directly to the insurance company and help pay for that coverage. 

Mr. DOGGETT. And if you are working at a lower wage job, you 

are entitled to a premium tax credit to assist you in getting health 

insurance that you have not been able to get until now. 

Mr. COHEN. That is right. 

Mr. DOGGETT. I had a woman a while back at a Relay for Life 

gathering come up to me in tears because her sister had breast 

cancer, and when she went to get treatment she learned she only 

had $25,000 of treatment to get radiation and chemotherapy to 

treat that condition, and they would not let her begin the treatment because it was going to cost so much more than that. 

Mr. COHEN. Right. 

Mr. DOGGETT. What happens to a woman like that who was 

left as a victim to the fine print put in there by her insurance company that she knew nothing about as a typical insurance purchaser? What happens to her under the Affordable Care Act that 

they want to derail? 

Mr. COHEN. Those provisions are in effect even today and have 

been since September 2010. Lifetime limits are no longer permitted. So you cannot put a cap on the amount of money that an 

insurance will pay over the course of the person’s lifetime, and annual limits have been phased out, and now beginning in 2014 will 

also be completely eliminated. So an insurance company cannot 

say, ‘‘We will only pay a certain amount of money in a year for 

your claims.’’ 

Mr. DOGGETT. As far as rights that exist right now under this 

Affordable Health Care Act, the same Affordable Health Care Act 

that the latest thing in the last few days has been whether they 

are willing to shut down the entire government, threaten the full 

faith and credit of the United States just because they are so zealous about derailing the Affordable Care Act and denying rights to 

Americans; right now if you are a senior do you get any rights that 

if we repeal the Affordable Health Care Act you would be denied 

what you get under the Affordable Health Care Act already? 

Mr. COHEN. There are a number of rights under the Affordable 

Care Act. For example, preventive services are provided free of any 

copay or any deductible. That is just an example. So people can actually get the kind of preventive care that they need to keep themselves healthy. 

Mr. DOGGETT. And prescription drugs, are there any benefits 

that if we repealed the Affordable Health Care Act seniors would 

be denied what they have today? 

Mr. COHEN. The so-called donut hole was closed by the Affordable Care Act. So millions of seniors have saved money as a result 

of—— 

Mr. DOGGETT. And the solvency of Medicare—— 

Chairman CAMP. The time has expired. 

Mr. DOGGETT [continuing]. Would be reduced also by—— 

Chairman CAMP. That answer will have to be the end of it. 

Thank you. 

Dr. Boustany. 


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Mr. BOUSTANY. Thank you, Mr. Chairman. 

I am glad to see that my colleague from Texas recognizes that 

there are many, many problems with this healthcare law. I am certainly aware of it with 30 years of it with 30 years of clinical experience in medicine. I am certainly aware of the problems attendant 

with this law. 

Mr. Werfel, Mr. Ryan pointed out a number of problems that are 

going to occur because of the delay in the employer mandate or the 

employer reporting requirements and, you know, the propensity for 

overpayment of subsidies, possible fraud, abuse, and so forth. And 

yet Treasury had 3 years to come up with the regulations on how 

this would work on these reporting requirements, and obviously the 

department has failed to date to come up with an adequate approach to this, hence the delay. 

So is there a problem with the statute? I know you are in charge 

of implementing. The burden is on your shoulders to implement 

this, but I know you have had some discussion with Treasury on 

this. Is there a problem with the statute? 

Mr. WERFEL. I do not think there is. I am not aware of a particular problem with the statute. We are working with the insurer 

and employer community to understand how best to implement the 

legislation through regulation of the reporting requirements. 

Mr. BOUSTANY. But 3 years. It has been 3 years of some very 

smart lawyers working on this, and you reference, I believe you 

said earlier alternative methods to validate. Can you give us any 

indication of what those alternative methods will be or is there any 

hope that you can implement this? 

Mr. WERFEL. Well, there is a communication that we can set up 

with—there are a lot of issues here, but the one that I think you 

are focusing on is whether we can determine whether an employer 

provided plan would block an individual from getting a premium 

tax credit. That is one issue, and I think the transition relief period, or the delay, does create additional challenges for the IRS in 

doing that, but it is not something that we cannot mitigate. 

Mr. BOUSTANY. But 3 years, 3 years is a long time. When did 

those discussions begin? 

I mean, I know you are relatively new in the position. Were you 

brought into these discussions from day one? 

Mr. WERFEL. Not from day one. The first I learned about it was 

in late June, that this issue was under consideration, but my staff 

had been consulted before then because they were constantly consulting IRS staff to understand what the administrative impacts 

were. 

And in this case we looked at the administrative impacts, and we 

determined that we can work with the employer community to get 

other sources of information from them to do the job of determining 

whether there was a sufficient employer offer. 

Mr. BOUSTANY. Did the IRS recommend the delay? 

Mr. WERFEL. No, not that I am aware of. 

Mr. BOUSTANY. Okay. Were other agencies or departments involved in those discussions or did they recommend the delay? 

Mr. WERFEL. I think it is my understanding that HHS and 

Treasury discussed the issue. I am not sure who in the government 

recommended the delay. I do understand that the employer comVerDate Sep 11 2014 07:09 Jan 23, 2017 Jkt 021120 PO 00000 Frm 00061 Fmt 6633 Sfmt 6602 I:\WAYS\WAYSPS\21120\21120.XXX 21120

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munity came in and we received comments that they preferred we 

take more time, delay the provision, and work through some—— 

Mr. BOUSTANY. I think the employer community would like to 

see that employer mandate go away, but when were you informed 

of the delay? I think it was announced in a blog post on July 2nd. 

Mr. WERFEL. Yes. 

Mr. BOUSTANY. Were you notified earlier? 

Mr. WERFEL. It was late June. I think it was around June 21st 

that I learned of it. 

Mr. BOUSTANY. Okay. Who told you? 

Mr. WERFEL. My recollection is I was in a meeting with the 

Treasury Department on a bunch of issues, and this was on the 

agenda, and it came up, and I understood that this decision was 

in the works and was being made. 

Mr. BOUSTANY. Okay. Well, obviously we need to do more oversight, and I take issue with our colleagues on the other side of the 

aisle who think this is all a charade and a joke. We are trying to 

do oversight, and we are trying to understand what the problems 

are, and obviously there are plenty of problems and this is just one 

of them. 

One other question on a different subject. Over a year ago I 

asked then Acting Commissioner Steve Miller to provide all documents with regard to the application or the decision about premium subsidies and whether or not they would apply to federally 

created exchanges. We have not gotten those documents yet. I 

would like you to commit to me to get those documents to us surrounding that IRS decision because it seems to run counter to the 

statute. 

Could you get that to us before September? 

Mr. WERFEL. I was not aware of that document request. I commit to you that I will look into the issue and get back to you as 

soon as possible with the time frame. 

Mr. BOUSTANY. Well, it has been a year. So hopefully—— 

Mr. WERFEL. Yes. I just have to look into it. 

Mr. BOUSTANY. I know staff have done work. I hope staff have 

done work on that. I would like that information before we get back 

in September. 

Mr. WERFEL. Understood. 

Mr. RANGEL. Would the gentleman yield? 

Mr. BOUSTANY. I will yield with what little time I have. 

Chairman CAMP. Dr. Boustany has the time. 

Mr. BOUSTANY. Yes, I will yield. 

Mr. RANGEL. Thank you so much for your comment. 

You indicated that this was an oversight hearing in which you 

had a response. I ask the gentleman: Is it your intention to improve the law as it relates to so-called Obamacare or the Affordable 

Care Act? Is that the purpose? 

Mr. BOUSTANY. Reclaiming my time, I believe the law is so 

deeply flawed, I favor repeal and replacing it. 

Chairman CAMP. All right. The time has expired. 

Mr. Roskam is recognized. 

Mr. ROSKAM. Thank you, Mr. Chairman. 

You know, this reminds me of the scene at the end of the first 

‘‘Indiana Jones’’ movie where Indiana Jones goes in and he is talkVerDate Sep 11 2014 07:09 Jan 23, 2017 Jkt 021120 PO 00000 Frm 00062 Fmt 6633 Sfmt 6602 I:\WAYS\WAYSPS\21120\21120.XXX 21120

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ing to the guy from the government, and Indiana says, ‘‘Where is 

the Arc?’’ 

And the guy from the government at the end of the movie says, 

‘‘We have top people working on it.’’ 

And then the next scene is the Arc of the Covenant going into 

a giant government warehouse somewhere. This exchange a little 

bit today, what I have heard from you is basically saying, ‘‘We have 

top people working on this.’’ 

So, Mr. Cohen, when you were asked by Mr. Brady a couple of 

minutes ago about the nature of the test, when you distill down 

what you actually said, you actually said to him and to Mr. 

McDermott, ‘‘We have top people working on it.’’ 

Mr. Werfel—— 

Mr. COHEN. That is not what I said. That is not what I said. 

Mr. ROSKAM. I paraphrased it and it is my—— 

Mr. COHEN. It is not what I said. 

Mr. ROSKAM. Mr. Werfel, when you were asked a couple of minutes ago by Mr. Ryan about the claw-back, you basically said, ‘‘Do 

not worry. We have top people working on it.’’ 

And we have had an expectation in this Committee that has actually been driven fairly low by previous witnesses. Previous Administration witnesses have come in with clear-eyed assurances 

that everything was fine, top people meeting deadlines. Everything 

is A.J. Squared Away, no problems at all. 

And yet today we hear in the exchange that you had with Mr. 

Levin, and it is your prerogative to have an exchange with Mr. 

Levin. He asks you questions. You say, ‘‘Yes, we will.’’ He asks you 

questions. ‘‘Yes, they will.’’ 

All right. So my expectations are fairly low, but the best predictor of future conduct is what has happened in the past. So, Mr. 

Cohen, here is my question. 

You are at CMS. It is a universally accepted fact that the payment rate, the fraudulent and erroneous payment rate, at CMS on 

Medicare is about $40 billion. It is known as ‘‘pay and chase.’’ GAO 

says that. The Attorney General of the United States, Eric Holder, 

in a 2012 article in Forbes Magazine actually upped the number. 

