Congressional Hearings
STABILIZING PREMIUMS AND HELPING INDIVIDUALS IN THE INDIVIDUAL INSURANCE MARKET FOR 2018: GOVERNORS
Congressional Hearings
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| AUTHORITYID | CHAMBER | TYPE | COMMITTEENAME |
|---|---|---|---|
| sshr00 | S | S | Committee on Health, Education, Labor, and Pensions |
[Senate Hearing 115-544]
[From the U.S. Government Publishing Office]
S. Hrg. 115-544
STABILIZING PREMIUMS AND HELPING INDIVIDUALS IN THE INDIVIDUAL
INSURANCE MARKET FOR 2018: GOVERNORS
=======================================================================
HEARING
OF THE
COMMITTEE ON HEALTH, EDUCATION,
LABOR, AND PENSIONS
UNITED STATES SENATE
ONE HUNDRED FIFTEENTH CONGRESS
FIRST SESSION
ON
EXAMINING STABILIZING PREMIUMS AND HELPING INDIVIDUALS IN THE
INDIVIDUAL INSURANCE MARKET FOR 2018, FOCUSING ON GOVERNORS
__________
SEPTEMBER 7, 2017
__________
Printed for the use of the Committee on Health, Education, Labor, and
Pensions
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COMMITTEE ON HEALTH, EDUCATION, LABOR, AND PENSIONS
LAMAR ALEXANDER, Tennessee, Chairman
MICHAEL B. ENZI, Wyoming PATTY MURRAY, Washington
RICHARD BURR, North Carolina BERNARD SANDERS (I), Vermont
JOHNNY ISAKSON, Georgia ROBERT P. CASEY, JR., Pennsylvania
RAND PAUL, Kentucky AL FRANKEN, Minnesota
SUSAN M. COLLINS, Maine MICHAEL F. BENNET, Colorado
BILL CASSIDY, M.D., Louisiana SHELDON WHITEHOUSE, Rhode Island
TODD YOUNG, Indiana TAMMY BALDWIN, Wisconsin
ORRIN G. HATCH, Utah CHRISTOPHER S. MURPHY, Connecticut
PAT ROBERTS, Kansas ELIZABETH WARREN, Massachusetts
LISA MURKOWSKI, Alaska TIM KAINE, Virginia
TIM SCOTT, South Carolina MARGARET WOOD HASSAN,
New Hampshire
David P. Cleary, Republican Staff Director
Lindsey Ward Seidman, Republican Deputy Staff Director
Evan Schatz, Democrat Staff Director
John Righter, Democrat Deputy Staff Director
(ii)
C O N T E N T S
__________
STATEMENTS
THURSDAY, SEPTEMBER 7, 2017
Page
Committee Members
Alexander, Hon. Lamar, Chairman, Committee on Health, Education,
Labor, and Pensions, opening statement......................... 1
Murray, Hon. Patty, a U.S. Senator from the State of Washington,
opening statement.............................................. 4
Warren, Hon. Elizabeth, a U.S. Senator from the State of
Massachusetts.................................................. 6
Bennet, Hon. Michael F., a U.S. Senator from the State of
Colorado....................................................... 6
Hatch, Hon. Orrin G., a U.S. Senator from the State of Utah...... 7
Enzi, Hon. Michael B., a U.S. Senator from the State of Wyoming.. 37
Isakson, Hon. Johnny., a U.S. Senator from the State of Georgia.. 41
Sanders, Hon. Bernard., a U.S. Senator from the State of Vermont. 43
Collins, Hon. Susan M., a U.S. Senator from the State of Maine... 45
Franken, Hon. Al, a U.S. Senator from the State of Minnesota..... 47
Young, Hon. Todd, a U.S. Senator from the State of Indiana....... 48
Cassidy, Hon. Bill, MD., a U.S. Senator from the State of
Louisiana...................................................... 52
Whitehouse, Hon. Sheldon, a U.S. Senator from the State of Rhode
Island......................................................... 54
Baldwin, Hon. Tammy, a U.S. Senator from the State of Wisconsin.. 56
Murkowski, Hon. Lisa , a U.S. Senator from the State of Alaska... 58
Hassan, Hon. Margaret Wood, a U.S. Senator from the State of New
Hampshire...................................................... 62
Casey, Hon. Robert P., a U.S. Senator from the State of
Pennsylvania................................................... 64
Kaine, Hon. Tim, a U.S. Senator from the State of Virginia....... 65
Murphy, Hon. Christopher S., a U.S. Senator from the State of
Connecticut.................................................... 70
Witnesses
Haslam, Hon. Bill, Governor, Tennessee........................... 8
Prepared statement........................................... 10
Bullock, Hon. Steve, Governor, Montana........................... 12
Prepared statement........................................... 14
Baker, Hon. Charles D., Governor, Massachusetts.................. 19
Prepared statement........................................... 20
Hickenlooper, Hon. John W., Governor, Colorado................... 24
Prepared statement........................................... 26
Herbert, Hon. Gary R., Governor, Utah............................ 32
Prepared statement........................................... 34
ADDITIONAL MATERIAL
Statements, articles, publications, letters, etc.
Letter from Governors (Aug. 30, 2017) to Speaker Ryan, Leader
McConnell, Leader Pelosi, and Leader Schumer............... 28
Letter from Governor Bullock to Chairman Alexander and
Ranking
Member Murray.............................................. 78
Response by Hon. Charles D. Baker to questions of:
Senator Whitehouse........................................... 79
Senator Hassan............................................... 80
(iii)
STABILIZING PREMIUMS AND HELPING INDIVIDUALS IN THE INDIVIDUAL
INSURANCE MARKET FOR 2018: GOVERNORS
----------
THURSDAY, SEPTEMBER, 7, 2017
U.S. Senate,
Committee on Health, Education, Labor,
and Pensions,
Washington, DC.
The committee met, pursuant to notice, at 9:05 a.m. in room
SH-216, Hart Senate Office Building, Hon. Lamar Alexander,
chairman of the committee, presiding.
Present: Senators Alexander, Murray, Enzi, Isakson,
Collins, Cassidy, Young, Hatch, Murkowski, Sanders, Casey,
Franken, Bennet, Whitehouse, Baldwin, Murphy, Warren, Kaine,
and Hassan.
Opening Statement of Senator Alexander
The Chairman. The Senate Committee on Health, Education,
Labor, and Pensions will please come to order.
This morning we are holding our second of four hearings on
stabilizing premiums and ensuring access to the individual
health insurance market for the year 2018. That is our focus.
We are delighted and honored to have the Governors of five
States here with us today. Thank you, gentlemen. We know how
busy you are. You have come long distances to be here, and we
appreciate it very much. We look forward to learning from you.
Senator Murray and I will each have an opening statement.
We will introduce the five Governors. It almost sounds like a
singing group. Does it not?
[Laughter.]
The Chairman. After that testimony, Senators will each have
an opportunity to ask the witnesses 5 minutes of questions.
We just left a meeting where the Governors met with
Senators not on our committee. We had 30 Senators there,
similar to yesterday when we had the State insurance
commissioners here. We had 31 Senators, most of them not on the
committee, meet for an hour. And then at our hearing, we had 22
of our 23 committee members. For 2 consecutive days, we have
had half the Members of the U.S. Senate focused in a bipartisan
way on a single, narrow objective: what can we do in the next
couple of weeks--that is a tall order--the next couple of
weeks--that the Senate can pass, the House can pass, and the
President will sign that will help 18 million Americans who are
in the individual insurance market in the year 2018?
The individual insurance market is 18 million Americans. It
is just 6 percent of those who have insurance, and about half
of those do not have any government help to buy insurance. And
it is those Americans who are getting hammered the most by the
higher premiums and the higher co-pays and deductibles.
Tennessee's insurance commissioner testified yesterday. She
said our State's individual market is very near collapse. At
the end of September last year, Blue Cross pulled out of the
individual market in Knoxville, Nashville, and Memphis, not
just for Tennesseans with Affordable Care Act subsidies but for
everybody. Even the people who did not get government subsidies
could not buy it from Blue Cross in those markets.
Just yesterday, an insurer in Virginia announced it will
pull out of parts of the State for the 2018 plan year, leaving
62,000 Virginians facing the very real prospect of having zero
options for insurance next year.
This could happen again next year in Tennessee and in
Virginia if Congress does not act. In our State, Tennessee, up
to 350,000 Tennesseans, songwriters, the self-employed,
farmers, and millions of Americans across our country could be
literally left with zero options as some in Virginia may be.
If we do act, we can limit increases in premiums in 2018.
We can continue support for co-pays and deductibles for many
low-income families. We could make certain that health
insurance is available in every county and lay the groundwork
for future premium decreases.
Yesterday, we had a focused hearing on this narrow part of
the market, the 6 percent. We asked our witnesses then, as we
do today, to focus on the individual market and what we could
do to help keep premiums down in 2018. Now, we are interested
in anything you have to tell us, but that is our focus today.
Yesterday, I heard three things mostly: addressing high-
cost individuals through reinsurance, or some other model;
continuing the cost-sharing reduction payments; and third, more
flexibility for States in the law's 1332 waivers.
One important discussion is how do we address the high cost
of care for the sickest population. It seems to me that
Senators on both sides of the aisle, as I listened to it,
understand that that discussion is likely to be part of any
long-term solution on the individual market because the
individual market has some exceptionally sick people, it is
small, and we have to find some way to deal with the complex
cases. Some Senators have suggested a new Federal program.
Under the Minnesota and Alaska plans, States are already using
some of the Federal money they are already getting to set up
reinsurance programs through the 1332 waiver, and they are
lowering rates a predicted 20 percent without more Federal
money.
We heard a number of good ideas for the short term
yesterday. One of the things I would like to know from you--we
all would--is there anything that we could do to section 1332
specific in the next 2-3 weeks to make it easier for more
States to do what Alaska and Minnesota are doing with their
reinsurance program?
And let me say as a former Governor, with respect to the
five Governors who are here, unless the Affordable Care Act is
changed over the next 10 years, according to the Congressional
Budget Office, the Federal Government will be spending about a
trillion new dollars on Medicaid expansion and about 866
billion new dollars to subsidize the individual insurance
market. That number, according to CBO, comes out to about
$4,200 per subsidized individual in the individual market. And
the Federal Government has a $20 trillion debt.
The question arises, if we need to address complex health
issues or reinsurance, why do the States themselves not do it?
For example, Alaska came up with its own State funds to help
with its plan. It is using some Federal dollars, $48 million,
it was already getting in premium subsidies and redesignating
them for reinsurance. And Minnesota came up with even more
money, planning to use roughly $135 million in State Federal
funds that it was already getting. Maine did it by adding a $4
charge per health insurance policy per month. As we think about
the need for more funds to deal with complex health cases,
whether it is reinsurance or an invisible high-risk pool or
stabilization fund, we need to think about what the States'
share ought to be.
At yesterday's hearing, we also heard several suggestions
for the short term on improving the 1332 waiver. These
suggestions ought not to be too controversial, including
reducing the 6-month waiting period, allowing a copycat
application. If Montana already gets a waiver, why should
Massachusetts have to go through all the same things again?
That ought to speed things up. Another idea is to allow just
the Governor or perhaps the insurance commissioner to apply for
a waiver and not wait for the legislature to pass a law since
some State legislatures only meet every 2 years.
I was intrigued by the suggestion by a Senator that we make
sure that we calculate the budget neutrality requirement in a
common sense way to support States' long-term plans. Then is
there a way to combine the State innovation 1332 waiver, one
Senator asked, with the State Medicaid 1115 waiver so that a
State could share any savings it has across the two
interconnected markets?
I know that New Hampshire has tried to do some things in
that area, and even though the Democratic Governors and the
Republican Governors support it, they are not able to do it
under both the Obama and Trump administrations.
Another possibility mentioned by several Senators on both
sides of the aisle would be allowing lower cost copper plans to
be sold--that is already in the law--plans that are often more
appealing to younger and healthier people that the insurance
commissioners said we need in the markets to bring down
premiums. Right now, if you are 29 or under, you can buy this
plan with higher deductibles at lower costs but not if you're
over 29.
That is a short list of some of the things that might make
some real difference in the 23 States that have actually
started the process for applying for a 1332 waiver.
I am hopeful maybe some combination of continuing cost
sharing for some period of time and significant changes in
flexibility for States, probably through changes to section
1332, since it is already in the Affordable Care Act--that
those two things might provide a basis for action that we can
take this month. Then if we act, we will count on the House of
Representatives and the President to take advantage of that, I
hope as they would.
This action would not end the process. That would only be
step one, and then we would go pretty quickly to step two on a
long-term, strong, vibrant individual market. I hope we can
begin to spend most of our time on the larger issue of health
care costs.
I mentioned this yesterday, but it is worth repeating.
Several of the Governors have mentioned it this morning
already. For 7 years, we have been stuck in this partisan
stalemate on health insurance, with most of the argument--not
all of it, but most of it--about 6 percent of the insured
Americans who buy their insurance on the individual market,
when we really should have been spending more time on the
fundamental problems with the American health care system that
have caused it to grow from consuming 9 percent of the gross
domestic product in 1980, about 40 years ago, to nearly 18
percent in 2015 and a predicted 20 percent in 2025. At the same
time, we have the phenomenon of 5 percent of those who receive
health care consuming 60 percent of the costs.
We should be doing more on those larger questions of health
care costs. There is no question about it. Look at how we pay
to visit the doctor, how to get a test at the hospital, what we
spend on prescription drugs, how much excessive paperwork and
administrative burdens increase our costs, what can be done to
encourage wellness, what can be done to prevent more serious
illness and disease and the high costs that come from being
ill. We should be looking at the real ways to bring down the
cost of health care, which is the best way to reduce the cost
of health insurance.
Senator Murray.
Opening Statement of Senator Murray
Senator Murray. Thank you very much, Chairman Alexander.
As I said yesterday, after so much partisanship around the
future of health care in our country, I am really glad that
these hearings give us an opportunity to take a different
approach and hopefully find some common ground. I appreciate
your leadership in starting this conversation, and I am really
grateful to all of our colleagues who are joining in on this.
Of course, I want to thank all the Governors who are here
today. I notice that their names either start with B or H. Was
that the requirement, or did that just happen?
[Laughter.]
It is great to have all of you here today as well.
As you know, Governors have added a really valuable
perspective to the health care discussion so far. I am really
glad that our committee will have the chance to get your input
as we enter this next phase of working to really stabilize the
markets and lower costs for our constituents in the near term.
The truth is that there is actually a lot many Democrats
and Republicans agree on when it comes to the specific goal. As
a starting point, even if we do not all agree on the cause, we
do agree on the problem itself. Families are facing higher
premiums and fewer options as a result of uncertainty in our
health care system. Democrats have a number of ideas, which I
will be interested in discussing with all of you today to
address this problem. I want to just give a few examples.
Senator Shaheen introduced a multi-year fix to ensure out-
of-pocket cost reductions under the Affordable Care Act are not
cutoff. We will need a long-term stability for this program if
we want insurers to stop worrying about uncertainty long enough
to actually lower premiums for patients.
Senators Kaine and Carper put forward legislation to help
with coverage costs for our sickest patients.
Senators McCaskill and Schatz have proposals on how we
prevent their counties moving forward.
Many of us are also interested in ensuring open enrollment
is as effective as possible this year, given the President's
decision to slash efforts to help people get coverage. And it
is not just Democrats in the Senate who are looking at a wide
range of ideas to strengthen markets and lower families' health
care costs in the near future. Governors Kasich and
Hickenlooper, who is here with us, have put forward a plan
including many policies that parallel those I have mentioned,
and their plan should help inform our conversation here in
Congress.
I was especially pleased, the Governors' plan would
maintain protections in current law for patients like those
with preexisting conditions and women seeking maternity care
because as I said yesterday, this needs to be a conversation
about moving our health care system forward not backward. It is
certainly not an opportunity to roll back protections for
patients or a chance to hand power back to the insurance
companies.
I hope we can focus on areas of common ground rather than
getting bogged down in ideology again that drove that Trumpcare
debate. If we can do this, I believe a bipartisan agreement on
health care reform is possible, not easy, but possible. I am
very hopeful we will not only succeed but be able to build on
the near-term steps to tackle the larger challenges families
continue to face in getting the affordable care they need.
Again, I want to thank Chairman Alexander for moving us
forward on this. I want to thank all of our colleagues who are
here and all the Governors who are here to help us with this
discussion, and I really look forward to it. Thank you.
The Chairman. Thank you, Senator Murray. I think people
know the high respect I have for Senator Murray. When she gets
involved and tries to get a result, we usually get one. This
committee has gotten results on big issues in the past that are
very complicated and very contentious, education, 21st Century
CURES. We have been able to do it. We are trying to take a
small step here that will lead to bigger steps.
I am going to introduce the first two witnesses, then call
on Senators Warren, Bennet, and Hatch, former chairman of this
committee and chairman of the Finance Committee, to introduce
the other Governors.
The first witness is Governor Bill Haslam of Tennessee. He
will not say it but I will say it. I think I am right.
Tennessee has the lowest taxes, the lowest debt, fastest
improving schools, and the No. 1 State for auto jobs. That is
our story and we are sticking to it.
[Laughter.]
Governor Haslam has been indispensable in that. He has been
a really terrific Governor. He is in his seventh year.
Governor Bullock is from Montana. Steve Bullock is a
Democratic Governor in a State with a Republican legislature.
They worked together to expand Medicaid. He has put the State's
checkbook online so Montanans can see how their tax dollars are
spent. Governor Bullock, we welcome you and thank you for
coming all the way across the country to be with us today.
Senator Warren.
Statement of Senator Warren
Senator Warren. Thank you, Mr. Chairman.
I am pleased to introduce Massachusetts' Governor, Charlie
Baker. Governor Baker has served as the Governor of
Massachusetts since 2015, and he is currently the co-chair of
the National Governors Association's Health and Human Services
Committee.
There is a particular reason to have him in this hearing
today, and that is that he previously served as Massachusetts
Secretary of Health and Human Services, as well as Secretary of
Administration and Finance, and before becoming our Governor,
he served for a decade as the President and CEO of Harvard
Pilgrim Health Care, which is a non-profit health care
insurance company based in Wellesley, Massachusetts and serves
the entire New England region.
I just want to add that Massachusetts has a long history of
bipartisan cooperation on health reform, which is one of the
reasons that our State's health care system has become a model
for the rest of the country. The Governor and I have continued
that bipartisan cooperation and tradition in recent months, and
I am glad that Congress is starting to move in this direction
as well.
Governor, thank you for being here and thank you for
contributing your considerable expertise to this conversation.
The Chairman. Thank you, Senator Warren. And welcome,
Governor Baker.
Senator Bennet.
Statement of Senator Bennet
Senator Bennet. Thank you, Mr. Chairman. As I said
yesterday, thank you for your bipartisan approach to the work
that is in front of us.
There is not anybody I know who epitomizes bipartisanship
more than our Governor, John Hickenlooper, my old boss. I was
his chief of staff when he was mayor of the City and County of
Denver. Some things I know about John is that he came to
Colorado as a geologist, and he promptly lost his job during a
downturn and his insurance, by the way, his health insurance.
That did not stop him. He created the first microbrewery
that existed between Chicago and Los Angeles in the City and
County of Denver, became a very successful businessman, became
Mayor of Denver. One of the first things he did was go out and
wrangle 34 mayors in the Denver metro area, many of them
Republicans, to raise the sales tax to pay for what is now the
newest light rail system in the country. It covers an area the
size of the State of Connecticut. When he became Governor, he
continued that bipartisan work, brought environmentalists and
industry together to create the first methane regulations in
the United States. He has worked, as has been mentioned by the
ranking member, with John Kasich from Ohio to create a
bipartisan path forward that other Governors have supported.
I would close just by saying to our chairman we have the
lowest unemployment rate in the United States of America, and
that is our story and we are sticking to it.
[Laughter.]
The Chairman. Thank you, Senator Bennet. Welcome, Governor
Hickenlooper.
Senator Hatch.
Statement of Senator Hatch
Senator Hatch. Thank you, Mr. Chairman.
I am pleased to be here today to introduce my friend and
colleague, Governor Gary Herbert. Governor Herbert's guidance
and leadership have been tremendously important to both my
staff and me on a whole variety of issues impacting the great
State of Utah. Governor Herbert has been a leader in addressing
opioid abuse in Utah and has truly been a trailblazer in
examining how the opioid crisis addresses homeless populations.
States are laboratories for transformative policies and
innovations in our country, and Governors deserve our respect
and appreciation for their tireless advocacy to improve daily
life for their citizens.
Furthermore, under Governor Herbert's leadership, Utah has
been at the forefront of providing innovative, cost-effective,
high-quality health care to its constituents.
I am pleased Governor Herbert is here today to share his
perspectives. Governor Herbert and I have frequently discussed
the issues that plague the individual market as a result of
Obamacare. He is engaged in these policies and is intricately
aware of how they interact with other State efforts that aim to
provide access to affordable care to all Utahans.
The Governor is also aware of the need to deregulate the
individual and small group health insurance markets to put the
power back in the hands of the States. This requires structural
reforms to Obamacare, not just bailouts.
The committee is fortunate to have Governor Herbert here
today, and I look forward to continuing to work with him to
advance the health and well-being of all Utahans.
While I wish I could stay for the discussion today, I need
to go and chair my Finance Committee hearing on the children's
health insurance program, which also is important. That is a
must-pass piece of legislation that I know each of the
Governors before us today supports. I leave the commentary for
Utah in the very capable hands of our beloved Governor, who I
am happy to say is a very close personal friend.
I appreciate you allowing me to do this, Mr. Chairman and
Madam Chairman, as well. Thanks so much.
The Chairman. Welcome, Governor Herbert.
Thank you, Senator Hatch. Just for the Governor's
information, when it comes to taxes, Medicare and Medicaid, the
Finance Committee under our system has the jurisdiction over
that, but you are speaking to a lot of members of the Finance
Committee when you speak to this committee because many are
members of both committees. We thank Senator Hatch for his
leadership.
Now we will go to the Governors, and we will ask each of
you, starting with Governor Haslam, down the line, if you could
please summarize your remarks in about 5 minutes. That will
give us an opportunity to have a conversation with you between
the Senators and Governors. Governor Haslam, welcome.
STATEMENT OF HON. BILL HASLAM, GOVERNOR, TENNESSEE
Governor Haslam. Thank you and good morning to members of
the committee, to Ranking Member Murray and to one of the
Tennessee's all-time favorite sons, Chairman Alexander.
It is an honor to be here with this group of Governors who
I consider friends and who I know to be problem solvers.
My request to this committee this morning is that you do
two things: first, that you move quickly to stabilize the
individual insurance marketplace; then second, that you would
undertake a serious effort to work together to address the cost
of health care.
As Chairman Alexander said, these are good times in
Tennessee. Our unemployment rate is the lowest in history. We
became the first State in the Nation to offer 2 years free of
community college or technical school to all of our citizens.
Our tax, as a percentage of income, and our debt per capita are
among the lowest if not the lowest in the country.
The crisis of health care and the uncertainty of its future
threaten our State's citizens and the State's budget. The
primary difference between governing Tennessee now and when
then a very young Governor Lamar Alexander led the State more
than 30 years ago is the impact that the cost of health care
has on everything else that we do.
Today, Tennessee finds itself with only three insurance
carriers offering ACA-compliant coverage. In more than 80
percent of our counties, citizens have only one insurance
option. And these limited options are provided to Tennesseans
at substantial cost increases. Our experience of fewer choices
at higher costs is not sustainable. We are on a path where
citizens simply will not have an option to purchase from the
insurance marketplace or cannot pay for the limited options
that are available to them. Either way, the system fails.
Congress should take steps now to prevent the total
collapse of the health insurance market by: No. 1, funding cost
share reduction payments; two, creating a short-term
reinsurance program; and three, providing flexibility to the
States.
In Tennessee, about 60 percent of our federally facilitated
marketplace participants are enrolled in CSR plans. Failure to
fund CSR payments will increase premiums significantly, create
even more uncertainty around the future of participating
carriers, and actually increase the Federal deficit due to
higher premium tax credits. Clearly, this is not a recipe for
success. It is also very important to understand that our
marketplace was facing collapse before this current discussion
of CSR payments, and other actions and reforms will be needed
to address the crisis.
Second, Congress can take additional action to stabilize
markets by funding a short-term reinsurance program that would
limit losses to carriers that provide coverage in the
marketplace. This should produce lower premiums which, in turn,
should attract new, healthier individuals to the marketplace.
A third critical way to provide more stability is to offer
flexibility to States to address their unique challenges and
circumstances. The waiver approval process should be expedited,
and the strict guardrails currently placed upon waiver requests
should be loosened in a manner that will attract younger,
healthier individuals to the marketplace.
I realize that some of the things that I just outlined
around stabilization costs more money, and I am asking for this
at a time when many Governors, including myself, are
emphasizing the skyrocketing costs of health care. The reality
is that failure to address the immediate stabilization needs
while Congress works on the bigger issue of cost will almost
certainly result in collapse of the market. Some may say the
only way to ensure legislative action on cost and realize real
reform is total collapse. I do not subscribe to that line of
thinking. I think every Governor here and those back at home
believe that we can move to stabilize the market now while we
work to take on the issue of health care costs.
Having helped to stabilize the market, it is my strong hope
that this committee will then turn its sights to the cost of
health care, which is crippling businesses and families and
overwhelming all the other needs that should be addressed in
State and Federal budgets. We must all recognize what has been
missing in the argument over the Affordable Care Act. The law
was supposed to solve two critical issues around health care in
America. The first was the large number of people who did not
have health insurance or could not afford coverage. Second, the
Affordable Care Act was supposed to make health care
affordable. Unfortunately, it has provided coverage or
government subsidies for millions of people to have coverage at
the same exorbitant costs.
One of the criticisms of the Affordable Care Act is that it
took the easy part, saying that we would provide free or
subsidized insurance to more people, without simultaneously
addressing the hard thing, addressing costs. We should not kid
ourselves. Addressing costs is difficult politically and
otherwise. One of the drivers of health care costs is the
misalignment of incentives that is created when we compensate
providers based on the volume of care that they provide rather
than on outcomes or efficiency.
In Tennessee, we are working to change the way we pay for
and deliver health care so that providers are compensated based
on value. And Congress should make a clear commitment to this
type of payment innovation.
All of us, Republicans, Democrats, and Independents, should
agree that our current path is not a sustainable one. During
all of the debate about the Affordable Care Act, there has been
a lot written and said about how immoral it would be to have
millions of people lose health insurance coverage. I understand
the argument. I am a Republican Governor who proposed a
conservative plan to increase Medicaid coverage in our State.
However, can we not all acknowledge that it is just as morally
questionable to cover everyone with health insurance and put
the bill on a credit card to be paid by our grandchildren and
not do everything we can to make health care affordable now?
Thank you again to the entire committee. As Governors, we
stand ready to partner with you to secure and strengthen the
individual market and our entire health care system.
[The prepared statement of Governor Haslam follows:]
Prepared Statement of Hon. Bill Haslam
summary
introduction
Congress must move quickly to address market stability and
then undertake a serious effort to address health care costs.
