U.S. GOVERNMENT PUBLISHING OFFICE

33–361 WASHINGTON : 2019

EXAMINING THE EFFECTIVENESS OF THE 

INDIVIDUAL MANDATE UNDER THE 

AFFORDABLE CARE ACT 

HEARING 

BEFORE THE

SUBCOMMITTEE ON OVERSIGHT 

OF THE

COMMITTEE ON WAYS AND MEANS 

U.S. HOUSE OF REPRESENTATIVES 

ONE HUNDRED FIFTEENTH CONGRESS 

FIRST SESSION 

JANUARY 24, 2017 

Serial No. 115–OS01 

Printed for the use of the Committee on Ways and Means 

( 

ii 

COMMITTEE ON WAYS AND MEANS 

KEVIN BRADY, Texas, Chairman 

SAM JOHNSON, Texas 

DEVIN NUNES, California 

PATRICK J. TIBERI, Ohio 

DAVID G. REICHERT, Washington 

PETER J. ROSKAM, Illinois 

TOM PRICE, Georgia 

VERN BUCHANAN, Florida 

ADRIAN SMITH, Nebraska 

LYNN JENKINS, Kansas 

ERIK PAULSEN, Minnesota 

KENNY MARCHANT, Texas 

DIANE BLACK, Tennessee 

TOM REED, New York 

MIKE KELLY, Pennsylvania 

JIM RENACCI, Ohio 

PAT MEEHAN, Pennsylvania 

KRISTI NOEM, South Dakota 

GEORGE HOLDING, North Carolina 

JASON SMITH, Missouri 

TOM RICE, South Carolina 

DAVID SCHWEIKERT, Arizona 

JACKIE WALORSKI, Indiana 

CARLOS CURBELO, Florida 

RICHARD E. NEAL, Massachusetts 

SANDER M. LEVIN, Michigan 

JOHN LEWIS, Georgia 

LLOYD DOGGETT, Texas 

MIKE THOMPSON, California 

JOHN B. LARSON, Connecticut 

EARL BLUMENAUER, Oregon 

RON KIND, Wisconsin 

BILL PASCRELL, JR., New Jersey 

JOSEPH CROWLEY, New York 

DANNY DAVIS, Illinois 

LINDA SA ́ NCHEZ, California 

BRIAN HIGGINS, New York 

TERRI SEWELL, Alabama 

SUZAN DELBENE, Washington 

DAVID STEWART, Staff Director 

BRANDON CASEY, Minority Chief Counsel 

SUBCOMMITTEE ON OVERSIGHT 

VERN BUCHANAN, Florida, Chairman 

PAT MEEHAN, Pennsylvania 

JASON SMITH, Missouri 

DAVID SCHWEIKERT, Arizona 

JACKIE WALORSKI, Indiana 

CARLOS CURBELO, Florida 

GEORGE HOLDING, North Carolina 

JOHN LEWIS, Georgia 

JOSEPH CROWLEY, New York 

SUZAN DELBENE, Washington 

EARL BLUMENAUER, Oregon 

iii 

C O N T E N T S 

Page 

Advisory of January 24, 2017, announcing the hearing ....................................... 2 

WITNESSES 

John R. Graham, Senior Fellow, The National Center for Policy Analysis ........ 5 

Thomas Miller, Resident Fellow, American Enterprise Institute ........................ 14 

Dr. John E McDonough, DrPH, MPA, Professor of Practice, Department of 

Health Policy & Management, Harvard TH Chan School of Public Health ... 28 

SUBMISSIONS FOR THE RECORD 

AHIP, statement ...................................................................................................... 58 

(1) 

EXAMINING THE EFFECTIVENESS OF THE 

INDIVIDUAL MANDATE UNDER THE 

AFFORDABLE CARE ACT 

TUESDAY, JANUARY 24, 2017 

U.S. HOUSE OF REPRESENTATIVES, COMMITTEE ON WAYS AND MEANS, SUBCOMMITTEE ON OVERSIGHT, Washington, DC. 

The Subcommittee met, pursuant to call, at 2:26 p.m., in Room 

1100, Longworth House Office Building, Hon. Vern Buchanan 

[Chairman of the Subcommittee] presiding. 

[The advisory announcing the hearing follows:] 

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Chairman BUCHANAN. The Subcommittee will come to order. 

Welcome to the Ways and Means Subcommittee Oversight hearing on Examining the Effectiveness of the Individual Mandate 

Under the Affordable Care Act. My focus today is on affordability. 

In Florida, 65 percent of our counties only have one carrier offering insurance to individuals in 2017. The State went from eight 

carriers in 2014. Today, we have five carriers, almost half, in 2017. 

In Manatee and Sarasota Counties, two counties I represent in my 

district, individuals went from being able to choose from among 

three different providers down to two. This happened in just a single year. In addition to less options to choose from, the average 

monthly premium Floridians enjoyed under the ACA increased by 

19 percent this past year, according to the Florida Office of Insurance Regulation. 

Let me pause and look back 4 years ago when the Affordable 

Care Act was just beginning to be implemented in 2013. Then, the 

HHS secretary released a report stating the goal of Affordable 

Healthcare Act is to increase competition and transparency in the 

markets for individuals and small group insurance leading to higher quality, more affordable products. Fast forward 4 years later, 

2017, what we are seeing not only in Florida but across the country 

is a decrease in competition, an increase in premium costs. This increase cannot continue. It is not sustainable. 


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We are here today to understand why the individual mandate, which today I think those fees that we are paying in over $3 billion 

was a key component. The ACA is failing to stabilize the health insurance marketplace. This discussion is important not so that 

members on our side of the aisle or the other side of the aisle can 

score political points, but that, so we can focus on the facts. We 

need facts because there are real people’s lives that are being impacted. 

When I talk to people in my district, it is clear to me that they 

are struggling. Although I mentioned some statewide and countylevel statistics, those numbers touch the lives of real people in Florida in terms of Florida families. We cannot stand idly by as health 

insurance under the Affordable Care Act becomes less and less affordable for our constituents. I hope this hearing serves as the first 

step to fixing what is broken. I look forward to listening to our witnesses and learning from the past so that we can develop better solutions for the future. 

I now yield to the distinguished Ranking Member Mr. Lewis for 

the purpose of an opening statement. 

Mr. LEWIS. Again, Mr. Chairman, thank you. I want to thank 

you again and congratulate you on your new role as chairman of 

the Oversight Subcommittee. 

The two Democratic Members of the Subcommittee have now arrived. They didn’t get lost in the tunnel. So they are here. Joe 

Crowley of New York and Danny Davis of Illinois. 

Mr. Chairman, I hope we can continue our tradition of strong 

oversight of the Administration as we have in past Congresses. I 

would also like to thank each witness for being here this afternoon. 

Let me begin by saying what I have said at countless other hearings. The Affordable Care Act works. It works. Now, I want to be 

crystal clear for the record. The topic of today’s hearing is a Republican idea. In fact, Governor Romney called it the ultimate conservative idea because it was based in personal responsibility. The individual mandate became a core part of the health care law. There 

is not a family in this country that has not been touched by sickness or injury. By sickness or injury. 

I have said it before and I will say it again. I believe in my heart 

of hearts that health care is a basic human right. It is not a privilege for the wealthy. It should not be reserved for the people that 

insurance companies have decided worthy of the risk. 

This Committee has a mission, an obligation, and a mandate to 

think of those that have been left out and left behind. We cannot 

forget the 100 million Americans with preexisting conditions. We 

cannot forget the struggle of those people whose care costs more 

than the insurance limit. We cannot forget the seniors in the 

doughnut hole who were unable to afford their medicine. 

I know that we can come together to make health care more affordable, more accessible for every person in our great country. I 

speak for the members on this side of the aisle who are ready to 

do the good work, the people’s work. 

We must be mindful not to harm the marketplaces where Americans buy insurance. We must protect children from being kicked off 

of their parents’ plan. We must ensure that a woman is not 

charged more simply because she is a woman. 

5 

Mr. Chairman, today we face a moral issue. In the coming weeks 

and months, we should come together to improve the law and not 

destroy it. At stake are not just the detail of policy but the fundamental principles of justice and the very character like our great 

Nation. 

Thank you, Mr. Chairman. And I yield back. 

Chairman BUCHANAN. Thank you, Mr. Lewis. 

Without objection, other Members’ opening statements will be 

made part of the record. 

Today’s witness panel includes three experts. First, John Graham is a senior fellow at the National Center for Policy Analysis. 

Tom Miller is a resident fellow at the American Enterprise Institute. And finally, Dr. John E. McDonough is a professor of practice 

at the Department of Health Policy and Management at Harvard 

TH Chan School of Public Health. 

The Subcommittee has received your written statements and 

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

each have 5 minutes to deliver your oral remarks. We will begin 

with Mr. Graham. You may begin when you are ready. 