He said it was much higher than that. 

How can you, with a straight face, come in and give assurances 

to this Committee that CMS has it all down when you are not even 

able to give a straight answer about the nature of the test? 

What is it that animates the hope in you that you are not going 

to have the same problems in implementing the Affordable Care 

Act when clearly CMS has demonstrated it has all kinds of difficulty on Medicare? 

Mr. COHEN. Congressman, I see absolutely no connection between the fraudulent payment rate in Medicare and the work I am 

doing, none. 

Mr. ROSKAM. Is that it? 

Mr. COHEN. I suspect that you could have any executive of any 

company come in here and ask him questions about how the IT 

testing is done on his computer systems and what he would tell 

you is—— 

Mr. ROSKAM. He has top people working on it. 


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Mr. COHEN [continuing]. ‘‘I need to refer you to the people who 

really are expert.’’ 

Rather than give you an answer that is wrong—I know you do 

not want me to do that—I will give you the best answer I can, 

which is I know that we have testing going on, and I will get back 

to you with a response to the specific question that Mr. Brady 

asked, and I am happy to do that. 

Mr. ROSKAM. Thank you for doing that. 

So the question is: What is it that animates your hope that the 

activity of your agency that everybody says has this type of fraud 

rate—you agree with that, do you not? 

Mr. COHEN. I do not work on the Medicare program. So I am 

not involved with—— 

Mr. ROSKAM. You are not aware of the GAO report? You are 

not aware of the Attorney General’s assertions about fraud in 

Medicare? 

Mr. COHEN. That is not my job. 

Mr. ROSKAM. Okay. 

Mr. COHEN. I am focused on my job and doing what I—— 

Mr. ROSKAM. There is some news. 

Mr. COHEN [continuing]. Need to do. 

Mr. ROSKAM. Are you ready for some news? Here is the news. 

Your agency has all kinds of trouble as it relates to Medicare fraud, 

Medicaid fraud, error in payment rates, and what you have basically said is, ‘‘We are good.’’ 

Mr. COHEN. No. What I said is I see no connection between 

those issues and the issues that I am dealing with, none. 

Mr. ROSKAM. All right. Let me ask you a different question. 

You said earlier, and I jotted it down; you said earlier that the impact on the employer mandate delay is quite small. 

If it is so small, why has it not been fixed in 3 years? 

Mr. COHEN. I said that it was small because of the number of 

employers. Ninety-six percent of the larger employers who would 

be subject to the employer mandate already offer coverage. So the 

number of employers who do not offer coverage who will be subject 

to the mandate is relatively small. 

Mr. ROSKAM. But it is a fairly complicated problem that you 

have not been able to fix yet, right? 

Mr. COHEN. That is not my responsibility. It is—— 

Mr. ROSKAM. What is your responsibility, Mr. Cohen? 

Mr. COHEN. My responsibility is to implement the provisions of 

the Affordable Care Act as it relates to the private insurance market that are under the law given to the Department of Health and 

Human Services. That is my responsibility. It is not the employer 

mandate. 

Mr. ROSKAM. You have top people working on it. I yield back. 

Chairman CAMP. Okay. Mr. Pascrell is recognized. 

Mr. PASCRELL. Welcome to guerrilla warfare. Mr. Cohen, Mr. 

Werfel, thank you for being here today. I know you are answering 

to the best of your ability. 

I would imagine, Mr. Cohen, and correct me if I am wrong, since 

we are all here to help implement affordable health care for all 

American citizens, certainly not to undermine the program that is 

law, has been vilified by the Supreme Court in terms of mandates; 


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we are certainly not here to undermine it. We are here to help implement it, much like we had the problems when Medicare was 

first passed in the mid-1960s or Social Security. Both sides came 

together to try to help to implement the program. 

So if healthcare costs grew slower than the rest of the economy 

for the first time in more than a decade, and the proportion of requests from insurers to State regulators seeking approval of double 

digit premium increases and private health insurance plummeted 

from 75 percent—correct me if I am wrong—in 2010 to 14 percent 

so far in 2013—— 

Mr. COHEN. That is correct. 

Mr. PASCRELL. Now, my question is the following. Is this because of the good feeling of insurance companies? 

Number two, is it simply by chance? 

Number three, or is somebody manipulating the numbers and all 

of these things are not right, or what is the reason? 

Mr. COHEN. I would say there are a number of reasons, but 

among them are the increased scrutiny that insurance company 

rates have been getting as a result of the Affordable Care Act; in 

particular the medical loss ratio provision over the so-called 80–20 

rule which requires that insurance companies spend 80 cents of 

every premium dollar on actual healthcare costs rather than on administrative costs or profit, which means that if their premiums 

are too high, they are going to have to pay a rebate back to their 

enrollees. 

Mr. PASCRELL. Let me ask you this question, Mr. Werfel. One 

of the cornerstones of the Affordable Care Act was the availability 

of tax credits to make premiums affordable. Can you explain very 

briefly what tax credits are available for individuals and families, 

and who would qualify for those tax credits? Just give me a quick 

synopsis. 

Mr. WERFEL. Yes. If there is an individual who does not have 

affordable healthcare coverage and they come to the exchange, depending on their income level, if they are within 100 to 400 percent 

of the poverty line, then they would be eligible for support, income 

support. 

Mr. PASCRELL. That is like a sliding scale. 

Mr. WERFEL. Yes, yes. 

Mr. PASCRELL. Go ahead. 

Mr. WERFEL. And, again, I think this is important because it 

goes to the question of erroneous payments. The premium subsidy 

that they get goes directly to the insurance company. They never 

see the money, but they get less expensive premiums. 

Now, they can do it one of two ways. They can get it in advance. 

Mr. PASCRELL. Right. 

Mr. WERFEL. So they can start their enrollment with the exchange and this new insurance company that they are now a part 

of by getting money up front, money support up front paid to the 

insurance company, or they can pay their premiums out throughout the year and at the end of the year on their tax form file for 

a credit to cover the payments they have made. Either one is available to them. 

Mr. PASCRELL. Mr. Werfel, that means in New Jersey 990,000, 

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comes under 400 percent. What is the 400 percent, Mr. Werfel? 

Four hundred percent of what? 

Mr. WERFEL. Four hundred percent of the poverty line. 

Mr. PASCRELL. Okay. In New Jersey they are going to be eligible for either Medicaid or subsidized coverage through the exchange. That is the difference it is going to make in the State of 

New Jersey. 

So my good friend from Washington State and my good friend 

from Louisiana, with all good intentions, good men, good people 

who have brought a lot to this Committee and a lot to the Congress 

of the United States, they are not here to help us implement this 

legislation because we know there is going to be kinks. There are 

always problems with every piece of legislation. We have never 

passed the perfect piece of legislation in the Congress. Only God is 

perfect, not the Congress. 

So we try our best to get the best in front of us that we can pass. 

That is where we are. Why are we not helping each other try to 

get this done? 

I cannot answer that question. It is a mystery to me because 

they have never denied any of the positive data that we have put 

before, that anybody has put before with the results of what has 

happened with ACA already; they have never denied any of those 

facts. 

Mr. BRADY [presiding]. The gentleman’s time has expired. 

Mr. PASCRELL. Not one fact. Well, you have given people more 

time on the other side. I only took 30 seconds. 

Mr. BRADY. Thank you, sir. 

Mr. Gerlach. 

Mr. GERLACH. Thank you, Mr. Chairman. 

Mr. Chairman, first of all I would like to ask for unanimous consent to offer into the record an August 1, 2013, letter from the National Treasury Employees Union. 

Mr. BRADY. Without objection. 

[The submission of The Honorable Jim Gerlach follows:] 


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Mr. GERLACH. Thank you. 

Mr. Werfel, the information that the IRS will start gathering related to the Affordable Care Act and taxpayer information related 

to the Affordable Care Act, will the IRS consider any disclosure of 

that information to be a violation of Section 6103? 

Mr. WERFEL. Yes, if—— 

Mr. GERLACH. To any outside individual or entity or organization? 

Mr. WERFEL. If it is done outside of the appropriate rules and 

regulations, yes. 

Mr. GERLACH. Okay. Thank you. 

Both Mr. Cohen and Mr. Werfel, this follows up on the question 

that Mr. Pascrell just asked relative to who is eligible for tax credits that will be available through these exchanges. It was my understanding it was just going to be those that are citizens of the 

United States or here as permanent legal residents. Are there folks 

beyond that that are eligible for tax credits, taxpayer subsidies 

under this program? 

Mr. COHEN. You have to be a citizen or lawfully present. 

Mr. GERLACH. You have to be lawfully present. What does that 

mean? 

Mr. COHEN. Well, you could be here on a student visa and be 

eligible. 

Mr. GERLACH. Okay. So a student from Germany comes to the 

United States to do 4 years of college. That student is going to be 

subsidized by taxpayers for health insurance? 

Mr. COHEN. They are eligible for subsidies depending on their 

income, yes. 

Mr. GERLACH. Okay. Somebody comes to the United States on 

a travel visa, has a visa for a certain period of time, a number of 

months and perhaps wants to stay longer. Will that person be able 

to apply for tax subsidized insurance coverage while here? 

Mr. COHEN. Well, if they overstay the visa, then no. 

Mr. GERLACH. But they are able to apply while they are here 

legally, lawfully. 

Mr. COHEN. I believe so, yes. 

Mr. GERLACH. Okay. Are there any other individuals, a battered spouse, child or parent, that might be from another country; 

is that person eligible for the subsidy? 

Mr. COHEN. I am not sure I understand the question. 

Mr. GERLACH. Well, I am looking at the eligible immigration 

status list on page 20 of Appendix B that is on your website as to 

those who are eligible for this program, and one of the categories 

is battered spouse, child or parent. 

Mr. COHEN. I am just not familiar with that particular status. 

Mr. GERLACH. The reason I am asking is because I wonder who 

makes that determination that the person was, in fact, battered 

and, therefore, becomes eligible for the program? 