The crisis of health care and the uncertainty of its
future threaten our State's citizens and the State's budget.
stability
In more than 80 percent of Tennessee counties, citizens
have only one insurance carrier option, and these limited options are
provided at substantial cost increases--possibly as much as 40 percent
for 2018, after increases totaling as much as 139 percent from 2014 to
2017.
Congress should take steps now to prevent the total
collapse of the health insurance market. These steps include: (1)
Funding cost sharing reduction payments; (2) Creating a short-term
reinsurance program; and (3) Providing flexibility to States.
Failure to address the immediate stabilization needs while
Congress works on the bigger issue of cost will almost certainly result
in collapse of the market.
Some say the only way to ensure legislative action on
costs and realize real reform is total collapse, but I and Governors
throughout the country don't subscribe to that line of thinking.
health care costs
Unfortunately, the ACA has provided coverage or government
subsidies for millions of people to have coverage at the same
exorbitant costs, and these costs have only continued to increase at a
rate that far exceeds non-medical inflation. At the State level,
spiraling health care costs in recent decades have forced States to cut
back on other services.
One of the criticisms of the Affordable Care Act is that
it took the easier part--saying that we would provide free or
subsidized insurance to more people--without simultaneously
accomplishing the hard thing--addressing costs.
One of the drivers of health care costs is the
misalignment of incentives that is created when we compensate providers
based on the volume of care they provide rather than on outcomes or
efficiency. In Tennessee, we are working to change the way we pay for
and deliver health care so that providers are compensated based on
value. Congress should make a clear commitment to this type of payment
innovation.
All of us should agree that our current path is not a
sustainable one. We are a country with $20 trillion in debt with even
more staggering debt projections.
During the debate on the future of the ACA, there has been
much said about the immorality of millions of people losing health care
coverage but it's just as morally questionable to cover everyone with
health insurance and put the bill on a credit card to be paid by our
grandchildren while not doing everything we can to make health care
affordable.
conclusion
As Governors, we stand ready to partner with you to secure
and strengthen the individual market and our entire health care system.
______
introduction
Good morning members of the committee, Ranking Member Murray, and
to one of Tennessee's all-time favorite sons, Chairman Alexander.
It is an honor to be here with this group of Governors who I
consider friends and who I know to be problem solvers. My request to
the committee this morning is that you do two things: first, that you
move quickly to stabilize the individual insurance marketplace. Then,
second, that you would undertake a serious effort to work together to
address the cost of health care.
These are good times in Tennessee. Our unemployment rate is the
lowest in history. Our K-12 public schools are improving at a faster
rate than any State in the country, and we became the first State in
the Nation to offer 2 years free of community college or technical
school to all of our citizens. Our tax as a percentage of income and
our debt per capita are among the very lowest in the country. The
crisis of health care and the uncertainty of its future threaten our
State's citizens and the State's budget. The primary difference between
governing Tennessee and when then Governor Lamar Alexander led the
State more than 30 years ago, is the impact that the cost of health
care has on everything else we do.
stability
Today, Tennessee finds itself with only three insurance carriers
offering ACA-compliant coverage. In more than 80 percent of our
counties, citizens have only one insurance option. These limited
options are provided to Tennesseans at substantial cost increases--
possibly as much 40 percent for 2018, after increases totaling as much
as 139 percent for some from 2014 to 2017. Tennessee's experience of
fewer choices at higher costs is not sustainable. We are on a path
where citizens simply won't have an option to purchase from the
insurance marketplace or can't pay for the limited options available to
them. Either way, the system fails.
Congress should take steps now to prevent the total collapse of the
health insurance market by: (1) Funding cost-share reduction payments;
(2) Creating a short-term reinsurance program; and (3) Providing
flexibility to States.
In Tennessee, about 60 percent of our federally Facilitated
Marketplace participants are enrolled in CSR plans, meaning they
receive assistance resulting in premium reductions. Failure to fund CSR
payments will increase premiums significantly for our citizens, create
even more uncertainty around the future of participating carriers and,
according to the Congressional Budget Office, actually increase the
Federal deficit due to higher premium tax credits. Clearly, this is not
a recipe for success. It's also very important to understand that our
marketplace was facing collapse before this discussion of CSR payments,
and other actions and reforms will be needed to address the crisis.
Second, Congress can take additional action to stabilize markets by
funding a short-term reinsurance program that would limit losses to
carriers that provide coverage in the marketplace. This should produce
lower premiums, which, in turn, should attract new, healthier
individuals to the marketplace.
A third critical way to provide more stability is to offer
flexibility to States to address their unique challenges and
circumstances. The waiver approval process should be expedited, and the
strict guardrails currently placed upon waiver requests should be
loosened in a manner that will attract younger, healthier individuals
to the marketplace. Examples of guardrail relief include more
flexibility around rate bands and plan design. Simply put, without more
flexibility, carriers will be left with two choices--leave the
individual market or raise rates.
I realize some of things I just outlined around stabilization cost
more money and I'm asking for this at a time when many Governors,
including myself, are emphasizing the skyrocketing costs of health
care. In fact, I'm going to address health care costs in a moment. The
reality is failure to address the immediate stabilization needs while
Congress works on the bigger issue of cost will almost certainly result
in collapse of the market. Some may say the only way to ensure
legislative action on cost and realize real reform is total collapse. I
don't subscribe to that line of thinking. I think every Governor here
and those back at home believe we can move to stabilize the market now
while we work to take on the issue of health care costs.
health care costs
Having helped to stabilize the market, it is my strong hope that
this committee will then turn its sights to the cost of health care,
which is crippling businesses and families and overwhelming all of the
other needs that should be addressed in State and Federal budgets. We
must all recognize what has been missing in the argument over the
Affordable Care Act. The law was supposed to solve two critical issues
around health care in America. The first was the large number of people
who didn't have health insurance or couldn't afford coverage. Second,
the Affordable Care Act was supposed to make health care, well,
affordable. Unfortunately, it has provided coverage or government
subsidies for millions of people to have coverage at the same
exorbitant costs.
It is past time for all of us in elected office to focus our
conversation on controlling the out of control cost of health care. In
the last 20 years, health care has gone from 21 percent of the Federal
budget to 31 percent. At the State level, spiraling health care costs
in recent decades have forced States to cut back on other services.
Ever wonder why college tuition has increased so drastically? The
primary factor is that as States spend more money on Medicaid, there
are fewer dollars for higher education. Surely all lawmakers can agree
this country has a fundamental problem as long as medical inflation is
increasing at almost twice the rate of inflation of everything else. If
not, as someone once quipped, ``the United States government is about
to become a large health insurance company with a small army attached
to it.''
One of the criticisms of the Affordable Care Act is that it took
the easy part--saying that we would provide free or subsidized
insurance to more people--without simultaneously accomplishing the hard
thing--addressing costs. We shouldn't kid ourselves--addressing costs
is difficult politically and otherwise. One of the drivers of health
care costs is the misalignment of incentives that is created when we
compensate providers based on the volume of care they provide rather
than on outcomes or efficiency.
In Tennessee, we are working to change the way we pay for and
deliver health care so that providers are compensated based on value.
Early results from our payment reform initiative show that we are
saving millions of dollars while maintaining quality of care. Congress
should make a clear commitment to this type of payment innovation by
encouraging coordination of Medicare, Medicaid, State employee and
private value-based care initiatives and by leveraging the Federal
employee plan to spur payments based on quality as opposed to quantity.
All of us--Republicans, Democrats and Independents--should agree
that our current path is not a sustainable one. We are a country with
$20 trillion in debt with even more staggering debt projections. During
all of the debate about the Affordable Care Act, there has been a lot
written and said about how immoral it would be to have millions of
people lose health insurance coverage. I understand the argument. I am
a Republican Governor who proposed a conservative plan to increase
Medicaid coverage in our State. However, can't we all acknowledge that
it is just as morally questionable to cover everyone with health
insurance and put the bill on a credit card to be paid by our
grandchildren and not do everything we can to make health care
affordable?
conclusion
Thank you again to the entire committee. As Governors, we stand
ready to partner with you to secure and strengthen the individual
market and our entire health care system.
The Chairman. Thank you, Governor Haslam.
Governor Bullock, welcome.
STATEMENT OF HON. STEVE BULLOCK, GOVERNOR, MONTANA
Governor Bullock. Chairman Alexander, Ranking Member
Murray, and members of the committee, thank you. First, thank
you for inviting Governors, Democrats and Republicans, to
appear before you today. Whatever comes out of Washington, DC
or does not come out of it, we are on the front lines of
dealing with it. And your recognizing the importance of our
involvement in this discussion is significant.
Second, thank you for undertaking the hard work of working
together. As we learned from the passage of the ACA, meaningful
and lasting reform will be substantially hamstrung if
implemented over the uniform objection of the minority party. I
applaud the chair and members of the committee for doing all
you can to ensure that Congress does not repeat errors of the
past or even errors of the past months.
Third, we are all familiar with the old adage, the only way
to eat an elephant is one bite at a time. My thanks for a
singular focus on the immediate steps Congress can take to
stabilize premiums and help individuals in the insurance
market. Anymore, governing in DC may seem like a zero sum game,
with few win-win scenarios. If you are earnest in adding
greater stability to the overall health care system and the
individual markets, I do believe that your efforts will reap
political rewards on both sides. Some may call me a dreamer,
but it might even prove to be a model for further efforts.
Following the eating the elephant analogy, it may be only
one bite that this committee is taking, but it is an important
one. Last time I was with Chairman Alexander again with a
bipartisan group of Governors, he handed out his pocket guide
to the basics of health care coverage. Sure, those on the
exchanges only represent 6 percent of all those covered, 4
percent of the total insured, or the individual markets, 6
percent of all those covered by insurance. Stabilizing the
individual market impacts all areas of coverage and also has a
highly pronounced impact on places like where I live.
Rural Montanans like rural Americans are less likely to
have that option of employer-sponsored insurance. Today 8
percent of those insured in Montana are on the individual
market. Three out of four enrolled in a marketplace plan are
from rural and frontier areas of our State. Eighty-four percent
of all Montanans enrolled in a marketplace plan receive tax
credits to make their premiums affordable, and half receive
cost sharing reduction payments to reduce their out-of-pocket
costs.
I do believe that we can find common ground in driving down
costs and stabilizing the marketplace, and the time to do it is
now.
While health care may be complex, it certainly does not
take a brain surgeon to figure out how to stabilize the
individual market. The effort I have been involved in, led by
Governors Hickenlooper and Kasich, offer a road map and a menu
of actions that this committee can take. And while the
perspectives of the five Governors appearing before you this
morning are certainly as diverse as the landscapes that we
represent, we are uniform in insisting that cost sharing
reduction payments be continued. All of us in our testimony
urge you to create a temporary stability fund. We all agree
that you need to make sure that both the healthy and the
unhealthy continue to be covered in order to spread the risk.
And we all seek the opportunity to innovate while still
maintaining important consumer protections.
If this committee will work across the aisle with one
another to undertake even those four measures, you will
accomplish your aim of stabilizing the individual market. If
you just did the CSR payments, you would take significant steps
to do so.
It also does not take a brain surgeon to sabotage our
current system. The inaction and the messages coming from some
in DC are doing it now. In Montana, our largest insurer has
proposed a rate increase for next year 10 times higher than it
would be because of the uncertainty that the President and DC
has created.
Finally, more important than being Governor, I am a parent,
and during my first State of the State address 5 years ago, I
urged policymakers to act like our kids are watching and
learning from our behavior, our words, and our deeds because,
indeed, they are. I implore you to do the same. In a time of
seeming dysfunction, this committee and this Congress can work
together to stabilize the individual market, beginning to eat
that elephant one bite at a time. And who knows? We all might
find that working together is not only good for Congress, but
it is good for our country.
Thanks for having me and my colleagues here. I look forward
to the conversation we will have over the next couple of hours.
[The prepared statement of Governor Bullock follows:]
Prepared Statement of Hon. Steve Bullock
summary
I appreciate the Senate HELP Committee's attention to this
important issue. It's heartening to see folks in Washington DC begin to
reach across the aisle and engage in a civil, respectful dialog. And
maybe even begin to listen to one another. Instead of debating
proposals that would take health insurance coverage away from thousands
of Montanans, and millions of Americans, focusing the discussion on how
to fix the existing flaws in our health care system is the only way
this country will move forward in the health care debate.
I know bipartisanship works, and on an issue as important as health
care, bipartisanship is an imperative. We must come together with real
solutions to stabilize the market. We need certainty and stability not
just for insurance providers but also for the people in our States that
need insurance. While we so often speak in terms of percentages and
aggregate numbers, we cannot forget that behind the numbers are people
facing a cancer diagnosis or planning to care for a sick child or
parent; young people that might think they are invincible, that seek to
avoid coverage, then are one accident or incident away from bankruptcy.
The millions of people currently in the individual marketplace all have
individual stories, and individual hopes and aspirations that this
committee and Congress can help further. These people need certainty
that their insurance premiums will not spike beyond what they can
afford.
I appreciate the work of my fellow Governors in finding common
ground on controlling costs and stabilizing the market, that will
positively impact the coverage and care of millions of Americans. As
Governors of both parties, both here before you today and others across
this Nation, we stand ready to work with you in an open, bipartisan way
to provide better insurance and health care outcomes for all Americans.
fund the cost sharing reduction: premium increases in montana from
failure to pay cost sharing reductions
The Administration's mixed--and at times hostile--signals regarding
the CSR payments and other destabilizing actions has led Montana's
largest insurer to propose a rate hike for next year that's 10 times
higher than it would have been under current provisions of the ACA.
create a temporary stability fund
Although no longer in place, in 2014, the reinsurance program under
the ACA reduced premiums in the individual marketplace by 10-15
percent.
encourage enrollment and enforce the individual mandate until a
credible replacement is found
Encouraging younger, healthier people to enroll in insurance will
improve the risk pool and bring more stability and affordability to the
market place. It will also protect our young adults, who are just
starting their independent lives, from financial calamity if the
unexpected happens.
encourage state innovation to reform payment and control costs
Strengthening primary care is critical to promoting health and
reducing overall health care costs. Congress created the Center for
Medicare and Medicaid Innovation (known as the Innovation Center, CMMI)
to test innovative payment and delivery models that can reduce costs
and improve health. Their Comprehensive Primary Care Plus model does
that through a public-private partnership that bolsters primary care,
provides flexibility and the right incentives to doctors, and reduces
the overall cost of care.
______
Chairman Alexander, Ranking Member Murray, and distinguished
committee members, thank you for the opportunity to appear today. Thank
you for the invitation to be here and discuss some of the ways we can
work together--Senators, Governors, Democrats and Republicans, to
finally begin to find meaningful solutions that will increase
affordability and quality of health care across America, specifically
through the individual marketplace.
I appreciate the Senate HELP Committee's attention to this
important issue. It's heartening to see folks in Washington DC begin to
reach across the aisle and engage in a civil, respectful dialog. And
maybe even begin to listen to one another. Instead of debating
proposals that would take health insurance coverage away from thousands
of Montanans, and millions of Americans, focusing the discussion on how
to fix the existing flaws in our health care system is the only way
this country will move forward in the health care debate.
Although difficult, this discussion is imperative and it is our
bipartisan responsibility. Indeed, while people across the political
spectrum may find flaws and shortcomings of the Affordable Care Act--
and doubtless there are differing opinions concerning the substance of
those shortcomings--there ought to be some agreement regarding the
enduring problems caused by the manner in which the ACA was ultimately
enacted. Meaningful and lasting reform in any area of policy will be
substantially hamstrung if that policy is implemented over the uniform
objection of the minority party. I applaud the Chairman, and members of
the committee, for recognizing this to be the case, and for doing all
that you can to ensure Congress doesn't repeat the mistakes of the
past.
While the individual marketplace is a relatively small percentage
of all Americans covered, it's instability not only impacts millions of
Americans, but also has impact beyond the percentages. I believe we can
find common ground in driving down costs and stabilizing the
marketplace, and the time to act is now. Bipartisanship on an issue as
difficult as health care can be challenging, yet it is not impossible.
I know this because we've done it in Montana. And my fellow Governors
appearing before you today are working hard every day to find similar
common ground in their States surrounding issues like health care and
other matters of significant concern.
a strong individual market is essential to a rural, frontier state like
montana
Montana is a State of a million people spread out over 147,000
miles. The rural nature of Montana is a celebrated part of our
heritage, but it does present some real challenges when it comes to
access to affordable, high quality health care and emergency services.
Indeed, the vitality and continuing viability of our communities, urban
and rural, depend on access to quality, affordable healthcare, and the
facilities that provide that care.
Until recently, far too many of our neighbors, friends, and
coworkers went to work every day with the knowledge that access to
health insurance--and quality, affordable health care--was beyond their
reach. As a result, they were forced to avoid regular check-ups and
screenings, and were often left with no choice but to access care when
and where it is most expensive and most difficult to treat--the
emergency room.
Montana was the last State in the country to legislatively pass
Medicaid expansion and we did so with true bipartisan compromise and a
uniquely Montana approach. I am grateful to my legislative colleagues
on both sides of the aisle for being willing to put politics aside to
improve access to health care in our State.
With passage of the Medicaid expansion and increased access to
individual insurance coverage through the health insurance marketplace,
Montana's rate of uninsured has dropped from a staggering 20 percent in
2013 to 7 percent in 2017. The implementation of Medicaid expansion in
2016 contributed most significantly to that drop. Growth in the
individual market as a result of tax credits, as well as elimination of
underwriting and pre-existing condition exclusions, were also
significant factors.
It is also important to note that while today's topic focuses on
the individual insurance market, the stability and affordability of the
private market in States like Montana are linked to the expansion of
the Medicaid population. It has been well documented that marketplace
premiums are about 7 percent lower in Medicaid expansion States than in
States that have not yet expanded Medicaid.\1\
---------------------------------------------------------------------------
\1\ Office of the Assistant Secretary for Planning and Evaluation
(ASPE), ``The Effect of Medicaid Expansion on Marketplace Premiums,''
August 25, 2016, https://aspe.hhs.gov/pdf-report/effect-Medicaid-
expansion-marketplace-premiums.
---------------------------------------------------------------------------
The decline in uninsured and the increase in access to affordable
coverage has been particularly meaningful in rural Montana. Rural
Montanans, like rural Americans, are less likely to have the option of
employer-sponsored health insurance. Today, three out of four Montanans
who enrolled in a Marketplace plan during the last open enrollment
period are from rural and frontier areas of our State. Eighty-four
percent of all Montanans enrolled in a Marketplace plan receive tax
credits to make their premiums affordable; half receive cost sharing
reductions to reduce their out of pocket costs.
real impacts: improving health care outcomes in indian country
The States that appear before this committee all present different
perspectives, challenges and opportunities. One perspective that is
more prevalent in the West, and worthy of this committee's
understanding, is the impact on American Indians. In Montana, the
lifespan of American Indians is, on average, 20 years shorter than
their non-native friends and neighbors. The ACA marked the largest
expansion of American Indian health care in a generation, as Medicaid
expansion and the health insurance marketplace have given many American
Indians access to health coverage for the first time in their lives.
Indian Health Services is an important part of upholding the
Federal Government's trust responsibility to Indian peoples, but it is
not comprehensive health coverage. Its chronic underfunding used to
mean that IHS clinics ran out of money part way through the year, and
only beneficiaries in danger of losing life or limb could get care.
The ACA, and especially Medicaid expansion, has changed that. Now,
in Montana, more than 13,000 Native Americans have gotten covered
through Medicaid expansion and the health insurance marketplace, which
means they have access to the full spectrum of health services they
need, when they need them--just like you and me.
It also means that IHS' funding lasts longer, and IHS clinics are
able to make up for some of the chronic funding shortfall by billing
Medicare, Medicaid and private insurance. Montana's tribal leaders have
told me how important the ACA is to their people's health and future,
and the Rocky Mountain Tribal Leaders Council passed resolutions
supporting the ACA and Medicaid expansion.
immediate actions to restore stability to private insurance market
At the end of the day, health care is about people, not politics or
posturing. It is about the well-being of our citizens, and the overall
health of our communities. The ACA certainly is not without flaws and
we must look for bipartisan ways to improve coverage and affordability
and to ensure a stable and fair market under the law. We will not
achieve these goals by pulling the rug out from under people who rely
on the coverage they receive to ensure the health of themselves and
their families.
We must continue working together across party lines, in public-
private partnerships, and using the latest technology and best
practices to ensure that patients, in all corners of our country, have
access to the best care--and that their doctors and health care
professionals have access to the training and support they need to
provide that care.
Good health is the foundation of everything from a competitive
workforce to the economic and financial security of our families.
Recently, a number of Governors sent congressional leaders some
thoughts on reform, and immediate steps that could be taken to make
coverage more affordable. The perspectives of the eight Governors
signing that letter are as diverse as the landscapes spanning the
signatory States. Doubtless, many other Governors across the country
would agree with most, or at least some of the recommendations included
therein. Below, I highlight a few of the areas that I hope the
committee will seriously consider.
A. Fund the Cost Sharing Reduction: Premium Increases in Montana from
Failure to Pay Cost Sharing Reductions
Notably, the invitation to testify before this committee wasn't to
endeavor to solve all the challenges of the ACA or healthcare, but
instead to present ``thoughts on the need for congressional and
administrative action to stabilize premiums and help individuals in the
individual insurance market for 2018.'' If this committee is genuinely
concerned with stabilizing the individual marketplace, the most
important step it can take in the near term is ensuring funding for the
cost-sharing reduction (``CSR'') payments for at least the next 2
years.
The impact of the uncertainty of whether the CSR payments will
continue to be funded is exemplified by the Montana experience. Montana
has three carriers offering insurance on the exchange. The
Administration's mixed--and at times hostile--signals regarding the CSR
payments and other destabilizing actions has led Montana's largest
insurer to propose a rate hike for next year that's 10 times higher
than it would have been under current provisions of the ACA.
In a hearing before the Montana Insurance Commissioner, the
president of that insurer testified that the uncertainty around whether
the Trump administration would pay the CSR and keep current provisions
of the ACA in place resulted in a requested 23 percent average rate
increase. He testified that that had these uncertainties not existed;
the insurer would only have requested a rate increase of 2.3
percent.\2\ Similarly, the non-partisan Congressional Budget Office
recently found that not paying the cost-sharing reductions would result
in a 20-25 percent increase in premiums, and increase the Federal
deficit $194 billion over the next 10 years.\3\ The uncertainty
surrounding whether the Trump administration will continue to make CSR
payments is having a real impact on private markets, and congressional
assurance that these payments will continue to occur will meaningfully
impact the stability of the market--in Montana, and across the country.
---------------------------------------------------------------------------
\2\ Matt Volz, ``Health law uncertainty balloons Montana insurance
rates,'' Associated Press, July 26, 2017, https://www.usnews.com/news/
best-states/montana/articles/2017-07-26/health-law-uncertainty-
balloons-montana-insurance-rates.
\3\ Congressional Budget Office, ``The Effects of Terminating
Payments for Cost-Sharing Reductions,'' August 2017, https://
www.cbo.gov/system/files/115th-congress-2017-2018/reports/53009-
costsharingreductions.pdf.
---------------------------------------------------------------------------
B. Create a Temporary Stability Fund
Although no longer in place, in 2014, the reinsurance program under
the ACA reduced premiums in the individual marketplace by 10-15
percent. With several more years of experience now behind us, it is a
mechanism that will add to the stability of the market. Certainly, some
States have been taking steps to do the same. However, Congress should
create a reinsurance program or a fund that states can use to create
reinsurance programs or similar efforts that reduce premiums and limit
losses for providing coverage. This safety net will allow insurers to
manage their risk and bring down premiums. As recommended in the
bipartisan Governors' letter, it should be provided for at least 2
years and that a funding source be identified to offset the cost so it
does not add to the deficit.
C. Encourage Enrollment and Enforce the Individual Mandate Until a
Credible Replacement is Found
Finally, encouraging younger, healthier people to enroll in
insurance will improve the risk pool and bring more stability and
affordability to the market place. It will also protect our young
adults, who are just starting their independent lives, from financial
calamity if the unexpected happens.
Education must remain a priority, and recent actions to reduce
funding that would drive individuals to sign up for insurance is penny
wise and pound foolish. Reducing the education budget by 90 percent and
payments to navigators by 40 percent is, like the continuing threats to
withhold the CSR payments, and overt attempt to sabotage the ACA. We
must continue to fund efforts to educate and encourage younger people
to enroll in coverage, including enrollment assistance.
Research shows young adults are less confident in their ability to
choose a health insurance plan, and that most uninsured adults would
like to talk with someone when signing up for health insurance.
Improving young adults' participation will lower risk and drive premium
costs down. Investing in marketing campaigns that educate and appeal to
this younger generation is a critical component of controlling costs.
Moreover, at this point, it remains necessary to reduce the risk
that only the sickest will get insurance. Coming from a rural State
like Montana that has a strong libertarian streak, I certainly
understand and sympathize with those who dislike individual mandate.
However this committee's aim is near term stabilization of the
individual market. The reality is that without participation of the
young and the healthy we will not achieve lower premiums. We must roll
up our sleeves and consider credible alternatives, but we must also
have the courage to recognize that while unpopular, enforcement of the
individual mandate is necessary to stabilize the market and prevent
carriers from leaving the market place or offering premiums that price
working Americans out of the private market.
looking forward: encourage state innovation to reform payment and
control costs
In taking steps to stabilize the market for the immediate term,
Congress must ensure that it doesn't stifle the innovation and efforts
occurring to transform the underlying market dynamics driving the
increasing cost of care; dynamics that were manifest even long before
the ACA was enacted. We know that healthier Americans make for
healthier businesses, families, and stable State economies. Individual
health can have an enormous impact on individuals, their families, and
the overall economy. We also know that, the current system of paying
for repeated tests and services, not outcomes, has significant
limitations. Ultimately, major transformation of how we incentivize and
provide healthcare is necessary.
Strengthening primary care is critical to promoting health and
reducing overall health care costs. Congress created the Center for
Medicare and Medicaid Innovation (known as the Innovation Center, CMMI)
to test innovative payment and delivery models that can reduce costs
and improve health. Their Comprehensive Primary Care Plus model does
that through a public-private partnership that bolsters primary care,
provides flexibility and the right incentives to doctors, and reduces
the overall cost of care.
In July of 2017, Montana Medicaid joined with the State's major
insurance carriers and Medicare to launch a Comprehensive Primary Care
Plus partnership in Montana that includes nearly 1/3 of Montana's
covered lives. Smarter spending to support primary care and enhancing
care coordination in more innovative ways is the right move. It lets us
give providers the freedom to care for patients the way they think is
best, and it has been proven to reduce emergency room use and costly
hospitalizations.
This is good news for patients, it's good news for families, and
it's good news for the patients in States like many of yours, who are
joining this move away from fee for service health care system:
Tennessee, Ohio and Northern Kentucky, the Greater Kansas City Area,
Colorado, Philadelphia, and next year, in Louisiana.
