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THE CENTER FOR CONSUMER INFORMATION AND 

INSURANCE OVERSIGHT, AND THE ANNIVERSARY OF THE PATIENT PROTECTION AND 

AFFORDABLE CARE ACT 

HEARING 

BEFORE THE

SUBCOMMITTEE ON OVERSIGHT AND 

INVESTIGATIONS 

OF THE

COMMITTEE ON ENERGY AND 

COMMERCE 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED TWELFTH CONGRESS 

SECOND SESSION 

MARCH 21, 2012 

Serial No. 112–129 

( 

Printed for the use of the Committee on Energy and Commerce 

energycommerce.house.gov 

COMMITTEE ON ENERGY AND COMMERCE 

FRED UPTON, Michigan 

Chairman 

JOE BARTON, Texas 

Chairman Emeritus 

CLIFF STEARNS, Florida 

ED WHITFIELD, Kentucky 

JOHN SHIMKUS, Illinois 

JOSEPH R. PITTS, Pennsylvania 

MARY BONO MACK, California 

GREG WALDEN, Oregon 

LEE TERRY, Nebraska 

MIKE ROGERS, Michigan 

SUE WILKINS MYRICK, North Carolina 

Vice Chairman 

JOHN SULLIVAN, Oklahoma 

TIM MURPHY, Pennsylvania 

MICHAEL C. BURGESS, Texas 

MARSHA BLACKBURN, Tennessee 

BRIAN P. BILBRAY, California 

CHARLES F. BASS, New Hampshire 

PHIL GINGREY, Georgia 

STEVE SCALISE, Louisiana 

ROBERT E. LATTA, Ohio 

CATHY MCMORRIS RODGERS, Washington 

GREGG HARPER, Mississippi 

LEONARD LANCE, New Jersey 

BILL CASSIDY, Louisiana 

BRETT GUTHRIE, Kentucky 

PETE OLSON, Texas 

DAVID B. MCKINLEY, West Virginia 

CORY GARDNER, Colorado 

MIKE POMPEO, Kansas 

ADAM KINZINGER, Illinois 

H. MORGAN GRIFFITH, Virginia 

HENRY A. WAXMAN, California 

Ranking Member 

JOHN D. DINGELL, Michigan 

Chairman Emeritus 

EDWARD J. MARKEY, Massachusetts 

EDOLPHUS TOWNS, New York 

FRANK PALLONE, JR., New Jersey 

BOBBY L. RUSH, Illinois 

ANNA G. ESHOO, California 

ELIOT L. ENGEL, New York 

GENE GREEN, Texas 

DIANA DEGETTE, Colorado 

LOIS CAPPS, California 

MICHAEL F. DOYLE, Pennsylvania 

JANICE D. SCHAKOWSKY, Illinois 

CHARLES A. GONZALEZ, Texas 

TAMMY BALDWIN, Wisconsin 

MIKE ROSS, Arkansas 

JIM MATHESON, Utah 

G.K. BUTTERFIELD, North Carolina 

JOHN BARROW, Georgia 

DORIS O. MATSUI, California 

DONNA M. CHRISTENSEN, Virgin Islands 

KATHY CASTOR, Florida 

JOHN P. SARBANES, Maryland 

SUBCOMMITTEE ON OVERSIGHT AND INVESTIGATIONS

CLIFF STEARNS, Florida 

Chairman 

LEE TERRY, Nebraska 

SUE WILKINS MYRICK, North Carolina 

JOHN SULLIVAN, Oklahoma 

TIM MURPHY, Pennsylvania 

MICHAEL C. BURGESS, Texas 

MARSHA BLACKBURN, Tennessee 

BRIAN P. BILBRAY, California 

PHIL GINGREY, Georgia 

STEVE SCALISE, Louisiana 

CORY GARDNER, Colorado 

H. MORGAN GRIFFITH, Virginia 

JOE BARTON, Texas 

FRED UPTON, Michigan (ex officio) 

DIANA DEGETTE, Colorado 

Ranking Member 

JANICE D. SCHAKOWSKY, Illinois 

MIKE ROSS, Arkansas 

KATHY CASTOR, Florida 

EDWARD J. MARKEY, Massachusetts 

GENE GREEN, Texas 

CHARLES A. GONZALEZ, Texas 

DONNA M. CHRISTENSEN, Virgin Islands 

JOHN D. DINGELL, Michigan 

HENRY A. WAXMAN, California (ex officio) 

(II) 

(III) 

C O N T E N T S 

Page 

Hon. Cliff Stearns, a Representative in Congress from the State of Florida, 

opening statement ................................................................................................ 1 

Prepared statement .......................................................................................... 3 

Hon. Diana DeGette, a Representative in Congress from the State of Colorado, opening statement ...................................................................................... 5 

Hon. Michael C. Burgess, a Representative in Congress from the State of 

Texas, opening statement .................................................................................... 6 

Hon. Marsha Blackburn, a Representative in Congress from the State of 

Tennessee, opening statement ............................................................................ 7 

Hon. Steve Scalise, a Representative in Congress from the State of Louisiana, 

opening statement ................................................................................................ 8 

Hon. Henry A. Waxman, a Representative in Congress from the State of 

California, opening statement ............................................................................. 8 

WITNESSES

Hon. Ron Johnson, a United States Senator from the State of Wisconsin ......... 24 

Prepared statement .......................................................................................... 26 

Hon. Donna F. Edwards, a Representative in Congress from the State of 

Maryland ............................................................................................................... 29 

Prepared statement .......................................................................................... 31 

Steven B. Larsen, Director, Center for Consumer Information and Insurance 

Oversight, Centers for Medicare and Medicaid Services, Department of 

Health and Human Services ............................................................................... 39 

Prepared statement .......................................................................................... 42 

SUBMITTED MATERIAL

Report, dated February 17, 2012, ‘‘Early Retiree Reinsurance Program: Reimbursement Update,’’ submitted by Mr. Waxman ............................................... 10 

(1) 

THE CENTER FOR CONSUMER INFORMATION 

AND INSURANCE OVERSIGHT, AND THE ANNIVERSARY OF THE PATIENT PROTECTION 

AND AFFORDABLE CARE ACT 

WEDNESDAY, MARCH 21, 2012 

HOUSE OF REPRESENTATIVES, SUBCOMMITTEE ON OVERSIGHT AND INVESTIGATION, COMMITTEE ON ENERGY AND COMMERCE, Washington, DC. 

The subcommittee met, pursuant to call, at 10:02 a.m., in room 

2322 of the Rayburn House Office Building, Hon. Cliff Stearns 

(chairman of the subcommittee) presiding. 

Members present: Representatives Stearns, Terry, Murphy, Burgess, Blackburn, Gingrey, Scalise, Griffith, Barton, DeGette, 

Schakowsky, Green, Christensen, Dingell, and Waxman (ex officio). 

Staff present: Gary Andres, Staff Director; Sean Bonyun, Deputy 

Communications Director; Paul Edattel, Professional Staff Member, 

Health; Julie Goon, Health Policy Advisor; Sean Hayes, Counsel, 

Oversight and Investigations; Debbee Keller, Press Secretary; 

Katie Novaria, Legislative Clerk; Andrew Powaleny, Deputy Press 

Secretary; Alan Slobodin, Deputy Chief Counsel, Oversight; Alvin 

Banks, Democratic Investigator; Phil Barnett, Democratic Staff Director; Brian Cohen, Democratic Investigations Staff Director and 

Senior Policy Advisor; Elizabeth Letter, Democratic Assistant Press 

Secretary; Karen Lightfoot, Democratic Communications Director, 

and Senior Policy Advisor; and Matt Siegler, Democratic Counsel. 

OPENING STATEMENT OF HON. CLIFF STEARNS, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF FLORIDA 

Mr. STEARNS. Good morning, everybody. I call to order this subcommittee’s hearing on the Center for Consumer Information Insurance Oversight during the week of the 2-year anniversary of the 

Patient Protection and Affordable Care Act. 

My colleagues, it has been 2 years since the health care law was 

forced on the American people on a purely partisan basis. As we 

have done since its initial passage, we continue to evaluate the effect the law has on individuals, the health care industry and the 

United States government. It is fairly obvious what those effects 

are: number one, higher cost, higher premiums, and increased government control. 

Now, these are not partisan points. These are objective facts. 

Proponents of the law promised lowered premiums, they promised 

2 

lowered costs, and they promised that if you didn’t want your coverage to change, it would not. That is simply not the case. 

This month, the Congressional Budget Office announced that the 10-year cost for the bill is nearly $2 trillion, substantially higher 

than the figure used when the law was passed. The CBO also reported that as many as 20 million Americans could lose their current coverage, despite the President’s countless promises that if 

you liked your coverage you could keep it. These are not partisan 

talking points. This is the analysis of the non-partisan Congressional Budget Office. 

Meanwhile, the implementation of the law has failed to inspire 

confidence in the future of Obamacare. The cost and premium increases for some were so large that a waiver program had to be 

created to excuse over 1,700 companies, insurers and individuals 

from the law’s effects. For example, one business from my home 

State of Florida needed a waiver so that 34,000 individuals did not 

face significant premium increases or the loss of their coverage. 

Yet, these waivers still expire in 2014, and I fear the premium increases and loss of coverage will become unavoidable for over 3 million Americans. 

The Early Retiree Reinsurance Program is practically broke. In 

fact, we will probably learn from one of the witnesses today whether this program, which was supposed to last until the year 2014, 

has finally run out of money. As of last month, it had already spent 

$4.7 billion of its $5 billion budget. 

Despite predictions that 375,000 individuals would sign up for 

the temporary high-risk pools in the first year, only 50,000 have 

signed up 2 years later. 

The countless pages of regulations, rules and requirements for 

Obamacare have been incredibly confusing. To my constituents and 

individuals throughout the country, these massive new rules and 

regulations demonstrate the increasing interference of the Federal 

Government into their lives, while to the business community, the 

uncertainty they create makes planning for the future nearly impossible. 

Lastly, the creation of the Independent Payment Advisory Board, 

the IPAB, has been met with universal distain by the medical community and our seniors. Today we are debating on the House Floor 

a bill to repeal this board of unelected bureaucrats charged with 

cutting Medicare payments to doctors and hospitals. 

Of course, next week the Supreme Court will address the question of whether this unprecedented reach into every American’s life 

is permitted by the Constitution, but today, my colleagues, we want 

to evaluate the law’s effects since its passage. 

Today’s hearing is unique because we will start off with a member panel featuring both Senator Ron Johnson from Wisconsin and 

our fellow House Member Donna Edwards. I welcome both of them 

this morning. I thank them for appearing and contributing their 

time. We also have Mr. Steven Larsen joining us again today. Mr. 

Larsen is the Deputy Administrator and Director for CCIIO and 

has previously been a witness of both this committee and the Subcommittee on Health. So we welcome him back also and thank him 

for joining us today. 

[The prepared statement of Mr. Stearns follows:] 

3 


86227.001

Statement of the Honorable Cliff Stearns 

Committee on Energy and Commerce 

Chairman, Subcommittee on Oversight and Investigations 

Hearing on The Center for Consumer Information and Insurance 

Oversight and the Anniversary of the Patient Protection and Affordable 

Care Act 

March 21, 2012 

(As Prepared/or Delivery) 

It has been two years since the health care law was forced on the American 

people on a purely partisan basis. As we have done since its initial passage, 

we continue to evaluate the effect the law has on individuals, the health care 

industry, and the government. 

It's fairly obvious what those effects are: higher costs, higher premiums, 

and increased government control. 

These are not partisan points-these are objective facts. Proponents of the 

law promised lowered premiums, they promised lowered costs, and they 

promised that if you didn't want your coverage to change, it would not. 

That is simply not the case. 

This month, the Congressional Budget Office (CBO) announced that the 10-

year cost for the bill is nearly $2 trillion, substantially higher than the figure 

used when the law was passed. 

The CBO also reported that as many as 20 million Americans could lose 

their current coverage-despite the president's countless promises that if 

you liked your coverage you could keep it. 

These are not partisan talking points; this is the analysis of the non-partisan 

Congressional Budget Office. 

Meanwhile, the implementation ofthe law has failed to inspire confidence in 

the future of Obamacare: 

The cost and premium increases for some were so large that a waiver 

program had to be created to excuse over 1,700 companies, insurers, and 

individuals from the law's effects. For example, one business from my 

home state of Florida needed a waiver so that 34,000 individuals did not face 
4 


86227.002

significant premium increases or the loss of coverage. Yet, these waivers 

still expire in 2014, and I fear the premium increases and loss of coverage 

will become unavoidable for over three million Americans. 

The Early Retiree Reinsurance Program is practically broke. In fact, we'll 

probably learn from one of the witnesses today whether this programwhich was supposed to last until 20 14-has finally run out of money. As of 

last month, it had already spent $4.7 billion of its $5 billion budget. 

Despite predictions that 375,000 individuals would sign up for the temporal') 

high risk pools in the first year, only 50,000 have signed up two years later. 

The countless pages of regulations, rules, and requirements for Obamacare 

have been incredibly confusing. To my constituents and individuals 

throughout the country, these massive new rules and regulation demonstrate 

the increasing interference of the federal government in their lives, while to 

the business community the uncertainty they create makes planning for the 

future nearly impossible. 

Lastly, the creation of the Independent Payment Advisory Board (IPAB) has 

been met with universal distain by the medical community and our seniors. 

Today, we'll be debating on the House floor a bill to repeal this board of 

unelected bureaucrats charged with cutting Medicare payments to doctors 

and hospitals. 

Of course, next week the Supreme Court will address the question of 

whether this unprecedented reach into every Americans life is permitted by 

the Constitution, but today we want to evaluate the law's effects since 

passage. 

Today's hearing is unique because we will start off with a member panel 

featuring both Senator Ron Johnson from Wisconsin and our fellow House 

member Donna Edwards. I thank the members for appearing today, and we 

look forward to what they have to say. 

We also have Mr. Steven Larsen joining us again today. Mr. Larsen is the 

Deputy Administrator and Director for CCIIO and is a previous witness of 

both this committee and the Subcommittee on Health. We welcome him 

back and thank him for joining us today. 
5 

Mr. STEARNS. I would like to recognize the ranking member, Ms. 

DeGette. 

OPENING STATEMENT OF HON. DIANA DEGETTE, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF COLORADO 

Ms. DEGETTE. Thank you very much, Mr. Chairman. 

I want to welcome our witnesses today. I am glad to see our favorite friend, Steve Larsen, the Director of the Center for Consumer Information and Insurance Oversight, and of course we are 

looking forward to hearing from our colleagues, Senator Ron Johnson and Representative Donna Edwards. Representative Edwards, 

it is nice to see a woman on a panel here to talk about the women’s 

health provisions of the Affordable Health Care Act. 

Mr. Chairman, in the spirit of basing today’s oversight hearing 

on the facts, I want to briefly describe some of the benefits of the 

Affordable Care Act that have or will soon go into effect. Because 

of this law, 2.5 million young adults who were previously uninsured now have health insurance coverage on their parents’ policies. Five point one million seniors have saved an average of more 

than $600 each on their prescription drugs through Medicare. More 

than 30 million seniors and more than 80 million Americans overall now have access to preventative care with no copays, coinsurance or deductibles. Over 100 million Americans with private insurance no longer have to worry about the worst abuses of the insurance industry. Their coverage cannot be revoked if they get sick, 

and they no longer have to fear hitting a lifetime coverage limit because of unexpected medical costs. 

Mr. Chairman, this new health reform law does so much good for 

so many people, and under the mantra of repeal and replace, all 

the Republican majority has done is vote to repeal it. Now, we have 

already had two votes in this Congress to repeal the Affordable 

Care Act in the last year, and yesterday Representative Ryan introduced his budget, which would not only repeal the health care law 

but would decimate Medicare and Medicaid to boot. 

Mr. Chairman, I am wondering when we are going to start having hearings on the second part of repeal and replace, which is the 

replace part of the Affordable Care Act. 

I want to give you a few examples of how the efforts to repeal 

but not replace health care law would hurt women in particular. 

In July 2011, the prestigious Institutes of Medicine made recommendations regarding preventative health services for women. 

These experts recommended insurance companies cover the cost of 

screening for cervical cancer, counseling and screening for sexually 

transmitted infections, annual well women preventative care visits, 

screening and counseling for domestic violence, and services for 

pregnant women. Using authority granted by the Affordable Care 

Act, the Department of Health and Human Services issued guidelines ensuring the full range of preventative services outlined by 

the IOM will be covered by health plans and available to all women 

without copayments, coinsurance or deductibles. Mr. Chairman, 

this preventative care will save women’s lives and save money, but 

the proposal to repeal but not replace the law that makes sure 

women could get this care has not been answered. 

6 

That is not all the majority has tried to repeal. Earlier this week, 

the National Women’s Law Center released a report on the pervasive discrimination in the insurance market for women. The report 

found that the same health insurance policy costs a woman 30, 50 

or even 85 percent more than a man of the same age, even if maternity care is not covered. Mr. Chairman, this is simply wrong, 

and thanks to the Affordable Care Act, it will not continue. But all 

I have seen are proposals to repeal and not to replace the law that 

would prevent health insurance discrimination against women. 

Mr. Chairman, the facts do not support the drive to repeal this 

bill, but facts don’t seem to matter in this case. Republicans have 

already decided in advance that the law will not work, and the 

facts have become irrelevant. Let me give you an example. In fact, 

Mr. Chairman, you talked about it in your opening statement. Last 

week, the Congressional Budget Office released new Affordable 

Care Act estimates. Committee Republicans were quick to claim 

that the CBO’s estimates had changed and this was proof that 

health care reform had failed. There is only one problem: this is incorrect. Earlier this week, CBO Director Doug Elmendorf spoke out 

about this misrepresentation and here is what he had to say: 

‘‘Some of the commentary on these reports has suggested that CBO 

and the Joint Committee on Taxation have changed their estimates 

of the ACA to a significant degree. That is not our perspective. For 

health insurance coverage, the latest estimates are quite similar to 

the estimates we released when the legislation was being considered. The estimated budgetary impact of the coverage provisions 

has also changed little.’’ 

Mr. Chairman, CBO concluded this year what they concluded 2 

years ago when health care reform was passed: the Affordable Care 

Act will improve health care coverage for hundreds of millions of 

Americans. It will cover tens of millions of the uninsured. It will 

improve Medicare and it will cut the deficit. Millions of Americans 

are seeing the benefits of health care reform already, and these 

benefits will continue in the future. Thank you. 

Mr. STEARNS. I thank my colleague and recognize Dr. Burgess for 

2 minutes. 

OPENING STATEMENT OF HON. MICHAEL C. BURGESS, A 

REPRESENTATIVE IN CONGRESS FROM THE STATE OF TEXAS 

Mr. BURGESS. I thank the chairman for the recognition. 

You know, I have really been interested in this, what started life 

as an agency, the Office of Consumer Information and Insurance 

Oversight, for a long time. It has always been a little bit of a mystery to me. This is the office that is the lead implementation force, 

the referee on meeting guidance for consumers, States and insurance companies on the Affordable Care Act, but nowhere in the Affordable Care Act is there any reference to the Office of Consumer 

Information and Insurance Oversight. It was a fabrication by the 

Secretary of Health and Human Services. Now, when the committee began to look into this in November of 2010 and January 

of 2011, the agency morphed into the Center for Consumer Information and Insurance Oversight and was drawn back into the Centers for Medicare and Medicaid Services. And it has been tough to 

get information out of this agency. Yes, sometimes it has come but 

7 

it has come in small morsels and it has required an inordinate 

amount of staff time in order to get the budgetary information, and 

by the time we receive it, it is frequently months out of date. 

Well, the operations of the of the Center for Consumer Information and Insurance Oversight are now under the aegis of the Centers for Medicare and Medicaid Services. This is the most powerful 

health agency on earth, and indeed that the earth has ever known, 

certainly within the Federal Government, because they have under 

their control now Medicare, Medicaid, SCHIP, and for the first time 

with the passage of the Affordable Care Act 2 years ago, private 

insurance is now regulated by the Federal Government in the Office of Consumer Information and Insurance Oversight. 

So it is essential that we as an oversight body maintain the oversight over this, now this very large and crucial organization. We 

have a Supreme Court hearing going on, a Supreme Court case 

being heard next week. It will be interesting to know what the contingency plans are at HHS and CCIIO should the Supreme Court 

not rule the administration’s way. 

I will yield back the balance of my time. 

Mr. STEARNS. The gentleman yields back. 

The gentlelady from Tennessee is recognized for 1 minute. 

OPENING STATEMENT OF HON. MARSHA BLACKBURN, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF TENNESSEE 

Mrs. BLACKBURN. Thank you, Mr. Chairman. 

I want to welcome our guests. Senator Johnson, great article in 

the Wall Street Journal today on Obamacare. We appreciate the 

work you have done. Ms. Edwards, we are so pleased that you are 

with us, and Mr. Larsen, I want to welcome you back. 

As we look at what has happened over the past 2 years, we see 

that $500 billion has come out of Medicare. Our constituents are 

aware of this. They are concerned, and they look at this cost of this 

entire bill. Now, as the chairman said, what we have found out is 

that the cost has doubled since the original estimates. Those of us 

from Tennessee who had TennCare, the test cast for HillaryCare 

back in 1994, indeed reported repeatedly that the cost quadrupled 

within 5 years. So we are going to want to look at what is happening with this cost. 

We are concerned about it. We are concerned about the potential 

loss of coverage for 5 to 20 million Americans. We hear from a lot 

of our constituents about the escalation in cost of their private insurance premiums, and indeed, many of my constituents, female 

business owners, talk about their concern about loss of coverage 

and access to consistent coverage for elderly relatives, for children 

with chronic conditions, because they see this insurance market 

changing and they know that the changes that are in front of them 

are not going to help them with consistent health care, and we express those concerns and I yield back the balance of my time. 

Mr. STEARNS. The gentlelady’s time is expired and the gentleman 

from Louisiana is recognized for 1 minute. 

8 

OPENING STATEMENT OF HON. STEVE SCALISE, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF LOUISIANA 

Mr. SCALISE. Thank you, Mr. Chairman. I appreciate you having 

this hearing. I want to thank our panelists who are going to be testifying later. 