And how are you setting up the regulations in this program to 

have the kind of verification that the people that are applying for 

the subsidies are actually eligible based upon the structure of the 

program? How are you going to verify that? 

Mr. COHEN. The verification of immigration status is done 

through data from the Department of Homeland Security. 


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Mr. GERLACH. Okay. All right. And I know a few other of my 

colleagues have asked about their particular State. I am from 

Pennsylvania, from the southeastern part of the State, and it will 

be a Federal exchange established in Pennsylvania. Do you know 

the status of that exchange? And will it, in fact, be up and running 

October 1st in Pennsylvania? 

Mr. COHEN. Yes, it will. 

Mr. GERLACH. Okay. 

Mr. COHEN. And we work very closely, by the way, with the 

Pennsylvania Insurance Department. 

Mr. GERLACH. Have the rate filings been offered and submitted 

to CMS as part of the establishment of that exchange? 

Mr. COHEN. Issuers have submitted qualified health plans to be 

certified to be offered on the exchange of Pennsylvania, yes, and 

that—— 

Mr. GERLACH. So will the average family in my district see the $2,500 reduction in their premium? 

Mr. COHEN. I cannot speak to what the rates are going to be. 

That information will be made public in September. 

Mr. GERLACH. You indicate in your testimony that come August 15th, I guess in about 2 weeks, grants will be issued for the 

Navigator program. Will anybody in Pennsylvania receive any navigator grant monies? Do you know? 

Mr. COHEN. I am not involved in the grant award process for 

reasons that I am sure you can appreciate, but my understanding 

is there will be navigators in Pennsylvania. 

Mr. GERLACH. Do you know how many navigators in Pennsylvania? 

Mr. COHEN. The law says that we should have at least two, and 

I expect that there will be at least two. 

Mr. GERLACH. Okay. Thank you. I yield back. 

Mr. BRADY. Thank you. 

Mr. Price is recognized. 

Mr. PRICE. Thank you, Mr. Chairman. I want to thank you for 

holding this hearing. This is really an important issue, and it is our 

intention to make certain that the American people have the highest quality of health care available to them. 

And our concern is that this law is making it more difficult for 

them to have access to the highest quality of care. 

As a physician before I got to Congress, I can tell you that my 

former colleagues have an increasing concern about their ability to 

care for their patients in the way that they deem most appropriate. 

We heard from our friends on the other side that there are not any 

alternatives. I just keep reminding them about H.R. 2300, which is 

a comprehensive piece of legislation, patient-centered health care, 

that puts patients and families and doctors in charge of health 

care, not Washington, D.C. 

Senator Baucus described or said he was worried about the rollout of this being a train wreck, and what we are seeing today is 

a documentation of this train wreck. I think there is no doubt 

about it, as my colleagues have alluded to in so many areas. 

Mr. Cohen, you said that your job is to administrate the private 

insurance market as it interfaces with the ACA. Now, I know that 

you have not seen the—is that fair? 


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Mr. COHEN. That is not exactly what I said, but that is okay. 

Mr. PRICE. What is your job? 

Mr. COHEN. My job is to implement the provisions of the Affordable Care Act as they pertain to the private insurance market. 

Mr. PRICE. The private insurance market. Very good. I know 

you have not seen the Atlanta Journal Constitution today. Not 

many people have. This is the headline in the Atlanta Journal Constitution today. ‘‘Insurance Options Shrink,’’ sub-headline, ‘‘Georgia 

Online Marketplace to Offer Fewer Choices for Some Consumers.’’ 

Parts of the State are going to have one insurance company, one. 

Aetna and Coventry have announced that they are pulling out of 

the individual market for the exchanges. That is not the way this 

was supposed to work. Clearly, access to care, access to coverage 

is being limited in the State of Georgia, and I suspect it is true in 

other States across—— 

Mr. COHEN. No, that does not follow though because the—— 

Mr. PRICE. Mr. Cohen, there are areas of our State that will 

have one insurer offering coverage in the exchange. That is not an 

option. That is a demand. That is a dictate. That is forcing individuals into one program. 

Let us get to cost. We had a stakeholder call yesterday with CMS 

and HHS highlighting that the exchange in the State of Georgia is 

on track, their words, on track. The State Insurance Commissioner, 

Mr. Hudgens, has sent a letter to Health and Human Services Secretary, Kathleen Sebelius, stating that some rates in our State are 

increasing up to 198 percent higher than those plans currently 

available in the State. 

So if the State exchange is on track, is this how it was supposed 

to work? Are we supposed to have 198 percent increases for individuals in our State for the purchase of health coverage? Is that 

the plan, Mr. Cohen? 

Mr. COHEN. It is not, but I do not know what Commissioner 

Hudgens is referring to. So I cannot comment as to—— 

Mr. PRICE. You have seen the rate filings for our State, have 

you not? 

Mr. COHEN. I have not seen the rate filings for Georgia. 

Mr. PRICE. Your office has seen the rate filings. 

Mr. COHEN. The rate filings have been filed with us, yes. 

Mr. PRICE. So I would urge you to please check the rate filings 

for the State of Georgia, and the fact of the matter is that costs 

are going up for individuals, not decreasing $2,500 for families as 

the President promised the American people. 

Mr. Werfel, many of my constituents are really concerned about 

the IRS and the activity that has gone on so far, and you were here 

earlier documenting the concerns that you had about targeting organizations that were applying for tax exempt status, about the potential leaking of donor information to other groups, and we have 

huge concerns, and we will continue this conversation about donors 

that were providing resources to those organizations then being 

targeted for audits. 

You said, ‘‘No personal health information will ever be disclosed.’’ 

That is what you said today. 

Mr. WERFEL. We do not have any access to personal health information. 


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Mr. PRICE. I suspect if you were here a couple of years ago you 

would have said that no targeting of tax exempt groups or donors 

will ever occur. So you understand the concern that we have. 

I want to ask a question about this whole issue of marketplace. 

You said that the IRS shares information with 300 different agencies, and you said it only will share this information with the marketplace. What is the marketplace? 

Mr. WERFEL. That is the exchange. 

Mr. PRICE. So anybody that has access to information through 

the exchange will have access to—— 

Mr. WERFEL. No. 

Mr. PRICE [continuing]. Taxpayer information. 

Mr. WERFEL. No. There are procedures and controls in place to 

make sure, for example, if someone is on a screen in the exchange 

working with this information, they will not have access to the raw 

taxpayer data. The only way the raw taxpayer data can surface is 

if the individual taxpayer gives consent. 

Mr. PRICE. Just like there were procedures in place to make certain that tax exempt organizations were not targeted. 

Chairman CAMP [presiding]. All right. Thank you. 

Mr. Crowley. 

Mr. CROWLEY. Thank you, Mr. Chairman. 

Mr. Cohen, Mr. Werfel, are you both familiar with the word 

‘‘irony’’? 

Mr. COHEN. Yes, sir. 

Mr. WERFEL. Yes. 

Chairman CAMP. Alright. 

Mr. CROWLEY. Can I enter into the record a definition I got off 

the Internet? Irony is the use of words ‘‘to convey a meaning that 

is the opposite of its literal meaning; an expression or utterance 

marked by a deliberate contrast between apparent and intended 

meaning.’’ 

The hearing notice we received, a hearing on the status of the 

Affordable Care Act implementation—I would actually think my 

colleagues on the other side of the aisle are interested in how the 

Affordable Care Act will be implemented. Yet tomorrow, we will 

have the 40th attempt to undo the Affordable Care Act, to derail 

it. And, in fact, they will go after, Mr. Werfel, your agency and 

deny funding to your agency, for the purposes of carrying out what 

is your responsibility under the law, under the Affordable Care Act. 

Is that not true? 

Mr. WERFEL. That is my understanding. 

Mr. CROWLEY. Do you think it is ironic that we are having this 

hearing today? 

Mr. WERFEL. I am not sure how to answer that question. I will 

answer it in this way. The—in the nature of the questions that I 

have been taking—like, for example, how do we address issues related to potential fraud—my goal has always been to partner with 

Congress to—— 

Mr. CROWLEY. You would think they would actually care about 

the implementation of this bill. 

Mr. WERFEL. I would like to partner with this entire Committee 

on solutions the IRS can deploy and—— 


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Mr. CROWLEY. Mr. Werfel, Mr. Cohen, do you know what I 

think? I think they realize that maybe they won’t be successful tomorrow in actually undermining the Affordable Care Act, that they 

may have a one-House bill that, once again, would do away with 

the Affordable Care Act, but it will not become law. 

And somehow they must know that the implementation of this 

law maybe is important to the American people. But they, once 

again tomorrow, will fail the American people and themselves 

when they are not successful in actually undoing this law. But they 

have a responsibility, I guess, to ask the proper questions about the 

implementation. 

What I find really ironic in one respect is that my colleague, Illinois, was concerned about the true-up. Yet their side of the aisle 

has attacked the ability of the middle-class and the working people 

of this country to access the tax credits to the Affordable Care Act 

on a number of occasions. Never once have I heard them stand up 

and defend the interests of the working people of this country, who, 

for the first time, many of them, have the ability to afford health 

insurance in this country. 

Mr. Cohen, in terms of what would be helpful from Congress to 

aid with smooth implementation, are 40 repeal votes what you 

would consider being productive? 

Mr. COHEN. I don’t think they move the ball forward, in terms 

of my job, no. 

Mr. CROWLEY. And I will ask this question of both you, Mr. 

Cohen, and Mr. Werfel. Will tomorrow’s 40th repeal vote to block 

tax credits from going to working families help with the implementation of the Affordable Care Act in any way? 

Mr. COHEN. No. 

Mr. WERFEL. I don’t think it will have any impact. 

Mr. CROWLEY. Mr. Cohen, I would like to clarify one of the 

issues brought up earlier. There was talk of the hub that will verify 

transactions in the marketplace. Can you clarify, will any personal 

data be stored on the hub? 

Mr. COHEN. No. The hub just routes information from the secure data sources: IRS, Social Security, et cetera, so that we can 

verify information that people put on their applications. 

