U.S. GOVERNMENT PUBLISHING OFFICE

24–766 WASHINGTON : 2018

STRENGTHENING MEDICAID AND PRIORITIZING 

THE MOST VULNERABLE 

HEARING 

BEFORE THE

SUBCOMMITTEE ON HEALTH 

OF THE

COMMITTEE ON ENERGY AND 

COMMERCE 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED FIFTEENTH CONGRESS 

FIRST SESSION 

FEBRUARY 1, 2017 

Serial No. 115–2 

( 

Printed for the use of the Committee on Energy and Commerce 

energycommerce.house.gov 

(II) 

COMMITTEE ON ENERGY AND COMMERCE 

GREG WALDEN, Oregon 

Chairman 

JOE BARTON, Texas 

Vice Chairman 

FRED UPTON, Michigan 

JOHN SHIMKUS, Illinois 

TIM MURPHY, Pennsylvania 

MICHAEL C. BURGESS, Texas 

MARSHA BLACKBURN, Tennessee 

STEVE SCALISE, Louisiana 

ROBERT E. LATTA, Ohio 

CATHY MCMORRIS RODGERS, Washington 

GREGG HARPER, Mississippi 

LEONARD LANCE, New Jersey 

BRETT GUTHRIE, Kentucky 

PETE OLSON, Texas 

DAVID B. MCKINLEY, West Virginia 

ADAM KINZINGER, Illinois 

H. MORGAN GRIFFITH, Virginia 

GUS M. BILIRAKIS, Florida 

BILL JOHNSON, Ohio 

BILLY LONG, Missouri 

LARRY BUCSHON, Indiana 

BILL FLORES, Texas 

SUSAN W. BROOKS, Indiana 

MARKWAYNE MULLIN, Oklahoma 

RICHARD HUDSON, North Carolina 

CHRIS COLLINS, New York 

KEVIN CRAMER, North Dakota 

TIM WALBERG, Michigan 

MIMI WALTERS, California 

RYAN A. COSTELLO, Pennsylvania 

EARL L. ‘‘BUDDY’’ CARTER, Georgia 

FRANK PALLONE, JR., New Jersey 

Ranking Member 

BOBBY L. RUSH, Illinois 

ANNA G. ESHOO, California 

ELIOT L. ENGEL, New York 

GENE GREEN, Texas 

DIANA DEGETTE, Colorado 

MICHAEL F. DOYLE, Pennsylvania 

JANICE D. SCHAKOWSKY, Illinois 

G.K. BUTTERFIELD, North Carolina 

DORIS O. MATSUI, California 

KATHY CASTOR, Florida 

JOHN P. SARBANES, Maryland 

JERRY MCNERNEY, California 

PETER WELCH, Vermont 

BEN RAY LUJA ́ N, New Mexico 

PAUL TONKO, New York 

YVETTE D. CLARKE, New York 

DAVID LOEBSACK, Iowa 

KURT SCHRADER, Oregon 

JOSEPH P. KENNEDY, III, Massachusetts 

TONY CA ́ RDENAS, California 

RAUL RUIZ, California 

SCOTT H. PETERS, California 

DEBBIE DINGELL, Michigan 

(III) 

SUBCOMMITTEE ON HEALTH

MICHAEL C. BURGESS, TEXAS

Chairman 

BRETT GUTHRIE, Kentucky 

Vice Chairman 

JOE BARTON, Texas 

FRED UPTON, Michigan 

JOHN SHIMKUS, Illinois 

TIM MURPHY, Pennsylvania 

MARSHA BLACKBURN, Tennessee 

CATHY MCMORRIS RODGERS, Washington 

LEONARD LANCE, New Jersey 

H. MORGAN GRIFFITH, Virginia 

GUS M. BILIRAKIS, Florida 

BILLY LONG, Missouri 

LARRY BUCSHON, Indiana 

SUSAN W. BROOKS, Indiana 

MARKWAYNE MULLIN, Oklahoma 

RICHARD HUDSON, North Carolina 

CHRIS COLLINS, New York 

EARL L. ‘‘BUDDY’’ CARTER, Georgia 

GREG WALDEN, Oregon (ex officio) 

GENE GREEN, Texas 

Ranking Member 

ELIOT L. ENGEL, New York 

JANICE D. SCHAKOWSKY, Illinois 

G.K. BUTTERFIELD, North Carolina 

DORIS O. MATSUI, California 

KATHY CASTOR, Florida 

JOHN P. SARBANES, Maryland 

BEN RAY LUJA ́ N, New Mexico 

KURT SCHRADER, Oregon 

JOSEPH P. KENNEDY, III, Massachusetts 

TONY CA ́ RDENAS, California 

ANNA G. ESHOO, California 

DIANA DEGETTE, Colorado 

FRANK PALLONE, JR., New Jersey (ex 

officio) 

(V) 

C O N T E N T S 

Page 

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

Texas, opening statement .................................................................................... 1 

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

Hon. Gene Green, a Representative in Congress from the State of Texas, 

opening statement ................................................................................................ 4 

Hon. Greg Walden, a Representative in Congress from the State of Oregon, 

opening statement ................................................................................................ 6 

Prepared statement .......................................................................................... 8 

Hon. Frank Pallone, Jr., a Representative in Congress from the State of 

New Jersey, opening statement .......................................................................... 9 

WITNESSES

Avik S. A. Roy, President, Foundation for Research on Equal Opportunity ...... 11 

Prepared statement .......................................................................................... 14 

Answers to submitted questions 1 ................................................................... 125 

John McCarthy, CEO of Upshur Street Consulting ............................................. 27 

Prepared statement .......................................................................................... 29 

Answers to submitted questions 2 ................................................................... 127 

Judith Solomon, Vice President, Center on Budget and Policy Priorities .......... 38 

Prepared statement .......................................................................................... 40 

Answers to submitted questions ...................................................................... 130 

SUBMITTED MATERIAL

Study entitled, ‘‘The Impact of Medicaid Expansions on Mortality,’’ Harvard 

School of Public Health, December 22, 2014, 3 submitted by Mr. Green ......... 55 

Congressional Research Service memorandum, January 30, 2017, 4 submitted 

by Mr. Guthrie ..................................................................................................... 59 

Statement of the National Coalition on Health Care, submitted by Ms. Castor .......................................................................................................................... 93 

Statement of the Asian & Pacific Islander American Health Forum, submitted 

by Ms. Castor ....................................................................................................... 95 

Statement of AARP, submitted by Ms. Castor ...................................................... 101 

Statement of the Save Medicaid in the Schools Coalition, submitted by Ms. 

Castor .................................................................................................................... 105 

Statement of the Association of American Medical Colleges, submitted by 

Ms. Castor ............................................................................................................. 109 

Statement of Governor Charles D. Baker, Commonwealth of Massachusetts, 

submitted by Mr. Kennedy .................................................................................. 112 

Statement of 3M, submitted by Mr. Shimkus ....................................................... 121 

1 Mr. Roy did not submit a response to questions for the record. 2 Mr. McCarthy did not submit a response to questions for the record. 3 The information can be found at: https://docs.house.gov/meetings/IF/ 

IF14/20170201/105498/HHRG-115-IF14-20170201-SD006.pdf. 24 The information can be found at: https://docs.house.gov/meetings/IF/ 

IF14/20170201/105498/HHRG-115-IF14-20170201-SD003.pdf. 

(1) 

STRENGTHENING MEDICAID AND 

PRIORITIZING THE MOST VULNERABLE 

WEDNESDAY, FEBRUARY 1, 2017 

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

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

2123 Rayburn House Office Building, Hon. Michael Burgess (chairman of the subcommittee) presiding. 

Present: Representatives Burgess, Guthrie, Barton, Upton, Shimkus, Murphy, Blackburn, McMorris Rodgers, Lance, Griffith, Bilirakis, Long, Bucshon, Brooks, Mullin, Hudson, Collins, Carter, 

Walden (ex officio), Green, Engel, Schakowsky, Butterfield, Matsui, 

Castor, Sarbanes, Lujan, Schrader, Kennedy, Cardenas, Eshoo, 

DeGette, and Pallone (ex officio). 

Also present: Representatives Flores and Ruiz. 

Staff present: Ray Baum, Staff Director; Mike Bloomquist, Deputy Staff Director; Elena Brennan, Legislative Clerk, Oversight 

and Investigation; Karen Christian, General Counsel; Jordan 

Davis, Director of Policy and External Affairs; Paige Decker, Executive Assistant and Committee Clerk; Paul Edattel, Chief Counsel, 

Health; Blair Ellis, Digital Coordinator/Press Secretary; Caleb 

Graff, Policy Advisor; Jay Gulshen, Legislative Clerk, Health; Zach 

Hunter, Director of Communications; Peter Kielty, Deputy General 

Counsel; Katie McKeough, Press Assistant; James Paluskiewicz, 

Professional Staff, Health; Mark Ratner, Policy Coordinator; Jennifer Sherman, Press Secretary; Josh Trent, Deputy Chief Health 

Counsel, Health; Luke Wallwork, Staff Assistant; Jeff Carroll, Minority Staff Director; Tiffany Guarascio, Minority Deputy Staff Director and Chief Health Advisor; Olivia Pham, Minority Health 

Fellow; Rachel Pryor, Minority Health Policy Advisor; Samantha 

Satchell, Minority Policy Analyst; Andrew Souvall, Minority Director of Communications, Outreach and Member Services; C.J. 

Young, Minority Press Secretary. 

Mr. BURGESS. My gosh, everything is new up here. I have got all 

kinds of buttons. I can actually silence you, Mr. Green, if I need 

to. 

Mr. GREEN. Mr. Chairman, you know I don’t need a mike. 

OPENING STATEMENT OF HON. MICHAEL C. BURGESS, A 

REPRESENTATIVE IN CONGRESS FROM THE STATE OF TEXAS 

Mr. BURGESS. Well, I want to welcome everyone of course back 

to the 2123. It is the best room in the Rayburn Building. Welcome 

2 

you to the first Subcommittee of Health hearing for this year. It 

is likely to be a very active term in the United States Congress on 

health care. 

There are members of the full committee who have asked to 

waive onto this committee for the purposes of this hearing, so I will 

ask unanimous consent for Dr. Ruiz when he gets here, but right 

now I will ask for unanimous consent for Mr. Flores to be on this 

committee. Without objection, so ordered. 

I will recognize myself 5 minutes for the purpose of an opening 

statement. Medicaid, a state and federal partnership designed as 

a safety net for the country’s most vulnerable has grown at a very 

rapid rate. Today’s Medicaid program is three times larger by enrollment and by spending than it was in 1997 under President Bill 

Clinton. This safety net program will cover up to 98 million people 

this year and will cost the taxpayers more than $600 billion. 

As a physician I have had the privilege of providing health care 

for hundreds of Medicaid patients. I have looked into their eyes, I 

have listened to their concerns, I have held their hands, I have delivered their babies, and I know of their stories. Now I have the 

privilege of trying to help many patients like this by holding this 

chair and by working with each of you on the subcommittee and 

the full committee to improve and modernize the Medicaid program. 

As we embark on a new Congress together, while I know we will 

have real differences, I hope we can agree on some shared goals to 

improve the Medicaid program to provide access and high quality 

care to those who truly need it. Today we will start by examining 

targeted common sense steps that can be taken to cut states’ cost 

and prioritize care for vulnerable patients who are awaiting access 

to Medicaid services. 

One of the bills we will consider addresses an area of concern 

that states have repeatedly requested to Congress that they examine. Individuals seeking Medicare coverage for long-term care must 

have assets below established thresholds to be eligible. Medicaid’s 

treatment of married couples’ resources has resulted in a loophole 

that allows the community spouse to shield assets by purchasing 

an annuity that is not counted against asset thresholds. 

Representative Mullin has written the Close Annuity Loopholes 

in Medicaid Act to put a stop to this gaming of the system. His bill 

would make half of the income generated from an annuity purchased by a community spouse within the 60-month look-back period that would count toward the institutionalized spouse’s financial eligibility. 

Another bill we will consider today originated with the state 

emailing the committee to express a concern. The Affordable Care 

Act required states to use the modified adjusted gross income for 

income calculations for determining Medicaid eligibility. Eligibility 

for Medicaid applicants is based on a monthly household income. 

Irregular income received as a lump sum such as a lottery or gambling winning, one-time gifts or inheritance is counted as income 

only in the month received. This means that lottery winners have 

been allowed to retain taxpayer-financed Medicaid coverage. 

Representative Upton’s bill would close this loophole. This bill 

would require states to consider monetary winnings from lotteries 

3 

1https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/ 

NationalHealthExpendData/NationalHealthAccountsProjected.html. 

as if they were obtained over multiple months for the purposes of 

determining eligibility. This provides a scalable approach so individuals with high-dollar winnings are kept off the program for an 

appropriate time. 

Finally, each of these bills we are considering allocate some portion of the dollars saved into the Medicaid Improvement Fund to 

be used for the purposes of improving access to care for the vulnerable and needy individuals currently on Medicaid waiting lists. 

While we will have additional hearings on Medicaid in the weeks 

and months to come, this hearing is focused on narrow issues and 

will cover bills that have been introduced in prior congresses. We 

all agree that it is important to secure care and keep our commitment to vulnerable Americans; I hope that we can begin by taking 

these small steps forward to put Medicaid spending on a sustainable path. 

I would now like to yield the remaining time to Representative 

Flores to speak about his bill that we will be considering today. 

[The statement of Mr. Burgess follows:] 

PREPARED STATEMENT OFHON. MICHAEL C. BURGESS

The Subcommittee will come to order. 

The Chairman will recognize himself for an opening statement. 

Medicaid-a state-federal partnership designed as a safety net for the most vulnerable-has grown at a rapid rate. Today’s Medicaid program is three times larger-by 

enrollment and spending-than it was in 1997 under President Bill Clinton. This 

safety-net program will cover up to 98 million people this year, and will cost taxpayers more than $600 billion. 1

As a physician, I have had the privilege of actually providing health care for hundreds of Medicaid patients. I have looked in their eyes, I have listened to their concerns, I have held their hands, and I know many of their stories. Now I have the 

privilege of trying to help many patients like this, by holding this Chair and by 

working with each of you to improve and modernize the Medicaid program. As we 

embark on this new Congress together, while I know we will have real differences, 

I hope we can agree on our shared goal: to improve the Medicaid program to provide 

access to high-quality care for those who truly need it. 

Today we will start by examining targeted, commonsense steps that can be taken 

to cut states’ costs, and prioritize care for vulnerable patients who are waiting to 

access Medicaid services. 

One of the bills we will consider addresses an area of concern states have repeatedly requested Congress examine. Individuals seeking Medicaid coverage for longterm care must have assets below established thresholds to be eligible. Medicaid’s 

treatment of married couples’ resources has resulted in a loophole that allows the 

community spouse to shield assets by purchasing an annuity that is not counted 

against current asset thresholds. Representative Mullin has authored the Close Annuity Loopholes in Medicaid Act, to put a stop to this gaming of the system. His 

bill would make half of the income generated from an annuity purchased by a community spouse within the 60-month lookback period countable towards the institutionalized spouse’s financial eligibility. 

Another bill we will consider today originated with a State emailing the Committee to express a concern. The ACA required states to use Modified Adjusted 

Gross Income (MAGI) for income calculations for determining Medicaid eligibility. 

Under MAGI, eligibility for Medicaid applicants is based on monthly household income. Irregular income received as a lump sum, such as lottery or gambling 

winnings, one-time gifts, or inheritances, is counted as income only in the month 

received. This means that lottery winners are been allowed to retain taxpayer-financed Medicaid coverage. 

Representative Upton’s bill would close this loophole. This bill would require 

states to consider monetary winnings from lotteries as if they were obtained over 

multiple months for purposes of determining eligibility. This provides a scalable apVerDate Nov 24 2008 15:39 Oct 18, 2018 Jkt 037690 PO 00000 Frm 00009 Fmt 6633 Sfmt 6633 I:\MY DOCS\HEARINGS 115\HEARINGS\115-2 CHRIS
4 

proach so individuals with high-dollar winnings are kept off the program for an appropriate time. 

Finally, each of these bills we are considering allocate some portion of the dollars 

saved in to the Medicaid Improvement Fund, to be used for the purpose of improving access to care for the vulnerable and needy individuals currently on Medicaid 

waiting lists. 

While we will have additional hearings on Medicaid in the weeks and months to 

come, this hearing is focused on narrow issues and will cover bills that have been 

introduced in prior Congresses. We all agree that it is important to secure care and 

keep our commitment to vulnerable Americans. I hope that we can begin by taking 

these small steps forward to put Medicaid spending on a sustainable path. 

With that, I’ll yield to Representative Flores to speak about his bill, which we will 

be considering today. 

Mr. FLORES. Thank you for yielding, Chairman Burgess. Chairman Burgess and Ranking Member Green, thank you for having 

me here this morning for this important hearing. I appreciate the 

opportunity to work with you to strengthen Medicaid and prioritize 

health care for our most vulnerable citizens. I also want to thank 

each of our witnesses for being here today. It is crucial that we 

work to identify and prioritize the populations that stand to benefit 

most from reform to our current health care system. 

Today a growing number of hardworking Americans are on Medicaid enrollment waiting lists in all 50 states. At the same time, 

other populations who do not qualify are enrolling in Medicaid and 

hurting access for our nation’s truly vulnerable populations. The 

Verify Eligibility for Coverage Act before us this morning addresses 

this issue. This bill prioritizes our neediest Medicaid populations 

by not forcing states to provide coverage for new applicants in Medicaid until those applicants have provided satisfactory documentation of lawful presence in the United States. 

Again I thank the chairman and ranking member. These Medicaid improvement bills before us today are reason for great optimism for our most vulnerable populations. Mr. Chairman, I yield 

back. 

Mr. BURGESS. The chair thanks the gentleman. The gentleman 

yields back. It is not lost on me that we are meeting today, well, 

of course this is the Dingell Committee Room, but also known unofficially as the Green Room. So it is now the chair’s privilege to recognize the subcommittee ranking member, Mr. Green, 5 minutes 

for an opening statement, please. 

OPENING STATEMENT OF HON. GENE GREEN, A 

REPRESENTATIVE IN CONGRESS FROM THE STATE OF TEXAS 

Mr. GREEN. Thank you, Mr. Chairman, and I appreciate that. It 

was my decision but I want to thank the previous chairman and 

the current chairman for leaving the beautiful green walls. Thank 

you, Mr. Chairman, and congratulations on your chairmanship. I 

look forward to continuing to work with you on issues. We have 

done that over the years. 

Medicaid is a lifeline, the safety net for more than 74 million 

Americans who depend on it for coverage. One in every five Americans receive health coverage from the Medicaid including 12 million people who now have health insurance thanks to the Affordable Care Act’s expansion of Medicaid for low-income adults. It is 

the primary health insurer for ten million Americans with disabilities, finances more than half the births, and is a main source of 

5 

long-term care coverage. In fact, one in seven seniors on Medicaid 

and 70 percent of all nursing home residents rely on the program. 

Today’s hearing is entitled Strengthening Medicaid and 

Prioritizing the Most Vulnerable. Medicaid is both strong and protects the vulnerable, and this idea of covering one population 

deemed less vulnerable as done at the expense of another more vulnerable population is just wrong both morally and factually. Health 

insurance is a right and coverage and benefits are not a zero-sum 

game. 

The idea of pitting one population or one benefit in a program 

against another is a red herring. It is in a poorly disguised plot to 

limit access/benefits and punish low-income Americans by undermining the effectiveness of the program. Medicaid is a health care 

safety net for coverage and this notion of one group being more vulnerable and thereby we should take money away from the other 

types of beneficiary goes against the intent of the program. 

Medicaid is strong. It provides comprehensive care at a lower 

cost than private insurance. It is true that total Medicaid spending 

has grown significantly, but increased coverage has been overwhelmingly the driver. Enrollment growth is a cause for celebration not a reason to undermine the program. It is baffling that we 

have a debate on whether a person having health insurance is a 

good thing. 

A part of the enrollment growth is driven by the ACA’s Medicaid 

expansion which has helped drive the uninsured rate to 8.6 percent, the lowest in our history. States that expanded Medicaid have 

not only increased, seen increase in health coverage, but has also 

seen savings in their health budgets. Medicaid beneficiaries, those 

under a hundred percent of the federal poverty level and the expansion population which fall between 100 and 135 percent of federal poverty level, are not fat cats draining the system. For the 

overwhelming majority of them private insurance is not an option 

financially and Medicaid allows them to work more hours and care 

for their families and seek higher paying jobs. 

More than 550,000 of my constituents fall into the Medicaid expansion gap because Texas refused to almost a $100 billion in federal money over a decade left them without an option. The idea 

that being uninsured is somehow better than having Medicaid flies 

in the face of simple logic. Being uninsured is a terrible situation. 

One illness can mean bankruptcy and the only point of access to 

care is through the emergency room. 

But even if that doesn’t persuade you, having a large number of 

uninsured population is bad for everyone, for folks with coverage 

through their employers by driving up premiums, physicians and 

hospitals and state budgets. I hear from constituents every day 

about how coverage has literally saved their life and would hear 

from more in Texas if it would stop engaging in legislative malpractice and act in the state’s best interest. 

Last Congress and the congresses before we worked together on 

meaningful strengthening of Medicaid, expanding benefits, shoring 

up program integrity, and streamlining the program. The proposal 

before us today score a savings because they will delay or deny coverage to some or redirect funds to states that choose to operate 

waiting lists for Medicaid home and community based services. 

6 

The idea that states have waiting lists because resources had to 

be diverted to expand Medicaid doesn’t hold water. It is absolutely 

no correlation between states’ coverage levels and waiting lists for 

home and community based services. Texas has the biggest waiting 

list in the country but didn’t expand Medicaid, while 12 of the 

states that did expand operate no waiting lists for these services 

of any kind. 

The right way to truly strengthen Medicaid for the future is to 

build on the ACA with expanded coverage, promoting program integrity and transparency and advanced delivery system reform in 

the program. I think every member of our committee is a problem 

solver. If we have a problem we want to deal with it. I am glad 

to work with anyone to solve problems, but we will fight with all 

our means to save the safety net of our low-income and oldest and 

youngest Americans. 

I thank you, Mr. Chairman, and I yield back my time. 

Mr. BURGESS. The chair thanks the gentleman. The gentleman 

yields back. The chair would ask unanimous consent that Dr. Ruiz 

be waived onto the subcommittee for the purpose of this hearing. 

Without objection, so ordered. 

The chair now recognizes the chairman of the full committee, Mr. 

Walden, 5 minutes for an opening statement, please. 

OPENING STATEMENT OF HON. GREG WALDEN, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF OREGON 

Mr. WALDEN. Well, Mr. Chairman, thank you. And before the 

clock starts I just want to commend former Chairman Upton, I 

guess, on the color choice. And Mr. Green, I know that makes you 

happy. I hope what comes up next makes everyone happy because 

we have this new—we have new electronics. Oh, look at that, the 

University of Oregon. That will now be a permanent feature since 

I thought it actually went with the green. Are you OK with that? 

I would like to yield to the gentleman from Clackamas County. 

Is that all right, Kurt? I can’t get an orange one. 

Mr. SCHRADER. Yes. No, I think this is a good example of how 

this committee is very bipartisan, sir. 

Mr. WALDEN. That is right. All right, thank you very much, Mr. 

Chairman. Thanks for your leadership. This does mark the first 

hearing of the Health Subcommittee in this new Congress with a 

physician heading the subcommittee and with other professional 

physical and mental health care providers in key roles. Let there 

be no mistaking our intention. We will modernize America’s health 

care laws by putting what is best for the patient as our top priority. 

The days of putting overbearing, unaccountable Washington bureaucrats and their tens of thousands of pages of regulations first 

are over. Today we embark afresh on our efforts to strengthen, improve, and modernize America’s Medicaid program. We share a 

common goal of making sure that those most in need of medical 

services in our communities get better quality affordable care. That 

is our shared goal. 

We are committed to protecting patients and to supporting innovative patient-centered solutions at the state and local levels. We 

recognize the Medicaid program is critically important. It is a safeVerDate Nov 24 2008 15:39 Oct 18, 2018 Jkt 037690 PO 00000 Frm 00012 Fmt 6633 Sfmt 6633 I:\MY DOCS\HEARINGS 115\HEARINGS\115-2 CHRIS
7 

ty net for millions of Americans, Americans who are elderly, Americans who are low-income, or Americans who are blind or have disabilities. Individuals and families served by Medicaid are not just 

program enrollees, they are our neighbors. They are our friends. 

Today we begin our work to modernize Medicaid and we turn to 

experts who have researched creative strategies to give us guidance 

on what is working and what is not. We should view our states as 

partners in a common cause to bring about a fresh approach to a 

big government program that began a half a century ago or more 

when Washington bureaucrats thought they knew what was best. 

I want to commend our Health Subcommittee who worked hard 

last Congress to identify and adopt measures which would improve 

access to care for patients, empower states with more flexibility 

and tools, and yield better care for patients, but no, that was just 

scratching the surface. Our talented and experienced witnesses 

today offer us a set of new ideas and they offer us their counsel 

and how we can improve our own members’ bills. Thank you for 

your input. 

You can sense an eagerness among governors whom I have met 

with, and state Medicaid directors and think tanks who for the 

first time in a long time realize they actually have a partner who 

is serious about hearing from them and working with them to 

transform the most expensive health care system in the world into 

the most modern patient-centered, outcome-based model known 

around the globe. That is our opportunity here. They are overflowing with better ways to deliver health care to our most needy 

citizens. 

I have read all of your testimony, it is terrific, and I hope you 

have only just begun to give those ideas to us. We have an obligation to improve Medicaid. We can make it more than just our country’s safety net that catches people when they are down and out. 

We can do better than that. We can empower states to innovate, 

to harness savings and enhance the actual health of the patients 

who have been waiting years for a Washington bureaucrat to decide to throw the kill switch on every new idea. 

The legislation we will consider today originates from our members listening to their constituents and state leaders back home 

who believe we have not done enough to root out waste, fraud, and 

abuse. Our committee was reminded of that yesterday in the Oversight subcommittee chaired by Mr. Murphy where we heard from 

the GAO and the HHS Office of Inspector General that for 14 years 

Medicaid has remained on the list of high-risk programs and that 

those tasked with identifying and preventing waste, fraud and 

abuse are still frustrated in their jobs because they cannot get the 

data, and the program’s lack of transparency. 

Prioritizing the most vulnerable and those in need necessarily requires setting priorities, so today we consider three proposals 

which make common sense changes to close loopholes, root out 

abuses and target savings to help patients most in need. A portion 

of those savings from each of these reforms would go to help individuals on Medicaid waiting lists for home and community based 

services. 

These bills improve Medicaid. They help patients by scrapping 

outdated rules or correcting unintended consequences from existing 

8 

federal policy. Consider this just the start of our work as we identify other red tape and outdated requirements that add costs and 

deny care to those truly in need. So in the months and weeks 

ahead we look forward to hearing from you and others in our work 

because we want to give states more choices, more tools, more flexibility, all toward the goal of improving health care choices and affordability for patients. 

With that I would yield to Markwayne Mullin the remainder of 

my time. 

[The statement of Mr. Walden follows:] 

PREPARED STATEMENT OF HON. GREG WALDEN

This marks the first hearing of the Health Subcommittee in the new Congress. 

With a physician heading this subcommittee and with other professional physical 

and mental health care providers in key roles, let there be no mistaking our intention: We will modernize America’s health care laws by putting what’s best for the 

patient as our top priority. 

The days of putting overbearing, unaccountable Washington bureaucrats and 

their tens of thousands of pages of regulations first.are over. 

Today, we embark afresh in our efforts to strengthen, improve, and modernize 

America’s Medicaid program. We share a common goal of making sure that those 

most in need in need of medical services in our communities get better quality, affordable care. We are committed to protecting patients and to supporting innovative, 

patient-centered solutions at the state and local levels. 

We recognize the Medicaid program is a critically important safety net for millions of Americans—Americans who are elderly, low-income, or Americans who are 

blind or have disabilities. Individuals and families served by Medicaid are not just 

program enrollees, they are our neighbors, and our friends. 

Today we begin our work to modernize Medicaid. And we turn to experts who 

have researched creative strategies to give us guidance on what’s working and 

what’s not. We should view our states as partners in a common cause to bring a 

fresh approach to a big-government program begun a half-century ago when Washington bureaucrats thought they knew what was best. 

I want to commend our Health Subcommittee who worked hard last Congress to 

identify and adopt measures which would improve access to care for patients, empower states with more flexibility and tools, and yield better care for patients, but 

know that was just scratching the surface. 

Our talented and experienced witnesses today offer us a new set of ideas, and 

counsel on how we can improve our own members’ bills. Thank you for your input. 

You can sense an eagerness among governors and state Medicaid directors and 

think tanks who for the first time in a long time realize they have a partner who 

is serious about hearing from them and working with them to transform the most 

expensive health care system in the world into the most modern, patient-centered, 

outcome-based model known around the globe. They are overflowing with better 

ways to deliver health care to our most needy citizens. And I hope we’ve only just 

begun to hear from them. 

We have an obligation to improve Medicaid. We can make it more than just our 

country’s safety net that catches people when they are down and out. We can empower states to innovate, to harness savings and enhance the actual health of the 

patients without having to wait years for a Washington bureaucrat to decide to 

throw the kill switch on a new idea. 

The legislation we will consider today originates from our members listening to 

their constituents and state leaders back home who believe we have not done 

enough to root out waste, fraud and abuse. Our committee was reminded yesterday 

in the Oversight Subcommittee hearing by the GAO and the HHS Office of Inspector 

General that for 14 years Medicaid has remained on the list of ‘‘high risk’’ programs 

and that those tasked with identifying and preventing waste, fraud and abuse are 

frustrated in their jobs by a lack of data and transparency. 

Prioritizing the most vulnerable and those in need necessarily requires setting 

priorities. So, today we consider three proposals which make common-sense changes 

to close loopholes, root out abuses and target savings to help patients most in need. 

A portion of the savings from each of the reforms would to help individuals on Medicaid waiting lists for Home and Community Based Services. 

9 

These bills improve Medicaid and help patients by scrapping outdated rules or 

correcting unintended consequences from existing federal policies. Consider this just 

the start of our work to identify red-tape and outdated requirements which add 

costs and deny care to those truly in need. 

In the weeks and months to come, we will actively work modernize Medicaid by 

giving our states more choices, more tools, more flexibility-all toward the goal of improving the health care choices and affordability for patients. 

Mr. MULLIN. Thank you, Mr. Chairman. It is an honor to sit on 

the Health Subcommittee and I am looking forward to reforming 

health care with my colleagues in Congress. Our Medicaid system 

is in drastic need to reform. In my bill, Close the Annuity Loopholes in Medicaid, or the CALM Act, closes an obvious loophole. 

The CALM Act makes sure that individuals with significant means 

do not take advantage of Medicaid by hiding some of their assets. 

Currently, some married couples are allowed to mask their assets by purchasing an annuity that pays out to their spouse. This 

also allows a couple to hide their true net worth when applying for 

Medicaid coverage. My bill closes the loophole and directs the savings to help those who are waiting for home and community based 

services. It is an easy loophole to close and I look forward to passing this with other Medicaid reform legislation to make Medicaid 

stronger. Thank you, Mr. Chairman, and I yield back. 

Mr. BURGESS. The chair thanks the gentleman and the gentleman yields back. The chair now recognizes the ranking member 

of the full committee, Mr. Pallone, 5 minutes for an opening statement, please. 

OPENING STATEMENT OF HON. FRANK PALLONE, JR., A REPRESENTATIVE IN CONGRESS FROM THE STATE OF NEW JERSEY 

Mr. PALLONE. Thank you, Mr. Chairman. Since 1965, the Medicaid program has been an invaluable resource to poor families, 

pregnant women, children, seniors, and now thanks to the Affordable Care Act low-income working adults. It is also the program 

that individuals with disabilities depend on to maintain independence in the community. In 2016, over 97 million Americans depended on Medicaid at some point during the year. Together, Medicaid and CHIP cover one in three children in this country and 

nearly half of all births. It is undeniable that Medicaid coverage 

pays us back as a society tenfold and that is why improving and 

strengthening Medicaid for generations to come continues to be one 

of our primary goals. 

Last Congress this committee worked together on targeted policies that generally strengthen and improve the Medicaid program 

for beneficiaries. Unfortunately the bills before us today do not 

share these priorities. In fact, one piece of legislation continues the 

Trump administration’s assault against our legal permanent resident population and naturalized citizens. 

The Republican strategy to strengthen Medicaid is to remove or 

exclude certain people from the program and then apply those resources to another person and this is a meaningless approach to resource management. There is no evidence to suggest that some 

beneficiaries take away resources from others or that excluding 

some beneficiaries will benefit others. 

10 

In today’s hearing we will discuss three bills that are based on 

this very falsehood, bills that target specific beneficiaries for exclusion, bills that ultimately incentivize and reward those states that 

choose to operate waiting lists for home and community based services. In order to truly strengthen the Medicaid program we should 

expand coverage, protect against fraud and implement advanced 

delivery system reform, and the Affordable Care Act did just that. 

Thanks to the Affordable Care Act, 31 states and the District of Columbia have adopted expansion and dramatically lowered the uninsured rate. 

All 50 states are testing innovative models of care and Medicaid 

eligibility and data collection systems have been modernized. Medicaid has always been under attack by Republicans, but the threat 

to this program and to its beneficiaries is more dangerous than 

ever before. Republican policies to cap or turn the program into a 

block grant would result in the rug being pulled out from under 

millions of children, elderly, individuals with disabilities, and lowincome working adults. 

These policies are nothing but bad for our providers and our 

state economics. In fact, one analysis by the Kaiser Family Foundation found that block-granting Medicaid would lead states to drop 

between 14.3 million and 20.5 million people from Medicaid, an enrollment decline of 25 to 35 percent, and would lead states to cut 

provider reimbursements by more than 30 percent. 

Now I know my Republican colleagues keep saying they have a 

plan and that Americans will not lose their health coverage. But 

I think it is clear today that the Republicans’ only game plan right 

now is to sabotage health coverage for tens of millions of Americans. I yield the remaining time to Mr. Luja ́n from New Mexico. 

Mr. LUJA ́ N. Thank you, Mr. Pallone. Hypocrisy isn’t a term that 

I use lightly. Unfortunately today hypocrisy is the word that readily comes to mind. Let’s start with the Republican title of this hearing: Strengthening Medicaid and Prioritizing the Most Vulnerable. 

Actions speak louder than words. Let’s talk about what this hearing is really all about. My Republican colleagues are holding this 

hearing to lay the groundwork for ripping health insurance from 

millions of Americans. 

Now I believe that access to affordable and quality health care 

is a right for all, not a privilege for some. We would be never be 

having a conversation like this if the topic wasn’t Medicaid. If we 

were having a hearing on Medicare we would be talking about real 

ways to better serve beneficiaries, yet when it comes to health care 

for working families struggling to make ends meet, mainly those on 

Medicaid, all my Republican friends do is talk about how to cutcut-cut and strip away access to care from millions of Americans. 

Gutting Medicaid would be a disaster for 74 million Americans 

including nearly a million New Mexicans. Why would anyone want 

a less healthy country? And just listen to the argument my Republican colleagues are making, fewer people having health insurance 

and access to care is good for America. It is bad for America, a 

country with fewer health care jobs and a country with more working class families that could lose everything because of a health 

emergency like a car accident or a cancer diagnosis. 

11 

I have to believe this comes down to the fact that the leaders of 

the Grand Old Party don’t think that some people are grand 

enough to deserve health care. That is wrong. And that is why the 

cloud of hypocrisy hangs over these discussions today and every 

day that we continue to discuss Medicaid solely through the lens 

of what Republicans can cut and how we can improve things for 

those millions of seniors and working families served by this program. With that I yield back. 

Mr. BURGESS. The gentleman yields back. The chair thanks the 

gentleman. This concludes member opening statements. The chair 

would remind members that pursuant to committee rules, all members’ opening statements will be made part of the record. 

And we do want to thank our witnesses for being here this morning taking of your time to testify before the subcommittee. Each 

witness will have the opportunity to give an opening statement and 

this will be followed by a round of questions from members. Our 

witnesses this morning are Dr. Avik Roy, the president of the 

Foundation for Research on Equal Opportunity; Mr. John McCarthy, the former director of the Ohio Department of Medicaid and 

the former deputy director of the DC Department of Health Care 

Finance; and Ms. Judith Solomon, vice president for health policy 

at the Center on Budget and Policy Priorities. 

We do appreciate each of you being here today. We will begin the 

panel with Dr. Roy, and you are recognized for 5 minutes for the 

purpose of summarizing your opening statement, please. 

STATEMENTS OF AVIK S. A. ROY, PRESIDENT, FOUNDATION 

FOR RESEARCH ON EQUAL OPPORTUNITY; JOHN MCCARTHY, CEO OF UPSHUR STREET CONSULTING; AND JUDITH 

SOLOMON, VICE PRESIDENT, CENTER ON BUDGET AND POLICY PRIORITIES 

STATEMENT OF AVIK S. A. ROY 

Mr. ROY. Thank you, Mr. Chairman, Chairman Burgess and 

Chairman Walden, Ranking Member Green, members of the 

Health Subcommittee of the Energy and Commerce Committee. 

Thanks for inviting me here today for your premier hearing as 

chairman. 

My name is Avik Roy. I am the president of the Foundation for 

Research on Equal Opportunity, a nonpartisan, nonprofit think 

tank focused on expanding economic opportunity to those who least 

have it. In my remarks I will discuss Medicaid’s poor health outcomes. I will describe why the program’s outdated design is directly 

responsible for those outcomes and I will explore some avenues for 

reform. 

Studies consistently show that patients on Medicaid have the 

worst health outcomes of any insurance program in America, far 

worse than those with private insurance and, strikingly, no better 

than those with no insurance at all. It seems inconceivable that we 

could spend $450 billion a year on Medicaid without any improvement in health outcomes on average, but the evidence is overwhelming and it is detailed in my written testimony. 

Why do patients fare so poorly on Medicaid? The key reason is 

that Medicaid pays physicians far below market rates to care for 

12 

Medicaid beneficiaries. In 2008, according to CMS, Medicaid paid 

physicians approximately 58 percent of what private insurers pay 

them for comparable services. These disparities have only increased over the ensuing decade. Surprisingly, a 2007 study by 

MIT economists Jonathan Gruber and David Rodriguez found that 

doctors fare even better treating the uninsured, economically, than 

they do caring for those on Medicaid because getting paid in cash 

by the uninsured is better than getting paid through Medicaid. 

