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88–493 PDF 2014

EXAMINING OBAMACARE’S PROBLEM–FILLED 

STATE EXCHANGES 

JOINT HEARING 

BEFORE THE

SUBCOMMITTEE ON ECONOMIC GROWTH, 

JOB CREATION AND REGULATORY AFFAIRS 

AND THE

SUBCOMMITTEE ON ENERGY POLICY, 

HEALTH CARE AND ENTITLEMENTS 

OF THE

COMMITTEE ON OVERSIGHT 

AND GOVERNMENT REFORM 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED THIRTEENTH CONGRESS 

SECOND SESSION 

APRIL 3, 2014 

Serial No. 113–115 

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

( 

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

http://www.house.gov/reform 

(II) 

COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM 

DARRELL E. ISSA, California, Chairman 

JOHN L. MICA, Florida 

MICHAEL R. TURNER, Ohio 

JOHN J. DUNCAN, JR., Tennessee 

PATRICK T. MCHENRY, North Carolina 

JIM JORDAN, Ohio 

JASON CHAFFETZ, Utah 

TIM WALBERG, Michigan 

JAMES LANKFORD, Oklahoma 

JUSTIN AMASH, Michigan 

PAUL A. GOSAR, Arizona 

PATRICK MEEHAN, Pennsylvania 

SCOTT DESJARLAIS, Tennessee 

TREY GOWDY, South Carolina 

BLAKE FARENTHOLD, Texas 

DOC HASTINGS, Washington 

CYNTHIA M. LUMMIS, Wyoming 

ROB WOODALL, Georgia 

THOMAS MASSIE, Kentucky 

DOUG COLLINS, Georgia 

MARK MEADOWS, North Carolina 

KERRY L. BENTIVOLIO, Michigan 

RON DESANTIS, Florida 

ELIJAH E. CUMMINGS, Maryland, Ranking 

Minority Member 

CAROLYN B. MALONEY, New York 

ELEANOR HOLMES NORTON, District of 

Columbia 

JOHN F. TIERNEY, Massachusetts 

WM. LACY CLAY, Missouri 

STEPHEN F. LYNCH, Massachusetts 

JIM COOPER, Tennessee 

GERALD E. CONNOLLY, Virginia 

JACKIE SPEIER, California 

MATTHEW A. CARTWRIGHT, Pennsylvania 

TAMMY DUCKWORTH, Illinois 

ROBIN L. KELLY, Illinois 

DANNY K. DAVIS, Illinois 

PETER WELCH, Vermont 

TONY CARDENAS, California 

STEVEN A. HORSFORD, Nevada 

MICHELLE LUJAN GRISHAM, New Mexico 

Vacancy 

LAWRENCE J. BRADY, Staff Director 

JOHN D. CUADERES, Deputy Staff Director 

STEPHEN CASTOR, General Counsel 

LINDA A. GOOD, Chief Clerk 

DAVID RAPALLO, Minority Staff Director 

SUBCOMMITTEE ON ECONOMIC GROWTH, JOB CREATION AND REGULATORY AFFAIRS

JIM JORDAN, Ohio, Chairman 

JOHN J. DUNCAN Jr., Tennessee 

PATRICK T. MCHENRY, North Carolina 

PAUL GOSAR, Arizona 

PATRICK MEEHAN, Pennsylvania 

SCOTT DESJARLAIS, Tennessee 

DOC HASTINGS, Washington 

CYNTHIA LUMMIS, Wyoming 

DOUG COLLINS, Georgia 

MARK MEADOWS, North Carolina 

KERRY BENTIVOLIO, Michigan 

RON DESANTIS Florida 

MATTHEW A. CARTWRIGHT, Pennsylvania, 

Ranking Minority Member 

TAMMY DUCKWORTH, Illinois 

GERALD E. CONNOLLY, Virginia 

MARK POCAN, Wisconsin 

DANNY K. DAVIS, Illinois 

STEVEN A. HORSFORD, Nevada 

(III) 

SUBCOMMITTEE ON ENERGY POLICY, HEALTH CARE AND ENTITLEMENTS

JAMES LANKFORD, Oklahoma, Chairman 

PATRICK T. MCHENRY, North Carolina 

PAUL GOSAR, Arizona 

JIM JORDAN, Ohio 

JASON CHAFFETZ, Utah 

TIM WALBERG, Michigan 

PATRICK MEEHAN, Pennsylvania 

SCOTT DESJARLAIS, Tennessee 

BLAKE FARENTHOLD, Texas 

DOC HASTINGS, Washington 

ROB WOODALL, Georgia 

THOMAS MASSIE, Kentucky 

JACKIE SPEIER, California, Ranking 

Minority Member 

ELEANOR HOLMES NORTON, District of 

Columbia 

JIM COOPER, Tennessee 

MATTHEW CARTWRIGHT, Pennsylvania 

TAMMY DUCKWORTH, Illinois 

DANNY K. DAVIS, Illinois 

TONY CARDENAS, California 

STEVEN A. HORSFORD, Nevada 

MICHELLE LUJAN GRISHAM, New Mexico 

(V) 

C O N T E N T S 

Page 

Hearing held on April 3, 2014 ................................................................................ 1 

WITNESSES 

Mr. Tom Matsuda, Interim Executive Director, Hawaii Health Insurance 

Exchange 

Oral Statement ................................................................................................. 12 

Written Statement ............................................................................................ 15 

Joshua Sharfstein, M.D. Chairman, Maryland Health Benefit Exchange 

Board, Maryland Health Insurance Exchange 

Oral Statement ................................................................................................. 107 

Written Statement ............................................................................................ 109 

Ms. Jean Yang, Executive Director, Massachusetts Health Insurance Exchange 

Oral Statement ................................................................................................. 119 

Written Statement ............................................................................................ 121 

Mr. Peter Lee, Executive Director, Covered California, California Health Insurance Exchange 

Oral Statement ................................................................................................. 125 

Written Statement ............................................................................................ 127 

Mr. Scott Leitz, Interim Chief Executive Officer, Minnesota Health Insurance 

Exchange 

Oral Statement ................................................................................................. 143 

Written Statement ............................................................................................ 145 

Mr. Greg Van Pelt, Advisor to the Governor, Oregon Health Insurance Exchange 

Oral Statement ................................................................................................. 147 

Written Statement ............................................................................................ 148 

APPENDIX 

Letter from Rep. John Delaney to Dr. Sharfstein, submitted by Chairman 

Jordan ................................................................................................................... 200 

Feb. 23, 2014 Sun Sentinel article by Rep. Deutch, submitted by Rep. 

Cummings ............................................................................................................. 202 

Feb. 21, 2014 Letter to Ms. Carolyn Quattrocki from S. Hamid Fakhraei, 

The Hilltop Institute, Director of Economic Analysis ....................................... 203 

Letter from Gov. John Kitzhaber dated May 15, 2014, answers to questions 

for the record, submitted by Chairman Issa, Chairman Jordan and Chairman Lankford ....................................................................................................... 205 

Responses from the Hawaii Health Connector in response to questions for 

the record from Chairman Jordan and Chairman Lankford ............................ 220 

Response from Dr. Sharfstein to questions for the record, submitted by Chairman Jordan and Chairman Lankford ................................................................. 232 

Response from Ms. Yang, to questions for the record from Chairman Jordan 

and Chairman Lankford ...................................................................................... 243 

Response from Mr. Lee to questions for the from Chairman Jordan and 

Chairman Lankford ............................................................................................. 257 

Response from Mr. Leitz to questions for the from Chairman Jordan and 

Chairman Lankford ............................................................................................. 266 

(1) 

EXAMINING OBAMACARE’S PROBLEM-FILLED 

STATE EXCHANGES 

Thursday, April 3, 2014 

HOUSE OF REPRESENTATIVES

SUBCOMMITTEE ON ECONOMIC GROWTH, JOB CREATION

AND REGULATORY AFFAIRS, JOINT WITH THE

SUBCOMMITTEE ON ENERGY POLICY, HEALTH CARE AND

ENTITLEMENTS, 

COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM, 

Washington, D.C. 

The subcommittee met, pursuant to call, at 10:00 a.m., in Room 

2154, Rayburn House Office Building, Hon. James Lankford [chairman of the House Subcommittee on Energy Policy, Health Care 

and Entitlements] presiding. 

Present from Subcommittee on Economic Growth, Job Creation 

and Regulatory Affairs: Representatives Jordan, DeSantis, 

McHenry, Gosar, Meadows, Bentivolio, Cartwright, and Connolly. 

Present from Subcommittee on Energy Policy, Health Care and 

Entitlements: Representatives Lankford, Gosar, McHenry, Jordan, 

Walberg, Massie, Speier, Norton, Cartwright, and Lujan Grisham. 

Also Present: Representatives Issa, Cummings, Maloney, and 

Hanabusa. 

Staff Present: Brian Blase, Majority Professional Staff Member; 

Molly Boyl, Majority Deputy General Counsel and Parliamentarian; Caitlin Carroll, Majority Press Secretary; John Cuaderes, 

Majority Deputy Staff Director; Adam P. Fromm, Majority Director 

of Member Services and Committee Operations; Linda Good, Majority Chief Clerk; Meinan Goto, Majority Professional Staff Member; 

Christopher Hixon, Majority Chief Counsel of Oversight; Michael 

R. Kiko, Majority Legislative Assistant; Mark D. Marin, Majority 

Deputy Staff Director for Oversight; Emily Martin, Majority Counsel; Laura L. Rush, Majority Deputy Chief Clerk; Jessica Seale, 

Majority Digital Director; Matthew Tallmer, Majority Investigator; 

Sarah Vance, Majority Assistant Clerk; Tamara Alexander, Minority Counsel; Jedd Bellman, Minority Counsel; Aryele Bradford, Minority Press Secretary; Susanne Sachsman Grooms, Minority Deputy Staff Director/Chief Counsel; Jennifer Hoffman, Minority Communications Director; Elisa LaNier, Minority Director of Operations; Una Lee, Minority Counsel; Juan McCullum, Minority 

Clerk; Suzanne Owen, Minority Senior Policy Advisor; Mark Stephenson, Minority Director of Legislation; and Cecelia Thomas, Minority Counsel. 

Mr. LANKFORD. The committee will come to order. 

2 

I would like to begin this hearing by stating the Oversight Committee’s mission statement. 

We exist to secure two fundamental principles: first, Americans 

have the right to know the money Washington takes from them is 

well spent and, second, Americans deserve an efficient, effective 

Government that works for them. Our duty on the Oversight and 

Government Reform Committee is to protect these rights. 

Our solemn responsibility is to hold Government accountable to 

taxpayers, because taxpayers have the right to know what they will 

get from their Government. We will work tirelessly in partnership 

with citizen watchdogs to deliver the facts to the American people 

and bring genuine reform to the Federal bureaucracy. This is the 

mission of the Oversight and Government Reform Committee. 

Good morning, everyone. This is a conversation today about the 

Affordable Health Care Act and about, specifically, the State exchanges. Four years ago the President’s health care law was 

passed. In selling his law to the American people, the President 

made several promises. He promised the people they would be able 

to keep the coverage and doctors they liked; he promised the premiums for the average family would go to about $2,500. 

Four years later reality is setting in. Over 5 million Americans 

have received cancellation notices from their insurance companies 

and millions more have found out the doctors they liked were no 

longer covered by that plan. Rather than premiums going down, 

premiums for family has increased in many areas of the Country 

since passage of the law. 

Just this week, the Bureau of Economic Analysis reported that 

health care spending growth hit a 10-year high. We were also told 

that ObamaCare would be good for the Nation’s economy. The 

truth is that in order to minimize the negative exposure to 

ObamaCare’s costly mandates and taxes, employers were forced to 

lay off some workers and reduce some full-time workers to parttime. 

The Congressional Budget Office estimated that within a few 

years ObamaCare would reduce employment and activities in employment by 2.5 million full-time job equivalents. ObamaCare dramatically increases Federal Government spending at a time when 

the Federal Government continues to run a massive deficit. According to the CBO, ObamaCare spends nearly $2 trillion over th next 

decade. To pay for all this, there are 20 new taxes and significant 

cuts to the Medicare Advantage program. 

Despite the Federal Government spending all this money, more 

than 80 percent of the people who were uninsured before 

ObamaCare took effect are still uninsured today. 

In addition to the negative economic effects of the law, the Administration has implemented extra legal fashion 21 different parts 

of the law changes. For example, in response to public anger over 

the President’s broken promise about health insurance, the Administration unilaterally allowed insurers to renew non-grandfathered 

policies for an additional year. Last month, the Administration extended this policy until after the 2016 election. This change by the 

Administration is just part of a pattern of extra legal actions aimed 

at insulating the law’s supporters from unpopular and inconvenient 

parts of the law at the expense of taxpayers. 

3 

While I welcome policy changes that reduce the burden of 

ObamaCare’s costly mandates and give consumers greater choice, 

the Administration set a dangerous precedent by going around 

Congress to rewrite parts of the law that are politically troubling. 

The Obama Administration’s rewriting of the law has introduced 

even greater uncertainty in the health insurance market and may 

lead to higher premiums in 2015 and beyond. Recently, WellPoint, 

one of the largest insurers participating in ObamaCare’s exchanges, predicted double-digit premium increases in 2015. Just 

this week, analysis at Moody’s predicted that premiums will continue to increase because of the way the Administration has carried 

out the law. 

While there are many issues we can and will explore about 

ObamaCare in the days ahead, the topics of today’s hearing are 

State exchanges. Representatives from the States of Hawaii, Maryland, Massachusetts, Minnesota, Oregon, and California are here 

today. Residents in these States were forced to use an error-ridden 

Website. Many people who thought they had successfully enrolled 

found out that the insurance plan they had chosen had not received 

any enrollment information from the exchange. 

State residents were also working through the same issues that 

are on the Federal side. And while States have worked incredibly 

hard, and we are grateful to your service to the people of the States 

that you represent, you are also struggling with some of the Federal regulations and some of the delays that are coming down as 

well. 

Multiple problems with the ObamaCare Websites built by different States and by the different exchanges raise several questions: How is it possible, after three and a half years and spending 

hundreds of millions of dollars of taxpayer funds, that so many different exchanges had an incredibly difficult time putting together 

a Website? Second, what was the effective delay in changing guidance from the Obama Administration on the construction of the 

State exchanges? Third, where was Federal oversight of the 

projects? How could so many State exchanges have such a difficulty 

all at the same time? And, finally, how many more taxpayer dollars 

will be requested to bail out any troubled State exchanges in the 

years ahead? 

Congress has an important oversight role: to ensure that taxpayer funds are spent wisely and effectively. I welcome the witnesses here and I really do appreciate you coming, being a part of 

this conversation. You have things to be able to contribute to this 

conversation that we cannot know until we get a chance to be able 

to hear from you, so glad to be able to have that conversation with 

you. 

I now recognize the distinguished ranking member, the 

gentlelady from California, Ms. Speier, for her opening statement. 

Ms. SPEIER. Thank you, Mr. Chairman and to all the witnesses 

who have traveled long distances to be with us today. 

Now that we have surpassed the goal established two and a half 

years ago for enrollment, with more than 7 million Americans enrolled in the ACA, Republicans are as determined today as ever to 

try and rip it apart. Seven million Americans must be wrong. 

4 

The reality is that the latest enrollment numbers prove that 

there is a genuine demand amongst the American people for affordable health care. This 7 million doesn’t even include enrollment 

surges that took place in the 15 States, including California, running their own exchanges. 

Republicans today won’t be focusing on these successes, or even 

conceding that their predictions thus far have been as reliable as 

a fortune-teller at a carnival. Many Republicans have voiced their 

certainty that the ACA would fail. They said that the 7 million goal 

was impossible. Several months ago, Chairman Issa said, ‘‘It is 

time for the President to finally acknowledge ObamaCare isn’t 

working and to delay the law in fairness to families and individuals.’’ 

Today is the committee’s twenty-sixth hearing on the ACA, and 

this week, on the floor, we voted for the fifty-second time to repeal 

it. 

Like all historic and transformative pieces of legislation, the rollout of the ACA has been challenging and far from smooth. But Republicans have contended from the beginning that there is no 

meaningful role for the Federal Government in health care. 

Let’s remember, though, how the market has handled health care 

in the past. The market allowed insurers to rescind your coverage 

if you got sick and deny you coverage if you had a preexisting condition. The unregulated market also allowed insurers to charge 

women more just for being women. 

Let’s all remember how the market determined premiums. Before 

the ACA, with the exception of the recession, premiums grew by 

double digits year after year. Since the law has gone into effect, we 

have seen dramatic declines in the rise of premiums. This is the 

real story of the impact of the ACA, and I ask you to look at this 

chart. This is profound. And if anything speaks to the importance 

of the ACA, it is that premiums have declined dramatically as a 

result of this effort. 

I agree with my colleagues on the other side that the ACA should 

be the subject of scrutiny by Congress and the oversight of this 

committee, but the consistently partisan and one-sided approach 

has been all about tearing the program down, not fixing it. The 

preparation for this hearing only provided the latest example of 

how this committee seeks to undermine the efforts of States and 

the Administration to implement the law. 

Today we will hear testimony from Ms. Jean Yang, Executive Director of the Massachusetts Health Insurance Exchange. Massachusetts has experienced its own set of Website issues and requested to send Ms. Yang’s highly qualified colleague to this hearing instead of Ms. Yang so that she could stay in Massachusetts 

and continue her work in fixing the Website. However, upon hearing about the change in witnesses, the chairman of the full committee threatened to issue a subpoena. 

I would like to apologize on behalf of this committee to you, Ms. 

Yang, and to the people of Massachusetts for the actions to bully 

you into testifying today. 

What this committee should be focusing on is what we have to 

do in the future to contain costs and how we can share the best 

practices by successful States like California, Connecticut, KenVerDate Aug 31 2005 12:17 Jul 07, 2014 Jkt 000000 PO 00000 Frm 00010 Fmt 6633 Sfmt 6633 C:\DOCS\88493.XXX APRIL
5 

tucky, and New York with the States that are still struggling. A 

truly balanced hearing would have looked at more than just one 

story of State-based exchange success. If someone from Kentucky’s 

exchange had been invited to testify, I am sure they would have 

wanted to tell the committee that a preliminary analysis found 

that approximately 75 percent of their enrollees were previously 

uninsured before signing up through the exchange, and that 49 

percent of their enrollees are under the age of 35, or that by the 

end of the enrollment period over 370,000 Kentucky citizens now 

have health insurance that didn’t have it before. 

To that end, I am so glad to have Peter Lee, the Executive Director of the California Exchange, Covered California, here to testify 

as Minority witness and to bring some good news and balance to 

this discussion. 

At the end of March 31st, over 1.2 million Californians have 

signed up for private health insurance through the exchange. This 

number greatly surpassed California’s baseline projection of 

580,000 and the enhanced projection of 830,000 for the entire open 

enrollment period. California’s Medicaid Program, Medi-Cal, enrolled approximately 1.93 million, and an additional 800,000 were 

found likely eligible. This brings the total of all Californians enrolled through Medi-Cal and the exchange to almost 4 million people, and insurance companies in California are reporting that 85 

percent of the enrollees have paid their first month’s premium. 

California has refused to accept the exchange’s current success as 

the now continually updating policies such as efforts to increase enrollment in the Latino community. 

Mr. Lee, I look forward to hearing more from you today about the 

improvements that California plans to make and how you can help 

other States. 

Mr. Chairman, as you know, I value our relationship. We have 

common interests that we have discussed many times, and I know 

we can put our heads together and come up with new hearing topics that conduct real oversight. For example, I sent a letter to 

Chairman Issa yesterday requesting that the committee investigate 

and hold a hearing on the alleged Medicare, Medicaid, and Tricare 

fraud perpetrated by Health Management Associates, a for-profit 

hospital chain that allegedly ripped off taxpayers for more than 

$600 million. That should be the work of this committee. 

I look forward to hearing the testimony of all the witnesses 

present today, and thank you for being here. 

Mr. LANKFORD. I ask unanimous consent that our colleague from 

Hawaii, Ms. Hanabusa be allowed to participate in today’s hearing. 

Without objection, so ordered. 

I would like to recognize the chairman on the Subcommittee on 

Economic Growth, Mr. Jordan, for his opening statement. 

Mr. JORDAN. Thank you, Mr. Chairman. I would, if I could, just 

ask unanimous consent my opening statement be put in the record. 

Mr. LANKFORD. Without objection. 

Mr. JORDAN. We have several witnesses. I want to thank you for 

having this hearing. 

Let’s just remember all the false claims that have been made 

about the Affordable Health Care Act. I think sometimes it is good 

just to go back and put some context on this. 

6 

If you like your plan, you can keep it. False. 

If you like your doctors, you can keep them. False. 

Premiums will go down. False. 

Premiums will go down an average of $2,500, the Administration 

said. False. 

The Website will work. False. 

The Website is secure. False. 

