Congressional Hearings
STABILIZING PREMIUMS AND HELPING INDIVIDUALS ON THE INDIVIDUAL INSURANCE MARKET FOR 2018: STATE INSURANCE COMMISSIONERS
Congressional Hearings
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| AUTHORITYID | CHAMBER | TYPE | COMMITTEENAME |
|---|---|---|---|
| sshr00 | S | S | Committee on Health, Education, Labor, and Pensions |
[Senate Hearing 115-470]
[From the U.S. Government Publishing Office]
S. Hrg. 115-470
STABILIZING PREMIUMS AND HELPING INDIVIDUALS IN THE INDIVIDUAL
INSURANCE MARKET FOR 2018: STATE INSURANCE COMMISSIONERS
=======================================================================
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 ON THE
INDIVIDUAL INSURANCE MARKET FOR 2018, FOCUSING ON STATE INSURANCE
COMMISSIONERS
__________
SEPTEMBER 6, 2017
__________
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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
WEDNESDAY, SEPTEMBER 6, 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
Murkowski, Hon. Lisa, a U.S. Senator from the State of Alaska.... 6
Casey, Hon. Robert P., Jr., a U.S. Senator from the State of
Pennsylvania................................................... 7
Enzi, Hon. Michael B., a U.S. Senator from the State of Wyoming.. 38
Paul, Hon. Rand, a U.S. Senator from the State of Kentucky....... 41
Franken, Hon. Al, a U.S. Senator from the State of Minnesota..... 43
Collins, Hon. Susan M., a U.S. Senator from the State of Maine... 45
Bennet, Hon. Michael F., a U.S. Senator from the State of
Colorado....................................................... 47
Baldwin, Hon. Tammy, a U.S. Senator from the State of Wisconsin.. 50
Cassidy, Hon. Bill, M.D., a U.S. Senator from the State of
Louisiana...................................................... 52
Murphy, Hon. Christopher S., a U.S. Senator from the State of
Connecticut.................................................... 54
Burr, Hon. Richard, a U.S. Senator from the State of North
Carolina....................................................... 56
Hassan, Hon. Margaret Wood, a U.S. Senator from the State of New
Hampshire...................................................... 58
Kaine, Hon. Tim, a U.S. Senator from the State of Virginia....... 62
Young, Hon. Todd, a U.S. Senator from the State of Indiana....... 65
Roberts, Hon. Pat, a U.S. Senator from the State of Kansas....... 69
Warren, Hon. Elizabeth, a U.S. Senator from the State of
Massachusetts.................................................. 71
Whitehouse, Hon. Sheldon, a U.S. Senator from the State of Rhode
Island......................................................... 73
Witnesses
McPeak, Julie, Mix, Commissioner, Tennessee Department of
Commerce and Insurance, Nashville, TN.......................... 7
Prepared statement........................................... 9
Kreidler, Mike, O.D., Washington State Insurance Commissioner,
Olympia, WA.................................................... 13
Prepared statement........................................... 15
Wing-Heier, Lori K., Director, Alaska Division of Insurance,
Anchorage, AK.................................................. 19
Prepared statement........................................... 21
Miller, Teresa, J.D., Insurance Commissioner of Pennsylvania,
Harrisburg, PA................................................. 25
Prepared statement........................................... 27
Doak, John, Commissioner, Oklahoma Department of Insurance,
Tulsa, OK...................................................... 33
Prepared statement........................................... 34
(iii)
ADDITIONAL MATERIAL
Statements, articles, publications, letters, etc.
September 5, 2017, letter to Hon. Lamar Alexander and Hon.
Patty Murray............................................... 80
September 5, 2017, letter to Hon. Mitch McConnell, Hon. Chuck
Schumer, Hon. Paul Ryan, and Hon. Nancy Pelosi............. 81
September 1, 2017, letter from Mental Health Liaison Group... 82
August 10, 2017, letter to Hon. Patty Murray................. 84
Response by Mike Kreidler to questions of:
Senator Alexander............................................ 87
Senator Burr................................................. 87
Senator Young................................................ 87
Senator Roberts.............................................. 88
Senator Whitehouse........................................... 88
Senator Franken.............................................. 88
Response by Mike Kreidler to questions of Senator Whitehouse. 89
Response by Lori Wing-Heier to questions of Senator Alexander 92
Response by Julie Mix McPeak to questions of Senator
Whitehouse................................................. 94
Response by Miller, Teresa, J.D. to questions of Senator
Whitehouse................................................. 95
STABILIZING PREMIUMS AND HELPING INDIVIDUALS ON THE INDIVIDUAL
INSURANCE MARKET FOR 2018: STATE INSURANCE COMMISSIONERS
----------
WEDNESDAY, SEPTEMBER, 6, 2017
U.S. Senate,
Committee on Health, Education, Labor, and Pensions,
Washington, DC.
The committee met, pursuant to notice, at 10:05 a.m. in
room SH-216, Hart Senate Office Building, Hon. Lamar Alexander,
chairman of the committee, presiding.
Present: Senators Alexander, Murray, Enzi, Burr, Isakson,
Paul, Collins, Cassidy, Young, Roberts, Murkowski, Scott,
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 first hearing on
stabilizing premiums and ensuring access to insurance in the
individual health insurance market for 2018.