As a result of these disparities in reimbursement, fewer physicians accept Medicaid enrolled patients. Internists are 8.5 times as 

likely to refuse to accept any Medicaid patients relative to those 

with private insurance. Physicians are six times more likely to 

deny an appointment to children on Medicaid suffering from serious medical conditions like a broken arm or an acute asthma attack relative to those with private insurance. Without consistent 

access to physicians, Medicaid enrollees don’t get their cancer diagnosed until it is too late, they don’t receive adequate care for problems like diabetes and heart disease until it is too late. 

So why is it that Medicaid’s reimbursement rates are so low? It 

is because of the flawed way in which the program was designed 

in 1965. Medicaid as you know is jointly funded by state governments and the federal government, but because neither states nor 

Washington have full responsibility for the program both parties 

have engaged in irresponsible behavior. 

As Medicaid has grown over time, state budgets have come under 

increasing strain. States’ Medicaid obligations now crowd out 

spending on teachers, police and roads. But it is mostly illegal for 

states to increase co-pays, deductibles or premiums for Medicaid 

enrollees. Moving people off of the Medicaid rolls is highly controversial, and most attempts by state governments to enact minor 

programmatic changes must survive as you know this lengthy 

waiver process with HHS. 

Federal law in some cases forces states to spend Medicaid dollars 

on people who don’t need the help. For example, lottery winners 

who receive a lump sum payment in 1 month but have zero income 

for the rest of the year are eligible for Medicaid 11 months out of 

12. Individuals whose spouses receive large annuities remain eligible in some cases for the Medicaid long-term care program. 

Federal law also requires states to provide Medicaid funds to 

new enrollees for a period of time even if they have not documented 

that they legally reside in the U.S. and are therefore eligible for 

such funds. These provisions put additional pressure on states to 

reduce Medicaid spending and reimbursement rates for the vulnerable populations that the program was designed to help. The vast 

majority of states have responded to these constraints in exactly 

that way by reducing Medicaid’s reimbursement rates to health 

care providers, paying hospitals and doctors less for the same level 

of service. 

The Health Subcommittee is considering legislation that would 

address some of these problems and I look forward to exploring 

those ideas with you at this hearing. I know that many of you believe as I do that we can do much more to improve the quality of 

care and coverage for Americans below the poverty line. 

13 

At the Foundation for Research on Equal Opportunity, we have 

published a detailed and wide-ranging health reform proposal 

called Transcending Obamacare: A Patient-Centered Plan for NearUniversal Coverage and Permanent Fiscal Solvency. We estimate 

that the plan would cover 12 million more people than current law, 

dramatically improve health outcomes for the poor by taking the 

dollars we spend on acute care Medicaid and giving them to patients in the form of refundable tax credits that can be used to purchase private coverage and build Health Savings Accounts. 

Per capita caps, a reform contemplated by this subcommittee, 

can also be structured in a similar way. Aside from the fact that 

private coverage is superior to Medicaid coverage, integrating Medicaid enrollees into an individual health insurance coverage will ensure that as their incomes go up and down they can remain in one 

insurance plan in one physician network and thereby gain a continuity of care that they do not have in today’s system. 

This Congress has a once-in-a-generation opportunity to transform the quality of coverage and care that we offer to the neediest 

amongst us. I look forward to your questions and to being of further assistance to this committee. Thank you. 

[The statement of Avik S. A. Roy follows:] 

14 


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FRE®PPorg 

The Foundation for Research 

on Equal Opportunity 

TESTIMONY BEFORE THE UNITED STATES CONGRESS 

House Committee on Energy & Commerce 

Subcommittee on Health 

STRENGTHENING MEDICAID 

Improving Access to Care 

and Health Outcomes for the Poor 

AVIK S. A. ROY 

President 

The Foundation for Research on Equal Opportunity 

February 1, 2017 

The Foundation for Research on Equal Opportunity (FREOPP) is a non~partisan, non-profit, 501(c)(3) organization 

dedicated to expanding economic opportunity to those \Vho least have it. FREOPP does not take institutional positions on 

any issues. The views expressed in this testimony are solely those of the author. 

Avik S. A. Roy -1 FREOPP.org 
15 


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INTRODUCTION 

Medicaid, enacted in 1965 under Lyndon Johnson's "Great Society" initiative, was 

designed to provide health coverage to low-income Americans, especially those with 

incomes below the Federal Poverty Level. The Affordable Care Act expands eligibility for 

Medicaid to individuals with incomes below 138 percent of the Federal Poverty Level. 

However, under the June 2012 U.S. Supreme Court opinion in NF!B v. Sebelius, states can choose whether or not to expand their Medicaid programs along the ACA's lines. As of 

January 2017, 31 states and the District of Columbia have chosen to participate. 

Studies consistently show that patients on lvledicaid have the worst health outcomes of any 

insurance program in America-far worse than those with private insurance and, strikingly, 

no better than those with no insurance at all. Access to a robust market for private coverage 

could significantly improve health outcomes for the poor, without increasing federal 

spending.'·' 

MEDICAID'S POOR HEALTH OUTCOMES 

A landmark study published in the New England Journal of Medicine compared health 

outcomes for Oregon residents who had won a lottery to enroll in that state's Medicaid 

program with demographically similar residents who had lost the lottery and remained 

uninsured. 

After following these individuals for tWO years, the authors found that rv!edicaid "generated 

no significant improvement in measured physical outcomes" such as mortality, high blood 

pressure, high cholesterol, and diabetes. 3 

Other swdies have found similar results. A 0 niversity of Virginia study published in the 

ilnnalr of Surgery examined outcomes for 893,658 individuals undergoing major surgical 

operations from 2003 to 2007! 

The authors divided their patient population by the type of insurance they held-private, 

Medicare, Medicaid, and uninsured-and adjusted the database to control for age, gender, 

income, geographic region, operation, and comorbid conditions. That way, they could 

correct for the obvious differences in the patient populations (for example, older and poorer 

patients arc more likely to have ill health). 

They then examined three measurements of surgical outcome quality: the rate of inhospital mortality; average length of stay in the hospital (longer stays in the hospital are a 

marker of poorer outcomes); and total costs. 

1 Roy A, Oregon Study: Medicaid 'Had No Significant Effect' On Health Outcomes vs. Being Uninsured. 

Forbes. 20 !3 l\1 ay 2; http://www .forbes.com/sires/theapoth_ecary/20 l },105/02/oregon-srudv-medicaid-h~c!:no­

~i go i fica nt:e ffect -on -he a I th -otLr<:.o mes-vs:bei n g -u ni_0su red/ #4829d 9 21 7 3"aa. 

2 Roy A, HowJ Medicaid Fails the Poor. Encounter Books. 2013. 3 Baickcr K et al., The Oregon experiment-effects of l'vledicaid on clinical outcomes. Neru· England Journal of 

Medicine. 2013 May 2; 368(!8): 17!3-22. 

"LaPar DJ eta!., Primary payer status affects mortality for major surgical operations. ilnnafs ojSurgny. 2010 

Sep; 252(3): 544-51. 

Avik S. A. Roy -2- FREOPP.org 
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The in-hospital death rate for surgical patients with private insurance was 1.3 percent. 

Medicare, uninsured, and Medicaid patients were 54 percent, 74 percent, and 97 percent, 

respectively, more likely to die than those with private insurance. 

Figure 1. Medicaid Reimbursement Rates for Primary Care, vs. Private Insurers, 2008 

States have reduced Medicaid reimbursements to physicians in response to fiscal pressures. 

States that have been most aggressive in expanding eligibility and services within their Medicaid 

programs-like California, New York, and New Jersey-have faced the most pressure to reduce 

reimbursement rates to physicians and hospitals. (Source: Urban Institute, FREOPP analysis) 

The average length of stay in the hospital was 7.38 days for those with private insurance; on 

an adjusted basis, those with Medicare stayed 19 percent longer; the uninsured stayed 5 

percent shorter; and those with Medicaid stayed 42 percent longer. 

Total costs per patient were $63,057 for private insurance; Medicare patients cost 10 

percent more; uninsured patients 4 percent more; and Medicaid patients 26 percent more. 

Avik S. A. Roy -3- FREOPP.org 
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A University of Pennsylvania study published in Cancer found that, in patients undergoing 

surgery for colon cancer, the mortality rate was 2.8 percent for Medicaid patients, 2.2 

percent for uninsured patients, and 0.9 percent for those with private insurance.' The rate of 

surgical complications was highest for Medicaid, at 26.7 percent, as compared with 24.5 

percent for the uninsured and 21.2 percent for the privately insured. 

A Columbia-Cornell study in the Journal of Vascular Surgery examined outcomes for vascular 

disease. Patients with clogged blood vessels in their legs or clogged carotid arteries (the 

arteries of the neck that feed the brain) fared worse on Medicaid than did the uninsured; 

Medicaid patients outperformed the uninsured if they had abdominal aortic aneurysms." 

II. study of Florida patients published in the Journal of the National Cancer Institute found that 

l\ledicaid patients were 6 percent more likely to have late-stage prostate cancer at diagnosis 

(instead of earlier-stage, more treatable disease) than the uninsured; 31 percent more likely 

to have late-stage breast cancer; and 81 percent more likely to have late-stage melanoma. 7 

Medicaid patients did outperform the uninsured on late-stage colon cancer (II percent less 

likely to have late-stage cancer). 

A University of Pittsburgh study of patients with throat cancer, published in Canm; found 

that patients on Medicaid or without insurance were three times as likely to have advancedstage throat cancer at the time of diagnosis, compared with those with private insurance. 

Those with Medicaid or withour insurance lived on for a significantly shorter period than 

those with private insurance.' 

A Johns Hopkins study of patients undergoing lung transplantation, published in the 

Journal of Heart and Lung Transplantation, found that Medicaid patients were 8.1 percent 

less likely to be alive ten years after their transplant operation, compared with those with 

private insurance and those without insurance. Medicaid was a statistically significant 

predictor of death three years after transplantation, even after controlling for other clinical 

factors. Overall, Medicaid patients faced a 29 percent greater risk of death." 

LOW REIMBURSEMENT RATES RESULT IN POOR PHYSICIAN ACCESS 

Why do patients fare so poorly on Medicaid? The key reason is that Medicaid pays 

physicians far below market rates to care for Medicaid beneficiaries. 

In 2008, according to the Centers for Medicare and tvledicaid Services, as shown in Figure I, 

Medicaid paid physicians approximately 58 percent of what private insurers paid them for 

comparable services. These disparities have only increased over the ensuing decade. 

" Kelz RR et aL, \forbidity and mortality of colorcctal carcinoma surgery differs hy insurance status. Canrer. 

2004 '.;ov; 101(10): 2187-94. 

(l Giacovelli JK eta!., Insurance status predicts access to care and outcomes of vascular disease. Joumal of 

l'mmlarSurgay. 2008 Oct; 48(4): 905-11 7 Roctzheim RG eta!., Effects of health insurance and race on early detection of cancer. Journal of the National 

Courer!uJtitute. 1999 Aug; 91(16): 1409-15. 

l'l K wok J et at., The impact of health insurance status on the survival of patients with head and neck cancer. 

(:auar. 2010 Jan; 116(2): 476-85. 

<)Allen JG eta!., Insurance status is an independent predictor of long~term survival after lung transplantation 

in the United States. Joun"'l ~f f!Mrt aud Lutlf!, TmnJplantotiou. 2011 jan; 30(1): 45-53. 

Avik S. A. Roy -4- FREOPP.org 
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Figure 2. Proportion of Physicians Who Accept No New Patients, by Insurance 

Status, 2008 

50% 

45% 

40% i 

35% 

30% 

25% 

20% 

15% 

10% 

5% 

0% 

• Private Insurance Medicare Medicaid 

Fewer physicians are willing to see Medicaid and Medicare enrollees. The 2008 Health Tracking 

Physician Survey found that individuals with commercial health insurance enjoyed broad access to 

physicians, while those in Medicaid-and increasingly Medicare-do not. Reimbursement rates for 

Medicaid and Medicare, relative to private insurance, have fallen since 2008, suggesting that these 

access gaps have widened further. (Source: Center for Studying Health System Change) 

Surprisingly, doctors fare even better treating the uninsured than they do caring for those on 

Medicaid. 

Avik S. A Roy 5 FREOPP.org 
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A 2007 study by MIT economists Jonathan Gruber and David Rodriguez found that, for 

nearly 60 percent of physicians, the average l'vledicaid fees were less than two-thirds of 

those paid by the uninsured, and that three-quarters of physicians receive lower fees for 

treating Medicaid patients than they do for treating the uninsured. 10 

Figure 3. Growth in Federal vs. State Spending on Medicaid, 1966-2009 (Billions) 

$300 

$0 

1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 

States have gamed the system to attract more federal funds, while still reducing provider 

payments. During the first two decades of the Medicaid program (1965-85), state (red) and federal 

(blue) spending on Medicaid grew in concert. However, a federally mandated expansion of Medicaid 

eligibility in the 1980s drove states to deploy creative accounting techniques, such as provider and 

premium taxes, that could increase the proportion of Medicaid spending borne by the federal 

government. Ac-cording to the official government formula-the Federal Medical Assistance 

Percentage, or FMAP-the federal government is paying for 60 percent of the pre-ACA Medicaid 

program, while the states are paying 40 percent. !n reality, however, the federal government is paying 

67 percent, and the states 33 percent: a difference of more than $30 billion per year. (Source: 

Bipartisan Policy Center, CMS) 

The difference in reimbursement rates does not capture the additional hassles involved in 

treating Medicaid patients-such as late payments from the government and excessive 

paperwork-relative to the uninsured, who pay in cash. 

10 Gruber J and Rodriguez D, How much uncompensated care do doctors provide? National Bureau of 

Economic Research. 2007 Nov: http://www.nber.org/papers/w!3585. 

Avik S. A. Roy -6- FREOPP.org 
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Surveys consistently show that patients with private insurance have far superior access to 

care than those on Medicaid. As shown in Figure 2, The 2008 Health Tracking Physician 

Survey found that internists were 8.5 times as likely to refuse to accept any Medicaid 

patients, relative to those with private insurance." 

A 201 I srudy published in the New England lottmal of Medicine found that individuals posing 

as mothers of children with serious medical conditions were denied an appointment 66 

percent of the time if they said that their child was on Medicaid (or the related Children's 

Health Insurance Program), compared with 11 percent for private insurance-a ratio of 6 to 

1." 

Among clinics that did accept both Medicaid/CHIP and privately insured children, the 

average wait time for an appointment was 42 days for Medicaid and 20 days for the privately 

insured. A related study, published by the same group in Pediatn'cs, found that 63.5 percent 

of Medicaid/CHIP beneficiaries were unable to get an appointment, compared with 4.6 

percent of those with private insurance-a ratio of 14 to 1. 13 

These differences in access to physician care go very far in explaining why Medicaid 

patients suffer from poorer health outcomes than their counterparts with private insurance. 

It is likely that the poor outcomes of cancer patients on Medicaid are caused by the fact that 

those patients' cancers are not diagnosed early enough to receive effective treatment. 

In addition, even when Medicaid patients gain access to care, the quality of that care is 

below average. A UCLA study published in the Jouma/ of the American Jlfedical Association 

found that those on Medicaid were far more likely robe treated in low-volume surgical 

centers than high-volume ones; hi?h-volume surgical centers have consistently 

demonstrated superior outcomes.' 

CREATIVE FINANCING GIMMICKS HAVE DISTENDED MEDICAID'S BUDGET 

In turn, the principal driv<;:r of Medicaid's poor provider reimbursement rates is its 

dysfunctional fiscal structure. Medicaid is jointly funded by state governments and the 

federal government. Because neither party has full responsibility for the program, both 

parties have engaged in irresponsible behavior. 

As Medicaid has grown over time, state budgets have come under increasing strain. States' 

Medicaid obligations now crowd out spending on other important responsibilities, such as 

education and public safety. 

But it is mostly illegal for states to increase co-pays, deducribles, or premiums for Medicaid 

enrollees. Moving people off of the Medicaid rolls is highly controversial. And most 

attempts by state governments to enact minor programmatic changes must survive a lengthy 

waiver process with the U.S. Department of Health and !Iuman Services. 

" Boukus E eta!., A snapshot of U.S. physicians: key findings from the 2008 Health Tracking Physician 

Survey. Center for Studying Health System Change. 2009 Sep; 

http://www.hschange.com/CONTENT/1078/1078.pdf. 

12 Bisgaier J and Rhodes KV, Auditing access w specialty care for children with public insurance. lVe&' E11gla11d 

Joun~al ofMediciue. 2011 Jun; 364:2324-33. n Bisgaier Jet a!., Disparities in child access to emergency care for acute oral injury. Pediatrics. 2011 Jun; 

127(6): c1428-35. l>l Liu JH ct al., Disparities in the utilization of high-volume hospitals for complex surgery. Journal of the 

.4mericau Medical Association. 2006 Oct; 296: 1973-80. 

Avik S. A. Roy -7- FREOPP.org 
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As a result, the path of least political resistance has been for states to reduce Medicaid's 

rcimbursemenrs to health care providers: paying hospitals and doctors less for the same 

level of service. 

Bur states are not innocent victims of the federal government; they, roo, have at rimes 

imprudently expanded their Medicaid programs by establishing creative financial schemes 

that transferred the costs of Medicaid expansions onto federal taxpayers. 

As a result, when it comes to Medicaid, the interests of states and the federal government 

have diverged. 

States have attempted to offload more costs onto the federal government, and the federal 

government has attempted to offload more costs onto the states. 

As the Bipartisan Policy Center describes in its 2010 fiscal-reform proposal drafted by a 

panel co-chaired by Pete Domenici and Alice Rivlin, a federally mandated Medicaid 

expansion of Medicaid eligibility in the 1980s drove state governments to seek "every 

possible opportunity to amend the financing structure of state- and locally funded health 

care programs to cover additional services under Medicaid, and hence receive federal 

matching payments for these services.''" In addition: 

States became highly creative in obtaining Medicaid for health services-such as visits to the school nurse by low-income children-that were previously fully funded 

with state and local resources. This search for federal dollars, referred to as "Medicaidization," brought dozens of new provider types and service categories 

under Medicaid. 

States then created additional strategies to drive up federal funding. 

In order to siphon additional Medicaid funding from federal taxpayers, they invented 

special Medicaid hospital taxes that increased state tax revenue, while also driving up the 

cost of care and thereby triggering additional federal Medicaid subsidies. 

For example, a state hospital rax of $100 might be entirely passed on to the Medicaid 

program in the form of higher costs. If the federal government is required to fund 60 

percent of a state's Medicaid program, that $100 tax results in a net gain to the state of $60 

in extra federal Medicaid funding. 

Similarly, states have also instituted sales and excise taxes on private health insurance 

premiums, and then contracted out their Medicaid programs to private insurers in order to 

collect premium taxes on the privately managed Medicaid plans. 

These schemes did nothing to improve the quality of care offered to Medicaid 

beneficiaries, or increase reimbursement rates, but merely drove federal funds to state 

budgets, giving states the freedom to pursue other priorities with their own tax revenue. 

The Bipartisan Policy Center observes that "by the early 1990s, the effective [federal 

contriburion] for [Medicaid] hospital services exceeded 70 percent, far more than the 

national average matching rate of 56 percent that had prevailed throughout the first 25 years 

of the program" (Figure 3). 

15 Domenici PV et aL, Restoring America's future: reviving the economy, cutting spending and debt, and 

creating a simple, pro-growth tax system. Bipartisan Policy Center. 2010 Nov; 

http://bipartisanpolicy.org/projects/domenici-rivlin-debt-rcduction-task-force. 

Avik S. A. Roy -8 FREOPP.org 
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To this day, what BPC describes as a "shoving match" continues between state 

governments and the federal government, as each party strives to engage in ever more 

complex fiscal engineering, decreasing the stability of Medicaid's financial structure. 

FOCUSING MEDICAID'S RESOURCES ON VULNERABLE POPULATIONS 

Congress is considering three measures that could help states avoid the need w further cut 

provider reimbursement rates in the Medicaid program. 

Focusing l'rfedicaid subsidies on U.S. citizens and legal immigrallts. In certain cases, federal law 

requires states to subsidize Medicaid-based coverage for those who have not yet 

documented that they legally reside in the U.S. To the degree that such individuals are not 

legally present in the U.S., the law forces states to spend scarce resources on those who are 

not eligible for Medicaid at the expense of those who are. Federal law should require proper 

documentation to enroll in Medicaid. 

Shielding a spormse's assets from Medicatd eligibility tests. Medicaid is designed to provide 

financial assistance to those who cannot afford to provide health coverage for themselves. 

However, a loophole in federal law allows spouses of Medicaid long-term care enrollees to 

receive large annuities. Annuities, and all other assets, should count toward Medicaid 

eligibility thresholds. 

Shielding lottery income from Medicaid eligibility tests. An individual who receives a $10 million 

lottery in one month is not eligible for Medicaid in that month, because his income is too 

high. But if his income goes to zero for the remainder of the year, he becomes eligible again 

for Medicaid due to his low monthly income. Congress should reconsider the treatment of 

lottery winnings and other lump-sum payments, so that Medicaid eligibility is reserved for 

those who arc truly poor. 

OFFERING PRIVATE INDIVIDUAL COVERAGE TO MEDICAID ENROLLEES 

A system of means-tested, advanceable, and refundable tax credits to purchase private 

health insurance for the population currently eligible for Medicaid could address Medicaid's 

structural problems, and also substantially increase the quality of health coverage currently 

available to those on Medicaid. 

Such tax credits are contemplated by many of the proposals to replace the Affordable Care 

Act, including the Patient CARE Act proposed by Senators Orrin Hatch and Richard Burr, 

former Sen. Tom Coburn, and Rep. Fred Upton, former Chairman of the House Energy & 

Commerce Committee. The Affordable Care Act itself deploys means-tested tax credits to 

subsidize coverage to those whose incomes are higher than Medicaid's eligibility thresholds. 

FREOPP's health-reform proposal, Transcending Obamacare: il Patiettt-Cmtered Plan for Near- U~tiversal Coverage and Penn anent Fiscal So/venry, proposes gradually migrating the entire 

Medicaid acute-care population onto a reformed individual market in which the subsidies 

now expended for Medicaid acute-care coverage are converted into premium assistance tax 

credits and health savings account deposits. 16 (For the purposes of simplicity, when this 

16 Roy A, Transcending Obamacare: .1 Patie11t-Centered Plan for Near-Universal Coverage and Permanent FiJcaf 

Solvency. The Foundation for Research on Equal Opportunity. 2016 Sep; 

http s:/Jrjri ve. googl e,<;om/fi lei d/0 B4 V pAF w B uZfUYI>,'ia VJ R udJ N s UT g/view. 

Avik S. A. Roy -9- FREOPP.org 
23 


24766.010

document refers to "Medicaid" it is referring to both the adult Medicaid program and the 

related CHIP.) 

Cnder the FREOPP proposal, called the Universal Tax Credit Plan, the premium and costsharing subsidies for private acute-care coverage that are now available to those with 

incomes between 100 and 138 percent of the Federal Poverty Level, under the ACA, would 

under the Universal Tax Credit Plan be also available to all those with incomes below the 

poverty line. 

By default, Medicaid acute-care enrollees would be gradually migrated onto the benchmark 

individual market plan in their states. Those who wished to remain in Medicaid, and not 

migrate onto the individual market, could opt out and remain in the legacy Medicaid 

program until January 1, 2027. 

Another important problem facing the Medicaid population is the problem of churn 

between different types of insurance coverage. Poor individuals tend to have highly volatile 

incomes, leading to eligibility for different health insurance programs from month to month. 

This can end up disrupting relationships between patients and doctors, as different health 

plans offer different physician networks. By migrating Medicaid-eligible individuals into 

the reformed individual market, the Universal Tax Credit Plan would considerably mitigate 

the problem of churn. 

States fund, on average, approximately 40 percent of the traditional Medicaid program; the 

federal government funds the remainder. However, the Affordable Care Act's insurance 

exchanges are entirely funded by the federal government. Hence, migrating the Medicaid 

acute-care population into the individual market, over a ten-year period, would increase 

federal funding responsibilities by approximately $1.2 trillion, and reduce state spending by 

a corresponding amount, excluding the impact of higher per-member costs with individual 

coverage (accounted for elsewhere in the Plan), and the fiscal offsets described below: 

I. Returning responsibility for !onrs-term care to the states 

Under the plan, states that agree to transfer their Medicaid acute-care populations into the 

reformed individual market would be required, over time, to take over full funding and 

administrative responsibility for the Medicaid long-term care program. 

This would operate, in effect, like a block grant from the federal government to the states, 

with two important differences: most states would eventually be 100 percent responsible for 

funding their long-term care programs; and they would be required to fund the program at 

levels that were no less than what the Centers for Medicare and Medicaid Services would 

have projected as the annual costs of the long-term care program through 2036 (i.e., a 

"maintenance of effort" requirement). 

By requiring states to fund their long-term care programs at existing levels, but increasing 

their administrative flexibility, states could do much more than Medicaid currently allows. 

For example, they could assist beneficiaries with capital expenditures, such as increasing 

the accessibility of their homes to wheelchairs. Giving beneficiaries the tools they need to 

remain in their homes, instead of in long-term care facilities, will improve the quality of 

their lives while also optimizing program expenditures. 

One significant advantage of cleaning up Medicaid's lines of responsibility is that it would 

substantially improve states' authority over their Medicaid-eligible populations. While the 

Universal Tax Credit Plan assigns to the federal government the financial responsibility of 

funding acute-care insurance for this cohort, state governments would have the authority to 

regulate the private health insurance plans that individuals would purchase on the reformed 

individual market. 

Avik S. A. Roy -10- FREOPP.org 
24 


24766.011

This feature, combined with states' full authority over the long-term care program, would 

end the "1115 Waiver" system, in which state governments must ask federal permission, 

and wait years, to implement even trivial Medicaid reforms. 

As John Holahan of the Urban Institute has pointed out, moving financial responsibility for 

Medicaid long-term care to the states will affect different states differently, depending on 

the size and scale of their long-term care populations. 17 Under a swap, a minority of states 

would end up as fiscal "losers," with a total net loss amongst them of $4.5 billion a year in 

2011 dollars. These disparities can be managed through a gradual transition in which states 

with large lon,p-tcrm care populations receive supplemental grants from the federal 

government. 1 

In sum, the Medicaid swap and related offsets below would be designed in such a way so as 

to be modestly fiscally advantageous to every state government, relative to the federal 

government, in order to encourage stares' participation. 

2. Prohibition of state Medicaid provider taxes 

The report published in 2010 by President Obama's National Commission on Fiscal 

Responsibility and Reform-popularly known as Simpson-Bowles-recommends "asking 

states to take responsibility for more of Medicaid's administrative costs by eliminating 

Medicaid payments for administrative costs that are duplicative of funds originally included 

in the Temporary Assistance for Needy Families (TANF) block grants." 19 We estimate that 

doing this would reduce federal spending by $3 billion between 2017 and 2026. 

Importantly, the Simpson-Bowles report took on the issue of creative financing, noting that 

"many stares finance a portion of their Medicaid spending by imposing taxes on the very 

same health care providers who are paid by the Medicaid program, increasing payments to 

those providers by the same amount and then using that additional 'spending' to increase 

their federal match. We recommend restricting and eventually eliminating this practice." 

3. Sales and excise tax exemption for subsidized health insurance 

An important driver of inflated health insurance premiums in the United States is starebased sales taxes and premium taxes. These taxes are passed onto consumers in the form of 

higher premiums, and passed onto taxpayers in the form of larger federal and state subsidies 

for health insurance premiums. 

Take the example of an employer-based family health insurance plan costing $15,000 per 

year. Ohio, f(Jr instance, imposes a 5.5 percent sales tax and a 1 percent premium tax, 

amounting ro an additional $975 per family. If that family is in the 25 percent federal tax 

bracket, and is liable for 15.3 percent in payroll taxes, these state taxes also result in $393 in 

lost revenue to the federal government. In other words, federal taxpayers are subsidizing 

Maryland's sales and premium taxes. 

17 Holahan J, Restructuring !\.1cdicaid through a swap: an alternative to a block grant. Urhan Institute. 2011 

Apr; http://www. urban.org/U ploadedPD F /412327 -restructuring-medicaid-through-swap. pdf. 

JB Holahan argues for a different, somewhat more complex, swap1 under which: (1) acute-care and dual-eligible 

Medicaid spending would be transferred fully to the federal government; (2) long-term care spending would 

shift to state funding supplemented by a federal closed-end matching grant; (3) Medicaid disproportionate 

share hospital payments would be eliminated or greatly reduced; (4) state "claw-back" funding for non-dual~ 

eligible acute-care ;vfedicaid where needed as a fiscal offset. Holahan does not propose migrating the acutecare !\ledicaid population onto the ACA exchanges. 

'"Simpson AK et al., The Moment of Truth. The National Commission on Fiscal Responsibility and Reform. 

2010 Dec; http://www.fiscalcommission.gov/sites/ 

fiscalcommission.gov/files/documents/TheMomentoiTruth 12_1_20 1 O.pdf. 

Avik S. A. Roy -11- FREOPP.org 
25 


24766.012

The problem is even worse in states that contract with private managed-care companies to 

administer their Medicaid programs. A $15,000 Medicaid plan, thereby subject to $975 in 

sales and premium taxes, might be 60 percent subsidized by the federal government, 

leading to $585 in additional federal spending. 

The state government, by contrast, makes money on this deal: $975 in additional tax 

revenue, for $390 in additional state Medicaid spending, for a net gain of $585. In effect, the 

tax gimmick allows states to tax the citizens of other states. For every dollar of taxes that a 

state levies on its Medicaid program, 60 cents are levied upon the taxpayers of other states. 

It is not difficult to see why many state-based politicians have found this maneuver 

appealing. 

Furthermore, these premium taxes give states a perverse incentive to mismanage their 

Medicaid programs, by making commitments they cannot sustain over time. In order to 

rectify this problem, the Universal Tax Credit Plan renders all federally subsidized health 

insurance plans-from Medicare, Medicaid, CHIP, individual tax credits, and employersas exempt from state and local sales and premium taxes. 

We estimate that the gross federal deficit-reducing effect of this change could exceed $100 

billion in 2019, though it would be more than offset under the Plan by decreased state 

spending on the Medicaid acute-care population. 

HARMONIZING FEDERAL ASSISTANCE FOR THE DISABLED 

The federal government provides assistance to the disabled through the Medicaid and 

Medicare programs. Under the Universal Tax Credit Plan, Medicaid's long-term care for the 

disabled would be transitioned fully to the states, while Medicaid's acute-care coverage for 

the disabled would become entirely a federal responsibility. 

The lJniversal Tax Credit Plan would take into account the special needs ofrhe disabled 

population by consolidating acme-care coverage for the disabled in Medicare with the 

federal government's newly expanded responsibilities for acute care for the disabled 

Medicaid population. 

The Plan would create a bipartisan commission to consider and enact reforms of this 

consolidated acute-care program for the disabled, in order to achieve the following goals: 

Ensure that federal resources are focused on the truly disabled. This involves reexamining Reagan- era reforms that rolled back the use of objective health criteria in evaluating eligibility for 

disability coverage. 20 

Address the currently uninsured disabled population. The commission would examine the 

broader suite of eligibility criteria to see if there are gaps in the disabled population for 

whom assistance is warranted. 

Harmonize asset limitations. Under Medicaid, many stares require a disabled individual to 

have very low amounts of assets-under $2,000, for example-in order to gain certain types 

of disability coverage. However, Medicare does not have asset limits. As a result, lowincome individuals have far stricter asset requirements than high-income individuals for 

20 Roy ASA, How Americans game the $200 billion-a-year 'disability-industrial complex.' Forbes. 2013 Apr 8; 

http://www.forbes.com/sites/theapothecary/2013/ 04/08/how-americans·game-the-200-billion-a-year-disabilityindustrial-complex. 

Avik S. A. Roy -12- FREOPP.org 
26 


24766.013

federal disability coverage. These asset limits should be harmonized across the federally 

assisted population. 

Rationalize the relationship between cash aid and health coverage. It may be worthwhile to convert 

some of the cash assistance offered to disabled individuals into health coverage, or vice 

versa, in order to maximize the efficacy of federal assistance. 

Fiscal neutrality. Reforms adopted by the commission should, in total, have the net effect of 

maintaining federal spending on the disabled at its currently projected levels. 

'DUAL ELIGIBLES' CONSOLIDATED ONTO THE REFORMED INDIVIDUAL 

MARKET 

Approximately l 0 million U.S. residents, primarily low-income retirees, are eligible for both 

Medicare and Medicaid. Because these individuals today gain health coverage from two 

very different government programs, with overlapping benefits and differing physician 

networks, care for these vulnerable individuals is often of poor quality and excessive cost. 

Cnder the Universal Tax Credit Plan, all of these "dual eligible" individuals would be 

migrated onto the reformed individual market, where they would receive an tax creditbased insurance benefit of the same actuarial value as that represented by their existing 

Medicare and l'vledicaid coverage. 

This would amount to a benchmark individual plan with the cost-sharing subsidies-in the 

form of health savings account subsidies-needed to achieve actuarial equivalence. In this 

way, dual-eligible individuals could gain coverage from a single health plan managed by a 

single insurer, with a unified network of physicians and hospitals. Over time, such an 

approach should lead to substantially higher-quality care, and lower costs, than the existing 

patchwork system. 

Avik S. A. Roy -13- FREOPP.org 
27 

Mr. BURGESS. The chair thanks the gentleman and the chair recognizes Mr. McCarthy 5 minutes for your opening statement, 

please. 

STATEMENT OF JOHN MCCARTHY 

Mr. MCCARTHY. Good morning, Chairman Burgess, Ranking 

Member Green and distinguished members of the subcommittee. I 

am John McCarthy, currently the CEO of Upshur Street Consulting. I recently stepped down from the position of Medicaid director for the State of Ohio and previous to that was the Medicaid 

director for the District of Columbia. I appreciate this opportunity 

to share my recommendations for strengthening the Medicaid program. 

The three bills that are up for discussion began to address some 

common sense reforms to eligibility requirements for the Medicaid 

program. Having recently served as the vice president on the board 

of directors for the National Association of Medicaid Directors, I 

know that it is important to Medicaid directors that the integrity 

of the program is maintained to make the program financially viable to serve those who qualify. These three bills promise to move 

the program in that direction. 

First, the discussion draft of Prioritizing the Most Vulnerable 

Over Lottery Winners Act of 2017 would place reasonable exclusion 

periods for Medicaid eligibility when a person wins the lottery. 

Limiting Medicaid eligibility for lottery winners is an eligibility 

change that many support and a policy change I advocated for the 

last few years. 

Second, the discussion draft of the Close Annuity Loopholes in 

Medicaid Act requires a state to apply half of an annuity’s payout 

to the spouse that is not institutionalized to the income of the 

spouse that is institutionalized and applying for Medicaid. Ensuring that Medicaid eligibility is limited to people without resources 

to pay for long-term services and supports, or LTSS, instead of also 

covering those who can shelter their resources would be an important improvement. 

For most states the greatest spending per person is for the aged, 

blind, and disabled population who are the greatest users of LTSS, 

so this is an important area to carefully explore. However, the bill 

does have some technical issues that need further examination. For 

example, the institutionalized spouse could purchase the annuity 

and then name the spouse the annuitant and avoid assigning half 

of the payment to the institutionalized spouse. Because this area 

of Medicaid policy is so complex, a very close analysis of this issue 

is needed to ensure the problem is fully addressed. 

Lastly, the Verify Eligibility for Coverage Act eliminates federal 

dollars being used on services before a person proves their citizenship or immigration status. This change would provide the person 

requesting eligibility with an incentive to produce documentation 

as quickly as possible and help to ensure federal dollars are not 

spent on individuals who do not qualify for the program. 

All the bills include the creation of the Medicaid Improvement 

Fund. The main stated goal of this fund is to reduce waiting lists 

for home and community-based service waivers. I agree that this 

is an important issue. It was one of the goals of the first Kasich 

28 

administration budget to eliminate the wait list for the PASSPORT 

waiver which serves people over the age of 60. 

We eliminated that wait list and reduced the number of nursing home bed-days that were paid for which in turn led to over $1 billion in savings over 4 fiscal years. A small initial investment was 

needed, but in the long term this offered a cost savings. However, 

this cost savings is only realized for cases in which there is a diversion from an institution. 

If the person who is on the wait list is never institutionalized, 

the Medicaid program is likely to have lower expenditures than 

HCBS would entail. That does not necessarily mean that the person does not have the care he or she needs, the person may be enrolled in the Medicaid program and receiving some amount of state 

plan services at home and additional services may be provided by 

non-paid caregivers or from services paid by local dollars. This program therefore will need to be carefully managed so that costs do 

not grow uncontrollably. In particular, in caution I offer that since 

this bill creates a competitive program with priority given to states 

with the highest number of people on wait lists that provides an 

incentive to a state to have higher wait lists. 

Other methods for determining the appropriate funding level per 

state should be explored in order to manage the cost of the change. 

One alternative may be to tie the proposal to the Money Follows 

the Person program and provide financial incentive to states to 

move people out of institutions and back into the community. Another option may be to have the dollars proposed—the Medicare 

program needs reform. There is simply too much unneeded and 

overly burdensome regulation that has been promulgated over the 

last few years and that does not provide a benefit to beneficiaries. 

The new Access to Care Regulation and the Managed Care Mega 

Rule are just two examples. The Access to Care Regulation was a 

backdoor method to take away the ability for a state to set reimbursement rates for providers by putting that authority in the Centers for Medicare and Medicaid Services’ hands. The amount of information that is requested by CMS, such as surveys of providers 

and private sector rate data, is not a true measure of adequacy of 

the proposal. Additionally, the staff time needed to complete this 

work pulls the staff away from more impactful tasks such as implementing value-based purchasing. 

The areas in need of reform that I have laid out above are only 

a subset of issues that are currently not working optimally in the 

Medicaid program. I do not have enough time today to go through 

all the areas. A good resource to use on what reforms are needed 

is the document published by NAMD, the National Association of 

Medicaid Directors legislative priorities for 2017. However, for real 

reform the fundamental role of CMS must be rethought. Currently 

it acts as a regulator for states. It should shift into the role of a 

payer and oversee the program. Instead of telling a state how much 

a state should reimburse providers, CMS should monitor health 

outcomes. 

With that, in conclusion, the Medicaid program is in need of reform. We need to think of new ways to oversee this program, and 

I am happy to answer any questions. 

