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THE STATE OF HEALTH INSURANCE MARKETS 

HEARING 

BEFORE THE

COMMITTEE ON 

HOMELAND SECURITY AND 

GOVERNMENTAL AFFAIRS 

UNITED STATES SENATE 

ONE HUNDRED FOURTEENTH CONGRESS 

SECOND SESSION 

SEPTEMBER 15, 2016 

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

Printed for the use of the 

Committee on Homeland Security and Governmental Affairs 

( 
(II) 

COMMITTEE ON HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS 

RON JOHNSON, Wisconsin Chairman 

JOHN MCCAIN, Arizona 

ROB PORTMAN, Ohio 

RAND PAUL, Kentucky 

JAMES LANKFORD, Oklahoma 

MICHAEL B. ENZI, Wyoming 

KELLY AYOTTE, New Hampshire 

JONI ERNST, Iowa 

BEN SASSE, Nebraska 

THOMAS R. CARPER, Delaware 

CLAIRE MCCASKILL, Missouri 

JON TESTER, Montana 

TAMMY BALDWIN, Wisconsin 

HEIDI HEITKAMP, North Dakota 

CORY A. BOOKER, New Jersey 

GARY C. PETERS, Michigan 

CHRISTOPHER R. HIXON, Staff Director 

DAVID N. BREWER, Chief Investigative Counsel 

SAMANTHA M. BRENNAN, Counsel 

KYLE P. BROSNAN, Counsel 

GABRIELLE A. BATKIN, Minority Staff Director 

JOHN P. KILVINGTON, Minority Deputy Staff Director 

REBECCA S. MADDOX, Minority Counsel 

LYNN SHA, Senior Health Policy Advisor, Office of Senator Carper 

LAURA W. KILBRIDE, Chief Clerk 
(III) 

C O N T E N T S 

Opening statements: Page 

Senator Johnson ............................................................................................... 1 

Senator Carper ................................................................................................. 4 

Senator McCain ................................................................................................ 8 

Senator Portman .............................................................................................. 9 

Senator Ernst .................................................................................................... 14 

Senator Lankford .............................................................................................. 27 

Senator Peters .................................................................................................. 44 

Prepared statements: 

Senator Johnson ............................................................................................... 49 

Senator Carper ................................................................................................. 51 

Senator McCain ................................................................................................ 54 

WITNESS 

THURSDAY, SEPTEMBER 15, 2016 

Hon. Mary Taylor, Lieutenant Governor, and Director, Ohio Department of 

Insurance, State of Ohio ...................................................................................... 10 

J.P. Wieske, Deputy Commissioner, Office of the Commissioner of Insurance, 

State of Wisconsin ................................................................................................ 12 

Nick Gerhart, Commissioner, Iowa Insurance Division, State of Iowa ............... 14 

Hon. Mike Kreidler, Commissioner, Officer of the Insurance Commissioner, 

State of Washington ............................................................................................. 16 

ALPHABETICAL LIST OF WITNESSES

Gerhart, Nick: 

Testimony .......................................................................................................... 14 

Prepared statement .......................................................................................... 79 

Kreidler, Hon. Mike: 

Testimony .......................................................................................................... 16 

Prepared statement .......................................................................................... 86 

Taylor, Hon. Mary: 

Testimony .......................................................................................................... 10 

Prepared statement with attachment ............................................................. 57 

Wieske, J.P.: 

Testimony .......................................................................................................... 12 

Prepared statement .......................................................................................... 72 

APPENDIX 

Statements Senator Carper submitted for the Record: 

William A. Hazel .............................................................................................. 90 

Christopher F. Koller ....................................................................................... 92 

Rita Landgraf .................................................................................................... 96 

Covered California ............................................................................................ 99 

Kathleen C. Hittner ......................................................................................... 102 

Statement submitted by Christina Corieri, Senior Policy Advisor to Arizona 

Governor Doug Ducey, Phoenix, AZ ................................................................... 103 

Response to post-hearing questions for the Record from: 

Ms. Taylor ......................................................................................................... 106 

Mr. Wieske ........................................................................................................ 115 

Mr. Gerhart ....................................................................................................... 127 

Mr. Kreidler ...................................................................................................... 137 

(1) 

THE STATE OF HEALTH INSURANCE 

MARKETS 

THURSDAY, SEPTEMBER 15, 2016 

U.S. SENATE, COMMITTEE ON HOMELAND SECURITY

AND GOVERNMENTAL AFFAIRS, Washington, DC. 

The Committee met, pursuant to notice, at 10:03 a.m., in room 

SD–342, Dirksen Senate Office Building, Hon. Ron Johnson, Chairman of the Committee, presiding. 

Present: Senators Johnson, McCain, Portman, Lankford, Ernst, 

Sasse, Carper, Tester, and Peters. 

OPENING STATEMENT OF CHAIRMAN JOHNSON 

Chairman JOHNSON. Good morning. 

This hearing of the Senate Homeland Security and Governmental Affairs Committee (HSGAC) will come to order. 

The subject of the hearing today is the state of the health insurance markets. 

I want to thank all of our witnesses for your thoughtful testimonies and for traveling here. It is a beautiful city you got. You 

brought beautiful weather, by the way. It is not quite as hot and 

humid as it normally is, but I really do appreciate you coming here 

for a very important subject. 

The truth of the matter is, the reason I decided to run for the 

U.S. Senate was because of the health care law. I come from the 

private sector. I understand marketplaces. I understand what 

works and what does not work. And, I was very concerned about 

the very harmful effect, on real people, that the Patient Protection 

Affordable Care Act (ACA) would actually result in—and it is coming true. 

The problem, that, certainly, I think all of us have had, in really 

evaluating the Patient Protection Affordable Care Act, is the complexity of the data. There is not just one overall metric that you 

can kind of point to and say, ‘‘Hey, it is not working.’’ 

There are some metrics, I think, some pretty powerful ones. So, 

absent that very simplistic type of metric, evaluating the success 

or failure, I think, probably, the best way of doing it is the way you 

evaluate any kind of product or any kind of program. I come from 

the private sector. We do capital expenditure reviews. And, managers would say, ‘‘OK. This is what we expect, if we invest this 

kind of money.’’ 

So, I think, maybe, the best way to take a look and start off the 

hearing—with my opening statement which, by the way, I have a 
2 

1The prepared statement of Senator Johnson appears in the Appendix on page 49. 

written statement. I would like to have that entered into the 

record1—I will enter yours too—is, literally, to take a look at what 

promises were made and how those promises—were those promises 

fulfilled or not? 

There were three primary promises made when people were considering, debating, discussing and, finally, passing the Patient Protection Affordable Care Act. The first one was pretty famous—and 

I will quote. This is from President Obama—and he made this 

promise 31 times: ‘‘If you like your health care plan, you will be 

able to keep your health care plan. Period.’’ You are going to be 

able to keep it. 

Well, there are all kinds of figures, again. How many millions of 

Americans actually lost their health care plan? I have seen them 

as high as, maybe, 8 million, but let us be conservative and go with 

the Urban Institute’s numbers. Their most recent study said that 

about 2.6 million Americans lost their health insurance plans. In 

Wisconsin, certainly, we had something called the ‘‘high-risk pool.’’ 

Anybody involved in the writing of the Patient Protection Affordable Care Act—they knew high-risk plans were going to be eliminated. So, I think there are more than 20,000 Wisconsinites that 

were in the ‘‘high-risk pool.’’ And, again, the authors of 

Obamacare—I will just start referring to the ACA as Obamacare— 

they knew those individuals were going to lose their health insurance plans. 

Early on, I had a couple—this was actually in the fall of 

2008—call me in a panic. His wife had Stage IV—I believe it was 

lung cancer. He was suffering and being treated for prostate cancer. They, obviously, were losing their ‘‘high-risk pool’’ plan. They 

were paying about $700 a month—$767 per month—for insurance 

in the ‘‘high-risk pool’’, which is very competitive. That was a program that actually worked very well in Wisconsin. 

First of all, they tried getting on healthcare.gov almost 40 times 

and could not, because that was a disaster when they first tried to 

initiate it. Finally, they called our office seeking help. Now, we did 

guide them to a couple of the insurance companies that were going 

to be on those exchanges. The cheapest plan they could find was 

$1,400. But, again, that couple lost their health care plan—contrary to President Obama’s repeated promise that that would not 

happen. 

The second guarantee, if you like—that means, again, I will 

quote President Obama: ‘‘That means that, no matter how we reform health care, we will keep this promise to the American people, 

this promise: If you like your doctor, you will be able to keep your 

doctor. Period.’’ 

I do not think anybody would stand up and say that that has 

been true. People have lost their doctors. We have a couple, in 

Marinette, Wisconsin, who, obviously, have lost their doctor. And, 

I just want to read a quick quote here. The only plan they could 

afford, under Obamacare, meant they would lose the doctor they 

have had for over 15 years. And, their quote was, ‘‘Now I have to 

see a physician I have never even met.’’ Broken promise number 

two. 
3 

I think the third most famous promise was—as a candidate, 

President Obama repeated: ‘‘In an Obama Administration, we will 

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

The truth is, back in 2008, when he was running as a candidate, 

according to the Kaiser Family Foundation (KFF), the average family was paying about $12,680 per year. In the latest figure by the 

Kaiser Family Foundation, an average family is paying $18,142 per 

year. That is a $5,462 increase, since President Obama made that 

promise. That is about 43-percent. 

You can look, year by year—and, obviously, that is the largest increase, because health care continued to increase—but even from 

2013, the year before the implementation of Obamacare, it was 

$16,351—and, today, it is $18,142—and that is still a $1,791 average increase across the board. So, obviously, the average family has not seen a $2,500 per year 

reduction in health care. Again, I have specific examples. A ‘‘Janice’’, from Spooner, Wisconsin, wrote me and said that, prior to 

Obamacare, she was paying $276 per month for health care. Her 

latest quote was $787 per month. That is a 185-percent increase. 

And, we had a woman—a young woman who—a young mother— 

she was a nurse. Her husband operated in the heating, ventilation, 

and air conditioning (HVAC) industry. They both were working. 

They loved their jobs, but, because of the increase in premiums— 

they went from about $500 per month to $700 per month to $1,200 

per month—a $700 increase. That is a 140-percent increase. The 

only way they could afford insurance—they were not getting it 

through their employer and they were having to buy on the individual market. The only way they could afford insurance was if she 

quit her job, so the income was lowered far enough that they could 

qualify for the subsidy. Broken promise number three. 

The really sad part about this is that this was known. The people 

who supported Obamacare had to know that those promises could 

never be kept. And, I just want to quote a number of quotes by 

Jonathan Gruber, who was, certainly, one of the individuals involved in the authoring of Obamacare. Politifact called him ‘‘an architect’’—and one of many architects of Obamacare—paid almost 

$400,000 by the Administration to consult. He was talking about 

the Cadillac tax, and here is his quote. He said, ‘‘We just tax the 

insurance companies, they pass on higher prices that offset the tax 

break we get, and it ends up being the same thing.’’ 

Here is really the important quote: ‘‘It is a very clever, basic exploitation of the lack of economic understanding of the American 

voter.’’ 

He went on to talk about the Cadillac tax and said—again, this 

is Jonathan Gruber, one of the architects of Obamacare—somebody 

who knew what he was doing. He said, ‘‘Americans were too stupid 

to understand the difference.’’ He also said, ‘‘The lack of transparency is a huge political advantage,’’ and, basically, called the 

stupidity of the American voter or whatever—but, basically, said 

that that was really critical to getting the thing to pass. 

Now, that is a pretty sad state of affairs, but that is the truth. 

That is what happened. 

Now, I just wonder—I just kind of ask the question—we have 

some Agencies in the Federal Government—one set up under the 
4 

1The prepared statement of Senator Carper appears in the Appendix on page 51. 

Dodd-Frank Wall Street Reform and Consumer Protection Act, 

called the Consumer Financial Protection Bureau (CFPB)—we also 

have the Federal Trade Commission (FTC)—that take a look at 

consumer fraud and try and protect the consumers. I wonder what 

they would do—the kind of enforcement action they would take 

against an insurance company that sold a product—an insurance 

product—and said, ‘‘Hey, listen, once you buy this thing, you are 

going to be able to renew this forever. If you like this plan, you can 

keep it.’’ And then, in the fine print said, ‘‘Well, that is not true.’’ 

In addition, they said, ‘‘Hey, this insurance plan allows you to keep 

your doctor. Period. You are going to be able to keep your doctor,’’ 

but then, the fine print said, ‘‘Well, not if that doctor is not part 

of the network that we are going to cover.’’ 

Three, if you buy this health care plan—whatever you were pay- ing last year—your premium is going to go down by $2,500. And, 

instead, your premiums went up $1,700 or $5,000. I just wonder 

what these Federal Regulatory Agencies would do to an insurance 

company that engaged—and let me be very clear about what this 

Administration did. It was a massive consumer fraud. That is what 

it was. That is what Obamacare is: a massive consumer fraud. We 

are going to be taking a look at that today. And, during my questioning, I will, probably, be asking the Deputy Insurance Commissioner from Wisconsin kind of his thoughts on how we would handle that, in Wisconsin. 

So, again, I want to thank the witnesses for coming. This should 

be a very interesting hearing. And, I think it is a very important 

hearing, because this Obamacare law is costing American taxpayers a whole lot of money. We all want people to be covered by 

health care. We all want people to have access and to be able to 

get high-quality insurance, but we did not have to completely remake the insurance in the health care market, to try and fill that 

gap and help those individuals, who we all want to help. And, I 

think we are going to see that this is not working. Those promises 

were, certainly, not lived up to. 

And so, again, I want to thank the witnesses. And, I will turn 

it over to Ranking Member Senator Carper. 

OPENING STATEMENT OF SENATOR CARPER1

Senator CARPER. Thank you. Thank you very much, Mr. Chairman. 

Welcome to one and all. Who of you is from Ohio? I am an Ohio 

State University (OSU) graduate, and I used to think Delaware 

was a little town just north of Columbus. I later found out it was 

a whole State. [Laughter.] 

And, I moved there, and they let me be their Congressman, 

Treasurer, Governor, and Senator. And, I am sitting here, today, 

with my colleagues and am able to welcome you all here, today. 

Tell your Governor that I said hello. He is an old friend. Give him 

my best. 

A little after noon, today, a handful of Senators—Democrats and 

Republicans, believe it or not—will gather in a room, not far from 

the Senate Floor—something we do almost every Thursday that we 
5 

are in session. For, maybe, a half an hour or so, we take part in 

a Bible study, lead by a guy who used to be a Rear Admiral in the 

Navy. He is Chief of Chaplains, from Navy Marine Corps. His 

name is Barry Black. He is our Senate Chaplain today, and believe 

it or not, Democrats and Republicans—amazingly, sit there and 

read in the same room. We read the scripture, we pray together, 

we share things with each other, and we talk about all kinds of 

things. 

And, invariably, during those conversations, Chaplain Black will 

ask how our faith should guide us. Almost every week—‘‘How 

should our faith guide us in the work that we do here and at 

home?’’ It is a good question. It is a really good question. 

And, almost every week, he reminds us of one of the two greatest 

commandments we have all heard. And, that is: ‘‘To love our neighbors as ourselves’’—to treat other people the way we want to be 

treated. And, Chaplain Black often invokes Matthew 25 as well. 

You may not recognize that right away, but you will in a second, 

because Matthew 25 calls on us to focus on the least of these—the 

least of these in our communities. I am just going to paraphrase 

it today: When I was hungry, did you feed me? When I was naked, 

did you clothe me? When I was thirsty, did you get me to drink? 

When I was sick or in prison, did you visit me? When I was a 

stranger in your land, did you take me in? 

Matthew 25 does not say, however, the following things. It does 

not say, ‘‘When my only source of health care was a crowded emergency room, did you help me?’’ Matthew 25 does not say, ‘‘When I 

turned 22 and could no longer be covered by my parents’ health 

care, were you there for me?’’ It does not say, ‘‘When I could no 

longer find health care coverage, because of a preexisting condition, 

did you do anything about it?’’ It does not say, ‘‘When I could not 

afford the medicine that would enable me to hold down a job or be 

the kind of parent that my children needed, did you lend a helping 

hand?’’ And, it does not say, ‘‘When I was denied health insurance, 

because I happened to be a woman, maybe, of childbearing age, 

and was charged an arm and leg for that coverage, did you go to 

bat for me?’’ 

Most of us are people of faith—different faiths. I believe we all 

agree on one thing, and that is, we have an obligation to treat 

other people the way we want to be treated—and we also have an 

obligation to the least of these who live among us. I believe that. 

I think my colleagues believe that and I think most of the people 

in this room believe that. And, I would like to think that most of 

the people in our country believe that. And, because our Nation’s 

budget deficit, while down—it has been greatly reduced—it is still 

too large, we need to find ways to meet that moral responsibility 

to the least of these, in ways that are fiscally sustainable. 

Just about every American President since Harry Truman has 

sought to find ways to do just that. They believed in their hearts 

that, when people in this country are sick or in need of health care, 

they ought to be able to see a doctor or nurse—or maybe both— 

within a reasonable period of time. And, I am certain that most, 

if not all, of our colleagues believe that—and I am sure that most 

Americans believe it as well. 
6 

So, why has it proved so hard to do? It sort of reminds me of 

what my mom and dad used to say to my sisters and me. They 

used to say, ‘‘The hardest things to do are the things most worth 

doing.’’ This is a hard thing to do. This is a really hard thing to 

do. 

For another—just about any time, we might—one of us might try 

to do something meaningful about it, our efforts can be turned into 

a 30-second commercial and used as political weapons against 

Presidents or Members of Congress who try to do what we all 

know, in our hearts, is the right thing to do. 

Well, I will be the first to acknowledge that the Affordable Care 

Act is not perfect. I am not perfect—none of us are. I have never 

written a perfect law, and, my guess is, if truth be told, neither 

have my colleagues. This legislation—this law—can clearly be improved. When the election is over, we need to go to work to do just 

that—stop ‘‘carping’’ about it. ‘‘Carping’’ is one of my favorite verbs. 

Stop carping about it, and just go to work. 

And, having said that, the Affordable Care Act has sought to better ensure health care for all Americans. I just want to mention a 

couple of ways how: 

In part, by creating state-based health insurance marketplaces, 

where people, who may never before have had access to health 

care, now have the opportunity to choose a plan that helps them 

get healthy and stay that way. How? By participating in large purchasing pools—not unlike the ones that Federal employees have 

participated in for decades. The individual mandate that incents 

people to purchase these plans is a well-tailored incentive that 

helps these marketplaces grow and thrive, so that insurance companies are not left with a pool of people to insure that are largely 

older, sicker, and more expensive to insure. 

In this room, today, there are witnesses and Members of Congress who represent—among others—the States of Delaware, 

Washington, Iowa, Ohio, Wisconsin, and more. The rate of people 

without insurance, in our States, on average, has fallen by almost 

half since our respective marketplaces have opened—almost half. 

For the Delawareans, Washingtonians, Ohioans, Iowans, and Wisconsinites who may now take the child to the doctor, it is not only 

life changing, it can also be live saving—and these life changing effects are not being felt only in our States. Today, because of the 

Affordable Care Act, 20 million Americans have access to health 

care that did not have it before—who did not have it before. 

Our uninsured rate is less than 9-percent—an all time low. 

Americans now have access to free preventive services, like cancer 

screenings and yearly checkups. And, the vast majority of people 

in the marketplaces buy their health insurance for less than $100 

per month—less than $100 per month. This progress has been realized, while extending, at the same time, the life of the Medicare 

Trust Fund by 11 years. 

I find it more than a little ironic that we have been deadlocked 

in partisan fighting, for years now, over a law that—unknown to 

most—is actually built on a couple of sound Republican ideas: 

health insurance marketplaces and the individual mandate. 

To my friends on the other side of the aisle—they are my 

friends—your willingness to walk away from the policies your party 
7 

once championed is dumbfounding to me, especially when those 

very same policies are enabling us to begin making a positive difference in the quality of life for so many Americans. 

Just a quick refresher for those who may not recall. 2012 Republican Presidential nominee and former Massachusetts Governor, 

Mitt Romney, revolutionized health care in Massachusetts, by creating an insurance marketplace and requiring citizens to, eventually, obtain coverage. In fact, these ideas go back even further. Listen to this: In 1993, Republican Senator John Chafee introduced 

legislation that proposed an individual mandate and the establishment of insurance purchasing pools. That bill looked, frankly, a lot 

like the Affordable Care Act we are discussing at today’s hearing. 

In fact, it had some 20 Republican cosponsors in the Senate. Some 

of them still serve here, today. 

Fast forward to 2009, my first year as a member of the Senate 

Finance Committee and the first year of a new Administration. 

And, our new President called on Democrats and Republicans to 

try and achieve what previous Presidents talked about doing for 

more than half a century. But, instead of coming to the table pursuing a productive discussion about how we could expand access to 

health care for millions of Americans, in the end, Senate Republicans, sadly, chose not to engage. But, the President and the rest 

of us soldiered on and, finally, passed this historic law that all of 

us acknowledge is not perfect—but a good deal better than continuing to do nothing. 

Like any major new Federal program, adjustments are going to 

need to be made as it is implemented. And, unfortunately, we have 

had a hard time finding as many willing partners in this effort as 

we would like. There used to be a time when Republicans and 

Democrats would come together to make bipartisan health care reforms. Some of us were here when we did just that. We created the 

Medicare Part D Prescription Drug Benefit. There was a lot of 

blowback on that. So, what did we do? We fixed it—we made it better. 

When we created Medicare Advantage Plans, there was a lot of 

blowback on that too. What did we do? We fixed it—we made it 

better. And, we did that together. 

That is not what we have done, with respect to the Affordable 

Care Act. Time and again, our Republican friends—and they are 

friends—have blocked funding, proper implementation, and, I 

think, common sense improvements. Republican Governors and 

State legislators in 19 States have refused to expand Medicaid—not 

Ohio Governor, John Kasich—tell him I said that—leaving millions 

of Americans without coverage and increasing marketplace premiums for millions more. 

It is a sad state of affairs when it seems that, sometimes, the 

only health care votes we are allowed to make are the ones which 

repeal the Affordable Health Care Act completely, leaving nothing 

in its place and leaving Americans with nothing—nowhere to turn 

besides a hospital Emergency Room (ER). I will close with these 

words. 

In a couple of months, thankfully, Americans will go to the polls 

to elect a new President and new Members of Congress. I talk almost every day with Delawareans who wait with anticipation for 
8 

1The prepared statement of Senator McCain appears in the Appendix on page 54. 

that day to arrive. Some of my colleagues feel that way, too. Once 

that day has arrived, though, and the new Congress—as well as 

the new President—have taken their oaths, we need to go to work 

to make a good idea even better. Like we did with Part D and like 

we did with Medicare Advantage Plans. We can do that. We need 

to embrace what I call the three Cs: communicate, compromise, 

and collaborate. We also need to embrace the words in the preamble of our Constitution. Remember, it starts off, ‘‘We the people 

of the United States, in order to form a more perfect union.’’ 

And, we need to get to work making the Affordable Care Act better. We can do that. I know we can and, with the right leadership, 

I believe that we will. In doing so, we will have, in the words of 

Mark Twain, ‘‘Confounded our enemies and amazed our friends.’’ 

Let us roll. 

Chairman JOHNSON. Thank you, Senator Carper. 

By the way, it is 54 days until Election Day, but who is keeping 

track? [Laughter.] 

Chairman McCain is stepping away from the Senate Armed 

Services Committee (SASC) hearing, and he would like to say a few 

words. So, we will go ahead and do that. 

OPENING STATEMENT OF SENATOR MCCAIN 

Senator MCCAIN. Thank you, Mr. Chairman. And, I would appreciate if my complete statement would be made a part of the 

record.1

And, I must say that I was entertained by the statement of my 

dear friend from Delaware—and we are very dear friends—but to, 

somehow, now call upon Republicans to work with you to fix this 

disaster after—on the Floor of the U.S. Senate—you did not allow 

a single Amendment—not a single Amendment by the Republicans 

was allowed. It is the first time an entitlement program has ever 

been enacted on a strictly partisan basis. 

You had your 60 votes. You rammed the 60 votes, and the Affordable Care Act, down our throats. And so, now that it has been 

an abysmal failure, you want us to come and help you to bail it 

out. We want to replace it. We do not want to fix it. We want to 

replace it, because it has been a complete failure—and my State is, 

probably, the best example that I know of. 

We now have 14 of our 15 counties with—guess what?—one provider. Do you remember the statement, ‘‘If you like your doctor, you 

will be able to keep your doctor. Period. If you like your health 

plan, you will be able to keep your health care plan. Period. No one 

will take it away, no matter what.’’ 

Of course, that turned out to be a lie. Ever since, Americans have 

been hit by broken promise after broken promise and met with 

higher costs, fewer choices, greater uncertainty, and poorer quality 

of care—and, let me tell you, my home State of Arizona is hurt. 

We are talking about, next November 1, seeing as much as 65- 

percent increases in premiums for our average citizens. We are 

talking about young people, who are now opting, clearly, to pay a 

fine, rather than to see these dramatically increasing costs—and, 
9 

of course, the cost of health care continues to skyrocket—all done 

on a purely partisan basis. 

I remember the victory dance that you guys performed after 

passing Obamacare without a single Republican vote. And so, now 

the chickens have come home to roost. So, now, the question is: 

‘‘Will the Republicans not join with us and fix this problem?’’ 

Give me a break. We need to replace it. We need to fix it and 

we need to go back to the fundamental principles of economics, 

which do not involve taking money from healthy young people in 

order to take care of unhealthy older people. That was the fundamental broken premise. And now, of course, I guarantee you the 

next step will be that you guys are going to want to go to a government run health care system. That will be your answer—which is, 

in Europe, clearly, a two-tiered system between those who are 

wealthy and can afford their own health care and those who are 

not, who will have a substandard level of care. 

Mr. Chairman, I would like to have my statement included in the 

record—but the people in my State are hurting. The people in my 

State are hurting. We have 15 counties—in 14 of them, there is 

only one provider. Just for a period of time, we had a county with 

no provider. Now, Blue Cross Blue Shield (BCBS) has moved in. Is 

what is happening in my State—is that, ‘‘If you like your policy, 

you can keep your policy? If you like your doctor, you will be able 

to keep your doctor? Period. No one will take away your health 

care.’’ 

Of course, we have people scrambling all of the time as, understandably, these providers have hundreds of millions of dollars in 

losses. They cannot afford to stay in this affordable health care 

business. 

So, I thank you for holding this hearing. I thank the witnesses. 

And, if the Senator from Delaware and his Democrat friends want 

to join together with us, then yes, let us throw it where it belongs: 

in the trash can. And, let us start all over and give people an affordable health care system that they can live with and that will 

not be the situation that exists in my home State of Arizona. 

I thank you, Mr. Chairman. 

Chairman JOHNSON. Thank you, Senator McCain. 

It is the tradition of this Committee to swear in witnesses. So, 

if you will all rise and raise your right hand. 

Do you swear the testimony you will give before this Committee 

will be the truth, the whole truth, and nothing but the truth so 

help you, God? 

Ms. TAYLOR. I do. 

Mr. WIESKE. I do. 

Mr. GERHART. I do. 

Mr. KREIDLER. I do. 

Chairman JOHNSON. Thank you. Please be seated. 

I think our first witness is Lieutenant Governor Mary 

Taylor—I think Senator Portman would like to introduce the Lieutenant Governor. 

OPENING STATEMENT OF SENATOR PORTMAN 

Senator PORTMAN. Thank you, Mr. Chairman. And, I am really 

thankful we have Mary Taylor with us, because she is a true ex-
10 

1The prepared statement of Ms. Taylor appears in the Appendix on page 57. 

pert. She is a certified public accountant (CPA), first, and had 16 

years in the private sector before she decided she wanted to get 

into public service. She started on her city council, where she did 

a terrific job—so much so that she got elected to the Ohio Statehouse. And then, she became our State Auditor—the first State 

Auditor ever to be a CPA. She transformed that office and was acknowledged, nationally, as having put together a cutting edge, 21st 

Century auditing office, in Ohio. 

Then, in 2011, she was sworn in as our Lieutenant Governor of 

Ohio. She has two other jobs: One is on regulation. She heads what 

is called the ‘‘Common Sense Initiative’’, which deals with making 

our regulations smarter—which has been a big reason for Ohio’s 

economic success during the Kasich-Taylor Administration. And 

then, second, she is the Director of the Ohio Department of Insurance (ODI). 

So, here you have a CPA with this private sector background and 

government background, who, actually, is in charge of our Ohio Department of Insurance and, therefore, has gotten very involved in 

the Affordable Care Act. 

You are going to hear from her on this. She has some really interesting statistics—very specific numbers as to what is happening 

with our premiums, by the way. For the individual market, it has 

gone up about 91 percent. With regard to the Obamacare exchanges, I believe the number is a 13-percent increase next year. 

Who can afford that? 

And so, she will have the opportunity to talk a little bit 

about what is actually happening in our health care market, in 

Ohio—what it was like before the Affordable Care Act and what 

has happened since. So, I am really glad she is here. And, thank 

you for letting me introduce my friend, Mary Taylor. 

Chairman JOHNSON. Lieutenant Governor, by the way, I knew 

there was something I liked about you—fellow accountant. 

So, Lieutenant Governor. 

TESTIMONY OF THE HONORABLE MARY TAYLOR,1 LIEUTENANT GOVERNOR, AND DIRECTOR, OHIO DEPARTMENT OF INSURANCE, STATE OF OHIO 

Ms. TAYLOR. Thank you very much, Chairman Johnson, Ranking 

Member Carper, and distinguished Members of the Committee. 

Thank you for the opportunity to testify before the Senate Homeland Security and Governmental Affairs Committee (HSGAC). 

My name is Mary Taylor, and I am Lieutenant Governor of Ohio, 

as well as the Director of the Ohio Department of Insurance. 

Today, I will provide testimony regarding Ohio’s experience, related 

to the Affordable Care Act, specifically, in regard to premium 

changes, market shifts, and other trends, since 2013. 

As the Director of the Ohio Department of Insurance, I am responsible for regulating Ohio’s insurance market—the seventh largest in the United States. Ohio is home to more than 200 insurance 

companies, and more than 1,600 do business in the State, representing $76 billion in annual premiums. 
11 

For years, we have taken great pride in the competitive insurance market we have in Ohio, across all lines of insurance. Under 

the leadership of both Democrat and Republican Administrations, 

the Ohio Department of Insurance has been a fair and thoughtful 

regulatory agency, providing the certainty and predictability that 

industry is looking for to be successful, which, in turn, benefits consumers. In fact, because our market is so competitive, the most recent data shows Ohio’s auto and homeowners insurance premiums 

are below the national average and are ranked 12th and 9th. 

But, I am here today to focus on health insurance and what is 

happening in Ohio. Prior to the implementation of the ACA, Ohioans benefited from a large selection of insurance carriers, with 

more than 60 companies selling health insurance products in Ohio. 

Consumers could buy plans with a wide variety of coverage options 

and pay the corresponding premiums to go with that coverage. 

Unfortunately, since before the law was implemented, I and 

many others across the country—including Members of this Committee—pointed out that the ACA would not work as promised. 

Studies conducted in Ohio, at my request, showed premiums would 

go up, consumers would lose choice, and the market would suffer 

from turbulent and disruptive changes. Fast forward to today and 

the new ACA era we live in. 

In 2016, 17 health insurers sold products on Ohio’s Federal exchange, during open enrollment. Next year—in 2017—assuming all 

companies approved to sell on the exchange by the Ohio Department of Insurance enter into contracts with the Department of 

Health and Human Services (HHS)—only 11 companies will offer 

exchange products. This dramatic decrease in participation can be 

better put into perspective when looking at a county-by-county 

comparison in Ohio. 

In 2016, every one of Ohio’s 88 counties had at least four insurers selling exchange products during open enrollment. In 2017, 19 

counties will have just one insurer selling exchange products and 

28 counties will have just two. 

Fewer options give consumers less of an opportunity to get the 

coverage they need. Dramatically increasing premiums make the 

problem even worse. Based on the final rates approved for 2017, 

the average premiums, for individuals buying on Ohio’s Federallyrun exchange—as Senator Portman has said—have gone up 91-percent since 2013. Even as insurers have fled the exchange, recent 

statements from HHS indicate everything is fine. Premiums 

around the country are increasing, but the response is that consumers are being shielded by tax subsidies that will offset the 

costs. The cost of those subsidies will continue to rise as premiums 

continue to increase—and the American taxpayer must shoulder 

that burden. 

I think most of us agree Americans should be able to purchase 

health insurance without facing barriers because of preexisting 

conditions. We agree more can be done to improve the system in 

order to increase accessibility and promote better outcomes for patients. However, the ACA is not living up to the promises that were 

made. 

In Ohio, less than 250,000 people purchased health insurance 

through the Federally-run exchange in 2016. If you consider the 
12 

1The prepared statement of Mr. Wieske appears in the Appendix on page 72. 

fact that there are 11.6 million people living in Ohio, that means 

we have completely upended the health insurance market, forced 

consumers to buy coverage they do not want or need, and placed 

significant regulatory burdens on job creators—all to offer taxpayer-backed insurance to 2.15 percent of our population. 

We need to increase access by reducing costs—instead of forcing 

everyone to buy more expensive coverage that, in many cases, they 

do not need and they do not want. We need to empower States to 

design systems that are best suited for their populations—instead 

of forcing one-size-fits-all mandates across the country. We need to 

decentralize the powers in Washington that, quite frankly, do not 

understand insurance or how to regulate it—as my colleagues and 

my predecessors across the country do. 

In Ohio, we have ideas to help improve our health system, without destroying the free market—as the ACA has done. We believe 

there is a better, more inclusive way to design reforms that will increase access without driving up costs, but we need the flexibility 

to do it. It is my hope that, with the help of Congress, States can 

once again have the power to implement positive change. 

Thank you for the opportunity to testify before the Committee 

today. I would be happy to answer questions, Chairman, when you 

choose. 

Chairman JOHNSON. Thank you, Lieutenant Governor. 

Our next witness is J.P. Wieske. Mr. Wieske is Deputy Insurance 

Commissioner for the—can I say the great State of Wisconsin here, 

in the hearing?—I think I can—the great State of Wisconsin. He 

has served as Deputy Insurance Commissioner since 2016. Prior to 

his appointment as Deputy Insurance Commissioner, Mr. Wieske 

served as the Office of the Commissioner of Insurance’s (OCI’s) 

Legislative Liaison and Public Information Officer. Mr. Wieske. 

TESTIMONY OF J.P. WIESKE,1 DEPUTY COMMISSIONER, OFFICE OF THE COMMISSIONER OF INSURANCE, STATE 

OF WISCONSIN 

Mr. WIESKE. Thank you, Chairman Johnson, Ranking Member 

Carper, and the distinguished Members of the Committee. 

Last week, at church, the prodigal son was a parable that was 

discussed—as well as the parable of the lost sheep. And, I think, 

one of the concerns that we have, as we look at our insurance market, is that, in Wisconsin, we did, in fact, take care of the lost 

sheep. We did, in fact, take care of our folks. 

You highlighted our ‘‘high-risk pool’’, and our ‘‘high-risk pool’’ 

provided excellent care for the sickest among Wisconsinites. It provided subsidies for the sickest as well as those who had significant 

medical conditions—and they could choose any doctor. 

Unfortunately, Obamacare ended that. That was 20,000 people 

that were thrown into the marketplace, which created additional 

problems. In our market, the individual market has grown to 

272,000 people from 200,000 people. However, the 200,000 we had 

in the market prior to this did not include our ‘‘high-risk pool’’ and 

did not include our folks that were in our existing Medicaid program, where Wisconsin had, in fact, expanded it beyond the Fed-
13 

eral requirements. In addition, we had a number of the reforms in 

Wisconsin, so we did not need the passage of Obamacare to protect 

adult dependents. 

In fact, we had to move our adult dependent coverage requirement down to age 26, because we had expanded it to age 27, in the 

State of Wisconsin. 

Our small-group market has dropped by 30,000 people since 

Obamacare—2013 to 2015. Our large-group market has dropped 

from almost 1.25 million people down to 1 million people. Now, 

most of that large-group market has moved into the Employee Retirement Income Security Act of 1974 (ERISA) space—the largely 

State unregulated space. So, I think we have a number of concerns 

with the way our market has been hit. 

On top of that, we have seen a number of frustrations, from a 

consumer standpoint, regarding the rollout of Obamacare as well 

as the continuing problems for consumers, as we continue to regulate this market. So, we actually had to delay the end of our ‘‘highrisk pool’’ by several months, because of the disastrous rollout. We 

had to delay the movement of folks off of the Medicaid program 

into private coverage, because of the disastrous rollout. 

On top of that, we are, consistently, getting calls from consumers—and consumer complaints, submitted to our consumer 

complaints division, talk about the interference of the health care 

exchanges for folks with their private coverage. Specifically, when 

people want to terminate their coverage, when they want to make 

changes, or when they want to add folks to their insurance plan, 

they no longer are able to just do that and to call the insurance 

company to make those changes. They have to call a Federal bureaucrat and ask for permission in order to get that done. And, 

that takes time—and it creates errors and it creates problems. 

So, we have seen a number of regulatory issues. In fact, last 

year—I will highlight one other issue—we had a consumer—an insurer contact us when the Federal Government asked them to take 

money out of all of their consumer accounts. They had made a mistake—and they had undercharged consumers—and, at Christmastime, the Federal Government had ordered them—which they 

would not do in writing—to take money out of the accounts of these 

consumers and pull it out of their accounts, in order to pay the 

back premiums. 

Now, as a matter of course, insurance regulators do not let insurance companies charge back consumers when they have undercharged them. So, we actually had to issue an order to protect our 

consumers—to prevent the direct pulling of the bank account information, from consumers, at Christmastime. 

On top of that, we are seeing, in this next year, this automatic 

reenrollment process, which is illegal in the State of Wisconsin. We 

have indicated, in letters, that it is illegal in the State of Wisconsin. We have 64,000 people in the State who will be losing their 

coverage—not just because of market withdrawals, but because of 

service area changes. Those 64,000 people will be automatically reenrolled—their information sent to another carrier without their 

permission. Their private information will be sent to another private medical insurer—from one to the other—without their permission, by the Federal Government. 
14 

1The prepared statement of Mr. Gerhart appears in the Appendix on page 79. 