We have five State insurance commissioners. Thank you for
coming from long distances, some of you, to be with us to give
your testimony on how to enable the 18 million Americans in the
individual insurance market.
To give an idea of how many people are interested in this,
Senator Murray and I invited senators who were not on our
committee--which about a quarter of the senate is on this
committee--to come to a coffee with the five commissioners that
we have just completed for an hour. We had 31 senators there.
That is a remarkable level of interest.
Senator Murray and I will each have an opening statement
and then we will introduce our five witnesses. After their
testimony, senators will have an opportunity to ask witnesses
questions and we will do it in 5 minute rounds.
As I mentioned, this committee includes 23 United States
senators, nearly one-quarter of the members of the senate. It
includes senators with the widest divergence of views. It has a
republican majority of only one.
Yet, working together during the last 2 years, we have been
able to agree on big steps on big issues about which we have
big differences of opinion such as fixing No Child Left Behind,
which President Obama called a Christmas miracle; 21st Century
Cures Act, which Senator McConnell, the Majority Leader, said
was the most important piece of legislation that passed
Congress last year; the first overhaul of mental health laws in
a decade; and in early August, after 2 years of work--and I
want to thank the staff for that 2 years of work especially--we
passed new agreements to help speed safe drugs and devices into
medicine cabinets and provide $9 billion in funding for the
Food and Drug Administration.
I congratulate Senator Murray and democratic, as well as
republican, members of the committee for those accomplishments.
This is the way Americans expect the U.S. Senate to work.
Those were big steps. This hearing is about taking one
small step, a small step on a big issue which has been locked
in partisan stalemate for 7 years, health insurance. It is a
step Congress needs to take by the end of this month.
This step is not so small to 18 million Americans--the
songwriters, the self-employed farmers--those who do not get
their health insurance from the Government or on the job. These
18 million buy their health insurance in the individual market,
and about half of them have zero Government support to help buy
that insurance.
Eighteen million is only 6 percent of those who have health
insurance in America. That is the individual market. Nearly 300
million Americans have health insurance. Eighteen million buy
it in the individual market. That is 6 percent of all the
insured and 9 million of those 18 million have no Government
help to buy their insurance. They are the ones most hurt by
higher premiums, and higher co-pays, and deductibles.
Let us take a hypothetical Tennessean, a 35 year old making
$48,000 a year in Lynchburg would receive no tax benefit to
cover her $7,100 per year premiums. She has an estimated take
home pay of $39,000 after taxes, which means almost a fifth of
her take home pay is spent on health insurance premiums, and
this does not include deductibles or co-pays.
Next year, the Tennessee Department of Insurance says
premiums are going to go up by an average of 21 to 42 percent.
That is an increase for her of between $1,500 and $3,000 more
in premiums next year, and that does not include increases in
deductibles and co-pays.
She ought not to have to pay one fifth of her income for
health insurance.
Tennessee's Insurance Commissioner, who is here today, has
described the State's individual market as, ``Very near
collapse.'' At the end of September last year, Blue Cross, our
largest insurer, pulled out of the individual market in
Knoxville, Nashville, and Memphis. Not just for Tennesseans
with Affordable Care Act subsidies, but for everybody.
That could happen again at the end of this September if
Congress does not act. And if it happens again, up to 350,000
Tennesseans and millions of Americans could literally be left
with zero options to buy insurance in the individual market.
Last year, only 4 percent of American counties had one
insurance company on the exchange. This year 36 percent have
one insurer on the exchange. For 2018, one-half of the counties
will have one insurer only on the exchange. In Tennessee, it is
78 of our 95 counties.
If we do act, we can limit increases in premiums next year,
2018. We can continue support for co-pays and deductibles for
many low-income families. We can make certain that health
insurance is available in every county and lay the groundwork
for future premiums decreases.
I would suggest we do this by taking two actions, although
there may be others that come from these hearings.
One, is appropriate cost-sharing payments through the end
of 2018 to help with co-pays and deductibles for many low-
income Americans.
Two, amend the Section 1332 Waiver already in the
Affordable Care Act so States can have more flexibility to
devise ways to provide coverage with more choices and lower
costs.
On the first, cost sharing payments are extra subsidies--or
discounts, really--for many low-income individuals who receive
premium subsidies under the law. They help these individuals
pay for out of pocket costs like co-pays and deductibles, but
their overall effect is to lower premiums in this individual
market.
On the second, the Section 1332 Waivers, as I said, are
already written into the Affordable Care Act. Under some
circumstances, they allow a State flexibility from certain
elements of the law, such as Essential Health Benefits. But
they do not in any way reduce the patient protections most of
us support, including protections for those with preexisting
conditions, and ensuring those under 26 may remain on their
parents' insurance and have no annual or lifetime limits.
Right now, 23 States have begun steps to apply for a
Section 1332 Waiver; 7 States have applied; 2 States, Alaska
and Hawaii, have received the 1332 Waivers so far.
To get a result, democrats will have to agree to
something--more flexibility for States--that some may be
reluctant to support. Republicans will have to agree to
something--additional funding through the Affordable Care Act--
that some may be reluctant to support.