[The statement of John McCarthy follows:] 

29 


24766.014

Testimony of 

John McCarthy 

CEO Upshur Street Consulting 

Before the United States House of Representatives Committee on Energy and 

Commerce; Subcommittee on Health 

On 

"Strengthening Medicaid and Prioritizing the Most Vulnerable" 

February I, 2017 
30 


24766.015

Testimony Summary 

• Reform of the Medicaid program is needed and long overdue 

• Ensuring that Medicaid eligibility is limited to people without resources to pay for longterm services and supports (L TSS) instead of including those who can shelter their 

resources would be an improvement, but this is a complex area and should be fully 

analyzed to ensure it is effective. 

• The Medicaid Improvement Fund can provide an incentive for states to reduce their 

waiting lists for HCBS services, but how funding allocations arc made can create 

unintended incentives and therefore should be carefully developed. 

• Six areas for which reform is sorely needed are eligibility levels and requirements, 

reasonable and enforceable co-pays and premiums, services for people dually enrolled in 

both Medicare and Medicaid, managed care, prescription drugs, and value-based 

purchasing. 

• In addition, other reforms are needed to reduce the undue administrative burdens on 

states. 

• Finally, Congress should explore changing the role of the Centers for Medicare and 

Medicaid Services (CMS) in Medicaid. Specifically, instead of a command and control 

model, a pay-for-performance approach could help manage costs and incentivize 

innovation. 

Page I 
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24766.016

Good morning, Chairman Burgess, Ranking Member Green, and distinguished Members 

of the Subcommittee. I am John McCarthy, currently the CEO of Upshur Street Consulting, 

LLC. I recently stepped down from the position of Medicaid Director for the state ofObio, and 

previous to that was the Medicaid Director for the District of Columbia. I appreciate this 

opportunity to share my recommendations for strengthening the Medicaid program. 

The three bills that arc up for discussion begin to address some common-sense reforms to 

eligibility requirements for the Medicaid program. Having recently served as the Vice President 

on the Board of Directors for the National Association of Medicaid Directors, I know that it is 

important to Medicaid Directors that the integrity of the program is maintained to make the 

program financially viable to serve those who qualify. These three bills promise to move the 

program in that direction. 

First, the discussion draft of"The Prioritizing the Most Vulnerable Over Lottery Winners 

Act of 20 IT' would place reasonable exclusion periods from Medicaid eligibility when a person 

wins the lottery. Limiting Medicaid eligibility for lottery winners is an eligibility change that 

many support, and a policy change I advocated for over the last few years. 

Second, the discussion draft of the "Close Annuity Loopholes in Medicaid Act" requires 

a state to apply half of an annuity's payout to the spouse that is not institutionalized to the 

income of the spouse that is institutionalized and applying for Medicaid. Ensuring that Medicaid 

eligibility is limited to people without resources to pay for long-term services and supports (or 

L TSS), instead of also covering those who can shelter their resources, would be an important 

improvement. For most states, the greatest spending per person is for the aged, blind, and 

disabled (ABD) population who are the greatest users ofLTSS so this is an important area to 

carefully explore. However, the bill does have some technical issues that need further 

Page 2 
32 


24766.017

examination. For example, the institutionalized spouse could purchase the annuity and then 

name the spouse the annuitant and avoid assigning half of the payment to the institutionalized 

spouse. Because this area of Medicaid policy is so complex, a very close analysis of this issue is 

needed to ensure the problem is fully addressed. 

Lastly, the "Verify Eligibility Coverage Act" eliminates federal dollars being used on 

services before a person proves their citizenship or immigration status. This change would 

provide the person requesting eligibility with an incentive to produce documentation as quickly 

as possible, and help to ensure federal dollars are not spent on individuals who do not qualify for 

the program. 

All the bills include the creation of the Medicaid improvement fund. The main stated 

goal of the fund is to reduce waiting lists for home- and community-based services (HCBS) 

waivers. I agree this is an important issue. It was one of the goals of the first Kasich 

administration budget to eliminate the wait list for the PASSPORT waiver, which serves people 

over the age of60. We eliminated the waitlist and reduced the number of nursing home bed days 

that were paid for, which in turn lead to over $1 billion in savings over four fiscal years. A small 

initial investment was needed, but in the long term this offered a cost savings. However, this 

cost savings is only realized for cases in which there is diversion from an institution. If the 

person is on the waitlist is never institutionalized, the Medicaid program is likely to have lower 

expenditures than HCBS would entail. That does not necessarily mean that the person does not 

have the care he or she needs. The person may be enrolled in the Medicaid program and 

receiving some amount of state plan services at home, and additional services may be provided 

by non-paid caregivers or from services paid by local dollars. This program, therefore, will need 

to be carefully managed so that costs do not grow uncontrollably. In particular, a caution I offer 

Page3 
33 


24766.018

is that since the bill creates a competitive program with priority given to states with the highest 

number of people on waitlists, that provides an incentive to a state to have higher waitlists. 

Other methods for determining the appropriate funding level per state should be explored in 

order to manage the cost of this change. One alternative maybe to tie this proposal to the Money 

Follows the Person program that provides financial incentives to states to move people out of 

institutions and back into the community. One option may be to have the dollars proposed for 

this fund be able to cover the cost of the HCBS services for two years after a person leaves an 

institution. 

The Medicaid program needs reform. There is simply too much unneeded and overly 

burdensome regulation that has been promulgated over the last few years that does not provide a 

benefit to the beneficiaries. The new Access to Care regulation and the Managed Care "Mega 

Rule" are just two examples. The Access to Care Regulation was a backdoor method to take 

away the ability for a state to set reimbursement rates for providers by putting that authority in 

the Centers for Medicare and Medicaid Services' (CMS) hands. The amount of information that 

is requested by CMS such as surveys of providers and private sector rate data is not a true 

measure of the adequacy of the proposed rate. Additionally, the staff time needed to complete 

this work pulls the staff away from other more impactful tasks such as implementing value based 

purchasing. 

Another rule CMS promulgated that was over complicated and was an overreaction to a 

couple of states that had difficult transitions from fee-for-service to managed care is the 

Managed Care "Mega Rule." It is true that the managed care rules needed to be updated, but it is 

unclear if CMS has enough resources to implement was has been put in place. CMS should have 

worked more closely with the National Association of Medicaid Directors (NAMD) to update 

Page 4 
34 


24766.019

the managed care rules, and to deal with states moving from fee-for-service to managed care 

CMS should have used rules that were already in place specifically the contract review and 

approval process along with the readiness review process. 

There are several areas for which reforms are sorely needed. I will go into detail about 

some of them here. But this is not a complete list - there are many opportunities for 

improvement that I will not have time to discuss in my time today. The areas that I will briefly 

mention are: Eligibility levels and requirements, reasonable and enforceable co-pays and 

premiums, services for people dually enrolled in both Medicare and Medicaid, managed care, 

prescription drugs, and value-based purchasing. 

Eligibility levels and requirements. States are required to cover individuals up to !33% 

ofthe federal poverty level (FPL), which is effectively 138% FPL with the 5% income disregard. 

However, exchanges provide subsidies to people down to 100% FPL. Requiring states to cover 

individuals who arc also covered by the exchanges does not make sense. The Medicaid 

eligibility level should be set at 100% FPL to align the two programs. Additionally, states 

should have the option to implement other requirements such as work, education, or training in 

order to be consistent with the values of the people of that state. 

Reasonable and enforceable co-pays and premiums. While the current law does allow 

for co-pays and premiums, CMS regulations make it nearly impossible to implement them. 

Furthermore, the amounts allowed for people above the federal poverty level are so low that it is 

often cost-prohibitive to implement. 

Services for people dually enrolled in both Medicare and Medicaid. Ohio was the 

third state approved to implement a Duals demonstration. CMS has stated that Ohio's program 

is one of the better demonstrations in the country. A major barrier to success of the 

Page 5 
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24766.020

demonstration is that a state is not able to require a dually eligible participant to enroll in a 

managed care plan on the Medicare side. A state can make it mandatory on the Medicaid side. 

Another barrier to success is that people on the program can change managed care plans any 

time. This policy leads to people changing plans multiple times within a short period oftimc, 

which then leads to confusion by the plans, providers and patients, and a loss of care 

coordination which is known to improve health outcomes and reduce cost. To address these 

issues, mandatory enrollment in a plan should be required, and a person should only be allowed 

to change a plan in the first 90 days or if there is a justified reason why the plan cannot meet the 

person's needs. Additional changes are needed to streamline the grievance and appeals process. 

Managed Care - CMS should eliminate the need for waivers to put special populations 

in managed care. Many states are using managed care to efliciently and effectively deliver 

services to all populations, and it does not make sense to limit the ability to do so. 

Prescription drugs- States are forced to cover all FDA-approved drugs and in turn 

receive rebates. However, for new high cost drugs, the rebate is not high enough to offset the 

large increase in expenditures. One consideration would be to Jet states opt out of the rebate 

program and requirement to cover all FDA approved drugs. A state could then create their own 

formulary and decide what drugs to cover in their Medicaid program. This approach could lead 

to negotiation on drug prices, which is currently prohibited. 

Value-based Purchasing- States such as Ohio won State Innovation Method (SIM) 

grants to implement value based purchasing. Ohio and other SIM states ran into barriers in the 

fee-for-service portion of the program because of outdated laws and regulations. Such barriers 

need to be removed to promote innovation in approaches that the value-based purchasing models 

are meant to enable. 

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24766.021

Provider Requirements- The "any willing provider" requirements for the fee-forservice program stifles provider competition, increases costs, and rewards low quality providers. 

States should be able to issue request for proposals for services. In Ohio, there is a surplus of 

nursing home beds. The average vacancy rate is about 15% statewide, but is some areas of the 

state that vacancy rate is much higher. A common-sense approach would be to let Ohio issue a 

request for proposal for a specific number of bed days and quality level. Providers would submit 

bids containing their price proposal and quality scores, and a state could choose the providers 

offering the best value. This approach would be expected to reduce costs and increased quality. 

The areas in need of reform that I laid out above are only a subset of issues that are 

currently not working optimally in the Medicaid program. I do not have enough time today to go 

through all the areas. A good resource to use on what reforms are needed is the document 

published by the NAMD, ''NAMD's Legislative Priorities for 20 171

." 

However, for real reform, the fundamental role ofCMS must be re-thought. Currently, it 

acts as a regulator of the states. It should shift into the role of a payer and oversee the program. 

Instead of telling a state how much a state should reimburse providers, CMS should monitor 

health outcomes. This could be done by using financial incentives tied to measures like the 

National Committee for Quality Assurance's (NCQA) Healthcare Effectiveness Data and 

Information Set (HEDIS) measures. For example, using the current federal medical assistance 

percentage (FMAP) formula, a state could receive a higher or lower percentage based on quality 

measures such as vaccination rates and rate of follow up appointments in seven days after an 

inpatient stay in a psych unit. This is similar to how states currently use pay-for-performance 

with their managed care plans. Other measures could also be used to obtain the outcomes 

desired, for example, measures like uninsured rates, patient satisfaction, or provider satisfaction, 

1 http://medicaiddirectors.org/wp-content/uploads/20 16112/N AMD-Legislative-T op-Issues-for-20 17 _FIN A !..pdf 

Page 7 
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24766.022

to name a few. This same concept could be used with other funding mechanisms such as per 

capita allotments or block grants. 

In conclusion, the Medicaid program is in need of reform. We need to think of new ways 

to oversee the program. We should focus less on command and control. Instead, both states and 

CMS need to be held accountable for the health outcomes of the people on the program. As 

health outcomes improve, the rate of growth of the program should move towards sustainability. 

I hope this testimony has provided you with a valuable high level overview to infonn your 

deliberations about these bills and the reform of the Medicaid program. I'm happy to take any 

questions. 

Page 8 
38 

Mr. BURGESS. The chair thanks the gentleman and the gentleman yields back. Ms. Solomon, you are recognized for 5 minutes 

for the purpose of an opening statement. 

STATEMENT OF JUDITH SOLOMON 

Ms. SOLOMON. Thank you, Chairman Burgess, Ranking Member 

Green, and members of the subcommittee. I am really happy to be 

here to testify today. I am Judith Solomon, vice president for 

health policy at the Center on Budget and Policy Priorities. I am 

going to cover three things in my statement, provide some background on home and community-based service waivers which I will 

refer to as HCBS, talk about how they work, explain why there are 

waiting lists, and briefly discuss how waiting lists should and 

should not be addressed. 

HCBS waivers became available in Medicaid in 1981 to give 

states a way to provide long-term care in people’s homes. Up until 

then because skilled nursing care and home health have been mandatory services in Medicaid there was a bias toward institutional 

care. Families often had to face the dilemma that the only way 

they could get their loved ones the care they needed was to put 

them in a nursing home. 

HCBS waivers gave states new ways to address the needs of children, adults with disabilities, and seniors. States can make people 

eligible for Medicaid who would only be eligible in a nursing home 

and create packages of services specifically designed to allow them 

to stay at home. These include home modifications, respite care, 

and enhanced home health services. Progress has been dramatic. 

In 2013, for the first time over half of long-term services and supports were for HCBS rather than for institutional care, and Figure 

1 in my testimony shows that trajectory. 

So why are there waiting lists? Well, HCBS waivers are the epitome of flexibility in Medicaid. States can target waivers to people 

with intellectual and developmental disabilities, seniors, people 

with HIV/AIDS and people with traumatic brain injury, and they 

can create packages of services that are specifically designed for 

the group they select. According to CMS there are now over 275 

waiver programs nationally serving well over a million people. 

Part of the flexibility states have is to limit their waivers to a 

defined number of slots and create waiting lists. The flexibility was 

important to states when these waivers were created because the 

waivers are expensive and states were concerned that the demand 

would just put them in the red. So the number of people on waiting 

lists shows that demand. They have grown every year going back 

to the data I have in my testimony to 2005, well before the Medicaid expansion. They have grown it an average rate of 14 percent 

a year and there is significant variation across states. 

Eleven states and the District of Columbia have no waiting lists, 

and of these states without waiting lists only two haven’t expanded 

Medicaid, Maine and Missouri. The two states, as was mentioned, 

with the longest waiting lists are Texas and Florida which have not 

expanded Medicaid. Another fact that is often overlooked is that 

people on waiting lists, the vast majority, are actually getting Medicaid so they are getting other services. The specialized services are 

39 

very important to them but they aren’t being left without the core 

services that Medicaid provides. 

So how do we deal with waiting lists? Certainly at CBPP we join 

the goal of people here to decrease them, but we think there are 

better ways to address the waiting lists than by taking savings 

from the three bills before you today to provide enhanced federal 

funds for states with the longest waiting lists. 

It would be much fairer to all states to provide incentives to enhance the provision of home- and community-based services which 

could include metrics to measure state progress. This could include 

continued funding for the Money Follows the Person program and 

the balancing incentive programs for which both the funding has 

expired. These were initiatives that have allowed states to make 

progress. The concern, and I think Mr. McCarthy said it as well, 

is by rewarding states with the highest waiting lists with higher 

match you really almost encourage states to grow their waiting 

lists. 

So in closing though I would like to note what I think the real 

threat to Medicaid is and to home- and community-based services 

specifically. The most recent House budget plan would have given 

states the choice of a block grant or per capita cap to achieve cuts 

in federal Medicaid funding of $1 trillion over 10 years, cutting the 

program by 30 percent in the 10th year and then even more in the 

decades after this. Cuts of this magnitude would likely lead to huge 

increases in waiting lists or elimination of the programs altogether 

because these are optional for states. 

I thank you, I look forward to answering your questions about 

this and also about the bills. I can talk about those as well. 

[The statement of Judith Solomon follows:] 

40 


24766.023

Center on 

Budget 

and Policy 

Priorities 

February 1, 2017 

820 First Street NE, Suite 510 

Washington, DC 20002 

Tel' 202-408-1080 

Fax: 202-408-1056 

center@cbpp.org 

www.cbpp.org 

Existing Medicaid Flexibility Has Broadened Reach of 

Home- and Community-Based Services 

Testimony of Judith Solomon 

Vice President, Center on Budget and Policy Priorities 

Before the Health Subcommittee of the House Energy and 

Commerce Committee 

Thank you for the opportunity to testify today. I am Judith Solomon, Vice President for Health 

Policy at the Center on Budget and Policy Priorities, an independent, non-profit, nonpartisan policy 

institute located here in \)Vrashington. The Center conducts research and analysis on a range of 

federal and state policy issues affecting low- and moderate-income families. The Center's health 

work focuses on Medicaid, the Children's Health Insurance Program (CHIP), the Affordable Care 

Act (i\CA), and Medicare. I have spent over 35 years working on Medicaid, beginning as a legal 

services attorney representing clients and in several positions focusing on ivfcdicaid policy issues 

affecting children, seniors, and people with disabilities. 

The three bills before you would make changes to various aspects of the Medicaid program, 

including the process for verifying citizenship, eligibility for people receiving certain lump-sntn 

income including lottery winnings, and the eligibility of seniors \.Vho purchase annuities for their 

benefit of their spouses. As I understand it, an amount equal to the projected federal savings 
41 


24766.024

resulting from these bills would be transferred to the Medicaid Improvement Fund. Monies in the 

Fund would then be used to provide funding at a 90 percent federal match to a select group of states 

to reduce their waiting lists for home- and community-based services. 1be criteria for selecting the 

states would be based on the size of the state's waiting list, how long people remain on the list, and 

the incomes of people on the waiting list, with preference given to states with lists including the 

lowest-income people. As I will explain later in my testimony, while we support the goal of 

decreasing HCBS waiting lists, there are better ways to help states make progress in this regard. 

Medicaid HCBS Services: Background 

Later in my testimony, I discuss our concerns regarding two of the bills, bnt I would like to start 

by providing some background information on how Medicaid provides home- and communitybased services (HCBS) for millions of vulnerable individuals, and more specifically why some states 

have waiting lists for people applying to receive these services. I especially want to address the claim 

that the Medicaid expansion has resulted in longer waiting lists and kept vulnerable people from 

getting the services they need. As I will explain, while waiting lists are something we all would like 

to eliminate and avoid in the future, they are a direct result of state choices on the design of their 

Medicaid programs and the amount of resources states make available to provide HCBS. There is 

no evidence that states are choosing to expand ~vfedicaid or keep their expansions at the expense of 

vulnerable people waiting for HCBS, and examining state choices on both expansion and HCBS 

waivers actually leads to a contrary conclusion. 

HCBS waivers became available in 1981 to provide states with a way to provide long-term services 

and supports (LTSS) outside of institutions. Skilled nursing care and home health services are 

mandatory services in Medicaid, but because many individuals need additional services beyond home 

2 
42 


24766.025

health to stay in their homes Medicaid was biased toward institutional care. Families often had to 

face the dilemma that the only way they could get their loved ones the care they needed was to put 

them in a nursing home. The choice was especially difficult for parents of children and adults with 

intellectual and developmental disabilities who needed significant supports to stay at home. 

HCBS waivers gave states new ways to address the LTSS needs of their residents, including 

children, adults 'W1th disabilities, and seniors, leading to a dramatic shift in the program since 1981. 

Using HCBS waivers, states can make people eligible for Medicaid who were previously only 

financially eligible if they were in a nursing home or other institution. States can also create 

packages of services specifically designed to keep people in their homes, including home 

modifications, respite care for family caregivers, and enhanced home health services. 

In 2013, for the first time, over half ofLTSS expenditures were for HCBS rather than for 

institutional care. Progress has been dramatic, with the share ofLTSS spending on HCBS climbing 

from 18 percent in 1995 to 53 percent in 2014. 1 (See Figure L) 

1 Truvcn Health :\nalytics, "Medicaid Expenditures for Long-Term Services and Supports (LTSS) in F'{ 2014," Aprill5, 2016, 

http:>: I I www. mcdicaid.gov I medicaid I !t:;~ I download:;/lt:->s-cxpcnditun:s-20 14. pdf. 

3 
43 


24766.026

Reproduction from Truven Health Analytics: 

Medicaid Expenditures for Long-Term Services and 

Supports (L TSS) in FY 2014 

HCBS Waivers Demonstrate Medicaid's Existing Flexibility 

HCBS waivers arc responsible for much of the progress in moving care out of institutions into 

homes and the community, and they are the epitome of how Medicaid provides states with flexibility 

to design their own programs. States can target waivers to particular groups such as people with 

intellectual and developmental disabilities, seniors, people with 1-IIV /AIDS, and people with 

traumatic brain injury, and create packages of services specifically designed to meet the needs of 

4 
44 


24766.027

certain groups. According to the Centers for Medicare & Medicaid Services (CMS), there are 

currently more than 275 waiver programs active nationwide serving well over 1 million individuals-' 

Part of the flexibility states have is to limit their HCBS waivers to a defined number of slots, and 

to create waiting lists once those slots are filled. States can also increase or decrease the number of 

slots by submitting amendments to CMS, and they can keep slots open if state funding isn't 

sufficient to fill them. This flexibility is important for states, because waiver services can be costly, 

although on average waiver services are cheaper than care in a nursing home. In 2013, the total 

expenditures per person for all waiver types was $27,768, \\~th waivers for people 'W~th intellectual 

and developmental <lisabilities the most expensive at $46,644 and waivers for people with 

HIV /AIDS the least expensive at $4,072 per person. 3 

Unlike nursing home care, which must be provided to all financially eligible beneficiaries who 

meet functional and medical criteria for skilled nursing care, states determine eligibility criteria for 

HCBS waivers and the services that are provided through the waivers. States can control their 

expenditures based on their fiscal and organizational capacity to support their initiatives and the 

budget decisions made by their legislatures. The availability of providers to provide the necessary 

services and supports can also influence state decisions on the number of available waiver slots. 

J Centers for Medicare and l'vkdJCaid Services, "!\.Icdicaid & (]liP: Strengthening Coverage, Improving I Icalth,January 2017, 

h ttps: I I \J./\VW .mcdtcud. f1!lV I medicaid I pnwram-in formation I downl!lads I acC<)mplishments-rcport. pdf. 

"I Kaiser Commission on f..tcdicaid and the Uninsured, "MedicaiJ Home and Community-Based Services Prot,rrams: 2013 Data 

Update," October 2016, http; I /kff.oq:r/mcdicaid/rcport/ medicaid hom<.> and ·community-bascd-scrviccs-provrams-2013-data 

~ 

5 
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24766.028

Data on HCBS waivers show enormous state variation, which is evidence of the flexibility 

Medicaid provides. The Kaiser Commission on Medicaid and the Uninsured has tracked Medicaid 

HCBS programs over the last 15 years. The Commission's most recent report looks at expenditures 

and participants in state programs in 2013, although it includes data on waiting lists through 2015. 4 

The number of people on waiting lists shows the growing demand for HCBS. Waiting lists have 

grown every year, increasing over the period from 2005 -well before the start of the Medicaid 

expansion- to 2015 by an average rate of 14 percent a year. (Sec Figure 2.) 

There is significant variation across states, with 11 states and the District of Columbia having no 

waiting lists at all. Of these states without waiting lists, only two- Maine and Missouri -haven't 

expanded lvledicaid. 5 The two states v.~th the longest waiting lists are Texas and Florida, which have 

not expanded Medicaid. In fact, Texas' waiting list of over 204,000 individuals represents almost 

one-third of all people on waiting lists in 2015. 6 Moreover, the number of people in Texas enrolled 

in !!CBS waivers has declined by 38 percent over the last ten years, and this decrease may be 

contributing to the size of its waiting list. 

As noted, expenditures for people ~th intellectual and dcvclopmetltal disabilities arc the highest 

of all waiver types, and over two-thirds of people on waiting lists in 2015 were in this category. For 

example, only California had a waiting list for people with HIV /AIDS in 2015, amounting to just 65 

people. 

1 Kaiser Commission on i'vlcdtcaid and the Unimurcd, 2016. 

s 'l'he other states besides the District of Columbia without waiting lh•ts arc Delaware, Hawaii, ~fassachusctts, :viichit,..J"Un, North 

Dakota, New Hampshire, New York, Oregon, and WashingtOn. 

6 '!'able 14 of the 2013 data update. 

6 
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24766.029

Another fact that is overlooked in discussions of waiting lists is that the vast majority of people on 

the lists- 93 percent for waivers for people with intellectual and developmental disabilities and 100 

percent for seniors are enrolled in Medicaid and receiving all medically necessary services 

available from the state's program other than waiver services. 111ese individuals are l'vledicaid 

beneficiaries, and they are able to get home health services, personal care services if covered under 

the state's plan, and of course prescription drugs and the full range of medical and specialty care 

Medicaid covers. This is not to say that they don't have a need for the additional HCBS waiver 

services that should be addressed, but just to make it clear that the waiting list is to receive the 

additional package of waiver services, not for services covered by the Medicaid program. 

Reproduction from Kaiser Commision: 

Medicaid Home and Community-Based Service Programs 

Medicaid§ 191S(c) HCBS Waiver Waiting lists, by 

Enrollment Group, 2005-2015 

BOthers 

il J\ied/Disab!e-d 

11 Persons with Intellectual/Developmental Olsabllltles 

2005 2006 2007 2008 2009 2010 2011 2012 l013 2014 2015 

Total; 2:60,916 l80:,176 331,689 393,096 36$,SS3 4l8.51l Sll,U4 $23,710 536,464 582,065 640$41 

7 
47 


24766.030

ACA Added Options for States 

It's also important to note new options and incentives states received in the ACA, which are 

contributing to the shift from institutional care to care in the commnnity. Similar to HCBS waivers, 

states have made their own decisions whether to take up these new options, some which provide 

grant funding to help states rebalance their programs away from institutional care. 

The ACA made significant improvements to an option first added to the Medicaid statute in 2005 

by allowing states to target services to particular populations and making other changes that help 

states address the needs of people with behavioral health conditions who aren't eligible for HCBS 

waivers. Under this option, states can provide HCBS under their state plans rather than through a 

waiver, and 18 states have taken up this option. Unlike HCBS waivers, states must cover all those 

who meet the eligibility requirements defined in the state plan, which means that states can't have 

waiting lists when they take up the HCBS option. Of the 18 states that have approved state plan 

amendments for HCBS services, 14 have also expanded Medicaid, again showing that state decisions 

on HCBS and expansion arc independent and instead depend on state decisions regarding how they 

wani to serve their residents 7 

The J\CJ\ also provided grants to states to help them rebalance their programs through the 

Balancing Incentive Program, a continuation of the Money Follows the Person program, which 

helps people transition from institutional care to the community, and the Community First Option 

to provide attendant services and other supports through the state plan rather than through waivers. 

7 The four non~cxpansion states arc Florida, Idaho, Mississippi, and \Visconsin, and the 14 expansion state:> arc California, 

Colorado, Connecticut, Indiana, lmva, Louisiana, ~1ichigan, Montana, Nevada, Ohio, and Oregon. 

8 
48 


24766.031

Bills Before the Subcommittee Aren't Best Way to Extend HCBS to More 

Individuals 

There is broad support for the goal of decreasing state waiting lists for HCBS -and CBPP is 

highly supportive of this goal- but there are better ways to address the waiting lists than by taking 

savings from the three bills before you to provide enhanced federal matching funds to states with 

the longest waiting lists. It would be much fairer to all states to provide incentives to enhance the 

provision of HCBS, which could include metrics to measure state progress. For example, while 

Texas has by far the longest waiting list for I-I CBS, it did participate in several of the ACA-provided 

options, including the Balancing Incentive Program and the Community First Choice Option. 

}

1 roviding increased resources through these types of program is aligned with the overall structure of 

the Medicaid program to provide states with an array of choices to meet their needs. Moreover, it 

avoids having states forgo their own efforts to reduce their waiting lists in order to get a chance to 

get 90 percent match available to states \vith the longest waiting lists. 

I would like to address two of the bills before you, starting \vith the "Verify Eligibility Coverage 

Act." \'\'e have significant concerns regarding this bill, because we think it will leave many eligible 

U.S. citizens \vithout coverage. People must be U.S. citizens or have an eligible immigration status 

in order to be eligible for Medicaid, and their citizenship or immigration status must be verified. 

When completing applications, U.S. citizens must attest that they are citizens. The vast majority of 

applicants provide their Social Security number, which is used along \vith other personal information 

to complete an electronic data match \vith Social Security Administration (SSi\) records to verify 

U.S. citizenship. Citizenship of a vast majority of applicants is successfully verified through the data 

match, but there are cases where the match isn't successful. When this happens, applicants have to 

send in documents to prove they are U.S. citizens. If applicants have satisfied all other eligibility 

requirements such as having income \vithin the state's eligibility limits, the applicant receives 

9 
49 


24766.032

Medicaid during a defined time period that is referred to as a reasonable opportunity period. States 

get federal funding for Medicaid provided during the reasonable opportunity period. 

The bill being considered today would end federal funding for Medicaid benefits provided during 

a reasonable opportunity period for applicants who have not had their U.S. citizenship verified. i\s 

noted, the vast majority of applicants attesting to U.S. citizenship have their citizenship verified 

through the electronic data match with SSA. Natnralized citizens and adult citizen applicants born 

abroad are the groups most likely unable to have their citizenship verified by SSA. This would 

include people who were born to members of the U.S. military serving abroad before 1972 when 

Social Security began including citizenship information in its records. 

The savings from this bill would largely result from delays or denials of eligibility for eligible 

people, especially naturalized citizens. Under legislation enacted in 2006, states were required for 

several years to ask families to present proof of their citizenship and identity- generally by 

producing a birth certificate or passport- when they applied or renewed their Medicaid coverage. 

In the eight months after this requirement took effect, states reported large declines in Medicaid 

enrollment, particularly among low-income children. This requirement was subsequently modified 

to allow states to usc Social Security Administration databases to confirm citizenship or eligible legal 

immigrant status in most cases and to provide a reasonable opportnnity period to provide 

documents to those who couldn't successfully verify their citizenship through the electronic match 

understanding that it takes time to provide documentation for the small group of people whose 

citizenship can't be verified through Social Security. 

10 
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24766.033

I would also note that the language of the bill refers to "aliens," who are individuals "declaring to 

be a citizen or national of the United States." Legal immigrants applying for Medicaid must prove 

they have a status that qualifies them for the program. There are strict rules for verifYing their status 

found in a separate part of the Social Security Act. So despite the reference to aliens, this bill would 

affect people who are citizens. 

The second bill is "The Prioritizing the Most Vnlnerable Over Lottery Winners Act of 2017." 

The current version of this bill is a vast improvement from where it started in 2015. As we wrote in 

a paper then, the earlier version would have undermined the streamlined, coordinated eligibility 

apptoach that health refonn established for Medicaid and marketplace subsidies and would have 

resulted in a number oflow-income people who would otherwise be eligible, including people with 

disabilities, becoming uninsured.' The bill still raises concerns, however, as to its impact on the 

streamlined enrollment process and coordination with the marketplace. It "'-ill require new questions 

on the application and new tracking by states for what may be a limited return. ~lichigan's current 

Medicaid expansion waiver allows the state to garnish state tax refunds and lottery winnings to 

recoup unpaid premiums and cost-sharing from participants in the program. In all of 2015 and 

through the third quarter of 2016, the state collected a total of $380.67 from just six lottery winners.' 

It is certainly possible that the payments to Michigan's contractor to collect these amounts exceeded 

the amount collected. 

"I louse Medicaid Bill \X1ould Result in l\torc Uninsured Low-Income Individuals and 

9, 

11 

on 
51 


24766.034

Threats Posed by Changing Medicaid's Structure 

In closing, I would like to note the real threat other Medicaid proposals present to HCBS services 

in contrast to the Medicaid expansion, which is not responsible for waiting lists. While not before 

the Committee today, President-elect Trump, House Speaker Paul Ryan, and Health and Human 

Services Secretary nominee Tom Price support radically changing the Medicaid program's basic 

structure by converting the program to a block grant or what is known as a "per capita cap" and 

reducing federal funding for the program over time. The most recent House budget plan (for fiscal 

year 2017), would have given states the choice of a block grant or per capita cap in order to achieve 

cuts in federal Medicaid funding of about $1 trillion over ten years and even more in the decades 

after that. These cuts would be in addition to repealing the Affordable Care Act's Medicaid 

expansion, which would withdraw roughly another $1.1 trillion in federal Medicaid funding for 

states over ten years. (See Figure 3.) 

3 

Medicaid Cuts Would Grow Over Time Under 

House Budget Committee Block Grant 

Percent cut in federal Medicaid funds, relative to current law 

'17 '18 '19 '20 '21 '22 '23 '24 '25 '26 

0 

-5 

-10 

-15 

-20 

-25 

-30 

-35% 

12 
52 


24766.035

Cuts of this magnitude would likely lead to huge increases in HCBS waiting lists or elimination of 

HCBS waivers altogether in many states. As states consider how to deal with these cuts, it is 

unlikely that they would risk terminating coverage for people in nursing homes, who could suffer 

serious harm or even death should they lose their coverage. Moreover, states would not be able to 

make the up front investments often needed to expand their capacity to provide HCBS10 With deep 

cuts in federal funds, it is far more likely that states would cut HCBS and other services for people in 

the community, reversing the admirable progress states have made since the inception of HCBS 

waivers in !981 to allow families to keep their loved ones at home. 

w Judith Solomon, "Caps on Federal Medicaid Funding \\fould Give States Flexibility to Cut, Stymie Innovation," Center on 

Hudt,tet and Policy llrioritics,January 18, 2017, http://www.cbpp.oqr/rcscarch/hcalth/ caps-on-fcJeral-mcdicaid-fundinp--

would-frivc~statcs-t1cxlbilit}'-to-cut-stymic 

13 
53 

Mr. BURGESS. The chair thanks the gentlelady. I really thank all 

of our witnesses for being with us today. This brings us to the 

question portion of the hearing and I am going to begin the questioning by recognizing myself for 5 minutes. 

Dr. Roy, Mr. Flores has a bill before us today that would require 

individuals to provide documentation of their citizenship or lawful 

status before the states begin covering them. Is this in fact a problem? Is this an area where regulation needs to perhaps be tightened up a little bit? 

Mr. ROY. If you talk to state Medicaid directors and other people 

at the state level they will say that this is a significant expenditure 

for them. And I am not aware of a CBO score for the previous— 

I know there has been a bill that has been scored previously along 

these lines, but I want to say at least several hundred million dollars potentially could be saved by ensuring you are dedicating Medicaid resource to people who are legally resident of the country and 

you don’t have these windows where people who aren’t documented 

are getting those benefits. 

Mr. BURGESS. And just as a consequence of that there is no way 

to retrieve those dollars once they have been spent, once they go 

out the door they are gone? 

Mr. ROY. They are gone. And as I mentioned both in my written 

testimony and my oral testimony, to me the biggest challenge is 

what we see is most states when they face a cost crunch what do 

they do, they lower reimbursement rates to providers, particularly 

physicians, which ends up in particular harming access to care for 

the people who are enrolled in the program who are eligible for the 

program in reality. 

Mr. BURGESS. And I appreciate your comments on that. 

Mr. McCarthy, under the Affordable Care Act of course expanded 

Medicaid and the expansion populations were eligible for a federal 

match of 95 percent this year, tapers down to 90 percent in 2020 

under current law. And there has been a concern expressed because a state that expanded is paying a smaller portion of the cost 

for care of the expansion population, in times of a budget crunch 

the incentive would be for a state to reduce services or benefits for 

the traditional population. Can you talk about the degree, do you 

think that this is a fair concern? 

Mr. MCCARTHY. Mr. Chairman, every state is different. They all 

make their different decisions. I would say that depending on 

where a state is and the number of advocates in that state for different services you would have to look at those things. 

I would agree with Dr. Roy that the first place a state would 

probably look is at reimbursement rates rather than looking at 

eliminating services for individuals. It partially goes back to what 

I was talking about on home- and community-based services. If 

you, for instance in Ohio where we had a waiting list for our PASSPORT program, which was our waiver for individuals who are aged 

above the age of 60, the service that they could get is nursing 

home. But we had a 20 percent nursing home vacancy when I 

began that role, so where a person would end up is just in that 

higher cost service anyway so just further driving up the cost of the 

program. 

54 

So that is the home- and community-based services we wanted 

to keep in place because that actually saved us a large amount of 

money. Actually, if you look at the Ohio program and you look at 

the number of people age 65 or older in January of 2011 when the 

Kasich administration came into office and you just looked at how 

that actually grew the number of the people in the program and 

then you plotted against that a line of the number of nursing home 

bed-days that we paid for, that line actually went down. 

So that is what generated that savings in there so we used that 

savings to go back into the program to do that. So I understand 

your question of, well, it is only ten percent and we wouldn’t get 

savings but at the same time the other costs are pretty large also. 

We hadn’t talked about duals population. That for us in Ohio was 

a huge portion of the costs and growing costs. Also the Medicare 

growing costs that we had, so our Part D and Part B expenditures 

for this budget that just got put in ate up almost our entire growth 

of the Medicaid state share of the budget. 

So there is a lot of moving pieces in there. I am not sure of going 

to where there would be cuts in services would be the first place 

probably would be in provider reimbursement. 

Mr. BURGESS. Which in turn has a deleterious effect downstream 

which Dr. Roy has detailed. Let me yield back my time and I will 

recognize the ranking member of the subcommittee, Mr. Green, 5 

minutes for questions, please. 

Mr. GREEN. Thank you, Mr. Chairman. Multiple studies show 

that Medicaid is a lean and high-performing program that provides 

access to quality health care for those who need it the most. Unfortunately the bills we are discussing here today are rushed and not 

well thought out and could undermine the program and its beneficiaries. Medicaid matters and it works. I think we have been in 

an audience to alternative facts and skewed in some of the testimony we have heard. 

I would like to use my time to ask Ms. Solomon questions to help 

set the record straight. Ms. Solomon, what are the benefits of having Medicaid coverage? I read in a recent study that the folks are 

literally dying while waiting for Medicaid expansion, yet we hear 

from some that it would be better to be uninsured than have Medicaid. I would like to see if you can debunk that myth that it is 

better to be uninsured than to have Medicaid. 

Ms. SOLOMON. Thank you. I think that it is very clear and the 

data on access show that Medicaid patients have a usual source of 

care at rates approaching that of privately insured and double that 

of uninsured people. I think the studies that Dr. Roy has cited are 

really looking at people with serious illness and comparing people 

on Medicaid to others, and it is really unclear where they were. 

Were they insured before they got sick? And the expansion, what 

the expansion has done has allowed that to happen. So if we look 

at this 10, 20 years from now assuming we stay steady, I think we 

would see a very different picture. 