Mr. CROWLEY. Mr. Cohen, would you say that Members of Congress can be of assistance to their constituents as enrollment in the 

marketplace gets underway? 

Mr. COHEN. Absolutely. It would be wonderful if all Members 

of Congress would put out helpful, accurate information for their 

constituents so that they can understand the benefits of the law 

and how to—— 

Mr. CROWLEY. And Members of Congress would be a good resource for their constituents with questions or to help direct them 

to resources. Wouldn’t you agree? 

Mr. COHEN. Definitely. 

Mr. CROWLEY. When the Medicare Part D bill was passed, and 

I voted against it, and we went through a political charade of almost 4 hours on the floor to pass the bill, a lot of political armtwisting took place. I didn’t agree with that bill, I fought against 

the bill’s passage. But when it came to implementation, I never 


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once didn’t help a constituent access the benefits—although I 

thought they were limited—to that particular bill. 

Do you think it would be wrong if Members of Congress were not 

to help their constituents with the implementation of a law, when 

enacted, if asked? 

Mr. COHEN. I would hope and expect that all Members of Congress would help their constituents get the benefits of the Affordable Care—— 

Mr. CROWLEY. Mr. Werfel, do you agree, as well? 

Mr. WERFEL. I am not going to comment on how the Member 

deals with their constituents. 

Mr. CROWLEY. Okay, I appreciate that. Mr. Chairman—oh, my 

time is up, I will yield back. 

Chairman CAMP. All right. Mr. Smith is recognized. 

Mr. SMITH. Thank you, Mr. Chairman and Mr. Cohen, Mr. 

Werfel, thank you for being here today. In the context of my questions is my concern that the healthcare law will actually hurt the 

very individuals it was intending to help. 

But, Mr. Cohen, can you briefly explain the training for these 

navigators? How long do you anticipate this training to take? 

Mr. COHEN. Sure. It is an online course, a series of courses. It 

is expected to take about 20 hours. That is comparable to what 

many States require insurance agents and brokers to do before 

they are licensed to be able to be insurance agents and brokers, 

and it will cover—— 

Mr. SMITH. Now, the licensees in the private sector are required 

to take exams and maintain continuing education. And I would 

argue that it is a little more burdensome than just a 20-hour training course. 

Mr. COHEN. Well, the training course includes a series of tests 

as you go through the material, so you do have to answer questions 

and, you know, be successful in passing those tests in order to get 

to the end and—— 

Mr. SMITH. Okay, thank you. Mr. Werfel, I think it is fair to say 

that the protection of private information remains an unresolved 

issue at your agency. Are you confident that these data hubs can 

truly protect private information? I mean, I would expect you to 

say yes, but do—are there not unresolved issues relating to private 

information? 

Mr. WERFEL. Let me answer it this way. We have a—I mentioned earlier we have a strong track record here. Let me put some 

numbers to that of—I said earlier that we provide, under normal 

operating business, and under the law, the taxpayer information to 

300 Federal and State agencies. That is 8 million records a year, 

okay? Last year, we know of 24 incidents of this type of breach, 

where the information got into the wrong hands. So that is 24 out 

of 8 million. 

Now, every single one of those 24 incidents is concerning. And 

every time one of them happens, we make an assessment in terms 

of whether it was advertent or inadvertent, and we have a lot of 

reaction to try to churn and make improvements. The point I am 

making is that we have a historical track record of success in establishing safeguards to protect this information. It is imperfect. 


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But where there is a breach we take our responsibilities very seriously to correct them, going forward. 

Mr. SMITH. But some of those—many of those situations remain 

an unresolved issue. Is that accurate? 

Mr. WERFEL. In some cases, where they are still being investigated, we may be still evaluating what changes we need to make 

to prevent them from happening again. 

Mr. SMITH. Okay. Now, we heard earlier that perhaps there 

would be some subsidies offered individuals through their insurance plan. But certainly an undue subsidy would exist. And the necessity to recapture that undue subsidy, can you tell us briefly how 

that would be recaptured? 

Mr. WERFEL. Well, I think there were two things. First, you 

apply for a subsidy and you provide certain income information, 

and you are essentially predicting what your income information is 

going to be if you are applying for an advanced credit. You are saying, ‘‘When I get to file my taxes in 2015 for the 2014 tax year’’—— 

Mr. SMITH. It is based on prospective income, correct? 

Mr. WERFEL. Yes, you need to—— 

Mr. SMITH. And that could change. 

Mr. WERFEL. That could change. 

Mr. SMITH. It could increase. 

Mr. WERFEL. So you are relying on recent data to try to make 

a projection of what your income is going to be when you are applying for an advanced credit. So after we go through the whole year, 

now we know, at the end of that year, as the taxpayer is sitting 

down to file, what their actual income was. 

And so, we do a true-up or a reconciliation to see maybe if they 

should have been given more premium support, maybe they were 

given too much, and then we will do that true-up and work it out 

with the taxpayer. 

Mr. SMITH. Would you characterize that recapture as a tax increase? 

Mr. WERFEL. It could be that the taxpayer could owe more. It 

could mean that they could be due a higher refund. It depends 

on—— 

Mr. SMITH. Would you characterize that as a tax increase? 

Mr. WERFEL. I don’t think I would call it a tax increase, no, 

because the individual is coming in for a benefit. It might be a 

smaller benefit than they anticipated, but it is a benefit. 

Mr. SMITH. Okay. I mean, we heard last year, I think it was, 

that in the repeal of the 1099 mandate, the pay-for was a recapture 

of the subsidies, undue subsidies, in the exchange. And we were 

told in a pretty loud tone that would be a tax increase. I certainly 

would dispute that. 

Mr. WERFEL. And there might be—and we might be just talking 

past each other in terms of characterization. It is real money—— 

Mr. CROWLEY. Will the gentleman yield? 

Mr. SMITH. My time is limited, thank you. But my concern is 

that this creates confusion, it adds to the complexity. And certainly, as the exchange of information is out there, an increase to 

that, an increasing exchange of information, the more errors will 

occur. 

So, thank you. I yield back. 


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Chairman CAMP. All right. Thank you. Mr. Paulsen. 

Mr. PAULSEN. Thank you, Mr. Chairman. Obviously, the law is 

complex and confusing in many respects. Mr. Cohen, until July 

2nd, which is just earlier this month, the Administration was telling all individuals who worked more than 30 hours a week, ‘‘We 

are going to make your employer provide healthcare coverage. And 

if they don’t, you will get health care and a subsidy on the exchange.’’ 

Mr. COHEN. No, that is not true. Large employers were subject 

to that. 

Mr. PAULSEN. Large employers. Okay. Now, that—— 

Mr. COHEN. Small employers are never subject. 

Mr. PAULSEN. Okay, and that—but that is no longer true for 

2014, right? An employer does not have to offer coverage any more. 

Mr. COHEN. That is true. But as I have said, 96 percent of them 

already do. 

Mr. PAULSEN. But many individuals—so these individuals are 

now going to have to go into the exchange in 2014, all next year, 

in order to get coverage. And a lot of these folks have already seen 

their hours slashed, they are cut back, businesses are attempting 

to comply with the 30-hour rule. 

I even heard from, in my district, cities that are concerned about 

volunteer fire departments that are now—it is affecting their ability to employ volunteer firefighters because they are on call, and 

there are concerns that if they are on call for over 30 hours a week, 

or their work hours are over 30 hours a week, the city may have 

to provide health insurance, and that could cost hundreds of thousands of dollars. 

Mr. COHEN. That seems unlikely. 

Mr. PAULSEN. Well, these are all the concerns that are being 

raised now as a part of the complexities of the law. Clearly, that 

is out there. So—— 

Mr. COHEN. That seems like an unlikely scenario. 

Mr. PAULSEN. And I will follow up with you on that to make 

sure that we can clarify—— 

Mr. COHEN. You are talking about a volunteer. 

Mr. PAULSEN [continuing]. For that city. Now, again, this is 

confusing, it is disruptive to people’s lives. I mean, is this fair for 

employers, or their employees, that are trying to comply with this 

30-hour rule? People have had their hours cut back. 

Mr. COHEN. We are going to make it possible for millions of 

people who have been unable to have insurance previously to get 

health insurance. That is what we are doing. 

Mr. PAULSEN. Mr. Werfel, let me ask you this, because you acknowledged earlier that there have not been delays in some of the 

implementations of the various tax and revenue raisers that have 

gone forward that the IRS administers. And the IRS has not delayed the medical device tax, of course, which the Joint Committee 

on Taxation says the costs from which are going to be passed on 

to consumers and passed on to businesses in the form of higher 

premiums. 

Has the IRS done any analysis at all as to the financial or the 

administrative impact that is being placed on firms due to the tax? 


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Mr. WERFEL. We would certainly look at administrative impacts, because part of our goal is to help work with taxpayers to 

reduce burden and give them electronic services, and all the kinds 

of things we do with taxpayers to improve their taxpayer service 

with the IRS. 

Mr. PAULSEN. Does the IRS have any sense of the problems 

that have been faced by some of the companies in trying to comply 

with the tax so far? 

Mr. WERFEL. The taxes like medical device—— 

Mr. PAULSEN. The medical device tax, specifically. 

Mr. WERFEL. I would want to get back to you. I can talk to my 

team about anything they are hearing in terms of specific problems. I don’t have them at my fingertips. 

Mr. PAULSEN. Okay. In addition to the cost of the tax, would 

you agree that the cost of compliance, as the Joint Committee on 

Taxation says, would also have a negative impact on patient care? 

Mr. WERFEL. That is a policy call. I really can’t make a judgement on that. 

Mr. PAULSEN. I know that recent surveys among the companies 

that have had to comply with the tax have indicated that the cost 

for just the compliance side, not on the revenue aspect of it, because we passed the $1 billion mark earlier this month, but the 

compliance costs have been estimated to be somewhere around 

$667 million, actually, $667 million so far. That is in addition to 

the billions of dollars that are being diverted from maintaining and 

creating good quality jobs and high-tech innovation, et cetera, and 

research and development. 

And, Mr. Cohen, let me just do one followup, too, because you 

mentioned you have seen the rate filings in the different States. 