That is called a compromise, a much smaller but similar
agreement to the compromise that created this U.S. Senate in
1789. When the Founders created a Senate with two members from
each State and a House of Representatives based on population;
that was a compromise.
This is a compromise that we ought to be able to accept.
Temporary cost sharing payments were included in both the
Senate and the House republican bills to repeal and replace
major parts of the Affordable Care Act. The Section 1332 Waiver
is already in the Affordable Care Act, it just has not been
very appealing to States because it is a difficult tool to use.
We hope to hear more about that from our witnesses today.
If we were able to take the big steps I mentioned earlier--
fixing No Child Left Behind and passing the 21st Century Cures
Act--we ought to be able to take this small, limited,
bipartisan step on health insurance. If we do not, millions of
Americans will be hurt.
Timing is a challenge. So I propose that we try to come to
a consensus by the end of next week when our hearings are
complete so that Congress can act on what we recommend before
the end of September. Otherwise, we will not be able to affect
insurance rates and the availability of insurance for next
year. That is because the Department of Health and Human
Services requires insurance companies to submit their final
rates by September 20, and the Department plans to put those
rates on healthcare.gov by September 27.
I believe we can do it here because we are plowing very
familiar ground. Our goal is a small step and so many Americans
will be hurt if we fail.
If we do not do it, it will not be possible for republicans
to make political hay blaming democrats, or democrats to make
political hay blaming republicans. The blame will be on every
one of us, and deservedly so.
Let me conclude with a word about process. We will have
four hearings. We are hearing from State insurance
commissioners today. We are hearing from five State Governors
tomorrow. We will hear from various experts on State
flexibility next Tuesday, and a variety of helpful perspectives
next Thursday, including representatives from doctors,
hospitals, insurers, patients, and insurance commissioners.
This is what we call a bipartisan hearing. Most of our
hearings are. That means that Senator Murray and I have agreed
on the hearings, on each topic, and on who the witnesses will
be.
This committee has a clear jurisdiction over the rules that
govern the individual insurance market, which is what we are
discussing today. We have jurisdiction over private insurance,
over the exchanges created by the Affordable Care Act, and over
the Cost Sharing Reduction payments.
The purpose of the hearings is to provide a forum and
create an environment for reaching a consensus that we can act
on quickly during the month of September.
Note that we do have neither jurisdiction over taxes,
including the Affordable Care Act tax credit subsidy, nor over
Medicaid nor over Medicare. Those belong to the Finance
Committee although there are at least nine members of that
committee on this committee.
There has been such great interest in this effort that
senators who are not members of our committee are being invited
to coffee before each of the four hearings. As I said, 31
senators came to the one today. Senator Murray and I have
invited them to do that and to participate in this process.
My goal is to get a result on a small, bipartisan, and
balanced stabilization bill. Where it makes sense, we will work
with other committees and members to get that result.
Health insurance has been a very partisan topic for a very
long time, but the bottom line is 18 million Americans need our
help, and I hope we can stay focused on getting a result.
Senator Murray.
Opening Statement of Senator Murray
Senator Murray. Thank you very much, Chairman Alexander.
I do want to start by expressing my appreciation for your
leadership in holding these hearings. It is refreshing to have
an opportunity for frank and bipartisan discussions on the
healthcare system, and is consistent, as you said, with
longstanding tradition of working across the aisle on this
committee. Thank you very much.
I am also very grateful to each of the State insurance
commissioners who have come a long way to join us today. Your
perspective is incredibly valuable in this discussion. I am
looking forward to hearing from each of you.
I particularly want to acknowledge Commissioner Mike
Kreidler, who came all the way from Washington State today.
Good to have you here as well.
We are beginning these conversations at an important moment
for patients and families. There is a lot of work that needs to
be done to undo the damage this Administration has caused
within the healthcare system because this Administration is
still trying to create Trumpcare by sabotage.
Our healthcare system is more stable than President Trump's
tweets would have you believe, but it is weaker as a direct
result of some steps that have been taken.
Unfortunately, the President has undermined outreach and
consumer assistance efforts, and put forward Executive Orders
seemingly designed to inject uncertainty into the markets.
Just last week, this Administration cut funding for
outreach by 90 percent and funding for consumer assistance by
over 40 percent. Another pressing example is the threats to
cutoff payments to reduce coverage costs for low-income people.
Should these out of pocket cost reductions be discontinued,
independent analysis suggests that premiums could be an average
of 20 percent higher next year for the most popular plans on
the exchanges. There will be even more uncertainty in the
markets, and patients and families likely will have fewer
options when they go to pick their plans.
That is unacceptable and it is avoidable.
Congress can act right away to confirm once and for all
that out-of-pocket cost reductions will continue, and we have a
very narrow window to do that, as the chairman said, before
insurers finalize their plans for 2018 later this month.
I am very glad that there are members on both sides of the
aisle who agree that we do need to take this step, and I
believe it is critical we work toward a multiyear solution in
order to provide the kind of certainty that will have the most
impact on families' premiums and choices in the marketplaces.
It takes plans months to develop their rates. If we do not
find a multiyear solution, we are just going to be back in this
room trying to patch the same problem a few months from now.
And that is simply not what certainty looks like.
