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23–646 PDF 2017

FROM PREMIUM INCREASES TO FAILING CO–OPS: 

AN OBAMACARE CHECKUP 

HEARING 

BEFORE THE

SUBCOMMITTEE ON HEALTH CARE, 

BENEFITS AND ADMINISTRATIVE RULES 

OF THE

COMMITTEE ON OVERSIGHT 

AND GOVERNMENT REFORM 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED FOURTEENTH CONGRESS 

SECOND SESSION 

JULY 13, 2016 

Serial No. 114–122 

Printed for the use of the Committee on Oversight and Government Reform 

( 

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

http://www.house.gov/reform 


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COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM 

JASON CHAFFETZ, Utah, Chairman 

JOHN L. MICA, Florida 

MICHAEL R. TURNER, Ohio 

JOHN J. DUNCAN, JR., Tennessee 

JIM JORDAN, Ohio 

TIM WALBERG, Michigan 

JUSTIN AMASH, Michigan 

PAUL A. GOSAR, Arizona 

SCOTT DESJARLAIS, Tennessee 

TREY GOWDY, South Carolina 

BLAKE FARENTHOLD, Texas 

CYNTHIA M. LUMMIS, Wyoming 

THOMAS MASSIE, Kentucky 

MARK MEADOWS, North Carolina 

RON DESANTIS, Florida 

MICK MULVANEY, South Carolina 

KEN BUCK, Colorado 

MARK WALKER, North Carolina 

ROD BLUM, Iowa 

JODY B. HICE, Georgia 

STEVE RUSSELL, Oklahoma 

EARL L. ‘‘BUDDY’’ CARTER, Georgia 

GLENN GROTHMAN, Wisconsin 

WILL HURD, Texas 

GARY J. PALMER, Alabama 

ELIJAH E. CUMMINGS, Maryland, Ranking 

Minority Member 

CAROLYN B. MALONEY, New York 

ELEANOR HOLMES NORTON, District of 

Columbia 

WM. LACY CLAY, Missouri 

STEPHEN F. LYNCH, Massachusetts 

JIM COOPER, Tennessee 

GERALD E. CONNOLLY, Virginia 

MATT CARTWRIGHT, Pennsylvania 

TAMMY DUCKWORTH, Illinois 

ROBIN L. KELLY, Illinois 

BRENDA L. LAWRENCE, Michigan 

TED LIEU, California 

BONNIE WATSON COLEMAN, New Jersey 

STACEY E. PLASKETT, Virgin Islands 

MARK DESAULNIER, California 

BRENDAN F. BOYLE, Pennsylvania 

PETER WELCH, Vermont 

MICHELLE LUJAN GRISHAM, New Mexico 

JENNIFER HEMINGWAY, Staff Director 

DAVID RAPALLO, Minority Staff Director 

SEAN HAYES, Subcommittee on Health Care, Benefits and Administrative Rules Staff Director 

SARAH VANCE, Professional Staff Member 

CHRIS HINKLE, Counsel 

WILLIE MARX, Clerk 

SUBCOMMITTEE ON HEALTH CARE, BENEFITS AND ADMINISTRATIVE RULES

JIM JORDAN, Ohio, Chairman 

TIM WALBERG, Michigan 

SCOTT DESJARLAIS, Tennessee 

TREY GOWDY, South Carolina 

CYNTHIA M. LUMMIS, Wyoming 

MARK MEADOWS, North Carolina 

RON DESANTIS, Florida 

MICK MULVANEY, South Carolina, Vice 

Chair 

MARK WALKER, North Carolina 

JODY B, HICE, Georgia 

EARL L. ‘‘BUDDY’’ CARTER, Georgia 

MATT CARTWRIGHT, Pennsylvania, 

Ranking Member 

ELEANOR HOLMES NORTON, Distict of 

Columbia 

BONNIE WATSON COLEMAN, New Jersey 

MARK DESAULNIER, California 

BRENDAN F. BOYLE, Pennsylvania 

JIM COOPER, Tennessee 

MICHELLE LUJAN GRISHAM, New Mexico 

Vacancy 


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C O N T E N T S 

Page 

Hearing held on July 13, 2016 ............................................................................... 1 

WITNESSES 

Mr. Kevin Counihan, Chief Executive Officer of the Marketplace and Deputy 

Administrator and Director, Center for Consumer Information and Insurance Oversight, Centers for Medicare and Medicaid Services 

Oral Statement ................................................................................................. 3 

Written Statement ............................................................................................ 6 

Linda J. Blumberg, Ph.D., Senior Fellow, The Urban Institute, Health Policy 

Center 

Oral Statement ................................................................................................. 19 

Written Statement ............................................................................................ 21 


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FROM PREMIUM INCREASES TO FAILING CO– 

OPS: AN OBAMACARE CHECKUP 

Wednesday, July 13, 2016 

HOUSE OF REPRESENTATIVES, SUBCOMMITTEE ON HEALTH CARE, BENEFITS AND

ADMINISTRATIVE RULES

COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM, Washington, D.C. 

The subcommittee met, pursuant to call, at 3:00 p.m., in Room 

2247, Rayburn House Office Building, Hon. Jim Jordan [chairman 

of the subcommittee] presiding. 

Present: Representatives Jordan, Walberg, DesJarlais, Meadows, 

Walker, Hice, Carter, Cartwright, DeSaulnier, and Lujan Grisham. 

Mr. JORDAN. The Subcommittee on Oversight and Government 

Reform on Health Care, Benefits, and Administrative Rules will 

come to order. 

Without objection, the chair is authorized to declare a recess at 

any time. 

Welcome, Mr. Cartwright, and welcome to our witnesses. We will 

get to you in just a moment. You know how this works. You’ve 

done this many times, opening statements, and then we’ll get your 

testimony, and then we’ll get right to our witnesses. 

Just about everything stated about ObamaCare when it was 

passed has turned out to be false. You like your doctor; you can 

keep your doctor. False. You like your plan; you can keep your 

plan. That turned out to be false. Premiums are going to go down, 

we were told. That turned out to be false. Premiums are going to 

go down an average of $2,500. Of course, that turned out to be 

false. The Web site will work, we were told. That turned out to be 

false. The Web site is secure. That was false too at the time. 

Deductibles will decrease. We found out that wasn’t accurate either. And, of course, we were told 21 million people would get insurance under the exchange. Now that’s been revised down to almost half, 11 million Americans. And, of course, we were told the 

CO–OPs were going to work. Just yesterday, Illinois’ CO–OP folded. That’s the fourth one since May. That’s 16 now out of 23. That’s 

after the administration spent $2.4 billion setting up nearly two 

dozen CO–OPs. Over $1.6 billion in Federal loans have gone to the 

failed CO–OPs, money that probably will never be recovered. More 

closures are expected. My guess is every single one of these, every 

single one, all 23, are ultimately going to fail. And that’s why we’re 

having this hearing today, to just underscore the simple fact that 

it’s not only just CO–OPs. It’s not only some of the things—it’s just 

this law has been a complete failure. And the American people 


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know it. Business owners know it. I think insurance companies 

know it. And we’re looking forward to hearing from our witnesses 

today on the CO–OP issue and other issues related to ObamaCare 

or, as some call it, the Affordable Care Act. 

So I want to thank our witnesses for being here, and with that, 

I would now recognize the ranking member, Mr. Cartwright, for an 

opening statement if he has one. 

Mr. CARTWRIGHT. Thank you, Mr. Chairman. 

And I’d like to thank our witnesses for taking the time to be with 

us today. I hope the committee uses this hearing as an opportunity 

to have a meaningful, productive discussion about the ACA, what 

aspects of the law are working, areas still in need of improvement. 

But I’ve been on this committee long enough and this subcommittee long enough to know that this hearing was called to give 

my colleagues in the majority an occasion again to attack the law. 

In fact, just the one-sided title of today’s hearing says it all, ‘‘From 

Premium Increases to Failing CO–OPs.’’ A fair approach might be 

titled ‘‘From Improved Access to Health Care to Historically Low 

Uninsured Rates’’ or ‘‘From Reducing Medical Debt to Slowing National Health Expenditures.’’ But, of course, my Republican colleagues don’t want to highlight the ACA’s successes, only its flaws. 

That’s the kind of partisan political hearing they believe serves 

their interests in an election year, but another partisan hearing 

doesn’t serve the public interests because there are some accomplishments of the ACA that the Republicans’ partisanship ignores. 

Because of the ACA, 20 million people who used to be without 

insurance now have access to quality, affordable healthcare coverage. And what that means at home on Main Street is that your 

hospitals, your local hospitals, are much less likely to fold because 

they are not doling out as much uninsured care as they used to 

have to do. That’s true in my district. We had two hospitals that 

failed after 2010 and before the implementation of the ACA. 

But here’s another accomplishment. The uninsured rate in this 

country is at a historic low. That means there are fewer people in 

this country than ever before that have to worry about what happens if they get sick, they can’t afford to go to the doctor, or can’t 

afford to pay for for their medications out of pocket. 

And here are some more accomplishments. Because of the ACA, 

people with preexisting medical conditions can no longer be denied 

access to coverage because of their health. Hospitals and States 

that expanded Medicaid have seen their rates of uncompensated 

care decline, as I just mentioned. Those States have also seen a decline of medical debt. So many of the people that declare bankruptcy in this country had to do so because medical debt put them 

under water. 

But even with all these accomplishments of the ACA, my Republican friends have chosen to hold more than 60 votes attempting to 

repeal or undermine this law. And we all know there are aspects 

of the ACA that still need a lot of work. For example, CO–OPs 

have faced daunting challenges, just as any startup businesses 

would. We have to remember the reason that CO–OPs were created: to inject much-needed competition into the insurance market 

so that rates can stay low for consumers. Instead of taking steps 

to help support the CO–OPs, however, the Republican-led House, 


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has voted multiple times to slash that program’s funding. There 

are certainly other aspects of the law that could be improved. I’m 

looking forward to hearing from our witnesses about how we can 

make the ACA better, how we can make it stronger and work for 

all Americans. 

But I’d like to close by focusing on why we passed this law in 

the first place. In June 2015, Brent Brown of Wisconsin wrote the 

President a letter thanking him for enacting health reform. Mr. 

Brown who has, quote, ‘‘voted Republican for the entirety of his 

life,’’ unquote, but who also had a preexisting medical condition 

that made it impossible for him to get health insurance before the 

ACA, he wrote, quote, ‘‘I would not be alive without access to care 

I received due to your law,’’ unquote. Mr. Brown’s letter is a reminder to all that the ACA is about helping real people live better, 

healthier lives, and it is working, unlike the harmful proposals recently put forward under the Speaker’s Better Way plan, which 

would roll back healthcare protections for women, raise medical 

costs for seniors, and cut long-term Medicaid funding to the detriment of patients and medical providers. 

After 6 years, Republicans still have not proposed a viable legislative alternative to the Affordable Care Act. I would urge my colleagues to keep this perspective in mind during today’s hearing. 

Mr. Chairman, I yield back. 

Mr. JORDAN. I thank the gentleman. 

We’ll hold the record open for 5 legislative days for any members 

who would like to submit a written statement, and we’ll now recognize our witnesses. 

I’m pleased to welcome Mr. Kevin Counihan, Deputy Administrator and Director of the Center for Consumer Information and Insurance Oversight at the Center for Medicare and Medicaid Services, U.S. Department of Health and Human Services; and Ms. 

Linda Blumberg, Ph.D., senior fellow at the Urban Institute. 

Welcome, again, to both of you. 

And pursuant to committee rules, all witnesses will be sworn in 

before they testify. Please raise your right hand, if you would stand 

and raise your right hand, excuse me. 

Do you solemnly swear or affirm that the testimony you are 

about to give will be the truth, the whole truth, and nothing but 

the truth, so help you God? 

Let the record show that both witnesses answered in the affirmative. We will now start with—we’ll just go right across, Mr. 

Counihan and then Ms. Blumberg. 

WITNESS STATEMENTS 

STATEMENT OF KEVIN COUNIHAN 

Mr. COUNIHAN. Good afternoon, Chairman Jordan, Ranking 

Member Cartwright, and members of the subcommittee. Thank you 

for the opportunity to provide an update on the Affordable Care 

Act. 

I joined CMS nearly 2 years ago after over 30 years serving various roles in the health insurance industry. At CMS, my focus is 

on the day-to-day operation and management of the Marketplace 

and other programs that help consumers gain access to affordable, 


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high-quality healthcare coverage. Thanks to the Affordable Care 

Act, millions of Americans who were previously uninsured now 

have access to affordable, high-quality health care. An estimated 20 

million more people now have coverage because of the law, and at 

9.1 percent, the uninsured rate in America is the lowest it has been 

on record. Preexisting conditions no longer preclude individuals 

from gaining health insurance, and lifetime and annual dollar limits are now a thing of the past. Tens of millions of Americans have 

new access to preventive services with no cost sharing, and consumers now have the comfort of knowing that if their employment 

changes or if they lose coverage for any reason, they can purchase 

affordable coverage through the Marketplace. 

The Affordable Care Act has also resulted in cost savings for 

both consumers and taxpayers. The law requires health insurers to 

provide consumers with rebates if they spend too much of a consumer’s premium on advertising and marketing instead of health 

benefits and quality care. Since this requirement has been put in 

place in 2011, almost $2.9 billion in total refunds have been paid 

to millions of consumers. And before the Affordable Care Act, insurance companies in many States were able to raise rates without 

explaining their actions. The law brought unprecedented transparency into health insurance pricing through the rate review process, and in 2015, rate review led to an estimated $1.5 in savings 

for consumers. 

Since the Affordable Care Act became law, healthcare prices 

have risen at the lowest level in 50 years. The Congressional Budget Office has estimated that the law will generate substantial deficit savings that grow over time, translating to a total savings of 

more than $3 trillion over the next two decades. 

One critical provision of the Affordable Care Act is the creation 

of the Health Insurance Marketplace. The Marketplace was designed to foster competition, facilitate comparison shopping, and 

ensure affordability. Three years in, the Health Insurance Marketplace is a competitive, growing, and dynamic platform, a transparent Marketplace where issuers compete on price and quality, 

and people across the country are finding health plans that meet 

their needs as well as their budgets. Every year, we encourage consumers to return to the marketplace and shop for the plan that is 

best for them and their family. For 2016, marketplace coverage, approximately 67 percent of marketplace consumers selected a new 

plan and saved an average of $42 a month, or $500 a year, in premium costs. 

In addition to providing consumers with a simple way to compare 

and find the plan that’s right for them, the Affordable Care Act 

also includes tax credits to help make that coverage more affordable. Roughly 85 percent of marketplace consumers receive these 

tax credits, and for 2016 coverage, their average monthly premium 

increased by only 4 percent or just $4. After taking these tax credits into account, nearly 70 percent of healthcare.gov consumers had 

a coverage option for $75 a month or less, and 74 percent had an 

option for $100 a month or less. Importantly, consumers say they 

can now afford primary care, prescription drugs they could not afford before the Affordable Care Act, and a majority are satisfied 

with their coverage. 


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While we are encouraged by the progress we have made, we 

know that implementation of the Affordable Care Act is a 

multiyear process. As CMS, our efforts to improve all of our programs, including the marketplace, are an ongoing commitment. 

This year among numerous other efforts, we are taking steps to 

enhance our outreach to young adults who are more likely to remain uninsured. We have also strengthened requirements for enrollment through special enrollment periods, ensuring that this tool 

is available for consumers when they need it, while preventing misuse and abuse. 

And we aren’t the only ones that are learning. Since the Affordable Care Act became law, I’ve seen an unprecedented amount of 

innovation in the private sector. The marketplace is increasingly 

serving as a laboratory for strategies that are helping improve care 

and control costs. For example, one issuer is creating plans based 

on the different needs of unique geographic communities, bringing 

together interdisciplinary teams focused on improving care for 

high-risk populations in particular communities. 

We look forward to continuing to work with Congress and other 

key stakeholders on ways to strengthen our operations to ensure 

the American people have access to affordable coverage and highquality health services. Using the tools created by the Affordable 

Care Act, we are all working toward a healthcare delivery system 

that works better for everyone, where care is improved through 

better coordination and integration, where we spend our healthcare 

dollars in smarter ways, and where our system is person-centered 

and Americans are healthier. 

I know you have a number of questions, and I am happy to answer them to the best of my ability. 

[Prepared statement of Mr. Counihan follows:] 


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STATEMENT OF 

KEVIN COUNIHAN 

CHIEF EXECUTIVE OFFICER OF THE MARKETPLACE AND ,',' 

DEPUTY ADMINISTRATOR AND DIRECTOR AT TH$'CENTE!l Ji'OR CONSUMER 

INFORMATION & INSURAN<.;:~OVERSIGHT 

CENTERS FOR MEDICA~& MEIHCAlllSERVICES 

ON 

AN AFFORDABLE CARE ACT CHECK UP 

BEFORE THE 

UNITED STATES HOUSE COi\-IMITTEE ON 

OVERSIGHT & GOVERNMENT REFORM 

SUBCOMMITTEE ON HEALTH CARE, BENEFITS, AND ADMINISTRATIVE RULES 

JULY 13,2016 
7 


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U.S. House Committee on Oversight & Government Reform 

Subcommittee on Health Care, Benefits, and Administrative Rules 

Hearing on 

An Affordable Care Act Check Up 

July 13, 2016 

Chairman Jordan, Ranking Member Cartwright, and members of the Subcommittee, thank you 

for the invitation to discuss the Centers for Medicare & Medicaid Services' ( CMS ') continuing 

work to implement the Affordable Care Act and provide consumers with affordable access to 

high quality health coverage. 

Thanks to the Affordable Care Act, millions of Americans who were previously uninsured now 

have access to affordable, high-quality health care. An estimated 20 million more people now 

have coverage because law, 1 and at 9.1 percent, the uninsured rate for Americans is the lowest it 

has been on record. 2 Pre-existing conditions no longer preclude individuals from gaining health 

insurance, and consumers have better access to comprehensive, affordable coverage. Consumers 

now have the comfort of knowing that if their employment changes or they lose coverage for any 

reason, they can purchase affordable coverage through the Marketplace-regardless of their 

personal health history. 

The vast majority of Americans get their health insurance at work, and that has not 

changed. However, because of the Affordable Care Act, that coverage is stronger and more 

secure. Lifetime and annual dollar limits are now a thing ofthe past, and an estimated 

105 million Americans had lifetime caps on their coverage lifted. Tens of millions of people 

have new access to preventive services with no cost-sharing. And consumers have new tools to 

appeal decisions made by their insurance companies. 

The Affordable Care Act has resulted in cost savings for both consumers and taxpayers. The law 

requires health insurers to provide consumers with rebates if the amount they spend on health 

1 https://aspe.hhs.gov/sitesldefaultlfileslpdf/187551/ACA2010-2016.pdf 

2 https://aspe.hhs.gov/sitesldefault/fileslpdf/204986/ ACARuralbrief.pdf 
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benefits and quality of care, as opposed to advertising and marketing, is too low. Last year, 5.5 

million consumers received nearly $470 million in rebates. Since this requirement was put in 

place in 2011 through 2014, more than $2.4 billion in total refunds will have been paid to 

consumers. The law also eliminates out-of-pocket costs for certain preventive services, and 

women can no longer be charged more than men for the same coverage. In addition, the 

Affordable Care Act phases out the "donut hole" coverage gap for nearly 10.7 million Medicare 

prescription drug beneficiaries, who have saved an average of $1 ,945 per beneficiary. 3 

Furthermore, the law has provided new transparency in how health insurance plans disclose 

reasons for premium increases and requires simple, standardized summaries so over 170 million 

Americans can better nnderstand their coverage information and compare plans. These consumer 

protections did not exist six years ago. 4 

Since the Affordable Care Act became law, health care prices have risen at the slowest rate in 50 

years. The Affordable Care Act's reforms to Medicare payment rates, along with likely 

"spillover" effects on prices in the private sector, have been major contributors to this recent 

slow price growth. The Congressional Budget Office (CBO) recently announced that compared 

with their and the Joint Committee on Ta,xation' s 2010 projection, the current estimate of the net 

cost of the insurance coverage provisions over the 2016-2019 period is lower by $157 billion, or 

25 percent. 5 In addition, CBO has estimated that the law will generate substantial deficit savings 

that grow over time, implying total savings of more than $3 trillion over the next two decades. 

Lower long-term deficits boost national saving, thereby increasing capital accumulation and 

reducing foreign borrowing, which raises wages and overall national income over time. 

These cost savings have been coupled with a focus on improving the quality of care provided. 

The law created the Hospital Readmissions Reduction Program, which adjusts payments for 

hospitals with higher than expected 30-day readmission rates for targeted clinical conditions such 

as heart attacks, hemt failure, and pneumonia. CMS has also nndertaken several major quality 

improvement initiatives, such as the Partnership for Patients, all targeted at improving the quality 

3 https://www. whitehouse.gov/the-press-office/20 16/03/22/fact-sheet-health-care-accomplishments 4 https://www.whitehouse.gov/the-press-office/2016/03/02/fact-sheet-affordable-care-act-healthy-communities-sixyears-later 

5 https://www.cbo.gov/publication/51385#section3 

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of care for individuals as they move from one health care setting to another and reducing 

unnecessary hospitalizations. 

We are already seeing national trends in health care improvements that are promising and likely 

a combined result of our efforts and tools provided by the Affordable Care Act. Since 2010, the 

rate of patient harm in U.S. hospitals has fallen by 17 percent. Cumulatively since 2010, this 

translates into 2.1 million avoided patient harms, like infections and medication errors, and an 

estimated 87,000 avoided deaths,6 resulting in $20 billion in cost savings. 7 In addition, the 

hospital readmission rate for Medicare patients has fallen sharply in recent years. If the 

readmission rate had remained at its level before the Affordable Care Act's passage, a 

cumulative 565,000 additional readmissions would have occurred through May 2015. That's 

565,000 times that a patient didn't have to experience an extra hospital stay. 8 The Affordable 

Care Act incentivizes hospitals to provide high-quality care and makes investments that help 

hospitals learn from each other how to keep patients safe. Ultimately, this shift towards quality 

and value will help patients receive, and doctors and other clinicians provide, the best care 

possible. 

The Marketplace is Strong 

The Marketplace was designed to foster issuer competition, facilitate consumers' comparison 

shopping, and ensure affordability through financial assistance, and research shows we are well 

on our way to accomplishing these goals. Three years in, the Health Insurance Marketplace is a 

competitive, growing and dynamic platform-- a transparent market where issuers compete on 

price and quality, and people across the country are finding health plans that meet their needs, 

and their budgets. And, increasingly, the Marketplace is also serving as a laboratory for 

innovations and strategies that are helping us build a better health care system. For example, one 

issuer is creating plans based on the different needs of unique geographic communities, 

involving activities such as bringing together interdisciplinary teams focused on improving care 

for high-risk populations in particular communities. 

6 https://www.whitehouse.gov/sites/default/files/page/files/20160322 aca six year anniversary slides.pdf 7 http://www.ahrg.gov/professionals/guality-patient-safety/pfp/interimhacrate2014.html 

8 https://www.whitehouse.gov/sites/default/files/page/files/20160322 aca six year anniversarv slides.pdf 

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Competition has worked to create more affordable choices for consumers. The average number 

of issuers remained stable between 2015 and 2016. On average, consumers were able to choose 

from 5 issuers for 2016 coverage, just as they could for 2015, and 88 percent of returning 

consumers were be able to choose from 3 or more issuers, translating into 50 plan options. 9 

Research also shows that consumers took advantage ofthese options, shopping for the coverage 

that best fit their and their families' needs. Approximately 67 percent ofHealthCare.gov 

consumers selected a new plan in 2016, including all new consumers and 43 percent of returning 

consumers. Consumers who switched plans saved an average of $42 per month in premium 

costs, equivalent to over $500 in annual savings. The increase in the average premium, taking 

shopping into account, was 8 percent between 2015 and 2016; among the roughly 85 percent of 

HealthCare.gov consumers with premium tax credits, the average monthly net premium 

increased by 4 percent, or just $4. The average monthly tax credit amount in 2016 is around 

$290 and reduces a consumer's premium by 73 percent. After taking into account tax credits, 

nearly 7 in I 0 HealthCare.gov consumers had the option of coverage for $75 or less in monthly 

premiums for 2016 coverage, and 74 percent had an option for $100 or less. 10 These tax credits, 

as of March 2016, have helped nearly 9.4 million Americans purchase health coverage through 

the Health Insurance Marketplaces. 11 

In addition to shopping for plans based on price, many consumers shopped for their plans based 

on health care providers and services. For the third Open Enrollment, for the first time, the 

Federally-Facilitated Marketplace (FFM) began to offer consumers the option of selecting plans 

by searching for plans that offered a specific hospital, physician, or prescription. In its pilot year, 

consumers chose this path 3.6 million times in just the 38 FFM states. 12 

https://aspe.hhs.gov/sites/default/files/pdf/l35461/2016%20Marketplace%20Premium%20Landscape%20Issue%20 

Brief"/o20 1 0-30-15%20FIN AL.pdf 10 https://aspe.hhs.gov/sites/default/files/pdf/198636/MarketplaceRate.pdf 11 https://www .cms.gov/Newsroom!MediaReleaseDatabase/F act-sheets/20 16-Fact-sheets-items/20 16-06-30.html 12 https://blog.cms.gov/2016/06/09/remarks-of-cms-acting-administrator-andy-slavitt-at-the-marketplace-innovationconference/ 

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As of March 31,2016, about 11.1 million consumers had paid their premiums and had an active 

policy, or "effectuated" their coverage for the 2016 benefit year, 13 compared to I 0.2 million 

individuals as of March 31,2015, nearly a 9 percent increase. 14 Importantly, consumers are 

getting value for their money. Research shows that consumers say they can now afford primary 

care and prescription drugs they could not afford before the Affordable Care Act, and a majority 

are satisfied with their coverage. 15 J.D. Power found that consumers who bought coverage 

through the Marketplace were generally more satisfied than those with other types of insurance, 

including employer coverage. 16 Employer-sponsored coverage has not been disrupted, and 

employees now have options to move jobs without fear of their families being unable to afford 

and obtain coverage. 

In February of this year, we issued the annual Notice of Benefit and Payment Parameters for the 

2017 coverage year, along with related guidance documents. The rule fmalizes provisions to: 

help consumers with surprise out-of-network costs at in-network facilities, provide consumers 

with notifications when a provider network changes, give insurance companies the option to 

offer plans with standardized cost-sharing structures, provide a rating on HealthCare.gov of each 

Qualified Health Plan's relative network breadth (for example, "basic," "standard," and "broad") 

to support more informed consumer decision-making, and improve the risk adjustment formula. 

Enhancing Outreach to Young Adults 

Since the ACA was enacted, the overall uninsured rate has fallen by more than 40 percent, and 

the uninsured rate among young adults has fallen by more than 50 percent. But younger and 

healthier adults are still more likely than average to remain uninsured. 17 In 2015, almost half of 

all uninsured individuals eligible for Marketplace coverage were between the ages of 18 and 

13 https://www.cms.gov/Newsroom/MediaReleaseDatabase/Fact-sheetsi2016-Fact-sheets-items/2016-06-30.html 14 https://www.cms.gov/Newsroom/MediaReleaseDatabase/Fact-sheets/2015-Fact-sheets-itemsl2015-06-02.html 15 http://www.commonwealthfund.org/acaTrackingSurvey/about.html 16 http://www.jdpower.com/press-releases/2015-health-insurance-marketplace-exchange-shopper-and-re-enrollmenthix-study 

17 https:/ /www .cms.gov/Newsroorn!MediaReleaseDatabase/Fact-sheets/20 16-Fact-sheets-items/20 16-06-2l.html 

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34. 18 Insuring these groups lets them invest in their health, protects them against catastrophic 

costs from serious illness, and helps young adults continue their education. It also contributes to 

a more balanced Marketplace risk pool and lower costs. CMS recently announced a series of 

actions to step up Marketplace outreach, especially to young adults, for the 2017 Open 

Enrollment. 