STATEMENT OF JOHN R. GRAHAM, SENIOR FELLOW AT THE 

NATIONAL CENTER FOR POLICY ANALYSIS 

Mr. GRAHAM. Thank you, sir. 

Chairman Buchanan, Ranking Member Lewis, my name is John 

R. Graham of the National Center for Policy Analysis. I will take 

my short time today to emphasize some of the commentary I 

brought up in my written comments, which I have already submitted to you and which I drafted before President Trump issued 

his executive order, which I think makes the individual mandate 

of even more pressing concern. 

Will it be enforced by the next HHS secretary? If it is not enforced, will it cause ObamaCare to collapse? Or perhaps some of us 

might say collapse more or faster than we have seen it collapsing 

already. 

Politically, it is very easy to go after the individual mandate. It 

is the least popular part of ObamaCare. However, it counterbalances the most popular part of ObamaCare, the protection against 

being underwritten for preexisting conditions. 

I think my message today could be worry not. Although the individual mandate is also—is bad politics, I would also assert it is bad 

economics or at least weak economics. Now, this is a very different 

message than we have heard for many, many years. It is true that 

it can properly be characterized as a conservative idea. And the 

high water mark of that was what we call RomneyCare in the Massachusetts health reform. The idea which is meant to appeal to 

conservatives is that this is—demonstrates individual responsibility. We have a problem that hospitals’ emergency rooms are 

jammed with patients who are not paying their bills, and so we 

have an uncompensated care crisis. Fair enough. 

Further, if people are encouraged to buy more insurance, they 

are more likely to get preventative and timely care and not have 

to go to the emergency room in the first place. Well, that would be 

fine. But the reality on the ground is it would only work if the 

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come households. If it was folks like Bill Gates or Warren Buffett 

who were crowding the emergency rooms. I am sorry. I should update that given the current Administration. Peter Thiel or Sheldon 

Adelson were crowding the emergency rooms. But they are not. It 

is low-income people who are largely uninsured. They cannot bear 

to pay the fee or tax or penalty or whatever we want to call it for 

violating the mandate. 

So although it is appealing to conservatives to think that this imposes individual responsibility, in fact what its real effect is to give 

cover to significant growth in government spending and government programs, which is fine in some people’s minds but not for 

conservative minds, I would suggest. 

Now, whatever we want to call it—the law, as you know, calls 

it a penalty. CMS healthcare.gov now calls it a fee. But whatever 

we want to call it, it is inefficient in a very mechanical sense. A 

recent memo from the Internal Revenue Service points out that 6- 

1/2 million people paid the fine in 2015, but 12.7 million were exempted for various reasons. Again, emphasizing the point that 

most people whom you think you are affecting with a mandate cannot afford to pay it. How much was raised from the mandate? $3 billion. Now, to me 

that sounds like a lot of money. But as you know, in the health 

care system that is nothing. We spent $3.2 trillion on health care 

in this country in 2015. If we compare the Congressional Budget 

Office score to—about ObamaCare, the Affordable Care Act in 2010 

versus the update in March 2016, it shows there is a slight reduction in anticipated revenue from the tax or penalty from the people 

who do not obey the mandate. But this is not because more people 

are getting private coverage and exercising their responsibility. 

In the original CBO score, the CBO estimated, this is back in 

2010, that the Affordable Care Act would leave 22 million uninsured in 2016 through 2019. Recently, that has been upped to 27 

million. Those with employer-based coverage, according to the original estimate, was 163 million. In the new estimate, it is down to 

159 million. Sorry. Down to 152 million. 

In 2010, the Congressional Budget Office estimated ObamaCare 

exchanges would enroll 21 million people in 2016, and we know 

where that has gone, increasing to 24 million in 2019. It is down 

to an estimate of 20 million people in 2019 under the current law, 

according to the latest CBO estimate. 

Who is getting insured? It is Medicaid. And the Medicaid dependency, the estimates according to the CBO, have gone up by about 

one-third. So the coverage through ObamaCare is not through enforcing any kind of individual mandate. It is through more government dependency on Medicaid, which is costing us far more than 

we are getting from an individual mandate. 

Chairman BUCHANAN. Thank you. 

[The prepared statement of Mr. Graham follows:] 

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Chairman BUCHANAN. Mr. Miller, you are up next. 

STATEMENT OF THOMAS MILLER, RESIDENT FELLOW, 

AMERICAN ENTERPRISE INSTITUTE 

Mr. MILLER. Thank you, Chairman Buchanan, Ranking Member Lewis, Members of the Subcommittee, for the opportunity to 

testify today to examine the effectiveness of the individual mandate 

under the Affordable Care Act. 

The shaky case for the individual mandate is based on mistaken 

premises, faulty economic analysis, shortsighted politics, and 

flawed health policy. Opponents have found the mandate to be administratively challenging, politically unsustainable, economically 

unnecessary, beyond the scope of a proper role of government, and 

constitutionally questionable. 

Most arguments in favor of the individual mandate usually 

present it as a necessary, though far less popular, means to more 

laudable ends. Well, they certainly got the last part right. The individual mandate touches exposed nerves and offends core principles 

in ways that other elements of the modern regulatory state do not. 

The individual mandate has consistently remained the most intensely unpopular provision of the new health care law since it first 

took shape. 

One of strongest driving forces behind officeholders resorting to 

the individual mandate is the desire to substitute off-budget mandated private funds in place of more visible taxes that they would 

otherwise find hard to impose to meet their insurance coverage 

goals and finance additional health care spending. But shifting 

costs less transparently is not the same as actually reducing them. 

The type of mandate that the U.S. political economy and health 

care system is likely to deliver in practice is very different and 

more complicated than what might be assumed under best case 

theories. Trying to force people to buy insurance they cannot afford 

or pay much more for such coverage than it actually appears worth 

to them remains politically and economically difficult. 

As a consequence, the individual mandate continues to face significant political limits on how large the mandate’s penalties can 

be, how aggressively they can be enforced, and how much compliance the mandate will produce. Hence, the mandate’s best future 

for continued survival involves operating much more as a gentle 

suggestion or nudge rather than a more polarizing command. Because the penalties for failing to comply with the mandate are 

rather modest in proportion to the average—likely average premium cost of required coverage, millions of individuals have calculated that it is much less expensive to pay the penalty than to 

purchase mandatory insurance. 

Projections for compliance versus penalty payment under the individual mandate by the Congressional Budget Office consistently 

have overestimated the degree of compliance. In practice, the Internal Revenue Service has reported noticeably higher numbers of individual mandate penalty payers despite lower amounts of actual 

revenue collected. CBO also has tended to be on the high side of 

claims that the Affordable Care Act would rapidly and substantially increase coverage in the new law’s exchanges for individual 

coverage as well. 

15 

Rather than reexamine the flawed foundations of its previous assumptions, CBO appears to have recently doubled down on them. 

The CBO estimates are flawed in overstating baseline assumptions 

for future growth in the ACA’s version of individual market coverage, exaggerating the response rate of those subject to the mandate before and after its possible repeal, misestimating Medicaid 

coverage effects, and setting unrealistic parameters for future 

health policy changes. In fact, the most significant force behind the 

size and shape of insurance coverage gains has been large taxpayer 

subsidies primarily through the expanded Medicaid program. 

Enrollment rates for the ACA exchanges are highly sensitive to 

one’s income and premium tax subsidy level. Enrollment by younger and healthier risks, which is supposed to be the primary target 

of the individual mandate, has failed to reach expected levels. 

There are a variety of alternative policy remedies that could be 

pursued if the individual mandate is either limited further or repealed. They include extension of HIPAA-like protection against 

health status risk rating to individuals in the nongroup market 

who maintain continuous qualified insurance coverage while 

switching between health plans. Or imposing penalties in the form 

of higher insurance premium surcharges when eligible individuals 

fail to obtain or maintain minimum qualified coverage during annual open enrollment periods. Or tightening eligibility verification 

further for special enrollment periods between annual open seasons 

in ACA exchanges. Or enabling default enrollment in minimum 

qualified coverage costing no more than the value of applicable 

Federal taxpayer subsidies for insurance. Or providing a different 

mix of taxpayer subsidies for obtaining and maintaining qualified 

insurance coverage in the individual market that are more generous to younger and healthier individuals who have declined coverage thus far. Or as a last resort for some and a first resort for 

others, actually enabling and incentivizing insurers to offer coverage that is less expensive and more attractive to potential uninsured customers. 

Thank you, Mr. Chairman. I look forward to your questions. 

Chairman BUCHANAN. Thank you, Mr. Miller. 

[The prepared statement of Mr. Miller follows:] 

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Chairman BUCHANAN. Dr. McDonough, it is your testimony. 