We have had countless hearings to dispel all these claims made 

by the Administration and now, today, Mr. Chairman, we are going 

to hear about the dismal performance of the State exchanges, again 

underscoring how poorly this law has operated, how bad it is, and 

why we need to change it. 

I just want to thank you for putting this hearing together. I look 

forward to hearing from our witnesses. More importantly, I look 

forward to asking questions of our witnesses about these six State 

exchanges and the overall impact this law has had on the American people. 

With that, I would yield back. 

Mr. LANKFORD. Thank you. 

I recognize the ranking member of the Subcommittee on Economic Growth, Mr. Cartwright, for an opening statement. 

Mr. CARTWRIGHT. Thank you, Chairman Lankford, and Chairman Jordan as well. 

This marks the twenty-sixth hearing this committee has held on 

the ACA. Over the course of 25 hearings you would think that 

every member on this committee on both sides of the aisle would 

have been working tirelessly to guarantee that each and every one 

of their constituents had access to affordable health care. You 

would also think that these hearings would have consisted of a bipartisan effort to find ways to fix Healthcare.gov and that actual 

oversight would eventually take place. This is the Oversight Committee. 

It saddens me to say that in 25 hearings none of these things actually happened, and I am afraid that today isn’t going to be any 

different. In this committee, and throughout this Congress, health 

care has become a divisive, partisan issue. Instead of offering solutions to ensure that constituents have access to universal health 

care, this House has, instead, held 54 votes to repeal the Affordable 

Health Care Act. Some of my colleagues have also run misleading 

and oftentimes outright false advertisements designed to frighten 

their constituents from signing up on the exchanges, as opposed to 

educating them on the realities of the ACA. 

I am very proud that congressional Democrats have held more 

than 400 events in their districts at home in an effort to educate 

constituencies on the ACA. I have had five of them myself in my 

district. I would also like to commend my fellow Democrats for all 

their efforts in ensuring that their constituents are afforded this 

same kind of information. 

This hearing has been called in order to examine the State 

health insurance exchanges under the ACA. California has one of 

the most successful State exchanges, with more than a million individuals having signed up for private health insurance plans 

through its exchange. Other States such as New York, Rhode Island, and Connecticut have also experienced success with impleVerDate Aug 31 2005 12:17 Jul 07, 2014 Jkt 000000 PO 00000 Frm 00012 Fmt 6633 Sfmt 6633 C:\DOCS\88493.XXX APRIL
7 

menting their State exchanges. I am very grateful that Mr. Peter 

Lee is here with us today to speak regarding California’s State exchange and provide much needed balance to this hearing today. 

I do wish that New York, Rhode Island, and Connecticut were 

also included today so we could hear about their best practices. I 

also wish that Pennsylvania had its own State exchange so that my 

constituents could have had the same tailored access that these 

States have. While I wish the governor of Pennsylvania had originally accepted the Administration’s generous offer for Medicaid expansion, it is my hope that the two sides can still agree on a plan 

and expand Medicaid for the more than 520,000 Pennsylvanians 

that would benefit from that kind of expansion. 

The high demand for the quality affordable health care available 

under the Affordable Health Care Act is real; it is evident by the 

recently released enrollment figures showing 7.1 million people 

have signed up for the private health insurance plans using both 

the Federal and State exchanges, beating both the Administration’s 

own goal and popular expectations. If the market demand isn’t 

enough evidence the health care bill is more popular than ever, 

about half of all Americans now support the law, despite the misinformation being disseminated over the last four years. 

And I want to say I am glad that many, many more people in 

places like Oregon, Maryland, California, Massachusetts, Hawaii, 

and Minnesota have health insurance than they did prior to October 1, 2013, and I am interested in hearing about how these States 

did this despite glitches with the rollout in each of those States. 

And I look forward to hearing about the best practices from the 

State of California, from which I think we can all learn a lot. 

I welcome our witnesses and thank them for taking the time to 

be with us today. 

I yield back, Mr. Chairman. 

Mr. LANKFORD. I would like to recognize the chairman of the full 

committee, Mr. Issa, for his opening statement or any statement 

that he would like to make. 

Mr. ISSA. Thank you, Mr. Chairman. Congressman Lankford, I 

want to thank you for the work you have done on the details of the 

flaws in Healthcare.gov and in the overall legislation. 

I ask unanimous consent that my entire opening statement be 

placed in the record. 

Mr. LANKFORD. Without objection. 

Mr. ISSA. Mr. Lee, I welcome you here. It is particularly important, as a Californian, to have California represented here because 

both the best and the worst, perhaps, will be seen in looking at the 

largest State in the Union. 

We often turn divisive, partisan legislation into divisive, partisan 

oversight. Mr. Cartwright, Ms. Speier have made that clear by 

talking about Republicans this, Republicans that. I have called or 

authorized every one of those many hearings they alluded to, and 

I am proud we did it and I am only sorry we didn’t do more and 

sooner. Ultimately, about half of America’s Federal spending will 

be related to health care, Medicare, Medicaid, Medicaid do eligibles 

for our seniors, and obviously the growth related to subsidizing the 

Affordable Health Care Act represent the largest single bulk of the 

budget today, and that over a trillion dollars is the area in which 

8 

we have no real control over the rise in those costs unless we implement changes that drive the cost of delivery down. 

Long before President Obama became a Senator we had problems 

with health care. I think Republicans and Democrats need to recognize that Medicare and Medicaid have been part of the problem, 

not just part of the solution. 

Just a few days ago, by voice vote, almost a cowardly act in many 

ways, we did what was called the doc fix. The doc fix is based on 

a decade, well, 1997, I guess, old mandate that somehow we were 

going to lower costs through some congressional magic and fiat. 

Every year we recognize that it doesn’t work and that if we don’t 

suddenly come up with billions of dollars of new money, our doctors 

will be underpaid by, now, about 25 percent of what apparently we 

believe is fair. 

And I use that as an example of a Clinton era Republican House 

and Senate attempt to fix health care, and I do it because this committee has a solemn responsibility to deal in real facts, in real 

costs, and in real savings. That has not been the case for people 

on both sides of the aisle for decades. 

The Affordable Health Care Act is well-intended, I believe, but 

it has had many flaws. One of them that we will see today is fairly 

straightforward: instead of doing a single Website in which everyone fed in, spending $700 million, $800 million, $1 billion, $1.5 billion, $2 billion, some enormous amount of money to create a network, what we did is we issued out large grants. In the case of 

California, the number I have in front of me is $1,065,212,950 in 

grants. In the case of Hawaii I am told it is about $200 million just 

to establish the Website. 

Let’s understand something here today. Whether you voted for 

the Affordable Health Care Act or you didn’t, redundant programs 

throughout most of 50 States that issued hundreds of millions of 

dollars per State to do the same thing again and again, sometimes 

with success or, in the case of Maryland, I believe, today some 

would say failure, in the Website. That alone was billions of dollars 

of unreasonable, unnecessary, redundant in the planning. For the 

States to all come together and use a common platform and common software was common sense. To divide it into contracts in 

which each State may or may not have chosen the same good vendor or, in some cases, the same bad vendor that the Affordable 

Health Care Act federally used is self-evident today. 

Let’s get passed the petty arguing about who voted for it or 

against it, whether we voted to repeal it or change it. Republicans 

and Democratic members are in fact, today, regularly talking about 

necessary change. I know the 7 million figure is big as of yesterday, 

and I know, as a Republican, I am told to say that very clearly that 

figure represents a great many people who lost their plans and, in 

fact, simply picked up and got the 7 million. Mr. Lee will undoubtedly, quite frankly, have to tell us that because California mandated to get onto the exchange, that you get off of programs that 

was necessary and deliberate cancellation of all kinds of programs 

in California because vendors had to choose whether to keep their 

old program or participate in the exchange. I am not holding anyone accountable; it probably seemed like a good idea at the time. 

9 

But the fact is we have not driven down the cost of health care to 

the individual except when the taxpayer picks up the tab. 

So all of us today should begin looking not just at mistakes like 

thirty-some different Websites all paid for with Federal dollars, all 

essentially asking many of the same vendors to simply duplicate 

the software, but bill us twice, three times, four times for reinventing it. But we also should look at the question of, since we 

have not succeeded in the past in driving down the cost of health 

care through CMS’s efforts, but, rather, repeatedly have simply 

said we will pay less and cost-shift as the Affordable Health Care 

Act is implemented and more and more people are under a federally subsidized program, where do we cost-shift to? We are running 

out of people we can cost-shift to, which means, by definition, everything we do will be something we have to pay for. 

Mr. Chairman, this was long and I apologize for going over, but 

I, like you, are passionate about efficiency; and not just the Affordable Health Care Act, but all the Federal spending has to really be 

looked at. 

Ms. Speier, I received your letter. I have taken note of the fact 

that corruption by vendors using Federal dollars is rampant and I 

believe that we do need to go after it, and I look forward to holding 

a hearing in which we look at both sides, vendors who sought to 

enrich themselves by getting more than they deserved and Government oversight agencies that let it happen until it piled up to hundreds of millions of dollars. 

Mr. Cartwright, I want to thank you for something you did that 

you may have forgotten. You voted for FITARA. You voted on a bipartisan basis for a major change in how we procure IT. And the 

Senate, Senator Udall has a companion bill. When that becomes 

passed, we will become more efficient as a result of our oversight 

and legislation created on a bipartisan basis in this committee. 

So I know we started off on a partisan basis. Hopefully, we can 

switch the tone to realizing that we are all living with increasing 

health care costs, and whether we voted for affordable care or not, 

we have a major role to try to drive down the future increases in 

health care if we are going to, in fact, be competitive around the 

world in commerce. 

So I thank you. 

Mr. Chairman, I thank you for your indulgence. Yield back. 

Mr. LANKFORD. Thank you 

I now recognize the ranking member of the full committee, Mr. 

Cummings, for his opening statement. Also, if you would please 

take time to introduce Mr. Lee of California, as well. I am sorry, 

of Maryland. Sorry, you are a representative from Maryland. Apologize. 

Mr. CUMMINGS. You just moved me clear across the Country. 

Mr. LANKFORD. I know. That is quite a shift. Sorry. I just shifted 

your time zones. I apologize. 

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

Today is April the 3rd, just three days after the deadline for 

Americans to sign up for health insurance under the Affordable 

Health Care Act. A lot has happened in the past six months since 

the Federal and State exchanges opened for business. It has not alVerDate Aug 31 2005 12:17 Jul 07, 2014 Jkt 000000 PO 00000 Frm 00015 Fmt 6633 Sfmt 6633 C:\DOCS\88493.XXX APRIL
10 

ways been pretty, but we should take a moment to reflect on what 

we have accomplished. 

More than 7 million residents of our States have signed up for 

affordable health care. Millions of people who could not afford 

health insurance and were one accident or illness away from financial ruin now have health insurance. This is very significant. This 

is something that we all should be proud of. 

And that is not all. We hear talk about what it didn’t do, but 

under the Affordable Health Care Act insurance companies are no 

longer allowed to discriminate against people with cancer, diabetes, 

or other preexisting conditions. They are no longer allowed to discriminate against women. That is happening now. Millions of our 

residents receive free preventative care so they can stay well. We 

all know that it is cheaper to keep somebody well than to treat 

them when they are sick, if you want to talk about driving down 

the cost of health care. Millions of kids can stay on their parents’ 

plan until they are 26, and billions of dollars in rebate checks have 

been sent to consumers across the Country. That has happened and 

it is happening now. 

Ladies and gentlemen, put simply, the Affordable Health Care 

Act saves lives and it prevents people, from going through pain, 

and it allows people to live longer, like the gentleman who is probably watching us right now with colon cancer, knowing that he has 

a way to be treated and he will be able to walk his daughter down 

the aisle; or the person who just wants to survive long enough to 

see their child graduate from high school. That is what the Affordable Health Care Act is all about. 

Sometimes I think we get so caught up in the problems that we 

are going through that we forget the big picture. Emerson said it 

best, he said do not be pushed around by your fears and your problems; be led by your hopes and your dreams. That is what this is 

all about, hopes and dreams. 

So to the witnesses here today and to the State and Federal employees who are working tirelessly to implement the law, I want to 

say thank you. I look at Dr. Sharfstein of Maryland, the head of 

our health department. This is a man who has given his blood, his 

sweat, and his tears trying to make life better for people when he 

was the commissioner in Baltimore, and now with our State. And 

I can probably say that if I knew all the people there, I know that 

you all are doing the same thing. And you don’t do this for the 

money; you do it because it feeds your souls. You do it because you 

want to make a difference. You do it because you want to affect 

generations yet unborn. And that is what we are all about, we 

should be about, making a difference so that people can live the 

best lives that they can. 

The road we took to get here today was rocky for the Federal 

Government. It has also been challenging for some States, including my home State of Maryland. I cannot fully express how frustrated I was with the troubled rollout of the Maryland Health Connection. In my State, as in many of yours, people have a desperate 

need for quality, affordable health care. We needed the system to 

work. Let me say it again, we needed the system to work. Lives 

depended upon it. And when it did not, unnecessary obstacles were 

put in the way, which is completely unacceptable. 

11 

Now, let me say this. Sometimes you have contractors that advertise more than they can produce, so they sell you a bill of goods. 

Maybe those are the folks that we need to be looking at. But let’s 

be clear. This is not just about a Website. It is not just about a 

Website. This is about making a difference for people so that they 

can be the best that they can be and be all that God meant for 

them to be. 

The answer to the problems is not to decimate the Affordable 

Health Care Act. The solution is not to eliminate health care for 

millions of people, to gut the funding for the ACA, or to return to 

the days when insurance companies could discriminate against us 

based on our medical conditions. 

I have said it before and I will say it again, we are better than 

that, to let insurance companies do that to us. The remedy certainly is not to try to scare people away from enrolling in health 

care they have a right to under the law. When you scare them 

away from enrolling, you have scared them away from having 

health care, from having insurance for being able to take care of 

their child when the child gets sick or prevent the child from getting sick. We are better than that. 

Unfortunately, our Republican friends have voted more than 50 

times to repeal, de-fund, and undermine the Affordable Health 

Care Act. And my friend Mr. Issa, the chairman of the committee, 

I agree with him, we need to move not to common ground, but to 

higher ground, what this Nation is all about. Higher ground, where 

we come together to try to figure out what is wrong and correct it 

and move forward. 

So when history is written, when that man is able to walk down 

that aisle with his daughter, when that mother is able to see her 

child graduate from college, when that person lives long enough to 

see their first grandchild born, they are not going to be worried 

about whether a Website failed. They are not even going to be talking about that. They may not even know that it was the Affordable 

Health Care Act that saved them and gave them a life. All that 

will matter to them is they had an opportunity to live and live in 

dignity and have a moment of happiness. 

So I am hoping that, as we move forward, since this is the law, 

by the way, that we move forward to make the law better, and not 

try to destroy it. And the only reason I mention these past efforts 

with regard to the numerous hearings is because I have not seen 

in these hearings one effort to improve the law, not one. If we could 

move to that, then we could move to higher ground. 

With that, I yield back. 

Mr. LANKFORD. Members will have seven days to submit opening 

statements for the record. 

I would like to recognize our panel. 

Mr. Cummings, would you like to introduce your guest from 

Maryland, as well? 

Mr. CUMMINGS. Yes. 

Dr. Sharfstein is the head of our health department in Maryland. 

As I said before, he has also served—by the way, he was a staff 

member on this committee, Mr. Chairman, some years back. Then 

he came to Baltimore and he was our commissioner of health there, 

where he brought all kinds of innovative projects to Baltimore, and 

12 

now he is head of our health department for the State of Maryland; 

and I am very pleased to have him. 

Mr. LANKFORD. Ms. Speier, would you like to introduce anyone? 

Ms. SPEIER. I am delighted to introduce Mr. Peter Lee, who is 

the Executive Director of Covered California, who has had a storied 

career in health care both in the private and public sector, and formerly was the Deputy Director of the Center for Medicare and 

Medicaid Innovation at CMS, among many other places. 

Welcome. We are very glad you are here. 

Mr. LANKFORD. Thank you. 

Mr. Matsuda, you definitely have the longest time zone change 

here of any of the folks that are here. We are glad you are here. 

He is the Interim Executive Director of the Hawaii Health Insurance Exchange. 

Ms. Jean Yang is the Executive Director of the Massachusetts 

Health Insurance Exchange. 

Mr. Scott Leitz is the Interim Chief Executive Officer of the Minnesota Health Insurance Exchange. 

Mr. Greg Van Pelt is the Advisor to the Governor of the Oregon 

Health Insurance Exchange. 

Pursuant to committee rules, all witnesses are sworn in before 

they testify, so if you would please stand and raise your right hand. 

Do you solemnly swear or affirm that the testimony you are 

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

the truth, so help you, God? 

[Witnesses respond in the affirmative.] 

Mr. LANKFORD. Thank you. You may be seated. 

Let the record reflect all the witnesses answered in the affirmative. 

In order to allow time for discussion, I ask you to be able to limit 

your testimony to five minutes. Your entire written statement, 

which all of you have submitted, will be a part of the permanent 

record as well. 

Mr. Matsuda, you are batting off the beginning here, to do a little spring baseball conversation there. So you are first up. If you 

press the talk button, we would be glad to be able to receive your 

testimony for five minutes. 

WITNESS STATEMENTS 

STATEMENT OF TOM MATSUDA 

Mr. MATSUDA. Thank you, Chairman, ranking members, and 

members of the subcommittees. My name is Tom Matsuda, Interim 

Executive Director of the Hawaii Health Connector, speaking on 

behalf of the Connector and its board of directors. 

Hawaii has long been a leader to ensure that our residents have 

access to quality, affordable health insurance. In 1974 Hawaii enacted a groundbreaking State law, the Hawaii Prepaid Health Care 

Act. This law requires that most employers in Hawaii provide 

health care coverage to employees who work more than 20 hours 

per week for at least four consecutive weeks. 

Hawaii’s Prepaid Health Care Act requirements are generally 

stricter than those of the Federal Affordable Health Care Act. As 

a result, Hawaii has a low uninsured rate, estimated at about 8 

13 

percent, or 100,000 individuals. Because the State law is so strongly supported by the people of Hawaii, the Aloha State authorized 

the establishment of a State-based marketplace to harmonize the 

ACA with the Hawaii Prepaid Health Care Act. 

My written testimony provides detail about the Connector and I 

would like to focus on some specific issues. 

First of all, enrollment. As of March 31st, 2014, we have 7,596 

individuals enrolled in commercial plans through the individual 

marketplace, 265 people enrolled through the SHOP small employer marketplace, and 24,641 completed applications in our system. 

The Connector does not handle Medicaid eligibility or enrollment 

for the Medicaid population; that is handled through the Department of Human Services, or DHS. DHS had over 28,800 Medicaid 

enrollments from last October through February this year, for a 

total of over 36,661 enrollments across the entire Hawaii marketplace. 

We launched our online marketplace on October 15th and accepted initial application forms between October 1st and 15th. The system has been operating since then, but it was very difficult to use 

at first. As of now, we have made significant improvements. The 

system is better today than it was back in October. Our system is 

working from end-to-end, but more improvements can be made. 

Sustainability. As a State-based marketplace, we must be selfsustaining by January 1st, 2015. Last year, the Connector board 

approved a 2 percent premium assessment for plans sold on the 

Connector. Our board is now engaged in a sustainability planning 

process. The key is to reduce operating expenses while 

supplementing enrollment, especially in the SHOP exchange. The 

Federal and State decisions to give small employers the option to 

remain with their existing insurance plans through 2016 have reduced the volume of participants in SHOP. 

Hawaii has received four Federal grant awards. While Hawaii is 

a small State, we are subject to the same Federal requirements as 

all other States to establish the infrastructure to operate these 

State-based marketplaces. The establishment costs will be comparable from State to State to ensure that the structural components of the marketplace are compliant and secure. Our small population and low uninsured rate mean that Hawaii has a smaller 

market to support our operating costs. As of December 31st, 2013, 

the Connector has spent about $57 million of the total $204 million 

in Federal grant monies awarded to us and we have an operating 

system. 

For our priorities going forward, we have roughly 11,000 incomplete applications. These individuals’ enrollment is not yet complete. We have increased staff to complete this process. We are also 

working on extending our outreach into island communities that 

are underserved to help educate these populations about the services available to them. 

On behalf of the Hawaii Health Connector, I appreciate the opportunity to discuss these issues with you today. We have much 

left to accomplish, but we believe in the mission of the Connector 

and are fully committed to contributing our part in Hawaii’s long 

14 

history of providing access to affordable, quality health care coverage to our residents. Thank you. 

[Prepared statement of Mr. Matsuda follows:] 

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Mr. LANKFORD. Thank you. 

Mr. Sharfstein. 

STATEMENT OF JOSHUA SHARFSTEIN, M.D. 