And I think what has happened in Louisiana where they are 

really documenting it is amazing. They have a dashboard that 

shows kind of how many cases of breast cancer have been diagnosed from their expansion that just started actually last year, how 

55 

*The information has been retained in committee files and can be found at: https:// 

docs.house.gov/meetings/IF/IF14/20170201/105498/HHRG-115-IF14-20170201-SD006.pdf. 

many cases of colon cancer, how many cases of diabetes and hypertension. You can look at that up to the minute. 

And what you are seeing is that in that expansion population 

that now has access to care, people are getting the exams and they 

are finding those things so that when people do have cancer and 

need surgery their outcomes will likely be better because they were 

covered up until the time that they got sick. Before the expansion 

you either had to be a very, very low income parent, a senior, a 

person with a disability, a severe disability. So what the expansion 

does is really open the door to allow access to care for everybody 

who can’t afford to purchase coverage on their own. 

Mr. GREEN. Can you describe access to care in the Medicaid program, for instance the timeliness in which Medicaid patients are 

able to make an appointment with a primary care doctor? Are Medicaid patients generally satisfied with their care? Have there been 

studies on that? 

Ms. SOLOMON. Yes. I think there is high levels of satisfaction. 

And again, a study from researchers at the Urban Institute showed 

that timely care was at about 78 percent of people reported they 

could get care in a timely manner. And that again compared favorably with patients that were insured, and people that were uninsured had obviously a much harder time getting care they needed 

when they needed it. 

Mr. GREEN. Do you believe that the Medicaid program will be 

able to serve the same number of people with the same quality and 

same benefits if the program were converted to a capped or a block 

grant program? How would states adjust to a capped or block grant 

system? 

Ms. SOLOMON. It is impossible. With the level of those cuts the 

Urban Institute—and a prior proposal—estimated a loss of 14 to 21 

million people covered by the program after a few years. It is just 

impossible to serve the same number of people when you are making a cut of that magnitude. And I think over time, you would see 

cuts in provider payments. But you would see other things as well. 

You would see cuts in eligibility, you would see cuts in benefits. 

And I think when we are talking about home- and communitybased services you have to think about it from the perspective of 

you have people in nursing homes that is not, you are not going 

to be able to turn those people out of nursing homes so where are 

the cuts going to be made? I think the home- and community-based 

services are particularly vulnerable as the topic of today that it is 

worth highlighting. 

Mr. GREEN. Thank you. Mr. Chairman, given some of Ms. Solomon’s answers I would like to submit two research studies for the 

record. The first study, the research that covers reducing mortality 

as evidence from states that expanded Medicaid prior to the ACA; 

and second, Mr. Chairman, illustrates the bipartisan support of the 

Medicaid program in the ACA expansion by both Republicans and 

Democratic governors. * I ask unanimous consent to put those in 

the record. 

Mr. BURGESS. Without objection, so ordered. 

56 

Mr. GREEN. And I yield back my time. 

Mr. BURGESS. The chair thanks the gentleman. The gentleman 

yields back. The chair recognizes the chairman of the full committee, Mr. Walden, 5 minutes for questions, please. 

Mr. WALDEN. Thank you very much, Dr. Burgess, appreciate it. 

Dr. Roy, I was intrigued by your, well, all of your testimonies, 

I read it all. It was all very helpful. I am curious, Dr. Roy, do you 

think it is appropriate for millionaires, maybe billionaires, to receive Medicaid while at the same time we do have people waiting 

for care? I mean I know we heard that there is nothing to that, but 

indeed we have heard from states. 

I have heard from Medicaid directors, I have heard from governors. They would just like the flexibility to close what some 

would say is a loophole that allows somebody to get a windfall. It 

is not just the lottery winner but it could be and it is in some cases, 

and then the way the rules are written they still qualify for Medicaid when actually they are flush with money. Do you think we 

ought to close that loophole? Does that harm somebody? 

Mr. ROY. I entirely agree with that Mr. Chairman, and let me 

take a minute to respectfully correct the record in terms of what 

Mr. Green did to characterize, how he characterized my remarks. 

I didn’t say that Medicaid beneficiaries were worse off than people 

with private insurance, I said they were no better off based on the 

gold standard research which comes from work that was published 

in the New England Journal of Medicine, not known as a sort of 

alternative facts. 

Mr. WALDEN. It is actually a peer-reviewed journal of high renown, right? 

Mr. ROY. Absolutely. And my written testimony contains 14 footnotes from peer-reviewed journals that discuss Medicaid help, how 

it comes in and the challenges thereof. 

Mr. WALDEN. See, and I approach this from the fact that why 

aren’t we looking at the science, why aren’t we looking at the peerreviewed journal and saying, OK, what is wrong there and how do 

we fix it? 

Mr. ROY. Absolutely. And this is one of the things that I hope 

that this committee can do in a bipartisan way is say look, this is 

not about a debate about whether we should provide and subsidize 

and help people who need—— 

Mr. WALDEN. Correct. 

Mr. ROY [continuing]. Health insurance who are poor, it is what 

is the best way to do that. 

Mr. WALDEN. Right. 

Mr. ROY. And I firmly believe that the best way to do that is 

through giving those patients more control over the health care dollars that are spent on their behalf. You get less waste and fraud, 

more accountability and more innovation in the delivery of health 

care. 

Mr. WALDEN. And in the meetings I have had with governors, 

just to continue this, they are begging for that flexibility at the 

state and local level. They are the ones that are managing and 

helping these patients. They have talked to me about really impressive things like, what was it, the high-risk assessments where 

57 

they get around a person and say this is a person with a lot of 

issues going on. 

They may need this kind of health care, this kind of mental 

health care, they may actually need some modification of their 

house and yet they have to come beg Washington and some bureaucrat back here to get a waiver to do this that or the other thing 

or they can’t plow the savings in to continue to expand and improve the patient’s health. 

I have always approached this having been on a local hospital 

board and then working on this stuff in Oregon that you start with 

the patient and if you get your hands around it that is where I see 

it is going trying to devolve some of the decision making back to 

the states. Are there other examples that you have run across in 

your work where states have had innovative ideas and yet can’t get 

past somebody back here in Washington to be able to implement 

it that would improve, improve patient care? 

Mr. ROY. We could spend all day talking about innovative ideas 

at the state level that have been stymied by CMS. One I can bring 

up is the Healthy Indiana program in Indiana. When it was first 

installed by then governor Mitch Daniels, they tried to do some 

very simple things to install a larger co-pay if you use the emergency department for non-urgent medical needs and instead they 

tried to create financial incentives for Medicaid enrollees to go to 

urgent care clinics or primary care physicians for those issues. 

They couldn’t do it because it is contrary to the Medicaid statute 

passed by Congress in 1965. They can’t even get a waiver for that 

because the statute itself forbids those practices. 

I can tell you it is not just policymakers at the state level who 

are concerned about these problems. If you have ever spoken to a 

patient who has spent a week trying to get a doctor’s appointment 

for their child or for themselves and can’t do it because so many 

physicians don’t take Medicaid, those are heartbreaking stories. 

Mr. WALDEN. And don’t your peer review data also show that? 

Mr. ROY. Yes. 

Mr. WALDEN. That the wait times are longer for Medicaid patients than for others, it is a fairly significant wait-time differential, right? 

Mr. ROY. Absolutely. And again in my written testimony I have 

referenced to some of that literature. 

Mr. WALDEN. I know in conversation I had with Governor, I 

think it is Governor Herbert from Utah talked about trying to be 

able to communicate with Medicaid patients in Utah by email, apparently some new and novel communication technique. He had to 

appeal to Washington to get a waiver, waited months, only to get 

an email from Washington saying no, sorry, you can’t do that. 

Now I don’t know what else was all involved there, but I assume 

they would have a backstop. If they didn’t have e-mail you would 

still do other ways to communicate because not everybody does, but 

that struck me as something pretty bizarre. Do you run into those 

sorts of things? Is he unique? 

Mr. ROY. Every Medicaid director, Democrat or Republican, has 

stories like that. It is a huge problem. And again this is why it is 

not only important to give states more flexibility in how they manVerDate Nov 24 2008 15:39 Oct 18, 2018 Jkt 037690 PO 00000 Frm 00063 Fmt 6633 Sfmt 6633 I:\MY DOCS\HEARINGS 115\HEARINGS\115-2 CHRIS
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age these populations, but it is also important to give individuals 

more flexibility—— 

Mr. WALDEN. There you go. 

Mr. ROY [continuing]. In how they use their health care dollars. 

Mr. WALDEN. Back to a patient-doctor, patient-provider system. 

I have used up my time. Thank you very much, all of you, for your 

comments, counsel and testimony. I yield back. 

Mr. BURGESS. The gentleman yields back. The chair thanks the 

gentleman. The chair now recognizes the gentleman from New Jersey, Mr. Pallone, 5 minutes for questions, please. 

Mr. PALLONE. Thank you, Mr. Chairman. My questions are to 

Ms. Solomon. There is a lot of misinformation, or maybe alternate 

facts is a better word, about Medicaid that continues despite all 

evidence to the contrary, so I would like you to help us set the 

record straight, Ms. Solomon. What do you say to claims that the 

Medicaid expansion funding threatens the truly vulnerable? Can 

you clarify why that is not the case? 

Ms. SOLOMON. Yes, thank you, Mr. Pallone. As I said in my written testimony, there really is just no correlation. And I think this 

was explored at the hearing yesterday and resolved that the states 

with the biggest waiting lists have not expanded. The states that 

don’t have waiting lists in large part have expanded. 

Another metric is the state option that the Affordable Care Act 

gave states to actually provide HCBS services without a waiver. 

Eighteen states have taken that up. The option actually doesn’t 

allow waiting lists, so this is opening up programs to everyone who 

qualifies. Eighteen states, fourteen are states that have expanded. 

So I think what you see, Texas unfortunately has one-third of the 

people, all the people on the waiting list is really no correlation between wait lists and the decision whether or not to expand. They 

are totally independent. 

Mr. PALLONE. All right. And in a similar vein, Mr. Roy claims 

that Medicaid is simply fiscally unsustainable due in part to the 

Medicaid expansion under the ACA. Can you clarify why this is not 

the case? Why have most states that have expanded Medicaid for 

instance actually experienced net budgetary savings associated 

with the expansion? 

Ms. SOLOMON. I mean it is true and they have documented them. 

New Jersey, for example, has put out reports and they have saved 

money in a variety of ways, primarily by lowering their payments 

for uncompensated care through hospitals and other providers as 

Medicaid has picked that up. They have also been able to better 

utilize the services that they have already been providing to people 

with behavioral health conditions, mental health, and substance 

use disorders. 

And that is where the expansion—and I know it is really true in 

Ohio—has been particularly helpful in dealing with the opioid epidemic in allowing states to use their own dollars more effectively 

to wrap around services for people, for example, who are chronically homeless, and address the social determinates of health recognizing that health care is only a small part of what is going to 

keep very low income and vulnerable people healthy. 

Mr. PALLONE. And Ms. Solomon, over the past 2 days in this 

committee we have heard from some sources that Medicaid expanVerDate Nov 24 2008 15:39 Oct 18, 2018 Jkt 037690 PO 00000 Frm 00064 Fmt 6633 Sfmt 6633 I:\MY DOCS\HEARINGS 115\HEARINGS\115-2 CHRIS
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*The information has been retained in committee files and can be found at: https:// 

docs.house.gov/meetings/IF/IF14/20170201/105498/HHRG-115-IF14-20170201-SD003.pdf. 

sion discourages work. It is my understanding that numerous studies have disproven the myth that Medicaid expansion diminishes 

work incentives and I want to know if that is correct. But also, furthermore, several states that expanded Medicaid have found that 

the expansion populations have not experienced greater job losses 

or work reduction, so would you comment on those? 

Ms. SOLOMON. That is absolutely right. And I think what the 

Medicaid expansion has been shown to do is allow people to work 

and to have greater earnings knowing that they can then transition 

to the marketplace and get subsidies or, assuming their employer 

doesn’t provide work. The other thing that is really important particularly for people who have mental health and substance use disorders is that states are creating supported work programs so that 

they are able through Medicaid to provide the supports that people 

need to help them get a job and stay employed. 

And Medicaid has been able to do that not only for people with 

disabilities in the disability category but also for people in the expansion. Most of the people that are getting expansion coverage actually are people who are working but they are working in low 

wage jobs or part-time jobs or multiple part-time jobs that don’t 

provide coverage. So Medicaid allows them to get the care they 

need to stay employed and to remain healthy, so it is a work support not a work discourager, I would say. 

Mr. PALLONE. And then also the studies have found that Medicaid expansion likely improves the financial situation of those who 

gained Medicaid coverage under the ACA including reducing unpaid bills and medical debts. Just a few seconds left, if you could 

comment on that. 

Ms. SOLOMON. Absolutely. A National Bureau of Economic Research study shows that a dramatic fall-off in people with debt sent 

to third-party collections in states that have expanded Medicaid 

compared to states that haven’t. 

Mr. PALLONE. Thank you. Thank you, Mr. Chairman. 

Mr. BURGESS. The chair thanks the gentleman. The chair recognizes the gentleman from Kentucky, the vice chairman of the subcommittee, Mr. Guthrie, 5 minutes for questions. 

Mr. GUTHRIE. Thanks. My first question is for Mr. McCarthy. 

There is a new CRS memo, CMS Collections of Information from 

states under the Medicaid Program that tallies the burden states 

face when complying with CMS requirements under current law. 

Mr. Chairman, I request unanimous consent this be placed in the 

record. *

Mr. BURGESS. Without objection, so ordered. 

Mr. GUTHRIE. This new memo shows that the reporting burden 

is higher than many people probably appreciate. One thing I have 

heard a lot over the past year is that CMS collects information 

from states but it is often focused on the wrong issues and it is not 

clear what CMS even does sometimes with the information reported. I mean we don’t even have good data matching expenditures by category of service to beneficiaries, and everyone knows 

how bad Medicaid data is. 

60 

I strongly believe in accountability for states, but I wonder if 

CMS has been focused on the wrong things at times. What reporting requirements do you think add costs and not value and what 

could we cut back on without negatively impacting accountability? 

Mr. MCCARTHY. I think what needs to be done is going through 

all of those reports that are identified in there to determine what 

information it is needed and how it will be used going forward. It 

is the same thing we did at the state when we came in. We looked 

at all the different reports we had and decided one way, should we 

keep the report or should we get rid of the report or is there something in there that we need? 

Often at the state level the report that we requested was partially due because a legislator at some point had asked for information and so you gathered that information and you just kept on 

gathering it. There are two reports from CMS that we always had 

to turn in. It was the CHIP report and also the EPSDT report, and 

I was unclear always of how CMS used those two reports. Our federal matching percentage isn’t changed because of those. It doesn’t 

go up or down. There is no penalties or rewards for those things. 

So I think that is a part of looking at those reports and saying 

OK, what information do we need? Information, giving that to CMS 

is very important. They get questions, you are talking about transparency especially on demonstration projects I know there is a 

number in there. We need to turn over that information, but the 

question is then how do they use that and if it is not good information or it is not used then let’s let it go. 

Mr. GUTHRIE. So in your testimony you talked about CMS should 

be more focused on outcomes for patients in Medicaid and less prescriptive on how states get there, and I agree with the sentiment 

and direction. Can you think of a few concrete steps to move incrementally that direction? 

Mr. MCCARTHY. So we, many states I should say, use managed 

care plans, private sector managed care plans to help provide services to the population. You hold them accountable and it is often 

called pay for performance for the managed care plans. And what 

you do is you hold back a percentage of their capitation rates from 

one percent to five percent, and some of that is changing right now. 

So it provides that incentive and then you use some type of measure. We often use NCQA HEDIS measures to be able to then measure those plans. The better they did they could get that money 

back. 

So one of my ideas has always been, well, why doesn’t CMS do 

the same thing with states and back off some of the command and 

control and instead hold states accountable for healthy outcomes. 

Dr. Roy brought those up. So if you have bad outcomes maybe a 

state should be penalized for that, but if you have good outcomes 

why isn’t there an increase in funding for that state to provide that 

incentive? States do what we are incentivized to do. Right now the 

incentive is how do you draw down the maximum amount of federal dollars that you can get, so it is how do you move from that 

to something else that can be measured? 

Mr. GUTHRIE. OK, thank you. And just from some of the other 

things that we have talked about, I am from Kentucky and Kentucky is an expansion state, elected a new governor recently. And 

61 

at some political peril to himself he decided we are going to try to 

figure out how to keep the expansion and make it work. 

And it is kind of news, it would be news to Kentucky that expansion has made the budget better. Maybe when the previous governor expanded it was a hundred percent federal, but the Medicaid 

program is going to take up 100 percent of the new additional revenues grown to Kentucky over the next biennium which means it is 

going to sacrifice what we can pay teachers, what we can do to colleges and universities. 

So our governor is actually trying to—and he is hearing some of 

the same rhetoric that we have heard in some of the opening statements. And when he is really trying to keep the program and make 

it better a lot of people say, well, keep it and make it better and 

he is trying to, and one of the things he is trying to do is co-pays. 

So there are people in the expanded population, so he has the 

traditional Medicaid, the disabled and the traditional Medicaid, 

looking at the expanded population—and he gets a lot of negative 

rhetoric for this. He says maybe they should pay $1 minimum to 

$15 maximum for health care per month, and the other one is a 

work requirement. And he says that people are in the expanded 

population working. There are working poor in the expanded population, but some people aren’t. 

And he says if you are able bodied and you are not, you should 

work at least 20 hours a week, volunteer work, and I think you can 

even classify maybe taking care of your grandchild. You can get it 

certified that as long as you are doing that 20 hours a week so 

somebody else can go work then you get credit for that. And so 

there are people trying to make this better and it is not sustainable 

the way that it is. And I know no one has offered a big tax increase 

to make Medicaid balance in states and at the federal level and so 

that is what we are trying to do. We are trying to be serious with 

it and have people covered and move forward. 

And I have run out of time so I will yield. I was going to ask 

a question but I ran out of time so I will yield back. 

Mr. BURGESS. The chair thanks the gentleman. The gentleman 

yields back. The chair recognizes the gentlelady from Florida, Ms. 

Castor, for 5 minutes for questions, please. 

Ms. CASTOR. Thank you, Mr. Chairman. Mr. Chairman, many 

people in organizations are speaking out about the difference that 

Medicaid coverage makes in the lives of millions of Americans and 

they have contacted the committee this week to make their views 

on Medicaid known. And I would like to ask unanimous consent to 

submit some of their letters from the record including a letter from 

the National Coalition on Health Care opposing the defunding or 

repealing of the Medicaid expansion. 

The coalition represents nearly 90 of America’s leading associations of health care providers. A letter from the Asian & Pacific Islander American Health Forum which works to improve the health 

of 20 million Asian Americans and nearly one million native Hawaiians and Pacific Islanders; a letter from the AARP representing 

38 million seniors in all 50 states; a letter from the Save Medicaid 

in Schools Coalition representing more than 25 organizations invested in the education of our kids; and a letter from the AssociaVerDate Nov 24 2008 15:39 Oct 18, 2018 Jkt 037690 PO 00000 Frm 00067 Fmt 6633 Sfmt 6633 I:\MY DOCS\HEARINGS 115\HEARINGS\115-2 CHRIS
62 

tion of American Medical Colleges representing the nation’s medical schools and major teaching hospitals. 

This is just a sampling of the diverse array of groups that 

proactively have reached out to this committee just recently to express support for the flexible federal-state partnership that is Medicaid and to offer their ideas to truly strengthen and protect vital 

Medicaid services. 

Mr. BURGESS. Will the gentlelady yield to accept her unanimous 

consent request? 

Ms. CASTOR. Yes, I will. 

Mr. BURGESS. Without objection, so ordered. 

[The information appears at the conclusion of the hearing.] 

Ms. CASTOR. Thank you very much. 

Ms. Solomon, the fear is palpable across the country among families that the Republicans aim to devastate care that is provided 

through the Medicaid partnership, families that relied on skilled 

nursing and home and community based services, families with an 

Alzheimer’s patient, children’s health care especially kids with 

complex medical conditions, people with disabilities, and now according to many news sources at the start of the Trump administration it appears that yes, indeed, they intend to target families 

who rely on Medicaid for elimination of care and services disguised 

by the terminology of per capita caps and block grants. 

And this committee has put out a press release as recently as 

last night Republicans also plan to target Medicaid through reconciliation so we are gearing up for that. I want to get it clearly 

on the record what American families can expect if Republicans try 

to change Medicaid to block grants or per capita caps. It looks like 

a real draconian process. 

I have served on the Budget Committee the past few terms as 

a representative of the Democrats on the Energy and Commerce 

Committee and we have seen those budgets. And we have always 

had this backstop of President Obama and the White House and 

senators that said no way are we going to devastate care for families, but I think it is really at risk. You have studied these budgets 

that have passed the past couple of terms; is that right? 

Ms. SOLOMON. Yes, I have. 

Ms. CASTOR. And could you describe the impact on health services for American families that rely on Medicaid if that approach 

is enacted into law? 

Ms. SOLOMON. Yes. In my testimony Figure 3 shows the trajectory of cuts over 10 years from the latest proposal, the proposal for 

fiscal year 2017 and it is enormous. And it is very clear that what 

these proposals do is basically pull federal funds out of the program 

and shift not only the cost to states but the responsibility to deal 

with the cuts and it is the states that then have to decide where 

those cuts should fall. They have to figure out whether they can 

put more of their own money in at the expense of education and 

other vital areas of the budget. But these are cuts. These are cuts 

in federal funds changing the partnership dramatically. 

Ms. CASTOR. And how many Americans would be left without 

health care services? 

Ms. CASTOR. Well, as I said, the estimate from a previous proposal was somewhere between 14 and 20 million and the cuts get 

63 

bigger over time. And they also can get bigger if things happen 

that are not anticipated. So the trajectory in my testimony shows 

what would happen based on expenses growing as expected. 

Ms. CASTOR. And we even have Republican governors speaking 

out against this approach. For example, Governor Charlie Baker of 

Massachusetts wrote recently we are very concerned that a shift to 

block grants or per capita caps for Medicaid would remove flexibility from states as a result of reduced federal funding. States 

would most likely have to make decisions based on fiscal reasons 

rather than the health care needs of vulnerable populations. 

Isn’t that true that when you devastate care and take a hammer 

to the federal-state partnership you are really saying to states you 

have less flexibility to care for your citizens? 

Ms. SOLOMON. You certainly can innovate. States have been innovating and they have been getting flexibility to provide some upfront funding to build the technology they need to coordinate across 

providers and deliver care in a more coordinated way. That is gone 

under these proposals. 

Ms. CASTOR. Thank you. Mr. Chairman, I will yield back my 

time. 

Mr. BURGESS. The gentlelady’s time has expired. The chair 

thanks the gentlelady. The chair recognizes the gentleman from 

Texas, the vice chair of the full committee, 5 minutes for questions, 

please. 

Mr. BARTON. Thank you, Mr. Chairman and thank you for holding this hearing. I was a little surprised to hear the tone and the 

tenor of our friends on the minority side. I have been on this committee 30 years. I missed the memo apparently where it said we 

were trying to gut Medicaid, destroy the program. 

The memo I got said that we have a budgetary crisis and we 

need to find ways to strengthen the program to reform and improve 

it and make sure that we get the money to the most vulnerable, 

and in doing that hey, we might give the states a little bit more 

flexibility. We might change the waiver process which is fairly bureaucratic. Again I am only the vice chairman and the past chairman and I have only been on the committee for 30 years, so maybe 

there is some things that have happened behind my back and if so 

I will take that up with Chairman Walden and make sure it 

doesn’t happen. 

I do know that the federal budget is about $4 trillion, Mr. Chairman. I know that the federal government is right now spending 

about $350 billion on Medicaid and that is supposed to double in 

the next few years. In total, state and federal spending is going to 

be about a trillion dollars. I also know that the expansion of Medicaid, which the Affordable Care Act engendered, added about ten 

million people to the rolls and we are spending in the neighborhood 

of $60 billion to cover those people and that as the federal hundred 

percent match is phased out the states are scrambling to find ways 

to continue to cover this. 

So I guess my first question to Dr. Roy, do you think it is possible to maintain the existing growth rate in Medicaid spending at 

the state and federal level and actually do it in a way that the 

hardworking taxpayers of America can afford? 

64 

Mr. ROY. No, Mr. Barton. And I will go back to something that 

Ms. Castor said. There is no state in America that does not make 

decisions about care and coverage for the Medicaid population 

based on fiscal consideration today. Every single state does that 

today. Every single state did that last year and the year before that 

and the year before that because for every state in America Medicaid expenditures are either the number one or number two line 

item in their budget. 

So fiscal considerations are dominant in the way states have to 

manage their Medicaid programs and they don’t, they simply don’t 

have the flexibility to focus their resources, their limited resources 

on the needs of their populations. 

Mr. BARTON. So you could say that the states right now are 

capitating Medicaid spending. 

Mr. ROY. They effectively are and in very ineffective ways by reducing reimbursement rates to physicians and to other providers. 

And if we gave them full flexibility, particularly if we gave individuals the flexibility to control the dollars that are being spent on 

their behalf for the health care needs that they have, we could dramatically improve their access to primary care, their access to specialist care and their access to high quality hospitals in a way that 

would substantially improve their health outcomes. 

We have been talking a little bit today about health outcomes for 

people in Medicaid versus being uninsured. The most important 

point I could make today is that health outcomes for people on private insurance are dramatically better than those for people on 

Medicaid. And so more—— 

Mr. BARTON. Well, we have three, this is called a legislative 

hearing so we have three bills before us. One of them has the radical idea that you should count lottery winnings. Now there are not 

very many of these lottery winners, 6,000 I think nationwide. 

Would that gut Medicaid if we actually counted lottery winnings as 

part of the income test? 

Mr. ROY. Not in the least. If someone can afford private coverage 

or otherwise is not the kind of person who the Medicaid program 

is designed for it just defies common sense why we would devote 

those scarce resources to subsidize those individuals as opposed to 

the individuals who need the help. 

Mr. BARTON. Congressman Flores has a bill that would say we 

give the states the discretion on covering undocumented workers or 

illegal aliens. They could cover it with their dollars but the federal 

government wouldn’t have to automatically cover them; now that 

is a little bit more controversial. These are people that have come 

into country illegally, don’t have the proper documentation. Do you 

think that the majority of the citizens and the taxpayers of the 

country would support that idea? 

Mr. ROY. As the child of immigrants to this country from this 

country from India I find it very puzzling that we are even having 

this debate. It seems entirely commonsensical that we would restrict Medicaid funding and resources to people who are legally 

resident in this country. 

Mr. BARTON. In my congressional district if I did an opinion poll 

it would be about 95/5, 95 in support of restricting Medicaid to citizens or legal residents. With that Mr. Chairman, I yield back. 

65 

Mr. BURGESS. The chair thanks the gentleman. The gentleman 

yields back. The chair recognizes the gentleman Mr. Luja ́n, 5 minutes for questions, please. 

Mr. LUJA ́ N. Thank you, Mr. Chairman. And Ms. Solomon, at the 

Center on Budget and Policy Priorities have you had a chance to 

review the Republican proposal, some of which was listed in Speaker Ryan’s Better Way document on—— 

Ms. SOLOMON. Yes. 

Mr. LUJA ́ N [continuing]. What they would do to Medicaid? Can 

you talk about that? 

Ms. SOLOMON. Yes. I mean I have mentioned it. It would really 

just shift huge amounts of costs to the states, as I said, along with 

the decisions of how to absorb the major cuts and also leave states 

shorthanded, essentially, if things that were not anticipated happened such as an epidemic. We have had the Zika threat, drugs, 

new blockbuster drugs, the ability to provide those to people, the 

aging of the population; all of the proposals are based on what the 

population looks like now. 

And we have that bulge of the Baby Boomers which right now 

are at the sort of lower end of the seniors, 10 years from now that 

is an older population and 20 years even more so. So none of that 

is really taken into whatever the formula would be that we would 

have a lot more people who are very old and need a lot more care. 

So basically states would have to figure out how to deal with that. 

Mr. LUJA ́ N. So Ms. Solomon, I know this is a complex issue as 

we are trying to better understand it to do our due diligence to 

make a difference to keep this program strong. The way that I understand, when the federal government shifts costs to the states 

that means that the federal government is going to cut the federal 

investment and put that burden on the state. Is that a fair assessment? 

Ms. SOLOMON. That is it. I mean that is exactly what these, we 

call them block grants, we call them per capita caps, but they are 

cuts. They are cuts in federal funds when it is very easy for Congress to do it because it really leaves the states with the hard decisions of how to absorb that change in the partnership between the 

federal and state government. 

Mr. LUJA ́ N. I appreciate that Ms. Solomon. So if there is any 

question associated with the Republican plan, I think Speaker 

Ryan has something called a Better Way that everyone can go take 

a look at that pamphlet. And when we are talking about what is 

happening here, if you are saying and using terminology to shift 

the cost from the federal government to the states that means you 

are cutting the program. I don’t know why we are parsing over 

this. It is what it is. Let’s just accept the programs that both sides 

are putting forward here. 

Now there is a lot of conversation, Ms. Solomon, associated with 

one of these areas and a term that we are learning more about 

called the reasonable opportunity period which is being talked 

about in one of these bills. It is my understanding that there is a 

verification process that has been established when someone applies for these programs that you have to submit your Social Security Number or documentation. 

66 

In cases maybe where Social Security doesn’t exist, but where it 

does exist you submit that that is verified Social Security Administration whether someone is eligible or not. If they don’t have their 

Social Security Number or their Social Security Number process is 

not one that is recognized by the Social Security Administration 

then an applicant would submit paperwork to show that they are 

citizens and then they would be put in this what is called an ROP. 

So can you tell me if there is challenges for naturalized citizens? 

Ms. SOLOMON. Yes. 

Mr. LUJA ́ N. Do they have to submit additional paperwork and 

then would they land up in an ROP? Would citizens born outside 

of the United States fall into that situation and have to fall into 

an ROP and namely children born on military bases outside of the 

United States, would their number fit into that process and would 

they fall into this ROP? 

Ms. SOLOMON. Yes, those are the groups that would be most affected by the bill that is before you because that bill if you look at 

the language it talks about aliens declaring that they are citizens. 

It actually affects the verification process for people who are attesting to being citizens or U.S. nationals. A vast majority of those individuals have their citizenship verified electronically pretty instantly by the Social Security Administration. 

There are several groups, the groups that you mentioned, naturalized citizens, people who are born abroad, say, to military parents and some newborns who have to provide documentation because Social Security can’t verify it quickly. The reasonable opportunity period was put into the law after we saw large numbers of 

children and others not being able to get through this without 

delays so that they could get benefits while they were submitting 

their documentation. 

Mr. LUJA ́ N. Thank you, Ms. Solomon. And as my time expires, 

Mr. Chairman, I think that we all want to make this system work, 

but citizens of the United States should not be left out. Thank you 

very much. 

Mr. BURGESS. The gentleman yields back. The chair thanks the 

gentleman. The chair recognizes the gentleman from Illinois, Mr. 

Shimkus, 5 minutes for questions, please. 

Mr. SHIMKUS. Thank you, Mr. Chairman. It is great to be here, 

great new hearing room and so I get to do the inaugural chart 

through this new technology. Obviously we are talking about the 

budget and we are talking about spending. I think you can see it. 

[Chart shown.] 

Mr. SHIMKUS. You should be able to see it right—can’t they see 

it in front? All right, see, it is all new to us. So you got it right 

in front of you. Does anyone dispute this as a federal budget pie 

in 2015? No. Mr. McCarthy? 

Mr. MCCARTHY. No. 

Mr. SHIMKUS. Ms. Solomon? No, that is it. Now, so we are debating—look, this is an important budget chart to show that we fight 

our budget on the blue area which is the discretionary numbers. 

The red is the mandatory, the red is spending out of control and 

as that continues to grow it squeezes the blue portion. 

And Ms. Solomon, you mentioned it on Medicaid, or someone, 

Mr. McCarthy, you mentioned it on Medicaid. As Medicaid in the 

67 

states expand it squeezes schools, public health, state budgets, so 

the debate on reforming the process to make it solvent, I think, is 

a very fiscally responsible debate, but people have to see the whole 

chart. So really, our challenge here is try to address the mandatory 

spending and make it fiscally sustainable and then we don’t have 

these discretionary budget fights. So that is just a good way to 

start. 

Now I want to go to specific questions. Mr. Guthrie just returned. 

He kind of talked a little bit. 

You can take that chart down now unless we want to keep it up 

just for the allure of it. 

But Mr. Guthrie at the end of his filibuster kind of started talking a little bit about the, what we call the work requirement. So 

I know, Mr. Roy, you have done some research on that. Can you 

talk about that ‘‘work requirement’’ as far maybe some possible reforms? 

Mr. ROY. Yes. So let me highlight, Mr. Shimkus, one of the 

things that we in the health policy community support about a 

work requirement and that is that there is a lot of emerging research that shows that individuals who have health insurance and 

who have health care needs who have work, who have a job are 

much more engaged in their actual health care and just the 

wellness that comes with having a job, going to work every day, 

feeling needed. 

A lot of these things are subtle, but the research is quite compelling in showing that people who have jobs do a much better job in 

terms of health outcomes versus people who don’t. Not because of 

income because you can stratify these results for income, but because of their engagement in their own lives and their own health. 

And so a lot of what I think our ambition is is to see a work, a 

relationship between work and the Medicaid program and other 

programs that help low-income individuals so that there is an encouragement for those individuals to be engaged in their lives and 

engaged in their health. 

Mr. SHIMKUS. And these are not, the elderly or the disabled are 

not involved in this work requirement discussion, correct? 

Mr. ROY. Correct. 

Mr. SHIMKUS. And Mr. McCarthy, having your experience in the 

state you know that the 1115 waiver supposedly has that ability 

to do that. Can you talk about how a requirement that an individual not just take from the Medicaid program but actually give 

back to the community can help that individual? 

Mr. MCCARTHY. So from the standpoint of what we saw in Ohio 

as many of the people on the program were working so we believed—and we had a Healthy Ohio waiver which we turned into 

CMS that was disapproved—that having people participate not 

only in their health care but in just making their lives better would 

be something that would be beneficial to everyone. 

I think one of the things that we get distracted on, and somebody 

brought this up earlier, was the issue just simply work. There was 

a discussion of could it be education or other things that are going 

on, just engagement of a person to say here is the things we need 

to do. Many people are already doing it. There is a subset that is 

68 

not, so let’s engage them to figure out what that is that they can 

do to better themselves. 

Now there was—— 

Mr. SHIMKUS. Let me in my last 45 seconds ask, don’t we do this 

already for TANF, for the Temporary Assistance for Needy Families, isn’t there some quantification right there already and that 

could be used in that same process? 

Mr. MCCARTHY. Yes. 

Mr. SHIMKUS. I yield back my time. 

Mr. BURGESS. The gentleman yields back. The chair thanks the 

gentleman. The chair recognizes the gentleman from Massachusetts, Mr. Kennedy, 5 minutes for questions, please. 

Mr. KENNEDY. Thank you, Mr. Chairman. I appreciate the opportunity here. I want to thank the witnesses for being here, discuss 

an important topic to our health care system and the 

underpinnings for how we try to make good on a promise that everyone in this country gets access to the care that they need when 

they need it and that is a fundamental bedrock for not just our 

medical community but our society. No one wants to be checking 

a health insurance card after you get hit by a bus, or a passport 

or for a green card. 

So the question then is, getting back to the pie chart Mr. Shimkus put up, is yes, there is issues on the discretionary spending 

and the mandatory spending side, and the focus of this hearing is 

looking at that smallest piece of the mandatory side and taking out 

that side interest on the debt and squeezing out efficiencies there, 

which I would point out is close to 50 percent of the Defense Department budget. 

So I think it is also important to put these reforms in context 

and to put a human side on them too. As we consider these reform 

bills that we go through we should remember that there is by some 

estimates 32 million Americans that are on the cusp of losing 

health insurance depending on what this committee decides to do. 

I toured a series of community health centers last week in my 

district and you heard the same message from their doctors, from 

their patients, from their advocates, from their staff which was 

don’t sabotage the Affordable Care Act, don’t gut Medicaid expansion and don’t jeopardize the progress that we have made in our 

health care system. It is not as simple as redirecting that funding. 

As more and more people lose coverage and access to preventive 

care which many of them can get from a community health center 

they turn to emergency room treatment, then uncompensated costs 

go up at hospitals and premiums increase with them. One of the 

health centers I visited, the North Shore Community Health Center, Medicaid makes up 60 percent of the total patient service revenue. Statewide community health centers serve over one-fifth of 

all Medicaid beneficiaries in the Commonwealth of Massachusetts 

and account for less than two percent of our Medicaid expenditures. 

So yes, while we need to look for innovative ways to deliver new 

care we should dismiss catchy ways to kick people off of Medicaid. 

We should be debating reforms that would replicate those efficiencies that we have seen across the country. In Massachusetts by 

the way—that has a 2.8 percent unemployment rate and a 2.8 perVerDate Nov 24 2008 15:39 Oct 18, 2018 Jkt 037690 PO 00000 Frm 00074 Fmt 6633 Sfmt 6633 I:\MY DOCS\HEARINGS 115\HEARINGS\115-2 CHRIS
69 

cent uninsured rate, the idea that the Affordable Care Act is somehow a job killer is demonstrably false, as we have seen in Massachusetts. 

So we also know that going forward the immediate repeal of the 

Affordable Care Act would result in a loss of three million jobs 

worldwide, would lead to $165.8 billion in hospital losses over the 

next 8 years, Medicaid expansion would, in fact the progress we 

have made on lowering marketplace premiums would be gone, and 

repeal without a replacement would lead to nearly 44,000 deaths 

annually by conservative estimates. There is a reason why Republican governors, many of them represented in states that my colleagues here represent, are begging Congress to try to defend that 

Medicaid expansion. 

And I would like unanimous consent, Chairman, to submit for 

the record a letter by my governor, Republican Charlie Baker, in 

response to a solicitation put out by leader Kevin McCarthy, detailing some of the reforms that he would like to see going forward as 

a health care executive, former health care executive. 

And he mentions in here, Chairman, that maintaining state 

health care safety nets including retaining existing federal health 

subsidies and uncompensated care pools that support health care 

coverage and charity care providers, avoiding proposals that only 

offer more flexibility and control in exchange for shifting costs to 

states, providing flexibility with then pulling back money does not 

solve the problems that we have heard from today. 

Mr. BURGESS. Will the gentleman yield for action on his unanimous consent request? 

Mr. KENNEDY. I will for that. Thank you. 

Mr. BURGESS. Without objection, so ordered. 

[The information appears at the conclusion of the hearing.] 