It is going to be a, potentially, fraudulent and problematic area 

for our Wisconsin consumers—64,000 of them, potentially, who 

could see these numbers change. 

In short, we have seen a number of issues, in the State of Wisconsin. And, we felt we did an excellent job of protecting consumers, prior to the ACA. We continue to try to protect them from 

the damage of the ACA. When we roll into 2017—I want to highlight that there will be, approximately, 200,000 people that will be 

newly on Obamacare—that have not been on it—who are on transitional plans, in our State. So, the damage is not yet done. 

In short, Wisconsin believes that the damage of Obamacare, 

hopefully, is not permanent. And, we are hoping for a solution that 

moves this problem back to the States, for us to fix it. 

Thank you. 

Chairman JOHNSON. Thank you, Mr. Wieske. 

I believe Senator Ernst would like to introduce our next witness. 

OPENING STATEMENT OF SENATOR ERNST 

Senator ERNST. Thank you, Mr. Chairman. 

It is my honor to introduce to the Committee, today, Iowa Insurance Commissioner Nick Gerhart. Nick has served our great State 

as Commissioner since February 2013. And, we appreciate your 

service, Commissioner. 

And, he also serves on the National Association of Insurance 

Commissioners’ (NAIC) Executive Committee. The Commissioner’s 

legal and health administration credentials, as well as his professional background, make him an excellent witness for us, today, to 

talk about this important topic. And, thank you, Commissioner, for 

traveling to Washington, D.C. to share your expertise with this 

Committee and the audience members—and your perspective on 

Iowa’s health insurance market. 

Thank you, Mr. Commissioner. 

Senator ERNST. Thank you, Mr. Chairman. 

TESTIMONY OF NICK GERHART,1 COMMISSIONER, IOWA 

INSURANCE DIVISION, STATE OF IOWA 

Mr. GERHART. Good morning, Chairman Johnson, Ranking Member Carper, and esteemed Members of the Committee. It is an 

honor to be here to share our views, in the State of Iowa. 

I really want to focus just on a couple of things in my short time. 

I want to focus on the duty of an insurance commissioner, the 

rates, and what is happening at the kitchen table to members of 

our State—and really a couple of highlights to fix some of these 

issues. And, I did submit written testimony, which is much longer, 

outlining some of those potential fixes. 

As the Insurance Commissioner for the State of Iowa—we are 

pretty local—a State of three million people. So, we actually know 

the folks that these rate increases are impacting. So, the 75,000 

Iowans that are getting rate increases of up to 43 percent—I know 

a lot of these folks. I see them at church and I see them in the grocery store—and a lot of them are friends. In fact, I want to share 

a story of a good friend of mine. He had a good corporate job. He 
15 

left that job. His name is Gregory Bailey. He started a company 

called Denim Labs in Des Moines, Iowa. He has two children in 

third grade and second grade and a lovely wife. And, when he got 

his notice, he called me—because he knows me—and was not very 

happy, obviously. 

I hope we are still friends, but, at the end of the day, he understands what is happening here—and he and his wife are looking 

at making a significant decision around whether they downsize 

their home—go without coverage. So, these are impacting all of our 

constituents. I hope we can have a productive dialogue on some potential fixes. 

In our State, we recently approved rate increases, from 19 percent up to 43 percent, impacting almost 75,000 Iowans. In a State 

of three million people, that is a pretty significant number of 

Iowans that this is going to impact. Cumulatively, the rates have 

been up about 100 percent since the implementation of the ACA. 

And, I am not here to say it was working that great before. Rates 

were going up before as well, but I think we have some ideas and 

solutions to make it better. 

What we are seeing is a very high concentration of risk in this 

‘‘individual-risk pool.’’ We had a ‘‘high-risk pool’’ that was functioning pretty well as well. We have expanded Medicaid, but a lot 

of the folks in this population are a lot like the Medicaid population. So, we have commercial insurers working to insure some of 

these ‘‘Medicaid-type population’’ folks. And, to give you an example, one claim in Wellmark is generating about $18 million in costs. 

Even with the discounts for the providers, it is about $12 million. 

That one claim is 10 percent of the 43-percent increase. So, that 

one claim in that risk pool costs about $808 per member of that 

risk pool. So, you can see there is really no protection from that 

kind of a catastrophic claim. And, I will tell you that that claim, 

in a few of our smaller regional carriers, would make them almost 

insolvent. 

Unfortunately, in Iowa, we have also experienced withdrawals 

from the market—United Health Group. We were the first State 

that had to take over one of the failed co-ops. On Christmas 

Eve—Day, 2014, we had to take over a co-op—the first one to fail. 

So, that caused a lot of disruption as well for the 120,000 members 

in Iowa and Nebraska. 

So, folks are a little bit skeptical right now about the market. We 

will have 23 counties, I believe, with one provider. We will have 

about half of the counties with two providers in the exchange. So, 

there are issues of having less choice. 

The product that is seeing the most traction in the market is 

what is termed a ‘‘narrow network’’ product. So, you have a concentration with one group of doctors that you could use—and, 

again, those plans are fine. I think my family would buy one if we 

had the option of buying one, but it is a ‘‘narrow network’’ plan. 

But, we have deemed those to be appropriate and we are waiting 

for the Centers for Medicare and Medicaid Services (CMS). 

But, as Lieutenant Governor Taylor said, we really do not know 

who is going to sign on, on the 23rd of this month, to be in the exchange—or not. We will know that here in a couple of weeks, I 

guess. 
16 

1The prepared statement of Mr. Kreidler appears in the Appendix on page 86. 

I also want to kind of highlight a few fixes. We talked a little 

bit about the ‘‘three Rs’’ in my written testimony: The risk corridor, 

risk adjustment, and reinsurance. Risk corridor sunsets—I would 

think we would want to keep it that way. It did not work very well. 

Risk adjustment—there are some new rules that CMS recently put 

out. I think that those, at least, look encouraging. And, I will wait 

for the carriers to comment on that. But, the reinsurance does sunset and we think that that was a provision that actually worked 

pretty well. And, it did help stabilize the market a little bit. 

Finally, we would encourage the Committee and the Members of 

this body to look at this idea of ‘‘high-risk pools’’ and, maybe, push 

the issue back to the States. We are going to look at a Section 1332 

State Innovation Waiver, potentially, to try to create an Iowa-based 

solution for Iowans. We think that is the best way to do it. Because, if you have seen one health insurance market, you have, 

probably, seen one health insurance market, to be honest with 

you—and our issues are not what Washington, Texas, Wisconsin, 

or Ohio would have. So, we feel that pushing it back to the 

States—for them to have more control makes a lot of sense. 

So, I would like to conclude by saying that it is an honor to be 

with you all. I will answer any questions at the right time. Thank 

you. 

Chairman JOHNSON. Thank you, Commissioner. 

Our final witness is the Honorable Mike Kreidler. Mr. Kreidler 

served as the Insurance Commissioner of the State of Washington. 

He has served as Washington State’s Insurance Commissioner 

since the year 2000. Mr. Kreidler previously served in the U.S. 

House of Representatives, representing Washington’s 9th Congressional District. Congressman Kreidler. 

TESTIMONY OF THE HONORABLE MIKE KREIDLER,1 COMMISSIONER, OFFICE OF THE INSURANCE COMMISSIONER, 

STATE OF WASHINGTON 

Mr. KREIDLER. Thank you very much, Chairman Johnson, Ranking Member Carper, and Members of the Committee. 

I am the longest serving Insurance Commissioner in the country, 

currently. And, it is a position—that means that I have served 10 

years before the Affordable Care Act and 6 years now, after. And, 

because it is the law of land, I have been working diligently to implement it to the fullest extent possible, in the State of Washington. 

I can tell you that, even though we have heard different stories, 

it has, quite frankly, had a profoundly positive impact on the State 

of Washington—not without problems, but profoundly—overall, 

very positive. And, we really need to look back at what it was like 

in that environment before health care reform. 

We have approximately seven million people in the State of 

Washington. Nearly a million of them were uninsured. That was 

14-percent of the population. We were experiencing something like 

$2 billion a year in uncompensated care. That is care that is being 

paid for, but it is coming at the expense of other payors that are 

absorbing those costs. 
17 

We also had a robust market at that time, before the Affordable 

Care Act—some 11 insurers in the individual markets. But, if you 

looked at the products out there, none of them in the individual 

market covered maternity or covered prescription drugs. And, for 

many people, they would find that a serious shortcoming. 

Today, we are down to 7.3 percent of the population being uninsured. That is, nearly, a 50-percent drop since the Affordable Care 

Act came into effect. And, we have taken the $2.3 billion in uncompensated care and dropped it down to $1.2 billion. Almost 80 percent of the people inside of our exchange—and we are looking at, 

approximately, 170,000 people inside of the exchange. The comparable number on the outside—but, of those inside of the exchange, 80 percent of them now receive a subsidy. 

Today, we are looking at—for 2017, 13 insurers in the market 

and 154 plans that will be offered to consumers, for 2017. The rates 

that came in were higher than what we had anticipated at 13.5 

percent—their request—not what I have approved. In October, we 

will know better about what that final number will be, but it is 

higher—and it is, certainly, something that was not unexpected. 

When insurers started, in 2013, to submit their plans, they had 

no idea just exactly what they should wind up charging. It was a 

dramatic change. As I said, now they cover maternity and drugs, 

and they did not before. So, it was a real change. So, they are still 

in kind of a learning phase here, but double-digit rate increases are 

no surprise. It is, certainly, something we saw very commonly— 

much more so before the Affordable Care Act. And, in 2014, as I 

said, it was really just a guess, at that point in time. 

And, no one wants to see rate increases going forward—least of 

all if you are elected statewide, like I am, and have to do it and 

have to have direct accountability to the people of the State of 

Washington. 

I think one of the things we really look at is the kind of changes 

that are going forward, as Commissioner Gerhart was talking 

about. One of those things, if we want to make it work better, that 

I would identify is, we have to make sure that premium relief to 

consumers is something that is there—and, perhaps, even more so 

than what we have currently. We also need to stabilize the health 

insurance markets going forward. 

The number one task for us was to get everybody covered. That 

was the first step. The second step, which is critically important is, 

we have to do a much better job of helping to hold down health 

care costs. As I look at changes that could make a profound difference in helping to stabilize that health insurance market, one of 

them would, certainly, be to help hold down the cost increases we 

are seeing in prescription drugs. That is the number one driver, 

right now, in the plans that came forward to us for 2017. 

Another, from a national perspective, is to make sure those 19 

States that have not expanded Medicaid do so. In the State of 

Washington, we have 595,000 people that are now insured, who, 

previously, did not have health insurance through the Medicaid 

program. 

I would also say that we have to make sure that those States 

that have nonconforming plans out there—so you have a breakup 

of the risk pool by virtue of nonconforming plans and conforming 
18 

plans to the Affordable Care Act—they all need to meet that same 

standard. Washington is working, as I said, diligently, to make 

sure that we fully embrace the Affordable Care Act reforms and to 

provide those to the people of the State of Washington. 

Now, holding down premiums is the next big factor needed to 

stabilize the private market. Immediate steps need to be taken to 

accomplish this. If we want to make this sustainable in the future, 

we have to address that second part: Get them covered, first, and, 

second, stabilize the market. 

Thank you, Mr. Chairman. 

Chairman JOHNSON. Thank you, Mr. Kreidler. 

Let me start with you. You said that it is an 18-percent increase 

that has been requested, on average? 

Mr. KREIDLER. 13.5 percent. 

Chairman JOHNSON. 13.5 percent. OK. You said that that was 

not unexpected—no surprise. Again, you were asserting that position. You heard candidate Obama say that his health care plan 

would reduce premiums by $2,500 per family. Did you believe that? 

Mr. KREIDLER. I have to admit there were a number of claims 

that were made, during those discussions, that I did not, as a professional regulator, necessarily embrace in totality. 

Chairman JOHNSON. Commissioner Wieske, it is very difficult to 

try to figure out exactly what these average increases are. And, I 

know the Manhattan Institute for Policy Research has done kind 

of a national study, by State. I have looked at that—six different 

demographic groups, in the State of Wisconsin. Our biggest cost increase, in terms of the individual Obamacare market, was in the 

first year. But, as I put the numbers together, based on the expected increase again for this year, the lowest increase on one of 

those demographic groups, since the inception of Obamacare, is 

about 1.8 times—in other words, an 80-percent increase. So, if you 

were paying a buck, now you are paying $1.80 for your health care 

coverage. The highest is over $3.00. 

I want to get to the point, in terms of what would happen, in the 

State of Wisconsin. I kind of raised the issue, on a national level, 

with the CFPB or the FTC. In the Office of the Commissioner, 

what would you do? Because, I know we have laws, in Wisconsin, 

where you are authorized to bring enforcement proceedings against 

insurers that engage in unfair marketing practices. By the way, 

that is defined as ‘‘misrepresentations or unfair inducements’’, 

which, I guess, a tax penalty would be kind of an unfair inducement. ‘‘Unfair discrimination.’’ I do not know about that. What 

about the restraint of competition? I think Obamacare is definitely 

restraining competition. ‘‘Unfair restriction of contracting parties’ 

choice of insurer.’’ Well, we have definitely seen that and then 

extra charges—things like the Cadillac tax—attempt to unduly influence employers and unfair use of official position. Man, that 

really describes Obamacare. Right? 

So, again, going back to the question I asked, if there is an insurance company that made those claims—you like your health care 

plan, your doctor, and $2,500 reduction—what would you do, as 

Deputy Insurance Commissioner in the State of Wisconsin? 

Mr. WIESKE. So, I think there would be a couple of things. So, 

first, up front, I do not know that we would let the insurer do that, 
19 

because they would go insolvent, because they would not be able 

to meet their obligations. Those promises are not deliverable. And 

so, I think we would have a concern if the insurer filed those with 

us. 

If they filed them from an advertising standpoint, I think, we 

would consider that unfair trade practices—and we have concerns 

and we take action against the insurer, because those are promises 

that, obviously, an individual insurer cannot deliver. 

We did have a number of carriers that wanted to make some sort 

of promises on rights over time. And, in fact, we did not allow them 

to do that. We have done that over a number of years. 

Chairman JOHNSON. So, unfair trade practices—another term for 

that would be ‘‘consumer fraud’’? 

Mr. WIESKE. It would be a fraudulent advertising. 

Chairman JOHNSON. In the private sector, that is unlawful, 

right? 

Mr. WIESKE. Right. Correct. 

Chairman JOHNSON. But, I guess when it is passed by the Federal Government—I guess that becomes legal consumer fraud. 

Mr. WIESKE. It appears so. 

Chairman JOHNSON. I really want to get back, because I was 

kind of shocked by a couple of your stories here. Describe again 

how the Federal Government forced you to recover undercharged 

premiums. 

Mr. WIESKE. So, there was a particular insurer—and we actually 

have the order that we can get you a copy of. A particular insurer 

made a mistake in their rate system. So, their quoting system was 

correct, but the rate system was incorrect. When the people got the 

rates and they were charged, a lower amount was pulled out of 

their accounts. 

Chairman JOHNSON. Just stop. So, again, had that just occurred 

with a private company, would that private company have been allowed to go back in and pull money automatically out of those accounts? 

Mr. WIESKE. They would not have even asked. They would not 

have asked us to pull money out. 

Chairman JOHNSON. They would have just sucked it up and said, 

‘‘We made a mistake.’’ 

Mr. WIESKE. They would have expected—most companies are 

good companies. From the consumers—they would not expect 

that—and they certainly would not ask their regulator if they could 

go back 6 to 8 months and pull money out of consumers’ accounts. 

No, they would not even ask that question. 

Chairman JOHNSON. I also want to talk about automatic enrollment. 

Mr. WIESKE. Yes. 

Chairman JOHNSON. When I first got involved in this, I called 

ACA—Obamacare—the greatest assault on our freedoms in a lifetime. This certainly speaks to that. 

Talk exactly about what is going to happen to individuals without their approval. What is going to happen, exactly, with automatic enroll? 

Mr. WIESKE. So, a consumer, who is currently in a plan with a 

health insurer that is either exiting a particular service area or 
20 

exiting the market in its entirety, will have their information sent 

by an insurer chosen—they have the option to choose it, by the 

way, but an insurer chosen by the Federal Government, and enrolled in that plan that will get an 834 transaction—is our understanding. And so, that information will be sent to the insurer, who 

will then contact the consumer and ask them for premium. 

Chairman JOHNSON. Now, are there not laws against unauthorized transfer of medical information from one party to another? 

Mr. WIESKE. We have made that argument, too. We have made 

that argument to our good friends in the Federal Government. We 

sent a letter over to Kevin Counihan, indicating all of the legal arguments—including Federal laws that we feel are broken—in sending people’s private medical information—private information from 

one insurer—and financial information, by the way—from one insurer—private insurer to another private insurer. 

Chairman JOHNSON. So, without the coercion of the Federal Government, an insurer would not be allowed to pass that information 

to another insurer without the insured’s permission, correct? 

Mr. WIESKE. Absolutely not. 

Chairman JOHNSON. That insurer would be breaking the law. 

Mr. WIESKE. Absolutely. 

Chairman JOHNSON. So, once again, this is legal? 

Mr. WIESKE. Well, we do not think it is legal. 

Chairman JOHNSON. Well, I am just saying, the Federal Government—— 

Mr. WIESKE. But they are treating it as—— 

Chairman JOHNSON [continuing]. The Federal Government is 

doing their—— 

Mr. WIESKE. Correct. 

Chairman JOHNSON. They are doing it on their own account. 

Mr. WIESKE. Correct. 

Chairman JOHNSON. Wow. 

Lieutenant Governor Taylor, I want to talk a little bit about the 

reduction in choice, because it is pretty stark—60 companies down 

to 11. That was not supposed to happen under the ACA, was it? 

I mean—competition was supposed to flourish, right? 

Again, I am coming from the free market. I would have loved to 

have been a monopolist, because I had to compete. My prices are 

lower, my quality is higher, and my level of customer service is 

higher because of competition. But, competition is best realized 

when you have a lot of competitors. That is not what is happening 

here. We are seeing consolidation in the health care industry, 

across the board, but, in your State, you certainly have an example 

of that. 

Ms. TAYLOR. Absolutely, Mr. Chairman. 

Unfortunately, we are seeing consolidation. Nationwide, of 

course, we know there are a couple of cases pending, regarding 

mergers of large insurance companies. But, even more than that, 

when you look at who is still left in the market, selling on the Federal exchange, in Ohio—as you have already stated, we had 60 

companies that, prior to the ACA, you could choose from—any individual could choose to purchase their insurance from—versus—we 

are going into 2017 down to 11. And, I think that is what 

is—again, which I stated in my testimony—the even starker reality 
21 

1The statements submitted appear in the Appendix starting on page 90. 

is evident when you look county by county. I spent all day yesterday, primarily, in Zanesville, which is Muskingham County in 

Ohio. And, they are one of the counties that will have one insurer. 

So, I do not call that a choice. That is one insurer. 

Chairman JOHNSON. It is not competition. 

Ms. TAYLOR. No. And, to a person—I met with a lot of people and 

a variety of audiences and crowds, and it seemed to me that everyone knew that that was what was going to happen under 

Obamacare starting in 2017. They are very concerned. In fact, one 

gentleman asked me, ‘‘Is there not something that you can do or 

your national association,’’ which we are all members of—and, unfortunately, no. The answer is no. 

Chairman JOHNSON. I think you mentioned in your testimony— 

do you have an overall average amount that your insurance has increased since Obamacare? 

Ms. TAYLOR. Ninety-one percent. 

Chairman JOHNSON. Ninety-one percent. Senator Carper. 

Senator CARPER. Thank you, Mr. Chairman. 

Let me just start by saying a number of States—many States, 

maybe, as demonstrated by the Commissioner of Washington 

today, have fully embraced the health care law and have seen very 

significant benefits for most of their residents. 

I request that statements from insurance commissioners, market 

leaders, and health secretaries from several States, including 

Rhode Island, California, Virginia, and Delaware, are entered into 

the hearing record.1 I think all of these—and I would make that 

request, Mr. Chairman. 

Chairman JOHNSON. Without objection. 

Senator CARPER. Thank you. 

All of these statements make, maybe, two points—and I will just 

briefly state them. One point is, the Affordable Care Act is working 

in their States, lowering the uninsured rate and improving their insurance marketplaces. 

The second point that would be made in the statements is, Medicaid expansion has been critical to lowering the cost of private insurance and improving the health of their residents. That is a point 

I do not think we have made very well here, today. And, I will return to that later. 

A little bit later, I am going to respond to some of what my 

friend Senator McCain said, but I will hold off on that for now. 

Let me just ask a couple of questions, if I could, of Commissioner 

Kreidler. And, let me just ask what—first of all, congratulations on 

being the longest serving insurance commissioner in the country. 

Is that right? 

Mr. KREIDLER. That is correct. 

Senator CARPER. Pretty amazing. 

What percentage of your population was uninsured before 2010, 

when the Affordable Care Act was first passed? Any idea? 

Mr. KREIDLER. Yes. At that time—and as we look back over at 

least a decade or two that we have the information for—at the time 

of the passage, we were at 14 percent. We have reduced that down 
22 

by nearly a 50 percent reduction in the number of uninsured in the 

State of Washington. It has had a profound positive effect. 

Senator CARPER. All right. Thank you. Were individuals with 

preexisting conditions able to purchase comprehensive and reliable 

health insurance for a reasonable cost? 

Mr. KREIDLER. No. They were not able to purchase it. There was 

the ‘‘high-risk pool’’ that was available to them, but there was a 

preexisting condition waiting period. So, if you had been diagnosed 

with cancer, and you would like to treat it right away, you would 

have to wait up to a year before you would have coverage. 

Senator CARPER. In those days, were women charged more for insurance based on their gender? And, if so, any idea by how much? 

Mr. KREIDLER. Actually, in the State of Washington, we have a 

State law that prohibits it—unlike a number of other States. So, 

there could not be a difference in the rates charged between men 

and women. 

Senator CARPER. OK. My Republican colleagues, several of them, 

have recently introduced legislation to roll back the individual 

mandate. If enacted, how would this change affect the risk pools 

and health insurance premiums in your State? 

Mr. KREIDLER. Well, it would devastate those pools, because you 

would have the healthy holding out until they got sick and then 

opting in—or hoping they could—when they started to become ill. 

If they, of course, had an emergent type of medical treatment, they 

are in a real problem until open enrollment rolls around again. 

For the rest of the individuals, it would be a situation where you 

would have a very sick pool of individuals very dependent on 

health insurance. Insurance does not work really well when you 

are only insuring the people who really need it and allowing them 

to come in at some later date. 

Senator CARPER. One of my guiding principles in life is to find 

out what works and do more of that. As a previous Governor and 

Chairman of the National Governors Association (NGA)—and I 

chaired the National Governors Association Center for Best Practices—I said to my cabinet in Delaware—when trying to wrestle 

with a particular problem, I would always say, ‘‘Some other State— 

some other Governor has dealt with this successfully. Maybe an insurance commissioner has dealt with this issue—maybe a Lieutenant Governor has dealt with this issue successfully. Let us find out 

who did it, how they did it, and whether or not the idea is transferable to Delaware.’’ 

In Massachusetts, when they launched the program there under 

Governor Romney, my recollection was, in terms of addressing lack 

of coverage, they addressed it. And, the plan, as I recall, really ensured that a lot of people got coverage. 

What they did not do well out of the starting gate was addressed 

costs. You have mentioned this a time or two in your statement. 

One of the things I recall—lessons learned from Massachusetts— 

I am going to ask you to share with us what those lessons 

were—but one of the things, it took a while for the penalty, if you 

will, for people who did not sign up—like my kids—my sons, who 

are 26 and 28 years old. 

Those who did not sign up, it took some while for the penalties 

to rise to a level that they actually said, ‘‘I might as well go ahead 
23 

and get coverage.’’ And, it helps to provide for a better insurance 

pool to serve. 

The other thing is, you had a lot of people who did not have 

health care in Massachusetts—and, frankly, in our States today— 

who have not had health care for years. They are not in good 

shape. And, once they have health care for the first time—maybe, 

in their lives—they are using it. And, that has had an impact on 

utilization and an impact on costs for insurers. And, they are trying to recover those costs. They did not have much experience. 

They did not know what it would be. It was like playing in the 

blind, trying to figure out what the rates would be without any 

kind of real experience. 

So, is there anything you can share with us—lessons learned in 

Massachusetts that might guide us, as we go forward for the country? 

Mr. KREIDLER. I think a number of us have looked to Massachusetts and their experience since they had a running start with the 

Affordable Care Act under Governor Romney. And, one of them, 

certainly, was having an adequate penalty, so you really incentivize 

people, so they did not hold out until they needed health care, because that was devastating. I think the other is, you cannot allow— 

you have to minimize the ability to get into health insurance coverage outside of the open enrollment period. So, you really encourage people—if you get a bad diagnosis, you want to be treated right 

away. You do not want to have to wait months before you will have 

the coverage you need. So, that was an important part. 

We wound up also finding it interesting—and Massachusetts did 

too—and that was that there was a prediction that the emergency 

rooms would be overrun with the expansion, particularly, with 

Medicaid expansion, in the respective States. We had the same prediction. The actual impact was that it was the opposite. We had a 

10-percent reduction in people entering emergency rooms in the 

State of Washington. And, that was also reflected in Massachusetts. 

The reason is, when you go in there with a non-emergent issue, 

you are told, ‘‘You know what, if you go down to the clinic down 

the street, the doctor in the box, so to speak—get your care there— 

it is going to cost you a lot less than getting it from us.’’ It is remarkable how people were sensitive to that price indicator. There 

were a number of lessons like that that were learned. 

Senator CARPER. All right. Lastly, you have mentioned in your 

testimony the need to promote competition. And, give us one or two 

just really good ideas of what worked in your State—and you think 

might work in others. 

Mr. KREIDLER. First, you have to stabilize the market. Some 

things came out of the Affordable Care Act having the essential 

health care benefits—the out of pocket expense limitations, but, beyond that, you have to try to make sure that you consolidate the 

risk pool. 

Insurers need stability. They are going to gravitate to that. If it 

looks predictable, they are going to be much more willing to enter 

a market, and that is where you start to get more competition. Unlike a number of States, we went from 11 insurers to 13 in our individual market in the State of Washington. And, I think that is 
24 

a part of it—that we embraced that part of it. Even if it meant taking some pushbacks, such as those canceled policies that we had 

out there—rather than trying to apply cardiopulmonary resuscitation (CPR) to them to bring them back—we wound up saying, ‘‘No, 

those are out of the market now.’’ And, it really helped to stabilize 

the market. I think those are the kind of changes that insurers are 

looking for, and it gives us the kind of predictability we would like 

to see. 

Senator CARPER. Thank you. Thank you so much. 

Chairman JOHNSON. Senator Portman. 

Senator PORTMAN. Thank you, Mr. Chairman. And, this has been 

a very interesting discussion. 

Our health care system was not perfect before the Affordable 

Care Act, but, as indicated by pretty much every speaker today— 

even you, Mr. Kreidler, and I appreciate you saying this—many of 

the pledges and promises that were made just have not been kept. 

And, you can say, ‘‘Well, that is because of overpromising, and it 

still means that this is an improvement.’’ But, I have to tell you, 

for a lot of my constituents, it is not an improvement. It has created more problems for them. It is not just higher costs. It is people 

losing their insurance. 

We have not even talked about the CO–OPs, which are part of 

the Affordable Care Act. And, this Committee has done some good 

work on that, as well as our Subcommittee—and we have tens of 

thousands of Ohioans, who have lost their coverage under the coop, because, pretty much every few weeks, another co-op goes 

under. And so, this has been tough for people. 

I have 30 specific examples here from constituents that I brought 

with me today out of the hundreds we have gotten, because we 

have a portal on our website, where people can tell us their experience. I am not going to go through all of them, because we do not 

have time. But, all I can say is, it is not just this theoretical issue 

that is a debate about health care policy. It is about people’s lives, 

their families, and their inability to get insurance that covers them. 

So, I think you have done a good job, Lieutenant Governor Taylor, 

today, in talking about the numbers. But, behind those numbers, 

are people, so here is Chad from Archibald. ‘‘The plan we had when 

Obamacare signed the law—the one we liked was canceled. At the 

next renewal, company said no longer able to do it due to the law’s 

passage—did not meet the requirements of the law—promised we 

could keep our plan if we liked it—promised lower rates. Our premiums have risen 92-percent,’’ he says, ‘‘And, we keep raising 

deductibles to keep it from going up more.’’ And, I hear that a lot 

back home. People say, ‘‘Yes, I have health care coverage, but really I do not, because my deductible is $5,000—$7,000 now—and that 

means it is like I do not have coverage.’’ 

One thing that I think that we should point out—and I could not 

agree more with Senator Carper and others who spoke who said we 

need to do this on a bipartisan basis. That was not done with 

Obamacare, obviously, as Senator McCain—who was here at the 

time—talked about it. I was not here at the time, but I saw it being 

shoved through. We have to figure out how to deal with this issue 

of not just the cost, but the quality of the care—and competition 

is going to help with that too, right? 
25 

So, let us talk about competition for a second. You have given 

some troubling testimony today, Lieutenant Governor Taylor. And, 

you talked about the fact that you are seeing a big increase next 

year. I think you said these rates are about a 12-percent or a 13- 

percent increase next year. Who can afford that? This in an exchange—it is an individual-market exchange. You said that it has 

gone up 91-percent, since the 2013–14 time period. 

Ms. TAYLOR. Yes. 

Senator PORTMAN. Wow. What do you see happening in the future? What is it going to be in 2018? And, what is it going to be 

5 years from now? What do you think is going to happen if things 

do not change? 

Ms. TAYLOR. Well, it is really hard to predict the future, but, if 

we look at the past and what has happened over the last several 

years, my biggest concern for the next couple of years is that we 

still are not going to have a stabilized market, because, as we continue to lose carriers, writing coverage on the Federal exchange— 

that obviously creates turmoil within the market that is in that 

particular district or in that particular region—and that creates a 

lot of chaos. And, where there is chaos, it is hard to price products. 

Where that happens, obviously, it is the consumer in the end 

who gets harmed, because they are going to pay more or they are 

going to have—as has been stated by some of my colleagues—they 

are shrinking provider networks, as we are seeing also in Ohio, 

where we just do not have the provider networks that consumers 

in Ohio are used to. 

So, my concern is, over the next couple of years—where our early 

study that we commissioned in 2011 may have predicted that the 

market would stabilize by now—unfortunately, that has not happened. And, I am not certain that that is going to happen in the 

next year or two either. 

Senator PORTMAN. It has not stabilized. And, what is interesting 

about your testimony is, it has gotten worse. And, very recently, it 

has gotten worse. 

So, in looking at your testimony here, 17 companies in 2016 were 

approved to offer health care on the Federal exchanges—only 11 

have decided to offer plans in 2017. Is that right? 

Ms. TAYLOR. That is correct. 

Senator PORTMAN. So, here we had a period where you would 

have expected some stabilization. Instead, you have just the opposite—and we have 88 counties in Ohio. How many now only have 

one insurer? 

Ms. TAYLOR. Let me find my numbers. 

Senator PORTMAN. I was doing the math when you were talking, 

but I think it is about—— 

Ms. TAYLOR. I have the math. 

Senator PORTMAN [continuing]. About 25 percent of our counties 

have—— 

Ms. TAYLOR. Nineteen. Yes. 

Senator PORTMAN. Yes. That’s about 25 percent, I think, that 

have only one insurer. I know, again, it is a complicated area. 

There is lots of debate about what we do, but just a lack of choice 

and the lack of competition, as it relates to costs—but it also relates to quality of care. Recently, there was a group called the Kai-
26 

ser Family Foundation that put out some estimates on this. And, 

they are saying that 19 percent of enrollees could have a single insurer by next year—2017. They talk about the increase in costs— 

substantially double digit increases in costs for people. They just 

cannot afford it. Eighty-six percent of Obamacare premiums were 

subsidized by tax dollars. So, people say, ‘‘Well, I am not on the exchange’’—because most people are not on the exchange. ‘‘It does not 

affect me.’’ Well, it does affect all of us, because we are all taxpayers. 

But, the other thing that is happening in Ohio—and I am told 

it is happening around the country—is that these insurers, who 

cannot make a profit under the exchanges, because of the way they 

were structured, are doing what? They are all staying in business. 

They are either leaving the exchanges, which, as you see, Aetna 

just left Ohio, as you reported, a few weeks ago. But, they are also 

cost shifting, right? 

So, if you are a person in an exchange plan, the bad news is your 

costs are going up dramatically—deductibles, copays, and premiums—everything. If you are being subsidized by that, that helps 

you, clearly. But then, the taxpayers are obviously paying that. But 

then, also we have the situation where, if you are in an employer 

based plan—which is where most of us are—you are seeing an increase in yours as well, because these companies are not going out 

of business, right? 

Do you have any evidence of that in Ohio—that there is cost 

shifting from the insurance companies, who cannot make it on the 

exchanges, because they are losing money? And, I assume we have 

numbers on those. 

I know Anthem, for instance, loses money in Ohio and other 

States they are in. But, these companies are not in trouble, because 

they are cost shifting on to the private employers. That is a concern 

that is outside of all we are talking about today, really. 

Ms. TAYLOR. Right. Senator Portman, I think it was Aetna, when 

they made their announcement they were pulling out of many markets across the country, that had announced a $400 million loss on 

their exchange—Federal exchange business. And so, I think that 

just using that number—clearly, there are some insurers that are 

finding it very difficult. The populations are sicker in the pools 

than they expected. And, they are having a hard time with the premium increases to keep up with the actual costs. 

I think one of the things that has not been said here, if I could— 

what has not been dealt with is the cost of health care—and premiums are driven by the ultimate cost of health care. And so, 

where we originally thought that the Affordable Care Act, or 

Obamacare, was going to place some emphasis on addressing the 

costs of health care, reinforcing healthy behavior, and getting people healthy and keeping them healthy—instead of only treating 

them when they are sick—that is not what we are seeing happen 

in the marketplace. 

So, the exchange business—there are certainly some insurance 

companies that could write it in a profitable way, but I think that 

more of them than not are finding that it is a loss for them. And 

so, they have to make a conscious decision. They have to make a 

business decision. Is it such that they can continue to offer health 
27 

insurance on the Federal exchange, even though they are writing 

at a loss? And then, if they decide to do that, how long can they 

continue to bear those losses before it, ultimately, is a decision they 

cannot make any longer? 

Senator PORTMAN. Again, my time has expired, but I really appreciate your expertise—and being a CPA and understanding how 

insurance works—and, as you say, looking at the broader dynamics 

in health care, which was not done in the Affordable Care Act, unfortunately. That is what we have to do in this place. And, we have 

to do it on a bipartisan basis—unlike last time—and we have to 

come up with something that actually makes sense in the real 

world. So, you have the ability to provide people with affordable, 

high quality health care. 

Thank you. 

Chairman JOHNSON. Senator Portman, thank you for raising the 

cost shifting issue. It has been going on for decades, not only just 

in terms of Obamacare, but, as providers and governments take 

over more and more reimbursement, they do not reimburse providers—sometimes to cover the costs—those providers cost shift to 

the private sector—one of the reasons it put a lot of pressure on 

premiums to begin with. 

The other point I want to make, too, is, you talked about the 

hundreds of letters you have gotten—we all have—talking about 

individuals being harmed. They are not pretending. They are really 

being harmed by Obamacare. I do not know about you, but I hear 

more and more people on these individual markets just taking the 

risk. They simply cannot afford the premiums. They look at them— 

even the high premiums on the insurance they are getting with 

high deductibles and high out of pockets—and they are going, 

‘‘What is the point?’’ So they are taking that risk on, themselves. 

I am not sure if you are seeing that in Ohio, but I am certainly 

seeing that in Wisconsin. Senator Lankford. 

OPENING STATEMENT OF SENATOR LANKFORD 

Senator LANKFORD. So, a year and a half ago, I talked to my 

daughter’s doctor and asked him point blank, ‘‘Why are you no 

longer practicing medicine after this year? Why are you closing 

your office?’’ To which he said, ‘‘For 21⁄2 years in a row, we have 

tried to make this work. And, every single month for the last 21⁄2

years, we have lost money. I cannot keep a practice open and do 

this. The new compliance costs—the things that are happening— 

we cannot stay open.’’ 

So, one of the great doctors in Oklahoma, who has years of experience, retired. He is not the only one. There are a lot of others. 

And, it is not just my family—it is a lot of families. 

Lieutenant Governor, I can very much appreciate Ohio experiencing, since 2014, a 91-percent increase in the premiums. I can 

understand that, because, currently, border to border in Oklahoma—77 counties—we now have one insurance carrier—one in 

the entire State. Every other carrier has left. 

That one has requested a premium increase for next year of 75 

percent from this year to next year—1-year increase: 75-percent. If 

CMS does not approve it—we are a State that CMS does the approval for—they could just withdraw. The hard part about it is— 
28 

and it is the dirty secret of the process for right now in the Affordable Care Act—that, certainly, CMS will approve the 75-percent increase, because then we will have no carriers in the entire State— 

and we will move from one to none. 

When they approve the 75-percent increase, it will change it dramatically for people that are at 201 percent above poverty. For everyone 200 percent of poverty and below, the subsidies will kick in. 

The taxpayers will cover the 75-percent increase, but, for everyone 

from 201 percent to 400 percent, their subsidies will not be near 

enough to be able to cover them. And, those at 400 percent and up, 

they will face the full brunt of the 75-percent increase. And, even 

more people in my State will say, ‘‘I cannot afford—the one policy 

that is available, I cannot afford at all.’’ And, they will go pay the 

tax penalty when they would like to buy insurance. But, literally, 

insurance now is so expensive in the State. Even those who want 

to buy it cannot buy it anymore. 

This has a very direct effect on what is happening to the families 

in my State. For those that are on the subsidies, they will not feel 

the effects—but those only 200 percent of poverty and down. There 

is, literally, now a new perverse incentive to say, ‘‘If you are at 250 

percent of poverty, find a way to be able to get to a 199 percent 

of poverty or you will not be able to get health care.’’ That is the 

wrong direction to be able to direct our country. With only one option that is out there in my entire State, we are in a bad place. 

Now, our State used to run something called ‘‘Insure Oklahoma.’’ 