Partnerships like this between private and public health plans, and
innovations through CMMI, must continue. While the Federal Government
won't always be positioned to create the partnerships or innovation, it
can support and incentivize the efforts to do so.
conclusion
Thank you again for inviting me and several of my colleagues. I
know bipartisanship can be hard and is not without challenge. I govern
in a State where almost two-thirds of those elected in both State
houses serve in the Republican Party. In my experience--one that I know
is shared by my fellow Governors--the challenges posed in finding
bipartisan solutions to difficult issues like health care can be
overcome. I worked with Democrats and Republicans to pass a unique
approach to Medicaid expansion, which led to a dramatic drop in the
number of people in my State without insurance. More than 80,000
Montanans have gained access to health care through expansion and folks
have finally started to receive the treatment they deserve.
I know bipartisanship works, and on an issue as important as health
care, bipartisanship is an imperative. We must come together with real
solutions to stabilize the market. We need certainty and stability not
just for insurance providers but also for the people in our States that
need insurance. While we so often speak in terms of percentages and
aggregate numbers, we cannot forget that behind the numbers are people
facing a cancer diagnosis or planning to care for a sick child or
parent; young people that might think they are invincible, that seek to
avoid coverage, then are one accident or incident away from bankruptcy.
The millions of people currently in the individual marketplace all have
individual stories, and individual hopes and aspirations that this
committee and Congress can help further. These people need certainty
that their insurance premiums will not spike beyond what they can
afford.
I appreciate the work of my fellow Governors in finding common
ground on controlling costs and stabilizing the market, that will
positively impact the coverage and care of millions of Americans. As
Governors of both parties, both here before you today and others across
this Nation, we stand ready to work with you in an open, bipartisan way
to provide better insurance and healthcare outcomes for all Americans.
The Chairman. Thank you, Governor Bullock.
Governor Baker, welcome.
STATEMENT OF HON. CHARLES D. BAKER, GOVERNOR, MASSACHUSETTS
Governor Baker. Thank you, Chairman Alexander and Ranking
Member Murray and the members of the committee. I want to thank
you for this opportunity to be here today to testify on
stabilizing premiums and helping individuals in the individual
insurance market.
I am honored to be part of this group of Governors that are
testifying today because we deal with these issues every day
and we want to work with Congress and the Federal Government on
health care reform.
Massachusetts has achieved near universal coverage with the
highest rate of individuals with health insurance in the
Nation. That is a story I am sticking to, too. And that is
because we have been working and reworking it for more than 10
years. At the center of our bipartisan success is the belief
that health care coverage is a shared commitment, not the
singular responsibility of government.
As you consider measures to stabilize premiums and address
the individual market, I would like to emphasize four key
points.
First, bipartisan cooperation is essential to achieving
quality, affordable health care coverage and stabilizing any
market.
Second, Congress should take immediate affirmative steps to
resolve the Federal cost sharing reduction payments until
longer-term reforms are enacted. Carriers, providers, and
employers and people all need certainty about what rates are
going to be and month-to-month resuscitation of cost sharing
reductions is not stabilization. They should be maintained for
at least 2 years.
As future reforms are considered, a key contributor to
market stability is the presence of younger and healthier
people in the market. When Massachusetts passed its universal
health care law in 2006, we included an individual mandate,
which I support. For starters, no one really knows when they
might get sick or have a tragic accident. And once it happens,
they will seek care and it will be provided. And in many
circumstances, they will be unable to pay for it, and that
means everyone else who has insurance will be paying for the
health care services rendered to those without coverage.
In addition, if people have unlimited access to purchase
coverage, many will purchase health insurance only when they
need it and then drop it once their care is provided, defeating
the whole point behind insurance in the first place.
Continuous coverage encouraged using incentives and
consequences is a critical element in ensuring that everyone is
treated fairly. Different States can choose different
approaches, but if we want to make insurance affordable for
people that do not have access to coverage through work and do
not qualify for public coverage, we need to nudge everyone into
purchasing coverage and then keeping it.
Third, Congress should establish broader parameters for
insurance market reforms that include greater latitude for
States to meet the unique needs of their residents and health
care marketplaces.
1332 waivers should be broadened for greater State
flexibility. It is no secret that Massachusetts is committed to
continuing to provide access to high-quality, affordable health
insurance for all of our residents. An increased waiver
flexibility would allow us to more effectively meet that
commitment.
Three areas where changes to 1332 waivers would be a
significant benefit to States are essential health benefit
compliance, benefit design, and budget neutrality.
Massachusetts is a strong benefit State. We support essential
health benefits. However, even in our State, it was a challenge
to adapt to the overly strict Federal framework of the ACA.
Fourth, Congress should take action to address health care
costs, and one critical driver is rising pharmaceutical costs.
Among other actions, safely expediting the FDA approval
process, increasing competition by insuring generic drug
availability, and creating greater opportunities for public
payers to negotiate prices should be pursued.
As you consider these and other reforms to our health care
system, I would ask that any legislative changes occur on a
gradual timeline, ideally with State flexibility to opt out or
grandfather in existing programs in order to prevent market
shocks and to improve market stability.
Finally, as Governors, we are responsible for the fiscal
health of our States, as well as the physical health of our
residents. Reforms can place States at significant fiscal risk.
Any reforms should not shift a greater financial burden onto
States.
Complex legislation requires fine tuning and adjustments,
and in Massachusetts, we have repeatedly revisited health care
reform as we have learned from implementation and as conditions
have changed. And our commonwealth is better for that. I urge
Congress to commit, as we did, to returning to the table in a
bipartisan fashion to review and revise any enacted reforms in
the coming years.
I thank you again for this opportunity to provide testimony
on this important issue, and we look forward to working with
you and other Members of Congress as you consider legislation.
I submitted written testimony that goes into greater length
on these and other issues and would be happy to take questions
on that or anything else. Thank you.
[The prepared statement of Governor Baker follows:]
Prepared Statement of Hon. Charles D. Baker
summary
My testimony will emphasize four key concepts.
First, bipartisan collaboration is essential to achieve affordable
health care coverage and stabilize the insurance market. Massachusetts'
success in expanding health care coverage is rooted in our ongoing
bipartisan approach to problem solving that includes insurance,
business, health care, political and advocacy communities.
Second, Congress should take immediate affirmative steps to
stabilize the insurance market as an interim step until longer term
reforms are enacted. Month to month resuscitation of cost sharing
reductions is not stabilization; they should be maintained for at least
2 years. As Congress contemplates future reforms, serious consideration
should be given to reintroducing a reinsurance program as a form of
market stabilization.
Additionally, as the presence of younger and healthier people in
the market is a key contributor to market stability, continuous
coverage should be a critical element in ensuring that everyone is
treated fairly and should be encouraged using incentives and
consequences.
Third, Congress should establish broader parameters for insurance
market reforms that include greater latitude for States to meet the
unique needs of their residents. States are incubators and innovators
of health care reform solutions and initiatives in both their Medicaid
programs and commercial markets. For example, States should be allowed
to broaden 1332 waivers for greater flexibility that will allow us to
meet our commitment to quality, affordable health insurance for our
residents in more effective ways.
Fourth, Congress should take action to address health care costs.
As we tackle reforms to the health care system, we should bear in mind
not just the implications for Federal and State budgets, but also on
the people and businesses struggling to keep up with the ever-
increasing costs of health care coverage and services. One critical
health care cost driver that Congress should address is rising
pharmaceutical costs.
I appreciate the opportunity to testify and look forward to working
with you and other Members of Congress as you consider legislation.
______
Chairman Alexander, Ranking Member Murray and members of the
committee, thank you for this opportunity to provide testimony before
the Senate's Health, Education, Labor, and Pensions Committee hearing
on Stabilizing Premiums and Helping Individuals in the Individual
Insurance Market.
Thank you for your willingness to engage in a bipartisan way in
order to find much-needed solutions. I am especially appreciative that
you have convened a group of Governors to testify as we are on the
front lines and are eager to work with Congress and the Federal
Government on health care reform.
As a former State secretary of Health and Human Services, former
CEO of a health plan and current Governor of a State justifiably proud
of its excellent and robust health care system, I care deeply about
access to and the affordability of health care. These are challenges
that must be tackled in a bipartisan, collaborative way, between the
States and the Federal Government, and with full participation from
patients, employers, insurers and providers. I appreciate the
opportunity to share my thoughts with you this morning.
the massachusetts health care landscape
Massachusetts believes strongly in health care coverage for its
residents. For more than 10 years, the Commonwealth has been 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. Working with
the Federal Government, we have made considerable progress toward the
goal of near universal health care coverage for our residents. Ninety-
nine percent of our children and youth, and more than 96 percent of all
of our residents have health care insurance, the highest percentages in
the country. Today more than 257,000 individuals are covered through
our State exchange, with 190,000 low to modest income residents
receiving Federal and State subsidies. An additional 300,000 adults
have Medicaid as a result of the expansion permitted through the
Affordable Care Act. The Massachusetts State-based exchange, known as
the ``Connector'' maintains a robust individual insurance market with
62 plans offered from 10 carriers for the current plan year.
Additionally, while health coverage is important first and foremost
for its benefits to residents, health care is an economic engine for
Massachusetts due to our standing as a global center of excellence in
field medical research and home to some of the best treatment
facilities in the world. The health care industry contributed $19.77
billion to the State's economy in 2014, outpacing any other industry.
One out of every ten workers is employed in health care related fields.
Massachusetts' success in expanding health care coverage is rooted
in our ongoing bipartisan approach to problem solving that includes
insurance, business, health care, political and advocacy communities
and that began in the 1990s. At the center of that success is our
shared belief that health care coverage is a shared commitment, not the
singular responsibility of government.
As you consider legislation to stabilize premiums and address the
individual insurance market, I would like to emphasize four key
concepts.
bipartisan collaboration
First, bipartisan collaboration is going to be essential to achieve
affordable health care coverage and stabilize the insurance market. The
current debate in Washington about health care reform has destabilized
the insurance market; carriers have responded by leaving some markets
altogether or proposing to markedly increase rates to adjust for the
uncertainty. The majority of Americans support a bipartisan approach to
stabilizing the market and engaging in meaningful health care reform
that yields affordable health care coverage.
market stabilization
Second, Congress should take immediate affirmative steps to
stabilize the insurance market as an interim step until longer term
reforms are enacted. Carriers need certainty in order to finalize rates
for plan year 2018 and begin preparing rates for plan year 2019, and
providers and employers also need certainty about what those rates are
going to be. Month to month resuscitation of cost sharing reductions is
not stabilization; they should be maintained for at least 2 years.
I cannot stress enough how critical it is for Federal cost sharing
reduction payments to be resolved affirmatively in order to maintain
market stability and to constrain rate increases. It is also important
to note that the Congressional Budget Office recently reported that
ending the cost sharing reduction payments will actually cost the
Federal Government more than making the payments, because they will be
paying out more in premium tax credit subsidies.
As Congress contemplates future reforms, serious consideration
should be given to reintroducing a reinsurance program as a form of
market stabilization. As you know, reinsurance simply reimburses a
portion of high cost claims exceeding a given attachment point.
A key contributor to market stability is the presence of younger
and healthier people in the market. When Massachusetts passed its
universal health care law in 2006, it included an individual mandate,
which I support. I support it for two reasons. First of all, no one
really knows when they might get sick or have a tragic accident, and if
they do get sick or have an accident, they will seek care, it will be
provided, and in many circumstances, they will be unable to pay for it.
That means everyone else who has insurance will be paying for the
health care services rendered to those without coverage. Second, if
people have unlimited access to purchase coverage, many will purchase
health insurance only when they need it, and then drop it once their
care is provided, defeating the whole point behind insurance coverage.
Insurance coverage is about shared risk. We all have coverage so
that together, we can pay for the care provided to the small number of
people who need very expensive care. And for those who do get sick,
costs can be very high. It is not unusual to have 1 percent of the
population incur 30 percent of the total cost of care provided to that
group. In many cases, 5 percent of the population incurs 50 percent of
the cost of care received by that group.
If people do not have to carry coverage when they are healthy, and
can access it only when they get sick, break a leg, need to have a
procedure, or something else, then the rest of us are unfairly tagged
with paying for the cost of their care.
Continuous coverage, encouraged one way or another using incentives
and consequences, is a critical element in ensuring that everyone is
treated fairly. A mandate is one way to encourage continuous coverage.
It can also be done using financial penalties for people who do not
have continuous coverage, or by establishing limited open enrollment
periods. Different States can choose different approaches--or some
combination--but if we want to make it easy for people to purchase
insurance if they do not have access to it through work, and they don't
qualify for public coverage, we need to nudge them into purchasing
coverage, and keeping it.
federal/state partnerships
Third, Congress should establish broader parameters for insurance
market reforms that include greater latitude for States to meet the
unique needs of their residents. States are incubators and innovators
of health care reform solutions and initiatives in both their Medicaid
programs and commercial markets.
States should be allowed to broaden 1332 waivers for greater
flexibility. These waivers are still very new tools for States to
utilize as they have only been available since January 1, 2017.
Massachusetts is committed to providing access to quality, affordable
health insurance for our residents; rather than walking away from that
commitment, we believe that increased flexibility would allow us to
meet that commitment in more effective ways. In fact, this week,
Massachusetts will be submitting a section 1332 waiver seeking
additional flexibilities that promote market stability with a premium
stabilization fund in the event that Congress does not appropriate
funding of cost sharing reductions. Additionally, I will be submitting
a letter to Secretary Price that seeks transitional relief regarding
reviving the State's employer shared responsibility program and
continuing to use specific State based rating factors. Finally, later
this year, we will be submitting an additional waiver seeking
permission to administer the Federal small business health care tax
credit at a State level in order to promote commercial group coverage
among small businesses with lower wage workers.
I offer the following three examples where changes to 1332 waivers
would be of significant benefit to States as we continue to reform our
health care system. These examples concern essential health benefit
compliance, benefit design and budget neutrality. Massachusetts is a
strong benefit State; we support essential health benefits (EHB).
However, even in our State, it was a challenge to adapt to the Federal
framework. Technical improvements to the process should be allowed that
support sufficient benefits that comport with best practices and market
mechanisms. A prime example of one of these challenges which we still
grapple with is the inclusion of pediatric dental coverage into the EHB
standard. The need for dental coverage for children and youth is not in
question, but addressing that need shouldn't require a rigid link
between dental and health benefits within the same plan. EHB required
that plans sold in the individual and small group market included
pediatric dental benefits, which has not historically been included in
most medical plans. There can be more than one efficient and effective
way that States can ensure children covered by individual or small
group plans are assured access to pediatric dental care. Even today,
despite good faith efforts, most of our medical carriers still struggle
to efficiently integrate dental benefits into their health plans,
facing significant technical and operational barriers. All of these
changes result in the carrier passing the cost down to the consumer.
All the while, our dental insurance carriers had been providing dental
coverage for children, adults and families with proven success and with
the efficiencies that come with specialization and scale. It is
critical that health plans provide coverage for the care that keeps
people healthy, but Federal mandates should leverage common sense
market practices and provide States with flexibility to match local
requirements to local needs. Federal frameworks can balance local
experimentation without sacrificing essential benefit categories.
Greater flexibility is also needed around benefit design. Value-
Based Insurance Design (V-BID) approaches to benefit design seek to
align patients' out-of-pocket costs, such as copayments and
deductibles, with the value of services. Certain technical parameters
of EHB make important kinds of benefit design innovation difficult. For
example, in many areas, bronze and silver plan deductibles are
extremely close to the maximum out of pocket (MOOP) limits. States may
want to experiment with designing plans in which there are lower MOOP
levels for high-value care (like chronic illness care) in exchange for
a slightly higher MOOP overall, perhaps exceeding the existing EHB MOOP
limit for relatively lower-value services. This would help make sure
people who opt to buy high deductible plans don't put off care that
will keep them healthy and also help make sure they don't develop an
even more costly medical condition.
Finally, the current 1332 regulations require that proposals are
examined on their own terms with regard to Federal deficit neutrality
impact. This can greatly limit creative proposals by not allowing
commercial innovations to draw from savings enabled on the Medicaid
program and vice versa. Opportunities for change could range from
coupling savings from 1115 and 1332 waivers that are filed together or
to determine savings over the course of several years. These types of
common sense adjustments along with consumer protection guardrails
could widen opportunities for meaningful innovation and allow for far
more comprehensive waivers that integrate the ACA, Medicaid and CHIP
programs into a coherent health care insurance program at the State
level.
In addition to increased flexibility and waiver authority,
Massachusetts supports the development of ``fast-track'' waiver
authority to expedite Federal processing and approvals.
health care cost drivers
Fourth, Congress should take action to address health care costs.
Having achieved near universal coverage in Massachusetts, we are now
focused on health care affordability for individuals, families and
employers. As we tackle reforms to the health care system, we should
bear in mind not just the implications for Federal and State budgets,
but also on the people and businesses struggling to keep up with the
ever-increasing costs of health care coverage and services.
One critical health care cost driver that Congress should address
is rising pharmaceutical costs. In 2013, Massachusetts established a
health care cost growth benchmark; originally set at 3.6 percent, it
was recently lowered to 3.1 percent. Although the growth in hospital
and physician spending has been near or below the benchmark, drug
spending is a major driver of health costs, far exceeding the State's
benchmark, growing at 8 percent last year.
Unfortunately, States have limited ability to control
pharmaceutical costs. Among other actions, Congress should consider
safely expediting the FDA approval process, increasing competition by
ensuring generic drug availability, and creating greater opportunities
for public payers to negotiate prices.
medicaid and other reforms
While this hearing is focused on insurance market reforms, the
prospect of reforms to the Medicaid program also looms large.
There are a number of reforms to Medicaid and the Affordable Care
Act that would be welcomed by many States, including Massachusetts. I
look forward to continuing to engage with Congress on those ideas. I
cannot support under any circumstances any Medicaid reform resulting in
a substantial loss of Federal revenue to Massachusetts and loss of
health coverage for thousands of currently insured individuals.
Additionally, I am opposed to Federal sanctions regarding family
planning and efforts to diminish support for behavioral health and the
opioid epidemic.
closing
As you consider these and other reforms, I ask that Congress
introduce any legislative changes on a gradual timeline, ideally with
State flexibility to opt out or grandfather existing programs in order
to prevent market shocks and to improve market stability.
We are making progress in our individual States, innovating with
new ideas and we should avoid disrupting ongoing systems that work.
Additionally, I urge that whatever reforms are enacted, there be a
bipartisan commitment to return to the table in the coming years to
review and revise those reforms. Complex legislation requires fine-
tuning and adjustments, no matter how perfect or well-intentioned the
legislation is. In Massachusetts, we have returned to health care
reform several times since 2006 as we have learned from our
implementation of the law and as conditions have changed, and our
Commonwealth is better for it.
Finally, as Congress takes steps to stabilize the insurance market
and turn its attention to longer term reforms in Medicaid and health
insurance markets, we should ensure that States have the necessary
Federal fiscal support to maintain important health care services. This
includes stability of funding for cost sharing reductions, the
reauthorization of the Children's Health Insurance Program (CHIP), as
well as the annual discretionary appropriations and Health Centers Fund
and a delay in the implementation of the proposed Disproportionate
Share Hospital rule.
Massachusetts currently has approximately 160,000 children on CHIP
and failure to reauthorize CHIP will cause uncertainty for the families
that rely on this program for health care services. Likewise, community
health centers are an integral part of our health care delivery system,
providing access to lower cost care in underserved locations.
For many States, including Massachusetts, this core funding
provides a safety net for many of our lowest income children, adults
and families which should be protected.
Thank you again for the opportunity to provide testimony on this
important issue. I look forward to working with you and other Members
of Congress as you consider legislation.
The Chairman. Thank you, Governor Baker.
Governor Hickenlooper, welcome.
STATEMENT OF HON. JOHN W. HICKENLOOPER, GOVERNOR, COLORADO
Governor Hickenlooper. Good morning. Thank you, Chairman
Alexander, Ranking Member Murray, and all the members of this
committee. I appreciate, as well as the others, the opportunity
to testify and briefly share our bipartisan plan for
stabilizing the individual health insurance market.
In 1932, Justice Louis Brandeis popularized the idea that
States are the laboratories of democracy. He said, ``a State
may, if its citizens choose, serve as a laboratory; and try
novel social and economic experiments without risk to the rest
of the country.'' In other words, States are where the rubber
meets the road on the highway of the American experiment.
In Colorado, we have implemented the Affordable Care Act
for 7 years, as long as I have been Governor. For many
Coloradans, it has been a success. With bipartisan support, we
expanded Medicaid and created a State-based marketplace. Around
600,000 Coloradans now have care because of the ACA. That is 10
percent.
Many people are angry and they have a right to be. The
United States is on a lonely island among high-income nations.
We spend almost twice as much for worse care. And this has been
the case long before the Affordable Care Act. We need to move
toward a system that compensates quality and good health, not
quantity.
For the 400,000 Coloradans in the individual marketplace,
many continue to struggle. Colorado has 14 counties--that is
almost 25 percent of our counties--with only one insurer on the
exchange. It is also home to some of the highest premiums in
the country. A 60-year-old in rural Craig, CO making less than
$50,000 will pay over $12,000 a year on premiums alone, around
25 percent of their income. That is simply unacceptable.
Even worse, our Division of Insurance is projecting
premiums will increase by as much as 27 percent for 2018.
It is a big problem. Our bipartisan group of Governors,
including Governor Kasich, who is not here, Governor Bullock,
who is, have been working on a common sense set of solutions to
help make insurance more affordable and markets more stable for
this crucial 7 percent of the population.
We can do a lot at the State level, especially with
congressional support.
Our plan asks you to explicitly fund the cost sharing
reductions at least through 2019. Funding the CSRs for 2018
alone only will put us right back where we are now in a matter
of months. It will foster uncertainty, threatening to drive up
premiums and force insurers out of the market.
We also need your support by creating a stability fund that
will help us set up reinsurance or similar programs.
We hope you will fully fund and strengthen Federal risk
sharing programs.
We are also requesting tax incentives for insurance
companies to enter counties with only one insurer, while giving
Americans who live in these counties the option to buy the same
insurance that Federal workers have.
Section 1332 of the ACA gives States the ability to
innovate to lower costs while ensuring that certain basic
guidelines are met. Existing regulations limit our ability to
come up with creative solutions. That is why we are asking for
a streamlined waiver submission and approval process and
additional flexibility in applying the budget neutrality
provisions of this section.
We believe all of this can be done in a fiscally
responsible way by offsetting costs.
We need to address the underlying drivers of health care
costs as well. That is why we are asking the Federal Government
to empower consumers with price and quality information. We
cannot stabilize the market without funding health priorities
that reduce costs like weight management, tobacco cessation,
family planning, and injury prevention.
Governors and the States have proven that we can innovate.
We are like startup companies. We learn from mistakes. We tweak
and constantly improve. Fine is never good enough. That is part
of being laboratories of democracy.
In Colorado, we are trying to stretch Federal dollars and
to pinch pennies. We are reducing costs and promoting a
competitive market while improving care and increasing
transparency.
We have a lot to be proud of, but recent Federal action and
inaction is undermining our efforts. It is time for the Federal
Government to work with us not against us.
Without your help, it is like climbing one of Colorado's
famous 14,000-foot mountains in winter without a parka or
crampons. It cannot be done. We need immediate Federal action
and responsible reforms that preserve coverage gains and
control costs.
I appreciate your efforts in calling this hearing and
returning to regular order in the Senate. Lasting solutions
that make health insurance more affordable and markets more
stable will need support from both sides of the aisle and
leadership from States.
I look forward to answering your questions.
[The prepared statement of Governor Hickenlooper follows:]
Prepared Statement of Hon. John W. Hickenlooper
summary
``In Colorado, we have implemented the Affordable Care Act . . .
For many Coloradans, it has been a success. . . Around 600,000
Coloradans now have care because of the ACA. Many people are angry, and
have a right to be . . . For the 400,000 Coloradans in the individual
marketplace, many continue to struggle.''
``It's a big problem, but our bipartisan group of Governors,
including Governor Kasich, who is not here, and Governor Bullock, here
today, has been working on common sense solutions . . . ''
``Our plan asks you to explicitly fund the cost sharing reductions
at least through 2019. Funding the CSRs for 2018 only will . . . foster
uncertainty surrounding these payments, threatening to drive up
premiums and force insurers out of the market.''
``We also need your support as we work to stabilize the market by
creating a stability fund, that will help us set up reinsurance or
similar programs.''
``We're also requesting tax incentives for insurance companies to
enter counties with only one insurer on the exchange, while giving
Americans who live in these counties the option to buy the same
insurance that Federal workers have.''
``Section 1332 of the ACA gives States the ability to innovate to
lower costs while ensuring that certain basic guidelines are met. . .
We're asking for a streamlined waiver submission and approval process,
and additional flexibility in applying the budget neutrality provisions
of this section. We believe all of this can be done in a fiscally
responsible way by offsetting costs.''
``Recent Federal action--and inaction--is undermining our efforts.
It's time for the Federal Government to work with us, not against us.
``We need immediate Federal action and responsible reforms that
preserve coverage gains and control costs. . . Lasting solutions that
make health insurance more affordable and markets more stable will need
support from both sides of the aisle, and leadership from States.''
______
introduction
Good morning. Thank you Chairman Alexander, Ranking Member Murray
and members of the committee. I appreciate the opportunity to testify
and share with you our bipartisan plan for stabilizing the individual
health insurance market.
In 1932, Justice Louis Brandeis popularized the idea that ``States
are the laboratories of democracy.'' He said ``a State may, if its
citizens choose, serve as a laboratory; and try novel social and
economic experiments without risk to the rest of the country.''
In other words, States are where the rubber meets the road on the
highway of the American experiment.
In Colorado, we have implemented the Affordable Care Act for 7
years--as long as I've been Governor. For many Coloradans, it has been
a success. With bipartisan support, we expanded Medicaid and created a
State based marketplace, known as Connect for Health Colorado. Around
600,000 Coloradans now have care because of the ACA.
We have dealt with its complicated provisions, benefited from its
good intentions, and created a culture of innovation.
Many people are angry, and have a right to be. We need to move
toward a system that compensates quality, not quantity. The United
States is on a lonely island among other high-income nations: we spend
almost twice as much for worse care.
For the 400,000 Coloradans in the individual marketplace, many
continue to struggle. Colorado's Western slope--which includes some of
our most rural areas--has 14 counties with only one insurer on the
exchange. It is also home to some of the highest premiums in the
country: A 60 year old in rural Craig, CO making less than $50,000 will
pay over $12,000 per year on premiums alone--around 25 percent of
income.
That is simply unacceptable.
Even worse, our Division of Insurance is projecting premiums will
increase by approximately 27 percent for 2018.
It's a big problem, but our bipartisan group of Governors,
including Governor Kasich, who is not here, and Governor Bullock, here
today, has been working on common sense solutions to help make
insurance more affordable and markets more stable for this crucial 8
percent of the population.
We can do a lot at the State level, especially with congressional
leadership.
Our plan asks you to explicitly fund the cost sharing reductions at
least through 2019. Funding the CSRs for 2018 only will put us right
back where we are now in a matter of months. It will foster uncertainty
surrounding these payments, threatening to drive up premiums and force
insurers out of the market.