Research during the 2016 Open Enrollment showed that young adults are almost twice as likely 

as older consumers to enroll because they receive an email about Marketplace coverage. During 

the upcoming Open Enrollment, we will draw on lessons learned this year about the messages, 

timing, and tactics that make email outreach more effective. 

Also, new since the 2016 Open Enrollment, this year we will be able to email consumers with 

important proactive reminders in near-to-real time if they open an account to start an application, 

finish an application to select a plan, and when they select a plan pay to their first premium as the 

last step to gaining coverage. We've learned that sending an email, with the right information, at 

just the right time, can make a significant difference in whether someone gets covered, and those 

are lessons we'll act on this year. 

In addition, we are making it easier for issuers to conduct outreach to young adults turning age 

26 and moving off their parent's plans. Specifically, new guidance from the Department of Labor 

makes clear that the sponsors of employer plans can- and are encouraged to- provide additional 

information that will help young adults understand their options and enroll in Marketplace 

coverage as appropriate. Along with issuing new policy guidance, we are strongly encouraging 

insurers to contact these consumers with targeted information about Marketplace options. 

Additionally, on June 13, we provided states and outreach organizations with $32 million in 

additional funding to help with Medicaid and Children's Health Insurance Program (CHIP) 

outreach. In conjunction with that funding announcement, we reminded them of their obligation 

to help children aging out of Medicaid and CHIP transition to Marketplace or other coverage. 

18 https://aspe.hhs.govlbasic-report/health-insumnce-markelplace-uninsured-populations-eligible-enroll-20 16 

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Finally, HHS has created a network of diverse outreach partners. While we will keep building 

that network until the start of the 2017 Open Enrollment and beyond, we are excited to announce 

that this year's partnerships will include Lyft, the American Hospital Association, and 

coordinated young adult campaigns that include more than 75 partnering organizations. To help 

focus these efforts, the White House will host a National Millennia! Health Summit on 

September27, 2016. 

Working with States to Benefit Consumers through Medicaid Expansion 

Throughout its 50-year history, Medicaid has served as an adaptable program, adjusting to 

national and state-specific needs and meeting the health care needs of children, adults, pregnant 

women, seniors, and people with disabilities. For these low-income Americans, Medicaid has 

provided health insurance coverage that is affordable, accessible, and has served as the Nation's 

major source oflong-terrn care coverage. CMS is committed to working with states to expand 

Medicaid in ways that work for them, while protecting the integrity of the program and those it 

serves. 

As a result of the Affordable Care Act, states have the opportunity to expand Medicaid eligibility 

to individuals 19-64 years of age with incomes up to 133 percent of the Federal poverty 

level (FPL). For the first time, states can provide Medicaid coverage for low-income adults 

without dependent children without the need for a demonstration waiver. The Affordable 

Care Act provides full Federal funding to cover newly eligible adults in states that expand 

Medicaid up to 13 3 percent FPL through Calendar Year 2016, and then phases down in 

subsequent years to cover 90 percent of costs in Calendar Year 2020 and thereafter. This 

increased Federal support has enabled 31 states and the District of Columbia to expand Medicaid 

coverage to more low-income adults. The Administration has proposed in its FY17 Budget to 

make full federal funding available for the first three years a state takes up expansion. Primarily 

as a result of the expansion of coverage to low-income adults and the eligibility and enrollment 

simplifications CMS and states have made, since the beginning of the Affordable Care Act's first 

Open Enrollment Period, Medicaid/CHIP enrollment has grown by 15.0 million individuals, and 

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among Medicaid expansion states, the uninsured rate for non-elderly adults declined by 49.5 

percent, compared to 33.8 percent in non-expansion states 19 

States that have expanded their Medicaid programs are documenting significant reductions in 

uncompensated care and the uninsured rate. Hospitals provided over $50 billion in 

uncompensated care in 2013; in 2014, there was a $7.4 billion reduction in uncompensated care 

costs, with 68 percent of the reduction coming from states expanding Medicaid. 20 And of the 12 

states with the greatest reductions in uninsured rates from 2013 to 2015, 11 had expanded 

Medicaid eligibility. 21 

Importantly, beneficiaries are satisfied with their plans. According to a recent report from the 

Office of the Assistant Secretary for Planning and Evaluation (ASPE), 93 percent of new 

Medicaid enrollees report being satisfied with their health plans and 92 percent report being 

satisfied with their doctors. In addition, 78 percent of new Medicaid enrollees indicated that they 

would not have been able to access or afford their care prior to Medicaid expansion and 

enrollment. Unmet health care needs among low-income adults declined I 0.5 percentage points 

after expansion, and the percentage of low-income adults reporting problems paying medical 

bills also declined by I 0.5 percentage points. 22 Further, compared with non-expansion states, 

enrollees in expansion states saw a 4I percent increase in preventive service visits in community 

health centers; access to Medicaid prescription drug refills increased 25.4 percent in states that 

expanded coverage, compared to only 2.8 percent in states that did not expand coverage; and 

cost-related barriers to dental care fell from 30 percent in 2013 prior to Medicaid expansion to 25 

percent in 20I4 post Medicaid expansion. 

Ongoing Efforts to Expand Upon Affordable Care Act Successes 

Part of our job at CMS in overseeing ongoing development of the Affordable Care Act is to 

create a predictable and level playing field for consumers, providers, issuers, and other 

19 https://awe.hhs.gov/sites/default/files/pdf/205141/medicaidexpansion pdf 20 http://aspe.hhs.gov/healthlreports/20 15/medicaidexpansion/ib uncompensatedcare.pdf 21 http://www.gallup.cornlpoll/189023/arkansas-kentucky-set-pace-reducing-uninsured-rate.aspx 21 https://aspe.hhs.gov/sites/default/files/pdf/205141/medicaidexpansion.pdf 

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stakeholders, and to facilitate stability during these early years. Over the past several months, 

CMS has taken a set of actions which strengthen the risk pool, limit upward pressure on rates, 

and provide a strong foundation for the Marketplace for the long-term. This process is a 

continual ongoing commitment, and we have made meaningful progress. 

Facilitating States' Improvement of the Rate Review Process 

The Affordable Care Act brought unprecedented transparency into health insurance pricing. 

Before the Affordable Care Act, insurance companies in many states were able to raise rates 

without explaining their actions to regulators or the public. Today, the rate review process 

improves insurer accountability and transparency. It ensures that experts evaluate whether the 

proposed rate increases are based on reasonable cost assumptions and solid evidence and gives 

consumers the chance to comment on proposed increases. In 2015, rate review led to an 

estimated $1.5 billion in savings for consumers. 23 Most recently, CMS announced the 

availability of additional funding to state insurance regulators to use for issuer compliance with 

Affordable Care Act key consumer protections. This award opportunity enables states to seek 

funding for activities related to plauning and implementing select federal market reforms and 

consumer protections including: essential health benefits, preventive services, parity in mental 

health and substance use disorder benefits, appeals processes, and bringing down the cost of 

health care coverage (also known as medical loss ratio provision). 

Strengthening Special Enrollment Period Requirements 

Over the last several months, the Marketplace has taken a number of steps to ensure that Special 

Enrollment Periods (SEPs) are there for consumers when they need them, while avoiding misuse 

or abuse. We've strengthened our rules and clarified our processes for SEPs, so that the people 

who need to can still easily get coverage, while making it hard for anyone thinking about taking 

advantage of them. We also eliminated 7 SEPs, including the SEP for individuals who owed the 

tax penalty for not having health insurance, contributing to an almost 30 percent year-over-year 

drop in the number of SEP enrollments during the three months after Open Emollment. 

23 https://www.cms.gov/CCIIO/Resources/Forms-Reports-and-Other-Resources/Downloads/Rate-Review-AnnualReport 508.pdf 

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Continuing that work, in February we announced that we would begin verifying certain 

consumers' eligibility for enrollments made since April through five common Special 

Enrollment Periods. In addition, starting Jnne 18 all individuals who qualify for these five 

Special Enrollment Periods are now asked to provide documents to prove their eligibility for that 

Special Enrollment Period at the time that they qualify. On our website, we have posted models 

of these eligibility notices that include lists of examples of acceptable documents people can 

submit to prove their eligibility for their Special Enrollment Period, as well as articles to help 

answer questions and assist consumers through this process. Consumers who qualify for and 

enroll in coverage through one of these five Special Enrollment Periods should provide the 

appropriate documents by the deadline listed in their notice to confirm eligibility for that Special 

Enrollment Period to avoid any disruptions to their coverage. 

Refining Risk Adjustment Models 

By reducing incentives for issuers to try to design products that attract a disproportionately 

healthy risk pool, risk adjustment lets them design products that meet the needs of all consumers, 

protecting consumers' access to a range of robust options. Earlier this year, CMS made a number 

of changes to improve the stability, predictability, and accuracy of the risk adjustment program 

for issuers. These changes include better modeling of costs for preventive services, changes to 

the data update schedule, and earlier reporting of preliminary risk adjustment data where 

available. We also published a Risk Adjustment White Paper and hosted a conference on March 

31,2016 to solicit feedback from issuers, consumers, and other stakeholders on additional areas 

for improvement. 

Building off the Risk Adjustment White Paper and stakeholder feedback, we recently announced 

two additional important changes to risk adjustment that we intend to propose in future 

rulemaking. First, we intend to propose that, beginning for the 2017 benefit year, the risk 

adjustment model include an adjustment factor for partial-year enrollees. By accounting for the 

costs of short term enrollees in ACA-compliant risk pool, this change will support the 

Marketplace's important role as a source of coverage for people who are between jobs, 

experiencing life transitions, or otherwise need coverage for part of the year. Second, we intend 

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to propose that, beginning for the 2018 benefit year, prescription drug utilization data be 

incorporated in risk adjustment, as a source of information about individuals' health status and 

the severity of their conditions. We are also considering proposing additional changes to the 

model for 2018 and beyond. 

Furthering Data Matching Accuracy 

CMS takes very seriously its obligation to ensure that access to coverage and financial assistance 

are limited to those individuals who are indeed eligible. The Marketplace verifies eligibility for 

most consumers through electronic trusted data sources, but if consumers' data cannot be 

matched electronically we generate a data matching issue to request additional information from 

enrollees. Consumers who do not provide the necessary information will have their coverage or 

financial assistance ended or modified. 

Unfortunately, eligible individuals sometimes lose coverage or financial assistance through the 

Marketplace during the year because they have trouble finding documents or navigating the data 

matching process. In addition to the direct impact on consumers, avoidable terminations due to 

data-matching issues also negatively impact the risk pool, since younger, healthier individuals 

appear to be less likely to persevere through the data matching process. In fact, in 2015, younger 

open enrollment consumers who experienced a data matching issue were about a quarter less 

likely to resolve their problem than older consumers. 

This year, CMS made a range of improvements to the data matching process, such as updating 

our online application and improving systems functionality, to help consumers avoid generating 

data matching issues in the first place and to help them resolve these issues once generated. 

More recently, we have also intensified our outreach, and partnered with issuers so that they are 

reaching out to consumers about data-matching issues as well. These efforts are beginning to pay 

off, with a sharp reduction in total data-matching issues generated and an almost 40 percent yearover-year increase in the number of documents consumers have submitted to resolve these 

issues. Continued progress in this area should benefit both directly affected consumers and other 

consumers who will benefit from a stronger risk pool. 

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Moving Forward 

Since the passage of the Affordable Care Act, millions of Americans now have access to high 

quality, affordable health care coverage, and we are controlling the growth of health care costs. 

From the outset, we knew that implementation of the Affordable Care Act would be a multi-year 

process, and we learn daily how to improve our operations and enhance the consumer experience 

by making the purchasing of health insurance easier and simpler for our customers. We look 

forward to continuing to benefit from suggestions from customers, assisters, brokers, issuers, and 

other key stakeholders on ways to improve our operations to ensure the American people gain 

the peace of mind of health insurance coverage. Using the tools created by the Affordable Care 

Act, we are working toward a health care delivery system that works better for everyone-where 

care is improved through better coordination and integration, where we spend our health dollars 

in smarter ways, and where our system is person-centered and healthier. 

12 
19 

Mr. JORDAN. Thank you, Mr. Counihan. 

Ms. Blumberg, you are now recognized. 

STATEMENT OF LINDA J. BLUMBERG, PH.D. 

Ms. BLUMBERG. Mr. Chairman, Ranking Member Cartwright, 

and members of the committee, thank you for the opportunity to 

testify before you today. The views that I express are my own and 

should not be attributed to the Urban Institute, its funders, or its 

trustees. 

The Affordable Care Act can claim substantial successes, including health insurance coverage for 20 million additional people 

through Medicaid and private nongroup health insurance and the 

elimination of discrimination related to health status in small employer and nongroup markets. The law also has contributed to the 

slowdown in national health expenditure growth and has created 

significant price competition in many nongroup health insurance 

markets. At the same time employer coverage rates have remained 

steady, and there have been no adverse employment affects. 

No one should expect one piece of legislation to address all problems in the Nation’s complex healthcare system, nor should one expect the full promise of the legislation to be met in the first few 

years of reform. Now is the appropriate time to assess remaining 

issues and to work seriously to improve upon these without sacrificing the many gains already achieved. I am going to address two 

areas where public policies could make further strides toward ensuring access to adequate affordable health care regardless of 

health status or income. 

First, some geographic areas have had less success engendering 

strong price competition in their nongroup insurance markets. Second, while the ACA has improved affordability for many families, 

some still face high healthcare expenses relative to income given 

premiums and out-of-pocket costs. In many larger States, the ACA 

has led to strong insurer participation in nongroup insurance markets and true price competition for the first time, replacing the previously rampant insurer competition for the best healthcare risks. 

Our research shows that areas with low premiums and low premium growth tend to have more insurers competing, larger State 

populations, and competition from provider-sponsored and formerly 

Medicaid-only insurers. 

Nationally, 48 percent of the population lives in rating areas 

where the lowest cost silver premium in the marketplace either decreased or increased by less than 5 percent in 2016. However, 36 

percent of the population lives in areas that experienced increases 

of 10 percent or more. Thus the dynamics at play are uneven both 

across the country and across areas within individual states. 

We need to design approaches that improve competition where it 

is missing without disrupting competition where it has been successful. Competition could be strengthened by reducing insurer 

and/or provider market power, adverse selection into the nongroup 

insurance market, and insurance policies not compliant with ACA 

standards. Strategies, such as continuing the reinsurance program 

or introducing a Medicare-based qualified health plan, can be useful to address these problems, but markets vary considerably, as 

will the appropriate types of intervention. The attraction of the 


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20 

ACA’s private sector focus was its potential to create real economic 

competition, yet that approach also allows for instances of continued local variability. 

Next, healthcare affordability remains an issue for some. While 

the share of families reporting difficulty paying for medical bills or 

having unmet medical need due to cost has decreased significantly 

since 2013, not all families have enjoyed similar gains. Poor adults 

in 19 States are ineligible for Medicaid because their State governments did not choose to expand eligibility despite the strong State 

budgetary advantages of doing so. Further incentives or other 

strategies may be required to bring all States into the expanded 

program. Financial assistance through marketplace tax credits and 

cost-sharing reductions are generous for those with incomes below 

200 percent of the Federal poverty level, but assistance decreases 

markedly above that level, leaving adequate coverage for some still 

out of financial reach. 

Healthcare costs have grown much less than originally anticipated when the ACA was implemented. Using just a portion of the 

systemwide savings that have resulted from that lower growth, we 

could improve upon the ACA subsidies to ameliorate the remaining 

affordability gaps and further reduce the number of uninsured 

Americans. 

In contrast, repealing the ACA would by 2021 increase the number of uninsured people by 24 million, reduce private insurance 

coverage by over 9 million people, increase State government 

spending, and substantially reduce the amount of medical care delivered to low and modest income families. 

The House Republicans’ plan combines repeal of the ACA with 

the introduction of policies that would substantially reduce assistance to low- and middle-income individuals and would undermine 

the ACA’s many advances in improving access to care for people 

with health problems. The ACA’s underlying framework increases 

the sharing of healthcare costs between the healthy and the sick. 

The House Republicans’ proposed strategies, such as continuous 

coverage requirements, elimination of benefit standards, sale of insurance across State lines, and individual health pools, would place 

much higher financial burdens on those with current or past health 

problems. And while such strategies can create savings for those 

who are healthy at a given time, they discount the fact that we 

tend to develop more health problems as we age and that even a 

20-something who appears perfectly healthy one day can wake up 

the next to find his luck has changed horribly. Focusing on how 

someone benefits financially by being insured in any given year is 

to misunderstand the inherent nature and purpose of insurance 

and seriously underestimates the value of continuous access to adequate affordable coverage regardless of circumstances. 

With that, I’m happy to answer any questions you may have. 

[Prepared statement of Ms. Blumberg follows:] 


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INSTITUTE 

Statement of 

Linda J. Blumberg, Ph.D.* 

Senior Fellow 

The Urban Institute 

Health Policy Center 

Hearing ofthe 

United States House of Representatives 

Committee on Oversight and Government Reform 

Subcommittee on Health Care, Benefits, and Administrative Rules 

"From Premium Increases to Failing Co-Ops: An Obamacare Checkup" 

Wednesday, July 13, 2016 

*The views expressed are my own and should not be attributed to the Urban Institute, its trustees or its 

funders 

Wushington DC 20037 

urbarwrg 
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Mr. Chairman, Ranking Member Cartwright, and members of the committee, I appreciate the 

opportunity to testify before you on the status of the Affordable Care Act. The views that I express are 

my own and should not be attributed to the Urban Institute, its trustees, or its funders. My testimony, 

submitted for the record, includes my oral remarks and two recent papers written with Urban Institute 

colleagues. 

The Affordable Care Act can claim substantial successes, including health insurance coverage for 

20 million additional people through Medicaid and private nongroup health insurance' and the 

elimination of discrimination related to health status in small employer and nongroup markets. The law 

also has contributed to the slowdown in national health expenditure growth2 and has created significant 

price competition in many nongroup health insurance markets' At the same time, employer coverage 

rates have remained steady,' and there have been no adverse employment effects' 

No one should expect one piece of legislation to address all problems in the nation's complex 

health care system, nor should one expect the full promise of the legislation to be met in the first few 

years of reform. Now is the appropriate time to assess remaining issues and to work seriously to 

improve upon these without sacrificing the many gains already achieved. 

I'm going to address two areas where public policies could make further strides toward ensuring 

access to adequate, affordable health care, regardless of health status or income. First, some geographic 

areas have had less success engendering strong price competition in their nongroup insurance markets. 

Second, while the ACA has improved affordability for many families, some still face high health care 

expenses relative to income, given premiums and out-of-pocket costs. 

In many larger states, the ACA has led to strong insurer participation in the nongroup insurance 

markets and true price competition for the first time, replacing the previously rampant insurer 

competition for only the best health care risks. Our research shows that areas with low premiums and 

low premium growth tend to have more insurers competing, larger state populations, and competition 

from provider-sponsored and formerly Medicaid-only insurers' Nationally, 48 percent of the population 

lives in rating areas where the lowest cost silver premium in the marketplace either decreased or 

increased by less than 5 percent in 2016. However, 36 percent of the population lives in areas that 

experienced increases of 10 percent or more. Thus, the dynamics at play are uneven both across the 

country and across areas within individual states. 

We need to design approaches that improve competition where it is missing without disrupting 

competition where it has been successful. Competition could be strengthened by reducing insurer 

and/or provider market power, adverse selection into the nongroup insurance market, and insurance 

policies not compliant with ACA standards. Strategies such as continuing the reinsurance program or 

introducing a Medicare-based qualified health plan can be useful to address these problems, but 

markets vary considerably, as will the appropriate types of intervention. The attraction of the ACA's 

private-sector focus was its potential to create real economic competition, yet that approach also allows 

for instances of continued local variability. 
23 


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Next, health care affordability remains an issue for some. While the share of families reporting 

difficulty paying for medical bills or having unmet medical need due to cost has decreased significantly 

since 2013,7 not all families have enjoyed similar gains. Poor adults in 19 states are ineligible for 

Medicaid because their state governments did not choose to expand eligibility, despite the strong state 

budgetary advantages of doing so.' Further incentives or other strategies may be required to bring all 

states into the expanded program. 

Financial assistance through marketplace tax credits and cost-sharing reductions are generous 

for those with incomes below 200 percent of the federal poverty level, but assistance decreases 

markedly above that level, leaving adequate coverage for some still out offinancial reach' Health care 

costs have grown much less than originally anticipated when the ACA was implemented.10 Using just a 

portion of the systemwide savings that have resulted from that lower growth, we could improve upon 

the ACA's subsidies to ameliorate the remaining affordability gaps and further reduce the number of 

uninsured Americans. 11 1n contrast, repealing the ACA would, by 2021, increase the number of 

uninsured people by 24 million, reduce private insurance coverage by over 9 million people, increase 

state government spending, and substantially reduce the amount of medical care delivered to low- and 

modest-income families." 

The House Republicans' plan13 combines repeal of the ACA with the introduction of policies that 

would substantially reduce assistance to low- and middle-income individuals and would undermine the 

ACA's many advances in improving access to care for people with health problems. The ACA's underlying 

framework increases the sharing of health care costs between the healthy and the sick.14 The House 

Republicans' proposed strategies, such as continuous coverage requirements, elimination of benefit 

standards, sale of insurance across state lines, and individual health pools, would place much higher 

financial burdens on those with current or past health problems.15 And while such strategies can create 

savings for those who are healthy at any given time, they discount the facts that we tend to develop 

more health problems as we age and that even a 20-something who appears perfectly healthy one day 

can wake up the next to find his luck has changed horribly. Focusing on how someone benefits 

financially by being insured in any given year is to misunderstand the inherent nature and purpose of 

insurance and seriously underestimates the value of continuous access to adequate, affordable 

coverage, regardless of circumstances. 

1 Matthew Buettgens, Linda J. Blumberg, John Holahan, and Siyabonga Ndwandwe, The Cost of ACA Repeal 

(Washington, DC: Urban Institute, 2016), http://urbn.is/29Eci9L. 
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2 Stacey McMorrow and John Holahan, The Widespread Slowdown in Health Spending Growth: Implications for 

Future Spending Projections and the Cost of the Affordable Care Act, An Update (Washington, DC: Urban Institute, 

2016), http://urbn.is/29zSdoM. 3 Linda J. Blumberg, John Holahan, and Eric Wengle, Increases in 2016 Marketplace Nongroup Premiums; There Is 

No Meaningful Notional Average (Washington, DC: Urban Institute, 2016), http://urbn.is/29zSrfs. 4 Fredric Blavin, Adele Shartzer, Sharon K. long, and John Holahan, "Employer~Sponsored Insurance Continues to 

Remain Stable under the ACA: Findings from June 2013 through March 2015," Health Reform Monitoring Survey 

brief, June 3, 201S, http://urbn.is/1ALFskh. 5 Bowen Garrett and Robert Kaestner, Recent Evidence on the ACA and Employment: Has the ACA Been a Job Killer? 

(Washington, DC: Urban Institute, 2015), http:l/urbn.is/29EfKWS. 6 Blumberg, Ho1ahan1 and Weng!e, Increases in 2016 Marketplace Nongroup Premiums. 7 Michael Karpman, Jason Gates, and Genevieve M. Kenney, "Time for a Checkup: Changes in Health Insurance 

Coverage, Health Care Access and Affordabi!ity, and Plan Satisfaction among Parents and Children between 2013 

and 2015," Health Reform Monitoring Survey brief, January 6, 2016, http:l/urbn.is/10AtKOa; Adele Shartzer, 

Nicole Garro, Cynthia Pellegrini, and Sharon K. Long, "Changes in Insurance Coverage, Access to Care, and Health 

Care Affordability for Women of Childbearing Age," Health Reform Monitoring Survey brief, October 27, 2015, 

http:l/urbn.is/10Wk1Br; Adele Shartzer, Sharon K. Long, and Nathaniel Anderson, "Access to Care and 

Afford ability Have Improved Following Affordable Care Act Implementation; Problems Remain," Health Affairs 25, 

no. 1 (2016): 1-8, http:Ucontent.healthaffairs.org/content/early/201S/12/14/hlthaff.2015.Q755.full. 8 Matthew Buettgens, John Holahan, and Hannah Recht, "Medicaid Expansion, Health Coverage, and Spending: An 

Update for the 21 States That Have Not Expanded Eligibility" (Washington, DC: Kaiser Family Foundation, 2015), 

http:/lfiles.kff.org/attachment{issue-brief-medicaid-expansion-health-coverage-and-spending-an-update-for-the21-states-that-have-not-expanded-eligibility. 

9 linda J. Blumberg, John Holahan, and Matthew Buettgens, "How Much Do Marketplace and Other Nongroup 

Enrollees Spend on Health Care Relative to Their Incomes?" (Washington, DC: Urban Institute, 2015), 

http:l/urbn.is/29tYvDs. 

10 McMorrow and Holahan, The Widespread Slowdown in Health Spending Growth. 11 Linda J. Blumberg, and John Holahan, After King v. Burwell: Next Steps for the Affordable Care Act (Washington, 

DC: Urban Institute, 2015), http:l/urbn.is/29zlcXn. 12 Buettgens et al., The Cost of ACA Repeal. 13 A Better Way: Our Vision for a Confident America; Health Core, June 26, 2016, 

http:l/abetterway.speaker.gov/_assets/pdf/ABetterWay-HealthCare-PolicyPaper.pdf. 

14 Unda J. Blumberg and John Holahan, ''Don't let the Talking Points Fool You: It's All about the Risk Pool," Health 

Affairs blog, March lS, 2016, http:l/healthaffairs.org/blog/2016/03/1S/dont-let-the-talking-points-fool-you-its-allabout-the-risk·pool/. 

15 Blumberg and Holahan, "Don't Let the Talking Points Fool You"; linda J. Blumberg, "Sales of Insurance across 

State Lines: ACA Protections and the Substantial Risks of Eliminating Them" {Washington, DC: Urban Institute, 

2016), http:l/urbn.is/29zVEvm; Linda J. Blumberg and John Holahan, "The New Bipartisan Consensus for an 

Individual Mandate" (Washington, DC: Urban Institute, 2015), http:l/urbn.is/29zVLXO. 
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Health l 

Don't Let The Talking Points Fool You: 

It's All About The Risk Pool 

Most people are healthy most of the time, and as a consequence, health care 

expenditures are heavily concentrated in a small share of the population: about 50 

percent of the health care spending in a given year by those below age 65 is attributable 

to just 5 percent of the nonelderly population. The lowest spending half of the population 

accounts for only about 3.5 percent of health care spending in a year. 

Deciding how much of total health care expenditures should be shared across the 

population and how to share it is the fundamental conundrum of health care policy. 

There is more risk pooling the larger the share of health expenditures included in the 

insurance as covered expenses (i.e., the fewer benefits excluded and the lower the outof-pocket cost requirements), the larger the number of both the healthy and the sick 

insured, and the lower the variation in premiums across different enrollees. Sharing the 

costs of the sick across the broader population (a.k.a., risk pooling) increases costs for 

the healthy to the benefit of those with health problems; this creates more financial 

losers than winners at a point in time, since there are many more healthy people than 

sick in a given year. Segmenting risk pools has the opposite effect, savings for the 

currently healthy while increasing costs for those with health problems. 

The health policies of the two political parties and their presidential candidates 

differentiate themselves clearly along the lines of pooling philosophies: the Democrats 

generally advocate broad-based pooling of health care risk and the Republicans 

generally advocate more individual responsibility and are willing to accept much greater 

segmentation of health care risk. These positions have dramatically different 

implications for individuals when they experience significant health problems, and they 

1 
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also have very different implications for low- and middle-income populations as 

compared to those with high incomes. As a consequence, each health care policy 

proposal should be evaluated as to its ramifications for risk pooling. 