STATEMENT OF JOHN E. MCDONOUGH, DRPH, MPA, PROFESSOR OF PRACTICE, DEPARTMENT OF HEALTH POLICY 

AND MANAGEMENT, HARVARD TH CHAN SCHOOL OF PUBLIC 

HEALTH 

Mr. MCDONOUGH. Thank you, Chairman Buchanan and Ranking Member Lewis and Members of the Committee. 

Chairman BUCHANAN. Turn your mike on. 

Mr. MCDONOUGH. Pardon me. Thank you. 

Thank you, Chairman Buchanan, Ranking Member Lewis, Members of the Committee. I am John McDonough from the Harvard 

Chan School of Public Health. I would just note from my bio in my 

statement that I, between 2008 and 2010, was a staff person for 

the Senate Committee on Health, Education, Labor, and Pensions, 

and worked on the writing and passage of the Affordable Care Act. 

So I am a former Senate staff person in recovery. And I think most 

of you will understand that that is unfortunately a terminal, lifelong preexisting condition that I just can’t shake as much as I 

might try. 

So thank you for the honor of speaking before you. I have a written statement, and I will just highlight my six main points in it 

and then engage in conversation on whatever matters you find of 

value talking with me about. 

First, the individual mandate, so-called the individual responsibility requirement of the ACA, is a core mechanism to ensure a 

healthy risk pool and more stable premiums in a guaranteed issue 

market that bans the practice of medical underwriting and preexisting condition exclusions in the individual health insurance 

market. It is core and it is recognized, and is not the only way to 

address it, but it is an essential component of the law. What we 

in Massachusetts where I was involved in the passage of the Massachusetts health reform law refer to as the three-legged stool. 

Secondly, to eliminate the mandate and to leave in place guaranteed issue is a sure and proven formula for major disruption in the 

individual health insurance market nationally. And that is a concern that I think is neither speculative nor hypothetical. We have 

seen it played out in a number of States over the past 25 years. 

Thirdly, I would mention, as Dr. Graham has also mentioned, 

that between the late 1980s and the latter part of the last decade, 

the individual mandate was largely a policy idea that was championed by conservatives, starting with Professor Mark Pauly and 

Stuart Butler in the late 1980s. And only in the latter part of the 

last decade was it embraced and accepted by Democrats. Its roots 

are entirely based on the notion of individual responsibility and 

shared responsibility as Governor Mitt Romney stated repeatedly 

during the Massachusetts health reform experience. 

Fourthly, there are other ways to get at the intent and purpose 

of the individual mandate. It is not that mechanism or anything 

else. One mechanism is in late enrollment penalties. Another mechanism is referenced in Speaker Ryan’s Better Way plan in terms 

of continuous coverage requirements. I would caution that I think 

that if you compare the individual mandate and continuous coverage requirements, I would regard the continuous coverage reVerDate Sep 11 2014 00:24 Feb 26, 2019 Jkt 033361 PO 00000 Frm 00032 Fmt 6633 Sfmt 6602 I:\WAYS\IN\33361\33361.XXX 33361
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quirements as far more onerous and punitive in terms of consumers and would urge caution before you go too far down that 

path. 

Fifthly, I find no empirical evidence that suggests that the individual mandate has anything to do with the stresses that have 

been experienced in the State and Federal health insurance exchanges over the 2007 enrollment and now carrying-out period. 

There are other causes that I think more effectively explain those 

problems that are going on in those markets and be happy to talk 

with you about those. 

And finally, I would only suggest that the suggestion that the 

size of the individual mandate penalty should be increased to enhance the uptake of individual health insurance is a mistaken notion. I think far more at the core in terms of enhancing enrollment 

would be to address the lack of adequate affordability in the health 

insurance exchanges right now, particularly for consumers between 

250 and 400 percent of the Federal poverty level. 

Those are my main points, and I look forward to further conversation. Thank you. 

Chairman BUCHANAN. Thank you, Doctor. 

[The prepared statement of Dr. John E McDonough, DrPH, MPA 

follows:] 

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Chairman BUCHANAN. I want to thank all of you. It is excellent 

testimony. We now proceed to questions and answer session. For 

the purposes of today’s hearing, I will hold my question until the 

end. 

I will now recognize the gentleman from Pennsylvania, Mr. Meehan. 

Mr. MEEHAN. Thank you, Mr. Chairman and the Ranking 

Member. And I am going to look forward to working with both of 

you and the full Committee on this important agenda before us. 

And there couldn’t be a more appropriate place to start than with 

this particular issue. 

One of the concerns that I hear back in my district frequently is 

the frustration of everyday Americans with Federal Government 

mandates telling people this is the way you are going to live your 

lives. It would be bad enough if that was all that there was to it. 

But the fact of the matter is we are talking about something which, 

notwithstanding the opening statement of my good friend the 

Ranking Member, the ACA does not work. And I was pleased to see 

Mr. Miller talk about the concept of exposed nerves from the Federal mandates that are happening. And we hear words about mandate, coercion. Those are the kinds of things that I think are affecting people. 

And then you look at the facts. We have had this program. Premiums have been rising by double digits for the very people that 

Mr. McDonough talked about in the hardest places to be able to 

pay. One-third of the counties now have only a single insurer. The 

exchanges are consisting largely now of older and less healthy people. 

And I look at my own district in Pennsylvania. And we have 

taken the time to ask people to weigh in. Premiums for ObamaCare 

plans of Pennsylvania are up 33 percent in 2017. Each year there 

is fewer to choose from. In 2016, there were 13 plans. Next year, 

there will be eight. Now listen to the individuals in their own 

words. Mike from Boyertown shared with me his concern, the cost 

of our health care insurance. ‘‘We have coverage from 

healthcare.gov and our rates are increasing from $1,600 to $2,600 

a month.’’ These are working class people. ‘‘Only six plans are 

available, and the lowest cost one is still over $2,000 per month 

just for my wife and I.’’ Fred from Lansdale wrote, ‘‘I received my 

annual health insurance rate increase for 2017 yesterday. My rates 

went up from $2,500 to over $3,750 per month. Per month. Last 

year’s increase was devastating. This year’s increase is even more 

overwhelming. I am self-employed. I only had a few short years 

ago. This news is devastating to my family.’’ 

People are voting with their feet in this. The CBO just came out 

and released its most recent, just this week. Expects a sharply 

lower number of participants in the Affordable Care Act for exchanges in 2017. CBO said the number of participants in the exchange was expected to be 10 million in 2017. So clearly, we have 

been sold a bill of goods. It isn’t working. 

Mr. Miller, what conclusions can you draw from this kind of revised estimate? 

Mr. MILLER. Well, it is not working according to plan is the 

short answer. To connect this up with the subject of today’s hearVerDate Sep 11 2014 00:24 Feb 26, 2019 Jkt 033361 PO 00000 Frm 00044 Fmt 6633 Sfmt 6602 I:\WAYS\IN\33361\33361.XXX 33361
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ing, one of this—this reflects, in effect, an overinvestment in a set 

of policies that did not come together and work as promised. And 

part of what you are seeing in the higher premiums and the restricted availability of plans, the losses in plans, is everybody was 

supposedly saying it is all going to work like clockwork. Everybody 

is going to go into the exchanges. That is what CBO projected. 

They weren’t talking to the people on the ground. And so we have 

got a different experience in practice than the one that was proposed to us in theory. 

Now, we can keep trying to implement that theory saying sooner 

later it will work out. That seems to be what CBO is mostly projecting. On the other hand, we can try to say we need to take this 

into the shop and change the mix around. And we need to get back 

to having health care coverage that actually matches what people 

are willing to pay for and can pay for. 

Mr. MEEHAN. I am so glad you said that about taking it into 

the shop. Because here is the big misnomer in this whole discussion. This idea that somehow there is this Republican effort to just 

drop the thing and leave everybody on the street, instead of the 

real genuine effort which is to take something that isn’t working 

and try to get it to work better. 

We only get 40 percent of the people who are eligible for these 

exchanges into it. And yet we need about 72 percent to make them 

work. So how do we incent that other 30 percent to get in? Is it 

by mandates or is it by working on the kinds of things which are 

being put in place to lower the cost, to make better availability, to 

make their—allow the programs to be the kinds of things in which 

they have a choice to find the insurance that fits them? Isn’t that 

the better way to get that remaining 30 percent so we can get the 

kind of exchanges that can actually work? 

Mr. MILLER. We have tried the weak punitive approach or we 

know what is best. We might want to try some positive incentives 

to find out what in fact—where the market is. 

Mr. MEEHAN. Mr. Chairman, thank you. I yield back. 

Chairman BUCHANAN. I now want to recognize the distinguished Ranking Member, Mr. Lewis, for any question he might 

have. 

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

Dr. McDonough, one of the things I am most proud of in today’s 

law is that because of the ACA, Americans with preexisting conditions are able to get insurance. Can you discuss why the individual 

mandate is so necessary? 