You know, I think it is important as we approach the 2-year anniversary of the President’s health care law that we look back and 

see just what has happened, what it is doing to the health care 

marketplace, and in fact, if many of the promises that were made 

have been kept or broken, and I think what we have seen so far, 

I know as I have talked to small businesses throughout my district, 

the biggest complaint that they give when they talk about the 

things that are keeping them from hiring people right now, keeping 

them from creating jobs, is the President’s health care law, the cost 

that it has added, the uncertainty that it has added. If you look at, 

you know, what it has done to Medicare, $500 billion was raided 

from Medicare by the President’s law, and in fact the President’s 

own health care actuaries confirmed that Medicare will go bankrupt in less than 12 years, and this is the current law of the land. 

And so absolutely we want to repeal it, get rid of the higher 

costs, get rid of the broken promises and the lost health care and 

the crony capitalism as we will see from these waivers that have 

been issued by many friends and supporters of the law whereas 

regular hardworking taxpayers, small businesses weren’t able to 

get those same waivers. I think it is important that we look back 

at all of that and, you know, hopefully work to address the problems like we will be working to repeal this unelected board of 15 

bureaucrats that would have the ability to ration care. 

So thanks again for having this hearing and I look forward to 

our panel. I yield back. 

Mr. STEARNS. I thank the gentleman. 

The Chair recognizes the ranking member of the full committee, 

Mr. Waxman, for 5 minutes. 

OPENING STATEMENT OF HON. HENRY A. WAXMAN, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF CALIFORNIA 

Mr. WAXMAN. Mr. Chairman, as we approach the 2-year anniversary of the Affordable Care Act, we have an opportunity to highlight the tremendous benefits that this landmark law has and will 

provide for millions of Americans, and I am pleased to welcome our 

first witnesses, Senator Johnson and Representative Edwards, and 

I know we will be hearing from Steve Larsen from the CCIIO who 

will be implementing a lot of the legislation. 

But House Republicans seem determined to overturn this law regardless of the facts. I find it hard to understand. The Affordable 

Care Act is giving vital benefits for millions of Americans. We are 

living up to the promises of this law. Nationwide, the law has provided insurance coverage for over 2 million young adults who were 

previously uninsured. It saves over 5 million seniors an average of 

more than $600 each on their prescription drugs. It provided more 

than 30 million seniors, more than 10 million children and more 

than 40 million adults new access to preventive care with no 

9 

copays, coinsurance or deductibles. Thanks to the Affordable Care 

Act, over 100 million Americans no longer have to worry about 

their coverage being revoked if they get sick or by hitting a lifetime 

coverage limit because of unexpected medical costs. 

Last week, my staff prepared reports on the benefits of the Affordable Care Act in all 435 Congressional districts. Mr. Chairman, 

I would like to enter the reports for the 23 members of the subcommittee into the hearing record. 

Mr. STEARNS. By unanimous consent, will do. 

[The information follows:] 

10 


86227.003

Early Re ree Reinsurance Program: Reimbursement Update 

February 17,2012 

The Early Retiree Reinsurance Program (ERRPJ was established by section 1102 of the Affordable 

Care Act enacted on March 23, 2010. Congress appropriated $5 billion for this temporary 

program and directed the Secretary of Health and Human Services (HHS) to set up the program 

within 90 days of enactment. By law, the ERRP Is scheduled to end when Its resources have been 

used to pay claims. Due to the significant response among the employer community, the 

Administration's budget released In February 2011 projected that the funds would be available 

Into fiscal year 2012, which started on October 1, 2011. The program ceased accepting 

applications for participation in the program on May 6, 2011. On December 9, 2011, CMS 

notified plan sponsors that $4.5 billion had been paid and Issued further guidance Informing 

plan sponsors that claims incurred after December 31, 2011 will not be accepted. 

People In the early retiree age group (I.e., ages 55 to 64) often face difficulties obtaining 

Insurance In the Individual market because of age or chronic conditions that make coverage 

unaffordable or inaccessible. The availability of group health Insurance coverage for America's 

retirees age 55 to 64 has declined significantly over the past 20 years, as the percentage of large 

employers providing workers with retirement health coverage has dropped from 66 percent to 

28 percent. The ERRP was designed to provide financial assistance to health plan sponsors that 

make coverage available to millions of early retirees and their families - Including for-profit 

companies, schools and educational institutions, unions, State and local governments, religious 

organizations and other nonprofit plan sponsors. 

By law, ERRP payments must be used to reduce plan participants' costs, to reduce plan 

sponsors' costs of providing coverage, or both. Program payments are thus targeted to 

encourage plans to continue providing coverage to early retirees and their families. 

CMS has taken several steps to promote the integrity of data submitted to, and claims paid by, 

ERRP. CMS has contracted with a program Integrity contractorto conduct audits of a subset of 

plan sponsors to verify compliance with program rules, including eligibility of early retirees, 

validity of claims submitted, and use of program funds. 

The Information below includes ail payments made to approved plan sponsors through January 

19, 2012. At this time, ERRP has received requests for reimbursement that exceed the $5 billion 

in funding appropriated. Reimbursement requests which exceed the program's $5 billion will 

now be held In the order of receipt, pending the availability of funds that may become avaiiable 

as a result of overpayment recoupment activities. CMS will continue to report the status of 

payments to plan sponsors periodically. 

For additional information on program operations and administration, please reference the 

2012 ERRP Report on the CMS CCiIO website http://cciio.cms.gov/. 

'Kaiser Family Foundation and Health Research and Educational Trust. (2010). Employer Health Benefits, 2010 

Annual Survey. Washington, DC. 

86227.004

The Sherwin-Williams Company The Timken Company The Western and Southern Ufe Insurance Company 

Tilden Mining Company L.C. 

UFCW Local Unions & Employers Benefit Plan of SW Ohio Area 

UFCW Unions' and Employers' Health and Welfare Plan of Central Ohio 

Union Construction Workers Health Plan 

United Food & Commercial Workers Union-Employer Health & Welfare Fund 

United Taconite LLC 

White Castle System, Inc. 

Wittenberg University 

Oklahoma 

Advantage Health Plans Trust 

Indian Electric Cooperative, Inc. 

OGE Energy Corp. 

1,208,513.56 

5,378,873.42 

1,581,553.64 

222,799.76 

1,016,661.70 

708,198.15 752,942.58 

180,414.52 

53,368.91 

86,307.96 

27,330.85 

35,012.60 

58,128.71 

695,927.41 

86227.005

General Electric Company 

General Re Corporation 

Glastonbury Public Schools 

Hamden Public Schools 

IBT Local 191 Health Service & Insurance Plan 

International Brotherhood of Electrical Workers Local 

International Union of Bricklayers and Allied Craftworkers 

International Union of Operating Engineers Welfare Fund 478 

IUPAT District Council No. 11 Health Fund 

Knights of Columbus 

Legrand Holding. Inc. 

Local 443 Transportation Health Service & Insurance Plan 

Madison Board of Education 

NECA - IBEW Local 35 Health Fund 

New England Electrical Workers Benefits Fund 

Newtown Board of Education 

268,408.33 

85,277.73 

441,936.49 

13,338.17 

65,943.32 

4,400.22 

270,756.00 24,661.60 

19,824.94 

94,487.81 

751.00 

4,081.96 

28,521.90 

364,608.67 

1,482.11 

86227.006

Electrical Workers Insurance Fund 

Flint Area Sheet Metal Workers Health & Welfare Fund 

Ford Motor Company 

Motors LLC 

Genesee County Community Health Genesee County Road Commission 

Genesee County Water and Waste Services 

Genesys Regional Medical Center 

Gkn North America Services, Inc. 

Guardian Industries Corp 

Haworth International, Ltd. 

Henniges Automotive Holdings, Inc. 

HLI Operating Company, Inc. 

Hurley Medical Center 

Huron-Clinton Metropolitan Authority 

Ingham County, MI 

908,030.E!O 

20,737.72 

17,290,035.77 

81,570.34 

176,953.54 107,356.19 4,846.86 466,848.55 

291,119.41 

35,155.18 

202,468.13 213,829.26 

194,873.95 

130,425.21 

294,272.74 

86227.007

Waterloo Central School District 

Wayland-Cohocton Central School District 

Wayne Central School District Wayne County Health Care Plan Trust Welfare Fund of Local No. One,lATSE 

Westchester Community College 

White & Case LLP 

William Floyd Union Free School District 

Williamson Central School District 

York Central School District 

NDrth carolina 

Alex Lee, Inc. 

Alexander County American Kennel Club Arrowood Indemnity Company 

61,219.29 

1,288.77 13,007.19 

80,630.40 

181,749.22 

318,648.24 

16,270.50 

268,146.77 

11,737.36 

1,184.29 

391,998.21 

6,500.87 

48,205.14 

152,669.12 

86227.008

Electrical Workers Insurance Fund 908,030.60 

Flint Area Sheet Metal Workers Health & Welfare Fund 20,737.72 

17,290',035.1:7 . 

General Motors LLC 31,282.423.69 Genesee County Community Health 81,570.34 

Genesee County Road Commission 176,953.54 

Genesee County Water and Waste Services 107,356.19 

Genesys Regional Medical Center 4,846.86 

Gkn North America Services, Inc. 466,848.55 

Guardian Industries Corp 291,119.41 

Haworth International, Ltd. 35,155.18 

Henniges Automotive Holdings, Inc. 202,468.13 

HLI Operating Company, Inc. 213,829.26 

Hurley Medical Center 194,873.95 

Huron-Clinton Metropolitan Authority 130,425.21 

Ingham County, MI 294,272.74 

86227.009

Harris County Hendrick Medical Center 

Hewlett-PackarifCompany 

Holly Corporation Houston Refining LP 

Hunt Consolidated Inc. Huntsman International LLC 

Interstate Brands Corporation 

Joint Board ofTrustees of U.A.P.P. Local 142 Bene 

Kinder Morgan, Inc. Lehigh Hanson, Inc. 

Lennox International Inc. 

Lyondell Chemical Company Maverick Tube Corporation 

Metropolitan Transit Authority of HarriS County, 1)( 

Millennium America Holdings Inc. 

3,089,168.13 

124,363.38 

m,192;806,41J 

261,844.21 

294,214.16 

110,006.88 1,076,681.57 

704,647.51 

17,596.12 

1,088,638.11 

287,417.32 

93,319.59 

772,792.74 

2,546.98 

706,531.09 

28,985.14 

86227.010

Texas 

Alcon Laboratories, Inc. Allied Pilots Association Alon USA Energy, Inc. 

American Airlines Inc. 

American Heart Association 

Anadarko Petroleum Corporation 

AT&Tlnc 

Atmos Energy Corporation 

Basell North America, Inc. 

BHP Copper, Inc. 

BJ Services Company, U.S.A. 

Boy Scouts of America 

Brazoria County 

Broken Hill Proprietary USA Inc. 

Burlington Northern Santa Fe, LLC 

2,206,097.44 

45,866.93 112,339.32 

24,260,057.92 

298,069.21 

859,791.74 

431,824.80 

176,839.10 

33,071.22 

214,759.36 

887,735.24 

245,489.80 

825,458.17 

2,749,230.73 

86227.011

J PMorgan· Chase&:co. 

Katonah-Lewisboro School District Kendall Central School Kenmore Town of Tonawanda Union Free School District 

KeySpan Corporation 

King Kullen Grocery Co., Inc. 

Kingston Trust Fund 

KLM Royal Dutch Airlines 

L-3 Communications Retiree Medical Plan 

Labor- Management Healthcare Fund 

Laborers Inti Union of N A Welfare Fund Local 754 

La ncaster Central School District 

LeRoy Central School 

Letchworth Central School Livonia Central School 

Local 342 Health Care Fund 

8,568,059.48 

520,418.91 

13,055.44 180,812.65 

2,197,691.20 

87,920.56 699,727.21 

235,574.29 

979,572.22 

1,825,270.97 133.81 

35,601.64 3,222.80 

692.38 

28,224.13 

49,857.95 

86227.012

Rocky Mountain UFCW Unions & Employers Health Benefit Fund 

West Metro Firefighters Health Benefits Trust 

Westmoreland Coal Company 

Woodward Governor Company 

Connecticut 

Aetna Inc. Alstom Power Inc. 

Arch Chemicals, Inc. 

ASSA ABLOY, Inc. 

Barnes Group Inc. Bethel Board of Education 

Board of Trustees local 493 Health Service & Insurance Plan 

Board of Trustees local 677 Health Service & Insurance Plan 

,"titigroap'toc. 

City of Bridgeport, CT 

City of Bristol 

1,450,662.30 

149,720.41 

179,187.68 181,015.69 

3,904,133.07 

268,233.76 

254,464.44 

157,054.86 

210,515.56 

161,988.47 

407.54 

614.70 

2,260,053.33 

305,808.51 

86227.013

UFCW National Health and Welfare Fund Unilever United States, Inc. United Association Local No. 322 Health and Welfare Fund 

United Water Resources Inc. 

Verizon 

West Windsor Township 

Woodbridge Township 

New Mexic;o 

Los Alamos National Security, LLC 

New Mexico Retiree Health Care Authority 

Sandia Corporation 

University of New Mexico 

New York 

1199SEIU Natl Benefit Fund for Health and Human Service Employees 

Advance Publications, Inc. Albany International Corp. 

499,412.54 

4,056,371.29 

139,709.55 125,288.00 

8,724.54 

392,376.72 

1,323,668.02 

5,915,300.20 

2,213,916.02 

451,441.07 4,359,989.34 

372,836.28 

498,638.82 

86227.014

American Express Company 

American Federation of Teachers 

Inc. 

Amherst Central School District 

Associated Press 

Attica Central School 

Auburn Enlarged City School District 

Avon Central School District 

Avon Products, Inc 

Bath Central School 

Bedford School District 

Board of Education 

Board of Education City School City of Rochester 

Board of Trustees Local 21 Welfare Fund 

Board of Trustees of Local 295/851 Employer Group Welfare Fund 

Bradford Central School District 

2,079,836.34 

74,367.14 

214,163.98 

99,258.55 

191,888.00 

37,187.67 

220,212.80 

1,971.62 

2,073,932.15 

101,878.17 

580,121.00 

40,823.07 

1,415,032.80 

401,647.24 

431,490.36 

8,543.42 

86227.015

Herkimer County 

Herkimer-Fulton-Hamilton-Otsego BOCES 

Hess Corporation 

Honeoye Central School District 

Horace Mann School 

Horseheads Central School District 

I.B.E.W. Local 43 & Electrical Contractors Welfare Fund 

IBEW 325 Joint Trust Fund 

IBEW Local 1249 Insurance Fund 

IBEW Local 86 Insurance Fund 

International Flavors & Fragrances Inc. 

In Corporation 

Jamestown Board of Public Utilities 

Jefferson Lewis Et AI. School Employees' Healthcare Plan 

John D. Brush & Co., Inc. 

101,473.60 

812,761.60 

101,577.94 

33,976.29 

12,993.86 

16,432.00 192,938.43 

65,888.74 

74,969.76 

142,536.80 

30,963,516.39 

516,107.00 

1,171,577.65 19,730.51 

1,506,823.06 

23,862.94 
23 

Mr. WAXMAN. They show that health reform is helping hundreds 

of thousands of people in each of our districts. In my district, 

health reform has provided 8,600 young adults with health coverage and given 9,600 seniors an average discount of $700 per person on their prescription drugs under Medicare Part D. And Mr. 

Chairman, in your district, because of health reform, 113,000 seniors have received Medicare preventive services without paying 

copays, coinsurance or deductibles, up to 42,000 children with preexisting health conditions can no longer be denied coverage by 

health insurance, and 250,000 of your constituents no longer have 

to worry about lifetime coverage limits on their health plan. And 

in the months and years to come, even more critical benefits and 

protections will go into effect. 

Later this year, every health insurance policy sold in this country 

will begin providing consumers with a clear, consistent summary of 

the costs and benefits of their coverage like food and nutrition labels for health care plans. 

In 2014, when the law is fully implemented, plans in the private 

market will be sold in transparent and competitive exchanges 

where consumers can be sure that the plans they purchase will be 

there for them when they need them without annual or lifetime 

limits, regardless of a preexisting condition, without insurers making unjustifiable premium increases or wasting huge percentages of 

premium dollars on administrative costs and profits. 

These are the facts. They show the Affordable Care Act is working and will continue to benefit the American people. What won’t 

work is the Republican alternative. They want to repeal the law. 

They say they we will repeal and replace. Now we know what their 

replacement is. From the Budget Committee chairman yesterday, 

the proposal would repeal health care reform, decimate Medicaid, 

cutting over $800 billion from this critical safety net program, and 

it would slash hundreds of billions of dollars from Medicare. After 

all the money that people complained about that was taken from 

the Medicare overpayment and some of the insurance companies, 

the Republicans would leave that in place and they would cut additional hundreds of billions of dollars as well, ending the program’s 

basic health guarantee for seniors. 

Mr. Chairman, these Republican solutions are wrong. They 

would devastate Medicare and Medicaid, leave tens of millions of 

Americans without health insurance at all. Their way of holding 

down costs is to shift those costs on to the Medicare individuals, 

and for the States, they would tell the States here is less money 

for Medicaid, you can cut back on health care for disabled people 

and very, very poor people under Medicaid while we are going to 

make sure that we are going to give wealthier Americans further 

tax breaks. I think that is obscene and I think the American people 

will see through this Republican effort. 

Mr. STEARNS. The gentleman’s time is expired. We will now go 

to our witnesses. Our first panel, of course, is Senator Ron Johnson 

from Wisconsin and Congresswoman Donna Edwards from Maryland. We welcome both of you today. And Senator Johnson, we will 

recognize you for 5 minutes. 

24 

STATEMENTS OF HON. RON JOHNSON, A UNITED STATES SENATOR FROM THE STATE OF WISCONSIN; AND HON. DONNA F. 

EDWARDS, A REPRESENTATIVE IN CONGRESS FROM THE 

STATE OF MARYLAND 

STATEMENT OF HON. RON JOHNSON 

Mr. JOHNSON. Thank you, and good morning, Chairman Stearns, 

Ranking Member DeGette and members of the committee. Thank 

you for the opportunity to participate in today’s hearing on the Patient Protection and Affordable Care Act. 

Unfortunately, this Orwellian-named law will neither protect patients nor make health care more affordable. It is my current mission to paint a picture of what America’s health care system, our 

freedoms and our Federal budget will look like in the unfortunate 

event that Obamacare is fully implemented. It will not be a pretty 

picture. 

Nancy Pelosi famously stated that we have to pass this bill so 

you can find what is in it. I am determined to make sure we don’t 

have to fully implement it to see what it will cost. 

Twenty-eight years ago, our infant daughter, like millions of 

other Americans, was saved by a health care system and medical 

professionals that dedicate their lives to saving the lives of others. 

Today, our daughter is a nurse herself helping to save infants in 

a neonatal intensive care unit. These are the people that President 

Obama chose to demonize in his quest to take over one-sixth of our 

economy. The result of his efforts was an ill-conceived, totally partisan, 2,700-page bill whose benefits were wildly overstated and 

whose costs will prove to be dangerously understated. 

Let me start there, understated costs. To sell the fiction that 

Obamacare would provide health care to 25 million uninsured 

Americans without adding one dime to our deficit, the original 

budget window included 10 years of revenue and fictional cost savings totaling $1.1 trillion to pay for only 6 years of benefits totaling 

$938 billion. Increased taxes, fees and penalties account for roughly 

half of the $1.1 trillion ‘‘pay for.’’ The other half supposedly results 

primarily from reduced payments to Medicare providers and cuts 

in Medicare Advantage. But Congress has not allowed the enactment of the $208 billion provider payment cuts required under the 

Sustainable Growth Rate formula because it understands those 

cuts would dramatically reduce seniors’ access to care. For the 

same reason, how likely is it that Obamacare’s Medicare reductions 

will actually occur. 

In addition, how likely is it that on net, only 1 million out of the 

154 million Americans that have employer-sponsored health insurance will lose that coverage and be forced to obtain coverage 

through the exchanges. Not very. Yet that was the CBO estimate 

that helped produce Obamacare’s unrealistic deficit reduction score. 

Instead of trying to interpret and comply with over 15,000 pages 

of rules and regulations, and instead of paying $20,000 in 2016 for 

family coverage, why wouldn’t business owners simply pay the 

$2,000 penalty? And by dropping coverage under Obamacare, they 

wouldn’t be exposing their employees to financial risk. They would 

be making them eligible for huge subsidies in the exchanges, 

$10,000 if their household income is $64,000. A recent study by 

25 

McKenzie and Company found that 30 to 50 percent — that would 

be 48 to 80 million Americans — 30 to 50 percent of employers 

plan to do just that, drop coverage. 

CBO’s March 2012 baseline estimates 9-year Obamacare outlays 

will exceed $1.9 trillion. Adding that many individuals to the exchanges could add trillions to these projections. Can America afford 

to take that risk? Those trillions of dollars for Obamacare will be 

taken from hardworking American taxpayers and the private sector 

filtered through the Federal Government in order for Washington 

to dictate the terms of health care consumption and delivery to 

every American. If that happens, we will be ceding a significant 

portion of our personal freedoms for the false promise of economic 

and health care security. 

There are too many uncertainties, and the stakes are far too high 

to proceed with implementing Obamacare. It is time to put the 

brakes on until we fully understand all its costs and consequences. 

In closing, let me ask some questions the administration should 

answer before Obamacare is fully implemented and it really is too 

late. If the Medicare cuts actually are enacted, how many doctors 

will stop taking Medicare patients? What services will be cut? How 

will quality suffer? Isn’t this how rationing begins? 

Because Medicaid reimbursement rates are often lower than provider costs, approximately 40 percent of providers do not accept 

Medicaid patients. How will the remaining 60 percent handle the 

25 million new Medicaid beneficiaries? 

Faith in the Federal Government is appropriately at an all-time 

low. How many Americans actually believe Washington can effectively and efficiently take over one-sixth of our economy? Does anyone think government would have invented the iPhone or iPad? 

What will happen to medical innovation under government control? 

Will Americans like Federal bureaucrats telling them they cannot get mammograms until they reach the age of 50, or the Independent Payment Advisory Board becoming Medicare’s de facto rationing panel? 