We were told we could not do that anymore. We used to run a plan 

to be able to take care of those in greatest need. That is being 

pushed out. There are other solutions that are out there and other 

ways to be able to take care of this. Supposedly, the co-ops, as Senator Portman mentioned, were supposed to rush into that space 

and provide the option. Now, of the 23 co-ops that were started— 

about $1.7 billion in total taxpayer funding—only 7 of them are 

left. And, all seven of them are in trouble. No way the taxpayer 

will recover that money. 

So, we have made it incredibly difficult for people to be able to 

get insurance on the insurance market in my State, because it is 

now so incredibly expensive they cannot get it on the individual 

market—they cannot afford it. So, they either have to go into poverty to be able to get health care insurance or be able to find some 

employer. But, if you are self-employed, you are stuck. 

It is a tough cycle that we are already in. And, in some ways, 

Oklahoma is the ‘‘canary in the coal mine.’’ And, we are raising our 

hand and saying, ‘‘This is really serious for us. This is what everyone said would happen. We are experiencing it now. It is actually 

happening there.’’ 

So, my question really is for Mr. Wieske as well. You talked a 

lot about State solutions and things Wisconsin has done in the 

past. We have done a lot of things in our State in the past—no 

longer allowed to do. If you were given the ability for your State 

to be able to say, ‘‘Here is some flexibility to be able to take care 

of people,’’ is it your assumption that your State would say, ‘‘No, 

only the Federal Government cares about people in my State. We 

do not care about people in our State?’’ Or, is it your assumption 

that your State would step into that gap and say, ‘‘There are people 
29 

in desperate need in our State. Give us the flexibility and we will 

be glad to fill that void?’’ 

Mr. WIESKE. I think the leadership that Governor Walker has 

shown—as well as our State legislature—over the years would 

show that, yes, we would absolutely want to take care of our State. 

And, we have actually done that, because we have expanded Medicaid eligibility up to 100 percent of poverty, where the State is, in 

fact, covering a piece of that. So, for the first time in Wisconsin, 

everybody in poverty is covered under our Medicaid plan. So, Wisconsin has started down that road. We would love more flexibility 

to be able to do it fully. 

Senator LANKFORD. What would that look like practically? What 

are the plans and options that you would put into place? 

Mr. WIESKE. Well, I think we need to take a look at what the 

options were, but I think we would, probably, to a large part, go 

back to a sort of ‘‘high-risk pool’’ that we had in the past. I think 

that was well functioning and did a good job of taking care of folks 

who had significant medical conditions in the State. And, it was a 

good funding procedure. It brought subsidies. 

We had a good program under BadgerCare to provide coverage 

for those folks in need. And, I think, if you look at the rates that 

I highlighted in my testimony—if you move the rates back down to 

a more reasonable level—if a 21-year-old does not get a 75-percent 

increase or more in the first year in Wausau—and a 21-year-old in 

Milwaukee does not get a 78-percent increase—they are more likely 

to join the risk pool. So, there would be a number of things that 

would help lower the rates and bring more competition. 

We are facing the same thing that Ohio is. We have 15 carriers 

and we have expanded service areas. And, where folks are covering 

has been in turbulence for the last several years. So, our market— 

despite the fact we have a highly competitive market—we have 

more insurers in Wisconsin than most States—it is in turbulence. 

And, more carriers are offering coverage off of the exchange than 

on. And, that is, in part, a reflection of the fact that it just does 

not work for them. And, our on-exchange carriers have literally 

lost—even the well capitalized ones—millions of dollars in value 

from surplus. So, eventually, they are going to be at even greater 

risk. 

Senator LANKFORD. Well, we have dropped down, as I mentioned, 

to one carrier. At the same time, several of our rural hospitals have 

closed in the last several months. Others are on the brink of that. 

And, it is a very difficult time for them to be able to manage what 

is happening right now and the requirements that are put on them. 

So, as we watch rural hospitals close, physicians retire early, 

other physicians merge into hospitals, other hospitals merge, and 

insurance companies around the country merge, we are not watching a healthy future for where we are in health care. We can say 

we are sustaining where we are now, but we can see quickly where 

things are going—and it is not a healthy mark in the days ahead. 

So, I appreciate all of your testimonies and for being here and 

being part of this. 

Chairman JOHNSON. Thank you, Senator Lankford. Just a quick 

point: I cannot tell you how many doctors in Wisconsin told me 

they are retiring early. And, even worse, they are telling their kids, 
30 

who have always wanted to follow in the footsteps of their mom 

and dad, ‘‘Do not go into medicine.’’ Some of them have even actually paid them incentives not to do it. So, it is a pretty sad state 

of affairs. Senator Ernst. 

Senator ERNST. Thank you, Mr. Chairman. And, again, thank 

you to our panelists today and witnesses. 

Commissioner Gerhart, thank you for being here, today. It is 

great to have someone representing Iowa and sharing some of our 

concerns on the panel today. I enjoyed your testimony—only because it is the same thing that I have heard over and over again, 

as I am traveling across Iowa. 

What I do not enjoy about that is the fact that the stories that 

are being shared by our wonderful Iowa families are stories of 

hardship, and what the ACA has done to their families. 

We all have very serious concerns about how our families will be 

able to continue to afford the Affordable Care Act—those insurance 

policies. And, I hate to say that I agree with you that Iowans and 

folks across the country have been placed into a situation where 

they are attempting to decide, ‘‘Do I pay for my mortgage, or do I 

purchase health insurance?’’ And, I have heard that time and time 

again. It is either a mortgage payment, because the insurance costs 

now are so much more than they were previously. Is it a car payment? Is it a truck payment? Is it a tractor payment? I mean, there 

are so many considerations that families are now making that they 

did not have to make a number of years ago. 

A family of 3 in Kossuth County, Iowa, reached out to my office to share that they are currently paying nearly $8,000 annually for 

2 policies. One with a nearly $6,000 deductible, and the other with 

a $2,500 deductible per person. And, based on initial rate requests, 

they received notice that one plan is expected to go up 37 percent 

and the other plan 46 percent, putting them over $10,000 in premiums for next year. And, one family member already took a second part time job off of the farm that barely covers the $8,000 premium expense now. And, the family has had very few medical costs 

so far this year and, rightly, asked me why, as healthy participants, they keep facing these increases. 

You also mentioned some pretty shocking statistics. We know 

that Aetna found that 5 percent of spenders drive 60 percent of 

costs. 

Can you explain a little more in detail what certain Federal policies are driving this? 

Mr. GERHART. Sure. Carriers have to have one individual risk 

pool for the individual market. And, again, if you have a catastrophic claim or a series of them, it drives the whole pool. And so, 

in Iowa, at least, we have had significant claims of one family driving upwards of 10 percent in one individual pool. 

So, we had a functioning ‘‘high-risk pool’’, and what has happened is the industry used to true that ‘‘high-risk pool’’ up to the 

tune of about $20 million annually. Now, that chronic spend is put 

onto the backs of insurance carriers. So, that pool is driving a lot 

of the rate. And, I heard it in my public hearing on these issues, 

Senator, where folks were really upset. 

To give you an idea, my family of 5—soon to be 6—if I wanted 

to buy a plan in Des Moines, Iowa, I think the cheapest plan I 
31 

would find with deductibles is probably about $26,000 a year. That 

is the cheapest Silver plan. So, it is a cost issue. People have to 

make significant kitchen table decisions. 

Senator ERNST. Absolutely. And, we do hear it all of the time as 

I am out traveling across the State. So, thank you for that. 

As I mentioned, Iowa families are paying a lot for these premiums. And, they still have the high deductibles and other out of 

pocket costs, but one thing I hear commonly from folks that reach 

out to my office and reach out to me is, they did not realize what 

their deductible meant when they bought the plan. And, others ask 

why they are paying all of this money in premiums when they likely will never reach the deductible. 

And, I understand that lower premiums on the front end generally will mean higher out of pocket expenses and costs when accessing services, but can we help consumers look beyond the price 

and focus on the benefits and the network associated with the 

plans in this high premium environment? Is there a way we can 

do that? 

Mr. GERHART. It is difficult, to be honest. And, we have done a 

lot of consumer education around the deductible issue, because, I 

would submit to you, $13,000, for the average Iowa family, is really 

not having insurance. They do not have $13,000 in their checking 

account to write that check if they actually use it. It is a really difficult issue. We tell folks to shop around. In some counties, there 

is only one option, so there is really not a lot of choice, to be honest 

with you. The plans that are out there are more narrow in network. Those might be cheaper. We have some new joint ventures 

that are kind of like an Accountable Care Organization (ACO). 

So, putting some of the risk in the provider community, I think, 

makes some sense so that the doctors have some skin in the game 

to keep the patient well. But, again, we have to look at prescription 

drugs, costs, and transparency. Insurance was fixed through 

Obamacare, and now a carrier has to pay out 80 percent or more— 

depending on what group they are in—but we did not look at the 

actual cost. I think, until we look at the entire system of health 

care, we are going to be having this dialogue for a long time. 

Senator ERNST. Yes. And, I know I have shared this story with 

you too, about a young beginning farmer that really—his plan was 

canceled—a $300 plan, which was perfectly acceptable to him. It 

was canceled. It did not meet the requirements of the Affordable 

Care Act. It was replaced with a plan. The cheapest he could find 

was $700—so a $400 difference every month—which he was very 

angry about, because that was his truck payment there. And, his 

deductible was $10,000. And, he said, ‘‘I do not have $10,000. If 

something should happen, I do not have it.’’ 

So, it is hurting our families. It is hurting those that are just 

starting out in the workforce, especially if they are self-employed. 

And, it targets many of our farmers and ranchers across the State. 

So, it has been very difficult for us. We could go on and on. 

I know you mentioned a solution for the ‘‘high-risk pool.’’ You 

mentioned the particular family that has had about $12 million of 

costs, which is a significant concern. Can you explain a little bit 

more about what that risk pool—your solution to that risk pool 

would be? 
32 

Mr. GERHART. Yes. My idea would be—like Commissioner Kreidler, giving the carriers predictability of pricing is critical. And, if 

a carrier with no lifetime limits—no annual limits—you get a catastrophic claim like that, Senator, your whole balance sheet could be 

disrupted, certainly, if you are a small regional carrier. So, our theory is, if those folks went into some other pool—whether State 

backed or Federal backed—where their coverage would still continue in some fashion—they still pay the premiums—if you told the 

carriers—you could almost pick a number. Say you have to pay the 

first million—it does not almost matter what the number is, but 

you are on the hook for $500,000 or $1 million. After that, it goes 

to this other pool that is more of a societal spend. I think that 

makes a lot of sense, because, in smaller States, like Iowa, the risk 

pool is just not that big. So, you get a catastrophic claim like that, 

in a pool of 21,000, and it is going to really hurt everybody in that 

pool. In our written testimony, we talk a little bit more about how 

that would work. I would be happy to explain that further if there 

is more time. 

Senator ERNST. OK. Wonderful. Thank you very much. 

Chairman JOHNSON. Thank you, Senator Ernst. Let me give you 

the opportunity. 

I am not quite sure whether every State’s ‘‘high-risk pool’’ is 

funded the same way. I believe Wisconsin’s was just basically a 

surcharge on everybody’s insurance, correct? 

Mr. WIESKE. It was a surcharge. It was paid by the insurers, and 

then the providers—medical providers—agreed to a discount, which 

was a portion of the contribution and then premium—— 

Chairman JOHNSON. So, rather than have the adverse effects, as 

Commissioner Gerhart is talking about, you pool everybody. Everybody that are basically allowed to operate insurance in the State 

are paying premiums into that. And, the system worked great. I 

mean, it, literally, worked great. 

When I was running my business, we would go to renewal. And, 

there would be somebody, maybe, with a cancer or something like 

that. They were never dropped from coverage, but they were not 

offered coverage. They were called ‘‘lasered out.’’ But, because we 

had the ‘‘high-risk pool’’, we would immediately go there, because, 

if they were denied coverage—immediately qualified. We purchased—and there was a menu of different types of coverages—different deductibles and different out of pockets. We could almost always come up with one that is, basically, identical to our own 

group plan—pretty comparable prices. 

It is a system that worked well. It was complete risk pool sharing—and nobody had to raise their rates astronomically to protect 

themselves. So, it actually worked. 

I do want to talk about it, because it is true. And, when you are 

facing a total cost—literally, I have talked about somebody—$1,400 

per month. You are getting up into the $15,000 to $16,000 per year, 

plus you have your deductibles of $6,000 to $7,000. You are, literally, talking about having to pay $20,000 or more before you get 

any insurance. And so, what I am seeing in the State—people are 

telling me that they are just dropping coverage. People that always 

had health care coverage—always were responsible to cover—they 

just simply cannot afford it and they are willing to take the risk, 
33 

because they are going, ‘‘What is the risk, other than a catastrophic 

instance?’’ 

I would like all of you to talk about that phenomenon in your 

own State. We will start with you, Lieutenant Governor. 

Ms. TAYLOR. So, in Ohio, the ‘‘high-risk pool’’ that existed just 

immediately before Obamacare was fully implemented was actually 

subsidized by the Federal Government. It was set up and essentially run by the Federal Government. And, it was subsidized by 

the Federal Government. So, it is a little different, it sounds like 

to me, than, maybe, what was explained in Wisconsin. 

Chairman JOHNSON. How did you guys get that done? 

Ms. TAYLOR. That was before my time (BMT). And so, it is different. However, we did regulate the insurance side of it, because 

it was, basically, underwritten by an insurance company in northeast Ohio. 

I will tell you, though, it was a unique arrangement, but we also 

had disputes with HHS. In particular, there were two disputes during the time since I have been in office. One was related to premium levels our actuaries looked at—the cost of the ‘‘high-risk 

pool’’ and the premium level necessary in order to sustain the 

‘‘high-risk pool.’’ And, HHS refused to accept what we believed was 

actuarially justified. Of course, we then believe that puts the ‘‘highrisk pool’’ at risk. And then, obviously, the consumer, ultimately, 

is harmed. 

I will tell you that the second disagreement that we had with regard to the ‘‘high-risk pool’’ was whether or not certain individuals 

would be eligible for coverage under the ‘‘high-risk pool.’’ Ultimately, we disagreed. The insurance company ended up having to 

file a lawsuit against both us, the Department of Insurance, and 

HHS in order to make a determination about which direction they 

were supposed to go. 

Chairman JOHNSON. So, there are always strings attached to 

Federal funding? 

Ms. TAYLOR. Yes. 

Chairman JOHNSON. But, again, I wanted to speak to the phenomena of individuals—people on the individual market with such 

high premiums and such high deductibles that they are just not 

taking insurance. 

I want to know how big of a problem is that in Ohio, Wisconsin, 

Iowa, and then Washington. 

Ms. TAYLOR. I can tell you, specifically, I talked to an individual—it has been about a year and a half ago—small business 

owner in central Ohio. And, her comment to me was, ‘‘The premiums are what they are.’’ She said, ‘‘But, if I get sick, it is going 

to cost me $12,000 out of pocket, in addition to what I have already 

paid in premiums in order to receive coverage. I do not have 

$12,000. I cannot afford to get sick.’’ 

Chairman JOHNSON. By the way, we are also seeing the same 

thing with people subsidized by Obamacare, because of the high 

deductibles—still do not access care, because they cannot afford it. 

I think that point has been made. Deputy Commissioner Wieske. 

Mr. WIESKE. First, I would note that the uninsured rate had— 

the methodology that the U.S. Census Bureau used has changed. 

So, we may be talking about apples to oranges, as far as the num-
34 

bers go. I think that is a concern of mine, when we look at those 

numbers, because Wisconsin, traditionally, has had a very low uninsured rate. We landed this time at sixth—and that is where we 

typically landed: sixth or higher—from an uninsured rate perspective. 

Chairman JOHNSON. Just really quickly, I have information that, 

in 2010, about 94 percent had had insurance. 

Mr. WIESKE. Yes. 

Chairman JOHNSON. Eighty-nine percent full time and 5 percent 

part time. In 2004, 94 percent had insurance. 

Mr. WIESKE. Yes. 

Chairman JOHNSON. Eighty-nine percent—it has not changed. 

Mr. WIESKE. It has been very consistent in Wisconsin, and we 

are fortunate for that, because of our competitive market, I think, 

which is becoming less competitive. 

The individual market has grown because of Obamacare, but I 

think the scary thing is, the large group market and the small 

group market have shrunk. We expect the large group market to 

shrink, because they are moving into unregulated—at least by the 

State’s ERISA plans—which is their prerogative—and the small 

group market has shrunk by 30,000 folks. 

So, if you factor in our changes in Medicaid and the loss of a 

‘‘high-risk pool’’, that is, in fact, probably, not any gain in the individual market, as far as the enrollment goes. It is actually a drop. 

Chairman JOHNSON. When you talk ERISA plans, are you talking about employer’s self funding—— 

Mr. WIESKE. Self funding, yes. 

Chairman JOHNSON [continuing]. And, starting their own—— 

Mr. WIESKE. Correct. 

Chairman JOHNSON [continuing]. Within their operations—— 

Mr. WIESKE. Correct. 

Chairman JOHNSON [continuing]. Which we are doing—so we 

have some real innovators in Wisconsin doing that. 

Mr. WIESKE. Yes. So, there were about 200,000. We are OK with 

that, but there are about 200,000 folks, who are in fully insured 

plans, who moved from that to self funded. And, the question is, 

why were they in fully insured before and why did they move into 

self funded? And, Obamacare is the reason they moved. 

So, there may be a reason for that. We are supportive of employers providing coverage. So, I do not want to imply that, by any 

means necessary, but I think it is a concern when you see that sort 

of sea change shift, and it is caused by a Federal law change. And, 

I think that is where we are concerned. 

And, I think, as far as folks going without coverage, we are seeing this pretty consistently in Wisconsin. We are hearing about it— 

that people just cannot afford coverage. We are hearing about it 

from our legislators. We are hearing about it from consumers who 

call our consumer lines. We do not have any good numbers on that, 

but we are hearing this as a phenomenon. And, based on what we 

see, we really have not seen the individual market grow as much 

as you would expect, given the subsidies—80 percent in subsidizes—etc., that would indicate that there has been real movement in getting private coverage. 
35 

Chairman JOHNSON. Because having insurance is not the same 

thing as having access? 

Mr. WIESKE. Correct. 

Chairman JOHNSON. Bottom line. Senator Carper. 

Senator CARPER [presiding]. I think the vote has started. And, 

we are going to come and go here for a while and try to conclude 

around noon or so. 

Again, thank you for joining us. 

I have a question for the record (QFR) that I am going to submit 

for you, Governor Taylor, and if you could respond to that, that 

would be great. 

I am going to ask Commissioner Kreidler to just think out loud. 

We have heard a fair amount about risk pools and other steps that 

States have taken or would like to take. Give us a short list of 

things that you would recommend that, when the elections are over 

or in a new year—new Congress and new President—what are 

some things you would recommend that we do on this end? Meanwhile, what are some things that the States should be doing—could 

be doing and should be doing on your end? 

Mr. KREIDLER. Senator Carper, I appreciate this question, because I think what I have noticed—even in the discussion that we 

have been holding this morning—is that there is more of a focus 

right now on what we can wind up doing to make the system work 

better. And, one of them, certainly, is the concept here of having 

some form of a reinsurance or risk pool that would help to mitigate 

the risk and exposure that insurance companies would have, so 

they do not wind up with the particularly very sick people or many 

of their people are much sicker—that there is more of an adjustment here between the insurers, so they can predict their exposure 

and have the benefits of a much larger risk pool—rather than just 

the people that have bought their particular policy. 

I think that is a step in the right direction. That is starting to 

look at what we can do better than what we have right now. 

Senator CARPER. Let me look at our other panelists. Would you 

just nod your head yes or no if you think that makes any sense. 

Thank you. Three heads nodded yes. One vigorously. 

Mr. KREIDLER. Senator, you also made mention about Massachusetts. I think one of the areas that would help a lot—and it really 

goes to the questions that have been raised about affordability that 

we have heard and, I think, where everybody is very sensitive— 

and, particularly, those of us who are regulators, because we are 

on the front lines. When those people have problems, they are calling us and registering their sentiment on the issue. 

And, that is something that Massachusetts has, which is the 

ability to move into what is referred to as ‘‘active purchasing’’ and 

‘‘standardized plans’’—‘‘value plans,’’ as they are sometimes called. 

Senator CARPER. What does that mean? I think I know, but what 

does that mean? 

Mr. KREIDLER. It is interesting. We were just at our national 

meeting, and we had a professor from Harvard, who is on the exchange board in Massachusetts. And, it really is just trying to 

make sure that those medical services that are really high value— 

meaning that you do not want people to delay, whether it is hypertension or diabetes, whatever it might be—you want to make sure 
36 

they are getting those services. Bring down the out of pocket expenses, the copays, and the deductibles. Make it easier to get those 

particular services, because they have such a profound impact on 

the level of health of that individual. 

I think the States are in a unique position to be able to experiment along these lines. Massachusetts—California is moving in 

that direction. I am hoping that maybe I can take that issue to my 

State legislature this January so that we have that ability to do it. 

We did it—both California and Massachusetts have their own State 

exchanges. We do too. I would like to have them have the kind of 

power, so we can get in there and really explore what we can do 

in improving the value of those plans by making sure those really 

important services are not impeded due to the out of pocket costs. 

Senator CARPER. All right. Give me one more good idea for us— 

for the Federal Government, please. 

Mr. KREIDLER. I would have to tell you, from a Federal perspective, I would obviously strongly encourage—because of the impact 

it had as the principal medical driver on the rates that I am looking at, right now, in the State of Washington—and that is pharmaceutical. The more that can be done to address that very tough, 

ticklish issue—and I understand that profoundly. At the same 

time, we are really out of line with other countries. We really need 

to bring down those costs. 

Stabilizing the market is very dependent on bending that cost 

curve down, so it does not rise as fast as it historically has. If we 

do not do that—getting everybody insured—the Affordable Care 

Act—it is not going to matter. We will be back to what we had before the Affordable Care Act—a whole system that is failing. We 

need to bring down the cost of health care. 

Senator CARPER. All right. Thank you. 

I want to go back to something that my friend John McCain said 

during his visit to our hearing today. And, Senator McCain mentioned that we passed the Affordable Care Act on a party line vote. 

And, I think what he did not say, though, is that we had the longest markup in history on the Finance Committee, prior to that. We 

voted on literally dozens—I think, scores of amendments—Republican and Democrat. He did not mention that Senators Max Baucus 

and Chuck Grassley—two very close friends, as it turns out—spent 

over a half year together with four of their colleagues—two Democrats and two Republicans—to try to find a bipartisan compromise. 

And, three of those people—Republicans—had an inordinate 

amount of pressure applied to them not to find a compromise. And, 

they, ultimately, felt compelled not to help find a compromise. 

I was there. And, there are three very fine Republicans—and 

three really good Democrats as well—and there is a lot of pressure 

on my Republican colleagues just not to find the middle. 

But, there is a community called the Health, Education, Labor 

and Pension Committee (HELP). They spent a full month deliberating the law on a bipartisan basis. The House held 79 bipartisan 

hearings and markups on the health reform bill over the period of 

an entire year. The Senate held dozens of public meetings and 

hearings in both the Finance and the HELP Committee—and accepted hundreds of Republican amendments. The Health, Education Labor, and Pension Committee held 14 bipartisan 
37 

roundtables, 13 bipartisan hearings, and 20 bipartisan walkthroughs on health care reform. 

The HELP Committee considered nearly 300 amendments and 

accepted more than 160 amendments—many of them offered by our 

Republican colleagues. The Finance Committee held, meanwhile, 

17 roundtables, summits, and hearings on health care reform. Our 

Committee also held 13 member briefings and walk-throughs as 

well as 38 meetings and negotiations, for a total of 53 meetings on 

health reform. And, our Committee—the Finance Committee also 

held a 7-day markup of the bill—I think that is the longest Finance 

Committee markup in 22 years—resulting in a bipartisan 14 to 9 

vote to approve the bill. And, finally, the Finance Committee markup resulted in 41 amendments to revise the bill, including 18 unanimous consent (UC)—or without objection. 

And, as to the reliability of the insurance plans, my friend, Senator McCain, did not mention that consumers regularly lost their 

insurance rights when they did get sick and when they needed it 

the most. And, in those days, premiums did go up—and, in some 

cases, by as much as 10 percent or 20 percent. I just want to put 

those things on the record. 

I want to go back to the issue of competition for our witnesses, 

if I could. There was one of my early mentors when I was State 

Treasurer. He was a very successful businessman—older man. In 

Delaware, he was also the Chairman of the State Pension Plan. His 

name was Ernie Dannemann—and he ran a very successful fiber 

or fabrics business in our State—in fact, in several States. He used 

to have the saying—it is not original, but he used to say, ‘‘Competition: first it makes you sick, then it makes you better.’’ And, I 

think what we need here is competition—not just on the insurer 

side, but on the provider side. And, we have heard some ideas as 

to how to do that. 

And, I think the second thing that we need is to make sure we 

have a purchasing pool that insurance companies can actually afford to insure and to make sure it includes a mix of people— 

healthy and unhealthy people. 

We talked a bit about this. You all offered different ideas or examples, but just let us go down the row, if you could. Governor 

Taylor, just on the competition—maybe, one particularly good idea 

that you think would enhance competition—either for the insurers 

or for the providers, please. 

Be very brief, if you could. 

Ms. TAYLOR. From the insurers’ perspective, I would say that it 

is less regulation—open market and consumer choice—and let insurers write the type of coverage that individual consumers want 

to purchase. 

Senator CARPER. OK. Thank you. 

Mr. WIESKE. It is the same thing in Wisconsin. We are seeing 

relatively homogenous plan designs because of Federal rules. And, 

I think that is a bit of a problem. Similar structures—similar 

provider network issues—that they are doing very narrow networks—and they are doing that to deal with the risk pool. So, I 

think—and then, they are constantly changing their service areas 

to reflect that. So, I think finding a way to get better competition 

and less regulation, I think, would free up and bring more carriers 
38 

into the market. That is what we have seen in every other line in 

Wisconsin. 

Senator CARPER. All right. Thank you. Mr. Gerhart. 

Mr. GERHART. I will give you two thoughts: One, let the States 

have more flexibility when we are looking at 1332 waivers and 

things of that nature when we work with CMS. Another is the Accountable Care Organizations and the alignment of the providers— 

and having skin in the game to keep the patient well and healthy. 

I think that is something we need to focus on. 

Senator CARPER. In my State we are seeing the formation of a 

lot of Accountable Care Organizations. And, in your States, are 

they being formed, as well? 

Mr. GERHART. We have quite a few in Iowa, yes. 

Mr. WIESKE. We are seeing a different model in Wisconsin, but 

we are seeing increasing partnership with the medical providers. 

Senator CARPER. All right. Thank you. 

Ms. TAYLOR. Some. 

Senator CARPER. Some. OK. Thank you. 

All right. Commissioner Kreidler. 

Mr. KREIDLER. I think what has been talked about here is allowing insurance companies to be able to innovate and offer changes 

without being unduly impeded. At the same time, you need to have 

the standardization so they maintain respective standards. You do 

not want an insurance company gaming the system so they get the 

healthy people at the expense of the less well. That is very harmful 

to the market and, certainly, to the individual group market that 

we have right now. So, it is really starting to have some standardization here—on the standards—but at the same time, you have to 

allow them to innovate. 

One of them is going to these narrow networks, which we have 

an obligation to make sure there is an adequate network there, to 

provide the services and the promises that are made with that particular policy. But, allowing them to go there—and go to the highly 

managed plans that we are seeing as a trend right now in the marketplace. It is an innovation that can help hold down costs, but it 

needs to make sure they do not game the system inappropriately 

at the expense of the whole system. 

Senator CARPER. All right. I may have said this earlier in the 

hearing, but I want to just say it again. We compete with a lot of 

different nations on earth. There are competitors. One of our 

strongest allies, but also a very strong economic competitor, is 

Japan. And, for years, I remember learning this when I was—I 

think it was my second year on the Finance Committee—2009 or 

2010—and one thing we learned in the hearing was, in competing 

with the Japanese, they were spending 8 percent of gross domestic 

product (GDP) for health care costs—8 percent. We were spending 

18 percent. The Japanese were getting better results. People lived 

longer and they had lower rates of infant mortality than we did. 

So, they are spending less money, but getting better results. 

In addition, at that point in time, we had 40 million people going 

to bed at night with no health care coverage—nothing. If you are 

lucky, you could go to a hospital—maybe, emergency room—and try 

to get something, but, for many of them, there was nothing. 
39 

And, we have had some heart wrenching stories shared with us 

about individuals who are having a hard time affording the premiums and making sure they can have coverage for themselves and 

their families. There were 40 million people—not just ones or 

twos—40 million people that were in a situation like that. And, we 

cannot forget them. We cannot forget them. I am not going to, and 

I do not think you want us to do that. 

I am not smart enough. My colleagues and I, probably, here— 

even if we all tried to figure this out together—are not smart 

enough to figure out how to take a very good idea and make it an 

even better—not just idea, but program—and one that entails the 

partnership with—not just the Federal Government, not just the 

States, and not just the Governors, Lieutenant Governors, Insurance Commissioners, the providers, and the insurers. This is what 

we call an opportunity for an ‘‘all hands on deck’’ moment. That is 

what we used to say in the Navy. 

And, that moment is going to come, I think, sometime in January. And, when the sound for General Quarters goes out on the 

Ship of State, my hope is that a lot of folks, including people in this 

room—people that I serve with and people who will be new in the 

Senate—new in, maybe, the White House—that they will answer 

that call as well. And, we will do what we do best as a country 

when we prevail—and that is to work together. We have done it. 

We need to do it again. We did it to clean up Medicare Advantage. 

We did it to clean up the Medicare Prescription Drug Program, 

Part D. We need to do it in this case as well. 

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

Chairman JOHNSON [presiding]. Thank you, Senator Carper. It 

looks like you went over your time. 

Senator CARPER. Sorry. 

Chairman JOHNSON. I appreciate you holding down the fort here. 

Kind of along similar lines of people taking a look at these enormous premium increases—their out of pocket deductibles and just 

dropping coverage—I also want to talk about people gaming the 

system, because we have certainly heard reports of this where, because, under law, you can sign up for—you can go through the 

open enrollment period and sign up for the health care, never pay 

a premium, have coverage for 3 months, which the Federal Government, if they are paying the premiums for you—providing the subsidies—and then quit. Never pay a premium, have insurance for, 

basically, 3 months out of 12 months. Is that something you are 

seeing in your States? I will start with you, again, please give kind 

of quick answers. I have a number of questions. 

Ms. TAYLOR. I do not have a specific example of that, but it is 

certainly a concern. And, I can tell you, in speaking with providers 

in a hospital organization yesterday—one of which was a rural hospital who had recently filed bankruptcy—those kinds of issues are 

significant—especially in our rural communities, where they have 

less ability to absorb those types of losses. 

Chairman JOHNSON. Commissioner Wieske, do you see that in 

Wisconsin? 

Mr. WIESKE. We do. We have heard from the insurers consistently, yes. 

Chairman JOHNSON. Is that a growing problem? 
40 

Mr. WIESKE. I think it is. Yes. 

Chairman JOHNSON. Commissioner Gerhart. 

Mr. GERHART. We have heard that and also with the special enrollment period (SEP) as well—lack of oversight on the special enrollment period. The claim I discussed earlier was a special enrollment. So, we are seeing the morbidity of the special enrollment 

crowd—about 100 percent to 200 percent more, on average. 

Chairman JOHNSON. Again, people are smart. If they see a system that can be gamed—the more they see it, the more they will 

do it, correct? Congressman Kreidler. 

Mr. KREIDLER. I am not seeing it in the State of Washington— 

the kind of people who will come in for a few months and then get 

out. But, special enrollment has been an issue. And, purely from 

the standpoint of being a regulator, you look at it and you say that 

if you want to stabilize your market, you cannot allow people to 

have multiple opportunities to go into the market. And, that is 

something that, I think, as an association of—across the country, 

we have spoken out and said that we do not like the idea of having 

the extent of special enrollments that we see because it is harmful 

to the quality of the overall market. 

Chairman JOHNSON. You mentioned the term ‘‘stabilized markets.’’ One of the signs of a market that is stabilizing would be if 

the price increases were actually declining over the years. And, certainly, what happened in Wisconsin is an enormous price increase 

that first year at the individual market. But, nationally—and I am 

going to quote an individual. Charles Gaba has done a study. And, 

you said that, between 2015 and 2016, on the individual market, 

there were rate increases somewhere between 12 percent to 13 percent. Between 2016 and 2017, they are looking at somewhere between 25 percent and 26 percent. That is going in the wrong direction. That is not a sign of a stabilizing market, correct? 

Does Anybody want to talk about that or dispute those figures? 

Again, part of the problem we have discussing this is that it is 

so hard to get good, solid metrics, because things are all over the 

map. 

Commissioner Gerhart, it looked like you wanted to speak. 

Mr. GERHART. Well, in 2013, during my confirmation hearing, I 

thought that, by this point, we would have a stable market. And, 

it is not stabilized. We are looking at about 100-percent rate increases and our individual purchasing insurance has actually gone 

down. We had 189,500 folks that purchased individual coverage 

pre-ACA and now it is about 184,500. So, we have actually seen 

fewer people buying their own coverage. Even though our uninsured rate has gone down, because of the expansion of Medicaid. 

Chairman JOHNSON. Again, the fewer people who participate in 

these ‘‘high-risk pools’’—they are going to self-select and they are 

going to be the sicker—and, again, it just makes it a less stable 

system. 

Commissioner Wieske, did you—— 

Mr. WIESKE. That is correct. And, this is typical, when you have 

seen certain kinds of reforms, that when you hit this year—the 

third year of implementation—and you are moving into the fourth 

year—if you look back at College Health IPAs (CHIPAs) that were 

implemented in a number of States—you look back at a number of 
41 

other reforms that went in States—it is, typically, this third to 

fourth year where you start to see the spike and you start to see 

what is called the ‘‘death spiral’’ in some of these markets—where 

the rates are increasing and your risk pool is getting worse and 

worse. 

Chairman JOHNSON. One thing about Obamacare—it is really affecting the individual market—less so on the group market. I do 

want you to speak a little bit about that. From my standpoint, fortunately, the group market has been able to operate and has not 

seen—although, as Senator Portman talked about, you are going 

to—and you probably already have seen the cost shifting of insurers from the individual market, because they cannot recover and 

shift that over to the group markets. 

But, can you just sort of speak to the dynamic curve there? And, 

Deputy Commissioner Wieske, you talked about people moving 

plans out of the group market into ERISA plans—completely selfinsuring and completely leaving the market. So, I would like all of 

you to kind of just talk about that dynamic between the individual 

market and the group markets, and what is expected in 2017 and 

beyond. 

We will start with you, Lieutenant Governor. 

Ms. TAYLOR. So, I do not have numbers to speak, specifically, as 

far as enrollment and the exact shift of individuals from the individual market to—or group to individual market or vice versa. I do 

think that it is human nature to move to the path of least resistance, which in many cases is: ‘‘What is going to cost me the least 

amount of money?’’ 

And, we have not seen quite the trend that you are commenting 

on, with regard to employers going to self-insured plans. However, 

I do expect that to change. I do think that we will see more of that 

going into the future—especially, as where—even if we stated that 

a 12-percent or a 13-percent premium increase—which is significant—our largest increase was in the first year. We had a 51-percent, on average, increase in the first year. Even if we thought that 

we could get to a point where we are stabilizing premiums, we are 

still not stabilizing the market with the carriers where you have 

19 counties with one carrier. You are still not stabilizing your market. 

Again, I do not feel like we have the stability in the market— 

and your point is, are you cost shifting? I guess, for all intents and 

purposes, that is what a pool does. A pool does cost shift from one 

individual to another—for all intents and purposes—for insurance 

purposes. I do not think that we could give you any numbers 

though to speak, specifically, to our—how is the individual market 

shifting to the group or vice versa. 

Chairman JOHNSON. It was pretty obvious, politically, that a 

number of the more harmful provisions of Obamacare were implemented in delayed fashion. 

Are there additional provisions about ready to kick in that will 

affect that group market? 

Mr. WIESKE. I think, for Wisconsin, the end of the transition policies—so the president’s promise that if you have a plan you can 

keep it—and then he sort of at the end—just before 2014, he allowed some transition policies. So, in Wisconsin, we allowed that. 
42 

So, in the small group market, there are roughly twice as many 

individuals in the small group market in transition policies and in 

grandfathered policies that are not Obamacare compliant than 

there are in Obamacare ‘‘single-risk pools.’’ So, when we get to the 

end of 2017, all of those plans—unless they do another extension— 

will go the way of the dodo. And so, that will create a big sea 

change in the small group market for us. 

Chairman JOHNSON. You will see a cumulative price increase, 

really, what we have seen since 2013, correct? 

Mr. WIESKE. Right. 

Chairman JOHNSON. All in one year. 

Mr. WIESKE. Correct. So, any of those consumers that have not 

participated either in the end—we have about 46,000 folks in the 

individual market who are in that, as well—they will see whatever 

the rates are in their particular counties, at that time. 

Chairman JOHNSON. So, if you take a look at what I said, based 

on the numbers from the Manhattan Institute, where, in the lowest 

demographic group, since the inception of Obamacare, premiums 

have increased at 1.8 times—the highest more than 3 times. That 

is the kind of cumulative effect you are going to see in the small 

group market. All of a sudden—bam, like that—in 2018, just hit 

them like a ton of bricks. 

Mr. WIESKE. Potentially, for those in the transition market, yes, 

they are going to have very significant increases. And, the same 

thing in the individual market—we expect they will see significant 

increases next year. 

Chairman JOHNSON. That is something people really need to understand. Senator Portman. 

Senator PORTMAN. Thank you, Chairman. 

I have a question for the group. And, I do not want to hold you 

guys much longer, because you have been really patient with us. 

I appreciate all of the input that we have gotten—and we have 

some really smart people on the panel here, who are going to hopefully help us unravel this at some point and come up with a better 

system. 

But, some of you may have seen yesterday I joined some of my 

colleagues to introduce what is called ‘‘The State Flexibility to Provide Affordable Health Options Act.’’ And, it basically says that, if 

you are a family in an exchange and you are in a situation—as is 

the case of 25 percent of our counties in Ohio or all of counties in 

Oklahoma, apparently, where you do not have choices, you can go 

outside of the exchange—use the subsidy to go outside of the exchange to buy insurance. And, it is, to me, not the ultimate solution here, because I do think the whole system needs to be reformed. 