This kind of discussion around strengthening our healthcare
system is exactly what democrats have hoped for over the last
few years. We have put forward a number of ideas that would
help stabilize markets and lower costs in the near term.
As I have said before, as we work together, I am more than
ready to consider additional ideas from the other side of the
aisle to make our healthcare system work better for our
families and for patients.
But to be clear, that means moving forward, not backward,
on affordability, on coverage, and quality of care. Families
have rejected the damaging approach taken in Trumpcare, which
would have raised families' costs and gutted critical
protections like those for preexisting conditions and Congress
should listen.
I think we are all aware that threading this needle will
not be easy. But I do believe an agreement that protects
patients and families from higher costs and uncertainty, and
maintains the guardrails in our current health system is
possible.
This kind of agreement would not only make a real
difference for the patients and families that we serve, but it
could provide a bipartisan foundation for future work. I have
said many times before this work did not end when the
Affordable Care Act passed. It is certainly true today.
There is much more we need to do to strengthen the
healthcare system, to lower costs, to expand coverage, and
improve quality of care. These are the issues we should be able
to work together on in a bipartisan way.
I hope with today's conversation, we can continue to turn
the page away from Trumpcare and partisanship that we have seen
way too much of, and instead, start working on healthcare
policies to help our patients and families afford the care that
they need because that is the goal that we should all be
focused on.
I am so glad we have seen the interest on both sides of the
aisle for coming together and working to find common ground on
these issues.
I want to, again, thank all of the commissioners and all of
our colleagues who are joining us today.
I will turn it back over to Chairman Alexander.
The Chairman. Thank you, Senator Murray.
Our first witness is Julie Mix McPeak. She is Commissioner
of Tennessee's Department of Commerce and President elect of
the National Association of Insurance Commissioners. She has
testified here before. Welcome, Commissioner McPeak.
Our second witness is Mike Kreidler. Senator Murray has
already welcomed him and acknowledged him. He is Washington's
eighth Insurance Commissioner, the State of Washington's, and
the country's, longest-serving commissioner.
I will ask Senator Murkowski to introduce the next witness.
Statement of Senator Murkowski
Senator Murkowski. Thank you, Mr. Chairman.
It is a pleasure to introduce to the committee an
individual who has been before us before. Director Lori Wing-
Heier is Alaska's Director of Insurance. She has been in that
position since 2014 and has done an exceptional job.
We recognize not only her service there, but she is also
the Chair of the American Indian and Alaska Native Liaison
Committee on the Association of Insurance Commissioners.
As you have noted, Alaska is one of two States that has
received a 1332 Waiver, and it has been under the guidance of
Director Wing-Heier that we have seen that come about.
I thank her, not only for being here today, but for her
leadership and her persistence in working, not only with the
Obama administration, but with the Trump administration in
getting that final sign off.
The Chairman. Thank you, Senator Murkowski.
Senator Casey, would you like to introduce the next
witness?
Statement of Senator Casey
Senator Casey. Yes. Thank you, Mr. Chairman.
I am pleased to introduce Teresa Miller who is
Pennsylvania's Acting Secretary of Human Services and former
Pennsylvania Insurance Commissioner. Secretary Miller served as
Insurance Commissioner from 2015 through August of this year,
when she was nominated by Governor Wolf to serve as Secretary
of Human Services.
In her role as Insurance Commissioner, she has been a vocal
supporter of Pennsylvania's health insurance marketplace,
demonstrating a deep understanding of the insurance industry
while advocating for polices in the best interests of
Pennsylvanians.
I congratulate her on being nominated to serve as Secretary
of Human Services and happy to welcome her to the HELP
Committee today.
Secretary Miller, thank you for your testimony today. We
are grateful you are here.
The Chairman. Thank you, Senator Casey.
Our fifth witness is John Doak. We welcome you back Mr.
Doak. You were here before to help us understand the issues.
He is Commissioner for Oklahoma's Department of Insurance.
He is well known for hosting healthcare innovation summits
within his State, which seek to offer cutting edge solutions to
the country's healthcare challenges.
As you already know from the meeting we have had earlier,
there is a lot of interest here among senators. So if you could
please summarize your remarks in about 5 minutes, we will then
turn to a series of questions from senators.
To follow that up, let us begin with you, Ms. McPeak.
STATEMENT OF JULIE MIX McPEAK, J.D., COMMISSIONER, TENNESSEE
DEPARTMENT OF COMMERCE AND INSURANCE, NASHVILLE, TN
Ms. McPeak. Thank you. Good morning, Chairman Alexander,
Ranking Member Murray, and members of the committee.
I am Julie McPeak, Commissioner of the Tennessee Department
of Commerce and Insurance.
Today, I plan to highlight Tennessee's history with the ACA
and discuss some immediate solutions that Congress can consider
to stabilize the individual insurance market.
Before I get started, I would like to thank you for holding
today's hearing and for inviting so many of my State regulator
colleagues.
In an interview last year, I characterized Tennessee's
individual health insurance market as very near collapse. In
the 12 months since, thankfully, our market has not collapsed,
but our market is not any more stable and probably less so.