Defensive medicine and junk lawsuits cost Americans hundreds 

of billions of dollars each year. Why was malpractice reform rejected? Did it have anything to do with President Obama’s support 

from trial lawyers? Why would anyone think that increasing taxes 

on health insurance plans, medical devices and drugs would help 

bend the cost curve down? The actual result: instead of lowering 

the cost of a family insurance plan by $2,500 per year as President 

Obama promised, family plans are now $2,200 higher. Does anyone 

really think that on net, only 1 million American will lose their employer-sponsored care and be forced into the exchanges? And finally, why have 1,722 waivers covering 4 million Americans been 

granted if implementing Obamacare doesn’t threaten current 

health insurance plans? 

President Obama promised: ‘‘If you like your health care plan, 

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

take it away, no matter what.’’ I am not sure what you would call 

that statement, but whatever you call it, it was a doozy. 

Thank you, Mr. Chairman. 

[The prepared statement of Mr. Johnson follows:] 

26 


86227.016

Statement of Senator Ron Johnson 

Ranking Member of the Senate Subcommittee on Oversight of Government Management, 

the Federal Workforce, and the District of Columbia 

Introduction 

before the Committee on Energy and Commerce, 

Subcommittee on Oversight and Investigations 

U.S. House of Representatives 

March 21, 2012 

Good Moming Chairman Stearns, Ranking Member DeGctte, Members of the Committee. 

Thank you for the opportunity to participate in today's hearing on the Patient Protection and 

Affordable Care Act (PPACA). 

Unfortunately, this Orwellian named law will neither protect patients nor make healthcare more 

affordable. 

It is my current mission to paint a picture of what America's health care system, our freedoms, 

and our federal budget will look like in the unfortunate event that PPACA is fully implemented. 

It will not be a pretty picture. 

Nancy Pelosi famously stated that: "We have to pass this bill so you can find out what's in it." I 

am determined to make sure we don't have to fully implement it to see what it will cost. 

Twenty-eight years ago, our infant daughter, like millions of other Americans, was saved by a 

health care system, and medical professionals that dedicate their lives to saving the lives of 

others. Today, our daughter is a nurse herself, helping to save infants in a neo-natal intensive 

care unit. These are the people that President Obama chose to demonize in his quest to take over 

one-sixth of the American economy. 

The result of his efforts was an ill-conceived, 2,700 page bill, whose benefits were wildly 

overstated, and whose costs will prove to be dangerously understated. 

Effect on Federal Budget and Costs 

Let me start there ... understated costs. To sell the fiction that PPACA would provide healthcare 

to 25 million uninsured Americans without adding one dime to the deficit, the original budget 

window included 10 years of revenue and fictional cost savings, totaling $1.1 trillion, which pays 

for only six years of benefits, totaling $938 billion. 

Increased taxes, fees, and penalties account for roughly half of the $1.1 trillion "pay for." The 

other half supposedly results primarily from reduced payments to Medicare providers and cuts in 

Medicare Advantage. 

1 
27 


86227.017

But Congress has not allowed enactment of the $208 billion provider payment cuts required 

under the Sustainable Growth Rate formula because it understands those cuts would dramatically 

reduce seniors' access to care. For the same reason, how likely is it that PPACA's Medicare 

reductions will actually occur? 

Effect on Private Insurance 

In addition, how likely is it that on net, only one million out of the 154 million Americans that 

have employer-sponsored health insurance will lose that coverage and be forced to obtain 

coverage through the exchanges? Not very, yet that was the Congressional Budget Office (CBO) 

estimate that helped produce PPACA's unrealistic deficit reduction score. 

Instead of trying to interpret and comply with over 15,000 pages of rules and regulations, and 

instead of paying $20,000 in 2016 for family coverage, why wouldn't business owners simply 

pay the $2,000 penalty? 

And by dropping coverage under PPACA, they wouldn't be exposing their employees to 

financial risk. They would be making them eligible for huge subsidies in the exchanges -

$10,000 if their household income is $64,000. 

A recent study by McKinsey & Company found that 30 percent to 50 percent of employers plan 

to do just that. CBO's March 2012 baseline estimates nine-year PPACA outlays will exceed 

$1.7 trillion. Adding this many individuals to the exchanges could add trillions of dollars to 

those projections. Can America afford to take that risk? 

Those trillions of dollars for PPACA will be taken from hardworking American taxpayers and 

the private sector then filtered through the federal government in order for Washington to dictate 

the terms of health care consumption and delivery to every American. 

If that happens, we will be ceding a significant portion of our personal freedoms for the false 

promise of economic and healthcare security. 

There are too many uncertainties, and the stakes are far too high to proceed with implementing 

PPACA. It is time to put the brakes on until we fully understand all its costs and consequences. 

Conclusion 

In closing, let me ask some questions the Administration should answer before PPACA is fully 

implemented and it really is too late. 

If Medicare cuts actually are enacted, how many doctors will stop taking Medicare patients? 

What services will be cut? How will quality suffer? Isn't this how rationing begins? 

2 
28 


86227.018

Because Medicaid reimbursement rates are often lower than provider costs, approximately 40 

percent of providers do not accept Medicaid patients. How will the remaining 60 percent handle 

the 25 million new Medicaid beneficiaries? 

Faith in the federal government is appropriately at an all-time low. How many Americans 

actually believe Washington can effectively and efficiently take over one-sixth of our economy? 

Does anyone think government would have invented the I-phone or I-pad? What will happen to 

medical innovation under government control? 

Will Americans like federal bureaucrats telling them they cannot get mammograms until they are 

50, or the Independent Payment Advisory Board becoming Medicare's de facto rationing panel? 

Defensive medicine and junk lawsuits cost Americans hundreds of billions of dollars each year. 

Why was malpractice reform rejected as part of health care reform? 

Why would anyone think that increasing taxes on health insurance plans, medical devices, and 

drugs would help bend the cost curve down? 

The actual result: instead of lowering the cost of a family insurance plan by $2,500 per year as 

President Obama promised, family plans are now $2,200 higher. 

Does anyone really think that on net, only one million American will lose their employer 

sponsored care and be forced into the exchanges? 

And finally, why have 1,722 waivers covering four million Americans been granted if 

implementing PPACA doesn't threaten current health insurance plans? 

President Obama promised: "If you like your health care plan, you'll be able to keep your health 

care plan. Period. No one will take it away, no matter what." I'm not sure what you would call 

that statement, but whatever you call it, it was a doozy. 

Thank you for the opportunity to testify before you today on what I believe is the most important 

issue facing our nation. llook forward to your questions. 

3 
29 

Mr. STEARNS. I thank you, Senator, and we recognize the 

gentlelady from Maryland for 5 minutes. 

STATEMENT OF HON. DONNA F. EDWARDS 

Ms. EDWARDS. Thank you, Mr. Chairman and Ranking Member 

DeGette, and thanks for holding this important and timely hearing 

on the Nation’s health care system, and for the opportunity to be 

here to testify today. 

I represent Montgomery and Prince George’s counties right outside of Washington, D.C. Even in my Congressional district close 

to the Nation’s capital, there are thousands of people who go without health care every day. I was honored to preside over the passage of the Affordable Care Act in the House and filled with pride 

actually to witness President Obama sign the landmark bill into 

law. 

Although the health care reform law has faced opposition from 

some, I am proud and steadfast in my support of the Affordable 

Care Act and the preventive care, the primary care, the community-based care and the quality care that will now be received by 

millions of Americans. 

Before the enactment of the Affordable Care Act, our health care 

system had been failing a large part of our population who most 

needed insurance coverage. In a national survey, 12.6 million nonelderly adults, 36 percent of whom tried to purchase health insurance directly from an insurance company in the individual market, 

had been discriminated against because of a pre-existing condition 

just in the last 3 years. With a Federal high-risk pool, these Americans will have access to a critical program that provides lifesaving 

health care coverage, and the Affordable Care Act also encourages 

and enables people to seek out care sooner, saving the system 

money and increasing the chance of positive health outcomes in the 

long run. That we should look to as very encouraging. 

I worked with my colleagues, and I was interested to hear you, 

Mr. Chairman, particularly Jan Schakowsky, in championing a provision that holds insurance companies accountable for excessive 

premium increases. That ensures affordability for working families 

who have health care coverage, but for whom costs are skyrocketing. 

In my congressional district, this provision has already helped 

protect 190,000 residents from price gouging by requiring health 

insurers to post and justify rate increases of 10 percent or more. 

This is true all across the country in every single Congressional 

district. 

At this important 2-year anniversary, for constituents in my district and throughout the country, health care reform has already 

delivered important and tangible benefits due to a number of provisions in effect today. I am proud that our system would allow me 

the option to keep on my health insurance policy my 23-year-old up 

until age 26 in the event that he doesn’t receive coverage through 

an employer. 

I visit senior centers regularly where seniors now understand 

that the Affordable Care Act strengthens their Medicare benefit by 

closing the prescription drug donut hole and expanding coverage, 

all while lowering costs to them. Under the expanded benefits of 

30 

Medicare, seniors can receive annual physical and preventive 

screenings. And the small businesses in my district and all across 

this country have received the benefit of a 35 percent, enhanced to 

50 percent in 2014, tax credit to help them as employers cover the 

cost of premiums paid to insure their workers. And with the filing 

deadlines approaching, employers should look for that credit filing 

on their return. 

And for women, and I am proud that for women all across this 

country Affordable Care Act has had a remarkable impact on their 

ability to finally obtain affordable and comprehensive coverage. According to The Commonwealth Fund, when the law is fully implemented, nearly all the 27 million women in this country ages 19 

to 64 who were uninsured in 2010 will gain health coverage that 

meets their needs at a fair price. 

By 2014, health care reform will keep insurance companies from 

denying women coverage due to preexisting conditions like experiencing domestic violence or pregnancy or even acne. What a shame 

that we needed a law to ensure that insurance companies would 

not penalize women for those or other conditions, but you know 

what? I am happy we have that law to do exactly that. 

And further, as members of this panel, male and female, know, 

the act of choosing a doctor for your health needs is an important 

and personal decision. The Affordable Care Act ensures that 

women are able to choose any doctor they trust without a referral. 

As if the insurance companies didn’t have enough influence over 

the health care decisions of women, before the passage of the Affordable Care Act insurers could also choose to charge a woman 

more for her insurance policy just because of her gender. The National Women’s Law Center reports the practice of charging women 

more than men for the same coverage cost women $1 billion a year 

with little evidence to explain the difference. 

And now with the Affordable Care Act in place and the scientific 

findings of the Institute of Medicine, women will receive a full 

range of preventive services at no cost including mammograms, 

colonoscopies, Pap tests, as well as well-woman visits, HPV testing, 

contraception methods, and support for interpersonal and domestic 

violence. To date, 20 million women have accessed these free preventive services. 

And for minority women like me who too often go uninsured, the 

Affordable Care Act will provide equal access to health care and 

close health disparity gaps that plague women in underserved communities. 

And so I appreciate the opportunity to be here today to celebrate 

the good news of health care delivery for the American people 

through the Affordable Care Act, and I thank you, and I am happy 

to answer any questions. 

[The prepared statement of Ms. Edwards follows:] 

31 


86227.019

Testimony of 

The Honorable Donna F. Edwards 

Before the House Energy & Commerce 

Subcommittee on Oversight and Investigations 

"The Center for Consumer Information and Insurance Oversight and the Anniversary of 

the Patient Protection and Affordable Care Act" 

March 21,2012 

Thank you, Chairman Steams and Ranking Member DeGette, for holding this important and 

timely hearing on the nation's health care system and for allowing me the opportunity to testify 

before the Subcommittee. I am Congresswoman Donna F. Edwards, and I represent Montgomery 

and Prince George's Counties in the Fourth Congressional of Maryland, located just outside of 

Washington, DC. 

I was honored to preside over the passage of the Affordable Care Act in the House and filled 

with pride to witness President Obama sign the landmark bill into law. Although the health 

reform law has faced opposition from some, I stand proudly and steadfastly in support of the 

Affordable Care Act and the preventive care, primary care, community-based care-quality 

care-that will now be received by millions of Americans. 

Prior to the enactment of the Affordable Care Act, our health care system had been failing a large 

proportion of our population who most needed insurance coverage. In a national survey, 12.6 

million non-elderly adults, 36 percent of whom tried to purchase health insurance directly from 

an insurance company in the individual insurance market, had been discriminated against 

because of a pre-existing condition in the last three years. I With a federal high risk pool, these 

Americans will have access to a critical program that provides life-saving health care coverage. 

The Affordable Care Act also encourages and enables people to seek out care sooner, saving the 

system money and increasing the chance of a positive outcome in the long run - things that we 

should be encouraging. 

I worked with my colleagues, particularly Rep. Jan Schakowsky (D-IL), to champion a provision 

that holds insurance companies accountable for premium increases, ensuring affordability for 

millions of working families who have health care coverage, but for whom costs are 

1 Coverage Denied How the Current Health lnsurance System Leaves MILLIONS Behind httpifw\V\v.hc3Hhrcform gov/ 

rcpof\<;/tknlcd co ..... crae('/co\(.'ragcdcl1lcd pdf 
32 


86227.020

skyrocketing disproportionate to inflation. In my congressional district, this provision has 

already helped protect 190,000 residents from price gouging by requiring health insurers to post 

and justify rate increases of 10% or more. 2 Across the country this provision has been used by 

state commissioners to save consumers millions of dollars.] 

At this important 2-year anniversary, for constituents in my district and throughout the country, 

health care reform has already delivered important and tangible benefits due to a number of 

provisions in effect today. The parents of children living with preexisting conditions no longer 

have to worry about being denied coverage for their young ones. As a mother of a healthy 23 

year old son, I am proud that our reformed health care system would allow me the option to keep 

him on my insurance policy until the age of 26 in the event he did not receive coverage through 

his employer. 1 visit senior centers regularly where seniors now understand that the Affordable 

Care Act strengthens their Medicare benefit by closing the prescription drug "donut hole," and 

expanding coverage - all while lowering costs to them. Under the expanded benefits of 

Medicare, seniors can receive annual physical and preventive screenings. And the small 

businesses in my district and around the country know that health care reform included a new 35 

percent-enhanced to 50 percent in 20 14-tax credit to help them as employers cover the cost of 

premiums paid to insure their workers. With tax filing deadlines approaching, employers should 

look for that credit filing on their return. 

For women, the Affordable Care Act has had a remarkable impact on their ability to finally 

obtain affordable and comprehensive coverage. According to The Commonwealth Fund, when 

the law is fully implemented, nearly all the 27 million women ages 19 to 64 who were uninsured 

in 2010 will gain health coverage that meets their needs at a fair price. 4 By 2014, health care 

reform will keep insurance companies from denying women coverage due to "preexisting 

conditions," like experiencing domestic violence or pregnancy or acne. What a shame that we 

needed a law to ensure that insurance companies would not penalize women for those or other 

conditions-but I am happy to have a law that does just that. 

!Oemocratlc Staff Report House Commmee on Energy and Commerce Benefits of the Health Care Reform Law In the 4'k Congressional 

DisHict of Maryland March 2012 

, U S Department of Human ServIces 

~ Robertson, Ruth and Sara R. Co!lms (201 I). Realizing Health Reform's Potentta!: Women at Risk Why Increasing Nllmbcrs of Women Are 

Failmg,lo Get the Health Care They Need and How the AtYordable Care Act Will Help.llle Commonwealth Fund http/lwwy,,'common 

\\calthfund om/-/mcJIMFllc-;/Publlcauonsllssuc"!i,20Bridf20IliMavIl502 Hobertson women al mk reform bncf v3 pdf 
33 


86227.021

Further, as the members of this panel - male and female - know, the act of choosing a doctor to 

care for your health needs is an important and personal decision. The Affordable Care Act 

ensures that women are able to choose any doctor they trust without a referral. 

As if the insurance companies did not have enough influence over the health care decisions of 

women, prior to the passage of the Affordable Care Act insurers could also choose to charge a 

woman more for her individual insurance policy just because of her gender. The National 

Women's Law Center reports the practice of charging women more than men for the same 

coverage cost women $1 billion a year with little evidence to explain the difference. 5 Thankfully, 

today under the Affordable Care Act, the 7.5 million women who buy their own insurance are 

protected from these costly and discriminatory practices. 

And now with the Affordable Care Act in place and the scientific findings of the Institute of 

Medicine, women will receive a full range of preventive services at no-cost share, including 

mammograms, colonoscopies, Pap tests, well-woman visits, HPV testing, contraception 

methods, and support for interpersonal and domestic violence. To date, 20 million women have 

accessed these free preventive services.6 For minority women, who too often go uninsured, the 

Affordable Care Act will provide equal access to health care and close the health disparity gaps 

that plague women in these underserved communities. 

The Patient Protection and Affordable Care Act is an historic improvement that will put health 

care back into the hands of consumers while ushering quality, affordable, and more accessible 

coverage for millions of Americans. In Maryland, by making sure people are healthy and care is 

accessible, we will save taxpayers and the health system $829 million over the next ten years 

while cutting the number of uninsured in our state in half. 

I appreciate the opportunity to appear before the committee today to offer my perspective on this 

vital law and am happy to answer any questions that my colleagues may have. 

i Garrett, DanieJlc (20! 2) "Turning to Fairness: Insurance Discrimination Against Women Today and the Affordable Care Act" National 

Women's Law Center. hnp i/\\\\,\' n'Ale org/sltes/defauitlfdes/pdfs/nwlc 2012 tumingtofalrncss report.rdf 

6 tJ S Department of Health and Human ServIces 
34 

Mr. STEARNS. I thank both of you. 

Senator Johnson, do you have time to answer any questions? 

Mr. JOHNSON. I believe so. I will run out of here at the last 

minute. 

Mr. STEARNS. OK, because I saw that you might have a vote here 

in the Senate. 

I guess the question for you would be, what experiences in the 

private sector have you had that give you insight into our impending problem with Obamacare? 

Mr. JOHNSON. Well, really, two pretty significant ones. First of 

all, as a small- to medium-size business owner, I purchase health 

care for the people who worked with me for over 31 years, so I certainly understand the thought process, the decision-making process 

that will be going into those health care purchasing decisions moving forward and certainly the passage of Obamacare changes the 

equation entirely. I mean, put yourself in the position of a business 

owner trying to comply with currently 15,000 pages, and that is 

just simply going to grow, and then take a look at the cost equation. So we have totally changed the equation in terms of how are 

we going to buy health care. 

But the other experience, life experience, that was pretty significant was the birth of our first child, our daughter, Carrie, who was 

born with a very serious congenital heart defect, her aorta and pulmonary artery reversed. So the first day of life, she was rushed 

down where, you know, one of those doctors came in 1:30 in the 

morning and saved her life. And then 8 months later when her 

heart was the size of a small plum, some other incredibly dedicated 

medical professionals reconstructed the upper chamber of her 

heart. So her heart operates backwards right now. But she is a 

nurse herself and she is a 28-year-old woman practicing medicine 

because my wife and I had the freedom. Again, this was ordinary 

insurance coverage. This was no Cadillac plan. We had the freedom 

to seek out the most advanced surgical technique at the time which 

allowed Carrie to have such a wonderful result. So I have got very 

direct experience both in terms of buying health care as well as 

being on the consumption side of that in a wonderful story that has 

a very happy ending. 

Mr. STEARNS. Senator, I also had a small business myself, and 

understanding the complexities. Do you think if health care is put 

in place, do you think employers will sort of dump employees all 

into the exchanges? What is your estimation of what will happen 

there? 

Mr. JOHNSON. Well, that is a concern, and the CBO initially estimated only a million people would, but there have been surveys, 

and the McKenzie is the one that I quoted that said 30 to 50 percent of employers—and by the way, that percentage goes up the 

more they know about the health care law—plan to do just that. 

Now, will they actually do it? Nobody knows. But what we are 

trying to get the CBO to do is let us give us the information just 

in case. I mean, what if half of the people that get their insurance 

through employer-sponsored plans actually lose it and access the 

exchanges under very high levels of subsidy? That would be 75 to 

80 million people, and then of course, that would result in cost 

shifting, putting more pressure on premium rates, which would 

35 

cause even more employees to lose their health care overage. And 

quite frankly, Chairman, I think that is exactly the way that this 

health care was designed. It was designed to lead to government 

takeover of the health care system basically a single-payer system. 

Mr. STEARNS. Congresswoman Edwards, you heard the opening 

statement of Ms. DeGette in which she talked about the Medicare, 

and I think either she or Mr. Waxman talked about Medicare and 

how the Paul Ryan budget would impact Medicare. Are you concerned, I think like a lot of us are, that when we passed 

Obamacare, there was a cut of $500 billion from Medicare? Does 

that concern you at all that these cuts are, one, feasible or are they 

accounting gimmicks or will it ever happen, I guess? 

Ms. EDWARDS. Thank you, Mr. Chairman, for the question, but 

let us look at the facts. In fact, what has happened is that we are 

actually saving seniors and providing additional benefits with the 

savings that have been achieved in Medicare, because after all, 

that went back into the Medicare system, and so when I look at 

our seniors, for example, who receive—who are working up to that 

donut hole and that they now can actually receive a benefit that 

wouldn’t by closing the donut hole, those are benefits. When I look 

at seniors who now can go for an annual physical so that they can 

look down the line to avoid illnesses or conditions that might otherwise impact them negatively, those seniors are actually receiving 

benefits through the savings that we actually achieve in Medicare. 

And so I think the American people should actually have the facts 

straight in terms of what we did with Medicare and what we did 

was enhance benefits for Medicare recipients so that we can ensure 

the coverage of preventive care, close the donut hole, and make 

sure that we have a system where we are able to enforce fraud as 

well. 

Mr. STEARNS. I would say in defense of what you said is, what you are talking about, paying for subsidies, but the $500 billion is 

actually impacting Medicare and this is something that the second 

panel can bring out because most of us feel that $500 billion will 

have a huge impact on Medicare and that is going to what I think 

Senator Johnson talked about, a lot of these doctors and others are 

just going to not want to take Medicare. 

With that, I recognize the ranking member. 

Ms. DEGETTE. Thank you very much, Mr. Chairman. 