Mr. MCDONOUGH. So thank you for the question, Representative. The concept of guaranteed issue, which means that insurers 

must issue coverage to applicants regardless of their prior medical 

history, regardless of their current medical status, is one of the 

most popular features of the Affordable Care Act. It is a policy that 

was implemented in various States starting in the 1990s. About 

eight States in particular. Five States implemented it. All eight 

States implemented it without an individual mandate. And all 

States, when they did it, saw significant substantial disruption in 

their individual health insurance market because people were 

going in and purchasing coverage when they felt they need it and 

42 

then dropping out of the market when they got whatever services 

they needed. 

And so it was a damaging risk pool that created what some refer 

to as an insurance death spiral where premiums go up, and as premiums go up, more people drop out. We saw that in Massachusetts, 

New York, New Jersey, Vermont, and other States. Kentucky, New 

Hampshire. Some States did guaranteed issue without a mandate. 

And when they saw the impact, they withdrew and they stopped 

guaranteed issue. Other States, like Massachusetts and New York, 

did it and had damaging impacts in the market and kept the policy 

in place. 

But guaranteed issue is one of the most popular features of the 

law. Americans don’t like the idea that to get coverage you can only 

get it if you don’t have any adverse medical history that would disqualify you from coverage. And they don’t like the individual mandate. And they usually don’t understand that there is a link between the two of them. And that guaranteed issue can’t function 

effectively in an environment without some kind of coverage responsibility, some kind of shared responsibility on the part of individuals. So that is where it comes from, and so—the linking together. 

And so Massachusetts, in 2006, in its Health Insurance Reform 

Law, for the first time put together and actually implemented an 

individual mandate and guaranteed issue together. We saw a dramatic drop in our rate of uninsurance. We saw a stabilization, a 

stabilization of premiums in the individual market. And it was a 

strikingly successful experiment in terms of the intended influence 

on the individual health insurance marketplace. So we saw it at 

work. 

And it was then the design feature that people thought made 

sense in terms of coming up with the national reform that is the 

Affordable Care Act. So that’s where it came from and that is why 

it is in there. It is an essential piece. So Americans love guaranteed 

issue and don’t want to lose that. But guaranteed issue without 

some kind of coverage requirement creates a serious market disruption which people would not want to see. 

Mr. LEWIS. Thank you very much, Doctor. Would you talk about 

the best ways to get people enrolled in insurance and engaged in 

their health care? Is it better to increase financial assistance or to 

follow the Republican suggestion such as the Better Way health 

proposal? 

Mr. MCDONOUGH. So the concern that I have with the Better 

Way health proposal and with some of the other plans that are forward is that, you know, the United States in January 1, 2014, banished medical underwriting from our health insurance market for 

the first time in our history. And overwhelmingly Americans like 

that reform. Don’t want to go back. And that seems to be fairly bipartisan. 

The concern that I see in terms of the suggestion to have guaranteed issue but only for people who can maintain continuous coverage is that there will literally be, in a very short period of time, 

tens of millions of Americans who will then fall back into the circle 

of people who will be newly subject to medical underwriting and 

have their insurance-ability, their ability to buy insurance, rated 

43 

based upon their medical history. I think that would be a terribly 

unfortunate step backward that Americans would not appreciate 

and have rejected that approach. 

Mr. LEWIS. And thank you very much, Doctor. 

I yield back. 

Chairman BUCHANAN. I now recognize Mr. Smith from Missouri. 

Mr. SMITH. Thank you, Mr. Chairman. 

Back in December, I held health care roundtables throughout our 

congressional district in southeast and south central Missouri to 

just hear from farmers, small business owners, families of the experiences that they have had under ObamaCare. And the message 

was very consistent. Forcing citizens to buy a product they simply 

didn’t want or suffer a tax penalty is un-American, especially when 

in many cases that product is too expensive and not adequate. 

As the gentleman from Pennsylvania mentioned briefly of the exchanges in his State going from 13 to 8 I think were the numbers, 

out of the 30 counties in the Eighth Congressional District of Missouri, individuals who are forced under the individual mandate, 

you know what their options are? Out of 30 counties, 26 of those 

30 counties has one choice. Looks like adequate options. Absolutely 

not. Take the case of Doug from southeast Missouri. He is a 61- 

year-old divorced cabinetmaker who helps his 20-year-old daughter 

and ex-wife pay for their health insurance. Doug started a small 

business just over 3 years ago. He wrote me. This is what he wrote: 

‘‘My business is beginning to be profitable. However, with startup 

costs and normal business costs, cash flow, et cetera, there is nothing left of the budget for my personal health insurance. I have been 

without coverage for 2-1/2 years. I make too much to qualify for 

subsidies, not that I would take advantage anyway, and do not 

make enough to pay the premiums after paying for everyone else. 

The ACA penalty adds injury to insult. Insult because the whole 

mandated mess is unconstitutional. And injury because I usually 

have to take out yet another business loan to pay my income taxes 

after the ACA penalty.’’ 

I checked prices for insurance for a 61-year-old man in his county 

of Missouri, and it is somewhere in the neighborhood of $900 a 

month. That is more than the typical rent payment in southeast 

Missouri and would likely represent one of the largest expenses he 

would be paying. So who is the policy really helping, I ask? It is 

definitely not the lower and middle class in southeast Missouri. 

The mandate targets individuals, but it also hurts the health care 

facilities and hospitals who help serve them. 

During one of our roundtables, the Chief Executive Officer of one 

of the federally qualified health centers testified that in their area, 

37.3 percent of the population they serve are uninsured. But yet 

everyone is required to have health insurance under the individual 

mandate. 

The mandate was designed to address uncompensated care, but 

it didn’t. Here is the bottom line. ObamaCare’s individual mandate 

has failed. Special enrollment periods and exemptions by the 

Obama Administration created an environment that goes completely against the idea of a mandate that created an unfair burden 

on facilities in my district that offer care to low-income individuals. 

44 

My question is to Mr. Miller. Your testimony highlighted weak 

enforcement and weak compliance as challenges with the individual mandate. Can you explain in more detail how the individual 

mandate harms the low- and middle-income people it was supposedly designed to help? 

Mr. MILLER. Well, I am trying to go backwards from where you 

are talking about. Part of it is because it didn’t deliver what it said 

it was going to do. In terms of the coverage effects you saw, where 

those people went was primarily into Medicaid to the extent they 

were lower income. That is what they ended up choosing rather 

than the exchange-based coverage. And that is where they have 

ended up. However, insurers along the way have incurred some 

substantial losses within these exchange markets because their 

original business plans assumed a different set of enrollment and 

a different level of compliance with a mandate which was never enforced in that manner. So that the mismatch has created, in effect, 

a compression of plans and the rising premiums. There are other 

distinctions along the way. 

Some of the statements that have been made about the scope of 

uncompensated care costs, if you look at the vast historical record, 

vastly exaggerated. Now, this law has a lot of moving parts. We 

took away some of the funding for that uncompensated care as— 

on the assumption it was going to be made up for by the increased 

enrollment. That didn’t match up. We have had behavioral changes 

which indicate that people who are nominally insured are still 

going to emergency rooms anyway. 

So it is hard to isolate the mandate alone along this broader mosaic of basically a floundering law which has many different theories behind it that don’t work out in practice. 

Mr. SMITH. Thank you, Mr. Chairman. 

Chairman BUCHANAN. I now recognize the gentleman from 

New York, Mr. Crowley. 

Mr. CROWLEY. Thank you, Mr. Chairman. Thanks very much. 

I appreciate this hearing today. 

If I can, I just want to—my good friend, I mean this with all sincerity, from Pennsylvania. I think the world of Pat Meehan and he 

knows it. He made the reference at the end of his comments where 

this notion or idea come from that Republicans want to repeal 

without replacing. And I would just note for the record that we 

have had 65 attempts to repeal the Affordable Care Act, or 

ObamaCare, over the last 6 or so years without ever once offering 

a replacement. Maybe that is where we might get the idea that you 

simply want—you all simply want to repeal the bill without replacing it. That is just an observation. 

Mr. McDonough, my home State of New York provides a valuable 

example of how the requirement to buy insurance is a critically important aspect of the ACA to provide stability in the individual insurance market. Before the ACA, New York’s individual market did 

not include an individual mandate. So the market did not have 

enough healthy individuals. As a result, monthly individual premiums reached over $1,500 and less than 20,000 people had enrolled. 

Now as a result of the Affordable Care Act, premiums for individuals are 50 percent lower than they would have been without the 

45 

ACA. The number of New Yorkers in the individual market has 

grown by 270 percent. And plan participation in more—is more robust. Sixteen insurers offer coverage in the individual market and 

21 serve the small group market. 