Dr. SHARFSTEIN. Thank you, Chairman Lankford, Chairman Jordan, Ranking Member Speier, Ranking Member Cartwright, and 

other members of the committee. I appreciate the opportunity to 

testify today. It is true that I used to staff this committee, I used 

to be one of the people sitting along the back wall. I think I can 

say that every staffer wonders what it would be like to sit on this 

side of the microphone, and after the hearing I will be able to tell 

them. 

As has been widely reported, Maryland has faced considerable IT 

challenges in establishing our State-based exchange. On October 

1st the system barely worked at all. For weeks we struggled with 

a range of software and hardware problems. But we did not give 

up. We now expect to hit our enrollment goal. In fact, we expect 

to exceed it by 10 percent or more. We expect the number of enrollments in qualified health plans to come within 10 percent of what 

was predicted by independent experts and to exceed our expectations for Medicaid enrollments. By the time the dust settles, we 

could see enrollments more than 300,000 in Maryland. 

Maryland’s story includes decisions we wish we could make 

again, failures by multiple vendors, and too many IT frustrations 

to count. But Maryland’s story is also about an exchange that is 

a lot more than a Website; it is about a State that is battling back 

and is looking towards the future. I have submitted detailed written testimony, so I will just make some key points. 

First, the exchange is a lot more than the Website. It includes 

our close partnership with more than 2,000 brokers; it includes a 

very competitive market with four carriers offering 45 plans; we 

have some of the most competitive insurance rates in the Country, 

including dental plans; we have a Website that has a physician at 

work for each carrier and a community-based Navigator program 

that includes more than 30 grassroots organizations. 

Second, we did face serious Website problems. We made a major 

misjudgment, in retrospect, initially in adopting a strategy of trying to buy commercial off-the-shelf software that could be configured for the purpose of the Affordable Health Care Act, instead of 

building something specifically for this purpose. The products that 

were advertised as being ready actually were defective and deficient. This caused immense frustration for consumers and at certain points made us wonder whether anyone would be able to enroll. 

Third, rather than give up in the face of these IT challenges, 

Maryland tackled the problem head-on. Changes included new 

leadership, including when the governor asked the secretary for IT 

to step aside from her job and be the single leader for all IT development; hiring a general contractor, Optum/QSSI, the same company that helped fix the Federal Healthcare.gov; implementing 

hundreds of critical IT fixes; collaborating closely with carriers to 

allow for special types of enrollment for people who had trouble on 

the Website; manual workarounds which allowed us to process certain types of eligibility by hand; elbow grease by the gallon and the 

108 

incredible tough work of hundreds of consumer assistance workers; 

and, finally, a strong finish, with as much enrollment in the last 

two days as in the first 10 weeks or so. 

As a result, as I said before, we expect not only to meet, but to 

exceed our enrollment goals. Quality and affordable health coverage is providing peace of mind and access to lifesaving care to 

families across Maryland, and is also going to reduce the hidden 

tax that all of us pay for poorly managed and uncompensated care 

under our unique system in Maryland of rate-setting for hospitals, 

which not only, I think, to Chairman Issa’s point, is going to reduce 

the costs for uncompensated care within that system, but also we 

are using across all payers with no cost-shifting to address the fundamental challenge of cost in health care. 

Let me finally say talk to next steps. In addition to the significant work and the hundreds of fixes that it took to get us to the 

point where we could exceed our enrollment goals, our secretary of 

information technology has led a process of figuring out the future 

for the Website, and after an extensive analysis the board, this 

week, voted to leverage the Connecticut IT solution in order to upgrade our Website. This is a model that has proven very effective 

and allows us to use something that works very well in time for 

the second open enrollment period. 

As the chair of the board of the Maryland Health Benefit Exchange, I deeply regret the frustration that many Marylanders 

have experienced. I am also proud of the efforts of so many who 

have worked tirelessly to overcome the IT challenges and help their 

friends, neighbors, and fellow citizens gain access to affordable and 

quality health coverage. 

Thank you for the opportunity to testify and I look forward to 

your questions. 

[Prepared statement of Dr. Sharfstein follows:] 

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Mr. LANKFORD. Thank you. 

Ms. Yang. 

STATEMENT OF JEAN YANG 

Ms. YANG. Thank you, Mr. Chairman. Chairman Jordan, Chairman Lankford, Ranking Member Cartwright, Ranking Member 

Speier, and members of the subcommittees, good morning. Thank 

you for the opportunity to testify about our experience implementing the Affordable Health Care Act in Massachusetts. 

As you know, Massachusetts is very familiar with the framework 

of the ACA. In 2006, former Governor Mitt Romney worked with 

our State legislature to fashion an approach to expanding health 

coverage that drew ideas from both ends of the political spectrum. 

Once he took office in 2007, Governor Deval Patrick worked to 

bring the statutory framework to life, in close collaboration with 

our State’s legislature, our health care providers, our business and 

labor leaders, our insurers, our consumer advocates, and countless 

others. 

We are extraordinarily proud of the results we have achieved together over the past eight years. Virtually all of the Commonwealth residents are now ensured, at 97 percent. Ninety-one percent of our residents report having access to a primary care physician and 88 percent having seen their physician in the previous 12 

months. On a whole host of measures, we are healthier. 

At the same time, more employers are offering coverage and our 

State’s budgets have been consistently balanced. 

One of the most important lessons we have learned in the years 

since 2007 was that health care reform takes time. We refined our 

plan as we learned new lessons in collaboration with our partners, 

including the Bush and Obama Administrations. It has not always 

been easy, but we kept our eye on the goal of getting people adequately covered. As Governor Patrick has remarked, we learned 

early that health care is not a website. 

We support the Affordable Health Care Act because it embodies 

the principles of our Massachusetts reforms and because it gives 

our State new tools to sustain and expand on our success. We know 

that it is already helping to put affordable coverage and care in the 

hands of Americans across the Country. In Massachusetts itself, 

since the ACA took full effect in January, over 200,000 more people 

have signed up for subsidized coverage. Almost 30,000 people have 

purchased unsubsidized ACA-compliant plans through our health 

connector. The health connector is also offering dental policies for 

the first time, with over 2,300 plans purchased to date by individual shoppers. 

Even so, while implementing the ACA, we have experienced 

Website challenges. These are mainly due to failures of our system 

integrator. But with our new team in place we are on a path to go 

live with a functional, reliable exchange Website for the next open 

enrollment period. 

Challenges with our system integrator and project management 

shortcomings impeded our progress in achieving our full vision for 

the Website by October 1st of last year. On that account, we decided to deploy only parts of the new system on that date. Given 

these constraints, and with many people encountering errors and 

120 

wait times even with the parts that were deployed, we have developed alternative pathways to support enrollment. These mechanisms have enabled us to protect and expand coverage with strong 

cooperation from our health insurers, providers, and consumer advocates. Many residents of the Commonwealth have experienced 

difficulties with some of these processes and we fully share their 

frustration. But we have not allowed Website problems to prevent 

us from meeting the ultimate goal of the ACA: getting people covered so that they can enjoy health and economic security. 

Though the website challenges are mainly the result of an underperforming IT vendor, we are holding ourselves accountable for fixing them, and we are making progress. We have stabilized our system, eliminated a backlog of paper applications, and substantially 

reduced call center wait times. We continue to maintain strong 

data security protocols that meet Federal standards and have kept 

personal information of applicants safe from data breach, and we 

have a detailed plan to open up new parts of the Website only 

when we know they are ready for users. In the meantime, through 

the creativity and flexibility of our team, people are getting covered. 

We have an unwavering commitment to ensuring quality, affordable health care for the people of Massachusetts, a commitment 

that kept us moving forward through both the peaks and the valleys of our State reforms, a commitment that keeps us moving forward today as we strive to realize the ACA’s full potential for improving care and improving lives. 

Thank you for your time. Look forward to your questions. 

[Prepared statement of Ms. Yang follows:] 

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Mr. JORDAN. [Presiding] Thank you, Ms. Yang. 

Mr. Lee. 

STATEMENT OF PETER LEE 

Mr. LEE. Good morning and thank you to Chairman Issa, Jordan, 

and Lankford, and Ranking Members Speier, Cartwright, and 

Cummings. I want to appreciate also the other distinguished members of the committee having us here. I am Peter Lee from Covered 

California and I am glad to share with you our early implementation lessons in California in launching the Affordable Health Care 

Act. 

I think it is important that we are excited in California to, across 

a whole range of constituents, whether they be insurance agents, 

county workers, health care providers of a range of political positions who have come together in California to launch this to expand coverage. We are seeing the fruits of that effort today. 

California is one of 15 State-based exchanges, and when we 

started we looked to the data and said that somewhere around 4 

million Californians could benefit from Federal support, either expanded Medi-Cal or subsidies through Covered California. In a 

very few short years we have gone from being a 10 person organization to an organization with over 1,000 people. We are a very, 

very fast startup that is working to change history. 

So how is it going so far? Well, you have heard some of the numbers: 1.2 million Californians now have coverage directly through 

Covered California. An additional 1.9 have coverage through MediCal today, and over 800,000 are signed up for pending eligibility. 

This is close to 4 million Californians. Every single one of them 

went through CoveragedCA.com, our Website. Many of them were 

touched by humans in the enrollment process. And I really can’t 

agree too strongly; again and again exchanges are about more than 

Websites. And I want to talk a little bit about what they are about. 

But I also want to underscore when we think about State-based 

exchanges, there are five exchanges out there that, as of a month 

ago, had already covered more than 30 percent of those eligible. 

Those States included California, Rhode Island, Vermont, Washington, and Connecticut. Other States have done a very good job 

as well: Kentucky, New York. As of three days ago, California had 

brought coverage to more than 50 percent of those subsidy-eligible 

in the exchange. That is a remarkable number when you think 

about what it takes to grow a brand new and historic program. 

So let me talk briefly about what it takes to make a State-based 

exchange work. And I would note that when we say work, we do 

not mean perfect. It has been rocky, it has been bumpy, and it will 

continue to be rocky and bumpy. This is historic. This is a very big 

change to the health care system. But, all in all, we feel good about 

the progress we are making. It takes, in our mind, three things for 

an exchange to work: it takes having affordable health plans delivering quality care; it takes effective marketing and outreach; and 

it takes effective enrollment. 

In the area of affordable care, Covered California has been what 

is called an active purchaser. Thirty-three health plans originally 

expressed interest in participating in our marketplace. We selected 

11. Covered California specifically went through a process of standVerDate Aug 31 2005 12:17 Jul 07, 2014 Jkt 000000 PO 00000 Frm 00131 Fmt 6633 Sfmt 6633 C:\DOCS\88493.XXX APRIL
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ardizing our benefit designs to give consumers better tools to make 

choices and understand what they were choosing between their 

plans. We ended up getting very competitive rates and we are optimistic those rates will stay very competitive and affordable. Right 

out of the gate, we have been giving consumers information to 

choose. That is having affordable plans that consumers can use 

their information to make the right choice for them. 

Second element of success is effective marketing and outreach. 

Covered California has been reaching out to Californians across demographic mix, across languages through a whole range of marketing channels; through TV, through radio, through newspapers, 

but as, or more importantly, through over 250 groups anchored in 

local communities doing outreach and educating people about the 

importance and opportunities of enrolling in Covered California. 

Finally, effective enrollment. It is more than about an IT system 

and it is a complex IT system. The enrollment system that we 

have, like the other people testifying with me here, has to connect 

with more than 11 different major databases, including the Federal 

Government, but also State systems. We have our system up and 

running. It has been up 91 percent of the time in the scheduled 

running time. It has served more than 12 million unique visitors. 

It is working well but, more importantly than it working well, 

the over 25,000 Californians, these are county workers, these are 

licensed insurance agents, these are certified enrollment counselors 

in every community in the State have been helping literally millions of Californians get enrolled. That is why we think it is largely 

working in California, because Californians have stepped up. They 

have stepped up to talk to their neighbors, members of their 

churches, members of their schools to get them covered. 

We do have lessons learned we can share. Those are in my written testimony. 

And I look forward to responding to questions from the committee. Thank you very much. 

[Prepared statement of Mr. Lee follows:] 

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Mr. JORDAN. Thank you, Mr. Lee. 

Mr. Leitz, you are up for your five minutes. 

STATEMENT OF SCOTT LEITZ 

Mr. LEITZ. Chairman Jordan, Chairman Lankford, Chairman 

Issa, Ranking Member Speier, Ranking Member Cartwright, Ranking Member Cummings, and members of the Oversight and Government Reform Committee, good morning. Thank you for inviting 

me to come here today to talk about Minnesota’s experiences in establishing MNsure, our online health exchange. 

I want to start by telling you about Corey and Kate Needleman, 

who live in Minneapolis. Corey is a teacher. For years the family 

had health insurance through his job. But over time the family’s 

out-of-pocket costs grew. After welcoming their third son, Irving, 

into the family, they had to choose between paying their mortgage 

or paying their health bills. Last fall, when MNsure opened, her 

three boys qualified for medical assistance with no premium or deductible, and she was able to purchase a plan for herself that is 

less than $200 a month without tax credits. In her words, I was 

thrilled. It blows my mind that we are going to be able to be cared 

for and we are not going to lose our house. 

Today, I am proud to say MNsure is stable, secure, and successful; and, because of our efforts, the Needlemans are just a few of 

the nearly 170,000 people in Minnesota who now have access to affordable, comprehensive coverage because of MNsure. 

Of that 170,000, nearly 88,000 have enrolled in Medicaid, over 

34,000 have enrolled in MinnesotaCare, our State’s basic health 

plan for people between 133 and 200 percent of the Federal poverty 

line. In other States, these individuals or enrollees would be in private plans with tax credits. The remaining over 47,000 have enrolled in private qualified health plans. 

It is also worth nothing that in Minnesota 95 percent of the people enrolled in health coverage have paid for it. And as we continue 

to process applications, we expect our numbers to grow even higher. 

It isn’t news to this committee that MNsure’s rollout was rocky. 

Our initial launch in October was plagued by software errors and 

technical glitches. I was appointed interim chief executive officer on 

December 18th, after the resignation of MNsure’s first executive director. In recognition that more must be done to ensure Minnesotans have access to a functioning Website and comprehensive affordable health coverage, I took immediate action. In January I 

commissioned an end-to-end review of our exchange by Optum 

Health. They recommended we make a number of enhancements to 

customer experience to help boost enrollment and to improve customer satisfaction. 

Working in close partnership with our vendors, we were able to 

stabilize our system. Our eligibility software is now operating with 

an over 99 percent success rate, compared to 70 percent in mid-December, and our online marketplace has been stable enough to 

process more than 2,000 enrollments a day. 

December’s software problems caused our call center wait times 

to climb to over an hour, and up to 70 percent of consumers were 

simply giving up before they could be helped. We resolved this 

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issue by more than doubling the size of our call center and by 

bringing stability to our software system. Average wait times for 

the month of March were dramatically less. 

Moving forward, we are planning our budgets for 2015. I am 

happy to say that next year’s calendar year budget is balanced and 

does not seek additional State or Federal funds to operate MNsure. 

In the longer term, we are in the process of selecting a lead vendor that will help MNsure assess the larger architectural software 

issues that were identified in the Optum report. The goal is to not 

just make the 2015 open enrollment period a better experience for 

consumers, but to have a comprehensive roadmap for continuously 

improving MNsure and enhancing the exchange for consumers in 

every open enrollment period to come. 

I had the opportunity to meet Kate Needleman and her son Irving recently. She told me that having affordable insurance has 

opened the door for her family. Health reform is indeed more than 

a Website; it is about getting real people and families into affordable comprehensive health coverage. This is something we are 

doing well in Minnesota. 

Thank you for the opportunity to testify, and I look forward to 

your questions. 

[Prepared statement of Mr. Leitz follows:] 

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Mr. JORDAN. Thank you, Mr. Leitz. 

Mr. Van Pelt, you have been patiently waiting. You are up. 

STATEMENT OF GREG VAN PELT 

Mr. VAN PELT. Thank you very much. Mr. Chairman, ranking 

members, and other members of the Oversight and Government 

Reform Committee, thank you for allowing me to speak before you 

today about Oregon’s health reform efforts. My name is Greg Van 

Pelt. I recently retired as chief executive officer of Providence 

Health and Services in the Oregon region. Throughout my career 

I have had direct experiences with the challenges of expanding access to quality health care while managing costs. 

Last year, Governor Kitzhaber asked me to step in to help navigate the challenges around the launch of the State’s health care exchange. Currently, I serve as the president of the Oregon Health 

Leadership Council and voluntary advisor to the governor and Dr. 

Bruce Goldberg, acting director of Cover Oregon, for whom I am 

appearing today because he recently suffered a broken leg. 

While the launch of the ACA in Oregon has been different than 

we hoped, over 300,000 individuals have enrolled in health insurance plans since October 1st. Governor Kitzhaber, two weeks ago, 

released an independent assessment of Cover Oregon produced by 

the company First Data. The report, which I also request to be included in today’s record, was based on 67 interviews with stakeholders from Cover Oregon and Oregon Health Authority employees to the governor and legislators from both sides of the aisle and 

a review of more than 3,200 documents. It assesses the technical 

problems with the development and rollout of our health exchange 

Website. 

Members of the committee, I want you to know that in response 

to First Data’s findings, the governor announced numerous steps 

he has taken or will take to improve performance, accountability, 

and oversight. These steps are detailed in my written testimony, 

which also has been shared with you. 

We do know that some things have worked very well. We have 

used our technology investment to roll more than 300,000 Oregonians in health care coverage since October thanks to Cover Oregon and the Oregon Health Authority. We continue to be proud 

of the work we have done to improve Oregonians’ lives, and we 

know that that will endure. 

I welcome your questions and the opportunity to discuss with you 

Oregon’s ongoing health care transformation work, as well as the 

progress that we have made to secure the public trust to make 

good on Cover Oregon’s promise to enroll more Oregonians in affordable, high-quality health insurance. Thank you very much. 

[Prepared statement of Mr. Van Pelt follows:] 

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Mr. JORDAN. Thank you, Mr. Van Pelt. 

We will now turn to questioning. We will start with the gentleman, the vice chair of the committee, Mr. Gosar, the gentleman 

from Arizona. 

Mr. GOSAR. Well, thank you very, very much. 

Mr. Leitz, I want to start off with you. You talked about the 

rocky start for your exchange earlier. So my first question is, in the 

three months leading up to the botched Website rollout, 14 managers of the sites received bonuses for work they did on the exchange. Is that accurate? 

Mr. LEITZ. Congressman, it is. 

Mr. GOSAR. Now, why would the State pay people a total of 

$27,000 for a botched Website? Usually, bonuses go to exceptional 

work. Botched doesn’t seem to meet exceptional. 

Mr. LEITZ. Congressman, those bonuses were approved by the 

previous executive director. 

Mr. GOSAR. Oh, I am glad you said that because have you done 

anything to claw back those bonuses? 

Mr. LEITZ. Congressman, not to date, no. 

Mr. GOSAR. Interesting. Now, in January, United Health’s Optimum division released a report stating that the exchange’s current 

program management structure and process is nonexistent, and 

management leadership decision-making is occurring via crisis 

mode. That report also concluded that the exchange might be so 

badly flawed that MNsure might have to scrap all of it. In the 

same article you were quoted as saying, we do intend to take actions—in fact, I thought I heard you speak about this in your comments—we intend to take actions as result of the report. 

Have you fired anyone in the State government for the bungled 

launch and the massive loss of taxpayer dollars? 

Mr. LEITZ. Congressman, we have made changes within the organization. 

Mr. GOSAR. I asked you a question. Have you fired anybody 

for—— 

Mr. LEITZ. Congressman, personnel actions have been taken. 

Mr. GOSAR. People have been fired? 

Mr. LEITZ. Congressman, I am not—— 

Mr. GOSAR. Or they have just been reassigned, like here in the 

Federal Government, and given a new title? 

Mr. LEITZ. Congressman, individuals are no longer with the organization who previously had been. 

Mr. GOSAR. Are they still in the State government? 

Mr. LEITZ. Congressman, no. 

Mr. GOSAR. So you did make some changes. 

Mr. LEITZ. Yes, Congressman. 

Mr. GOSAR. Now, last week the Los Angeles Times reported on 

how Governor Dayton referred to the Minnesota exchange as the 

black hole, where he was referencing consumer applications that 

were frozen or had vanished. Did you ever find out where those 

vanished applications went? 

Mr. LEITZ. Congressman, yes, we did. 

Mr. GOSAR. You have a total accounting of all those vanished? 

158 

Mr. LEITZ. Congressman, yes, we are able to identify any applications that had previously been in the system that we weren’t able 

to track during the fall rollout. 

Mr. GOSAR. Will you provide that to the committee? I mean, a 

lot of the folks back in Minnesota don’t know that story. 

Mr. LEITZ. Congressman, I would be very happy to provide an accounting of those individuals, in the aggregate, of course. 

Mr. GOSAR. Thank you very much. 