Now, is Minnesota set to comply on October 1st for having their exchange ready? 

Mr. COHEN. Yes. Minnesota is operating a State-based exchange, and they are doing well, and it will be operating in Minnesota. 

Mr. PAULSEN. Okay. Have you seen the rate filings, or has your 

office seen the rate filings for the plans being offered in Minnesota? 

Mr. COHEN. We wouldn’t have, since the State—it is a Statebased exchange. That is—the State is running the exchange. They 

will make them public whenever they make them public. 

Mr. PAULSEN. Okay. Can you say whether the average typical 

family would see a reduction in their premium of, again, the 

$2,500, which is the typical family? 

Mr. COHEN. I don’t know what the rates are going to be in Minnesota, no. 

Mr. PAULSEN. Okay. Thank you, Mr. Chairman. I yield back. 

Chairman CAMP. All right. Mr. Davis. 

Mr. DAVIS. Thank you very much, Mr. Chairman. I also want 

to thank the witnesses for being here. 

You know, I have listened to the discussion all morning. And it 

came to my mind that I have never seen the implementation of a 

new system, a new program, or a new law that covers the entire 

country, without there being some glitch or some glitches. It also 

occurred to me that the only perfection that I have ever seen were 


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Egyptian mummies. And, of course, they didn’t move. They remained as they were. 

I would imagine that if we were to ask one of the more than 30 

million individuals who, until now, had no access to health insurance if any of the reasons that we have heard this morning would 

be a reason to do what I call throw out the baby with the bath 

water because it is not as clear as we would like for it to be, I think 

the debate—and, of course, tomorrow we will vote on something, 

and we will not necessarily vote on what we are hearing today, because that is not exactly the purpose. Today, we are looking for 

perfecting ideas. I mean, how do we make the Affordable Care Act 

more effective? How do we improve it? How do we make sure that 

there are fewer glitches, as the implementation occurs? 

Let me ask you, Mr. Cohen, if we look at what has already taken 

place—I mean, not what we are talking about will happen in the 

future, but we have already seen a slowdown in healthcare cost 

growth in both national health spending and in Medicare. This 

week, the Council on Economic Advisors announced the slowest 

growth in health spending in 49 years. 

The only thing that I have heard year after year after year after 

year has been the increasing costs of health care, that we are 

spending more money and getting less. I am told that insurance 

companies now must spend at least 80 percent of their premiums 

on medical care, not other kinds of things. In 2012, Americans have 

saved $3.4 billion. That is a lot of money, even in Chicago, Illinois, 

where I live. That is a lot of money, $3.4 billion saved, and another 

$500 million in rebates. 

Could you share some additional benefits that we have already 

seen from the Affordable Care Act? 

Mr. COHEN. Certainly, I would be happy to. There have been 

3.1 million young people age 26 and below who have been able to 

get insurance through their parents’ employer coverage; 71 million 

Americans who have gotten expanded access to preventative services at no cost to them; 27 million women included in that who 

have gotten guaranteed access to additional preventative services 

without cost sharing; and 17.6 million children who have pre-existing conditions and now can’t be denied insurance coverage as a result of the Affordable Care Act. 

Mr. DAVIS. Let me tell you, those kind of benefits—I mean, we 

can nitpick about verification. We can nitpick about anything that 

we come up with. But the reality is the American people want to 

see implementation of the Affordable Care Act. And that is what 

we are going to get. I yield back. 

Chairman CAMP. Thank you. Mr. Marchant. 

Mr. MARCHANT. Thank you, Mr. Chairman. For 3 years now, 

we have been monitoring, in our office, the phone calls, the emails, 

and the letters about the Affordable Health Care Act. Ninety-five 

percent of the correspondence that I get from my constituents is 

against Obamacare. It is against the implementation. So, as a representative of my district, some of the questions I will ask are 

going to reflect that. 

When I look at this application, when I have looked through the 

entire application, and have listened to the testimony that we have 

had today—and I want to thank the Chairman for having this imVerDate Sep 11 2014 08:04 Jan 24, 2017 Jkt 021120 PO 00000 Frm 00078 Fmt 6633 Sfmt 6602 I:\WAYS\WAYSPS\21120\21120.XXX 21120

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plementation hearing—I am finding out that not only after my constituents are told that they are going to be breaking the law if they 

don’t have health insurance, and if they don’t fill out this application they are going to owe a penalty, and they get to the middle 

of this application and they find that this application asks them for 

some very, very personal information, and asks them about, actually, almost every bit of their financial life, now my constituents 

are very alarmed with all of the headlines about information being 

shared about their phone records, information being shared about 

their emails. They are alarmed. They are concerned that the government is learning way too much about their private lives, and 

that the government is sharing way too much of that information. 

You can’t be anything but alarmed after going through this application and then hearing today in this hearing that this information 

is going to be shared with State insurance agencies, it is going to 

be shared—it is going to be gathered by navigators who may be 

making $10 or $12 an hour, it is going to be shared with private 

insurance carriers, and that these private insurance carriers are 

going to be able to access information from the IRS. And they are 

alarmed. 

And nowhere in this document does it say that, by law, the Supreme Court has said that you do not have to take this insurance, 

that you can, in fact, pay a penalty. 

Mr. COHEN. Congressman, I would like to work with you to ease 

your constituents’ concerns, because no one has to provide any information about themselves unless they want a benefit, unless they 

want a subsidy. They don’t have to provide any information whatsoever. 

What the law says is your individual, personal responsibility is 

to have health insurance coverage. 

Mr. MARCHANT. In order to follow the law, they must fill out 

this application, or be—— 

Mr. COHEN. Well, I hope you will explain to them that is not 

true. 

Mr. MARCHANT [continuing]. Or be in violation of the law and 

pay a penalty. 

Mr. COHEN. Well, I hope you will explain to them that is not 

true, because it is not true. 

Mr. MARCHANT. Americans want to follow the law, they want 

to do the right thing. And they are going—and I believe they will 

go to this application because they feel like they must, to follow the 

law. 

Mr. COHEN. The application asks whether you want to receive 

a subsidy. And then, if you say yes, you go on to provide income 

information. If you don’t want to receive a subsidy from the government to help pay for your health insurance, you don’t have to tell 

us anything. Go out and buy health insurance. 

Mr. MARCHANT. If a responsible family fills this application 

out, how can it be assured that this information will not be shared 

with some clerk at Aetna Insurance Company, and that then the 

clerk will have access to go to the IRS and find out whether the 

information you gave in that is correct, or—— 

Mr. COHEN. You can—— 


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Mr. MARCHANT [continuing]. Some navigator sitting out at a 

tax-exempt organization that has a contract—— 

Mr. COHEN. You can assure them that Aetna Insurance Company will never see their personal information with respect to what 

their income is, never, based on filling out this application. 

Mr. MARCHANT. But we have had testimony today that says 

that the number of people that are going to receive personal IRS 

information is going to be significantly expanded. And you are saying that only if you desire this benefit will you then, de facto, be 

giving permission for this information to be shared. 

I am reflecting the concern of the people that live in my district 

about the—— 

Mr. COHEN. And I would like to help you alleviate that concern, 

because it is based on a misunderstanding of how this works. 

Mr. MARCHANT. Why does, at the very end of this application—— 

Mr. COHEN. The insurance company doesn’t get this application. 

Mr. MARCHANT. Why, at the very end of this application, does 

it give instructions on how a person can go register to vote? 

Mr. COHEN. Because Congress passed a law that says that 

whenever the Federal Government provides a benefit to people, it 

needs to provide an opportunity to let people know how to register 

to vote. It is called the motor voter law. 

Mr. MARCHANT. We also need to—— 

Mr. COHEN. That is a law that Congress passed, and we follow 

it. 

Mr. MARCHANT [continuing]. Let people know that a person 

does not have to fill this application out by law. 

Chairman CAMP. All right, thank you. Time has expired. Ms. 

Black. 

Ms. BLACK. Thank you, Mr. Chairman. I want to thank you for 

having this very important hearing. 

Mr. Cohen, I want to just get right into the questions, because 

just 3 weeks ago, we had, by rule, a statement that said you were 

not ready to fully verify income. What has changed in those 3 

weeks? 

Mr. COHEN. What has changed is that we have looked at our 

process, and we have confirmed that we are able to verify income 

for 100 percent of the applicants who will be submitting applications to the marketplaces. 

Ms. BLACK. You can verify for one to two percent? 

Mr. COHEN. One hundred percent. 

Ms. BLACK. One hundred percent. 

Mr. COHEN. Yes. We will be verifying—— 

Ms. BLACK. So, if that is the case, I am really curious how, in 

just 3 weeks, with a rule being put out just 3 weeks ago to say we 

do not have the technology to be able to do that, and yet 3 weeks 

later we are now seeing, oh, all of a sudden we have the technology 

to do that. 

Mr. COHEN. No. 

Ms. BLACK. How did that happen? 

Mr. COHEN. That is not right. We said we were going to sample, 

and now we have concluded that the sample size is going to be 100 

percent. 


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Ms. BLACK. Okay. 

Mr. COHEN. We always said we were going to do it, we just said 

we were going to do some. Now we are saying we can do all. 

Ms. BLACK. I don’t have the rule right in front of me, Mr. 

Cohen, but it did say that you did not have the technology to implement. And I don’t have it right in front of me. But let me go 

to my next point. 

On April 12th, here in this Committee, in a Ways and Means 

Committee, Secretary Sebelius claimed 15 times there would be no 

further delay in this law. And yet, the first of July we got a rule 

that said there would be a delay of the employer mandate, and that 

there would be a delay in the income verifications. And I just find 

that really interesting, that it was stated 15 times in our Committee that we are not going to have a delay. 

And now, Mr. Werfel, you claim that you are making efforts to 

verify the employer-sponsored coverage. You are making efforts? 

And, Mr. Cohen, you now tell us that tomorrow we are going to 

receive a new rule on the income verification. We are 60 days out. 