Tennessee in 2017 has continued to see health insurance
carriers flee the market due to the tremendous uncertainties
surrounding the 2018 plan year, as well as year-over-year of
substantial losses.
As of today, and subject to change until QHP agreements are
signed later this month, Tennessee consumers across the State
will have at least one option for coverage, but only one in the
clear majority of our State.
While we feel very fortunate that Tennesseans will have an
opportunity for coverage, I do not think that many people
believe that having a single choice in 78 of 95 counties
represents ideal market competition.
To summarize, Tennessee's experience over the last 4 years,
our consumers have seen premium prices skyrocket while their
plan choices have diminished. Tennessee had around a dozen
carriers offering individual health insurance coverage in 2010,
reduced to only three companies offering ACA-compliant plans in
2018. Tennessee's current ACA trajectory, quite simply, is not
sustainable.
Today's hearing could not be timelier as we are approaching
a September 20 deadline for final determinations on 2018 rate
filings. Tennessee's carriers filed rates assuming the CSRs are
not funded, with each carrier attributing approximately 14
percent of their average rate increase to CSR uncertainty.
According to CMS data, approximately 120,000 Tennesseans
are enrolled in CSR plans representing almost 60 percent of our
FFM market. The CSR funding issue is the single most critical
issue you can address to help stabilize insurance markets in
2018. To be clear, this issue is not an insurer bailout.
CSR funding ensures that some of our most vulnerable
consumers receive assistance for co-pays and deductibles that
are required to be paid under Federal law. It has the effect of
reducing proposed premium increases and has a direct impact on
the amount of subsidy assistance provided by the Federal
Government.
In fact, as you know, last month the CBO reported the
Federal deficits would increase by $6 billion in 2018 if CSR
funding is terminated.
But on the other hand, should the Federal Government agree
to fund CSRs and CMS works with the State, in Tennessee, we
could see proposed increases for 2018 be reduced.
Beyond CSRs, Congress should also establish a reinsurance
mechanism that would stop losses for individual claims at a
specified amount to increase market participation by carriers.
For the most immediate impact, this backstop mechanism must be
Federal as it would be impossible for many States to develop
such a program for the 2018 plan year.
States should have the option and flexibility to set up
their own programs to reflect our unique dynamics and market
conditions, but the Federal Government should set up a default
mechanism to stabilize markets during any transition to a
State-run program.
Following these immediate measures--CSR funding and
reinsurance--Congress must address broader ACA reforms, such as
benefit design, rating restrictions, and the underlying cost of
healthcare.
As the cost of healthcare services increase, so too must
the cost of health insurance. This causal relationship is
simple to understand, yet it is too often not discussed in
conversations of health insurance reform.
Health insurance rate requests are subject to review by
State insurance departments and in FFM States by the Federal
Government.
In Tennessee, the rate review process is an entirely public
one. As soon as a rate is filed, it is publicly accessible to
anyone interested. Rates are filed and approved on a plan year
basis that prohibits rate changes during the year, and provides
consumers' notice before a rate increase for the following
year.
These parallel protections are nonexistent in the
pharmaceutical industry and this level of transparency is
lacking in determining appropriate costs for medical services.
These issues cannot remain to be unaddressed in our focus on
health insurance rates and accessibility.
In conclusion, consumers around this country need, and
deserve, access to quality health insurance coverage at
affordable rates. Working together, we can get back to a place
of vibrant, competitive markets where insurers look to expand,
rather than contract, their operations.
Congress should focus on two critical elements to make that
possible: CSRs and reinsurance. After addressing these issues,
Congress should focus its attention on a broader conversation
of our Nation's health and strategies to improve health
outcomes while reconsidering tenets of the ACA that have led to
challenge and potentially unsustainable markets across much of
the country.
Thank you again for your time. I look forward to answering
your questions.
[The prepared statement of Ms. McPeak follows:]
Prepared Statement of Julie Mix McPeak, J.D.
summary
Highlight
The ACA as it stands today is not sustainable in Tennessee. Our
market remains ``very near collapse.'' Congress and the Administration
have a tight window to enact bipartisan legislation that can provide
immediate relief and stability for 2018 as Members continue to work
together on longer-term solutions.
Tennessee Experience
Tennessee's individual health insurance marketplace is no stronger
today than it was a year ago. In fact, in 2017 we continued to see
carriers with significant market presence flee the market due, in large
part, to the tremendous uncertainty surrounding the 2018 plan year as
well as to substantial losses in recent years. Today, Tennesseans in 73
of 95 counties only have one FFM option. That number will increase to
78 counties in 2018. Tennesseans have also seen their premium prices
increase substantially since 2014, and those rate requests have been
fully justified by medical claims. Tennessee has gone from having
premiums among the lowest in the country in 2014 to among the highest
for 2018. We have three carriers remaining in the marketplace selling
ACA-compliant plans, and carriers have introduced narrower networks.
Immediate Stabilization
Congress can strengthen insurance markets by fully funding CSR
payments through the 2018 plan year and by establishing a reinsurance
mechanism. CSR funding ensures that some of our most vulnerable
consumers receive assistance for copays and deductibles and has the
effect of reducing proposed premium increases that would otherwise
increase the amount of advance premium tax credit assistance provided
by the Federal Government if done expeditiously. Reinsurance will
effectively stop losses for individual claims at a specified amount,
providing more stability to the claims evaluation and projection
process. The program should provide an immediate Federal backstop and
then flexibility for States to set up their own programs in the future
and ultimately reduce premiums and bring carriers into the market.