Senator, thank you for coming over, slumming it with us here in 

the House. When you talked about your young daughter who had 

the heart surgery, it struck a chord with me because I have a 

daughter who was diagnosed with type 1 diabetes at age 4 when 

I was in my first term in Congress, and I lived like you did, you 

know, with the uncertainty of a chronically ill child who would be 

ill for her whole life, and I was terrified for many, many years 

about the idea that when she turned 18 or when she graduated 

from college, she might be uninsurable. In fact, my husband and 

I actually went to see our attorney about trying to set up some 

kind of a fund from our earnings. You know, forget about college, 

we were worried, could she afford to pay for her diabetes care. And 

there is 17 million children in this country who have preexisting 

conditions like your daughter and my daughter who now will be 

guaranteed that they will have insurance. I would imagine—I know 

36 

that you are against the Affordable Care Act and I know that you 

would like to repeal it, but I would imagine you would think it 

would be a good thing if insurance companies couldn’t simply drop 

kids because they had preexisting conditions. 

Mr. JOHNSON. Well, first of all, there is a far simpler solution. 

We didn’t need a 2,700-page bill. We didn’t need—— 

Ms. DEGETTE. What is that solution? 

Mr. JOHNSON. So the solution is what many States have, most 

States have, high-risk pools, and they work very well. And the way 

they work is, every insurance carrier that is licensed in the State 

has to participate in those pools, and it is a known risk, it is actually pooling the risk. That is what insurance is all about. So that 

when people are uninsurable, they become eligible for those highrisk pools and those insurance rates are subsidized. Again, we are 

a very compassionate society here and we want to provide a strong 

social safety net so we are very certainly supportive of that but we 

didn’t need to pass a 2,700-page bill and a virtual national takeover, Federal takeover of our health care system to accomplish that 

goal. 

Ms. DEGETTE. So in Wisconsin, for example, under the Affordable Care Act, there is 95,000 kids that would be in that situation. 

Does Wisconsin have a high-risk pool? 

Mr. JOHNSON. Yes, it does. 

Ms. DEGETTE. And were all of those kids covered in the high-risk 

pool? 

Mr. JOHNSON. That I couldn’t say. Am I saying the high-risk 

pools are perfect? No, but we could have made adjustments to those 

on a State-by-State basis as opposed to a total Federal Government 

solution. 

Ms. DEGETTE. OK, and do you have any idea how much it would 

cost, say, in Wisconsin or Colorado to insure 95,000 kids that 

weren’t already insured in those high-risk pools? 

Mr. JOHNSON. I don’t have exact figures but I have in my previous life as a business owner, I have looked at the insurance rates 

for the high-risk pool in Wisconsin. They were very comparable to 

the same rates we were paying on an annual basis with our business plan, very comparable. 

Ms. DEGETTE. Right. And does every State have a high-risk pool 

like that? 

Mr. JOHNSON. I am not sure. Not every State but the vast majority do. 

Ms. DEGETTE. See, the question I am asking is, all of these 17 

million kids who now can’t be discriminated against, these are kids 

who previously were not insured in the high-risk pools. So I am 

just wondering if you or your staff had done the math to figure out 

how much extra it would cost in the States to give those subsidies, 

because I don’t know about your State but in my State, we are having difficulty keeping our police officers and our firefighters and 

our teachers on the payroll. 

Mr. JOHNSON. Let me just answer by saying I would like to dispel a notion, because I hear it over and over again that now seniors 

are obtaining preventive services for free and we are offering coverage to, you know, children up to the age of 26 for free. Nothing 

is free. We are just spreading the risks. And I would say when we 

37 

spread it and we filter it through the Federal Government, which 

by the way there aren’t too many Americans who think that the 

Federal Government is capable of taking over one-sixth of our economy, to do it effectively and efficiently. I think going through a 

Federal government is the least efficient way of pooling those risks 

and taking care of those individuals. 

Ms. DEGETTE. OK. I hear what you are saying. I disagree but I 

hear what you are saying. 

Now, Congresswoman Edwards, I just wanted to ask you a question. The chairman asked you about Medicare cuts under the Affordable Care Act. Have you glanced at the new Ryan budget that 

was introduced yesterday? 

Ms. EDWARDS. Well, it is very disturbing actually because I think 

that what the new majority budget does it, it actually undercuts 

Medicare. I mean, we would in effect be saying to our seniors, not 

only are we going to get rid of the program that you have known 

and that you trust and that delivers efficient care; we would be 

saying to you, we are going to ask you to reach into your pocket 

for thousands of dollars that we know that you don’t have in order 

to—I don’t know. It looks to me it would be turning Medicare into 

a private kind of system where individual seniors would be kind of 

out on the marketplace in order to obtain their health care. I don’t 

think that that is the system that the American people want, and 

I think for the seniors that I visit in my Congressional district and 

I would imagine that this is true across the country, that those 

seniors right now must be wondering what it is that we are thinking here on Capitol Hill that we would take a system that is working, that is providing a benefit that they too have paid into and ripping that out from under them. 

Ms. DEGETTE. Thank you very much. 

Mr. STEARNS. The gentlelady’s time has expired. 

Senator Johnson has to leave in about 5 minutes or less. Anybody on my side would like to ask questions? Dr. Burgess? 

Mr. BURGESS. I thank the chairman for yielding. 

Senator Johnson, this is something with which I worked with the 

previous ranking member on the Health Subcommittee, Nathan 

Deal, who is now Governor of Georgia, on the preexisting condition 

issue, and I think you are exactly right. In fact, when Senator 

McCain was running for President, one of the difficulties he had 

when he articulated a very detailed plan on health care as opposed 

to an amorphous plan but the detailed plan that Senator McCain 

talked about in fact built on the very structure that you talked 

about, the already existing State risk pools, State reinsurance programs and I think there were a couple of other novel ways that 

States dealt with this. In Texas, I am a physician. I practiced for 

a long time. I can’t tell you that I ever saw anyone who was covered under one of the risk pools but I understand since entering 

into this discussion in the last several years that there are many 

people in Texas who are covered and do not want to see that coverage changed in any way whatsoever. I can promise you, I never 

got a reimbursement check from the State high-risk pool as a physician, but at the same time, I think there is ample evidence that 

they do work. 

38 

The problem is, that the State is limited in the amount of subsidy that they can provide, so if we were going to build something, 

it would have made a lot more sense to build on those 35 State programs that already existed. Now, Nathan Deal was very sensitive 

not wanting to create a new State mandate but he suggested that 

a Federal subsidy could be available to a State that was willing to 

provide such coverage and make it an incentive rather than a punishment. Those bills were introduced in the 111th Congress, H.R. 

4019, 4020, for anyone who is keeping score at home. Those things 

are ready to go as part of any replacement strategy if something 

happens to the Affordable Care Act like the Supreme Court voids 

its existence at the end of June when they provide us with their 

ruling. 

So I just wanted to emphasize, I think you are right on the mark. 

We will hear from Mr. Larsen about the high-risk pools and the 

success they have had but we were led to believe when this debate 

was going on, and I don’t believe you were in the Senate when the 

debate was going on, but we were led to believe through the popular media and through discussions with the President that this 

number was 5 million people, 8 million people, 15 million people 

who were not covered because of preexisting conditions, 50,000 people in the first 2 years of this new Federal subsidy that was set 

up and how much more could have been done had a program been 

designed that would have helped the States do what they were 

doing already, in other words, augmented the help that they were 

providing, and for the life of me I have never understood why we 

took it upon ourselves to set up a brand-new Federal program, a 

brand-new Federal agency, all new computers, all new staplers, 

and didn’t utilize the structure that was already there in your 

State and my State and 35 other States across the country. Do you 

have any thoughts on that? 

Mr. JOHNSON. Before I go, I will make two points. First of all, 

as I recall, and I wasn’t here at the point in time, but it was very 

difficult to get people signed up for the Federal program initially. 

With the initially set premiums, only a couple thousand people 

signed up, so they had to drastically the premium rate to even get 

the 50,000 which is way under the estimate. I also want to just dispel the notion that Republicans don’t have solutions. We have plenty of solutions. You know, why don’t we reform our malpractice and 

save hundreds of billions in defensive medicine, and finally dispel 

the notion that Medicare and Federal Government doesn’t deny 

benefits. They actually deny benefits to almost twice the rate of 

large employers at about a 4 percent rate versus about a 2 percent 

for most large insurance companies. So again, there is an awful lot 

of misinformation, and with that, Mr. Chairman, again, I appreciate it and I am going to have to go take a vote. 

Mr. STEARNS. Senator Johnson, thank you very much for taking 

your time to come over from the Senate. 

Mr. BURGESS. Let me reserve the balance of my time. We will let 

the Senator leave, but I just to make one other point on the preexisting conditions for kids. There was a drafting error in the Affordable Care Act as it was passed by the House and Senate and 

signed. Indeed, the Affordable Care Act said that insurance companies could not limit coverage for kids but there was nothing that 

39 

prevented them from denying coverage to children. So the actual 

loophole that would have allowed insurance companies to get out 

from under covering preexisting conditions for children still existed 

at the signing of the Affordable Care Act, and because most of the 

insurance companies said ‘‘Hey, look, we understand it was a drafting error, we will do the right thing and not deny coverage to those 

children.’’ In fact, that is what allowed the Affordable Care Act to 

work. But it was just one more example of the numerous drafting 

errors that were contained in this thing, and the reason there were 

drafting errors was because it was rushed through, it was force fed 

through the Congress and force fed on the American people, which 

is why it has never enjoyed immense popularity, and we are going 

to get into more of that as this goes on. I will yield back. 

Mr. STEARNS. All right. We would thank the gentlelady from 

Maryland for attending with Senator Johnson. You also can leave 

and we will go onto our second panel. Thank you. 

I would say just a comment to my colleague from Texas, that it 

would be nice to see on the Democrat side their plan to save Medicare. Congressman Paul Ryan has come up with a plan to save 

Medicare and it would be awfully nice to hear either the President 

or the Democrats provide us a plan. 

With that, the second panel is welcomed. We have just one witness, my colleague, Mr. Steve Larsen, the Director of the Center for 

Consumer Information and Insurance Oversight. 

Mr. Larsen, I think you are aware that the committee is holding 

an investigative hearing, and when doing so has had the practice 

of taking testimony under oath. Do you have any objection to testifying under oath? 

Mr. LARSEN. No. 

Mr. STEARNS. OK. The Chair then advises you that under the 

rules of the House and the rules of the committee, you are entitled 

to be advised by counsel. Do you desire to be advised by counsel 

during your testimony this morning? 

Mr. LARSEN. No. 

Mr. STEARNS. In that case, if you would please rise and raise 

your right hand? 

[Witness sworn.] 

Mr. STEARNS. You are now under oath and subject to the penalties set forth in Title XVIII, Section 1001 of the United States 

Code. We welcome your 5-minute summary of your written statement. 

STATEMENT OF STEVE LARSEN, DIRECTOR, CENTER FOR 

CONSUMER INFORMATION AND INSURANCE OVERSIGHT, 

CENTERS FOR MEDICARE AND MEDICAID SERVICES, DEPARTMENT OF HEALTH AND HUMAN SERVICES 

Mr. LARSEN. Chairman Stearns, Ranking Member DeGette, 

members of the subcommittee, thank you for opportunity today to 

highlight the efforts of CMS and my office, CCIIO, in implementing 

the provisions of the Affordable Care Act. 

Over the last 2 years, we have been focusing on implementing 

the ACA as smoothly as possible in a way that continues to 

strengthen the productive partnership between the private sector 

and our office and the government. 

40 

I would like to highlight some of the very important provisions 

of the ACA and the benefits that they provided to millions of Americans already. For example, in the past, young adults making the 

transition from school to work have been more likely than any 

other group to go without health insurance. The ACA makes it 

easier for younger Americans to get health insurance coverage because the law allows young adults to be covered under their parents’ policies up through the age of 26, and about 2–1/2 million 

young adults have already gained health insurance coverage because of this part of the law. 

In addition to helping young people find health care coverage, 

CMS established the Preexisting Condition Insurance Program or 

PCIP, which we talked about. It was created under the ACA and 

it provides an affordable coverage option for uninsured people with 

preexisting conditions until the broader reforms of the ACA take effect in 2014. Already, PCIP is helping 50,000 Americans with preexisting medical conditions to access critical health care services. 

Many of these individuals have been diagnosed with cancer and 

other life-threatening diseases, and without PCIP would have no 

other coverage options. 

Besides ensuring that people have access to private health insurance coverage, CMS is working to implement new rights and benefits for consumers. For example, insurance companies can no longer 

drop or rescind someone’s policy simply because they made an unintentional mistake on their application. Insurance companies can’t 

place lifetime limits on the dollar value of the benefits in the policy. Before, cancer patients and individuals with serious and chronic and expensive diseases often had limited treatment or went 

without treatment because they had reached their insurer’s lifetime 

dollar limits on their health insurance coverage. Now with this provision in place, about 105 million Americans including nearly 28 

million children enjoy better coverage without the worry of bumping up against lifetime dollar limits. 

Also, about 54 million Americans in new insurance plans are receiving expanded coverage for recommended preventive services 

without additional out-of-pocket payments including colonoscopy 

screenings for cancer, Pap smears and mammograms for women, 

well-child visits, flu shots and other preventive services. 

The ACA also increases transparency for consumers. Starting 

this September, health insurers in group health plans will have to 

provide clear information about health plan benefits and coverage 

in a consistent, easily understandable format that allows apples-toapples comparisons. 

The ACA also helps make sure people get value for insurance 

premiums. For example, the rate review program does this by making sure that proposed rate increases that exceed 10 percent in the 

small group and individual market are reviewed by experts in 

order to make sure that they are reasonable. Rate review is primarily a State-based reform with the majority of the States, not 

HHS, conducting these reviews. 

The medical loss ratio provision makes sure that people get value 

for their premiums by requiring that insurance companies spend 80 

or 85 percent of the premium revenue for medical care and to improve the health care quality for their customers. We know many 

41 

insurers are moderating their rates in order to meet the MLR 

standard already. 

We have worked steadily towards establishing the Affordable Insurance Exchanges. We have issued extensive guidance to States 

and other stakeholders over the last 2 years in many areas related 

to exchanges, and earlier this month we released the final rules on 

exchanges that provide flexibility to States to build exchanges that 

work for them in their State. And we know that States are making 

good progress toward establishing their own exchanges. 

CMS is proud of all that we have accomplished in the last 2 

years, and I look forward to partnering with Congress, the States, 

consumers, businesses and other stakeholders across the country to 

strengthen insurance options. 

Thank you for the opportunity to discuss the work that CMS and 

CCIIO has been doing to implement the ACA. 

[The prepared statement of Mr. Larsen follows:] 

42 


86227.022

STATEMENT OF 

STEVEN B. LARSEN 

DEPUTY ADMINISTRATOR ANDl)IREqoF, 

CENTER FOR CONSUMER INFORMATIO~S.INSURANCE OVERSIGHT, 

CENTERS FOR MEDICARE & MElncAtDsEIWICES 

.oN 

"THE CENTER FOR CONSUMERJNFORMA TI ON AN}) INSURANCE .oVERSIGHT " '" 

AND THE<ANNIVERSARY OF'. 

THE PATIENT PROTECTION AND AFFoRDABLE CARE ACT" 

BEFORE THE 

U. S. HOUSE OF REPRESENTATIVES COMMITTEE ON ENERGY & COMMERCE, 

SUBCOMMITTEE ON OVERSIGHT AND INVESTIGATIONS 

MARCH 21, 2012 
43 


86227.023

House of Representatives Committee on Energy & Commerce 

Subcommittee on Oversight and Investigations 

"The Center for Consumer Information and Insurance Oversight and the Anniversary of 

the Patient Protection and Affordable Care Act" 

March 21, 2012 

Chairman Stearns, Ranking Member DeGette, and Members of the Subcommittee, thank you for 

the opportunity to highlight the efforts made by the Centers for Medicare & Medicaid Services 

(CMS), and my office, the Center for Consumer Information and Insurance Oversight (CClIO), 

in implementing the Affordable Care Act. Nearly two years ago today, Congress passed historic 

health reform legislation, which will reduce our deficit, control rising health care costs, expand 

access to affordable, quality health insurance coverage for millions of Americans and strengthen 

consumer protections to ensure individuals have health insurance coverage when they need it 

most. Since the Affordable Care Act became law, we have focused on the law's main goal for 

private health insurance, to strengthen the private health insurance market in order to make 

private health insurance coverage more available, affordable, and accountable to Americans. 

To achieve this goal, we have improved access to private health insurance coverage for millions 

of people, and created and enforced new rules making private health insurance fair and more 

affordable. Over the past two years, we have been focusing on implementing the Affordable 

Care Act as smoothly as possible, in a way that continues to strengthen the productive 

partnership between the private sector and the government. We have provided States, 

employers, and insurance companies the flexibility needed to ensure an easy transition towards a 

health insurance system that is accessible and affordable for all Americans. Over the next two 

years. our work continues with the implementation and start of the Affordable Insurance 

Exchanges, markets where small businesses and people without employer-sponsored coverage 

and small businesses wi II be able to easily compare and choose comprehensive health insurance 

plans that best fit their needs. 
44 


86227.024

Two Years oflncreasing Private Health Insurance Options 

The Affordable Care Act is strengthening the private health insurance market by making 

affordable, high-quality private health insurance coverage accessible to millions of Americans. 

Because of important reforms in the Affordable Care Act, most young adults under 26 can now 

be covered under their parents' plans, people with costly pre-existing conditions are able to find 

affordable health coverage, insurance companies are prohibited from denying children with preexisting conditions coverage, and early retirees have continued to receive quality health 

insurance from their employers. 

Historically, young adults making the transition from school to work have been more likely than 

any other demographic group to go without health insurance. The Affordable Care Act makes it 

easier for younger Americans to obtain and maintain health insurance coverage. Before this 

policy was enacted, insurance companies typically dropped children from their parents' coverage 

when they turned 18 or graduated from college. Young adults are also more likely to get jobs 

that do not offer employer-sponsored coverage. The law now allows most young adults without 

access to employer-sponsored coverage to stay on their parents' health insurance plans until they 

turn 26. About 2.5 million young adults have already gained health insurance coverage because 

of this part of the law. 

In addition to helping young people find private insurance, CMS established the Pre-Existing 

Condition Insurance Plan (PCIP). Created under the Affordable Care Act, the PCIP program 

provides an affordable coverage option for uninsured people with pre-existing conditions, until 

the broader reforms in the Affordable Care Act take effect. Data shows that the program is 

helping those Americans in great need of health care who have been locked out of the private 

insurance market. Already, PCIP is helping 50,000 Americans with pre-existing medical 

conditions access critical health care services. 

CMS recognizes the important role that States play in their administration and support of the 

PCIP program nationwide and is committed to maintaining that strong partnership throughout the 

duration of the program. Twenty-seven States operate their own PCIP program, often in 

2 
45 


86227.025

coordination with existing State High Risk Pools, and 23 States and the District of Columbia 

have opted to have a Federally-operated program. 

The Affordable Care Act is also making it easier for employers to provide quality, affordable 

health insurance for their workers and early retirees. In the past, many Americans who retired 

before becoming eligible for Medicare lost their savings because of the high cost of insurance in 

the individual market. Millions more saw their insurance disappear, leaving them vulnerable to 

high costs and unmet health care needs. Under the Affordable Care Act, the Early Retiree 

Reinsurance Program (ERRP) was created as a temporary program that supports employers that 

continue to provide private health coverage, helping early retirees keep the private coverage they 

already have. The ERRP provides financial relief for employers so early retirees and their 

spouses, surviving spouses, and dependents can continue to have quality, affordable insurance. 

To date, ERRP has provided $4.73 billion in reinsurance payments to more than 2,800 employers 

and other sponsors of retiree plans to help more than 19 million individuals in plans that have 

received support. ERRP funds are a critical source of support, benefiting retirees, their families, 

and employees across the country. 

The Affordable Care Act created a program to help establish new non-profit health insurers, 

called a Consumer Operated and Oriented Plan (CO-OP). These insurers are run by their 

customers. CO-OPs are meant to offer consumer-friendly, affordable health insurance options to 

indiv iduals and small businesses. Already seven non-profits offering coverage in eight states 

have been awarded more than $638 million in loans to get up and running, and more awards will 

be made in the future, 

Two Years of Strengthening Private Health Insu ranee 

Besides ensuring that more people are able to access private health insurance coverage, CMS is 

working to ensure that private health insurance is working better for current consumers. During 

the past two years, CMS has implemented important private health insurance reforms that are 

providing new rights and benefits to put consumers back in charge of their health care. 

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Specifically: 

Insurance companies cannot deny coverage or specific benefits to children with preexisting conditions. 

Insurance companies can no longer drop or rescind people's coverage because they 

made an unintentional mistake on their application. Before the law, about 10,700 

people annually lost coverage due to the practice of rescissions, where insurance 

companies routinely dropped coverage. 

Insurance companies cannot place lifetime limits on the dollar value of essential health 

benefits. Before the law, cancer patients and individuals suffering from serious and 

chronic diseases often had limited treatment or went without treatment because they had 

reached their insurer's lifetime dollar limit on their health insurance coverage. About 

105 million Americans, including nearly 28 million children, had lifetime dollar limits 

on their health benefits before the Affordable Care Act. Now, these Americans enjoy 

improved coverage without the worry of lifetime dollar limits. 

Insurance companies are transitioning to 2014 when they will no longer be able to place 

annual dollar limits on essential health benefits. 

About 54 million Americans in new insurance plans are receiving expanded coverage 

of recommended preventive services without additional out-or-pocket payments, 

including colonoscopy screenings for colon cancer, Pap smears and mammograms for 

women, well-child visits, flu shots for all children and adults, and more. 

Americans also have the right to appeal decisions made by their insurance company to 

an independent third party and use the nearest emergency room without higher costsharing, regardless of whether it is in network. 

Starting on or soon after September 23, 2012, health insurers and group health plans will 

have to provide clear information about health plan benefits and coverage, in a consistent 

format that can easily be compared by the millions of Americans who have or are 

shopping for private health coverage. I f people are looking to buy private health 

insurance now, they can compare plans at www.HealthCare.gov, which provides 

information about more than 10,000 insurance plans from more than 600 insurers. 