Now I am going to go to everybody, so we are going to try to go 

fairly quickly. How many people did you have to hire to process 

paper applications because of the problems with your exchange 

Website? Start with you, Dr. Matsuda. 

Mr. MATSUDA. In our contact center, recently we increased staffing to handle the backlog that I mentioned in my remarks by a 

total of 80 people. 

Mr. GOSAR. How much did that cost? 

Mr. MATSUDA. I will have to supplement that to the record. I can 

get the exact number for you. 

Mr. GOSAR. We would like to know how it was paid for, too. 

So let’s go to the next. Mr. Sharfstein? 

Dr. SHARFSTEIN. About 200 more people through the call center 

and fulfillment center, about $6 million. 

Mr. GOSAR. And how was it paid for? 

Dr. SHARFSTEIN. Through our grants through the usual rules. 

Mr. GOSAR. Through the Federal Government? 

Dr. SHARFSTEIN. Federal and State government, right. 

Mr. GOSAR. Okay. 

Ms. Yang? 

Ms. YANG. Congressman, we have leveraged the workforce of 

about 300 individuals through an intensive work period in the past 

four weeks, and we are happy to report that the paper application 

backlog has been eliminated. 

Mr. GOSAR. And how much did it cost? 

Ms. YANG. I do not know the precise number for that period. We 

can get back to you on that. 

Mr. GOSAR. And how it was paid for. 

Mr. Lee? 

Mr. LEE. We have a customer service staff that we expanded by 

about 250 people that do both phone and mail, but we also have 

shared into the paper processing work with county partners 

throughout the State of California and additionally did some extra 

contracting of vendors to help us get through the paper backlog. I 

am not sure the exact number; I will happily follow up with you 

on that number, but it was absolutely paid for out of our Federal 

establishment grants. 

Mr. GOSAR. Okay. 

Mr. Leitz? 

Mr. LEITZ. Congressman, approximately 50 individuals were 

added for that purpose. We also paid for that out of the establishment grant. 

Mr. GOSAR. Gotcha. 

Mr. Van Pelt? 

159 

Mr. VAN PELT. Thank you. Oregon also leveraged workforce from 

different State agencies, but I will have to get back to you on the 

precise number and payment source. 

Mr. GOSAR. I am going to come right back to you real quickly, 

Mr. Van Pelt, because when did the State first alert CMS that the 

exchange was not going to be operational? 

Mr. VAN PELT. That is all in the first data assessment, and I 

would have to defer to that report, congressman. 

Mr. GOSAR. So you can’t address the oversight? 

Mr. VAN PELT. My particular role was such that I was called in 

shortly after the governor and the Cover Oregon determined that 

this was not working or going to work, and, that being the case, 

my time focused on setting up the paper application process and 

steps going forward. 

Mr. GOSAR. And my point was that CMS had very, very poor 

oversight. In fact, your predecessors were talking in regards to 

their lackluster questions and how they had impressed CMS with 

unimpressive answers. So I would like to have a detailed report on 

that. 

Mr. VAN PELT. Be happy to do that. 

Mr. GOSAR. I yield back. 

Mr. JORDAN. I thank the gentleman. 

Gentlelady from California, the ranking member, is recognized. 

Ms. SPEIER. Mr. Chairman, thank you. 

And thank you again for your really outstanding testimony. It is 

really a tribute to you as executives in each of your programs that 

you have turned lemons into lemonade. 

I would like to start by quoting the speaker when he referenced 

the rollout as horrendous and a launch was anything but smooth. 

Representative Barton called it a huge undertaking and there is 

going to be glitches. 

Now, those were comments made by the speaker and by Congressman Barton on the rollout of Part D, Medicare Part D, which 

was seen as full of problems with the initial rollout; and, yet, Republicans at that time were all about fixing it because it was in 

President Bush’s Administration. I would like to see the same kind 

of frankness and willingness to fix the system now that it is in 

President Obama’s Administration and we are undertaking a 

much, much larger effort. 

Now, what is good about everything I have heard here this morning is that you have fixed the initial problems. You are all optimistic about the success of your programs. Can I just have each of 

you indicate whether or not you believe that you have met your 

goals or will meet your goals? 

Mr. MATSUDA. Thank you, Ms. Speier. We do believe we are 

going to reach our goals. Our system is working, as I testified earlier, and, really, our goal now for the short-term is to improve the 

functionality and the usability of our system. 

Dr. SHARFSTEIN. Maryland has exceeded its enrollment goal. 

Ms. SPEIER. Ms. Yang? 

Ms. YANG. Congresswoman, as you have heard in my testimony, 

we are proud of the fact that we are achieving the fundamental 

goal of the ACA, which is expand coverage on top of an already 

160 

solid ground on Massachusetts. Our work is not done, but we are 

on a very solid path. 

Ms. SPEIER. Mr. Lee? 

Mr. LEE. Well, we actually have never had specific goals. We 

have exceeded all expectations and all independent projections. Our 

goals are to insure every single Californian, so we still have work 

to do. 

Ms. SPEIER. Mr. Leitz? 

Mr. LEITZ. Congresswoman, Minnesota is solidly on track and we 

feel very good about the future of what is ahead of us. 

Ms. SPEIER. Mr. Van Pelt? 

Mr. VAN PELT. Thank you. Oregon is very much on its way to 

achieving its enrollment goals and feels confident in the steps we 

have taken to improve our technology. 

Ms. SPEIER. Great. 

Mr. Lee, California is a great sunshine story here and we are 

proud of that. Would you tell us what some of the reasons for the 

success were? 

Mr. LEE. Congresswoman, I would be happy to, and some of 

these are highlighted in my testimony, and I would highlight just 

very briefly five things. 

One, leadership across the State focused on consumers. We put 

politics aside and said let’s make this work for consumers. 

We had very effective collaboration both between State agencies, 

the Medi-Cal agency, which I partner with, but also with the regulatory agencies; Department of Managed Health Care, Department 

of Insurance. This has changed the entire insurance market. It is 

not just about exchanges, it is about changing the marketplace. 

That coordination is critical. 

Partnerships. This has worked because it has worked on the 

ground in communities, with community clinics, with counties, with 

insurance agents. That partnership collaboration has been vital. 

Finally, that we have had a culture of both transparency and 

learning. We have had bumps along the way, and we have adjusted 

our course continually, and will continue to do that. This is the beginning of a very long road and we look forward to learning and 

improving as we go forward. 

Ms. SPEIER. Dr. Sharfstein, you are going to implement the Connecticut IT solution. I don’t know how many other States are, but 

they seem to have made it work very well. What do you think the 

key is to the Connecticut system? 

Dr. SHARFSTEIN. Thank you, Congresswoman. There are several 

things that are very attractive about the Connecticut solution. First 

of all, it is a very simple and elegant design both for consumers 

and the consumer assistance workers. It also has very good 

functionality for insurance brokers, and we have a lot of insurance 

brokers that we are working with in Maryland, so that was very 

good. It also uses some of the same software, not the specific software for the Affordable Health Care Act, but some of the general 

software pieces that we already have licenses to, and it runs on the 

same kinds of computers that we have already purchased. So there 

is a lot of overlap and allows us to reuse some of the initial investment. 

161 

So those are some of the reasons. And we were able to demonstrate it at our board meeting recently. We have gotten a lot of 

positive feedback around Maryland for that. 

Ms. SPEIER. All right. Thank you all. 

Mr. JORDAN. We will now go to the gentleman from Michigan, 

Mr. Walberg. 

Mr. WALBERG. Thank you, Mr. Chairman, and thank you for 

holding this hearing to look at a program that is being panned as 

just an exceptional opportunity to, I guess, carry on an approach 

that takes away freedom, competition, opportunity, and I think 

great health care continuation for our Country simply because we 

are unwilling to deal with the costs and increase that competition. 

But let me ask a question of Mr. Lee. Thank you for being here. 

A July 2013 State auditor’s report that called the Covered California plan a new high-risk entity. That was the auditor’s statement. The report stated that under all enrollment scenarios Covered California will not have sufficient revenue to cover its operating costs in fiscal year 2015–2016. Specifically, it said it would 

be losing $73 million. You told State finance officials in September 

that ‘‘the long-term sustainability of the organization’’ is its greatest weakness. 

What did you mean by that? 

Mr. LEE. Well, a couple things. One, we are very appreciative to 

receive Federal funding to get going. In California, after we are 

going, we will be running 100 percent on our own steam, supported 

by premium dollars. We, by State law, cannot go to the State of 

California for general funds, so making sure we are fiscally well 

managed is a critical important factor for being an ongoing organization. 

The auditor’s report also noted, I believe, and our budgeting has 

always planned to have a couple years of what are called deficit 

spending to then be operating in the black. In 2016–2017, we plan 

to be operating in the black and put money in the bank—— 

Mr. WALBERG. You still believe that you will be? 

Mr. LEE. Pardon me? 

Mr. WALBERG. You still believe that you will be operating in the 

black? 

Mr. LEE. Absolutely. Absolutely. We are actually in the process 

of developing our next year revised budget now based on our current enrollment figures that we will be taking in draft to our board 

actually this next month, and we will be able to adjust every year 

our operations both on the revenue and the expense side to be fiscally well managed for Californians. 

Mr. WALBERG. Well, let me follow up that with, again, the State 

auditor’s report noted that premiums in both the individual and 

SHOP markets ‘‘generally would provide the revenue required to 

operate the exchange.’’ 

Mr. LEE. That is right. 

Mr. WALBERG. But you shut down the SHOP market earlier this 

year. 

Mr. LEE. No, we did not, Congressman. 

Mr. WALBERG. You didn’t shut it down? 

Mr. LEE. Absolutely not. Our SHOP market is running. We have 

more than 6,000 individuals enrolled and over 600 businesses. We 

162 

turned off the online enrollment functionality, which is generally 

not used—— 

Mr. WALBERG. Of the SHOP market. 

Mr. LEE. Of the SHOP market. But that is generally not how 

small businesses enroll anyway, using online functionality. But we 

are enrolling people today and continue to in our SHOP program. 

Mr. WALBERG. So you don’t plan any taxpayer bailout in the future? 

Mr. LEE. Absolutely not. 

Mr. WALBERG. You are certain of that? 

Mr. LEE. By State law, in California, I want to be clear, we cannot be dependent on general fund money, and we expect that we 

are going to be converting to—— 

Mr. WALBERG. Federal taxpayer bailout as well? 

Mr. LEE. We have been supported by the Federal support to get 

launched. 

Mr. WALBERG. But you don’t expect any more Federal support or 

bailout. 

Mr. LEE. I do not expect any more. 

Mr. WALBERG. We will hold you to that. 

Mr. LEE. Okay. 

Mr. WALBERG. I hope that is the case. 

Mr. LEE. Me too, Congressman. 

Mr. WALBERG. We both do. 

Let me move on to ask several of you questions. 

Let me start with Dr. Sharfstein. In total, how much has been 

paid to your State to develop and operate its exchange? 

Dr. SHARFSTEIN. So far, our exchange has spent, for all costs, in- cluding the website, about $129 million. 

Mr. WALBERG. That is what has been paid in total to your State 

to operate this exchange? 

Dr. SHARFSTEIN. No. So our Federal grants I think in total, if I 

am correct, are about $180 million. Oh no, I am sorry. Let me get 

the exact number for you here. 

Mr. WALBERG. Ms. Yang, you can get prepared for that same 

question. 

Dr. SHARFSTEIN. Yes, it is about $180 million in grants. We 

haven’t spent all that, though. 

Mr. WALBERG. But that is what has been paid to you thus far. 

Dr. SHARFSTEIN. Those are the Federal SSI grants that we have 

been awarded. 

Mr. WALBERG. Who are the contractors and how much have they 

been paid? 

Dr. SHARFSTEIN. There is a long list of contractors, so I could 

submit that for the record. 

Mr. WALBERG. I would appreciate that. Were they bid competitively or sole-sourced? 

Dr. SHARFSTEIN. For the major IT procurement we did a competitive procurement. 

Mr. WALBERG. Any other contracts sole-sourced? 

Dr. SHARFSTEIN. There were a couple much smaller contracts 

that were sole-sourced. 

Mr. WALBERG. Appreciate that on the record as well. How would 

you rate the contractors’ performance under contract? 

163 

Dr. SHARFSTEIN. Well, we let go our prime contractor; we did not 

think that they performed well. We were particularly disappointed 

with how some of the software worked. As I mentioned before, it 

was sold to us as out-of-the-box it would be able to do a lot of 

things that in fact it could not do out-of-the-box, and we wound up 

with some of the same problems that Minnesota had. 

Mr. WALBERG. Mr. Chairman, if I could ask, for the record, if I 

could get also information to us that would clearly state whether 

you will seek further Federal funds to fix your mistakes. 

With that, my time has expired. 

Mr. JORDAN. I thank the gentleman. 

Ranking member, the gentleman from Pennsylvania, Mr. Cartwright, is recognized. 

Mr. CARTWRIGHT. Thank you, Mr. Chairman. 

And thank you to all the witnesses who have joined us here 

today and thank you for your tireless efforts to get people signed 

up for affordable health care. Unfortunately, I come from a State 

that did not start its own exchange, Pennsylvania, which I think 

the failure to do that in Pennsylvania was an abdication of the responsibility of Governor Corbett on behalf of Pennsylvania’s citizens. 

In the last five yeas we have seen 12 hospitals in Pennsylvania 

close and I see the ACA and enrollment as a way to strengthen 

America’s hospital system, and that includes Pennsylvania. Governor Corbett’s decision back in 2012 to decline to establish an exchange was announced in a peculiar way: it was first celebrated in 

a press release by Americans for Prosperity, the Koch brothers’- 

funded enterprise. Twenty minutes later the Commonwealth of 

Pennsylvania itself made the same announcements in a press release. 

The timing of that announcement, to me, certainly raised questions as to how the Koch brothers influenced that decision in the 

first place. Even more disappointing I want to say is Governor 

Corbett’s decision not immediately to expand Medicaid for the more 

than 520,000 Pennsylvanians who could be covered. The Federal 

Government would have paid 100 percent of those costs for the first 

three years, phasing it down to 90 percent by 2020. 

I have had a health care CEO in my district, in Northeastern 

Pennsylvania, confide to me that if Pennsylvania doesn’t accept the 

Medicaid expansion, he is going to have to close one of his two hospitals. That is how important this is. 

Instead of accepting Federal funding to expand a highly successful Medicaid program, Governor Corbett, in Pennsylvania, submitted a waiver proposal that would impose premiums, work 

search standards and limits to benefits for Medicaid recipients. According to the Kaiser Family Foundation, the governor’s delay will 

cost Pennsylvanians hundreds of millions, if not billions, in Medicaid dollars this year and will leave hundreds of thousands of lowincome residents without health care coverage in 2014 in Pennsylvania. It is unconscionable to me. It is time to quit playing politics, 

as Ranking Member Cummings has pointed out, with people’s lives, 

with people’s health. I urge Governor Corbett to reconsider his 

wrong-headed decisions. 

164 

With that, I would like to turn to the panel today. The citizens 

you represent, ladies and gentlemen, are fortunate that all of your 

States have made the decision to accept the Medicaid expansion. 

Mr. Lee, I want to start with you. California has enrolled more 

than 1.5 million new applicants into Medicaid since October 1. Am 

I correct in that? 

Mr. LEE. That is correct. 

Mr. CARTWRIGHT. Could you tell the committee about what the 

Medicaid expansion means for those California residents and for 

the State as a whole? 

Mr. LEE. Absolutely. I appreciate the question. We have been, in 

California, in very close partnership with our Medi-Cal agency; it 

is an arm-in-arm enrollment process. And people don’t know what 

they are eligible for. We have had literally thousands of people 

break down in tears at the idea they have, for the first time in 

their lives, affordable coverage that is being provided to them. That 

is both for Medi-Cal coverage and for the subsidized coverage in 

Covered California. I have talked to many of them myself personally and our people on the front lines, whether they be insurance 

agents or customer service people, relay these stories constantly. It 

is touching many, many lives. 

Mr. CARTWRIGHT. Thank you, Mr. Lee. 

What about you, Mr. Leitz? Can you describe the impact of the 

Medicaid expansion on your residents and your State? 

Mr. LEITZ. Congressman, we know in Minnesota that about 60 

percent of our uninsured population is eligible for the Medicaid 

program, so as our numbers have grown through MNsure, we know 

that we are reaching the uninsured by enrolling them into Medicaid; and what that has enabled them to be allow them to do is 

to access services, oftentimes for the first time, to get preventive 

screenings, to care for issues that they might have had not cared 

for in the past. So it has been a very, very important thing both 

for them, as well as the caregivers that they seek. 

Mr. CARTWRIGHT. Thank you, Mr. Leitz. 

What about you, Dr. Sharfstein? Same question to you. 

Dr. SHARFSTEIN. Sure. The Medicaid expansion is extremely important in Maryland. We have done an analysis that there are well 

over $150 million in uncompensated care reductions that we expect 

as a result of the expansion, and it matters a great deal. I am a 

pediatrician. I met one mom who was telling me this story about 

a very sick baby who needed a heart surgery that the Medicaid 

paid for, and then out came the daughter to give me a hug. They 

are real people in Maryland. My patients, when I see them in clinic, how the Medicaid expansion changes their lives. 

Mr. CARTWRIGHT. I thank you, sir, and I yield back. 

Mr. JORDAN. I thank the gentleman. 

Ranking member of the subcommittee, the gentleman from Florida, Mr. DeSantis, is recognized. 

Mr. DESANTIS. Vice chairman, not ranking member. I am on your 

team. That is all right. 

Mr. JORDAN. You have been called worse, I am sure; you are in 

politics. But vice chair. Excuse me. 

Mr. CONNOLLY. Not a bad thought, though, Mr. Chairman. 

165 

Mr. DESANTIS. Thanks to the chairman. I appreciate this hearing. I have to tell you, when I hear things like that this law is 

causing premiums to decline sharply for Americans, I don’t know 

what to say after having dealt with so many disappointed constituents in my district. The question is who are you going to believe, 

those who are defending this law or your own lying eyes. And I 

think that the American people will make that determination. 

Some of the things that are said are just factually not true. We 

keep hearing that this has led to expansion of coverage for 3 million young adults, but the people who have looked at that most recently have debunked that number and said it is probably less than 

1 million. And oh, by the way, that is imposing a cost on families 

between $160 and $480 per policy. And, of course, some of the 

numbers back and forth are fine, but the central promise of this 

law was that if you liked your arrangements, this law would not 

negatively affect you and, indeed, it would benefit you with lower 

costs, and that central promise clearly has been broken. 

If people like their plan, they may not be able to keep it. People 

are losing access to their preferred doctors. I don’t have any constituent who has come to me and said their policies that they had 

have declined in premiums by $2,500, as was promised. Also, we 

don’t talk about the increase in deductibles. People are paying 

higher premiums and seeing their deductibles go up, so they are 

spending way more out of pocket than they used to. 

Can we put the slide up on the board? 

[Slide.] 

Mr. DESANTIS. So you have all of those things which we were 

told were not going to happen, but then we see a lot of people have 

seen their existing arrangements undermined or changed in a way 

that they would not have chosen to do it. 

So what was the promise of this? It is constantly said everyone 

now has health insurance, but if you look, the CBO, when the law 

initially passed, they said it would be 37 percent of Americans 

right now who are uninsured would be covered, and then they said, 

well, actually, it is going to be closer to 40 percent of all the uninsured by this point in 2014. And the actual number is about 12.5 

percent; and that is not just including these exchanges, that is including the Medicaid expansion and, of course, the age 26 rule. 

So you have about 12.5 percent of the uninsured that have now 

been covered and, of course, at a great cost. We are seeing the cost 

here, just the amount of money that has gone into creating these 

exchanges. We are seeing the cost of people who have lost access 

to their doctors, people on Medicare Advantage. So it hasn’t even 

produced what they said in terms of expanding coverage, and I 

think that that is something that has made a lot of folks very frustrated when they see numbers like that. 

I just have a couple quick questions for California. 

Mr. Lee, I read a news report where a couple in La Mesa had 

signed up for a plan in the Covered California, then they got a 

voter registration card sent to them that had the Democratic party 

already checked. Are you familiar with that report? 

Mr. LEE. Yes, I am. 

Mr. DESANTIS. And how does it become to where they would get 

something that would be pre-checked as the Democratic party? Is 

166 

that something that you have control over or is the elections office 

sending this stuff separately from Covered California? 

Mr. LEE. Covered California has been designated a national voter 

registration agency, so it is a requirement under law that we send 

these out in California. Every voter registration form is provided 

to us by the Secretary of State’s Office. This report is something 

we reported promptly to the Secretary of State’s Office and is being 

investigated. 

Mr. DESANTIS. Okay, thank you. I also read another report about 

Covered California, whether they are advertising to people who are 

in the Country unlawfully. Obviously, I don’t think that they are 

lawfully allowed to get ObamaCare subsidies, but can you say how 

are you guys approaching that? Are you trying to get folks who 

don’t have legal status to sign up on Covered California? 