Health Care Costs
Health insurance helps consumers shoulder the costs of health care
services. As the costs of health care services increase, so too must
the costs of insurance. This causal relationship is simple to
understand, yet is too often not discussed in conversations of health
insurance reform.
Future
Congress must first focus on these critical stabilization measures.
After addressing immediate stabilization measures, Congress should
focus its attention on a broader conversation of our Nation's health
and health insurance systems and the long-term sustainability of these
systems.
______
introduction
Good morning Chairman Alexander, Ranking Member Murray, and members
of the committee. Thank you for inviting me to testify this morning. I
enjoyed meeting with this committee in February and I look forward to
today's conversation.
As you know, I am Julie Mix McPeak. I am commissioner of the
Tennessee Department of Commerce and Insurance (TDCI) where I also
serve as the State's Fire Marshal. In addition to my responsibilities
at home, I also serve as president-elect of the National Association of
Insurance Commissioners (NAIC), as an executive committee member of the
International Association of Insurance Supervisors (IAIS), and as a
member of the Federal Advisory Committee on Insurance (FACI). I have
spent most of my career in insurance regulation, previously serving as
the executive director of the Kentucky Office of Insurance, and have a
strong affinity for the country's State-based system of insurance
oversight.
My testimony today will highlight Tennessee's history with the
Affordable Care Act (ACA) before discussing some immediate and longer-
term solutions that Congress and/or the Administration can consider to
stabilize the individual insurance market. Before I get started, I
would like to thank you for holding today's hearing and for inviting so
many State insurance regulators as we have all spent a significant
number of days working in our States and working together to ensure
stability in the health insurance markets of this Nation.
tennessee's individual market
In an interview last year discussing 2017 filings and rates, I
characterized Tennessee's individual health insurance marketplace as
``very near collapse.'' In the 12 months since, our marketplace has not
collapsed. Unfortunately, however, our market is not any more stable
than it was late last year.
Tennessee in 2017 has continued to see health insurance carriers
flee the market due, in large part, to the tremendous uncertainty
surrounding the 2018 plan year as well as to substantial losses in
recent years. Humana Insurance Company and TRH Health Insurance Company
announced this year that they would not write ACA-compliant plans on or
off of the federally Facilitated Marketplace (FFM) in 2018. While we
added one new insurance carrier, Oscar Insurance Company of Texas, that
company will only be writing in one of the State's eight rate and
service areas--the Nashville region and its surrounding counties.
BlueCross BlueShield of Tennessee (BCBST) has tentatively agreed to
offer coverage in the Knoxville region and its surrounding counties.
This is noteworthy because it means that, as of today, and subject to
change until Qualified Health Plan (QHP) agreements are signed later
this month, Tennessee consumers across the State will have at least one
option through the FFM. While we feel very fortunate that all
Tennesseans will have such an opportunity, I do not think that many
people would argue that having a single choice in 78 of 95 counties and
a total of three (3) insurance carriers offering ACA-compliant coverage
in the State represents ideal marketplace competition.
Tennesseans will face substantial rate increases for yet another
year. BCBST and Cigna filed rate increases that averaged 21 percent and
42 percent for the 2018 plan year, respectively. Those increases may be
offset for the 88 percent of our FFM enrollees that receive advance
premium tax credits (APTC), but for the other 12 percent of FFM
enrollees and for the 37,478 individuals who purchase insurance off the
exchange, these premium increases are substantial. And they are in
addition to substantial rate increases absorbed by these populations
over the last several years.
Tennessee began the ACA experience in 2014 with some of the lowest
rates in the country. In fact, our rates ranked the second-lowest in
2014 and the fifth-lowest in 2015. During those same 2 years, Tennessee
had the highest and second-highest risk scores in the Nation, according
to metrics developed and reported by the U.S. Department of Health and
Human Services (HHS). Tennessee is also among the many States that had
a Co-Op experience that did not end in success. Our Co-Op provided
coverage through the end of 2015, but due to a multitude of factors was
ultimately placed into Supervision by my Department. We have been
working with HHS since that time and hope to soon complete the
company's wind-down and we fully expect that the company will be able
to repay the Federal Government a small portion of the Federal moneys
allocated for its startup and solvency purposes.
To summarize Tennessee's individual market experience over the last
4 years, our consumers have seen premium prices skyrocket while their
choices have dropped substantially. Tennessee had around a dozen
carriers offering individual health insurance coverage in 2010, and
looking to 2018, the State has a total of three companies offering ACA-
compliant plans (though consumers in much of the State will only have
one choice), and one company that sells non-compliant, underwritten
plans. The companies' experiences and the State's population health,
which we are working as a State to improve, have justified the rate
increases. While we recognize that premiums for ACA-compliant plans
were going to be pricier than non-ACA-compliant plans available before
2014 due to their more robust benefit offerings, policies that increase
in price significantly year-over-year has been a tremendous
affordability challenge for Tennessee's citizens.