But, it is almost surely the stopgap measure that is needed right 

now to give some of these folks I represent—and from these other 

States that are even seeing less competition—a little bit of choice— 

and, again, cost and quality being what comes with more choice. 

What do you think about that? I know there is a potential problem with the tax credit—and we need to work on that, but what 

do you think about that, as a concept, to say, ‘‘OK. Let us let people 

at least be able to go outside the network here to be able to get 

insurance when their choices are so constrained? ’’ 
43 

Ms. TAYLOR. Senator Portman, thank you for the question. 

The more choice we can give consumers, the better. The more 

that we can eliminate overly burdensome regulations to allow the 

free market to work, so that consumers can choose the type of 

plans they want to purchase for the prices they can afford to pay, 

I think, the better off we are. So, I certainly would support an option to give consumers more choice to purchase health insurance. 

Senator PORTMAN. Thank you. 

Mr. WIESKE. I would note that Governor Walker of Wisconsin 

sent a letter asking for this in 2013 as well, broadly—and we are 

very supportive. It does not necessarily make any sense why a consumer should have to send all of their private information and run 

everything through a Federal exchange in order to be able to get 

a subsidy. If it is an insurance subsidy, then that might be something that we can look at—look at broadly—and there is some 

sense—we do not do this for anything else. So, I think, conceptually, it makes a lot of sense. 

Mr. GERHART. And, I have not read it, myself. In concept, it is 

something we would support. It makes a lot of sense, absolutely. 

Senator PORTMAN. Mr. Kreidler. 

Mr. KREIDLER. My principal concern would be one of making sure 

the market is not somehow compromised by allowing people out— 

and what that would do to the integrity of the pool, itself, by doing 

that. The idea is to get as many people covered—whether they are 

in a rural area, which is not going to be well served by—they were 

not well served before the Affordable Care Act. It is an ongoing 

problem and challenge in rural communities. We want to make 

sure they are not made second class citizens and it comes at their 

expense, from the standpoint of having the kind of choices in a free 

market that they have. That is a task for all of us—regulators and, 

certainly, for Congress. 

Senator PORTMAN. Yes. Clearly, that is exactly the objective 

here—to avoid that—that is currently happening. I do not know 

how—Washington is looking at it—exchanges going forward, but, 

certainly, in a place like Ohio, we are just seeing fewer and fewer 

choices. And, therefore, that second-class citizen you were talking 

about—that is, unfortunately, happening within the exchanges. 

I will say there are some counties where there are not necessarily insurance companies willing to write at all. We may not 

have one in Ohio yet, but I am told, from talking to Lieutenant 

Governor Taylor, we may have that situation in our State, too. So, 

it is getting dire and we have to figure out a way. This is one, I 

think, that would provide people the flexibility they need to be able 

to get the care they and their family need. 

Did you want to comment, Lieutenant Governor? 

Ms. TAYLOR. No. 

Senator PORTMAN. Thank you very much, Mr. Chairman, for allowing me to ask another round of questions. 

Again, I appreciate all of the information you guys have provided 

today. And, I hope you will stay in touch. 

Chairman JOHNSON. Senator Peters. 
44 

OPENING STATEMENT OF SENATOR PETERS 

Senator PETERS. Thank you, Mr. Chairman. And, thank you to 

each of the witnesses for being here and providing some good testimonies as to what is happening in your States. And, I certainly appreciate the comments of my colleagues here, particularly, Senator 

Portman. I appreciated your comments talking about how we need 

to be bipartisan. We have to figure out how to deal with some of 

these very complex issues and do it in a collaborative way. So, I 

hope that we are now at the point where we can get away from this 

partisan divide that has prevented us from dealing with the health 

care system in this country—where folks think we just repeal—or 

we are well beyond that debate now. The Affordable Care Act is not 

going to be repealed, but that does not mean it is perfect—although 

there is also a lot to celebrate in it as well. 

So, we should be in a position to celebrate what is good and fix 

what is not so good, and take it in a practical commonsense kind 

of way—roll up our sleeves to do that. And, I think it is also important, as we are having that debate, to remember that the health 

care system was not all that great before the Affordable Care Act 

was passed. The reason it came out is because of significant problems that existed, in terms of access and in terms of costs. 

I think, in my State of Michigan, prior to the Affordable Care Act 

passing, statistics I saw showed it was up something like—costs 

had been growing at 15 times faster than wages. That is not a sustainable course. So, the health care system was not on a sustainable course prior to the Affordable Care Act. 

At the same time, you had large numbers of people who simply 

did not have health insurance. In this great country of ours, we 

had folks who knew that if they got sick, that might mean personal 

bankruptcy for them and ruining their family. In fact, I think that 

the number one cause of bankruptcy—personal bankruptcy—was 

that someone got sick. 

How could we accept the kind of system that existed before the 

Affordable Care Act where now anybody—even if they have a preexisting condition—can get health care? To me, that is where the 

American people are. It is certainly a very popular option—probably, the most popular option as they know, that, if they leave a 

job and they lose health insurance and they have a preexisting condition, they can still get health care coverage. They are not in a 

system where they are out of luck. And, it frees up people from an 

entrepreneur’s perspective too—that you are not locked into a particular insurance plan. You can get insurance and you can go off 

and start your own business and know—even if you have a preexisting condition—your family is still protected. Your children are 

protected now, up to age 26. 

So, there is a lot. And, if I look at Michigan—the numbers—I 

think if you look between Medicaid expansion, the marketplace, 

and the Children’s Health Insurance Program (CHIP), it is somewhere around 700,000 people, after the ACA, that now have health 

insurance. They did not have it before. 

So, I think that is significant. And, we should celebrate the fact 

that we have 700,000 people that now know they have some coverage and protection should they get sick. 
45 

But having said that, nothing is perfect. I have never seen a perfect bill in my years as a State legislator and now in Congress. I 

have never seen a perfect bill. I do not think one exists and never 

will exist, so you have to go back and refine it and try to find those 

changes. 

So, along those lines, certainly, a lot has been said about competition, which I am very troubled by as well—the lack of competition and how that does not bring prices down. 

So, first, for Lieutenant Governor Taylor, you have been particularly outspoken about your concerns about the reduction of competition. And, I think you said, in your testimony, too, that we need 

to make sure that it continues to be robust. 

Under your role as an insurance commissioner, do you have the 

authority to hold public hearings? 

Ms. TAYLOR. Yes, in some cases I do, Senator Peters. 

Senator PETERS. So, were you asked to hold any public hearings 

about the merger between Aetna and Humana? 

Ms. TAYLOR. Yes, we were, Senator Peters. 

Senator PETERS. Did you hold any of those public hearings? 

Ms. TAYLOR. I did not. 

Senator PETERS. So, here we have two major insurance companies—and I think you talked about how some places in Ohio have 

just one insurance company—and now you have two major providers in your State combining, which means less competition. You 

have talked a great deal about how we have to keep robust competition—and it was my understanding that a number of groups in 

Ohio did ask you to hold public hearings, because there were concerns that this merger was going to reduce competition, it was 

going to raise costs, it was going to decrease network adequacy, 

and it was going to hinder success to the individual market in 

Ohio. 

So, why did you choose not to hold those hearings on the merger? 

Ms. TAYLOR. Thank you, Senator Peters. I was referring to my 

health policy expert. The law, in this case, would not have permitted us to hold a public hearing, because they had met the requirements, under the law, to proceed. There is no specific statute 

that would have said that we could have or should have held public 

hearings in this particular situation. 

Senator PETERS. So, are you working to change that law in Ohio? 

Ms. TAYLOR. No, I am not. 

Senator PETERS. Do you think it would be good to have public 

hearings before a major merger of the magnitude that we are seeing in Ohio, which will limit competition? 

Ms. TAYLOR. Obviously, as you well know, each State deals with 

these types of acquisitions and mergers differently—but they also 

impact States in a different way. So, where you may have a merger 

of two very large insurance companies—obviously, being reviewed 

by the Department of Justice (DOJ), where a determination will be 

made on its face in total—whether or not there are competitive 

issues, States deal with this individually. And, individual States 

may have a different impact on overall competition. 

So, where Ohio may be less impacted by that particular merger— 

from a competitive perspective—you might speak to another commissioner of another State where they would express more concern, 
46 

because of the nature of the market that they hold within that 

State, the type of business that they write, and where and how it 

might impact competition. 

Senator PETERS. So, it sounds like it is a good reason why you 

should have public hearings in your State, because every State is 

different. You would certainly want to understand how mergers 

would impact your State. And, certainly, I would think the people 

of Ohio would be interested to have that kind of transparency. 

And, really, when we are talking about consolidation and what 

is happening, I am particularly concerned—and I am sure my colleagues have received all sorts of correspondence on what is happening with drug manufacturers—the recent EpiPen situation, 

where you have a drug that really has not changed much in years, 

as far as its composition, and, yet, we have seen a 400-percent cost 

increase by the drug company. 

Now, we understand a drug company’s need to charge a fair price 

to have research and development (R&D) and to develop products. 

And, we all agree that there has to be some return to them. But, 

when you have a drug that has been out in the marketplace and 

has not changed, and you see a 400-percent increase that is then 

passed on either to the individuals who buy it or to the insurance 

companies that have to cover it—I just had a group of dermatologists in my office earlier this week. And, they are saying that they 

are seeing 400- 500-, and 600-percent increases in basic creams— 

things that may have cost—what they were saying was, $4 or $5 

in the past—are now several hundred dollars for a tube of cream 

for dermatologists. And, these drug companies are increasing these 

prices. 

So, maybe, I will open it to the panelists and maybe Mr. Kreidler 

will mention—what should we be doing? And then, the others— 

what should we be doing to reign in these outrageous price increases from drug companies when there is not even a change in 

their product—it is at the end of their life cycle—and they are just 

profiting? The only one that seems to be rewarded are the Chief 

Executive Officers (CEOs) of these companies. They are getting 

huge bonuses. 

Chairman JOHNSON. We will take that as a question for the 

record. We are over in time. And, you can submit your responses 

to Senator Peters for the record. 

Senator Portman, you had a quick comment. 

Senator CARPER. Mr. Chairman, I would ask for unanimous consent that the panel be given, like, 2 minutes to respond, please. 

Chairman JOHNSON. Two minutes maximum. 

Senator CARPER. Thank you. Thank you a lot. 

Senator PETERS. Two minutes to respond to a major reason why 

health care costs are going up in this country? That is worth 2 minutes. 

Chairman JOHNSON. You could have started your questioning 

with that. But, anyway, 2 minutes. And then, if you have a further 

response, you can—— 

Senator PORTMAN. Mr. Chairman. 

Chairman JOHNSON. Senator Portman. 

Senator PORTMAN. All of us have appointments. I have constituents waiting for me. And, I appreciate the fact that you want to 
47 

have more time than you are allotted. The rest of us have been 

here all morning, listening to this testimony. I also appreciate the 

fact you want to get an answer to your question, but you could 

have asked that question, rather than asking a question that is totally unrelated to this hearing to our Lieutenant Governor—who 

did a terrific job answering you, by the way, by saying you are 

wrong. She did not even have the ability under the law to do what 

you claim she should have done. So, I just want to state that for 

the record as well. I am happy to stay and keep the constituents 

waiting, but I hope we can keep to our time. And, I hope Members 

would show up to these hearings to be able to listen to the testimony and hear from these experts, rather than taking our time 

here at the end. 

Senator PETERS. Well, if I may say, I was here, and you will note 

I was here and heard the testimony from these folks. And, I did 

leave to vote. So, I am sorry that I went to vote, but it is one of 

our requirements, Senator Portman. 

Chairman JOHNSON. I understand that. 

I will give you 2 minutes, but let us go because I also have another hearing to go to. 

So, does anybody want to respond? Start the clock. 

Ms. TAYLOR. So, at the Department of Insurance, we regulate the 

business of insurance. We do not regulate health care, nor do we 

have any authority over the regulation of health care costs. 

Chairman JOHNSON. OK. Does anybody else want to comment on 

that? 

Mr. WIESKE. It is the same in our State. 

Mr. GERHART. It is the same in our State. But, I would agree. 

Prescription drugs—in particular, specialty drugs—are a major 

issue. 

Mr. KREIDLER. I would absolutely agree. And, I think it is important to keep in mind that, before the Affordable Care Act, we were 

seeing actual rate increases that were going up faster than what 

we are seeing right now. So, this is not a new feature, and I think 

it has been well stated by all of the Committee Members, Mr. 

Chairman, that we really need to start to focus on how we can 

make this work better. 

Chairman JOHNSON. I would suggest the Food and Drug Administration (FDA) reform. It used to take about 10 years from discovery to approval of a drug. Now, it takes about 14 years. It used 

to cost about a billion dollars, now it is $2.5 billion. There would 

be a good place to start—again, governmental reform at the FDA. 

Senator Carper, do you have additional questions before I close 

it out? 

Senator CARPER. Just a pretty easy one—maybe, a yes or no. 

We talked a bit today about the value of having States increase 

their coverage under Medicaid and the positive effect you can have, 

in terms of making the marketplaces work better. And, as an Ohio 

State alumni—somebody who cares a lot about Ohio—I follow what 

goes on there—followed my friend Kasich as well from afar. But, 

your testimony—and I applaud him for having made the change in 

Ohio that a lot of other States have made. 

But, your testimony does not acknowledge the important role 

that the Affordable Care Act played in allowing States to expand 
48 

1The statement of Christina Corieri appears in the Appendix on page 99. 

Medicaid. And, I would just ask: Is this something—do you support 

Medicaid expansion in your home State of Ohio? 

Ms. TAYLOR. So, to address the reason—— 

Senator CARPER. You do not have to go into any depth. Is that 

something you support? I know the Governor does. 

Ms. TAYLOR. There is no statement here, because I do not regulate Medicaid. It is a separate agency. And, I support the Governor 

in the decision that he made. 

Senator CARPER. So, you think he has done the right thing? 

Ms. TAYLOR. I support the Governor in the decision he made. 

Senator CARPER. All right. Thank you. 

Chairman JOHNSON. Thank you, Senator Carper. 

Again, I want to thank all of the witnesses. In the spirit of bipartisanship, here would be my suggestion for a little fix: Eliminate 

the individual mandate and return a little freedom to Americans. 

Let the States define what insurance is—let the States regulate. 

That is the vision of our founding fathers—government is supposed 

to govern. That would return choice to the American public. And, 

I am happy to repeal the Cadillac tax. 

So, there would be my little olive branch. You want to do some 

bipartisan reform to fix this, you eliminate the individual mandate, 

you put the States back in charge of defining and regulating insurance products, and you eliminate the Cadillac tax. That would be 

a good place to start. 

Again, thank you all for your thoughtful testimonies and for traveling here. I would ask unanimous consent to enter a statement by 

Christina Corieri1, a senior policy advisor to Arizona Governor 

Doug Ducey, for the record, without objection. 

Senator CARPER. Yes. 

Chairman JOHNSON. With that, the hearing record will remain 

open for 15 days, until September 30, 5 p.m., for the submission 

of statements and questions for the record. 

This hearing is adjourned. 

[Whereupon, at 12:24 p.m., the Committee was adjourned.] 
(49) 

A P P E N D I X 
50 

consumers living in Menominee, Polk, St. Croix and Pierce counties will have the "choice" of 

purchasing health care from only one insurance company, according to Kaiser. 

I am proud to join Senator McCain and others to introduce a bill that would exempt enrollees 

from Obamacare's individual mandate penalty if they live in a county with fewer than two 

insurers offering ACA plans. Americans should not be penalized for failing to purchase a 

product when there is only one or zero companies selling the product where they live. 

The American people have been sold a bill of goods. Obamacare marketplaces have been 

plagued by lower-than-expected enrollments that have driven premiums up even higher and left 

taxpayers on the hook for costly subsidies. I fear these markets are unsustainable. I thank the 

witnesses for their testimony and I look forward our discussion. 
51 

Opening Statement of Senator Thomas R. Carper 

"The State of Health Insurance Markets" 

September 15,2016 

Let me begin by thanking our chairman for calling this hearing today and by welcoming our 

witnesses from around the country. 

A little after noon today, a handful of senators - Democrats and Republicans - will gather in a 

room not far from the Senate floor as we do most Thursdays. For a half-hour or so, we'll take 

part in a Bible study led by Senate Chaplain Barry Black, who also happens to be a retired Navy 

rear admiral. There, we read the Scripture together, we pray together, and we talk about many 

different things. Invariably, during those conversations, Chaplain Black will ask us how our faith 

should guide us in the work we do here and at home. It's a good question. 

Almost every week, he reminds us of one of the two greatest commandments- to love our 

neighbors as ourselves, treating others as we'd want to be treated. He often invokes Matthew 25, 

which some of us will recall focuses on the 'least of these' in our communities. Let me 

paraphrase it today: 'When I was hungry, did you feed me? When I was thirsty did you give me a 

drink to drink? When I was naked, did you clothe me? When I was sick or in prison, did you 

visit me? When I was a stranger in your land, did you take me in?' 

Matthew 25 doesn't say, 'When my only source of health care was a crowded emergency room, 

did you help me?' It doesn't say, 'When I turned 22 and could no longer be covered by my 

parents health care plan, were you there for me?' Or, 'When I could no longer find health care 

coverage because of a pre-existing condition, did you do anything about it?' Or, 'When I 

couldn't afford the medicine that would enable me to hold down a job or be the kind of parent 

my children needed, did you lend a helping hand?' Or, 'When I was denied health insurance 

because I happened to be a woman of child-bearing age or charged an arm and a leg for it, did 

you go to bat for me?' 

Regardless of our faith, I believe that we have a moral responsibility to the 'least of these who 

live among us.' I suspect that most of the people in this room believe that, too. And because 

our nation's budget deficit- while greatly reduced- is still too large, we need to find ways to 

meet that moral responsibility in fiscally sustainable ways. Just about every American president 

since Harry Truman has sought to find ways to do just that. They believed in their hearts that 

when people in this country are sick or in need of health care, they ought to be able to see a 

doctor or nurse or both within a reasonable period oftime. I am certain that most, it not all, of 

our colleagues believe that, too, and I'm sure that most Americans believe it, as well. 

So why has it proved so hard to do? For starters, because it's an incredibly hard thing to do. For 

another, just about anything we might try can be turned into a 30-second commercial and used as 

political weapons against presidents or members of Congress who try to do what we all know in 

our hearts is the right thing to do. I will be the first to acknowledge that the Affordable Care Act 

is not perfect. It clearly can be improved. When this election is over, we need to go to work to do 

just that. 
52 

Having said that, the Affordable Care Act has sought to better ensure access to health care for all 

Americans. How? In part by creating state-based health insurance marketplaces where people 

who may never before have had access to health care now have the opportunity to choose a plan 

that helps them get healthy and stay that way by participating in large purchasing pools not 

unlike the ones that federal employees have participated in for decades. The individual mandate 

that encourages people to purchase these plans is a well-tailored incentive that helps these 

marketplaces grow and thrive so that insurance companies aren't left with a pool of people to 

ensure that are largely older, sicker and more expensive to insure. 

In this room today, there are witnesses and members of Congress who represent- among others -

-the states of Delaware, Washington, Ohio, Iowa and Wisconsin. The number of people without 

insurance in our states, on average, has fallen by almost half since our respective marketplaces 

opened. For the Delawareans, Washingtonians, Ohioans, Iowans and Wisconsinites who may 

now take their child to the doctor, this is not only life changing, but it's also life saving. And 

these life-changing effects aren't being felt only in our states. 

Today, because of the Affordable Care Act, 20 million more Americans have health insurance. 

The uninsured rate is less than nine percent- an all-time low. Americans now have access to free 

preventive services like cancer screenings and yearly checkups. And the vast majority of people 

in the marketplaces buy their health insurance for less than $1 00 per month. And, this progress 

has been realized while extending at the same time the life of the Medicare Trust Fund by 11 

years. 

I find it more than a little ironic that we have been deadlocked in partisan fighting for years over 

a law that is built upon a couple of sound Republican ideas: health insurance marketplaces and 

the individual mandate. To my friends on the other side of the aisle- your willingness to walk 

away from the policies you once championed is dumbfounding, especially when those very same 

policies are enabling us to begin making a positive difference in the quality oflife for so many 

Americans. 

A quick refresher for those who don't remember: Republican Presidential nominee, Governor 

Mitt Romney, revolutionized health care in Massachusetts by creating an insurance marketplace 

and requiring residents to obtain coverage. In fact, these ideas go back even further. In 1993, 

Republican Senator John Chafee introduced legislation that proposed an individual mandate and 

the establishment of insurance purchasing pools. That bill looked a heck of a lot like the 

Affordable Care Act we are discussing in this hearing. In fact, it had 20 Republican cosponsors 

in the Senate, some of whom still serve here today. 

Fast forward to 2009, my first year as a member of the Finance and the first year of a new 

Administration. Our new president called on Democrats and Republicans to try anew to achieve 

what previous presidents talked about doing for more than a half-century. But, instead of coming 

to the table and pursuing a productive discussion about how we could expand access to health 

care for millions of Americans, in the end Senate Republicans chose not to engage. But, the 

president and the rest of us soldiered on and finally passed this historic law that all of us 

acknowledged was imperfect. 
53 

Like any major new federal program, adjustments are going to need to be made as it is 

implemented. Unfortunately, we've had a hard time finding many willing partners in this effort. 

There used to be times when Republicans and Democrats could come together to make bipartisan 

health care reforms. Some of us were here when we did just that. We created Medicare Part D, 

the prescription drug program, and Medicare Advantage. Not long after we had done so, though, 

we worked together to improve them. Together! 

That's not what we've done with respect to the ACA. Time and time again, our Republican 

friends have blocked funding for proper implementation and commonsense improvements. 

Republican governors and state legislators in 19 states have refused to expand Medicaid, leaving 

millions of Americans without coverage and increasing marketplace premiums for millions 

more. It's a sad state of affairs when it seems sometimes that the only healthcare votes we're 

allowed are ones to repeal the Affordable Care Act completely, leaving nothing in its place, and 

leaving Americans with nowhere to turn besides a hospital emergency room. 

In a couple of months, Americans will go to the polls to elect a new president and members of 

Congress. I talk almost every day with Delawareans who await with anticipation for that day to 

arrive. Once it has, though, and a new Congress as well as a new president have taken their 

oaths, we need to go to work to make a good idea even better. We can do that. We need to 

embrace what I call the three 'C's' communicate, compromise and collaborate. We need to 

embrace those words in the Preamble of the Constitution, 'We the people of the United State, in 

order to form a more perfect union ... ' and get to work making the Affordable Care Act 

better. We can do that. I know that we can and, with the right leadership, I believe that we will. 

In doing so, we will have confounded our enemies and amazed our friends. 'Let's roll!' 
54 

Mr. Chairman: 

HSGAC Hearing Statement by Senator McCain 

The State of Health Insurance Markets 

September 15, 2016 

There are times when one takes no pleasure in saying, "I told you so". Or, pride in one's 

prescience. Such is the case with Obamacare. 

Over seven years ago, when the President and Congressional Democrats traversed the country 

touting the benefits of what would become the so-called "Affordable Care Act", my Republican 

colleagues and I were quick to highlight that their proposals, however well-intentioned they 

might have been, would result in making things worse. It doesn't take a policy expert or a Ph.D. 

to recognize that injecting unprecedented levels of government control into what amounts to 

nearly one-fifth of the nation's economy would have devastating consequences. 

Regardless of those warnings and a relentless effort by Democrats to demonize those that 

opposed the law as alarmists and fear-mongers, President Obama continued to promise to the 

American people that "If you like your doctor, you will be able to keep your doctor, period. If 

you like your health care plan, you'll be able to keep your health care plan, period." The 

President doubled down on this promise saying "No one will take it away, no matter what." This 

of course turned out to be a lie. Ever since, Americans have been hit by broken promise after 

broken promise, and met with higher costs, less choices, greater uncertainty, and poorer quality 

of care. 

Let me be clear. A choice between a single insurance plan or being financially penalized by the 

federal government for not buying a plan, is not a true choice. And, it is certainly not the choice 

and competition that the president sold to the citizens of my state. 

Unfortunately for the citizens of my state, our warnings are being realized now-in real time. 

Over the last two years, here's what "keeping your doctor" and "keeping your health care plan" 

has looked like in Arizona. The first Obarnacare casualty carne to fruition when Arizona's 

Obamacare-established CO-OP, Meritus Mutual Health Partners, closed its doors after the HHS 

Inspector General found that it was one of the lowest achieving CO-OPs in the county. As a 

result, 60,000 Arizonans were left scrambling to find a new health care plan. At that point, 11 of 

the original 23 co-ops nationwide closed despite having received $2.4 billion in low-interest 

federal loans-paid by you and me. 

Not long after Meritus closed its doors, UnitedHealth announced that it was leaving the Arizona 

marketplace--after accumulating over $1 billion in losses in two years as a result of nationwide 

exchange participation. This left another 45,000 Arizonans not "keeping their plans". Worse still, 

another 60,000 Arizonans saw their plan terminated as a result of Blue Cross Blue Shield of 

Arizona and HealthNet's announcement they were restricting their Arizona offerings in 2017. 

Why? Because they too accumulated massive financial losses to the tune of millions of dollars as 
55 

a result of Obamacare. Phoenix Health Plans and Aetna also decided to exit Arizona's 

exchanges, leaving another 32,154 and 13,162 behind, respectively. 

Altogether, Arizonans have seen over 210,000 cancellation notices mailed out in less than one 

year's time. Those notices should have been sent to the White House and every Member of 

Congress that voted in support of this failed health care law, and because of that support has left 

hundreds of thousands of Arizonans and millions across the country with fewer choices and 

higher costs when it comes to health care options. 

After Blue Cross Blue Shield of Arizona decided to step in to be sole insurer in Pinal Countypreviously the only county in America without a single health insurance provider offering plans 

in 2017-14 of Arizona's 15 counties will only have a single health insurer to "shop" for 

coverage when open enrollment begins on November !st. That includes Maricopa CountyArizona's most populous county-impacting more than 120,000 people. This is down from the 

eight health insurance options that Maricopa County residents had in 2016. As Christian Corieri, 

Senior Health Care Policy Advisor to Arizona Governor Doug Ducey, stated in testimony 

submitted for today's hearing, "While Blue Cross Blue Shield has recently decided to offer a plan 

there at a 50% premium increase, it is only a matter of time until another county faces the 

prospect of being without an insurer on the exchange." Indeed, with Cigna serving as the only 

insurer in Maricopa County and Obamacare coming apart at the seams, I continue to be 

concerned about uncertainty and instability in the marketplace there. 

With this mind, I guess it should come as no surprise that the President had to assemble the 

CEOs of the major health insurance companies at the White House to convince them that the 

walls surrounding Obamacare are in fact not falling in. 

While many insurers have been forced to exit the marketplace altogether, for the insurers who 

continue to participate in the exchanges, their only option is to raise premium rates 

astronomically high in order to cover their losses. 

Last year, Arizonans saw the key benchmark plan premium increase to more than double the 

national average, and unfortunately there is no end in sight. This year, individuals in 13 of 

Arizona's 15 counties will see premiums increase on average by 51 percent. For some families, 

this could mean hundreds of dollars more per month out of their paychecks. 

As a result, I'm hearing daily from Arizonans throughout the state who are choosing to pay the 

Obamacare penalty because the cost of health insurance has gotten so out of hand. And what 

truly breaks my heart, is that Arizonans are now asking the question, "why enroll in Obamacare 

if you can't afford it or worse still, can't get access to care?'' This is what "health care" means 

for millions of Americans in the world of Obamacare, despite the fact that this is a far cry from 

what President Obama promised before and after signing his signature health care reform bill 

into law. 

The collapse of Obamacare in Arizona and across the country confirms what Republicans have 

warned all along: Government-mandated health care is unsustainable. I'm not sure a bill has 

failed to live up to its name so profoundly as the so-called "Affordable Care Act." What's clear 
56 

is that Obamacare is crumbling, and it is unacceptable to sit on the sidelines and watch it 

continue to happen, because in the meantime, Arizonans and folks across the country are being 

left to pick up the pieces. It is imperative that Obamacare be replaced with commonsense 

solutions that empower patients and doctors- not the government- to take back control of their 

health care. 

I ask that the written testimony of Christina Corieri, Senior Policy Advisor to Arizona Governor 

Doug Ducey, be included in today's record. Thank you, Chairman Johnson for holding this very 

important hearing. 
57 

The Committee on Homeland Security and Governmental Affairs 

Statement of Mary Taylor, 

Ohio Lt. Governor and Department of Insurance Director 

Washington, District of Columbia 

September 15, 2016 

Mr. Chairman and distinguished members of the committee, thank you for the opportunity to 

testify before the Senate Homeland Security and Governmental Affairs Committee. My name is 

Mary Taylor and I am the Lt. Governor of Ohio as well as the Director of the Ohio Department 

of Insurance. Today, I will provide testimony regarding Ohio's experience related to the 

Affordable Care Act (ACA)- specifically in regard to premium changes, market shifts and other 

trends since 2013. 

As the Director of the Ohio Department of Insurance, I am responsible for regulating Ohio's 

insurance market- the 7th largest in the United States. Ohio is home to more than 200 

insurance companies and more than 1,600 do business in the state representing $76 billion in 

annual premium. In fact, because our market is so competitive, the most recent data shows 

Ohio's auto and homeowners insurance premiums are significantly below the national average 

and ranked 12'h and gth lowest respectively1• 

The Ohio Department of Insurance is made up of several divisions designed to help consumers, 

regulate the industry, and- when necessary -take enforcement action. The Department 

1 According to 2013 data- the most recent available from the National Association of Insurance Commissioners. 

1 
58 

leverages these divisions to review all insurance products sold in Ohio, ensure the premium 

rates are actuarially justified, adequate, and non-discriminatory and assist consumers. The 

Department ensures companies are solvent while monitoring their conduct in order to protect 

consumers from practices that do not meet the highest standards. 

Our mission at the Ohio Department of Insurance is to provide consumer protection through 

education and fair but vigilant regulation while promoting a stable and competitive 

environment for insurers. Our staff works every day to ensure consumers are protected and 

that the insurance market in Ohio is strong and vibrant. When it comes to health insurance, 

this mission has become more difficult because of the ACA. 

In 2011, shortly after becoming the Director of the Department of Insurance, I commissioned 

reports to help inform decision making around whether or not Ohio should establish a statebased exchange under provisions in the ACA or if Ohio would be best served by having a 

federally facilitated exchange. One study (conducted by Milliman) looked at the pre-ACA 

market in Ohio and compared that to what a post-ACA market might look like. The second 

study (conducted by KPMG) looked at the work and funding needed to run a state-based 

exchange. 

Both studies offered findings that were sobering for Ohio's health insurance market once the 

ACA was fully implemented. For one, running a state-based exchange would be costly to the 

state and ultimately to consumers without providing any additional flexibility to ensure the 

2 
59 

exchange best met the needs of Ohioans. Second, Ohio's health insurance market would 

undergo significant change leaving consumers with fewer choices and more mandated 

coverage. Finally, because of changes to coverage options in Ohio, premiums were forecast to 

increase by 55- 85 percent. 

Based on these studies, our administration in Ohio decided not to run a state-based exchange 

seeing no benefit to burdening our taxpayers with the additional cost and no ability to impact 

the changes coming to our market that would ultimately drive-up the cost of health insurance. 

Further, the Milliman study provided strong evidence that premiums would go up in Ohio for 

consumers and small businesses. But these issues were just some of the challenges states 

would be facing as provisions of the ACA began to take effect. 

In April2013, I had the opportunity to testify before the U.S. House Energy and Commerce 

Subcommittee on Health. During my testimony, I discussed Ohio's experience with our high 

risk pool and the federal government. At the time, states were mandated by the ACA to have 

high risk pools to help provide coverage to the sickest populations in each state until other 

provisions of the ACA were fully implemented. 

Ohio's high risk pool was administered by a private insurer, funded by the U.S. Department of 

Health and Human Services (HHS) and regulated by the Ohio Department of Insurance. 

Because of the unique nature of the arrangement, disputes arose over appropriate premium 

levels for the high risk pool with HHS refusing to accept the actuarially justified rates that the 

3 
60 

Ohio Department of Insurance deemed necessary for coverage as well as disagreements over 

whether consumers qualified to purchase coverage. The disagreement over coverage eligibility 

led to a lawsuit and served as an example of the challenges state regulators were facing 

because of encroachment by the federal government. 

I share this example because at the time of my testimony in 2013, I predicted states would face 

significant challenges as the ACA was fully implemented. I made the case that based on our 

experiences in Ohio with HHS on disputes over our high risk pool- disputes that would have 

never occurred prior to the ACA becoming law because states had previously always had 

authority in these areas- these types of problems would only increase as the law took effect. 

In the summer of 2013, the Ohio Department of Insurance reviewed health insurance plans to 

be sold on the federal exchange for the first time. Any insurance company selling these 

products in Ohio must file those plans for review and approval with the Department of 

Insurance. Following the Department's review, we concluded that average individual premiums 

for health insurance products sold on the federal exchange for coverage in 2014 would increase 

41 percent from the previous year2• 

The information received widespread attention that year considering the significant change in 

cost coupled with it being the first year the exchanges were open to consumers. However, 

'Comparison based on premium data collected by the National Association of Insurance Commissioners (NAIC) for 

Ohio companies compared to final rates approved by the Ohio Department of Insurance in 2013. 

4 
61 

much of the push-back to the data we released from the federal government and supporters of 

the ACA stemmed from access to subsidies. They argued consumers would rarely pay for these 

large increases because they would have access to large, federally funded tax subsidies to offset 

the cost. 

However, as 1- and many others around the country- pointed out those tax subsidies must be 

funded. The hundreds of billions of dollars in subsidies being spent across the country are 

taxpayer dollars. And some of the funding is pulled directly from the insurance industry to help 

make the system work. The imbalance in the system is further exacerbated by skyrocketing 

premiums. HHS put out a report in August of this year showing the faster premiums increase 

on the federal exchange, the more consumers will qualify for subsidies. The HHS study showed 

that a SO percent increase in premiums for 2017would allow more consumers to access the 

subsidies compared to a 10 percent increase in premiums3• 

Such a model is unsustainable and cannot stand under its own weight. That was the argument I 

made at the time, but without some of the realities we now know those arguments were often 

dismissed as hysteria or obstructionism. But as the ACA continued to be implemented, more of 

those concerns were demonstrated to be well founded. Just look at the current state of co-ops 

around the country. 

'Information based on HHS report: The Effect of Shopping and Premium Tax Credits on the Affordability of 

Marketplace Coverage released on August 24, 2016. 

5 
62 

Under the ACA, the co-op program was created to help foster competition across the country. 

It was deigned to help offer consumers more choices and in so doing, help lower the cost of 

insurance by making the industry adjust to added competition. However, I argued at the time 

that government should not be in the business of creating competition in a free-market 

environment. The foundation upon which a free-market system is built is freedom from 

government interference. 

In Ohio, a co-op under the name Coordinated Health Mutual applied for and eventually 

received a license in 2014. It was unable to offer coverage on the first year of the exchange 

because it didn't receive a license soon enough. Ultimately, that delay probably helped the coop avoid some of the tumult experienced by insurers during the first year of coverage and in 

our estimation helped ensure it could sell coverage for as long as it did. However, like many of 

the co-ops around the country, it fell victim to skyrocketing costs and a lack of revenue earlier 

this year. 

In May, the Department of Insurance took control of Coordinated Health Mutual in order to run 

out the claims by its enrollees and liquidate the entity. Of the 23 original co-ops set-up across 

the country, only seven still remain in operation. The failure of these federally funded entities 

has cost taxpayers billions of dollars and left consumers -like those in Ohio right now- facing 

uncertainty as well as disruptions in coverage and treatment. 

6 
63 

These realities are so frustrating because they have all been preventable. Commissioners 

around the country have been voicing concerns for years over the implementation of the ACA. 

We have regularly communicated to HHS that rules are too vague in places where specificity is 

needed and too prescriptive in places where flexibility is needed. A one-size-fits-all approach to 

health care doesn't work. The simple truth is that what Wisconsin needs is not the same as 

what Ohio needs or Mississippi or California, etc. States need the tools and the autonomy to 

address these important issues on a more local level. 

With the failures of the co-op program and the uncertainty insurers are now facing due to 

languishing federal cost containment programs, the future is even bleaker than ever when it 

comes to the ACA. Risk adjustment, risk corridor and reinsurance programs were all created 

under the ACA to help insurers weather the initial years of ACA implementation. 

Those programs have fallen short of the promises made in 2010 and -along with the mandateheavy coverage now required by the ACA- are having an impact on consumers and state 

insurance markets especially when it comes to the amount of competition. 

Prior to full implementation of the ACA, Ohioans benefited from a large selection of insurance 

carriers, with more than 60 companies selling health insurance products in Ohio. Based on the 

filings the Ohio Department of Insurance just reviewed and approved for the 2017 coverage 

year, Ohio's insurance market is set to go through more significant changes on top of those 

already experienced in the past few years that will negatively impact consumers. 

7 
64 

In 2016, 17 health insurers sold products on Ohio's federal exchange during open enrollment. 

In 2017- assuming all companies approved to sell on the exchange by the Ohio Department of 

Insurance enter into contract with HHS- only 11 companies will offer exchange products. This 

dramatic decrease in participation can be put into better perspective when looking at a countyby-county comparison of Ohio. 

In 2016, every one of Ohio's 88 counties had at least four insurers selling exchange products 

during open enrollment. In 2017, 19 counties will have just one insurer selling exchange 

products and 28 counties will have just two4• This is not the competition and choice the 

country was promised in 2010- to say nothing of the rate increase that Ohio has seen since the 

implementation of the ACA. 

Based on the final rates approved for 2017, the average premiums for individuals buying on 

Ohio's federally run exchange have gone up 91 percent since 20135• A near doubling of the 

premium will undoubtedly harm some Ohio consumers as open enrollment gets underway later 

this fall. Yet, the passage of the ACA came with assurances that costs would go down, 

consumers would have more choice and if you liked your doctor and wanted to keep your 

doctor you could. Unfortunately, that is all becoming more and more difficult for consumers. 

4 Ohio county-by-county data found in attachment to testimony. 5 Premium comparisons for Ohio found in attachment to testimony. 

8 
65 

As the cost of offering health insurance becomes more expensive for insurers and with the 

companies facing losses from selling exchange products which is compounded by a lack of 

adequate cost stabilization mechanisms as originally promised by the federal government, they 

have to find ways to stay competitive. 