Left unchecked, people who perceive themselves healthy will tend, if they are pursuing 

their own near-term financial self-interests, to separate themselves from sick peopleeither by avoiding health insurance entirely, purchasing insurance products sold 

predominantly to other healthy people, or purchasing insurance products offering limited 

benefits that likely are not attractive to those requiring significant medical care. Those 

supporting public policies that allow or encourage this type of separating of health care 

risks often argue that they are placing greater personal responsibility on each individual, 

who will in turn make better decisions about the use of medical services. However, the 

burden of that increased responsibility falls most heavily on those with health problems, 

since it places larger financial costs on those with medical care needs at the time those 

needs arise, reducing costs for individuals while they are healthy. 

Depending upon the extent of the risk segmentation created, these policies can 

effectively deny care to those that need it. Those who are well off financially can finance 

a considerable amount of necessary care out-of-pocket; a low- or middle-income 

individual experiencing a health crisis cannot. Thus, policies that separate risks will not 

only harm the sick, they will decrease access to care most heavily for the non-wealthy 

with health problems. Therefore, the amount of risk pooling versus risk segmentation is 

a fundamental choice. 

The Risk Pooling Continuum 

Policies That Promote Greater Pooling Of Risk 

The degree of risk sharing under current law varies by the insurance market. Public 

insurance (e.g., Medicare, Medicaid) represents the most pooling of risk. All 

beneficiaries are eligible for the same health insurance benefits, and the cost of 

providing those benefits is largely financed by broad-based revenue sources (e.g., 

income or payroll taxes), completely separating enrollee health status from financing of 

the programs' benefits. Public programs that include deductibles, co-insurance, or copayments or limit covered benefits reduce the sharing of risk to some extent, as these 

provisions increase financial burdens directly with medical care use. 

Employer based insurance, still the primary source of insurance for the non-elderly, 

promotes natural pooling of risk, since individuals generally choose employers for 

reasons unrelated to their health status, and participation in employer-offered plans 

2 
27 


KING-6430 with DISTILLERInsert offset folio 20 here 23646.020

tends to be high. Trends that are increasing cost-sharing requirements in employerbased coverage are, however, reducing risk pooling to some extent in these plans over 

time. 

Prior to 2014 when the Affordable Care Act's main coverage provisions were 

implemented, thenongroup and small employer insurance markets were 

characterized by very little risk pooling, with risk segmentation being the greatest for 

nongroup insurance. Individual purchasers could be denied coverage outright in the vast 

majority of states due to health care risk. they could be offered policies that permanently 

excluded care associated with particular health problems. they could be offered policies 

with higher cost-sharing requirements (deductibles, coinsurance) because of their health 

profile, and many policies excluded or severely limited benefits such as maternity care, 

prescription drugs, and mental health services. In both the small group and nongroup 

markets. minimum benefit standards were rare, higher premiums could be charged 

depending on the health care profiles of enrollees, and substantial pre-existing condition 

exclusion periods often applied. 

An array of policies included in the Affordable Care Act increased risk pooling 

significantly in these markets. but by no means does the law pool all risk. Key risk 

pooling provisions include guaranteed issue, modified community rating, minimum 

benefit and cost-sharing standards, prohibitions on pre-existing condition exclusion 

periods, the individual mandate. and income-related financial assistance for the 

purchase of nongroup insurance coverage. By requiring insurers to "take all comers" 

regardless of their health status or health history (guaranteed issue and renewal) and 

once they are covered to reimburse them for expenses related to health conditions that 

began prior to purchasing insurance (prohibitions on pre-existing condition 

exclusions). the ACA ensures that all insured individuals share in each other's health 

care costs. yielding a more diverse pool than would otherwise exist. 

Minimum benefit and cost-sharing standards increase the share of total health 

expenditures that are financed through premiums, spreading health care costs more 

broadly and reducing the financial exposure for those with greater health care needs. 

Limiting variance in premiums due to the individual characteristics of the insured 

(modified community rating) increases pooling substantially compared to unregulated 

markets featuring different premiums for purchasers based upon their health status. 

health history, gender. and industry of employment, as well as much broader premium 

variation by age and other factors. Modified community rating is also critical to ensuring 

the effectiveness of guaranteed issue and guaranteed renewal; otherwise, insurers 

3 
28 


KING-6430 with DISTILLERInsert offset folio 21 here 23646.021

could charge unhealthy enrollees much higher premiums than their healthy counterparts, 

counteracting the intended effects of those rules. 

By requiring all or most individuals to enroll in health insurance coverage, individual 

mandates increase the number of healthy and sick individuals in insurance pools by 

providing incentives for them to enroll in and retain insurance; such mandates have the 

largest behavioral effect on those with lower health care costs who would be less likely 

to enroll otherwise. The more people subject to the mandate and the stronger the 

enforcement mechanisms, the greater its effect in spreading health care risk. 

Importantly, without the individual mandate, the other consumer protections (rating 

rules, guaranteed issue, benefit standards, etc.) would allow individuals to remain 

uninsured until a health problem arose, leading to a costly and unstable insurance pool. 

Significant income-related financial assistance for the purchase of private 

insurance coveragenot only improves affordability for the sick, it also brings in lowincome healthy individuals who otherwise could not enroll. This yields greater diversity 

in insurance pools and lowers the average health care costs of those enrolled; the 

greater the financial assistance provided, the broader the sharing of risk. 

The ACA does not pool all risk even in the small group and nongroup markets; some 

enrollees have large cost-sharing requirements and certain benefits are not included in 

the essential benefit requirements, for example. Moreover, policy decisions that allowed 

for grandfathered and grand mothered plans in the small employer and nongroup 

insurance markets reduced risk pooling in the short-run, keeping the health care risk of 

people insured through those plans (who tended to be healthier on average) separate 

from the rest of those markets. 

Policies That Decrease Risk Pooling, Separating The Risks 

While the Affordable Care Act increased risk pooling, conservative members of 

Congress, presidential candidates, and policy analysts have proposed a number of 

health policies, many of which would work in combination to reverse that change. They 

would tend to isolate much larger shares of the health care costs of the sick from those 

that are healthy. This would reduce costs for the healthy and increase them for the sick. 

And because there are more healthy people than sick at a point in time, the savings 

4 
29 


KING-6430 with DISTILLERInsert offset folio 22 here 23646.022

engendered for each healthy person would be smaller than the increased costs created 

for each unhealthy person. These policies include: 

Various Forms Of Experience Rating Ofinsurance Premiums 

Experience rating of premiums includes, e.g., health status/health history rating, gender 

rating, age rating, tobacco use rating, industry rating, and rating based on genetic 

information. Allowing insurers to vary health insurance premiums according to the 

characteristics of insured individuals and groups increasingly segments the healthy from 

the sick. Each factor on which premiums can vary allows insurers to effectively create 

separate health insurance pools-pools in which only the health care costs of those with 

similar characteristics are averaged together. Those not in "healthy" pools would have 

high average expected costs and could be charged enough that most or all of them 

simply cannot afford insurance coverage. 

Incentives To Increase Use Of Health Savings Accounts 

Health Savings Accounts (HSAs) are investment accounts that allow individuals to 

deposit funds pre-tax and accrue tax free earnings on those funds; by current law, the 

accounts must be used in conjunction with high-deductible health plans, although some 

have proposed eliminating that requirement. Funds in the accounts can be used for 

medical purposes without incurring taxes or penalties and can be used for any purpose 

without penalty after age 65. 

HSAs allow individuals to pull health care dollars that would otherwise be devoted to 

more comprehensive coverage out of the insurance pool and place them into accounts 

for the individual's own use. As a result, they have very different implications for those 

who are healthy and those who are sick. With an HSA, those with low expected use of 

medical care can limit their sharing of risk with a high-deductible insurance plan and 

receive significant tax benefits from deposits into the HSA; the tax benefits are greatest 

for those in the highest tax brackets. If they do not need much medical care, they benefit 

from the equivalent of an additional IRA. 

People with health problems and people without the financial resources to fund the 

individual accounts do not receive the tax benefits associated with the accounts' growth 

and must face the financial burden of funding substantial portions of their care 

independently. Proposals designed to increase the numbers of people using HSAs by 

eliminating current restrictions on them will tend to decrease the number of healthy 

people enrolled in comprehensive insurance, reducing the sharing of their risk with those 

more likely to use medical care. (HSAs can be funded by employers, but a large 

percentage who offer HSA qualified high-deductible plans to their employees do not 

5 
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KING-6430 with DISTILLERInsert offset folio 23 here 23646.023

contribute to them: among those that do, the average contribution is small relative to the 

potential out-of-pocket liability faced by the worker.) 

Allowing Unrestricted Sales Of Insurance Across State Lines 

Often mentioned by advocates as a way to increase competition across insurers, 

unrestricted sales of insurance across state lines would directly undermine state policies 

designed to broadly pool health care risk. Advocates for this policy consistently combine 

it with the elimination of the policies currently in place that encourage risk sharing in the 

private, individually purchased insurance market. 

As a result, insurers domiciled in states with much more limited insurance market 

regulations (e.g., without guaranteed issue of insurance, as well as those permitting use 

of pre-existing condition exclusions, premium rating based on health status, and limited 

benefit plans) could sell low-cost coverage to healthy individuals living in a state with 

policies designed to share health care risk. These insurers could pull healthier 

consumers out of the insurance pools in their home states while leaving their sicker 

neighbors behind in higher-cost pools. Left with only those with health problems to 

enroll, insurance pools could not survive in those states attempting to share risk more 

broadly, ultimately leavin9 many of the sick with no insurance options at all. ill 

Allowing Coverage Denials, Benefit Exclusions, Cost-Sharing Variations With Health Status 

Allowing private insurers to deny coverage to those at risk for higher-than-average 

medical expenses, to offer plans that exclude particular benefits consumers are 

expected to use based on their health histories, and to offer only coverage with highcost sharing requirements to those with higher expected use of medical services are all 

strategies that place greater financial burdens for health care on those who most need 

to use it. These approaches separate all or significant portions of the expenses of highneed consumers from the insurance risk pool. For example, excluding mental health 

services from a plan requires a person with mental health care needs to bear the cost of 

those services themselves. Advocates for eliminating guaranteed issue, the current 

minimum benefit requirements, and/or actuarial value standards in the individually 

purchased and small-group insurance markets would re-instate strategies used to 

segment health care risk prior to implementation of the Affordable Care Act. 

Age-Related Tax Credits That Do Not Vary With Income 

Some of those advocating a replacement of the ACA suggest eliminating income-related 

subsidization of health insurance, replacing it with fixed tax credits for all Americans that 

vary somewhat with age but which would be available in equal amounts regardless of 

6 
31 


KING-6430 with DISTILLERInsert offset folio 24 here 23646.024

income. Those in favor of these policies argue that administrative costs and marginal tax 

rates would be lower than under the income-related assistance in current law. In 

principle, one could provide tax credits to all irrespective of income of sufficient size to 

make adequate coverage affordable for those of all ages and financial means; however, 

such an approach would cost a fortune in government dollars. As such, proposals for 

this type of substitution are consistently associated with elimination of benefit and costsharing standards and significant loosening of limits on premium variations in the 

individually purchased insurance market. 

The proposed age-related-only credits are much smaller than the ACA's income-related 

credits for an obvious reason: spreading aggregate tax credit costs across a much larger 

number of people (an entire population versus the low-income) inevitably means that the 

size of the credit allocated to each person must be much smaller, unless much more 

public money is devoted to the program. With a reduction in individual financial 

assistance and deregulated insurance markets, insurers would offer narrower coverage 

or no coverage at all to those with significant expected health care needs, and the 

assistance available would be insufficient to make adequate coverage affordable to 

those with modest incomes. Considerable costs would fall upon those with health care 

needs themselves, and even healthy people of modest means would not be able to 

afford coverage that gave them effective access to necessary care. 

High Risk Pools 

High risk pools are insurance pools designed to cover individuals with significant 

expected medical needs; these are individuals who have been denied coverage in 

private health insurance plans or who have specified conditions that are extremely likely 

to lead to denials. In other words, these are mechanisms for explicitly separating the 

costs of those with high medical needs from others, and these pools only makes sense 

in a market that allows insurers to deny coverage outright based on individuals' health 

status. A well-financed high risk pool that provided such high-need individuals with 

adequate, affordable coverage is in principal conceivable but would require very hefty 

public expenditures. As a result, customarily, states (and the federal government as 

transitional assistance between 2010 and 2013 prior to full ACA implementation) have 

provided only limited subsidization of insurance coverage through high risk pools. 

Because the average health care costs of those eligible to enroll were high by design 

(they all had at least one high-cost medical condition) and because subsidies were 

limited, the high risk pools' insurance premiums and cost-sharing requirements were 

large. Many such pools had pre-existing condition exclusion periods, limited benefits, 

and enrollment limits; all of these characteristics served to reduce the value of the 

7 
32 


KING-6430 with DISTILLERInsert offset folio 25 here 23646.025

coverage, creating high financial burdens for enrollees and limiting the number of people 

who could access the coverage. These problems could be addressed, but only with a 

much higher investment of tax dollars than any candidate proposing this approach has 

suggested. 

"De-Linking" Insurance From Employment 

The tax code provides strong incentives for individuals to obtain insurance for 

themselves and their family members through their employers, and this encourages risk 

spreading. The larger the employer, the greater the pooling of risk. Policy proposals to 

"de-link" insurance from employment, usually by eliminating the tax preference for 

employer-based insurance, would tend to reduce the provision of, and the participation 

in, those employer plans. 

If the alternative is an individually purchased private insurance market that is built 

around policies that broadly pool health care risk (like those in the ACA), the effect on 

risk sharing of such a de-linking would be limited. However. those supporting these 

approaches consistently advocate for the deregulation of the individual insurance 

market, including eliminating minimum benefit requirements, premium rating rules, and 

other policies that operate to ensure access to adequate coverage for those with health 

problems. That combination would greatly reduce the sharing of health care risk; it 

would lower costs for those who are healthy at any point in time, but substantially 

increase costs and reduce access to coverage for those with current or past health 

problems. The currently healthy would be at similar risk if and when they develop health 

problems in the future. 

The Competing Philosophies: Crystallizing The 

Difference 

While those who are healthy at a given point in time may benefit financially from policies 

that separate their health care costs from those with health problems, health status is 

not a fixed state. As many of us know too well, the good fortune of a young, healthy 20-

or 30-something can turn quickly with a single diagnosis of cancer, multiple sclerosis, or 

pulmonary emboli, or in the event of a serious motor vehicle accident. A perfectly 

healthy kindergartner can fall victim to leukemia without warning; a bright, active 

teenager can become severely depressed and require intensive psychiatric treatment. 

8 
33 


KING-6430 with DISTILLERInsert offset folio 26 here 23646.026

Even the most fortunate among us must face increasing health care costs as we age, 

although we erroneously may discount the value of our future access to adequate and 

affordable health insurance coverage when we are young and feeling invincible. 

Meanwhile, once we experience health problems, the broad sharing of health care risk 

that provides us with affordable access to necessary care may be invaluable. 

The health care policy proposals offered by the various political players emerge from 

two starkly different philosophies. Those proposed by Democrats are generally 

consistent with broad based sharing of health care risk across the healthy and the sick. 

Their approaches employ deductibles, co-payments, and co-insurance and limit benefits 

to a degree, so some risk is borne by individuals themselves. But, in general, they are 

designed to spread risk broadly, increasing financial burdens on the currently healthy to 

the benefit of those with current health care needs. 

Republican proposals generally place health care costs much more heavily on nonhealthy individuals through various approaches that segment risk pools. Some proposals 

would pool risk for high catastrophic expenses; others would not. The risk segmenting 

approach has real financial benefits for those who are healthy at a given time, and those 

who are healthy significantly outnumber the unhealthy-hence the short term appeal. 

But these approaches place heavy financial burdens on those with the most health care 

needs, and they discount the value to the currently healthy of having affordable access 

to adequate care when and if they develop health problems in the future. 

Risk pooling approaches promote broad access to affordable medical care regardless of 

income or health status, while the risk segmenting approaches do not and would in fact 

reduce access relative to current law. Advocates of the latter generally employ terms 

such as individual responsibility, skin in the game, consumer choice, and market 

competition, but make no mistake about it: it is all about the risk pool. 

ill Even under the ACA which provides regulatory floors below which states may not go, 

state regulations differ. For example, New York's nongroup and small group insurance 

markets comply with pure community rating; Massachusetts allows age rating in their 

markets to vary by a ratio of 2 to 1; and the ACA prohibits greater age variation than a 

ratio of 3 to 1.Therefore, unrestricted sales across state lines could undermine state 

decisions under the current system as well. That is why today the ACArestricts crossstate line sales of insurance to states that have mutually agreed to permit them through 

an interstate insurance compact. 

9 
34 


KING-6430 with DISTILLERInsert offset folio 27 here 23646.027
35 


KING-6430 with DISTILLERInsert offset folio 28 here 23646.028

With support .from theRoberrWoodJohnsrin Fou~datio~ (RWJF), theUrbatl Insrltllte 

is l!~de·'~aldng a c~ltlprehe)lsiye mo · . )lg pr<Jj~ct tO ":xa111i~e th~ .·.··· •.. 

iJ1lp!~merttatlo~a,ndeffectst>fthe .· ... ···· .. · ........ ~rdableOit:tiMcof:~Qi? '\ 

(ACA,:)~ 'lbe pro jeer began in May20ll ~4~11 ~eplaee v.:r s~era\ ye<IJ:s. ¥~:tJrk~ .~. ~!lsti~~Will'd~u,ment ch~s. '<>,. the}~P!~~~,a~ht\ ~f !latiei~~·he~~ref\>r~.t~~~~~ · ;• 

states~ researchers "!14 poliey111aket'5 lti:trn ~!fithe process ~ lt ul1fol4s.l{ep?rrs tlutt hay~ 

been trepared .a~ part of thi~ on~oii!g,proJ<iCt ~n be (ouqdatwmy.rwj£org. . . .. ·. . . · 

an~ vyww;healthpolli;ycenter:~»:g,''fhe quat!titative componetit of the project i~ prqdu~ng 

aualys~ of the effects t>f the ACA pn ~o~erage, heal~h expenditures, .affordabilhy, attes$ 

and premiums in the states and nationally. 

Several reports estimate that 2016 nongroup marketplace 

premium Increases were considerably higher than in previous 

years. Depending on the source and the premium measure 

usecL premium increases have been reported as 7.5 percent, 

12.6 percent an~ 11 percent.1 Earlier this year, we published 

a national estimate that the fowest~cost silver plan premium, 

available in 2016 was, on average. 4.3 percent higher than the 

lowest~cost silver plan premium available in 2015; that estimate 

is based on the largest population rating areas in the first 

states to have their rates approved, and the estimate weights 

premiums by rating area population size.2That analysis used 

data on 20 states plus the District of Columbia and included 

large and small states from a diverse geographic distribution. 

Now, with data available for all states, we find that the average 

change in premiums for the !owest~cost silver plan across all 

rating areas in all states increased a weighted average of 83 

percent between 2015 and 2016. However, further exploration 

rew:als that the rates of increase vary tremendously across 

states and across rating areas within states, with statewide 

averages as high as41.8 percent in Oklahoma and as low as 

~ 12,1 percent in Indiana. 

We conclude that a national average rate of premium increase 

is a fairly meaningless statistic since different markets are 

having very different experiences. The focus of attention 

should be on understanding the wide variability by identifying 

the characteristics of markets that have experienced high 

premiums or high growth in premiums and of markets with 

lower premiums or lower growth in premiums. Tables 1 and 2 

summarize the considerable variation in the changes in lowestcost silver pian premiums offered between 2015 and 2016, 

comparing statewide and regional averages as well as detailing 

the variation in experiences across rating areas within each 

state. We find the following: 

Across 499 rating areas nationally, 29.1 percent of the 

population lives in rating areas with reductions between 

2015 and 2016 in lowest-cost slfver plan premiums.. 

Another 19.0 percent live in ratlng areas with Increases 

between 0 and 5 percent, and 16.1 percent live in areas 

with increases between 5 and 10 percent. Rnally, 9.6 

percent of the population live in rating areas with increases 

between 10 and 15 percent, and 263 percent live in areas 

with increases greater than 15 percent (table 2). 

There is also considerable variation in premiuin changes by 

geographic area. In 19states {indodln9 Michigan. ~lorida, 

Texas, Virginia, California, and Ohio), sotld majorities of the 

population reside In areas where the lowest~cost silver plan 

marketplace premium either decreased any amount or 

increased less than 5 percent. 

On the other hand, 16 states {including North Carolina, 

Colorado, Arizona, Oklahoma, Tennessee, Minnesota, and 

West Virginia) had majorities of their populations living 

in areas in which the lowest~cost silver plan marketplace 

premium increased more than 15 percent between 2015 

and 2016. 

In some states (such as New York), the large population 

centers {such as New York City, Long Island, and Buffalo) 

saw decreases or small increases In lowest~cost silver 

plan premiums, although the rest of the state saw larger 

increases. 
36 


KING-6430 with DISTILLERInsert offset folio 29 here 23646.029

Regiot'iat AVerag~ 

Cohn:ectlctJt $)4<\ $34!1 

DelaWare $286 $291' 

DfstrictofColumbia $238 S:ZS$1' 

Maine $311 $307 

Maryland $221 :$228 

Massachusetts $247 $243 

New Hampshire $288 $23S 

New Jersey $308 $315 

NewVotk $340. $344 

Pennsylvanla $207 $222 

Rhodelsl3nd $274 -'~244 

Vermont $395 $428 

R._gionaf Average $239 

Hllnols $i22 -S-229. 

lndi~na $313 S300 

Iowa $219 $231 

Kansas $208 $201 

Mic:h!9afl $218 $241 

Minnesota $178 $199 

Missouri $257 $2.69 

Nebraska $239 $2$4 

North Dakota $281 $292 

Ohlo $244' $<$2 

South Dakota $274 $257 

WisConSin $271 $21!1 

1Jl% 

0.6% $351 

4.0% $354 

0.1% $229 

·LS% $309 

3.2% $245 

-1.5% $247 

·175% $260 

2.2% $325 

l.O% $3/l 

7.1% $24$ 

·16.9% $25!} 

8.3% ,$465 

3.5% 

3,0% $247 

4.3% $264 

5.7% $273 

-3.3% $2~1 

10.5% $237 

11.8% 

4.6% :$303 

6.3% $32.0 

3.7% $313 

3.2% $24l> 

-6.4% $318 

1.3% $290 

6.7% 

Q.8%. 

19.0% 

'42% 

0,$% 

75% 

15% 

9.3% 

33% 

SJ% 

10.$% 

6.1% 

&.6% 

6.2% 

S.l% 

'-12.1% 

18.2% 

l9.6% 

·'1.9% 

25.8% 

12.6% 

26.2% 

1.4% 

-1.1% 

23.8% 

3.4% 

:4.2% 

0.1% 

11.2% 

~2.0% 

·M% 

5.3% 

0.0% 

-5.1% 

1.7% 

4.6% 

8.8% 

~:t.s% 

8.5% 

4.8% 

5.5% 

,-$.3% 

11.8% 

7.6% 

4.1%-

18.6% 

8.5% 

15.8% 

5.6% 

1.0% 

7.6% 

23% 
37 


KING-6430 with DISTILLERInsert offset folio 30 here 23646.030

Kentucky $2Q3 $200 2.5% $233 11.8% Ul% 

Louisiana $294 $297 1.t% $327 10,2% 5.5% 

Mlss!sstppi $324 $28~ ·12.$% $464 -6.8% 

North: Carolina $2'89 $367\ 6.2%' $371 laS% 13;291> 

Oklahoma $206 $21Jt •2:2% $iss 4U~% 17.f!:% 

SoUth Carolina $267 $266 .(>.6% $300 J),O% 6.0% 

T~nnessee $JS9 $199 $.0% $275 3M% 

Texas $2'31 $248 7.:1% $251 1.2% '4-.1% 

Vltgfnia $259 $2Bp 4.0% 

We~~r~~~,~:~~ $266 S29().; ···~.~\<···.· $.352 •• ~~·~!',· .. •'!'1% •• 

Re9iQnatA~~e $26<! $2$1 ll'l% $2$1 t"s~ 

Alaska $580 $4l!8 $6!l4 40,2% 34.2% 

Ar~tona $20Q $!77 '24.4% s.r% 

Catlfornta $200 $293 4S% $297 U% l.9% 

C"forad-0 $258 $12$ $281 '2411:%.' 4.5% 

Hawaii '$Ji'6 $195 )0.4% $260 33.6% 2't.S% 

Idaho $2:i!-1 $23$ S.ll< $~72 15.5% !Q.S% 

Montana $249 $237 -<ll% sno 35.2% t3.4% 

Nevada $276 .$270 ~2.1% $284' 5,2~ 1.5% 

New Mexico $i25 $204 ·9.2% $195 -4.7% ·7.0% 

Oregon $204 $216 $.;>% $254 17.6% 11.6% 

Utah $196 $211 8.0% $231 9.1% 8.6% 

Washington $269 $237 ~12.0% $255 7,8% -2.6% 

Wyoming $396 $449 8.6% $454 5.6% 7.1% 
38 


KING-6430 with DISTILLERInsert offset folio 31 here 23646.031

'ConnectiCut 

~!aware 

Dis.trictoftolumbfa 

Maine 

Maryfand 

Massa<:hu~etts 

Ne!N Hampshire 

New Jersey 

~w'fork 

Pennsylvania 

Rhode island 

Vermont 

Reg10tt~\ A'v~rag~ 

HHriols 

Indiana 

Jowa 

Kansas 

Mic:hlgan 

Minnesota 

MiSsouri 

Nebrq:ska 

North Dakota 

Ohio 

South Dakota 

Wlsconsln 

29.:6% 

0.\1% 

100.0% 

30.1% 

0.0% 

48A% 

0.{)% 

0.0% 

493% 

0.0% 

0.0% 

0.0% 

124 41.4% 

13 40,7$ 

17 100.0% 

0.0% 

0.0% 

16 74.9% 

,O,Q% 

10 Q.O% 

o,.o% 

QO% 

17 62S% 

0.0% 

16 26J% 

65.2:% 

M% 

0.0% 

69,9% 

13.6% 

27.2% 

0.0% 

100.0% 

27.2% 

36.2% 

0.0% 

0.0% 

7:4% 

0.0% 

0.0% 

0.0% 

0.0% 

3:.6% 

0.0% 

om·o 

-0.0% 

0.0% 

15.1% 

0.0% 

50.5% 

5.2$ 

(),Q% 

0,0% 

0.0% 

75.2% 

M% 

10M!% 

0.0% 

0.0% 

25.4% 

100.0% 

100.0% 

1tl.\'Y• 

5.4% 

0.0% 

0.0% 

0.0% 

18.8% 

0.0% 

51.6% 

0.0% 

77.5% 

0.0% 

0.0% 

10.S% 

Q.\1% 0.0% 

0.0% 100.0% 

0:0% 0.0% 

O.Q% O.Q% 

n.2% 0-.0% 

12.1% 12.4% 

0~0% 0.0% 

{l.O% O.Q% 

Q,{l% 23.4% 

ll.6% 26.8% 

Q,{)% 0.0% 

0.0% O.Q% 

9.511k 31.6% 

10.9% 43J% 

0.0% 0.0% 

2:9.2% 70.8% 

Q.O% 1'00.0% 

OJ)'?~> 2.6% 

0:0% 100.0% 

9.8% 38.6% 

0.0% 100.0% 

22.5% 0,0% 

22.3% OJ)% 

0.0% 100.0% 

12,9% 0.0% 
39 


KING-6430 with DISTILLERInsert offset folio 32 here 23646.032

Arkarisas 0.0% 82.9% 17.1% 0.0% 0.0% 

Florida 67 44,7% Htb% 19,8% 1S% ·15.()% 

Geor~la 16 6.0% 50:.1% OJ)% 22.1% 11,$% 

KentucKy 205%. 19,1% tto% 11.5% 48.9% 

louisiana '9.4% Q.O% .24.9% 65.6% O.Olj 

Mtssiss[ppt 93.4% M% {tO% 0.0.% 0.0% 

North Carolina 16 Q,Q% Q~% 1P% 87.3% 

Oklahoma 0:.0% 0.0% o.Q% Joo.b% 

South Carolina 46 0.0% 42.&% 36.0%' 

Tenn!l$see s 0.0% Q,Q% 0.0% 0.016.> 100-0% 

Texas 26 32]% .44.2% 115% 0.9% 11l7% 

Virglnia 12 '9.&%: 0.~ 

westyJ~fr!la 

ft~ttinat Average , 

Alaska 

Arizona 

(alifotnia 

Coloratt.o 

Hawaii. o:O% 0.6% {),0% 0.0% 1(>fMm 

tdaho. 0.0% 0.'0% 30.6'% *f.S$ 4S:tl% 

Montana O.Q% {1.0% 0.0% 0.0%, 100.()% 

,Nevada 13.5% 223% 64.2% o.O% 0.091) 

NewMexko 54.8% 7.1% 38.1% (1'.0% 

OreQon 0.0% .{).Q% 0.0% 28.0% 

Utah 19.0% 0.0% '63.0% O.ll% 18.0% 

washlitgto.n 37.3% 0.()% <).()% 42.1% 2.M% 

Wyonltng 0.0% 80.1% 0.0% 13.9% 0.0%' 

No~: 1\>pubtion t. d"'errnined >tth<: rnrlnga= k•d 
40 


KING-6430 with DISTILLERInsert offset folio 33 here 23646.033

This analysis focuses on identifying the characteristics of local 

markets associated with higher and !ower premiums and larger 

and smaller changes in premiums between 2015 and 2016. 