Mr. LEE. Absolutely not. And we are absolutely trying to communicate very clearly how a family that has mixed status—in California there are many families that might have one member of the 

family who is not a documented resident and another family member who is. We want to make sure those that are eligible for coverage get coverage, so we have been clearly communicating the 

rules on how a family should still come forward and we, quite honestly, great appreciated the guidance from the Federal Government 

to make it clear that immigration status information provided to 

Covered California is only used for that purpose to not discourage 

individuals as families coming forward to get coverage because they 

would be worried the information might be used by us for immigration purposes. 

Mr. DESANTIS. But if someone cannot prove legal status, then 

that would mean they would not get any—— 

Mr. LEE. Absolutely not. Absolutely not. 

Mr. DESANTIS. Okay. 

Mr. Van Pelt, how many cancellations has Oregon had in the individual market, do you know offhand? 

Mr. VAN PELT. I do not know offhand. 

Mr. DESANTIS. The number I have is about 135,000 individuals 

who have lost policies because of the Affordable Health Care Act 

mandates. How many people have enrolled via the individual market in Oregon as of April 1st, do you have that number? 

Mr. VAN PELT. In the qualified health plans, approximately 

65,000, and then another 140,000 in Medicaid or Oregon health 

plan. 

Mr. DESANTIS. And of the 140,000 in Medicaid, do you know offhand how many would have been eligible for Medicaid anyways? 

Mr. VAN PELT. Approximately 100,000. 

Mr. DESANTIS. Okay. So it seems to me that there were more 

policies canceled certainly than have signed up in the individual 

market. And then when you kind of control the Medicaid numbers, 

a lot of States have seen increases in States that didn’t even expand Medicaid. So I think it is important that we are able to determine those. 

I think I am out of time, so I will yield back. 

Mr. JORDAN. I thank the gentleman. 

The ranking member of the full committee, the gentleman from 

Maryland, Mr. Cummings, is recognized. 

167 

Mr. CUMMINGS. Mr. Chairman, I would rather one of my colleagues go ahead. 

Mr. JORDAN. Okay. Then I believe the gentlelady from New Mexico is recognized. 

Ms. LUJAN GRISHAM. Thank you very much, Mr. Chairman, and 

I also appreciate the panel today. I spent, actually, before coming 

to Congress, some time working with our State legislature and our 

current governor to enact legislation that got passed by our legislature. From the immediate we had to pass it three years three times 

in order for New Mexico to get started. So while you were pointing 

out the trials and tribulations, one thing that we haven’t discussed 

today is that many States waited until the very last minute, and 

that, I think, also exacerbated some of the issues that you have 

identified today. 

I am really interested in some of the education and outreach efforts and would love to try to have each of you talk to me a little 

bit about that going forward, targeting those folks that are still uninsured, really clarifying these numbers, looking at folks and businesses and those trends, working with all of your Navigators and 

Assistors and brokers. If each of you would talk to me a little bit 

about moving forward. 

Mr. MATSUDA. Our outreach program in Hawaii is called the 

Heinola program, and we have arranged subgrants of our Federal 

funding to about 32 nonprofit organizations on all of the islands; 

and with those grants those organizations are hiring people to go 

out into the community to work with people from many different 

cultures and many different language groups to work with them 

face-to-face to help them understand health insurance, first of all, 

and then the Affordable Health Care Act. And if they are interested in looking into applying, then they will assist them with 

going through our application process for enrollment. 

Dr. SHARFSTEIN. In Maryland we work with more than 2,000 insurance brokers. In addition, we have a Connector entity program 

where there are six regions each with a Connector. Each of those 

is working with local agencies. When I was way out in Western 

Maryland, I was meeting for another reason with a group called Allegheny Health Right, which it is the sole mission of that nonprofit 

to help people get health care for many years. They work with the 

medical community up there. And I was wondering and they said, 

actually, we are part of the coalition that got funded. So we have 

some great organizations across the State. It is one reason we have 

been able to hit our goals despite the IT problems. 

Ms. LUJAN GRISHAM. I think that is really important. And as the 

rest of the panel answers, and I appreciate the reference to your 

partners who are part of those grant investments, but also looking 

at—tell me what you will do differently going forward, because 

while some of you met the targets, some other States are still really struggling. We could do a lot better in New Mexico. Although we 

did a good job, we could do a much better, for example, in the Medicaid outreach. 

Ms. YANG. Congresswoman, I really appreciate this question because one of the things that I can say that based on Massachusetts’ 

reform experience in the past eight years, outreach and education 

is really one of the most critical efforts; it is the most important 

168 

investment area, particularly the most vulnerable population, the 

low-income. They are the hardest to reach. 

And if you look at the Massachusetts reform records, we have 97 

percent of the residents insured. The 3 percent remaining are primarily low-income. And we are very proud to see the fact that we 

were able to bring 200,000 new people into subsidized coverage. 

That is a major step forward relative to where we were. 

Mr. LEE. We have a lot of learning still to do, but I think one 

of the things, as we look forward, having insured probably close to 

50 percent of those eligible for subsidies, it is going to be get harder and harder. The people that are not insured are folks that often 

have never had insurance. There is more education about what it 

means to be insured, and they don’t believe that it could be affordable. That is a core education and outreach message, and we have 

done it with both advertising, but also with our on-the-ground people. 

The other thing that I think has been critical for us and we are 

continuing developing is this is complex stuff, and having personto-person support for enrollment in language; people who speak 

Spanish with Spanish speakers, speak Hmong—— 

Ms. LUJAN GRISHAM. And I want to actually, since I only have 

45 seconds left, really have you hit that. We know that 8 out of 10 

Hispanics are likely eligible for Medicaid, one of the Medicaid programs or subsidized coverage, and yet we have half the Hispanic 

population is not going to be insured; and I worry that we actually 

have too many steps in this face-to-face process to actually execute 

the deal. 

Mr. LEE. Well, if I speak to that specifically, in our first three 

months in California, a very big State with a very big and important Latino community, 18 percent of our enrollment was Latino, 

which was way off our target. In the month of March it was 36 percent. We doubled the rate of insuring Latinos because it takes more 

touches; it takes education, it takes people on the ground doing enrollment. We are going to try to do better than that in our next 

round of open enrollment. 

Ms. LUJAN GRISHAM. We have a couple seconds, and I think if 

the chairman will allow I think everyone can do a quick, concise 

answer. Thank you. 

Mr. LEITZ. Congresswoman, very briefly. We have certainly seen 

the importance of working with agents and brokers on the ground; 

they are in every community, they know the communities very 

well. That has worked very well for us. The other area that we 

have been focusing very heavily on is with our Hmong and Somali 

communities, and also working with them like many of the other 

States on the panel, helping them understand the importance of insurance coverage, what the options are for them, and working with 

them in their languages. 

Mr. VAN PELT. Thank you very much. Similar to other States, 

working very closely with community agents and community partners to help get the word out and, in fact, walk many of our citizens step-by-step through the application process. 

Ms. LUJAN GRISHAM. I am way over, but thank you. I really appreciate all that and am very grateful for those responses. I would 

love for everyone to consider, and maybe at a future hearing, Mr. 

169 

Chairman, I know that the importance and value with complicated 

information on that person-to-person touch, but in my State I went 

to several different enrollments and they varied; but there were too 

many touches, and this notion of waiting for appointments and not 

having that work for the States who did the education and then a 

little more in-depth, and then go to an appointment with an 

Assistor and then have an Assistor or the Navigator help you actually then sign up, we lost, I would say, 50 percent of those folks 

in that line of touches, so I am thinking maybe too much. Thank 

you. 

Thank you, Mr. Chairman. I yield back. 

Mr. JORDAN. You bet. Thank you. 

Dr. Sharfstein, I think earlier you said that you received approxi- mately $180 million in Federal taxpayer grant dollars, the State of 

Maryland received that. 

Dr. SHARFSTEIN. Through SSI grants, yes. 

Mr. JORDAN. And you have spent approximately two-thirds of that, I think you referenced $120 million. 

Dr. SHARFSTEIN. I think of that we probably have spent about $100 million. 

Mr. JORDAN. Okay. And I think in earlier questions you indicated 

that you had to hire, because of Website concerns, approximately 

200 more people to answer phones and work at your call centers? 

Dr. SHARFSTEIN. That is correct. 

Mr. JORDAN. Okay. I also think I remember that when Ms. 

Speier was asking I think each of you how you are doing, I think 

you said, doctor, that the State of Maryland is ‘‘meeting our goals.’’ 

I think a lot of people would disagree with that. 

Dr. SHARFSTEIN. Well, I was referring to the enrollment goal. I 

would absolutely agree we did not meet our goal in terms of the 

function of the Website. 

Mr. JORDAN. Okay. But you met your enrollment goal as well? 

Dr. SHARFSTEIN. That is correct. 

Mr. JORDAN. My understanding is that CMS enrollment target 

number was 150,000 for the State of Maryland, and as of April 1st, 

as of a couple days ago, you have enrolled 60,000 people. 

Dr. SHARFSTEIN. Our enrollment goal between Medicaid and the 

qualified health plans was 260,000, and we are about 295,000. 

Mr. JORDAN. I am talking about the individual market enrollees. 

Dr. SHARFSTEIN. So for our individual market we had an independent assessment of what the estimate would be and they estimated around 75,000. And what I testified is that we expect to get 

at least within—— 

Mr. JORDAN. Wait, wait, wait. I thought CMS told you your enrollment was 150,000. 

Dr. SHARFSTEIN. No. 

Mr. JORDAN. We have a document from CMS that says that, 

150,000. 

Dr. SHARFSTEIN. If that is the case, I haven’t seen it. 

Mr. JORDAN. So where is the 75,000 number coming from? 

Dr. SHARFSTEIN. It comes from the Hilltop Institute at the University of Maryland at Baltimore County. We could provide the letter that explains that. 

Mr. JORDAN. And that is your target goal, 75,000? 

170 

Dr. SHARFSTEIN. No. Our goal was for overall enrollment across 

Medicaid and qualified health plans, but insofar as how we are 

doing in terms of qualified health plan enrollment, the estimate—— 

Mr. JORDAN. Well, I guess here is what I am trying to figure out. You took $180 million of Federal taxpayer dollars. The Federal 

agency involved in implementing the Affordable Health Care Act is 

CMS. They said your enrollment target should be 150. And yet you 

can take the money but you can get someone independent to tell 

you what your goal really is, something smaller. When was that 

number, 75,000, given to you all? 

Dr. SHARFSTEIN. That was the estimate that was given by the 

University of Maryland, Baltimore County. 

Mr. JORDAN. When? 

Dr. SHARFSTEIN. It was a revision of a report that they did in the 

last couple months. 

Mr. JORDAN. A revision? What was the initial number, then? 

Dr. SHARFSTEIN. The initial number they gave us was about 

150,000. 

Mr. JORDAN. Oh, imagine that, the number I just said. And when 

did you get the revision? 

Dr. SHARFSTEIN. A couple months ago. 

Mr. JORDAN. Oh, so you are into this and you are not coming 

close to the 150,000 and, shazam, you get a revision. 

Dr. SHARFSTEIN. Well, they had made an error in the report and 

we can provide you their letter. 

Mr. JORDAN. How convenient. The Federal Government gives you $180 million, they say 150,000 you need to meet. You see you are 

not going to meet that, you get someone to give you a revised number and suddenly, oh, now we are close. Defining the standard 

down is what it sounds like to me. 

Dr. SHARFSTEIN. Well, you can judge for yourself. You can look 

at the letter that they gave, but I don’t consider the Medicaid individuals to be invisible, Mr. Congressman. 

Mr. JORDAN. I am not saying that either. All I am saying is the 

standard was here, then, suddenly, when you are not even coming 

close to the standard, the standard gets revised not by the Federal 

Government, who has given you the money, but by some independent agency that Maryland goes to and gets a number that they 

like. And I am not the only one who thinks you guys aren’t doing 

the job. You have a Democrat congressman from your State. I have 

four letters from Congressman John Delaney from the State of 

Maryland, two of them were sent to you, where Mr. Delaney says 

this thing is such a mess, we encourage you to switch to the Federal exchange. Right? 

So it is not Republicans saying this thing is a mess; it is your 

own congressman from your own State saying, look, I care about 

our constituents. With all the headlines, all the problems associated with the Federal exchange, you have a Democrat congressman 

from the State of Maryland saying you guys are such a mess, we 

should bag this and go to the Federal exchange. 

Dr. SHARFSTEIN. Well, I testified that the IT didn’t work. I mean, 

I don’t disagree that we had a major IT problem. But it was overcoming that problem that allowed us to hit our enrollment goal. 

171 

Mr. JORDAN. No, you haven’t hit your goal. We are talking about 

individual market enrollees. You have 60,000; you were supposed 

to be at 150,000. That is markedly short from your goal. 

Dr. SHARFSTEIN. That was an estimate, never a goal, and it was 

an estimate that was in error. And you can judge from the University of Maryland—— 

Mr. JORDAN. It wasn’t an estimate in error, it was the number 

you were given by the Federal Government, the same entity that 

gave you the $180 million of taxpayer money. 

Here is what the President said. When did you let the Federal 

Government know you were going to come far short of this 150,000 

number? Do you have to give the Federal Government periodic reports of where you are going to be? 

Dr. SHARFSTEIN. Well, we have been working very closely with 

the Federal Government the whole time, so we have been providing 

weekly public updates on where our enrollment is since October 

1st. 

Mr. JORDAN. Let me ask you a couple more questions. I am over 

my time, and I will get to the chairman here. 

How many people in your State lost insurance because of the Affordable Health Care Act, were kicked off their existing plans? 

Dr. SHARFSTEIN. I think very few. There weren’t that many cancellations, for example. There are some notices of non-renewal, and 

the carriers allowed people to renew for 12 months if they wanted 

to, our major carrier. 

Mr. JORDAN. According to our reports, according to our reports, 

according to AP, what has been press accounts, 73,000 individuals 

in Maryland were going to lose their insurance because of the Affordable Health Care Act. And what you are telling me is your revised goal is approximately the same number, 75,000. So your revised goal of people you were going to sign up is we are going to 

sign up the people who were kicked off of the Affordable Health 

Care Act. 

Dr. SHARFSTEIN. No. The problem with that is that there is also 

a market outside the exchange, and we are going to see the overall 

individual market inside and outside the exchange, including the 

people who also renewed their policy early, to be far more than we 

had in 2013. So you have probably as many people in the individual market outside the exchange as inside the exchange, plus 

you have people who renewed early and are still in those plans. So 

our carriers predict significantly more enrollment across the individual market. 

Mr. JORDAN. You may predict all that. All I am saying is, according to press accounts, 73,000 Marylanders are going to be kicked 

off their plan because of the Affordable Health Care Act, and you 

are telling me your goal, the goal you were supposed to meet by 

April 1st, was only 75,000. 

Dr. SHARFSTEIN. You are comparing apples and oranges, with all 

due respect. 

Mr. JORDAN. I am comparing people who got kicked off because 

of this law and I am comparing the number you say you are going 

to sign up through your exchange, which is far below, roughly half, 

of what the initial number that CMS gave you. 

172 

Dr. SHARFSTEIN. I think an apples-to-apples comparison would be 

the size of the individual market before and after. So whether people have coverage in the individual market before January 1st 

versus after, because some people don’t need subsidies, they will go 

right to a carrier. 

Mr. JORDAN. Right. 

Dr. SHARFSTEIN. So we are seeing not only just the exchange enrollment, the outside the exchange enrollment, which is probably 

going to be at least that, plus the fact that people could renew 

early. We are going to see a much bigger individual market. That 

is the apples-to-apples comparison. 

Mr. JORDAN. But I think you are leaving out the fact, your calculations, what you just went through, those who were kicked off. 

There are certainly people who are now in the individual market; 

they just got kicked off their plan. 

Dr. SHARFSTEIN. No, they were in the individual market before. 

It was an individual market plan. 

Mr. JORDAN. I understand that. 

Dr. SHARFSTEIN. So the apples-to-apples would be you were in 

the individual market before, you are in the individual market 

after. That is apples-to-apples. And we are going to see a huge increase in the individual markets after. That is more people covered. 

Mr. JORDAN. Right, but I am looking at the number. The number 

you are saying is your goal, 75,000. You got lots of people kicked 

off; you got people who didn’t have insurance before who you are 

supposed to try to sign up, even though you are woefully short in 

the chart Mr. DeSantis brought up; and we are back to the original 

point. CMS said here is $180 million, Maryland. Your goal is 

150,000. That gets revised in the last few months, out of the blue, 

down to 75,000, and we have a congressman from your own State 

who is in the other party who says this thing is such a mess, you 

should have switched to the Federal exchange a long time ago. In 

fact, clear back in January he was calling for you to switch. 

Dr. SHARFSTEIN. We investigated that possibility. There is no disagreement about whether or not our Website worked like we wanted it. It absolutely didn’t. 

Mr. JORDAN. One other thing. The President said, just days before, late September, he gave a speech in Maryland days before the 

launch, promising that ObamaCare would be ‘‘smoother in places 

like Maryland, where governors are working to implement it rather 

than fight it.’’ And yet we know, you even indicated that it was a 

mess when it started. So what information were you communicating with the Federal Government that would give the President the assurance that he can make that kind of statement in 

your State, that this thing was going to work great, when in fact 

you said it didn’t work well? 

How could the President make that statement when we have 

seen what we have seen since October 1st in your State, where we 

have a Democrat member of Congress saying this thing is such a 

mess, go to the Federal Exchange? How could the President make 

that statement? What was he basing that on? Were you guys talking with the Administration? Were you telling them everything is 

going to be fine? 

173 

Dr. SHARFSTEIN. I think that it was well known that there were 

going to be glitches and bumps. We were communicating that publicly; the Federal Government was communicating that publicly. 

Mr. JORDAN. Well, the President didn’t get the memo. He didn’t 

say there would be glitches, he said it would be smoother in places 

like Maryland, where governors are working to implement this 

rather than fight it. 

Dr. SHARFSTEIN. Well, I think that we were certainly surprised 

by the scale of problems that we had after October 1st. 

Mr. JORDAN. One last thing, if I could, real quick. I want to go 

to this slide. A whistleblower gave us this. 

[Slide.] 

Mr. JORDAN. High level business and technical architectural diagrams. This was a report. And we will give this to you. And this 

is difficult to read, I see, but we think this is important. 

You have a copy there for him? Okay, good. 

And what it says is all the red are problems associated with that, 

here we go, significant delay or risk, all the red; and there is a lot 

of red up there. Now, this was a report given to you all back in 

February 2013, and it shows you knew a year ago there were going 

to be some big problems. And you didn’t communicate that with the 

Federal Government, who was giving you $180 million in taxpayer 

dollars? 

Dr. SHARFSTEIN. The Federal Government received the reports 

from our internal IV&V team. 

Mr. JORDAN. So the President had access to this report before he 

made that statement, just days before the launch of the Affordable 

Health Care Act? 

Dr. SHARFSTEIN. We were communicating with CMS, the agency 

that we worked with. But I would say that subsequent to that period of time we were able to make progress that the team that was 

working on different parts of this—— 

Mr. JORDAN. Well, of course you were going to make progress. 

When it is this bad, you have no place to go but up. 

Dr. SHARFSTEIN. In June of 2013, we passed an important test. 

I think this probably gave us a little bit more optimism that was 

deserved at the time. We were obviously very disappointed with 

how the IT went. 

Mr. JORDAN. All right. I am way over, and I appreciate the chairman’s indulgence. 

Mr. CUMMINGS. Thank you very much, Mr. Chairman. This is my 

time? This is my time, and I guess I would like to have my 12 minutes, just like Mr. Jordan. 

Let me go to you, Dr. Sharfstein. I listened to Mr. Jordan and 

I wonder how many people he helped get enrolled under the Affordable Health Care Act. And I know it has been difficult. As you 

know, the last three Saturdays I spent all day helping people who 

were trying—as a matter of fact, I sponsored two events all day to 

get people enrolled under the Affordable Health Care Act. And I 

am glad we didn’t take the attitude in Maryland that because the 

Website had a problem, that we would throw up our hands and say 

throw everything out. 

I stood on Saturday and I talked to those people that waited all 

day trying to enroll, and I don’t know what you say to somebody 

174 

when they come up to you and say this is the first time I have been 

able to get insurance in years because I had a brush with breast 

cancer. I don’t know what my colleagues would say to that person. 

Say don’t apply for the Affordable Health Care Act, when it is the 

law? I am not sure. 

And we can nitpick and we can go ring around the rosy today, 

but I go back to what I said from the beginning. This is not just 

about a Website. And, as I understand it, the figures were adjusted 

in Maryland. I am going to refer to a February 23rd, 2014 article. 

Maybe you can help me with this. I am just going to read from it. 