Because health insurance under the ACA's more stringent requirements is more expensive, 

provider networks in Ohio and across the country are becoming narrower. The more a health 

plan can narrow a provider network, the more ability that plan has to contain costs and remain 

competitive. The result leaves many Ohioans to shop on Healthcare.gov this fall facing fewer 

options and coverage that may not include their preferred doctor. And in some cases the 

nearest hospital may not be in their insurer's network. Putting aside rising premiums and the 

exploding subsidy costs needed to offset higher premiums, this is an issue that has real and 

significant impacts on consumers. 

At the Ohio Department of Insurance, we have worked to address these issues exacerbated by 

the ACA by ensuring consumers have access to better, more timely information when it comes 

to health insurer networks. Insurers are required to update their information in a more timely 

fashion as well as provide safeguards to protect the consumer from making decisions based on 

outdated network directories. 

These changes- implemented in Ohio before CMS could address the problem- also make it 

easier for consumers to access information as to whether their provider is in network while 

9 
66 

they shop. These efforts, however, cannot change the fact that some Ohioans may purchase a 

plan this fall that does not include their doctor or their hospital. 

I think most of us agree Americans should be able to purchase health insurance without facing 

barriers because of pre-existing conditions. We agree more can be done to improve the system 

to increase accessibility and promote better outcomes for patients. However, the ACA is not 

living up to promises made in regard to what our health care system would look like long-term. 

We need to increase access by reducing costs instead of forcing everyone to buy more 

expensive coverage that in many cases they don't need or don't want. We need to empower 

states to design systems best suited for their populations instead of forcing one-size-fits-all 

mandates that in some areas are simply unworkable. We need to decentralize the power of 

Washington bureaucrats who- quite frankly- do not understand insurance or how to regulate 

it as my colleagues and I and our predecessors have done for decades. 

In Ohio, we have ideas to help improve our health system without destroying the free market 

as the ACA has done. We believe there is a better, more inclusive way to design reforms that 

increase access without driving up costs, but we need the flexibility to do it. It is my hope that 

with different leadership and the help of Congress, states can once again have the power to 

implement positive change. 

10 
67 

Thank you for the opportunity to testify before the committee and I am happy to answer any 

questions you have. 

ATTACHMENT 

Comparison 2017 to 2013 

Weighted Average Annual Premium 

11 
68 

Comparison 2017 to 2013 Weighted Average Annual Premium 

Individual Market 

Weighted Average 

Annual Premium 

2013* $2,650.17 

2017** $5,065.30 

%Change 91% 

Small Group Market 

Weighted Average 

Annual Premium 

2013* $4,041.66 

2017** $7,847.92 

%Change 94% 

*2013 Weighted Average Annual Premium was calculated from issuer reported annual premium and 

number of covered lives in the NAIC Supplemental Health Care Exhibit for 2013, Comprehensive Health 

Coverage. Issuers with zero premium or zero lives were removed from the census. Average weighted 

by number of lives as reported by the issuer. 

**2017 Weighted Average Annual Premium was calculated from the monthly rates in the 2017 Rate 

Data Templates as of 8/23/2016 and weighted by the member months assumed by the issuers listed in 

the URRT. Trend was not incorporated into the calculation. Average weighted by member months 

assumed by the issuer. 
69 

ATTACHMENT 

County Comparison 2017 to 2016 

Insurer Offerings in Ohio 

12 
70 

# of Carriers: 

~ =4 

0 =5 

=6 

=7 

2016 PY Individual Market On-Exchange Availability 

=8 

=9 

II= 10 

11=11 

Product Type: 

H=HMO 

P=PPO 

PS= POS 
71 

2017 PY Individual Market On-Exchange Availability as of 8/16/2016 

#of Carriers: 

111=1 =4 

111=2 =5 

II =3 =6 

Product Type: 

H=HMO 

P= PPO 

PS= POS 
72 

Testimony of 

Deputy Commissioner J.P. Wieske, on behalf of the 

Wisconsin Office ofthe Commissioner oflnsurance 

Before the 

U.S. Senate Committee on Homeland Security and Governmental Affairs 

Regarding: 

The State of Health Insurance Markets 

September 15, 2016 

342 Dirksen Building 
73 

Good morning Chairman Johnson, Ranking Member Carper, and distinguished members of the 

subcommittee. My name is J.P. Wieske and I am the Deputy Insurance Commissioner for the 

Wisconsin Office of the Commissioner of Insurance (OCI). I have been with OCT since October 

of2011. As part of my duties I have been involved with a number of health insurance issues 

including serving on the state's high-risk pool board, working with our state legislature, and 

assisting with the implementation of the Affordable Care Act (ACA). 

Thank you for the opportunity to testifY on the state of the Wisconsin health insurance market. 

Before describing the current state ofthe market, it is important to understand what it looked like 

prior to the passage of the ACA. 

As a regulator, Wisconsin has been traditionally known as a state with tough but consistent rules. 

We were one of the first states with a number of market and consumer protections that eventually 

became models for the National Association of Insurance Commissioners (NAIC) and were 

subsequently included as part of the ACA. These included independent external review, 

standardized applications, coverage for adult dependents, cancer clinical trials, guaranteed 

renewability in the small group market, and a robust review ofthe market conduct of our 

insurers. Our financial review of companies has been led by highly experienced staff. In short, 

we ensured, and continue to ensure, that insurers in the health insurance market deal with 

consumers fairly and maintain the financial means to pay consumer claims. 

Pre-ACA, the Wisconsin market was certainly not the least expensive in the country; however, 

we typically landed in the lowest third of states. While the medical care provided in Wisconsin is 

high quality, it is not inexpensive. The medical costs in our market are relatively higher than 

other states; in fact, a U.S. Government Accountability Office (GAO) report released in the early 

2000s named Wisconsin cities as 8th of their 10 most expensive medical areas in the country. 

Our competitive health insurance market ensured that Wisconsin consumers paid relatively low 

rates despite the relatively high medical costs. 

Wisconsin consumers in both the individual and small group markets had a large number of 

insurers and plans to choose from. They could choose from large national companies or small 
74 

regional insurers, a managed care plan with a narrow network or a plan with limited managed 

care and a broad network, or from a for-profit company or not-for-profit company. In some areas 

of the state consumers could choose to participate in one of our two existing co-ops. 

For consumers that could not qualify for private coverage, Wisconsin had a high-risk pool, the 

Wisconsin Health Insurance Risk-Sharing Plan (HIRSP). HIRSP provided comprehensive 

coverage to consumers with the ability to choose any medical provider practicing in Wisconsin. 

It was funded by premiums from consumers, assessments on insurers, and contributions from 

medical providers. Consumers could choose from a variety of plan options, and for the most 

impoverished consumers, further subsidies were made available. The cost of coverage closely 

mirrored the cost of private coverage in the state. 

In short, pre-ACA, Wisconsin had a well-functioning health insurance market that provided a 

means for consumers with serious medical conditions access to comprehensive, affordable 

coverage, along with subsidies available to offset the cost. 

The ACA made a number of changes to the rules governing health insurance markets across the 

country. These "one-size-fits-all" changes have impacted rates, consumer choice, and the ability 

for a free market to operate. 

ACA Impact on Wisconsin Health Insurance Rates 

With the enactment of the ACA came guaranteed issue, additional coverage mandates, and the 

elimination ofHIRSP, the state's high-risk pool. Wisconsin insurers were quickly faced with an 

uncertain influx ofindividuals with serious health conditions; 20,000 alone from HIRSP. They 

were also faced with vague regulations from the federal Department of Health and Human 

Services (HHS) that changed constantly and were not communicated consistently from HHS. In 

short, insurers wanting to continue to participate in the Wisconsin health insurance market 

ultimately had no choice but to increase rates. The net result was that Wisconsin consumers paid 

more for coverage, including those individuals who previously received coverage through 

HIRSP. 
75 

To offset the increased risk insurers would take on under the ACA, the HHS issued regulations 

creating the risk adjustment, reinsurance, and risk corridor programs, i.e., the "three Rs." Each of 

these programs was to have either state components or to be managed entirely by the states. 

However, in one oftheir first acts of ignoring state concerns, HHS changed course and modified 

the regulations to allow the federal government to take over the "three Rs" from the states. 

Unfortunately for Wisconsin consumers, this change would negatively impact them as insurers 

struggled to plan for and capture their estimated risk and receive their fair share of funding from 

these programs. HHS continues to struggle to manage these programs in a way that fairly 

compensates insurers taking on a significant portion of the risk. 

Rising health care costs and adjusting to the fundamental market changes the ACA imposed both 

continue to drive up the cost of health insurance. These pressures are further exacerbated by 

uncertainty related to the risk pool, federal funding, and federal regulations that constantly 

change without significant notice. Insurers are operating in a turbulent environment and many 

are struggling to remain profitable and offer affordable coverage that meets consumer needs. 

Detailed Impact ofthe ACA on Wisconsin Health Insurance Rates 

In an effort to prepare consumers for the coming market, OCI issued a press release in 2013 to 

highlight the expected increases. The chart used in the release is below: 

Percent Increase From Pre to Post 2014, Average Per Area 

---, ___ , _______ ~--~--··· 

Eau Green La 

Age Milwaukee Claire Bay Madison Appleton Wausau Kenosha Crosse ----f-·-----·-··· 

21 78.ll 68.75 53.73 124.85 54.18 77.44 37.59 88.53 -·---- ------·-- ---·-.-~.--·~-~ --~~-~-·--- -·-··-·-··---·~--

40 40.85 48.35 53.73 73.43 36.75 35.03 15.15 41.58 ·---------·--1--·- ....... f-··· 

63 45.48 58.12 22.54 70.04 32.01 26.07 9.72 37.29 

As you can see, the increases varied from a low of almost I 0 percent for a 63-year-old in 

Kenosha to almost 89 percent for a 21-year-old in La Crosse. For purposes of comparison, we 

used a $2,000 deductible plan pre- and post-A CA. Male and female rates were averaged pre-
76 

ACA. In many cases, the post-ACA plan had a higher deductible but we attempted to match the 

plan design close as possible. When multiple plans were available, the rates were averaged. 

Below are the premium tables used to develop the percentages. 

21 $155.98 $176.79 $162.71 $102.41 $116.95 

40 252.07 257.02 240.85 172.38 193.78 

50 376.72 358.56 364.56 266.39 282.66 

63 563.70 556.99 579.86 408.21 449.88 

Family 716.57 753.46 682.23 466.62 546.25 

21 $ 277.81 $ 298.34 $250.13 $ 311.05 $ 262.96 

40 355.04 381.28 319.67 397.52 336.06 

so 496.16 532.83 446.74 555.53 469.65 

63 820.09 880.69 738.39 918.21 764.96 

Family 1,062.90 1,141.44 957.00 1,190.08 1,001.22 

It may be important to note that the impact on our HIRSP members-our most vulnerable 

citizens-was more pronounced. Many HIRSP members received significant subsidies for their 

coverage through HIRSP, could choose from any medical provider in Wisconsin, and had a 

variety of plan choices. Their coverage was replaced with more expensive coverage, limited plan 

design options, and limited access to their choice of providers. 

Since 2014, the rates have continued to increase annually. The years 2015 and 2016 saw 

relatively moderate average increases of almost 3.8 percent and 8.3 percent, respectively, though 

many consumers received much higher or lower increases depending on their particular plan. 

The on-Exchange increase in 2017 averages roughly 16 percent with a high of37 percent and a 

decrease of more than 10 percent. Wisconsin's increases are likely more moderate than what you 

will see in other states due to the highly competitive nature of our market. It takes 17 insurers to 

comprise an 80 percent share of the individual health insurance market. That said, the challenges 

imposed by the ACA have led to individual market exits which reduce consumer choice and, if 

continued as a trend for future years, threatens the ability of our market to prevent rates from 
77 

reaching levels seen in other states. Our competitive market is a saving grace for consumers as a 

means for holding down what would be even higher increases. Insurers in our state are fighting 

an uphill battle to adhere to ACA regulations and still remain viable enough to offer competitive 

products. 

Consumer Choice and Interfering with a Free Market Model 

So far, for plan year 2017, Wisconsin has had several insurers exit the individual market 

completely, leave the Exchange, or reduce the number of counties they are willing to serve. As a 

result, there are thousands of individuals enrolled in a plan that is offered by an insurer that will 

not be available to them in 2017. The HHS solution is to "auto re-enroll" these individuals into a 

new plan with a new insurer. While federal regulations indicate that this can only occur if 

permitted under state law, HHS is unwilling to change course in light of several states, including 

Wisconsin, indicating that the auto re-enrollment process violates several state laws. Consumers 

who do not act within an undefined timeframe will be assigned to a new plan with a new insurer, 

not of their choosing, and will receive a premium invoice from their new insurer. Consumers will 

be confused and forced to forgo paying their premium if they choose to refuse the assigned 

coverage. 

Auto re-enrollment is impacting consumer choice at the market level as well. HHS is cherry 

picking which insurers will get additional business. This is interfering with a free market which 

has successfully offered affordable choice meeting consumer demand. HHS is adding lives to 

insurers who, in some cases, will be given a leg up in growing their business and for others 

unanticipated additional lives may result in financial ruin. When insurers are made aware two 

months out from open enrollment that several thousand lives are now anticipated to be autoenrolled with them, they are faced with significant rating and operational considerations, some of 

which may be too great to overcome on such short notice. 

A Look Ahead; Impact of Transitional Plans 

It is important to remember the volume of consumers covered under transitional plans in the 

individual and small group markets. In Wisconsin, as of December 31,2015, there were 203,587 

covered lives under transitional plans. In 2018, when these plans are no longer available, 
78 

consumers, in particular employers, will experience rate increases as they are forced to purchase 

coverage meeting all of the ACA requirements. 

Conclusion 

In conclusion, Wisconsin had a strong health insurance market offering products responding to 

consumer needs prior to the ACA. Since the passage of the ACA, insurers struggle to continue to 

stay viable and offer affordable coverage to Wisconsin consumers. Rates continue to increase 

and an insurer's ability to predict risk from year to year remains difficult in light of an unstable 

federal regulatory environment where the rules keep changing without attention to the diverse 

insurance markets that exist across the country. Each state is unique. Forcing health insurance 

markets into a standardized set of federal regulations adds an unnecessary layer of complexity 

that stifles both an insurer's and state regulator's ability to be innovative and have the flexibility 

necessary to meet consumer needs. 
79 

Testimony for the Senate Committee on Homeland Security and Governmental Affairs 

The State of Health Insurance Markets 

September 15,2016 

Nick Gerhart, Iowa Insurance Commissioner 

Introduction 

Good afternoon Chairman Johnson, Ranking Member Carper and esteemed members of the 

committee. My name is Nick Gerhart and I am the Insurance Commissioner of the State of 

Iowa. I have held this position since January 2013 and have worked extensively at the state level 

to comply with Federal law on the implementation of the Affordable Care Act. I am here to 

speak with you today about Iowa's health insurance markets and issues affecting health 

insurance markets as a whole. 

ACA Implementation 

Prior to the Affordable Care Act (ACA), Iowa had one of the highest health care insurance 

coverage rates in the nation (less than 9.7% uninsured rate 1

). The individual health 

insurance market faced challenges prior to the ACA, such as rate increases, exclusions, and 

denial of coverage, but the market functioned for those able to obtain coverage. The state 

operated a state high-risk pool for citizens unable to obtain coverage, and the state has left that 

pool open to this day to provide another coverage option for Iowans. The high-risk pool 

coverage is expensive, but it provides a viable option for coverage for those Iowans who were 

unable to obtain other coverage. 

The ACA was created with the principal goals of improving health care quality, access, and 

affordability for all Americans. In part, the law has achieved some of these goals, for example, 

the national uninsured rate decreased by nearly nine million from 2013 to 2014.2 While many 

states had higher rates of uninsured citizens, Iowa traditionally had one of the lowest uninsured 

rates in the country. However, the uninsured rate in Iowa did improve since implementation 

of the ACA and fell from nearly 248,000 in 2013 to 189,000 in 2014.3 It is important to note 

that the increase in the number of Iowans obtaining health coverage is due to the implementation 

of Medicaid expansion. Iowa has actually seen a decrease in its numbers of people purchasing 

individual insurance. In 2013, 189,594 Iowans purchased individual insurance coverage. At 

year-end 2015, 184,744 Iowans purchased individual health insurance coverage either through 

the marketplace or outside of the marketplace. And significant debate remains about whether 

improved access could have been achieved through much more efficient market mechanisms. 

1 Available at: http://www.hhs.gov/healthcare/facts-and-features/state-by-state/how-aca-is-working-foriowalindex.html#. 

2 U.S. Census Bureau. See Table A-1; available at: 

http://www.census.gov/content!dam/Census/library/publications/20 15/demo/p60-253.pdf 3 U.S. Census Bureau. See Table A-1; available at: 

http://www.census.gov/content/dam/Censusllibrary/publications/2015/demo/p60-253.pdf 
80 

The ACA implemented market reforms requiring insurance companies to cover people 

regardless of their pre-existing conditions. This change permitted many people with serious 

health conditions to gain access to health insurance. The ACA also made advanced premium tax 

credits available to help lower the cost of Health Insurance Marketplace premiums for those who 

qualifY. Nearly 85 percent of the 55,000 Iowans receiving coverage through the Marketplace in 

2016 qualified for these tax credits. 4 

The ACA's changes to the Medicare and Medicaid programs are often overshadowed by the 

commercial market reforms and the Health Insurance Marketplace. The changes in these 

programs, however, are also worth mentioning as movement towards the ACA's principal goals. 

Iowa's largest health insurance company created accountable care organizations (A COs) that 

were modeled after the ACA's Medicare ACOs. Wellmark Blue Cross Blue Shield ACOs cover 

fully insured members and reportedly generated $35 million in health savings in 2015.5 "The 13 

health systems participating in the A COs achieved savings by reducing hospital readmissions by 

more than 22 percent, inpatient admissions by almost 8 percent, and emergency department visits 

by nearly 4 percent, according to Wellmark."6 Iowa is also a state that implemented our own 

bipartisan, tailored version the ACA's Medicaid Expansion. This program, known as the Iowa 

Health and Wellness Plan, currently provides coverage to over 150,000 low-income, childless 

adults, many of whom were previously uninsured. 7 This program integrates health ownership 

with modest premium contributions required at certain income levels above 50 percent of the 

federal poverty level and as a guiding principle. The Iowa Health and Wellness Plan since April 

1, 2016 has been delivered through a managed care payment model. 

The Health Insurance Market in Iowa and Challenges of the ACA 

While the ACA has increased health coverage for Iowans overall, the costs of health care have 

hit the pocketbooks oflowans hard as rates have increased every year since 2014. Generally, 

healthier Iowans have subsidized the costs of increased access for sicker Iowans through higher 

insurance costs. As background, Iowa has a population of just over 3 million people and nearly 

66 percent of Iowans have access to employer-sponsored insurance. 8 Less than 7 percent, or 

about 190,000 Iowans, purchased individual coverage prior to the formation of the Health 

Insurance Marketplace in Iowa. Of those who purchased individual coverage, nearly 78 percent 

purchased their policies from one company, Wellmark, Inc. (Wellmark)9 In calendar year 2014, 

when Iowa's State Partnership Health Insurance Marketplace became a source of health care 

4 See U.S. Department of Health & Human Services, Office of the Assistant Secretary for Planning and Evaluation. 

See 'State Level Data Excel Tables' available at: https://aspe,hhs.gov/health-insurance-marketplaces-2016-openenrollment-period-final-cnrollment-report. Interestingly, in an liD survey of Marketplace carriers, carriers selfreported a total of only 47,813 enrolled members by June 30,2016. 5 Business Record, July 27, 2016, available at: http://www.businessrecord.com/Content/Health-Wellness/HealthWellness/ Article/W ellmark-AC0s-generate-35M-in-health-savingsll74/836/74ll9. 6 Business Record, July 27,2016, available at: http://www.businessrecord.com/Content/Hcalth-Wellness/HealthWellness/ Article/W ellmark-ACOs-generate-35M-in-health-savings/174/836/74l19. 7 lowa Department of Human Services, Improve Iowan's Health Status, p.3-28 available at: 

http://dhs.iowa.gov/sites/default/files/15·6 Improve Health Status.pdf. 

• This percentage of health insurance coverage is based on the health insurance market in 2010-20!1, available at: 

http://www.epi.org/publicationlbp353-employer-sponsored-health-insurance-coverage/ 

9 National Association oflnsurance Commissioners, !-Site Supplemental Health Care Exhibit. 
81 

coverage, Wellmark did not join. Also in 2014, grandfathered and transitional plans remained 

available and many kept their previous coverage. As a result, enrollment numbers in Iowa's 

Marketplace were low with only 25,560 10 people purchasing Marketplace policies in 2014. 

Wellmark declined to join the Marketplace in 2015 and 2016 and continues to provide coverage 

to over 65 percent of the individual health insurance market as many Iowans have kept their 

grandfuthered and transitional plans. 11 

As mentioned above, the costs of health care in Iowa have increased every year since 2014. 

During the first year of Marketplace implementation, many insurance policies were underpriced, 

in part due to a lack of claims history on the uninsured population, pent-up demand, and lack of 

movement from grandfathered and transitional policies. The insurance industry found pricing 

for this population very challenging. Based on the Marketplace claims experience from 2014 

and 2015, federal regulators and insurance carriers found that the population utilized healthcare 

in a manner similar to the nation's Medicaid population. To be more specific, the previously 

uninsured population is, on average, sicker and has a higher level of health care utilization 

than the population who receive commercial coverage through their employer sponsored 

plans. With the claims experience available, carriers realized premium increases were necessary 

and I will discuss those rate increases in a moment 

Changes mandated by the ACA and some actions of Congress also directly contributed to these 

increases. The single risk pools in the ACA Marketplaces were designed to spread the costs of 

health care across all members of the risk pool. In Iowa, however, low enrollment in the 

Marketplace has resulted in a few members with high cost claims driving up the premiums 

for the entire group. Aetna 12, a carrier on Iowa's Marketplace since 2014, reported that " ... the 

top 5 percent of spenders drive nearly 60 percent of the cost." 13 This concentration of risk and 

high utilization population is driving significant rate increases across the carriers' individual risk 

pools. The ACA does not provide adequate flexibility for a carrier to shield the risk pool from 

the cost of catastrophic claims. 

Additionally, with the ACA's elimination of annual and life time limits on health care costs, 

the costs of large claims have greatly increased. Aetna reported that claims costing more than 

$50,000 have increased by 38 percent. 14 Wellmark reported that percentage of claims costing 

more than $100,000 increased by 200 percent. 

The Marketplace special enrollment periods (SEP) have also contributed to increasing 

health care costs. Carriers in Iowa and nationally have noticed that people who enroll during 

10 The number represents the number of non-Medicaid persons on Iowa's Marketplace in 2014. There were an 

additional20,808 Medicaid Expansion members receiving Marketplace coverage and because the state Medicaid 

program paid premiums for these members, the numbers have been excluded. 11 Percentage represents numbers through 2015. 12 Aetna purchased Coventry and began Marketplace operations in Iowa in 2016; prior to Aetna's purchase Coventry 

operated as Coventry Health Care oflowa, Inc. in 2014 and 2015. 13 Iowa Rate Hearing transcript, Dale Mackel (Aetna) testimony, p.l2. 14 Iowa Rate Hearing transcript, Dale Mackel (Aetna) testimony, p.l2. 
82 

SEPs cost nearly double the amount of those who enroll during open enrollment. 15 Wellmark, 

for example, received one member during a SEP whose health care coverage costs nearly $12 

million annually and caused roughly 10 percent of the rate increase for 2017. 16 

The Rising Costs of Healthcare 

In Iowa, the rising costs of health care has resulted in carriers requesting premium rate 

increases that were significantly greater than before the implementation of the 

Marketplace. In fact, in 2012 and 2013, the average premium rate increases among health 

insurance carriers was 5.48 and 5.95 percent respectfully. 17 For calendar years 2016 and 2017, 

however, Wellmark received rate increases of26.5 and 42.6 percent respectively for its ACAcompliant, off the Marketplace plans. 18 Aetna received rate increases of 19.8 and 22.58 percent 

for calendar years 2016 and 2017 respectively. These increases were spread among the ACA 

compliant plans offered both on and off the Marketplace. 19 For calendar year 2017, Iowa has 

carriers that have scaled back on the amount of plans they will offer and the areas where 

they will provide services. Iowa also had one state-wide carrier, United Health care of the 

Midlands, completely withdraw from the Marketplace without even requesting a rate 

increase. Finally, Iowa was the first state to face a failed health care cooperative, CoOportunity, in late 2014. The Iowans on that plan were forced to quickly secure other coverage 

in 2015. Due to the co-op failure and United Healthcare withdrawal, Iowans looking for 

coverage may have limited options on the Marketplace in 2017. 

In my role as Iowa's Insurance Commissioner, I have to balance the needs ofiowa's consumers 

against the solvency of an insurance carrier. As previously described, several provisions of the 

ACA have had significant impacts on Iowa's health insurance premium rates and pricing. In 

reviewing rate increase requests, I facilitate a public hearing20, review consumer comments, and 

study the actuarial reports from consulting actuaries and internal actuarial staff from the Iowa 

Insurance Division?1 Ifi find that there is no evidence that the proposed rate filings are 

discriminatory or excessive under Iowa statute, the rate increases are approved. 

The Need for Reform 

The levels of rate increases cannot continue to be sustained by Iowa's consumers. If this pattern 

continues over the next few years, I have serious concern about whether Iowa's consumers will 

be able to afford Affordable Care Act policies. We are essentially placing consumers in 

situations where they must choose between healthcare coverage and paying their mortgage or 

15 Wellmark publication, "Understanding Proposed 2017 Premiums, How Wellmark is Addressing Costs." May 

2016. 

16 Available at: http://www .desmoinesregi ster.com/story/news/health/20 16/05/12/wellmark -p lans-3 8-to-4 3-

increases-some-customers/84277758/. 

"Information from liD healthcare insurance actuary. Percentages are not based on weighted averages of individuals 

but rather the increases received for each company. 18 Available at: http://www.iid.state.ia.us/node/11419107 and httn://www.iid.state.ia.us/node/14060795. 19 Available at: http://www.iid.state.ia.us/node/114191 09 and htto://www.iid.state.ia. us/node/14060792. 20 In 2016, hearings were only required when rate increase requests exceeded 6.4 percent. See lAC 191-36.20(3). 21 The Iowa Insurance Division is one of the few DOl's that utilize both internal and external actuarial staff in the 

rate review process. This is done to ensure accuracy. 
83 

rent. I also have serious concerns about whether carriers will continue to participate in Iowa's 

Marketplace. In its current form, the ACA has turned a previously stable Iowa market 

with some of the lowest premiums in the nation, into an unstable and teetering market with 

extremely high premiums. Federal legislative changes are necessary to ensure the continued 

viability of the Health Insurance Marketplaces. Specifically changes are necessary to the 3R's 

programs and to the single risk pool. Changes are also needed to address the costs of 

healthcare. There is little a state can do in isolation to reform their health insurance market. 

Without changes from the federal level, in collaboration with the states, individual states will be 

in the difficult position of watching a potential collapse of the individual health insurance 

market. 

The 3R's programs. 

I believe an area oflegislative focus needs to be the 3R's programs. The ACA's risk corridors, 

risk adjustment, and reinsurance programs, collectively known as the 3R's programs, were 

designed to protect against the impacts of excess loss or gains, adverse selection, and costs of 

catastrophic claims. 

As you may know, the risk corridors program intended to set a range of allowable gains or losses 

sustained by any qualified health plan (QHP). The QHPs with less claims amounts would 

essentially pay the QHPs with greater claims amounts. The intention of this program was not 

realized because the aggregate losses were so significant. In 2014, the QHPs requested a total of 

$2.8 billion in risk corridors pay-outs, but only received $360 million.22 In December 2014 

Congress passed the continuing resolution budget act requiring that the risk corridor be budget 

neutral. Due to the shortfall in risk corridor payments into CMS, QHP carriers received just over 

12 cents for each dollar they thought they would receive. In Iowa, this was detrimental to the coop and contributed, among other factors, to its eventual insolvency. The state of Iowa is now 

involved in litigation with CMS over many issues as it pertains to the dissolution of the Iowa 

based co-op, but a main issue is the recovery of risk corridor funds. The risk corridor program 

is set to expire in 2016 and we do not recommend that it be continued in the future. 

The risk adjustment program was designed to redistribute funds from plans with lower-risk 

consumers to plans with higher-risk consumers; this is determined from each consumer's risk 

score relative to the statewide average. The program is available for all ACA-complaint plans 

available both on and off the Marketplace. Although this program may have worked as intended, 

in Iowa, this program may result in the unintended consequence of pushing narrow 

network carriers out of the Marketplace. In 2014 and 2015, plans that tried to control costs 

with narrow networks paid the larger broad-based PPO plans. Aetna, a carrier with narrow 

networks, paid over $9.2 million and over $10.8 million in 2014 and 2015 respectfully.23 While 

Wellmark, a carrier with PPO plans, received over $4.6 million and over $16.6 million for its off 

the Marketplace plans in 2014 and 2015 respectfully. 24 Iowa's Marketplace cannot be 

sustainable if the carriers who choose to control costs with narrow networks (that are deemed to 

22 Numbers received from liD's healthcare insurance actuary. 

" Numbers received from liD's healthcare insurance actuary. 24 Numbers received from liD's healthcare insurance actuary. 
84 

be 'adequate' by CMS through the QHP certification process) are required to pay those carriers 

who offer broad-based plans. This program may have contributed to Aetna's withdrawal from 

11 of the 15 states where it participated in the Marketplace. Iowa was one offour states where 

Aetna chose to continue operations. 25 We do have concerns, however, about Aetna's continued 

participation in Iowa's Marketplace if there is not legislative reform in this area. As CMS 

recently released draft rules in attempts to address the short-falls of the risk adjustment program, 

we are hopeful that carriers find the reforms adequate. 

The final 3R program is the reinsurance program. This program requires all health insurance 

carriers, including small group and large group carriers, to provide funds to ACA-compliant 

individual plans that enroll higher-cost individuals. In Iowa, this program works as envisioned. 

Without this program, premiums in the individual ACA-compliant market would have been 

approximately 10 percent higher in 2014,6 percent higher in 2015 and 4 percent higher in 

2016.26 This program is set to expire after 2016, thus causing rate increases over the same time 

period. In other words, if a carrier is receiving a l 0 percent reinsurance credit in one year due to 

this program, premiums will increase by the same amount when the program expires. 

Legislative changes should be considered to allow this program to continue in a manner 

that protects individual state interests. 

The Single Risk Pool. 

Federal legislators should also consider reviewing how an effective high-risk pool could offer 

more predictable single risk pool pricing. As stated earlier, a small number of claims in Iowa are 

driving a significant amount of the rate increases. This is adverse selection by definition. 

Adverse selection occurs when more people with higher healthcare expenses buy insurance than 

people with lower health care expenses. When Marketplace coverage became available in 2014, 

many people who were previously uninsured and who had pent-up demand for services bought 

Marketplace plans. Additionally, far fewer than expected healthy, young Americans signed up 

for Marketplace coverage. Carriers initially priced their plans to include the younger, healthier 

population. Without this population to offset the costs of those with higher healthcare costs, 

carriers incurred higher costs of claims. Recall that for Aetna, the top 5 percent of high cost 

members are responsible for 60 percent of the cost of claims. The higher costs of claims results 

in carriers needing to raise premium rates in the subsequent years. The increased rates, in turn, 

deter the younger, healthier population from enrolling despite the penalty for going without 

insurance. 

Iowa had a state high-risk pool that is still in effect today. Looking at using that as a 

mechanism to cover the most needy and chronically ill people may be worth exploring. 

High-risk pools effectively spread the cost across society by covering high cost claims, rather 

than costs being incurred by the individual insurance carrier, and spread to the members of the 

pool. If states were allowed to place high-cost consumers into a single, national high-risk pool, 

the costs of those who remain in the Marketplace would become more stable. A high risk pool 

25 http://www .usatoday .com/story /money/20 16/08/ 16/aetna-obamacare-affordab1e-care-act-exchanges/88825798/. 26 Numbers received from liD's hea1thcare insurance actuary. 
85 

should be designed to address the problems with the previous federal high-risk health insurance 

pool including: 1) ensuring enough funding is available to cover the consumers health care costs; 

2) designing a coverage option that provides optimal coverage for people with high healthcare 

needs; and 3) ensuring persons in the pool have access to affordable coverage by offering, for 

example, the same level of tax credits and subsidies as those in the Marketplace. 

Cost of Claims 

The cost of health care claims in Iowa spiked post ACA and the spike has persisted. A number 

of factors are driving the high cost of claims. For example, prescription drug costs, in particular 

specialty drugs, are driving up the overall cost ofhealthcare. In addition, the high cost of 

hospital stays, higher levels of hospital utilization, and increasing advances in technology are 

putting upward pressure on costs. More transparency and communication around costs and a 

focus on quality and outcomes would ultimately help bend down the cost curve. by better 

communicating costs prior to services obtained. Informed consumers of any good or service will 

ultimately lead to a better performing health care market. 

The ACA reformed insurance dramatically, but does little to address other costs. A continued 

focus on outcomes, transparency, quality, drug pricing, and wellness is critical to bend down the 

cost of care. The insurance industry can work within the health care system to address these 

issues, but it cannot be expected to do that alone. The issues with health care extend well beyond 

insurance and a review of the entire health care economy and marketplace is necessary. 

Conclusion 

Despite the political controversy surrounding the ACA, we all want the same thing: for people to 

have access to affordable, quality healthcare. State and federal policy makers need to work 

together to address the shortcomings of the ACA and work to ensure that state health insurance 

markets remain vibrant. It is time to work together to make substantive corrections. The states 

stand ready to assist. 
86 

Testimony of Washington State Insurance Commissioner Mike Kreidler 

Before the U.S. Senate Committee on 

Homeland Security and Governmental Affairs 

September 15, 2016 

10:00AM 

Good morning Chairman Johnson, Ranking Member Carper, and members of the 

committee. 

Thank you for the opportunity to testify today about our individual health insurance 

market under the Affordable Care Act (ACA}. 

My name is Mike Kreidler, and I am the statewide-elected Insurance Commissioner 

for the state of Washington, the longest-serving insurance commissioner in the 

country, and a former member of Congress. I am testifying today on behalf of the 

people of Washington state. 

I've spent most of my career in the health care field- either as a provider, elected 

policymaker or health administrator, and have worked for years to reform our 

health care system. 

For the last six years, I have been leading efforts to implement the Affordable Care 

Act in my state. It has not always been easy, but the benefits have been profound. 

I remember clearly what our health insurance market looked like before reform. 
87 

At the end of 2013, before the Affordable Care Act took effect, almost a million 

people in our state were uninsured. That is 14 percent of our state's population. 

We had more than $2 billion in uncompensated care costs. 

We were fortunate to have very good competition, with 11 health insurers 

participating in our individual market, but most of the plans did not cover maternity 

or prescription drugs - two vital services for most families. 

It was clear to me then that without significant health reform, our current health 

care system was not sustainable. Medical costs would continue to rise and more 

people would become uninsured. 

Today, our uninsured rate is down to 7.3 percent- representing a 50 percent drop 

since the Affordable Care Act took effect, and the lowest rate we've seen since at 

least 1987. 

Our uncompensated care costs are down from $2.3 billion to $1.2 billion. 

Seventy-eight percent of people enrolled through our state's exchange, Washington 

Healthplanfinder, receive a subsidy to help pay for their coverage. 

People have access to meaningful coverage that provides critical services when and 

if they need them. 

2 
88 

This year, 13 health insurers filed 154 health plans for our 2017 individual marketboth inside and outside of our Exchange, with an average requested rate increase of 

13.5 percent. 

Most of these plans and their rates are still under review, so we will not have a 

complete picture of our individual market until October. 

Now, 13.5 percent is higher than we have seen in the last two years, but it is not 

unexpected nor is it higher than what we saw before passage of the A CA. Even with 

our aggressive rate review, double-digit rate requests were common, but so was 

being denied coverage when you needed it. And you could not find an individual 

health plan in our state that covered prescription drugs. 

In 2014, when our Exchange opened, the insurers set their rates, making their best 

guess at who would sign up and what medical services they would need. They now 

have two years of experience, which is still very limited. 

They also had to estimate the payments or credits they would either owe or receive 

from the federal risk adjustment program. Most of our insurers have had to revise 

their requests based on allotments from this program, announced by the Centers for 

Medicare and Medicaid Services in June of this year. 

No one wants to see their premiums go up. I have been in this job for many years, 

and I understand the impact any increase has on individuals and families. The 

Affordable Care Act is doing what it was designed to do - helping people access 

health care. But if we want to bring premium relief to consumers and stabilize the 

3 
89 

markets nationwide - if we are serious about reforming what is wrong with our 

health care system- we need to look beyond the Affordable Care Act. We need to get 

everyone covered and we need to do more to bring down the costs of health care. 

Our first step must be stopping the skyrocketing costs of prescription drugs. Across 

the board- for every insurer in our individual market- prescription drug costs was 

the single biggest driver of medical trend. If we do not bring down drug costs, we 

will not lower premiums. 

Every state should be required to expand Medicaid. Our decision to do so in 

Washington state has helped 595,000 adults get covered and is the key reason our 

uninsured rate has dropped to a record low. 

We must get rid of non-conforming health plans that dilute the risk pool. If you do 

not have everyone covered, sharing the risk, you simply cannot bring down costs. 

States that opted to keep old legacy policies in place when President Obama said if 

you like your plan you can keep it, understand this firsthand. 

The Affordable Care Act is working in Washington state because we took full 

advantage of the reforms it provided. I believe we will see premiums in our market 

stabilize as insurers gain more experience. But unless we as a country take on the 

tough challenges and start talking about how to really slow down the cost of health 

care and get everyone covered, we will not bring sustainable relief to all consumers. 

Thank you. 

4 
90 

September 1S, 2016 

STATEMENT FROM WILLIAM A. HAZEL, M.D., SECRETARY OF HEALTH AND HUMAN RESOURCES, 

COMMONWEALTH OF VIRGINIA 

Virginia has greatly benefited from the passage of the Affordable Care Act (ACA). First and foremost, the 

number of uninsured people in Virginia has decreased since its passage. Enrollment in the Federal 

Health Insurance Marketplace is increasing, and while some state markets have seen disruption via the 

departure of major health plans, Virginia's market remains healthy and ready to offer choice to its 

consumers. Virginia has benefited from federal flexibility authorized by the ACA to improve care for 

Medicare and Medicaid enrollees via the Commonwealth Coordinated Care Program. The 

Commonwealth has also leveraged federal funding to modernize our benefit program eligibility 

determination system. In addition to these benefits, Virginia also has an opportunity to realize further 

gains through Medicaid expansion. 