Mr. McDonough, would you say that New York’s experience with 

the mandate illustrates just why it is so critical and the dangers 

that could happen if it is repealed or undermined? 

Mr. MCDONOUGH. So thank you, Representative, for that question. I think it is important to recognize that the issues with the 

Federal and State health insurance exchanges from New York, 

from Pennsylvania, from Missouri, from all of the different States 

vary. So there are some States that are going through very significant disruption and very critically high rises in premiums. There 

are other States like, for example, New York and California, that 

are doing very well actually in terms of a moderate rate of growth. 

There is the striking example that we have of the State of Alaska. Alaska last spring had projections that the premiums in their 

individual market were going to go up by over 40 percent. In the 

summer, the Alaska legislature with their governor agreed to create a reinsurance pool within the State individual health insurance 

market just in Alaska. When they did that, that single act, they 

brought their projected premium increases from 40 percent down to 

7 percent. 

So part of the difference, and it is not exclusively this, but it is 

very much a factor, part of the difference is that States that have 

aggressively grabbed and worked to take a leadership role in helping this new health insurance market to work and succeed have 

seen strikingly better results in terms of premium growth and in 

terms of plan participation than States that have, for their own legitimate reasons, been very hostile to the implementation and have 

had not only nothing that they wanted to do to help it, but actually 

worked consciously and proactively to try to undermine the implementation of the law. 

So there is a real difference there. And I think it is worth understanding that you can make differences happen here. States need 

to be part of the solution. And the States that have done that have 

made a real difference. Sorry for too much time in that answer. 

Mr. CROWLEY. That is all right. 

Mr. Chairman, I have a letter from the Department of Financial 

Services in New York State which oversees the insurance industry 

in the State. I would just ask that we include that for the record 

to the Committee. 

Chairman BUCHANAN. Yeah, that is fine. 

Mr. CROWLEY. I just wanted to say, listen, this is incredibly 

complicated, all the parts that go into making the Affordable Care 

Act work itself. We talked about, you know, the mandates. We 

haven’t talked about other aspects that have—in the whole, that 

make it actually work or in theory work. So, listen, I understand 

the frustration. We have been frustrated for the last 6 years. We 

haven’t found any partners to actually improve the Act as opposed 

to just repealing it. 

I think my colleagues on the other side of the aisle realize now, 

as does the new President, how difficult it is to take away the 

sweets. It is the vegetables, I think, my colleagues have had a difVerDate Sep 11 2014 00:24 Feb 26, 2019 Jkt 033361 PO 00000 Frm 00049 Fmt 6633 Sfmt 6602 I:\WAYS\IN\33361\33361.XXX 33361
46 

ficult time swallowing in order to get to the sweets first. But I 

think they are learning that. And I yield back. 

Chairman BUCHANAN. I now recognize the gentleman from Arizona, Mr. Schweikert. 

Mr. SCHWEIKERT. Thank you, Mr. Chairman. And those of us 

with a sweet tooth, we will work on that. And, Mr. Chairman and 

fellow Members and obviously the panel, being from Arizona, when 

you use the term ‘‘disruption,’’ we’re one of the epicenters of it. You 

know, if it wasn’t for almost a charitable gift by I think our Blue 

Cross Blue Shield going into a couple counties, I would have had 

counties—remember, my State has only 15 counties. So our counties are huge. They would have had no offering. 

So could I beg of you, and this is going to be a little different, 

but this is something staff and I have been trying to hunt for 

years. Could we do a little math together? I need some help on 

something. What I am hunting for is—and we have even had researchers from Kaiser and other people try to help us. And the Administration has been willfully difficult, and maybe it is because 

the way the data sets are collected. Maybe it is obfuscation. Maybe 

it is perfectly innocent. 

If I go back at the end of fiscal year 2016, we functionally have 

had what? Three years out there where there was product offered. 

How many of our brothers and sisters gained coverage that either 

did not have coverage before or who were not Medicaid eligible? 

And when I say did not have coverage before, truly had gone long 

term. Not where they had 3 days between jobs and we called them 

uncovered. But how many—I mean, what is the real number? How 

many folks now have coverage by the end of fiscal year 2016 that 

did not have any either access to coverage or weren’t Medicaid eligible? And can anyone give me an honest number? This is an 

open—I mean, this is a fly ball for whoever can pitch it back. 

Mr. MILLER. I don’t usually like to do this in a hearing. I may 

have to quote Jon Gruber. And I only do that every couple of years. 

Because even a stopped clock may be right a couple of times a day. 

Based on those recent calculations, approximately 60 percent of 

the coverage gains came from Medicaid. There is a little bit of a 

dispute as to how much of that is expansion Medicaid and how 

much of that is old Medicaid. 

Mr. SCHWEIKERT. Look, we have 2 minutes and 30 seconds to 

play here. So, okay, let’s say it is 60 percent of the population 

gained it through Medicaid. Then of the remaining 40, I have seen 

some numbers out there that say a substantial portion of that had 

either access to or had coverage at some time before. And my—— 

Mr. MILLER. Some of that is old Medicaid. There is a provision 

where if you go into the hospital, you can get signed up for Medicaid. That is under old Medicaid as well as new Medicaid. There 

were States who were already expanding before 2014. It makes 

that old Medicaid. 

Mr. SCHWEIKERT. So is it—— 

Mr. MILLER. Some of it came from the individual exchanges, 

though. That is a fact. 

Mr. SCHWEIKERT. Okay. So who—— 

Mr. MILLER. But probably about only about half of the exchange 

coverage more or less are actually net uninsured getting coverage. 

47 

Some of them were people who got pushed out of the other part of 

the individual market. 

Mr. SCHWEIKERT. And, look, I understand this is a little difficult and there is a lot of moving parts here. As someone just said, 

it is complicated. So are we now down to 7 million? 

Mr. MILLER. We could be down to 6 or 7 million. And, again, 

these are fuzzy numbers because we pretend that our data is excellent and you can raise four or five different surveys and get different numbers and make different assumptions. 

Mr. SCHWEIKERT. In the next minute and 30 seconds, let’s pretend we are accountants. Okay. So over the beginning of this law 

till the end of 2016, how much has been spent? And when I say 

‘‘spent,’’ I mean by the Federal Government, the State government, 

individual premiums, losses from insurance companies, others. 

What is my total dollar amount? Because I have seen numbers at, 

you know, $500 billion. I mean, I have seen some really interesting 

numbers that if you do a true all-in math, and I am—you see 

where I am going. For 3 years of coverage, my all-in cost to help 

7 million, I could almost do that in the top of my head. Someone 

is going to correct me later. $68,000 per life? I mean, I am buying 

their health coverage, and I could have probably bought them a 

really nice car. 

So something’s wrong. And just if we take a step backwards, 

whether it be the individual mandate or just the basic math of if 

we all agreed we want to help our brothers and sisters out there, 

our total dollars per total life coverage, something is horribly wrong 

in what we are doing. Am I being unfair? 

Mr. MCDONOUGH. I would just respond, Mr. Schweikert, by 

saying that I think that 6 million is a significant understatement. 

And I don’t want to put out a number that I can’t defend. 

Mr. SCHWEIKERT. Okay. I would be elated if you could do me 

one of the grandest favors of all. Because we really—and my staff 

is back there laughing at me. I have spent a couple years of my 

life looking for this number, and talking to really smart people like 

yourself. Help me find real math. Because I come from a world of 

the math is the math is the math. But right now I am looking at 

numbers where I could have bought their coverage and bought 

them a nice car. Something’s horribly wrong in what we’re doing. 

Thank you. And I yield back, Mr. Chairman. 

Mr. MCDONOUGH. Happy to do that, sir. 

Chairman BUCHANAN. I now recognize the gentlewoman from 

Indiana, Mrs. Walorski. 

Mrs. WALORSKI. Thank you, Mr. Chairman. 

President Obama promised over and over again, if you like your 

doctor, you can keep your doctor. If you like your health plan, you 

can keep your health plan. And despite these repeated pledges, we 

know now that these statements were completely untrue. In fact, 

in the fall of 2013, millions of Americans started receiving plan 

cancellation notices. PolitiFact ranked President Obama’s statement as its lie of the year in 2013. But it wasn’t just the immediate 

loss of plans. People are still losing them. For example, in Indiana 

last year, four insurers left the exchange, leaving Hoosiers with 

fewer options. That is 50 percent loss of our own plans. Recently, 

I heard from a constituent of mine from Starke County in Indiana. 

48 

He has had two open heart surgeries at Mayo Clinic that requires 

him to be on blood thinning and other medications, as well as periodic checkups. He had a private health insurance plan that he 

liked. Covered his medical needs. But in 2015, it was knocked out 

by ObamaCare. He was forced to buy a health care policy on the 

marketplace, but unfortunately discovered at an annual checkup at 

Mayo Clinic that his doctors were not in the network. And because 

of that and because they were out of State, they were out. He was 

forced to pay thousands of dollars out of pocket for the visit, in addition to thousands more out of pocket for the prescriptions. When 

he appealed to the Indiana Department of Insurance, he was told 

there was no marketplace insurance plan that would cover his doctors at Mayo Clinic as a Hoosier living in the State of Indiana. 