We also need your support as we work to stabilize the market by
creating a stability fund, that will help us set up reinsurance or
similar programs.
We hope you will fully fund and strengthen Federal risk sharing
programs that will help amplify our efforts.
We're also requesting tax incentives for insurance companies to
enter counties with only one insurer on the exchange, while giving
Americans who live in these counties the option to buy the same
insurance that Federal workers have.
Section 1332 of the ACA gives States the ability to innovate to
lower costs while ensuring that certain basic guidelines are met.
Existing regulations limit our ability to come up with creative
solutions. That's why we're asking for a streamlined waiver submission
and approval process, and additional flexibility in applying the budget
neutrality provisions of this section.
We believe all of this can be done in a fiscally responsible way by
offsetting costs.
Bringing down health insurance premiums will require us to address
the underlying drivers of health care costs. That's why we ask the
Federal Government to fully commit to paying for value over volume and
empower consumers with price and quality information.
We can't stabilize the market without funding health priorities
that reduce health care costs like weight management, tobacco
cessation, family planning and injury prevention, just to name a few.
Governors and States have proven we can innovate. We're like
startup companies--we learn from mistakes, fix, tweak, and constantly
improve. Fine is never good enough. That's why we're the laboratories
of democracy.
In Colorado, we are stretching Federal dollars and pinching
pennies. We're reducing costs and promoting a competitive market while
improving care and increasing transparency.
We have a lot to be proud of, but recent Federal action--and
inaction--is undermining our efforts. It's time for the Federal
Government to work with us, not against us.
Without your help, it's like climbing one of Colorado's famous
14,000 foot mountains in winter without crampons; it can't be done.
We need immediate Federal action and responsible reforms that
preserve coverage gains and control costs.
I sincerely appreciate your efforts in calling this hearing and
returning to regular order in the Senate. Lasting solutions that make
health insurance more affordable and markets more stable will need
support from both sides of the aisle, and leadership from States.
I look forward to answering you questions.
______
August 30, 2017.
Hon. Paul D. Ryan, Speaker of the House,
H-232, The Capitol,
Washington, DC 20515.
Hon. Mitch McConnell, Senate Majority Leader,
S-230, The Capitol,
Washington, DC 20510.
Hon. Nancy Pelosi, House Minority Leader,
H-204, The Capitol,
Washington, DC 20515.
Hon. Charles E. Schumer, Senate Minority Leader,
S-221, The Capitol,
Washington, DC 20510.
Dear Mr. Speaker, Leader McConnell, Leader Pelosi and Leader
Schumer: As Congress considers reforms to strengthen our Nation's
health insurance system, we ask you to take immediate steps to make
coverage more stable and affordable. The current state of our
individual market is unsustainable and we can all agree this is a
problem that needs to be fixed. Governors have already made restoring
stability and affordability in this market a priority, and we look
forward to partnering with you in this effort.
Most Americans currently have access to a stable source of health
insurance coverage through their employer, or from public programs,
like Medicare and Medicaid. While rising costs are a concern throughout
the system, the volatility of the individual market is the most
immediate concern, threatening coverage for 22 million Americans.
Continuing uncertainty about the direction of Federal policy is
driving up premiums, eliminating competition, and leaving consumers
with fewer choices. Proposed premiums for the most popular exchange
plans are expected to increase 18 percent in 2018 and 2.5 million
residents in 1,400 counties will have only one carrier available to
them on the exchange.
Despite these headwinds, States continue to try to stabilize the
individual market and have developed innovative solutions to preserve
coverage while making insurance more affordable.
Previously, we have written that changes to our health insurance
system should be based on a set of guiding principles that include
improving affordability and restoring stability to insurance markets.
Reforms should not shift costs to States or fail to provide the
necessary resources to ensure that the working poor or those suffering
from mental illness, chronic illness or addiction can get the care they
need.
Based on these guiding principles, we recommend (1) immediate
Federal action to stabilize markets, (2) responsible reforms that
preserve recent coverage gains and control costs, and (3) an active
Federal/State partnership that is based on innovation and a shared
commitment to improve overall health system performance. Just as these
proposals have brought together Governors from across the political
spectrum, we are confident they can attract support across party lines
in both chambers of Congress.
1. Immediate Federal Action to Stabilize Markets
Congress should continue its work to identify reforms that
strengthen insurance markets in the long term, but we need immediate
action to ensure consumers have affordable options in the short term.
Insurers have until the end of September to make final decisions about
participating in the marketplaces. Congress and the Administration need
to send a strong signal now that the individual market will remain
viable this year, next year, and into the future.
Fund Cost Sharing Reduction Payments. The Trump Administration
should commit to making cost sharing reduction (CSR) payments. The
National Association of Insurance Commissioners (NAIC), National
Governors Association, and United States Chamber of Commerce have
identified this as an urgent necessity. The Congressional Budget Office
(CBO) estimates not making these payments would drive up premiums 20-25
percent and increase the Federal deficit $194 billion over 10 years.
Also, Congress should put to rest any uncertainty about the future
of CSR payments by explicitly appropriating Federal funding for these
payments at least through 2019. This guarantee would protect the
assistance working Americans need to afford their insurance, give
carriers the confidence they need to stay in the market, increase
competition, and create more options for consumers. Because the cost of
this initiative is already included in the budget baseline, the
appropriation would not have budget consequences.
Create a Temporary Stability Fund. Congress should create a fund
that States can use to create reinsurance programs or similar efforts
that reduce premiums and limit losses for providing coverage. The House
and Senate each recently proposed $15 billion annually for States to
address coverage and access disruption in the marketplace with a goal
of lowering premiums and saving money on premium subsidies. We
recommend funding the program for at least 2 years and fully offsetting
the cost so it does not add to the deficit.
Offer Choices In Underserved Counties. Congress should foster
competition and choice in counties where consumers lack options because
there is only one carrier on the exchange. We ask Congress to encourage
insurance companies to enter underserved counties by exempting these
insurers from the Federal health insurance tax on their exchange plans
in those counties. We also ask Congress to allow residents in
underserved counties to buy into the Federal Employee Benefit Program,
giving residents in rural counties access to the same health care as
Federal workers. While these proposals may be temporary solutions, they
will help provide Americans with additional choices until other
policies have improved the market dynamics.
Keep The Individual Mandate For Now. Finally, to prevent a rapid
exit of additional carriers from the marketplace, Congress should leave
the individual mandate in place until it can devise a credible
replacement. The current mandate is unpopular, but for the time being
it is perhaps the most important incentive for healthy people to enroll
in coverage. Until Congress comes up with a better solution--or States
request waivers to implement a workable alternative--the individual
mandate is necessary to keep markets stable in the short term.
2. Responsible Reforms That Preserve Coverage Gains and Control Costs
Federal action to stabilize markets is only the first step.
Governors have been eager to pursue reforms that strengthen health
insurance markets in our States, but uncertainty about the ACA and the
status of Federal subsidies to support the individual market have made
it difficult to proceed. Working alongside States, the Federal
Government must make reforms that will preserve and expand gains in
coverage, while controlling costs for consumers.
In efforts to augment the potential Federal actions we recommend in
this letter, we attach a menu of options that individual States may
consider or pursue. The options can be considered alone or assembled
into a comprehensive strategy to achieve the interrelated goals of
maximizing market participation, promoting appropriate enrollment,
stabilizing risk pools, and reducing cost through coverage redesign.
Different States will take different approaches. We all agree on and
support the proposals contained in this letter, but each State will
choose the State-based approaches that best fits their individual
situation.
Maximize Market Participation. Approximately 22 million people now
purchase coverage through the individual market, but another 27 million
remain uninsured. Increasing coverage uptake among the uninsured would
improve the risk pool and set in place a virtuous cycle of lower
premiums leading to higher enrollment.
First and foremost, encouraging younger, healthier people to enroll
in insurance and educating Americans about the importance of coverage
can help improve the risk pool. The Federal Government should continue
to fund outreach and enrollment efforts that encourage Americans to
sign up for insurance. Many States invest in similar efforts, and all
States need the Federal Government's support to maximize participation
from younger, healthier people.
Also, making insurance more affordable is a key part of increasing
participation in the marketplace. For example, current law includes a
glitch that makes some families who can't afford insurance through
their employer ineligible for tax credits on the exchange. Congress
should fix the ``family glitch'' and give more working families access
to affordable coverage.
Promote Appropriate Enrollment. Some consumers choose to enroll in
a plan only when they need health care, stop paying premiums at the end
of the year, or purchase exchange plans even though they are eligible
for Medicare and Medicaid--all of which drives up costs in the
individual market. Congress and individual States can reverse this
effect, for example by shortening grace periods for non-payment of
premiums, verifying special enrollment period qualifications, and
limiting exchange enrollment for those who are eligible for other
programs.
Stabilize Risk Pools. The ACA created several risk sharing programs
to help effectively manage the risk of the individual insurance market.
However, the Federal Government has gone back on its commitment to
these programs, in some cases refusing to fully fund risk sharing
programs. Congress should modify and strengthen Federal risk sharing
mechanisms, including risk adjustments and reinsurance. This commitment
to Federal risk sharing will augment the State efforts that are
supported by the stability fund.
Reduce Cost Through Coverage Redesign. States have an important but
limited role in selecting essential health benefits (EHB). The
Secretary of Health and Human Services (HHS) should allow States more
flexibility in choosing reference plans for the 10 EHB categories than
are currently allowed by regulation. HHS should give States that
develop alternatives to EHBs that meet the requirements of Section 1332
of the ACA the opportunity to pursue and implement innovative
approaches.
3. An Active Federal/State Partnership
States can pursue many reforms without Federal assistance. However,
in some cases States are constrained by Federal law and regulation from
being truly innovative. We urge Congress and Federal agencies to work
with States to overcome these constraints, focusing first on improving
the regulatory environment, supporting State innovation waivers, and
controlling costs through payment innovation.
Improve the regulatory environment. The ACA created a greater role
for the Federal Government in State health insurance markets, but
retained States as the principle regulators of those markets.
Recognizing the need for some common Federal standards, the Federal
Government should not duplicate efforts or preempt State authority to
regulate consumer services, insurance products, market conduct,
financial requirements for carriers, and carrier and broker licensing
in States that already effectively perform these functions. Also,
Federal agencies should review the list of regulatory reforms
identified by NAIC to stabilize markets.
Support State innovation waivers. Section 1332 of the ACA permits a
State to request permission to waive specific provisions of the ACA,
including the individual and employer mandates, as well as requirements
for qualified health plans, essential health benefits, tax credits and
subsidies, and exchanges. A State may not waive community rating
requirements, prohibitions on preexisting condition exclusions,
lifetime maximum coverage limits, preventive care mandates, or coverage
for adults as dependents through age 26. To obtain a waiver, a State
must demonstrate its plan would not increase the Federal deficit, would
not reduce the number of people with health coverage, and would not
reduce the affordability or comprehensiveness of coverage.
Many States view Section 1332 as an opportunity to strengthen
health insurance markets while retaining the basic protections of the
ACA. We recommend HHS streamline and coordinate the waiver submission
and approval process, including an option for States to easily build on
approved waivers in other States, and an option to fast-track waiver
extensions. We also recommend HHS rescind its 2015 guidance on Section
1332 and clarify that States may combine waivers into a comprehensive
plan and measure deficit neutrality across the life of the waiver and
across Federal programs.
Control Cost Through Payment Innovation. Coverage is important, and
coverage reforms can help contain costs, but eventually our Nation
needs to confront the underlying market dynamics that are driving
unsustainable increases in the cost of care. With the support of the
Federal Government, States are resetting the basic rules of health care
competition to pay providers based on the quality, not the quantity of
care they give patients. This is true in our States, where we are
increasing access to comprehensive primary care and reducing the
incentive to overuse unnecessary services within high cost episodes of
care.
Congress and the Administration should make a clear commitment to
value-based health care purchasing. For example, Medicare and other
Federal programs should be allowed to participate in multi-payer State
Innovation Models. The Administration should align priorities for
value-based purchasing across all Federal agencies, including HHS, CMS,
SAMHSA, CDC, VA, AHRQ, HUD, DOL, OMB and others. Payment innovation
projects should be funded through the Centers for Medicare and Medicaid
Innovation and expanded to more States.
Empowering consumers with information about the cost and quality of
care can help to drive competition that will lower costs. New tools
should be developed to provide consumers with better information about
how much health services cost or which providers offer the best quality
of care. For example, the Federal Government should work with States to
promote consumer-facing websites and apps that let consumers shop for
health care based on quality and cost. Many States have developed all
payer claims databases to provide greater transparency for consumers,
and should be allowed to include claims information from federally
regulated ERISA plans in these databases.
We strongly encourage that Congress and the Administration take
immediate action to stabilize the individual health insurance
marketplace. If there is a clear signal to consumers and carriers that
the individual market is viable, then additional State-based reforms
will be more manageable and we can succeed in preserving recent
coverage gains and controlling costs. As we move beyond the immediate
crisis, the real challenge over time will be to confront the underlying
cost drivers of health care spending, and reset incentives to reward
better care for individuals, better health for populations, and lower
cost.
Lasting solutions will need support from both sides of the aisle,
and we applaud the bipartisan efforts that have now commenced in both
the House and Senate. We ask that you support these efforts to return
to regular order, allowing committees to work in an open, transparent
and bipartisan manner. Governors have extensive expertise implementing
changes to our health insurance system, and we stand ready to work with
you and your colleagues to develop solutions that are fiscally sound
and provide quality, affordable coverage for our most vulnerable
citizens.
Sincerely,
John Kasich, Governor, State of Ohio; John Hickenlooper, Governor,
State of Colorado; Brian Sandoval, Governor, State of Nevada; Tom Wolf,
Governor, State of Pennsylvania; Bill Walker, Governor, State of
Alaska; Terence R. McAuliffe, Governor, State of Virginia; John Bel
Edwards, Governor, State of Louisiana; Steve Bullock, Governor, State
of Montana.
______
A Bipartisan Approach to Strengthen Our Nation's Individual Health
Insurance Markets
menu of state reform options to supplement federal reforms
Maximize Carrier Participation
Waive exchange fees for carriers who are the last
remaining carrier in a county.
Encourage participation across lines of business (Medicaid
MCO, State employee, etc.).
Streamline payor compliance (quality reporting, coverage
transparency, etc.).
Maximize consumer participation
Increase outreach to attract healthier individuals.
Provide adequate and effective subsidies and/or premium
tax credits.
Encourage younger people to get coverage.
Encourage continuous coverage (e.g., reward those who
renew coverage every year, penalize those who stop paying premiums,
require SEP enrollees to maintain coverage, and/or late enrollment
penalties or waiting periods for non-continuous coverage).
Promote Appropriate Enrollment
Verify special enrollment period (SEP) enrollment
qualifications (NAIC).
Limit individual market enrollment for those eligible for
other public programs (NAIC).
Prevent third-party payers from diverting consumers from
Medicare coverage (NAIC).
Shorten the 90-day grace period for non-payment of
premiums (NAIC).
Stabilize Risk Pools
Administer a reinsurance or similar program.
Pursue strategies to create larger, more stable pools
(e.g., consider combining individual and small group markets, or
consider combining Medicaid and marketplace populations).
Reduce Cost Through Coverage Redesign and Payment Innovation
Apply for a State Innovation Waiver to pursue innovative
strategies to strengthen health insurance markets while retaining the
basic protections of the ACA. Section 1332 of the ACA allows a State to
request permission to waive provisions related to individual and
employer mandates, qualified health plans, consumer choices and
insurance competition through marketplaces, and premium tax credits and
cost-sharing reductions in the marketplace provided that State covers
as many people with coverage that is as affordable and as comprehensive
without adding to the Federal deficit.
Encourage the adoption of population-based payment models
that reward the effective management of total cost of care.
Encourage the adoption of episode-based payment models
that reward the effective management of specialty care.
Enable the use of value-based insurance design and
wellness incentives to tie the level of coverage for chronic care to
personal responsibility for health outcomes achieved.
Increase transparency in cost and quality (e.g., promote
the use of consumer facing websites, include ERISA plan data in all
payer claims databases).
The Chairman. Thank you, Governor Hickenlooper.
Governor Herbert, welcome.
STATEMENT OF HON. GARY R. HERBERT, GOVERNOR, UTAH
Governor Herbert. Thank you, Chairman Alexander and Ranking
Member Murray and members of the committee. We are all honored
to be here to address you on this very important issue.
The market for individual health insurance protect, among
others, the families of Utah's entrepreneurial self-employed.
It would be irresponsible to allow these markets to collapse
simply because of political paralysis or inaction.
Having served as Chairman of the National Governors
Association, as well as the Western Governors Association, and
soon to be the next President of the Council of State
Governments, I have a broad appreciation for the role that
States have in our Federal system. I would, therefore, urge
Congress to get past the health care impasse and delegate the
responsibility to find solutions to the laboratories of
democracy, as Governor Hickenlooper has mentioned, our 50
States.
I would recommend allowing each State to take on the full
role of regulating our health insurance markets. You can
diversify the social, economic, and political risk associated
with this policy change by letting the States experiment as
laboratories of democracy to determine what policy works and
what policy does not work.
For your information, the State of Utah has one of the
lowest health care costs in the Nation. That certainly stems
from our local culture and our favorable demographics, but it
also comes from such practices as evidence-based measures of
effectiveness, eliminating duplication of services, innovative
use of managed care organizations, and empowering doctors and
patients alike to make more informed choices.
I believe that if you will empower the States to determine
their own health care destiny, the States will innovate and
create practical solutions for the most complex health care
issues of the day. We will learn from each other, and therefore
we will improve.
Under current law, empowering States means greater
flexibility in defining essential health benefits and
simplifying the State innovation waiver process.
True self-determination goes well beyond coming to the U.S.
Department of Health and Human Services with hat in hand on
bended knee and with a hope for favorable treatment. True self-
determination would mean a block grant of Medicaid and
Affordable Care funds with a formula that gets us to funding
parity in the 50 States.
Before achieving that vision of a vibrant State-based
approach, Congress needs to provide immediate certainty to the
individual insurance markets.
To that end, I recommend establishing a clearly defined
transition period. This would allow markets to incentivize the
broadest, continuous participation in the individual insurance
market. This should be done while anticipating the adjustments
in a market based on greater State-level autonomy.
I personally am not a fan of cost sharing reduction
payments. Nevertheless, in the near term, individual insurance
markets need predictability in order to price their products
adequately. The sudden demise of CSRs would destabilize Utah's
individual insurance market, putting at risk some 110,000
Utahans who benefit from this program. A transition should
include funding for CSRs through at least 2018 or 2019.
We should also look to market-oriented incentives to
maintain and increase continuous participation in individual
health insurance markets. For example, Congress could
immediately reduce the cost of premiums by eliminating the
health insurance tax. Insurance products could be better
tailored to demand by allowing insurers to underwrite a wider
array of cost-effective products, including more affordable
high-deductible plans. Participation could be incentivized by
greater flexibility in health savings accounts. The Federal
Government should fund a temporary insurance program for high-
risk pools with an option for States to operate their own risk
stabilization programs.
At the bottom of all this, health insurance needs to be
able to do its job of pooling risks and protecting against
unforeseen health care costs instead of being used for some
vehicle for social justice reform.
To get there, the excessive burden of regulatory
restrictions that we have placed on insurance policies needs to
be peeled back, and that needs to be done with predictability
and transparency.
Frankly, most of America's consumers do not care whether or
not a lot is repealed and replaced or modified and improved.
Utahans want us to know that if they are prudent in their
planning and budgeting, that they will be able to purchase
reliable health insurance to protect them against life's
unexpected health challenges. And they need to know that if
they experience a medical catastrophe, that there is a safety
net that will keep them from spiraling into a financial
catastrophe.
The States are better able to address these issues for the
unique populations and unique demographics than is the Federal
Government, which is too often trapped in a one-size-fits-all
mentality. I would urge you to consider a health care future
that gives back to the States the lion's share of
responsibility. It is something that both sides of the aisle
can support, giving more authority to Governors and State
houses. Returning control to the States is both prudent policy,
but it is also prudent politics.
Thank you for listening.
[The prepared statement of Governor Herbert follows:]
Prepared Statement of Hon. Gary R. Herbert
executive summary
Allowing our individual health insurance market to fail without
providing a viable path forward would be irresponsible, but political
paralysis threatens such a collapse.
Our Nation's healthcare impasse stems from principled differences
about the proper role of government with regard to health insurance and
healthcare. Congress can break this logjam by pushing this debate to
each of the 50 States. By letting the States experiment with what works
and what doesn't, Congress can diversify the social, economic and
political risk associated with major policy change.
As it devolves this issue to the States, Congress needs to create a
clear glide path to improved individual insurance markets. To that end,
Congress should:
create a clearly defined transition period during which
Congress should continue to fund cost sharing reduction (CSR) payments;
promote market-oriented incentives to maintain and increase
continuous participation in individual health insurance markets, e.g.,
by expanding high deductible health plans and health savings accounts;
help educate and financially reward individuals for taking
advantage of continuous coverage (vetted outreach programs may be
useful);
reduce the cost of premiums by eliminating the Health
Insurance Tax;
fund a temporary reinsurance program for high risk pools;
peel back the layers of regulatory restrictions that have
been placed on the basic health insurance contract in a predictable,
transparent way.
As Congress points the way to a more stable individual health
insurance market (which in Utah would likely mean fewer market
distorting taxes and subsidies) it should then foster policies that
promote the breakthrough innovations in finance, education, governance
and technology needed for to improve and reduce the underlying costs
associated with medical care.
______
introduction
Thank you Chairman Alexander, Ranking Member Murray and members of
the committee for the opportunity to share my perspective on how to
stabilize our individual health insurance markets.
As you know, the primary regulation of both insurance and medicine
have traditionally been at the State level. It is not immediately
evident that Federal intervention has helped to improve upon the
States' role.
Careful observers agree that the status quo of our individual
health insurance markets is unsustainable.
And most agree that allowing these markets to collapse without
providing a viable path forward would be irresponsible.
And yet, because of Washington DC's political logjam, it appears
that lawmakers might indeed allow this important insurance market that
protects, among others, the families of Utah's entrepreneurial sole
proprietors, to collapse.
This morning I want to share my thoughts about how Congress can
overcome its healthcare impasse, how we can create a smooth glide path
toward a broad and stable individual health insurance market with fewer
market distorting taxes and subsidies, and why we should shift the
national dialog about healthcare from debates about our healthcare
payment system to how we can promote cost-reducing innovations medical
care.
congress can overcome its impasse by returning greater control to the
states
I believe the Nation's healthcare impasse stems from two deeply
rooted differences of thought. The first is that lawmakers have
principled differences about the proper role of government with regard
to health insurance and the second is that lawmakers also have
different viewpoints about which level of government--Federal or
State--should be the primary regulator.
As the past chair of both the National Governor's Association and
the Western Governor's Association, as the next president of the
Council of State Governments, and as one who has governed in a State
where productive collaboration toward shared aims is more important
than ideological purity, I would urge Congress to get past your impasse
on these issues by delegating the issue of government's proper role to
the 50 States.
Please allow each of the States, in their various hues of blue, red
and purple, to take on the primary role of regulating their health
insurance markets. Instead of foisting huge social and economic
experiments on the entire country--too often along narrow party-line
votes--Congress has an opportunity to diversify the social, economic
and political risk associated with major policy change by letting the
portfolio of States experiment with what works and what doesn't.
Utah enjoys among the lowest health care costs in the Nation. Our
costs may be lower because we have the youngest population in the
Nation. They are also lower because of the healthy lifestyle choices of
our people, many of whom regularly enjoy the unparalleled opportunities
for sport and outdoor recreation in our State and many of whom
religiously abstain from alcohol and tobacco.
It is not just our demographics. Utah has been able to keep our
healthcare costs low because of deliberate efforts within our private
healthcare system to use evidence-based measures of effectiveness,
eliminate duplication of services and empower doctors and patients
alike to make more informed choices. We have worked to reduce Medicaid
costs low because of innovative use of managed care organizations.
If you will empower Utah to determine more fully its own healthcare
destiny, I promise you that we will provide the other 49 States with
proven and scalable solutions for their most complex healthcare issues.
And Utah will learn from and emulate the success of others.
Under the Patient Protection and Affordable Care Act, empowering
Utah would mean giving us greater flexibility in defining Essential
Health Benefits. It would mean dramatically simplifying the State
Innovation Waiver process under Section 1332. And it would mean
expanding what could be waived under Section 1332.
Please appreciate that our vision for greater State self-
determination goes well beyond coming to the U.S. Department of Health
and Human Services to ask permission for how we would organize our
insurance markets.
creating a glide path to improved individual insurance markets
In order for the Nation to glide into that vision of a vibrant and
innovative State-based approach, Congress needs to act today to provide
immediate certainty and stability to the individual insurance market.
To that end, I recommend establishing a clearly defined transition
period that allows markets to incentivize the broadest, continuous
participation in the individual insurance market possible while
anticipating the adjustments needed to a market with less
subsidization, less taxation, and less socialization.
continue cost sharing reduction payments in the near term
I do not believe that cost sharing reduction (CSR) payments are the
most transparent and effective way to assist low income individuals.
Nevertheless, in the near term, our individual insurance markets need
predictability in order to price their products adequately. The sudden
demise of CSR support would destabilize Utah's individual insurance
market. In 2016, 110,000 Utahns benefited from the CSR program,
accounting for 63 percent of those receiving health care coverage
through healthcare.gov. As a part of a transition, I recommend funding
for CSRs through 2019.
incentivize the broadest, continuous participation
As Congress considers the fate of the individual mandate, we should
look to market-oriented incentives to maintain and increase continuous
participation in individual health insurance markets. Congress can
immediately reduce the cost of premiums by eliminating the Health
Insurance Tax. The supply of insurance products can be better tailored
to demand by allowing insurers to underwrite a wider array of cost-
effective products.
For example, we would support broadening the kind of wellness
incentives that can attract younger populations, the expanding high
deductible health plans and health savings accounts, and providing
greater flexibility within health savings accounts--such as the ability
to pay for insurance premiums from an HSA. Individuals also need to be
educated about and financially rewarded for taking advantage of
continuous coverage. Publicly funded outreach programs may be useful,
but should be evaluated for their effectiveness.
stabilize through reinsurance
The Federal Government can further stabilize the market by funding
a temporary reinsurance program for high risk pools with an option for
States to operate their own risk stabilization programs.
allow insurance to insure
Insurance pools risk in order to contractually cover the costs
associated with defined contingent losses. Although straightforward in
concept, pooling risk in a way that is affordable to the insured and
profitable to the insurer has never been easy.
If losses and costs are not contingent, in other words, if they are
certain and known, then insurance premiums no longer pool probabilistic
risk, but instead they socialize known costs. By forcing the coverage
of pre-existing conditions, by narrowing the bands of risk, by
dictating coverages and uniforming prices, government has largely
robbed insurance of its risk-pooling function. And the Federal
Government has further complicated matters by providing an opaque
substitute for income support by instead creating public subsidies for
insurance contracts.