The new Consumer Assistance Program grants will help make sure that consumers 

receive their new rights and benefits under the Affordable Care Act by providing nearly 

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$30 million in new resources to help States and Territories. These new grants will allow 

States, who are in some cases partnering with local non-profits. to help strengthen and 

enhance ongoing efforts in the States and local communities to protect consumers from 

some of the worst insurance industry practices. Consumer Assistance Programs will 

benefit millions of Americans by providing them with information on insurance options 

and their rights under the new law. 

In the two years since the enactment of the Affordable Care Act, CMS has made it easier to find 

and buy private health insurance, while also ensuring that insurance companies can no longer 

rescind or limit coverage for arbitrary reasons. These reforms are part of the transition to an 

improved private health insurance system where consumers are better able to understand what 

they are buying and can be reassured that they will not lose or be denied benefits if they become 

sick. 

Two Years of Helping to Make Private Health Insurance Coverage More Affordable 

The Affordable Care Act helps make coverage more affordable by providing States with 

resources to improve their review of proposed health insurance premium increases and 

supporting them as they hold insurance companies accountable for unjustified premium 

increases. The already-operational rate review program works with States to ensure consumers 

receive value for their premium dollar. Historically, States have been charged with reviewing 

rate increases for health insurance. Most States operate effective rate review programs and 

review proposed rate increases. Many States have the authority to reduce or deny a rate increase. 

Since the passage of the Affordable Care Act, the number of States with the authority to reject 

unreasonable rate increases went from 30 to 37. 

The Affordable Care Act strengthens these State activities and provides $250 million in grant 

resources for States to bu ild and upgrade their rate review infrastructure, hire new staff, and 

improve the circulation of rate review information to consumers. CMS has awarded $157 

million to date and plans to continue to award grants to States that gain effective rate review 

programs or further strengthen their programs. For States that do not operate an effective rate 

review program, insurance companies are now required to provide information to CMS if their 

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rate increases by 10 percent or more, and to provide CMS and their customers with a justification 

for rate increases CMS determines to be unreasonable. 

States are already using this authority to save money for families and small businesses: 

In New Mexico, the State insurance division denied a request from Presbyterian 

Healthcare for a 9.7 percent rate hike, lowering it to 4.7 percent. 

In ConnecticLlt, the State slopped Anthem Blue Cross Blue Shield, the State's largest 

insurer, from hiking rates by a proposed 12.9 percent, instead limiting it to a 3.9 percent 

increase. 

In Oregon, the State denied a proposed 22.1 percent rate hike by Regence, limiting it to 

12.8 percent. 

In New York, the State denied rate increases from Emblem, Oxford, and Aetna that 

averaged 12.7 percent. instead holding them to an 8.2 percent increase. 

In Rhode Island, the State denied rate hikes from United Healthcare of New England 

ranging from 18 to 20.1 percent, instead seeing them cut to 9.6 to 10.6 percent. 

Working alongside the rate review provision, the medical loss ratio (MLR) provision ensures 

that insurance companies generally use at least 80 or 85 percent of premium revenue, 

depending on the market, to either provide or improve the quality of health care, for their 

cllstomers. Starting in 2012, consumers may receive rebates if their insurance companies did 

not spend at least 80 or 85 percent of premium dollars on medical care and health care quality 

improvement in 20 II. Consumers will receive a notice explaining their carrier's MLR if their 

carrier owes them a rebate on their premium payments. Insurers will issue the first round of 

rebates in August 2012, based on their MLR from 2011. 

Irinsurers' practices in 2011 were like 2010, lip to 9 million Americans could be eligible for 

rebates in 2012 that are worth up to $1.4 billion. Average rebates per person could be $164 in 

the individual market. We are already seeing signs that insurers are lowering their prices for 

consumers before customers pay premiums in order to meet the MLR standard required by the 

law, indicating the provision has already positively influenced insurer-pricing methods. For 

example, the Government Accountability Office found that in a survey of seven insurers, most of 

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the insurers were adjusting premiums and making changes to other business practices in response 

to the MLR requirements. I 

In the regulations implementing the MLR provision, CMS adopted the recommendations of the 

National Association of Insurance Commissioners. The regulations recognize the importance of 

State flexibility and allow States to request adjustment to the MLR rule for the individual market 

in order to transition more smoothly to the improved private health insurance market. CMS has 

considered MLR adjustment requests from 17 States 2 and one U.S. Territory in the past year. 

Through a transparent and data-driven process, we determined that no adjustment was necessary 

in ten States, approved an alternative adjustment in six States, and approved the request sought 

by one State. By balancing the need for flexibility within the private health insurance market 

with the American people's need for affordable private health insurance coverage, we have 

successfully implemented new tools that will make private health insurance more affordable. 

Moving Towards the Affordable Insurance Exchanges 

Over the last two years, CMS has partnered with private insurance companies and the States to 

improve the availability, affordability, and accountability of private insurance. To continue our 

goal of supporting and improving the private health insurance market, we have steadily worked 

towards establishing the Affordable Insurance Exchanges. Beginning in 2014, the Exchanges 

will provide improved access to insurance coverage choices for an estimated 20 million 

Americans by 2016. Individuals will be able to access qualified health plan insurance options 

through the Exchange market, including when they do not receive insurance through their 

employers, are self-employed, or are currently unemployed. We expect a robust employersponsored insurance market to continue, with the additional protections and benefits described 

earlier that make private insurance more fair and affordable for consumers. 

Exchanges will make purchasing private health insurance easier by providing eligible individuals 

and small businesses with one-stop shopping where they can choose qualified health plans that 

I Dicken, John. Early Experiences Implementing New Medical Loss Ratio Requirements. GAO-II-711. July 29, 

20 II. http://IVww.gno.gov/new.itemsldI1711.pdf 

2 The 17 States considered for a MLR adjustment were Maine, New Hampshire, Nevada, Kentucky, Florida, 

Georgia, North Dakota, Iowa, Louisiana, Kansas, Delaware, Indiana, Michigan, Texas, Oklahoma, North Carolina, 

and Wisconsin. 

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best fit their needs, while also guaranteeing access to a comprehensive package of items and 

services, known as "essential health benefits.,,3 New premium tax credits and reductions in cost 

sharing will help ensure that eligible individuals can afford to pay for the cost of private 

coverage purchased through the Exchanges. The Exchanges will also allow States to pool 

together small businesses to help lower premium rates, while the insurance reforms provided in 

the Affordable Care Act will protect these people and others who receive their insurance through 

their employer. 

Although the Exchanges are not required to be operational until 2014, the research and planning 

necessary to build them is underway. CMS' CCIIO has been steadily working with States 

through Exchange planning grants to support their infrastructure, and gathering feedback as we 

develop our rulemaking. This year will be critical for building Exchange infrastructure and 

initiating the many business operations needed to meet the 2014 deadline. 

Earlier this month, we continued our progress towards 2014 by releasing new rules to help States 

design and develop their Exchanges. The Final Rule, released on March 12,2012 (CMS-9989-

F), offers a framework to assist States in setting up their Exchanges. The framework preserves 

and, in some cases, expands the significant flexibility in the proposed rules that enables States to 

build Exchanges that work for their residents. For example, the final rule allows States to decide 

whether their Exchanges should be operated by a non-profit organization or a public agency, 

how to select plans to participate, and whether to partner with the Department of Health and 

Human Services for some key functions. The final rule offers significant additional flexibility 

regarding elii\ibility determinations for Exchanges and affordability programs. It also makes it 

easier for small businesses to get coverage through the Small Business Health Options 

Program (SHOP), strengthens consumer protections, and keeps it simple for health plans 

interested in participating in the Exchanges. 

3 Essential health benefits must include items and services within at least 10 categories -- ambulatory patient 

services, emergency services, hospitalization, maternity and newborn care, mental health and substance use disorder 

services, including behavioral health treatment, prescription drugs, rehabilitative and habilitative services and 

devices, laboratory services, preventive and wellness services and chronic disease management, and pediatric 

services, including oral and vision care. 

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86227.031

CMS starts with the basic premise that we want States to establish their own Exchanges, and we 

are working to get them the guidance, regulations, and resources they need to do so. States are 

already making progress towards establishing their own Exchanges: 

• 44 States have initiated an information technology gap analysis to assess what 

information technology capabilities they need to run a State-based Exchange, and 37 

States have completed that analysis; 

• 33 States, including DC, are working toward establishing an Exchange with 

Establishment or Early Innovator funding; 

• 17 States have authority to establish an Exchange either through State laws that support 

their ability to establish or operate an Exchange or through an Executive Order granting 

that authority; 

• 15 States have issued a Request for Proposals or are in the process of issuing a Request 

for Proposals for a System Integrator; and 

• 12 States have issued a Request for Proposals or are in the process of issuing a Request 

for Proposals for an Exchange Platform, 

Establishing the Exchanges continues our mission to support and improve the private health 

insurance system by making comprehensive, affordable private insurance options available to all 

Americans. 

In the Years Ahead 

CMS is proud of all that we have accomplished and implemented since enactment of the 

Affordable Care Act two years ago. The Affordable Care Act will reduce our deficit, control 

health care costs, and make health care more affordable, available, and accountable. Over the 

past two years, we have made significant progress. Already, millions of Americans are receiving 

new preventive benefits without cost sharing, 2.5 million young adults are covered on their 

parents' policies, the ERRP has helped support 19 million early retirees, their fsmilies and their 

former co-workers, and the PClP has provided sometimes life-saving care and coverage for over 

50,000 Americans who were previously shut out of the market due to a pre-existing condition. 

am looking forward to 2014 when even more Americans will have access to affordable, 

comprehensive health insurance plans through the Exchanges, tax credits, and expanded 

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Medicaid coverage. In the meantime, I look forward to partnering with Congress, the States, 

consumers, and other stakeholders across the country in order to strengthen health insurance 

options. Thank you for the opportunity to discuss the work that CMS has been doing to 

implement the Affordable Care Act. 

10 
53 

Mr. STEARNS. Mr. Larsen, thank you very much. I will start with 

my questions. 

You know, the main point of contention is the mandate, and of 

course, the Supreme Court will be looking at that shortly. So if you 

can, just answer the question yes or no. Is your office going to be 

responsible for enforcing the mandate? Yes or no. 

Mr. LARSEN. Well, in conjunction with our colleagues at the Department of Treasury and the IRS. 

Mr. STEARNS. So will you have the main responsibility in your 

office for enforcing the mandate? 

Mr. LARSEN. Well, the individual responsibility provisions ultimately are enforced through the Tax Code, so it is largely IRS and 

Treasury. 

Mr. STEARNS. But have you worked out any provisions in terms 

of a narrative on how you are going to enforce the mandate in your 

office? 

Mr. LARSEN. Not yet, no. 

Mr. STEARNS. And since you run the exchange, how will you determine if an individual has purchased health care or not? 

Mr. LARSEN. Well, that is one of the issues that we are working 

through now is the data that we collect through the exchanges and 

through employers to know who has coverage and who doesn’t, and 

again, that is—— 

Mr. STEARNS. Will this data be precise? Will you be able to tell 

if a person has health care or not? 

Mr. LARSEN. Yes. 

Mr. STEARNS. And how will you determine that? 

Mr. LARSEN. Well, it will involve getting information from both 

employees and individuals and—— 

Mr. STEARNS. Is this going to be voluntary? 

Mr. LARSEN [continuing]. From employers to provide the information. 

Mr. STEARNS. Will this be voluntary to the employees and to the 

employer? 

Mr. LARSEN. Well, the employees and individuals will want to 

provide the information so that they can know that we know that 

they have health insurance coverage, and employers will want to 

give the information so that they know that they—— 

Mr. STEARNS. So you are saying it is all voluntary? 

Mr. LARSEN. Well, I am not sure quite how to answer that because obviously there are—— 

Mr. STEARNS. I think it is not voluntary. 

Mr. LARSEN. Well, there are financial provisions that apply. 

Mr. STEARNS. It is called a mandate. 

Mr. LARSEN. People can choose—— 

Mr. STEARNS. Let me ask you, what kind of manpower is going 

to be required in your office to enforce this mandate? 

Mr. LARSEN. That I don’t know yet. 

Mr. STEARNS. So you have no idea whether you are going to increase the number of people? 

Mr. LARSEN. Well, we have plans to increase our staff in connection with the areas that we are enforcing. I don’t know what the 

plans are with respect to IRS. 

Mr. STEARNS. OK. When does enrollment in the exchanges begin? 

54 

Mr. LARSEN. Well, the exchanges have to be up and running in 

January of 2014, and so there will be an open enrollment preceding 

that in October of 2013. 

Mr. STEARNS. What rulemaking have you issued with regard to 

these exchanges? 

Mr. LARSEN. We have issued a number of rules both final rules, 

proposed rules and then guidance to the States on a range of topics. As I mentioned, we did just release the final exchange rule. 

There is a rule that we call the 3 R’s rule that is—— 

Mr. STEARNS. Three R’s? 

Mr. LARSEN [continuing]. Insurance, risk adjustment and risk 

quarters, which are financial mechanisms to stabilize the market 

in 2014, so that final rule was issued. There were final rules on the 

Medicaid provisions that relate to exchanges as well, and there 

have been a number of papers and bulletins that we have released 

on topics such as—— 

Mr. STEARNS. It sounds a little complicated. 

Mr. LARSEN. Well, it is not complicated but there is a lot of work 

to do to get ready for 2014. 

Mr. STEARNS. When can we expect the rules on essential health 

benefits and actuarial value to be released? 

Mr. LARSEN. Hopefully soon. We are working on that. We released initial guidance to the States back in December and we have 

issued additional guidance after that in the form of questions and 

answers, and we know States and issuers are anxious to get that 

information, so hopefully in the near future. 

Mr. STEARNS. Have you conducted any analysis of the effect on 

family or individual premiums? 

Mr. LARSEN. We have not conducted an analysis of that at this 

point. 

Mr. STEARNS. Who is going to do that, or when it is going to be 

done? 

Mr. LARSEN. Well, we will be doing that. I know CBO has looked 

at that. A number of private entities have looked at potential rate 

impacts. States have looked at that. It does vary—— 

Mr. STEARNS. Wouldn’t this affect some of the decisions you 

make? You are saying CBO is going to do this but shouldn’t you 

folks do analysis of your own to see the effect of the premiums on 

individuals and families? 

Mr. LARSEN. We will. 

Mr. STEARNS. You will? So you are not going to kick it to CBO, 

you expect to do your own? 

Mr. LARSEN. Yes. 

Mr. STEARNS. In the analysis that you have done so far, does it 

appear that the premiums are going to go up or go down? 

Mr. LARSEN. It really varies by State and by the individual involved because—— 

Mr. STEARNS. Well, let us take Virginia, for example. 

Mr. LARSEN. Well, I don’t know the specifics of any particular 

State. I guess what I was going to say is—— 

Mr. STEARNS. Do you know the particulars of any State? 

Mr. LARSEN. No, I don’t know the particulars of any State. 

Mr. STEARNS. OK. Your testimony states that beginning in 2014, 

the exchanges will provide improved access to insurance coverage 

55 

choices for an estimated 20 million Americans by 2016. How was 

this analysis done? Who did it? In-house? 

Mr. LARSEN. The 20 million comes from the CBO report, in other 

words, when CBO estimated both the financial impact and the uptake through the exchanges, that was in their—and that was in 

their most recent report. 

Mr. STEARNS. Are these people that already have health insurance or are these people that don’t? 

Mr. LARSEN. Well, it is a combination of people but it is a number of people that will be eligible for the subsidies that are available for people with incomes below 400 percent, and then there will 

be people that aren’t eligible for subsidies but will still access the 

exchanges. 

Mr. STEARNS. Would it be fair to say a lot of those people in the 

20 million already have health insurance of their own and that 

their employer provides? 

Mr. LARSEN. Most of them won’t because again, according to the 

CBO estimates, you have got a reduction in the number of uninsured in the United States by about 30 million people as a result 

of the Affordable Care Act so there are many, many people that 

don’t have access to affordable coverage today that will be able to 

have that. 

Mr. STEARNS. All right. I will just conclude. Mr. Larsen, if you 

could provide this analysis for us, that would be appreciated. 

Mr. LARSEN. OK. 

Mr. STEARNS. With that, the ranking member is recognized. 

Ms. DEGETTE. Thank you very much, Mr. Chairman. 

Mr. Larsen, Senator Johnson seemed to—one of his main concerns, and this is a valid concern, I think, is what will happen to 

employer-based coverage under the Affordable Care Act because 

what we tried to do was to build, as you know—we tried to build 

off of the employer-based system that is already in place while adding some new consumer protections and trying to increase the pool 

so that that will decrease actuarial costs. CBO’s most recent analysis of the employer-based health insurance coverage under the Affordable Care Act, as you know, presented a range of scenarios for 

potential changes in employer coverage, and Senator Johnson 

seemed to assume that the vast majority of employers are simply 

going to drop their employees. But while CBO said it was possible 

there could be a net reduction, they said roughly maybe 3 to 5 million might lose their employer-based coverage. They also said that 

‘‘a sharp decline in employment-based health insurance as a result 

of the ACA is unlikely’’ and the CBO maintained its position that 

the bill will extend health coverage to more than 30 million people. 

Do you agree with CBO’s assessment that the new law is not likely 

to result in a sharp decline in employer-based coverage? 

Mr. LARSEN. We don’t think it will, and I think if you look at the 

number of models that other groups have done whether it is Rand 

Health or the Urban Institute, both of those groups have indicated 

that in fact employer-based coverage will increase, and then you 

are right, CBO estimated a very small reduction in employer-based 

coverage, but of course, that is across a base of about 160 million 

Americans. 

56 

Ms. DEGETTE. So why would employers choose to keep their people on insurance under the Affordable Care Act? Why would they 

choose to keep their people on employer-based insurance under the 

Affordable Care Act? 

Mr. LARSEN. There are many reasons. One is that both the employer and the employee get tax advantages from employer-based 

coverage. 

Ms. DEGETTE. Right. So like if there is a small employer that 

wants to offer insurance right now, and most employers do, I would 

think, they would get a tax advantage by offering that they don’t 

have until this is implemented, right? 

Mr. LARSEN. Exactly. Yes. 

Ms. DEGETTE. OK. Now, let us say there are some employees 

who lose their employer-based insurance. They are like the Senator. They don’t want a Federal mandate so they say I am not 

going to offer the insurance. Those employees could go into the exchanges then, right? 

Mr. LARSEN. Yes. 

Ms. DEGETTE. Now, what would happen to people like that? You 

know, in the economic downturn, a lot of employers just couldn’t 

offer insurance to their employees. What happened to those employees who lose their employer-based insurance? 

Mr. LARSEN. Well, they ended up in—at least now without exchanges and the protections in the market, they ended up probably 

without coverage. 

Ms. DEGETTE. I mean, they have the option in the individual 

market right now. 

Mr. LARSEN. They do. 

Ms. DEGETTE. But that is wildly expensive in most places. 

Mr. LARSEN. It is expensive, and there is underwriting so that 

if you have a preexisting condition, in most States you may not get 

coverage or you may not have coverage for your preexisting condition. 

Ms. DEGETTE. So under the Affordable Care Act, if, heaven forbid, an employer drops somebody, they can still go through the exchanges? 

Mr. LARSEN. That is right. 

Ms. DEGETTE. And is it anticipated that those exchanges are 

going to be as costly for those individuals to buy insurance policies 

as the private market is right now? 

Mr. LARSEN. Well, the exchanges bring major advantages compared to the individual market today. One is administrative efficiency, and two is a much broader risk pool that is segmented 

today and CBO estimated that there were reductions that would 

occur in premiums as a result of the better risk pool and the administrative efficiency. 

Ms. DEGETTE. Thank you. Now, I want to ask you a couple of 

questions about the women’s health care benefits under the Affordable Care Act. I just want to ask you a basic question. Prior to enactment of the ACA, did all Americans and in particular women 

have access to basic preventative health services? 

Mr. LARSEN. No. 

57 

Ms. DEGETTE. Can you give me an example of the types of services that are not currently always covered by health insurance and 

that will be covered by the Affordable Care Act? 

Mr. LARSEN. Well, many of the ones that IOM recommended including, you know, cancer screening, counseling, domestic violence 

screening and education, contraception, the recommendations that 

IOM came up with. 

Ms. DEGETTE. And the IOM did that on a scientific basis, deciding what actually was necessary for women’s health, correct? 

Mr. LARSEN. That is right. 

Ms. DEGETTE. And HHS implemented the recommendations of 

the Institute of Medicine? 

Mr. LARSEN. We did. 

Ms. DEGETTE. OK. Now, my understanding is that an estimated 

20 million women nationwide are already benefiting from these 

new preventative care requirements. Is that correct? 

Mr. LARSEN. Well, the broader range of preventive services that 

went into effect already, and of course, the specific dialog about the 

contraceptive services around a different schedule. 

Ms. DEGETTE. OK, but everything except for the contraceptive 

services—— 

Mr. LARSEN. Yes. 

Ms. DEGETTE [continuing]. 20 million people are already benefiting from that? 

Mr. LARSEN. Yes. 

Ms. DEGETTE. One last question. Would you expect that preventive care benefits might result in cost savings, not only for patients 

but for the health care system overall? 

Mr. LARSEN. Yes. 

Ms. DEGETTE. Thank you. 

Mr. STEARNS. The gentlelady’s time is expired. 

Dr. Burgess is recognized for 5 minutes. 

Mr. BURGESS. Thank you, Mr. Chairman. 

Mr. Larsen, again, thank you for being here. Thank you for the 

information you have provided our office. In the passed law, there 

was a broad $1 billion implementation fund to administer the implementation of the health care law. Is that correct? 

Mr. LARSEN. That is right. 

Mr. BURGESS. Section 1005, as I recall. You provided us some 

documents November 1st, that $150 million of this fund had been 

spent by the Senator. Is that correct? 

Mr. LARSEN. It sounds a little high to me but I would have to 

go back and look. 

Mr. BURGESS. Well, the October numbers you provided showed 

$116 million in outlays, so that was about a $35 million increase, 

but also in October you provided information that there were $242 

million in obligations. Now, the obligation figure wasn’t provided 

for December but I have to assume that the obligation number had 

to go up as well as the number for outlays. Is that correct? 