He recently learned that his marketplace plan through 

UnitedHealthcare won’t offer individual market plans for his area 

in 2017. He was forced back into the marketplace again to find a 

new health care plan that still will not cover his out-of-state doctors. It reinforces to me that for many Americans, this law is not 

working as promised. 

And Mr. Miller and Mr. Graham, I wanted to direct this to you. 

Isn’t it true that the individual mandate was supposed to increase 

competition on the exchanges by ensuring that people sign up, 

thereby encouraging insurance carriers to offer more choices and 

broaden those networks? 

Mr. GRAHAM. That was the stated objective. And as you have 

described it, it has not been the case. So I agree, I guess, would 

be my answer. 

Mrs. WALORSKI. Mr. Miller. 

Mr. MILLER. As I like to say, it seemed like a good idea at the 

time. Although, unlike Mr. McDonough’s testimony, it has been a 

bad idea for many of us for a long period of time on the conservative Republican side of the aisle, just to rewrite history a little bit, 

going back to the 1990s. 

What was proposed wasn’t executed. And it wasn’t going to work 

that way because of the grand design, in theory, did not reflect the 

reality on the ground. Some people gained under this arrangement. 

There is no question about that. If you were a low-income person 

suddenly getting substantial subsidies for coverage, you might not 

be crazy about that coverage, but you will say you came out ahead. 

There are other people in that market, though, who had something 

that they were comfortable with or at least were ready to settle for. 

They were told that is not good enough. These are the folks who 

got moved out of other parts of the individual market and ended 

up with less effective choices and ones they didn’t want. And that 

is what you are mostly hearing from among your constituents. 

Mr. GRAHAM. And that is not going to turn around on its own. 

I think President Obama’s Council of Economic Advisers just before 

they left asserted that the insurers have now got it figured out, everything is under control. The first 3 years you had the training 

wheels on board and—but now we are good to go. That doesn’t 

make any sense. You know, the last year, from 2016 to 2017, you 

had by far the worst premium increase, 25 percent nationwide average. It is not getting better, it is getting worse. It is like the inVerDate Sep 11 2014 00:24 Feb 26, 2019 Jkt 033361 PO 00000 Frm 00052 Fmt 6633 Sfmt 6602 I:\WAYS\IN\33361\33361.XXX 33361
49 

surers are having more and more trouble every year they stay in 

the exchange. 

Mrs. WALORSKI. Well, I guess my follow-up is, when insurance 

networks have become so narrow that individuals like my constituent, and there is many of those in Indiana, I just talked about 

one. When they lose access to their doctors, what does that say 

about the individual mandate’s effectiveness to begin with? 

Mr. GRAHAM. I think it says you are on the route to Medicaid 

for everybody where there is very poor access to care in many 

cases. So folks like—I know some of the Members have given testimony from their constituents. The whole structure is so terrible. 

You know, you earn an income that is—you are not Medicaid eligible so you can’t even get the poor access to care that Medicaid offers. You might get some tax credit in the ObamaCare. Maybe you 

make too much money for that. Hard work to figure all that out, 

you know. And then the IRS comes after you next year and says 

you owe money back. So the complexity is far too complex. And I 

think when you go from one insurer to no insurer, as in Arizona, 

you were very lucky. I mean, what is a market where there is no 

insurance offered? It is not a market. 

Mrs. WALORSKI. Right. I appreciate it. 

Mr. Chairman, I yield back. 

Chairman BUCHANAN. I now recognize the gentleman from Illinois, Mr. Davis. 

Mr. DAVIS. Thank you very much, Mr. Chairman. And I want 

to thank all of our witnesses who are being very helpful as we deal 

with one of the most complex issues and problems that I think we 

face today as it relates to health care. 

I represent the State of Illinois in the seventh district, which contains more hospital beds than any other congressional district in 

the country. The Affordable Care Act, which also has been beneficial to the four major medical center operations, medical schools 

that we are all so fortunate to have, the Affordable Care Act has 

greatly improved access to care for tens of millions of Americans. 

Enrollees now have access to medical homes, in general no longer 

have to rely solely on hospital emergency rooms, and have the 

comfortability of knowing that when they need care, it is available 

there for them. 

Today, more than 1 million Illinoians have health insurance coverage as a result of ACA, either due to the law’s Medicaid expansion or its health insurance marketplace, and the majority of whom 

were uninsured prior to September 2013 when the ACA’s coverage 

expansions were first implemented. Because of ACA the Nation’s 

insurance uninsured population has dropped dramatically to less 

than 11 percent currently from nearly 17 percent in 2013. 

If Congress repeals health insurance coverage, Illinois would sustain a potential loss of $11.6 billion, $13.1 billion in annual economic activity, and about 95,000 jobs lost. Ultimately, any attempt 

to repeal the ACA should be accompanied with an appropriate and 

responsible replacement plan that, at a minimum, ensures access 

to coverage for the more than 20 million U.S. residents who now 

have coverage as a result of the law. 

If Congress does not make repeal of coverage contingent on adoption of an ACA replacement plan, then lawmakers should also corVerDate Sep 11 2014 00:24 Feb 26, 2019 Jkt 033361 PO 00000 Frm 00053 Fmt 6633 Sfmt 6602 I:\WAYS\IN\33361\33361.XXX 33361
50 

respondingly repeal the significant hospital payment cuts that help 

pay for ACA’s coverage expansions. This is important for Illinois’s 

hospitals and health systems which, to date, have had to absorb 

the more than $1 billion in Medicare reimbursement cuts to pay for 

the cost of the law’s coverage expansion. For example, Northwestern Medical has seven hospitals alone, including Northwestern 

Memorial Hospital. They have absorbed more than $273 million in 

Medicare cuts since 2011. 

Mr. McDonough, can you see institutions sustaining those kind 

of cuts and expenditures and continue to provide the level of care 

and service that they currently provide? 

Mr. MCDONOUGH. Thank you, Mr. Davis. And no, I don’t see 

that. I think there is a real difference across the country right now 

in terms of the financial health of hospitals, frankly between States 

that have expanded Medicaid under the ACA and States that have 

not. The States that have expanded along with the robust expansions through the marketplace have seen much greater financial 

health. And in States that have not expanded, there has been a far 

higher rate of hospital closure and of serious financial dilemma facing hospitals and other medical providers in those States. So it is 

a real difference and an indicator of what may come were there to 

be total repeal. Sorry. 

Mr. DAVIS. Thank you. 

Thank you, Mr. Chairman. 

Chairman BUCHANAN. I now recognize the gentleman from 

Florida, Mr. Curbelo. 

Mr. CURBELO. Mr. Chairman, thank you very much for holding 

this hearing. It will be my honor to serve under you in this Congress and with my colleagues here, especially Ranking Member Mr. 

Lewis, who I was proud to welcome to my community recently to 

celebrate Dr. Martin Luther King Day. And I also want to thank 

the witnesses for their testimony today. 

Dr. McDonough, we share someone in common, Dr. Julio Frenk 

was the dean at your school. He has since moved up in the world, 

transferring to the University of Miami where he serves as president, which happens to be my alma mater. 

Mr. Chairman, although enrollment in the ACA is relatively high 

in Florida, particularly in the Miami-Dade metropolitan area, 

choices continue to decrease and premiums continue to rise. This 

year, the counties in my district have lost insurance carriers. Monroe County lost one carrier and Miami-Dade lost two carriers participating on the exchange. I have heard people in my district 

about how the current system has reduced their choices and increased their out-of-pocket costs. 

Emily, my constituent, explained that she is paying over $700 

per month for a plan with a deductible that is over $6,000. But still 

she has been unable to find a doctor in her area who will accept 

her insurance. Even though she has insurance, her options are severely limited and premiums continue to increase. 

Mr. Miller, I have a question for you. These examples that you 

have heard here today, and I think it is important that we raise 

them because statistics are fundamental to understanding what is 

happening in the world, but these real life human examples matter 

also. Do you believe that these examples are isolated, unique to our 

51 

districts or are these the types of things that are happening all 

over the country? 

Mr. MILLER. Well, there is a battle of warring anecdotes and everybody has to have their respective horror story, and you can get 

them on both sides. In the aggregate, though, we know that this 

is not working out in reaching its residual level. I comment somewhat in light of some of the discussions here that I am surprised 

that this embrace by folks who are more favorable to the Affordable 

Care Act of what you might think of as trickle-down economics. 

Let’s first take care of the hospitals, let’s first take care of the insurers, and maybe some people on the ground might eventually get 

some benefit from this. 