Mr. KENNEDY. Thank you, Mr. Chairman. So I realize I filibustered there for a little while, apologies. But Ms. Solomon, two very 

simple questions and then just so I leave with: do you support repealing the Medicaid expansion and do you believe that health outcomes improved in states with expanded Medicaid versus those 

that did not? 

Ms. SOLOMON. I obviously support the expansion and do believe 

that it has made a huge difference in the states that have expanded in addition to lowering the un-insurance rate, more people 

getting care, its evidence is indisputable. 

Mr. KENNEDY. And then very briefly since we have about 30 seconds left, the largest payer of mental health services in this country is Medicaid. There has been in this committee a bipartisan 

commitment to look at some of the issues around mental health. 

How can we possibly address the systemic failures of our mental 

health system without addressing Medicaid? 

Ms. SOLOMON. You can’t because it really is providing the foundation for things such as the initiatives that were in the CURES 

bill and elsewhere. Those are going to wrap around the foundation 

that is provided through Medicaid for behavioral health services. 

Mr. KENNEDY. Thank you and I yield back. 

Mr. BURGESS. The gentleman yields back. The chair thanks the 

gentleman. The chair recognizes the gentleman from Pennsylvania, 

Mr. Murphy, 5 minutes for questions, please. 

70 

Mr. MURPHY. Thank you, Mr. Chairman. First, Dr. Roy, you were 

talking about how people who are on Medicaid don’t really differ 

much from people who have no insurance at all and cited a few 

studies, looked at things like cancer, diabetes rates and things like 

that. And I just want to make sure I got it on the record you are 

not implying that being on Medicaid causes cancer. 

Mr. ROY. Of course not. 

Mr. MURPHY. That being on Medicaid worsens cancer or reduces 

life span, and you also say that people who are on Medicaid, the 

doctors are paid below market rates, and you are not saying that 

when doctors are paid less that reduces life span, but you are talking about an access to care. 

And I believe one of those studies, I looked it up here, is also 

Kwong, et al., University of Pittsburgh, my alma mater. But what 

is happening is that people actually come in worse. They put off 

care. And this is where I agree with some of my colleagues on the 

other side of the aisle, when people don’t have insurance they put 

off care. 

And it has actually been some of the problems of the Affordable 

Care Act. It was supposed to have been that it would increase outpatient visits and actually reduce inpatient and emergency room 

visits and it has had the opposite effect because what people have 

found they have high co-pays and deductibles. Does that make 

sense? 

Mr. ROY. That is correct. Emergency room volume has increased 

through the Medicaid expansion and it has not increased the rate 

of primary care physician access relative to what Medicaid’s performance was previously. 

Mr. MURPHY. Mr. McCarthy, I want to understand. You had 

made some references in your comments about co-pays and premiums that were reasonable and enforceable which should keep— 

is that meant to keep people from the emergency rooms and keep 

those costs down? 

Mr. MCCARTHY. It is designed, the purpose of it is to have a person actually make a choice of where they are going to go and make 

a reasonable choice to say—— 

Mr. MURPHY. I understand. And the same thing with formularies 

and for drugs there, because initially we were trying to grapple 

with that when dealing with the cost of drugs that formularies and 

negotiated drug prices in selecting one can be part of a cost savings, correct? 

Mr. MCCARTHY. Right. The problem with the Medicaid program 

right now is that a state is forced to cover every FDA-approved 

drug and it leaves you with no negotiating room for new drugs. 

Mr. MURPHY. OK. And part of the issue we dealt with here on 

another hearing was that when a state chooses, for example, a formulary in mental health drugs that assumes that all anti-depressants are anti-depressants the same and all anti-psychotics are the 

same just because they have that same function, they are not the 

same because they have different side effects and because of different side effects people may not take them. When they don’t take 

them their situation gets worse. 

And I know that Ms. Solomon, you also made some comments 

about when people have to make a choice about care and they are 

71 

on waiting lists to get into long-term care. And I am assuming you 

would be supportive that if there was an option for an alternative 

payment model and if someone could be cared for in-home that 

would save money and probably be more preferable to that patient. 

Am I correct? 

Ms. SOLOMON. Absolutely. And there are multiple options and 

flexibilities for states that want to do that including the new state 

option for home and community based services. This is where there 

is enormous flexibility in Medicaid for states to pick up different 

ways of doing that. 

And as Figure 1 in my testimony shows, the result has been 

that—— 

Mr. MURPHY. I have to cut you off. I am trying to get to another 

point here, but if you can get me that I want it because here is the 

thing I want you to think, although I think we are not there yet. 

We are talking about moving around how things are paid for, 

whether doctors are paid more, what is happening there. A number 

that keeps coming up to us is that 5 percent of the people on Medicaid account for 55 percent of Medicaid spending and they are not 

a homogeneous group. 

One thing I would like to submit, Mr. Chairman, is an article by 

Gregorio, et al., on inflammatory bowel disease in medical homes, 

talking about this in an op-ed that I wrote called A Better Model 

for Healthcare in America from the Washington Examiner that 

when you actually wrap service around something and you identify 

the over utilizers versus someone who just is a high utilizer you 

can make a massive difference. 

So not all of those people on Medicaid are the same, and it isn’t 

just paying doctors more. This is where I want to know, I am not 

sure the bill, I mean the bills we are dealing with today have some 

effects here on spending but they don’t have an effect on changing 

medical models. So now Ms. Solomon, if you can complete your 

thought, how do we change an alternative spending model that 

saves money in Medicaid and provides better care? You have 30 

seconds. 

Ms. SOLOMON. It is going on today in multiple states that have 

done exactly what you are saying, identify those high utilizers. The 

health home program that was in the Affordable Care Act, things 

like the programs at the Camden Coalition which has become a national model—— 

Mr. MURPHY. Very important. Can we do more to incentivize 

those, because as some of those even worked it is kind of state by— 

the Camden model is a great model, but the question is, and this 

is where I would like all of you to get back to this committee, it 

is extremely important that we find ways of effectively helping 

those and it isn’t just going to be raising their co-pays and 

deductibles to do that. 

With that Mr. Chairman, also one other thing I want to ask 

unanimous consent to submit for the record. It is a letter from the 

National Association of Psychiatric Health Systems too, on these 

models too. 

Mr. BURGESS. So just to clarify the gentleman had two unanimous consent requests? 

Mr. MURPHY. Three. 

72 

Mr. BURGESS. Was there one embedded in that previous discussion? 

Mr. MURPHY. There is three. One is an article by Gregorio, et al., 

where—— 

Mr. BURGESS. Without objection, so ordered. 

The gentleman’s time has expired. The gentleman yields back. 

The chair recognizes the gentlelady from California, Ms. Eshoo, for 

5 minutes for questions, please. 

Ms. ESHOO. Thank you, Mr. Chairman. Glad to be back on the 

subcommittee. I am a returning member because I did serve on 

this subcommittee for several years. Thank you to the witnesses. 

There is an advantage to coming in a little later in terms of asking 

questions because we have been listening to both questions, answers, comments of members. 

My takeaway on the three bills here is that they, all three of 

them, change Medicaid eligibility requirements, and when eligibility requirements narrow some Medicaid beneficiaries who previously qualified for coverage will no longer qualify and will lose 

their Medicaid coverage. So the results in coverage are essentially 

being taken away from these people, so this is subtraction. This is 

subtraction. That is my take on the three bills. I could say more 

about them. I am just fascinated with some of the things that have 

been said. 

Now I want to go to you first, Dr. Roy. I am not familiar with 

your organization, the Foundation for Research on Equal Opportunity. Who funds you? 

Mr. ROY. We are a nonpartisan, nonprofit think tank that has 

donors from—— 

Ms. ESHOO. Yes, but who funds you? Where does the money come 

from? 

Mr. ROY. The money comes from donors just like every other 

think tank who are individuals. 

Ms. ESHOO. And who are they? Who are your major donors? 

Mr. ROY. We don’t disclose our donors. We are 4 1⁄2 months old. 

Ms. ESHOO. Does the committee require in the witness background to submit to the committee who funds organizations, et 

cetera that witnesses come here to testify on behalf of? If we don’t 

I think that we should consider that. 

Mr. ROY. I am not testifying on behalf of donors. I am testifying 

on behalf of the Foundation for Research on Equal Opportunity and 

myself. 

Ms. ESHOO. Well, that is why I am asking about the Foundation 

because we have foundations and we have foundations. But since 

you don’t wish to disclose, I think that the committee should for all 

witnesses make that determination and make it a requirement so 

that members do know. 

Now did you support the ACA when it was passed? 

Mr. ROY. We don’t take institutional positions on legislation. 

Ms. ESHOO. Do you support it today? 

Mr. ROY. What I do support—— 

Ms. ESHOO. No, no, no. Answer it. I only have 5 minutes. 

Mr. ROY. What I do support is universal coverage, and we have 

put out a plan to achieve universal coverage. 

Ms. ESHOO. Do you support the elimination of Medicaid? 

73 

Mr. ROY. I don’t support the elimination of Medicaid. I support 

covering everyone who needs financial assistance to afford health 

insurance. 

Ms. ESHOO. Right. In your research—the chairman of the full 

committee made mention of millionaires and billionaires who use 

Medicaid. In your research have you found anyone in those two categories that are in Medicaid, using Medicaid? 

Mr. ROY. There are lottery winners who by law if they receive 

all their income in a lump sum in 1 month—— 

Ms. ESHOO. So it is lottery winners, and how many of those are 

there? 

Mr. ROY. It is not merely lottery winners. It is anybody who receives a lump sum payment. So for example someone who received 

a financial bonus from work—— 

Ms. ESHOO. So if someone is in an automobile accident and there 

is a settlement then that makes them a millionaire or billionaire. 

I have to tell you that this is a bad rub when these things are 

thrown around that millionaires and billionaires are on Medicaid. 

Mr. McCarthy, do you support eliminating the federal dollars of 

Medicaid and then have the states be the laboratories of invention 

and be able to expand or contract or write their own rules with 

their own money and believe that people will still be served? 

Mr. MCCARTHY. I believe that people can be served if the states 

are given the proper flexibilities in whatever—— 

Ms. ESHOO. No, I am asking about the federal dollars though, 

picking up on Ms. Solomon’s testimony. 

Mr. MCCARTHY. If the federal dollars change the states will—— 

Ms. ESHOO. Do you support subtracting the federal dollars out 

and just have the states carry out with their own dollars whatever 

they want to design? 

Mr. MCCARTHY. If you are asking if all federal dollars, no. That 

would be very difficult for a state to do. 

Ms. ESHOO. Sure would. And at what point do you support the 

reduction of federal dollars? What level reduction are you—— 

Mr. MCCARTHY. It depends on what flexibilities are given to 

states. Those two things have to go hand in hand. 

Ms. ESHOO. So you don’t want to name the amount of dollars 

that you are willing to subtract as a former director of the program 

from a state, from a major state. 

Mr. MCCARTHY. Again it would depend on what flexibilities come 

with it. 

Ms. ESHOO. Ah-ha. So we want the money for sometimes, we 

don’t know how much but someone is going to decide it. That is 

quite a proposition. Well, what the conclusion that I have come to, 

and it is not hard listening to the testimony, is that there is really 

not support for this program and so there is a nitpicking around 

the edges. 

In anything we do there is always room for improvement, but 

this, I don’t think today’s hearing is about improvement. I think it 

is about elimination, subtraction and I don’t—— 

Mr. BURGESS. The lady’s time has expired. 

Ms. ESHOO [continuing]. Think your surveys and whatever you 

presented in your testimony are reliable or acceptable because I 

think they hurt people. Thank you. 

74 

Mr. BURGESS. The chair would request that we respect other 

members’ time, and I am now going to recognize Mr. Lance from 

New Jersey 5 minutes for questions. Mr. Lance lost interest. Mr. 

Griffith, 5 minutes for questions, please. 

Mr. GRIFFITH. Thank you very much. I appreciate our committee 

working hard on this. As you have heard we can always make 

things better. And one of the things that the American people want 

and my people that I represent in Virginia and my district want 

is folks to make sure that if they need the help they get it. But 

if they suddenly find themselves millionaires because they won the 

lottery or they have gotten some other lump sum payment, they 

don’t think those folks ought to necessarily be getting Medicaid. 

And so while I have heard it said that throwing it around that 

millionaires are getting Medicaid is a bad rub, currently it is a bad 

rub the average hardworking American taxpayer is paying for it, 

wouldn’t you agree, Dr. Roy? 

Mr. ROY. My foundation, the Foundation for Research on Equal 

Opportunity is dedicated to expanding economic opportunity for 

those who least have it. Generally speaking, millionaires and billionaires are not people who at least have economic opportunity in 

this country. 

Mr. GRIFFITH. And in fact when I read the bill I noticed with 

some interest that I thought it was fairly generous because it basically allocates it out as roughly $40,000 a month for the first, say, 

hundred thousand and then it is more than that. So it is not like 

we are saying that if you win a million dollars you can never be 

on Medicaid again, it is fairly loose. Wouldn’t you agree? 

Mr. ROY. I mean to me it is very simple. If you can afford to buy 

health insurance yourself, please do so. If you can’t afford health 

insurance on your own and you need the financial assistance and 

are eligible for the financial assistance that Medicaid provides then 

let’s find a way to get you that assistance. It seems completely noncontroversial and I really don’t understand why members of the minority find this problematic. 

Mr. GRIFFITH. And I am going to switch gears but stick with you, 

Dr. Roy, if I might. In your written testimony, and I don’t believe 

you have had an opportunity and I apologize if I have missed it 

somewhere, but I don’t believe you have had an opportunity to discuss it. On page 8 of your written testimony you start getting into 

issues about how ‘‘the interest of state and federal governments 

have diverged in Medicaid because of the way it is set up.’’ 

And I am not sure these bills directly get to that but I thought 

that was interesting testimony because it is one of the things that 

has been a bad rub for Virginia. And that you then go on to talk 

about how the federal government has done some things that 

maybe they ought not to have done and the state governments 

have responded and done some things where they came up with 

creative financing and you actually reference Medicaid hospital 

taxes. And in Virginia we rejected that concept because we saw it 

as a tax on the sick and that they wanted to create a bed tax 

where, if you were a Medicaid patient you would get the money 

back as increased costs and you would receive as you said in your 

testimony whatever your match was, in Virginia it is 50 percent 

but you used 60 percent in your example, you would get that 

75 

money back and so the states have actually gamed the system in 

some states to get more federal dollars from Medicaid and in some 

cases like New York they have actually had to have reforms because they gamed it so much they had so much money floating 

around they were wasting millions of dollars. Isn’t that true? 

Mr. ROY. Absolutely. And a number of the states in fact nearly 

I would say a majority of the states that have expanded Medicaid 

under the ACA in theory there—— 

Mr. GRIFFITH. Just a second. Mr. Chairman, I am having a hard 

time hearing. 

Mr. BURGESS. The gentleman is correct and the time will suspend. The chair notices a significant difficulty hearing the testimony of the witness even with amplification, so could I ask conversations be taken off the dais in respect to our witnesses who 

have agreed to be with us this morning? 

Mr. GRIFFITH. Thank you. 

Mr. BURGESS. The gentleman continues to suspend. Conversations off the dais to allow the witnesses a chance to be heard. The 

chair thanks the committee. The gentleman may proceed. 

Mr. ROY. A majority of the states that have expanded Medicaid 

under the ACA have used provider taxes and health insurance premium taxes to fund the theoretical ten percent match that they are 

supposed to contribute. We have heard some descriptions of the socalled savings that states have achieved by expanding Medicaid. 

There are no so-called savings. 

What has happened is that state governments have raised taxes 

on Medicaid providers and on managed Medicaid managed care 

companies and use those revenues to fund the Medicaid expansion 

in their states, in other words increasing the federal liabilities for 

the Medicaid programs in ways that the ACA did not contemplate. 

That is not just true of the ACA. In my written testimony I cite 

the fact that on average the FMAP, the match rate at the federal 

level is around 58 to 60 percent. At least that is what it is supposed to be on paper, in reality it is closer to 70 percent because 

of these taxes that states use to game the system and attract 

raised costs in the Medicaid program and drive revenue to the 

states from the federal government that they otherwise wouldn’t 

gather and aren’t supposed to obtain. 

Mr. GRIFFITH. And I want to summarize and probably then have 

to conclude, but in summary, if the federal government gives the 

state $2 million and the state was only going to spend a million 

dollars, the state has not saved a million dollars, the federal government has spent a million dollars it maybe didn’t need to. 

Well, I support all three of these bills, but I would invite all of 

our witnesses if you have ideas on ways that we can improve these 

bills, please let us know because we are trying to make sure—I 

agree with the philosophy, but if there is some way that we can 

make the bills better, please let us know and I would appreciate 

it very much if you will give that in writing. That would be great. 

And with that Mr. Chairman, I yield back. 

Mr. BURGESS. The gentleman yields back. The chair thanks the 

gentleman and the chair recognizes the gentlelady from Colorado, 

Ms. DeGette, 5 minutes for questions, please. 

76 

Ms. DEGETTE. Thank you so much, Mr. Chairman, and it is good 

to be back on the committee, on the subcommittee, although this 

morning I can’t help but feel like I am in a Lewis Carroll book because here we are talking about lottery winners and undocumented 

people getting Medicaid, but then the testimony particularly from 

the majority witnesses is all about the full Medicaid expansion. 

We saw this yesterday in the Oversight and Investigations hearing on the Medicaid expansion and I think we really need to clarify 

what we are talking about. I don’t think the biggest problems facing Medicaid are lottery winners getting Medicaid advantages, and 

also under current law although it may not be good from a health 

care policy standpoint, people who are not citizens or have documentation they can’t get Medicaid right now under current law. 

And with respect to people who are vulnerable, as has been demonstrated by all of the evidence, if you expand Medicaid then you 

actually are more able to insure the vulnerable. 

So let’s talk about what we are really discussing today under the 

guise of these three bills. What we are really discussing today is 

the majority’s intention to gut the Medicaid expansion for a variety 

of reasons. And that is what I want to talk about. 

Ms. Solomon, I want to ask you, now I understand that in the 

Medicaid expansion under the Affordable Care Act 80 percent of 

the people who are getting that Medicaid expansion are actually 

working; is that right? 

Ms. SOLOMON. That is right. 

Ms. DEGETTE. What is the situation with the other 20 percent 

of the population? 

Ms. SOLOMON. So it is varied, but you do have a large share of 

people if you think about who was not covered by Medicaid before 

and is picked up by the expansion you have the people we sort of 

shorthand call the childless adults. And these are people that 

didn’t fit a category and we did away with the categories. So you 

do have people who are chronically homeless, people with substance use disorders, people with mental illness and then just a 

group of people who are caring for family members and low income, 

unable to work. 

So it is probably a diverse population, but there really isn’t—the 

people that are mostly affected are the people who didn’t have a 

pathway to coverage before and who were working because they 

were working in jobs without coverage. 

Ms. DEGETTE. And how did those people get their health care before we had these Medicaid expansions? 

Ms. SOLOMON. They didn’t. I mean they didn’t have insurance so 

they—— 

Ms. DEGETTE. Well, if they got sick what did they do? 

Ms. SOLOMON. Yes. They went to the emergency room. They went 

to hospitals. They went to community health centers that 

would—— 

Ms. DEGETTE. Right, and eventually we the taxpayers paid for 

that, right? 

Ms. SOLOMON. Correct. 

Ms. DEGETTE. Now you heard Dr. Roy say that he did a study— 

and Doctor, I read your testimony and also the article that you 

wrote that you cited in your testimony. And he said that the data 

77 

shows that people on Medicaid have no better outcomes than people who are uninsured. Is that supported by the rest of the data? 

Ms. SOLOMON. I don’t think so. People are getting care. And I 

think again the studies are very, very narrow and they look at people with very serious illnesses, and I think Dr. Roy said that they 

came in late. They didn’t have their conditions diagnosed, and that 

is exactly what the Medicaid expansion is allowing. I would just 

commend everybody to look at the dashboard in Louisiana where 

they are tracking the people that are being found through their 

pretty new expansion. 

Ms. DEGETTE. OK. So some of you who were at yesterday’s hearing in O&I, I talked about some of the people I had last week in 

Denver. I had a listening session for people to come and talk about 

their experiences in the ACA. And I had one woman, Lisa Scheim 

of Denver. She developed a neuroimmune illness and so she has 

only been able to work part-time. Because she works part-time she 

is not eligible for insurance through her employer, and before the 

ACA she was rejected for insurance because she had a preexisting 

condition. 

We had a high risk pool in Colorado, but the premiums were so 

high she couldn’t buy in. So then she got ulcerative colitis and an 

autoimmune disease, she couldn’t even go in for a diagnosis because she couldn’t pay for it. Finally she got a part-time job but 

she couldn’t get insurance. In the meantime her medical bills went 

to collection and she even got a letter that said she was going to 

jail. So now she is on the Medicaid expansion. She works part-time, 

she gets her treatment, and if we eliminate this expansion she now 

won’t have insurance again. 

Mr. Chairman, those are the types of people who are getting 

health insurance now. I can’t help but believe Lisa Scheim and all 

the other millions of people who are getting insurance are getting 

worse care now than no care before. I yield back. 

Mr. BURGESS. The chair thanks the gentlelady. The gentlelady 

yields back. The chair recognizes the gentleman from Florida, Mr. 

Bilirakis, 5 minutes for questions. 

Mr. BILIRAKIS. Thank you, Mr. Chairman, I appreciate it and I 

thank the panel for their testimony. 

Mr. McCarthy, in your testimony you noted that giving priority 

to states with the biggest wait lists would only incentivize states 

to have high wait lists. I am from Florida and we are the number 

two when it comes to the size of our home and community based 

care waiting lists, and I understand Texas is number one. Right, 

Mr. Chairman? 

You also mentioned tying funds to the Money Follows the Person 

program. There are 44 states that have that program, Florida does 

not. How do you propose allocating funding to promote more home 

and community based care, something I strongly support, and yet 

not disadvantage states such as Florida and Texas that have a 

greater need? 

Mr. MCCARTHY. It has to do with how we provide that incentive. 

So the idea is like in Ohio—our Money Follows the Person program, when we started we had about 600 people that we moved out 

of institutions. By the time I left that number was over 5,000 peoVerDate Nov 24 2008 15:39 Oct 18, 2018 Jkt 037690 PO 00000 Frm 00083 Fmt 6633 Sfmt 6633 I:\MY DOCS\HEARINGS 115\HEARINGS\115-2 CHRIS
78 

ple. So in 6 years we were able to do it. We focused on how to get 

people out of institutions, looking at that to pull people out. 

We also used the money that came to the state by the one percent increase for rebalancing, so we used that also. So my point of 

it was if you were to say that it only goes to the states with the 

highest wait lists, then in Ohio my incentive would be to let the 

wait list grow that I have so as to be able to access that that funding was 90/10 in the bill, so that would be my incentive to get 

there. 

So instead of doing that I was saying, how do you just tie it to 

programs that are out there and hopefully other states will be looking at what we have done in Ohio or other states and learning from 

that and that is where CMS can come in and do a better job of getting states to collaborate to figure those different pieces out to 

move forward in those areas. 

Mr. BILIRAKIS. Thank you. Again for Mr. McCarthy, Medicare is 

moving towards value-based payments. Some forward-thinking 

Medicaid directors of programs have been adopting this model 

while others have been much slower. Can you talk about why 

value-based purchasing is important and what some of the existing 

barriers are both regulatory and statutory that need to be removed? How can we promote, really, generally how can we promote 

innovation? 

Mr. MCCARTHY. So Ohio is a State Innovation Model grant winner and so that was a benefit to the state to move forward in that. 

And the reason value-based purchasing is important in Medicaid is 

because it rewards better health outcomes, it doesn’t just put 

money into the program. 

So in Ohio for instance even in this last budget that was introduced Monday, there weren’t just simply for physicians putting 

money into increases in fee-for-service physician rates. It was going 

into the per member per month amount going to doctors which 

then get rewarded for bringing down costs but having better outcomes. 

And so that is why value-based purchasing is important. The 

barriers that you run into are all at the CMS level. I have talked 

to CMS about this. The Center for Medicare and Medicaid Innovation don’t talk to CHDS at the Medicaid side. And for instance in 

Ohio we ran into a barrier. The only way we could do patient-centered medical homes in the fee-for-service world was through a 

state plan and that meant then we had to bring up a PCCP program, which we didn’t run in Ohio. 

So there is this whole barrier of how do we get there? Those 

things need to be waived, because what we were trying to do is 

bringing more value to the program and increasing outcomes. 

Mr. BILIRAKIS. Thank you very much. I yield back, Mr. Chairman. 

Mr. BURGESS. The gentleman yields back. The chair thanks the 

gentleman. The chair now recognizes the gentleman from Oregon, 

Dr. Schrader, 5 minutes for questions, please. 

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

the hearing, and some of these fixes to the Medicaid population 

issues and the Medicaid expansion issues I think are fine. I think 

unfortunately it doesn’t get at the big gorilla in the room which is 

79 

what do we do with the Medicaid expansion population and how do 

we deal with Medicaid going forward. 

And I apologize to Dr. Roy right off because I am going to ask 

you a few questions. When was study, the New England Journal 

of Medicine study done that cites some of the issues in the Oregon 

Medicaid program that you cite in your testimony? 

Mr. ROY. The study was conducted in the late 2000s and early 

2010s, and I believe it was published in 2014. 

Mr. SCHRADER. Yes, so it predated the ACA. 

Mr. ROY. It wasn’t about the ACA expansion, but it was 

about—— 

Mr. SCHRADER. I understand, reclaiming my time. The problems 

you cite with outcomes, no better no worse, but no better than traditional Medicaid with the waiver program. Second question, do 

you think it is cheaper based on your information to give tax credits and subsidies for the federal government, for the federal taxpayer to do that rather than have eligible people be on Medicaid? 

Mr. ROY. In Transcending Obamacare, our health reform proposal, we propose taking the same dollars. So it is not about a reduction in dollars relative to the Medicaid program, but it is about 

taking the dollars that are spent, providing acute care coverage to 

the Medicaid population and giving them the option of having a tax 

credit that allows them to purchase—— 

Mr. SCHRADER. Thank you, I appreciate that. And the answer is 

it is unfortunately to put people in the Medicaid population for the 

American taxpayer. I am trying to be a little fiscally responsible as 

we look at the costs of all these people. I prefer not to have to take 

care of people that are unable to afford health care, but on the back 

end I don’t want to pay for them in the emergency room or for longterm, serious, life-threatening issues at the end of their life. 

Mr. ROY. If you buy an East German car it might be cheaper 

than buying a Toyota or a Ford but that doesn’t mean you get more 

transportation out of it in the end. 

Mr. SCHRADER. I totally agree. 

Mr. ROY. So cheaper isn’t necessarily better. 

Mr. SCHRADER. I am a businessman. Spending money sometimes 

saves you money up front, right? So if you spend your money you 

can hopefully make it up on the back end. How many people do you 

think that are under 138 percent of poverty level or earning 

$16,000 a year are going to be able to afford to put money into an 

HSA account that you recommend in your proposal? 

Mr. ROY. If it is subsidized through these tax credits they would 

be able to afford it. 

Mr. SCHRADER. If it is subsidized. So in other words we need to 

have money in the Medicaid expansion population or whatever system we have to be able to make something go forward in a reasonable way that Joe Sixpack could actually afford things. 

Mr. ROY. Absolutely. 

Mr. SCHRADER. The issue I have here right now is that, you 

know, the bottom line is the Medicaid expansion population has 

been an unqualified success. We have red states, red state governors, some of my Senate colleagues, some of my Republican colleagues who cross the aisle, you know, really excited about the opportunity to serve people. That is really the goal, right? People, you 

80 

don’t want them not to have health care. You don’t want them not 

to show up to work. You don’t want them to be a burden to the 

taxpayer, and health care is kind of a central way to make that 

thing happen. 

I am very worried that the block grant math is unfortunately a 

death spiral. That has been talked about. It is a block grant. I don’t 

care if it is a Medicaid expansion population, I don’t care if it is 

Medicaid itself. I don’t care if it is all these little bills that we are 

talking about that are supposed to fix, not repeal Medicaid or Medicaid expansion, you know, we need to make sure that these things 

are there at the end of the day. The block grant math doesn’t do 

that. 

Population in America is going increase. By definition 20 percent 

of Americans are on Medicaid, 25 percent in my district, 50 percent 

in the chairman’s district are on Medicaid. You put that on a block 

grant with increasing population it is a death spiral not just for the 

individuals, not just for the families, but for the taxpayers of this 

country. 

Rural districts in particular benefit by the Medicaid expansion. 

In my district, in my state alone in rural parts of my district and 

the chairman’s district, the coordinated care organizations are giving better care for less money. It doesn’t always have to be this 

Hobbesian choice where you cut provider reimbursement. That is 

a medieval technology. That is a medieval technology, colleagues. 

What you want to do is incentivize with block grant global payments like we have talked about with the SGR, you know, to give 

these local districts, local control to the states to create their own 

way to provide Medicaid services to these people. In Oregon, contrary to that study that you cite in your testimony, it has been an 

unqualified success. You know, emergency room admissions are 

down 20, 30 percent; primary care visits up 60 percent. Diabetes, 

one of the studies they are doing and looked at, much better outcomes, almost 60 percent better outcome than we see before. And 

I could on with COPD, all these. 

If you give people the right incentives to get good health care, 

not burden them with financial burdens we can get this thing done. 

So I would urge my colleagues to think thoughtfully as we look at 

this Medicaid expansion issue going forward. And I yield back. 

Thank you, Mr. Chairman. 

Mr. BURGESS. The chair thanks the gentleman; precisely why we 

are having the hearing. The chair recognizes the gentleman from 

Indiana, Dr. Bucshon, 5 minutes for questions, please. 

Mr. BUCSHON. Thank you very much, Mr. Chairman. Indiana expanded under the Affordable Care Act under current Vice President Pence, so obviously, you know, a state based program like HIP 

2.0 is a flexible program but required a difficult to acquire waiver. 

Mr. Roy, in House Republican health care proposal Better Way 

would allow states to use Medicaid to provide a defined contribution in the way of premium assistance or a limited benefit to workcapable adults who are working or preparing to work. States can 

do this now but require a waiver as in HIP 2.0. This would allow 

states to use this approach without a waiver so they can enroll 

more low-income adults in private coverage if they are working. 

81 

This is similar to the goals, as I mentioned, Healthy Indiana 

Plan 2.0 and in fact it is being implemented and I would like to 

explore this idea legislatively, so what are your thoughts on this 

type of policy reform? 

Mr. ROY. Thank you for the question. I think it is better than 

nothing to have more flexibility for states to do the kinds of things 

you are talking about. As I alluded to earlier in response to a different question though, the Medicaid statute severely limits the 

flexibility even if CMS grants waivers to states to do certain types 

of things with their Medicaid program. 

So what is very important is to reform the statute so that individuals have more control over their healthcare dollars, they can 

buy the kind of insurance that really serves their needs, deploy 

Health Savings Accounts sometimes for example to use retainer 

based direct primary care so they can get much bigger and much 

more frequent access to primary cares and specialists when they 

need them. If you do that it will dramatically improve health care 

outcomes relative to the Medicaid program today. 

Mr. BUCSHON. Thank you. Mr. McCarthy, in your testimony you 

said the fundamental role of CMS should be rethought and we 

should focus less on command and control. There are nearly 400 

staff at CMS and CHIP—well, Centers for Medicaid and CHIP 

services at CMS. Do you know how many of them have worked in 

a state program for a health provider or a managed care plan? 

Mr. MCCARTHY. I do not know how many of them worked in—— 

Mr. BUCSHON. Well, I will give you the data. Using LinkedIn to 

look at publicly available information it was examined in 2016 that 

about 40 percent of the staff had a bachelor’s degree and nearly 15 

percent had a law degree or Ph.D., but only 4 percent held a credential as a health care provider. The majority of the staff, 57 percent of the staff had spent their career in Federal or state government, but only 5 percent had previously worked for a state Medicaid program or fewer than 20 percent had ever worked for a 

health plan or provider. 

Of course none of this is to suggest that these aren’t great employees and are doing the best that they can, but it does raise the 

question of whether or not there is an unintentional institutional 

bias for individuals who are writing the rules and regulations for 

state Medicaid programs if you only have 5 percent of the people 

that have ever actually worked for a state Medicaid program. 

What could be done to devolve CMCS authorities or assure there 

are more people at CMS that have more real-world experience in 

this area? 

Mr. MCCARTHY. One of the things that often comes up is the fact 

that CMCS treats the National Association of Medicaid Directors 

as just another stakeholder group. They are no different than a 

hospital association or anyone else. 

And so one of the things I have advocated for a long time is the 

Medicaid directors should be brought in earlier to talk about rules 

and regulations and what will work and not work. They should not 

be treated as just another stakeholder because they are part of the 

system that is putting up a bunch of the money, so they need to 

be talked about. For instance, the latest rules, the mega rule where 

you brought up that came up around the IMDs, Institutions for 

82 

Mental Disease, in that final rule states cannot implement what 

was put in and that was because CMCS didn’t talk to states specifically around how could this be implemented. 

So I don’t know how to change getting people who work at CMCS 

to come from states because obviously they would have to move 

across the country there or you would just be some of my old staff 

from the district or Maryland would be the only two places that 

people would move there for. But the rules and regulations and 

how states are looked at have to be—— 

Mr. BUCSHON. So I think what at the end of the day, which we 

see this across federal agencies, federal agencies should reach out 

to people who have subject matter expertise probably in a better 

way than they have. Not necessarily have those people with that 

expertise in the agency, but they should probably reach out more 

to people like yourself and others. 

Ms. Solomon, do you believe that all citizens of the United States 

should be on Medicaid or on Medicare? 

Ms. SOLOMON. All citizens, no. I mean the ones that—— 

Mr. BUCSHON. Yes. That would be a single payer. Do you believe 

in a single payer? 

Ms. SOLOMON. I believe in universal coverage. I think what we 

did in—— 

Mr. BUCSHON. No, the answer is you do or you don’t. 

Ms. SOLOMON. No, I don’t believe in single payer. I believe in 

whatever gets us there. 

Mr. BUCSHON. Yes. 

Ms. SOLOMON. And the ACA made a big start in that. 

Mr. BUCSHON. Yes. OK, thank you. I yield back. 

Mr. BURGESS. The chair thanks the gentleman. The gentleman 

yields back. The chair recognizes the gentleman from New York, 

Mr. Engel, 5 minutes for questions, please. 

Mr. ENGEL. Thank you, Mr. Chairman. We have heard Republicans describe their alternative picture of Medicaid before. In fact 

we have had a hearing on most of these bills before. I don’t think 

anyone here would disagree with meaningful efforts to shrink waiting lists and afford Americans the services they need quickly, but 

that is not what these bills do. These bills represent yet another 

Republican attempt to gut Medicaid based on total falsehoods. 

I think it would be helpful to talk about the real Americans for 

whom Medicaid is lifesaving. First, let’s clear up any misconceptions about who Medicaid covers. Nearly a quarter of New Yorkers 

were covered by Medicaid or CHIP in 2015. The vast majority of 

New York’s Medicaid beneficiaries come from working families. 

These Americans cannot afford private health insurance even with 

a full-time job. For them, Medicaid is a chance to stay healthy 

which means a chance to work longer hours and provide for their 

families. 

Now I would like to debunk another misconception. My friends 

on the other side of the aisle allege that Medicaid spending is out 

of control. In fact, Medicaid spending is lower than the spending 

growth rate of Medicare and private insurance, and again I will 

point to New York. Despite charges that Medicaid is inflexible, our 

state has dramatically revamped our program to improve program 

integrity, better care for patients and save money. These efforts 

83 

have avoided costs to the Medicaid program in excess of $1.8 billion. New York achieved this while expanding Medicaid and cutting 

our uninsured rate in half. 

There is one more issue I would like to address and that is the 

one before us today. A Republican’s ideas to strengthen Medicaid 

entail delaying or denying coverage to Americans that need it to redirect funds to other parts of the program, specifically to those 

states that choose to operate waiting lists for Medicaid home and 

community based services. They are suggesting that if states have 

high coverage levels they are also letting Americans suffer on waiting lists. 

Let me ask you this, Ms. Solomon. I am wondering if you can 

help us delve into that claim. You said in your testimony that 11 

states and D.C. do not operate waiting lists. I believe my state of 

New York is among them. Is that correct? 

Ms. SOLOMON. That is right. 

Mr. ENGEL. Thank you. As I said a minute ago, New York cut 

its uninsured rate in half, thanks in part to its decision to expand 

Medicaid. Now even with that major expansion of coverage zero 

New Yorkers, nobody, was forced onto a waiting list. So Ms. Solomon, let me ask you again. Would you say that New York’s example is representative of most states without waiting lists? 

Ms. SOLOMON. It is. As I said, only two of the states without 

waiting lists have not expanded, so there isn’t a correlation there. 

Mr. ENGEL. Thank you. And I have one final question for you, 

Ms. Solomon. Is there any evidence that refusing or holding up 

Americans’ Medicaid coverage as these bills would do, would reduce 

waiting lists for home and community based services? 

Ms. SOLOMON. I don’t think they would because these are all 

state choices. States have made a choice whether or not to lower 

their waiting lists to provide more services to take up options. It 

is all state choices. It is not necessarily because another state has 

done something for other people. 

Mr. ENGEL. Thank you very much. Let me say that if as this 

hearing title suggests my Republican friends are serious about 

strengthening Medicaid, and I quoted this is what this about, 

‘‘Strengthening Medicaid and Prioritizing the Most Vulnerable,’’ 

well, let me suggest there is a way to do that. The Affordable Care 

Act strengthened Medicaid tremendously by modernizing it and 

promoting program integrity. The ACA also helped America’s most 

vulnerable. Thanks just to the law’s Medicaid expansion, more 

than 12 million people gained insurance coverage. 

So in short, let me say this. If you want to strengthen Medicaid, 

if you really want to strengthen Medicaid, strengthen the Affordable Care Act. Thank you, Mr. Chairman. I yield back the balance 

of my time. 

Mr. BURGESS. The chair thanks the gentleman. The gentleman 

yields back. The chair recognizes the gentlelady from Indiana, Mrs. 

Brooks, 5 minutes for questions, please. 

Mrs. BROOKS. Thank you, Mr. Chairman. I would actually like to 

talk about something that we have done in Indiana that my colleague from Indiana has talked about which I do believe will 

strengthen Medicaid, and that is Healthy Indiana Plan 2.0, which 

I might say the logo is health coverage equal peace of mind. 