I don’t think you all are ready. I really don’t believe you are ready 

by what you are telling us here, that you are making efforts. This 

is 3 years worth of work. And we were told by the Secretary there 

would be no more delay. So, I think that you can’t have it one way 

and then something else comes up. 

But let me go to Mr. Cohen on this one. Can you tell me what 

the role of Equifax and other contractors will be on these recently 

signed contracts that you have with them on verifying and providing 100 percent? 

Mr. COHEN. Sure. Equifax is a source of data from employers 

that we will be checking the information that people put on an application against in circumstances where we can’t verify the information that has been provided from IRS data. We will check it 

against Equifax data, because that is a current source of how much 

people are getting—earning that exists, not for all employers, but 

for many employers. So it is another source of data that we can use 

to verify employment. 

Ms. BLACK. So you are saying in this Committee today that 100 

percent of the applications that are filed will have a verification of 

their income through whatever source, whether it is Equifax—do 

you have another contract besides Equifax that you use—— 

Mr. COHEN. And then, if we can’t verify against the sources 

that we have available, then we request documentation from the 

individual. They will have to provide us, for example, with pay 

stubs. 

Ms. BLACK. Okay. So, quickly, I want to go—because I know my 

time is going to run out here—I want to go to the whole claw-back 

issue. Because, Mr. Cohen, you mentioned earlier the IRS is supposedly going to be clawing back any fraudulent payments when 

people file their tax returns, and somehow the Administration 

thinks this is going to deter fraud. 

But, Mr. Werfel, this question is for you. Can you please explain 

to the Committee to what degree the IRS has been able to recover 

fraudulent payments that have been made through similar advanced tax credits in the earned income tax program and also the 

educational tax credit? 


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Mr. WERFEL. Well, a couple of things in terms of the clawback, 

to clarify, because there is a difference between the earned income 

tax credit and here. And again, I made the point earlier. The taxpayer doesn’t actually receive funds. The funds go to the insurance 

provider. 

Ms. BLACK. I understand that. 

Mr. WERFEL. And that is important, because—— 

Ms. BLACK. But that is still money that goes out the door. 

Mr. WERFEL. I agree. 

Ms. BLACK. Those are Federal dollars—— 

Mr. WERFEL. I agree. 

Ms. BLACK [continuing]. That the hard-working taxpayer is paying. And that is—and I know my time is going to run out here, but 

$11 billion were fraudulently doled out—by the Inspector General’s 

report—in the earned income tax credit, $11 billion a year, and $3 

billion in the education tax credit. And he testified in this very 

Committee that they have been—and these are his words—‘‘incredibly unsuccessful in clawing back that money.’’ 

Mr. WERFEL. I know we are running out of time. Let me commit to work with your staff, if you will allow it, to explain the procedures that we have in place to get money returned to the IRS in 

the earned income tax credit, and how it is going to work in the 

ACA. 

Ms. BLACK. Would you please do that? 

Mr. WERFEL. I will. 

Ms. BLACK. Because, as I said, this is absurd. We are 60 days 

out from full implementation, 3 years later, we are still rewriting 

this train wreck. 

Chairman CAMP. All right. 

Ms. BLACK. And it is time that this Administration admits it is 

not ready and we need to delay this train wreck. 

Chairman CAMP. All right. 

Ms. BLACK. I yield back. 

Chairman CAMP. And, Mr. Werfel, I realize you are relatively 

new to the position, but I want you to know, with these improper 

payments, I have been raising that issue with the previous commissioners of the IRS for several years, and not gotten concrete proposals on how this Committee might be able to address the problem of improper payments. And that is why there is a concern here. 

But—— 

Mr. WERFEL. My commitment would extend to you and your 

staff, as well, to roll up sleeves and talk about the issue, absolutely. 

Chairman CAMP. All right. Mr. Larson. 

Mr. LARSON. I thank the Chairman. And I thank our witnesses 

for being here this morning. And I want to commend our Chairman. As this Committee has conducted business over the last several—this past year, in fact, and before that, our Chairman is to 

be commended for the bipartisan nature of which we have done 

things together. 

This hearing, however, today does not take on that same feeling. 

In fact, I will bet at one point or another Mr. Cohen and Mr. Werfel 

might have felt like this was part of an inquisition rather than a 

hearing. But I assure you there are no Torquemadas on the other 

side; they are indeed good people. And it is unfortunate that, like 


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the way in which we are working on tax reform, we couldn’t be 

working on constructing the Affordable Health Care Act in a way 

that serves people. 

Just quickly, without the Affordable Health Care Act, all of the 

provisions that you talked about that people are currently enjoying, 

what would happen to them? They would not be there or available 

to the 3.1 million people who receive specific benefits, the 17.6 million children, or the 71 million elderly in preventative care. That 

would all be gone, correct? 

Mr. COHEN. If the law were to be repealed, yes. 

Mr. LARSON. If it were to be repealed. The goal here is to repeal. There is no substitute, there is no replacement. 

What would insurance costs be without this Act? What was the 

trend with respect to insurance costs? 

Mr. COHEN. Insurance costs, health insurance costs, were going 

up at a much higher rate before than they are now. 

Mr. LARSON. That is, in fact, true. And so, now, with the exchange coming on, the truth of the matter here is that what we 

have is not something that CMS oversees, like Medicare, which is 

single payer—and many on our side would have preferred either a 

single payer system or Medicare-for-all-system—what we have is 

an amalgamation of different systems. But it is primarily the seed 

of an idea that was put forward by the Heritage Foundation, an 

idea that was then implemented by a Republican Governor in a 

Democratic State. And, as you heard Mr. Neal say, done very successfully because Democrats and Republicans worked together to 

put this through. 

And now we have an opportunity to take the very best of public 

health, the very best of science, technology, and innovation, and the 

very best of entrepreneurialism, and drive down the most inefficient business in this country, which is healthcare delivery. I repeat. The most inefficient business. 

And so, we have the tools and the techniques that the other side 

should be joining with us to use that, by the way, would drive 

down the national debt, would make health care more accessible, 

affordable, and create a new paradigm where patient outcome and 

wellness is the goal, not so much the delivery in a hodge-podge 

manner. And it is because the private sector now is coordinating 

care under the Affordable Health Care Act that we see the tremendous opportunity for great gain. 

But instead, here in Congress, we persist on playing tastes great, 

less filling. We see yet the 40th time that a bill is going to be repealed, dragging before us again people from the various agencies, 

instead of saying, ‘‘How can we work together,’’ trying to play 

gotcha and what is going to go wrong within the agency. The American people are fed up with this. We are going to go through this 

charade one more time before we exit, because it is a political point 

that has to be made. 

But what the American people want to see is affordable health 

care, is the deficit paid off. We have the framework, the context to 

do it. My God, Mr. Chairman, let’s work together to get this done. 

Let’s use these agencies. Let’s not go after these people who are 

trying as hard as they can to get an Act in front of the American 

people that will allow them and assist them to get the healthcare 


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coverage that they need. This is a good thing for the American people, and it is something that we should be working on together, not 

fighting with one another over. Thank you, Mr. Chairman. I yield 

back my time. 

Chairman CAMP. Thank you. Mr. Young is recognized. 

Mr. YOUNG. Thank you, Mr. Chairman. Thank you, gentlemen, 

for being with us today. I am concerned about the adverse impact 

that the Affordable Care Act is going to have on our hourly employees. There has been a discernable and dramatic shift from full-time 

to part-time work in recent months. Schools, colleges, cities, and 

restaurants throughout my district in Indiana have reported this 

on the ground to me. But this is not just anecdotal evidence that 

I have. 

You look at the national trends. According to the Labor Department, since January roughly 100,000 fewer Americans are working 

full-time. The June Jobs Report indicates that 322,000 people have 

seen an increase—there has been an increase by 322,000 people— 

in the number of Americans who want to work full-time but can 

only find part-time work. 

So, what is driving this trend? It is the Affordable Care Act, in 

large measure. You have employers that are chopping up their fulltime positions into part-time positions, so that they can stay under 

that 30-hour threshold, which is mandated under the so-called employer mandate. An employer mandate is driving up costs on businesses, estimated—according to our Federal Government—at $106 

billion. 

And, you know, there are a number of people who are living from 

paycheck to paycheck that I talk to on a regular basis who are not 

just hurting, they are angry. They are angry at those who put this 

law into place and those who are implementing it. And they want 

reforms. 

And so, I do come here in the spirit of partnership to try to identify those reforms. I would note that President Obama has already 

signed seven of the so-called partisan and meaningless bills, which 

he, on a regular basis, despises in his speeches. He has responded 

to the employer community by delaying the employer mandate. 

These are both actions that the President has taken. I wish he 

would also extend mandate relief to individual rank-and-file Americans and their families by also delaying the individual mandate. 

But I am going to ask you a few pointed questions here. Do you 

think that the Administration could support, as another possible 

measure, repealing the new definition of full-time of 30 hours, 

which it has never been popularly understood to be, and restoring 

the traditional 40-hour definition, as it applies to this Act? 

Mr. WERFEL. I will start by saying I am just not the right government official to answer that question. I think I would defer to 

Treasury on those types of policy calls. 

Mr. COHEN. Right, that is not mine, either, I am afraid. 

Mr. YOUNG. Okay. Well, the Tax Code, of course, is your forte, 

so I will ask you this. Can you point to any other places within the 

Internal Revenue Code where full-time is defined as being 30 hours 

a week? 

Mr. WERFEL. I will look into that and get that answer for you. 

I don’t have it at my fingertips. 


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Mr. YOUNG. I believe I know the answer. 

Mr. WERFEL. Okay. 

Mr. YOUNG. I am not the Commissioner of the IRS, I am not 

the guy in charge, but I think the answer is no, it has never been 

defined as 30 hours, and that is why the American people understand it to be something much higher than that. 

Do you believe a 1-year delay of the employer mandate, as you 

consult with your bosses—do you believe that is going to stop this 

trend of reducing the number of hours that our hourly employees 

are receiving, from 34 hours down to, say, 29 hours, the so-called 

29er effect? 