This was a very interesting academic study of the Medicare expansion population, one showing that it had grown quite larger in 

terms of the cost per capita for the new adult, newly eligible ablebodied adults, but it hasn’t necessarily delivered any more services. 

There is another study that indicated the Medicaid beneficiaries actually valued the coverage they received at about 20 to 40 cents on 

the dollar. So we are pumping more money into the system, but it 

isn’t necessarily getting down to the ground level where it is actually improving people’s care. And that is because the system is designed not for the beneficiaries at the end of it to be calling the 

shots, but somewhere along the line we determined what is good 

for them and what they should receive. And it works for other people in the system; doesn’t necessarily deliver that value at the bottom line for the consumers we supposedly care about. 

Mr. CURBELO. So, Mr. Miller, are you suggesting that perhaps 

major health care special interests such as hospital chains, insurance companies and pharmaceuticals were too influential in the 

drafting of the last health care reform legislation? 

Mr. MILLER. The previous Administration had to cut a deal and 

in some cases they had to give as well as take. And part of that 

deal was to make sure that they had placated those interests first 

in order to get the legislation passed. 

Mr. CURBELO. Mr. Graham, with regards to the individual 

mandate, some suggest, well, this is, as we have kind of concluded 

here, not working very well, perhaps the solution is to raise the 

penalty and coerce more people into signing up for health insurance. I don’t think that would be a very popular measure, and I 

assume most Members of this Committee and in this House would 

probably not be predisposed to supporting that kind of measure. 

What are some alternatives? 

Mr. GRAHAM. I think Mr. Miller proposed some good alternatives. I think Professor McDonough’s criticisms of those alternatives is also valid. There is a certain population, if you are just 

going to say you have got to maintain continuous coverage, you 

have got to—or pay a fine or whatever, there is some level of population that will not pay that. This is just a reality. 

You know, when you lose your job, your mortgage payment or 

your rent comes first and you are going to drop your health insurance premiums. So there will always be some population that has 

to—you know, I hate to say it—be taken care of, but the social safety net. And I know on your side of the aisle you have talked about 

high risk pools, things like that. 

52 

I would just like to point out that, you know, Massachusetts had 

a reform that had some good things, some bad some things, the 

gentleman from New York who has left, every State had all these 

tools at their disposal. So what I would like to say is if we don’t 

know the perfect answer, the magic bullet, let’s let 50 States try 

and figure it out and learn from them. 

Mr. CURBELO. Thank you. I yield back. 

Chairman BUCHANAN. I now recognize the gentleman from 

North Carolina, Mr. Holding. 

Mr. HOLDING. Thank you, Mr. Chairman. 

I am going to pick up where my colleague, Mr. Meehan, left off. 

He listed some good testimony regarding the mandate not panning 

out, producing the numbers. We have got a slide, if we could put 

up there, of ACA exchange enrollment expectations versus reality. 

There. And you have done a good job of talking about some of the 

problems with the mandate. But it is clear that the economic modeling that the Obama Administration was using, they overestimated the strength of the mandate. 

So perhaps, Mr. Miller, you could pick up here. Why would the 

models overestimate the mandate strengths so pretty dramatically 

there? 

Mr. MILLER. I would say the first reason is they relied upon evidence from Massachusetts and Massachusetts’ experts, which was 

unique to Massachusetts as opposed to the rest of the country. And 

that was built into a lot of the over assumptions of the high yield 

from the mandate. They also assumed they would have larger effects further up the scale. And the reality is if you subsidize people 

heavily, as turned out to be the case for basically those below 200 

percent of Federal poverty level, you will get a lot of people, even 

though they are not crazy about the coverage, they will take it because it doesn’t cost them much of anything when you add in the 

cost-sharing subsidies. You’ve got a lot of complaints about high 

deductibles. That has differential effects because of the way in 

which those cost-sharing subsidies in the exchanges tend to mute 

those out. 

So when you were trying to get more people to come into this 

market who are either younger or had a little bit more money or 

were healthier, it turned out it was a bad deal for them. There’s 

plenty of work done by some economists at the University of Pennsylvania, Wharton School, which talked about why you just didn’t 

pay for people to take this coverage compared to either paying a 

penalty or dodging it in one form or another. 

So all of this idea that new revenue was going to come in to pay 

for what we wanted didn’t work out that way. And some of that 

is reflected in the reduced enrollment that was assumed but never 

materialized because you run out of subsidies to pay for people. 

And when it turns out that people have to pay for something they 

don’t want, they don’t buy it. 

Mr. HOLDING. Right. Well, you know, speaking of subsidies, I 

find it kind of remarkable that according to some estimates that we 

have seen, that only about 40 percent of the subsidy eligible population signed up on the exchange. Now, this is concerning. I mean, 

do you find it concerning and why do you think it is? 

53 

Mr. MILLER. Well, that reflects the fact that as you move further up the ladder beyond what I just cited, which is about 60 to 

65 percent, those subsidies aren’t particularly generous. They are 

there, but they begin to phase out. This is a highly skewed, very 

progressive, if you want to use that term, approach to subsidizing 

very low-income individuals, even more so in the Medicaid-eligible 

population. 

So mission accomplished in terms of getting that target population, but it didn’t fit into the larger economic model which assumed that somewhere there was something else to pay for this. 

They tried a lot of other gimmicks in order to do this, but it didn’t 

actually materialize in the way in which it was originally designed. 

And part of that is because it was a built-in ceiling on how much 

the individual mandate could ever produce, despite all the theories 

to the contrary, and also how much money that was actually there 

to subsidize people. And we found out that we are going to have 

come up with some other solutions. 

Mr. HOLDING. Well, you know, you have got the benefit now of 

some history; you know, you have got a graph, we have got some 

real numbers in. And, you know, you mentioned at the top of the 

hearing in your prepared remarks, you know, the CBO is doubling 

down on these flawed estimates. I mean, what would the rationale 

be behind that? 

Mr. MILLER. Well, people when they do models have assumptions and they tend to not want to let go of them. There are some 

things external to what originally started out that are moved 

around. Certainly, the Supreme Court decision changed some of the 

projections in terms of Medicaid enrollment. But the ingrained 

view that somehow the individual mandate was going to draw in 

all these people and they were going to comply and was going to 

be enforced didn’t work out that way. 

Potentially by some, you know, standard you could have about— 

you know, at one time they had a 30-million target population, and 

it turned out that only 3 million of those people were actually—you 

know, were paying into the individual mandate as opposed to staying uninsured. It is the difference between theory and practice. We 

have learned a lot about theories. We need to go back to reexamining what will work in practice. 

Mr. HOLDING. Thank you very much. 

Mr. Chairman, I yield back. 

Chairman BUCHANAN. We have been joined at this hearing by 

our fellow Ways and Means Committee Member, Mr. Kelly. As is 

our custom, he will be permitted to ask witnesses questions. Now 

that the Members of the Subcommittee have concluded their questioning, Mr. Kelly from Pennsylvania, you are now recognized for 

5 minutes. 

Mr. KELLY. Thank you, Chairman. And again, thank you for allowing me to participate today. 

All three of you are here for a reason. We talked today the purpose of the hearing is to examine if the individual mandate penalty 

is actually stabilizing health markets. Okay? And we talked about 

a lot of different things. I have got so many constituents back home 

that now have a policy, but don’t have any health care. 

54 

So between premiums being where they are, deductibles being 

where they are, copays being where they are, I know there is reference made to Medicaid. The question is who all accepts Medicaid 

as payment? How many actual providers of health care say, no 

thanks, it doesn’t begin to cover my cost of delivery? 

So here is what it comes down to. If we are talking about this 

and if a big part of the individual mandate was going to cover the 

cost of all these things, the question is did it work? Is there anybody of the three of you that could say this was—it was well intended? I am going to say it wasn’t well intended. 

And, Mr. Miller, I love the fact it is three versus practice. Again, 

it is assuming things without looking at reality. People usually 

don’t buy things they don’t want and they certainly don’t overpay. 

It is okay if they are being subsidized, but they—out of their own 

pocket, will say, you know what, thanks, but no thanks. Has this 

worked at all? Go ahead. I mean, if we are trying to get to an end 

here, what has it done? 

Mr. MILLER. Well, I always try to be a little more balanced in 

this approach. We had a lot of bad policies incorporated into the 

Affordable Care Act, not the individual mandate alone. The way I 

would first put it is the individual mandate, not only did it not 

work, it didn’t save those other bad policies. So we need to reexamine more than just the individual mandate itself. 

The reason why coverage may not be attractive to people may be 

a part of the way in which we tried to standardize coverage in certain ways, which meant that suddenly it no longer appealed to people in the same manner when they were paying more of the cost 

than they did before and weren’t highly subsidized. So we have got 

a lot of different things to take out of the bottle and reassemble. 