We estimate regression models as a way to summarize these 

associations. We find the following: 

There is some regression to the mean; rating areas that had 

Those rating areas with a Medicaid insurer competing in 

the marketplace also have lower premiums and lower rates 

of increase than those regions without a Medicaid insurer 

competing. The presence of a co-op insurer was associated 

with lower premium increases although a co-op was not 

significantly associated with a lower premium level in 2016. 

high premiums in 2015 relative to the national average had We also provide detailed information on sub state rating areas in 

lower premium growth in 2016 and vice versa. seven states that had high statewide average increases in their 

20161owest-cost silver plan premiums and seven states that 

However, the most important factors associated with had low statewide average increases in 2016. These examples 

lowest-cost silver plan premiums and premium increases allow us to ground the findings of the regressions in specific 

are those defining the contours of competition in experiences. 

the market. Rating areas with more competitors had 

significantly lower premiums and lower rates of increase 

than those that did not. 

We analyze nongroup marketplace premium and insurer 

participation data taken from the 2015 and 2016 Robert Wood 

Johnson Foundation Health Insurance Exchange Comparison 

(H!X Compare) datasets for every rating area in the country; we 

combine those data with several validity checks and edits based 

on Healthcare.gov and the relevant state marketplace websites. 

Our analyses use the premium for the lowestMcost silver plan 

offered in each rating area for a 4D-year-old nonsmoker. We 

have focused on the lowest-cost silver plan as a premium 

measure because it represents the least expensive entry point 

into the most popular tier of coverage. All averages presented 

are weighted by rating area population. In addition to average 

changes in state premiums between 2015 and 2016, we also 

calculate changes in average state premiums between 2014 

and 2015 and the average annual change between 2014 and 

2016 (geometric mean) to provide a broader context for the 

premium changes seen thus far. 

To summarize the market-level characteristics associated 

with higher or lower premiums and higher or lower growth in 

premiums, we estimate linear probability models. We estimate 

two regressions, each with premium rating area as the unit of 

observation. The first has a dependent variable equal to the 

lowest-<:ost monthly silver plan premium in the rating area in 

2016, and the second has a dependent variable equal to the 

percentage difference between the lowest-cost silver plan 

premium in the rating area in 2015 and in 2016. Explanatory 

variables in each regression include state population; the 

number of insurers in the rating area in 201 5; the change in the 

number of insurers between 201 5 and 2016; and indicators for 

2016 participation in the rating area for previously Medicaidonly insurers {hereafter referred to as Medicaid insurers), coops, national insurers, regional or local insurers (including new 

commercial entrants like Oscar}, provider-sponsored insurers, 

and Blue Cross Blue Shield-affiliated insurers (including 

Anthem and subsidiaries such as Bridgespan), 

Additionally, in the premium regression we included indicators 

for states with pure community rating (New York and Vermont) 

because premiums in those states for a 4G-year-o!d are 

significantly higher than in other states because the former 

states' insurers are prohibited from varying premiums by 

age (relative to cases in which premium variation by age is 

permitted, pure community rating increases premiums for 

younger enrollees and reduces them for older enroHees).J In 

the premium change regression we add average lowest-cost 

silver plan premiums in the rating area relative to the national 

average in 2015 to test for regression to the mean as an 

explanation for variation in premium increases or decreases. 

We define Blue Cross Blue Shield insurers as those that are 

members of the Blue Cross Blue Shield Association. Co-ops 

were established under the Affordable Care Act (ACA), and all 

operating members are listed on the National Alliance of State 

Health Co-ops website. Medicaid insurers are those that only 

offered public insurance {Medicaid with or without Medicare) 

plans before the 2014 nongroup open enrollment period. 

Provider-sponsored Insurers are those directly affiliated with a 

provider group (usually a hospital system). 

A !imitation of our analysis is that some insurers participating 

in a given rating area do not serve the full population in that 

rating area, only a part of it. As a result, in some portions of 

some rating areas, individuals likely do not have access to the 

lowest cost silver premium we identify. However, we are unable 

to analyze sub-rating area service areas at this time. 
41 


KING-6430 with DISTILLERInsert offset folio 34 here 23646.034

Characteristics of Markets Associated with 

High and Low Premium Levels and Growth 

Rates, 2016 

The weighted means of each variable used in the regressions 

are shown in table 3. The regressions estimated to summarize 

the association of market characteristics with premium levels 

and relative premium growth are shown in table 4.1n table 

4, the dependent variables are the monthly premium of the 

lowest~cost silver plan fn each rating area !n 2016 and the 

percentage difference between the lowest~cost silver plan 

premium in the rating area in 2015 and the lowest-cost silver 

plan premium in the rating area in 2016. 

Table 4 shows that the lowest-cost silver plan premium 

avalfable is lower when more insurers participate in the 

nongroup marketplace in a given region in 2015. Although this 

,Percentage change Jt:~ !owest-!::OstJ;ilverplao preti»oro,. 2015-16. 

2016lowe.st-Cost'Sllverp!ahmonth1y premium 

Independent Variables 

'sta~e populatlo!i 

Number of participating insUrers, 2015 

Change fn,num~er Oflrysurers, 'z(>'S~t6 

Lowest-cost snverplan P~emtum re!i!ltlVetothe natlo'nal aver<i9e.~l5~ 

Medic~id lft~urer partiClpatin~ ln 2016 

Co..op lnsU{er partttlpa:tlngln 2016 

National fnsure~ paltldp/iti:ngln 2016 

Reglomd orlo,cal ~ns4rer partklpa~!ng In 2016 

PrOvider-sp-onsored insurer ~rtklpatlng in 2b16 

Blue Cross Btue Shield insurer partlclpatlng in2o16 

Community rated nclngroup market" 

is likely because of the effed of competition, it could also be 

because markets that begin with somewhat lower premiums 

have more competition; causation cannot be determined 

here. Markets with a Medicaid insurer or a provider--sponsored 

plan in 2016 had lowest--cost silver plan premiums that were 

statistically lower than those in rating areas in which these 

Insurer types did not compete. Premiums in rating areas with 

a focal or regional insurer or a Blue Cross Blue Shield-affiliated 

insurer particlpating tended to be higher, signaling that 

such insurers may be more likely to participate in higherpriced mar,kets, were less likely to price aggressively, or were 

underpriced in 2015. The presence of a co-op insurer in a rating 

area in 2016 is negatively correlated with the IQwest~cost silver 

plan premium in the rating area, but the relationship is not 

statistically significant. The presence of a national insurer is also 

not statisticalfy significant 

M7 

OM! 

0.20 

0.76 

iJ.S2 

05S 

0.95 

0.06 
42 


KING-6430 with DISTILLERInsert offset folio 35 here 23646.035

Table 4 shows that rating areas with more insurers participating 

in the marketplace in 2015 tended to have smaller relative 

premium increases in 2016, and this relationship is highly 

significant. Each additional insurer participating in 2015 is 

associated with a 2016 premium increase that is 1.9 percentage 

points lower, all else constant. For example, a rating area that 

had eight marketplace insurers in 2015 had an expected 

premium increase of 3.8 percent in 201 6; a rating area with 

average characteristics (including having two marketplace 

insurers in 2015) had an expected premium increase of 15.1 

percent in 2016, measured at the mean for all other variables 

(table 5, scenario 1). 

Whether a rating area experienced an increase or decrease in 

the number of marketplace insurers between 2015 and 2016 

was also significantly correlated with its relative change in 

lowest-cost silver plan premium. Increases in the number of 

marketplace insurers are correlated with lower increases in the 

regions' lowest-cost silver plan premiums; the opposite holds 

Number of partldpatlng insurers, 2015 

~hange in number ofinsurers, 2015-16 

lflWest-costsllver plan premium in 2015 relative-to national 

average 

Medicaid in-surer participating in 2016 

Co-op insurer partlcipatlng in 2016 

National insurer participating In 2016 

Regional or local insurer partidpatlngln 201(; 

Provider-sponsored insurer partidpatlng In 2016 

Blue Cross- Blue Shield insurer participating in 2:016 

Community ratednongroup market 

Intercept 

R' 

true for decreases in the number of marketplace insurers. A 

2016 increase (or decrease} of one in the number of insurers 

is associated with a 2.9 percentage point lower {or greater) 

increase in its lowest cost silver premium than an identical 

region that had the same number of insurers in each of 2015 

and 2016 (table 5, scenario 2). 

Rating areas with 2015 silver plan premiums that were high 

relative to the national average tended to have lower premium 

increases in 2016. For example, a rating area that was average 

in all other characteristics but that had a 2015 lowest-cost silver 

plan premium that was 10 percent above the national average 

had an expected premium increase in 2016 2.8 percentage 

points tower than an otherwise identical rating area in which 

the 2015lowest-cost silver plan premium was equal to the 

national average (table 5, scenario 3}. This finding suggests a 

possible regression to the mean over time; that is, markets in 

which early premiums were high are growing at a slower rate 

than markets in which early premiums were low. 

-10,60~n .0.02"" 

-4.50 -o.03**" 

N/A -0.28"*'" 

+21.07*** -0.07'"'"' 

~10.72 -0,0$"*" 

-4.59 -1101 

26.13*"* 0.07*"" 

-;12.31"'* -o.oi 

28,13'"'*" 0.06"** 

112.16~ NIA 

320.67 0.45 

034 039 

499 499 
43 


KING-6430 with DISTILLERInsert offset folio 36 here 23646.036

C~-op l~sUre~~~pet~-in r~i~ar~ ' 

N.ot:o·optf:~surerco~inratlng-atea 

JW~t6~t~i~~~r~~te~, ~~ rai!ns~~ 

No re9fofialiq$:o/er<Orf!~~es i!'itat1!'9 area 

at~e.Cro~·ait!e·~Qi~~~ffilf~,tedJns~te~Jm~res !~ra~~te~ , 

NO ~!U€! Cros~.~l~~hl~1d~~ffiU~t~~OSl!rer somP~~;ln -~~t{~g at~ 

Nation~{ ~gu{etco'mtk~S1n~...;g~rea' 

·s* , No ~tl'?~-~~~U~.c~m~~~)n. r~t!ng;ar~~ 

PI'OY!~e~ $p~~~~ i~Wrercompet~ in rating ·~e\t ' 

9" N,o ptovk;l~>'>f!QOS~~ !l:'lsurer c.ompet~sln nitingare<t 

R~tiilga~<l'i!\'stat~ 0f:a~ragepQpU!att~n sk 

1Cf Rating ~re~ In, sti).te.o~wlth populatl~n s.l~ lQrili!lion,abo~ average 

N<>tc· El&o!< "'~ ev>lwn~d ~• ''"""' due< fm >ll othcr 'wt>h1o" <mit of oh='"'''"' ;, ,~,.; udng ><<> 

• The'>';ri.hle< ;,.;,,,.,;"Sf'"'"'""";, tho m•<h< of • Ha<io!!.l i•><urcrm • pro"dcr'l"''"o"'d ""~«:tis not ""dstk.1ly>ignifi<:;m ;, 1hc "'t;=im> (.sec <•bk 1) 

ls.z%' 

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10 
44 


KING-6430 with DISTILLERInsert offset folio 37 here 23646.037

The regression results also indicate that a Medicaid insurer or 

a co-op participating in the marketplace in 2016 is associated 

with a significantly lower rate of increase in the lowest-cost 

silver plan premium in 2016. For example, competition from 

a Medicaid insurer in a rating area with otherwise average 

characteristics is associated wlth a relative premium increase 

7.3 percentage points tower than that in an identical rating 

area that lacks a Medicaid insurer {table 5, scenario 4}. The 

participation of a co-op in a rating area with otherwise average 

characteristics is associated with an Increase in the lowestcost silver plan premium that is 4.5 percentage points lower 

than that of an identical rating area that lacks a co-op {table 

5, scenario 5). On the other hand, the presence of a regional 

insurer or a Blue Cross Blue Shield-affiliated insurer was 

associated with a higher rate of increase (7.1 percentage points 

and 5.9 percentage points, respectively; table 5, scenarios 6 and 

7). The presence of a national insurer or a provider-sponsored 

insurer in the market did not have a stat!stica!ty significant 

correlation with premium growth {table 5, scenarios 8 and 9). 

Rating areas in states with larger populations had lower rates 

of premium growth than rating areas in states with smaller 

populations. For an otherwise average rating area, for example, 

being in a state with 10 mi!hon more people than average was 

associated with an increase in that region's lowest~cost silver 

plan premium that is 2.8 percentage points lower than that of 

an identical rating area in a state with the average population 

(table 5, scenario 1 0). 

These results, which show smaller increases in lowest-cost 

silver plan premiums in rating areas with more marketplace 

participating insurers in 2015, combined with larger increases 

in the number of marketplace participating insurers in 2016, 

point to strong effects of competition in the marketplaces. That 

is, in markets with strong and growing competition, premium 

increases are held down. Markets with few insurers and those 

in which competition is diminishing are seeing much greater 

rates of increase. However, our findings also indicate that the 

presence of certain types of insurers in a market is associated 

with lower premium increases than the presence of other types. 

Medicaid insurers, co-ops, and to a lesser extent providersponsored insurers, seem to' be associated with lower rates of 

premium growth than Blue Cross Blue Shield-affiliated insurers, 

regional or local insurers, and national insurers. 

Examples of Market Experiences of Low 

Premium-Increase States, 2016 

We ground the findings in the regression further by looking 

in detail at 2016 changes in lowest-cost silver plan premiums 

in seven states with low average rates of increase (California, 

Texas, Florida, Michigan, Virginia, Ohio, and New York) and 

seven states with high average rates of increase (Colorado, 

Minnesota, North Carolina, Arizona, Oklahoma, Tennessee, and 

West Virginia). Within each of these states, we analyze premium 

changes in the largest rating areas (including providing detail 

by insurer), show the average relative change in !owest~cost 

silver plan premiums across the state's remaining rating 

areas, and provide a statewide average percentage change 

in lowest-cost silver plan premiums. Table 6 {low average 

premium growth states) and table 7 (high average premium 

growth states} show the change in the lowest-cost silver plan 

premium between 2015and 2016, the2015 premium relative 

to the national average, and the number of insurers in each 

rating area. We also provide an average for the rest of the state 

and the state population. Detailed tables for each of the 14 

states are provided as an appendix (tables A.l through A.14). 

In each, we present additional detail on the lowest-cost silver 

plan premiums offered by each insurer participating in the 

marketplace in each rating area studied. 

!n general, large urban markets in larger states are experiencing 

!ower rates of increase in their lowest-cost silver plan premiums, 

reflecting the higher level of competition in those markets. 

Smaller markets outside the large cities. even in !ow-growth 

states, are experiencing higher rates of growth. The data also 

show that states with higher average rates of growth have 

fewer competitors. 

11 
45 


KING-6430 with DISTILLERInsert offset folio 38 here 23646.038

0,9l 

~U% 1.31 

S<inDfego .,3,3% 1.09-

Rest of State 2.2% 1.16 

1.2% M2 

Dallas: -6.7% 

Austin 15.7'% 

Houston \,9% 9 0.92 

San Antonio o:3% "'81 

Rest of State 5.0% 0.87 

Stat<£ Average Q.Q% 1.02, 

Miami ~5.6% 1.01 

tCtO% 0.89 

Orlando 4.9% t.M 

ta.mpa ~10:4% 1.02 

Rest of State 6.1% 1.02 

'1.9% 0.89 

Detrolt ·4.4% l1 0,81 

NOrth of Detroit -4.4% lQ OJ,H 9,~96,000 

Grand Rapids ·5.6% 0.81 

Rest of State 0.8% 0.99 

State Average 2.7% 1.01 

Rkhmond 9.2% M9 

DC Suburbs •0.9% ·1,01 8;26o,ooa 

Virginia Beach 5.4% 1.01 

Rest of State 4.9% 1.05 
46 


KING-6430 with DISTILLERInsert offset folio 39 here 23646.039

3,2% 

COlumbus 10.1% 0.90 11$71~000 

Cleveland -4.7% 12 0.89 

Rest of State --4.5% 0.97 

State Average 8.1% J,27 

New York City -1.5% 11 1.37 

Loogls!aod 0.8% 1.40 19,65i,OOO 

Buffalo 4.3% (},97 

RestofState 29.4% 1.10 
47 


KING-6430 with DISTILLERInsert offset folio 40 here 23646.040

0.12 

1.19 

31.2% 0.84 

o.n 

RQche~ter ••. !!% 1.04 

3{Ji%' 

Minneapolis 2$.5~ 0.67 

RestofState 30,9% 0.78 

2Q.~9f 03 

Ch<trlotte Uti% 1.1<1 

Fayettevme 11.1% M9 

iS.s% 1.08 

21.8% 1.15 

24.4% 10 0.1!5 

43J% " 2:0,2.'% 

2s.ll% 

30.3% 

~ateAvemge '4't8% '0,~4 

OklahomaOty 4Q.9%. ,4' 0.74 

3,MJ,odo iul~ 41A%: <1.15 

Rest of State 42.8% 0.74 

St~teAv~ $8.6% 0.73 

Knoxville 4_9.0% 0.67 

Nashville }-5.4% 0-.72, 6,496:,000 

Memphis 47.0% 0.68 

Rest of State 33.3% 0.80 

State Average 20:5% 1.07 

Charleston 21.1%\ 1.16 

1,a54,000, Hurttlngton 2.S% Ul2 

Rest of State 23.3% 1.07 
48 


KING-6430 with DISTILLERInsert offset folio 41 here 23646.041

Table 6 and tables A.l through A.7 provide data on seven states 

with low increases. California had an average rate of increase 

of 1.4 percent in its !owestHcost silver plan premiums between 

2015 and 2016; this was quite low compared to the national 

average increase of 8.3 percent {table 6). Throughout the state, 

there was strong competition among Health Net (a regional 

insurer) Blue Shield, Anthem, and Kaiser (table A.l). A national 

Medicaid plan, Molina Healthcare, provided strong competition 

in several California markets. A large local Medicaid plan, LA. 

Care, was important in the Los Angeles markets. On balance, 

2015 lowest~cost silver plan premiums in California were higher 

than the national average, although this was not the case in 

the Los Angeles rating areas (table 6). The California experience 

is consistent with the regression analysis finding that 2015 

premiums that are high relative to the national average are 

associated with a lower percent increase in premiums in 2016 

as well as the finding that larger states tend to have lower 

rates of increase. The marketplace participation of multiple 

Medicaid insurers in several regions also likely contributed to 

low increases. 

Texas's statewide average increase in its lowest-cost silver 

plan premiums was only 1.2 percent between 2015 and 2016 

(table 6). All its major urban areas except Austtn had very tow 

increases or decreases. The rest of the state, which includes 

midsize cities and rural areas, had a premium increase of 5.0 

percent on average. Texas has several insurance competitors; 

the average number of insurers per rating area is eight. The 

state has strong competition from Medicaid plans, both 

national plans such as Molina and local Medicaid insurers (table 

A.2). Texas also had active competition from Blue Cross Blue 

Shield, Scott & White Health Plan (a provider-sponsored insurer) 

and Oscar (a startup insurer that initially offered coverage only 

in New York and New Jersey but offers coverage in Oregon, 

Dallas-Fort Worth and San Antonio starting in 2016). Although 

most large cities and the rural rating area had small increases 

or decreases in the number of marketplace insurers and the 

price of their lowest-cost options, Austin lost three of the nine 

insurers participating in their 2015 marketplace and had an 

increase of 1 5.7 percent in its lowest~cost silver plan premium 

in2016. 

Florida had a statewide average increase in lowest-cost silver 

plan premiums of 2.6 percent in 2016 (table 6). The state had 

many insurers in 201 5, particularly in large urban areas. The 

largest rating area in the state, Miami, had a reduction of 5.6 

percent in its lowest-cost sHver plan premium, and Tampa had a 

reduction of 10.4 percent. Coventry Health Care {part of Aetna); 

Florida Blue, part of the Blue Cross and Blue Shield Association 

and which offered an HMO product in much of the state; and 

United Healthcare a!! participated in several markets (table A.3). 

Ambetter and Molina, both national Medicaid chains, were also 

important players in Florida. The state has a large population 

and had average lowest~cost silver plan premiums slightly 

above the national average in 2015 ($276 per month versus 

$264 per month, table 1). 

Michigan had many insurers in 2015 and an almost 2 percent 

decrease in its average lowest~cost silver plan premium in 2016 

(table 6). Michigan has strong competition from Humana (a 

national insurer}, a Blue Cross HMO product, Priority Health 

and Health A!liance Plan (both provider-sponsored insurers), 

and Molina, a national Medicaid chain (table AA). Although 

Michigan's average 2015lowest-cost silver plan premium was 

below the national average, a circumstance correlated with 

higher 2016 premium growth in our data, the large number of 

competitors in the marketplace and the presence of Medicaid 

and provider sponsored insurers are associated with the state's 

relatively low premiums and its average lowest cost silver 

premium decrease in 2016. 

In Virginia, the average rate of increase in lowest-cost silver 

plan premiums across the state was 2.7 percent in 2016 (table 

6). In 2015, there were five competitors in the major urban 

markets (excluding Virginia Beach, which had three) and 

fewer in the rest of the state. Anthem is the largest insurer in 

the state and offers an HMO product throughout the state, 

Hea!thKeepers, as well as a multistate plan option (table A.S). 

Innovation, a providerwsponsored insurer operated by the I nova 

Hospital System, is highly competitive in the Washington, DC, 

suburbs. Optima, an insurer operated by the Sen tara Hospital 

System, is a low-cost insurer in Virginia Beach and is priced 

almost the same as Anthem's Hea!thKeeperslowest-cost silver 

plan there. Both Anthem HealthKeepers and Coventry are 

the most price-competitive insurers in Richmond. Kaiser, a 

provider-sponsored insurer, is very competitive in Richmond 

and the Washington, DC, markets. The state's premiums were 

roughly equivalent to the national average In 2015, a correlate 

of low premium increases in our model as is its relatively large 

population. 

Ohio had a statewide average decrease in lowest-cost silver 

plan premium in 2016, seemingly associated with its large 

number of insurers; the state averaged 10 insurers per rating 

area (table 6). Cincinnati and Cleveland each had 12 insurers 

and Columbus had nine. CareSource, a regional Medicaid 

insurer, and national Medicaid chains Molina and Ambetter 

are strong price competitors in the state and were primarily 

responsible for keeping rates low {table A.6). Anthem, Aetna, 

and Humana also competed but are not among the lowest-cost 

insurers. Premier Health Plan, a provider-sponsored insurer, is 

price competitive in Cincinnati in 2016. 

15 
49 


KING-6430 with DISTILLERInsert offset folio 42 here 23646.042

New York had a statewide average increase of 8.1 percent in 

its lowest~cost silver plan premiums between 2015 and 2016 

{table 6). But the interesting feature of New York is that New 

York City experienced a drop in its lowest cost silver option 

(~ 1.5 percent), there was almost no change in Long Island (0.8 

percent), and there was a small increase in Buffalo {4.3 percent), 

all rating areas where there are a large number of competitors. 

The participating insurers include several Medicaid Insurers in 

both New York City and long Island as well as one in Buffalo. 

Many of those Medicaid insurers had lower rates of premium 

increase than their competitors (table A.7). New York also has 

participation by Empire Blue Cross Blue Shield and several 

national and regional insurers, but those are generally not 

among the lowest~cost insurers. Northshore UJ, a provider~ 

sponsored insurer, became the lowest~cost silver plan for2016 

in New York City and Long Island Oscar, a startup commercial 

insurer, was also reasonably price competitive in both years 

in the same rating areas. Outside of the New York City, long 

Island, and Buffalo regions, there were fewer insurers {including 

fewer Medicaid insurer participants), and lowest~cost silver plan 

premium increases were substantially higher at 29.4 percent 

on average. Competition from Flde!is, a Medicaid plan, was still 

associated with modest premium increases In some markets. 

Health Republic, the state's coMop, had premiums in 2015 

priced significantly below the remainder of the market The 

subsequent exit of Health Republic significantly contributed to 

these large increases. 

Examples of Market Experiences in High 

Premium Increase States, 2016 

Table 7 provides data on seven states with larger relative 

premium increases in their lowest-cost silver plans between 

2015 and 2016, averaging across rating areas. Some had low 

2015 premiums relative to the national average, some lost 

a low~cost insurer from 2015, and others simply had little 

competition. All of these market characteristics are associated 

with higher relative premium Increases in our summary 

regression. 

Colorado had a 24.8 percent statewide average increase in 

its JowestMcost silver plan premiums in 2016 (table 7). Before 

2016, Colorado had significant marketplace competition 

and participation among insurers, with an average of eight 

insurers participating in the stateS marketplace and 10 insurers 

offering coverage in Denver. However, several insurers left the 

marketplace for 2016, including the co-op, which left Colorado 

in its entirety and was the lowest~premfum frisurer in Denver 

and Colorado Springs in 2015 {table A.S).In 2016, eight of 

the state's nine rating areas saw a reduction in the number of 

insurers offering marketplace nongroup coverage. Plus, In 2015, 

the average fowest~cost silver plan premiums on the state's 

marketplace were significantly below the national average 

(0.82 relative to the national average), with the exception of 

the western counties (1.29 relative to the national average). The 

large increases can likely be attributed to the exit of its lowestcost insurer, the co-op, and possibly to premium re~adjustments 

to account for setting premium rates too low In theflrsttwo 

years of reform. 