Congress can help stabilize the individual health insurance market
by allowing it to do the job of insuring against unforeseen health
costs instead of using it as a vehicle for other social policies. To
get there, Congress should peel back the layers of regulatory
restrictions that have been placed on the basic insurance contract in a
predictable, transparent way.
focus on innovation
The national debate about health care has been primarily about our
healthcare payment system. I believe that if States were to play a
larger role in facilitating their insurance and healthcare markets that
the conversation would turn to how to dramatically reduce the cost of
health care. I don't believe States, for example, would choose to stunt
innovation in medical technology by putting an excise tax on medical
devices the way Congress has.
If we can help support robust competitive markets to operate in
health care, we can turn from asking about who should be paying for
medical care to questions like: How can we spur disruptive innovation
in telemedicine, artificial intelligence, medical robotics and
genomics? How can we continue to develop new breakthrough drugs without
bankrupting those who pay for the drugs? How can we creatively increase
the use of non-physician medical labor? How can we deliver more cost-
effective education for nursing, health sciences, and medicine? How can
we empower patients to manage better their own health with well-
informed choices?
conclusion
Thank you for letting me visit with you today about some aspects of
our Nation's healthcare challenges.
My strong sense is that when it comes to their healthcare, the
people of Utah--like most Americans--care about results rather than
slogans. Whether or not a law is repealed and replaced, or modified and
improved, what they need to know is that if they are prudent in their
planning and budgeting, that they will be able to purchase reliable
health insurance that will protect them from life's vicissitudes. And
they need to know is that if they should (heaven forbid) experience a
medical catastrophe, that there is a safety net that will keep it from
spiraling into a financial catastrophe.
My constituents don't particularly care about the details of ``cost
sharing this'' or ``mandated that.'' What they would appreciate,
however, is a realistic vision for an affordable, reliable, responsive,
professional, and patient-focused healthcare system.
I believe that the States can do this better for their unique
populations than can the Federal Government. That is why I would urge
you to consider a healthcare future that gives back to the States the
lion's share of responsibility. Given the impasse at the Federal level,
federalism is both prudent policy and prudent politics.
As you point toward that future--which in our State would mean
fewer market distorting taxes and subsidies--please provide a measured
and transparent transition rather than shock therapy. And as you step
back from debates about who should pay for what, please consider how to
foster an environment where financial, organizational and technological
innovations for improved, less-expensive medical care can thrive.
______
The Chairman. Thank you, Governor Herbert. And thanks to
all of the Governors.
The Governors stuck to 5 minutes. I am going to ask the
Senators if you will as well. And we will begin with Senator
Enzi.
Statement of Senator Enzi
Senator Enzi. Thank you, Mr. Chairman and Ranking Member.
Thank you, Governors. A lot of good suggestions there.
I am going to refer to what we are trying to do and what
Senator Alexander is suggesting is biting off some pieces, but
I am going to call it eating the whale one bite at a time to
make it more bipartisan.
[Laughter.]
Governor Bullock. There was no intent on that one, sir.
Senator Enzi. And we have a whale of a problem that we have
to solve, and you are kind of at the heart of the laboratories
of being able to do that. I used to serve in the Wyoming
legislature, and of course, naturally then have a lot of
confidence in the ability of legislators.
Earlier today we talked about the section 1332s and having
the possibility of, if it is approved for one, doing it for
all. I would add to that--and I think that was part of the
discussion--that there be a Governor opt-out of that particular
thing. I would add to that--and I know that there is a
difference between when the Governors that are around all the
time and the legislators who are around some of the time. I
have always suggested that there be an opt-out or an opt-in by
the Governor provided when the legislature meets, they agree. I
do not know what happens if there is not agreement. I am
certain that there would be some good suggestions that would
come out of that.
Yesterday, we talked with the insurance commissioners, and
they talked about the need for reinsurance and the high-risk
pools. And Maine has an invisible high-risk pool that I think
could be useful, again provided there was an opt-out by the
Governors with the approval of the legislature.
We also had a good explanation yesterday of small business
health plans or association health plans and how that could
help to reduce the individual market by having people be a part
of a bigger group that would have more clout for doing
legislating.
Let me start my questions with Governor Baker because you
have explored the 1332 waiver. I think all of you have explored
it. I would be interested in all of your opinions on that,
where you are in the process and what suggestions you would
have for changing that process for the 1332 waiver.
Governor Baker. Thanks very much for the question.
Let me just say this. We literally are filing a 1332 waiver
this week, but that is the official filing. We have actually
submitted what I would call kind of a template or an outline of
what it is we would like to talk about doing under 1332
previously to the folks at CMS. One of the innovations that the
current administrator brought to this program was to stay
instead of having you file a waiver and then have us get into a
big debate about every element of it, how about you file what
she called kind of a pro forma on what it is you would like to
do. Let us review the game plan you have in mind, tell you
where you think have soft spots and weaknesses, and then we
will help you make sure that by the time you actually submit a
formal document, we have some agreement about what it is you
are trying to do and where we think our opportunity to support
that might be. And I thought that was administratively a
terrific reform.
The one thing I would say generally about this is there are
things that are program issues which I think have, for all of
us, consequences in terms of how we deal with our legislature
on some of this. A lot of the administrative stuff that is part
of the relationship that goes on between States and the Federal
Government is not particularly useful to us, and I would argue
it is not particularly useful to the Federal Government either.
It chews up an enormous amount of time.
If I had to pick the one thing I would say on 1332 is if
you could help Washington figure out the difference between
what is a debate over how you administer something and what is
a debate over what a program design looks like, that would be
great. There is a ton of time that is being spent on this
administrative stuff that I do not think translate into much
value-added for anybody.
Senator Enzi. Thank you.
Governor Herbert, would you care to quickly comment on the
difference between Utah and Massachusetts?
Governor Herbert. There are significant differences. He has
a lot more people than we have for one thing. We have a younger
population. We have a median age of 30. Our health care needs
would be different. That is why I say we need to respect the
regional differences and the demands in the marketplace for
health care coverage. They are not all the same, and that is
why we would encourage flexibility.
On the waiver requirements, the biggest problem really is
it just takes so long. We put in a waiver ourselves this past
August. That is a year ago. We still have not received an
approval or denial. Streamline the process for waivers. I
expect that every State would have some idea of what a waiver
would look like, what they would need in their respective
States. We just need to streamline the process. Once it has
been approved by one State, it ought to be automatically
approved by another State.
Senator Enzi. Thank you. My time has expired.
The Chairman. Thanks very much.
Senator Murray.
Senator Murray. Again, thank you to all of you for being
here. This is really valuable.
Governor Hickenlooper, I want to start with you and thank
you again for testifying today and for working with bipartisan
Governors across the country to propose some solutions to
stabilize the individual market. It is really my hope that we
can use some of that same bipartisan approach here in this
committee to come up with solutions and really appreciate your
input on that.
In your proposal with the eight other Republican and
Democratic Governors, you made several recommendations to
immediately stabilize the market. One of those is to establish
funding for reinsurance. Can you talk to us a little bit about
why that will help bring premiums down?
Governor Hickenlooper. Yes. Thank you. As you say,
especially this committee has a record of bipartisan solutions
to some of the most vexing problems the country has faced. If
we are going to have any committee in whose hands to put our
fate, we are glad it is you guys.
We looked at the reinsurance as one of the--I would say the
cost sharing is the most important thing. Reinsurance is a very
close second just because so many of these pools end up being
dominated by the least healthy individuals, especially people
that have chronic diseases. End stage renal disease end up in
dialysis all the time. These are very expensive patients. When
they end up in one pool--one of our carriers has three
different patients that cost more than $5 million a year. That
raises everybody's premium. What happens is if you are able to
find some sort of cost sharing--it could be by disease. It
could be by the cost to the patient, but some way to have a
reinsurance pool, which is what happens in pretty much every
other industry, then you are able to drive down the premium
cost, the average cost for everyone, and dramatically increase
people's participation.
I think one thing we all agree is that one of our great
challenges is to make sure that we get more people
participating in the system because that is what drives down
premium costs. It is a reinforcing feedback loop. Reinsurance
pools I think is one of the best ways to do that, and whether
we do it by the Alaska model where they took existing revenues
and were able to see--I think they saw a 30 percent--a 28
percent reduction in premiums costs. That is remarkable.
Senator Murray. I was really glad to see that you agreed
that we should not roll back the guardrails that protect people
with preexisting conditions and appreciate that input as well.
That was very important.
Governor Bullock, thank you for being here. Senator Tester
is always talking to me about this. It is great to have a
fellow Montanan here to talk about this.
This is actually our second hearing on market
stabilization. And yesterday, as you know, we heard from five
of our Nation's insurance commissioners about the unusual steps
they are being now forced to take because they do not know
whether the Trump administration is going to maintain the out-
of-pocket cost reduction program, CSR.
Governor Baker noted in his testimony that almost as soon
as the 2018 rates are finalized, insurers will begin preparing
their premium proposals for 2019.
In the recommendations that you made with Governors Kasich
and Hickenlooper, you propose Congress provide more than just 1
year of certainty for out-of-pocket cost reduction. Talk to us
about why 1 year of certainty is not enough?
Governor Bullock. Thank you, Senator Murray. I fully
recognize that Congress will continue to work on health care
reform as we talk about immediate stabilization of the
individual market.
In Montana, we have three insurers. All 56 counties are
covered. As I said in my testimony, a 10X increase for 2018
because it is already filed because of the uncertainty of the
CSR payments going forward. Those same insurers are already
working on the 2019 rates, and they will be in earnest by doing
it by next spring of 2018.
The only way that we are going to get some sort of
certainty is if insurance companies and others feel that there
will be predictability at least for a period of time while you
all discuss greater reform. I do not think the cost sharing
reduction payments of 1 year is sufficient for that. I would
love to see 3 years. Certainly if you do overall reform in
other areas, you could always trim that back. You are sending a
message to the market that there is going to be some stability
there, and then they can plan accordingly.
Senator Murray. Thank you very much.
Governor Baker, Massachusetts has a very long history with
health care reform. I know your State is always looking at ways
to promote stability and bring down costs. As was just talked
about, you are currently applying to create a State-based
premium stabilization fund to protect against the possibility
that the Trump administration discontinues the out-of-pocket
cost reductions. I assume that developing the premium
stabilization fund proposal requires a lot of State resources.
Correct?
Governor Baker. The answer to that would be yes.
Senator Murray. Would you not agree that it would be better
to have long-term certainty for the out-of-pocket cost
reduction program rather than your State taking up these
extraordinary steps?
Governor Baker. In addition to the fact that open
enrollment begins within the next 30 to 40 days, you have a lot
of people who have made a lot of decisions, including people
who buy insurance, based on assumptions about what products are
going to be available to them and what they are going to pay
for them. I think the reason the CSRs are so important at this
point in time--I agree with what others have said, which is it
creates stability and a sense of consistency for people at a
point in time when they are literally going to be purchasing
coverage for the next year.
As I said in my remarks, we basically had people price this
stuff based on the assumption that the CSRs would be in place.
If the CSRs are not in place, the carriers are going--and our
market mostly is nonprofit carriers, too, who are local. If the
CSRs are not in place, they are going to have to reprice those
products, and they are probably going to go up by somewhere
around 20 percent, which is going to be a real problem for the
people who buy those plans. By the way, it is also going to
shift a whole bunch of spending onto the advance premium tax
credits to support those people who would have been buying
coverage with the support of the CSRs.
Senator Murray. I appreciate that. I apologize to all of
you. I am going to have to leave shortly. We are doing a markup
on the Health, Education Committee that I am ranking member on.
I really appreciate all of you being here and our committee
members for being here as well. Thank you.
The Chairman. Thank you, Senator Murray. We want you to go
to that other appropriation hearing because it is a good bill,
and from what I have heard about it, I am looking forward to
voting for it.
Senator Isakson.
Statement of Senator Isakson
Senator Isakson. Thank you, Senator Alexander. Thanks to
you and Senator Murray for the approach that you have taken on
this. You have been commended by these Governors, and that
should be echoed again by us on the committee. We do have a
bipartisan challenge and a bipartisan problem that is going to
require a bipartisan solution. I appreciate all of you
recognizing that. I appreciate Lamar and Patty's effort to make
sure we do the same on the committee.
Governor Haslam, welcome. You are a great neighbor. You all
were, unfortunately, a rude guest when you all beat Georgia
Tech the other night as we opened up the Mercedes Dome. It was
a great football game. Congratulations.
Governor Haslam. A lot of us stayed up later than we should
have.
Senator Isakson. As usual, when you talk about Tennessee,
Governor Alexander was involved because he was also the
President of the University of Tennessee before he was
Governor--before or after he was Governor of Tennessee.
Governor Haslam. After.
Senator Isakson. We share a lot of things together. One of
them is we have a large rural area, and we have a huge problem
in Georgia and I think Tennessee does too in terms of rural
health care and the loss of hospitals in our State in the rural
area. Are you all dealing with that in Tennessee now?
Governor Haslam. We are. Governor Bullock referred to that
in his testimony. I think that is a pretty national issue, but
we definitely are. I think caught up in that you have some
issues around coverage, but quite frankly, the health care
industry itself is changing a lot. As they consolidate, I think
all of us are afraid that the trend will be to lose more
hospital beds in rural areas.
Our challenge, quite frankly, is tied to that. It is about
rural economic development. It is keeping jobs and people in
those areas. That is what will attract the hospital beds.
Governor Bullock's point was that it is a little bit of a
chicken and egg. As you lose the hospitals, it is hard to
attract jobs. That is a consistent challenge, I would bet, for
everybody in this group.
Senator Isakson. Rural areas have a higher percentage of
non-insured patients coming to their doors, and that doubles
and triples and exacerbates the problem.
Governor Haslam. I do not know this, but I have been in
Tennessee. Steve again showed Lamar's chart about how many
people are in the individual marketplace. I bet a
disproportionate share of those are rural folks in Tennessee.
Senator Isakson. You just used the magic phrase in terms of
disproportionate share.
Are you familiar with the DISH payment?
Governor Haslam. I am very much.
Senator Isakson. Those were being phased out under the
Affordable Care Act under the belief that if health insurance
was available to everyone and everyone was covered, then those
who are indigent and could not pay and are poor, would not just
go to a indigent care hospital but would go to one where they
were covered because they had insurance. That did not happen.
Those payments are going away, which is causing big problems in
Nashville I am sure, which is one of the major health centers,
and it is in Georgia.
Do you have any suggestions on this disproportionate share
and what we should do in the short term?
Governor Haslam. Ultimately I think it is part of this
larger issue that we are talking about. You addressed it when
the DISH payments went away, and then particularly in States
like Georgia and Tennessee that did not expand, those hospitals
were caught in a particularly difficult situation.
In terms of short term what we can do about that within the
confines of the budget bill that you have, I do not have an
answer for that right now.
Senator Isakson. I think Governor Baker, Governor Bullock
mentioned this. Maybe others did as well. One of the key things
that we have got to do is find some way to get everybody
covered, get everybody participating, and getting people who
are young and not at high risk for expensive diseases in their
early years to help us ameliorate the cost of the senior
citizens like me who are going into the hospitals at higher
cost health care.
I was listening to you talk. I remember when I was in the
State legislature in the 1970s and 1980s, the States faced a
big crisis in terms of automobile insurance and liability
insurance and finally created something called no fault. I have
forgotten the first State to do it, but the States, one at a
time, created no fault laws where you could not get your car
tags or you could not drive your car unless you had minimum no
fault insurance for liability.
Is there a comparison anybody has thought about doing in
terms of health care in the States where you could have a quid
pro quo where you get health insurance when you get your car or
whatever it might be?
Governor Baker. We have not gone there. In Massachusetts,
basically each year when you file your State income tax, you
have to demonstrate that you have coverage continually for the
previous 12 months. If you do not have coverage for the
previous 12 months, you pay a fee, and that fee goes into the
fund that pays for uncompensated care. Generally speaking, most
people choose to either take the insurance through their
employer--by the way, that was the single biggest take-up when
we put the individual mandate in place, which was people who
had access to coverage through their employers who had not been
taking it took it. That was, in fact, probably the single
biggest move with respect to the number of people who are
covered. We should remember here that a lot of people do have
access to coverage through their employer. They just choose not
to take it for a whole bunch of different reasons. When we put
the mandate in place, they took it, which made a really big
difference with respect to the number of people we actually had
covered.
Senator Isakson. Which is why we put the mandate in the ACA
as well.
Thank you for your leadership. I thank all of you for being
here.
Thank you, Mr. Chairman.
The Chairman. Thank you, Senator Isakson.
Senator Sanders.
Statement of Senator Sanders
Senator Sanders. Thank you, Mr. Chairman. Let me concur
with virtually everybody by thanking you for holding these
hearings. I think a lot of pain and time would have been saved
perhaps if we held these hearings 6 months ago rather than
going through what we went through.
I want to thank the Governors for being here. As a former
mayor, I am more than aware that a whole lot of innovation
comes at the local and State level and the Federal Government
can learn a lot from what happens locally.
Mr. Chairman, in your opening remarks, you talked about the
need to ask larger questions, and I think that is exactly
right. One of the larger questions comes about--I think
Governor Baker made the point that young and healthy people
today may have an accident tomorrow and they will not be so
healthy and they are going to run up large insurance costs. In
my State and all over this country, I have talked to people who
are scared to death about losing the health insurance they have
if some of these Republican proposals were passed.
That raises the larger question. Why is it that in the
United States of America we are the only major country on earth
that does not guarantee health care to all people as a right?
It is not a question of whether you are young and healthy or
older and sicker. If you are an American, should you be
entitled to health care as a right? Increasingly the American
people believe that is the case. That is a larger question that
we have got to address.
In my view the Affordable Care Act had significant
successes. It also had failures. It is no small thing that 20
million more Americans have insurance who previously did not,
and it is no small thing that we eliminated the obscenity of
preexisting conditions and brought some other provisions.
I think, Mr. Chairman, the time has come when we as a
Nation and what the polling now tells us, 60 percent of the
American people now believe the Federal Government should take
responsibility working with the States in guaranteeing health
care to all people as a right, something that I believe.
No. 2--and Governor Hickenlooper made this point. I think
you made the point that we are now spending about twice as much
per capita on our health care as do the people of any other
country. Mr. Chairman, I think it is great that we have the
Governors here today, and we should do more of that. We might
want to ask our friends from Canada or the UK or Scandinavia or
Germany what they are doing, and we might ask why it is that we
are spending almost $10,000 per person on health care today,
which is clearly unsustainable, while other countries are
spending half of that.
I think, Governor Hickenlooper, you made the point in many
ways that health care outcomes in other countries are as good
or better as they are in this country. Life expectancy is
longer abroad. Infant mortality is less.
Those are some of the larger questions that we have to ask.
The third larger question. We keep talking about the
insurance companies. Let me break the bad news. The function of
insurance companies is not to provide quality care to people.
It is to make as much money as they possibly can. Maybe
insurance companies are part of the problem as to why we are
spending so much money on health insurance.
In terms of some of the questions I would like to ask. All
of us are aware the cost of health care is much too high and it
is rising too rapidly. One of the factors for that is the high
cost of prescription drugs. In that area, as everybody knows,
we are spending far, far, far more than any other country on
earth. The last statistics that I have seen, five major drug
companies make $50 billion in profit, while one in five
Americans cannot afford the prescription drugs they need.
Governor Haslam--let us work on down the line--what do you
suggest that we do to lower the outrageously high cost of
prescription drugs in this country?
Governor Haslam. I think there are a couple of things that
come to mind. Having the FDA speed up the approval process for
generics is one. Looking at how government as a major payer
negotiates for those costs is two.
Senator Sanders. You would have Medicare negotiate prices
with the pharmaceutical----
Governor Haslam. I would.
Senator Sanders. Good. OK.
Governor Haslam. No. 3, I think one of the things that the
Affordable Care Act has done is it has not allowed States in
their Medicaid programs to limit the number of prescriptions.
In Tennessee, unfortunately we lead the Nation in prescriptions
per cap or we are in the top two or three. We had a program in
place that we thought was very effective providing the care
that we needed that took away our right to do that.
Those are three things that come to mind.
Senator Sanders. Thank you.
Governor Bullock.
Governor Bullock. There may be some unique ideas, but from
the perspective of--Governor Baker spoke very eloquently on the
State as a formulary and the idea of how long it takes for
generics to pass through.
Allowing the State more market power, the ability to
negotiate I think would be significant.
Senator Sanders. What about reimportation of drugs?
Governor Bullock. I think that certainly health and safety
standards need to be met. To the extent that health and safety
standards are met, it is worth a discussion.
Also, it took 19 extensions to get a 6-year highway bill
through. I worry in some ways--I fundamentally and
philosophically agree we need to address prescription drug
prices. I am a realist enough to try to say what is going to
actually come out of this Congress.
Governor Baker. I would agree with what Governor Haslam----
The Chairman. We are running out of time. If you can give a
real short answer.
Governor Baker. I think the generic piece absolutely has to
get worked on.
I think giving States the ability to create formularies and
programming around prescriptions generally--one part of the
high cost of drugs is the high cost of individual drugs, but
another part of it is--you talk about opioids for example. We
are 5 percent of the world's population. We consume 80 percent
of the world's opioids. We have real issues with respect to
volume.
The Chairman. We are running too far over.
Senator Sanders. Can Governor Hickenlooper get 30 seconds?
Governor Hickenlooper. One sentence. I would argue for
transparency of prices so that consumers can have choices, and
there are apps out there that could make those choices freely
available.
Governor Herbert. Can I add my 20 seconds? If it takes 20
years and a billion dollars to get a drug approved, that is way
too long. That causes the pharmaceuticals to try to recover
their costs. Streamline the time, reduce the cost, we will have
cheaper drugs.
The Chairman. Thank you, Senator Sanders.
Senator Collins.
Statement of Senator Collins
Senator Collins. Thank you, Mr. Chairman.
First, let me thank the Governors for appearing today and
offering your excellent testimony.
Governor Haslam, your insurance commissioner yesterday
testified about the benefits of reinsurance and said that, ``it
should bring premiums down remarkably.'' That is consistent
with the experience in my State of Maine and also in Alaska. It
suggests that a reinsurance pool can be successful in helping
to drive down the cost of premiums.
Unfortunately, as a practical matter, many States are
simply not in the position to immediately stand up their own
high risk pools and to finance them. Alaska was very creative
using some savings from the premium tax credits, but still put,
I think it was, $55 million into the plan.
So my question for you is, is there a need for financial
assistance from the Federal Government in the short term to
help set up reinsurance pools?
Governor Haslam. I think in the short term, States will
have two issues setting it up in terms of getting it through
our legislature. You have got to have a legislative process,
and then No. 2, where are the funds going to be? If Alaska is
55, I am not sure what Tennessee would be, but I assume it is
something in that neighborhood.
Long-term, though, I definitely feel like the States should
run those programs. We can run them and we will run them
better.
Senator Collins. I agree with that. I am just worried about
the short term.
Governor Haslam. I think our Commissioner McPeak was right.
I think for the first year, you are going to have to have the
Federal Government help on that, but then quickly let the
States do it.
Senator Collins. Thank you.
Governor Baker, great to see you here again. Another key to
driving down premiums is broadening the number of people in the
individual market. You have an individual mandate in
Massachusetts, which has been in existence for many years.
Obviously, the ACA has an individual mandate, which is
extremely unpopular. We know that young people can stay on
their parents' policies until age 26, but then they age off
those policies. That is the vulnerable group. What I hear in
Maine from young people is they would rather pay the fine
because it is less expensive for them, particularly if they do
not qualify for a hefty subsidy. They would rather pay the fine
than get insurance.
So Senator Cassidy and I at the beginning of the year
introduced a bill that called for auto-enrollment of
individuals with the opportunity to opt out if they wanted to.
We know from the experience with 401K plans, that if you auto-
enroll employees, they stay in the plan overwhelmingly. I think
it is 75 percent do. Whereas, if you hand them a packet of
information, they never get around to signing up.
I realize the mechanics are difficult, but if the
individual mandate were to go away, which is not something you
support I know, but if it were to go away, what would you think
of our having an auto-enrollment system so that you could get
people into insurance plans, perhaps starting with a copper
plan for young people, and then allowing them the option of
opting out?
Governor Baker. I think what I would say is that--and by
the way, I am glad you are thinking about this stuff this way.
Maybe this is because I am a Governor and not a Senator.
I think the way you folks should think about this is there
are a lot of ways for people to broaden the pool. You could do
it with an auto-enroll. You could do it with an individual
mandate. You could do it with a penalty for people who do not
maintain continuous coverage. You could do it with access to
certain kinds of plans and not others if you do not maintain
continuous coverage. There is a whole bunch of different ways
people could nudge people into the market and encourage them to
stay in it. Frankly, you ought to leave it up to the States and
let the States figure out which ways work best, as long as they
pursue one.
The other thing I would say to you is you could put
criteria--this would make sense financially--in there that says
if you want us to play in your reinsurance pool, you have to
demonstrate to us that you are doing something to encourage
people to be covered because, as Governor Hickenlooper pointed
out, 5 percent of the population spends 50 percent of the
money, and that is in a random risk pool. You get into the
individual market where typically there is a lot more people
who know they are going to need the system and that is why they
buy it in the first place, it is a different game.
There is definitely an opportunity here for States and
Federal officials to work together to do things collectively
that would broaden the risk pool, lower the premiums, encourage
people to buy, and share some of the risk associated with what
I think Governor Hickenlooper is talking about is the 5
percent. I really do believe you ought to make that a flexible
opportunity and have States do the things that are going to
work best in each State rather than trying to come up with one
answer at the Federal level and then apply it across the whole
50.
Senator Collins. Thank you.
The Chairman. Thank you, Senator Collins.
Senator Franken.
Statement of Senator Franken
Senator Franken. Thank you, Mr. Chairman. I want to thank
you and the ranking member again for holding these hearings. I
found yesterday's hearing with the insurance commissioners to
be informative and constructive, as is today's.
As I mentioned yesterday, Minnesota has applied for a 1332
waiver to set up a Federal-State reinsurance program. This
would bring down the premiums by a whole lot, like 20 percent
more. And speaking of getting more people in to get a bigger
risk pool--and on the cost sharing, may I say CBO scored the
cost sharing where without the cost sharing, it said the rates
would go up 20 percent, and because the rates would go up and
the Federal Government has to pay the subsidies, our deficit
would go up. Talk about a no-brainer on the cost sharing. I
agree that it should be more than 1 year and 3 better than 2.
Anyway, let us go to the Federal-State reinsurance program,
which has the same kind of dynamic. If this waiver is
approved--and we are hoping for news any day now. Minnesota's
has not been approved yet. Our health premiums will be 20
percent lower than they would otherwise be in 2018.
During the hearing, we talked about how State and Federal
reinsurance programs could be financed. In Minnesota, the State
estimates that the reinsurance program will cost about $230
million in 2018. Of this, the State will pay somewhere between
$104 million and $132 million, with the Federal Government
paying the rest. The State has authorized the program for 2
years. Even with a partial funding the State could receive from
the Federal Government, if Minnesota's waiver is approved, the
State's reinsurance program represents a significant financial
commitment.