84 

So we in Indiana do believe that health coverage equals peace of 

mind. And the Healthy Indiana Plan which was approved by our 

General Assembly prior to the Affordable Care Act being implemented had incredible difficulties with CMS getting waivers during 

the time that it has been in existence, and our new governor, Governor Holcomb, just resubmitted Healthy Indiana Plan 2.0 with 

some modifications just yesterday. And I have to just share some 

of the year one results, and this comes, some of this information 

comes from analysis of 2015 member surveys. 

There are over 370,000 members approved for coverage. Seventy 

percent of the members choose to make contributions into their 

POWER accounts, and we could go into more. Forty two percent 

emergency room visits lower, 42 percent emergency room visits are 

lower for individuals that have moved from traditional Medicaid 

into Healthy Indiana Plan. Eighty percent HIP plus members report satisfaction, so do providers. Three and four providers, and we 

started out the hearing talking about providers, believe HIP will 

improve health care in Indiana. And there is a gateway to work in 

trying to incentivize for the expansion population more and more 

people to seek work opportunities and to get them training. 

So I would like to just focus a little bit on what your thoughts 

are about Healthy Indiana Plan 2.0, each of you, what do you think 

are the best things, and maybe a challenge very briefly in my 3 

minutes, about what you know about Indiana’s innovative, the first 

consumer-directed health care program in the country for the Medicaid population. 

Dr. Roy. 

Mr. ROY. So in my view the Healthy Indiana program and in 

particularly the initial version that was passed under Governor 

Mitch Daniels is the most innovative Medicaid program in the 

country. And I think it is very encouraging that Seema Verma who 

was one of the chief implementers of that plan has been nominated 

by the President to be the CMS administrator. 

I think one thing we should mention about the Healthy Indiana 

Plan 2.0 is that under the Obama administration CMS there was 

lot of pushback on some of the important features of Healthy Indiana that made Healthy Indiana so attractive. So, for example, in 

the POWER accounts that Healthy Indiana, the program has, the 

Health Savings Account-like instruments in the Healthy Indiana 

program, there were certain requirements. To be eligible for the 

Medicaid expansion under HIP 1.0 you had to do very small things, 

provide a small premium payment of like a dollar in some cases. 

Mrs. BROOKS. A dollar a month. 

Mr. ROY. Exactly, a dollar a month. Do some basic annual checkup tests like checking your cholesterol, checking your diabetes, 

your HbA1c, other basic checkups to make sure that you were engaging in the primary care and wellness health activities that 

would help people manage their care in a really good way. 

A lot of those requirements were watered down in Healthy Indiana Plan 2.0 because the ACA Medicaid expansion is mandatory 

and so there isn’t the same carrot opportunity to say, look, if you 

do these things we will give you the reward of expanded access to 

coverage under HIP 2.0 the way it was for HIP 1.0. So that is one 

85 

of the very disappointing aspects of how the Obama administration—— 

Mrs. BROOKS. Thank you. And Dr. Roy, because I would like to 

get Mr. McCarthy because my time is running out, I would appreciate it if you would supplement your testimony with other responses if you might. 

Mr. McCarthy. 

Mr. MCCARTHY. I agree with what Dr. Roy said. It is really important to say that it was the pre-ACA versus post-ACA. And I 

would also point out that in Ohio under our Healthy Ohio program 

that we had with something similar we also hired Seema Verma 

to help us write that waiver. And that was called Health Savings 

Account, but we called it a BRIDGE account so that a person could 

take the money that was in that account with them when they 

moved off of Medicaid to help them pay for health care services 

when they weren’t on Medicaid any longer. 

Mrs. BROOKS. Can you please quickly explain your concept? You 

mentioned in your written testimony about money following the 

person approach. Could you briefly touch on what that means? 

Mr. MCCARTHY. Yes. So that is where people who are in home 

and community, well, basically people who are in institutions so 

they are institutionalized. And what you are doing is trying to get 

the person out of the institution back into the community and the 

issue is often that person doesn’t have the money to do some of the 

very basic things and that is where Money Follows the Person 

works, like buy people pots and pans and help on the first month’s 

rent. 

The idea there was to use those dollars that would be available 

to then also pay for home and community based services for a year 

or 2. 

Mrs. BROOKS. Thank you. I am sorry, my time is up. I yield back. 

Mr. BURGESS. The chair thanks the gentlelady. The chair recognizes the gentleman from Georgia, Mr. Carter, 5 minutes for questions, please. 

Mr. CARTER. Thank you, Mr. Chairman, and thank all of you for 

being here. This has been a very informative session today and I 

appreciate all of your input. 

Dr. Roy, I want to start with you. First of all, I want to thank 

you. Today you have articulated the fact that Medicaid spending is 

climbing and that unfortunately the health outcomes in Medicaid 

are not what they should be and they are far worse than many 

other programs. So it seems like we are at an impasse. And my 

question is, all of us want to improve care and we want to decrease 

costs and cut costs and decrease spending but, and we are looking 

for ways that we can do that and certainly the bills that have been 

presented here today that we are discussing will do that and we 

are thankful for that. 

But what are some other solutions very quickly that you envision 

that perhaps could help us in this goal? 

Mr. ROY. Absolutely. Thank you for the question. I think the 

most important thing is to maximize the flexibility that individuals 

have and also states and localities to take the health care dollars 

and the financial systems that we are offering so that individuals 

can buy the health coverage and health care that they need. 

86 

The biggest problem with the Medicaid program and the reason 

why it doesn’t work is not because we don’t spend enough money 

or we spend too much money, it is because there is very little flexibility in how those dollars can be spent. And so a lot of the dollars 

have to be spent in massively inefficient ways that prevent people 

from getting the care that they need. 

Mr. CARTER. Where does personal responsibility come in and how 

do you legislate that? I mean it is difficult. 

Mr. ROY. Well, I think when individuals are controlling more of 

those health care dollars they are naturally going to be much more 

responsible for their coverage and care, because they know that if 

they manage those dollars wisely they are going to have savings 

later on in a POWER account or something like that that cannot 

only accrue to their future health care needs but those of their children, their spouses, their descendants, the caregiver, the people 

they have to take care of. 

So that is an important aspect of when you take the dollars out 

of the bureaucracy and give it to patients to control themselves; 

surely we can all agree that the more the patient controls the dollar the better that patient is. 

Mr. CARTER. Absolutely. Thank you for that. And I am going to 

stay with you, Dr. Roy, and I am going to ask you one more. In 

your written testimony you discussed the 2010 Simpson-Bowles report, and that of course took on the issue of creative financing and 

noted that many states finance a portion of their Medicaid spending by actually taxing the providers. We did this in the state of 

Georgia. I was in the state legislature for 10 years and we actually, 

I was on the Appropriations Health Subcommittee, I was on Health 

and Human Services, so I was right in the thick of it. 

And we actually drew down, we were drawing down more federal 

dollars from Medicaid at a 1:2 ratio. In other words for every dollar 

we would put in we were getting two. Well, obviously we balanced 

our budget that way, and in fact the state of Georgia this year is 

reauthorizing that in this legislative session. How can we do this 

better? That just doesn’t make much sense to me. 

Mr. ROY. Thank you again for this question. What we propose in 

Transcending Obamacare, and it is an idea that we actually borrowed from the Urban Institute and a scholar there named John 

Holahan, a left of center think tank, is that the best way perhaps 

to reform the Medicaid program broadly is to restructure it so that 

instead of having both states and Washington offload these costs 

onto each other and split the responsibility in ways that don’t 

work, have the states and Washington divide the responsibilities 

up. 

So for example what we propose is have the federal government 

say we are going to take over the part of Medicaid that is providing 

financial assistance to poor people who need acute care health insurance, just like we do for tax credits for the uninsured, et cetera, 

and then the long-term care, trade that and give that fully to the 

states to manage. If you do it that way, if you clean up the lines 

of responsibility—states control one aspect, federal government 

supports the other—you eliminate all these poor and bad incentives 

for mismanagement. 

87 

Mr. CARTER. OK. Mr. McCarthy, I have got about a minute and 

there is something that is very important to me. In your testimony 

you said that states are forced to cover all FDA-approved drugs 

and in turn receive rebates. However, for new high cost drugs the 

rebate is not high enough to offset the large increases in expenditures. Would we not be better off letting the states opt out of the 

rebate program and do it themselves? 

I will be quite honest with you we used to do it ourselves in 

Georgia. We used to have our own rebate system before this started with the federal government. Dr. Bucshon can certainly attest 

to the fact that in the South we are in the Cardiac Belt. We utilize 

more of a certain type of drugs than they do in other parts of the 

country. Dr. Murphy mentioned the anti-psychotics, and of course 

as a pharmacist I understand all this. And how do you think that 

idea would go if we let the states do their own rebate program? 

Mr. MCCARTHY. As always if you let states have that option and 

don’t force them to do something I would be in support of that because right now you can only negotiate on additional rebates. 

Mr. CARTER. Good. OK, well, I am out of time, but thank all of 

you again for this. 

Mr. BURGESS. The gentleman yields back. The chair thanks the 

gentleman. The chair now recognizes the gentleman from California, Dr. Ruiz, for 5 minutes for questions, please. 

Mr. RUIZ. Thank you, Mr. Chairman. Thank you, panelists, for 

being here. I am not on this subcommittee, but I am still here because this issue is so very important to me personally, my patients, 

and my constituents. I am an emergency physician and there is 

just so much to say about this conversation. 

First, all doctors, Republican or Democratic doctors prefer health 

insured patients over uninsured patients. There is no doctor on this 

committee or anywhere in our nation that prefer their patients to 

be uninsured. Two, Medicaid patients have higher morbidity because they are a higher risk group. They are the sick, vulnerable, 

and poor. That means that actually Medicaid is working because 

we are targeting those patients that it is intended to target. 

Three, block grant and per capita block grants will create more 

uninsured patients and physician reimbursement rates will worsen 

because states will choose to cut eligibility, reduce insured patients, 

and cut reimbursement rates to physicians. Tax credits will not 

cover the full cost of health care, in fact it will have our vulnerable 

populations pay higher premiums and deductibles and therefore 

patients will have to pay more out-of-pocket. 

Since the expansion of Medicaid under the Affordable Care Act, 

emergency departments around the nation including mine have 

seen a dramatic decrease in uninsured patients by 50 percent or 

more. That is good for the patient. That is good for the emergency 

department and that is good for hospitals and taxpayers. And the 

reason why emergency departments have seen an increase in patients is because there is not enough physicians to see the newly 

insured. The over 20 million newly insured patients in our nation 

now have insurance. 

So these patients who have been putting off taking care of their 

chronic illness because they couldn’t see a doctor because they 

couldn’t afford it are now insured and they can’t see physicians in 

88 

their community because of the severe physician shortage crisis so 

they go to the emergency department. 

OK. I have concerns that the Verify Eligibility Coverage Act will 

hurt American citizens. This bill will prohibit federal funds until 

citizenship is proven. So let me give you a real-life case of a citizen 

that this bill will hurt. At the Mass General Hospital where I was 

training in medical school I took care of a patient that arrived in 

the emergency department after a severe motorcycle accident and 

suffered severe multi-organ trauma including completely degloving 

of his face. 

He was in the trauma ICU for 2 months without any identification of who that person was. He couldn’t speak, he was intubated, 

and there was no information about him and nobody, no family was 

calling in to look for him. so we simply didn’t know who he was. 

What do we do with them? What do we do with that citizen? Are 

we not allowed to pay for his care because he couldn’t prove his 

citizenship? 

So in regards to the lump sums and lottery winning legislation, 

Ms. Solomon, while I think it is safe to say that an overwhelming 

amount of millionaires aren’t trying to qualify for Medicaid, I 

would like to clarify the impact of this legislation. It should be 

noted that this bill has changed since last Congress and reflects 

some additional nuances and protections that are very important. 

This legislation is a prime example of why it is so critical that 

we slow down and take the time needed to truly consider a policy 

proposal and its impact on lives of millions of Americans. So is 

there any evidence that this bill actually solves a rampant problem? 

Ms. SOLOMON. Thank you, Dr. Ruiz. This bill has changed considerably and I commend the drafters for filling in a lot of the problems that were identified initially, and now I think what it really 

will do is very modest and just create hassles for states. 

It is really interesting to look at what has happened in Michigan 

which actually is recovering from lottery. In their Medicaid waiver 

they were given permission and over the 21 months that this provision has been live they have recovered $380, but they have a contractor that needs to track so it is not clear it does much of anything. 

Mr. RUIZ. Let me ask you another question regarding tax credits. 

Can you explain why tax credits don’t work in place of Medicaid 

coverage? 

Ms. SOLOMON. Especially these tax credits that are being proposed that are flat and not based on income would clearly not 

work. But the other thing that we need to remember is that Medicaid is a very different program than private insurance that is specifically designed and very flexible to cover the multiple populations that are served. A tax credit isn’t going to have that same 

flexibility that Medicaid has to provide the kinds of substance use 

treatment, behavioral health treatment, programs for kids with 

special needs; it just isn’t going to work. 

Mr. RUIZ. Thank you. 

Mr. BURGESS. The chair thanks the gentleman. The gentleman 

yields back. The chair recognizes the gentleman from Maryland, 

Mr. Sarbanes, 5 minutes for questions, please. 

89 

Mr. SARBANES. Thank you, Mr. Chairman, I appreciate it. I want 

to thank the panel for its testimony. 

And Ms. Solomon, I wanted to ask you a question, but I also 

wanted before that just to say that it is unfortunate that our Republican colleagues seem to want to take parts of the Medicaid program that really do represent innovation and flexibility and then 

instead of identifying that as a real opportunity to build on a 

strong foundation in the overall program, they use it to distract 

from good parts of the program or actually go pull money away 

from that foundation. 

So you talk about the home- and community-based waiver program which is a terrific innovation, I think. When I was still in the 

health care arena representing a lot of health care clients in Maryland, we were looking at a waiver program that would allow some 

Medicaid funding to flow to assisted living facilities where there is 

a lower need for care and less costly, but didn’t usually qualify for 

Medicaid reimbursement. 

So we wanted to explore that as an alternative to nursing home 

care which is very high cost, the home- and community-based care 

waiver is an extension of that thinking and so we ought to pursue 

it in a meaningful way, but we shouldn’t just then use it as a shiny 

object to be able to then argue that we should go take money from 

other important parts of the program. 

In the same way the idea of flexibility is an important one. I 

think you do want to give state Medicaid programs flexibility to innovate and try other things, but then using the flexibility argument that our colleagues on the other side say, OK, that is why we 

should block-grant things because that is the ultimate flexibility, so 

again they go take a concept that could be a constructive one and 

they use it to advance something which has the effect of undermining the core strength of the Medicaid program. And I think it 

is unfortunate. It is a missed opportunity for us to talk about how 

we can continue to strengthen and improve a program that works 

pretty well already. 

So I would like you to maybe speak to that idea of how you keep 

the foundation of the program strong even as you are looking at potential for innovation and flexibility. And in fact that if you did 

maintain the strength of the program and gauge states’ flexibility, 

they would actually go identify sources of savings and you would 

probably achieve more savings than as what is being proposed by 

these three bills to take away from the existing beneficiaries. 

So if you could speak to that because I think it is important if 

we want to get a more efficient program that provides solid care 

and maintains a strong foundation that is the way flexibility and 

innovation ought to be pursued. 

Ms. SOLOMON. I totally agree with that. And we have been actually cataloguing on our Web site examples of states doing exactly 

that and they have been given tremendous flexibility to innovate, 

including being able to use upfront dollars which often are necessary to build the communication system across providers, to increase provider capacity and then achieve the savings in the long 

run. 

When I worked in Medicaid at the state level that was always 

the barrier, because as an advocate we would argue but you would 

90 

be able to save money if you make this investment. And the money 

wasn’t there. And if you look at the innovation through the SIM 

grants that Mr. McCarthy spoke of and other initiatives that have 

taken place that is exactly what has been going on. 

And I really take issue with Dr. Roy’s statement that Medicaid 

doesn’t work. Medicaid works really well. And I think that is really 

the thing that we are trying to lift up through highlighting these 

innovative programs, targeting the high utilizers that are responsible for a great portion of the costs by providing better coordination with some of the alternative models that have been put forth 

in the Affordable Care Act and elsewhere. So I think we could go 

on for all day on how Medicaid works. 

Mr. SARBANES. Thank you for your testimony. I yield back. 

Mr. BURGESS. The chair thanks the gentleman. The gentleman 

yields back. The chair recognizes the gentleman from California, 

Mr. Cardenas, 5 minutes for questions, please. 

Mr. CARDENAS. Thank you very much, Mr. Chairman. Don’t let 

these people distract you from the big picture, ladies and gentlemen. They keep talking about less than six—— 

Mr. BUCSHON. Would the gentleman yield? 

Mr. CARDENAS. Yes. 

Mr. BUCSHON. We are not these people, we are elected members 

of Congress that represent over 700,000 citizens. 

Mr. CARDENAS. Would you please give me back my time, Mr. 

Chairman? Thank you very much. Don’t let these elected Congress 

members distract you from the big picture. They keep talking about 

less than 6,000 people. The big picture is the more than 74 million 

Americans today that have a life of dignity because they are using 

Medicaid and Medicare, 74 million, ladies and gentlemen, right 

now in the United States of America. Six thousand, let’s deal with 

that. 

Let me be very clear here, ladies and gentlemen, for the majority 

of Americans, middle class Americans, Medicaid is what gets you 

or your mother or your father into a nursing home. It is what allows you to have a nurse help you in your home with things you 

otherwise need to live a basic life of dignity. It is not Medicare, ladies and gentlemen. It is Medicaid that provides that. Medicare 

doesn’t even get you through the door. 

Seniors, families with seniors who need help cooking, walking or 

even changing their clothes, I want you to be very clear about this. 

We are talking about you, ladies and gentlemen, we are talking 

about your loved ones. This is important here. Your long-term care 

doesn’t come through Medicare. It comes through Medicaid. Many 

people don’t understand the program. They want to demonize it to 

basically rip it out of your hands. 

But Republican and Democratic governors are begging Republicans here in Washington, please don’t do this Congress members, 

because if Republicans in Congress do, these governors know that 

their state, the people in their state are going to suffer. Governors 

are going to have to decide what to cut from your life. Ladies and 

gentlemen, they are going to turn their backs on Grandma and 

Grandpa and we are going to have sick people in the streets more 

than there are today and we will be right back where we were, and 

that is not the good old days, folks. 

91 

Today people on Medicaid walk into the doctor’s office. If Republicans make these changes, people will be flooding emergency 

rooms. That will increase health care costs for everyone. Doctors 

and nurses and hospitals won’t be able to handle the workload. 

Now according to the study in the New England Journal of Medicine, one of the oldest and most prestigious medical journals, if Republicans take away everyone’s coverage over 43,000 people could 

die each year based on these actions. In California that means over 

7,600 people could die in 1 year. In Texas that is over 2,400 people 

a year. I am sure my colleague chairman of the Health Subcommittee understands the value in saving lives and doing no 

harm. In Illinois that is over 1,400 people a year. I am sure my colleagues from Illinois think that is unacceptable. In Oregon that is 

over 1,200 people a year. I am sure the chairman of the committee 

doesn’t want to see Medicaid dollars get slashed in his state. 

We cannot accept this. We cannot allow Republicans to do this 

to seniors, to children and to the people with disabilities. These are 

hardworking Americans. Republicans in Congress want to take 

that care away, but they won’t own up to it. Republicans say to you 

that they don’t want to pay for Medicaid. What they don’t want you 

to figure out is that they want to pocket your tax dollars. They are 

going to cut Medicaid while lowering taxes for the wealthiest people. They are going to lower taxes for Trump’s billionaire friends, 

and in the committee down the hall, but raise taxes on everyone 

else. It is not fair. It is just another trade-off, and Republicans are 

sabotaging the American health care system. 

Ms. Solomon, people in L.A. County where I am from have truly 

benefited from the Affordable Care Act. I have seen it with my own 

eyes. Can you talk a little bit about what repealing the law and 

what kicking people off of Medicaid would mean for people in Los 

Angeles? 

Ms. SOLOMON. I think you probably have as many people as 

many states do in your county. I have had the opportunity to meet 

the people from the community health centers across L.A. County. 

I think large numbers would just lose coverage as they would in 

every state, hospital uncompensated care would grow, same for 

other providers, and as you noted there would be real harm. 

Mr. CARDENAS. Thank you very much, my congressional colleagues. I yield back. 

Mr. BURGESS. The gentleman’s time has expired. The gentleman 

yields back. Seeing that there are no further members wishing to 

ask questions, I do want to thank our witnesses for being here 

today. 

The chairman would remind the committee that we all agree it 

is important that we secure the care and keep our commitment to 

vulnerable Americans. The very fact that we are holding this hearing today as the first Subcommittee of Health hearing, I think, is 

evidence of that fact and I hope we can continue to take these steps 

and have the discussion in a rational manner. 

Pursuant to committee rules, I remind members they have 10 

business days to submit additional questions for the record. I ask 

the witnesses to submit their response within 10 business days on 

the receipt of these questions, and without objection, the subcommittee is adjourned. 

92 

Mr. GREEN. Can you yield just for a second? 

Mr. BURGESS. One second. 

Mr. GREEN. OK. 

Mr. BURGESS. Time is up. 

Mr. GREEN. Mr. Chairman, I think on our side we want to work 

with you and I will leave this, I think a start of a good hearing. 

So we will go from here and to see what we can do. 

Mr. BURGESS. Well, again, Mr. Chairman, the very fact that this 

was the first hearing of the subcommittee, I mean I know there are 

members on my side who actually resent the tone that this committee ended up on today. I regret that fact. I hope that we can 

keep this on a civil and unemotional level going forward. This is 

important work that we do and it is literally the future of our country. 

Again I want to thank our witnesses for being here today, and 

without objection, the subcommittee is adjourned. 

[Whereupon, at 12:43 p.m., the Subcommittee was adjourned.] 

[Material submitted for inclusion in the record follows:] 

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/:}ATIONAL 

COALITION 

/

ON HEALTH 

A----CARE 

February 1, 2017 

The Honorable Greg Walden 

Chairman 

Committee on Energy and Commerce 

U.S. House of Representatives 

Washington, DC 20515 

The Honorable Frank Pallone 

Ranking Member 

Committee on Energy and Commerce 

U.S. House of Representatives 

Washington, DC 20515 

Working Together for an Affordable Future 

The Honorable Orrin Hatch 

Chairman 

Committee on Finance 

U.S. Senate 

Washington, DC 20510 

The Honorable Ron Wyden 

Ranking Member 

Committee on Finance 

U.S. Senate 

Washington, DC 20510 

Dear Chairman Walden, Ranking Member Pallone, Chairman Hatch and Ranking MemberWyden: 

The National Coalition on Health Care (NCHC) opposes the repeal or defunding of the state option to 

expand Medicaid eligibility to beneficiaries with incomes at or below 138% of poverty. The repeal or 

defunding of this option would undermine important reform initiatives at both the state and federal levels 

and make health care less affordable for millions of Americans. 

NCHC is the nation's largest, most broadly representative nonpartisan alliance of organizations focused on 

health care. Our members and supporters include nearly 90 of America's leading associations of health care 

providers, businesses and unions, consumer and patient advocacy groups, pension and health funds, 

religious denominations, and health plans. They represent-as employees, members, congregants, and 

volunteers-more than 150 million Americans. The Coalition is committed to advancing-through 

research and analysis, education, outreach, and informed advocacy-an affordable, high-value health care 

system for patients and consumers, payers, employers and taxpayers. 

In a letter dated January Sth, 2017, Governor Brian Sandoval (R·NV) urged leaders of the House of 

Representatives to "ensure that individuals, families, children, aged, blind, disabled and mentally ill are not 

suddenly left without access to the care they need to lead happy productive lives." We agree. 
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To date, thirty-one states and the District of Columbia have opted to expand Medicaid eligibility to more 

than 11 million Americans, making health care accessible to many who previously lacked affordable 

coverage options. Putting at risk these states' achievements or restricting the remaining nineteen·states' 

flexibility to expand Medicaid would undercut state-level efforts to reform health care and protect the most 

vulnerable. This alone is sufficient reason to preserve the state option to expand Medicaid eligibility and 

the enhanced federal financial support which makes that option viable. 

However, NCHC is also gravely concerned that repeal or defunding of Medicaid expansion would roll back 

the bipartisan achievements of the 114th Congress. 

1. To support physicians and other clinicians who embrace new high-value models of care, the 

Medicare Access and CHIP Reauthorizati-on Act of2015 (MACRA) took crucial steps to support 

alignment of payment policies across all payers- including Medicaid. Grappling with a rollback of 

Medicaid eligibility would consume the attention of state officials and the health care providers 

who serve Medicaid beneficiaries. This would effectively sideline the nation's second-largest payer 

and many of the providers which rely on it- just as MACRA's historic value-based payment reforms 

are getting off the ground. 

2. MACRA also reaffirmed the bipartisan consensus that has sustained two crucial parts of our safety 

net: community health centers and the Children's Health Insurance Program (CHIP). Unfortunately, 

disrupting Medicaid expansion coverage will have disastrous consequences for FQHCs, which rely 

on Medicaid for 44% of their revenue. Additionally, he added strain on state budgets occasioned by 

repeal or defunding of Medicaid expansion could limit states' investments in children's coverage, 

including CHIP. 

3. just last year, to improve and expand treatment for mental illness and substance abuse, Congress 

passed two landmark pieces oflegislation, the Comprehensive Addiction and Recovery Act and the 

mental health provisions of the 21" Century Cures Act. Eliminating the Medicaid expansion 

coverage which makes treatment possible for adults earning at or below 138% of the federal 

poverty level would move federal policy in the opposite direction. 

NCHC is committed to fixing what is broken in our health system. However, repealing or defunding the 

state option to expand Medicaid would put at risk recent state health reform initiatives, impair health care 

access for vulnerable populations and detract from recent, bipartisan federal legislative achievements. We 

call upon you to reject any repeal or defunding of the state option to expand Medicaid eligibility. 

In the weeks and months ahead, we look forward to discussing this issue further and sharing our 

perspective on health policy issues not addressed in this letter. If you have questions about this or related 

issues, please contact me directly at jrother@nchc or~: or 202-638-7151. 

Yours truly, 

john Rother 

President and CEO 

NATIONAL COALITION ON HEALTH CARE 
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APIAHF 

ASIAN & PACIFIC ISLANDER 

AMERICAN HEALTH FORUM 

WRITTEN STATEMENT FOR THE RECORD 

FOR THE HEARING ENTITLED "STRENGTHENING MEDICAID AND PRIORITIZING 

THE MOST VULNERABLE" 

UNITED STATES HOUSE COMMITTEE ON ENERGY AND COMMERCE 

February 1, 2017 

BY THE 

ASIAN & PACIFIC ISLANDER AMERICAN HEALTH FORUM 

The Asian & Pacific Islander American Health Forum (APIAHF) submits this written testimony for the 

record for the February 1, 2017 hearing before the House Committee on Energy and Commerce entitled 

"Strengthening Medicaid and Prioritizing the Most Vulnerable." APIAHF is a national health justice 

organization that influences policy, mobilizes communities, and strengthens programs and organizations 

to improve the health of the over 20 million Asian Americans and nearly 1 million Native Hawaiians and 

Pacific Islanders (AAs and NHPis) in the United States. For over 30 years, APIAHF has worked at the 

federal, state, and local levels to advance sensible policies that reduce health disparities and promote 

health equity. 

Congress is debating the importance of ensuring that Medicaid is available to our most vulnerable. 

Medicaid represents a vital piece of our country's health care system and is the sole source of health 

insurance for many AAs and NHPis. Since 1965, it has served as the safety net for those in need of help, 

including persons with disabilities, those in poverty and older Americans. The Affordable Care Act (ACA) 

expanded Medicaid to cover poor, childless adults for the first time. In this testimony, APIAHF describes 

the importance of Medicaid to AA & NHPI communities, the value of the program and the current access 

immigrant populations have to Medicaid. 

Medicaid Serves Our Most Vulnerable Members of Society 

Access to health insurance is a critical part of ensuring a strong public health infrastructure. Medicaid 

and the Children's Health Insurance Program (CHIP) provide essential health coverage to 78 million 

people, about half of whom are children.' Medicaid also serves as a vital resource to seniors. As our 

country ages, many families struggle to find care for aging parents. Medicaid is the primary payer for 

1 Centers for Medicare and Medicaid Services (2016). Medicaid & CHIP: August 2016 Monthly Applications, 

Eligibility Determinations and Enrollment Report. https://www.medicaid.gov/medicaid/programinformation/downloads/august-2016-enrollment-report.pdf. 
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more than half of long-term services and supports.' Medicaid is also critically important to providing 

reproductive and maternal healthcare to women. Together with CHIP, Medicaid covers nearly half of 

births across the country.3 

Medicaid represents an important part of our country's ability to minimize harm at times of growing 

poverty rates and increasing need. Medicaid's recent growth as a share of insurance coverage 

represents this design. In addition to the eligibility expansion under the ACA, much of that growth is a 

reflection of greater need, corresponding with higher poverty rates for children, seniors and adults.4 

Efforts to ensure Medicaid is accessible to the most vulnerable are important, but must be approached 

carefully. For example, fraud rates in Medicaid are comparable to the broader health care system.5 

Efforts to combat fraud must be focused on the true sources of misallocated funds, namely a small 

minority of providers, rather than targeting beneficiaries.• Providing for effective allocation of Medicaid 

involves targeted efforts that address the causes of fraud and must be carefully approached. Otherwise, 

eligible beneficiaries could face burdensome barriers to care. 

Medicaid Plays an Important Role for AAs and NHPis 

AAs and NHPis are among the fastest growing racial groups in the United States. Between 2014 and 

2015, the AA population grew by 3.4 percent, more than any other group, while NHPis grew 2.4 percent, 

following only mixed race individuals.7 Planning for a successful Medicaid population in the future must 

take the needs of AA & NHPI communities into account. Like many Americans, health care ranks as one 

of the top issues of importance to AA families. This is reflected in polling showing that among AAs, 

health care was mentioned as the second most important issue affecting voters personally. In addition, 

60 percent of AAs voters have said they support the Affordable Care Act. 8 

Medicaid provides coverage to racial and ethnic minorities, including AAs and NHPis, who would 

otherwise have to go without essential health care and therefore plays a pivotal role in addressing 

health disparities. 

2 caL. Reaves & MaryBeth Musumeci (2015). Medlcald and Long-Term Services and Supports: A Primer. Kaiser 

Family Foundation. http:ijkff.org/medicaid/report/medicaid-and-long-term-services-and-supports-a-primer/. 

3 Markus, A., Andres, E., West, K., Garro, N., & Pellegrini, C. (2013). Medicaid covered births, 2008 through 2010, in 

the context of the implementation of health reform. Women's Health Issues, 23(5), e273-e280 

4 Bradley et al (2017). Strengthening Medicaid as a Critical Lever in Building a Culture of Health. National Academy 

of Social Insurance. 

https://www.nasi.org/sites/default/files/research/Strengthening Medicaid as a Critical Lever Low Res.pdf 5 Berwick, Donald and Andrew Hackbarth. (2012). Eliminating Waste in US Health Care. Journal of the American 

Medical Association. www.oregon.gov/oha/analytics/MetricsDocs/Eiiminating Waste in US Health Care.pdf 

6 The Challenge of Health Care Fraud. National health Care Anti-Fraud Association. 

https://www.nhcaa.org/resources/health-care-anti-fraud-resources/the-challenge-of-health-care-fraud.aspx 

7 Lam. Charles. (2016). Asians Remain Fastest-Growing US Group as Pacific Islanders, Mixed-Race Numbers Grow: 

Census. NBC News. http:/lwww.nbcnews.com/news/asian-america/asians-remain-fastest-growing-us-grouppacific-islanders-mixed-race-n597711 

2 
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The importance of Medicaid to AA & NHPI communities is emphasized by the 17 percent of AAs and 34 

percent of NHPis who are enrolled in its coverage? NHPis match American Indians as the racial 

community with the highest percent of its population on Medicaid. Twelve percent of AAs live in 

poverty, as do 17.3 percent of NHPis.'0 

Through Medicaid, AA & NHPI populations can access treatment for conditions that disproportionately 

impact these communities, such as liver and stomach cancers, hepatitis and diabetes." AAs and NHPis 

have a higher likelihood of suffering from a number of chronic conditions requiring routine access to 

care and underscoring the importance of early prevention. AAs are 25 percent more likely to be 

diagnosed with diabetes than Whites, while NHPis are 3 times more likely." AAs and NHPis are the only 

racial group for whom cancer is the leading cause of death." Certain AA and NHPI subpopulations suffer 

from even greater health disparities. Fourteen percent of Indian Americans have diabetes, a rate higher 

than that of nearly all other racial groups.14 Vietnamese women have cervical cancer rates five times 

higher than White women. 1

s 

Medicaid Expansion Covers the Vulnerable 

Under the ACA, states were required to expand Medicaid to all individuals making under 138% of 

poverty. While the Supreme Court made that expansion optional in NF/8 v. Sebelius, 32 states including 

Washington, DC, have chosen to make Medicaid available for that population, many for the first time 

and many on a bipartisan basis. Before the ACA, a childless adult could be penniless, yet not be eligible 

for subsidized health insurance and often struggled to stay healthy, even while working. The expansion 

of Medicaid has served as a critical part of the ACA's coverage expansion. 

Many of those who are fortunate enough to live in states that expanded Medicaid gained health 

insurance for the first time, along with the ability to manage chronic diseases and access preventive 

services. Medicaid expansion has already been associated with reductions in preventable deaths and 

delayed care due to cost, as well as an increase in self-reported good health statuses." For example, in 

9 National Health Interview Survey. (2015). United States Centers for Disease Control. 

ftp://ftp.cdc.gov/pub/Health Statistics/NCHS/NHIS/SHS/2015 SHS Table P-ll.odf 

10 2015 American Community Survey One Year Estimates. Table S0201. 

11 Asian American & Pacific Islander Health Disparities Compared to Non-Hispanic Whites. (2014). Families USA. 

http://familiesusa.org/product/asian-american-pacific-islander-health-disparities-compared-non-hispanic-whites 

12 Asian and Pacific Islander American Health Forum. (2010). Native Hawaiian and Pacific Islander Health 

Disparities. www.apiahf.org/sites/default/files/NHPI ReportOSa 2010.pdf 

13 Heron, Melanie. (2016). Deaths: Leading Causes for 2014. National Vital Statistics Reports Volume 65, Number 5. 

United States Centers for Disease Control. 

14 Spanakis, Elias and Sherita Hill Golden. (2013). Race/Ethnic Difference in Diabetes and Diabetic Complications. 

Curr Diab Rep. 13(6) https://www.ncbi.nlm.nih.gov/pmc/articles/PMC3830901/ 

15 Miller BA et al. (1996). Racial/Ethnic Patterns of Cancer in the United States, 1988-1992. 

https:/ I seer. cancer.gov I archive/publications/ ethnicity I 16 Benjamin D. Sommers, Katherine Baicker, & Arnold M. Epstein (2012). Mortality and Access to Care among 

Adults after State Medicaid Expansions. New England Journal of Medicine, 367, 1025-1034. 

http://www.nejm.org/doi/pdf/10.1056/NEJMsa1202099. 

3 
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expansion states, more people were able to access a diabetes diagnosis, a critical first step towards 

controlling the chronic condition often underdiagnosed in AA and NHPI communities." 

The Medicaid expansion filled a gap for low income workers whose employers did not offer health 

insurance. Of adults who would have become eligible in states that did not expand Medicaid in 2015, 

more than half were working." Many of these workers are in industries that offer little to no paid sick 

leave, making health insurance an important part of promoting public health and safety. 

Medicaid expansion has furthered state's roles as policy laboratories. Medicaid's structure as a joint 

federal-state partnership includes flexibility that allows states to tailor their expansions to best suit the 

needs of their residents, while ensuring coverage and quality are maintained under existing law and 

guidance. Medicaid expansion states are using the flexibility that exists within the program to 

experiment in how to deliver better care, such as linking payment to performance for federally qualified 

health centers." 

Prior to the ACA, AAs and NHPis faced major disparities in access to health care, in part because many 

lacked health insurance.20 These communities, particularly certain subpopulations, faced higher 

uninsured rates in addition to cultural and language barriers. While the ACA has not eliminated health 

disparities, Medicaid expansion has played an important role in helping to reduce the number of AAs & 

NHPis without insurance. States that expanded Medicaid had nearly twice as big a drop in uninsured 

than states that did not.21 Since 2010, the uninsured rate for AAs has dropped from 15.1 to 7.5 percent. 

The percentage of NHPis without insurance fell from 14.5 to 7.8 percent. These are among the biggest 

gains in health coverage among all racial and ethnic groups." 

If all states had expanded Medicaid, nearly 800,000 AAs and NHPis would have become newly eligible 

for the program. 23 Currently, people in the coverage gap, those who make too little to qualify for ACA 

subsidies but are not in an expansion state, are disproportionately from communities of color. 24 1n states 

17 Kaufman, Chen, Fonseca, and McPhaul. (2015). Surge in Newly Identified Diabetes Among Medicaid Patients in 

2014 Within Medicaid Expansion States Under the Affordable Care Act. Diabetes Care 38, no. 5: 833. 18 Mahan1 Dee. (2015). Medicaid Expansion Helps low-Wage Workers: Non-Expansion States. Families USA. 

http:l/fami!iesusa.org/product/medicaid-expansion-helps-low-wage-workers 

19 Peter Shin, Jessica Sharac, Zoe Barber, & Sara Rosenbaum (2016). Community Health Centers and Medicaid 

Payment Reform: Emerging Lessons from Medicaid Expansion States. Geiger Gibson RCHN Community Health 

Foundation, Issue Brief #45. https://publichealth.gwu.edu/sites/default/files/downloads/GGRCHN/CommunitvHealth-Centers-and-Medicaid-Payment-Reform-45.pdf 

2

° Kim W, Keefe RH. (2010) Barriers to healthcare among Asian Americans. Soc Work Public Health. 25:286-95. 21 Greater Drop in Uninsured Rate Among Adults in Medicaid Expansion States. (2016). Center on Budget and 

Policy Priorities. http://www.cbpp.org(greater-drop-in-uninsured-rate-among-adults-in-medicaid-expansion-states 

"American Community Survey Table S2701. (2015 and 2010). United States Census. 