Minnesota had a statewide average increase of 25.8 percent 

from 2015 to 2016 fur its lowest~cost silver plan premiums 

(table 7).1n 2014, Minnesota had the lowest premiums in 

the country, attributable to incredibly low premiums set 

by PreferredOne. a provlderMsponsored insurer {data not 

shown). After taking substantial losses because of inadequate 

premiums, PreferredOne left the market in 2015, immediately 

increasing the lowest-cost silver plan premium for 2015. But 

Minnesota premiums were still very low in 2015, reflected by 

the 0.73 index relative to the national average. Blue Cross Blue 

Shield increased its fowest"cost silver plan premium more than 

50 percenL possibly because of disproportionate enrollment 

ofhighwrisk ind!viduat.s for which they Were not compensated 

adequately (table A9}. Despite double~digftrate increases 

themselves. local Medicaid insurers Ucare and Medica have 

become the lowest-cost insurers in the state's fargest markets. 

North Carolina had a 2015-16 statewide average increase in 

the lowest-cost silver plan premium available of 20.6 percent 

(table 7). North CarolinaS marketplace has been~ relatively 

stable insurance market with little! change in the number of 

insurers offering marketplace coverage in the state. However, 

the number of participating insurers fs low compared to states 

with lower premium growth. North Carolina has no Medicaid 

insurers participating, nor do they have a CO"'p or a providerw 

sponsored insurer (table A.lO). The state's Blue Cross Blue Shield 

plan had relatively high premiums in both 2015 and 2016 

compared with the national average, and its lowest-cost silver 

plan premiums increased over 30 percent ln 2016.\ts lowestcost insurers are national carriers (Aetna or United, depending 

upon the rating area), and they are typically not aggressive 

marketplace competitors. 

Arizona has had an experience somewhat similar to Colorado's 

in terms of 2015 insurer participation. Of the focal states with 

high premium growth, Arizona had the largest number of 

insurers participating In the marketplace in 2015 (table 7}. 

Arizona also had an average lowest-cost silver plan premlum 

substantially below the 2015 national average, 0,65 relative to 

the national average. These below-average premium prices 

were present in all the rating areas studied here: Phoenix, 

Tucson, Flagstaff, and the rest of the state (0.61, 0.63, 0.76, and 

0.79 relative to the natfonal average~ respectively}. Many of the 

2015 insurers left the Arizona marketplace In 2016, however, 

with an average of five insurers leaving the marketplace across 
50 


KING-6430 with DISTILLERInsert offset folio 43 here 23646.043

the states' seven rating areas (table A. 11 ). Merit us Health, the 

state's co-op, was the lowest-cost insurer in much of the state in 

2015 and left the state altogether in 2016, The exit of so many 

insurers combined with the substantially below-average 201 5 

premiums likely led to the high rate of premium growth in the 

statefrom2015to 2016. 

Oklahoma had the highest state average increase in the 

lowest-cost silver plan of any state in the country in 2016, 

41.8 percent. Few insurers participated in the Oklahoma 

marketplace in 2015, with four participating in Oklahoma 

City and Tulsa and only three in the rest of the state {table 

7). Blue Cross Blue Shield of Oklahoma was the only insurer 

to offer coverage statewide. In 2016, three of the insurers, 

Global Health, CommunityCare, and Assurant, left the market. 

but United Healthcare entered statewide, though it had 

significantly higher premiums than Blue Cross Blue Shield (table 

A.12). Thus, Blue Cross Blue Shield has little price competition 

statewide in 2016. Similar to the other states with large 

premium increases, Oklahoma had 2015 lowest-cost silver plan 

premiums well below the national average, with a statewide 

average premium index of 0.73.ln 2016 only a Blue Cross Blue 

Shield-affiliated insurer and a national insurer participate in the 

Oklahoma nongroup marketplace; both types of insurers are 

correlated with higher premium increases !n our regression. 

Tennessee had an experience very siml!arto Oklahoma's, 

with a statewide average increase in the lowest~cost silver plan 

premium of 38.6 percent in 2016 {table 7). Insurer marketplace 

participation was low during plan year 2015; only four insurers 

participated in the major cities in the state and only two 

participated statewide following the collapse of the state's 

co-op earlier in the year. Consistent with expectations based 

on the regression analysis, Tennessee's premium prices in 2015 

We find that although the national average increase in lowest~ 

cost silver plan premiums between 2015 and 2016 was 8.3 

percent, the rates of increase in premiums across the country 

vary tremendously. Average Increases range from~ 12.1 percent 

in Indiana to 41.8 percent in Oklahoma. Across the country, 

about 29.1 percent of the population lives in rating areas that 

experienced reductions in the lowest-cost silver premium 

available to them; at the other extreme, 26.3 percent of the 

population lives in rating areas that experienced increases of 

more than 15 percent. In large states, such as Michigan, Ohio, 

Florida, Texas, Virginia, and California, a majority of people 

!lve in areas in which the lowest-cost silver plan premiums 

either fell or increased less than 5 percent in 2016. At the other 

were low relative to the national average, with a statewide 

average index value of 0.73; those low 201 5 premiums may 

have contributed to relatively large premium increases in 

2016, Community Health Alliance was the lowest-cost insurer 

in the state in 2015, but it left the marketplace in 2016 as did 

Assurant, although the latter was high priced (table A.l3). Blue 

Cross Blue Shield ofTennessee was the second~lowestMpriced 

insurer in 2015, and it increased the premium of its !owest~cost 

option by 27 to 37 percent in 2016, depending upon the rating 

area. United Heafthcare entered the Tennessee marketplace in 

2016 with fairly competitive premiums relative to Blue Cross 

Blue Shield and Cigna. Thus, Tennessee's marketplace, like 

Oklahoma's, now relies on Blue Cross Blue Shield-affiliated and 

national insurers. 

West Virginia, unlike many of the states with large 2016 

premium increases, had a statewide average !owest~cost 

silver plan premium slightly above the national average in 

2015, with an index value of 1.07 (table 7), West Virginia had 

only one insurer participating in its marketplace in 2015, 

Highmark Blue Cross Blue Shield. As shown by the regression 

analysis, the number of insurers is inversely correlated with 

premium increases and the prlce of the lowest-cost option 

available. In addition, Blue Cross Blue Shield-affiliated insurers 

are associated with larger premium increases in 2016 than 

Medicaid insurers and co~ops. It has been difficult for other 

insurers to enter the state because of Highmark's dominance, 

and it is difficult for Highmark to negotiate rates in most of 

the state because of the limited number of providers. In 2016, 

CareSource, a regional Medicaid insurer, entered some regions 

in West Virginia. CareSource, a !though high priced compared 

with insurers in nearby states, is price competitive with 

Hlghmark in the regions it entered. 

extreme, 16 states, including North Carolina, Colorado, Arizona, 

Oklahoma, Tennessee, Minnesota, and West Virginia, have most 

of their population in areas in which the lowest-cost silver plan 

premiums increased more than 15 percent between 2015 and 

2016. 

We show that several factors are associated with these 

differences. Both large and small increases in lowest-cost silver 

plan premiums in a rating area sometimes reflect regression 

to the mean. Rating areas with relatively high 20151owestcost silver plan premiums tended to see smaller increases on 

average; states with low lowest~cost sliver plan premiums in 

2015 tended to see larger increases. We find that one of the 

17 
51 


KING-6430 with DISTILLERInsert offset folio 44 here 23646.044

most important factors associated with premium levels for 

the lowest cost silver plan and premium increases between 

2015 and 2016 is the amount of competition in the market as 

measured by the number of insurers. Rating areas with more 

competitors tend to have lower premiums for their lowest~ 

cost silver plans and lower premium growth; having fewer 

insurers competing is associated with higher premiums and 

premium growth. Competition from Medicaid insurers is also 

correlated with tower premiums and lower rates of premium 

increase than seen in rating areas without a Medlcaid Insurer 

competing; the same is true of co-ops. The presence of 

provider-sponsored insurers is correlated with lower premiums 

but is not significantly correlated with lower growth. However, 

having a national insUrer {such as United Heafthcare,. Aetna, or 

Cigna) competing in a rating area is not significantly associated 

with premiums or premium growth. On average, the presence 

of insurers affiliated with Blue Cross Blue Shield in a market is 

associated with higher premiums and higher premium growth. 

In many instances, however, a Blue Cross Blue Shield insurer 

offers an HMO product that is price competitive. 

These findings also support our earlier work indicating that 

United Health care was not drivlng price competition in most 

marketplaces, and that therefore the insurers' announcement 

that it intends to leave several marketplace nongroup markets 

should not cause substantial disruption.4 United Healthcare 

does participate in some markets in which there are few 

other insurers, and its departure from these markets could be 

problematic. 

The results of this analysis indicate that, where markets are 

competitive, premium levels and premium increases tend to 

be lower. This most often occurs in large states and in urban 

markets. Such markets typically have several insurers, and they 

also often have intense competition from Insurers that provided 

coverage only through Medicaid (or Medicaid and Medicare} 

before 2014, Blue Cross Blue Shield-affiliated insurers offering 

health maintenance organization products, or provider~ 

sponsored insurers. One consequence of this successful price 

competition is the growth in insurers using more-limited 

provider networks. Limited networks could create barriers 

to access to needed care, particularly for specialists, and the 

adequacy of these networks bear monitoring and evaluation. 

But many markets in the nation are not seeing significant 

insurer competition, and premium increases are higher in those 

areas. Such areas have too few insurers or new insurers who 

have entered the area are having a difficult time competing 

with an established insurer, such as one affiliated with Blue 

Cross Blue Shield, that dominates the market. !n some markets, 

even dominant insurers have a difficult time negotiating 

rates with a limited supply of providers. Thus, the managed 

competition approach, an essential feature ofthe ACA, is 

having success in many but not all markets. If the degree of 

insurer competition does not increase naturally or if provider 

consolidation or limited supply means Insurers have littleabllity 

to negotiate payment rates, other options can be considered to 

control premium increases. These could include the adoption of 

a public option in less-competitive markets or public regulation 

ofb9th insurer and provider payment rates.,However, su~h 

interventlons could focus on the rating areas wh~re premium 

levels and premium growth rates are problematic; the many 

areas where the ACA's design has already engendered market 

price competition can be left alone. 

Meanwhile, as has happened in the first three open enrollment 

periods, some have begun to predict widespread, large 

premium increases for marketplace plans in 2017.5 These 

predictions are being fed by insurer reports of adverse selection 

into the nongroup insurance market. concerns, that the current 

risk-adjustment methodology may be inadequate, and the 

planned end ofthefederal reinsurance ~nd risk corridor 

programs. Insurers that are still priced too low in 2016 may 

increase premiums in 2017 to avoid losses. However, several 

factors w111 soon arise that should contribute to jmproved risk 

pools and hence lower premium increases. First. the size of the 

individual mandate penalties increased to their permanent and 

highest level for 2016, and the penalty's full effect will be felt by 

those remaining uninsured in early 2017 when they file their 

2016 tax returns. This could increase marketplace enrollment 

with individuals who are healthier on average and who have 

been more resistant to purchasing coverage in the early years 

of reform. Second, "grandmothered" and "grandfathered"plans, 

which have kept some healthlernongroup Insurance-enrollees 

out of ACA~compliant markets and risk poolS fn some areas, will 

continue to decrease in size, and the grand mothered plans will 

be eliminated by the end of 2017.6 Many enrollees currently 

In these plans will en rollin AC:A-comp!iant coverage once 

their current coverage options are gone, a shift that should 

improve the average health care risk of those in the ACA~ 

compliant plans. Finally, as the first few years: of the reforms 

have demonstrated, the incentives for insurers to offer lowercost plans in the marketplaces are strong, and large premium 

increases will tend to decrease enrollment in a given plan as 

many consumers are willing to change plans to save money. 

These competitive pressures, present in many markets and for 

large swaths ofthe population, tend to keep premium increases 

in check. So although Increases will undoubtedly be substantia! 

in some areas with weaker competition, the experience will 

vary considerably across the country with no overall average 

able to meaningfully describe the dynamics of marketplace 

premiums. 
52 


KING-6430 with DISTILLERInsert offset folio 45 here 23646.045

Blue Shield tUue 

Health Net Regional 

Kaiser Permanente Provider 

LA. Care Regiot'lal 

Molina Healthcare Medicaid 

Percentage change in region's lowest~premium option 

Anthem Blu'e 

Blue Shield Blue 

Health' Net Regional 

Ka!ser Permanente Provider 

LA.~are Regional 

Molina Healthcate Medicaid 

Oscar Region~ I 

Percentage change in region's lowest-premium option 

Anthern 

e:tue.Shiefd 

CCHP 

Health Net 

l<alser Permanente 

tltue 

Blue 

~glonat 

Regional 

Provider 

Percentage change in region's lowest-premium option 

$270 

$230 

$287 

$265 

$259 

$270 

$30ll 

$247 

$300 

$278 

$259 

NIA 

'$414 

$401 

$356 

$449 

$393-

$245 

$243 

$298 

$254 

$253 

$218 

$318 

$25$ 

$312 

$266 

$236 

$29$ 

$4$$ 

$388 

$352 

$438 

$413 

-9.3% 

5.4% 

3.9% 

43% 

·2.3% 

5.4% 

2.9% 

3.4% 

3.4% 

'-9% 

-43% 

·9.2% 

N/A 

·4.5% 

·3.2% 

·1.1% 

-2.4% 

S.O% 

·1.1% 

19 
53 


KING-6430 with DISTILLERInsert offset folio 46 here 23646.046

He'aJthNet, ~e9lonid ~295 $2% ':~ 

Kals.er Petm<lnente Ptovider $31•( $329 -ta% 

Sharp Provider $329- $344 

Mollna Healthcare Medicaid $314 $2!!6 -:;9,1% 

Percentage change in region's lowest-premium option 4.3% 

20 
54 


KING-6430 with DISTILLERInsert offset folio 47 here 23646.047

Oscar Insurance Company of Texas Regional N!A $320 N/A 

Blue CroSs Blue Shield ofTexas Blue $2:79 $334 19.6% 

Insurance Company of Scott& White Provider $292 $340 16.4% 

Aetna life lnsurahce Company National $36l $362 0.1% 

Cigna Health and life Insurance National $364 $368 1.1% 

Company 

/murilntHealth Nati'onal $475 N/A N/A 

United Healthcare National $290 NIA NIA 

Percentage change in region's lowest~premium option ~6.7% 

Hu~na Health Pian ofTexa~, Inc. National $229 $280 22.4% 

Ambetter Medlcald $260 $164 NIA 

Assurant Health National $388 NIA N/A 

Clgna HealthCare ofTexas, Inc. National $338 N/A N!A 

Insurance Company of Scott & White Provider $250 $290 16.1% 

Blue Cross Blue Shield ofTexas Slue $261 $309 18.3% 

Sendero Health Plans Medicaid $241 N/A NIA 

UnitedHealthcare National $258 $291 12.7% 

Aetna life Insurance Company National $2% $338 14.0% 

Percentage change in region's lowest-premium option 15.7% 

Mofina Healthcare ofTexas Medicaid $268 $253 *5.6% 

Community Health Choke, Inc, Medicaid $248 $261 5.1% 

Insurance Company of Scott& White ProvideT $250 $29ll 16.1% 

Blue Cross Blue Shield ofTexas Blue $250 $292 16.8% 

Cigna HealthCare ofThxas,lnc. National $339 $311 -8,3% 

Aetna life Insurance Company Natfona! $327 $328 0.1% 

Assurant Health National $432 N/A N/A 

United Healthcare National $264 N/A NIA 

Humana Health Plan ofTexas, Inc. National $294 $375 21.6% 

Percentage change in region's lowest~premlum option 1.9% 

21 
55 


KING-6430 with DISTILLERInsert offset folio 48 here 23646.048

ComMU~'ty FJrst Health Pl~s. hl~.· MedlcyJd $145 

AU SaVers: fosurilnce Compat1Y National $!;44 $260 6.5% 

HumanaHealth P@nul,-:exas:, friC:. Nation<tl $223 Sl® 25.3% 

Allegian Insurance COm.pdrty Reglona! $211 $281 3.7% 

Blue. Cross· Bfue Sh:felq oft~x~s S!ua ;>54 $~01 1&2% 

Assurant Helifth National $307 N!A N/A 

Aetna t.!feirts!JfancaCompany Natfona} $273 $316 16.0% 

Percentage change in region's lowest-premium option 0.3% 
56 


KING-6430 with DISTILLERInsert offset folio 49 here 23646.049

Coventry National 

F!orlda Blue (BCSS ofFlorlda) Blue 

Florida Blue HMO Blue 

Humana National 

Mo!lna Medicaid 

National United 'Healthcare Ass!) rant 

National 

Cigna National 

Percentage change in region's lowest~premium option 

Coventry Natlona! 

Ambetter Medicaid 

F!ortda'Biue Blue 

Florlda Blue HMO Blue 

Molina Medicaid 

Humana National 

Assuraht National 

Cig!)a National 

UnftedHeatthcare National 

Percentage change in region's lowest-premium option 

Florida Blue (SCSS'ofF!or!da) 

Florida Blue HMO 

Humana 

Ggna 

Assurant 

United Healthcare 

'litu~ 

Blue 

National 

National 

National 

National 

Percentage change in region's lowest~premium option 

$309 $301 ~2.6% 

$362 $347 -4.1% 

$430 • $307 -28.6% 

$301 $362 203%• 

$274 $274 M% 

N/A $366 N!A 

$397 N/A N/A, 

$419 N/A N/A 

-5.6% 

$241 $26-5 10.0% 

$293 $277 M5.5% 

$363 $342 -5.8% 

$388 $27'9 -28.1% 

$287 $288 03% 

$272 $299 9.9% 

$397 N/A NIA 

$377 N/A NIA 

$308 $338 9.7% 

10.0% 

$312 $312 0.0% 

$374 $302 -19.3% 

$288 $336 16.7% 

$374 N/A N/A 

$348 N/A N/A 

$298 $355 19.1% 

4.9% 

23 
57 


KING-6430 with DISTILLERInsert offset folio 50 here 23646.050

Humana National $215 $3.06 J1.1~ 

Assurant. National N/A If/A 

Unfted Healthcare NatiOnal 0294 $348. 111.2%, 

Clgna National '$369 NIA f!/A 

Percentage change in region's lowest-premium option -10,4% 
58 


KING-6430 with DISTILLERInsert offset folio 51 here 23646.051

Total Health Care USA, Inc. Regional $243 $250 2.&% 

Blue Care Network of Michigan Blue $234 $l36 0,6% 

Mclaren Health Pl<m, !nc. Provider $309 $324, 4.9% 

Health,AU!ance Plan (HAP) Provider $266 $260 ~2.3% 

Blue Cross Blue Shield ofMlchigan (MSP) Blue $301 $332 10.2% 

P.riprlty Health Provider $285 $246 -B,S% 

Mollna Medkaid $252 $229 -8.8% 

A!Uat11;;e 'rteaJtti and Llfe ProVtdet $338 $35$ ·b.S% 

Consumers Mutua!lnsuranceof Co-op $348 N/A N/A 

Michigan 

Ass\Jrant National $334 \'liA N/A 

UnltedHealthcare National $230 $262 14.1% 

Percentage change in region's lowest-premium option ·4.4% 

Blu~ 9'~eNetWork ofMkhl9an Slue $144 $236 ~3.3.% 

Mclaren Health Plan, Inc. Provider $309 $324 4.9% 

Blue: Cross Slue Shield of Michigan (MSP) Blue $301 $331 10.1% 

PrlorityHe;~lth Provider $286 $246 ·14.0% 

Aliiance life and HM!th Provider N/A $334 N/A 

Health Alliance Plan Provider $264 $25B -2,3% 

Hun:lana Insurance Company National $2:21 $211 -4.4% 

Molina Medicaid $252 $2:29 ..£.8% 

Total Health Care R~lona! $243 $250 2.8% 

United Health Care National $248 $253 1.7% 

Assurant Natlonat $347 NIA N/A 

Consumers Mutual Insurance of co-op $348 NIA N/A 

Michi~an 

Percentage change in region's lowest~premium option ~4.4% 

25 
59 


KING-6430 with DISTILLERInsert offset folio 52 here 23646.052

Pdor1ty Health $'2j5 ~t~1)% 

Blue Cross stue Sh!eldOfMi<:hisial'! {MSP} $378 15.9% 

C91isumersMutuat!nsuranceof NIA N/A 

MichigAn 

Humana tnswatlce Company National $232 $206 ~lo:-9% 

Assura~t Ngl.tlona! $~28 N/A NJA 

Physicta~'s Healt!iP!an Provlder $3,56 $348 -2,3%, 
60 


KING-6430 with DISTILLERInsert offset folio 53 here 23646.053

Anthem (MSP) Blue $280 $295 5.4% 

Ant!lem Hea!thKeepers Blue $264 $276 4.7% 

CoventryOne National $241 $264 9.2% 

KaiserPerrnanente Provider $273 $>84 ''% Optima Health Provider $372 $382 25% 

United Hi:!a!thcare National N/A $280 N/A 

Piedmont Community Health Care Provider $324 $305 -$.6% 

Percentage change in region's lowest·premlum option 9.2% 

Anth1!mtMSP} Blue $309 $323 4A% 

Anthem HealthKeepers Blue $292 $303 3.8% 

CareFtrst BlueChoiee, Inc. Blue $323 $3$6 10.1% 

CareFirst(MSP) Blue NIA $413 N/A 

lnnov~t!on Health Insurance CompanY Provider $282 $270 ·4.1% 

Kalset Permanente Provider $273 $284 3.9% 

United Hea!thcare National N/A $288 N/A 

Optima Health Provider $355 $389 9.4% 

Percentage change in region's lowest~premium option ~0.9% 

$333 9.3% 

Anthem (MSP) Blue $304 $32:1 5.4% 

Anthem Health Keepers Blue $287 $301 4.8% 

Optima Health Provider $285 $308 7.9% 

Percentage change in region's towest~premium option 5.4% 

17 
61 


KING-6430 with DISTILLERInsert offset folio 54 here 23646.054

H~ana,ln;;. $2$3 $295 '""" Premier Health Plan Provider $2$1 $247 -3.6% 

HeatthSpan Reg~nal s2o8 $343 2M% 

Molina Marketplace Medicaid $2$1 $244 cl2:9% 

Aetna Natiom:il $2~8 $34{}' l~;{l~ 

lnHealth Mutua! Co-op '$30Q $344 14.4% 

Anthem Blue Cross lind Shk 'Shield BlUe $319 $304 ~4.7%\ 

UnitedHeatthcare Natiorial $326 $3~0 U%. 

MedMutual Reg!otlal ':$3~3 $367 4.J%. 

Assur-C~ntH!'l'alth National $478 N/A NIA 

Percentage change In region's lowest-premium option 3.2% 

~\(.\ ... , $~7~ 

Molina Marketplace' Medicaid $28t $274 

Paraffiount Insurance Company Medicafd $282 $312 

A-etna National $)03 $337 

tn.Heatth Muwal Co-op ;;oi' $351 \4.4%-

Anthem Blue Cross and Blue-Shield Blue $342 $31.7 ~7.3% 

MedMut\,lal Regional $352 $396 12.6% 

UnltedHea!thcare National $366 $304 ,-17.1% 

As'surant Health National $435 N/A NIA 

Hea!thSpan Regional NIA $421 NIA 

Percentage change in region's lowest~premium option 10.7% 
62 


KING-6430 with DISTILLERInsert offset folio 55 here 23646.055

CareSourie Medicaid $252 $252 ·tl.2% 

Health:Span Integrated C~re Regionat $268 $319 19.4%' 

Mnt!na Marketplace Medicaid $278 $265 -4.7% 

Aetna National $283 $333 t7.9% 

MedMutua! Regional $301 $319 12.6% 

Paramount InsUrance Company Medicaid $302 $334 10.7% 

UnltedHealthcare National $322 $3)4 ·25% 

!nHealth Mutual Co--Op $326 $37< 143% 

Anthem Blue Cross and Blue Shield Blue $346 $317 ·82% 

SummaCare Inc Provider $373 $372 ·0.3% 

Assurant Health National $488 N/A N/A 

Humana,Jnc. Natioilal N/A $315 N/A 

Percentage change in region's lowest-premium option -4.7°/o. 

29 
63 


KING-6430 with DISTILLERInsert offset folio 56 here 23646.056

Q.S<;itr gegfo(lal 

£rrtb!em ~io'nal 

Jite)NYork'Fidetls Medkald S'clll4 

EmpireBCBS Slue $448 

#orth~hore:LU Provider $394" 

Hea1thfitst Medicaid $387 

Affinity~ Alt$tandatd Benefits Medicaid $372: 

Urdted i-lealthcare of NY National $545 

We!lcareH:Mo Medicaid ~12 

Percentage change in region's lowest~premium option 

Affinity Medicaid $380 

E,mQ!effiHI}? Regional $40% 

EtnpireHMO Blue $448 

Fide!is Medicaid $384 

HealtM•.Itst Medicaid $~7 

NorthShore.UJ ProVIder sJ<>i. 

OS<ar Re9k.mal $l94 

Uni~ He~tthciireof.NY Natlooal $$4$ 

Pe~entag:E~; chatlge.ln tt~giQn's lowest~pl'$mlum option 

NEiwYot:kfl<lefls M;wkald 

Unlver-a (An. Excel/us Company) Slue $474 

~lthRepub!k Insurance Co-op $342 

1Hl3:C Provider $428 

MVPHealtb Regional .$365 

Sl~~fOS:s Sl~e Shtei~fQfWesfern NY $1UE1 $342' 

•· M<tnrhlyP"'m'um priwdUploy<d m: foe• Mn·•moklngindi>idual 

b.Stott>ndtt<r.m'->tott:""'"~~"'""'""ghttd!>ytotingregionpopub!hmTho><>l'<f"!:"'AR'Onlyl<>rth<km><<t-<:O"'ilwrpbn•'"';bl>h:intho"'g!oo 

$43<\ 

$463 

$408 

$5B 

$435 

$39$ 6.>1' 

$661 22:4% 

$486 

-1.5% 

$403 6,1% 

$527 29-:4% 

$412 s.~"' 

s>•s· ~.Ojh 

$435 

$383 

$430 

$1161 

0.8% 

$514 tt.3% 

N!~ NIA 

$37~ -1'2.7% 

$389 6.5% 

$3$2 2.9% 
64 


KING-6430 with DISTILLERInsert offset folio 57 here 23646.057

Humana National 

Colot!Jido Health OP Co-op 

Denver Health Medicaf Plan Provider 

Colorado Choice Health Plan Regional 

Rotky Mountain Health Plans Regional 

Ogna National 

HMO Colorado (Anthem) BlU< 

AU SaverS National 

New HeafthVentures {A-ccess Health <:;-olorado) Re-glonaf 

Uni:teQ ~althtate ofCO National 

Percentage change in region's lowest-premium option 

Humarya National 

Cotorado Choice Health Plan Regional 

l(a!:ser Permanente Provider 

Rocky Mountain Health Plans Regional 

HMO Colorado (Anthem) Blue 

Colorado Health Op Co-op 

NeW Health Ventures {Access Health 'Coll.>tado) Regional 

Percentage change in region's lowest~premium option 

~MbtoJQ~~,(Arith~ml, 

United Hea!thcare of CO 

Rocky Mountain Health, Plans 

Cign,a 

'KaiSer Permanente 

Natlonal 

Regional 

National 

Provider 

Percentage change In region'slowest·premium option 

$244 

$207 

$318 

$308 

$345 

$339 

$316 

$349 

$274 

NIA 

$233 

$276 

$257 

$312 

$296 

$194 

$251 

Nil\ 

N!A 

NIA 

NIA 

NIA 

$278 

NIA 

$363 

$287 

$459 

$296 

$402 

$331 

NIA 

$319 

$~67 

$257 

$259 

$451 

$320 

N/A 

N/A 

's<f.li;, 

$5:19 

$4S2 

$446 

:$346 

13.7% 

N/A 

US% 

·6.8% 

33.2% 

·12.4% 

27.0% 

-SJ% 

N/A 

N[A 

29.0% 

t5.0'% 

-7.0% 

1~% 

45.0% 

8,0%' 

NIA 

N/A 

32.2% 

N/A 

NIA 

N/A 

NIA 

0.0% 
65 


KING-6430 with DISTILLERInsert offset folio 58 here 23646.058

aces Mtnnesota(MSPJ Blue. $;!51 $501 42.9%~ 

BtueP!us Blue N/A $422 NIA 

Percentage change In region's fowest~premlum option '""% 

HealthPartners Reglon*r ~18i $235 

BCBS Minnesota atue. $101 $321 

Uc~;~m Medicaid $183 $228, 

Medica Med!~id $222 

SC!i$ Mh:vnisota (MSP) 'S)oe '$14• 4$X% 

Blue Plus Blue $20$ $300 46,4% 

PercentagE! change In region's lowest·premium option 25.5% 

rka!titf1ar~is 

BCBSM!nnesota 

U<are 

Medi'a Med.it:a!d NIA $270 NIA 

BCBSNUonesota (M$P} .,., N/A $403 N/A 

Blue Plus Blue NIA $~86 N/A 

Percentage change in region's lowest·premium option 31.8% 
66 


KING-6430 with DISTILLERInsert offset folio 59 here 23646.059

Blue Cross and Slue Shield of NC Blue 

UnitedHealthcare of North Carolin~, Inc National 

Percentage change in region's lowest~premium option 

Aetna Htl'aJth lnc ,Nationa~ 

Blue Cross and Blue-Shield of NC Blue 

UnltedHeci!thcare of Notth Carolina, Inc NatiO!lal 

Percentage change in region's lowest-premium option 

Aetna Health Inc. 