As documented in a letter all of our offices received from
the executive directors of 12 health insurance marketplaces,
other States face budget constraints that limit their ability
to fund either a State-level reinsurance program or to meet the
Federal matching requirements for a Federal-State reinsurance
program like the one proposed in Minnesota. Given this, the
letter argues for a federally funded reinsurance program that
would help improve competition and stabilize the individual
market over the long term. The panel of bipartisan insurance
commissioners we heard from yesterday offered similar support
for a federally funded insurance program.
To all the panelists, would your State be able to fund and
sustain either a State-based reinsurance program or fund the
State match for a State-Federal reinsurance program under a
1332 waiver?
Governor Haslam. Again, if you would give us a year, we can
run that ourselves.
Governor Bullock. Certainly we would have to crunch the
numbers. It would be better to start at the Federal level. We
also have a legislature that meets 90 days every 2 years. Also
under the ACA when you had reinsurance, rates had decreased.
The ability to be able to show here is what this temporary
stability fund does would make it a lot easier then for the
States following thereafter.
Governor Baker. I would say it is more a question of time
than anything else and figuring it out. This gets to one of
those budget neutrality questions we talked about. There are
Federal and State dollars that go into a whole variety of
programs here. Thinking about them in their totality so that
you understand the complete picture with respect to Federal
funds and we understand the complete picture with respect to
State funds and how a reinsurance pool would affect what we are
all spending now, it may make it possible for folks like us to
apply more appropriately funds to support a reinsurance pool.
It would be something we would have to figure out. I certainly
believe that working collaboratively on that is something we
would be very interested in doing and figuring it out.
Senator Franken. Colorado.
Governor Hickenlooper. I would echo that. The
interconnectedness of what the Federal Government spends on all
these different programs emphasizes community health centers,
the large network of where people have a medical home and avoid
costs. It sounds like that is not a direct aspect of making
sure we have reinsurance pools. Without question, the savings
the reinsurance pools would create allow community health
centers, which I guess you guys do not have funding
jurisdiction on that, but that is coming up at the end of the
month, so it is worth being aware that that is a very important
thing that we get funded.
Senator Franken. Senator Sanders is a big fan. I see him
animated and happy.
[Laughter.]
Everybody look at that. He is happy.
[Laughter.]
Senator Sanders. I will be happier if they are adequately
funded.
Senator Franken. Yes, OK. Now I got him grumpy again.
[Laughter.]
Governor Hickenlooper. My answer is that for any State,
especially low tax States, funding those reinsurance pools
would be a difficult step in a year, but we would do it,
absolutely.
Governor Herbert. The answer is yes. We had high-risk pools
before the Affordable Care Act and they worked pretty well. I
think the issue is transition. Again, I think the model we see
in Alaska where they have identified 33 high-cost conditions
that would allow them to redirect money into a reinsurance pool
is something we could all look at and copy and emulate. The
answer is yes.
Senator Franken. Thank you. My time is up. My first
question went a minute over. I will have questions for the
second, third, fourth, and fifth rounds.
[Laughter.]
The Chairman. Good. I will not say anything.
[Laughter.]
Thank you, Senator Franken.
Senator Young.
Statement of Senator Young
Senator Young. Thank you, Chairman.
Thank you, Governors, for being here.
Obviously, our near-term focus here is trying to stabilize
the individual markets. Governor Herbert, you mentioned in your
testimony that we can then turn to what I would regard as the
more exciting questions. I will just kind of lay some of them
out here.
How can we spur disruptive innovation in telemedicine,
artificial intelligence, medical robotics, and genomics?
How can we creatively increase the use of non-physician
medical labor?
How can we deliver more cost-effective education for
nursing, health sciences, and medicine?
How can we empower patients to manage better their own
health with well informed choices?
This is where ultimately we all want to end up because if
you are not controlling the cost of health care, the cost of
health insurance is going to continue to go up.
You are the chief executive officers of the laboratories of
democracy, and so I would like to hear from you since
innovation does, indeed, occur at the State level, in addition
to the local level, the Federal level perhaps to a lesser
degree than we would like, and most importantly in the private
sector. I would like to hear what you have done in your States
to promote innovation, to bend the cost curve down, and then
touch on the Federal barriers to that State-level innovation.
We will start, since I have already invoked your name, with
Governor Herbert please.
Governor Herbert. We believe in the private sector. We are
free market people in Utah and we believe that is what has made
America great. Most innovation does not come from government.
It comes from the private sector. We all carry around these
iPhones that have more computing power now than we had during
World War II on our hip. The telecommunication capability we
have and access to the Internet, et cetera has come from the
private sector innovation.
In Utah, we have a significant growth sector in life
sciences, medical health devices. We have a number of companies
that are innovating things all the time. One of the challenges
we have had with this program is the tax on medical devices,
which has stymied innovation and actually makes it less
affordable for those who really need to have a medical device.
Senator Young. Thank you so much.
Governor Hickenlooper.
Governor Hickenlooper. We have something called the
regional care collaboratives, which are all over the State.
There are 29 clinics that allow people to have a medical home,
but they are basically bare bones. The focus there is to try
and make sure we get ahead of chronic diseases or issues well
before they become huge, cost-driven issues that they often
are.
We also steal. We call it facilitated larceny among
Governors, but we steal the best ideas.
I would be remiss if I did not mention New Hampshire's
efforts at transparency. Transparency is going to be one of the
most important things. We all talk about controlling health
care costs. Knowing what you are buying when you are buying it,
whether it is pharmaceuticals or getting your broken leg fixed
in a hospital, knowing what it is going to cost you one place
versus another in real time and what your co-pay is going to be
would go a long way. New Hampshire has that.
Senator Young. Thank you, Governor. You did mention the
1332 waiver, which we discussed the need for some reforms
there.
Governor Baker.
Governor Baker. I would agree with Governor Hickenlooper
about transparency. The same service, the same person, the same
outcome, five different places in Massachusetts, the price can
vary by 300 or 400 percent. There is a huge opportunity there.
I really do believe we are getting there on that one.
I would also say that one of the things we are currently
doing with our Medicaid program is contracting with health care
systems on an ACO basis as opposed to a traditional fee-for-
service basis and basically saying you have a big group of
folks that you worry about and you take care of. You make the
decisions with respect to how the best way to serve them would
be and trying to get from under this volume-based approach to
care delivery, which I think everybody agrees does not
necessarily deliver high quality but certainly delivers high
volume.
The other thing I would point out--it may be small in the
grand scheme of things but it has had a big impact on
prescribing--is we completely redid our prescription monitoring
program and made it much more 21st century. As a result, we
have five times the number of searches being done on it by
doctors and other prescribers now as we saw before, and it has
had a real impact on prescription writing on both opioids and
on benzodiazepines and other schedule 2 and 3 drugs, which is
from my point of view a good thing.
Senator Young. Time is limited here. To the other
Governors, my apologies.
One note is we refer to laboratories of democracy on a
regular basis. I think there are some opportunities for
improvement in terms of sharing best practices between
laboratories. That may or may not be something that we in the
Federal Government need to do, to provide clearinghouses of
these best practices that result in innovative approaches,
bring down costs and so forth. It may be. It may be an area
where we can make some improvements. Perhaps we could work
together on that.
Senator Enzi [presiding]. Senator Bennet.
Senator Bennet. Thank you, Mr. Chairman. Senator Alexander
has left, but I want to call our attention to what he said at
the outset of this hearing. By the way, I am so deeply grateful
for his bipartisan approach to this work. That is that we need
to address larger questions. He is right about that. What we
are talking about today and what has consumed our politics over
the last 8 years is the individual market, which covers only 6
percent of the people that are insured in this country. It is
important for us to deal with it, and it is important for us to
deal with it in a bipartisan way.
What we really need to grapple with--all these Governors
have talked about it--is the fact that we are spending twice
what any other industrialized country in the world is spending
on health care and we are getting worse results, increasingly
worse results. And that is not satisfactory to people in
Colorado. Whether they support the Affordable Care Act or
whether they do not, they are deeply unhappy with the way they
intersect with the health care system in our country.
I want to thank all the Governors for being here, and I
want to thank you for your bipartisan leadership on what for
people I represent is not a political issue. They realize they
are having to make choices about their lives and their small
businesses that no one else in the industrialized world is
having to make because our system is fundamentally broken. And
they know that.
I agree with Governor Hickenlooper, not surprisingly
because he tells me what to believe.
[Laughter.]
That transparency is a very important part of this. There
is no other market in America where you cannot know what
something costs. And by the time you have finished fighting
with your insurance company, you do not even know what you are
being charged anymore.
We do have big issues, and I hope you will come back to
deal with them.
Governor Hickenlooper, you mentioned the Colorado
Accountable Care Collaborative, and I wondered whether you
might be willing to talk a little more about that. Colorado was
able to save over $100 million by implementing that program
which fosters integration and collaboration across providers.
It has resulted for better outcomes for Coloradans in the
Medicaid program and savings from the State. I wondered if you
could talk a little more about that and whether it might inform
the work that we are doing on the individual market.
Governor Hickenlooper. Sure. We started this about--it took
a year and a half to kind of think it through and then a year
to implement. The idea is that in each region of the State,
there is a central integration of everything. It includes
mental health so that now when you go to your basic care
provider and you have some serious depression issues, whatever,
your child is acting really bizarre--the idea was to integrate
that care. We have 29 different clinics, and they are set up in
seven regional care collaboratives.
These regional care collaboratives are driven by two
things. One is that they cannot diminish quality. Their whole
focus is to make sure quality--nothing stays the same, so
quality has to improve. Second is how can they control costs.
They are focused relentlessly on controlling costs. With that
effort, obviously, we want--and I think have done a good job of
expanding coverage and making sure more people have a medical
home. The notion that we can get to people that have
potentially crippling diseases, that we can get to them sooner
and make sure that they get the care that will mitigate and in
many cases can avoid those really drastic conditions has been a
huge part of saving that $100 million.
Senator Bennet. Thank you for that. I hope we pay attention
to it as we go forward.
I also wanted to ask you one additional question. As you
mentioned, 600,000 Coloradans have been covered as a result of
the Affordable Care Act. We are now at a record low of 6.7
percent uninsured people, but we still have a lot more to do
especially in our rural areas where there is often only one
hospital. Fourteen of our counties only have one insurer. It is
especially difficult--Governor Baker mentioned this--for
families that are facing this opioid crisis that we have.
You mentioned in one of your bipartisan proposals with
Governor Kasich the idea that people in such counties might be
able to buy into the Federal employee health benefit plan. I
wonder if you could talk about that a little bit and how you
came to that proposal.
Governor Hickenlooper. We have 14 counties, almost a
quarter--we have 64 counties in Colorado--that have only one
insurance company that provides coverage. We wanted to, A,
provide incentives for other companies to come into that market
and they would avoid all taxes, a number of different tax
incentives to encourage that competition. We also wanted to
make sure that the Federal employee benefits program--that
people could then choose to be a participant in that plan as
well. Again, another choice. For many people, not necessarily
the right choice, but for some it would be exactly the right
choice, but again, expanding those choices. I think the goal
there is to make sure that the Federal Employee Health Benefit
Plan is available in those States where we have the greatest
challenge--in those counties.
Senator Bennet. I would say, Mr. Chair--I know I am out of
time--that another possibility here that I have heard of might
be for people to be able to buy into the State employee plans
as well. These are all interesting.
Governor Hickenlooper. We agree with that, and we did want
to speak for all the other States. There was some resistance
among other Governors.
Senator Enzi. Senator Cassidy.
Statement of Senator Cassidy
Senator Cassidy. Gentlemen, thank you all. You have all
thought deeply about health care. I have had the privilege to
speak with some of you. Thank you all for being here.
I apologize I came late. You may have already addressed
this.
Each of you--I walked in just as you all were speaking I
think you, Governor Baker, or maybe you, Governor Haslam, about
the need for flexibility, implying that if you have
flexibility, frankly you do a little bit better job, more bang
for the buck, if you will, than right now what we do from
Washington, DC.
That said, we have a CPIM, a rate of inflation which is
higher than the normal rate of inflation, and in some areas of
health care, it is a little bit higher than that. There is some
stuff in there you cannot control. I think, Governor Baker, in
your testimony you say States cannot do much about the cost of
pharmaceuticals. We stipulate that. With flexibility, do you
think that you could bring down the rate of inflation of health
care in your State? With flexibility, you get a lump sum of
money. You can combine risk pools. You can do reinsurance
programs. You can--you name it. You can work with that.
Governor Haslam. I will make a couple of comments. I think
Senator Young has talked about innovation. There is nothing
that makes you innovate quite as much as having to balance your
budget. All of these Governors, I guarantee you somewhere
during the year we say we balanced however many budgets for
however many years you have been in office. The truth is most
of our constitutions make us do that. That causes us to think
innovatively.
Governor Herbert is right. The market thinks of innovative
ways to change products. That is not our job. Our job is to
think of creative ways we can address that.
Senator Cassidy. The simple answer, it sounds as if you
think as you could.
The question is, though, because critics would say if the
Federal Government is not telling you what to do, then coverage
will suffer. You will have folks with a fig leaf of coverage
but in reality Governors do not care enough to make sure that
they have adequate coverage.
Governor Haslam. Right. The question particularly for folks
will be, well, will you care about the least of these if we
give you that control. I would argue this committee just went
through an exercise last year where you really passed an
unprecedented amount of control not just to States but to local
governments through schools. I think you are going to see that
process work.
Senator Cassidy. Governor Bullock.
Governor Bullock. I think the ability to innovate certainly
when there are consumer protection safeguards on such, we can
do a lot with. One of the things that the Affordable Care Act
did is provided some essential health benefits that did not
exist certainly prior in so many areas.
Senator Cassidy. Let me ask. Let me interrupt because I
have limited time.
The CHIP program gives you an essential health benefit
package essentially. You are all familiar with CHIP. I do not
have to define it. What about the CHIP as a vehicle that would
give you that safeguard but perhaps a little bit more
flexibility than the ACA?
Governor Bullock. I think flexibility can be helpful. If
the funding is not there, it is fairly meaningless. In some of
the proposals that I have seen, talking long-term, if I lose a
third of my Medicaid funding, I am not going to be able to do
what I am currently doing.
Senator Cassidy. Got it. If funding is adequate, then you
would feel like you can do something a little bit more cost-
effective than maybe what you are required to do.
Governor Bullock. Adequacy defined by the terms of a
Senator or a Governor may be two different things.
Senator Cassidy. My daughter and me. We have different
definitions of adequate funding.
[Laughter.]
Governor Bullock. The distinction is there that, we are
providing the coverage, and if it all gets shifted to the
States, it is going to substantially change what can be done I
think no matter how much flexibility we are given.
Senator Cassidy. Let me just shift gears.
One thing I have noted under the ACA, the expansion is
generous, obviously, but in 2020 States will be required to put
up 10 percent in order to draw that down. For the expansion
State Governors, frankly my State will be about $310 million.
And if we are frank, financing gimmicks will make up some of
that, but it is still a lot of money.
For the expansion State Governors, is that going to be
problematic or do you think, oh, no, we can handle the 10
percent, no big deal, and send it on?
Governor Baker. Massachusetts started covering more people
through a variety of 1115 waivers back in the 1990s. We
negotiated literally the fifth Federal waiver that we have
negotiated over the course of the past 20 years and signed it
last fall, just about a year ago now. That waiver has certain
parameters on the Federal side and on the State side that we
have to live with for 5 years. Our assumption is we are going
to deliver on our share of the puzzle on that one, and we
expect the feds to deliver on theirs. There are all kinds of
shared responsibility and accountability in that.
Senator Cassidy. Yes, but again, that 10 percent on the ACA
2020 Medicaid expansion, that is a chunk of change for States
that typically are paying more for their Medicaid expansion
population than their traditional Medicaid and they have
enrolled a lot of people.
Governor Baker. Yes. No, I know. My point here is that we
have a 5-year expansion. We signed the waiver. We expect to
live up to our end of the bargain.
Senator Cassidy. It may not be easy, but you are going to
do it.
Governor Baker. Yes.
Senator Cassidy. Sounds good.
Anyone else?
Governor Bullock. It is real money, but I can also say
uncompensated care has dropped by 25 percent. My overall
uninsurance rate has dropped from 20 percent in 2013 to 7
percent today. And for a rural State, if I do not have health
care in those smaller communities, I lose those communities. Is
it a big chunk of money? Yes. Is it an investment in Montanans
that we will be asking the legislature to make? Yes.
Senator Cassidy. Thank you. I yield back.
Senator Enzi. Senator Whitehouse.
Statement of Senator Whitehouse
Senator Whitehouse. Thank you very much. I know that both
the chairman and the ranking member had to go on to other
things. It is a very busy time here as you all know very well
from all the many issues you have in other committees here in
the Senate, as well as ours.
I want to join my colleagues in expressing my appreciation
for both the bipartisan nature of the committee's work that
Senator Alexander and Senator Murray have led and particularly
Senator Alexander's stated commitment this morning that he
wishes to move on to address other issues, cost-related issues,
in the system.
What I would like to spend my time doing with our
distinguished Governors here this morning is to ask for you to
take a look at a couple of questions and then get back to us
because I am going to make a bet that we will, in fact, move on
to those other topics once we get through the market
stabilization. I am not sure we are going to get you back
before we move on. I want to take advantage of you while you
are here. These are questions that I will ask for the record so
that you have a chance to have your staffs get back to us here,
but I really think it would be helpful for us as we move on
into that next area to get your views on some of the specifics
in those areas.
I have a number of them. The first has to do with patient
safety and medical errors. It strikes me that hospitals who
give their patients hospital-acquired infections are a good
bipartisan topic. I do not think there are Democratic or
Republican hospital-acquired infections. There have been a lot
of studies that show there is significant cost to patient
safety problems and medical errors with hospital-acquired
infections being one example among many, perhaps the most
watched example. I would like to get your thoughts on whether
you think that ought to be an area of focus for us.
A second somewhat related topic is the wild variations in
care and in outcomes that we see in different States and for
different conditions. It seems to me that the areas where
people are showing really good results ought to be leadership
areas and other States ought to be induced to move toward those
results and we should try to encourage that kind of behavior in
whatever way we can. That is the second point is what you can
give us by way of advice in trying to move the bad performers
where there are wide variations in care and outcomes more
toward the higher performers.
The third is in the area of administrative overhead and
dispute. There are lots of areas under that general category,
but the one that most readily comes to mind to me is the
continuing bureaucratic warfare between insurance companies and
providers over getting paid. Insurance companies have built an
enormous stable of staff who are dedicated to telling providers
no, we are not going to pay you for that. Providers in return
have had to staff up with an armamentarium of their own to
fight through that insurance industry blockade, and the entire
exercise back and forth contributes exactly zero health care
value by my judgment anyway. There are ways that we can reduce
those burdens.
I know that years ago when I visited our Cranston community
health center, they told me that they had more bodies on the
payroll devoted to trying to get paid than they had on the
payroll--boy, do I see a lot of heads nodding when I said
that--devoted to actually delivering health care services to
their clients and customers.
Fourth is trying to support--and Wisconsin has been
particularly good in this--making sure that what a patient
wants as he or she nears the end of life is what that patient
gets. There is a combination of bad preparation for that
inevitability and bad Medicare and other billing rules around
that predicament that very often lead families to get trapped
into a machinery of hospital--the grind that they cannot get
out of in time for their loved one to actually have their
wishes honored at home. There is no Democratic or Republican
way to have a family's wishes honored.
The last thing I will mention is payment reform. We can do
a lot more to encourage health care as opposed to just
treatment when people get sick. My time is up, but let me just
brag on Coastal Medical, a primary care practice in Rhode
Island, and Rhode Island Primary Care Physicians, another big
primary care practice in Rhode Island, both of whom have
demonstrated that they are driving down costs year over year on
an average annual patient basis while seeing the service to
their patients and the happiness and satisfaction of their
patients soar because they are getting better treatment. Better
treatment in this area actually has the happy benefit often of
reducing cost.
If you could look at those specific things, together with
any particular local things that I have not mentioned that you
would like to flag for us, that would be a very useful thing
for us to put to work in later hearings.
I thank the chairman for indulging me in the extra minute,
and I thank all of you for your cooperation in this effort.
The Chairman [presiding]. Thank you, Senator Whitehouse.
I apologize. I had to step away and vote. I am glad I did
because for the third consecutive year, we recommended to the
Senate a $2 billion increase in appropriations for the National
Institutes of Health. That does not make many headlines, but it
is very important.
[Applause.]
That was good. That does not happen much.
[Laughter.]
Senator Baldwin.
Statement of Senator Baldwin
Senator Baldwin. Thank you, Mr. Chairman. I am glad you are
calling on me next because I want to get down there to cast
that same vote. We have two committees meeting, overlapping.
I want to reiterate what I said yesterday about how pleased
I am that we are at this point of bipartisan hearings, and your
work together with our ranking member is so important. It is
great to have this excellent panel of Governors representing
both parties in diverse States.
We are focused predominantly on market stabilization issues
that we hope to expeditiously see move through the Senate and
hopefully the entire Congress. I know that there have been a
number of elements of that legislation that we have heard
reflected in our chairman and ranking member's opening remarks
and in all of your statements to this committee. Those areas of
growing consensus relate to the cost sharing reduction
payments, the State flexibility issues with 1332 waivers, and
some of the areas emerging around reinsurance and risk
management tools.
Most of you also mentioned the incredible importance of the
participation of young and healthy people in the markets in
your States. Prior to the passage of the Affordable Care Act,
young people in particular were one of the most uninsured age
demographic in our country often because graduating from high
school, an entry level job that does not provide insurance or
going to school where the insurance offerings might be lacking,
all sorts of barriers for young people.
We have been talking about the growing consensus. At the
same time that Congress is working together, we have an
Administration that has announced recently some changes in
spending plans, if you will, and other administrative policies
that may work against that or will work against that. There is
a 90 percent cut in the outreach expenditures for this next
open enrollment period, shrinkage of the actual time for that
open enrollment period, cuts to programs like The Navigator
program, and last, I think a question mark around enforcement
of the individual mandate. It might be called an individual
aspiration rather than an individual expectation of seeking
coverage.
I guess in terms of stabilizing the markets in your States,
how important is it that we focus on addressing these
administrative changes? And if you could answer sort of quickly
about the aggregate impact of those, that would be helpful
because I would love to get one more question in. Governor
Haslam?
Governor Haslam. I do not know if there is a quick answer
to what you said, so I will do my very best.
Obviously, the individual mandate is not working. We have a
lot of folks that it is intended to sign up who have just said
I am still not going to do it. On the other end, the sick
people are sicker than we anticipated, and that is why we are
in the situation we are in. I will let some other folks have a
minute to talk about that.
Governor Bullock. Quickly-- I referred to this in my
written testimony--we need to make sure we have a risk pool.
The idea that we will cut 90 percent of the education dollars
and 40 percent of The Navigator dollars, when what we need to
do is draw these people in, does not make sense. In Montana, we
are a Libertarian State. We do not like the government telling
us what to do. By the same token, we need to make sure people
are in that risk pool. Until a credible alternative, either
incentives or other things, are created that we need to
continue to have that mandate. In some respects, it is like the
no fault insurance that Senator Enzi had referenced at the
start. It made everybody get insurance, and we got to make sure
of ways to do that if we are going to hold down costs in the
individual market to ensure that we have a decent risk pool.
Senator Baldwin. Governor Baker.
Governor Baker. We are in a slightly different spot because
we run our own exchange, and if you run your own exchange, you
are required under the Federal law to actually have a Navigator
and an outreach program, which we do. We run it and we pay for
it ourselves in Massachusetts.
What I would say about that is it is at least important
what you are doing as it is how much you spend on it. We made a
lot of changes to the way we do outreach over the course of the
past couple years and have tried to do things that actually
seem to move the needle with respect to enrollment and have
stopped doing things that were not moving it at all. I would
say this is a good example of Senator Young's comment about
States could learn from each other about this. I am telling you
there is some stuff that you and we pay for that does not get
us anything with respect to enrollment, and there is some stuff
we do that does and we should be talking more about the how on
that one.
Senator Baldwin. Great.
Governor Hickenlooper. Without repeating anything anyone
else said, we started using social media for the first time. We
are getting rock and roll bands and musicians. You have to look
at who your target is and then how you get to them. The notion
of using trusted advisors, trying to do outdoor recreation
opportunities to get people to sign up, all those are different
ways--and cutting back the revenues by which when you're
finally figuring out how to make it work is probably bad
timing.
Governor Herbert. Let me just say that talking to Senator
Franken earlier, we debate over how we pronounce ``insurance.''
We actually are debating what insurance is. And the challenge
of having a pool created, whether it is by mandate or by
incentive--we have kind of violated the program. We have said
we have a lot of young people that do not want to be involved.
In Utah, our uninsurance rate was 11 percent before the ACA.
The national average was 13. Of those 11 percent, half of them
could afford it but chose not to. A lot of it was the young
invincibles. If we are reinventing the definition of what
insurance really is, recognize that we have some of these
problems. Should we have a mandate or should we have incentives
to create that proper pool? And that is part of the debate we
have overall that undergirds this whole thing.
The Chairman. Thank you, Senator Baldwin.
Senator Murkowski.
Statement of Senator Murkowski
Senator Murkowski. Thank you, Mr. Chairman. We are all kind
of popping in and out of other meetings, but it was important
for me to come back.
I personally wanted to thank each of you for being here,
each of you for your leadership on these issues. Governor
Hickenlooper, what you have done in leading a bipartisan group
of Governors to come forward with some suggestions for us--I
think this is exactly what many of us had been hoping that we
would have an opportunity to do is this level of engagement. We
can do a lot up here in the capital here in Washington, DC, but
you all have to translate it on the ground. The fact that we
have not had this open dialog to this point in time on this
particular issue area is I think part of what has taken us so
long to get here. I just thank you for that.
It has been described that we got to figure out how we
approach this, and I appreciate the chairman's leadership in
focusing on a very discrete area in terms of how we stabilize
the individual market. Whether we are eating the elephant one
bite at a time or Senator Enzi's analogy, which was eating the
whale, I will tell you that I actually know how to eat the
whale.
[Laughter.]
It is a very prescribed way that you cut the whale so that
it is shared according to tradition.
I am not going to suggest that I have all the answers with
health care, but I do think that Alaska has provided a little
bit of some guidance here as an extremely high-cost State in a
very remote and rural area with a very small population.
Everyone is now looking at what we have done in leading on
1332. It is not perfect, but it does provide an example.
I want to recognize that with the approach that the
chairman and the ranking member have taken, that we are going
to look specifically to how we can stabilize the individual
market, there are some very clear areas of consensus whether
you are Republican or Democrat, rural or urban.
First is dealing with the CSRs, and whether it is a 1-year,
2-year, or perhaps longer, we can figure that out. It is about
the predictability. I think that that has to be key.
The flexibility given to the States. Again, there is
uniformity there.
The fact that it has to be bipartisan. This cannot be the
Republican solution to health care, just as just having a
Democrat solution to health care was not the answer for us
either.
Getting us to where we are today--the process is better
when it is open like this, and I appreciate your input here.