In 2010, 1,020,000 or 13.1 percent of Virginians were uninsured. As of 2015, Virginia has seen a 27 

percent drop in the number of uninsured Virginians to 746,000, or 9.1 percent of the total population. 

Health Insurance Marketplace enrollment has increased from 216,000 policies purchased in 2014 to 

421,000 policies in 2016. Virginia has attained its highest enrollment to date and ranks 7'h highest in the 

nation. 

This decrease in the uninsured rate directly benefits Virginia's state budget. The cost of providing care to 

the uninsured at hospitals is projected to fall by $33 million in state fiscal year 2018, largely due to 

enrollment in the federal marketplace. 

The Health Insurance Marketplace in Virginia continues to grow and remains strong. In 2017, ten health 

insurance carriers will offer plans in the Virginia exchange, including two new carriers: Aetna Health, Inc. 

and Cigna Health and Life Insurance Company. 

Some of the often-overlooked aspects of the ACA are the demonstration projects for reforms that add 

value to the system. 

One of these projects in Virginia is Commonwealth Coordinated Care, a Financial Alignment 

Demonstration administered through collaboration between the Centers for Medicare and Medicaid 

Services (CMS) and Virginia's Department of Medical Assistance Services (DMAS). The collaboration to 

implement CCC was made possible when the ACA established the Medicare Medicaid Coordination 

Office (MMCO) under CMS. Virginia's Commonwealth Coordinated Care focuses on a person-centered 

approach for Medicare-Medicaid enrollees and coordinates services across primary, acute, behavioral 

health, and long-term services and supports. Virginia is one of 13 states participating in the Financial 

Alignment Demonstration and more than 27,000 Virginians are benefitting from this program. 

Virginia has also taken advantage of CMMI funding, a state innovation model planning grant to establish 

a statewide metrics to align population health and clinical care. We have analyzed data to demonstrate 
91 

ways to reduce wasteful medical tests and procedures; we have worked to improve care transitions and 

hospital readmissions; and are working to prepare physicians for value-based payment methodologies. 

Virginia is leveraging a 90/10 federal match from CMS to modernize our eligibility determination system 

in coordination with the Virginia Department of Social Services (DSS). Virginia implemented the program 

with the intent of having one system for Medicaid eligibility, TANF, SNAP, and other DSS programs. 

States that have expanded Medicaid have realized a much larger reduction in the rates of uninsured 

than Virginia. Over 400,000 currently uninsured Virginians would benefit from a Medicaid expansion, 

and closing the coverage gap would provide additional resources in critical need areas such as 

behavioral health and addiction recovery and treatment services. 
92 

"The State of Health Insurance Markets" 

Senate Homeland Security and Governmental Affairs Committee 

September 15, 2016 

Testimony: Christopher F. Koller, President Milbank Memorial Fund 

Chairman Johnson and Ranking Member Carper: 

Thank you for the chance to submit written testimony for this hearing. The Milbank 

Memorial Fund is a 110 year old operating foundation that works with state health 

policy makers to improve population health by connecting them with the best evidence 

and experience. Prior to assuming leadership of this organization in 2013, I served the 

state of Rhode Island for eight years as the country's first Health Insurance 

Commissioner, during the implementation of the Affordable Care Act. Before that I ran 

the state's largest Medicaid Managed Care health plan, Neighborhood Health Plan of 

Rhode Island. 

I hope these experiences in running and regulating health insurance plans and 

overseeing a commercial health insurance market are of use to the committee as it does 

this important work. 

The goal of health insurance markets should be to offer a range of reliable, affordable 

options for consumers. In my experience, health insurance markets need the following 

elements to attain those goals. 

1. Sufficient market size. Whether offering individual, small group or large group 

products, there must be a sufficient number of eligible lives to make it 

worthwhile for insurers to enter and stay in the market. In smaller state-wide 

markets, the segmentation of small group and individual risk pools by state 

officials into separate on-exchange and off exchange markets, while politically 

attractive, has hindered this goal. The District of Columbia and Vermont are two 

jurisdictions that have merged their markets and benefit as a result. 

2. A reliable, stable mix of healthy and sick people. Where healthy peoplebecause of weak mandates, grandfathered benefit plans, poor outreach efforts, 

or enrollment churning- are allowed to exempt themselves from the risk pool, 

the market suffers. This has been the case in many individual markets in the 

country and federal action is needed to correct it. 

Similarly, total patient cost sharing (premium, copayments, coinsurance and 

deductibles) must be limited and indexed to inflation at the federal level if we do 

not want to see poor, healthy people opt out of the risk pool. 
93 

3. Regional non profit insurers committed to serving their markets. While 

national insurers provide important choice options and market competition, 

regional non profits are the backbone of all non self insured health insurance 

markets. Whether they are Medicaid health plans, Blue Cross and Blue Shield 

plans or multi-product regional non profits, by their organization and mission, 

these plans are more reliable partners for states and communities in making 

local markets function than national insurers. 

4. Consistent, enforceable rating rules that reflect public priorities for spreading 

anticipated costs differences due to age, family size, health status, gender and 

other factors. Actuaries know which populations will use more health care. It is 

up to policy makers to figure out who pays. These rules need to be consistent 

across markets, and hence national. My own opinion is that the ACA got these 

about right. You should not pay more for health insurance because you are sick 

-and making prices much cheaper for younger people will pose an unacceptable 

extra financial burden on older people. These rules must then be vigorously 

enforced in health plan pricing. 

5. Reliable mechanisms for mitigating adverse selection among insurers. Even 

with consistent rating factors, sometimes payers- by chance or effort- will 

attract populations that are systematically healthier or sicker than others, and a 

mechanism should be made for sharing these costs. Like similar efforts in 

Medicare Advantage, the federal program risk adjustment program is necessary 

but refinement is always needed. 

6. Comprehensive state level rate review. Some state insurance officials are seeing 

requests for significant rate increases this year. To evaluate them, they need 

clear statutory direction that requires them to balance affordability and insurer 

solvency. With scrutiny, regulators can accomplish four specific ends: 

a. Assess the validity of the insurers' requests and find the right balance 

between affordability and insurer solvency. In my role in Rhode Island, I 

had to find this balance repeatedly- determining when and how much 

rates requests should be cut. 

b. Ensure that insurers are not allocating administrative costs to the 

individual market which should be borne by the large group and self 

insured markets. 

c. Educate stakeholders on the importance of a policy focus on underlying 

rates of trend, rather than merely shifting costs to employees in the form 

of higher premium sharing and to patients and providers in higher cost 

sharing. 

d. Document underlying cost drivers in medical services such as pharmacy, 

hospital care, physician services and educate the public and policy 

makers both on the benefits and limits of insurer competition as a way to 

reduce them and the steps needed to address these trends -like 
94 

payment reforms aligned across payers, true system integration and 

limited networks. 

We did all of this work in my tenure in Rhode Island. As a result in recent years 

the state has had the lowest rate of increase in commercial premiums in New 

England. 

Often state insurance regulators do not have comprehensive rate review 

authority, and frequently they do not use the tools they have to understand the 

validity of insurers' requests and take necessary actions. CMS's Center for 

Consumer Information and Insurance Oversight could address this in part by 

raising its standard for what constitutes adequate state level rate review. 

7. Small numbers of uninsured because of Medicaid expansion. Reducing the 

number of uninsured reduces pressure on commercial payments to hospitals to 

cross subsidize their compensated care. It makes for a more attractive and stable 

pool of covered lives in the state, reduces insurance "churn", adds new insurers 

into Medicaid managed care (and thus potentially commercial markets as well) 

and keeps healthy lives in the both the Medicaid and commercial risk pools. 

Markets that are seeing robust insurer competition and lower rates of year over year 

premium increase- markets as diverse as California and Rhode Island- possess most of 

these characteristics. Policy makers at the state and federal level need to promote 

greater adoption ofthese characteristics and discourage policies which are not 

supported by evidence, including: 

weakening of individual mandates 

lowering of minimum benefit comprehensiveness and raised cost sharing 

levels 

inter-state insurer competition 

Creating markets with these characteristics requires actions at the state and federal 

level, as suggested above. To the extent states have not taken all the steps available to 

them, they continue to suffer the consequences. As Noam Levey of the Los Angeles 

Times points out, eight of the nine states where consumer choices on the exchange will 

be most limited in 2017 have rejected Medicaid expansion. 

Finally we should not mistake what is driving the problem of health insurance 

affordability- it is rising health care costs; the same issue that troubles CMS Actuaries 

and Medicaid Directors. The most robust commercial insurance competition cannot hide 

the fact that we in the US spend almost two and half times the international average on 

health care, as a percent of GOP, and get poorer health outcomes as a result. This is a 

fundamental challenge for our country- robbing us of more productive investments in 

education, our infrastructure and the environment- and policy makers must rise to it. 
95 

Thank you for your time and interest, and for your service. 
96 

September 15, 2016 

SENATE COMMITTEE ON HOMELAND SECURITY AND GOVERNMENT AFFAIRS HEARING ON 

"THE STATE OF HEALTH INSURANCE MARKETS" 

STATEMENT FROM SECRETARY RITA LANDGRAF, DELAWARE DEPARTMENT OF HEALTH AND 

SOCIAL SERVICES 

Starting in March 2010 when the Affordable Care Act was signed into law, Delaware has been 

on the forefront of health care reform. As the lead agency in Delaware, the Department of 

Health and Social Services (DHSS) has worked to implement its state-federal partnership Health 

Insurance Marketplace, with coverage beginning Jan. 1, 2014, and the enhanced expansion of 

Medicaid, with coverage beginning on the same date. Delaware expanded Medicaid up to 

100% federal poverty level back in 1996 under then Governor Carper. In addition, DHSS has 

been a significant partner in designing a plan and applying for a federal Center for Medicare 

and Medicaid Innovation (CMMI) grant, and implementing the plan to change the way health 

care is delivered and paid for in our state. 

In 2008, Delaware's insured rate was estimated at 11.2 percent, or about 101,000 individuals. 

That rate ranked Delaware 33'd among the states. By 2015, our state's uninsured rate was down 

to 5.9 percent, leaving 54,000 Delawareans without coverage, according to a U.S. Census 

Bureau report released just this week. Delaware now has the ninth-lowest uninsured rate in the 

country. 

Delaware adopted a state-federal partnership for its Health Insurance Marketplace, meaning 

Delaware would retain responsibility for plan management and consumer assistance, while the 

federal government would be responsible for information technology through HealthCare.gov. 

In the third year of the Marketplace, 28,256 Delawareans were enrolled for private health 

insurance plans as of January 2016, with enrollment almost doubling from Year 1 to Year 3. Of 

the 28,245 enrolled in 2016, 82 percent were eligible for a premium tax credit, averaging about 

$328 per month. That brought the average monthly premium after the tax credit down 69 

percent to $150 per month. In Delaware, 70 percent of those enrolled pay $100 or less in 

monthly premiums, while 64 percent pay $75 or less. 

To further increase coverage, Gov. Jack Markell decided in July 2013 to expanded eligibility for 

Medicaid up to 138 percent of the Federal Poverty level beginning Jan. 1, 2014. Through 

January 2016, 9,896 Delaware adults were eligible for coverage through the expansion. 

Still, Delaware's health care costs are 25 percent above the national average, with $8 billion 

spent annually on health care and 22 percent of the State budget devoted to health care costs. 

Those expenditures have not resulted in a high rate of positive outcomes. Delaware's rate for 
97 

such diseases as diabetes, obesity and cancer are above the U.S. average, and the health of 

many Delawareans remains at or below average on many measures. 

As a way to embrace a "health" care system instead of a "sick" care system, Delaware also is 

engaged in the work of health care innovation. Beginning in 2013, more than 100 stakeholders, 

including those representing hospitals, providers, insurers, educational institutions, patients, 

and government, came together to develop Delaware's health innovation plan. Based on that 

plan, Delaware was awarded a four-year, $3S million grant from the Centers for Medicare and 

Medicaid Innovation (CMMI) to transform the way health care is delivered and paid for by using 

a total investment of $130 million over four years. 

In 2015, the Delaware Center for Health Innovation, a not-for-profit organization, was created 

to carry out the innovation work. The DCHI Board created six committees: Clinical, Workforce 

and Education, Payment, HIT, Healthy Neighborhoods, and Patient/Consumer Advisory. Two 

multi-payer, value-based payment models will be offered statewide: Pay-4-Value and Total Cost 

of Care. Delaware's goals by 2018 are to become one of the five healthiest states in the U.S.; to 

achieve top performance for quality and patient experience; to improve provider experience; 

and to bring health care spending growth more closely in line with the growth of the economy. 

During the course of the Committee's hearing you will hear about a lot of numbers and trendsand those are important- but that's not the only thing I think about when I think about the 

difference the Affordable Care Act is making in Delaware. 

I think about people like Janice Baker from Selbyville, Del., one of our first enrollees. Janice 

couldn't get coverage before the start of Delaware's Marketplace because of pre-existing 

conditions she has. During those first days of enrollment, she stayed on HealthCare.gov for 

hours to make sure she was signed up. 

I think about the Reverend Donald Morton of New Castle, Del., who had been uninsured for 

years, but whose cancer was caught after he signed up for Marketplace coverage and went to 

the doctor for a physical. He wonders what might have happened if the ACA had not been 

become law. 

And I think about Felipe Hernandez, a 27-year-old machine operator from Wilmington, Del. 

Unlike his wife and daughter, Felipe did not have insurance coverage. Relatives told him about 

the Health Insurance Marketplace and he enrolled for coverage beginning in 2014 and reenrolled after that. Felipe, who pays a monthly premium of about $73, said he is now more 

hopeful about his future. "I've gone to the doctor for exams, blood work, and medications to 

prevent future illness," he said. "My health has improved a lot. I'm not going to go broke 

because I get sick." 
98 

In all of these cases-- and thousands more-- Delawareans are connected to health care 

through the Marketplace and the Medicaid expansion. That was the premise and the promise 

of the ACA- that we would connect people to coverage and they would get the care they need 

to get well or to stay healthy. While we face challenges in terms of the cost of premiums, the 

size of deductibles and our ability to reach people who remain uninsured, I know because of 

the Affordable Care Act we have made tremendous progress in building a healthier Delaware. 
99 

September 14, 2016 

The Honorable Ron Johnson, Chairman 

The Honorable Thomas R. Carper, Ranking Member 

U.S. Senate Committee on Homeland Security and Governmental Affairs 

340 Dirksen Senate Office Building 

Washington, DC, 20510 

Dear Chairman Johnson, Ranking Member Carper and Committee Members, 

As a part of the deliberations to take place during the September 15th U.S. Senate 

Committee on Homeland Security and Governmental Affairs hearing on the state of 

Health Insurance Markets, I would like to take this opportunity to provide some 

background and discussion points as to how the Affordable Care Act is working in 

California, and the nation. 

The Affordable Care Act created a historic new era of health care that is working for 

millions of people throughout the nation. At the end of the most recent open enrollment 

period, the Centers for Medicare and Medicaid Services announced that 20 million 

people had been covered either through a marketplace plan or through expanded 

Medicaid. Since opening its doors in California, more than 2.5 million individuals have 

signed up for health care coverage through Covered California, the state's health 

benefits Exchange. In concert with expanding its Medicaid program, California was able 

to make significant gains in reducing its number of uninsured and improve access to 

care. According to a report issued this week by the U.S. Census Bureau, California cut 

its uninsured rate by half (a reduction of 8.6%) due to the success of both Covered 

California and the expansion of Medicaid. Our state's uninsured rate now stands at the 

lowest level on record. 

California is using all of the tools made available by the Affordable Care Act to improve 

health care quality, lower cost, and provide meaningful choice and best value for 

consumers. Specifically, Covered California: 

• Creates a competitive health insurance marketplace by requiring insurance 

carriers to meet high standards of quality, affordabi/ity, and accountability 

as they compete in the marketplace, and also by negotiating the premiums 

they can charge. For 2015 and 2016, the statewide weighted average increase 

was 4.2 percent and 4 percent respectively. In 2017, the statewide weighted 

average increase is 13.2 percent. While this change is higher than previous 

years, the three year average since Covered California began is 7 percentlower than the pre-Affordable Care Act trend. 

COVERED CALIFORNIA• 1601 EXPOSITION BOULEVARD, SACRAMENTO, CA 95815 WWW.COVEREDCA.COM 

SOARD MEMBERS Diana S. Dooley, Chair F'au! Fearer Genoveva Islas Marty Morgenstern Art Torres EXEC. DIRECTOR Peter V. Lee 
100 

September 14, 2016 

Page2 

It should be noted that 2017 is a transitional year for premium rates across the 

nation. The main factor driving these rate changes is the end of the temporary 

federal reinsurance program, which was designed to help keep rates down 

during the first three years of the Affordable Care Act. According to the American 

Academy of Actuaries, the end of the reinsurance program will cause a one-time 

increase of 4 to 7 percent to 2017 rates. 

Another factor contributing to 2017 being a transitional year in many parts of the 

country is due to adjustment for mispricing. In the early years, insurance carriers 

did not have any data on their new consumers and had to base rates on their 

best estimates. Some carriers got it right, while others saw wide fluctuation in 

cost. It is important to note that while pricing has NOT been a significant issue in 

California, it has had an impact across the nation. There are two reasons for this 

fact: first, many states did not transition their individual markets to one common 

risk pool in 2014. As a result, carriers had difficulty calculating which consumers 

would and would not be part of the risk pool. California was one of the dozen 

states to make the conversion to a single risk pool in 2014. Secondly, in 

California, Covered California provided independent analysis of the risk mix of 

those enrolling to assist the carriers in pricing appropriately. 

We will likely see further rate stabilization in coming years now that carriers have 

more data on the costs and health status of consumers, and as states finish their 

transitions to one common risk pool in 2017 and 2018. 

• Provides choice and patient-centered benefits to ensure consumers have 

robust coverage options. Consumers have access to standardized health 

plans specifically designed to reduce the number of services that are subject to a 

deductible, thus increasing a patient's access to care. Even our most affordable 

plans in the Bronze tier promote care, allowing consumers to see their doctor or 

a specialist three times before being subject to the deductible. 

• Invests in significant marketing, outreach, and enrollment efforts to ensure 

a healthy risk mix. As of May of 2016, Covered California had 1.4 million 

consumers enrolled in a marketplace plan. In 2015, Covered California provided 

health plans with compelling data showing that enrollees were healthier and 

presented less risk, which helped drive down the cost of health premiums and 

saved an estimated $100 million in premiums. Overtime, Covered California 

also improved its risk mix by enrolling younger, healthier enrollees. The 

percentage of consumers between the ages of 18 and 34 who signed up for 

coverage was 38 percent during our most recent open-enrollment period, up from 

29 percent during the first open enrollment. 

• Helps reduce costs by improving the delivery system. Premiums are a 

reflection of what health care costs and how it is delivered. Covered California is 

works with health insurance carriers to find new and innovative ways to improve 

quality and lower cost. For example, Covered California is advancing several 

initiatives that reward quality over quantity with the goal of improving health care 

delivery. 
101 

September 14, 2016 

Page3 

The Affordable Care Act is working in California and for Californians, and we have built 

a sustainable and competitive marketplace. We are seeing lives changed by the 

security they now have and the quality care they have received. While we have the 

building blocks in place to create competitive marketplaces for consumers and to 

promote fundamental changes to the health care system, our job is not done, and there 

is more work to do. We are committed to helping implement this new era of health care 

in our state and across the nation. 

Thank you for your consideration. Please do not hesitate to contact me if you have any 

questions or if I can provide additional information. 
102 

September 14'", 2016 

The Honorable Thomas Carper 

Ranking Member, Senate Committee on 

Homeland Security and Governmental Affairs 

340 Dirksen Senate Office Building 

Washington, DC 20510 

Kathleen C Hittner, MD 

Health Insurance Commissioner, Rhode 

Island Office of the Health Insurance 

Commissioner 

1511 Pontiac Ave. Bid. 69-1 

Cranston, Rl 02920 

RE: Senate Homeland Security and Governmental Affairs Committee Hearing on the State of Health 

Insurance Markets. 

Dear Mr. Carper, 

I appreciate the opportunity to share with you the positive effects that the Patient Protection and Affordable 

Care Act (ACA) has had in the state of Rhode Island. Rhode Island's health insurance market is made 

stronger and fairer as a result of the ACA. As Rhode Island's Health Insurance Commissioner, my agency 

has responsibility for monitoring and enforcing the consumer protection and market reform provisions of 

the ACA. From a commercial insurance market perspective I highlight three of the most important 

contributions of the ACA below. 

Since 2012, Rhode Island's consumers have saved over $200 million through enhanced rate 

review. Rhode Island has received four grants under the Rate Review Grant program. These 

resources have enabled Rhode Island to build one of the most comprehensive rate review 

programs in the country. Rhode Island's fully insured market comprises a quarter of a million 

consumers across the individual, small and large group markets. OHIC's rate review program has 

saved $220 million for consumers in these markets since 2012. In the last few years, premiums 

have been lower and more stable as a result of the work we are doing. For plan year 2017, average 

premium changes in the individual market will range from a 5.9% decrease to a 5.9% increase, 

based on issuer. In the small group market, average premium changes in 2017 will range from a 

decrease of 3.1% to an increase of 3.6%, based on issuer. 

Since 2012, Rhode Island's uninsured rate has declined from 10.9% to 4.8%. The ACA has 

led to significant health insurance coverage expansions in Rhode Island, through more affordable 

non-group coverage and the Medicaid expansion. Federal dollars have financed key infrastructure, 

including HealthSource Rl, Rhode Island's state-based health insurance exchange, which serves 

as a national model of success for state-based exchanges. Individual market consumers benefited 

from more affordable coverage due to $76 million in tax credits in 2015. 

The ACA has improved access to preventive health care services for Rhode Island residents 

and helped the state establish a consumer assistance program and conduct detailed review of 

health insurance coverage documents. Consumer protection assumes a more proactive form in 

Rhode Island as a result of the ACA. 

States are a vital partner with the federal government in ensuring that the health care system supports 

better care, smarter spending, and healthier people. Rhode Island is building on the authority and 

resources of the Affordable Care Act to support a stable, efficient, and consumer friendly market for health 

insurance. 

Sincerely, 

(P·~~·t·><• (1. 

Kathleen C Hittner, MD 

Health Insurance Commissioner 
103 

Testimony of 

Christina Corieri 

Before the 

Senate Committee on Homeland Security and Governmental Affairs 

September 15,2016 

Christina Corieri 

Senior Policy Advisor to Arizona Governor Doug Ducey 

Phoenix, AZ 
104 

September 15,2016 

The Honorable Ron Johnson, Chairman 

Senate Committee on Homeland Security and Governmental Affairs 

340 Dirksen Senate Office Building 

Washington, DC, 20510 

The Honorable Thomas R. Carper, Ranking Member 

Senate Committee on Homeland Security and Governmental Affairs 

340 Dirksen Senate Office Building 

Washington, DC, 20510 

Dear Chairman Johnson, Ranking Member Carper, Members of the Senate Homeland Security 

and Governmental Affairs Committee: 

As you consider testimony regarding the state of health insurance markets, I would like to submit 

for your consideration, brief comments on the impact that we have seen in Arizona. 

The Patient Protection and Affordable Care Act, commonly referred to as Obamacare, has 

created an extremely unstable market in Arizona. When the Obamacare marketplaces were first 

rolled out, President Obama promised that individuals would "find more choices, more 

competition, and in many cases, lower prices." Unfortunately for Arizonans, none of those 

promises have materialized. 

In 2013, before the opening of the exchanges, Arizona had 24 insurance companies selling plans 

on the individual market. In 2017, consumers who shop for plans on the exchange in Arizona 

will have only one option for their plan. In reality, choosing between a single insurance plan, or 

being financially penalized by the federal government for not purchasing a plan, is not a true 

choice and it is certainly not the choice and competition that was promised to consumers by the 

president. I want to personally commend Senators McCain and Flake for their effort to pass 

legislation that would at least insulate individuals who have no choice from being financially 

penalized for the failings of the system. 

Unfortunately, it is not just the choice of insurance plans that has decreased as a result of 

Obamacare. Choice within those plans has also decreased as insurers have narrowed their 

networks to protect themselves from further losses. And as we all know, when choice decreases, 

costs increase. Consumers on the exchange in Arizona will see an average increase in 20 I 7 of 

49%. While many people who receive subsidies will be insulated from those increases, enrollees 

who do not receive a subsidy may find that the steep increases are unaffordable. We know for 

certain that these are not the lower prices that Americans were told they could expect. 

Even more concerning for Arizona, there was a time when it appeared that Pinal County would 

be the first county in the country without a single insurer willing to offer a plan on the exchange. 

While Blue Cross Blue Shield has recently decided to offer a plan there at a 50% premium 

increase, it is only a matter of time until another county faces the prospect of being without an 

insurer on the exchange. The situation that Pinal County faced illustrates that Obamacare is 
105 

broken, its promises have failed to materialize, and it is time for Congress to return to the 

drawing board to fix it. 

Sincerely, 

Christina Corieri 

Senior Policy Advisor to Arizona Governor Doug Ducey 
106 

Post Hearing Questions for the Record 

Submitted to the Honorable Mary Taylor 

From Senator Joni Ernst 

Question 1: 

In your written testimony, you mentioned an HHS study from this August that said more 

consumers will be able to qualifY for federal subsidies as premiums continue to rise. It seems 

like the suggestion is that it's good thing - get people more subsidies and rate hikes will be less 

shocking. But if trends continue, what does this mean for the American taxpayer, who is 

ultimately paying the bill for these subsidies? Is the ACA making anything more affordable as 

Americans were promised? 

Response: 

Premiums are going to increase and will continue to increase unless the underlying cost of health 

care is addressed. The Affordable Care Act (ACA) has often been described as health care 

reform, but it is really health insurance reform. Because the law is not addressing those 

contributing factors, health care costs will continue to rise which will result in higher premiums. 

As the federal government released information on October 24 about national premium increases 

on the exchanges, the argument on behalf of the consumer was about subsidization. At no point, 

however, did the administration admit those rising premiums mean higher subsidy costs that 

every American taxpayer must pay for. As constructed today, the ACA is headed toward 

financial collapse. 

Post-Hearing Questions for the Record 

Submitted to the Honorable Mary Taylor 

From Senator Ben Sasse 

Question 1: 

How much money has InHealth Mutual repaid the federal government for their solvency and 

start-up loans thus far? 

Response: 

Once an insurance company is put into liquidation, Ohio statute determines how funds are 

disbursed as claims and other financial obligations are processed. 

Question 2: 

How much do you estimate will be repaid in the future? 

Response: 

Any funds paid out during the liquidation process are dictated by what state law requires in Ohio. 
107 

Question 3: 

Is it realistic to assume InHealth Mutual and the 16 other failed Co-Ops will repay any of their 

loans? 

Response: 

Because the other Co-Ops are regulated by other states, we would not be able to predict how 

those processes will work. 

Question 4: 

How many people were forced to change plans in the middle of the year due to the collapse of 

InHealth Mutual? 

Response: 

At the time InHealth Mutual was placed into liquidation, approximately 22,000 Ohioans were 

enrolled with coverage. 

Question 5: 

What happened to the out-of-pocket costs that were already paid by these enrollees? Were the 

amounts already paid credited to a new plan or did they have to start over towards meeting their 

out-of-pocket maximums and deductibles? 

Response: 

Unfortunately, consumers enrolled with InHealth Mutual when the company was liquidated were 

unable to rollover their out-of-pocket maximum and deductible usage as a credit if they moved to 

a new plan. Those that continued with their InHealth Mutual plan through the remainder of this 

coverage year would have not experienced any changes in their out-of-pocket maximums or their 

deductibles until they switched to a new plan. 

Question 6: 

Do you know how many consumers in Ohio will be left with fewer than two insurers on the 

exchange next year? 

Response: 

We know that there will be 20 counties with just one carrier for the 2017 plan year and an 

additional 27 counties will have just two carriers. Data around consumers impacted by the 

change in carrier participation is not something the Department of Insurance maintains. 

Question 7: 

What percentage of Ohio counties will have three or more insurers? 

Response: 

Of Ohio's 88 counties, 41 counties will have three or more carriers selling federal exchange 

products during open enrollment for 2017. That represents approximately 47 percent of the state. 

The other 4 7 counties - or 53 percent of the state will have either one or two carriers selling 

exchange products. 

2 
108 

Question 8: 

How many issuers have decreased their coverage options from 2016 to 2017? 

Response: 

All carriers selling on the federal exchange in Ohio have made changes to their plans for 2017. 

In addition to those changes, four carriers have withdrawn from the market and others have made 

reductions in their coverage areas. 

Question 9: 

How many people will be forced out of their current plan? 

Response: 

The Department of Insurance does not maintain data specific to federal exchange enrollees who 

will lose their current plan for 2017. The U.S. Department of Health and Human Services would 

have the most accurate information pertaining to other plan changes. 

Post-Hearing Questions for the Record 

Submitted to the Honorable Mary Taylor 

From Senator Kelly A. Ayotte 

Question 1: 

Lieutenant Governor, your state has had to deal with the consequences of the failure of one of the 

co-op health insurance companies established and funded by the Affordable Care Act (ACA). 

As you note in your written testimony, the Ohio Department oflnsurance had to take control of 

Coordinated Health Mutual in May 2016. 

As of September, 17 of the 23 co-ops established by the ACA have failed. Recently, one of the 6 

remaining co-ops-Community Health Options-announced that it would stop selling plans on 

the New Hampshire partnership exchange, deciding to only offer plans in neighboring Maine. 

As a result of this decision, more than 11,000 of my constituents will have to find a new plan 

with a new insurance carrier during the upcoming open enrollment period. 

A) Community Health Options, the co-op that recently announced it would not be 

offering plans on the New Hampshire partnership exchange, insured 

approximately II ,000 people in my home state last year. Taking into account 

your experience in Ohio with the failure of Coordinated Health Mutual, what 

impact will the withdrawal of an insurer have on individuals and families who 

were insured under that carrier? For example, is there a chance they may not be 

able to see their preferred health care provider or be treated in their preferred 

hospital? 

Response: 

Any time an insurance carrier exits a market, it has an impact whether its auto, 

homeowners or health insurance. When a health insurance carrier exits, all of its 

consumers shift to other carriers, changing the risk pools that those remaining carriers 

3 
109 

will cover moving forward. That could have an impact on the premium those 

remaining carriers charge for the coverage offered. It could also mean a change in the 

provider network. The fewer carriers selling a product in a specific area, the more 

likely it is for some providers to be left out of the network. All of these changes 

impact consumers and may impact cost and access. 

B) What specific challenges did the Ohio Department oflnsurance face in taking 

over the operations of Coordinated Health Mutual? For example, was the state 

required to pay any liabilities that the co-op had outstanding to providers in its 

network? 

Response: 

In Ohio, the state does not pay when an insurance company is placed into liquidation. 

A combination of the state's guarantee fund as well as the company's remaining 

assets are used to pay claims and other financial responsibilities. That process in 

Ohio is dictated by state statue. 

C) What was the average consumer experience of someone who lost their health 

insurance due to the failure of Coordinated Health Mutual? 

Response: 

It is hard for the Department of Insurance to capture the average experience of any 

one consumer impacted by the liquidation of Coordinated Health Mutual. However, 

any time an insurance carrier is put into liquidation, every consumer is impacted with 

inconvenience, some may be impacted with additional costs, and others may struggle 

to find a plan that provides the same level of coverage. Certainly, what happened 

with Coordinated Health Mutual and with all other Co-Ops that were operating 

around the country resulted in a negative impact to the markets where those entities 

offered coverage. 

D) What were some of the challenges facing Coordinated Health Mutual that 

eventually led to its failure? For example, did the co-op set actuarially sound 

rates when it first entered the market? 

Response: 

Health insurance is a complicated market and companies selling on the exchanges 

across the country have well established footprints with significant expertise in that 

space. Coordinated Health Mutual faced some of the same challenges all insurance 

carriers are facing today but without the advantage of the resources and years of 

experience that other insurers had prior to the A CA. 

E) Both Ohio and New Hampshire have areas that are rural. Does selecting a health 

insurance provider and plan when there are fewer options available pose any 

additional obstacles for residents living in rural areas? 

4 
110 

Response: 

Lack of choice can be difficult for any consumer whether in a rural or urban 

environment. Certainly, however, there tend to be less providers in less populated 

areas so fewer options can be challenging for Ohioans living in more rural parts of the 

state. 

Question 2: 

Lieutenant Governor, in your written testimony you note that in Ohio next year 19 counties will 

have a single insurer offering plans on the ACA exchange while 28 counties will only have two 

insurers offering plans. You make the point in your testimony that this is not the competition 

that was previously envisioned by supporters of the health care law. 

In my home state of New Hampshire, during the first open enrollment period, only one insurer in 

the entire state offered plans on the exchange. As a result, Granite Staters were faced with an 

extremely narrow network that limited their ability to see their own doctor or visit the hospital of 

their choice. 

A) Please provide additional details regarding how the ACA has impacted 

competition in the health insurance marketplace. 

Response: 

Implementation of the ACA has resulted in significant change in Ohio's health 

insurance market. Prior to the ACA, there were more than 60 companies selling 

health insurance products in Ohio. Now there are fewer than 40. Specifically, as it 

relates to the federal exchange in Ohio, 17 companies sold products in that market 

this year while only 11 are selling coverage for 2017. With less participation on the 

federal exchange, fewer option are available to consumers. As a result, access to care 

and the cost of coverage could be impacted. 

B) What impact does a lack of competition have on the costs of health insurance? 

Response: 

Because Ohio has always had a competitive insurance market when it comes to all 

types of insurance- health, life, auto, homeowners- the price of the products has 

been lower than the national average. Prior to the ACA, Ohio's health insurance 

premiums were competitive and over the years our auto and homeowners insurance 

have consistently been among the lowest in the country. But as carriers leave the 

health insurance market in Ohio, we are concerned premiums will increase even more 

leaving consumers with less choice and higher health insurance costs. 

C) How can a lack of competition among health insurance companies impact the type 

and quality of health care an individual may receive? For example, could an 

individual face barriers when it comes to the physicians she may want to see or 

the hospital in which she may wish to receive care? 

5 
111 

Response: 

Good competition leads to better outcomes. That seems true in all aspects oflife and 

it is certainly true when it comes to free markets. When competition is eroded and 

potentially even eliminated, the incentive to excel isn't as strong. Certainly, as 

carriers continue to leave the federal exchange in Ohio, there is the potential for 

consumers to see an impact on networks and the availability of care when it comes to 

their doctor or their hospitaL 

Question 3: 

Across the country, states continue to see rising premiums and deductibles. As of 

September, the average rate increase requested by insurers in the individual market was 23 

percent. 

A) Are you concerned that a tipping point may be reached where the cost of health 

insurance becomes so unaffordable that relatively healthy individuals may see 

little benefit in paying for a plan that often has a high deductible along with high 

premiums? 

Response: 

I think we're already at that tipping point. Simply look across the country and you 

will see state exchanges struggling with an older, sicker population than was initially 

anticipated. As a result, enrollment numbers are significantly less than was projected. 

In order for the system to work, younger, healthier consumers have to buy the 

products. But what we're seeing is the exact opposite. That group is not interested in 

buying mandate heavy coverage that is too expensive for the care they anticipate they 

need in their 20s and 30s. As premiums continue to increase and competition is 

further reduced, there will be even less incentive for healthier consumers to purchase 

an exchange plan. 

B) If the answer to the question above is yes, how soon do you believe this point may 

be reached? 

Response: 

As I indicated above, I believe we are already at the tipping point. My concern 

moving forward is how do carriers react after this enrollment season? What happens 

if enrollment for 2017 is weak again and the risk pools continue to be more expensive 

than is sustainable? If carriers continue to leave the exchange market, there won't be 

anyone left to sell products. 

6 
112 

C) What would be the implications on the health insurance marketplace should 

premiums and deductibles continue to rise in the absence of an adequate risk 

pool? 

Response: 

If current trends are not reversed in the exchanges, we could see a death spiral in 

which prices continue to rise so much that only the sick stay because they need the 

coverage making the risk pool impossible to cover with premiums collected. I am 

concerned based on current trends we are rapidly heading in that direction especially 

in states where only one carrier is selling products. 

Post-Hearing Questions for the Record 

Submitted to the Honorable Mary Taylor 

From Senator Claire McCaskill 

Question 1: 

In your testimony you described issues communicating with the Department of Health and 

Human Services and the vagueness of guidelines and regulations. Can you please describe in 

detail instances of unclear directives, the difficulties you had in communicating with HHS 

officials, and the method in which this information was disseminated or not disseminated to your 

agency. 

Response: 

Communicating with HHS over the past six years has been difficult and often inconsistent. 

Guidance from the agency when it comes to rules is often put off until the last minute and then 

provides little detail when specificity is required or is too prescriptive when flexibility is in the 

best interest of state regulators. 

Question 2: 

You claim that the cost of implementing the ACA outweighs the benefits that consumers receive. 

Have you done any cost comparison of unpaid medical care and medical debt before and after 

the implementation of the exchanges? If so, what were the results of that? 

Response: 

As a regulatory agency, the Department oflnsurance does not conduct such studies, therefore we 

do not have such data. A recent study from the Ohio Hospital Association, however, shows that 

from 2013 to 2014 in Ohio, bad debt increased from $1.04 billion to $1.23 billion (an increase of 

$190 million) indicating the ACA may not be helping reduce the bad debt consumes are 

incurring when it comes to health insurance. 

Question 3: 

In an effort to understand and discover best practices for efficacy, please explain how your 

agency "requires insurers to update their information in a more timely fashion" and what the 

safeguards are to "protect the consumer from making decisions based on outdated network 

directories." 

7 
113 

Response: 

Recently, the Department of Insurance adopted new network transparency rules as it relates to 

provider networks in Ohio. Through these rules, standards have been put in place to ensure 

provider networks are updated through the carrier on a regular basis, allowing consumers to 

better understand whether their doctor is in network or not. 