Blue eros'S. and Blue Shiekl of N( Blue 

UnitedHealthcareofNorth Carolina, Inc National 

Percentage change in region's lowest-premium option 

$328 

$340 

$339 

$362 

$267 

'$282 

$293 

$305 

$452 

$409 

$.472 

$324 

$35$ 

$391 

$354 

37.7% 

20.3% 

18.7% 

21.1% 

27.0% 

33.9% 

15,8% 

25.5% 

33 
67 


KING-6430 with DISTILLERInsert offset folio 60 here 23646.060

AU Savers National $249 

Blue Cross Blue Sh1€!d of ArlzoTta,,Jnc. Blue su~ :tVl%' 

Health Choic-e lnsutanceCo. Medkaid $207 62'!1. 

He:afth Net ofAtk:on<)~ tne.. 'Roeglo~l J276 2..43% 

trurnana Heatth Plan, lne., National $269 1.4~ 

C!iJna National $3$0 $l$9 

Meritus Co·op $166 N/A N/A 

Unfve!s~ t!fArrtona 'PrO\Iider ·WA 

~utint National lWA 

Phoertix Health PlanS, fnC. Medttald S2S2 $204 ~19.0% 

Percentage change in region's lowest·premium option 23.1% 

All Savers Natlona), $208 ,-4.1% 

Blue Cross: Slue Shield of Ar~na.lnc. Slue $200 $229 14;6% 

Meritu$ Co-Op $170 $204 20.2% 

University of Arizona Provider $r89 N/A NIA 

Aetr'la National $22.1 NiA NIA 

Health ChOke lrtsutante Co. MediCaid $132 $256 10,5% 

Heal~ Net of Arizona, Inc. f\eglon<!l -$1~1 $237 243% 

Clgna National $290 N/A NIA 

~ssurant National $313 N/A 'wA 

Humana Health PTan,lnc. National $23.8 $247 3.7% 

Percentage change in region's lowest-premium option 20.2°/o 
68 


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Slue Cross Blue Shield of Arlzonatlnc. Blue $334 $380 14.0% 

Health Choke lnswance,Co. MediCaid $309 $325 5,2% 

Meritus Co-Op $206 $262 26.8% 

Health t;.retOf Arizona.-!m::. Regional $295 NIA N/A 

Assurant National $399 N/A NIA 

Clgna National $470 N/A NIA 

Aetna Nationaf $355 NIA N/A 

Percentage change in region's lowest-premium option 26.8% 

35 
69 


KING-6430 with DISTILLERInsert offset folio 62 here 23646.062

Gobaff!ealth lle9lonaf $.210 N!A 

Assurant Natltlna! $276 WA N/A 

Comunity(:are Regional S269 WA WA 

Percentage. change in region's lowest~premium option ,.,.9% 

st~e cOOs~~t~~Sh.Tenr~O~~homa l3h.le $204 $289' 

UnitedHea:!thcareof Oklahoma, trn::. National WA $334 

Regtonal ,$i65 N/A 

Assurant Natioi\at $340 N/A 

<omunityCare Regional $269 N/A NtA 

Percentage change in region's lowest-premium option 41.4% 
70 


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Humana Insurance Company National 

Assurant:Health National 

Community Health Alliance Co-op 

United National 

Percentage change In region's lowest-premium option 

ffiue ~roS~ 81~~ shieldotT~~n~~see:' 

Humana Insurance Company 

C!gna Health and Life Insurance Company 

Community Health Alliance 

United 

tllue 

National 

National 

Co-Qp 

Natlonat 

Percentage change in region's lowest-premium option 

StU~ Cross ~toe Shield of 'Tennessee 

HUman a l~surance Company 

Cigna Health and Ufe Insurance Company 

Community Health Alfiance 

United 

Blu~ 

National 

National 

Percentage change in region's lowest-premium option 

$241 

$355 

$181 

NIA 

$220 

$292 

$301 

$194 

NIA 

$214 

$240 

$298 

$184 

NIA 

$~92 21.2:% 

NIA NIA 

N/A NIA 

$270 NIA 

49.0% 

$288 30.7%' 

$350 20.2% 

$262 -12.9%> 

NIA NIA 

$303 NIA 

35.4% 

$271 26,8% 

$288 20.2% 

$324 8.8% 

NIA NIA 

$291 NIA 

47.0% 
71 


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CareSoUh:e Medi\':ald NfA $381 N/A 

Pef'centage change In region's lowest-premium option 21.1% 

Hlghm~rk'BI~~~:Bt~~Sh!dd {MSP)1 Slue NIA 'N/A 

Hlghmakr 8!\le CrOss Btue ShleldWe$tVirg!nla Slue $277 $M2 23.5% 

care-source Mecflca!d NIA $284 N?A. 

Percentage change in region's lowest-premium option 2.8% 
72 


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1 H~gemann L Obamacare prem1ums are on the nso, but don't blame mumrs 

Forbas. December 8, 2015. httnJfw.yw tqrhf§Gfyrvs'rrwrooJspni>'OI.&l2LQ& 

qlw.acaro-pmffi!!ms.tJffi·m"hfrlf&tb!•t·dQat-blatnfrm!fftrS(Ii3WpdQ?M5e, 

Accessed May 12, 2016. Brlnkfey·Sadgett C. Obamacare premlu!T'l$ wm rncrease ITl 

2016, b\lt by how much? Fox BUSiness. Docember 22, 2015. 

2 Holahan J, Blumberg LJ. Wangle E. and Solleveid P. 2016 Prermum Increases 

in the AC4 Marketplaces: Not Nearly as DramatiC as \'Ou've Basn Led ta 

Believe. Wash•ngton: Urban Institute; 2015. hi!VIIwwwuf!wn qrg!rgo;ood!/ 

~.AccessadMay12,2016. 

3. We also exam:ned those states w1th nonstandard age CUI"Vt:\S (Massachusetts, 

Minnesota, New Jersey, Utah, and Wash1rtg!on D.C.) and found ~'1e pre!T';ums for 

thosestatesnottobestattstrcally&gnlfC<lntin"!tleregress:ons. 

. . . ·\. . . .~. . . .. . -~:· ,<·:\\. . ·•: .:: 

About the Authors and~"""~~ents 

Linda BlumQ.,rg is a Senior Fel!<>W; J<>hn H9W\an is an Jnstitute,Fellow, an<:! Er/~ ~engle is It research ass"'iate, 

all with: ~e Uiban lnsritute~s Healt~ PoJio/ Center. The authors are grateful to Kevi.n, Lucia for ~mments and 

suggestions. 

AbOlrt' the Rof>ert Wood }<lhnson"Fonndation 

fu.r II\9"' than 40 years the Rob<:rt. \,VoodJghnson Foundation has worked roirttprowhea!th and health care. We 

ar:e.:Wnrf!;ing with Others to build'( oati~nal Culture of)'lealth enabling.everj>qne in :Affierl<;a roJiw; longer, healthier 

~ive~~ ~r ~ore lnfo~ati~nt v~sit.~~~~· Follow the Foundation ;an Twi~¢! a~~~rW}t:o~tw:Jtter or on 

Fac~bo<>k "www·rwif.otgl&celroolc · 

.1\lli>~t.the Urban Institute. ·The ~np~fi~ Urban Inst~tut~ ~ ~ed~~~ l!J· ¢~e~ati.ng the debate, on so~jal ~d.~~no.mff policy. ~or nearly five 

dec•"¥s,.Uthan.schofars have. <;<>nducte,l ~IO'h 1Uld olfeied evidence:-b<lSed~<>;lt>tio)l~ that improveUves and 

Slt<)lgthen (:onimunities ~~ a "'Pi4ly \lr)l;tpizlng world. Their obie<:tive ·~ai<;li helpS expan<l oppor:runities for 

alliredu<:«hardship among the mosqidn~rable. imd strengthen the dfectiY<J).SS .. oF ~he j>ubli<: sector. fur more 

i~arlon ~pecific t~ the .t,.J~~~,lp:S~i~ute~s J:i~ith.l~olicy Center, its ~thlf, :tnd ~tS recent reS¢arch; visir http:llw:w~. 

urban.otglpolicy-«mtetslhea!ih•policy..C.Oter. 

39 
73 

Mr. JORDAN. Thank you, Ms. Blumberg. 

The chair recognizes the gentleman from Tennessee, Dr. 

DesJarlais. 

Mr. DESJARLAIS. Thank you, Mr. Chairman, and thank you, 

panel, for being here. 

Mr. Counihan, let’s start with the CO–OPs. How many CO–OPs 

were initially created under the Affordable Care Act? 

Mr. COUNIHAN. Initially, we had granted 24. One never started, 

so in all practice, 23. 

Mr. DESJARLAIS. And how many are still active today? 

Mr. COUNIHAN. Seven. 

Mr. DESJARLAIS. Seven. Okay. And we had a hearing in February, and at the time, I think there were 11, so there has been 

4 more that have failed since February? 

Mr. COUNIHAN. Yes. 

Mr. DESJARLAIS. About how many individuals have been impacted by the CO–OP closures? 

Mr. COUNIHAN. I’m going to have to get back to you on that. 

Mr. DESJARLAIS. I have 870,000. Does that sound right? 

Mr. COUNIHAN. I need to confirm that one. 

Mr. DESJARLAIS. Okay. If you and your family were going to buy 

insurance through one of the remaining CO–OPs, would you think 

that maybe you should be warned that two-thirds of these CO–OPs 

have closed in the past year or so? 

Mr. COUNIHAN. Yeah. I do not, and I’ll tell you why. The CO– 

OPs are like any other insurance company that are certified by a 

State division of insurance. They have to have the same actuarial 

standards, the same capital standards. They have to meet a solvency requirement. They have to meet a variety of certain circumstances. If the State certifies those issuers, if the State certifies 

that CO–OP, that feels to me that they should be on a level playing 

field with any other issuer. 

Mr. DESJARLAIS. Okay. Well, President Obama said if you like 

your plan, you can keep it. But, apparently, if you get a CO–OP, 

that’s not necessarily the case. You got a two-out-of-three chance 

that you’re going to lose your insurance. So you’re saying you 

would still recommend people and their families to go to the CO– 

OPs to obtain insurance? 

Mr. COUNIHAN. I would say that, if they are certified and licensed by the State, which they are, that they should be judged on 

the same basis as any other, and I think it would be unfair not to. 

Mr. DESJARLAIS. The two-thirds that have failed, they weren’t 

certified and licensed by the State? 

Mr. COUNIHAN. As you know, sir, this is a challenging business. 

The CO–OPs are not the first issuers to have felt the challenge of 

that or to have closed. 

Mr. DESJARLAIS. Well, you painted a pretty rosy picture of the 

successes of the healthcare law. Our chairman tended to disagree. 

Mr. Cartwright said that we’re enjoying a historically low uninsured rate. What is the historical low, and what year was that 

noted or documented? 

Mr. COUNIHAN. Well, as of 2015, the uninsured rate is 9.1 percent. That was a drop from 16 percent before the Affordable Care 

Act. 


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74 

Mr. DESJARLAIS. And what’s the historical low? Do we know? I’d 

asked this question before dating back to 1950, and no one knew, 

and they were supposed to get back to me, but they never did. 

Mr. COUNIHAN. I will need to do the same, sir. 

Mr. DESJARLAIS. Okay. So how many people are uninsured now 

in America? What percentage? 

Mr. COUNIHAN. 9.1 percent. 

Mr. DESJARLAIS. Is that taking into account the people who have 

lost their insurance because they couldn’t afford premiums? Has 

there been any study? I guess I would like to know where we got 

this data. The chairman mentioned that 11 million had insurance. 

You’re saying 20 million. What did President Obama say was uninsured when we needed this law? 

Mr. COUNIHAN. Well, I think the difference there between what 

the chairman had quoted and what I had quoted was the difference 

is Medicaid expansion. So the 20 million that I quoted, for example, 

includes marketplace enrollment plus expanded Medicaid enrollment. 

Mr. DESJARLAIS. So the average person has not really been 

helped then by the healthcare law that has to pay for it with the 

increased deductibles and increased premiums. We don’t really 

have a study showing how many are just opting to pay the tax that 

the Supreme Court ruled was not a penalty but a tax. Do we have 

any studies indicating how many people have just opted out of the 

insurance and chosen to pay the tax? 

Mr. COUNIHAN. Well, I think it’s actually the opposite. I think 

what we’re finding is that the average American has completely 

benefitted from this law, and I’ll tell you how. A is through the 

elimination of preexisting conditions. B is through the elimination 

of lifetime caps. C is there are no gender premium differentials 

that there were. There is expanded coverage. It’s more affordable 

than before. 

Mr. DESJARLAIS. I get the talking points. You’re in a parallel universe with what I’m hearing. We hear different things back home, 

but I appreciate and respect your right to have an opinion. I just 

don’t know that those can be backed on facts. 

Now, we had $1.6 billion in loan money that was given out. Dr. 

Mandy Cohen was here before, and she said that we’re going to recoup this. I asked, why didn’t they just call them grants, because 

I don’t think we have any real chance of getting them back? Now 

she said that they were very much loans, and we expect to get 

these taxpayer dollars back from these failed CO–OPs. And at the 

time, she had just started. Can you give us an update of how successful the recoupment efforts have been? 

Mr. COUNIHAN. So the Department of Justice is engaged in the 

recoupment efforts. I cannot speak for them with respect to their 

progress. Happy to have somebody from DOJ come to report. 

Mr. DESJARLAIS. A half year later, we still have no update on 

how we’re going to recoup the $1.6 billion to these failed CO–OPs. 

This is taxpayer money, and they have a right to know. 

Mr. COUNIHAN. As I said, the way taxpayer, these moneys can 

be received, how they can be recovered, is typically when administrative expenses are paid and runout claims are fully satisfied. For 


KING-6430 with DISTILLER
75 

most of these wind-downs, that has not occurred yet, so it’s really 

premature to be able to speculate. 

Mr. DESJARLAIS. So I’m just about of time, but I guess I tend to 

agree with the chairman. We have seen 24 turn to 23 to 11. Now 

we have seven, and you’re telling people they should still go use 

these CO–OPs with confidence that their family can get insurance, 

and they’re not going to lose it, and then you’re also trying to tell 

them that we’re going to recoup the money from all these failed 

businesses. I have an idea we’ll probably be having this hearing 

again in a few months, and I anticipate, unfortunately, the chairman’s predictions will come true, but we’ll see where we’re at. I 

would like to get the data on the numbers where you’re saying 20 

million are now uninsured, and I’d like to see how many people 

have lost their insurance because that’s what I tend to hear back 

home, not the successes that the both of you have laid out for us 

today. 

I yield back. 

Mr. JORDAN. I thank the gentleman, and I now recognize Mr. 

Cartwright for 5 minutes. 

Mr. CARTWRIGHT. Thank you, Mr. Chairman. 

In the 6 years since the ACA was enacted, as I mentioned, Republicans have held over 60 votes to repeal or undermine the law, 

but they still haven’t proposed a viable legislative alternative. Now, 

the Speaker recently unveiled his, ‘‘Better Way’’ plan for health 

care. The title of this plan is something of a misnomer because it 

is the wrong way, not a better way. A Better Way plan is short on 

specifics but contains many ideas that really would be harmful to 

working Americans. 

And, Dr. Blumberg, I’d like to ask you, are you familiar with 

Speaker Ryan’s Better Way plan? 

Ms. BLUMBERG. Yes, I did read the materials that they released. 

Mr. CARTWRIGHT. And you commented on this in your testimony. 

Do you think it’s a viable alternative to the ACA? 

Ms. BLUMBERG. Well, it is not an alternative to the ACA in terms 

of an equivalent way to expand coverage and to reduce costs for individuals—regardless of their health status, to make that coverage 

adequately accessible. 

Mr. CARTWRIGHT. One element of the Speaker’s plan is to encourage the use of these health savings accounts combined with highdeductible health plans, and according to the plan, this is supposed 

to help patients understand the true cost of care. 

Dr. Blumberg, isn’t it true that this change could increase the 

out-of-pocket costs for middle class Americans? 

Ms. BLUMBERG. Well, it certainly increases out-of-pocket costs 

when individuals move into a health savings account combined 

with a high-deductible health plan. They are designed to be, at this 

point anyway, to be combined with a high-deductible plan. Individuals then have larger cost-sharing requirements, but they have certain tax advantages which tend to accrue most greatly to those who 

are high income, so they are—the health savings account itself can 

act, if not used for health purposes, as an additional IRA, which 

is beneficial for the high income. The problem comes in for those 

individuals who don’t get the tax advantages and don’t have the 

extra money to put into the HSAs. They are certainly disadvanVerDate Nov 24 2008 11:02 Mar 09, 2017 Jkt 000000 PO 00000 Frm 00079 Fmt 6633 Sfmt 6633 H:\23646.TXT APRIL

KING-6430 with DISTILLER
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taged, and it tends to pull healthy people out of the insurance market where they would otherwise be sharing healthcare costs with 

those with healthcare problems. 

Mr. CARTWRIGHT. Okay. So it’s the Better Way plan for higherincome people, is it? 

Ms. BLUMBERG. Well, a lot of components of the Better Way approach would be most advantageous to those with higher incomes 

and those very much in particular who are healthy at a given point 

in time. 

Mr. CARTWRIGHT. Well, do you think the people who couldn’t afford health insurance before the ACA was enacted really need help 

understanding the true costs of their medical care? 

Ms. BLUMBERG. Well, for the lowest income population, those 

that are assisted through the Medicaid expansion under the Affordable Care Act and those who receive the most generous assistance 

under the marketplaces really are in situations where having higher out-of-pocket costs are going to very much reduce the amount of 

care that they receive. And contrary to popular belief, individuals 

are not very good at discriminating between care that is necessary 

and care that is unnecessary. So what happens is, when you increase their out-of-pocket costs, particularly for the modest income, 

they use much less care, and a lot of it is necessary care. 

Mr. CARTWRIGHT. The Speaker’s plan would also irreparably 

harm Medicaid. First of all, it would prevent any more States from 

expanding Medicaid as provided by the ACA. It would also force 

States to choose between receiving Medicaid payments as a per 

capita allotment or a block grant. 

Now, Dr. Blumberg, what would these changes mean for people 

who rely on Medicaid for their health coverage? 

Ms. BLUMBERG. Well, in both cases, regardless of what the States 

chose, the amount of Federal dollars going to States for the Medicaid population would be reduced over time. There would be both 

initial reductions because of changes in matching rates. There 

would also be—the intent is to lower the rate of growth in Federal 

dollars going to States. The biggest concern, while there’s danger 

for sure with the per capita caps, the block grant, as I read it in 

the materials that were released, suggests that the only mandatory 

populations that would continue to be required that States provide 

Medicaid coverage for under the block grant approach would be the 

elderly and the disabled. 

Mr. CARTWRIGHT. Okay. Now, the Speaker’s plan would once 

again allow insurance companies to discriminate by charging higher premiums based on health status, sex, and age, and it would 

eliminate caps on out-of-pocket expenses. 

Mr. Counihan, aren’t these the types of abusive insurance practices that the ACA protects against? 

Mr. COUNIHAN. Those are good examples of dramatic improvements that the Affordable Care Act brought. 

Mr. CARTWRIGHT. The Speaker’s plan would also harm seniors by 

raising the Medicare eligibility age to age 67. Now, the Center on 

Budget and Policy Priorities said this about the Speaker’s plan, 

‘‘Overall, the plan would represent an enormous step backward for 

our country, reversing historic progress in expanding health coverage under the Affordable Care Act.’’ 


KING-6430 with DISTILLER
77 

Dr. Blumberg, do you agree with that statement? 

Ms. BLUMBERG. I do. 

Mr. CARTWRIGHT. I don’t know why anybody would want to go 

back to the bad old days before the ACA, and that’s apparently exactly what the Republicans are trying to do with this misguided 

plan. 

I yield back, Mr. Chairman. 

Mr. JORDAN. I thank the gentleman. 

I now recognize the gentleman from Georgia, Mr. Hice, for his 

questions. 

Mr. HICE. Thank you, Mr. Chairman. 

I respect my colleague, but I thought we were here to discuss the 

Affordable Care Act and ObamaCare, and I have anything to say 

about it other than the false belief that somehow it has ushered us 

into the good old days. This has been nothing but a disaster and 

continues to be a disaster. Premiums and deductibles are raising. 

I hear it every time I go home. People can’t afford it. Insurers are 

reducing plan offerings. CO–OPs, as we have already discussed, are 

imploding. We have administrative requirements that are ballooning to the tune of $273 billion in administrative expenses attributable to ObamaCare, which amounts to hundreds and thousands of hours of paperwork to try to keep up with the requirements. The enrollment is skewed, going down. I don’t see how in 

the world this has ushered us into the good old days. It is absolutely a disaster every way I can possibly look at it. 

Mr. Counihan, you mentioned today that, because of the Affordable Care Act, that a lot of people have insurance because of 

ObamaCare. But what you did not mention, in all honesty, is that 

these folks are older; they’re sicker; they’re more expensive to insure even than the administration ever anticipated. As a result, we 

now have insurers who are rising the premiums because it is so expensive to insure these folks. Kaiser predicts that premium increases this year are going to be steeper than they have seen so 

far. And it has already just gone up and up and up since the beginning. The former CMS Administrator recently predicted the same 

thing. 

We have high deductibles that, quite frankly, are just making insurance coverage less affordable and less accessible to the people. 

This is anything but an Affordable Care Act. People can’t afford it. 

I hear it constantly, not only from people in my district but from 

small rural hospitals: 17 percent of the people have a deductible 

over $5,000. They can’t afford the deductible. They go to the hospitals, and hospitals end up never getting paid, and they are going 

under. 

We have already mentioned ObamaCare promised to keep the 

doctors, keep your health plan, and we, of course, all know that 

that simply has not been the case. Insurers have limited their provider networks trying to cover the cost of this thing. Brian Webb 

of the National Association of Insurance Commissioners recently 

said that the individual market is a mess. I mean, how in the 

world can we look at this in any other possible honest way but to 

say, ‘‘This is a disaster’’? And I really, Mr. Chairman, I really don’t 

have any questions. I’m just flabbergasted that we are still in any 

way trying to defend this and trying to continue to push it on the 


KING-6430 with DISTILLER
78 

American people, rather than face the reality. We have fewer 

plans. We have fewer doctors. We have reduced choice. And I guess 

my only question, is this the legacy of ObamaCare? I don’t see any 

other way out of it. 

Mr. Chairman, I thank you for holding this hearing. 

And I yield back. 

Mr. JORDAN. I thank the gentleman. 

I couldn’t agree more with his sentiments on the disaster that 

this legislation has turned out to be. 

Mr. Counihan, is the CO–OP program in ObamaCare a complete 

failure? 

Mr. COUNIHAN. No, not in my view, and I’ll tell you why. 

Mr. JORDAN. Okay. Tell me why or define to me what would be 

a complete failure if the facts—let me just recite the facts again. 

Twenty-three programs were given money just 2 years ago, and 16 

of them have already failed. The seven that haven’t failed yet, four 

are on corrective action plans. Isn’t that accurate? 

Mr. COUNIHAN. No. Six are on corrective action plans. 

Mr. JORDAN. So the six that haven’t failed—six of them are on— 

of the seven that haven’t failed, six of them are on corrective action 

plans? 

Mr. COUNIHAN. Correct. 

Mr. JORDAN. Oh, wow, so it’s worse than I thought. Because of 

the last four that failed, all those were on corrective action plans, 

and they all failed here, one in Ohio just a few months ago. So 23 

started. Sixteen have failed. Of the remaining seven, six are on corrective action plans. Every other CO–OP that was put on a corrective action plan did, in fact, actually then later fail. $2.4 million allocated—$2.4 billion allocated; $1.5 given out and now lost. And yet 

you don’t think that defines a complete failure? 

Mr. COUNIHAN. Let me just if I can, Mr. Chairman—— 

Mr. JORDAN. Tell me what would be a complete failure. Let me 

ask this way, if all 23 actually fail, would that be a complete failure, because that’s where this is headed—— 

Mr. COUNIHAN. I think we’re seeing with the CO–OP program, 

as we are with other parts—— 

Mr. JORDAN. No. Answer that question. If all 23 fail, would that 

be a complete failure? 

Mr. COUNIHAN. I think if all 23 fail, it underscores how challenging the health insurance business is. 

Mr. JORDAN. That’s not what I asked you. Would it be a complete 

failure if every single CO–OP that you guys authorized just 2 years 

ago failed? Would that be a complete failure? Because we all know 

that’s where it’s headed. Sixteen have already failed. Of the seven 

left, six are on corrective action plans, and they’re going to fail too. 

So when all 23 fail, would that be a complete failure of the CO– 

OP program under ObamaCare? 

Mr. COUNIHAN. As I said, I think it underscores how tough this 

business is. I think it underscores how challenging it is it being a 

small business—— 

Mr. JORDAN. Mr. Counihan, you’re a witness here today, and I’m 

asking you to answer one question. If they all fail, if they all fall 

apart, like we know they’re going to, is that a complete failure? 

Just give me a yes or no to that one. That’s all I’m asking you. 


KING-6430 with DISTILLER
79 

Mr. COUNIHAN. I’m just, Mr. Chairman, it underscores again that 

this is a very tough business. 

Mr. JORDAN. Is it a no? Is it a yes? 

Mr. COUNIHAN. And, Mr. Chairman, I’ve worked for an insurance 

firm that was about the size of one of the larger CO–OPs. We became successful, but I understand very, very specifically—— 

Mr. JORDAN. Are you saying some of these 16 are going to come 

back to life? They’re not dead forever. They’re going to miraculously 

revive and resurrect themselves? Is that what you’re saying? 

Mr. COUNIHAN. What I’m trying to say is the following. 

Mr. JORDAN. Let me ask you this. Are you sitting here today and 

saying you’re going to assure me that the seven left, that they’re 

not going to fail? Those seven are going to keep working? They’re 

going to be fine. Will you tell me that? Would you tell me that? Are 

they going to continue to be in operation? The seven that haven’t 

failed yet, are they going to still be good when you come back here 

in a few months and we have this same kind of hearing? 