The question that Senator Baldwin had just posed about how
we deal with ensuring that we have significant numbers that are
enrolled. Yesterday, there was discussion about the cuts to The
Navigator program. It was very interesting because the
insurance commissioner from Oklahoma said we have insurance
agents on every corner. In Alaska, I can tell you we do not.
Recognizing that we might need to look at different approaches
given the demographics of the respective States I think is
important for us.
One thing that came up in a letter that you had led,
Governor Hickenlooper, was the opportunity for some creative
solutions in underserved markets. Alaska is clearly an
underserved market. The proposal that was out there was that
you might be able to buy into FEHBP, the Federal Employee
Health Benefit Plan. That might not be the answer, but it is
intriguing to me. In Alaska, we have 18,000 people on the
individual market. That is it. Why are we creating a new system
for 18,000 people?
Can you speak a little bit more to the discussions that you
had amongst Governors on some of these proposals for how we
deal with those in underserved markets?
Governor Hickenlooper. Sure. And thank you for your
leadership on health care as well. Obviously, you do represent
a different part of the United States.
It is worth saying that all these Governors--Governor
Kasich and I talked to over 20 Governors to try and collect
information around this. One of the hard parts was figuring out
how do you distill that down into a set of recommendations that
can have a real material bearing on something like those
individual markets in certain parts of the world where it
almost does not make sense.
Obviously, I think the Federal plan is a viable solution.
When you look at it, for a lot of individual markets, it is too
expensive. They get things they do not necessarily want. It is
not a perfect solution. Also trying to provide incentives for
basic health insurance plans and companies to go into these
markets and give it at least a fighting chance to make a sliver
of profit out of it is probably the most important thing.
Governor Kasich and I--we disagree about an awful lot of
this stuff. Ohio has a big rural population. We have a big
rural population. Everybody up here has a big rural population.
That is a consistent effort that I think if we had more
bipartisan support and I would say more work with the Governors
as well, we would make more progress.
Senator Murkowski. I want to do that.
Thank you, Mr. Chairman.
The Chairman. Thank you, Senator Murkowski.
Senator Warren.
Senator Warren. Thank you, Mr. Chairman.
I also apologize for having to be in and out. We are doing
a hearing on North Korean sanctions, another easy issue.
As Governor Baker has already emphasized, in Massachusetts
making sure that everyone has high-quality, affordable health
insurance has not been a partisan issue. Democrats and
Republicans work together to make sure everyone has access to
health care.
Governor Baker, I want to ask you a question about costs.
If President Trump follows through on his threat and refuses to
pay the cost sharing reduction subsidies that help keep
insurance premiums down, Massachusetts would lose about $146
million in 2018 alone. Does that mean that the Federal
Government will save $146 million in Massachusetts
expenditures?
Actually no. This is one of the things we talked about with
respect to the fact that there is a whole bunch of places where
Federal money is involved in health care. According to the
CBO--we have talked about this a little bit--you would end up
at the Federal level paying more in advanced premium tax
credits if you did not have the CSRs. And net-net, it would be
a negative for the Federal Government over the course of the
next 10 years.
Senator Warren. In fact, I think it is about $194 billion
nationwide.
Let me ask the question the other way then. If insurance
companies and people in Massachusetts are going to get Federal
money either way, then why do you care whether or not President
Trump makes the cuts to these cost sharing programs?
Governor Baker. The big part about the cost sharing piece
and the uncertainty associated with it is what it does to the
behavior of people in the market. Whether you are health
insurance plans or you are individuals or you are providers,
you are all basically trying to figure out what are the rules
of the game and what is the Federal Government's role going to
be in participating.
Part of the reason why we have talked about the fact that
you probably need to put this in place for 2 years and then
figure out what some of the larger issues we have been talking
about this morning should be about is because you need to
create some certainty here for the individuals and the families
who buy in the individual market, who participate in the
exchanges, and send the same message to the carriers and to the
provider community.
Senator Warren. If the President's threat to cut cost
sharing makes no sense financially either for the Federal
Government or for the States or for the families, can you think
of any policy justification for threatening to blow up the
health insurance marketplaces in Massachusetts and around the
country by deliberately driving up costs in this way?
Governor Baker. Having listened to my colleagues here talk
about what the impact of the elimination of the CSR program
would be in their States and knowing that it would probably
represent a 20 percent increase in the cost of insurance for
individuals and small businesses, which is really who we are
talking about here in Massachusetts, and the fact that I do not
think the Federal Government would save money, I said before I
think it would be a bad idea. I really appreciate the fact that
you all are having a conversation about how to make sure that
we continue to provide stabilization or create stabilization in
a market that clearly needs it.
Senator Warren. I think failure to stabilize is reckless
and preventing that should be our No. 1 priority here.
I want to ask a question about market stability. Some
people are asserting that in order to improve the ACA's
insurance markets, we need to let States reduce the quality of
coverage that people are allowed to buy, garbage plans, you
know, weaker and weaker plans or plans with much higher out-of-
pocket costs. Governor Baker, in order to stabilize its market,
does Massachusetts let insurers offer garbage plans, plans that
toss out coverage for things like maternity care or addiction
treatment, or let insurance companies offer plans that have
such high deductibles that people will go bankrupt even though
they have health insurance when they get sick?
Governor Baker. We have a fairly robust exchange. We have
10 carriers. We have 60 plans. And by the way, depending upon--
within the essential benefits framework which we support, you
can buy a different level of cost sharing. You buy a bronze
plan, a silver plan, a gold plan, depending upon what your
particular interests are.
Massachusetts pays--people think of us as a high-cost
State, but actually families and individuals in Massachusetts
pay less as a percent of their income in health insurance than
the national average. People in Massachusetts have lower out-
of-pocket expenses as a percent of their personal income than
people do at the national average level. And the total cost of
coverage in Massachusetts, even with the fact that we have
pretty robust plan designs, is plus or minus about 5 or 6
percent higher than the U.S. average but nowhere near as a lot
of people think it is. We do not think the path to success with
regard to market stability is reducing in draconian ways the
options that are available to people.
What I do believe--and I said this earlier--is our ability
to create stability in that market over the course of 10 years
to get a lot of people into it and to encourage people to
participate. As I said, I support--the mandate has been a much
more effective way for us to manage costs.
The other thing I would say--and this gets back to the
question that was asked earlier about risk sharing and
reinsurance--we do support with State funding on the premium
side because we think that is a good idea with respect to
making sure people have access to plans they can afford. That
is part of what would become the conversation in Massachusetts
if we headed down the road of trying to play to support a
reinsurance model as well.
Senator Warren. Thank you very much. I think Massachusetts
is the example of showing that we can stick with strong
insurance plans that protect families and at the same time have
market stability and that ultimately that works for everyone.
Thank you.
Thank you, Mr. Chairman.
The Chairman. Thank you, Senator Warren.
I do not usually do this--and I will give Senator Warren
time if she wants to say anything else. I do not disagree with
what she said about the President and the cost sharing thing
except one other fact is the United States District Court for
the District of Columbia ordered the President to stop paying
the cost sharing reduction payments because he is not
authorized to do that under the Constitution because we, the
Congress, authorized the payments but did not appropriate the
money.
What we would like to do is clear that up--I would like to
do is clear that up by appropriating the money for a period of
time. Then if the President did not do it, that would be
another question.
Senator Warren. Mr. Chairman, I need no rebuttal. If this
Congress moves forward and authorizes the money and gives our
States the ability to stabilize their markets under the
Affordable Care Act, I am all in.
The Chairman. Good. Thanks very much. You and I agree on
that. Thank you, Senator Warren.
Senator Hassan.
Statement of Senator Hassan
Senator Hassan. Thank you, Mr. Chair. And my thanks to you
and Ranking Member Murray for these hearings.
To our very distinguished panel, thank you for being here.
As a former Governor, you are some of my favorite people.
Welcome.
Thank you for offering the different perspectives of your
States. As I said yesterday, I think one of the things that is
so useful about these hearings--yesterday we heard from
insurance commissioners. Today we are hearing from you. You all
actually are on the front lines making things work, and I think
sometimes when we move out of our ideological debates and into
problem solving, we actually can find a way forward.
To that end too, a shout out to Governor Hickenlooper and
Governor Kasich and all of you who have come together on the
bipartisan proposal from the Nation's Governors because it has
really helped us focus on problem solving and I appreciate it
very much.
We have talked a lot about two issues that seem to be
everybody's focus in terms of the task of immediately
stabilizing our markets, reinsurance and the cost sharing
reductions.
I want to ask quickly about the discussion we have been
having here about whether the Federal Government should fund at
least a temporary reinsurance option for States, whether the
States have the wherewithal to do it all themselves. I sat here
today thinking that if I were still in the Governor's seat, I
would be making the argument that at least some of the seed
money should come from the feds because the feds are going to
save money if we put in place a reinsurance program and
premiums go down.
Is that an assumption or a belief you all share too, that
there are savings both on the State side and on the Federal
side, if the Federal Government could put up the seed money and
get the reinsurance program up and running at least
temporarily? Any one of you.
Governor Baker. I certainly look at the funding you spend
on the advance premium tax credits and the money you spend on
the CSR program and the money you spend on Medicaid generally.
And I would say yes. If you reduce the cost of coverage, then
that is going to impact all the other things that the Federal
Government puts money into to pay for the cost of coverage.
Senator Hassan. Thank you.
Anyone else?
Governor Herbert. Let me just add. Senator, I think we all
want to have a cost-to-benefit analysis. Whatever the cost is,
there ought to be a benefit. If there is a better way of doing
things and spend the money in a better way, let us do it. We
want stability in the marketplace. We want predictability. We
know that is what the marketplace wants.
We find, though--and Governor Haslam kind of mentioned
this--that States kind of have to govern under a different set
of rules than you do here in Congress. We really do have to
balance the budget. We have to live within our means. When you
say provide seed money, if you have that in the budget to
provide seed money or any other kind of whatever you want to
call the money, if we could find a cost-to-benefit where we
have a reduction of the overall deficit being spent here in
Congress, that is probably a good thing. If it just adds to the
deficit, I think the concern that many have in this country is
where is the end going to be. If we are approaching $20
trillion, how much more can you generate.
Senator Hassan. If we are talking about the actual program
that we have up and running, the advance premium tax credits
that we would have to pay as opposed to using that money as
seed money for reinsurance and bringing down the overall cost I
think weighs to the benefit side of the cost-benefit analysis.
Governor Herbert. I agree, and I think we need to think in
terms of short term, but you also need to be thinking in terms
of long term.
Senator Hassan. Thank you.
I know that others may want to chime in, but I wanted to
move on to at least one other point. Governor Baker, I will
start with you because as neighboring States, we have worked
together on combating the heroin and opioid/fentanyl crisis in
our States. It is an epidemic that impacts States around the
country. I wonder if you could comment on the importance of
having predictability, participation in the insurance coverage
market, and essential health benefits to the capacity to stand
up treatment and recovery services in your State.
Governor Baker. Certainly the fact that we already had sort
of virtually universal coverage made it much easier for us to
expand our recovery and treatment capability in Massachusetts,
which we have done over the course of the past couple years. We
have probably increased our support for that by about 50
percent.
The other thing--and I mentioned this earlier--that really
made a difference was being able to work collaboratively with
our colleagues across the New England region on prescription
monitoring, which because the system is now a lot more 21st
century and a lot more user friendly, we have far more
prescribers using it and they are using it a lot more often.
The data that they are getting from it not just in terms of the
person that is in front of them, but also in terms of sort of
best practice standard and where they sit relative to their
peers, has had a big impact on prescribing patterns. For the
first time in 15 years, in the first 6 months of 2017 over the
first 6 months of 2016, the number of people who died in
Massachusetts went down. We still have a long way to go. That
number had gone up year over year every single quarter for
literally 15 years. I do think that having a system where for
the most part coverage was not the first question that people
had to deal with with respect to accessing treatment made a big
difference.
Senator Hassan. Thank you.
Mr. Chair, I see my time is up. I will submit maybe a
question. We have talked about transparency of cost, which is
something that New Hampshire has led in. We also need to be
talking in transparency of outcomes because my experience has
been that people think that if we are talking about lowering
the cost of their care, we must be talking about giving them
lower quality care. In fact, the inverse is often true. I think
combining those metrics is really important. I will include a
question to the record about that.
The Chairman. Thank you, Senator Hassan.
Senator Casey.
Statement of Senator Casey
Senator Casey. Mr. Chairman, thanks. I want to reiterate
our thanks to you and Ranking Member Murray for these
bipartisan hearings. Good news for the country when they see
these hearings playing out.
We are grateful and certainly grateful to the Governors who
are here. You have very difficult jobs every day, and the time
you are spending here not only here today to give testimony and
answer questions, but both your advocacy and the way you convey
a sense of urgency about these short-term issues, especially
CSR payments, and other issues we hope to get consensus on, we
are particularly grateful.
I was just running back and forth literally across one
hallway to the Finance Committee. We are dealing with yet
another matter of urgency which is the Children's Health
Insurance Program deadline on September 30th. Lots to do on two
major health care issues.
The one part about this discussion today that is
encouraging--and it has been evident now for a couple of weeks
at least, if not longer--is that there is consensus about the
need to make the cost sharing payments and to legislate, as
Chairman Alexander has indicated to us, and to also get to some
other issues like 1332.
One thing I wanted to ask about is--because there was
discussion I think today that I may have missed but certainly
yesterday as well about the 1332 waiver but also the 1115
waivers. Governor Baker, I wanted to start with you.
On the thinking to combine savings from both waivers, one
concern raised with regard to that by combining those savings
from those waivers, the intent would be to help folks in the
marketplace. Would there be a cost or an adverse impact on
Medicaid or Medicaid beneficiaries? Anything you can tell us
about that or any concern you have about that.
Governor Baker. That is a big part of why we appreciate the
opportunity to think about this stuff holistically in our
conversations with folks at CMS and at the Federal level. The
number of different revenue streams and the number of different
programs that the feds finance different parts of the health
care community, when you are talking about the population that
is sort of somewhere between, call it, 100 percent of poverty
and 300 percent of poverty, working people for the most part,
folks who do not typically have access to coverage as directly
as folks who are either automatically qualified for Medicaid
sort of across all 50 States because of their status and their
age and they are disabled or they are very poor and the folks
who just have access to coverage because they have been working
for 20 years and they make enough where it does not really
affect their ability to access employer-based coverage--that
whole area in there, which represents a lot of people, has with
it a lot of different sources of State and Federal money. One
of the things we believe would be helpful to you and to us is
to make sure that we account for all of that when we try and
figure out what the best way, as Governor Herbert said before,
to deliver the highest benefit and the most appropriate level
of cost across what we at the commonwealth put in but also what
you at the Federal level put in as well.
Senator Casey. I appreciate that. I know I will be short on
time, but if we can do it by way of written response to an
additional question.
Governor Hickenlooper, I want to thank you for the work you
have done in a bipartisan fashion with Governor Kasich,
including Governor Wolf of Pennsylvania working with you as
well. I know that others at the table are equally engaged.
Because you have some Pennsylvania roots, I will direct this
question to you.
With regard to the age rating limit, some States have
proposed balancing the risk pool, which is obviously of great
significance and priority, but some States have proposed
balancing that risk pool in a way that potentially could
negatively impact seniors. Is there anything that you would
want to say about that with regard to both the age rating
limits or otherwise? Any concern you have there?
Governor Hickenlooper. Yes, of course, I think we all have
a lot of concern on that, and I will be brief.
Expanding the calculations by which older people end up
paying even more than they have been seems unconscionable.
Certainly there are other ways to approach some of those
discrepancies. The real issue here is how do you get more young
people to join up. This is probably the wrong way. If you talk
to AARP or any of the advocates for older Americans, they get
very agitated when they hear this. It is unfortunate to take
that direction when there are other choices.
Senator Casey. Governor, thanks very much.
Thank you, Mr. Chairman.
The Chairman. Thank you, Senator Casey.
Senator Kaine.
Statement of Senator Kaine
Senator Kaine. Thank you, Mr. Chair. To the chair and
ranking, these are great hearings.
The chair mentioned in his opening comments just yesterday
in Virginia, there was an announcement that a major company
that was thinking about going into markets that Anthem had
pulled out of--individual markets--that Optima, which was
thinking about doing it, had decided not to do it. Virginia is
going to grapple with what so many States are, a real now
division between urban, suburban, and rural communities. The
Optima decision, the Anthem decision is going to hit rural
Virginia the hardest. Virginia did not expand Medicaid. That
has hit rural Virginia the hardest. One of the issues we have
to grapple with--and I think many of your States are facing
this too--is we do not want to become two nations separated
between rural America and the rest of the country.
I thank all the Governors. I really admire what you do. You
are on the front line. And you are before a committee that is
uniquely situated to do this job. This is a committee that has
Governors, mayors, doctors, insurance commissioners, State
auditors, small business owners, professional humor therapists.
[Laughter.]
We have the bases covered. We can do good work.
I am struck by both yesterday and today the commonality in
testimony between the insurance commissioners and Governors
around a number of concepts: stability and hopefully 2 years of
stability and predictability around the CSRs, what we can do to
get more young people in, a variety of strategies on that
flexibility to States under 1332, and the viability of
reinsurance, whether it is a Federal program or Federal funding
for State reinsurance programs. These are bipartisan ideas.
One thought that has been ventured by critics of some of
these approaches--and these are not the people on this
committee, by the way, but they are some people in Congress and
elsewhere--is things like CSR and reinsurance is, ``bailing out
insurance companies.'' You are elected Governors of your
States. I assume that you are not here with the primary purpose
of bailing out insurance companies. That is a rhetorical
question. I know that is not why you are here. It is
interesting that is sort of a critic that some would level
about CSR and reinsurance in particular.
As I understand the CSR payments, they are basically
payments to help individuals deal with out-of-pocket costs,
deductibles and co-pays.
You have done a very good job, each of you. As you have
collectively described the benefits of reinsurance, you can
lower premiums. By lowering premiums, you can bring in more
young, healthy people and other people who just find
affordability more attractive, obviously. By lowering premiums,
you reduce the advance premium tax credit, the subsidy call on
the Federal budget. You can protect high-risk people, and you
can also send a signal of stability to insurers that there will
be a backstop against high-cost claims keeping them in the
market.
The strategies that we are talking about here and that have
been validated by yesterday and today, two groups of bipartisan
leaders at the State level, are anything but a bailout for
anyone. They are really designed to help people and to provide
at least some temporary stability with a predictability that
will enable us to find bigger picture items.
I am going to ask a general question kind of along the line
of Senator Whitehouse since there is such consensus around the
basic points. When we get to the longer-term discussion, if you
could start Governor Haslam, and come across the table, what
would be the one thing you would most want us to focus on if we
get to step two, we take the stabilization steps?
Governor Haslam. I think we have to begin to align
incentives. Some of you have talked about payment reform and
doing that on the provider side. Quite frankly, you have to do
something on the user side as well to incentivize better
behavioral choices. Today, I tell people all the time health
care is like going to the grocery store. The assistant manager
meets you when you walk in the door. You walk up and down the
aisles. You get to the cash register and they say thank you
very much. You can see why we have gotten to where we are. We
all know the history. Aligning incentives would be where I
would start.
Governor Bullock. I largely agree with Governor Haslam. We
need to move from paying for just repeated services and tests
to paying for value.
It is also important through all of this too--I think
Tennessee has done it. Montana has done comprehensive primary
care plus reform. We did it through the Center for Innovation.
As you go forward, do not mess with things like that because we
are trying to do some good work already in payment reform and
starting to look at care coordination, which did not always
exist.
Senator Kaine. Governor Baker.
Governor Baker. To build on what my colleagues have already
said, I would add to that the transparency issue that has been
discussed before. There is a lot of variation--let us leave it
at that--not just in the way care gets delivered but also how
much we pay for basically the same kinds of things.
I also think, as Senator Whitehouse brought up, this whole
issue around variation in both approach to providing care in
certain situations and circumstances and outcomes. There is a
lot of research on that, and not a lot of it finds its way into
daily practice. That would be a great place I think for,
frankly, the Federal Government to actually take the lead. You
have a lot of resources and a lot of knowledge and a lot of
opportunity there.
Senator Kaine. Mr. Chair, I am over time, but could I allow
Governors Hickenlooper and Herbert to answer? Thank you.
Governor Hickenlooper. I would just reemphasize
transparency. I think that is going to be the next big
opportunity. Just go into a Walmart or any big--you know,
Target, and they have hundreds of thousands of SKUs, all
different colors, every little thing you can buy, and yet
hospitals come and tell us or other care providers tell us,
well, there is too much complexity. We cannot predict what
something might cost. Ultimately we have got to be able to have
some system by which people know and can easily through their
handheld device or whatever get a sense of what it is going to
cost them to get their broken leg fixed or stitches in their
arm or maybe a serious medical procedure and know what that is
going to cost and what their co-pay is going to be and what the
quality is going to be at, let us say, the five different
places that are within a 5-minute drive of where they live.
Senator Kaine. Governor Herbert.
Governor Herbert. Let me say I agree with what has been
said. I think we learn from each other. If Massachusetts has a
great plan and the people of Utah like it, we will probably
adopt it. It should not be mandated to us. We should be able to
choose what we think is best in our own respective areas of
responsibility.
I do believe we need to move the conversation, once we get
through the stabilization here, but there has got to be a
discussion about the cost of health care. The undergirding
cause of the rise of premiums and insurance. What are we doing?
Why are we not putting more doctors in the marketplace? Why are
we not incenting people to go into the field of medicine? How
about tort reform? What about more information and consumer
choice where they can pick and choose and be informed in their
choice on their medical issues? Those things will help us drive
the cost down for the cost of health care and drive down the
cost of insurance.
Senator Kaine. Thanks, Mr. Chair.
The Chairman. Thank you.
Senator Murphy is here and he has not asked questions. The
Governors have been very generous with their time this morning,
including the hour they spent with about 30 other Senators.
After Senator Murphy, I am going to move to wrap up the hearing
unless Senators have other--Senator Franken and Senator
Whitehouse, you may have other comments.
Senator Franken. I do.
The Chairman. OK. Then we will make time for that. Then I
am going to give the Governors a minute or 2 each in case there
is one more thing you would like to say to us. Then we will
wrap it up after that.
Senator Murphy. If Senator Franken has a question, he can
go ahead.
Senator Franken. Is that OK, Mr. Chairman?
The Chairman. Sure.
Senator Franken. Yesterday we briefly discussed the Graham-
Cassidy proposal. I want to say that I have a great deal of
respect for both Senators Graham and Cassidy. Though if Cassidy
were here, I would say more for Graham.
[Laughter.]
He is not here.
I have grave concerns with this proposal, and I want to ask
our panel about the plan's potential implications. Although the
plan's specifics have changed over time and reportedly will
change again, what we know from earlier versions of the Graham-
Cassidy plan and from recent news reports is that it could
eliminate funding for premium subsidies, eliminate the cost
sharing reduction payments, and eliminate the enhanced Federal
funding for the Medicaid expansion. Instead, starting in 2020,
the Federal Government would return some but not all of this
funding back to States in the form of a block grant. This means
that States will be receiving less money under these block
grants than they would be projected to receive under the ACA.
Not only that, but the proposal significantly redistributes
funding across States such that States that have been more
proactive in enrolling individuals in the Medicaid expansion
and marketplace coverage like, Governor Baker, yours and my
State, will see billions in losses, while other more sparsely
populated States and those that have not expanded Medicaid
coverage could see funding increases at least in the initial
years.
After 2026, all the State funding would be eliminated,
which means States would be on the hook for all costs
associated with Medicaid expansion, premium subsidies, and
other cost sharing reduction payments after that point.
Earlier versions of the Graham-Cassidy plan also included a
proposal to cap and cut Medicaid funding just like the proposal
that was included in the Republican bill to repeal the ACA,
which failed to pass the Senate a few weeks ago.
Governor Baker, based on what we know about the Graham-
Cassidy proposal, is this a reform that you could support for
Massachusetts?
Governor Baker. I am also a big fan of Senator Graham and
Senator Cassidy, but no. The proposal would dramatically
negatively affect the Commonwealth of Mass. We are talking
billions and billions of dollars over the course of the next 4
or 5 years. That is not to say that there are not plenty of
programs where the Federal Government block grants money to
States that work. A lot of our child welfare money comes
through a block grant. We get money for substance abuse
services and mental health services through block grants. We
get money for--I would argue some of the transportation money
we get looks a lot like a block grant. This particular
proposal, in part because of the way it is designed, has major
consequences for a State like Massachusetts.
I would also argue when we talk about Medicaid generally--
and I know this is not supposed to be about Medicaid--your
income level as a State, your wage as a State is calibrated
into what you get from the feds. We are a 50 percent match
State. I am pretty sure you are a 50 percent match rate.
Governor Herbert is a 70 percent Federal match rate. Governor
Bullock I think is a 65 percent match rate, and I think
Governor Haslam is a 65 percent match rate. I have no problem
with that. Higher income States should get a lower share of
reimbursement from the feds than lower income States. I
completely understand that. That formula is framed in a way
that is deemed to be sort of equitable based on that.
The problem I have with the Graham-Cassidy piece,
especially for a State like us, is it assumes that the cost of
health care across the country should be the same everywhere.
We are a high wage State, as I just pointed out. Because we are
a high wage State, wages make up about 70-75 percent of the
cost of health care at the provision level in most States,
which is why we get paid less on the Medicaid match than some
other States. To promote the idea you could build a block grant
model around the idea that the cost of care that is higher in
Massachusetts than it might be in Florida because somehow
Florida is just smarter and better, that is not accurate. The
simple truth is we have higher wages than they do in Florida,
and that has a lot to do with why our health care costs are
higher.
Senator Franken. I am out of my time. I would note that 99
percent of children are covered in Massachusetts, and more than
96 percent of all Massachusetts residents have health care.
These are the highest rates in the country, and with a
bipartisan effort, Massachusetts developed a system of health
coverage that works. I know that this Graham-Cassidy plan would
be not beneficial to States like yours and like mine----
Governor Baker. Correct.
Senator Franken [continuing]. That do cover--I think we may
be second in the country.
Governor Baker. You just need to know my mom is a Democrat
from Rochester, MN.
Senator Franken. I so love you.
[Laughter.]
The Chairman. With that, we will thank Senator Franken and
go to Senator Murphy. Then we will conclude the hearing.
Statement of Senator Murphy
Senator Murphy. Thank you, Mr. Chairman.
You all have been so fantastic for giving us so much of
your time.
I wanted to just probe this question of guardrails a little
bit more, and maybe I am going to pose this question to
Governor Hickenlooper.
I understand the need to allow for States to be
laboratories of experimentation. Lord knows, we still need more
experimentation to figure out what works and what does not work
in health care. We also do exist in a national economy with a
decent amount of fluidity between people and businesses. There
is an argument that having some floor on what insurance plans
cover protects States and actually creates stability in the
overall economy.
You have all recommended giving States more flexibility,
but where is the natural end of that? Because I think there is
some benefit to knowing that no matter what State you go to,
you are going to be able to have folks that are sick or have
higher levels of medical acuity be insured. There is probably
some benefit to know that there is some relatively uniform
standard of benefit, maybe not exactly what is in the ACA
today, but at least some modicum of regularity.