Mr. WERFEL. I am not sure. I mean, what we are hearing from 

employers is they wanted an opportunity for two things; to talk, 

have more time to work with the Treasury Department and the 

IRS around how these regulations are constructed and how the reporting provisions will exist; and they also wanted more time to develop and ramp up their technology and process solutions to meet 

the new requirement. 

Now, whether that then, in turn, has other impacts on their business, I would imagine it would. I don’t know what impacts it might 

have on their business, but a directive we had from them is more 

time to both work with us on the requirements themselves and give 

them time to develop the systems needed to meet those requirements. 

Mr. YOUNG. Well, we have another Jobs Report coming out on 

Friday and others to follow. So we will see whether or not this 1- 

year delay has any impact on the reduction of number of hours, 

and thus wages, of these workers who are on the margins of our 

economy. Thank you, and I yield back. 

Chairman CAMP. All right. Mr. Renacci. 

Mr. RENACCI. Thank you, Mr. Chairman. I thank the gentlemen for being here. I know it has been a long day so far. 

But, Mr. Cohen, help me out with my constituents. You know, I 

represent a district where I was a businessman there for almost 28 

years before coming here. You made a statement that I wrote 

down. It said health insurance rates were going up at a much 

higher rate than they were—— 

Mr. COHEN. They have since, yes. 

Mr. RENACCI [continuing]. Since the Affordable Care Act. But 

when I go back home, and I go back to those same businesses, and 

I remember when I operated them, health insurance costs were 

going up, they were going up 7, 8, 9 percent, sometimes 11. Today 

32, 52—63 is one of the percentages I have gotten from some of 

those businesses that I dealt with. 

Explain to me—tell me what I should be telling them, because 

you just said healthcare costs are going down. But that is not what 

is happening in Ohio, by the way—— 

Mr. COHEN. Well—— 

Mr. RENACCI [continuing]. Which, as you know, is expected— 

premiums are expected to increase 88 percent. 

Mr. COHEN. So, obviously, I am talking about, you know, averages across the country. I am not talking about a specific business 

in Ohio, so I can’t necessarily speak to—— 


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Mr. RENACCI. I am talking about a district, too. I am talking 

about an area—— 

Mr. COHEN. I am not talking about a specific district in Ohio. 

But one thing you can tell them that is a real benefit to small businesses under the Affordable Care Act, once it is fully implemented 

in 2014, actually there are two things. 

Traditionally, businesses with high—in higher-risk types of employment, say construction workers, the cost of healthcare coverage 

for them was extremely high, because they could be up-rated based 

on an industry factor. They can’t do that anymore, beginning in 

2014. 

The second thing is that, for smaller employers, if you had one 

employee with high health costs, you could be up-rated because of 

the health condition of that one employee. They can’t do that anymore after 2014. 

So, there are some benefits that are going to come into effect 

starting next year that are going to have a real significant impact 

on the cost of coverage for small business. 

Mr. RENACCI. So you would—you are saying hold on, it is coming, even though they are experiencing all these high rates. 

Mr. COHEN. Well, not all the provisions have gone into effect. 

But beginning in 2014, these will. 

Mr. RENACCI. Well, again, just so we know, I mean, that is kind 

of the comments you have been making today, that, in general, 

costs are coming down. I am afraid my district is not experiencing 

that. 

Mr. Werfel, regarding the data hub, you know, my constituents, 

my colleagues—I am even somewhat concerned. We talk about sensitive taxpayer information being prepared for October 1st, you 

know, having this all ready. You said you are going to have everything ready October 1st. Correct? 

Mr. WERFEL. With respect to the transmission of tax data 

through the hub to the exchanges, yes. 

Mr. RENACCI. Would you be willing to demo that system for 

Members of this Committee in September, before it is—before you 

implement it? 

Mr. WERFEL. I will consult with my staff to make sure that 

something like that can be done. But anything we can do to provide 

you more information on how the process will work, and to give you 

assurances about what we are doing, I am committed to that. 

Mr. RENACCI. Well, if it is ready to go October 1st—you are 

saying it is going to be ready to go October 1st? 

Mr. WERFEL. It is absolutely ready to go October 1st. Yes, I 

think—— 

Mr. RENACCI. Unless there is—— 

Mr. WERFEL [continuing]. We just have to work out what you 

mean by ‘‘demo.’’ But, yes, we will get you what you need in order 

to understand exactly how the process works, and we will work, in 

terms of what the demo looks like. But, yes, I am committed to do 

that. 

Mr. RENACCI. So sometime in September we could expect that? 

Mr. WERFEL. Yes. We will work with—I will have my staff work 

with yours. 


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Mr. RENACCI. Can you tell me how much the Department has 

spent to date to implement this new system? 

Mr. WERFEL. I do have statistics for the various costs of the 

systems. There are a variety of different systems involved. But as 

an example, you know, in terms of the transactional portal, the 

gateway for data passing to and from IRS, $3.1 million spent to 

date. I mean, I can go through all the numbers, but I think what 

might be helpful is for me to just give you a rack-up, a detailed 

rack-up, of costs to date or by fiscal year. And I can provide that 

information to you. 

Mr. RENACCI. All right. I would appreciate that. 

Mr. Cohen, can you explain? I know you have said a number of 

times that the exchanges will be ready to go on October 1st. What 

is the back-up plan if they are not? Do you have a back-up plan, 

or is there—I mean—— 

Mr. COHEN. Well, there is no ‘‘if not.’’ I mean, people will be 

able to go online and submit their data and enroll in coverage. 

There are—you know, we will be sure that the opportunity to get 

enrolled in the coverage will be available. I mean—— 

Mr. RENACCI. There is no back-up plan? 

Mr. COHEN. Well, we have a lot of different procedures in place 

to make sure that is possible, but there is no ‘‘it’s not going to 

work.’’ It is going to work. 

Mr. RENACCI. All right. And, Mr. Cohen, you have said a number of times today, too, that you are going to do 100 percent 

verification of income. 

Mr. COHEN. Right. 

Mr. RENACCI. One hundred percent. That is a—I just want to 

make sure. Now, when you say that—— 

Mr. COHEN. Yes. 

Mr. RENACCI [continuing]. Are you talking about, in 

verification—and I am a CPA, so sometimes—— 

Mr. COHEN. Okay. 

Mr. RENACCI [continuing]. You verify by looking at this document, that document. You know, someone—if you go to Equifax, 

and they give you an incorrect number, but it is the number they 

gave you, are you going to call that verification? I am just trying 

to get—— 

Mr. COHEN. We are going to compare the information that the 

applicant gives us against available data sources: IRS, SSA, 

Equifax. And then we are going to see if we can verify that way. 

If we can’t, we are going to get additional information from the applicant, such as pay stubs. 

Mr. RENACCI. So a year-and-a-half from now, if you come back, 

you will be able to testify you have verified 100 percent? 

Mr. COHEN. Well, that is the system we are designing, so—— 

Chairman CAMP. Time has expired. Mr. Blumenauer. 

Mr. BLUMENAUER. Thank you, Mr. Chairman. I am intrigued 

by my friend from Ohio talking about 88 percent premium increases, because we are seeing States that are working to try to implement the legislation, and are doing so in aggressive and 

thoughtful action, and are actually seeing the opposite. We are seeing reductions in New York, reductions in California, reductions in 

the State of Washington. 


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Mr. Chairman, I would like unanimous consent to enter into the 

record what is happening in Oregon in terms of lower costs, better 

care. One of the problems in some of these States coming up with 

the scare tactics is people are actually not comparing apples to apples. They are not comparing health care that no longer has preexisting conditions, no longer can cherry-pick in terms of inadequate coverage that previously people had. 

And I am—I find this unfortunate. But I find it entirely consistent with what has happened in this Committee. When we had 

the Prescription Medicare Drug program jammed through in the 

middle of the night after unprecedented arm-twisting, some Republicans claimed borderline bribery, leaving the machine open for 21⁄2, 

3 hours, whatever it was. And these were not our approaches in a 

program that wasn’t paid for, unlike this. We could have sabotaged 

it. We could have picked away at it. But, to the best of my knowledge, all of us kind of rolled up our sleeves. That was the law. 

There is an opportunity to give benefit to people. And we were 

moving forward to try to improve it. 

I heard some concern from my friend, Mr. Ryan, about what is 

going to happen with some of the people who may run athwart the 

penalty provisions. There may be—I find that ironic, because this 

Committee Majority actually took action to make the cliff worse, to 

magnify the effect of the claw-back, to put more people at risk of 

having to pay back more money. There was one provision that 

would have eliminated it altogether. And I just—I find that emblematic of what is really sad, that for the first time we have a 

party committed to undermining a law, not fixing it, not refining 

it, not trying to truly clarify where the problems are, and working 

together to solve them, but to throw sand in the gears. I mean, the 

IRS is having furlough days, for heaven’s sake. I don’t know any 

business that lays off its accounts receivable. 

Undercutting the information, having interminable hearings— 

dragging thoughtful men and women who would like to be out 

doing their job, implementing the law—on pointless exercises to repeal a law that is not going to be repealed, and thus making it 

harder to have a smooth implementation, harder to give people the 

information, harder to work out the glitches. Nobody would have 

designed the bill the way it is. It is a B-minus. But, because of a 

complete collapse of the legislative process in the Senate, we had 

to do it through reconciliation. And then, ever since, there has been 

this assault on its implementation. And I think that is sad. I think 

it is unfortunate. It short-changes men and women around the 

country who would like to take advantage of the provisions. 

And, as I will illustrate from the information I am submitting for 

the record from Oregon, there are some real advantages here. It is 

going to be fascinating watching in a year States that have rejected 

money for Medicare, States that have rejected setting up their own 

exchanges and trying to work, compared with States that have, is 

going to be a positive benefit. I hope that this is the last time we 

see a concerted effort to sabotage a government program and benefits for our citizens, as opposed to refining, fixing, debating, and 

moving forward. 

But, Mr. Chairman, I appreciate your having the hearing. I 

would appreciate, Mr. Cohen, if you could provide in writing the 


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answer to Mr. Ryan, where the hypothetical that he came up with, 

the young woman would be eligible to apply if she is not a dependent. If that could be made a part of the record I would appreciate 

it. I see my time is up, but if you could provide that for the Committee, I would deeply appreciate it. 