It is the Baltimore Sun. It said the new number is 70,000 after it 

was corrected by the Hilltop Institute at the University of Maryland, Baltimore County, a nonpartisan health research organization that discovered its error weeks ago and sent a letter dated 

February 21st to Dr. Sharfstein, Health Secretary and Chairman 

of the Exchange Board. It was a footnote to one chart that wrongly 

also included open enrollment targets beginning next fall for 2015 

coverage. 

Does that refresh your recollection? Do you have that letter? 

Dr. SHARFSTEIN. Yes, I have that letter here. The letter was written—— 

Mr. CUMMINGS. Now, did you go seeking that? I mean, Mr. Jordan has a way of asking questions that you never get a chance to 

answer. But did you go seeking that out? How did that work? What 

happened there? So we found we had a problem. People have problems every day. They don’t just throw up their hands and just go 

and get all upset and say I can’t do it. They find a way to get it 

done. And sometimes we make adjustments. We make adjustments 

every day of our lives. And I guess maybe the reason why I have 

that attitude is because, again, my mom and dad only had a second 

grade education; they were former sharecroppers. Worked like 

slaves, but yet and still they were able to have a son who became 

a congressman, so we believe in the can-do attitude. And I am hoping that we believe in the can-do attitude in Maryland. 

Now, would you explain that to me, please? 

Dr. SHARFSTEIN. Sure. 

Mr. CUMMINGS. Since Mr. Jordan made such a big deal of this? 

Dr. SHARFSTEIN. I think this is a letter from the Director of Economic Analysis at the Hilltop Institute, and he basically said that 

the report where they gave a figure of 147,000 represented the 

newly insured for both the first and second open enrollment periods. So a reasonable estimate of combined enrollment would be 

160,000, including approximately 70,000 in the exchange and 

90,000 in Medicaid. 

Now, of note, at that time we had already set the goal of 260,000, 

and people came to us and said, well, now you are probably going 

to lower that goal. But we didn’t. Even though we were way below 

200,000 at that point, we did not lower that goal. And the governor 

still wanted us to shoot for 260,000. And I testified in the State legislature and I said even though the overall estimate has been lowered by the people that we hired to do an independent analysis because they made an error, we are not changing our goal, and in the 

end we wound up exceeding it by more than 10 percent. 

175 

Mr. CUMMINGS. Now, on Saturday, when I was at the Convention 

Center in Downtown Baltimore all day, trying to help people get 

insurance, I had an opportunity to speak to the Navigators. These 

are people who are not making a lot of money, but giving their 

blood, sweat, and tears because they wanted to touch somebody’s 

future and change the trajectory of their destiny. And one of the 

things that was very interesting, we had so many people trying to 

get health care that, and correct me if I am wrong, that we had 

to basically put some people in a queue and say, look, we can’t— 

there were so many we couldn’t even get to them all and said we 

are going to get back to you during the week and bring you back 

in. Is that what is happening now? 

Dr. SHARFSTEIN. That is exactly right. We expect the numbers for 

the first open enrollment to be higher than what we have now, 

even, and right now our whole call center is doing outbound calls 

to the people who weren’t able to enroll by the end of March and 

had called and asked for extra help. It could be several thousand 

more or more than that, we will see. But I do think we may be able 

to surpass 300,000, against a goal of 260,000 in the face of incredible IT challenges. 

Mr. CUMMINGS. The can-do attitude. Can-do. So let’s talk a little 

bit more about the contractors. You know, when I served as the 

ranking member of the Maritime Subcommittee of the Transportation Committee, we had a situation where we had folks, contractors that were building boats for the Federal Government and the 

boats didn’t float, literally. And sometimes I think some contractors 

have moved to a culture of mediocrity, and it is so very, very unfortunate because if we continue down that road we will be in a situation like I think about a trip that I made to Israel years ago, and 

it was a saying that they had everywhere, it said, If we are not better, we will not be. If we are not better, we will not be. 

Can you kind of talk about the contractual situation here, what 

happened? You said that you had some bad situations that happened. And could we have foreseen some of that, Dr. Sharfstein? 

Dr. SHARFSTEIN. Sure. So I think that the major, in retrospect, 

misjudgment, although it was hard to know at the time, the States 

faced the decision of whether to try to build a computer system 

from scratch with the requirements of the Affordable Health Care 

Act or rely on existing products, and we thought that it would be 

less risky to rely on existing products. We procured a system that 

had at its base an IBM Quorum software for eligibility and it was 

portrayed as out-of-the-box being able to work; we would just be 

able to configure it very easily. This has been a big point of discussion some of our State discussions. We have shared with the State 

legislature the parts of the bid that related to this and some other 

advertisements from IBM. 

And, in fact, the software did not work as advertised, or even 

come close to it; it was defective and deficient on the launch and 

created a whole range of problems that we had not anticipated. 

And I think that the States that did more of the building themselves for this particular goal were more able to be successful, particularly the States that worked with Deloitte, California and New 

York, and we, in the end, because we can reuse a lot of the softVerDate Aug 31 2005 12:17 Jul 07, 2014 Jkt 000000 PO 00000 Frm 00181 Fmt 6633 Sfmt 6633 C:\DOCS\88493.XXX APRIL
176 

ware and hardware, are going to go with a particular solution that 

Deloitte built in Connecticut. 

Mr. CUMMINGS. Now, does the State of Maryland plan on recouping some of the costs paid to Noridian for the development for the 

flawed product? 

Dr. SHARFSTEIN. We do intend to seek recoupment of the funds, 

absolutely. 

Mr. CUMMINGS. So now you are going with Deloitte, is that right? 

Dr. SHARFSTEIN. Correct. 

Mr. CUMMINGS. And what are Deloitte’s plans for fixing or upgrading the Website? 

Dr. SHARFSTEIN. The basic plan is to take the system that was 

developed in Connecticut, and has been very successful, and move 

it into Maryland with minimal changes; and basically plug it in. 

We have to build the interfaces to the Maryland systems and 

change certain elements of the Website and then use it in Maryland for the Fall open enrollment session. 

Mr. CUMMINGS. So who is going to fund that and how will Maryland fund a new course of Deloitte’s work? 

Dr. SHARFSTEIN. So we will be putting our plan in a corrective 

action plan for the IT challenges that we face for the Federal Government and we will be seeking to have the same model of partnership funding that we have had so far. 

Mr. CUMMINGS. I want to say to you, and I said it in your introduction, you know, I know what you have done for Maryland, I 

know what you have done for Baltimore, and I know the dedication 

of you and I am sure of all the other people sitting there. You 

know, Dr. Sharfstein, when we had Medicare Part D we had problems; and when you go back and you look at some of the comments 

that were made back then, we had folks who said, on both sides 

of the aisle, we have a problem, we have to work through it; we 

are going to get there. And we got there. Now you don’t even hear 

about the glitches; it is like ancient history. And I can recall when 

Medicare Part D came through, and I think you were around then 

in Baltimore. If you recall, what we did is we held the same kind 

of events. Members of the Congress went from senior citizens’ 

house, had all kinds of meetings, town halls. Most of us hadn’t 

even voted for it, but it was the law and we wanted to make sure 

that it worked. 

I hear all of this and I do wonder, I really wonder, and I know 

that there are problems with the Affordable Health Care Act, nobody has denied that, but I wonder what it would be like if we 

could just join in together to address those issues, because as my 

father used to say, when you are dead, you are dead; you are gone. 

So what we are talking about is trying to save people’s lives. We 

are trying to make sure that we keep people healthy. We want to 

make sure that we give people a sense of a peace of mind. And I 

want that for my colleagues’ constituents and I want it for mine, 

because I think that we have one life to live. This is no dress rehearsal, and this is that life. And I think we ought to be about the 

business of trying to help each other live the very best life that we 

can. 

I will yield back on that. 

177 

Mr. LANKFORD. [Presiding] Mr. Bentivolio, would you yield to Mr. 

Jordan for a moment? 

Mr. BENTIVOLIO. Yes. 

Mr. JORDAN. I thank the gentleman for yielding. 

My point was real simple. In essence what happened is the Federal Government enters into a contract with the State of Maryland. 

The initial terms of the contact were 150,000 enrollees in the individual market and $180 million going to the State of Maryland. Dr. 

Sharfstein just said they are going to go after some of the contractors they felt didn’t fulfill their end of the deal; they are trying to 

recoup funds. The question is real simple: Is Maryland going to return some of the money? The initial contract was you get $180 million; you said you will sign up 150,000 people. And all of a sudden 

you get a new study that says, oh, we made a mistake, you only 

have to get 75,000. That was my point, plain and simple. So the 

question is real simple: Are you going to return some of the money? 

Dr. SHARFSTEIN. Thank you, I will turn to that. I just want to 

say I am not—just having looked at this document, I am not exactly sure what this document is, so I am not sure exactly who this 

document was shared with. So if we can—— 

Mr. JORDAN. I am going with you. The number you gave is 

147,000 people, right? The number—— 

Dr. SHARFSTEIN. No, I was just referring to the document that 

was handed to me. I just want to be clear, because I thought it may 

have been a different document. 

To your point, we will follow all the applicable laws, and to the 

extent we are able to recoup funding, I certainly expect that it will 

be refunded to the Federal Government. 

Mr. JORDAN. No, no, no. I am talking about the State of Maryland. Are you going to return Federal taxpayer dollars? The contractual agreement was CMS, here is the deal, 150,000 enrollees 

approximately; you get $180 million. You didn’t meet that. You 

changed it. But when they issued the money, when it all set out, 

that was the goal. Are you going to return any money? 

Dr. SHARFSTEIN. We are going to follow all the applicable laws 

in terms of funding. 

Mr. JORDAN. But you are going to go after the contractors who 

you think didn’t fulfill their end of their contract relative to the 

functionality of the Website. 

Dr. SHARFSTEIN. That is correct. 

Mr. JORDAN. Okay, so it is okay to go after them, but it is not 

okay for the Federal taxpayers to get back some of their money. 

Dr. SHARFSTEIN. I think the Federal taxpayers should get back 

some of the money as we get money back from the contractors, yes. 

Mr. JORDAN. I yield back. 

Mr. CUMMINGS. Unanimous consent for one minute, Mr. Chairman. 

Mr. LANKFORD. It is Mr. Bentivolio’s time, but I would assume 

we wouldn’t have any problem with that. 

Mr. CUMMINGS. Just for one minute. 

I noticed Mr. Lee was shaking your head. Why are you shaking 

your head, Mr. Lee? Did you have something you wanted to say? 

Mr. LEE. Well, the HHS–CMS document that was an integral 

document prepared in September was prepared not as a matter of 

178 

contract between us and CMS, but they pulled from a range of 

things, and I will note the California estimate used in that document, because I saw it many months hence, took the end of two 

rounds of open enrollment and misconstrued and thought that was 

the goal for our first round of open enrollment. And our numbers 

for our independent in California, we had independent estimates 

developed. We have been public about them consistently. Those 

independent estimates in California, I noted earlier. Our open enrollment period high-end estimate was 800,000. At the end of two 

rounds of open enrollment it was 1.2 million. I think you are alluding to a September CMS internal memo that was never part of our 

contract, never part of our receipt. But they got the numbers 

wrong, with all due respect. 

Mr. JORDAN. I wasn’t alluding to anything in California; I was 

focused on Maryland, where the gentleman has had 147,000 and he 

said it was revised in February down to 73,000. That is all I was 

alluding to. 

I would ask unanimous consent to have put in the record the letter from Congressman John Delaney to Dr. Sharfstein suggesting 

that they switch to the Federal. 

Mr. LANKFORD. Without objection. 

Mr. CUMMINGS. And I would ask unanimous consent that the 

Sun paper article dated February 23rd, 2014, and the Hilltop Institute letter to the Interim Executive Director of the Maryland 

Health Benefit Exchange dated February 21st, 2014 be entered 

into the record. 

Mr. LANKFORD. Without objection. 

Mr. Bentivolio. 

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

As a school teacher, I taught my students there were three 

branches of Government, the legislative, judicial, and executive 

branch. Kind of a checks and balances system, right? Except they 

should have taken my course they keep writing checks and my constituents are getting the balances. 

I also taught my students bills were brought to the floor, went 

to committee, and then brought to the floor again for debate and 

passage, considering passage. But the ACA was passed before Congress could read and debate the bill. Shame on Congress for allowing this to happen. Shame on those who circumvented the congressional procedures long established that allows open and respectful 

debate before a vote and passage of a law. 

The billions of dollars spent and the division it has caused in this 

Country is inexcusable, because Congress passed a bill before it 

was read and debated. This is shameful. 

It seems here, listening to all these debates, the good, the bad, 

and the ugly, the money that was spent, and all we have is billions 

spent and division in this Country. 

Let me just say this. In Congress we are the fiduciaries of the 

public interest, and I think few attorneys or citizens would sign a 

blank contract based on hopes and dreams. And today, after hearing your testimony and reading this testimony, all I see is more 

money wasted for failed systems, coverups. That is what I anticipate. Lawsuits will be filed, and every citizen knows somehow, 

179 

something at someone, it is going to be swept under the rug. More 

money spent. 

It is unacceptable and we need to have accountability for the 

money already spent and the actions that are being taken as we 

move forward. 

With that, I just have a few questions. 

Mr. Lee, how many uninsured people are there in the State of 

California? 

Mr. LEE. At this moment, I do not know that. I look forward to 

knowing that at the end of this year, when we do a State-wide survey, which we do every year in California to assess the status of 

people’s insurance. 

Mr. BENTIVOLIO. So do you know the population? 

Mr. LEE. About 35 million. 

Mr. BENTIVOLIO. Thirty-five million people. How many people in 

California have enrolled through the State exchange? 

Mr. LEE. Approximately 1.2 million in Covered California’s products and another approximately 2 million are currently enrolled in 

Medi-Cal. 

Mr. BENTIVOLIO. Okay, so we have 35 million people in the State, 

1.2 million. Wow, if it was a good product, you would think people 

would beat a path to your door. 

Does the Website have the ability to show, of those who have enrolled in the State exchange, who has paid for their insurance premiums to date and those who have not paid their premiums yet? 

Mr. LEE. No. After people enroll, they then, directly with the 

health plan they select, pay their premiums, and our plans in California report that approximately 85 percent of those individuals 

have paid their premium. 

Mr. BENTIVOLIO. Eighty-five percent. 

Mr. LEE. Yes. 

Mr. BENTIVOLIO. Okay. Do you believe it is important to know 

how many people are actually going to receive insurance through 

your exchange? 

Mr. LEE. Absolutely. 

Mr. BENTIVOLIO. Okay, thank you very much. 

With that, I yield back, Mr. Chairman. 

Mr. LANKFORD. Thank you. 

Ms. Norton. 

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

I want to ask a question about the contractors. I don’t think 

there has been, in all the hearings that have been had, enough of 

a focus on the contractors; Congress is so busy fighting off the Affordable Health Care Act itself. But I must say that the number 

of State exchanges that have problems, when you combine that 

with the problems we had in the Federal exchange really does 

show that technology is overrated. And I must say it also shows 

that since this has not been found just in the Federal exchange, 

this rollout problem, this problem with technology, just in this 

State or that State, but, rather, much to a wide cross-section of 

States, that we are dealing with a new problem, and that we ought 

to approach it that way. 

Now, that means if it were new to the Government, State and 

Federal alike, it certainly looks like what we did not anticipate is 

180 

how new it would be to these contractors; and that was perhaps 

over-reliance or over-reliant faith put in the contractors. Now, I 

know that one of them, CGI, has its fingerprints on a number of 

the States, as well as the Federal exchange, and I can’t believe that 

that is accidental. 

Let me just ask you who use CGI, did you look to see what its 

record had been, for example, with Massachusetts? I see that Massachusetts no longer uses CGI. So those of you who used CGI, and 

there were several of you who did, would you speak up and indicate 

whether you checked to see what CGI’s experience had been in 

doing precisely this kind of work, at least in Massachusetts? 

Ms. YANG. Thank you, Congresswoman, for the question. First of 

all, let me say that ACA implementation has many components; IT 

implementation is one of them. We work with a wide range of different contractors, and some of them have been delivering excellent 

performance, ensuring our overall success. 

Ms. NORTON. I am asking about CGI in particular. 

Ms. YANG. Correct. Sorry about that. CGI was involved in Massachusetts’ ACA implementation, specifically with the Website development, and we engaged them through a competitive procurement 

process consistent with guidance applicable to us. But, unfortunately, CGI’s performance has been disappointing. They were behind schedule in delivering a required functionality—— 

Ms. NORTON. Did you use them from the beginning? Did you use 

CGI from the beginning? 

Ms. YANG. I am sorry, I didn’t catch that. 

Ms. NORTON. Had you used CGI before? 

Ms. YANG. No. The Health Connector was engaged in CGI for the 

first time with this contract. 

Ms. NORTON. I see. When you rolled out your own product, did 

you use CGI? 

Ms. YANG. No, we did not work with CGI. It was a very different, 

much simplified Website development. We worked with a local vendor. 

Ms. NORTON. What led you to use CGI? 

Ms. YANG. Why did we use CGI? We went through a competitive 

procurement process to—— 

Ms. NORTON. I don’t want to know about your process. What 

about CGI led to its selection? 

Ms. YANG. It was selected through a procurement. 

Ms. NORTON. Everybody was selected through a procurement, 

Ms. Yang. 

Ms. YANG. I am sorry, I was just trying to answer why we ended 

up with CGI. 

Ms. NORTON. I only have so much time. Did they have experience? Did they have some other factor that made them stand out 

among those who competed for your contract? 

Ms. YANG. It was the best vendor among the respondents. 

Ms. NORTON. Best in what way, Ms. Yang? 

Ms. YANG. In demonstrated experience? 

Ms. NORTON. In this kind of work? 

Ms. YANG. Yes. 

181 

Ms. NORTON. Mr. Matsuda, you used CGI. What made you use 

this company, which has had this bad experience across a number 

of States? 

Mr. MATSUDA. I was not with the Hawaii Health Connector at 

the time the decision was made. 

Ms. NORTON. Well, surely you know the answer. 

Mr. MATSUDA. But my understanding is that we went through a 

full procurement, and a major factor in the decision was that CGI 

had been selected for the Federal exchange. 

Ms. NORTON. Do any of you know whether CGI had experience 

doing this kind of work before? Who else used CGI, please, at the 

table? Anybody else at the table? Had CGI had experience comparable to this experience that you engaged them to do, to your 

knowledge, Ms. Yang and Mr. Matsuda? 

Ms. YANG. Congresswoman, as you know, ACA implementation is 

a new project for all of us, so I wouldn’t say CGI was engaged in 

identical projects. But in terms of comprehensive system integration, CGI does—— 

Ms. NORTON. All right. 

Mr. Lee, did you consider CGI? You had a successful experience. 

Did they apply to California? 

Mr. LEE. I actually don’t think, as I recall, CGI bid, or it was not 

one of the finalists for us. So I don’t know if they were a bidder, 

but the folks that did bid didn’t have direct experience, because it 

was doing something new, and you needed to look at general track 

record, costs, the staff they provided, factors like that that went 

into our selection. 

Ms. NORTON. You know, the District had a real heavy burden because Congress, in a spite amendment, made members of Congress 

and their staff go to the exchange and took them out of the Federal 

program. Well, it worked pretty well. I have to go back and make 

sure they didn’t use CGI. I do think we have to look at these contractors and see what was the difference in the experience with 

contractors in particular. When you are doing something entirely 

new, which Congress has not taken in consideration in its criticism 

of this process, it does mean that you probably are asking contractors to do something that they haven’t done either. The problem 

with this is we assume that contractors do something much bigger. 

You know, we talk about the big parts of the private sector, and 

we assume that these must be the same contractors who have handled things in the Country, so surely they could do the health care 

exchange for a particular State or, for that matter, for the United 

States. 

Mr. Chairman, if I could say one thing, just to note for the record 

that Mr. DeSantis, from Florida, put up a graph which he said 

showed and questioned witnesses on the theory that it showed that 

these contractors and others, including the Federal exchange, had 

in fact performed below CGI expectations considerably. Please note 

for the record that his State, and now a great many other States, 

are directly responsible for that because they have failed to allow 

poor and middle class and disabled people to get health through expansion of the Medicaid exchange. That it happened, I have no 

doubt that the goals would have been met. So, especially coming 

from a State, to use such a graph without taking responsibility for 

182 

why there is a reduction in the uninsured Americans takes a lot 

of chutzpah. 

Thank you, Mr. Chairman. 

Mr. LANKFORD. I would only say one thing with that. In my State 

we also have that. Some of those individuals were covered by our 

Insure Oklahoma program prior to that, and they lost it. And part 

of the waiver issue was we had to remove that as a safety net. 

Ms. NORTON. Mr. Chairman, that doesn’t take care of those 

where you have an expanded Medicaid. 

Mr. LANKFORD. That is what I meant. Those individuals that 

would have been—— 

Ms. NORTON. Did you have expanded Medicaid? 