Tennessee's current ACA trajectory, quite simply, is not
sustainable into the extended future. We are thankful that consumers in
all counties of Tennessee appear to have an FFM coverage option for
2018, and we are hopeful that that remains the case, but for how much
longer, as we are running out of carriers? I appreciate today's hearing
designed to create solutions to immediately inject some level of
stability into the market and I encourage you to continue discussions
to more broadly address America's health insurance and healthcare
challenges.
timeline & csrs
Today's hearing could not be more timely as we are rapidly
approaching a September 20 deadline for States and the Centers for
Medicare & Medicaid Services (CMS) to make final determinations on 2018
rate filings. This deadline was pushed back by CMS on August 10 from an
original August 16 due date with a recognition that cost-sharing
reduction (CSR) questions added a layer of complexity to the rate
review process. The States have addressed CSR uncertainty in a variety
of ways, including by requiring carriers to file two sets of rates: one
set of rates that assumes CSRs are not funded and the other set of
rates that assumes CSRs are funded by the Federal Government for the
2018 plan year.
Tennessee's marketplace carriers filed one set of rates assuming
the CSRs are not funded. We asked carriers to identify the percentage
of their rate request that is due specifically to uncertainty
surrounding CSR funding. BCBST reported that 14 percent of its overall
21 percent average rate increase is due to CSR uncertainty, while Cigna
reported its impact at 14.1 percent of its overall 42 percent average
rate request. According to CMS data, approximately 120,000 Tennesseans
are enrolled in CSR plans, representing almost 60 percent of our FFM
market.
There is still potentially time for the Congress and Administration
to provide stability to health insurance markets across the country by
agreeing to fund CSR payments at least through the 2018 plan year. Such
a stability measure could result in an immediate reduction in proposed
premium rates for 2018 following coordination between the States and
CMS.
The CSR funding issue is the single most critical issue that you
can address to help stabilize insurance markets for 2018 and
potentially bring down costs. And to be clear, this issue is not an
``insurer bailout.'' CSR funding ensures that some of our most
vulnerable consumers receive assistance for copays and deductibles that
are required to be paid under Federal law AND has the effect of
reducing proposed premium increases that would otherwise increase the
amount of APTC assistance provided by the Federal Government. In fact,
as you know, last month the Congressional Budget Office (CBO) reported
that Federal deficits would increase by $6 billion in 2018 if CSR
funding is terminated.
Should the Federal Government refuse to fund CSRs, premium rates
will increase at rates that are otherwise unnecessary based on medical
trend, inflation, and other cost considerations. This increase will
impact the second-lowest silver plan rates, which in turn will increase
the amount of available subsidy to FFM consumers. On the other hand,
should the Federal Government agree to fund CSRs, and CMS works with
the States, we could see proposed increases for 2018 be reduced by
substantial margins. Those reductions could also result in the Federal
Government paying out less in APTC than they would pay should currently
filed rates be approved. Please act now to fully fund CSRs and provide
that necessary certainty to our insurance markets.
individual market reforms
Reinsurance/Stop-Loss Mechanism
In addition to providing certainty regarding CSRs, the Federal
Government can take additional action to stabilize markets. To
stabilize markets, we need to grow risk pools with healthy individuals.
To attract new, healthier risk to the market, we need to calm rates and
backstop losses relative to the most expensive claims. Along these
lines, Congress should consider establishing, at the very least, a
short-term reinsurance mechanism that would effectively stop losses for
individual claims at a specified amount. For a most immediate impact,
this backstop mechanism must be Federal as it would be impossible for
many States to develop such a program for the 2018 plan year and a
significant challenge for States to implement a mechanism for 2019 and
perhaps 2020. States should have the option and full flexibility to set
up their own programs to reflect their unique dynamics and market
conditions, but the Federal Government should set up a default
mechanism to stabilize markets during any transition to a State-run
system.
In Tennessee, TDCI recently issued a data call to our health
insurance carriers to better understand the frequency of high cost
claims. We requested claim cost numbers in specified increments
beginning at $50,000 claims and extending beyond $5 million.
Preliminarily, and on the aggregate as we issued this data call under
our confidential market conduct authority, we have identified that
between 85 percent and 95 percent of claims incurred and reported in
2015 and 2016 respectively, fell between the $50,000 and $200,000
range. We are continuing to review the data.
Rate Bands
When I was here in February, I highlighted providing more
flexibility related to rate bands as one area that Congress and/or the
Administration could address in trying to bring younger, healthier
individuals into the individual insurance marketplaces. In Tennessee,
the majority of our FFM population is 45 years of age or older. We need
younger, healthier risk to enter the market and balance the currently
insured business that, as HHS has indicated, has resulted in a higher
risk score than almost every other State's insured population.
As you know, the ACA has a 3:1 age band that requires premiums to
differ based on age by no more than a 3:1 ratio. I said in my February
statement:
Providing more flexibility to insurance regulators and
carriers in how individuals are rated, even while keeping
prohibitions against discrimination based on preexisting
conditions, may help stabilize insurance markets. Ratios closer
to 5:1 or 6:1 would provide more rate flexibility in the market
and when coupled with EHB flexibility may have the ultimate
impact of growing the individual insurance pool in Tennessee.