Mr. COUNIHAN. Nobody could make that kind of prediction, sir, 

but let me tell you one of the reasons why. It’s because there are 

so many variables that could impact the success of a business like 

that, most fundamentally claim costs. So, for example, if an issuer 

like a CO–OP has a very tough year—— 

Mr. JORDAN. We just heard from you, Dr. Blumberg, and the 

ranking member that ObamaCare is the greatest thing since sliced 

bread. We just heard that. And yet we have this phenomena in 

front of us. Sixteen of 23 have completely failed. And we know the 

other seven are going to fail. And yet you just all told us 

ObamaCare is the greatest thing in the world. And I’m just asking 

you, can we at least just focus on the CO–OP and say, if all 23 of 

those fail, that part of ObamaCare, at least that has to be a complete failure, right? 

Mr. COUNIHAN. Yeah. As I’ve said, I’ve worked for a company 

that’s one of the sizes of the larger CO–OPs. What can impact the 

business of a CO–OP—— 

Mr. JORDAN. I’m not looking for excuses. I’m just looking for an 

answer to that question. If they all fail, is it a complete failure? 

Mr. COUNIHAN. What I’m trying to tell you, number one, is that 

the CO–OP program is not the whole Affordable Care Act. Number 

two is that it’s a very, very tough low margin business. Number 

three is it deals with a lot of—— 

Mr. JORDAN. Do you know what the COOP program is, Mr. 

Counihan? It’s one more thing that was promised when 

ObamaCare was first enacted that was going to be just so special, 

just like you all just had said earlier—well, one of the other things 

that was promised: ObamaCare passes, there will be no one without insurance. We know that’s not the case because you even said 

it. There are still several million people that don’t have insurance. 

One of the things we were promised when ObamaCare passed is 

20 million people will use the exchange. We know that’s not true 

because you all had to change the definition. You now say, well, it 

is 20 million, but it’s the exchange plus Medicaid expansion. You 

totally changed the definition to meet that number. 

So, not to mention all the other—if you like your plan, keep it; 

like your doctor, keep it; premiums are going to go down—all those 


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other things have turned out to be false as well. And all I’m asking 

you is one program, the CO–OP program, and you won’t answer my 

question. It seems, by definition, if 23 out of 23 fail, then you 

should be able to say that, of course, by definition is a complete 

failure. 

Mr. COUNIHAN. Yeah. So let me tell you, sir, what the CO–OP 

program has done. The CO–OP program has provided more choice. 

It’s provided more competition. It’s helped consumers in a variety 

of different States, giving them opportunities that they may not 

have had before. If I may, sir, tell you something else. It’s also 

given the opportunity to innovate. Several of these CO–OPs have 

introduced new types of care management programs that have 

been new in their markets and new in their States. 

Mr. JORDAN. So new and so great; that is laughable. So new and 

so great that they actually went out of business. I find that to be 

laughable on its face. 

Mr. COUNIHAN. But the others, sir, are replicating. So the health 

insurance business and the healthcare business, as you well know, 

is highly dynamic. It changes. There are a lot of variables to it. The 

CO–OP program has provided a lot of choice to people, and that’s 

a key part of what it was for. 

Mr. JORDAN. Are you willing to tell this committee today, Mr. 

Counihan, that when you come back later this fall and we have another hearing on the CO–OPs, that the seven that are still in business are still going to be in business then? 

Mr. COUNIHAN. Sir, I would, number one, be very happy to come 

back at any time. Number two is I could not predict the future of 

any issuer. 

Mr. JORDAN. You were here a couple months ago, and it was 11, 

and we asked you then, and you wouldn’t commit. We said we 

think they’re all going to fail, and here we are a couple months 

later and four more are gone, and the other six or the other seven 

are on corrective action plans. Let me ask you this. Have you done 

anything to recover the $1.5 billion that’s out the door? 

Mr. COUNIHAN. Yes, sir. 

Mr. JORDAN. What have you done? 

Mr. COUNIHAN. So the Department of Justice is in the process of 

working with several of the CO–OPs—— 

Mr. JORDAN. I didn’t say that. I said ‘‘you.’’ Not the—you’re CMS. 

You don’t work for the DOJ, do you? 

Mr. COUNIHAN. No. 

Mr. JORDAN. Okay. So I’m asking CMS. You have the ability to 

terminate the loan agreements, don’t you? 

Mr. COUNIHAN. Well, what I was trying to do—— 

Mr. JORDAN. Is DOJ a signatory on the loan? 

Mr. COUNIHAN. What I was trying to say, sir, is that these are 

Federal loans. Once those Federal loans become in recovery, that 

moves over to the DOJ. 

Mr. JORDAN. What are you doing? You’re the one who gave out 

the—you’re the one who decided who got the money. You allocated 

the money. You gave it out. What is CMS doing to recover the $1.5 

billion of taxpayer money? 

Mr. COUNIHAN. The process of how this works, sir, is when a 

Federal loan goes into recovery of that sort, it moves to DOJ for 


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that process, and I am very happy to have someone from DOJ come 

here to give you an update. 

Mr. JORDAN. You can’t terminate yourself? 

Mr. COUNIHAN. Well, I’m talking about loan recovery. I thought 

your question was about recovery of the loan. The process of recovering a Federal loan is that DOJ takes over that process. 

Mr. JORDAN. But what have you done? Have you terminated a 

loan so that DOJ, in fact, can do that? 

Mr. COUNIHAN. Sir, it very much depends on the situation of the 

CO–OPs. I think what’s important for everyone to remember—— 

Mr. JORDAN. We know the situation, Mr. Counihan. Sixteen of 

them have completely failed. What are you doing to get the money 

back? 

Mr. COUNIHAN. And these are independent, licensed issuers by 

States. They compete just like any other health insurance company 

in that State. 

Mr. JORDAN. Okay. I went a couple minutes over. I apologize. 

So we will now turn to the right fine gentleman from North 

Carolina, Mr. Meadows, for his questioning. 

Mr. MEADOWS. Thank you, Mr. Chairman. 

Good to see you both. Kevin, good to see you. Let me do a little 

housekeeping if I could on one particular issue, Mr. Counihan. You 

are aware I guess that Ways and Means and Energy and Commerce has issued subpoenas as it relates to I guess the cost-sharing 

reduction program. Is that correct? 

Mr. COUNIHAN. Yes. 

Mr. MEADOWS. And so have you been instructed to collect materials that are responsive to that subpoena? 

Mr. COUNIHAN. No. 

Mr. MEADOWS. You haven’t? 

Mr. COUNIHAN. No. 

Mr. MEADOWS. So no one has reached out to you? Because that’s 

a real problem. 

Mr. COUNIHAN. My job—— 

Mr. MEADOWS. Again, if that’s your sworn testimony—so what 

you’re saying is no one has asked you to collect any documents responsive to a congressional subpoena regarding that program? 

Mr. COUNIHAN. Yeah. We have a staff of people that I work with 

that are responsible for collecting documents of that sort, and 

they’re responsible for doing it. That’s not in my role. 

Mr. MEADOWS. But you haven’t been instructed? So have you instructed anyone to collect those documents? 

Mr. COUNIHAN. No. 

Mr. MEADOWS. So are you aware of anyone who has been instructed to collect those documents? 

Mr. COUNIHAN. You know, as I said, sir, we have a whole staff 

of people that are responsive to that. 

Mr. MEADOWS. But you know the point I’m trying to get to. Is 

somebody collecting those documents or not, Kevin? 

Mr. COUNIHAN. Congressman, to that very issue that you are 

speaking to, we have tried to be as responsive as we possibly can 

because I know the issue about document retrieval is very important to the committee—— 


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Mr. MEADOWS. So when will we get them—or when will they get 

them? 

Mr. COUNIHAN. I’ll need to get back to you. 

Mr. MEADOWS. But you’re saying no one’s asked you, and you’ve 

instructed no one. Wouldn’t you know if someone were instructed? 

Because you’re the head of the—we have had a number of conversations about responses and the lack thereof. 

Mr. COUNIHAN. That’s right. 

Mr. MEADOWS. And I guess my question is—you’ve got a staff behind you. 

Mr. COUNIHAN. Yes. 

Mr. MEADOWS. Are they aware of anybody collecting the documents? 

Mr. COUNIHAN. Sir, I want to be responsive to you. Let me get 

back to you, please. 

Mr. MEADOWS. And you can get back to me by when? 

Mr. COUNIHAN. I’ll have to circle that back with you. 

Mr. MEADOWS. I mean, it’s not a hard question. You got a subpoena. I’m sure when the subpoena came in, somebody said, ‘‘Oh, 

my gosh, we got a subpoena,’’ because we don’t issue subpoenas 

just willy-nilly. We only issue subpoenas after you don’t respond. 

Mr. COUNIHAN. Yeah. And Congressman—— 

Mr. MEADOWS. So have you been asked for the documents personally? 

Mr. COUNIHAN. Congressman, we want to be responsive. I know 

we have already provided—— 

Mr. MEADOWS. Let me tell you the last person who told me that. 

The last person who told me that was not responsive, Kevin. I 

apologize. I shouldn’t be calling you Kevin, Mr. Counihan. The last 

person who told me that was actually part of a rulemaking process 

who they had been working on it for a year, and we came to find 

out they hadn’t been working on it. So I guess my question is, 

when can Ways and Means and when can Energy and Commerce 

expect a production of the documents according to the subpoena 

that you acknowledge you’re aware of? 

Mr. COUNIHAN. Sir, what I would like to say is I need to get back 

to you with that timing. 

Mr. MEADOWS. Actually, it would be appropriate for you to get 

back to this committee but also to Chairman Brady and Chairman 

Upton with regards to a timeframe, and so can we expect a response by the close of business on Friday in terms of a timeframe? 

Mr. COUNIHAN. We’ll get back to you. 

Mr. MEADOWS. Yes or no, is that not reasonable? 

Mr. COUNIHAN. Sir, I need to get back to you. 

Mr. MEADOWS. Mr. Counihan, you do not have the option of not 

giving me a timeframe, because in doing that, you’re thereby forcing the same issue, and it would be a contempt of Congress to continue to stonewall. So is that what you’re saying is, is that you’re 

not willing to give me any kind of a timeframe? 

Mr. COUNIHAN. Sir, what I’m telling you is the following: I want 

to be as responsive to you as possible. I want to give you an accurate timeframe. What I’m asking from you is to give me the time 

to be able to be responsive. 

Mr. MEADOWS. What’s a reasonable amount of time? 


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Mr. COUNIHAN. As I said, sir, I need to go back with my folks, 

understand it, and get back to you then. 

Mr. MEADOWS. Let me, by Friday, the close of business, I either 

want a response on why you can’t respond by then, why you 

haven’t been able to find it, or some kind of legitimate response in 

terms of a timeframe, okay? 

Mr. COUNIHAN. That’s fair. 

Mr. MEADOWS. And so, as we start to see this—and I apologize, 

Mr. Chairman, if you’ll indulge me just a few moments. Let me say 

one of my concerns, and you know, philosophically, we probably 

have a big difference. I don’t want to get into the philosophical differences. Let me tell you where I am troubled, is for all the stories 

of people who now have coverage, I continue to get a disproportionate number of people who are saying their premiums are going 

up or their companies are going out of business. And so today we’re 

talking about really a CO–OP program. And I’ve had some of the 

major insurers in the country come to me saying that not only are 

they losing money, but they’re hemorrhaging a loss of money because they can’t get either this on a profitable point of view or costs 

continue to go up. Are you hearing some of the same concerns from 

insurance companies? 

Mr. COUNIHAN. You know, let me tell you what I’m hearing, and 

I talk to a lot of CEOs. And in this past open enrollment, I was 

in 13 States talking to people. What I’m hearing is that looking at 

the traditional way of managing care, contracting with the providers, servicing this new population is less effective than it is by 

designing newer, more customized approaches that often exist 

within Medicaid plans. So issuers—— 

Mr. MEADOWS. So let me make sure I’m understanding that. So, 

in your 13–State tour and talking to CEOs, they’re suggesting that 

we go to a Medicaid? 

Mr. COUNIHAN. No. 

Mr. MEADOWS. Because I thought that’s what you were saying. 

Mr. COUNIHAN. I apologize. I was not clear. What I meant to say 

was that if you look at issuers that have a strong Medicaid background, that have served the Medicaid population, that work to design and customize care management tools that are more specific 

to this new type of population, they’re finding themselves being 

more effective than those that have just traditionally served, say, 

the small group insurance market or the large group market. 

Mr. MEADOWS. But you and I both know that I’m a numbers guy. 

Mr. COUNIHAN. Yes. 

Mr. MEADOWS. In a Medicaid patient, the amount of money spent 

per Medicaid patient is higher than the other patients typically. I 

know it is in North Carolina, exponentially higher. So what you’re 

saying is, is that we need to go to a model where we spend more 

per patient? 

Mr. COUNIHAN. No. I’m actually saying the opposite. What I’m 

actually saying is that one of the interesting things I’m seeing in 

talking to CEOs is that they are retooling their provider contracting to match a number of issuers that have been successful in 

this business from the beginning. And what we’re finding, Congressman, is that there’s a clear opportunity for issuers that have 

thought of this market more strategically, that have used a lot of 


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data to understand the specifics of their market, understand the 

uninsured in their State, design products that meet them, tier networks, if appropriate, and provide new cost-management tools. 

That’s what I’m saying. 

Mr. MEADOWS. So let me go to one of the biggest ones, Blue 

Cross Blue Shield, in my State, obviously the largest provider. 

They have gone up 30 percent, 34 percent, and anticipated 20-plus 

percent this year in terms of the insurance rates. We’re hoping that 

it’s lower. I talked to them just 2 weeks ago. So, when you look at 

that, you know, you aggregate all of that together. 

Mr. COUNIHAN. Yeah. 

Mr. MEADOWS. That is not affordable health care, and certainly 

my rates are not anywhere close to what they used to be 3 years 

ago. Fortunately, I can afford to pay it. Many cannot. They are just 

barely scraping by. What they shared with me is that emergency 

room visits are not really down. Is that correct? Because that was 

the whole premise: we would get this group of uninsured from 

going to use the emergency room as their primary healthcare provider. And, actually, they’re saying that that went up, and it continues to stay at an elevated rate. Are you finding that? 

Mr. COUNIHAN. A couple things that you’ve raised. First of all is 

that, if you look at cost increases, cost increases are at the lowest 

level during the ACA than they’ve been historically over the past 

50 years—— 

Mr. MEADOWS. Lowest level against what? What are we comparing it to? Mr. Counihan, how can you say lowest level? I’m 57 

years old. I’ve been paying insurance premiums for over 35 years. 

So 35 percent, 30 percent, and 18 to 20 percent is not the lowest 

level of increases that I’ve faced. That is just factually incorrect. 

Mr. COUNIHAN. But if you’ve looked at the average in the markets, so, for example, if you looked at the cost increases on average 

nationally—— 

Mr. MEADOWS. Let’s look at North Carolina. You knew I was 

going to be here, and you know my numbers, so let’s look at North 

Carolina. Is it better in North Carolina over the last 3 years than 

it was in the previous 10 years, in terms of rate of increase? 

Mr. COUNIHAN. Yeah. And, unfortunately, Congressman, I don’t 

have the benefit of the insight of North Carolina—— 

Mr. MEADOWS. Well, you can get back to me. 

Mr. COUNIHAN. But I can speak to nationally, and I can tell you 

that from 2000 to 2010, the average rate increase was 8 percent. 

From 2010 to 2015, it was lowered to 5 percent. So I’m talking nationally. 

Mr. MEADOWS. So what you’re saying is we’re an anomaly in 

North Carolina? Is that your sworn testimony? Because we went 

30, 35, 34 percent, now 18, and we are astronomically more than 

anybody else? 

Mr. COUNIHAN. Sir, what I am saying is that there’s not any 

monolithic or consistent level of rate increases nationally. If you 

look at rate actions, they vary by urban areas versus rural, as you 

and I have discussed? 

Mr. MEADOWS. They vary by Medicaid and Medicare more so 

than anything else. 

And I will yield back. 


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Mr. COUNIHAN. Well, okay. All right. 

Mr. JORDAN. I thank the gentleman. I now recognize the gentleman from Tennessee for an additional round of questions. 

Mr. DESJARLAIS. I guess I’m going to kind of follow up where 

Representative Meadows was on numbers. You are saying that 20 

million people now have insurance. What percentage of that is 

Medicaid expansion? 

Mr. COUNIHAN. Roughly half, about 9 million. 

Mr. DESJARLAIS. Okay. So what did President Obama claim we 

had in terms of the number of uninsured when he was proposing 

his healthcare law? 

Mr. COUNIHAN. I can’t remember, Congressman, exactly. You 

want to use your percentage? You said 16 percent? 

Mr. COUNIHAN. Oh, excuse me. The percentage of uninsured? Excuse me, 16 percent. 

Mr. DESJARLAIS. Okay. And we have 300 and some odd million 

people in the country, so 40, 45 million people. 

Mr. COUNIHAN. Yeah, 43 or so, yeah. 

Mr. DESJARLAIS. So what we have done is we have doubled the 

number of people on Medicaid, and of the other 10 million that now 

have insurance, how many of those have significant subsidies? 

Mr. COUNIHAN. About 85 percent of our population have subsidies apply, tax credits apply. 

Mr. DESJARLAIS. I can see where the cash flow problem might be 

coming from then, because only just a million and a half then are 

actually paying for their health care or a small number, small percent? 

Mr. COUNIHAN. I guess I believe, Congressman, that everybody 

is paying for their health care. It’s just that these individuals, 

based on their income, are getting tax credits to help them make 

it more affordable, but everyone’s paying. 

Mr. DESJARLAIS. Did we ever figure out how many people—there 

are people that are living here illegally that are getting health 

care, correct? 

Mr. COUNIHAN. I’m not familiar about the number of people, 

illegals, that are getting health care in this country. 

Mr. DESJARLAIS. It seemed like there was an estimate of—I don’t 

remember—10, 15 million people possibly that were getting that, 

but you don’t know? 

Mr. COUNIHAN. No. 

Mr. DESJARLAIS. We’re talking about the cost of deductibles. 

Even President Obamaacknowledged that too many Americans are 

straining to pay other physicians for their deductibles and costs. 

And I think somewhere that you said the deductibles have decreased $850. We have heard numbers thrown around here upward 

of $5,000 is the deductible cost. Why the discrepancy? That’s a big 

difference. 

Mr. COUNIHAN. The median deductible in our plans actually was 

lower this year by about 5 percent from the year before, to about 

$850. 

Mr. DESJARLAIS. That’s the median. And that’s for the people 

who are being subsidized, the 10 million who are not getting Medicaid expansion? 


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Mr. COUNIHAN. Yeah. That’s correct. That’s in that number of the 

11 million. That’s right. 

Mr. DESJARLAIS. So, basically, healthcare costs have gone up for 

about 90 percent, maybe even 95 percent, of Americans because of 

ObamaCare? 

Mr. COUNIHAN. I think it’s actually the opposite, sir. 

Mr. DESJARLAIS. You’re saying that healthcare costs have gone 

down? 

Mr. COUNIHAN. What I’m saying is that healthcare costs have 

been made more affordable than ever because of the Affordable 

Care Act. If you look at last year, just as an example, the average 

individual out-of-pocket increase went up by $4, 4 percent. So we’re 

making costs more affordable. We’re making coverage more accessible. 

Mr. DESJARLAIS. And the CO–OPs are going broke, and there’s 

been money that’s come out. The Court ruled that the Obama administration was using funds to subsidize insurance companies 

that it wasn’t authorized to do. That’s probably a topic for another 

hearing. 

Ms. Blumberg, you’re talking about access to care. I practiced 

medicine for 20 years. I know if you’re on Medicaid, you essentially 

have no deductible. You can go to the ER. You can go to a clinic, 

but if you have private insurance, if you go to the ER, your deductible might be $300, $400 or more. So, even if you have an emergency, you can’t afford to go to the ER, so you might wait to the 

next day to come see the doctor. I know I’ve seen that happen. Now 

people have deductibles up to $5,000. Middle class folks are not 

going to the doctor, and they’re not seeking to get care, so their 

quality of care is actually going down. We have helped some people. 

We have helped some people. As you’ve said, we’ve helped people 

get Medicaid, and we have helped subsidize people, but there’s a 

whole lot of other people hurting because they can’t afford to go to 

the doctor, or they won’t go to the doctor, and they let problems fester because of that high deductible. What would you say to them? 

Ms. BLUMBERG. Well, I think, with regard to the emergency room 

care, according to the rules under the Affordable Care Act, if it’s 

emergent care that you’re receiving through the emergency room, 

you don’t face those deductibles. So it may be, yes, if you’re going 

in to get nonemergent care through the emergency room and you’ve 

got a private insurance plan—— 

Mr. DESJARLAIS. Are you talking Medicaid or private insurance? 

Ms. BLUMBERG. But if you’re getting nonemergent care, then outof-pocket cost is going to be significant if you go use the emergency 

room because the intent is to give financial incentives to get alternative sources of care for nonemergent care. And what we have 

found in our survey work is that, indeed, the number of—the percentage of adults reporting a usual source of care outside the emergency room has increased significantly since 2013, and those not 

obtaining necessary care due to cost has gone down substantially 

since then. 

Mr. DESJARLAIS. I’d like to see those numbers. 

Ms. BLUMBERG. Certainly. 

Mr. DESJARLAIS. Mr. Counihan, quickly, how many people now— 

ObamaCare has been around for a while. How many people have 


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paid the penalty on their IRS taxes rather than getting health 

care? In other words, how many people had health care that have 

dropped their health care and opted to pay the taxes? 

Mr. COUNIHAN. Yeah. So I—sir, I can’t remember the exact number of people that have paid that penalty. I’m, again, happy to get 

back to you with that figure. 

Mr. DESJARLAIS. Can you ballpark? Can you guess? 

Mr. COUNIHAN. You know, I really wouldn’t—— 

Mr. DESJARLAIS. Okay. We still have 10 percent uninsured by 

your number. 

Mr. COUNIHAN. Nine percent, yeah. 

Mr. DESJARLAIS. Nine percent. Okay. So that is roughly 30 million people. Who are they? 

Mr. COUNIHAN. Excuse me? 

Mr. DESJARLAIS. Who are the 30 million people that don’t have 

insurance? If 10 percent are still uninsured and we have all of 

these other people that now have insurance, who are the ones that 

don’t have it? 

Mr. COUNIHAN. Yeah. So it’s in a couple of different segments. So 

one would be Medicaid expansion States, States that have an expanded Medicaid; a significant component there. Number two 

would be young people. I mentioned earlier about the importance 

of enrolling younger folks and the outreach efforts that we are 

making to that. That’s another cohort that’s critical for that. 

Mr. DESJARLAIS. Yeah. It’s really expensive for young people. I 

know that by talking to them. But I think what we’ve done is shifted health care. Some people that didn’t have health care where 

now they get subsidized, but a large group of people that had 

health care can’t afford it now, so they are paying taxes to the IRS 

and going without insurance. And the ones that do have high 

deductibles and they can’t get health care because they are afraid 

they have to spend their deductible. But somehow you both seem 

to think this is a success; not at all what we are hearing back 

home. 

Mr. COUNIHAN. Yeah. To your point, sir, around young people 

and affordability, the vast bulk of them would be eligible for subsidies, for tax credits, and I think that would make that coverage 

much more affordable for them. 

Mr. DESJARLAIS. But that’s going to make the overall program— 

any time you give cash subsidies to somebody, it makes it way 

more expensive somewhere else. Right? 

Mr. COUNIHAN. As I said, sir, our job is to enroll people into affordable care. I think we’ve made good progress. We’ve got more to 

do, as you say. 

Mr. DESJARLAIS. Sounds like socialized medicine. Thank you. 

Mr. JORDAN. I thank the gentleman. 

I will now recognize the gentleman from Pennsylvania. 

Mr. CARTWRIGHT. Thank you, Mr. Chairman. 

So I’m going to throw this one open to both witnesses. It’s a tossup question. Mr. Hice of Georgia just said that because of the ACA, 

we have fewer doctors. Is there any substance to that? Do we have 

fewer doctors in this country since the enactment of the ACA? 

Ms. BLUMBERG. I don’t know that we have any evidence of that 

whatsoever. 


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Mr. CARTWRIGHT. That would have been a shock to me. And of 

course, my friend, Mr. Meadows of North Carolina, was lamenting 

the premium increases and he was talking about his advanced age, 

and I’m a bit long in the tooth myself. And I was a business owner 

for many years and year after year, we would have premium increases. This was long before the Affordable Care Act, you know, 

20 percent and 30 percent and 35 percent in a single year. And 

that was tough to take. It’s still tough to take. But how about either of you, can you put your finger on the ACA as the reason for 

annual premium increases as opposed to what went on in the world 

before ACA? 

Mr. COUNIHAN. Yeah. If I could just answer that, Congressman? 

Mr. CARTWRIGHT. Sure. 

Mr. COUNIHAN. I understand exactly what you’re referring to, 

and I actually think that the ACA has had the exact opposite effect. It’s moderating increases. And I will just give you an example. 

In the mid-1980s, mid to late 1980s, annual trend, inflationary 

trend in health insurance was in the mid 20s, 24, 25, 26 percent. 

That’s beyond the impact of any utilization expense. That was pure 

inflationary trend. That’s been dramatically, dramatically cut back. 

So I think that helps prove your point. 

Mr. CARTWRIGHT. Do you want to weigh in on that, Dr. 

Blumberg? 

Ms. BLUMBERG. Sure. There definitely has been a long history of 

variability in premiums from year to year. What we are finding in 

terms of the increases in the nongroup marketplace plans, which 

I think is the focus of some of the concern here, is that there is 

huge variation by geographic area. We have seen that in the areas 

that tend to have the biggest increases, we’re talking about the 

smallest population centers. We’re also talking about seeing larger 

increases coming where the premiums had been in the prior years 

quite low relative to the national average. 

And so we think some of this is a regression to the mean over 

time, that some of these insurers came in too low and they’re correcting now, but it’s not necessarily that they’re all going very high, 

relative to what you’re seeing in other parts of the country, but 

they made some errors in judgment originally and they’re correcting for them. So some of these large percentage increases are 

on a much smaller premium basis. And so the—— 

Mr. CARTWRIGHT. Like a market correction. 

Ms. BLUMBERG. Exactly. 

Mr. CARTWRIGHT. All right. And I don’t mean to cut you off. You 

have long interesting answers, but we’re on the clock here. 

Ms. BLUMBERG. Sorry. 

Mr. CARTWRIGHT. So we’re very—we have to have short, couple 

of sentence answers. Not paragraph answers. 

Ms. BLUMBERG. Understood. 

Mr. CARTWRIGHT. Your research found, and I quote, ‘‘Rates of increase vary tremendously across States and across rating areas 

within States.’’ 

The question is: Why do premium rates vary in this way? 

Ms. BLUMBERG. They vary depending upon the market conditions 

that were there prior to the Affordable Care Act to some extent, 

how many insurers are competing, and that is related to the historVerDate Nov 24 2008 11:02 Mar 09, 2017 Jkt 000000 PO 00000 Frm 00092 Fmt 6633 Sfmt 6633 H:\23646.TXT APRIL

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ical situation, what types of insurers are competing and the types 

of insurers that have come in or have exited from the market. 

Mr. CARTWRIGHT. Okay. And here’s my question. The Affordable 

Care Act, has it helped facilitate increased competition that is 

needed to drive down the rates? 

Ms. BLUMBERG. Definitely. Because in the nongroup insurance 

market, in particular prior to the ACA, we didn’t really have price 

competition in these areas. But what the insurers were doing was 

competing for healthcare risks. Now there is transparency, there is 

equivalency of the plans. And so for the first time, we’re seeing 

price competition where we didn’t see it before in this market. 

Mr. CARTWRIGHT. Now, Mr. Counihan, I want to get your answer 

on that as well. 