"Wendt eta!. (2014). Office of The Assistant Secretary for Planning and Evaluation. Eligible Uninsured Asian 

Americans, Native Hawaiians, And Pacific Islanders: 8 In 10 Could Receive Health Insurance Marketplace Tax 

Credits, Medicaid Or CHIP. https://aspe.hhs.gov/sites/default/files/pdf/180311/rb UninsuredAANHPI.pdf 24 Rachel Garfield & Anthony Damico (2016). The Coverage Gap: Uninsured Poor Adults in States that Do Not 

Expand Medicaid- An Update. The Kaiser Commission on Medicaid and the Uninsured; The Henry J. Kaiser Family 

Foundation, Issue Brief. 

4 
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that expanded Medicaid, the gap between uninsured whites and people of color narrowed, while it 

expanded in non-expansion states. 25 

Medicaid is Good Care 

Medicaid plays an important role in our health care system, promoting public health and ensuring 

vulnerable populations can access health care. Medicaid's entitlement nature and ability to cover all 

who are eligible is at the center of that role. Uninsured adults are more likely than those with insurance, 

including Medicaid, to die from a heart attack, be diagnosed with advanced cancer, have uncontrolled 

hypertension and have higher hospital mortality rates. 26 Medicaid beneficiaries access and use of care is 

comparable to people with employer sponsored insurance. If they lost access to Medicaid, beneficiaries 

would be more than four times as likely to have unmet needs for medical care.27 

A study of the 2008 Oregon Medicaid lottery found that Medicaid beneficiaries were 25 percent more 

likely than the uninsured to report having good, very good or excellent health and 10 percent less likely 

to have depression. They had better access to preventive healthcare services and saw increased 

utilization of mammograms (60 percent), cholesterol tests (20 percent) and blood sugar or diabetes 

tests (15 percent).28 

Medicaid provides the necessary federal support to allow states to respond to new and deepening 

health crises. For example, in response to the Flint water catastrophe, Michigan Governor Rick Snyder 

used a Medicaid waiver to ensure the city's population had access to care." Because Medicaid is 

available to any eligible individual, if a city or state experiences a similar disaster, its residents can be 

assured access to care. 

Over 43 million Americans face some kind of mental health challenge, including 13 percent of AAs and 

22 percent of NHPis.30 Over a quarter of mental health dollars come through Medicaid, a number that is 

expected to grow over time. Before the federal government took greater responsibility for improving 

mental health in recent decades, this burden fell on state and local governments (whose share of 

25 Courtemanche, Marton, Ukert, Yelowitz, and Zapata. {2016). Impacts of the Affordable Care Act on Health 

Insurance Coverage in Medicaid Expansion and Non-Expansion States. he National Bureau of Economic Research. 

Working Paper No. 22182. 

26 America's Uninsured Crisis. {2009}. Institute of Medicine of the National Academies. 

http:ljwww.nationalacademies.org/hmd/~/media/Files/Report%20Files/2009/Americas-Uninsured-CrisisConsequences-for-Health-and-Health-Care/Americas%20Uninsured%20Crisis%202009%20Report%20Brief.pdf 

27 Teresa A. Coughlin, Sharon K. Long, Lisa Clemans-Cope, & Dean Resnick (2013). What Difference Does Medicaid 

Make? Assessing Cost Effectiveness, Access, and Financial Protection under Medicaid for Low-Income Adults. The 

Kaiser Commission on Medicaid and the Uninsured; The Henry J. Kaiser Family Foundation. 

https://kaiserfamilyfoundation.files.wordpress.com/2013/05/8440-what-difference-does-medicaid-make2.pdf. 

28 What is the link between having health insurance and enjoying better health and finance? (2012) Robert Wood 

Johnson Foundation. http://www.rwjf.org/content/dam/farm/reports/issue briefs/2012/rwjf72145. 29 Sara Rosenbaum (2016). Caring for Flint: Medicaid's Enduring Role in Public Health Crises. The Commonwealth 

Fund. http://www .com monwealthfund. org/pu bl ications/blog/2016/feb/ caring -for -IIi nt 30 Any Mental illness (AMI) Among U.S. Adults. (2014). National Institute of Mental Health. 

https://www.nimh.nih.gov/health/statistics/prevalence/any-mental-illness-ami-among-us-adults.shtml 

5 
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spending on mental health has dropped 10 percentage points in the last 30 years). These states and 

local governments, with strapped budgets, would be unlikely make up the difference now.31 

Federal law Already Restricts Access to Medicaid for Immigrant Populations and Creates Burdens to 

Accessing Care 

Since the passage of the Personal Responsibility and Work Opportunity Reconciliation Act of 1996, legal 

permanent residents are subject to a five-year bar for means-tested public benefit programs. 

Undocumented immigrants are barred from Medicaid, regardless of their tenure in the country. Some 

states, such as New York and California, have chosen to recognize the public health benefits of providing 

health care to immigrants and do so using state dollars. Thirty-two states have chosen a state option to 

waive the five-year bar for immigrant children and/or pregnant women, exercising the inherent 

flexibility in the program to tailor coverage to best meet the needs of state residents. 

Many immigrants go without care because of existing restrictions on Medicaid eligibility, despite 

working hard, paying taxes and contributing financially to the same program. Restricting access to care 

limits the ability of immigrants to access routine care, including preventive services that can identify 

serious chronic conditions before they worsen. Given the existing barriers that immigrants, including 

those with lawful status, face in accessing care, additional restrictions targeting immigrant communities 

would move Medicaid in the wrong direction. The program's ability to help the most vulnerable, which 

includes many immigrants, would not be furthered by such proposals. 

Notably, immigrants do not use a significant amount of public healthcare resources. The libertarian 

CATO institute found that immigrants use public benefit programs, including Medicaid, less than their 

native-born counterparts. Subsequently, according to the report, "the cost of public benefits to noncitizens is substantially less than the cost of equivalent benefits to the native-born."" Immigrants 

constitute 5% of the United States' population, but only constitute 1% of health care spending, as they 

tend to be younger and healthier than native born people.33 

Medicaid Must Continue to Serve All Vulnerable Persons 

APIAHF is committed to working to ensure Medicaid continues in its role as a source of health insurance 

for the most vulnerable Americans. As Congress debates the future of Medicaid and the health care 

system, we urge policy makers to take into consideration the needs of AA and NHPI communities, many 

of whom would have to forgo healthcare if Medicaid was cut or eligibility was further restricted. 

31 Substance Abuse and Mental Health Services Administration (2014). Projections of National Expenditures for 

Treatment of Mental and Substance Use Disorders: 2010-2020. http:Ustore.samhsa.gov/shin/content/SMA14-

4883/SMA14-4883.pdf. 

32 Ku, Leighton and Brian Bruen. (2013). Poor Immigrants Use Public Benefits at a Lower Rate Than Poor NativeBorn Citizens. Cato lnstitute.http:f /www.cato.org/publications/economic-development-bulletin/poor-immigrantsuse-public-benefits-lower-rate-poor. 

33 Ku, Leighton. (2009). Health Insurance Coverage and Medical Expenditures of Immigrants and Native-Born 

Citizens in the United States," American Journal of Public Health, 99(7):1322-1328. 

http:Uwww.ncbi.nlm.nih.gov/pmc/articles/PMC2696660/. 

6 
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Real Possibilities 

January 30, 2017 

The Honorable Tim Murphy 

Chairman 

Subcommittee on Oversight 

and Investigations 

Committee on Energy and Commerce 

U.S. House of Representatives 

2125 Rayburn House Office Building 

Washington, DC 20515 

601 E Street, NW i Washmgton, DC 20049 

202-434-2277 l 1-888-0UR-AARP I 1-888-687-2277 I TIY: 1-87t434-7598 

W\VW.aarp.org I twitter: @aarp I facebook.com/aarp i youtube.com/aarp 

The Honorable Diana DeGette 

Ranking Member 

Subcommittee on Oversight 

and Investigations 

Committee on Energy and Commerce 

U.S. House of Representatives 

2125 Rayburn House Office Building 

Washington, DC 20515 

Dear Chairman Murphy and Ranking Member DeGette: 

Thank you for holding this hearing on Medicaid Oversight: Existing Problems and Ways 

to Strengthen the Program. AARP appreciates the opportunity to share this letter on 

Medicaid with the subcommittee. AARP, with its nearly 38 million members in all 50 

Stales and the District of Columbia, Puerto Rico, and U.S. Virgin Islands, is a 

nonpartisan, nonprofit, nationwide organization that helps people turn their goals and 

dreams into real possibilities, strengthens communities and fights for the issues that 

matter most to families such as healthcare, employment and income security, retirement 

planning, affordable utilities and protection from financial abuse. 

As Congress considers changes to Medicaid --a joint federal and state funded program 

--it is important to look at the impact of Medicaid on the people it serves. Medicaid is a 

vital safety net and intergenerationallifeline for millions of individuals, including 17.4 

million low-income seniors and children and adults with disabilities who rely on the 

program for critical health care and long-term services and supports (L TSS, i.e., 

assistance with daily activities such as eating, bathing, dressing, managing medications, 

and transportation). 

Of these 17.4 million individuals: 6.g million are ages 65 and older (which equals more 

than 1 in every 7 elderly Medicare beneficiaries)'; 10.5 million are children and adults 

living with disabilities; and about 10.8 million are so poor or have a disability that they 

1 Kaiser Commission on Medicaid and the Uninsured, Kaiser Family Foundation, 'Medicaid at 50", May 

2015, 13. Available at: htlp://files.kff.org/attachmentlreport-medicaid-at-50 
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qualify for both Medicare and Medicaid (dual eligibles). 2 Dual eligibles account for 

almost 40 percent of Medicaid spending a While they comprise a relatively small 

percentage of enrollees, they account for a disproportionate share of total Medicare and 

Medicaid spending. While some use fewer services, many have intensive care needs 

associated with exceedingly high costs. As a group, they tend to be sicker, poorer, and 

more expensive to care for than other individuals covered by either the Medicare or 

Medicaid programs. 

Medicaid beneficiaries with disabilities include younger individuals with physical 

conditions such as multiple sclerosis or epilepsy; HIV/AIDS; spinal cord and traumatic 

brain injuries; disabling mental health conditions such as depression and schizophrenia; 

intellectual and developmental disabilities such as Down syndrome and autism; and 

other functional limitations, as well as older adults in nursing homes or receiving home 

and community-based care.4 Disabling conditions that affect older adults include 

Alzheimer's disease, stroke, and chronic and disabling heart conditions. Individuals 

may have low incomes, high costs, or already spent through their resources paying outof-pocket for L TSS, and need these critical services. For these individuals, Medicaid is 

a program of last resort. 

Individuals with disabilities and older adults rely on critical Medicaid services, including 

home and community based services (HCBS) for assistance with daily activities such as 

eating, bathing, dressing, and home modifications; nursing home care; assistance with 

Medicare premiums and cost-sharing; and other benefits such as hearing aids and 

eyeglasses.5 People with disabilities of all ages rely on Medicaid for access to 

comprehensive acute health care services. Medicaid also helps some people with 

disabilities stay in the workforce and lead productive lives. Children with significant 

disabilities are able to stay with their families and receive the help they need at home or 

in their community because of Medicaid 6 

As Congress considers possible changes to Medicaid, it is important to understand how 

any proposed changes will affect real people. AARP opposes Medicaid block grants 

and per capita caps because we are concerned that such proposals will endanger the 

2 Medicaid and CHIP Payment and Access Commission, "MACStats: Medicaid and CHIP Data Book", 

Exhibit 14. Available at: https://www.macpac.gov/wp-content/uploads/2015/01/EXHIBIT-14.-MedicaidEn rollment -by-State-Eiig ibility-G roup-and-Dually-Eiiqible-Status-FY -2013. pdf 3 Rudowitz. Robin, Kaiser Family Foundation, "Medicaid Financing: The Basics", December 22, 2016. 

Available at: http://kff.org/report-section/medicaid-financinq-the-basics-issue-brief/ 4 Kaiser Commission on Medicaid and the Uninsured, Kaiser Family Foundation, "Medicaid Financial 

Eligibility for Seniors and People with Disabilities in 2015", 1. Available at: 

http:l/files.kff.orq/attachment/report-medicaid-financial-eligibility-for-seniors-and-people-with-disabilities-in2015 

"Kaiser Commission on Medicaid and the Uninsured, Kaiser Family Foundation, "Medicaid at 50", May 

2015, 13. Available at: http://files.kff.org/attachmentlreport-medicaid-at-50. Not all17.4 million people 

receive L TSS. 6 Kaiser Commission on Medicaid and the Uninsured, Kaiser Family Foundation, "Medicaid at 50", May 

2015, 10, 11, 13. Available at: http://files.kff.org/attachmentlreport-medicaid-at-50 
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health, safety, and care of millions of individuals who depend on the essential services 

provided through Medicaid. 

A block grant would end the guaranteed access to care for millions of Americans who 

are eligible and instead provide a fixed amount of federal funding to each state for its 

Medicaid program, which may not take into account increases in actual cost or need. 

We oppose the end of the guarantee and are concerned that fixed federal funding to 

states will result in cuts to program eligibility, services, or both- ultimately harming 

some of our nation's most vulnerable citizens. 

In addition, moving from the current Medicaid financing structure to fixed federal 

Medicaid block grant funding would shift costs to states and state taxpayers. With aging 

demographics, the rising needs of the chronically ill, and individuals with some form of 

dementia, states cannot meet these increased Medicaid costs. The National Governors 

Association has also recently stressed the importance of protecting states from 

unforeseen financial risks and not shifting costs to states. 

Per capita cap proposals would provide a fixed amount of federal funding per person, 

while allowing for enrollment growth. This approach to financing would also likely result 

in overwhelming cost shifts to state governments and families unable to shoulder the 

costs of care without sufficient federal support. It is unclear how Congress would 

determine the baseline amount of the caps in ways that would accurately reflect the cost 

of care for individuals in each state, let alone determine growth rates that would 

accurately reflect the cost of care for individuals in each state. 

We are especially concerned with how caps would be set for children and adults with 

disabilities, as well as for seniors. There is great variation among people of all ages 

living with disabilities in terms of the severity of their condition. Such variation makes it 

very challenging to establish realistic baseline cap amounts that would be sufficient to 

meet the very costly needs of those living with the most severe disabling conditions. 

Establishing unrealistic baseline spending for this population would make it impossible 

to meet the needs of those who have very high levels of need. 

In terms of poor seniors, we have serious concerns about setting caps at a time when 

per-beneficiary spending for poor seniors is likely to increase in future years. By 2026, 

when boomers start to turn age 80 and older, they will likely need much higher levels of 

service-including HCBS and nursing home-moving them into the highest cost group 

of all seniors. As this group continues to age, their level of need will increase as well as 

their overall costs. We have not seen any per capita cap proposals that take this into 

account. 

If Congress is interested in changes to improve Medicaid, there could be an opportunity 

to address Medicaid's longstanding institutional bias. When Medicaid was created in 

1965, nursing homes were the only option for a person who needed L TSS. States 

receive the funding they need to provide nursing home care for those who are eligible, 

but they can only provide home and community-based services (HCBS) to a more 
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limited extent in practice. The funding is now treated differently for nursing homes and 

services in homes and communities. It is time to update the law to reflect where and 

how people want to receive services today. In addition, governors have called for 

additional flexibility in the administration of the Medicaid program. We suggest that 

states should be given the flexibility to use Medicaid dollars for HCBS- without having 

to request permission from the federal government. About 90 percent of older adults 

want to remain in their own homes and communities for as long as possible. 7 They 

want to maintain their independence and have control over their own decisions. 

On average, in Medicaid, the cost of HCBS per person is one-third the cost of 

institutional care.8 HCBS are more cost effective and help people live in their homes 

and communities where they want to be- this makes fiscal sense and commonsense. 

States should be able to access funding for HCBS in the same way they can access 

nursing home funding. Eliminating the institutional bias in Medicaid aligns public policy 

with consumer preference. In addition, such efforts can yield significant returns on 

investments both to governments looking for more cost-effective solutions and 

taxpayers. 

AARP appreciates the opportunity to provide written input and looks forward to working 

with you to keep Medicaid's vital safety net in place and help people live in their homes 

and communities for as long as is reasonably possible. If you have further questions, 

please feel free to contact me or have your staff contact Rhonda Richards on our 

Government Affairs staff at rrichards@aarp.org or 202-434-3770. 

Sincerely, 

~0!¥ Senior Vice President 

Government Affairs 

7 Nicholas Farber and Jana Lynott. Aging in Place: A State Survey of Liability Policies and Practices 

(Washington, DC, AARP Public Policy Institute and the National Conference of State Legislatures, 

December, 2011) 8 Terence Ng, Charlene Harrington, MaryBeth Musumeci, and Erica L. Reaves, "Medicaid Home and 

Community-Based Services Programs: 2011 Data Update" (HCBS) and 2013 Medicare and Medicaid 

Statistical Supplement (Nursing Homes). Available at: http:/ldataexplorer.aarp.org/indicator/31/medicaidltss-spending-peruser#/bar?primarygrp=dist18&secondgrp=loc&dist18=1 02,103,104,105,106,107.1 08&1oc=1 &tf=12&fmt=1 

32? 
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January 31, 2017 

The Honorable Michael Burgess 

Chairman, Subcommittee on Health 

House Energy and Commerce Committee 

U.S. House of Representatives 

Washington, D.C. 20515 

The Honorable Gene Green 

Ranking Member, Subcommittee on Health 

House Energy and Commerce Committee 

U.S. House of Representatives 

Washington, D.C. 20515 

Re: Hearing on Strengthening Medicaid and Prioritizing the Most Vulnerable 

Dear Subcommittee Chairman Burgess and Ranking Member Green: 

On behalf ofthe undersigned member organizations of the Save Medicaid in the Schools Coalition, we 

would like to outline several ways that significant changes to Medicaid, such as converting it to a block 

grant, or instituting per capita caps, would most likely result in harm to our nation's most vulnerable 

children: students with disabilities and students in poverty. We are deeply concerned that critical 

services and professionals in school will be reduced or eliminated if proposals to refinance Medicaid are 

advanced. A per capita cap or attempt to shift Medicaid costs to states will undermine the entitlement 

of America's neediest children to access vital healthcare that ensures they have adequate educational 

opportunities and contribute to society. Given that children comprise less than SO% of Medicaid 

beneficiaries, but only about 19 percent of the costs for Medicaid, current proposals to cap or limit state 

funding are misguided and threaten to disproportionately harm children's access to care. 

Schools Provide Critical Health Care for Students 

A school's primary responsibility is to provide students with a high quality education. However, children 

cannot learn to their fullest potential with unmet needs, including physical and/or mental and 

behavioral health needs. As such, school district personnel regularly provide critical health services to 

ensure that all children are ready to learn and able to thrive. Schools provide an efficient and impactful 

delivery system because they are where children spend their days. Increasing access to health care 

services through Medicaid improves health care AND educational outcomes. Providing health and 

well ness services and services that benefit students with disabilities ultimately enables more children to 

become employable and attend higher-education. 

Since 1988, Medicaid has permitted payment to schools for certain medically necessary services 

provided to children under the Individuals with Disabilities Education Act (IDEA) through an 

individualized education program (IEP) or individualized family service program (IFSP). Schools are thus 

eligible to be reimbursed for direct medical services to Medicaid eligible students with an IEP or IFSP. In 

addition, districts can be reimbursed by Medicaid for providing Early Periodic Screening Diagnosis and 

Treatment Benefits (EPSDT), which provides Medicaid eligible children under age 21 with a broad array 

of diagnosis and treatment services. The goal of EPDST is to assure that health problems are diagnosed 

and treated as early as possible before the problems become complex and treatment more costly. 

School districts use their Medicaid reimbursement funds in a variety of ways to help support the 

learning and development of the children they serve. In a 2017 survey of school districts, it was 

reported that two-thirds of Medicaid dollars are used to support the salaries of health professionals and 

other specialized instructional support personnel (e.g. speech- language pathologists, occupational 

therapists, school psychologists and school nurses) who provide comprehensive health and mental 
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health services to students. Districts also use these funds to expand the availability of a wide range of 

health and mental health services available to students in poverty, who are more likely to lack 

consistent access to healthcare professionals Further, some districts depend on Medicaid 

reimbursement to purchase and update specialized equipment (walkers, wheel chairs, exercise 

equipment, special playground equipment, equipment to assist with hearing and seeing) and assistive 

technology for students with disabilities so they can learn alongside their peers. 

The Consequences of Medicaid Block Grants or Per Capita Caps Will Potentially Be Devastating for 

Children 

Significant reductions to Medicaid spending could have devastating effects on our nation's children, 

especially those with disabilities. Due to the significant underfunding of IDEA, districts rely on Medicaid 

reimbursements to ensure students with disabilities have access to the supports and services they need 

to access a Free and Appropriate Education. If a per-capita cap or block grant were to be enacted, school 

districts would stand to lose much of their funding for Medicaid. A block grant could mean that districts 

would no longer have a dedicated funding stream based on reimbursement for the services they are 

providing to students. However, cuts to Medicaid will impact all students, not just those receiving 

special education services. The Center on Budget and Policy Priorities estimates that these structural 

funding changes could result in 30% reduction in Medicaid funding to states, and therefore, school 

districts. Potential consequences of this critical loss of funds include: 

Fewer services: Providing comprehensive physical and mental health services in schools 

improves accessibility for many children and youth, particularly in high needs and hard to serve 

areas such as rural and urban communities. In a 2017 survey of school district leaders, half 

indicated they have taken steps recently to increase Medicaid enrollment in their districts. 

Reduced funding for Medicaid would result in decreased access to critical healthcare for many 

children and youth. 

Cuts to general education: Cuts in Medicaid funding would require districts to utilize funds from 

other sources to provide the services as mandated under IDEA. The subsequent reduction from 

other sources would result in elimination of equivalent costing program cuts in "non-mandated" 

areas of regular education. 

Higher taxes: Many districts rely on Medicaid reimbursement to cover personnel costs for their 

special education programs. A loss in Medicaid reimbursement could lead to deficits in districts 

that require increases in property taxes or new levies to cover the costs of the special education 

programs. 

Job loss: Districts use Medicaid reimbursement to support the salaries and benefits oft he staff 

performing eligible services. A 2017 AASA survey found 68% of districts use Medicaid funding to 

pay for direct salaries for health professionals who services for students. Cuts to Medicaid 

funding would impact districts' ability to maintain employment for school nurses, physical and 

occupational therapists, speech-language pathologists, school social workers, school 

psychologists, and many other critical school personnel who ensure students with disabilities 

and those with a variety of educational needs are able to learn. 

Fewer critical supplies: Districts use Medicaid reimbursement for critical supplies such as 

wheelchairs, therapeutic bicycles, hydraulic changing tables, walkers, weighted vests, lifts as 
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well as items that are very student specific and are necessary for each child to access the 

curriculum as closely as possible to their non-disabled peers. Replacing this equipment would be 

difficult if not impossible without Medicaid reimbursement. 

Fewer mental health supports: Seven out of ten students receiving mental health services 

receive these services at school. Cuts to Medicaid would further marginalize these critical 

services and leave students without access to care. 

Noncompliance with IDEA: Given the failure to commit federal resources to fully-funding IDEA, 

Medicaid reimbursement serves as a critical funding stream to ensure districts can provide the 

specialized instructional supports that students with disabilities need to be educated with their 

peers. NAME estimates that 1% of all Medicaid reimbursement goes to local school districts 

(between $3-4 billion), which is roughly a quarter of the investment we make in IDEA ($17 

billion). 

We urge you to carefully consider the important benefits that Medicaid, as it is currently structured, 

provides to our nations' most vulnerable children. Schools are often the hub of the community, and 

converting Medicaid to a block grant, or instituting per capita caps threatens to significantly reduce 

access to comprehensive health and mental and behavioral health care for children with disabilities and 

those living in poverty. We look forward to working with you to prevent unnecessary changes to this 

highly effective and beneficial program. 

If you have questions about the letter or wish to meet to discuss this issue further, please do not 

hesitate to reach out to the coalition co-chairs via email: John Hill Oohn.hill@medicaidforeducation.org), 

Sash a Pudelski (spudelski@aasa.org) and Kelly Vaillancourt Strobach (kvaillancourt@naspweb.org). 

Sincerely, 

AASA, The School Superintendents Association 

Accelify, LLC 

American Occupational Therapy Association 

American Dance Therapy Association 

American School Health Association 

Association of Education Service Agencies 

Association of School Business Officials International 

Colorado School Medicaid Consortium (The Consortium) 

Council of Administrators of Special Education 

Easterseals 

Health and Education Alliance of Louisiana 

Judge David L. Bazelon Center for Mental Health Law 

Learning Disabilities Association of America 

Michigan Association of School Administrators 

National Alliance for Medicaid in Education 

National Association of School Nurses 

National Association of School Psychologists 

National Association of Social Workers 

National Association of State Directors of Special Education (NASDSE) 

National Center for Learning Disabilities 
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National Education Association 

National Rural Education Association 

Paradigm Healthcare Services 

School Social Work Association of America 

Society for Public Health Education 
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January 30,2017 

The Honorable Greg Walden 

Chairman 

Energy & Commerce Committee 

U.S. House of Representatives 

Washington, DC 20510 

The Honorable Michael Burgess, M.D. 

Chairman 

Health Subcommittee 

Energy & Commerce Committee 

U.S. House of Representatives 

Washington, DC 20510 

The Honorable Tim Murphy 

Chairman 

Oversight and Investigations Subcommittee 

Energy & Commerce Committee 

U.S. House of Representatives 

Washington, DC 20510 

Association of American Medical Colleges 

i( f! 

~AAMC 

655 K Street, N.W., Suite 100, Washington, D.C. 20001·2399 

T 202 828 0460 f 202 862 6161 WMV.aamcorg 

Darrell G. Kirch, M.D. President and Chief Executive Officer 

The Honorable Frank Pallone 

Ranking Member 

Energy & Commerce Committee 

U.S. House of Representatives 

Washington, DC 20510 

The Honorable Gene Green 

Ranking Member 

Health Subcommittee 

Energy & Commerce Committee 

U.S. House of Representatives 

Washington, DC 20510 

The Honorable Diana DeGette 

Ranking Member 

Oversight and Investigations Subcommittee 

Energy & Commerce Committee 

U.S. House of Representatives 

Washington, DC 20510 

Dear Chairman Walden, Chairman Burgess, Chairman Murphy, Ranking Member Pallone, Ranking 

Member Green, and Ranking Member DeGette: 

On behalf of the nation's medical schools and major teaching hospitals, I write to reiterate the Association 

of American Medical Colleges' (AAMC) commitment to informing policies that address opportunities and 

challenges in our health care system, and to ensuring that all individuals receive the comprehensive 

insurance coverage and high-quality care they need. 

We appreciate the House Energy & Commerce Committee's commitment to a public dialogue regarding 

how best to improve the Medicaid program, including the Medicaid hearings scheduled this week in the 

Subcommittee on Health and the Subcommittee on Oversight. To that end, the AAMC is committed to 

working with Congress to strengthen the Medicaid program, the low-income health program that provides 

health coverage to more Americans than any other type of insurance. As Congress considers changes to 

the Medicaid program and additional health care reforms, maintaining, and in some cases improving, 

coverage and access to high quality care for Medicaid beneficiaries will be essential. 

The AAMC is a not-for-profit association dedicated to transforming health care through innovative medical 

education, cutting-edge patient care, and groundbreaking medical research. Its members comprise all 147 

accredited U.S. medical schools; nearly 400 major teaching hospitals and health systems, including 51 
110 


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Chairman Walden, Chairman Burgess, Chairman Murphy, Ranking Member Pallone, Ranking Member 

Green, and Ranking Member DeGette 

January 30, 2017 

Page 2 

Department of Veterans Affairs medical centers; and more than 80 academic societies. Through these 

institutions and organizations, the AAMC serves the leaders of America's medical schools and teaching 

hospitals and their nearly 160,000 faculty members, 83,000 medical students, 115,000 resident physicians, 

and thousands of graduate students and postdoctoral trainees in the biomedical sciences. 

Teaching hospitals and their medical school faculty physicians achieve world-renowned heights of clinical 

excellence, while also tending to the basic needs of our nation's most vulnerable patients. Though they 

represent only five percent of America's hospitals, AAMC-member teaching hospitals (also known as 

academic medical centers) provide nearly 25 percent of all hospital care - including 24 percent of all 

Medicaid inpatient visits and 20 percent of all Medicare inpatient visits - and deliver nearly 40 percent of 

the nation's charily care. These institutions also are committed to their communities and the nation as 

drivers of high-quality health care, pioneers of cures and treatments for diseases, leading employers, 

providers of safety net and critical emergency services, and partners in public health. We work for a just 

health care system for all, including rural and urban underserved populations, children, veterans, and 

seniors, among others. 

This depth of experience and advanced capability mean teaching hospitals support efforts to ensure that 

Medicaid is a strong and reliable payer and source of robust coverage. However, teaching hospitals are all 

too aware when these programs fall short of this goal. State Medicaid programs vary considerably, and 

Congress must do more to ensure that this variation is used to innovate and improve health outcomes, while 

not inadvertently disadvantaging patients and providers. 

The AAMC urges Congress to adhere to the following principles when considering any potential changes 

to the Medicaid program: 

Congress should protect states, taxpayers, and Medicaid beneficiaries by maintaining the 

Affordable Care Act's {ACA) Medicaid expansion. Many states have achieved expansion 

using Medicaid waiver authority, which has allowed them to tailor programs according to state 

priorities. Repealing the Medicaid expansion would leave states with fewer resources, 

threatening not only patients but also the safety net providers who care for them. If Congress 

wants to empower state decision-making, the use of waiver authority combined with the resources 

provided by the ACA can successfully achieve this objective. Existing Medicaid Section 1115 

demonstration authority already allows for considerable state flexibility and innovation. Indiana, 

for example, includes Health Savings Accounts (HSAs) as part of its Medicaid program to 

empower beneficiaries in prioritizing wellness activities. Nearly every state has experimented 

with managed care and other cost containment strategies. Innovation for the betterment of 

beneficiaries cannot occur, however, when resources are scarce or unpredictable. Repealing the 

Medicaid expansion places these innovations and Medicaid beneficiaries at risk. 

Congress should maintain the federal government's commitment to match state spending 

on medical care for Medicaid beneficiaries- without limits, caps, or block grants, Current 

eligibility levels and federal matching rates should be sustained. Proposals to block grant or 

cap federal Medicaid spending would undermine the federal government's commitment to states 

and the health care needs of the most vulnerable. Setting fixed Medicaid budgets would mean 

states would be unable to accommodate the availability of new drugs or treatments, or weather 

downturns in the economy that necessitate increased enrollment. Congress should pursue policies 

that promote innovation and fiscal responsibility but not those that limit the federal government's 

commitment to Medicaid beneficiaries. 
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Chairman Walden, Chairman Burgess, Chairman Murphy, Ranking Member Pallone, Ranking Member 

Green, and Ranking Member DeGette 

January 30, 20 17 

Page 3 

The federal government should ensure that Medicaid beneficiaries have meaningful access 

to high-quality care by maintaining and enforcing network adequacy requirements and 

mandating sufficient payments to providers. One of the Medicaid program's recurring 

challenges is ensuring adequate access to timely, high-quality care. States should continue to 

innovate with new models of care delivery, especially ones that promote care coordination and 

population health, but within the parameters of clearly defined and enforced federal standards 

regarding network adequacy, timely access, and sufficient provider payments. 

• Congress should delay scheduled cuts to Medicaid disproportionate share hospital (DSH) 

payments. The ACA included more than $9 billion in cuts to the federal contributions to DSH, 

to be phased in beginning in FY20 14. Subsequently delayed, they are now scheduled to begin in 

September 2017. Cuts of this magnitude would devastate the health care safety net, including 

teaching hospitals around the country, which depend on these payments to help care for the 24 

million Americans who remain uninsured despite the coverage expansions achieved by the ACA. 

Any increase in the number of uninsured coupled with Medicaid DSH cuts would cripple 

teaching hospitals' ability to ensure a strong health care safety net. Medicaid DSH cuts should be 

delayed until universal coverage is achieved. 

Congress should permanently reauthorize the Children's Health Insurance Program 

(CHIP) and make CHIP funding permanent rather than subjecting it to the appropriations 

process. The Children's Health Insurance Program- which covers over 8 million low-income 

children nationwide- enjoys strong, bipartisan support. Despite this support and its well 

documented success, CHIP continues to be at risk because of the recurring need to reauthorize it 

every two to three years. The value of covering kids, for its own sake and for the long term 

health of our nation, is unquestionable. Continued funding for a program that effectively achieves 

that aim should not be questioned either. 

Medicaid is a lifeline for tens of millions of working families, individuals with disabilities, children with 

complex health needs, and low-income seniors with disabilities. The AAMC supports the laudable goals 

of efficiency, flexibility, and long-term healthcare cost containment but believes the best way to achieve 

this - for both the Medicaid program and health care generally - is by working to continue to reduce the 

growth in underlying health care costs. We look forward to engaging with Congress on this goal, as it will 

benefit not only the Federal government but states and individuals as well. 

Please feel free to contact AAMC Chief Public Policy Officer Karen Fisher, JD (kfisherriilaamc.org) or me 

if we can provide any additional information or answer any questions you might have. 

Sincerely, 

£)~G.!<)~ 

Darrell G. Kirch, MD 

President and Chief Executive Officer 
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OFFICe OF THE GoVERNOR 

CoMMONWEALTH OF MASSACHUSETTS 

STATE HousE • BosToN, MA 02133 

(617) 725-4000 

CHARLES D. BAKER 

GOVERNOR 

KARYN E. POLITO 

LIEUTENANT GOVERNOR 

The Honorable Kevin McCarthy 

Majority Leader 

United States House of Representatives 

H-107, U.S. Capitol Building 

Washington D.C., 20515 

Leader McCarthy, 

January 11, 2017 

Thank you for the opportunity to provide initial input on how to improve upon the goals of the 

Patient Protection and Affordable Care Act of 2010 (Affordable Care Act). For more than ten 

years, the Commonwealth of Massachusetts has been deeply engaged in designing and 

implementing health care reform solutions, first on a state level with our comprehensive, 

bipartisan state reform in 2006, and later with implementation of the Affordable Care Act. 

Although our state's initial implementation of the Affordable Care Act was deeply flawed, today 

more than 220,000 individuals have health care coverage through our state exchange, 180,000 

low to modest income residents receive federal and state subsidies, and an additional 300,000 

adults are enrolled in Medicaid as a result of the expansion allowed through the Affordable Care 

Act 

As an overarching statement, Massachusetts believes strongly in health care coverage for its 

residents. Working with the federal government, we have made considerable progress toward a 

goal of ensuring near universal health care coverage for our residents. Over 96.4% of 

Massachusetts residents were insured in 2015, the highest in the country.' Massachusetts 

retains a vital employer-sponsored insurance market, covering just under 60% of those insured. 2 

And, the Massachusetts state-based exchange, known as the "Connector" maintains a robust 

individual insurance market with more than 10 health insurers. Affordability of health care 

remains a significant challenge, including double digit health care premiums. 

Additionally, while health coverage is important first and foremost for its benefits to residents, 

health care is an economic engine for Massachusetts. The health care industry contributed 

$19.77 billion to the state's economy, outpacing any other industry. One out of every ten 

workers is employed in health care related fields. 3 

1 http://www. chiamass.gov/ assets/ docs/r /surveyim]l is-2015/2015-M H IS.ru!f. 

' )l ttp ://www.ch lama ss.gov /assets/ docs/r /surveyL_'l)his-2015/2015-M H IS.gdf. 

'http:U247)vallst.com/special.report/2016/09/23/largest-industry-in-each-state-3/6/ 

1 
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Massachusetts attributes much of its success in expanding health care coverage through a 

strong bipartisan effort across insurance, business, health care, political and advocacy 

communities that began in the 1990's and resulted in the passage of our state's health care 

reform law in 2006. Our belief is that health care coverage is a shared commitment, not the 

singular responsibility of government. Some of the changes to its health care law that 

Massachusetts had to make to comport with federal provisions have resulted in unintended 

consequences particularly impacting the employer sponsored insurance market and Medicaid 

program. Since 2011, the Commonwealth has seen a costly shift of approximately half a million 

lives from the commercial, employer-sponsored market into public coverage. The Medicaid 

program now accounts for just under 40% of the state's budget. Since 2012, the percent of 

residents on commercial insurance has decreased by 7 percentage points while Medicaid 

enrollment increased by 7 percentage points and now covers 28% of the population. The 

uninsurance rate has remained constant at 3%. The significant shift in lives from private to 

public coverage as a result of implementing the ACA- without a change in the uninsurance rate 

- has disrupted the stability of the Commonwealth's coverage landscape and contributed to 

challenges in the growth of the Medicaid program. 

Massachusetts seeks flexibility to achieve the goals inherent in the Affordable Care Act and 

Medicaid programs while meeting the needs of its state. 

In addition to expanding health care coverage, there are other important provisions contained 

within the Affordable Care Act. These include but are not limited to patient protections such as 

the ban on pre-existing condition exclusions, elimination of annual or lifetime limits and gender 

inequities. The ACA also closed the Medicare "donut" hole, extended the solvency of the 

Medicare trust fund and allowed for young people to remain on their parents' coverage through 

the age of 26. In addition, the ACA authorizes an important demonstration for integrating care 

for individuals dually eligible for Medicaid and Medicare. 

However, as is true for any complex and complicated piece of national legislation with significant 

impact on the delivery of health care in 50 unique states, there is an opportunity to review and 

amend legislation to ensure it meets its intended goals and provides states with flexibility to 

implement health care reform in a way that meets states' needs. Any changes to the Affordable 

Care Act must also take into account the impact changes would have on the Medicaid program. 

MassHealth, the Massachusetts Medicaid and Children's Health Insurance Programs, provides 

health care coverage for nearly 1.9 million residents; it is an important safety net for a significant 

portion of our state's population. Medicaid is a shared federal/state partnership. Proposals that 

suggest states may be provided with more flexibility and control must not result in substantial 

and destabilizing cost shift to states. 

As Congress considers options related to health reform, we believe that a measured and 

objective analysis of the opportunities and challenges for states in the current federal landscape 

is essential. During this period of deliberation, it is important that coverage gains, patient 

protections and market stability are maintained. Our overall recommendations going forward 

include: 

Maintaining market stability as reform options are considered. 

Reviewing and revising key provisions of the Affordable Care Act and Medicaid program 

to provide states with flexibility to meet the unique needs of their state's population. 

Providing ample time for transitioning into new health care coverage and/or delivery 

models to ensure operational readiness. 

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Maintaining state health care safety nets, including retaining existing federal subsidies 

and uncompensated care pools that support health care coverage and charity care 

providers. 

Avoiding proposals that only offer more flexibility and control in exchange for shifting 

costs to states. 