Mr. LARSEN. I would have to check because we executed a number of procurement contracts to help with the building of the exchanges, which would be reflected as an obligation, and those were 

done last year as opposed to the outlays, which were—— 

58 

Mr. BURGESS. Well, here is the question. Can you tell us today 

how much money remains unobligated in the implementation fund? 

Mr. LARSEN. The entire implementation fund? I can’t. I mean, as 

I think you saw in the materials we provided in January, the $1 

billion implementation fund is for all agencies at this point, so IRS, 

Treasury, Department of Labor, HHS. So there are kind of other 

folks that I would have to consult with to get you that number. 

Mr. BURGESS. But still, I mean, you know of our interest in this 

and we are having the hearing, so we need the information. 

Mr. LARSEN. OK. 

Mr. BURGESS. And I referenced this in my opening statement. I 

mean, the Supreme Court is going to hear this case next week, and 

whether you think that is a good thing or a bad thing, I mean, it 

is a fact of life. It is going to happen. They will rule and they will 

provide us a ruling presumably before their term ends in June. 

Now, you may think that the likelihood is low that they would 

agree with Judge Vincent and the Federal District Court in Florida 

that the entire law is unconstitutional, not severable, therefore 

gone, and you may disagree with that, but there is a possibility 

that the court will find in accordance with Judge Vincent’s ruling 

from Florida. 

Now, I already referenced in my opening statement that you 

were never authorized in statute. You don’t have to worry. If they 

void the entire law, you weren’t authorized in it anyway so you will 

still be there but your money won’t, will it, if the entire Affordable 

Care Act were to be struck down, or does your money exist outside 

the structure of the Affordable Care Act? 

Mr. LARSEN. You know, that is a—I hate to say it. I mean, I 

think that is a legal issue that we would have to consult with our 

lawyers. If the court were to strike down the law, which we don’t 

believe it will, and that means the entire law as opposed to, you 

know, certain portions of it, I don’t know the exact mechanism that 

occurs with respect to funding for the law. For example, the billion 

dollars largely is for the implementation of exchange-related activity. 

Mr. BURGESS. You know, an observation. If I were in your position, and I thank God every day that I am not, but if I had your 

job and this was out there, I think I would at least have in the 

back of my mind some contingency plan for what happens next because you have got all these States that are planning their exchanges. They are all looking to you for guidance. They are waiting 

on the rules to be finalized. I mean, there is a lot of people whose 

lives will be turned upside down and you would be the logical place 

to minimize that tumultuousness, if that is a world. 

Mr. LARSEN. Right, but there is a whole range of activities and 

provisions within the ACA, not just the individual responsibility, 

guaranteed issue, guaranteed renewability, the market reforms and 

of course the exchange provisions, many of which are not I think 

being challenged, although some people would like to see the whole 

law overturned. 

Mr. BURGESS. Well, again, Judge Vincent—— 

Mr. LARSEN. Many people are focused primarily on the individual 

responsibility part. 

59 

Mr. BURGESS. Right, but Judge Vincent in his opinion said the 

whole thing went away. 

Donna Edwards in her testimony, she talked about how women 

are going to be able to choose any doctor they want without a referral. Section 1311(h) in the law, and I questioned the Secretary 

about this and she seemed absolutely unprepared to answer, maybe 

you can help us with that. Under 1311(h) in the law as written, 

really, you are not going to have the availability of any doctor you 

want. You are going to have the availability of any doctor that the 

Secretary says you can have, as I read Section 1311(h), the health 

provider only if such provider implements such mechanisms to improve health quality as the Secretary may be regulation require. 

Now, that could be something like board certification but it could 

also be quality as determined by will you accept Medicare or Medicaid as well as patients in the exchange. Have you all looked into 

how that actual aspect of the law is going to be administered? 

Mr. LARSEN. I will have to go back and look at that because I 

have not focused on that particular provision. 

Mr. BURGESS. It seems like no one is focusing on that within the 

agency but it is really going to be quite, again, tumultuous to the 

provider community out there if their lives are suddenly turned upside down by a ruling by the Secretary of Health and Human Services. So do everyone some—provide some value in doing that. 

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

Mr. STEARNS. The ranking member from California is recognized 

for 5 minutes. 

Mr. WAXMAN. Mr. Chairman, the benefits from health reform are 

already being delivered. Millions of seniors are saving billions of 

dollars on Medicare prescription drugs. Hundreds of millions of 

Americans have new insurance protections and millions of children 

with preexisting conditions have access to coverage for the first 

time, and the law will reduce the deficit by hundreds of billions of 

dollars. Yesterday, the House Republicans released a new budget 

plan that turns its back on all this progress. 

Mr. Larsen, what impact would the Ryan budget have on the reforms your office has put into place? 

Mr. LARSEN. Congressman Waxman, I will have to defer on that 

question because I actually haven’t had—— 

Mr. WAXMAN. Well, the Republican budget would repeal the important Affordable Care Act provisions that expand health care—— 

Mr. DINGELL. If the gentleman would yield, could you summarize 

for the record? 

Mr. WAXMAN. The Republican budget would repeal the important 

Affordable Care Act provisions that expand health care coverage 

and prevent the worst abuses performed by the insurance industry. 

If the Ryan budget became law, would insurance companies 

again be able to impose lifetime coverage limits on the 105 million 

more Americans who now benefit from this protection? 

Mr. LARSEN. If it were repealed, absolutely. 

Mr. WAXMAN. If the Ryan budget became law, would the 2.5 million young adults who now have health insurance coverage continue to be covered under their parents’ plan? 

Mr. LARSEN. No. 

60 

Mr. WAXMAN. If the Ryan budget became law, would insurers 

again be able to deny coverage to the up to 27,000 children in my 

district and the 17 million nationwide with preexisting conditions? 

Mr. LARSEN. Yes. 

Mr. WAXMAN. If the Ryan budget became law, would insurers 

again be able to spend, 30, 40, even 50 percent of enrollees’ premiums on profits and administrative costs? 

Mr. LARSEN. Yes. 

Mr. WAXMAN. And if the Ryan budget became law, what impact 

would it have on the number of Americans without insurance coverage? 

Mr. LARSEN. Well, they would have the situation that they have 

today which is a very challenging, broken market where it is difficult for individuals—— 

Mr. WAXMAN. Thirty million Americans would be covered under 

the Affordable Care Act who are not now covered, and I assume 

that they will go without coverage if the act is repealed? 

Mr. LARSEN. As many are today. 

Mr. WAXMAN. There is no Republican alternative to the Affordable Care Act benefits. They offer only repeal. But the Republican 

budget goes beyond repeal. It decimates all the critical consumer 

protections in the Affordable Care Act without offering any solutions to the broken insurance market. It puts Americans back at 

the mercy of the health insurance companies, and it leads to 33 

million more uninsured Americans. But that is not all it does. The 

Ryan budget eliminates Medicare as we know it and destroys the 

Medicare safety net, all in the name of tax breaks for millionaires 

and billionaires. The cuts are staggering and deeply disturbing. 

The Ryan budget cuts $810 billion from Medicaid by turning it 

into a block grant and then another $931 billion from the program 

by repealing the Affordable Care Act. That is a $1.7 trillion cut 

over 10 years from the program that protects poor children born 

with disabilities and pays for the care of our sickest and most vulnerable seniors. 

The Republican budget could not be more wrong for America. It 

would roll back the clock on the dramatic benefits we are already 

seeing from the Affordable Care Act. It would decimate Medicaid, 

cutting three-quarters of our support, three-quarters of our support 

for the sickest and most vulnerable people in the Nation. It would 

cut hundreds of billions of dollars from the Medicare program on 

top of the cuts they complain about on the other side of the aisle 

in Medicare expenditures in the Affordable Care Act. They keep 

that in place. And they would end the Medicare program’s guaranteed benefit for seniors. 

Mr. Chairman, this is not the right path for this Nation. I yield 

back my time. 

Mr. STEARNS. I thank the gentleman. I assume that was a question you had. 

We recognize on this side, Mrs. Blackburn is not here, Mr. 

Scalise is recognized for 5 minutes. 

Mr. SCALISE. Thank you, Mr. Chairman, and Mr. Larsen, I appreciate you coming back to our committee as we approach the 2- 

year anniversary. I know a lot of the questions that many of us 

have deal with the effects that we are already hearing from our 

61 

constituents about, and, you know, unfortunately, the constituents 

that I talk to and especially our small business owners who I constantly meet with back home, the biggest complaint that they have 

is that under the rules they have already seen, let alone the rules 

that haven’t been written, they don’t see how they are going to be 

able to comply with the law and in fact many of them are facing 

the not desirable option but the almost necessity that they will no 

longer be able to provide health care for their employees. We have 

seen reports that millions of Americans will lose the health care 

that they have today that they like. You know, with that, one of 

the big promises that President Obama made was if you like what 

you have, you can keep it. Do you feel—you are under oath. Do you 

feel that that promise has been kept? 

Mr. LARSEN. Yes, I do, absolutely, and I think that—— 

Mr. SCALISE. Well, are you denying then that there are already, 

millions of people that are facing losing their health care because 

of this law that they like? 

Mr. LARSEN. Well, it is not because of this law, and I think if you 

look back—— 

Mr. SCALISE. That might be your opinion. 

Mr. LARSEN [continuing]. In the last 10 or 20 years, and I have 

been doing this for a long time starting with when I was insurance 

commissioner, even back in the ’90s, the rising insurance rates for 

small businesses was a huge issue, and that continues today, and 

it really illustrates why we need the Affordable Care Act. 

Mr. SCALISE. Well, but if you go back to the beginning of the debate on the health care law, you know, 3 or so years ago, you know, 

the biggest problems back then were cost and other problems like 

discrimination against people based on preexisting conditions. Now, 

we put forth legislation that would have actually lowered the cost 

of health care. That was rejected by the President. We put forward 

legislation that would prevent discrimination based on preexisting 

conditions. The President’s health care law has actually been 

scored to have increased the cost of health care. It actually made 

it worse. The cost is worse now. And our small businesses—and 

maybe you talk to different people than I do, and I guess that gets 

to this question of the waivers. You know, so many small businesses I talk to would love to have a waiver from the law, and even 

components of the law, and I know, you know, we have talked 

about this waiver issue before, you know, but it seems like there 

was a lot of crony capitalism that was played in issuing of waivers 

to people that in many cases helped support the law, came to 

Washington and said pass this law, it is important to pass, and 

then they went to the White House and got a special waiver from 

the law. How many waivers have been given, you know, whether 

from—— 

Mr. LARSEN. Well, first, I do have to say that is not how the process worked. We ran a very open, transparent fair process that 

didn’t favor anybody based on what their political background is. 

Mr. SCALISE. Well, why is it that small businesses I talk to—— 

Mr. LARSEN. The GAO—— 

Mr. SCALISE [continuing]. Not one of them heard about the waiver program, not one of them, and I tell them about it. They said, 

‘‘Hey, I would love to get it.’’ I mean, we have a list here. What 

62 

is the current number? I have got over 1,400 companies that got 

a waiver from Obamacare—— 

Mr. LARSEN. Well, the waiver—— 

Mr. SCALISE [continuing]. Yet small businesses I talk to never 

even heard about it, and once they heard about it, you all ended 

the program. 

Mr. LARSEN. Well, the waiver was for a very targeted group of 

employers that offered these mini-med policies that many people 

don’t like. They don’t provide great coverage. Employees that are 

in the mini-med policies—— 

Mr. LARSEN. According to you, but somebody who has no coverage versus that coverage, and they like that coverage, you are 

going to sit here and testify—— 

Mr. LARSEN. Well, that is exactly why we had a waiver program. 

Mr. SCALISE [continuing]. That is not good coverage. What if they 

think it is good coverage? 

Mr. LARSEN. We came to the same conclusion. 

Mr. SCALISE. Shouldn’t that be their choice? 

Mr. LARSEN. We came to the same conclusion, which was in the 

law, the ACA specifically permitted and authorized and contemplated this where you would have these groups of policies. They 

are a small percentage but nonetheless they are something for people that have them, so the law permitted the Secretary to set up 

a waiver program. We did that for exactly the reason that you suggest so that people that have that coverage, even though it isn’t 

great coverage, it is something and they can continue—— 

Mr. SCALISE. But did you end the program? I mean, this waiver 

program, you know, a new company that now knows about it, because a lot of companies have heard about it because we have been 

telling them. You know, you go look, a lot of these labor unions 

that came here and said pass this law, we need this law, they went 

to the White House and got a waiver, and we got the list. 

Mr. LARSEN. Well, the White House didn’t make the waiver decisions, and only 2 percent of—— 

Mr. SCALISE. Well, again, I call it crony capitalism because it was 

a lot of the people who supported the law found out about it. Now, 

you say it was advertised. 

Mr. LARSEN. It was. 

Mr. SCALISE. Most small businesses never heard about it, so you 

didn’t do a good enough job of advertising or maybe you only advertised to people who supported the law, but it is curious that most 

people that I talk to that don’t like this law that are trying to figure out how to comply with it but can’t, they didn’t even know 

about this waiver program that you saw was so well advertised yet 

so many of the groups that came here and said pass the law conveniently found out about the waiver program and got it. They got 

a waiver from a program that they said we needed. They got the 

waiver. And the companies who didn’t want it can’t get the waiver 

and now you have ended the waiver program. Can a company that 

didn’t know about the waiver program that now knows about it, 

can they apply for a waiver? 

Mr. LARSEN. No, but I can say that small businesses were a very 

large percentage of the people that—— 

63 

Mr. SCALISE. So the companies, and I have seen a long list of 

Fortune 500 companies that got the waivers too, but, you know, 

AARP, groups that supported this law, got the waiver but these 

small businesses I talk to, they never knew it existed. They would 

love to get the waiver now and you are telling me under oath that 

they can’t get it today. 

Mr. LARSEN. That is right. 

Mr. SCALISE. So the other companies that got the waiver, are you 

going to take the waiver away from them or are you going to let 

them keep it? 

Mr. LARSEN. No, they got notice, they applied, they met the criteria. 

Mr. SCALISE. So they get to keep it. The guys that knew about 

it, friends that helped pass the law—— 

Ms. DEGETTE. Mr. Chairman. 

Mr. SCALISE [continuing]. Get to keep the waiver from it. They 

don’t have to comply with it, and the folks that—— 

Mr. LARSEN. Well, as I said, the GAO looked at the way we ran 

the process and found—— 

Ms. DEGETTE. Excuse me, Mr. Chairman. 

Mr. SCALISE [continuing]. Crony capitalism. I yield back the balance of my time. 

Mr. STEARNS. The gentleman yields back the balance of his time. 

Ms. DEGETTE. I would just make an observation, which is, if 

members would actually like the witness to answer questions, I 

would suggest they would stop badgering—— 

Mr. SCALISE. It is not badgering. 

Ms. DEGETTE [continuing]. And give them the time to answer the 

question. 

Mr. SCALISE. We recognize the gentleman from Michigan. Mr. 

Dingell, you are recognized for 5 minutes. Take the floor. You are 

on. 

Mr. DINGELL. Coming to the waiver question, I would like a yes 

or no. At the time of this hearing, waivers have been granted to 

over 90 percent of the applicants. The average wait time for a decision is 13 days, and union health plans are less likely to receive 

waivers than non-union plans were. Isn’t that true? 

Mr. LARSEN. That is true. 

Mr. DINGELL. Now, some other yes or no questions. As you know, 

the Affordable Care Act provides $40 billion in tax credits for small 

businesses so that they may offer health insurance to their workers. I believe that it is true that in 2011, 360,000 small employers 

took advantage of the small business tax credit, providing insurance for better than 2 million employees. Yes or no? 

Mr. LARSEN. I think that is right, yes. 

Mr. DINGELL. It is true that since the implementation of the Affordable Care Act, that Medicare Part B deductible has gone down 

for the first time in Medicare history? Yes or no. 

Mr. LARSEN. Yes. 

Mr. DINGELL. Is it true that over 2 million additional young 

adults are now insured because ACA allows them to stay on their 

parents’ plans until they are 26? Yes or no. 

Mr. LARSEN. Yes. 

64 

Mr. DINGELL. Prior to ACA, many people faced lifetime limits on 

health insurance. These limits had potential to financially cripple 

people if they faced a chronic disease or severe illness such as cancer. These limits would also force them to make decisions to compromise the quality of health care. Isn’t it true that since the implementation of ACA in 2010, 105 million Americans no longer face 

lifetime limits on their insurance? 

Mr. LARSEN. Yes. 

Mr. DINGELL. Is it true that once the Affordable Care Act is fully 

implemented in 2014, 20 million more Americans who still lack 

coverage will become insured? Yes or no. 

Mr. LARSEN. Yes. 

Mr. DINGELL. Is it true that CCIIO’s implementation of the Transitional Preexisting Condition Insurance Plan led to health coverage for tens of thousands of previously uninsured Americans? 

Mr. LARSEN. Yes. 

Mr. DINGELL. Is it true that CCIIO is moving now towards full 

implementation of the Affordable Care Act in 2014 by working with 

States to make sure that the health insurance exchanges required 

by ACA are designed properly to meet the needs of each of the individual States? 

Mr. LARSEN. Yes, sir. 

Mr. DINGELL. Finally, as we move toward the future, I am very 

much concerned about the Americans who will lose coverage if my 

colleagues on the other side are successful in repealing this bill. 

Am I correct in saying that 33 million Americans will lose insurance if my colleagues on the other side of the aisle repeal ACA? 

Mr. LARSEN. Yes. 

Mr. DINGELL. Now, wouldn’t such an increase in the number of 

our uninsured in this country increase costs to the health care system? 

Mr. LARSEN. Yes. 

Mr. DINGELL. Now, isn’t it a fact that the ACA has in fact reduced the deficit? 

Mr. LARSEN. It is projected to reduce the deficit. 

Mr. DINGELL. All right. Now, isn’t it a fact that in 2008, people 

without insurance did not pay for 63 percent of their health care 

cost? 

Mr. LARSEN. I think that is right. 

Mr. DINGELL. All right. Now, when President Obama was elected, he quickly recognized the inescapable truth: an individual mandate was essential to make the plan work. Without that, the larger 

pool of premium payers, there is no feasible way to require insurance companies to cover all applicants and charge the same 

amount regardless of the health status of the beneficiaries? 

Mr. LARSEN. Individual responsibility is an important part of the 

matrix. 

Mr. DINGELL. Now, I believe this is an overwhelming truth: 

Those with insurance now are supporting those who do not have 

insurance, and they are winding up paying much of the bill for 

those who do not have insurance and that those people are running 

up health costs of about $116 billion annually. 

Mr. LARSEN. That is right. 

65 

Mr. DINGELL. And so this means that the families and persons 

with insurance are now paying more than $1,000 a year for those 

who do not have health insurance? 

Mr. LARSEN. That is right. 

Mr. DINGELL. Now, the function of insurance is to spread the 

risk. Previous to the time ACA was passed, we found the insurance 

companies had to avoid the risk and so now we have a broad pool 

which covers everybody. Isn’t that right? 

Mr. LARSEN. That is right. 

Mr. DINGELL. And that makes it possible for insurance companies to do the things that are mandated in the ACA. Isn’t that 

right? 

Mr. LARSEN. Right. 

Mr. DINGELL. And without that, we are going to go back to the 

dismal days when we were not able to take care of our people, see 

to it that young people stayed on their parents’ policies and we 

won’t be able to see to it that preexisting conditions are dealt with 

without cost and charge to people? 

Mr. LARSEN. That is right. 

Mr. DINGELL. Thank you, Mr. Chairman. 

Mr. STEARNS. I thank the gentleman. 

Mr. Griffith is recognized for 5 minutes. 

Mr. GRIFFITH. Thank you, Mr. Chairman. 

Our staff is going to hand you some excerpts from the February 

17, 2012, Early Retirement Reinsurance Program update. This is 

a list of those who received money from the program. Now, I will 

give you a second to take a look at that as well. But before I get 

to that, as I understand your testimony, the Early Retirement Reinsurance Program has spent $4.73 billion of the $5 billion allocated. Is that correct? 

Mr. LARSEN. That is correct. 

Mr. GRIFFITH. Now, that number appeared in that February 17th 

report and in your testimony today but surely there has been some 

of the small amount left spent in that last month. Is that not true? 

Mr. LARSEN. Well, there will be, because as we go through and 

make sure that all the claims have been submitted appropriately, 

it may turn out that we have the money—— 

Mr. GRIFFITH. But at this point it is certain that $4.73 billion of 

the $5 billion has already been spent? 

Mr. LARSEN. We are effectively at the end of the program. There 

will be some continued claims. 

Mr. GRIFFITH. But wasn’t the program supposed to go through 

2014? 

Mr. LARSEN. I think it was originally intended to go through 

2014 but many sponsors took advantage of the program, which I 

think reflects the outstanding need for the program. 

Mr. GRIFFITH. Can you take a quick look at that material that 

was handed to you? 

Mr. LARSEN. Is there anything in particular you want to me to— 

the highlighted ones? 

Mr. GRIFFITH. Well, I am getting ready to ask you about all those 

companies that are highlighted. 

Mr. LARSEN. OK. 

66 

Mr. GRIFFITH. Could you provide me a yes or no answer to the 

following, and I am going to ask you, of the companies I am going 

to name off, if they received money from the Early Retiree Reinsurance Program, and I think the ones that you have got that I am 

going to ask you about are highlighted so you can see them easily. 

ConocoPhillips? 

Mr. LARSEN. It looks like they did, yes. 

Mr. GRIFFITH. General Electric? 

Mr. LARSEN. They are listed here as well. 

Mr. GRIFFITH. General Motors? 

Mr. LARSEN. They are listed on the sheet that you have given 

me. 

Mr. GRIFFITH. Bank of America? 

Mr. LARSEN. They are here. 

Mr. GRIFFITH. Ford Motor Company? 

Mr. LARSEN. I see Ford Motor Company. 

Mr. GRIFFITH. Hewlett Packard Company? 

Mr. LARSEN. That is here. 

Mr. GRIFFITH. AT&T? 

Mr. LARSEN. Yes. 

Mr. GRIFFITH. J.P. Morgan? 

Mr. LARSEN. Yes. 

Mr. GRIFFITH. Citigroup? 