Mr. LANKFORD. We do not have expanded Medicaid, but we did 

have coverage there already with our Insure Oklahoma program. 

Ms. NORTON. Well, Mr. Chairman, my remarks were limited to 

those who failed to expand Medicaid and had no other way, obviously, of insuring them. 

Mr. LANKFORD. Right. 

Mr. MCHENRY. Mr. MCHENRY. Thank you, Mr. Chairman. 

I would just ask this question of the whole panel. You all are in 

charge of your exchanges in your respective States. I will just go 

down the line. Yes or no, have you enrolled through these exchanges that you are in charge of? Mr. Matsuda? 

Mr. MATSUDA. Excuse me? Yes. 

Mr. MCHENRY. Okay. 

Mr. Sharfstein? 

Dr. SHARFSTEIN. No. You mean me personally, is that what you 

are saying? 

Mr. MCHENRY. Yes. 

Dr. SHARFSTEIN. No, I am a State employee. 

Ms. YANG. No, I am a State employee. 

Mr. LEE. I am sorry, I don’t understand the question. 

Mr. MCHENRY. Are you enrolled through the very exchange you 

are in charge of enrolling others. 

Mr. LEE. Through State coverage. 

Mr. LEITZ. Congressman, through State coverage I am. 

Mr. MCHENRY. Okay. 

Mr. VAN PELT. Thank you. Two things. First, I need to apologize 

and correct a statement I made earlier. 

Mr. MCHENRY. No, you can use somebody else’s time for that, sir. 

Mr. LANKFORD. I can grant unanimous consent for additional 

time to be able to answer that, if he needs to, as well. 

Mr. MCHENRY. Go right ahead. 

Mr. VAN PELT. Thank you. Mr. DeSantis asked about the enrollment of our qualified health plans of April 1st. The correct number 

is 57,000. 

With respect to your question, Congressman, I am not an employee of the State; I am self-employed and did not apply for insurance through Cover Oregon. 

Mr. MCHENRY. Okay. Okay. So the question, and I ask this because this is one of the questions that my constituents ask about 

the laws that we live under and those implementing the laws, 

whether or not they are complying with them or living under them 

183 

are going through the same process. So I would ask you, there is 

a concern I have about personally identifiable information and folks 

that are putting information into the exchange and the safety of 

that information. 

Would you personally guarantee that personally identifiable information is safe through your respective exchanges? Mr. Matsuda? 

Mr. MATSUDA. What I do know since I have started in this position is that I verified that the exchange was given full authority 

to connect to the Federal hub after passing all necessary security—— 

Mr. MCHENRY. Yes, but we have concerns with the Federal hub 

as well. So you are sharing perhaps some concern? 

Mr. MATSUDA. No, because—— 

Mr. MCHENRY. So let me ask you again. Would you personally 

guarantee that personally identifiable information is safe through 

your exchange? 

Mr. MATSUDA. I believe it is secure, yes. 

Dr. SHARFSTEIN. Recognizing that nothing is 100 percent safe, I 

believe the Maryland exchange has done what it needs to do—— 

Mr. MCHENRY. Is it about 80 percent safe, 90 percent safe, 95? 

Dr. SHARFSTEIN. Well, if you look at what has happened in the 

private sector, there are a lot of things that can happen. But we 

have had no known incursions and, to your point, my personally 

identifiable information is in there. I did start an application; I put 

in my social security number. I had no qualms about doing that. 

Mr. MCHENRY. Well, were you able to complete your application? 

Dr. SHARFSTEIN. I didn’t complete an application because I have 

coverage. I was just testing it. 

Mr. MCHENRY. You were testing it. Okay. 

Ms. YANG. Congressman, this is one of our highest priorities in 

terms of protecting people’s private information. We have not had 

a data breach and I wouldn’t be letting the exchange operate without having confidence that personal information was protected. 

Mr. LEE. Similarly, the safety of personal information is our top 

priority. We are very confident that that information is being kept 

secure. We have had no data breaches and we have no incidences 

that we know of of individuals’ financial or personal health information being breached in any way. 

Mr. LEITZ. Similarly, Congressman, security is a top priority for 

us. We certainly do everything we possibly can to protect the information that goes in. 

Mr. MCHENRY. Will you guarantee that? 

Mr. LEITZ. Congressman, it is very much a top priority. 

Mr. MCHENRY. I will take that as a modified, if possible, yes or 

no, however you want to see it. 

Mr. VAN PELT. The Cover Oregon also meets the CMS security 

requirements, which have been validated by CMS. And we are not 

aware of any security breaches with respect to connecting to the 

hub. 

Mr. MCHENRY. Okay. All right. I wanted to at least ask that. So 

in terms of lost applications and incorrect subsidies, it is not an 

error-proof system we have, obviously; there have been faults and 

failures, obviously. 

184 

But I have a story for you, Mr. Sharfstein. In your system in 

Maryland I have a staffer whose mother was given a notice by her 

insurer that, due to the Affordable Health Care Act, her insurance 

was discontinued, so she had to go to the exchange; and she began 

a three-month-long process to enroll in your exchange. I know that 

you have about 4,000 applications in your State that were given incorrect subsidies or lost applications. Is that about the right number? 

Dr. SHARFSTEIN. We reported a subsidy problem about that number, right. 

Mr. MCHENRY. Similar to that. Okay. So her experience is one 

that I know very well through her daughter and through her telling me the story. So the first roadblock for her in filling out the 

application was a question of her citizenship, which she could not 

verify. She calls the Help Line. The Help Line obviously is very 

helpful in all your States, as you all will attest to, when people 

have problems with the website; and they have been noted, I don’t 

have to recount this. 

But in her situation she was told through the hotline to fax her, 

I believe it was, driver’s license and social security number to this 

open fax line. And she asked, well, do I put it to your attention, 

can I put it to someone’s attention? No, just fax it to this number. 

Is that concerning to you, that you have somebody’s driver’s license 

and social security number given to this random fax number in 

order to proceed with the application? 

Dr. SHARFSTEIN. It is not just like a fax in the corner that people 

wander by. 

Mr. MCHENRY. I would hope not. I would hope not. 

Dr. SHARFSTEIN. It isn’t. 

Mr. MCHENRY. Or a fax at a local truck stop or something. 

Dr. SHARFSTEIN. No. 

Mr. MCHENRY. I know it is a little better than that. 

Dr. SHARFSTEIN. There is a Fulfillment Center and they have an 

approach to secure personal information, too. And we have to verify 

things like whether people are able to purchase coverage under the 

law. 

Mr. MCHENRY. So those folks that are privy to that fax machine, 

or whatever the technology is that you use, privy to that? Are they 

vetted? Is there some safety and security that I can tell her that 

there was for her information? 

Dr. SHARFSTEIN. Yes, you can. And particularly for the Fulfillment Center. 

Mr. MCHENRY. Describe that for me. 

Dr. SHARFSTEIN. Well, we work with Maximus, which is a company that secures a lot of personal information. They do, for example, they are an enrollment broker for the Medicaid program, they 

work in many States. They are a very big company that has extremely strong policies around protecting private information because they do it in a whole bunch of States. They are the ones who 

were staffing the Fulfillment Center that those faxes go to. 

Mr. MCHENRY. Okay. 

Mr. Chairman, the final question I have is you all have in your 

metrics the number of enrollees as a part of your measurement of 

the success of your respective exchanges. Do you have a cost per 

185 

enrollee? For instance, Maryland has spent about, what, $100 million, $150 million, in that range, to build the Website and the exchange? Is that about right? 

Dr. SHARFSTEIN. Right. So far, about $129 million. 

Mc. MCHENRY. $129 million. So about $2,000 per enrollee? 

Dr. SHARFSTEIN. Well, again, we have enrolled 295,000 people, so 

it would be a lot less than that if you were to divide it. But if you 

look, from our perspective, we are looking over several years. 

Mr. MCHENRY. Yes. So this is the individual market. 

Dr. SHARFSTEIN. Right. But people on Medicaid are not invisible. 

This is how they get coverage in Maryland. 

Mr. MCHENRY. But they previously had coverage. 

Dr. SHARFSTEIN. They did not. A lot of them did not have coverage. 

Mr. MCHENRY. A lot? How many? 

Dr. SHARFSTEIN. The vast majority of them did not have coverage. These are people who have all gained coverage since January 1st. 

Mr. MCHENRY. So if this is about the individual market getting 

individual folks in the market, the individual market getting access 

to insurance, is that not a fair measurement for this? 

Dr. SHARFSTEIN. I don’t think so. It is also how people on Medicaid get access to insurance. 

Mr. MCHENRY. But they could have had access to insurance previously under Medicaid. 

Dr. SHARFSTEIN. No they couldn’t. They couldn’t because—— 

Mr. MCHENRY. Not at all? I thought Medicaid was actually an 

insurance program. 

Dr. SHARFSTEIN. The vast majority of people in Maryland, single 

adults, for example, did not have coverage. Now they have coverage 

up to—— 

Mr. MCHENRY. The vast majority of adults in Maryland did not 

have coverage? 

Dr. SHARFSTEIN. Single adults did not have Medicaid coverage in 

Maryland. 

Mr. MCHENRY. Okay. 

Dr. SHARFSTEIN. Even if they were very poor. 

Mr. MCHENRY. So how do you enroll in the individual market? 

Mr. CONNOLLY. Mr. Chairman? Mr. Chairman, I don’t object to 

my colleague having extra time; I just want to make sure equal 

time is granted to the Minority. 

Mr. LANKFORD. Has Mr. Connolly seen me be unfair before? 

Mr. CONNOLLY. No. I have no question about that. But I just 

wanted it for the record. 

Mr. MCHENRY. If I can just ask one final question. 

Mr. CONNOLLY. Certainly. 

Mr. MCHENRY. And if the gentleman was here to see Mr. 

Cummings, I am being a little less greedy than he was with the 

time; and as members of Congrss we are but a little bit greedy with 

the time. Mr. Cummings is coming back in and I would revise that. 

Mr. Cummings was appropriately useful with his time. 

Mr. CUMMINGS. Would the gentleman yield? 

Mr. MCHENRY. I have no more time. 

186 

Mr. CUMMINGS. I used the exact amount of time that the gentleman—— 

Mr. MCHENRY. All right, how about this? I will yield back. 

Mr. CUMMINGS. The exact amount of time. 

Mr. MCHENRY. If you want to quibble with this. I certainly appreciate it. 

Mr. CONNOLLY. Mr. McHenry? 

Mr. MCHENRY. I reclaim my time. 

Mr. Chairman, thanks so much for your generosity. I certainly 

appreciate the kindness of my colleagues and I will show you the 

same kindness. 

Mr. CONNOLLY. And, Mr. McHenry, for the record, I was not objecting; I was simply trying to make sure that the Minority was 

granted equal time. 

Mr. LANKFORD. I am going to do something out of order. 

You have been seated for two and a half hours. Would you like 

a moment just to stand and stretch? This lady right here, Ms. 

Hanabusa, has also been seated two and a half hours waiting for 

questions. She is going to get the next questions. But would you 

like to stand for just a moment? 

We will take just a very short recess just to be able to stand. 

[Pause.] 

Mr. LANKFORD. Ms. Hanabusa is recognized. 

Ms. HANABUSA. Thank you, Mr. Chair. First, on behalf of the 

people of Hawaii, I want to thank you again. You were the manager of the measure that allowed us to name a post office after 

former Congressman Cecil Heftel. Thank you again for that. 

And I would like to thank you plus the members of this committee for their unanimous consent to allowing me to participate. 

Mr. Chair, one of the reasons why I asked to participate is because of the fact that the people of Hawaii were also very concerned about the reports of the money spent on our Connector. 

Mr. Matsuda, I do want to say up front that I know you have 

inherited this. The Connector went into effect in 2011, July specifically, and you came on board in November. So to the extent that 

you can address some of these concerns, I would appreciate it. 

First of all, one of the things that I think fundamentally we must 

all understand is Hawaii is truly different. I know everybody says 

that, but Hawaii is truly different. We are the only State that has 

the prepaid health care law that went into effect in 1974; and I 

think that is part of the issues that we have to understand as we 

look at these numbers. I saw the letter sent to the governor and 

it speaks to $205 million going to the Hawaii Connector, and I 

think they computed it out at about $44,000 per person. But let’s 

begin there. 

So, Mr. Matsuda, $205 million I think was the grant that you 

were entitled to. How much money did the State actually use? 

Mr. MATSUDA. As of the end of this past calendar year, we have 

spent $57 million out of that amount. 

Ms. HANABUSA. And it is my understanding that there was a request to extend so that you could spend the remaining amount or 

however amount you could justify, but the State has been denied 

that, is that correct? 

187 

Mr. MATSUDA. The operations and maintenance portion of the 

grant cannot be used beyond this calendar year, that is correct. 

Ms. HANABUSA. So of the $205 million, so people understand us 

very clearly, how much money would either be returned to the Federal Government, if you want to answer it that way, or how much 

money do you get to continue to use? 

Mr. MATSUDA. So in addition to the $57 million that has already 

been spent, we have obligated under contract an additional approximately $50 million So that means we have about $100 million, 

roughly, of the Federal grant money that has yet to be obligated 

or spent. The amount or the portion of that that is related to operations and maintenance, versus development money, which can be 

extended to next year, has yet to be determined. We are working 

with CMS to figure that out because we just got the decision recently. Obviously, we want to be careful about how we use taxpayer 

dollars, so the development money will be used just to the extent 

necessary to improve the system to fit our unique marketplace. 

Ms. HANABUSA. And what you have testified before the State legislature is that—and I think I misheard you speak earlier—is that 

the Hawaii Connector cannot self-sustain in terms of if you base it 

purely on the amount of monies that are coming in in terms of premium percentage of 2 percent or so. Was that correct? 

Mr. MATSUDA. Yes, that is what I testified to. 

Ms. HANABUSA. And I think that was in line with the potential 

request to the Hawaii State legislature for State funds of approximately $15 million a year to continue the Connector. It may be less 

because of the number, but that was about the amount. Am I correct in that? 

Mr. MATSUDA. Well, yes. Actually, we are going through a process right now to figure out how we can reduce those expenses substantially below $15 million. 

Ms. HANABUSA. So the State is aware that it has to kick in, in 

essence, to cover the continuing cost of the Connector. 

Mr. MATSUDA. Yes, but I think it is important to put it into context. The issue for us on the revenue side is that because of the 

Prepaid Health Care Act, virtually all small businesses in the State 

already have insurance for their employees, so there is very little 

incentive for them to leave a system that they have been accustomed to for almost 40 years. So I think it is incumbent on us, 

looking at that marketplace reality, to try to reduce the cost of the 

operations of our system as much as possible. 

Ms. HANABUSA. So if we can just go through this very quickly. 

So there is said to be 100,000 total uninsured in Hawaii, of which 

about 58,000, almost 60,000 are really going to be covered by Medicaid expansion. So the only number that can be enrolled is about 

33,000, is that about right? Because we have some that are ineligible because of immigration status. 

Mr. MATSUDA. Yes. That is right if you are only looking at the 

uninsured. But there are other people who currently have insurance that might be able to find better quality or lower cost insurance through the exchange. So the potential on the individual marketplace is probably bigger than just the 33,000. 

Ms. HANABUSA. If I may, Mr. Chair, if I can just have a little bit 

of leeway here, if you don’t mind. 

188 

Mr. LANKFORD. I will give you some of Mr. Connolly’s time. 

Ms. HANABUSA. Thank you. 

So, Mr. Matsuda, the thing that I really wanted to get to is, quite 

candidly, a level of frustration I have had with your predecessor 

and whoever was there. You know, I was not here when we voted 

the ACA; however, I do know that the ACA has an exemption for 

Hawaii, I think it is Section 1560, which is anticipated in the original law, because of our Prepaid Health Care Act. I have always 

asked, okay, what have you done or what does it mean, and we 

have not gotten a response on that. I do also know that there is 

a movement in Hawaii that we avail ourselves of Section 1332 of 

the ACA, which is really an exemption from the provisions; and it 

is supposed to be because you have a, I guess for lack of a better 

description it is called the Waiver for State Innovation. And, of 

course, we like to think that we were the major innovators in any 

kind of health care. But that doesn’t kick in until 2017. 

So the question is why hasn’t the State or the Connector looked 

at this? Because the problem is the fact that prepaid health and 

the ACA are not meshing well. I mean, that is our problem. That 

is the reason why the Connector doesn’t work; that is the reason 

why we can’t go on the Federal system, because it doesn’t take into 

account the uniqueness of Hawaii’s law. Would you agree with me 

that that is your fundamental problem, that is the reason why it 

is not working? 

Mr. MATSUDA. That is correct, Congresswoman, and we are very 

anxious to take advantage of the innovation waiver in 2017; and, 

in fact, we wish it would occur earlier. 

Ms. HANABUSA. But what about the exemption in the law itself 

that exists today, which is Section 1560? Why haven’t we availed 

ourselves of that? Or is there a way that you can go to the Secretary of Health and Human Services or CMS and say, we have got 

this waiver in the law and we have this waiver that we know you 

probably will qualify us for in 2017? Why haven’t we done that? 

Mr. MATSUDA. I am not an expert on that section of the law, but 

my understanding is that it only refers to preserving the exemption 

that we have for prepaid under ERISA. But the scope of the ACA 

is much bigger than that and includes other areas of the law. So 

I think there is a complicated legal evaluation that needs to be 

made to see if we can take advantage of it in the way that you are 

suggesting. 

Ms. HANABUSA. And we haven’t done that yet. 

Mr. MATSUDA. I do know that it is under consideration by both 

the legislature and the State administration, and we are trying to 

assist with that. 

Ms. HANABUSA. Thank you. Mr. Matsuda, like I said, this is 

something that you inherited, but, notwithstanding, you can imagine how people at home are very frustrated with this and, actually, 

they are very embarrassed that people are saying we have all this 

money and we have only enrolled less than 8,000 people. But the 

enrollment of the less than 8,000 is really a function of the existing 

laws that we have that are not meshing, and I would really appreciate it if you would keep us apprised of that, because that has always been a question that we have constantly asked, or I have constantly asked, is why have an exemption in a law, not use it, and 

189 

then have to wait until 2017, when we are clearly, I believe, the 

example that that provision, Section 1332, was intended to not 

have to address because we are exempted. But we are truly innovative, wouldn’t you agree? 

Mr. MATSUDA. Yes. 

Ms. HANABUSA. Thank you very much. 

And thank you, Mr. Chair, again. I yield back. 

Mr. LANKFORD. Mr. Connolly. 

Mr. CONNOLLY. Thank you, Mr. Chairman, and thank you for 

your courtesy to our colleague from Hawaii. 

Welcome to this panel. It is a fascinating panel. 

You know, I wish, on this subject, we could sort of move beyond 

the partisan talking points. If there are things to be fixed, why not 

come together and try to fix them? And if there are things to be 

celebrated, why not intellectually be honest and celebrate them? 

But if you go into a subject matter unrelentingly for four years 

in opposition, then you are probably going to have the problem we 

had with today’s hearing. In the Majority staff memo, the hearing 

purpose, and it says: The current enrollment numbers of 

ObamaCare are significantly lower than expected. Oops. Well, actually they are significantly higher than expected; they actually met 

the highest stretch number CBO set for them. They exceeded their 

own revised numbers after the Website rollout, and are at 7.1 million and counting. Anyone on the panel, can any of you think of a 

brand new program from scratch in less than six months that enrolled 7.1 million people? Anybody? No. Not even California. 

Ms. Yang, Massachusetts. The individual mandate that we have 

in RomneyCare and ObamaCare, do you know where it came from 

intellectually? Do you know where its wellspring was? Liberal 

Democratic idea? 

Ms. YANG. Sorry, Mr. Congressman. 

Mr. CONNOLLY. It came out of the Heritage Foundation. It was 

a conservative Republican idea enshrined in both the Massachusetts because of a conservative Republican philosophy that felt, correctly, people needed to take ownership for their decision-making; 

and, therefore, they have to have some skin in the game, and thus 

the individual mandate. In fact, no less a figure than then Republican Speaker Newt Gingrich said that one of the reasons he opposed the Clinton health care initiative back in 1993 and 1994 was 

because it lacked an individual mandate. And yet, today, because 

of partisan politics, that individual mandate, conservative Republican intellectual wellspring, is now referred to as socialism. 

Do you have an individual mandate requirement in Massachusetts that preceded ObamaCare, Ms. Yang? 

Ms. YANG. Absolutely, Congressman. 

Mr. CONNOLLY. And is it working? 

Ms. YANG. It is working very well. 

Mr. CONNOLLY. What happened to the population of uninsured in 

Massachusetts? 

Ms. YANG. There is a very small percentage of our residents that 

were uninsured. Prior to the implementation of the ACA it about 

3 percent. We are actually very optimistic that number has further 

shrunk because we brought more people into coverage, so we expect 

that number to be even less than 3 percent now. 