Expanding state flexibility in response to unique state needs that meet the overarching 

goals of health care coverage, access, quality and afford ability in both the ACA and in 

the Medicaid program. 

Massachusetts passed a version of universal health care coverage. The Affordable Care Act 

has provided both opportunities and challenges. The opportunities included further expanding 

coverage and receiving increased federal support for expansion. The challenges include 

implementing provisions that have added to state health care complexity and cost, rather than 

outcomes and affordability. We believe the path forward is to build upon a strong federal and 

state partnership in agreeing to the goals we all share while allowing states sufficient flexibility to 

tailor their health care system to meet the needs and demands of their unique state. 

Charles D. Baker 

Governor 

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1. What changes should Congress consider to grant more flexibility to states to provide 

insurance options that expand choices and lower premiums? 

Massachusetts has appreciated the flexibility that Congress and the Department of 

Health and Human Services have made available to states in the past, such as existing 

Section 1115 and Section 1332 waiver pathways. Massachusetts values the availability 

of federal infrastructure and funding for states to continue innovating to meet the specific 

needs of their populations and markets. Critically, and during the next few years, we 

request that Congress offer states the option to maintain state flexibility agreements 

already in place, when considering any future changes. 

Massachusetts believes there are opportunities to expand upon flexibility provided to 

states with both the 1115 and Section 1332 authorities. State innovation is key to 

achieving health care coverage, managing health care costs and afford ability, as well as 

improving patient outcomes and satisfaction. 

Going forward, greater flexibility should be provided to states with regard to: 

o state specific benefit rules, beyond what is permitted under Essential Health 

Benefit standards 

o state specific actuarial value calculator for benefit standards 

o state specific rating factors to apply for small group premium development 

o a more flexible risk adjustments system or elect not to apply risk adjustments 

o insurance products offered through group purchasing cooperatives and 

professional employer organizations 

o administrative rules and regulations, simplification regarding compliance and 

other reporting requirements. 

o greater authority and flexibility to ensure that mental health parity rules are 

complied with. 

2. What legislative and regulatory reforms should Congress and the incoming 

administration consider to stabilize your individual, small group, and large group 

health insurance markets? 

Congress and the incoming administration should introduce any legislative or regulatory 

changes on a gradual timeline, ideally with state flexibility to opt out or grandfather 

existing programs, to prevent market shocks and to improve market stability. 

Congress should consider: 

o allowing states to maintain the individual mandate to allow stability within risk 

pools 

o maintaining risk corridor and reinsurance payments in 2017 with coverage in 

place in 2016 

o maintaining risk adjustment for 2017 as carriers have built risk adjustment into 

already offered 2017 premiums. 

o allowing states to determine risk adjustment system for 2018 and onward. 

o permitting states to develop state specific open enrollment rules. 

What are key administrative, regulatory, or legislative changes you believe would 

help you reduce costs and improve health outcomes in your Medicaid program, 

while still delivering high quality care for the most vulnerable? 

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Medicaid represents a significant portion of state budgets Gust under 40% in 

Massachusetts) and is a shared federal/state partnership. While we strongly support 

maintaining and increasing flexibility for states (such as through existing Section 1115 

waiver authorities), proposals that suggest states be provided with more flexibility and 

control must not result in substantial and destabilizing cost shift to states. We are very 

concerned that a shift to block grants or per capita caps for Medicaid would remove 

flexibility from states as the result of reduced federal funding. States would most likely 

make decisions based mainly on fiscal reasons rather than the health care needs of 

vulnerable populations and the stability of the insurance market. The federal/state share 

varies by state, ranging from 80/20 to 50/50; Massachusetts is a 50/50 state. Any 

Medicaid reform should start with the assumption that every state's current federal share 

establishes the baseline. 

Medicaid provides the option for states to pursue flexibility through the use of Section 

1115 Demonstration Waivers. Massachusetts has had an 1115 in place since 1997, 

allowing the state to deviate from traditional Medicaid rules with expanded eligibility, 

streamlined eligibility processes, mandatory managed care and, most recently, a move 

to value-based purchasing and Accountable Care Organization programs. Our 

projections show that this move to A COs will result in reducing spending while also 

improving health outcomes. We urge our federal partners to maintain flexibility for states 

through 1115 waivers. 

• While our Medicaid program has been a crucial prong in the state's approach towards 

achieving almost universal health coverage for our residents, we do believe that the 

Medicaid program could be improved through certain changes to Medicaid rules allowing 

greater flexibility around benefit design while maintaining patient protections. In 

particular, the ACA added new Essential Health Benefits (EHB) requirements to the 

coverage provided to the Medicaid expansion population. This construct is unnecessary 

and adds unneeded complication to the development of benefit packages. States 

already make decisions regarding the optional benefits provided to their non-expansion 

populations and the EHB requirement for expansion populations removes the flexibility 

states may need to make appropriate benefit decisions for their populations. We also 

would support the removal of the requirement to provide non-emergency medical 

transportation to the expansion population. 

3. What can Congress do to preserve employer-sponsored insurance coverage and 

reduce costs for the millions of Americans who receive health coverage through their 

jobs? 

The Affordable Care Act changed important elements of the Commonwealth's previous 

version of health care reform with unintended consequences. The ACA employer 

mandate (for employers with 50 or more FTEs) replaced the Commonwealth's fair share 

contribution for employers with 11 or more FTEs and added significant administrative 

burden for employers. In addition, the ACA changed a number of previous rules 

governing eligibility for subsidized coverage for individuals with access to employer 

sponsored coverage, changing the dynamic between employers, employees and 

taxpayer-funded programs in concerning ways. 

As a result, over the past several years, the Commonwealth has seen a shift of 

-500,000 lives from the commercial, employer-sponsored market into public coverage. 

Since 2012, the percent of residents on commercial insurance decreased by 7 

percentage points from -65% to 58%; over the same period, Medicaid enrollment 

increased by 7 percentage points and now covers 28% of the population. The 

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uninsurance rate has remained constant at3%. The significant shift in lives from private 

to public coverage as a result of implementing the ACA- without a change in the 

uninsurance rate- has disrupted the stability of the Commonwealth's coverage 

landscape. It has also contributed to challenges in the growth of the Medicaid program, 

with 85% of growth over the past several years being driven by enrollment. 

Massachusetts maintains an unwavering commitment to universal coverage and, based 

on its experience, supports maintaining many components of the ACA, combined with 

increased flexibility for states to make adjustments based on state-specific needs. This 

must include more flexibility for states through 1332 waivers to sustain universal 

coverage, including allowing states to waive the ACA employer mandate for employers 

with more than 50 FTEs with certain conditions attached (e.g., if states have a better 

suited alternative) and giving states more flexibility to stabilize commercial coverage 

options for both individuals and small employer segments. 

As Congress considers changes to the employer-sponsored insurance market, we would 

request consideration of the need for ample lead-time in order to ensure that employers, 

insurers, and individuals are able to prepare and possibly alter their choices without 

undue disruption. 

We suggest revisiting mechanisms to support employers seeking to contribute to 

coverage through targeted, market-based incentives and administrative simplifications. 

To control the shifting of cost and responsibility for coverage from the commercial 

market to public programs, rules that allow individuals with access to employer 

sponsored coverage to enroll in Medicaid should be revised. 

States should be allowed to waive certain ACA provisions, such as the employer 

mandate for employers with more than 50 FTEs and the definition of full time as 35 

hours/week, which can be done with certain conditions attached (e.g. under condition of 

implementing an approach better suited to the particular state). 

Tax subsidies should be offered to small employers providing affordable coverage to low 

income employees. 

Flexibility on utilization of existing (and hopefully new) 2 year SB tax subsidies- allow 

states to access available funds immediately and disburse it by setting own customized 

eligibility for businesses. 

Allow access to APTC to eligible employees, before applying defined contribution funds 

provided by employer. 

For example, Congress could: 

o revisit tax code provisions that prohibit employers from setting aside pre-tax 

money under a Section 125 plan or other tax-preferred mechanisms, so that nonbenefit eligible employees can use pre-tax dollars to purchase the non-group 

coverage of their choice. Massachusetts has substantial experience 

administering a similar program. 

o refine the ACA's small business health care tax credit, by allowing states to 

repurpose federal funds toward small group coverage incentive programs that 

meet local business needs. 

Congress should give states more flexibility to: 

o establish state-specific benefit rules, beyond what is permitted under Essential 

Health Benefits standards. 

o establish preventive health standards and applicable cost-sharing requirements. 

o develop a state-specific Actuarial Value Calculator to establish benefit standards 

or elect not to use one. 

o establish state-specific rating factors to apply for small group premium 

development. 

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o develop a more flexible risk adjustment system or elect not to apply risk 

adjustment. 

o permit insurance products offered through group purchasing cooperatives and 

professional employer organizations. 

o eliminate ACA premium taxes, including the so-called Cadillac tax. 

4. What key long-term reforms would improve affordability for patients? 

Over ten years of state-level reform, Massachusetts has learned that lower-income 

residents require a substantial level of subsidization in order to take-up and maintain 

coverage. 

In addition to federal subsidies, Massachusetts offers a program that "wraps" around 

individual coverage available through the Exchange with additional subsidies for eligible 

low-income individuals who do not qualify for Medicaid. This level of subsidization, 

exceeding the current federal level, is critical to enrollment and retention of a healthy risk 

pool. Massachusetts recommends flexibility to preserve this program in order to boost 

coverage efforts among hard-to-cover populations. 

• Congress must address the growing cost of prescription drugs and foster greater 

transparency in the cost of high cost health care providers. 

5. Does your state currently have or plan to enact authority to utilize a Section 1332 

Waiver for State Innovation beginning January 1, 2017? 

a. If allowed, would your state utilize a coordinated waiver application process 

for both 1115 Medicaid and 1332 State Innovation Waivers for benefit year 

2017? 

b. If allowed, would your state utilize a model waiver for expedited review and 

approval similar to the Medicare Part D transition and assistance for Hurricane 

Katrina evacuees? 

c. If allowed, which requirements would your state seek to waive under a 1332 

waiver? 

d. If allowed-and if applicable-what changes would be necessary to current 

guidance to accelerate your states' ability to pursue a 1332 waiver? 

Massachusetts supports granting states more flexibility under a variety of waiver 

authorities (Section 1332, Section 1321 (e) for states with pre-ACA state health reforms, 

and Medicaid 1115 waivers) to maintain stable, universal coverage. Massachusetts 

would also welcome the opportunity to participate in the development of "fast-track" 

waiver authority to expedite processing and approvals. 

Specific examples of flexibilities include allowing states to: 

o Waive the ACA employer mandate for employers with more than 50 FTEs and 

the definition of full time as 35 hours/week with certain conditions attached (e.g., 

if states have a better suited alternative), and/or significantly simplify the 

administrative burden on employers for reporting 

o Support employers who are seeking to contribute to coverage through marketbased incentives, including: 

More flexibility for Section 125 plans (for example, Defined Contribution 

models to purchase coverage on the exchanges) 

Flexibility to ensure effective implementation of new provisions from the 

21st Century Cures Act related to Health Reimbursement Accounts 

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(HRAs) and opportunities for employees to make tax-deductible 

contributions for employees purchasing coverage on the exchanges 

Maintain flexibility for low-income coverage options through Medicaid 

1115 waivers (the Commonwealth's 1115 waiver allows for premium and 

cost-sharing wraps for individuals purchasing coverage on the exchange 

with income <300% of FPL) 

Access small business tax credits and other subsidies 

Waive conflicting eligibility standards between Medicaid and the 

Exchange (income standards, household size, etc.) 

Implement state-specific Actuarial Value Calculators and rating factors 

Maintain flexibility through Medicaid 1115 waivers on the structure of 

uncompensated care pools 

6. As part of returning more choice, control, and access to the states and your 

constituents, would your state pursue the establishment of a high-risk pool if federal 

law were changed to allow one? 

Massachusetts has to date not considered such a plan. The establishment of a high risk 

pool would depend on the rules and structure of the program; however, we would be 

concerned given the history of high-risk pools, which has not been particularly 

successful. 

7. What timing issues, such as budget deadlines, your legislative calendar, and any 

consumer notification and insurance rate and fonm review requirements, should we 

consider while making change? 

We appreciate Congress' attentiveness to the local timing needs that would be critical to 

the successful implementation of any ongoing federal reforms. 

Carriers need clear guidance to develop appropriate products and to set premiums for 

the insurance market. 

Key deadlines in Massachusetts include: 

o For all individual plans and some small group plans effective January 1, 2018 

insurance carriers must complete their development of plan designs and submit 

them to the Division of Insurance by April1, 2017 for their review and approval in 

the previous mid-summer. Carriers must submit the development of rates and 

submit them to the Division of Insurance by July 1 for their review and approval 

by mid-summer. For example, plans starting January 1, 2018 will be proposed by 

insurers by early July 2017. 

o For small group plans effective other than January 1, insurance carriers must 

forward plan design and rates to the Division of Insurance at least 90 days prior 

to their effective dates. 

o Open enrollment for individual plans begins November 1, 2017 and ends January 

31, 2018. Small group plans have open enrollment on a continuous basis 

throughout the calendar year. 

o IT and systems changes for the state-based Exchange are generally calendared 

at least one year in advance -for example, the Massachusetts Health Connector 

has planned and budgeted for its 'systems releases' through Fall2017. 

o Legislative sessions in Massachusetts are for two years, with the new session 

starting January 2017. Formal sessions run through November in the first year 

and July 31 in the second year. Massachusetts government is funded on a fiscal 

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year basis, running from July 1 through June 30. The annual budget process 

begins each year when the Governor files recommendations as a bill by the 4th 

Wednesday of January. If federal changes that affect the annual state budget 

were to materialize, the Governor's primary opportunity to propose any required 

policy adjustments would arise the following January in his annual 

recommendation with final implementation the following July. 

8. Has your state adopted any of the 2010 federal reforms into state law If so, which 

ones? What impact would repeal have on these state laws? 

Massachusetts has enacted many health reform-related provisions into law, some of 

which predate the ACA but are substantially similar (such as the state's individual 

requirement to maintain coverage). 

However, since Massachusetts has not adopted every provision of the ACA into state 

law, and in some cases state law refers to federal citations, any Congressional repeal 

effort on a rapid time line could cause significant confusion in the market. We ask 

Congress to offer states an ample runway to prepare for any significant federal changes 

with corresponding state law changes, as needed. 

Massachusetts is actively working to manage health care costs for federal and state 

payers, individuals, and businesses -- such as through the launch of a comprehensive 

payment reform initiative in the Medicaid program. 

Massachusetts has enacted many legislative changes relative to the Affordable Care Act 

(ACA) include: 

o Changed definition of "eligible individual" in Small Group Laws. 

o Established transition period for phase-out of certain small group rating factors in 

Small Group Laws. 

o Revised timing of filing rates in Small Group Laws. 

o Established authority for Division of Insurance to enforce ACA provisions. 

o Conformed dependent coverage provisions to ACA (age 26). 

o Conformed Massachusetts preexisting conditions and waiting periods to ACA. 

o Revised timing of submission of rate filings to conform with ACA. 

o Conformed external review process to ACA. 

o Granted authority for EOHHS and Connector (Exchange) to obtain necessary 

data from any state or public entity for certain administrative functions. 

o Conformed Medicaid eligibility requirements to the ACA. 

o Revised Connector's enabling statute; removed references to Connector Care. 

o Enacted technical changes authorizing Connector to administer premium and 

cost-sharing wrap. 

o Conformed Connector premium requirements to ACA. 

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3M 

Energy and Commerce Committee 

Subcommittee on Health 

Hearing on "Strengthening Medicaid and 

Prioritizing the Most Vulnerable" 

February 1, 2017 

3M Company ("3M") appreciates the opportunity to submit this statement for the record before 

the Energy and Commerce Subcommittee on Health Hearing on "Strengthening Medicaid and 

Prioritizing the Most Vulnerable. 

3M thanks the Committee for its continued efforts to improve all of the critical programs within 

the health care system to keep pace for the betterment of patients. As the Committee considers 

ways to strengthen the program and provide states with greater flexibility, we would recommend 

encouraging states to reduce costs by tying payment incentives to improved patient outcomes. 

Background on 3M Health Information Systems 

3M is a large U.S.-based employer and manufacturer established over a century ago in 

Minnesota. Today, 3M is one of the largest and most diversified manufacturing companies in 

the world. We are a global company conducting the majority of our manufacturing and research 

activities in the United States. 

3M Health Information Systems works with providers, payers and government agencies to 

anticipate and navigate a changing healthcare landscape. 3M provides healthcare data 

aggregation, analysis, and strategic services that help clients move from volume to value-based 

health care, resulting improved provider performance and better patient outcomes. 3M HIS is 

one of the industry leaders in hospital and health system payment classification systems tied 

to quality, computer-assisted coding, clinical documentation improvement, performance 

monitoring, quality outcomes reporting, and terminology management. 

Targeting the Problem to Improve Quality and Reduce Costs 

The 2012 Institute of Medicine (IOM) study Best Care at Lower Cost estimated that unneeded 

services, mistakes, delivery system ineffectiveness and missed prevention opportunities were 

leading to $395 billion in annual health care expenditures that could be avoided without 

worsening health outcomes. 

If the health care system can focus on targeting these potentially preventable services, 

complications, inefficiencies and missed opportunities, we can improve patient care and save 

valuable health care resources. 

W c know that failures in quality typically result in a need for more interventions to correct the 

quality problem resulting in high rates of potentially preventable: 
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• Complications, 

• Readmissions, 

• Admissions, 

• Emergency room visits, and 

• Outpatient procedures and diagnostic tests. 

These five potentially avoidable events represent the vast majority of avoidable adverse 

outcomes. The added benefit of this definition of avoidable outcomes is that each of these can be 

translated into dollars. As a consequence they also represent a large proportion of the 

unnecessary spending within our health care system and should be the target of state and federal 

efforts to make our system more efficient and effective for patients and tax payers. We can 

improve our health care system if we can reduce these kinds of events through better 

collaboration, information, payment incentives and care coordination. 

State Efforts to Improve Outcomes and Reduce Costs in Their Medicaid Programs 

For most states, expenditures for Medicaid are one of the largest or the largest items in the state 

budget. This has necessitated that states seek innovative ways to control Medicaid expenditures. 

Many of the successful state based payment system reforms are practical, transparent, and 

identify opportunities for improvement that are being realized today. 

Leading Medicaid programs have focused on payment system reforms that link the outcomes of 

care to payment. These state programs are boldly leading the way on hcalthcare system payment 

reform as they respond to their urgent state budget issues. States like Texas, New York, 

Pennsylvania, Illinois, Maryland, Ohio, and Minnesota have adopted payment systems that 

create clear financial incentives for providers to increase efficiency and improve quality 

outcomes. 

The payment reforms implemented by these and other state Medicaid programs have been more 

comprehensive than those implemented by Medicare. Examples include outcomes focused pay 

for performance programs that target a wider range of clinically-related readmissions and a more 

comprehensive set ofhcalthcare acquired complications than is currently included in Medicare 

payment policies. 

While some of the implementation details across these state Medicaid reforms may differ, they 

all have the following characteristics in common: 

• Payment adjustments for quality are based on the outcomes of care 

• Measureable and clinically meaningful objectives for improving the outcomes of care are 

established 

• Comprehensive provider specific information on the outcomes of care arc made publicly 

available 

The core objective of an outcomes payment reform is to motivate provider behavioral change 

that leads to improved outcomes, better quality and lower costs. Outcomes related payment 

adjustments are directed at health delivery organizations with a consistently higher risk-adjusted 

rates of PPEs because they are more likely to have underlying quality problems that can be 

identified and corrected. By focusing on outcomes that are potentially preventable, healthcare 

delivery organizations can direct their quality improvement efforts on problems where quality 

can actually be improved. 
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As an inherent byproduct of responding to the financial incentives in an outcomes payment 

reform, healthcare delivery organizations must find new and innovative ways to coordinate care 

and improve quality. Because there is a clear and unambiguous relationship between each PPE 

and its financial consequences, reductions in the rate ofPPEs directly translate into lower cost of 

care. The only way to significantly improve outcomes performance is to provide better care 

coordination and improved quality. As a result, the care for patients will improve as healthcarc 

delivery organizations strive to improve their outcome performance. 

State Examples 

Several state Medicaid agencies arc in the process of implementing comprehensive outcomes 

payment reforms. 

• Texas passed comprehensive Medicaid reform legislation in 2011 to establish quality 

outcomes based payment adjustment targeting managed care plans, hospitals and regional 

healthcarc partnerships. As of2016, Texas was generating annual savings of$90 million 

via plan and provider reductions of potentially avoidable events. 

• New York has created a delivery system reform and value based payment program 

designed to reduce state-wide avoidable hospital use (readmissions, admissions and 

emergency department visits) by 25% over a five year period ending 2020. 

• Pennsylvania has revamped its Medicaid managed care program, which will measure 

plans' quality outcomes, and will require plans to make 40% of their transactions with 

providers to be value based transactions within three years. Pennsylvania has also 

established a Hospital Quality Incentive Programs to reward hospitals showing year-toyear improvement in reducing avoidable readmissions. 

• Illinois established a hospital inpatient rate adjustment program based on potentially 

preventable readmissions performance that generated $40 million in savings. 

• Maryland's potentially preventable complication outcomes payment program has 

generated a state-wide 50% reduction in inpatient complications over a five year period. 

Ohio has established outcomes based payment programs to reduce hospital potentially 

preventable readmissions and nursing potentially preventable admissions. 

• Minnesota's state hospital association sponsored "Reducing Avoidable Readmissions 

Effectively" Program reduced avoidable readmissions by 2% over three years, generating 

over $70 million in savings-and won the National Quality Forum Patient Safety Award 

in 2014. 

Application for Medicaid Reform 

As the Committee considers ways to strengthen the program and provide states with greater 

flexibility, we would recommend encouraging states to reduce costs by tying payment incentives 

to improved patient outcomes. The existing Federal Medical Assistance Percentage (FMAP) for 

Medicaid funding has resulted in a rising a Federal share along with increased complexity, cost 

and frustration experienced by states from CMS oversight. The existing Medicaid financing 
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relationship between CMS and the states should be transformed from a contractual arrangement 

to a simplified regulatory structure in which superior operational performance of a Medicaid 

agency and its bottom-line success are closely linked and do not require burdensome 

retrospective oversight measures. 

Specifically, we would recommend replacing the current FMAP with a risk-adjusted, per capita 

matching payment system that ties payment incentives to efficiently delivered improved 

outcomes. This would permit states to have greater control over their program under a national 

rate not based on "covered costs" but instead based on spending adjusted for patient mix and 

achieved outcomes. This is an extension of the pricing approach used in the Medicare inpatient 

prospective payment system (IPPS) implemented in 1982. The IPPS had the effect of saving the 

Federal government billions of dollars while maintaining quality. 

At the same time, we would recommend establishing quality outcomes targets for Medicaid 

programs to provide objective measurement of relative performance within the matched funding 

budget. Under such an approach, states could be allowed to earn a greater relative match by 

reducing their cost, thus driving reductions in overall costs but allowing states to share in their 

program efficiency improvements. Long term this would reduce federal share as average 

matching dollars will fall. 

Conclusion: We Should Learn from and Respond to What is Working 

Successful state Medicaid program efforts that are fully operational and producing improved 

outcomes should provide the basis for reforming and strengthening the Medicaid program going 

forward. A more widespread adoption of these innovative payment system reforms across entire 

Medicaid program should encouraged. Payment system reforms that are practical, transparent, 

clinically credible, and identify opportunities for improvement can yield better outcomes at 

lower costs. 

We would appreciate the opportunity to present additional findings and would welcome the 

opportunity to answer any questions. Please contact Megan Ivory Carr at mmivory@mmm.com 

or 202.414.3000 for any information. 
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GREG WALDEN. OREGON 

CHAIRMAN 

FRANK PALLONE, JR .• NEW JERSEY 

RANKING MEMBER 

Dr. Avik S. A. Roy 

President 

ONE HUNDRED FIFTEENTH CONGRESS 

cteongrc~~ of tbr llniteb ~tatt~ 

~ou~r of ~eprrsentatiiJr~ 

COMMITIEE ON ENERGY AND COMMERCE 

2125 RAYBURN House OFFICE BuiLDING 

WASHINGTON, DC 20515-6115 Majority (202)22&-2927 

Minority {202/225-3541 

February 17, 2016 

The Foundation for Research on Equal Opportunity 

3267 Bee Caves Road 

Suite 107-375 

Austin, TX 78746-6773 

Dear Dr. Roy: 

Thank you for appearing before the Subcommittee on Health on February I, 2017, to testify at the 

hearing entitled "Strengthening Medicaid and Prioritizing the Most Vulnerable." 

Pursuant to the Rules of the Committee on Energy and Commerce, the hearing record remains 

open for ten business days to permit Members to submit additional questions for the record, which are 

attached. The format of your responses to these questions should be as follows: (I) the name of the 

Member whose question you are addressing, {2) the complete text of the question you are addressing in 

bold, and (3) your answer to that question in plain text. 

To facilitate the printing ofthe hearing record, please respond to these questions with a 

transmittal letter by the close of business on March 3, 2017. Your responses should be mailed to Jay 

Gulshen, Legislative Clerk, Committee on Energy and Commerce, 2125 Rayburn House Office Building, 

Washington, DC 20515 and e-mailed in Word format to jay .gulshen@mail.house.gov. 

Thank you again for your time and effort preparing and delivering testimony before the 

Subcommittee. 

cc: The Honorable Gene Green, Ranking Member, Subcommittee on Health 

Attachment 
126 


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Attachment- Additional Questions for the Record 

The Honorable Gus Bilirakis 

1. There was an idea in the House Republican health proposal, A Better Way, which would 

grandfather successful waivers for managed care if they have already been renewed 

twice. It's my understanding Arizona has operated their program through a managed care 

waiver since the 1980s, and I know other states are largely managed care. Florida has a 

statewide managed care plan. Does it make sense to require successful waivers to be 

repeatedly renewed? 

The Honorable Cathy McMorris Rodgers 

l. In your testimony, you talked about the need for Congress to adopt solutions that would 

better coordinate care and constrain costs for dual eligibles- individuals who are enrolled 

in Medicare and Medicaid. I know this is an area of bipartisan interest, and I think we all 

know we can do better by these vulnerable patients. What concrete steps do you have in 

mind that you think Congress should consider in this space? 

2. While I believe in a strong Medicaid safety net, I certainly want to see a robust private 

sector. So, since waiting lists may demonstrate unmet need, what is the appropriate role 

for private sector resources and entities to play in preventing public funds crowding-out 

private fund or cost-shifting to the public sector? 

3. Many individuals with intellectual and developmental disabilities require ongoing longterm services and supports for their entire life. In 20 I 5, there were 640,841 individuals on 

HCBS waiver waiting lists across the country. Individuals with IDD made up 67 percent 

of those waiting. You suggest in your testimony that Medicaid's long-term care for the 

disabled could be transitioned fully to the states. What policies could be put in place to 

ensure states prioritize serving IDD individuals -who make up the largest portion of 

those waiting for care today? 

The Honorable Richard Hudson 

I. What would you think about such a proposal- not to change what the Secretary can 

approve, but to add transparency, show outcomes data, etc.? 

The Honorable Michael C. Burgess 

1. One of the concerns we have had with traditional Medicaid expansion is how it crowds 

out the private market. Even research from Jonathan Gruber has shown this. In your 

research, have you observed trends in which the presence of public insurance (like 

Medicaid) causes someone with private insurance to drop coverage for public insurance? 

If so, what solutions would you offer to counter this trend? 
127 


24766.070

GREG WALDEN, OREGON 

CHAIRMAN 

FRANK PALLONE, JR., NEW JERSEY 

RANKING MEMBER 

Mr, John McCarthy 

Fonner Director 

ONE HUNDRED FIFTEENTH CONGRESS 

f!ongre~s of tbt Wniteb ~tates 

~ouse of l\eprtsentcltibes 

COMMITTEE ON ENERGY AND COMMERCE 

2125 RAYBURN HousE OFFICE BuiLDING 

WASHINGTON, DC 20515-6115 Majority (202} 225 -2927 

Mlnority {202)225-3641 

February 17,2016 

Ohio Department of Medicaid 

8375 Nemain Loop 

Dublin, OH 43016 

Dear Mr. McCarthy: 

Thank you for appearing before the Subcommittee on Health on February I, 2017, to testifY at the 

hearing entitled "Strengthening Medicaid and Prioritizing the Most Vulnerable." 

Pursuant to the Rules of the Committee on Energy and Commerce, the hearing record remains 

open for ten business days to penn it Members to submit additional questions for the record, which are 

attached. The fonnat of your responses to these questions should he as follows: (I) the name of the 

Member whose question you are addressing, (2) the complete text of the question you are addressing in 

bold, and (3) your answer to that question in plain text. 

To facilitate the printing ofthe hearing record, please respond to these questions with a 

transmittal letter by the close of business on March 3, 2017. Your responses should be mailed to Jay 

Gulshen, Legislative Clerk, Committee on Energy and Commerce, 2125 Rayburn House Office Building, 

Washington, DC 205 I 5 and e-mailed in Word fonnat to jay.gulshen@mail.house.gov. 

Thank you again for your time and effort preparing and delivering testimony before the 

Subcommittee. 

cc: The Honorable Gene Green, Ranking Member, Subcommittee on Health 

Attachment 
128 


24766.071

Attachment- Additional Questions for the Record 

The Honorable Gus Bilirakis 

1. There was an idea in the House Republican health proposal, A Better Way, which would 

grandfather successful waivers for managed care if they have already been renewed 

twice. It's my understanding Arizona has operated their program through a managed care 

waiver since the 1980s, and I know other states are largely managed care. Florida has a 

statewide managed care plan. Does it make sense to require successful waivers to be 

repeatedly renewed? 

The Honorable Cathy McMorris Rodgers 

1. In your testimony, you talked about the need for Congress to adopt solutions that would 

better coordinate care and constrain costs for dual eligibles- individuals who are enrolled 

in Medicare and Medicaid. 1 know this is an area of bipartisan interest, and I think we all 

know we can do better by these vulnerable patients. What concrete steps do you have in 

mind that you think Congress should consider in this space? 

2. While I believe in a strong Medicaid safety net, I certainly want to see a robust private 

sector. So, since waiting lists may demonstrate unmet need, what is the appropriate role 

for private sector resources and entities to play in preventing public funds crowding-out 

private fund or cost-shifting to the public sector? 

3. Are there other types of patients who may be eligible for Medicaid but face barriers 

accessing timely care that you would recommend the Committee examine? 

The Honorable Richard Hudson 

1. Under the Medicaid statute, the Secretary of HHS can allow federal financial 

participation for Costs Not Otherwise Matchable for State programs. However, there is 

no requirement that requires federal matching funds be spent on programs that serve care 

needs of Medicaid patients or uninsured or low income patients. In fact, oversight by the 

Governrnent Accountability Office has found the Obama Administration approved some 

really questionable spending. There was an idea in the House Republican health proposal, 

A Better Way, which would require transparency from the Secretary ofHHS in 

exercising this authority. The idea would be to require the Secretary to merely report on 

how federal funding helps prioritize the most vulnerable --Medicaid patients or 

uninsured individuals below a specific income threshold. What would you think about 

such a proposal? 

The Honorable Michael C. Burgess 

l. In your testimony, you recommended CMS shift into the role of a payer and oversee 

Medicaid, especially by monitoring health outcomes. You note "this could be done by 

using financial incentives tied to measures" like HEDIS or NCQA measures. This is a 

fascinating and compelling idea. Can you tell us more about how it could work? 
129 


24766.072

2. I am also interested in getting your perspective on the growing body of literature that 

shows that Medicaid often doesn't improve health outcomes. Is that research just focused 

on specific States? Do you think some of the challenges are attributable to socioeconomic factors? As we think about ways to strengthen Medicaid in your opinion, what 

health outcomes and measures should we assess to best gauge the value of health care or 

long-term care patients receive? 

3. It's disappointing that we are still paying for volume in traditional Medicaid Fee-forService, though I appreciate 2/3 of beneficiaries are in managed care. You mentioned 

CMS should act less like a regulator and more like aa oversight entity. It should allow 

states flexibility and then monitor, and bold States accountable for health outcomes. 

How would you do this? Would you look at total Medicaid population? I assume you 

would have different quality and outcomes measures for i:he disabled, elderly, pregnant 

mothers, children, and able-bodied groups? 

4. GAO has found that one state reported seeing annuities for the community spouse worth 

more than $1 million. Would Ohio's Medicaid program choose to cover these individuals 

if given flexibility in federal law? 

5. As I sit hear listening for ideas on how we can cut costs, I have to ask you about two 

different ideas: presumptive eligibility, aad retroactive eligibility. Obamacare expanded 

presumptive eligibility- where an applicant is basically presumed to be eligible. 

Medicaid also allows for retroactive coverage- where coverage can go back nat only to 

the date of application but also to three months prior to the application. Bath of these 

policies are more generous than commercial insurance. These policies seem excessive to 

me and many others. Are there reasons why Congress should not curb both policies? 

6. In your testimony, you explained that "the 'any willing provider' requirements for the 

fee-for service program stifles provider competition, increases costs, and rewards low 

quality providers." You offered a few ideas about alternative approaches. Could you 

please elaborate on how those alternative approaches would work for the Committee'! 

2 
130 


24766.073

GREG WALDEN, OREGON 

CHAIRMAN 

FRANK PALLONE, JR., NEW JERSEY 

RANKING MEMBER 

Ms. Judy Solomon 

ONE HUNDRED FIFTEENTH CONGRESS 

ctongre!)!) of tbe 'Qliniteb ~tate!) 

~ou~t of 1\tprtstntatil.lt~ 

COMMITTEE ON ENERGY AND COMMERCE 

2125 RAYBURN HousE QFFICE BuiLDING 

WASHINGTON, DC 20515-6115 Majority (2Q-2) 22&-2927 

Minorily i202) 225-3641 

February 17,2016 

Vice President for Health Policy 

Center on Budget and Policy Priorities 

820 First Street, N.E. 

Suite 510 

Washington, DC 20002 

Dear Ms. Solomon: 

Thank you for appearing before the Subcommittee on Health on February I, 2017, to testify at the 

hearing entitled "Strengthening Medicaid and Prioritizing the Most Vulnerable." 

Pursuant to the Rules of the Committee on Energy and Commerce, the hearing record remains 

open for ten business days to permit Members to submit additional questions for the record, which are 

attached. The format of your responses to these questions should be as follows: (I) the name of the 

Member whose question you are addressing, (2) the complete text of the question you are addressing in 

bold, and (3) your answer to that question in plain text. 

To facilitate the printing of the hearing record, please respond to these questions with a 

transmittal letter by the close of business on March 3, 2017. Your responses should be mailed to Jay 

Gulshen, Legislative Clerk, Committee on Energy and Commerce, 2125 Rayburn House Office Building, 

Washington, DC 20515 and e-mailed in Word format to jay.gulshen@mail.house.gov. 

Thank you again for your time and effort preparing and delivering testimony before the 

Subcommittee. 

Subcommittee on Health 

cc: The Honorable Gene Green, Ranking Member, Subcommittee on Health 

Attachment 
131 


24766.074

Questions to Judith Solomon From The Honorable Ben Ray LujanIn New Mexico, as part of the Affordable Care Act, Medicaid Expansion took Medicaid 

from a safety net for the poor to a ladder for the middle class. 

Before passage of the ACA, the number one reason that middle class families declared 

bankruptcy- lost their houses, lost their cars, lost everything- was medical debt. 

We should not go back to a time where the difference between being middle class and living 

in poverty is a cancer diagnosis. The difference between having a house and being homeless 

is one bad car accident. Without this ladder, our middle class families will fall and many 

working class New Mexicans will slip into poverty. 

1. Ms. Solomon, are the bills we are considering today the best way to help the 

program succeed? 

The bills considered at the February 1 hearing would not improve or strengthen the Medicaid 

program. Instead, they would likely keep people who arc now eligible from obtain health care 

services they need. 

The elimination of the Medicaid expansion program in New Mexico will gut nearly 4,800 

healthcare and social assistance jobs in our state. 

In my state, healthcare is not only about physical health, it is also about jobs. Over 2,500 

jobs were lost in the health care sector due to under-funding Medicaid last year. If 

Medicaid expansion is stripped away, we will lose thousands more. 

While much of the rest of the state's economy has declined, the health care field has become 

an economic driver, accounting for seven of the top 10 fastest-growing job categories. 

2. Ms. Solomon, are the bills we are considering today going to help us keep the health 

care jobs we have? 

In my opinion the bills considered at the February 1 hearing would have little or no impact on 

health care jobs. They would likely result in fewer people having coverage but it's unlikely that 

the decrease in coverage would be large enough to affect health care employment. 

I would like to zoom in on what the Verify Eligibility Coverage Act would do. 

3. Ms. Solomon, I understand from your testimony that most people can have their 

citizenship status verified quickly through a data match with the Social Security 

office, so can you describe the kinds of people likely to be impacted if this bill were 

to become law? 

The bill considered by the committee changed how citizenship is verified. As noted, the vast 

majority of people have their citizenship status verified quickly through a data match with the 

Social Security Administration. Naturalized citizens and adult citizen applicants born abroad are 
132 

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24766.075

the groups most likely unable to have their citizenship verified by SSA. This would include 

people who were born to members of the U.S. military serving abroad before 1972 when Social 

Security began including citizenship information in its records. 

In my state, as in many other states the stereotype of Medicaid as a program for single 

mothers and their kids simply isn't accurate- the Medicaid program serves thousands 

upon thousands of elderly and disabled New Mexicans. 

4. Ms. Solomon, how will the bills we are considering today help those who depend on 

Medicaid to pay for long-term care or other services for their parents and 

grandparents later in their life? 

As I noted in my testimony, states have a great deal of flexibility regarding their Medicaid 

programs, including how they provide long-term services and supports. There are far better 

ways to help states expand home- and community based services than by providing enhanced 

funds to states with the longest waiting lists as was proposed in the bills considered by the 

Committee on February 1. It would be much fairer to all states to provide incentives to enhance 

the provision ofHCBS, which could include metrics to measure state progress. Making 

increased resources available to all states through programs like the Balancing Incentive Program 

and the Community First Choice Option, which were part of the Affordable Care Act, is better 

aligned vvith the overall structure of the Medicaid program to provide states with an array of 

choices to meet their needs. Moreover, it avoids having states forgo their own efforts to reduce 

their waiting lists in order to get a chance to get 90 percent match available to states with the 

longest waiting lists.