Talk to me a little bit about whether you see some benefit
in having some floor of benefits or protections and how far you
would go in taking down the guardrails.
Governor Hickenlooper. We discussed this at great length in
trying to come to consensus with Republicans and Democrats. In
the end, we support the concept of essential health benefits
and what those guardrails are, as they are now. In other words,
we do not address that.
What we really focused on was how do you make the
bureaucracy easier so you can get these various waivers that
pretty much all of us agree offer not only cost savings, but in
many cases will improve the actual outcomes of health care
delivery. At some point, that will get discussed and debated,
and that is a longer issue than we have here. We were very
specific to make sure that those essential health benefits,
those guardrails, should be maintained.
Within that, there are all kinds of places where
maintaining those health benefits can be done less expensively.
Governor Baker talked about the alignment of medical, you know,
dental benefits. Rather than having your basic insurance
company set up whole new systems to provide dental benefits,
you have companies that do that already, and they were not
permissible under the Affordable Care Act. Those kinds of
waivers I think are the driving force of a lot of the change we
are going to see in the short term, and if one State has
already qualified, other States should qualify as well.
Governor Haslam. Senator Murphy, can I jump in on that real
quick?
Senator Murphy. Sure.
Governor Haslam. Undoubtedly you are right. I will say
this. It is way out of whack now. The balance is--back to
Governor Herbert, it is the States going to the Federal
Government hat in hand, and there is an assumption from the
Federal Government--and it is a little offensive, to be honest
with you--that says you will not care for the least of these
unless we tell you exactly how to do it. You trust us with
education. You trust us with so many other things. And there is
a sense in which like you are saying we do not trust you to
care for the least of these. I know Governors of all types, and
we get it. We understand that is part of our deal. We are just
so caught up in the bureaucracy that we know there are a lot of
dollars being wasted.
Senator Murphy. I want to ask you one other question on
another topic. Governor Baker, I want to talk to you about the
individual mandate because as part of the President's executive
order at the beginning of the year, he required that the IRS
start to unroll the enforcement of the individual mandate. And
they actually declared on February 14th that they would scrap
plans to reject tax returns that do not include information on
coverage status. And at least one actuarial firm suggested that
this order, this uncertainty around whether the individual
mandate is going to be enforced, is contributing to about 10
percent of the premium rise.
You were sort of first out of the box as a State to
understand the importance of the individual mandate. Can you
just talk a little bit more about your experience with the
mandate and what it potentially does to rates if there is at
the very least great uncertainty from the perspective of
insurers as to whether anybody is going to bear consequences if
they do not abide by it?
Governor Baker. I was an insurer once. I am not anymore. I
am not going to try and speak for them today.
What I would say is that the mandate, at least in
Massachusetts, did three things. The first thing was it
encouraged people who had access to coverage through their
employer to take it, and that actually represented a huge part
of the increase in covered lives after the mandate took effect,
which was not something anybody was anticipating or
appreciated, I do not think, before we put the mandate in
place. We were thinking about it mostly as a way to make sure
that everybody was in the game, including folks who
historically had just chosen not to buy.
The second thing I would say is that we have been at it for
10 years now, and it does create a certain level of sort of
shared responsibility and a cultural understanding that there
is a reason why you buy insurance because you do not know
necessarily if there might be some point in time when you are
going to need to use it. We are also a mandatory auto insurance
State. I think people for the most part get that, and I think
it has helped stabilize the market in some respects.
I really do believe that the CSR issue is a much bigger
issue for the carriers than what shows up on your income tax
return. This is me being the Governor as opposed to a Senator.
I would push you folks to think about encouraging States to
come up with ways, especially if you are going to create
reinsurance pools in conjunction with them, that create some
semblance of a reasonable market. There are a lot of ways
people could encourage folks to buy insurance and to keep
insurance other than a mandate. I happen to like the mandate
because it is what we have been using. It is what people are
familiar with, and people understand it in Massachusetts. I do
think this is one thing where States, which are a lot closer to
people and have a lot more engagement with them day in and day
out, could pursue a whole variety of different options. You
need to find out that some work better than others, and that
would end up being useful and appropriate, especially if you
decide you want to get into the business of doing shared
reinsurance pools.
Senator Murphy. Thank you.
The Chairman. Thank you, Senator Murphy.
Governors, thank you. I want to give you the last word in
just a minute to ask you to take a minute or 2 for anything you
would like us to have for the record or you would like to
emphasize.
First, let me ask you. There has been a good deal of talk
about attracting younger people into the individual market. A
couple of Senators on both sides of the aisle actually have
suggested that with what is now the copper plan in the
Affordable Care Act, which is essentially a low premium, high
deductible alternative--you could call it a catastrophic plan
in a sense. Its goal is to keep, as I think one of you
described, a medical catastrophe from turning into a financial
catastrophe. In the Affordable Care Act, you can only buy that
if you are 29 or younger. The suggestion was to take off the
age cap and allow anybody of any age to buy the copper plan.
Do any of you have an opinion about that? Let me put it
this way. If it were part of a bipartisan package that included
extension of the CSR and other things, what are the pros and
cons of that?
Governor Haslam. I do not know enough actuarially to know
how big a difference that is going to make. I do not know.
Governor Bullock. I think when you are actually hearing
some real consensus on what needs to be done to stabilize it,
if Charlie Baker does not know what it is going to do, chances
are none of the Senators will. I think that it goes a little
further than where we ought to be talking about if we are
really looking at immediate stabilization.
Governor Baker. Going back to when we did health care
reform in Massachusetts 10 years ago, we did set up plans that
you could buy if you were under the age of 29. This was before
the Federal law that said you could carry your parents'
coverage until you are 26. We were really thinking about a
particular market there. And that was designed to encourage
young, healthy people to purchase insurance, many of whom are
thinking differently about this than other people are.
I agree with Governor Haslam. I do not know what the
actuarial impact of applying that more broadly across the whole
marketplace would be. Obviously, my answer to that would be it
would be good to have somebody do the analysis and let you know
what they think.
In Massachusetts, it was designed to serve a very
particular purpose, and that purpose only. It was not made
available to the whole market for a reason, and the reason was
we wanted to make sure that the market overall maintained some
degree of actuarial soundness within the folks who were buying
who were sort of over the age of 30.
The Chairman. Anybody else?
Governor Hickenlooper. I would agree that we do not have
actuarial information, but there was a huge process of
discussion that went into that decision to put the age limit on
there. If you were going to change it--it is not impossible to
imagine changing it incrementally, in other words, just do not
abolish it but look at what you might add or take away from the
plan and then how you might adjust the age in some way.
The Chairman. It is a thought. Thank you.
Governor Herbert. Let me add that I do not know that we
know the impact actuarially, but I do believe that more choice
is better than less choice. I think government puts barriers in
place that draw lines and it probably distorts the market. If
there is a demand out there for lower cost, high deductibles,
we ought to allow that to happen and see, in fact, what the
market will, in fact, result in.
The Chairman. Thank you for your answers. This is the kind
of thing that you deal with in your States with your
legislatures. I am looking for a way to get a result, and it is
pretty easy to be for extended cost sharing payments. That is
just more money, and we can argue about how long it should be
and that is one thing. We will have no chance of getting that
unless we have, in addition to that, some restructuring of the
market, part of which could be with making section 1332 work
better. That is an opportunity to do that, and the reason I am
emphasizing that, I think there is generally consensus about
that. It is already in the law. It is easier for people to
accept on the Democratic side who approved the law. If we are
fixing it, that is easier for them to do.
To get a Republican President and a Republican House and a
Republican Senate just to vote for more money will not happen
in the next 2 or 3 weeks unless there is some restructuring. A
different policy, which is already in the law for people under
the age of 29, is some restructuring and would be welcomed by,
I think, a number of the Senators, which is why I asked that.
I have two questions to ask you. And a number of you have
your staff and insurance commissioners here. It would help us
if you could give us specifically the things you would like to
see us change in flexibility on 1332, and you can add 1215 if
you want--those two waivers--very specific. For example, the
waiting period, the me-too plan, the things you have mentioned.
If you could give them to us in the next 3 or 4 days. We have
written down what you have said, but this train may move
through the station, and this is a chance to change those
things. If you want to tell us exactly what those are and we
got it by the middle of next week, we could use it and it would
help us get a result.
The same would be true if you can think of anything that
would help States do what Alaska and Minnesota have done, if
any change in the law is helpful to that because many of you
have talked about reinsurance. Reinsurance is one way to deal
with individuals with complex care. Stabilization funds is
another, a variety of ways. Creating a brand new Federal
reinsurance pool in the next 10 days is not going to happen.
There is just not any way to do that. What we see in Alaska and
Minnesota is you are using dollars that are already there in a
way that does not cost any more and you are actually reducing
premiums without more Federal dollars. If there is any
impediment in the law to any other State doing that, it would
be very helpful to know it.
Another thought, something we might be able to do in the
short term, is pilot programs for a good idea. Senator Heitkamp
suggested that. She suggested, for example, association plans,
which we go back and forth about, but she suggested before this
hearing, let us try a pilot program for a few States who have
ideas about association plans. If that idea were appealing,
that would be helpful. Or if you want to suggest another kind
of a pilot program that we might include in our short-term
plan. I am trying to be very specific with you because all of
you are Governors. You do this all the time. This is what you
do every day. You try to get a result right out of competing
points of view.
We have, just to put it bluntly, Democrats who have no
trouble voting for more money for the Affordable Care Act
because they wrote the act, they passed it, and they like to
fund it. You have Republicans who have 7 years of opposing more
funding for the Affordable Care Act. Republicans want more
flexibility.
Those are the two things that will help us get a result to
help stabilize the individual market in 2018.
All the other ideas are very welcomed. Anything that has to
do with taxes--for example, the health care tax was mentioned.
That is $145 billion over 10 years. There is no way we are
going to find a way to get $145 billion in the next 10 days.
Plus, all those things are the jurisdiction of the Finance
Committee and it would be more complicated.
I am trying to keep it very simple. We know how to do big
issues. Senator Murphy is here. He and Senator Cassidy solved a
big complicated problem on mental health, and we know how to do
that. I think we have been so much at a stalemate on this that
any small step that helps stabilize the market in 2018 will, A,
keep the premiums down and that step would include some
extension of the CSRs. As Governor Bullock pointed out, it
would be a signal to the country and to the markets that we
know what we are doing and a second and third step may be
coming down the road.
I was going to ask this question, but I will not. I will
just state it. I am intrigued with the fact that Maine set up
its own reinsurance program. You can pay for these. I think
there is general consensus among Republicans and Democrats that
an individual market that is small, has people that do not fit
into all the other markets, some very sick people, that any
long-term solution is going to have to address especially some
amount of people with complex cases, some of the sickest
people. And that takes money. There are different places the
money can come from. It could come from Federal dollars or
savings from Federal dollars. It could come from State tax
dollars. I pointed out in my statement your budgets are
balanced and we are $20 trillion in debt. We are spending a
trillion on Medicaid expansion in the next 10 years, another
trillion on subsidies--866 on subsidies, so a little money
problem here. Or what Maine did was they just tacked $4 on
every policy and created a fund, and it worked pretty well for
them.
As we think about reinsurance as one way to deal with
complex cases, I think there is a State role in this as we go
along.
Finally, thank you so much for coming. I know how busy you
are. You have busy schedules every day. You have come a long
way. You have given us an enormous amount of time. You have
been very specific and helpful. I hope we can come to some sort
of result this month. I would like to give you the last word
going down the line, and then we will conclude the hearing.
Governor Haslam. I would just say I think you have a group
of people who are willing to help. When you walk through the
political situation, we get that. We deal with it every day and
we want to help.
I also need to beg your forgiveness. I have to jump out.
Thank you very much for hosting us.
Governor Bullock. I would say ditto to my colleague,
Governor Haslam. It was striking to me, as I read the testimony
of the five of us, how much similarity there was. I think we
all know what we need to do. I think Congress knows what we
need to do in the immediate term under your charge. I do
fundamentally and philosophically believe if this committee and
this Congress can take this step, that it also sends a much
more significant message as far as the opportunities for reform
going forward.
Governor Baker. Ditto my colleagues to my right here.
I would also just add there are a number of other things
that would be interesting to incorporate into a bill that would
involve reform on the 1332 piece. One is section 125 plans. We
used to have those. Pre-tax basis, individuals could buy
coverage if they did not qualify for coverage available at
their employers. That is another thing that the ACA just wiped
away. And there are a lot of people who used to play in the
section 125 space, and it is a good solution for a lot of
people. It is unfortunate that it is gone.
The family glitch, which we talked about earlier--that is a
total winner. Republicans and Democrats should be all in on
that one.
States that have established rating factor models that have
worked for years and years--and they are a small group in their
individual market, which again was just wiped away by the
Federal reform.
I frankly do not understand why we should be running rating
factors for individual and small group insurance in 50 States
out of Washington, DC. It just does not make any sense to me.
We will put all these on a list, but I think there is a
bunch of things we can offer up with respect to that.
The Chairman. It would be very helpful. The more specific,
the better.
Governor Baker. The final thing I just want to say is I
really appreciate your leadership on this, and I have always
appreciated the tone and the civic-minded approach you have
taken to everything you have done in public life. Thank you.
Governor Hickenlooper. I want to echo that too.
I will echo also the gratitude. It is refreshing not just
for us but for all the Governors and I think for a lot of
people around the country to see this work being done on a
bipartisan basis. Actually Governors being the people that have
to implement these laws and these sets of regulations--we find
it very important for us to be involved in the process and
obviously recognize the work you have to do is not easy and it
has got a long way to go.
I want to emphasize--I was going to emphasize the family
glitch, but Governor Baker did that already.
I do want to reemphasize community health centers and
making sure that people have a medical home at the least
possible cost with the highest possible quality, which is what
community health centers stand for.
I also just want to frame the question because this gets
into the partisanship, but at least from my perspective, the
Republican inclination is more focused around individual
freedom, individual responsibility; Democrats around the power
of collaborative efforts. Democrats care just as much about
that self-responsibility and that individual freedom, and
Republicans care just as much about that collaborative effort.
When I was in business, I spent 15 years renovating old
buildings and building restaurants--aligning self-interests
where you can get both sides to see that they can get a benefit
from a possible compromise is the single reliable way to make
progress through really difficult issues. And I think this case
is a classic case in point that we all have self-interests, the
Republicans, the Democrats, and then all the different players.
We talked about the pharmaceutical companies. We talked about
the care providers. We can go right down the list. There is a
way, by having them at the table, that we could thread that
needle I think and really begin to control costs, for the first
time maybe in the last 50 years at the same time that we are
improving quality and expanding access.
The Chairman. You have the very last word, Governor
Herbert.
Governor Herbert. Very appropriate too. Thank you.
[Laughter.]
Let me say amen to what my colleagues have said. I think
it is an opportunity for us in fact to address you and to give
you some what we think is a common sense approach to things,
which Governors have to do, and I know as a former Governor,
you understand that.
I wrote down three things I learned here today, maybe
reemphasized.
One, there are philosophical differences. We have some that
argue that health care is in fact a right, while others think
it maybe is not a right.
We have the same kind of goals. We differ on process. That
is the debate you have around here all the time. We want to
make sure everybody has health care, access to good quality
health care at affordable prices. How we get there is where we
in fact have disagreement.
We also emphasized--and you mentioned it in your remarks,
Mr. Chairman--that we have different rules. We balance our
budgets. We have to do that. They do not do that here in
Washington, and you are approaching $20 trillion in debt and
rising. The question is how much is too much and what do we do
about it. I think you are going to have to finally decide how
much money are you going to spend, how much are you going to
commit on health care. That is a decision that is yet to be
made. Again, I think that is one that you are going to have to
look at.
I would also say we cannot let perfect be the enemy of
good. You have heard that before. There are some great
solutions and opportunities here, but sometimes they get
stymied. If we look at just our immigration debate forever, and
yet we cannot seem to get anything done because we have perfect
being the enemy of good.
And last but not least, there is clearly a lack of trust
exhibited in my opinion by Congress toward the States. That is
why they feel like they have to put out every jot and tittle of
what we need to follow. Nobody cares more about Utahans than
Utahans and those who have also been elected to represent them.
Please give us the confidence that we will find a way. Let the
States be the laboratories of democracy on all of these issues,
and we will find a better solution. If in fact Massachusetts
has a better way, Utah will be the first in line to try to copy
and emulate. If we think that is good or bad or we will modify
and improve, we will do what we need to do in the Utah way. I
would say the same thing for all the States. Give us that
opportunity and we will solve the problem much more
effectively, much more efficiently with lower cost to the
taxpayers and getting better outcomes.
The Chairman. Thank you, Governor Herbert. Thanks to all of
you.
I noticed that Senator Carper, former chairman of the
National Governors Association, has been sitting there in the
front row for most of today. Governor King, Senator King, was
here as well.
On September 12th, our committee will meet again to hear
about the State flexibility and advance many of the topics
mentioned today.
The record will be open for 10 days for comments and
questions.
Thank you again for being here.
The committee will stand adjourned.
[Additional Material follows.]
ADDITIONAL MATERIAL
Office of the Governor,
Helena, Montana 59620.
Hon. Lamar Alexander, Chairman,
Hon. Patty Murray, Ranking Member,
Committee on Health, Education, Labor, and Pensions,
U.S. Senate,
Washington, DC 20510.
Dear Chairman Alexander and Ranking Member Murray: Thank you again
for the opportunity to appear before your committee to discuss
stabilization of the individual market. I hope the committee will act
quickly and introduce legislation to stabilize the individual market.
As outlined at the hearing, ongoing funding for the cost sharing
reduction is a critical first step.
This letter responds to the follow-up questions submitted by the
committee. Those questions ask for thoughts on how to improve
transparency and address costs and improve quality outcomes in our
healthcare system. My answers are provided below.
improving transparency & addressing costs
Fragmented health information is a major barrier to understanding
and improving the true value of health care services being delivered to
all patients in all care settings. While many ideas have been proposed
to correct the ills of the health care system, it's clear that there is
no one single solution.
Instead, a collection of improvements need to be made to the health
care delivery and payment systems to lower costs while improving the
quality of care that individuals receive.
The electronic exchange of health information is integral to any
health care transformation, both because of its potential to prevent
medical errors and improve costs, efficiency, and quality and as a tool
for monitoring system performance. Without the right data to
demonstrate accountability, funding that should go to patient care goes
to insurers and providers to build new buildings, pay executive teams
millions of dollars in wages and executive perks, maintain incredibly
wasteful and costly systems and operations with no proof of impact, and
otherwise avoid transparency and accountability for actions that
diminish and impair access to care for patients.
Montana Data Infrastructure Pilot
Montana has established a stakeholder group to explore the
feasibility of establishing a State Health Information Exchange (HIE),
built on a successful pilot underway in the State's largest community
of Billings. Success of this initiative is based on performance that
delivers a great experience, high care quality outcomes, optimal
utilization of services, and ultimately curbs costs. Comprehensive
Primary Care Plus (CPC+) elevates the bar for a provider or health
system's need to demonstrate and be accountable for the level of value
of their services. All of this requires interconnected, reliable
information. A Montana HIE solution will create significant
opportunities throughout Montana not only in health care, but in the
health of Montanans by:
Informing decisionmaking at all levels including
consumers, healthcare providers, payers, healthcare associations,
policymakers, and State leadership;
Promoting and helping fulfill regulatory compliance for
healthcare providers and payors more efficiently;
Illuminating healthcare utilization trends, and individual
and population health risks and needs; Connecting emerging delivery
models like home and community based services; And improving
understanding of value-based performance of healthcare delivery and
payor systems.
For such an effort to be successful, Congress should hold HIT
vendors accountable to strong interoperable data infrastructure
standards necessary to support a sophisticated network of care
coordination partnerships. The result will be a higher-performing
health system, with measurably better outcomes and value.
improving health outcomes
Integrated Behavioral Health and Access to Behavioral Health Services
The American health care system should better address social
determinants of health, which underlie management of chronic disease
and utilization of healthcare resources. Integrated behavioral health
services not only demonstrate positive impact for high risk patients,
but also positive impact on productivity and sustainability for
practices using these services. If we are going to look to develop a
high-performing health care system that deals with the totality of
medical costs, ignoring mental health and substance use as drivers of
costs will not work. Primary care providers are already on the front
lines of this fight, as they prescribe 70 percent of the anti-
depressants in the United States.
This year, Montana launched the first public-private partnership to
fund a project ECHO clinic to help integrate behavioral and physical
health care. Montana Medicaid is partnering with commercial carriers to
use tele-health technology to provide psychiatric expertise and
consultation to remote collaborative care teams at primary care
practices across the State. These integrated behavioral health
collaborative care tele-clinics are the result of a public-private
partnership between Montana Medicaid, the Montana Mental Health Trust,
Blue Cross Blue Shield of Montana, and PacificSource Health Plans. The
initiative launched this year and already serves 16 primary care
practices across Montana.
The care teams work on topics that include:
Basic and advanced psychopharmacology
Suicide and substance use screenings
Unipolar and bipolar depression
Anxiety disorders
Child and adolescent psychiatric disorders
If you have additional questions, please contact the Governor's
Senior Health Policy Advisor, Jess Rhoades, at Jrhoadesmt.gov. or 406-
444-5503.
Sincerely,
Steve Bullock,
Governor.
______
Response by Charles Baker to Questions of Senator Whitehouse
and Senator Hassan
senator whitehouse
Question. Following the HELP Committee's work to stabilize the
individual market, I hope the committee will move on to other efforts
to address cost and improve quality in our health care system.
I believe the following areas are ripe for bipartisan
collaboration:
a. Improving patient safety by preventing medical errors and
healthcare-acquired infections;
b. Addressing the dramatic variations in care quality and outcomes
across States;
c. Identifying ways to reduce administrative overhead and dispute,
specifically the bureaucratic warfare between insurance companies and
providers over reimbursement;
d. Ensuring that a patient's wishes are honored at the end of his
or her life; and
e. Advancing payment reform to encourage prevention and primary
care.
Which of these areas should be a priority for the HELP Committee
going forward? What strategies would you suggest to lower costs and
improve quality in these areas? Is there innovative work in your States
and communities that you would like to highlight?
Answer. Thank you again for the opportunity to address the HELP
Committee on stabilization of the individual market. Stabilizing the
market is necessary in order to address the underlying issues of health
care affordability and costs. States are incubators and innovators of
health care reform solutions and initiatives, and I continue to
advocate for increased flexibility within the 1332 waiver process to
allow States to innovate in meeting the unique health care needs of
their States, while also maintaining the coverage gains we've achieved.
Below please find my responses to the questions submitted for the
record. I am available should the committee have any further questions.
I believe addressing cost and quality in our health care system
with bipartisan solutions is an important undertaking. Having achieved
near universal coverage in Massachusetts, we are now focused on health
care affordability for individuals, families and employers.
I suggest the HELP Committee prioritize policies that advance
payment reform and encourage preventative and primary care.
Massachusetts has been advancing payment reform on various fronts, most
notably in our Medicaid program (known as MassHealth). Through the
State's innovative 1115 Medicaid waiver, Massachusetts is implementing
a nation-leading model of Accountable Care Organizations (ACOs). Under
the new model, networks of physicians, hospitals and other community
based health care providers will be financially accountable for cost,
quality, and member experience for over 850,000 MassHealth members.
Historically, MassHealth has operated under a fee-for-service model
that has resulted in the inefficient delivery of care. Under the ACO
model, health care providers will be paid to improve the care
coordination and health outcomes for MassHealth members. Notably, the
ACO program will allow for investment in primary care providers and
innovative ways of addressing social determinants of health. As of
August of this year 2017 health care organizations across the State
have executed agreements to participate in the program, which is set to
go live March 1, 2018.
Administrative simplification and reducing overhead for payers and
providers are equally important policies to pursue. In Massachusetts,
we have undertaken several initiatives to address burdens cited by our
own health care market participants. Examples of such initiatives
include:
the establishment of a quality measurement taskforce
comprised of government and industry representatives to develop a
standardized, multi-payer quality measurement set; and
the establishment of a cross-agency working group to
identify and reduce State reporting requirements on payers and
providers.
senator hassan
Question. During the September 7th HELP Committee hearing, many of
you mentioned curbing rising health care costs as an important part of
stabilizing premiums in the individual market. In this effort, I
believe we should consider not only health care cost transparency, but
also transparency in health care outcomes. Lowering health care costs
should not mean that patients experience worse outcomes; instead, we
should take steps to incentivize value-based care--we should give
patients the tools they need to choose quality health care providers,
and reward providers for lowering costs while simultaneously improving
outcomes. I am interested to know your thoughts related to not only
cost transparency but also on transparency of outcomes--and how we can
combine these metrics to improve our health care system. Are your
States engaged on this front, and if so, how?
Answer. In Massachusetts, we believe that transparency around costs
and quality is fundamental to curbing costs and improving our health
care system. It also allows consumers to be better informed about their
health care options and the decisions they make. We are actively
engaged in several transparency initiatives:
Consumer Website--One of our State's quasi-public
agencies, the Center for Health Information and Analysis (CHIA), will
be launching a consumer transparency website later this fall. The first
phase of the site, largely modeled off of New Hampshire's health care
cost website, will contain a pricing tool that allows consumers to look
up the price of certain procedures based on their zip code and
insurance plan using data from the Massachusetts' All Payer Claims
Database. Initially, the website will include existing quality data,
with the goal of eventually layering in more sophisticated quality
measurements.
Quality Measure Alignment--Massachusetts has also
established a quality measurement taskforce, comprised of government
and industry representatives to develop a standardized, multi-payer
quality measure set. Standardized metrics will allow for meaningful
quality comparison across providers and plans, thereby increasing the
utility of such quality information by health care consumers and
policymakers.
[Whereupon, at 12:10 p.m., the hearing was adjourned.]
[all]
| MEMBERNAME | BIOGUIDEID | GPOID | CHAMBER | PARTY | ROLE | STATE | CONGRESS | AUTHORITYID |
|---|---|---|---|---|---|---|---|---|
| Hatch, Orrin G. | H000338 | 8314 | S | R | COMMMEMBER | UT | 115 | 1351 |
| Burr, Richard | B001135 | 8286 | S | R | COMMMEMBER | NC | 115 | 153 |
| Collins, Susan M. | C001035 | 8291 | S | R | COMMMEMBER | ME | 115 | 1541 |
| Enzi, Michael B. | E000285 | 8328 | S | R | COMMMEMBER | WY | 115 | 1542 |
| Isakson, Johnny | I000055 | 8323 | S | R | COMMMEMBER | GA | 115 | 1608 |
| Murkowski, Lisa | M001153 | 8234 | S | R | COMMMEMBER | AK | 115 | 1694 |
| Young, Todd C. | Y000064 | 7948 | S | R | COMMMEMBER | IN | 115 | 2019 |
| Scott, Tim | S001184 | 8141 | S | R | COMMMEMBER | SC | 115 | 2056 |
| Paul, Rand | P000603 | 8308 | S | R | COMMMEMBER | KY | 115 | 2082 |
| Roberts, Pat | R000307 | 8275 | S | R | COMMMEMBER | KS | 115 | 968 |
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