Mr. LARSEN. Yes. 

Mr. GRIFFITH. Verizon? 

Mr. LARSEN. Yes. 

Mr. GRIFFITH. AIG? 

Mr. LARSEN. Yes. 

Mr. GRIFFITH. IBM? 

Mr. LARSEN. Yes. 

Mr. GRIFFITH. Now, what we just went over is a list of companies 

that are not just in the Fortune 500 but that receive this taxpayer 

money but are companies that are in the top 20. Twelve of the top 

20 of the Fortune 500 received money from this program. And I 

think you told us in a previous hearing that that is because the underlying law didn’t make a distinction for those that needed the 

money, it was just out there if you met the criteria. 

Mr. LARSEN. The law was based on the fact that historically, the 

number of companies that are able to provide retiree coverage has 

dropped off, I think by half in the last 10 years. So it was not 

needs-based. And I think as you probably saw, many of the biggest 

recipients of the funds were in fact State retiree programs, State 

teachers, State employees. 

Mr. GRIFFITH. One of my concerns, though, is that if the intent 

of the bill was to give this early retirement assistance to companies 

so that they could fund their programs, I think we have the same 

problem Mr. Scalise pointed out. A lot of the big companies got in, 

the rich folks got it because they had people to monitor all this 

stuff and keep track of it. I am not sure that the small companies 

that probably needed the assistance got it. Wouldn’t you say that 

is a fair assessment? 

Mr. LARSEN. I don’t think so. We have had, I think, over 2,800 

sponsors of a wide range of size and background come to get money 

from this program. Remember, it has to be companies that are alVerDate Aug 31 2005 13:49 Jan 13, 2014 Jkt 037690 PO 00000 Frm 00070 Fmt 6633 Sfmt 6633 F:\112-12~1\112-12~1 WAYNE
67 

ready providing benefits to their retirees, so that is, you know, 

typically going to be some larger companies, although, as I said, it 

is frequently States and their State employee retirement systems 

that got the money as well as some of the companies you mentioned here. 

Mr. GRIFFITH. Now, you said in testimony—and I am switching 

gears on you. You said in testimony earlier that this would not necessarily be enforced, the act would not be enforced by your agency 

but by the IRS because it was—— 

Mr. LARSEN. Getting back to the individual responsibility provision? 

Mr. GRIFFITH. Yes. And that would be enforced by the IRS. Is 

that the 16,000 new IRS agents we have heard so much about? 

Mr. LARSEN. I don’t believe so. I don’t think that it is how it enforced. It will be enforced electronically through the filing and 

through the verification of whether someone has purchased insurance. And that doesn’t occur until 2015 because that is when the 

responsibility provisions actually kick in to confirm that someone 

had coverage in 2014. 

Mr. GRIFFITH. All right. My time is just about up but I want to 

ask you about CBO said it going to cost more than the trillion that 

we were originally told it was going to cost when this passed before 

I got here, and it looks like, is it fair to say that based on that information over the 10 years that this may actually cost $2 trillion 

or more? 

Mr. LARSEN. Actually, the CBO report found that there would be 

about 50 billion fewer costs associated with implementing this because of the number of changes that they highlighted, so the numbers in the CBO report that just came out said that over the 10- 

year period from 2012 to 2021 would be $49 billion or $50 billion 

less than what they had projected a year ago in March of 2011. 

Mr. GRIFFITH. But it is going to be more for the first 10 years. 

Isn’t that correct? Isn’t that what CBO said? 

Mr. LARSEN. No. 

Mr. GRIFFITH. All right. I yield back, Mr. Chairman. 

Mr. STEARNS. The gentlelady, Ms. Christensen, is recognized for 

5 minutes. 

Mrs. CHRISTENSEN. Thank you, Mr. Chairman. And Mr. Chairman, before I ask my question, I just wanted to make some comments about the Early Retiree Reinsurance Program because the 

attacks on it are really unfair and unjustified. 

Prior to the passage of the Affordable Care Act, employers were 

dropping coverage for their retirees at an alarming rate or finding 

themselves saddled with huge and rapidly increasing health care 

costs. The program was an effort to help employers bridge the transition to 2014 when more affordable coverage options will be available, and in the face of overwhelming need, the ERRP program had 

great results. The program has helped more than 2,800 employee 

health plans sponsors across the country cover the cost of medical 

care for early retirees. These plans cover more than 19 million 

beneficiaries. ERRP funds support employers that continue to provide private health coverage and help early retirees keep the private coverage they already have. This important transitional program worked to support employers making the right choice for 

68 

their retirees, and I think it is an important way to support that 

choice. 

Mr. Larsen, let me ask you some questions about the Preexisting 

Condition Insurance Plan. You testified before the subcommittee on 

April 1st to discuss the Preexisting Condition Insurance Plans, the 

PCIP, or high-risk pools established under the Affordable Care Act. 

In that hearing, we heard about thousands of Americans with preexisting conditions who finally had access to coverage, and we established that maybe somewhere around 50,000 Americans have 

enrolled in the PCIP. And I understand that many of these individuals have serious health conditions including 1,900 individuals 

with cancer, nearly 4,700 with heart disease. What type of coverage 

options did these individual with preexisting conditions have before 

we passed the Affordable Care Act? 

Mr. LARSEN. Well, the fact is that they really wouldn’t have any 

other coverage options. I think many of these people would be diagnosed with cancer and end up in the emergency room or not get 

care at all for their condition. 

Mrs. CHRISTENSEN. And how will those options improve in 2014? 

Mr. LARSEN. Well, when the insurance reforms kick in, at that 

point we will have guaranteed issue, guaranteed renewability and 

so we will have a much larger insurance pool and people that 

would get locked out of the system today by the insurance companies won’t be locked out in the future, but we will also have many, 

many more people in the insurance pool to offset those costs. 

Mrs. CHRISTENSEN. Thank you. The only complaint I have about 

that program is that it didn’t extend to the territories, Mr. Larsen. 

Still working on that. 

But, you know, Republicans should love the PCIP program. It 

has been the centerpiece of their past reform proposals, but instead 

they attack it because they say it is not popular enough unless of 

course they are attacking it for the opposite reason, that it is too 

popular and may spend too much money. So Mr. Larsen, what happens if the program becomes so popular that the expenditures 

might exceed $5 billion? 

Mr. LARSEN. Well, we have to manage within the amount that 

Congress has appropriated for this so we continue to monitor the 

progress that States are making in their enrollment and their 

costs, and if we have to make adjustments in the future, we will 

do so. 

Mrs. CHRISTENSEN. Are there procedures in place to make sure 

that they don’t exceed the program costs? 

Mr. LARSEN. We have to make sure that we don’t exceed program 

costs. 

Mrs. CHRISTENSEN. And what happens if you do not spend the 

entire $5 billion? 

Mr. LARSEN. That is a good—I don’t know the exact answer to 

that but I will say that if we exceed our costs, then there are a 

number of different options that we can pursue to make sure that 

we stay within the $5 billion. 

Mrs. CHRISTENSEN. OK. So we have a win-win scenario here. In 

one case, the program becomes extremely popular, many people receive coverage and you still have processes in place to protect taxpayers and to make sure expenditures do not exceed authorized 

69 

amounts. The other scenario involves low enrollment. In that case, 

I think what happens is you will return the extra money to the 

Treasury, which would help reduce the national debt. So I appreciate your walking us how the money is being spent. 

I know that there are many unfair attacks against the health reform law, the Patient Protection and Affordable Care Act, but I 

think the record is clear that you are administering the PCIP program and the law as a whole in a very effective and efficient fashion, and it is a humongous task, so we really commend CCIIO and 

the entire department for the way that you are doing it. And I do 

have some specific territory-related questions that I will submit for 

the record. 

Mr. LARSEN. OK. We will look forward to answering those. 

Mrs. CHRISTENSEN. Thank you, Mr. Chairman. 

Mr. TERRY [presiding]. Thank you. Now the Chair recognizes the 

gentlelady from Tennessee for her 5 minutes. 

Mrs. BLACKBURN. Thank you, Mr. Chairman, and Mr. Larsen, we 

are pleased that you are back with us today. 

I want to talk about the nonprofits. You said that you had 

awarded more than $638 million in loans already from the consumer operated and oriented plan, but OMB has estimated that 

under the co-op program, that taxpayers could lose $370 million 

from unpaid loans to the nonprofit insurers. Do you think that is 

accurate? Are we missing something here? Are they missing something? 

Mr. LARSEN. Well, I guess for purposes of the loan program, 

OMB has to make some type of projection as they would for any 

loan program about the rate at which recipients would not repay 

their loans. I can tell you that in our review process for the applicants that we got, we hired an outside consultant with extensive 

financial expertise to look at the applications that we got. So OMB 

has to make some assumptions, I guess, for purposes of releasing 

the money. But we are running a very vigorous process and we—— 

Mrs. BLACKBURN. So basically you are saying this is a bad investment for the taxpayer? 

Mr. LARSEN. Not at all, no. 

Mrs. BLACKBURN. You are not saying that? 

Mr. LARSEN. I am not saying that. 

Mrs. BLACKBURN. You are saying the taxpayer should expect to lose money because $370 million—— 

Mr. LARSEN. No, I am not. I am saying the opposite. 

Mrs. BLACKBURN [continuing]. Is a health care Solyndra. Well, 

you just told me that you thought OMB has to expect a certain 

amount of this, and, you know, if they are saying as much as 50 

percent of the loans issued under the program may not be repaid, 

I mean, do you think that is accurate? 

Mr. LARSEN. Well, we don’t think there is going to be a default 

rate on these loans. I think they have to make projections for certain purposes, but again, I can tell you from our perspective, we 

are doing everything we can to make sure that we only provide the 

loans to—— 

Mrs. BLACKBURN. Then let me approach it this way with you because reading this is of concern to me, and after what this committee has been through looking at the DOE loan program and the 

70 

bankruptcies that are there, let us kind of agree to get out ahead 

of this, and what I would love for you to do is to submit the analysis and the documents related to the program and then your approval of or rejection of the loans. I think as we oversee this, that 

that would be very helpful to do that. Would you submit that to 

us for the record? 

Mr. LARSEN. Yes, assuming that we can provide that application 

material, but I would be happy to kind of explain for you exactly 

what process we ran to make sure that we got the best applicants. 

Mrs. BLACKBURN. That would be great. I have got just a little bit 

of time left, and I do have another question for you. Last time you 

were with us and we discussed the waivers, I asked if you had a 

plan B for when the waivers ran out, and you did not have a plan 

B, and now we are looking at is, what is it, 1,800 waivers that have 

been given, as you look at your cost in the coming years and you 

look at 2014 when these waivers—have you come up with a plan 

B for how you are going to integrate these programs and what the 

expectations are going to be for the impact on the system? 

Mr. LARSEN. Well, essentially the plan B or the transition is that 

in 2014, when the requirements of the annual limits provisions 

would apply, these mini-med policies would no longer be offered because employees would have access to full, comprehensive coverage. 

Many of them would be able to access the tax credits that are 

available because it is often lower income workers that are in these 

mini-med plans and those are exactly the kinds of people—— 

Mrs. BLACKBURN. OK. Let me ask you this—— 

Mr. LARSEN [continuing]. Who would have access to the tax credit in 2014. 

Mrs. BLACKBURN. OK. All right. As you have gone through the 

waiver program, how many people were denied waivers? How many 

companies were denied waivers? 

Mr. LARSEN. It was a very—we approved over 90 percent. I think 

it was only, 90 or 100 that were denied. 

Mrs. BLACKBURN. OK. And the waiver program is closed. You can 

no longer get a waiver? 

Mr. LARSEN. That is right. 

Mrs. BLACKBURN. All right. The ones that were denied, what was 

the reason for the denial to them? 

Mr. LARSEN. Well, to be approved for the waiver program, you 

had to show that applying the high annual limits, at the time, 

$750,000 annual limits, to your policy would result in a substantial 

increase in premiums or a decrease in access to coverage. So for 

policies that had coverage of $25,000 or $5,000, which are these 

mini-med policies, typically applying that standard, it would raise 

premiums. Some people might not be able to afford them. So that 

is how you were approved for a waiver. If you weren’t approved for 

a waiver, it meant that you didn’t meet the regulatory criteria. In 

other words, it wasn’t going to cause a large increase in premiums 

to comply with the annual limits provisions that were in place at 

the time. 

Mrs. BLACKBURN. All right. Yield back. 

Mr. TERRY. I thank the gentlelady from Tennessee. 

Now we recognize the gentleman from Texas, Mr. Green. 

71 

Mr. GREEN. Thank you, Mr. Chairman, and again, welcome, Mr. 

Larsen. 

I know there are some concerns, and our committee actually 

spent a lot of time on the Affordable Care Act when we were marking it up both in our subcommittee and the full committee 2 years 

ago, and I have a district that has such a huge impact the Affordable Care Act will do. Before the passage, the 29th district that I 

represent had the largest percentage of uninsured in any district 

in our country, a very urban area in Houston, again, not a wealthy 

area. We still have a lot of work to do but things are getting better. 

As many as 53,000 children in our district can’t lose the security 

offered by health insurance due to preexisting conditions. Thirtyfour hundred seniors have saved an average of $540 on prescription 

drugs and 9,000 young adults have health insurance they couldn’t 

have before the Affordable Care Act. Additionally, about 60,000 of 

my constituents, most of them minority and historically underserved communities, are receiving an array of preventive health 

services without copays, coinsurance or premiums, and this is a result of the Affordable Care Act and its tremendous help toward reducing health care disparities in our district particularly but in our 

country. 

I am proud to represent part of Houston. We have a great Texas 

Medical Center there, I think one of the largest in the country. It 

is just hard for my folks to get there except through our public hospital system. Individuals in underserved communities, minorities, 

rural areas and communities with high poverty rates need the Affordable Care Act, and I would like to ask you some questions 

about how this act is serving the underserved areas. 

First, what are some of the biggest barriers to access to care for 

these underserved communities, again, very urban like mine or 

even rural areas? 

Mr. LARSEN. One of the main ones is cost for lower-income individuals, the cost of coverage and access and coverage, and the Affordable Care Act of course addresses that through the tax subsidies that are available for people. 

Mr. GREEN. The health care law provides billions of dollars in 

public health grants for community health center expansion. I 

know we had received some of those grants in our district and we 

need more because Houston in Harris county is the fourth largest 

city in the country and yet we are behind the curve on communitybased health centers, and I know a few years ago when we authorized it, we had a provision in there that if you are a very urban 

area and all being equal, if you had a huge underserved population, 

that your grant application was given a higher priority. I know 

that is helpful, but will the Affordable Care Act address some of 

those barriers, expanding and health care providers and community health centers? 

Mr. LARSEN. It will, and there are provisions in the exchange 

rule that requires network adequacy to make sure that health 

plans have a full network of providers including essential community providers, which are an important part of the support for the 

individuals you are referring to. 

72 

Mr. GREEN. Can you just verbalize some of the preventative 

health care benefits that we are seeing now on the second year anniversary? 

Mr. LARSEN. Well, there is a whole range, particularly for 

wellness visits for women, for children, cancer screenings, 

colonoscopy screenings, you know, the things that have been approved by IOM that have been shown to be effective in terms of 

prevention. 

Mr. GREEN. OK. I realize this is not your area but the health 

care reform law also contained funding and new programs to help 

expand the health care workforce, especially primary care workforce. Can you give us an update on how that will help, not only 

minorities and underserved but individuals in those underserved 

areas? 

Mr. LARSEN. I know that there is substantial funding available 

in HHS for a number of workforce initiatives, which is extremely 

important and it is significant, the details of which I don’t have in 

front of me but I know that it is a key part of this law. 

Mr. GREEN. Finally, the Affordable Care Act coverage provisions, 

expansion of Medicaid, new health care credits for small businesses 

and the State insurance exchanges that will make health insurance 

less expensive and easier for individuals. I know, for example, in 

Texas, and a lot of States, I think 26 States, are waiting until the 

Supreme Court decides whether they are going to participate, even 

though my home State received planning money for it, they have 

decided to wait. But even if they are waiting, HHS will provide an 

exchange system for those States that do not participate. 

Mr. LARSEN. We will. One way or another, there will be an exchange for the health care consumers in each State including 

Texas, although many States, even States that are challenging the 

law, actually have applied for and received extensive grants and 

are moving forward to be ready in 2014. 

Mr. GREEN. And I know in Texas, again, the political decision 

has been made, but hopefully the Supreme Court will come back 

with an argument and realize that health care is just like Social 

Security, like a lot of other things, Farm Bill, things like that, that 

Congress has the right to make that mandatory. 

So Mr. Chairman, thank you for your time. 

Mr. TERRY. Thank you, Mr. Green. 

The Chair recognizes the gentleman from Pennsylvania, Mr. 

Murphy, for 5 minutes. 

Mr. MURPHY. Thank you, Mr. Chairman. 

Mr. Larsen, do we have any numbers yet of what we estimate 

an individual will pay for their premium and copay under new insurance plans under the Affordable Care Act? 

Mr. LARSEN. I don’t have an estimate, and the estimate really 

varies depending on the State and how old they are and whether 

they are buying in the individual and small group market. 

Mr. MURPHY. Will it be $1,000 a year, do you think? 

Mr. LARSEN. I don’t know. 

Mr. MURPHY. Well, current policies now average what nationwide? 

73 

Mr. LARSEN. You know, I think the typical estimate is for, you know, $12,000 for an individual. I think that is in the individual 

market. 

Mr. MURPHY. I understand. Now, with regard to this plan, will 

it be open enrollment year round, a person can sign up for an insurance plan? 

Mr. LARSEN. Now, there will be open enrollment periods, you 

know. In the reg that we put out, there is an initial open enrollment period that is a little longer and then each year there will be 

open enrollment windows. 

Mr. MURPHY. And do we have estimates of how much we think 

that coverage under the Affordable Care Act will increase or decrease? I know as part of the mandate, everybody is supposed to 

get a policy. There is a belief that somehow that will have an impact. But do we know exactly how much it may reduce individual 

costs, keep it the same, increase, slow growth? 

Mr. LARSEN. You know, there are a number of different estimates. I know CBO did one that said for the small group market, 

it could be flat to advantageous because of the economies of scale 

you get coming in. It somewhat depends in a particular State 

whether they have a full range of benefits today or a modest range, 

and then you get of course the efficiencies in the individual market 

of having everyone in one single insurance pool in a State. 

Mr. MURPHY. But as far as the States go, there still is a required 

amount of coverage that each plan has to have but some States—— 

Mr. LARSEN. That is the essential health benefits. 

Mr. MURPHY. So some States have very few mandates, some 

States have a lot. This will have a set amount that every plan has 

to have? 

Mr. LARSEN. Well, one of the things we did in the bulletin that 

we issued was to allow States to select their own benchmark for 

essential health benefits so you are exactly right. In some States 

they have more mandates than other States, and that State could 

select that as their benchmark, and the State that has a small, a 

thinner mandate, benefit package, assuming that it kind of met the 

basic criteria, could choose that as their benchmark. 

Mr. MURPHY. So we are still not clear on this. Now, we do know 

that if an employer drops coverage, they would pay a $2,000 fine? 

Mr. LARSEN. There is a penalty, yes, for not offering coverage. 

Mr. MURPHY. And I have seen estimates all over the place as 

have you. I have seen some as high as 85 million people may not 

be covered. Some say it may be 10 million. It is all over the board. 

Some say 20 million won’t be covered by employers. Does that 

sound right, estimates all over the place? 

Mr. LARSEN. Well, I would say this. There are many different estimates but I think most of the estimates like CBO suggest, there 

could be a small number of people that have it today that might 

not have it then, but then there are many other people that don’t 

get it offered today that will have it offered in the future. So when 

you net those things out—— 

Mr. MURPHY. Big question mark there. I know that is estimated about $40 billion a year is lost for uncompensated care that hospitals say they need that money, or is it more than that? Do you 

know? 

74 

Mr. LARSEN. Right. I mean, that that was one of the premises 

of the act that we all pay for that uncompensated care. 

Mr. MURPHY. And what they are looking at, so an employer may drop coverage and pay a $2,000 fine. As I understand it, an individual, if they choose not to have coverage, they will pay, I think, 

a fine of $695 or 2–1/2 percent of their income, whatever is higher. 

Am I correct? 

Mr. LARSEN. Right. 

Mr. MURPHY. Now, given what people are facing here now, there 

are multiple open enrollment periods during the year, you have 

people also facing increased energy costs with the policies where 

many coal-fired power plants are going to drop, we are going to lose 

about 20 percent of our power generation so people’s electric bills 

are estimated to go up 30 to 40 percent, with gasoline costs going 

up now where an individual this year is paying about $2,500 or 

$5,000 more a year, families are going to continue to make individual choices. So although there is a mandate to require people to 

purchase health care, you still can’t make them purchase health 

care. If they decide to not purchase it, they can still hold off and 

not purchase it? 

Mr. LARSEN. Well, they pay the financial penalty. 

Mr. MURPHY. But if they say look, I will pay $695 versus several 

thousand dollars, they may make that decision? 

Mr. LARSEN. Some could, although for many lower-income individuals, up to 400 percent of poverty, there are the tax credits 

available that significantly offset the cost. 

Mr. MURPHY. A tax credit for somebody who is on poverty and 

doesn’t pay taxes? 

Mr. LARSEN. Well, many of them do. I mean, obviously people 

that are on Medicaid may not but the credits are available for people up to 400 percent of poverty. 

Mr. MURPHY. I mean, the issue that still baffles me is the preventative care issues. I mean, there is still—we know that there is 

decreased cost for people who don’t see a doctor. There is decreased 

cost for people who eat healthy foods, decreased cost for people who 

have optimal weight. I think obesity costs our health care system 

$147 billion a year. Decreased costs for people who exercise regularly, follow their prescriptions carefully. I think misusing prescriptions is a $250 billion drain a year. People who are chronically ill, 

if you monitor them, work with them on health, there can be a 40 

percent cost savings. If this is the where all the costs are, will we 

be mandating those things in order to really save? Because those 

things add up to be several hundred billion dollars a year. Will we 

be mandating these behavior changes too? 