Mr. COHEN. I would be happy to. 

Chairman CAMP. And, without objection, the gentleman’s information that he will submit for the record will be allowed. 

And I do want to note to the gentleman that this is the first oversight hearing on implementation of the healthcare law this Congress that the Committee has had, the first and only so far. 

So, with that, we will go to Mr. Griffin and then to Mr. Schock. 

Mr. GRIFFIN. Thank you all for being here. I appreciate it. I 

take this hearing seriously. And everybody up here represents 

about 700,000 people. And people I represent don’t agree necessarily by the same margins with some of the other folks that sit 

up here. I represent a district where people oppose, in large part, 

this law. And that is just a fact. So when I speak, it is not Tim 

Griffin giving you my opinion only. I am speaking for Americans 

who have grave concerns. So I think it is important to have this 

discussion. 

And, you know, I have heard today talk about passing bills that 

have zero chance of becoming law, that we don’t want to improve 

the law. Well, last time I checked, seven of those we have passed 

have become law. I am holding the list right here. So if you doubt 

that we want to improve it, as well as get rid of it, they are not— 

these are not inconsistent. You have a long-term goal and a shortterm goal. And we have passed numerous bills here that the President has signed into law, at least seven. And the biggest change, 

the gutting—at least for 1 year—of the employer mandate, that is 

what my bill was introduced to do. The worst the White House 

could say about it was that it was redundant. I wanted to comply 

with the law, I thought it would be better if Congress spoke on that 

issue. 

So, I take issue with the idea that somehow these bills can’t become law. I think there are a lot of laws that people on both sides 

of the aisle oppose, and they will work their time in Congress to 

appeal them. This is one of them that I am focused on. 

But I want to mention a number of things here. Sometimes I feel 

like the discussion is not rooted in the reality that I hear. Okay? 

So, I am going to get away from my opinions, get away from the 

opinion writers, and I just want to read some of these headlines 

from news stories, so that we can all agree that this is out there 

around the country. I think this is important, so I am going to just 

read some of these. 

These are headlines from the Associated Press: ‘‘Florida Insurance Officials Say Rates Will Rise Under the ACA’’; ‘‘Georgia Insurance Rates Spike Under Obamacare’’; ‘‘Chattanooga Business 

Owner Says Obamacare Costing Workers Pay Raises and Benefits’’; 

‘‘Maryland Consumers Could See 25 Percent Premium Increases 

Under Obamacare’’; ‘‘UNA Asks Student Employees to Work Fewer 

Hours’’; ‘‘Half of Affordable Care Act Cost Center Jobs Will Be 

Part-Time’’; ‘‘Obamacare to Impact Franklin County Workers’’; 

‘‘Wisconsin Grocery Store Forced to Cut Hours, Due to Obamacare’’; 


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‘‘White Castle on Obamacare: ‘We May Only Hire Part-Time Workers’ ’’; ‘‘Wellpoint Sees Small Employers Dropping Health Coverage’’; ‘‘Growing Worries About Obamacare Forcing Insurers Out 

of State Markets’’; ‘‘Full-Time Versus Part-Time Workers: Restaurants Weigh Obamacare’’; ‘‘Obamacare Forces Work Hour Limits for Students’’; ‘‘Brevard Cuts Some Workers’ Part-Time Hours 

to Avoid Obamacare Rules’’; ‘‘Obamacare Delays the Relief for a 

Family Business’’; ‘‘Texas Business Owner Facing $1 Million in Annual Obamacare Costs.’’ And I have pages and pages and pages 

and pages. And I will be reading these on the floor of the House 

tonight. 

But the point is these aren’t manufactured concerns. These aren’t 

opinions. These are The Hill and the Missourian, the Huffington 

Post, and others. These are real news articles. So in a serious way, 

I am trying to convey that a lot of our objections and concerns reflect the concerns of our constituents. 

I hear it every day. I received a text on the way—I was over 1 

minute—on the way over here I received a text from a constituent 

who has my cell phone number—most do—telling me her objections 

to Obamacare and the Affordable Care Act. So this is real, and it 

is real for our constituents. And I just want to make sure that you 

hear that side of it. It is not all Washingtonspeak. We are communicating what our constituents are telling us. And they are scared, 

and they are concerned. 

Thank you all for coming, I appreciate your time. 

Chairman CAMP. Okay. Mr. Schock. 

Mr. SCHOCK. Thank you, Mr. Chairman. Thank you, gentlemen, 

for your patience and cooperation with our questions. 

Let me just start at the 30,000-foot level. Mr. Cohen, your responsibility is to carry out and implement the Affordable Care Act. 

And, obviously, this is a law that was hotly debated, passed the 

Senate, passed the House, signed into law by the President, is the 

law of the land. Your responsibility, as a Federal employee, is to 

carry out and implement that law. 

The President has decided—the Administration, I guess I should 

say—the President vocalized his unilateral decision to withhold implementation of a portion of that law, specifically the employer 

mandate. I am just wondering, from your perspective as that Federal employee, did you seek any legal counsel or legal opinion on 

whether or not you could go ahead and not implement a portion of 

the law passed by Congress and instead move forward on a dictate 

from the President inconsistent with U.S. law? 

Mr. COHEN. I haven’t, but I would point out that portion of the 

law is not one of the ones that I am tasked with implementing. 

That portion of the law is the Treasury Department, the IRS’s, not 

mine. 

Mr. WERFEL. And I will answer that—— 

Mr. SCHOCK. Mr. Werfel. 

Mr. WERFEL [continuing]. There was a—I was not in these 

meetings, but there was a team of lawyers, as I understand it, who 

evaluated the legal issues surrounding this decision on the employer provisions. So I think there was significant legal review of 

the issue. 


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Mr. SCHOCK. Can you get to us the names, specifically, of who 

gave that legal opinion, whether it was Treasury Department attorneys, or whether it was legal staff at the White House, who specifically weighed in on the legal interpretation to determine the executive branch could unilaterally make a decision of not upholding a 

U.S. law passed by Congress and signed into law by the President? 

Mr. WERFEL. I will consult with Treasury on the best way to 

respond to your question. 

Mr. SCHOCK. Okay, thank you. I think that would be helpful. 

Because I think it is confusing to Americans to watch us debate 

laws, watch them be enacted, and then see, maybe for legitimate 

reasons, the President say, ‘‘Look, this isn’t ready for implementation,’’ and rather than go back to Congress and say, ‘‘Look, we need 

permission to not do X, Y, or Z, the executive branch simply says, 

‘‘We are just not going to do it.’’ I think it speaks not only to the 

credibility of this law, but I think it also undermines the credibility 

as we work on other important challenges and issues facing our 

country, whether it be immigration, our national debt, and the like. 

That trust is so important between the executive and the judicial 

branch—or executive and the legislative branch, as well as with 

the American people. 

Mr. Werfel, you mentioned in your comments earlier in reference 

to the IRS and Treasury union employees who wish to opt out of 

the exchanges, that you thought it was appropriate that those employees be able to stay with their current policy because they are 

happy with it, happy with their policy. I am wondering whether or 

not, given the fact that there have been several thousand exemptions given out to different businesses and labor groups not to have 

to comply with the law, whether or not the Treasury union employees would be able to apply for a similar exemption? 

Mr. WERFEL. I think, if I understand the issue correctly, the 

Federal employees and the IRS employees would not need to do 

that. The NTEU statement was in response to a proposed piece of 

legislation that would have required Federal employees to move 

into the exchange framework. And so they were saying, ‘‘We prefer 

for that legislation to not pass, because, again, we already have affordable healthcare coverage, and we are happy with our current 

program.’’ 

So, there is no need for a waiver for the IRS employees, as far 

as I understand the law today. 

Mr. SCHOCK. So how would they be exempted, or how—— 

Mr. WERFEL. Well, they—the reality is that you only go to the 

exchange if you are unhappy with your health care—it is an option. 

You go to the—you have to have health insurance, right, under the 

law. But as a Federal employee you have health insurance, so you 

are covered. You wouldn’t need to go to the exchange, unless you 

were unhappy. 

Mr. SCHOCK. But the law requires them to go to the exchange. 

That is the problem. 

Mr. WERFEL. No, it does not. 

Mr. SCHOCK. Well then, why are they—— 

Mr. WERFEL. Because the proposed bill that was being considered and introduced would have had this requirement in place. It 

would have basically taken away the normal Federal employee 


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health benefit plan, and required them to move to a different 

health benefit plan, which would have been through the exchanges. 

And they were basically saying, ‘‘I don’t want that law to be 

passed, because I am’’—— 

Mr. SCHOCK. So they don’t want to have happen to them what 

is happening to Congress. 

Mr. WERFEL. Well, but—because they were saying—because 

that—well, yes. That is right. 

Mr. SCHOCK. That just makes it much clearer. 

Mr. WERFEL. That is correct, yes. 

Mr. SCHOCK. Thank you. Finally, I just want to hit on the selfattesting—it sounds as though you have a plan in place, Mr. 

Cohen, to speed up the process of being able to verify income. I just 

want to very quickly throw out a few figures. 

In Illinois they did the self-attesting and verification later, just 

on the Medicaid portion. And they found, just in their initial investigation, 20,000 Medicaid cases, 13,000 of which should not have 

gone on to Medicaid, they did not meet the income verifications. So 

these people self-attested, ‘‘Yes, I qualify.’’ Two-thirds of them, 

after the agency followed up, actually were thrown off. So I think 

that is a problem, if we are going to say yes now and verify later. 

And I would suggest that maybe there ought to be a way that we 

verify their income first, before they start getting a benefit. I yield 

back. 

Chairman CAMP. All right. Time has expired. I want to thank 

both Mr. Cohen and Mr. Werfel for being here and being willing 

to answer all the questions that Members of the Committee put 

forward to you. 

And, with that, this hearing is adjourned. 

[Whereupon, at 1:02 p.m., the Committee was adjourned.] 

Æ 


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