190 

Mr. CONNOLLY. Is that not the second lowest uninsured population in the United States? 

Ms. YANG. I thought that was the first lowest. 

Mr. CONNOLLY. Well, I think Hawaii has—what is Hawaii’s, Mr. 

Matsuda? 

Mr. MATSUDA. I am happy to concede to Massachusetts. 

Mr. CONNOLLY. Oh, all right. 

[Laughter.] 

Mr. CONNOLLY. Then, Ms. Yang, you are even more successful 

than I thought. 

Ms. YANG. Thank you, Congressman. 

Mr. CONNOLLY. So in terms of Website, I heard the testimony 

here that Websites are not the same as the exchange, and Websites 

sometimes do have glitches, sometimes big ones, unfortunately. Did 

Massachusetts have glitches when it started, Ms. Yang? 

Ms. YANG. Absolutely, Congressman. In fact, I would just say 

that the Website that we launched in 2007 looked nothing like the 

Website that we had prior to the ACA. Even the pre-ACA Website 

went through a journey both from a performance perspective and 

a functionality perspective. Technology is meant to evolve over 

time; it is meant to be innovative, improved as we gain experience, 

as we react to the market. So when we, unfortunately, experienced 

challenges with the Website, we were not panicking. We have gone 

through this before. These are things that we just need to work 

through. We have worked through it before. ACA is complicated, 

but it is not beyond technology. There are technological solutions: 

we need to identify the right vendor; we need to put the right team 

in place, and we can fix them. 

Mr. CONNOLLY. Wouldn’t it be fair to say the goal here for the 

ACA, the Affordable Health Care Act, known as ObamaCare, was 

never to have a perfect Website, it was to get people enrolled. 

Website is a method, not an end. 

Ms. YANG. That is exactly right. And I would just say look no 

further than Massachusetts, because we did not have sort of the 

fortune of having a state-of-the-art modern Website. We had something very simple, but easy to navigate. We demonstrated the concept, but we didn’t really have the benefit of the ACA Website, 

which really brings it to the next level. Now, it does bring a lot 

more convenience to people; it does improve people’s experience. 

But at its fundamental, ACA is about coverage, and Massachusetts 

is demonstrating it. 

Mr. CONNOLLY. Mr. Lee, one of the things asserted by some of 

my friends on the other side of the aisle who are never going to 

give this, ever, a positive mark of any kind, is that actually the 

number of people enrolled is masking the fact that it equals or is 

less than the number of people who have in fact lost their health 

care coverage. How many people are enrolled in California again? 

Mr. LEE. Well, again, enrollment first through Covered California directly in our plans, about 1.2 million. 

Mr. CONNOLLY. 1.2 million. 

Mr. LEE. We have 1.9 million enrolled in Medi-Cal plans, and we 

don’t know, and this is one of the things that is lost in this discussion, the number of people that enrolled directly with their health 

plans in Affordable Health Care Act-compliant plans with essential 

191 

benefits. We think that for the vast majority of the individual market that converted out of their plans this year didn’t come to our 

marketplace because they weren’t subsidy eligible, so they are now 

in the individual marketplace. 

Mr. CONNOLLY. Right. But surely the enrollment in California is 

not exceeded by the number of people who have lost their private 

insurance plan. 

Mr. LEE. Absolutely not. But, again, this term that is often used 

of people who have lost their coverage, people converted to different 

coverage. The vast majority kept coverage with their existing plan, 

or some came to the marketplace and benefitted from subsidies. So 

the term of lost coverage, people converted coverage and converted 

to new coverage that now meets essential benefits protections 

under the Affordable Health Care Act. 

Mr. CONNOLLY. And is this a brand new phenomenon? Apparently, for the first time ever in history, people are losing their coverage and insurers are cancelling their coverage. 

Mr. LEE. What is new is that no insurance company can turn 

people away that knock at their door. What is new is that people 

cannot be turned away because of a health condition. Health plans 

cancelled policies at their whim previously, and if people left jobs 

they were left potentially without insurance, etcetera. So we are in 

a new set of circumstances, but not the set of circumstances of people changing types of coverage or losing coverage. 

Mr. CONNOLLY. Thank you. 

Mr. Chairman, you have been generous and I yield back. 

Mr. LANKFORD. Thank you. 

Let me run through a few things here. The way your agency is 

set up for funding stream, once we get into next year or the next 

year, how is your agency funded, is it general revenue, is it percentages? Mr. Matsuda, you mentioned it was a percentage at some 

point. So I would like to just quickly know how is it funded in the 

days ahead. Mr. Matsuda? 

Mr. MATSUDA. Currently, we are only funded by the Federal 

grant. We are a nonprofit corporation that is not part of the State 

administration, and we are before the State legislature right now 

with a funding proposal. 

Mr. LANKFORD. Okay, so there is not a revenue stream at this 

point. 

Mr. MATSUDA. I am sorry. 

Mr. LANKFORD. I am talking about trying to keep your agency 

doors open next year. 

Mr. MATSUDA. Excuse me. I forgot to mention we also have, by 

board of directors’ policy decision, a 2 percent fee that is assessed 

against all plans that are sold in our marketplace. 

Mr. LANKFORD. Okay, so that 2 percent fee is what covers that, 

plus whatever general revenue is allocated. 

Mr. MATSUDA. Yes. 

Mr. LANKFORD. Okay. 

Dr. SHARFSTEIN. Ours is through a premium assessment across 

all State-regulated insurance. 

Mr. LANKFORD. All insurance. And what is that percentage? 

Dr. SHARFSTEIN. It is about $40 million a year. I don’t know the 

exact—— 

192 

Mr. LANKFORD. What is the percentage? That is a fee on all insurance. 

Dr. SHARFSTEIN. Yes. Whatever it is, it works out to about $40 

million. But I will—— 

Mr. LANKFORD. Three percent, 5 percent, .2 percent? Give me a 

ballpark. I won’t hold you to it because it is ballpark. 

Dr. SHARFSTEIN. It is probably in the 1 to 2 percent, roughly, but 

I will definitely have to follow up. 

Mr. LANKFORD. But it is on all insurance. 

Dr. SHARFSTEIN. All State-regulated, right. 

Mr. LANKFORD. Okay. 

Ms. Yang? 

Ms. YANG. Mr. Chairman, as you know, the Massachusetts Connector has been in existence for the past eight years. We have historically been funded with a combination of State funding, the general fund, and insurance carrier administrative fee; and that is the 

reason is because, on the one hand, we serve as a distribution 

channel that really provides backroom function for the insurance 

companies at the same time we perform policy responsibilities and 

service for the State. We envision that model is going to continue 

post-ACA. We do not have expectation of additional Federal funding to support the administration. We have not yet made a decision 

at this point in terms of the fee percentage. Historically it is between 2.5 percent and 3.5 percent. 

Mr. LANKFORD. Okay. 

Mr. Lee? 

Mr. LEE. Our ongoing revenue is going to be based on a carrier 

administrative fee. The current fee is on a per member, per month 

basis, 1395, which is a little bit over 4 percent of premium. And 

we are going to be reviewing and adjusting that on an annual basis 

based on what our revenue needs are as we adjust our expenses. 

I would also—— 

Mr. LANKFORD. Could you help me real quick? 

Mr. LEE. Yes. 

Mr. LANKFORD. Per member, per month, is that the individual 

that holds the policy? Where is that? 

Mr. LEE. That is built into the premium. 

Mr. LANKFORD. 1395. 

Mr. LEE. Yes. And I would note we did a lot of analysis of this, 

so this actually enables health plans to lower their costs, because 

our cost per acquisition of what it means to enroll an individual is 

far less expensive than it used to be in the individual market; and 

the individual plans have a reduction and no longer have an underwriting cost because there is no longer underwriting, guaranteed 

issue. 

Mr. LANKFORD. It is amazing that people would beat a path to 

your door when they are going to be fined if they don’t, so that does 

help for enrollment. And that is not being critical of you, but that 

is definitely a good promoter. 

Mr. LEE. Well, actually, if I could, Congressman, when we talked 

to thousands of them surveying, for the vast majority the penalty 

is not a huge incentive. The incentive is finding health care that 

is affordable. And the size of the penalty compared to making 

193 

health care affordable is a much bigger factor. For some it is actually a factor, but for a small minority. 

Mr. LANKFORD. There was a deadline that we faced, as well. 

Mr. Leitz? 

Mr. LEITZ. Chairman, we are funded through an assessment on 

policies sold through MNsure, and that is up to a 3.5 percent assessment. 

Mr. LANKFORD. And that is per policy that is sold through the 

system itself? 

Mr. LEITZ. Yes. 

Mr. LANKFORD. Not all. Because Maryland it is everybody, right? 

Every insurance. You all’s is just what is being sold through the 

system. Okay. 

Mr. Van Pelt? 

Mr. VAN PELT. Thank you, Mr. Chairman. Going forward, our financing is based on a 2.5 percent on premiums sold through the 

exchange. 

Mr. LANKFORD. Okay. All right, a follow-up question on that. As 

you have the enrollment coming through, obviously the open enrollment just ended, another open enrollment opens up next year. You 

are looking at your budgets based on what has come in at this 

point and what you have. Is the agency sustainable? Is the target 

there to be able to make? And I will kind of go backwards through 

here. Mr. Van Pelt? 

Mr. VAN PELT. Right now, the target is sustainable at the level 

that we have enrolled and the projections going forward. As many 

of our colleagues have spoken, you do have to manage the expense 

side to match the revenue side. We expect that, with the enrollment that we have, we can do that. 

Mr. LANKFORD. Okay. 

Mr. Leitz? 

Mr. LEITZ. Mr. Chairman, yes, it is sustainable. 

Mr. LEE. Very similar. It is absolutely sustainable and we will 

be balancing both our expenses and the revenue. But when we look 

at the 1.2 million people that are enrolled, we are very confident 

we can have a very going proposition in California. 

Mr. LANKFORD. Okay. 

Ms. Yang? 

Ms. YANG. We also believe we are going to be sustainable. We 

have 30,000 qualified health member. We also have over 100,000 

Commonwealth Care members currently served through the exchange. We also have 5,000 small businesses. And, lastly, we have 

138,000 subsidized members in transitional coverage. We expect a 

meaningful percentage will be exchange members as well. 

Mr. LANKFORD. Okay. 

Dr. SHARFSTEIN. Yes, we believe it will be sustainable. 

Mr. LANKFORD. Okay. 

Mr. Matsuda? 

Mr. MATSUDA. As indicated in my written testimony and in my 

discussion with Representative Hanabusa, right now sustainability 

for Hawaii is going to be a challenge, and we are trying to figure 

out how to reduce expenses and look for other ways to increase revenue. 

194 

Mr. LANKFORD. Okay. Have you talked to other States that are 

experiencing something similar? Most of the States, obviously, have 

found a way to be able to hit the balance on it. I would assume 

you are interacting with those, saying we are having this problem, 

who else is having it? Do you know of any other States that are 

having issues with that as they approach next year? 

Mr. MATSUDA. No, I do not, but I imagine that any State that 

has a small population like we do and a small number of uninsured 

will be facing the same kind of challenge. 

Mr. LANKFORD. Okay. 

Mr. Van Pelt, I want to talk a little bit about the co-ops. That 

is a new invention as well. Obviously, that is in the middle of the 

market. Several of you have co-ops in the market. Oregon Health 

and Health Republic, both those names ring true there. Each received $60 million to be able to start up as a co-op. Are you familiar with how they are doing and how they are functioning within 

the exchange? 

Mr. VAN PELT. No. I can get that information for you. It has been 

relatively low enrollment numbers, but I can get you greater detail. 

Mr. LANKFORD. How is that interacting with the other companies 

and how is that working? Because the initiative was the initial perspective from the group that passed this, and I wasn’t here when 

it passed, was to create some nonprofit that is sitting out there 

that would compete or that would go into markets that other places 

wouldn’t go. Have you experienced that they are good competition 

for the others? 

Mr. VAN PELT. I think it is always, we have had a very good 

turnout in terms of interest in both profit taxable not-for-profit and 

not-for-profit plans. So I can’t say there has been much discussion 

or analysis of the impact of the co-ops. 

Mr. LANKFORD. When you say there is not much discussion or 

analysis, can you tell us if it has made an impact? Is there any 

sense of sigh of relief of I am glad the co-ops are there, because we 

would not have met our goals without them? 

Mr. VAN PELT. I don’t believe so. I have not heard any of that 

conversation. Again, because the Oregon market has worked with 

both the interest of the, again, the profits, all kinds of health plans, 

I don’t believe that it is felt that this has been a void that they specifically filled. 

Mr. LANKFORD. Right. 

Same for Massachusetts and Maryland. Maryland has Evergreen; Massachusetts has Minuteman. Is that correct, both of you? 

Ms. YANG. That is correct. 

Mr. LANKFORD. Has there been a sigh of relief to say I am really 

glad the co-op is there, because without them I don’t know that we 

would have made it? Or have you experienced any issues or how 

is that working and functioning? Because, again, this is a new invention. 

Ms. YANG. We are glad that Minuteman was interested in competing in the Massachusetts market. This is not the first time that 

we have had a new entrant into the market. 

Mr. LANKFORD. Do you know how many enrollees they have at 

this point, how successful they have been in the market? 

Ms. YANG. Several hundred. We can get back to you on that. 

195 

Mr. LANKFORD. Again, we have all the preliminary stuff. Their 

goal, I think, was 37,000 is what they had hoped to enroll. 

Ms. YANG. I would defer to you on that. 

Mr. LANKFORD. Okay. Just trying to figure out. Again, it was 

$156 million given to start this co-op up to hopefully go into an 

area that was under-served. I am trying to figure out in Massachusetts if it was meeting a need of under-served, and where that $156 

million goes and how is the sustainability. They are going to have 

the same sustainability all of you have to deal with in balancing 

your budget; the co-ops do as well. 

Ms. YANG. Absolutely, Mr. Chairman. We work very collaboratively with Minuteman, so to my best knowledge they continue 

to be very interested in competing in the Massachusetts market. I 

would just say that, as you know, Massachusetts is already very 

well served in terms of insurance companies. We have great coverage and we have many, many carriers competing. 

Mr. LANKFORD. Right. That was my interest of why we spent 

$156 million to start a co-op to compete in an area that has quite 

a bit of competition already. I just didn’t know how successful they 

were. 

Ms. YANG. My understanding is that, and I agree with that, Minuteman comes in with a low cost model that could offer additional 

options for members to shop around. And we continue to believe 

that they are able to deliver that once we have the functionality. 

Mr. LANKFORD. Okay. 

Maryland, any issues on there? Anything we can fill in the gap 

on? 

Dr. SHARFSTEIN. I would just say that it is probably too early to 

answer the question about the investment there. 

Mr. LANKFORD. Sixty-five million dollars to help start up a co-op 

that would stand up, and there is quite a bit of competition in 

Maryland as well. 

Dr. SHARFSTEIN. Maybe not as much as in Massachusetts. I 

would say that Evergreen is really focused on the control of cost 

through a very aggressive primary care approach, which we think 

is promising. 

Mr. LANKFORD. Do you know how many they have signed up at 

this point? 

Dr. SHARFSTEIN. In the individual market, they have signed up 

on the order of a few hundred. Their prices were higher than the 

market leader and I think that hurt them in the first year. But I 

think that they are signing up more in the small group market, 

where their prices are more competitive, and I think it is probably 

going to take a couple years to really understand their role and see 

whether they are able to succeed. 

Mr. LANKFORD. When problems came up, and as you were approaching deadlines getting to October the 1st, was there a key 

person that you were supposed to communicate with or that would 

give you comeback to sign off, whether that be the Oregon site, 

which is great frustration on the Maryland site? Who was the point 

person that you were to report to and say, okay, we have some 

issues, we don’t know where we are, we are still working through 

our testing for security; we are not launching well, we are going 

196 

to have to have a delay, whatever it may be. Who was the point 

person you were going back to for CMS to keep them informed? 

Dr. SHARFSTEIN. I can say we had a specific person at Sacio who 

was the main point of contact. 

Mr. LANKFORD. Okay. What is the name again? 

Dr. SHARFSTEIN. I think her name is Amanda Cowley. She, I 

think, has left Sacio since the launch. 

Mr. LANKFORD. Oh, so this was a separate contractor working for 

CMS? 

Dr. SHARFSTEIN. Right, she worked for CMS. She was an employee. 

Mr. LANKFORD. Okay. 

Dr. SHARFSTEIN. She was sort of the liaison. 

Mr. LANKFORD. So the name was Amanda? 

Dr. SHARFSTEIN. Cowley. I just want to quadruple check the 

name. 

Mr. LANKFORD. Great. So let’s kind of run through. 

Who was the point of contact for you? Somebody had to do signoff to be able to answer questions for you. Yes, sir, Mr. Leitz. 

Mr. LEITZ. Mr. Chair, similarly I believe our primary contact administrator at the time was Amanda Cowley at Sacio. 

Mr. LANKFORD. Okay. 

Mr. Van Pelt? 

Mr. VAN PELT. Mr. Chair, I do not have that information with 

me today; I was not there, but I can get that for you. 

Mr. LANKFORD. Thank you. We will just follow up. 

Mr. Lee? 

Mr. LEE. Amanda Cowley is the director of State exchanges and 

was the endpoint. We also had a State officer who had sort of dayto-day responsibility for sort of making sure all the elements were 

approved and checked. 

Mr. LANKFORD. Okay. 

Ms. Yang? 

Ms. YANG. Same thing here; Amanda was the point of contact. 

We were in constant contact with the entire CMS team. 

Mr. LANKFORD. Mr. Matsuda, you weren’t there, I don’t think, at 

that time, as well. 

Mr. MATSUDA. Yes. I will have to provide that on the record 

later. 

Mr. LANKFORD. That will be fine. 

Ms. Yang, at some point I want to be able to follow up with you, 

as well. We have a document, and I will get you a copy of it, that 

says for policy development. This is a piece that walks through as 

far as how you were hitting the core as Massachusetts was walking 

through this. And I will read this to you. And, again, I want you 

to be able to get a copy of it and we can talk again later. 

This was an August document talking through the Website and 

how things were working, and what they considered a go or a nogo status. Browsing was anonymously a go; creating an account 

was a go; submitting application was a go; eligibility determination, no-go; shop and compare, no-go; pay and enroll, no-go; lock 

user account, no-go; IT administration create account, no-go; broker 

quoting information, no-go; browse, compare, select plans, no-go. Of 

the 17 core functions, only 5 were assessed as a go in August at 

197 

that point, late August, as they were preparing for an October 

launch. 

Was there a conversation at some point to say, okay, we have a 

lot of no-gos here; let’s stall, let’s delay? If so, who would that go 

to to be able to say, okay, we have a bunch of no-gos and we are 

getting really close to deadline and we may need some extra time? 

Ms. YANG. So a couple of things, Mr. Chairman. I can explain 

this document. This appears to me was a steering committee minutes document, so it records the discussion that took place at the 

time. We did go through a comprehensive evaluation of the readiness of the system before we deployed the system on 10/1, and this 

was a record of the discussion that we had that looked at each component, which ultimately led to our decision to deploy what we did 

deploy and also what we did not deploy on October 1st. 

Mr. LANKFORD. Who did you have to report to at CMS to say we 

are having problems in these areas, we are not going to be able to 

deploy? Was there someone you were held to account to to keep 

them informed? 

Ms. YANG. Yes. As I mentioned, we were in constant communication with CMS; we still are. We have weekly discussions with them 

on all levels of details. 

Mr. LANKFORD. The who is what I am looking for there. 

Ms. YANG. Similar to the other States, Amanda Cowley was the 

director for, I think, State exchanges, and also her team that included our State officers. 

Mr. LANKFORD. Okay. 

This has been a very long day for you. I have a million more 

questions. We will follow up in the days ahead just to be able to 

go through the process. 

I do appreciate you coming and for the conversation. You all are 

working very hard. No one is trying to push back and say you are 

not working hard or you are not trying to make something work. 

The frustration is obviously this is a round peg in a square hole 

at times, and trying to work through Federal regulations and what 

you already have in your State, trying to make that work, whether 

it be Hawaii or Massachusetts, and trying to function with that. 

In my own State we had a plan called Insure Oklahoma that already existed that we assumed we were going to get a waiver for 

that we ended up not getting a waiver for, and having to have that 

flip; and suddenly a working State plan had to be punted to try to 

get into a website that then wasn’t working. We had all the chaos 

of that as well. 

So what you are doing and what you are trying to work through 

the process to be able to serve people is honorable, and I appreciate 

your service on that. The mess that surrounds all this in the law, 

and trying to execute a law that has many, many complicating and 

conflicting parts of it is a major issue, and I think will continue to 

be a major issue. 

So, with that, we are grateful for your time to be here. Thank 

you, and we are adjourned. 

[Whereupon, at 1:10 p.m., the subcommittee was adjourned.] 

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