Mr. COUNIHAN. I just wanted to say, in addition to that, we have 

significantly enhanced the quality of the coverage that the individual market now gets access to. Both the substance of that coverage and also the elimination of the ability to discriminate in that 

coverage. So just the elimination of preexisting conditions alone is 

a significant and a huge improvement. The fact, again, that there 

is no annual lifetime maximums, there is no caps on specific types 

of procedures. All of these types of things are significantly enhancing. 

Mr. CARTWRIGHT. No penalty for being a woman. 

Mr. COUNIHAN. That is exactly right. In my old State, women 

were typically priced twice as high as men for the same type of coverage. We have also seen that the number of bankruptcies due to 

medical costs have dramatically reduced since the introduction of 

the ACA. So, again,you know, significant movement and progress. 

Mr. CARTWRIGHT. Now, it’s also important to remember that the 

premium rates insurers have filed for next year, 2017, are not necessarily the rates that will be approved by State departments of insurance. Am I correct in that? 

Mr. COUNIHAN. Correct. 

Mr. CARTWRIGHT. All right. And in fact, ACA created a rate review program to help State departments of insurance strengthen 

their rate review process. Is that right? 

Mr. COUNIHAN. That’s correct. 

Mr. CARTWRIGHT. According to a 2015 HHS report, rate review reduced total premiums in individual small group markets by $1.5 

billion. 

Mr. COUNIHAN. That’s right. 

Mr. CARTWRIGHT. Rate review process. Mr. Counihan, what other 

tools did the ACA provide to help consumers mitigate the effects 

of the premium increases? 

Mr. COUNIHAN. Well, number one, we talked about the tax credits. We talked about other ways to make things affordable. You’ve 

mentioned already the ability of States to take a more aggressive, 

transparent view for the creation of rates. We’ve created more competition. We’ve created more choice. 

Just to give you a quick example, last year the average enrollee 

had an option of looking at three health plans—three issuers, and 

50 health plans to choose from. So there’s a variety of different 

ways that we’re using the marketplace to help dampen prices and 

give people more options. 


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Mr. CARTWRIGHT. You know, I was just complaining about, you 

know, as a business owner, what it was like to go through these 

every year, double-digit premium increases. I just saw a figure that 

premiums increased by 58 percent during the last 6 years of the 

Bush administration. 

Have you seen that number? 

Mr. COUNIHAN. I hadn’t. 

Ms. BLUMBERG. I haven’t. 

Mr. COUNIHAN. My colleagues in the majority have also brought 

up the fact that UnitedHealth and a small number of other issuers 

have decided not to participate in the ACA marketplaces in 2017 

as evidence that the ACA is not working. 

Dr. Blumberg, what do you make of that argument? 

Ms. BLUMBERG. We looked pretty seriously at the United situation and they came in very—mostly in the second year. They really 

didn’t participate much at all the first year and where they came 

in, they ended up coming in really high. In a few areas they were 

the low-cost insurer, but in general, they priced very high relative 

to the others. As a consequence, it is a very price-sensitive population. They really didn’t get much enrollment. 

Mr. CARTWRIGHT. Is that evidence that the ACA is not working? 

Ms. BLUMBERG. No. It’s evidence that United strategically was 

not paying enough attention to how this market was working. 

Mr. CARTWRIGHT. Okay. 

Mr. COUNIHAN. And Congressman—— 

Mr. CARTWRIGHT. Yes. 

Mr. COUNIHAN. —that is not uncommon in business of any sort 

or in the health insurance business. People’s strategies change, 

their strategic direction can evolve. So we see more of that. But 

the—— 

Mr. CARTWRIGHT. Not only that, startup businesses in general 

fail for a whole spectrum of reasons. Right? 

Mr. COUNIHAN. That’s correct. And particularly health insurance. 

It’s a low margin, very, very challenging industry. 

Mr. CARTWRIGHT. Now, a recent article in JAMA, the Journal of 

the American Medical Association, it’s titled ‘‘Reports of 

ObamaCare’s Demise Are Greatly Exaggerated.’’ It notes other 

large insurers like Anthem and CIGNA have, quote, ‘‘expressed 

more confidence in the ACA’s marketplaces as a business opportunity.’’ In fact, CIGNA is even planning to expand its presence in 

the marketplaces. 

Mr. COUNIHAN. Yeah. 

Mr. CARTWRIGHT. Mr. Counihan, what do you make of the fact 

that some insurers are deciding not to participate in ACA marketplaces in 2017? 

Mr. COUNIHAN. I think it’s a couple of things. I think, A, this is 

an example as strategies evolve. Two, I think an example so that 

people look at opportunities. You used the example of CIGNA. 

That’s a good example. There are other examples of big national 

publicly-traded firms that are expanding into new markets. 

I think the other thing that it’s showing is that with any new 

market—and this is a new market and there hasn’t been a new 

market like this in a long, long time—it takes a combination, 

whether looking at it from an underwriting perspective, an actuVerDate Nov 24 2008 11:02 Mar 09, 2017 Jkt 000000 PO 00000 Frm 00094 Fmt 6633 Sfmt 6633 H:\23646.TXT APRIL

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arial perspective, a risk management perspective, a care management perspective, a provider contract perspective, all these are different. And what we’re finding is that those that are using the 

same kind of pattern that they used for their commercial business 

are being less successful and are in the process of retooling, versus 

those that have looked at this market and this enrollment more 

uniquely. 

Mr. CARTWRIGHT. All right. Last question, and this is the $64,000 

question, Dr. Blumberg. If my Republican friends get their way and 

we repeal the ACA, what do you think will happen to health insurance premiums in this country? 

Ms. BLUMBERG. Well, I think health insurance premiums would 

go up extraordinarily for those who have past health problems or 

current health problems. And that’s really the key is, are we going 

to leave those who are most vulnerable at their time of most need 

with inadequate access to care or are we going to pool them together with people who are currently healthy? 

Mr. CARTWRIGHT. Well, thank you. 

I yield back, Mr. Chairman. 

Mr. JORDAN. I thank the gentleman. 

Dr. Blumberg, Mr. Counihan wouldn’t answer the question, probably can’t answer the question. He is in the administration. When 

I asked him the fact that 16 of 23 CO–OPs have already failed and 

the other 7 are going to, he wouldn’t answer the question whether 

that’s a complete failure. But you don’t work for the government. 

You work for the Urban Institute. Is that right? 

Ms. BLUMBERG. That’s right. 

Mr. JORDAN. You are here on your own capacity today. 

Ms. BLUMBERG. Correct. 

Mr. JORDAN. All right. So you’re not part of the administration. 

Right? 

Ms. BLUMBERG. I am not. 

Mr. JORDAN. So when you have a program where 23 CO–OPs are 

created in this CO–OP program in ObamaCare, 16 have already 

failed and 7 are going to, would you describe that as a complete 

failure? 

Ms. BLUMBERG. I’d say it’s a—you know, you can’t say that’s a 

success when all of those plans fail. But I also think that there’s— 

the important thing is for us to look at why those plans failed. I 

think it was a combination of issues related to they had a big hill 

to climb as new insurers to begin with. But I also think that the 

problem with the redefinition of what the risk corridors were going 

to be and making those, forcing those to be budget neutral, which 

they were not intended to be, had bad implications for those CO– 

OPs as well. And that was something that came after the Affordable Care Act. 

I also think that it’s an indication that we have some improvements to make in the risk adjustment system that I think are some 

in progress, additional ones that could be done. And I think that, 

you know, the timing of those support payments from the risk adjustment reinsurance and risk corridors were important there. 

Mr. JORDAN. Mr. Counihan, we’ve asked certain individuals to be 

scheduled for transcribed interviews, including yourself, Mr. 


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Cleary, Ms. McNeill, and—I guess just three. When are we going 

to get that scheduled? 

Mr. COUNIHAN. Sir, I need to get back to you on that. I don’t do 

that type of scheduling and I’m happy to respond to you fast. 

Mr. JORDAN. Yeah, but you’re the boss there at CMS and so 

we’ve been trying to do this. Can you make a commitment that 

you’re going to get it done here? We want to get it done this month. 

Mr. COUNIHAN. You’re absolutely right, sir, that I am the boss. 

But the CO–OP program, for example, has its own director, it’s 

own team of people that are dedicated to it. I need to circle back 

with you. 

Mr. JORDAN. But they answer to you. Right? 

Mr. COUNIHAN. Correct. 

Mr. JORDAN. Okay. Well, that’s why I’m asking you. You’re the 

guy here on the witness stand. You’re the boss at CMS. 

Mr. COUNIHAN. Yeah. 

Mr. JORDAN. So we want to get you and two other people in for 

an interview. 

Mr. COUNIHAN. Yeah. 

Mr. JORDAN. We’re just asking you, can we make that happen in 

2 weeks? 

Mr. COUNIHAN. Yeah. And, sir, I want to comply with that. As 

I said, I’m just looking—— 

Mr. JORDAN. Okay. We’ve also requested—— 

Mr. COUNIHAN. —for a time to be able to get back to you. 

Mr. JORDAN. We’ve also requested documents from you. When 

are you going to give those to us? 

Mr. COUNIHAN. So, sir, we have already given you, as you’re 

probably very, very much aware, thousands of pages of documents 

to be responsive. 

Mr. JORDAN. We want them all. We want the ones—we want the 

ones that we need, the ones we’ve asked for, not some—you know, 

we hear this every time in congressional committees. We’ve given 

you thousands of—I don’t care if you have given us a bazillion. If 

they’re not the ones that matter—— 

Mr. COUNIHAN. Yeah. 

Mr. JORDAN. —who cares? I want the ones that matter. When 

are you going to give those to us? 

Mr. COUNIHAN. Well, and the ones that—and I’m not sure how 

you’re defining the ones that matter, but the one that have—— 

Mr. JORDAN. The ones that matter are the ones we asked for. 

Mr. COUNIHAN. Well, the ones that have business risk to those 

businesses, those CO–OPs, have been available in camera. They 

continue to be available in camera to your staff. We’re not hiding 

anything from you. But—— 

Mr. JORDAN. Sure sounds like you are when you’re saying in 

camera. Give them to us. We want them. We don’t want to have 

to come over there with a special thing in a special room, look at 

them, can’t take notes and all this. We’ve been through this before 

in other committees as well. 

Mr. COUNIHAN. Yeah. 

Mr. JORDAN. It’s just ridiculous. It’s a congressional investigation, congressional inquiry. We want the information. Give it to us. 


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Mr. COUNIHAN. Yeah. And we want to give you the information, 

but we can’t have the information leak out for businesses. As I told 

you, I worked for a small business—— 

Mr. JORDAN. Now, that is, again, almost laughable. They’re all 

going to fail. Anyone with a brain can see that, and now you are 

telling us, oh, we got to be X—we’re going to be confidential with 

the information. But to say you have to see them in camera because, oh, by the way, some of these things might fail, we already 

know that. Anyone with a brain knows it because every one of 

these are going to fail. So that’s sort of a lame excuse, frankly, Mr. 

Counihan. Just let us have the documents. Will you? 

Mr. COUNIHAN. Well, sir, I respectfully have a different perspective on your comment about them all going to fail. What I would 

tell you is that we have an obligation, a fiduciary obligation, to 

make sure that no confidential information about their businesses 

gets leaked out and can be used against them. And I’m sure you 

can appreciate that. 

Mr. JORDAN. I certainly can, and we can certainly keep confidential information confidential. 

Mr. COUNIHAN. Yeah. 

Mr. JORDAN. How about the materials relating to the CO–OP 

risk committee? When are we going to get those materials? 

Mr. COUNIHAN. Yeah. So I will have to check on the status of 

your request for information related to that. That’s not an area 

that I personally get engaged with, so I will follow up with you on 

that. 

Mr. JORDAN. What about the notes from the weekly calls you 

have with the CO–OPs? When are we going to get that information? 

Mr. COUNIHAN. Yeah. Sir, as I said, I’m not responsible for responding for those types of document requests. And we’ll be happy 

to get back to you with details. 

Mr. JORDAN. The gentlelady from New Mexico is recognized for 

5 minutes. 

Ms. LUJAN GRISHAM. Thank you, Mr. Chairman, and thanks to 

the witnesses. 

So I know that Mr. Counihan is very familiar with New Mexico 

and our woes. And to be fair, given what I’ve heard in your answers today and in reading your prepared testimony—and I agree 

with my colleague Mr. Cartwright, that there were plenty of significant difficult issues pre-ACA. And the reality is, is that a private insurance, private healthcare market has significant challenges for a sick population in this country that’s not very homogeneous and we are effectively, as a result, have been very poor 

healthcare consumers. 

I believe in the fundamental consumer protections unequivocally 

in the ACA, but between my colleagues asking questions, I find 

myself in a very interesting position where I may disagree with you 

about the ACA and its impact and about whether or not we’ve really been proactive in dealing with the issues that we were clear or 

we wouldn’t have had a risk corridor, we wouldn’t have worked on 

a CO–OP model. We knew there were going to be some very interesting competitive issues. We were also a bit nervous about premiums and premium stability, which is why were alerted to the 


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fact, but I think in many States, particularly mine, very surprised 

by the out-of-pocket costs and the very high deductibles which, 

quite frankly, has just pushed people into emergency rooms. And 

we just cost shift somewhere else. 

And as you’re well aware, New Mexico has never had competition 

in the marketplace. And now, in my district, this minute, I only 

have one. Now, Secretary Burwell, and I know that you’re aware, 

have known that these issues—so to the credit of my colleagues behind me, you have seen them coming. I’ve alerted the White House. 

I’ve alerted HHS. I’ve alerted CMS on multiple occasions. Our superintendent of insurance is, you know, feeling really confident 

that he can manage this. I would say I don’t share his confidence. 

We’ve got another 10,000 enrollees, 80 percent of whom need those 

and get those subsidies. They are going to find themselves maybe 

in a precarious position. 

The rates that are published that are not yet agreed to is an 80 

percent increase by Blue Cross Blue Shield. That was with Presbyterian in. If they’re out, I don’t know what that means, and given 

that nationally they’ve been another one like United that’s given us 

great pause about what they can and should and are willing to do. 

So given that, that New Mexico doesn’t fit any of the things that 

you’ve described as successes, what are we going to do? And that 

CO–OP is in the most precarious position. What strategies have 

you specifically thought about, given that rural and frontier States 

and poor States, higher risks to begin with—it’s not like we didn’t 

know that. 

Mr. COUNIHAN. Yeah. 

Ms. LUJAN GRISHAM. I’ve seen nothing that’s been targeted or 

strategic for those States, and I’ve seen very little, quite frankly, 

from the administration about dealing with these issues, except 

telling me that the marketplace is incredibly competitive and people have great choices and it’s all going to work itself out. So I 

want to know, and I haven’t given you very much time, but what 

specifically have you done in the 7 years given these serious issues? 

I know that you weren’t there for the whole 7—— 

Mr. COUNIHAN. Yeah. 

Ms. LUJAN GRISHAM. —but you are at the top now. 

Mr. COUNIHAN. Yeah. 

Ms. LUJAN GRISHAM. —about New Mexico, and what are you 

going to do to help us make sure that consumers really are, in fact, 

protected as is the vision in the ACA? Because I’m not seeing it. 

Mr. COUNIHAN. Okay. First of all, thank you for the question. I 

happen to be fairly familiar with New Mexico and with the competitive environment there. 

Ms. LUJAN GRISHAM. Or the lack thereof, you mean. 

Mr. COUNIHAN. I’m aware too—I have a valued relationship with 

the DOI superintendent, and actually just spoke with him about 10 

days ago about the competitive environment, also rate actions by 

Blue Cross. So I had that review. So we had a good—— 

Ms. LUJAN GRISHAM. Did he actually tell you that Presbyterian 

was going to pull out yesterday? 

Mr. COUNIHAN. No, he did not. 

Ms. LUJAN GRISHAM. I would say that your relationship with our 

superintendent needs to be reevaluated. 


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Mr. COUNIHAN. Well, I value the relationship that we have. And 

I will tell you that he and I have discussed a variety of things 

about different issuers. One of the things that we both understood 

is some of the complexity about urban versus rural counties. 

Ms. LUJAN GRISHAM. In fact, the rural counties, Mr. Counihan, 

have higher competition, given the regional plans that are on the 

marketplace. It’s the urban area that is the most at risk currently 

today with both the CO–OP and now Presbyterian, all the large insurance carriers are pulling off the marketplace in the largest city 

and the most urban area in the State. It’s contrary to what you just 

said, in fact. 

Mr. COUNIHAN. Yeah. Well, one of the things that we’ve talked 

about is I think that the CO–OP is a good example of new choice, 

of more competition, of innovation. 

Ms. LUJAN GRISHAM. Right. But that hasn’t translated. And I’m 

out of time. But the reality is, I’m going to ask you to give me in 

writing—and hope that the chairman will continue to let me have 

a few more seconds. I need those specific strategies, given that we 

have asked for them from this administration on multiple occasions. I believe you have an obligation to hold us accountable, to 

work on strategies that are going to protect those consumers, because so far, that has not translated and I think we can get it 

right. We have significant challenges. That is not occurring currently, and I don’t think that the administration has really been 

thoughtful about that. 

In addition, which is not really in your wheelhouse, but I’d like 

you to take back to the administration that I think that they 

should be—look very seriously at the 6 percent Medicaid cuts that 

are going to drive even more providers out of New Mexico. So you 

have a very precarious situation there that I’m not sure is getting 

the attention that it really deserves and needs. 

Thank you. I yield back. 

Mr. CARTER. [Presiding.] The gentlelady yields. 

I now recognize myself for 5 minutes. 

Mr. Counihan, to date, we know that 16 of 23 ObamaCare CO– 

OPs have collapsed and it’s impacted 870,000 enrollees. That’s including the Land of Lincoln, Co-Op of Illinois, which announced 

just yesterday, just yesterday, that it will close after only 3 years 

of operation, leaving 50,000 enrollees without insurance. 

What’s more troubling than that, perhaps, is that CMS loaned nearly $1.5 billion to these failed CO–OPs, despite the administration’s projection that the program would lose a significant amount 

of taxpayers’ dollars, over 40 percent predicted to never be repaid. 

That’s a lot of taxpayer dollars. I think you would agree with that. 

A lot of taxpayers’ dollars casually thrown away to prop up yet another failed facet of ObamaCare. 

Mr. Counihan, I’m concerned that despite the previous oversight 

hearings that we’ve had and on the failing CO–OPs and the staggering amount of taxpayer dollars that are at risk, that CMS still 

has yet to come up with a plan or a process for recouping the loans 

lost by these CO–OPs. 

Mr. COUNIHAN. Yeah. So—— 

Mr. CARTER. Am I right? I mean, tell me I’m wrong. 

Mr. COUNIHAN. Yeah. 


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Mr. CARTER. Do you have a plan to recoup the money? 

Mr. COUNIHAN. We have a specific process for recoupment of 

moneys. I explained some of it just before you were able to arrive, 

and if you don’t mind, I’d like to explain it again. 

Mr. CARTER. Very briefly. 

Mr. COUNIHAN. Yeah. So fundamentally, this is a matter of make 

sure that claim runouts are finally resolved and paid and administrative expenses to vendors are paid. Moneys left over from that 

are typically the best ways for us to recover money. The Department of Justice is in the process right now of doing just that with 

a couple of these CO–OPs. 

Mr. CARTER. So you’re trying to do it through payment offsets or 

what? 

Mr. COUNIHAN. No, I’m trying to do it through recovery of Federal loans. And recovery—— 

Mr. CARTER. And are you doing witness all of the CO–OPs that 

have failed? 

Mr. COUNIHAN. As appropriate as in at the appropriate time. 

Mr. CARTER. When is the appropriate time? I mean, after they 

fail, they failed, and there’s no money left. Right? 

Mr. COUNIHAN. But—no, not necessarily. And as I mentioned, 

the vast majority of these CO–OPs still are in runout, which means 

that their claims, their incurred but unreported claims still need to 

be paid. 

Mr. CARTER. Okay. So let’s go back here. It’s my understanding 

that now we have got seven remaining CO–OPs. Is that correct? 

Mr. COUNIHAN. Correct. 

Mr. CARTER. How are they doing? From my understanding, 

they’re not doing well at all. They’re in very similar situations and 

they’re set to fail. 

Mr. COUNIHAN. Sir, these are small businesses. They’re small 

businesses in the health insurance business. This can very much 

depend on a month-by-month basis. So—— 

Mr. CARTER. Well, let me ask you something. You know, I was 

always taught that you don’t want to throw good money after bad. 

While they still have got some good money, why don’t we just go 

back and get it and recoup it and just call it a day? Obviously, if 

16 out of 23 have failed, why should we think that the remaining 

seven are going to make it? 

Mr. COUNIHAN. The moneys that have been—that we have have 

been obligated already to those businesses. Those businesses right 

now are in the process of succeeding like any other business or any 

other insurance company does in the State where they do business. 

This is a tough industry, as you very well know. It’s very tough to 

be a small business and it’s tough to be a small health insurance 

company. I used to work for one, so I can tell you that. 

But we’re doing everything that we can to collaborate with the 

State divisions of insurance, and with the CO–OPs to make them 

successful. 

Mr. CARTER. But it’s not working. It’s failed 16 out of 23. Another 

one failed yesterday. The remaining seven are in bad shape and 

you know it. 


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Mr. COUNIHAN. So, sir, if you look at the history of new entrants 

in health insurance, typically, at least half of them or so have a 

hard time making it. So this is not inconsistent with the industry. 

Mr. CARTER. Okay. Well, let me ask you something, Mr. 

Counihan. Out of the seven that are still currently operating—— 

Mr. COUNIHAN. Yeah. 

Mr. CARTER. —how many of them are profitable? 

Mr. COUNIHAN. So profitability very much can depend on the 

month. 

Mr. CARTER. That’s yes or no. 

Mr. COUNIHAN. It depends on the month, sir. 

Mr. CARTER. It depends on the month? 

Mr. COUNIHAN. Yes. 

Mr. CARTER. This month, how many of them are profitable? 

Mr. COUNIHAN. I can’t tell you that. 

Mr. CARTER. Last month? 

Mr. COUNIHAN. The claims data that we have right now—— 

Mr. CARTER. Can you tell me last month? 

Mr. COUNIHAN. —it’s typically through May. You know, we’ve got 

actuarially certified data through the second quarter. You know, 

we’re trying—actually, we get that in August. We’re trying to do 

our best to keep up, as we are with the State divisions of insurance, but when you’re a small carrier like this, it very much depends on the claims you get for that month. 

Mr. CARTER. Mr. Counihan, this looks like a total failure. I mean, 

not only are we throwing good money after bad, losing money, but 

now we got all these enrollees who don’t have any insurance coverage. 

Mr. COUNIHAN. Well, so, can I give you another perspective on 

that? 

Mr. CARTER. Please. 

Mr. COUNIHAN. So another perspective on that is that because of 

these CO–OPs, we’ve been able to give people more choice. Because 

of the CO–OPs we’ve been able to enhance competition in these 

States. Because of these CO–OPs we have been able to innovate. 

Many of these new CO–OPs have come up with new care management models that are being replicated by some of their larger competitors. So there’s been all sorts of dynamics. 

Mr. CARTER. If I were one of their larger competitors, I would 

not—I wouldn’t copy anything they’ve done. They’ve failed. 

Mr. COUNIHAN. But, sir, there’s a variety of different reasons 

that lead to the expenses in a health insurance company. Care 

management models are things that can help migrate between 

sizes of firms and profitability of firms. So I’m giving you three examples of where they’ve added specific value. 

Mr. CARTER. Okay. Okay. Okay. If there is a silver lining, perhaps you just—you’ve just described it. I fail to believe that. Nevertheless, let’s shift gears for one second. Okay? Let’s talk about—we 

know the CO–OPs are not the only entities that are struggling 

under ObamaCare. UnitedHealth has pulled out of a number of 

markets, abandoned a number of exchanges due to profit concerns. 

If the Nation’s largest insurers can’t assume the risks and burdens 

of ObamaCare, why should we believe that anyone can? 


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Mr. COUNIHAN. Well, could I—if I could just give you some examples for that, because—— 

Mr. CARTER. Please very quickly. 

Mr. COUNIHAN. Okay. I’ve got a deep history in this industry. 

Often, insurers that came into this market were making some assumptions about the utilization and the morbidity of the new enrollees. What we’re finding is some of those assumptions and old 

care management tools have been less appropriate to this new population than those that innovated and created new ones. And so 

many right now, issuers, are retooling based on looking at new 

models. 

Mr. CARTER. Okay. All right. I need to finish up. I’m sorry, Mr. 

Counihan. Out of all due respect, sir, they’re failing. They’re losing 

money. The patients aren’t being covered. Their premiums are 

going up. It looks to me like it’s a total failure. 

Mr. COUNIHAN. Sir—— 

Mr. CARTER. I’ve got a closing statement I want to make. Okay. 

In a July 11, 2016, article in Healthcare Reform, President Obama 

acknowledged that too many Americans still strain to pay for their 

physician visits and prescriptions, cover their deductibles, or pay 

for their monthly insurance bills. That’s directly from the President. Even the President can’t avoid the fact that after 6 years, his 

signature healthcare reform bill has completely failed. Completely 

failed. Healthcare costs are higher than ever. Families have seen 

their premiums double and deductibles increase and the average 

American cannot afford health insurance. 

This is why we’ve come out with Speaker Ryan’s A Better Way 

policy agenda, and I hope that we will look at that. We all want 

healthcare coverage here in America. Republicans, Democrat, we 

want it. And we feel like we have a better way. Obviously, to anyone who’s looking at this, this is not working. It is failing. 

Finally, there’s some documents that we’ve asked you to produce. 

On November 20, December 23, and May 18, we sent letters, and 

on February 17 we sent a subpoena to Secretary Burwell. Are you 

familiar with this? 

Mr. COUNIHAN. I am familiar with the request, yes. 

Mr. CARTER. Have you been asked to collect any of the material? 

Mr. COUNIHAN. Sir, a couple of things. One is, I know that we’ve 

already sent thousands of pages in response. Number two is, to the 

extent that there are requested documents that are confidential 

that could put any of these businesses at risk—and again, I used 

to work for one. 

Mr. CARTER. I thought it was a subpoena we sent. 

Mr. COUNIHAN. We have made those available in camera. They 

remain that way, but we can’t have those divulged publicly or those 

businesses—— 

Mr. CARTER. Mr. Counihan, if we agree on anything in this committee, Democrats, Republicans, Independents, whoever, it is that 

y’all need to pay attention, and when we ask you something we expect for you to get it to us. I don’t think you will find anyone who 

disagrees with that. 

Mr. COUNIHAN. That’s understood. But we have a fiduciary responsibility to these firms, as I’m sure you can appreciate. 


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Mr. CARTER. I can appreciate that, but you have an even greater 

responsibility to this committee and to answering to the people who 

have been elected to represent the American citizens. All right. 

That’s all. 

Mr. CARTWRIGHT. Mr. Chairman, I have a unanimous consent request. 

The witness was questioned about profitability and was not able 

to answer questions on second quarter because they won’t be out 

until—and audited until August. 

Mr. COUNIHAN. Yeah. 

Mr. CARTWRIGHT. I request unanimous consent to put into the 

record a Financial Press article noting that for the first quarter, at 

least three ACA created CO–OPs turned Q–1 profits in Maryland, 

New Mexico, and Massachusetts. 

Mr. CARTER. Without objection. 

Mr. CARTWRIGHT. Thank you. 

Mr. CARTER. Mr. Counihan, Ms. Blumberg, I want to thank both 

of you, and thank you for taking time out to appear before us 

today. 

Is that it? Did you have anything else? We’re all done. 

If there’s no further business, without objection the subcommittee stands adjourned. 

[Whereupon, at 4:30 p.m., the subcommittee was adjourned.] 

Æ 


KING-6430 with DISTILLER