Question 4: 

In your state, what have been the biggest gaps in insurance, care provided, and access to 

treatment for those afflicted with opioid addition? What issue or best practices are you seeing in 

terms of provider availability, access to care, insurance coverage and affordability of specialized 

care? 

Response: 

Even with the implementation of the ACA, there are still gaps in coverage. There are still 

hundreds of thousands of Ohioans living without health insurance. Many are going without 

insurance because they cannot afford the coverage that is available especially as premiums 

continue to increase. We also know many Ohioans enrolled in ACA compliant exchange 

products often face large out of pocket costs and high deductibles. Those costs on top of 

whatever premium they may pay make it difficult to get care they need. As the market continues 

to change and carriers reduce their coverage areas or withdraw completely, access to care is 

impacted. While more Ohioans have health insurance today than did in 2010, there are still 

certainly challenges that must be addressed. 

Question 5: 

Prescription drug pricing is mentioned in all4 testimonies. We've seen that when the price of 

pharmaceuticals goes up, the cost is often times directly passed to the consumer. In your 

experience with the Ohio health exchanges, how has prescription drug pricing affected 

consumers especially those looking to purchase a plan on the exchanges? 

Response: 

The Department of Insurance does not have any regulatory authority over prescription drug 

prices in Ohio. Anecdotally, however, it appears that drug prices are continuing to rapidly 

increase and drive up the cost of health care. This is an issue for all consumers, including those 

purchasing coverage through the federal exchange, which is why more emphasis needs to be 

placed on dealing with the underlying costs of health care. 

8 
114 

Post-Hearing Questions for the Record 

Submitted to tbe Honorable Mary Taylor 

From Senator Jon Tester 

Question 1: 

Would the risk corridor program have better worked to stabilize insurance markets if Congress 

had not prohibited funding for it? 

Response: 

Changes to any programs implemented by the ACA have an impact on how the law operates. 

However, the risk corridor, risk adjustment and reinsurance programs are not the only drivers of 

the law's failures. The way the ACA was designed, it was always going to be unsustainable and 

problematic. In order to address the underlying costs of health care while also encouraging the 

younger and healthier consumers to enroll in coverage, significant changes need to be made at 

the federal level in order to provide states with more flexibility and fewer Washington mandates. 

Question 2: 

Besides the changes that came from health care reform, what factors do you see contributing to 

the growth of health care costs, and what actions do you recommend to address these issues? 

Response: 

Health care reform cannot be exclusively focused on insurance, which is what the ACA did. 

Instead, you have to look at the entire system. In Ohio, we have been focusing on quality and 

not quantity of care, while also driving better outcomes for patients through innovation, 

collaboration and efficiencies. These are areas where an impact can be made on the cost of 

coverage which impacts insurance. 

Question 3: 

What steps do you recommend be taken to encourage more healthy people to invest in insurance 

coverage, or otherwise improve the risk pool in individual markets? 

Response: 

When costs are addressed and when more competition is permitted in the market instead of being 

suffocated out through government intervention, that is what will bring younger, healthier 

consumers back to the market and make the risk pools more manageable and less costly. 

### 

9 
115 

Post Hearing Questions for the Record 

Submitted to Mr. J.P. Wieske 

From Senator Joni Ernst 

"The State of Health Insurance Markets" 

September 15,2016 

I. In your written testimony, you mentioned that Wisconsin already had many consumer 

protection reforms in place pre-A CA. What drove those choices in your state and could 

there have been a way to incentivize more states to do that, without a top-down 

mandate? 

\\'iscmhin. like other statcs. is best suited to make decisions related to our health 

insurance market No one marh<:t across the country is alike. from their consum<:r needs. 

state (rural vs. urban areas), provider acc.:ssibility. insurer competitiorL etc. 

Whik state lm\s have \'Uried, there vvcre many states that had a large number of 

consumc'r protections in place. Pre-A CA. the state lcgislativc process was allowed to 

work to ensure requirements the health insurance market met market needs and 

demands. llistorically, stale consumers, prmiders and insurers actively participated in 

that pwccss to achie\ c goals i(lr the health insurance market. :\ow, the .. one size fits all"' 

li.:dc:ral rcgubtions add annthc'r that confines the state's ahilit} t<> 

react to its m •. 1rkct. 

In shon. Wisconsin wasn't uniqtk'. \!any states made the same decisions m1tl passed 

many <li'thc same rei(mlls. Most stcrles had hl\vs in place that prm idcd some lcvd <'f 

guManlccd coverage for indh·iduals \\ith medical conditions. All states had portability 

lav, un the boob to ensure individwils l<:aving cmerage could get guaranteed issue 

co\·eragc. ·1 he tme issue v\as ail'ordability. Thl~ current one-size tits all approach has only 

made it less afi[H·Jablc. 

2. You also discussed HHS' automatic reenrollment of consumers into a new plan when 

canceled exchange plans are no longer available. How is this information 

communicated to consumers? Ill IS has a communication plan. Please sec the attached 

power point 

If consumers find out the plan they were automatically assigned isn't working for them 

because of cost or narrow networks, do they have any recourse? ll is my understanding 

thm a consumer's <lpponunity to choose a plan, other than the one l !I IS is 

limikd t.o the op~n enr<lilmcnt period. If a consumer makes their lirst premium pa) ment 

Juring PJK11 cmollmcrH f(Jr the plan that!!! lS Ill IS \\Ou!d argue the consumer 

is u:;rccint: to the plan. There i-; not a ! nmllmc:nt Period f(Jr 

cnnsumcrs who arc auto enrolkd into a plan and later lind that it docs nol meet their 

needs. 
116 
• Consumers receive official MOEN and issuer discontinuation notices 

in October 

• Additional outreach to consumers with discontinued plans (2-3 

touches): 

- Acknowledging plan discontinuation, 

- Encouraging them to shop for the plan that meets their needs and budget during 

OE 

- Reinforcing the availability of financial help via the Marketplace 

• Consumers in discontinued plans are eligible for a loss of MEC SEP for 

12/31. Communications will still focus consumers on active plan 

selection by Dec 15 to help ensure timely enrollment for January 1 (i.e. 

welcome kits and cards are received so consumers can use coverage 

beginning 1/1) 
• Consumers with discontinued plans will receive targeted 

communication and additional touches totaling a 

minimum of ( +7 touches). 

• As a secondary message, communication will inform them 

that the Marketplace will match them with an alternate 

plan later in the month to ensure they do not have a gap in 

coverage. 

• If consumers login to HealthCare.gov during this time, 

they will see in their plan results their "Current or 

Alternate Plan" listed at the top. The description of the 

alternate plan will be similar to: ((If your current plan isn't 

available for 2017, an alternate plan is displayed for you to 

consider." 
• Outreach (3+ touches), including a Marketplace 

notice, notifying discontinued consumers that the 

Marketplace has: 

- Matched them to an alternate plan with [Insurance 

company name] (where possible). 

- Consumers may receive communication from that 

insurance company in the coming weeks including a 

welcome kit and a bill. They should keep this 

communication until they've selected their 2017 plan. 

- Consumers are under no obligation to start their 

coverage with this new insurance company. 

- Consumers should actively shop for a plan by December 

15. 
• Outreach encouraging discontinued 

consumers to shop and actively renew their 

coverage by the December 15 deadline. 

• Communication ramps in proximity to the 

deadline (2o+ touches). 

• The Marketplace will send enrollment 

transactions for alternate plans the week of 

November 21 
• Outreach reminding consumers that the Marketplace matched them with an alternate plan to protect them from a gap in coverage (s+ touches). 

• They must pay their first bill with the new insurance 

company tliey were matched with or they will not have 

coverage on January 1st. 

• Consumers are under no obligation to the pay bill if they want to select a different plan. Consumers sliould attest 

to the loss of MEC on 12/31 and they will still be able to select a new plan for coverage starting January 1st. 

• Don't wait until the end or it may take longer for you to receive your new bill and insurance card and you may miss out on time to use your benefits in January. 
122 

Post-Hearing Questions for the Record 

Submitted to Mr. J.P. Wieske 

From Senator Ben Sasse 

"The State of Health Insurance Markets" 

September 15, 2016 

1. Is Wisconsin's CO-OP, the Common Ground Healthcare Cooperative, financially stable? 

Common (iround do~s not current!: have ~my restrictions on '"riling business. OCI \\ill 

not approve an insurer in a linam;ially lul/ardous condition to \Hitc new CO\'eragc. 

2. Did the Wisconsin CO-OP lose money in 2014 or 2015? Is it losing money this year? If 

so, how much? In general. insurer llnancial inl(mnation is proprietary. llowc\·cr on their 

annual statcmcms '' hich arc Common (!round rcport"d statutory net loc.scs of 

S2X.249JJ77 in 20 I and S36.544.66R in 2014. 

3. Do you think it will be able to offer coverage in 20 17? Y cs 

4. Has the CO-OP requested a premium increase for 2017 coverage? If so, for how much? 

Yes, the m crage increase in the indh·idual market is 27.69% in 2017. 

5. Does the CO-OP plan to expand or retract coverage options in 2017? In the indhidual 

market. the ( ·o-OP dropped one gold plan and added two new siln:r plan'i. 

6. Do you expect consumer choice of insurers on the exchange to decrease in your state in 

2017 compared to 2016? Yes. consumer dmice will decrease. i\s publiclv announced, 

l cnitc·d and llunwrw exited thc Wisconsin indi\ idunl insurance market. There ar~ 

addition:1l insurers that of'tl:rc:d plans on Fxchungc in ::>0 16 who arc r)()t to ofl'er 

in I Alsn. there arc insurers 11Im will cuntinuc to offer on Exchange in 2017 hut who 

han: rcducc·d their service areas. 

7. How does the county-level insurer choice in the exchanges compare to choices available 

in the individual markets in your states prior to the ACA? Has it increased or decreased? 

\\h:n looking at the number nfinsun:rs <lffcring coverage on Fxchange \'S. pre-AC\ off 

Fxchange in each county. then.: arc t:cnerully fewer options m·ailablc on Fxchangc. 

!!owner. the ol'f Lxchange market still exists in Wisconsin and consumers can choose an 

insun:r oDcring cmcmgc off !>,change only (and those insurers (ll'f<:ring on Lxdwngc 

must otkr their plans oiT Lxchangc). Those consumers who rely on !Cdcral subsidies 

haYc kss choice they me limited to insurers ofkring on Lxchant:c. 

'I 'he number of insurers offering on Exchang.: varies county by county so some 

consumers ha\·e more choic~: than others. Wisconsin's competitive health insmance 

murkct has historically kd to consumer choice among several national or local insurers. 

!'he ,\C,\ contimll:s l<l Wisconsin's market, as seen 1\ith the n:ccnl market 

c:-<its. 
123 

Post-Hearing Questions for the Record 

Submitted to Mr. J.P. Wieske 

From Senator Claire McCaskill 

"The State of Health Insurance Markets" 

September 15, 2016 

In your testimony you described issues your agency had communicating with the Department of 

Health and Human Services particularly regarding change of regulations without significant 

notice. Can you please describe in detail instances of regulation change without notice, the 

difficulties you had in communicating with HHS officials, and the method in which this 

information was disseminated to your agency. Unl(munatcly, there arc too many instances tr> 

ckt:~il including ignoring President Obama·s l~xccutil·c Order 1.156.1 requiring regulations to 

~llhm at kast" 60-d<Jy comment pcric>d, an um,illingncss to communicate in writing. proYiding 

inconsistent rc;;ponsco and using inl(mnal 1111.0ans ol'cmnmunications like F·\Q's to ofler 

;.,ubstan1i\ c guiduncc, 

The' iolation of I c;-,ccuti 1c ( lrdcr 13563 is particularly frustrating because l!! IS proposed 

rcguluti<Hh o!lcn contain signiflccmt changes to current processes. procedures. programs, etc. 

The: timcli·amcs alln!lcd fi.Jr public comment me too often limited to timclhuncs that do not allow 

stakclwlckrs to digest "hat is proposed anJ submit thoughtful responses that not only point to 

conCl'ITJs_ but abo include altcrnati\ cs to a duress those concerns. rhc most cgrc12ious "as the 

comitkcnt I'Criod l(H· the 2017 \iotin; nl' lknclit and Paymcnt Parameters. CMS only allowed a 

50 dil\ cnt~tmcnt period lhJll.UJl<e_cicttc oiJ?.,ll>li~.l20.illng. With the Thanksgi1 ing holiday, the 

comnh.:nt pc:riod ''"' un], I<) days from the date it C\as pusted in the F~dcn!l Negisler on 

Dcccmhcr ,\mL this included major polic: changt:s like federal network adequacy 

<,landards_ standardi/cd pl:ms. auto rc-cnrollmcnL Comments on the ;\ntuml !.etters to Insurers 

(which include crucial deadlines that impact both Exchange and ofi~Jixchangc plans) have also 

been iimikd to :10 days. 

•\ 30-da: comment period was also prO\ idcd fz>r such compliclicd rcgulntions as Fsscntictl 

I kalth Bcneli\S: .\ctuarh1l Value: and Vlarkct Regulations_ 

.\,,a n;sult of circunl\cnting the public comment period. !!liS has issued regulations that arc not 

ckar. When Ill IS is ~bkcd l(n clariJ!c<Jtion, the r''sponscs ii'prm idcd at all arc inconsistent 

depend in[.! t1n mTn t)f thl· agency rt:spunds. roo often, the agenc) ha~ refused 1o respond 

in \\riting tu ~peci!ic questions. In some cases. after enough coui'usion is apparent in the markcL 

I IllS ''ill i:Nh.f an l i\Q to clari 1) its intent which also may not be consistent with c'l;r]icr 

I 'his adds to coni'usion and insmcrs und regulators to change course. 

thmu[!h inl(mnul means the usc of L\Q's is troubling. Oral guidance and 

not on equal i(loting "ith statutes and regulations as cni(Jrccmcnt touls. 
124 

Additionally, you also claim that there were instances of"cherry picking which insurers will get 

additional business" thus interfering with a free market. Please describe in detail the instances in 

which this occurred, the companies involved, and provide any relevant information that indicates 

there was favoritism shown. Rcgulntor interference b; picking vvinncrs and losers is troubling. lt 

is our bclki' that consumers should be allowed to pick their ovv n plans vv ithout interference. My 

rcf(?n·ncc: to "chcrrv picking" relates to the Ill IS nuto rc-cnrollmcnt process. whcrchy HilS is 

aut" enrolling indiv idw1h into new plans oi'krcd by an insurer the consumer did not choose. This 

is pbnncd i(lr ccmsumcrs vv ho hmc cov 1:ragc in 20 i 6 '' ith an insurer that l.'ithcr docs not intend 

to ot'kr plans on th.: Lxchangc in 2017 or vvill notlw mailabk in the consumers scrvicc urea t()r 

201 

In a ll·cc market consumers arc not pre-assigned a pbn. They do their own shopping and choose 

the pbn '' ith the insun:r that best suits their needs. Insurers compctc V\ ith each othcr to get 

business. Ill IS is deciding \\hich insurers in an area rccciv·c the business through its auto rccnroilment process. ikcausc some insurers are gelling thousands oi' li\ cs enrolled with them. 

automatica!h. by Ill fS, the market has been put at risk. :\uto no-enrolling over ~7.000 people 

into plans the\ did not choose ''illultinwtclv- llav·c n negative lin<mcial impact on our insurers. 

\lore impmlnllll\. this ill mid signilicmlli) to consumer conf'usion. 

Prescription drug pricing is mentioned in all4 testimonies. We've seen that when the price of 

pharmaceuticals goes up, the cost is often times directly passed to the consumer. In your 

experience with the Wisconsin health exchanges, how has prescription drug pricing affected 

consumers especially those looking to purchase a plan on the exchanges? The increasing cost of 

prescription drugs has hud a numbc'r oi' importmt impucts ern pricing in a number of' \\G~ s. It is 

certainly a component of higher premium cnsts. Some insurers hmc mmk changes to their plan 

designs to reflect higher drug cost.s. It is ~rlso impurtalll to note that rules crulkd b0 flliS have 

ai'<l limited the ilhilitv ofinsmc:rs to react to drug pricing issues. i\ number of the rules may have 

~!ctuall; increased drug ~pending (:us1s \\ ithout providing l:onsunH.:r \ aluc. 
125 

Post-Hearing Questions for the Record 

Submitted to J.P. Wieske 

From Senator Jon Tester 

Homeland Security and Governmental Affairs Hearing: "The State of Health Insurance 

Markets" 

September 15, 2016 

1. Would the risk corridor program have better worked to stabilize insurance markets if 

Congress had not prohibited funding for it? I\o. ft ~\as flawed !l·om I IllS's fundamental 

of the health insurance mark.:!, and their decision to federalize all of 

the programs that allowed risk transtcr. 

2. Besides the changes that came from health care reform, what factors do you see 

contributing to the growth of health care costs, and what actions do you recommend to 

address these issues? First, it is important to understand the difference between health 

care costs and health insurance premiums. Health care reform has significantly impacted 

the cost of health insurance premiums, and made it more difficult to control health care 

costs that drive health insurance premiums. Health care reform/the ACAJ Obamacare has 

incentivized adverse selection in health insurance. In dictating V\ho must be <.:1l\Tred and 

the kn~l rd· CO\lTdgc th<Jt must be providclL '"ithout safeguards to ensure the 

"mount "r risk insurers tnkc on haiam:cd. the i\Cfordablc Care i\ct has resulted in 

incrcu.:-cd hr:a!th in,.urancc premiums. Increased cosh makes health insurance kss 

~KU's•,iblc to those wh\l need it and impacts the Clht or medical care~~ hen prov·iders arc 

kit vv ith unpaid charges. Additionally, the charges providers seck I(Jr care is Jrivcn by 

geography, advances in 

practitioner relationships, etc. 

. varying degrees of managed care, hospital and 

!here arc a numbcr of vvay,: to address increasing health care costs that drive up heallh 

insuram:c prcmimns. There has been some vvork on valw: based plan design to ensure the 

delivery of c!Tcclivc medical c:1rc. Cmhllmcr-drivcn solutions, which provide consumers 

"ith the tnois to make bctll:r medical decisions, prov·itk some prmni>c. lnsur.crs and 

rncdicd pn;v idcrs haw been 11orkini·' collabor~Hivcl; in some case:.. to lind better 

outcome,. ! !owev..:r. the ov..T rcg.ulation nfthc health insurance market has consistently 

sh<ll\ n poor results. 

3. What steps do you recommend be taken to encourage more healthy people to invest in 

insurance coverage, or otherwise improve the risk pool in individual markets? Like 1-vith 

other products m ailablc f(H· sale. inJi1 iJuals should rctnin the choke to purchase health 

itblll'illh.:t: or nol. bas,~d on their needs. :\s the rqmlatnrs of health irl:'urancc in 

their sta\C's, Stak Insurance lkp<trlmcnts. along vvith stale legislatures. consumers. 

providers anJ health insurers should dctcrrninc the rules l(lr oflcring health insunmcc 
126 

CO\<:ragc in their slates, withom the o\·crlay of"onc size fits all'' federal regulations that 

arl' not rcspon;;iq? to state specific m;nket dj nmnics. 
127 

Post-Hearing Questions for the Record 

Submitted to Mr. Nick Gerhart 

From Senator Kelly A. Ayotte 

"The State of Health Insurance Markets" 

September 15, 2016 

1. Commissioner Gerhart, you have a unique understanding of what occurs after a health 

insurance company ceases operations, as Iowa was one of two states in which 

CoOportunity Health-the first failed co-op health insurer-Qffered plans. 

Last year, your Department announced that it would be seeking the liquidation of 

CoOportunity Health, one of the 23 health insurance co-ops established with taxpayer 

dollars under the Affordable Care Act (ACA). This announcement was made shortly 

after regulators in your state took over operations of the co-op. 

As of September, 17 of the 23 co-ops established by the ACA have failed. Recently, one 

of the 6 remaining co-ops-Community Health Options-announced that it would stop 

selling plans on the New Hampshire partnership exchange, deciding to only offer plans in 

neighboring Maine. As a result of this decision, more than 11,000 of my constituents will 

have to find a new plan with a new insurance carrier during the upcoming open 

enrollment period. 

A) What are some of the unique and especially difficult challenges posed by a 

health insurance company failing in the middle of the plan year-like 

CoOportunity Health did? Understanding you may not be as familiar with 

plans operating in other states, in your professional opinion, do you believe it 

is possible that another co-op could fail in the middle of a plan year? 

Response: The remaining Marketplace insurers and the consumers of the 

failed company are both impacted by a "middle of the plan year" failure. The 

remaining insurers are faced with absorbing potentially thousands of members 

during the special enrollment period. Smaller, regional carriers may not have 

the network capacity to absorb the increased numbers. 

Also, the consumers of the failed company are forced to find another 

company that may not have the same providers, potentially resulting in noncontinuity of treatment. Additionally, and as we saw in Iowa, the new insurer 

is not required to honor the consumer's existing cost sharing payments that 

were made towards the consumer's out-of-pocket maximum (i.e. deductible.) 

So, consumers had to 'start over' in payment towards their deductibles and 

out-of-pocket maximums. 

Given the experiences of the co-ops, I do believe it is possible for another coop to fail in the middle of the plan year, particularly because the Risk 
128 

Adjustment charges become known in the middle of the year while the Risk 

Corridor payments are not known until later in the year. 

B) While Community Health Options announced prior to the start of open 

enrollment that it wouldn't be offering plans on the New Hampshire 

partnership exchange, this decision will still require more than 11,000 Granite 

Staters to select a new health insurance carrier next year. What impact will 

this have on individuals and families who were customers of Community 

Health Options? For example, is there a chance they may not be able to see 

their preferred health care provider or be treated in their preferred hospital? 

Response: Yes, there is a chance consumers may not be able to see their 

preferred health care providers or may not be treated in their preferred 

hospitals. This may occur if the providers in the insurers' networks are 

different. 

C) Both Iowa and New Hampshire are rural states. Does selecting a health 

insurance provider and plan when there are fewer options available pose any 

additional obstacles for residents living in rural areas? 

Response: Yes, consumers in rural areas may face additional obstacles if 

their new insurer has a different provider network. As discussed earlier, if the 

insurers' networks do not have the same providers, consumers may have to 

seek treatment from different providers, potentially resulting in non-continuity 

of care. 

Additionally, people in rural areas often need to travel long distances to be 

able to see their providers. A change in providers may result in longer travel 

times for consumers. 

D) What was the average consumer experience of someone who lost their health 

insurance due to the failure of CoOportunity Health? Were accommodations 

made to assist individuals and families with finding a new health insurance 

plan? Was your Department made aware of situations where individuals or 

families who lost their health insurance mid-plan year were unable to access 

or afford health care, or had to delay office visits or necessary medical 

procedures due to a lack of insurance? 

Response: It is important to know that although CoOportunity was placed 

into receivership in December 2014, coverage was available through the Iowa 

and Nebraska Guaranty Associations until August 31, 2015. Consumers had 

ample time to change coverage and the Iowa Insurance Division (IID) sent 

numerous communications to both consumers and providers during this 
129 

timeframe to address the questions received. In general, the communications 

sent to consumers explained that CoOportunity would no longer provide 

coverage in Iowa and urged them to immediately enroll with another carrier. 

Provider communications explained the rehabilitation and liquidation 

processes and ensured providers that they would continue to receive payment 

for services to CoOportunity consumers. Examples of these communications 

may be viewed in the following links: 

http://ww-,v.i id.state. ia.us/nodc/1 007 4 703 

http://www. iid.statc.ia.us/nodc/1 0074 702 

http:/lwww.iid.statc.ia.us/nodc/9999268 

http://www.iid.state.ia.us/noJc/l 0163569 

hltp://www.iicl.statc.ia.us/nodc/996 1281 

http:i/www.iid.statc.ia.us/nodc/9961282 

http:/ /www.i id.state. ia. us/nodc/9961280 

h!tp://www.iid.statc.ia.us/node/9953683 

http:/ /vvww. iid.statc. ia. us/nodc/9923293 

Additionally, because CoOportunity was ordered into rehabilitation in late 

December, its consumers had the option to change coverage during the 2015 

open enrollment period that ran through February 15, 2015. Consumers also 

had two special enrollment periods (SEP). The first SEP was from March 1 

through April 30, 2015 and the second SEP was from July I through August 

31,2015. 

E) What were some of the challenges facing CoOportunity Health that eventually 

led to its failure? For example, did the co-op set actuarially sound rates when 

it first entered the market? 

Response: CoOportunity faced multiple challenges that eventually led to its 

failure including but not limited to: 

1. When CoOportunity Health entered the market its rates were not 

adequate. Among other things it appears that its medical management 
130 

was not sufficient, its provider network was too costly and its 

prescription drug formulary/tiers structure was inappropriate. 

2. The federal decision to allow for the continuation of the Transitional 

policies kept healthy individuals out of the Marketplace. Premiums 

from healthy individuals with Grand-mothered policies were not 

available to help off-set the costs of enrollees who had high health 

costs. 

3. As a non-profit company, CoOportunity was prohibited from raising 

funds in the manner of a commercial carrier. Also, the timing of 

federal Reinsurance payments and the inability to access or 

collateralize the Reinsurance or Risk Corridor amounts owed meant 

CoOportunity had significant unliquid assets that could not be utilized. 

2. In your written testimony you note that the number ofiowans purchasing health 

insurance in the individual market has actually decreased since the enactment of the 

Affordable Care Act. 

A) What factors are leading to fewer consumers in Iowa purchasing plans on the 

individual market? 

Response: Several factors include but are not limited to the following: 

I. The weakness of the individual mandate. 

2. The high cost of the plans for the younger, healthier population. 

Factors that contributed to these costs include, the 3:1 age band rating 

requirement and incorrect assumptions about the average age of 

consumers (The average age ofiowa's population is much higher than 

the assumed age of35). 

3. Iowa's expansion of Medicaid. 

B) Are the individuals who are no longer purchasing plans on the individual 

market insured through a different type of plan or program, or are these 

individuals now uninsured? 

Response: Although more Iowans are covered today, we have to guess as to 

why fewer individual are purchasing coverage. It is unclear as to whether 

these persons have become eligible for Medicare or Medicaid, become 

eligible for employer-sponsored insurance, or been able, as young adults, to 

stay on their parents' insurance. It is also possible that some may have 

obtained coverage through Health Care Sharing Ministries (HCSM). Since the 

ACA was passed, enrollment numbers in HCSMs have increased nationally 

from approximately 140,000 to approximately 600,000. HCSMs may fulfil the 

individual mandate requirement for individuals, but are not insurance and are 

not regulated by state divisions of insurance. 
131 

3. In your written testimony, you note that insurance rates in Iowa have increased every 

year since 2014. 

A) Are you concerned that a tipping point may be reached where the cost of 

health insurance becomes so unaffordable that relatively healthy individuals 

may see little benefit in paying for a plan that often has a high deductible 

along with high premiums? 

Response: Yes. 

B) If the answer to the question above is yes, how soon do you believe this point 

may be reached? 

Response: We are entering this point in calendar year 2017. A significant 

number oflowans may be exempt from the individual mandate due to their 

insurance being 'unaffordable' per the ACA requirements that premiums not 

exceed 8.13 percent of the consumer's annual household income. (8.13 is the 

'unaffiJrdable percentage for 20 16; this number is adjusted annually.) 

C) What would be the implications on the health insurance marketplace should 

premiums and deductibles continue to rise in the absence of an adequate risk 

pool? 

Response: No private carrier will offer individual health coverage, on or off 

the Marketplace. The only persons with health insurance will be those with 

employer-sponsored insurance. Small businesses will likely not be able to 

continue offering health insurance coverage. 
132 

Post-Hearing Questions for the Record 

Submitted to Mr. Nick Gerhart 

From Senator Ben Sasse 

"The State of Health Insurance Markets" 

September 15,2016 

I. How much money has CoOportunity repaid the federal government for their solvency 

and start-up loans thus far? 

Response: The federal government set-off and sent to the U.S. Treasury approximately 

$15.2 million to repay CoOportunity's $14.7 million start-up loan and associated interest. 

The $15.2 million was withheld from CoOportunity by the federal government for 2014 

amounts due CoOportunity for federal Reinsurance, Risk Adjustment and Risk Corridor 

programs. CoOportunity is in litigation with HHS regarding the legality of that setoff, 

applicable law and proper accounting of amounts due CoOportunity from the federal 

government. 

CoOportunity is owed $155 million for Risk Corridor for 2014-2015, an amount which 

far exceeds amounts CoOportunity owes the federal government (CoOportunity's 

solvency loans are surplus notes and are expressly subordinated by the federal 

government, to be repaid only when approved by the Commissioner and all other 

creditors have been paid). 

2. How much do you estimate will be repaid in the future? 

Response: It is difficult to determine at this time how much can be repaid the federal 

government given the uncertainty over Risk Corridor payments. If the federal 

government pays $155 million owed CoOportunity for 2014-2015, CoOportunity may be 

able to repay all of its other creditors, the start-up loan and approximately $70 million of 

its $132 million of solvency loan. The federal government has already withheld over $30 

million from CoOportunity to set-off amounts owed by CoOportunity on Risk 

Adjustment and for its Start Up loan. 

3. Is it realistic to assume CoOportunity and the 16 other failed CO-OPs will repay any of 

their loans? 

Response: It is more than realistic that a substantial portion of their loans can be repaid 

if the CoOps are paid the Risk Corridor amounts they are owed. In CoOportunity's 

situation, this would mean repayment of all of its start-up loan and over 50% of its 

solvency loan. 
133 

4. How many people were forced to change plans in the middle of the year due to the 

collapse of CoOportunity? 

Response: About II 0,000 people had to get health coverage from different carriers as a 

result of CoOportunity's insolvency. 

5. For CoOportunity, how many enrollees were from Iowa and how many were from 

Nebraska? 

Response: Of the 109,960 people enrolled with CoOportunity as of January 1, 2015, 

27,068 were enrolled in Iowa and 82,892 were enrolled in Nebraska. 

6. What happened to the out-of-pocket costs that were already paid by these enrollees? 

Were the amounts already paid credited to a new plan or did they have to start over 

towards meeting their out-of-pocket maximums and deductibles? 

Response: Information on whether any credit for out-of-pocket costs was provided by 

other carriers would need to come from those carriers. Coventry did not provide such 

credits to CoOportunity consumers. 

7. Do you expect consumer choice of insurer on the exchange to decrease in Iowa in 2017 

compared to 2016? 

Response: In 2016, Iowa has 2 state-wide carriers, United HealthCare and Medica. In 

2017, Medica will be the only state-wide carrier. Even with the additional of two new, 

regional carriers, we have fewer choices of carriers at the county level because carriers 

are choosing to offer regional plans with narrow networks. 

8. How does the county-level insurer choice in the exchanges compare to choices available 

in the individual markets in Iowa prior to the ACA? Has it increased or decreased? 

Response: Choices prior to the ACA focused on the availability or accessibility of 

provider networks as opposed to the current discussion which is focused on the 

availability or operations of carriers in certain counties. The county-level insurer choice 

has decreased since the ACA was implemented. 
134 

Post-Hearing Questions for the Record 

Submitted to Mr. Nick Gerhart 

From Senator Claire McCaskill 

"The State of Health Insurance Markets" 

September 15, 2016 

In your testimony, you claimed that expanding Medicaid was a key component of creating more 

affordable plans. Can you please explain how the expansion of Medicaid would open the doors 

for those in 'the gap' between the poverty line requirements for standard Medicaid eligibility and 

being unable to afford private insurance plan, especially those on the exchanges? 

Response: I respectfully disagree with your statement that I "claimed that expanding 

Medicaid was a key component of creating more affordable plans." Expanding Medicaid 

was a key component of increasing the insured rate in Iowa, but it did not create more 

affordable plans. Regarding your question about 'the gap' in poverty line requirements, 

the Medicaid expansion provides coverage to adults ages 19 through 64 who have income 

at or below 133 percent of the Federal Poverty Level (FPL). Iowa implemented the 

Medicaid expansion on January 1, 2014. Prior to this time, Iowa's Medicaid program did 

not provide coverage to the expansion population. Implementing the Medicaid expansion 

provided coverage to approximately 150,000 Iowans, many of whom did not previously 

have coverage. At the end of March 2016, approximately 107,000 Medicaid expansion 

members had income at or below 1 00 percent of the FPL and therefore, would not qualify 

for the ACA's Advanced Premium Tax Credits (APTCs) or Cost Sharing Reductions 

(CSRs) available for Marketplace plans. 

Prescription drug pricing is mentioned in al14 testimonies. We've seen that when the price of 

pharmaceuticals goes up, the cost is often times directly passed to the consumer. In your 

experience with the Iowa health exchanges, how has prescription drug pricing affected 

consumers especially those looking to purchase a plan on the exchanges? 

Response: In Iowa, the prescription drug component of plan pricing is significant, and has 

been growing at a quicker rate relative to other components of pricing. Drug tiering has 

also led to adverse selection of those carriers that offer the more expensive prescriptions at 

lower tiers. 
135 

Post-Hearing Questions for the Record 

Submitted to Nick Gerhart 

From Senator Jon Tester 

Homeland Security and Governmental Affairs Hearing: "The State of Health Insurance 

Markets" 

September 15, 2016 

1. Would the risk corridor program have better worked to stabilize insurance markets if 

Congress had not prohibited funding for it? 

Response: Yes, if the program met the expectations of the carriers' pricing models, it 

may have worked as envisioned. However, because most carriers sustained losses, the 

payout was just over 12 cents on the dollar for calendar year 2014. 

Regardless, the risk corridor program led to a moral hazard in pricing because carriers 

had the 'false confidence' that even if they mispriced their rates, there was a federal backstop. I believe this is a failed business model and, as stated in my testimony, the federal 

government should focus on allowing the reinsurance program to continue in a manner 

that protects individual state interests. 

2. Besides the changes that came from health care reform, what factors do you see 

contributing to the growth of health care costs, and what actions do you recommend to 

address these issues? 

Response: The rising costs of prescription drugs and inpatient, outpatient and 

professional services have contributed to the growth of health care costs. Use of 

accountable care organizations in the commercial market may help address this growth. 

As I testified, one of Iowa's commercial carriers has seen early success with A COs. 

3. What steps do you recommend be taken to encourage more healthy people to invest in 

insurance coverage, or otherwise improve the risk pool in individual markets? 

Response: As detailed in my testimony, I believe Federal legislative changes should be 

considered to allow the reinsurance program to continue in a manner that protects 

individual state interests. Federal flexibility with the single risk pool requirements 

through 1332 waivers and addressing the increasing costs of health care are also reforms 

necessary to ensure the continued viability of the individual markets. Currently, due to 

the single risk pool, individual mandate, and other ACA requirements, the federal 

government set up a system that has created adverse selection within the risk pool. 

Healthy people are being asked to subsidize the costs of adverse selection within the risk 

pool. As prices climb, many may choose to pursue exemptions such as Health Care 

Sharing Ministries (in order to avoid the individual mandate penalty); choose to pay the 
136 

individual mandate penalty while having no health insurance coverage; or choose to go 

without any health coverage and not have to pay the individual mandate penalty (if the 

cost is deemed 'unaffordable' per the ACA requirements). 
137 

Post-Hearing Questions for the Record 

Submitted to Hon. Mike Kreidler 

From Senator Ben Sasse 

"The State of Health Insurance Markets" 

September 15, 2016 

1. Do you expect consumer choice of insurer on the exchange to decrease in your state 

in 2017 compared to 2016? 

In 2015, 12 insurers applied and were approved to sell136 individual health plans for 

2016 in our exchange, Washington Healthplanfinder. This year, nine insurers applied and 

were approved to sell 98 health plans inside our exchange in 2017. 

2. How does the county-level insurer choice in the exchanges compare to choices 

available in the individual markets in your states prior to the ACA? Has it increased 

or decreased? 

Prior to the Affordable Care Act, Washington state had nine health insurers in its 

individual market. Today, it has 13 insurers. Nine of them are selling inside our 

exchange, Washington Healthplanfinder. Here is a link to a chart of the health insurers 

and plans <n'ailablc bv countv inside and outside of our exchange for 2017. 

In 2013, before the Affordable Care Act, three insurers -Lifewise, Time, and ODS Health 

Plan, Inc. - sold statewide in our individual health insurance market. Attached is a PDF of 

the 2013 guide to the Washington state individual market that includes the insurers and 

their plans by county. 
138 

S hoppingfor an 

I 

I 
139 

An individual health plan is health insurance you buy directly from an insurance company for 

yourself or for family members. Some individual health plans may not be sold where you live. Before 

you select a plan, look at the chart on page 3 to see what plans are offered in your county. 

Once you know which plans are offered in your county, be sure to compare the benefits and costs. 

Rates 

How much you'll pay a month for a plan depends 

on several factors including: 

o Your age 

o Whether or not you smoke 

o The size of your family (how many 

people you want to cover) 

o The deductible amount (what you have to 

pay out of pocket before the plans starts 

to pay) 

Generally, the higher the deductible you select, the 

less you'll pay per month. 

High-deductible/catastrophic 

health plans 

Most of these health plans are NOT 

portable. This means if you select another 

plan in the future, you may have to wait up 

to 9 months for coverage of a pre-existing 

condition after your insurance takes effect. 

2013 deductibles: $1,970 or more for 

one person 

$3,940 or more for 

two people 

Before you make a final decision on costs and benefits, call the plan directly to get the most current 

benefit information and rates. Company contact information is available on the next page. 

All requests to change rates are public. Go to www.insurance.wa.gov to: 

o View proposed rate increases 

o Sign up to get notified by email when rates increase 

o See how we review rates 

• Post comments on a pending rate request 

• Read frequently asked questions 
140 

2 

Contact the companies 

For more informationabout specific individual health plans, contact the insurance company using 

the toll-free phone number or visit their website. 

Asuris Northwest Health 

1-866-704-2708 

www.asuris.com 

Group Health Cooperative 

1-800-358-8815 

www.ghc.org 

Group Health Options 

1-800-358-88! 5 

Kaiser Foundation Health Plan of the Northwest 

1-800-914-5519 

www.kaiserpermanente.org 

LlfeWise Health of Washington 

To see which plans are available in your county, please review the chart on the following page. 
141 

Individual health plans by county 

"' Coveraae service area varies bv zio code. 