Mr. LARSEN. Well, not behavior changes certainly but there are 

a lot of incentives in the Affordable Care Act for health and 

wellness programs for insurance companies who will get a credit on 

their medical loss ratio calculation if they provide health and 

wellness programs. 

Mr. MURPHY. So you are believing that the financial incentives 

to help people drive to behavior changes on this versus mandating 

them? 

Mr. LARSEN. I think in this case, yes, for the health and 

wellness. 

75 

Mr. MURPHY. Thank you. 

Mr. STEARNS. The gentleman’s time has expired. I think we are 

ready, I would say to my ranking member, we will go a second 

round to Mr. Larsen, and I will start with this, and I tell members 

who would like to stay a second round, stick around. 

Let me just start by sort of asking you, Mr. Larsen, a sort of general question. We have heard from Mr. Waxman and others how 

the cost of health care is going to come down. Do you actually believe that the cost of health care in America will come down? Is 

that what you are saying to us today, that Obamacare will cause 

the cost of health care to come down? 

Mr. LARSEN. Well, many aspects of the ACA will lower health 

care costs, first by getting more people—— 

Mr. STEARNS. I understand, but has it lowered premiums so far? 

I mean, this bill has been enacted 2 years. Have you seen the premiums come down, in your opinion? 

Mr. LARSEN. The provisions that help address the—— 

Mr. STEARNS. I mean yes or no. 

Mr. LARSEN [continuing]. Insurance premiums don’t take effect 

until 2014. 

Mr. STEARNS. So you say it is too early to see the impact of 

Obamacare? 

Mr. LARSEN. Well, with respect to premiums. I mean, we have 

expanded coverage, we have provided people with better coverage. 

The provisions that help address some of the cost efficiencies with 

the exchanges don’t—— 

Mr. STEARNS. But the fact is, health insurance premiums have 

shot up 9 percent, three times the rate of inflation. This is according to the Kaiser Family Foundation. And I think you would agree 

that the Kaiser Family Foundation said the costs have gone up 9 

percent, 3 percent above inflation. Wouldn’t that indicate that a lot 

of the things that you have talked about that have been implemented have really not brought costs down? 

Mr. LARSEN. Well, first of all, that rate of increase has been consistent over the last 10 years, which is why we need—— 

Mr. STEARNS. So the fact is, it has not changed with Obamacare. 

Mr. LARSEN. Well, in fact, I think the CBO in their recent report 

found that the rate of health care spending and premiums had actually moderated in the last year when they looked at the estimates for the costs—— 

Mr. STEARNS. Don’t you think that is probably the economy more 

than anything? 

Mr. LARSEN. Well, it could be a number of factors. I guess what 

I am saying is, that we don’t think the provisions of the ACA are 

what is at work when you look at the historical rate of increase of 

premiums year over year. The ACA will help fix those provisions. 

Mr. STEARNS. So Mr. Larsen, you are saying today, we can expect 

health care costs for families to go down? 

Mr. LARSEN. We hope and expect that costs will moderate with 

the provisions of the ACA. 

Mr. STEARNS. Now, the President promised lower premiums by 

an average of $2,500 per family. Do you think this is going to happen? 

76 

Mr. LARSEN. I think costs will be much lower compared to what 

they would have been if the ACA hadn’t been enacted. 

Mr. STEARNS. Your testimony talked about the rate review on insurance increases in New Mexico, Connecticut, Oregon, New York 

and Rhode Island, correct? 

Mr. LARSEN. That is right. 

Mr. STEARNS. In any of these situations, did the premiums go 

down? 

Mr. LARSEN. I think in the examples we cited, that the insurance 

commissioner in that State worked to lower the initial rate filings 

that came in. 

Mr. STEARNS. Well, I think your testimony indicated that the 

rate review situation resulted in premiums going up. The government really said they couldn’t go up so much but I think that is 

true. 

Mr. LARSEN. Oh, I see. You mean their increases were approved 

but they were lower than what originally was filed by the insurance company? 

Mr. STEARNS. Yes. 

Mr. LARSEN. Right. 

Mr. STEARNS. Where in your testimony do you discuss lowering 

premiums? 

Mr. LARSEN. Well, lowering—it is all relative, right? I mean, lowering premiums means lower than what they would have been if 

we hadn’t had these types of provisions. 

Mr. STEARNS. That is like we do in Congress. We say we reduce 

spending by lowering the spending more than we projected. 

The example you cite, you say that ‘‘The Government Accountability Office found that in a survey of seven insurers, most of the 

insurers were adjusting premiums.’’ Is that it? 

Mr. LARSEN. Well, that was a result of the medical loss ratio provisions. GAO did a very limited survey of a number of companies 

to see whether they were taking action to comply with the MLR 

and what it is, and in some cases, companies were moderating 

their premium increases. We did have an example, and there may 

be others, of a company that actually lowered premiums. There is 

a case—— 

Mr. STEARNS. Can you give me a specific example? 

Mr. LARSEN. Aetna Insurance Company in Connecticut actually 

lowered premiums. 

Mr. STEARNS. OK. So is that the only one, Aetna of Connecticut? 

Mr. LARSEN. Well, that is the one that I am aware of. 

Mr. STEARNS. Can you name anyone else that has lowered premiums specifically because of Obamacare? 

Mr. LARSEN. Well, when you say lowered, you mean moderated 

the premium increases that would occur? 

Mr. STEARNS. To use your term—— 

Mr. LARSEN. I can find that and get it to you in writing because, 

yes, many companies have been on the record both with us and in 

Wall Street indicating that they were moderating their rate increases based on the MLR provisions in the Affordable Care Act. 

Mr. STEARNS. Do you provide waivers if companies find out that 

their premiums are going up significantly? Is that one of the factors which you provide a waiver for? 

77 

Mr. LARSEN. Well, in the waiver program that we don’t operate 

anymore, but at the time, that was one of the criteria, that is right. 

Mr. STEARNS. Mr. Scalise talked about, I don’t know, 1,200, 

1,400, I think there is 1,700 entities that got waivers. Isn’t that 

true? 

Mr. LARSEN. Overall, though that included about 400 or 500 companies that offered HRAs, or health reimbursement accounts, that 

we really concluded didn’t need a waiver under the law. 

Mr. STEARNS. All right. My time is expired. Mr. Dingell is recognized for 5 minutes. 

Mr. DINGELL. Thank you, Mr. Chairman. You have, first of all, 

Mr. Larsen, given us a very good statement today, and Mr. Chairman, I think that the information that we got in this hearing has 

been most helpful in understanding how we are doing and moving 

forward, and also in having some significant appreciation of the 

chores which yet remain. I think if we all are willing to work together, we are going to see this program be a good one of which 

we will all be proud. 

Mr. Larsen, you made some points here. In your statement, you 

said States are already using this authority to save money for families and small business. Starting out in New Mexico, the State insurance division denied a request from Presbyterian Health Care 

for a 9 percent rate hike, lowering it to 4.7 percent. In Connecticut, 

the State stopped Anthem Blue Cross Blue Shield, the State’s largest insurer, from hiking rates by a proposed 9 percent, instead limiting to a 3.9 percent increase. In Oregon, the State denied a proposed 22 percent rate hike by Regency, limiting it to 12.8 percent. 

In New York, the State denied increases for Emblem, Oxford and 

Aetna that averaged 12.7 percent, holding it instead to an 8.2 percent increase. In Rhode Island, the State denied rate hikes to 

United Health Care of New England ranging from 18 to 21 percent, 

instead seeing them cut to 9.6 to 10.6 percent. I know what you 

are telling us, that these provisions are working in terms of assuring the protection of consumers. Is that a fair statement? 

Mr. LARSEN. Yes, sir. 

Mr. DINGELL. Now, we have talked a little bit about the health 

insurance exchanges. You will note that as you have indicated, 

CCIIO is charged with helping States set up these exchanges. Isn’t 

that right? 

Mr. LARSEN. Yes. 

Mr. DINGELL. How will these exchanges change consumers’ experience in purchasing health insurance on the individual market? 

Mr. LARSEN. Well, individuals will now have access to a competitive market, an affordable market. 

Mr. DINGELL. Will he know what he is getting? 

Mr. LARSEN. They will know what they are getting, and they will 

get comprehensive coverage and they will have the ability to get 

tax credits if they meet the criteria. 

Mr. DINGELL. They will be written in a simple, understandable 

way? 

Mr. LARSEN. Yes. 

Mr. DINGELL. So that the purchaser of the insurance policy will 

be able to understand what he is buying and what the advantages 

of the different plans might happen to be. Is that right? 

78 

Mr. LARSEN. Exactly. 

Mr. DINGELL. And you don’t need to be a Philadelphia lawyer to 

understand this. Is that right? 

Mr. LARSEN. That is right. 

Mr. DINGELL. So in addition to improving the market for individual coverage, then we must assume that the exchanges will also 

provide for small businesses to have for the first time ever the ability to pool their risk and buying power together to drive down 

costs. Is that right? 

Mr. LARSEN. That is right. 

Mr. DINGELL. Now, there seems to be some misunderstanding 

here. Insurance companies over the years have been forced to go 

to the idea that they will avoid the risk because they didn’t have 

a decent insurance pool, so what they did is, they curtailed the size 

of the pool by getting rid of the most risky people, and that is why 

they used preexisting conditions and other things to prevent certain classes of people from buying insurance. Is that right? 

Mr. LARSEN. That is right. 

Mr. DINGELL. So now the insurance companies are going to be 

able to engage in the practice that is so important in terms of having real insurance. They will cover everybody. 

Mr. LARSEN. That is correct. 

Mr. DINGELL. And this is going to enable insurance companies to 

then practice insurance in the classical sense by making it available to all persons and then we will all share the risk that flows 

from the possibility of sickness or illness or debilitation. Is that 

right? 

Mr. LARSEN. That is correct. 

Mr. DINGELL. And this is one of the main ways in which we are 

going to see significant savings of monies to the Federal Government, to the employers and to of course the purchasers of the insurance. Is that right? 

Mr. LARSEN. That is right. 

Mr. DINGELL. Mr. Chairman, I am going to surprise you. It is 38 

seconds I yield back. 

Mr. STEARNS. All right. Thank you, Mr. Dingell. 

Dr. Burgess is recognized for 5 minutes in our second round. 

Mr. BURGESS. Thank you, Mr. Chairman. I am tempted to actually go to the left of John Dingell but I am going to resist the temptation. 

He was talking about—and we do this all the time—the ERISA 

market is not the same as the small group market and the individual market. Mr. Dingell’s questions really were about the small 

group market and the individual market, not the employer-sponsored insurance market, because preexisting conditions are covered 

then in the open enrollment, are they not? 

Mr. LARSEN. You mean for the self-insured market? 

Mr. BURGESS. No, no, I am talking about for someone who works 

for, say, a big telecom company that is known only by its—— 

Mr. LARSEN. Yes, that is one of the big advantages of working 

for a large company. 

Mr. BURGESS. Right. Those individuals in the large group market 

were not subject to the same constraints that Mr. Dingell was just 

discussing. Is that correct? 

79 

Mr. LARSEN. Typically that is right, yes. 

Mr. BURGESS. And it really seems like had we wanted to reform 

the system, we would have tried to help the individual market and 

the small group market behave more like the large group market, 

and I think we could have gotten a lot more bang for the buck, but 

that is another story. We didn’t get to do it. Am I going to be able 

to keep my HSA? 

Mr. LARSEN. There is nothing in the Affordable Care Act—— 

Mr. BURGESS. There is not? What about the medical loss ratio? 

Are you going to count the amount of money that I contribute to 

my health savings account as a medical expense or is that administrative expense? 

Mr. LARSEN. Well, at this point I don’t think it counts in the 

MLR provisions but we are looking at HSAs and HRAs in connection with—— 

Mr. BURGESS. Can you guarantee me that I will be able to keep 

my HSA when this thing is fully implemented? 

Mr. LARSEN. I don’t see any reason why you couldn’t keep your 

HSA. 

Mr. BURGESS. Well, I will tell you, my read of it is that there is 

a risk, and if we really want to control costs without rationing, and 

I do, because I don’t like rationing, but if we really want to control 

costs, we will leave the health care consumer, the patient, in 

charge of a lot of the decisions and the money of their expenditures 

because I know from my own experience, I am a much more costconscious shopper in health care because it is my money that I am 

spending, that money being designated from my health savings account. President Obama himself, and he is from the White House, 

told us this last year when he had all us down there to talk to us 

about the debt limit, he referenced how expensive health care was, 

and he said he got a rash on his back, he put some cream on it 

and there was a $5 copay but he was out on the campaign trail, 

he didn’t have his card, and he went to the pharmacist to explain 

his predicament. The pharmacist got the prescription transferred— 

thank you, electronic health records—but when the prescription 

was handed up to him, he was told that it would be $400, and the 

President said you know, this rash is not that bad. And exactly 

right, Mr. President. You became an informed health care consumer. So the power of putting—putting this power in the hands 

of the consumer really can be a powerful incentive to hold costs 

down, and the only other thing you have got, the only other lever 

you can pull is you say we are going to have waiting lists or rationing, or we are going to cut reimbursements to physicians. We saw 

what happened in Medicare with the SGR. You cut my reimbursement. My fixed costs remain the same, so what do I do? I do my 

stuff so I cost you more money because I have still got to pay the 

same bills that I had to pay before. So I really think getting away 

from an HSA-type model, especially for people who are in the immediate pre-Medicare years, that is going to be a big mistake and 

it is going to drive costs up, not the other way around. 

Now, having been in practice and having seen what happened 

when an insurance company went bankrupt and seeing the effect 

on patients and the people who are supposed to be paid by all those 

claims that didn’t get paid and yes, there was a small State fund 

80 

that we could go to but nowhere near covered the expenses, are you 

concerned at all that when a company comes to you and says we 

need to raise our rate and it is based on actuarial evidence, are you 

concerned at all when you hold these rates down that you may be 

driving companies toward insolvency, maybe not tomorrow, maybe 

not next year, but over time? 

Mr. LARSEN. Well, first of all, HHS, when we review rates in the 

small number of States that we do it, we don’t have the ability or 

the authority under the ACA to actually force the company to do 

anything different. We make a conclusion and the company can 

proceed if they want to with the rate, and certainly in the States 

that do have the authority to modify rates, it is something that 

they—and I did this as well—you need to take into account when 

you are looking at their—— 

Mr. BURGESS. Wait a minute. I thought under the Affordable 

Care Act rates are going to go down because you are going to prevent large increases from the insurance companies? Did I not hear 

that said several times this morning? 

Mr. LARSEN. And I think the evidence shows that that is happening. I think all I am saying is that when regulators look at the 

rates, they have to make sure they are reasonable and not excessive, and you are absolutely right. They have to make sure they are 

not inadequate as well and that companies—— 

Mr. BURGESS. So a recent news story—— 

Mr. LARSEN [continuing]. And that companies have enough revenue. 

Mr. BURGESS [continuing]. Said rates went up 26 percent in Alaska, 23 percent in Florida, 20 percent in Washington State, all since 

the implementation of the Affordable Care Act. Is that going to be 

modified in the future? Are those rates are going to be going up 

less because of the Affordable Care Act? 

Mr. LARSEN. I am not sure what you are citing there. 

Mr. BURGESS. Well, there was an article in the general news. 

Mr. Chairman, I will yield back at this point, but I am going to 

submit that question with more detail, and I would appreciate a 

thoughtful answer to that. 

Mr. LARSEN. OK. 

Mr. STEARNS. All right. The gentleman’s time is expired. 

The gentleman from Virginia is recognized for 5 minutes. 

Mr. GRIFFITH. Thank you, Mr. Chairman. 

Let us talk about medical loss ratio rebates. Your testimony 

states ‘‘Consumers will receive a notice explaining their carrier’s 

medical loss ratio, MLR, if their carrier owes them a rebate on 

their premium payments.’’ Now, as I understand it, this is to be 

issued in August of 2012. Is that correct? 

Mr. LARSEN. That is right. If rebates are repaid, they would come 

out—they are supposed to be done by August. 

Mr. GRIFFITH. By August of 2012? 

Mr. LARSEN. Um-hum. 

Mr. GRIFFITH. And the law requires the companies to send these 

notices out, or the rebates out? 

Mr. LARSEN. Yes. I mean, we proposed in our regulations that 

when an individual gets a rebate, that they would get a notice from 

their insurance company describing what it is they are getting and 

81 

whether their company complied with the law and what the MLR 

was. 

Mr. GRIFFITH. Let me ask you this question. Does the carrier 

have to send all of their customers a letter whether or not they get 

a rebate or only if they get a rebate? 

Mr. LARSEN. Well, two things. One, in the rule that’s on the 

books now, we from the beginning had made it clear that when 

there is a rebate to be provided, yes, the consumer would get a notice. We did propose for consideration and posted the idea that for 

consumers whose company complied with the MLR requirements 

but didn’t get a rebate, that they would get a notice so the company 

would—the consumer would understand that their company complied with the law and they got value for their insurance premium. 

So that is a proposal that we have made and we haven’t finalized 

that idea yet. 

Mr. GRIFFITH. So if that proposal were to be finalized, everybody 

would receive a letter in August 2012 talking about either rebates 

or we complied with the law in regard to this section—— 

Mr. LARSEN. Yes. 

Mr. GRIFFITH [continuing]. Right before the election, but all the 

costs under the bill to the hardworking American taxpayers occur 

after the election. Isn’t that correct? 

Mr. LARSEN. Well, the timing—— 

Mr. GRIFFITH. You didn’t fix the timing. I understand that. 

Mr. LARSEN. And it doesn’t have anything to do with the election. 

Mr. GRIFFITH. But it is an accurate statement, is it not, sir? 

Mr. LARSEN. It is accurate—— 

Mr. GRIFFITH. Thank you very much. I yield to Dr. Burgess. 

Mr. BURGESS. Just one last series of questions on the budget, 

and going back to Section 1311(a) on the authority that you have, 

CCIIO has, to draw funds from the Treasury and administer grants 

to the States and territories to establish exchanges, the end of November 2011, I think you told us, $733 million was obligated to the 

States and $27 million had actually been spent. Does that sound 

about right? 

Mr. LARSEN. Yes. 

Mr. BURGESS. So that was November. You may not have in right 

in front of you but can you provide to the committee what has gone 

out to the States since November? 

Mr. LARSEN. Yes, we had another round of establishment grants 

so I think the total grants including everything—innovation grants, 

planning grants, establishment grants—I think is up to $800 million or $900 million. The rate at which States are drawing down 

on that money continues to lag behind the grants that we make as 

they go out and they do a procurement to hire outside experts and 

IT consultants and then procurement has to come on board and 

then the procurement agency has to bill, so there is a lag between 

the obligations and the outlays for the State grants. 

Mr. BURGESS. Well, the previous projections estimated total of $2 

billion would be spent in the exchange grants over the life of the 

program. When do you expect this money will be fully exhausted? 

Mr. LARSEN. Well, unlike the $1 billion, the money that is available to provide grants to States is not limited. It is from a separate 

funding source. 

82 

Mr. BURGESS. So do you have a new projection for us on what 

the—— 

Mr. LARSEN. On how much States ultimately will spend? We 

don’t. I mean, we are getting better insight into that as States 

come in with their grant applications and tell us what they think 

it is going to cost to build an exchange in their State, so—— 

Mr. BURGESS. Let me just ask you something. There are a lot of 

things that the last Congress and this Congress has done to sort 

of kick cans down various roads, and it looks to me like all the 

roads end in December of this year. 

Mr. LARSEN. December of this year? 

Mr. BURGESS. Yes, the doc fix, the unemployment insurance expiration, the unemployment insurance payroll tax holiday, BushObama tax cuts, a lot of things expire at the end of this year. Of 

course, the alternative minimum tax always expires at the end of 

every year, so there is a lot of stuff that is going to happen at the 

end of this year. It is quite possible we will be at or near exceeding 

the statutory debt limit of the United States of America by that 

time as well. It is difficult as the increase in the debt limit was in 

August of last year. This time it will be without all the good feelings that we had last August. Do you worry at all that the subsidies and the exchange, which Mr. Griffith has already talked 

about, are you concerned that that may have to be postponed simply because we are out of money and cannot afford it? 

Mr. LARSEN. Well, I certainly hope not and hope that everyone 

will come together to make sure that that doesn’t happen because 

they are an important part of expanding the coverage provisions in 

the ACA. 

Mr. BURGESS. Even if we are borrowing in excess of 40 percent 

of those dollars that we are going to be handing out to people to 

subsidize their insurance? 

Mr. LARSEN. We hope it doesn’t happen because, you know, it is 

such an important part of the Affordable Care Act. 

Mr. BURGESS. There is no place else to go for another sequester 

other than the Affordable Care Act. It has been remarkably protected. It has led a charmed life with all the other budget-cutting 

things that are going on. I have to believe at some point that 

charmed life expires. 

Thank you, Mr. Chairman. You have been generous. I will yield 

back. 

Mr. STEARNS. I thank the gentleman, and we are all finished 

with our hearing. Does the chairman emeritus have any closing 

comments before I close the committee? 

Mr. DINGELL. Just to thank you, Mr. Chairman, and thank our 

witness. Mr. Larsen, you have done a superb job. 

Mr. LARSEN. Thank you. 

Mr. DINGELL. I think it has been a very useful and very helpful 

hearing, Mr. Chairman, and I commend you for it. 

Mr. STEARNS. All right. Thank you. 

Mr. DINGELL. And I think that we have laid to rest a lot of the 

concerns that I have heard expressed, and we have been able to observe that some of the concerns I have heard have been essentially 

red herrings drawn diligently across the pathway of success in the 

future. I want to thank you for your fine participation in this, Mr. 

83 

Chairman, and you, Mr. Larsen, thank you for your kindness. To 

my colleagues here, I want to say we appreciate your getting these 

questions out because they are valuable and they will lead us to 

a better understanding of the events before us in this legislation. 

Thank you, Mr. Chairman. 

Mr. STEARNS. And with that, I would agree that this hearing will 

give us a better understanding of Obamacare. 

I want to thank the witness for coming today and for the testimony and members for their devotion to this hearing today. The 

committee rules provide that members have 10 days to submit additional questions for the record to the witness. 

With that, the subcommittee is adjourned. 

[Whereupon, at 12:22 p.m., the subcommittee was adjourned.] 

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