But the individual mandate itself did not provide some extra boost. 

And you can’t keep subsidizing people to basically say, come on. 

Instead, what we got were limited networks, lower actuarial values, and higher deductibles for people who saw the cost and they 

didn’t want that coverage and they are complaining to you about 

it. That is how we created a new distortion to deal with the old distortions. 

Mr. MCDONOUGH. Can I address? 

Mr. KELLY. Oh, yes. Please. Sure. 

Mr. MCDONOUGH. Thank you for the question. So just the 

question, does this work? Well, work is obviously in the eye of the 

beholder. But just let me give you some responses to does this law 

work. 

Mr. KELLY. Can you do that, Mr. McDonough, if it is in the eye 

of the beholder? Yeah, I have got two or three pages of people back 

home in my district, they are saying it doesn’t work. So in the eyes 

of a lot of beholders, including the majority of this country, it 

doesn’t work. 

Mr. MCDONOUGH. Okay. So lowest rate of uninsurance in the 

history of the United States. Drop the—— 

Mr. KELLY. But, sir, listen, I don’t want to equate having an insurance policy with having health care. Huge difference. 

Mr. MCDONOUGH. Rates of satisfaction among people who have 

been enrolled in Medicaid and people who have been enrolled in exchange policies, around 80 percent satisfaction. Drop in the rate of 

55 

uninsurance among America’s children, by 50 percent over the past 

several years. The rate of financial security and the drop in medical debt experienced by Americans across the country, a substantial drop. Rate of increase in per enrollee Medicare spending is the 

lowest it has been in the history of the program since it was created in 1965. Those are just five things. We can go on and on. 

Mr. KELLY. Where is this study from? 

Mr. MCDONOUGH. These are all different studies, sir. I would 

be happy to share the sources of all of those with you. 

Mr. KELLY. Okay. I would like to see that information. And I 

appreciate that. 

Mr. MCDONOUGH. Happy to do that. 

Mr. KELLY. Mr. Graham. 

Mr. GRAHAM. I think what Professor McDonough stated, those 

facts are certainly cohere with what I understand of a lot of things, 

but very little of that has to do with the individual mandate. You 

know, there has been some Medicare changes going on. Most of the 

effect of the Affordable Care Act in terms of coverage is Medicaid. 

And I know I am going to provoke some folks here, but I don’t like 

to include Medicaid as insurance because Medicaid is a welfare 

program. So as long as we include more Medicaid enrollment as insured, that is like saying more TANF with having a job, it doesn’t 

make any sense, you know. 

So if we are going to be coherent or whatever, giving people more 

welfare benefits, that’s fine. If that is what you all want to do, that 

is your prerogative as the folks who tax and spend, that’s what you 

are going to do. But let’s not pretend that we are making people 

more individually responsible through this mandate. And as you 

say, for very many people, the small business owner, the self-employed person, it is just driving them crazy, as we have heard from 

you and so many of your colleagues, trying to figure out what the 

heck is going on, how to get an affordable plan and—— 

Mr. KELLY. I know. We are going to continue to work, Chairman, and I appreciate, again, being included. We are going to continue to try to work to make sure that the American people understand. They are not going to lose, by the way, their insurance. I 

mean, Mr. Trump was sworn in last Friday. I don’t think anybody 

is walking around the country right now and had their insurance 

pulled away from them, so that is kind of a false narrative. But we 

have got to find something that makes sense. None of this makes 

sense to me economically. Why would anybody stay in the insurance business to lose money? 

Thank you. 

Chairman BUCHANAN. I now recognize myself. We spent a lot 

of time on the mandate. I want to shift gears a little bit and talk 

about affordability and access. 

My background before I got here, I have been here about 10 

years, but before that, 30 years. And I think back 30, 40 years ago, 

companies paid or people had access to low cost, high quality 

health care. I thought back a few days ago and I was thinking back 

20 years ago when I was chairman of the chamber in our area, we 

had 2,500 businesses, most of them 15 employees or less. The number one issue, 20 years ago—and this before the ACA to give 

them—you know, we can talk about that a little bit. 

56 

But 20 years ago, the number one issue, we surveyed all our 

members, was access and affordable health care. And it just seems 

like it has accelerated to the point of being absurd that typical individuals—it is not unusual in my area in Florida, Sarasota Florida, 

a couple could be paying $2,000 a month for health care. That is 

outrageous. That is more than a car payment and a house payment. 

I read the other day, and I shared this with our people, in the 

front page of I think it was USA Today, 62 percent of Americans 

don’t have $1,000 in the bank. I thought to myself when I looked 

back, you know, you can talk about wages and everything else, that 

one of the things that is gutting the middle class I think is health 

care cost. You get the subsidy. You know, maybe it works for you, 

but people just outside the subsidy, because small businesses and 

everybody else, they can’t afford to provide it. It’s $1,400 for a family of four, $1,600. So the small business might pick up $600, $700. 

It is getting passed to the workers. And that is why nobody has 

anything. 

So my thought when I first heard about the ACA, I was concerned back then about the cost of health care and I was openminded, if it bent a curve on health care. But I heard what you 

said, Doctor. But I can just tell you in our region in Florida, it is 

not unusual to hear every single day rates going up 20 and 30 percent for small businesses and individuals. That is the reality. 

So I guess I would ask any of you, Mr. Miller, Mr. Graham, let’s 

start there, what are we going to do about, or your thoughts, in 

bending the curve? It is just—and I know it is a big discussion, but 

I would like to just have maybe 30 seconds each of you just to give 

me your point. 

Mr. MILLER. All right. That is a bigger discussion. 

Chairman BUCHANAN. I know it is a big discussion. 

Mr. MILLER. So let me simplify. This may not be the politically 

astute answer. 

Chairman BUCHANAN. No. I just want—— 

Mr. MILLER. If we keep pumping more money into health care, 

it is going to cost more. Now, if we want to do that, we need to 

think about that a little bit more surgically. So the approach might 

be to actually have the individuals supposedly benefiting from this 

to control those dollars and decide how they want to spend it. That 

will be a different type of result in terms of better quality health 

care at a lower price over time. We have tried subsidizing it, we 

have tried regulating it, we have tried placating everybody in between. We need to get it down to the ground level and decide what 

people actually want to spend their money on. And that includes 

trading off health care with better wages. And we need to stimulate economic growth and we need a healthier population. We need 

a better health care delivery system. 

Those are all things well beyond the little games we play with 

individual mandates and insurance subsidies. That is a bigger discussion, but we need to focus more on that. 

Mr. GRAHAM. I would agree with Mr. Miller. And I would point 

out that all this money going into the ObamaCare exchanges, it 

really goes to insurance companies, you know. We advocate consumer-driven health care. We don’t give any tax credits to individVerDate Sep 11 2014 00:24 Feb 26, 2019 Jkt 033361 PO 00000 Frm 00060 Fmt 6633 Sfmt 6602 I:\WAYS\IN\33361\33361.XXX 33361
57 

uals that they can spend directly. And I know one of the Members 

talked about the premium is more than the rent. Well, when I pay 

my rent, I move in that day and I start living there, you know. I 

pay for these insurance policies and they don’t kick in until I go 

to the hospital. So if we are going to help people, let’s help them 

pay directly for care. And we had some good experience that that 

can help reduce some cost. 

Chairman BUCHANAN. Doctor, I will give you an opportunity. 

Take a few seconds and wrap up. 

Mr. MCDONOUGH. The major challenge, it seems to me and to 

many other experts with whom I work, is to change the underlying 

incentives in terms of the delivery of medical care to move away 

from a system that rewards providers to do more and more through 

fee-for-service and, instead, to move toward a system that rewards 

providers when they actually provide quality, value service. And we 

have a number of important directions that we are going in. 

The Nation is moving in this direction, regardless of what happens to the fate of the ACA. You saw it in the MACRA law, the 

bipartisan bill that passed the House and the Senate in 2015. That 

is not a rejection of the direction that the ACA started, it is an enhancement and an acceleration of it. That is going to continue. And 

I think that is really probably the most important dynamic that is 

going on right now in terms of moving our system to a different 

place. 

Chairman BUCHANAN. Let me just conclude. In Florida—I was 

chairman actually in the floor of the chamber down there too—it 

is the biggest issue. The cost of health care keeps going. It is not 

just the last 8 years. It has been the last 20 years. It is out of control, out of hand. We have got to find a way we can work together 

for the betterment of everybody in the country. 

I would like to thank our witnesses for appearing before us 

today. Please be advised that Members have 2 weeks to submit 

written questions to be answered later in writing. Those questions 

and your answers will be part of the formal hearing record. 

With that, the Subcommittee stands adjourned. 

[Whereupon, at 3:45 p.m., the Subcommittee was adjourned.] 

[Public Submissions for the Record follows:] 

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