Adams 

Asotin 

Benton __ _ 

Chelan 

~llirrl____ 

Clark 

Columbi<L_ 

Cowlit_z __ 

Douglas_ 

j'_"'_r:y __ _ 

Franklin 

Garfield 

Grant __ 

Grays Harbor 

~-­

_Jefferson 

King 

Kitsap 

Kittitas 

Klickitat 

Lewis 

Lincoln 

_Mas_QD___ 

Okano~_!}__ 

Pacific ______ _ 

Pend Oreille 

Pierce 

San luan 

Skagit 

Skamania __ _ 

Snohomish 

_spokan_e __ 

Stevens 

Thurston 

Wahkiakum 

Walla Walla 

Whatcom 

Whitman 

Yakima 

3 
..,. 

Asuris Northwest Health 

Monthly Rates for Individual Plans 

Rate Effective Date 10/1/2012 

Page One -

Plan Name Smoker/Non· 

Smoker 

Asuris Emerge Core Plan. Non-smoker 

$2,500 Deductible Smoker 

Asuris Emerge Core Plan, Non-smoker 

$5,000 Deductible Smoker 

Asuris Emerge Core Plan, Non-smoker 

$7,500 Deductible Smoker 

Asuris Emerge Core Plan, Non-smoker 

$10,000 Deductible Smoker 

Child 

$122 

$122 

$100 

$100 

$87 

$87 

$78 

$78 

Age Band Age Band Age Band Age Band Age Band Age Band Age Band Age Band Age Band 

0-24 25-29 30-34 35-39 40-44 45-49 50-54 55-59 60+ 

$122 $140 $163 $192 $226 $273 $325 $382 $447 

$140 $161 $187 $221 $260 $314 $374 $439 $514 

$100 $115 $134 $158 $186 $225 $268 $314 $368 

$115 $133 $154 $182 $214 $259 $308 $361 $423 

$87 $100 $116 $137 $161 $195 $232 $273 $320 

$100 $115 $134 $158 $186 $225 $267 $314 $368 

$78 $90 $104 $123 $145 $176 $209 $245 $287 

$90 $103 $120 $142 $167 $202 $240 $282 $330 
\Jl 

Asuris Northwest Health 

Monthly Rates for Individual Plans 

Rate Effective Dale 10/1/2012 

•- - • w•-

Plan Name 

Smoker 

As uris Emerge Plus Plan, 

$1,000 Deductible 

Smoker 

Asuris Emerge Plus Plan, Non..Smoker 

$5,000 Deductible Smoker 

Asuris Emerge Plus Plan, Non..Smoker 

$7,500 Deductible 

Child 

$265 $265 $167 $167 $151 

$151 

Age Band Age Band Age Band Age Band Age Band Age Band Age Band Age Band Age Sand

0-24 25-29 30-34 35-39 40-44 45-49 50-54 55-59 60+ 

$265 $304 $354 $417 $491 $594 $707 $830 $972 

$305 $350 $407 $480 $565 $683 $813 $954 $1,118 $167 $191 $222 $262 $309 $373 $444 $522 $611 

$192 $220 $256 $302 $355 $430 $511 $600 $703 

$151 $173 $201 $238 $280 $338 $403 $472 $553 

$H4 $199 $231 $273 $321 $389 $463 $543 $636 
0\ 

Asuris Northwest Health 

Monthly Rates for Individual Plans 

Rate Effective Date 10/1/2012 Page Three -

Plan Name 

Smoker 

As uris Emerge HSA 80 Non..Smoker Plan, $2,0001$4,000 

Deductible Smoker 

As uris Emerge HSA 80 Non ..Smoker Plan, $3,5001$7,000 

Deductible Smoker 

Child 

$159 $159 $127 $127 

Age Band Age Band Age Band Age Band Age Band Age Band Age Band Age Band Age Band 

0-24 25-29 30-34 35-39 40-44 45-49 50-54 55-59 60+ 

$159 $182 $212 $250 $294 $356 $423 $497 $582 $182 $209 $243 $287 $338 $409 $487 $571 $669 

$127 $146 $169 $200 $235 $285 $339 $397 $466 $146 $168 $195 $230 $270 $327 $389 $457 $535 
" 

Group Health Cooperative 

Monthly Rates for Individual Market Plans 

Effective 7/1/2012 

Plan Name Smoker!NonAma Smoker 

Western Smoker 

Welcome $1000 Non-smoker 

Deductible Plan 12 Central and Smoker 

Eastern Non-Smoker 

Western Smoker 

Welcome $2000 Non-Smoker 

Deductible Plan 12 Central and Smoker 

Eastern Non-Smoker 

Western Smoker 

Welcome $3500 Non-Smoker 

Deductible Plan 12 Central and Smoker 

Eastern Non-smoker 

HSA $2000 Individual Western 

Smoker 

I $4000 Family Non-smoker 

Catastrophic Central and Smoker Deductible Plan 12 

Eastern Non-Smoker 

65+(N): 65 and over, not eligible for Medicare 

Child 

$172 $172 $176 $176 

$83 

$83 $85 $85 

$70 $70 $71 $71 $86 $86 $89 $89 

(A&B): Plan members enrolled in Medicare Parts A and B 

(A): Plan members enrolled in Medicare Part A 

(B): Plan members enrolled in Medicare Part B 

25-29 30-34 35-39 ...... 45-49 5().54 55-59 ..... 65+ (N) (A&B) (A) (B) 

$342 $370 $429 $401 $416 $478 $589 $701 $905 $905 $572 $861 $861 

$283 $306 $355 $334 $349 $399 $492 $587 $754 $754 $480 $717 $717 

$349 $406 $440 $408 $428 $489 $602 $718 $927 $927 $628 $879 $879 

$291 $339 $368 $342 $355 $406 $503 $598 $775 $775 $522 $732 $732 

$122 $134 $148 $162 $198 $233 $282 $345 $438 $438 $369 $418 $418 

$102 $114 $124 $135 $166 $193 $234 $286 $367 $367 $309 $349 $349 $125 $136 $150 $167 $203 $237 $286 $353 $447 $447 $369 $426 $426 

$103 $116 $126 $137 $168 $199 $240 $294 $374 $374 $309 $355 $355 $103 $111 $122 $136 $167 $196 $237 $290 $367 $367 $367 $367 $367 

$87 $95 $103 $115 $138 $164 $196 $243 $306 $306 $306 $306 $306 

$105 $116 $126 $138 $171 $201 $241 $298 $376 $376 $376 $376 $376 

$88 $96 $105 $117 $141 $168 $201 $247 $314 $314 $314 $314 $314 

$124 $135 $149 $166 $201 $236 $284 $349 $442 $442 $442 $442 $442 

$104 $115 $124 $137 $168 $197 $236 $292 $368 $368 $368 $368 $368 

$127 $137 $151 $170 $207 $241 $288 $357 $451 $451 $451 $451 $451 $106 $117 $126 $140 $170 $203 $242 $299 $374 $374 $374 $374 $374 
00 

Group Health Options, Inc. 

Monthly Rates for Individual Market Plans 

Effective 7/1/2012 

Plan Name Smoker/Non* 

Area Smoker 

Western 

Smoker 

Balance 1750 Plan -12 Non-Smoker 

$1750 Deductible Smoker Eastern 

Non-Smoker 

Western Smoker 

Balance 2500 Plan -12 Non-Smoker 

$2500 Deductible Smoker 

Eastern 

Non-Smoker 

Western 

Smoker 

Balance 5000 Plan 12 Non-Smoker 

$5000 Deductible Smoker Eastern 

Non-Smoker 

Western 

Smoker 

HSA $2750 lndividuall Non-Smoker 

$5500 Family 

Catastrophic Plan -12 Eastern Smoker 

Non-Smoker 

Child 

$172 $172 $175 $175 

$95 $95 $97 $97 $78 $78 

$80 $80 $92 $92 $94 $94 

Age Band Age Band Age Band Age Band Age Band Age Band Age Band Age Band Age Band Age Band 

0-24 2&-29 30·34 35-39 40-44 4549 50-54 55-59 60..S4 65+ 

$356 $432 $449 $417 $436 $497 $615 $735 $946 $946 

$297 $361 $377 $348 $364 $416 $512 $611 $789 $789 

$364 $442 $462 $428 $445 $510 $630 $752 $966 $966 

$303 $369 $383 $356 $372 $423 $525 $625 $810 $810 

$145 $159 $173 $191 $235 $276 $329 $404 $511 $511 $120 $131 $147 $161 $195 $230 $276 $337 $427 $427 

$148 $162 $177 $196 $239 $281 $337 $413 $527 $527 

$122 $135 $148 $163 $197 $237 $281 $343 $439 $439 

$116 $128 $142 $155 $189 $222 $269 $326 $414 $414 

$100 $107 $116 $129 $157 $184 $222 $273 $346 $346 

$118 $130 $143 $159 $191 $229 $272 $333 $426 $426 

$101 $109 $120 $132 $160 $189 $229 $280 $355 $355 

$138 $151 $165 $182 $221 $262 $314 $386 $488 $488 

$115 $125 $138 $152 $184 $219 $262 $323 $408 $408 

$140 $153 $168 $188 $226 $268 $320 $394 $499 $499 

$116 $131 $140 $157 $189 $224 $269 $329 $417 $417 
147 
148 

10 

Kaiser Foundation Health Plan of the Northwest 

KP Individuals and Families Plans~ Open Plans 

New Plans Open to New Enrollees on or after ,January 1, lOll 

Clark County~ Smoker Rates 

Effective .January 1, 2013 Through December 31. 2013 Enrolltd aft~r J2/3J/1010 

Subscriber Age 

ill~l2..:.1!&.12~~Sl.:M~~ 

KP 1001)/l5Jib- Form 8WDEDGI0000113 RWR.XGt.:Ot13 RWVIll0113 

Child!Sub$mber0nly $253 $)00 $.113 $.183 

Subscnber+SI'I'u~e $506 $6.00 $6.66 $766 

Subscnber +Child $506 $553 $5~6 $636 

Sub!icnber..-Chddren S784 S\IJJ S96.6 $1,0!6 

Subscnber,Spous~,Ch•ld $759 U5J $919 $).0!9 

Subscnber,Spouso,Chddren S!.037 $!,2J3 $1,2'19 $1 .. 199 

KP 2500130/R~ ·Form BWOEDSlSOOOip RWRXGUOJJJ 

Chlld/SubsmlmOnly $209 $247 $27$ 

Subscnber+Spouse $41& 

Subscnber+Ch•ld $418 

Subscnher+Choldren 1648 

Suhscnber,Spou>e.C'hdd S627 

Sub•cnb~r. Spouse. Choldrcn $&51 

KP 5000130/Rx. For!!! BWDEDMOOOOIIJ RWRXGt10113 

(hJld/Sub>cnb~r Only S!S2 $214 S23& 

Subscnb~r + S[>Ouse SJ64 '"' $476 

Subscnber+Chdd '"' $396 1420 

$'M 

Sub;crober.Spou;e.Ch•ld S546 '"'" S6l0 $6Sg 

Subsc,ber.Spou•e,Chlldren $883 $9)1 

KP 7~0/30/R~- f<trm BWDEDS7SOOOII3 RWRXQUOIIl 

Chold/SubscroberOuly $165 $195 $216 $249 

Subscnber+Spouse $330 t90 $432 $498 

Subs.:;nber-'-Chrld $330 $360 $3&1 $414 

$512 "''" $629 

Subscnbor,Spou;e,Chdd "'' "" $555 $597 $M3 

Sub>cnber,Spouse.Chlldron $671 SSOJ $845 $91! 

S212 

t424 

$3!6- ~351 $436 

S5J4 $654 

$487 $56-9 $727 

nos S7S7 

jif;!~OG!SINM- form BWDEDBJSOOOIJ3 

Chil<iSubscrrberOnly $!39 $!6-5 $205 

Subs~"ber+S[>Ou>e $278 sno $410 S%0 

Subscflber >Ch1ld $278 $304 $419 

$431 $511 $553 1628 

Sub$c,ber,Spouse,Chr!d $417 $46\1 $549 $699 

Subscnber,Spou<e,Cho)dren $570 $75& '"'' 

SIS8 $257 $346 $3SJ 

$)02 $376 $514 $692 

U79 $316 SJ85 $474 "'' $51! 

"'' ~508 $577 

$430 $<;04 $642 $894 

$621 $6<16 $~,4 $1,086 

KP 7.SOOmf:'l~- f!);rm BWD~DB7S0001p 

ChrldiSuh•cnberOnly $1!8 $)3'} $236 $3!\1 ~352 

Subscnb~r +Spouse $2'16 $278 $J46 $472 $6)8 $704 

Sub><nber+Chll<! $236 $257 $291 $3S4 $437 

Subscrober+Chrldren Sl66 $434 $46& $$11 $6!4 "" 'M7 

Subscrlber,Spouse.Ch•ld SJH $391> $464 SS90 $756 $812 

Sub"'nber, Spous~.Chlidren S484 $573 ''"' $767 $931 
149 

Kaiser Foundation Health Plan of the Northwest 

KP Individuals and Families Plans- Open Plans 

New Plans ()pefl to New Enrollees on or after January l, 2011 

Other thau Clark County - Non-Smoker Rales 

Effective January I, 2013 Through December 31, 2013 tnrolledaft,TlliJ.lll\110 

$265 

$5)(1 

S440 

$7(13 

S70S 

'"'' 

S4S4 

'"' $458 

~Ml S69S 

$644 $756 

$9% 

KP7500f301J!~-f2r!!! BWD£.DS7SUOOIU RWR.XGliO!U 

Chdd/Su1m:r•b~r0nly $147 $174 $\93 

Sub,;cnber+Spouse $294 $348 $3~6 $444 $548 

SubS<Onber+('h!ld $294 $32! $340 $36Q S42l 

$4$6 $542 $56! '"" $642 

Subscriber,Spouse,Ch<ld $441 $495 S5JJ $~91 S695 

Subscnber,Spouso.Ch>ldren $601 $7!6 S754 $812 $916 

$152 $!8& 

$304 $370 

$280 Sll6 SJ86 

S47Z $508 sns 

$644 

$&36 

$147 $!82 $249 

$294 5164 '"" $672 

$271 $305 $Ji:l 

S457 $492 $559 "" $646 

$4!R S48S 5622 ''"' '"" $674 $&oS $982 

S!J6 $168 S2ll $344 

$272 $336 $462 S622 

$251 S28J $340 $416 $459 "'" $424 $456 $519 $599 $632 

$1S7 S4S! $577 $7J7 

S'i60 $024 

$126 $289 $319 

$3l4 $428 $S7S $638 

$233 $264 $32! $lQ6 S426 

$394 $425 '"' S557 $5S1 

$3~9 $421 $535 $685 1745 

$520 $582 "" $$46 $'106 

11 
150 

12 

Kaiser Foundation Health Plan of the Northwest 

KP Individuals and Families Plans • Open Plans 

:-lew Plans Open to ~ew Enrollees on or after January I, 2011 

Other than Clark County • Smoker Rates 

Effective ,January 1, 2013 Through December 31, 2013 Enrol!odafierll/31/!010 

SuMoribtlrA~• 

:.:.llM..:..li~&.:.l!~~~~lill:!; 

KP 5000f3l!IRI- form 8WDEOS5000011J RWRXG\ '0113 

t'hlld!Substnb~rOnly Sl92 i227 $152 

SubscnbeT+Spo\IS<' ~384 $4S4 $${l4 

Subscnbor+Child SJB4 $419 ~44 

Subs-cnber+Ch,ldren S59S $707 i732 

Sub>onber.Spo=.Chold H76 S646 ~69<\ 

Subs.;nber.Spow.t,Ch•ldnm $787 $934 $9R4 

KP75<10/30Jfh-f~rm BWDKDS75000!13 RWRXGl!Olll 

Chrld/Sub;mberOoly $J76 S20l! $231 $26.S 

s~bsc,ber -1-Spo<iSe $3S2 $416 $462 $530 

Subs.;nber•Ch!ld $J11 SJ84 $4(17 S44l 

Subscnbor•Ch!ld!e» $546 S64& $671 $705 

Sub~wber, Svouse. Ch.!d SSl& S$92 $63& S706 

Subscnber,Spouse,Child!<'n $72Z $902 $970 

$182 

SJ64 5452 

$1].6 SJ8ll 

S61l 

$606 

$l98 

$3SZ $5% 

$324 SJ66 $44Q 

$546 S588 ~66$ 

s;oo $5S4 $744 

Pl2 $806 '""' 

$162 $20! $275 

Sl24 $402 $550 

$299 SJJS 

ssos $544 '"' $618 

S46! S5J9 

$667 

U86 SlS5 

~300 SJ72 S'HO 

$l71 $3!1 $3S2 

.~4~8 SSM sn1 $427 $499 SOH 

"" $S28 
-

"' 

Lifewise Health Plan of Washington 

2013 Monthly Rates for Individual Market Plans 

Effective 1/1/2013 

Page One 

Per Adult Comprehensive Plan 

WiseAdvantage ($1,800 Oed) 

Age Band Non-Smoker Smoker 

<25 $273 $319 

25-29 $310 $359 

30-34 $357 $414 

35-39 $427 $497 

40-44 $501 $586 

45-49 $629 $728 

50-54 $771 $897 

55-59 $897 $1,040 

60+ $1,021 $1,194 

Per Child $230 

Per Adult HSA Compatible Plans 

WiseSavings 20 Plan WiseSavings 20 Plan WiseSavings 20 Plan 

($1,970 Ded) IND ($3,940 Ded) FAM ($3,000 Ded) IND 

Age Band Non-Smoker Smoker Non..Smoker Smoker Non-Smoker Smoker 

<25 $194 $225 $143 $168 $154 $182 

25-29 $219 $255 $161 $189 $175 $204 

30-34 $254 $293 $188 $217 $204 $239 

35-39 $301 $353 $223 $261 $246 $282 

40-44 $356 $417 $263 $307 $291 $336 

45-49 $447 $516 $330 $381 $361 $420 

50-54 $546 $636 $405 $470 $441 $513 

55-59 $636 $739 $470 $546 $517 $597 

60+ $723 $843 $534 $626 $576 $682 

Per Child N/A ~1~2 N/A 

WiseSavings 20 Plan 

($6,000 Ded) FAM 

Non-smoker Smoker 

$121 $139 i 

$133 $154 

$154 $181 

$183 $217 

$218 $256 

$275 $316 

$336 $393 

$393 $456 

$443 $518 

$100 
:p;: 

Lifewise Health Plan of Washington 

2013 Monthly Rates for Individual Market Plans 

Effective 1/1/2013 

Page Two 

Per Adult Value Plan 

WiseEssentials 6 WiseEssentials 6 

($1,970 Ded) ($2,500 Ded) 

Age Band Non&Smoker Smoker Non-Smoker Smoker 

<25 $160 $188 $139 $164 

25-29 $183 $211 $158 $183 

30-34 $210 $244 $181 $209 

35-39 $250 $293 $218 $254 

40-44 $294 $345 $255 $298 

45-49 $369 $427 $320 $372 

50-54 $452 $527 $393 $458 

55-59 $527 $611 $458 $529 

60+ $598 $702 $521 $608 

Per Child $135 $116 

Per Adult Value Plan 

WiseEssentials Copay WiseEssentials Copay 

($5,000 Ded) ($7,500 Ded) 

Age Band Non-Smoker Smoker Non-Smoker Smoker 

<25 $119 $140 $97 $116 

25-29 $134 $156 $113 $129 

30-34 $155 $182 $127 $149 

35-39 $188 $219 $153 $179 

40-44 $220 $257 $180 $212 

45-49 $276 $318 $227 $260 

50-54 $339 $393 $276 $321 

55-59 $393 $458 $321 $374 

60+ $446 $522 $363 $428 

Per Child $100 $81 

WiseEssentials 6 

($3,500 Ded) 

Non-Smoker Smoker 

$124 $149 

$143 $166 

$164 $191 

$196 $229 

$230 $270 

$291 $336 

$355 $414 

$414 $479 

$465 $549 

$106 

WiseSimplicity 

($10,000 Ded) 

Non..Smoker Smoker 

$87 $100 

$96 $111 

$111 $130 

$133 $155 

$156 $185 

$197 $228 

$241 $282 

$282 $327 

$319 $372 

$70 
..... 

Ul 

ODS Health Plan, Inc. 

Monthly Rates for Individual Market Plans 

Effective 81112012 

Plan Name Tobacco/NonArea Tobacco 

Western 

Tobacco 

Non-Tobacco 

ODS Premium $1,500 

Eastern 

Tobacco 

Non-Tobacco 

Western Tobacco 

Non-Tobacco 

ODS Hybrid $2,500 

Eastern 

Tobacco 

Non-Tobacco 

Western 

Tobacco 

Non-Tobacco 

ODS Hybrid $3,500 

Eastern 

Tobacco 

Non-Tobacco 

Western 

Tobacco 

Non-Tobacco 

ODS Basic $5,000 

Eastern 

Tobacco 

Non-Tobacco 

Western 

Tobacco 

Non-Tobacco 

ODS Basic $7,500 

Eastern 

Tobacco 

Non-Tobacco 

Western 

Tobacco 

ODS HSA Individual Non-Tobacco 

$2,500 Tobacco 

Eastern 

Non-Tobacco 

Western 

Tobacco 

ODS HSA Family Non-Tobacco 

$5,000 Tobacco 

Eastern 

Non-Tobacco 

Oep. 

Child 

$215 

$215 

$224 

$224 

$109 

$109 

$114 

$114 

$98 

$98 

$102 

$102 

$75 

$75 

$78 

$78 

$62 

$62 

$65 

$65 

NIA 

N/A 

N/A 

NIA 

$91 

$91 

$94 

$94 

·-·-·-·-·~·~·~·~·~·~ 0-24 25-29 30-34 35...J9 4044 45-49 50-54 55..S9 ..... 65+ 

$300 $337 $388 $466 $550 $682 $840 $975 $1,118 $1,118 

$256 $292 $333 $400 $468 $590 $722 $840 $956 $956 

$312 $350 $404 $484 $571 $709 $873 $1,014 $1,163 $1,163 

$266 $303 $347 $416 $487 $614 $750 $873 $994 $994 

$153 $172 $196 $238 $280 $347 $429 $497 $569 $569 

$131 $148 $170 $204 $239 $301 $369 $429 $489 $489 

$159 $179 $204 $247 $291 $361 $446 $517 $592 $592 

$136 $153 $177 $212 $248 $312 $383 $446 $508 $508 

$139 $156 $178 $214 $253 $313 $387 $448 $513 $513 

$117 $133 $153 $183 $215 $271 $331 $387 $438 $438 

$144 $162 $185 $223 $263 $326 $402 $465 $533 $533 

$122 $136 $160 $191 $224 $281 $345 $402 $455 $455 

$106 $119 $138 $166 $195 $242 $299 $347 $397 $397 

$91 $103 $118 $143 $167 $210 $256 $299 $340 $340 

$111 $124 $143 $172 $203 $251 $311 $361 $413 $413 

$95 $107 $123 $148 $173 $218 $266 $311 $353 $353 

$89 $98 $114 $136 $161 $198 $244 $285 $326 $326 

$75 $86 $97 $116 $137 $172 $211 $244 $279 $279 

$92 $102 $118 $141 $168 $205 $254 $296 $339 $339 

$78 $89 $101 $120 $142 $179 $219 $254 $290 $290 

$168 $188 $219 $260 $309 $366 $472 $550 $628 $628 

$143 $160 $188 $226 $267 $332 $405 $476 $534 $534 ' 

$175 $195 $228 $270 $321 $401 $491 $571 $653 $653 

$149 $167 $195 $235 $277 $345 $421 $494 $555 $555 

$128 $143 $167 $199 $236 $292 $361 $419 $477 $477 

$111 $123 $143 $169 $200 $252 $309 $361 $407 $407 

$133 $148 $174 $207 $245 $304 $375 $436 $495 $495 ! 

$115 $128 $148 $176 $208 $262 $321 $375 $423 $423 
154 

16 

Premera Blue Cross Individual Plans 

Effective 1/1/2013 

Per Adult Preferred 35 Contract- 022360(01-2012) 

Age Band Non-Smoker Smoker 

<25 $325 $377 

25-29 $384 $448 

30-34 $403 $464 

35-39 $448 $521 

40-44 $592 $689 

45-49 $689 $799 

50-54 $789 $920 

55-59 $958 $1,113 

60-64 $1,118 $1,299 

65+ $1,197 $1,391 

Per Child $246 
-

" 

Regence BlueCross BlueShield of Oregon (Clark County) 

Monthly Rates for Individual Plans 

Rate Effective Date 12/1/2012 

. 

- --··-

Plan Name Smoker/Non· Age Band Age Band Age Band Age Band Age Band Age Band Age Band Age Band Age Band 

Smoker Child 0-24 25-29 30-34 35-39 40-44 45-49 50-54 55-59 60+ 

Regence Evolve Core Plan, Non-smoker $139 $139 $159 $185 $218 $257 $311 $370 $434 $509 

$2,500 Deductible Smoker $139 $160 $183 $213 $251 $296 $358 $426 $499 $585 

Regence Evolve Core Plan, Non-Smoker $115 $115 $132 $154 $181 $213 $258 $307 $361 $423 

$5,000 Deductible Smoker $115 $133 $152 $177 $209 $245 $297 $353 $415 $486 

Regence Evolve Core Plan, Non-Smoker $104 $104 $120 $139 $164 $193 $234 $279 $327 $383 

$7,500 Deductible Smoker $104 $120 $138 $160 $189 $223 $269 $320 $376 $441 

Regence Evolve Core Plan, Non-Smoker $96 $96 $111 $128 $152 $178 $216 $257 $301 $353 

$10,000 Deductible 

________!)~~*~!:_________ 

$111 $127 $174 $205 $248 $295 $~7_ $406 

-- L_$96 -----$148 -
.... 

"' 

Regence BlueCross BlueShield of Oregon (Clark County) 

Monthly Rates for Individual Plans 

Rate Effective Date 12/1/2012 

Page Two 

Plan Name Smoker/Non- ~~~~~~~~~~~~~~~~~~ 

Smoker Child 0-24 25-29 30-34 35-39 40-44 45-49 50-54 55-59 60+ 

Regence Evolve Plus Plan, Non-Smoker $299 $299 $343 $399 $471 $554 $670 $797 $935 $1,096 

$1,000 Deductible Smoker $299 $344 $395 $458 $541 $637 $770 $917 $1,076 $1,260 

Regence Evolve Plus Plan, Non..Smoker $194 $194 $223 $259 $306 $360 $436 $519 $609 $713 

$5,000 Deductible Smoker $194 $224 $257 $298 $352 $414 $501 $596 $700 $820 

Regence Evolve Plus Plan, Non-Smoker $176 $176 $202 $235 $277 $326 $394 $469 $551 $645 

$7,500 Deductible 

--

Smoker $176 $202 $232 $270 $319 $375 $453 - ~5_40 $633 -- $742 
-

"' 

Regence BlueCross BlueShield of Oregon (Clark County) 

Monthly Rates for Individual Plans 

Rate Effective Date 12/1/2012 

. 

- -····--

Plan Name Smoker/Non~ ~~~~~~~~~~~~~~~~~~ 

Smoker Child 0-24 25-29 30-34 35-39 40-44 45-49 50-54 55-59 60+ 

Regence Evolve HSA 80 Non-Smoker $183 $183 $210 $244 $289 $339 $411 $489 $574 $672 Plan, $2,0001$4,000 

Deductible Smoker $183 $211 $242 $281 $332 $390 $472 $562 $660 $773 

Regence Evolve HSA 80 

Non~Smoker $147 $147 $169 $196 $231 $272 $329 $392 $460 $539 Plan, $3,5001$7,000 

~~~~~~~~~ 

~moker. _________ $147 $169 $194 ---$225 $266 _ __ $313 $3~0 ------ $529 $619 
"' 0 

Regence BlueShield 

Monthly Rates for Individual Plans 

Rate Effective Date 10/1/2012 

Page One 

Plan Name Smoker/NonSmoker 

Regence Evolve Core Plan, Non..Smoker 

$2,500 Deductible Smoker 

Regence Evolve Core Plan, Non-Smoker 

$5,000 Deductible Smoker 

Regence Evolve Core Plan, Non-Smoker 

$7,500 Deductible Smoker 

Regence Evolve Core Plan, Non-Smoker 

$10,000 Deductible 

__ §moker 

Child 

$125 

$125 

$103 

$103 

$89 

$89 

$80 

$80 

~~~~~~~~~~~~~~~~~~ 

0·24 25-29 30-34 35-39 40-44 45-49 50-54 55-59 60+ 

$125 $143 $166 $196 $231 $279 $333 $390 $457 

$143 $165 $191 $226 $266 $321 $382 $449 $526 

$103 $118 $137 $161 $190 $230 $274 $321 $376 

$118 $135 $157 $186 $218 $264 $315 $369 $433 

$89 $102 $119 $140 $165 $200 $238 $279 $327 

$102 $118 $137 $161 $190 $230 $273 $321 $376 

$80 $92 $107 $126 $148 $180 $214 $251 $294 

$92 $106 $123 $145 $171 $206 $:!46 $288 $338 
~ Regence BlueShield Monthly Rates for Individual Plans Rate Effective Date 10/1/2012 Page Two Plan Name SmokerfNon~ Smoker Regence Evolve Plus Plan, Non-smoker $1,000 Deductible Smoker Regence Evolve Plus Plan, Non-smoker $5,000 Deductible Smoker Regence Evolve Plus Plan, Non-Smoker $7,500 Deductible ___ Smoker Child $271 $271 $170 $170 $154 $154 Age Band Age Band Age Band Age Band Age Band Age Band Age Band Age Band Age Band 0-24 25-29 30-34 35-39 40-44 45-49 50-54 55-59 60+ $271 $311 $361 $427 $502 $607 $723 $848 $994 $312 $358 $416 $491 $577 $698 $831 $976 $1,143 $170 $196 $227 $268 $315 $382 $454 $533 $625 $196 $225 $261 $308 $363 $439 $522 $613 $718 $154 $177 $206 $243 $286 $346 $411 $483 $566 $177 $204 $237 $279 __1329 $397 ~3 $55~-~ 
tv tv 

Regence BlueShield 

Monthly Rates for Individual Plans 

Rate Effective Date 10/1/2012 

f Q:dV ,,. • .,..,.-

Plan Name 

Smoker 

Regence Evolve HSA 80 Non-Smoker Plan, $2,000/$4,000 

Deductible Smoker 

Regence Evolve HSA 80 Non-Smoker Plan, $3,5001$7,000 

Deductible Smoker 

Child 

$162 $162 $130 

$130 

Age Band Age Band Age Band Age Band Age Band Age Band Age Band Age Band Age Band 

0·24 25-29 30-34 35-39 40-44 45-49 50-54 55-59 60+ 

$162 $186 $216 $255 $300 $363 $432 $508 $595 

$186 $214 $249 $294 $345 $418 $497 $584 $684 

$130 $149 $173 $204 $240 $291 $346 $406 $476 

$149 $171 $199 $235 $276 $334 $398 $467 $547 
TIME INSURANCE COMPANY 

CATASTROPHIC PLAN 

NON-GRANDFATHERED PLANS 

NON-TOBACCO RATES 

EFFECTIVE JANUARY 2013 

$2,000 

25% 

$4,500 

!Urban 

TIM POLCORE WA.FCHN 

$2,000 $2,000 

25% 50% 

$7,000 $7,000 

Rural Z1p Codes: 986, 988.!}94 Urban Z1p Codes· 980-985 

"' "' 

$2.000 $2,000 $3,000 $3,000 $3,000 

50% 50% 25% 25% 50% 

$12,000 $22,000 $5,500 $8,000 $8,000 

Exhibi

$3,000 $5,000 $5,000 $5,000 $5,000 $!0,000 $10,000 $!0,000 

50% 25% 25% 50% 50% 25% 25% 50% 

$13,000 $7,500 $10,000 $10,000 $15,000 $12,500 $15,000 $!5,000 
"" """ 

TIME INSURANCE COMPANY 

CATASTROPHIC PLAN 

NON-GRANDFATHERED PLANS 

TOBACCO RATES 

EFFECTIVE JANUARY 2013 

Deductible $2,000 ~oio 25% 

u! of Pocket w!Ded $4,500 

:Area 

Rural 

iUrban 

TIM. POL CORE WA.FCHN 

$2,000 $2,000 

25% 50% 

$7,000 $7,000 

Rural Zlp Codes: 986, 988-994 Urban Z1p Codes 980-985 

$2,000 $2,000 $3,000 $3,000 

50% 50% 25% 25% 

$12,000 $22,000 $5,500 $8,000 

Exhibit 

$3,000 $3,000 $5,000 $5,000 $5,000 $5,000 $10,000 $10,000 $10,000 

50% 50% 25% 25% 50% 50% 25% 25% 50% 

$8,000 $\3,000 $7,500 $10,000 $!0,000 $15,000 $12,500 $15,000 $15,000 
N 

"' 

TIME INSURANCE COMPANY 

HSAPLAN 

NON-GRANDFATHERED PLANS 

EFFECTIVE JANUARY 20I3 

r~------~I~N~Il~IV~I~Ili~JA~L~-----;~ 

!Urban 

$2,700 

20"/r.. 

$4,700 

NON-TOBACCO 

$2)00 

20"/, 

$4,700 

TOBACCO 

.------FAMILY ___j 

$5,400 

20% 

$9,400 

NON-TOBACCO 

$5,400 

20% 

$9,400 

TOBACCO 

TIME INSIJRANCE COMPANY 

COMPREHENSIVE PLAN 

NON-GRANDFATHERED PLANS 

EFFECTIVE JANUARY 2013 

Deduct1ble $1,500 

lcom 25% 

lOut of Pocket w/Ded $9,000 

Type NON-TOBACCO 

TIM POLONE.WA.FCflN TIM POLMAX.WA l'CBN 

Rural Z1p Codes: 986, 988-994 Urban Z1p Codes 980-985 

Exhibit 

$1,500 

25% 

$9,000 

TOBACCO 
164 

Need more help? Call our Insurance Consumer Hotline! 

1-800-562-6900 

Or visit us at www.insurance.wa.gov 

Our professional consumer advocates provide assistance, enforce insurance law, and can 

investigate complaints against insurance companies and agents on your behalf. 

We also offer individual counseling and group education on health care issues in your 

community. Our highly trained Statewide Health Insurance Benefits Advisors (SHIBA) 

volunteers can help you understand your rights and options regarding health care coverage, 

prescription drugs, government programs, long-term care options and more. 

0 2004-0IC-Consumer Guide, Individual Healthcare-EN-rev, 12112 
165 

Post-Hearing Questions for the Record 

Submitted to Hon. Mike Kreidler 

From Senator Claire McCaskill 

"The State of Health Insurance Markets" 

September 15, 2016 

In your testimony, you concluded that every state should be required to expand Medicaid 

and claim that it is the reason so many of the uninsured were able to get insurance on the 

exchanges. Please describe how you have seen the Medicaid expansion care for those in the 

"Medicaid gap". 

Washington state initially projected it would reach 262,000 newly-eligible adults through 

Medicaid expansion. Instead, close to 600,000 adults gained coverage through Washington's 

Apple Health. This is the most significant factor behind drop in the uninsured. 

Washington state does not have a Medicaid gap- our Medicaid expansion covers people up to 

the Qualified Health Plan (QHP) eligibility (138 percent FPL). Also, 70 percent ofQHP 

enrollees qualify for premium tax credits and 70,000 have qualified for cost-sharing reductions. 

(Rer)()r/: Health Coverage Enrollment Report- ,'vfarch 2016! 

Our state is serving the Medicaid population and the lowest income QHP population well by 

coordinating and working together across systems. Our Medicaid director is a member of the 

state exchange and the both organizations work together to ensure that the "no wrong door" 

approach is working for people in the state of Washington. This coordination is evident by the 

low amount of fall-off and chum between the two types of coverage. (Reporr. Churn Between 

11>1 Aeple llealth und ()Ill's- .Jan 2016! 

Prescription drug pricing is mentioned in all4 testimonies. We've seen that when the price 

of pharmaceuticals goes up, the cost is often times directly passed to the consumer. In your 

experience with the Washington health exchanges, how has prescription drug pricing 

affected consumers especially those looking to purchase a plan on the exchanges? 

We know that the majority of consumers enrolled through our exchange are taking advantage of 

premium tax credits to afford their coverage and that many enroll in silver-level plans to make 

coverage even more affordable. 

However, it is true that higher income consumers, those with incomes above 250 percent of the 

federal poverty level are struggling to pay for care. Reports show that some of the hardest hit 

consumers are those that have chronic conditions for which expensive and routine prescription 

drugs are the only way to treat their conditions. 
166 

Our state legislature acknowledged the difficulty that all consumers with chronic disease, 

regardless of income, have with affording costly prescription drugs and established the Patient 

Out-of-Pocket Costs Taskforce to examine the issue. (Senate !Ji!lli569.) 

The taskforce will report back to the legislature in December of this year, providing more details 

about how the state might address the issue of rising prescription drug costs. 
167 

Æ 

Post-Hearing Questions for the Record 

Submitted to the Honorable Mike Kreidler 

From Senator Jon Tester 

Homeland Security and Governmental Affairs Hearing: "The State of Health Insurance 

Markets" 

September 15, 2016 

I. Would the risk corridor program have better worked to stabilize insurance markets 

if Congress had not prohibited funding for it? 

Yes. If properly funded, the risk corridor program would have worked as it was intended 

and helped to stabilize the costs of health care for consumers now facing higher 

premiums. It also would have helped to bolster the health insurance market- particularly 

those insurers new to the individual markets. 

2. Besides the changes that came from health care reform, what factors do you see 

contributing to the growth of health care costs, and what actions do you recommend 

to address these issues? 

The biggest impact on our health insurance rates this year was the growing cost of 

prescription drugs. As I said in my testimony, Congress must take action to curtail the 

rising costs of prescription drugs if they wish to address the growing costs of health 

insurance for consumers. 

3. What steps do you recommend be taken to encourage more healthy people to invest 

in insurance coverage, or otherwise improve the risk pool in individual markets? 

I believe that one of the strongest incentives to encourage people to get covered is the tax 

penalty they have to pay for not getting covered. However, I do believe that the amount 

of the penalty is too low to truly encourage people to buy a health plan. Today, even with 

the penalty rising to $700 for an individual, many people who do not believe they need 

health insurance, may see $700 as a reasonable amount to pay versus paying monthly 

premiums for a year. Given this fact, I would encourage congress to increase the penalty 

amount to an amount that makes the trade-off less attractive.