I stand by that statement today and would add that a 5:1 or 6:1
ratio should be a ceiling rather than a requirement. Before the ACA, we
saw rates that often provided a 5:1 age ratio in Tennessee. These rates
were actuarially justified and allowed for more variability in rates
for younger consumers. Should the ACA be amended to provide more
flexibility, it is possible, if not highly likely, that younger
consumers who today want to purchase insurance but decide to instead
pay the individual mandate penalty due to higher prices would come back
into the markets to give themselves a sense of comfort that insurance
provides should they need medical services.
Yes, greater flexibility in age rating would mean lower prices for
younger consumers. Yes, it could also mean higher prices for older
consumers; but that's not necessarily the case and it is a situation
that Congress could simultaneously address by adjusting APTC formulas.
However, there is simply no denying that a bigger risk pool with a
greater percentage of low risks will outperform a smaller risk pool
with concentrated high risk. We should do what we can to grow our risk
pools for the benefit of the many, including by expanding the range of
individuals qualifying for an APTC to apply to those individuals
falling below 100 percent of the Federal Poverty Level (FPL) who may
not otherwise have access to affordable insurance coverage as well as
by opening up access to catastrophic plans to everyone, rather than for
only individuals aged 30 and younger or those who can otherwise qualify
under special circumstances.
healthcare costs
Health insurance helps consumers shoulder the costs of health care
services. As the costs of health care services increase, so too must
the costs of health insurance. This causal relationship is simple to
understand, yet is too often not discussed in conversations of health
insurance reform. While recognizing that today's focus is on immediate
strategies to stabilize health insurance markets, I would be remiss if
I did not urge the committee to also begin a conversation about health
insurance cost drivers, and specifically the costs of health care
services.
Health insurance rate requests are subject to review by State
insurance departments and in FFM States, the Federal Government. Health
insurance rates are among the most highly regulated financial products
in the country as they must be related to risk and are prohibited from
being excessive or inadequate or discriminatory. In addition, Federal
law specifies ``loss ratios'' for health insurance products that
require carriers to provide rebates to consumers if the carriers spend
too much of their premium revenue on administrative costs. In
Tennessee, the rate review process is an entirely public one. As soon
as a rate is filed through the Department's electronic system, it is
publicly accessible to anyone interested. Objections to the filings,
and questions from the Department, are also publicly accessible, as are
responses from the companies. Insurance consumers go on healthcare.gov
to view a menu of policy options, complete with monthly premium prices.
Rates are filed and approved on a plan year basis that prohibits rate
changes during a year and provides consumers notice before a rate
increase for the following year. Are there parallels to these
protections applicable to the pharmaceutical industry? Is this level of
transparency achieved in determining appropriate costs for medical
services?
Medical and particularly pharmaceutical costs and transparency,
balance and surprise billing, and air ambulance costs, services, and
billing, contribute to the cost of health insurance. As we continue our
conversation on stabilizing health insurance markets, I would encourage
you not to lose sight of key cost drivers and to look for incentives
and wellness programs that may help improve the overall health of our
shared constituents.
conclusion
Thank you for the opportunity to visit again with this committee.
Health insurance markets remain ``near collapse'' in several States and
are certainly challenged in many others. But insurance regulators are a
resilient group, and we stand ready to work with you to provide
immediate and long-term stability to our markets.
Consumers around this country need and deserve access to quality
health insurance coverage at affordable rates. Working together we can
get back to a place of vibrant, competitive markets where insurers look
to expand, rather than contract, their operations. The Congress should
first focus on two critical elements to make that possible: CSRs and
Reinsurance. Fully funding CSRs will provide immediate certainty to our
markets, and very possibly bring requested rate increases down, and a
Federal backstop for high-dollar claims will calm troubled markets.
After addressing these issues, the Congress should focus its attention
on a broader conversation of our Nation's health and strategies to
improve health outcomes while reconsidering tenets of the ACA that have
led to challenged and potentially unsustainable markets across much of
the country.
Thank you again for this conversation. I look forward to your
questions.
The Chairman. Thank you, Ms. McPeak.
Mr. Kreidler.
STATEMENT OF MIKE KREIDLER, O.D., WASHINGTON STATE INSURANCE
COMMISSIONER, OLYMPIA, WA
Mr. Kreidler. Good morning, Mr. Chairman, and Ranking
Member Murray, and members of the committee.
My name is Mike Kreidler and I am the Insurance
Commissioner for the State of Washington. I want to thank you
for your bipartisan commitment to address the challenges that
we, as insurance commissioners, are facing, but also you are
facing in the coming months.
This is especially true for the individuals and families
who buy their own health insurance, some 330,000 people in the
State of Washington. The health of that market is really the
canary in the coal mine. If there is a problem in the
individual market, it is a problem for all of us.
This is made up, as you pointed out, Chairman Alexander, of
early retirees, self-employed people who work for employers who
do not offer health insurance. The individual market is clearly
a very critical safety net. They are relying on us to find a
path forward that offers a great deal more certainty than what
we have right now.
Washington State has fully embraced the Affordable Care Act
from the very beginning. We have a very stable market since
2014. Our uninsured rate has plummeted from 15 percent down to
under 6 percent in the State of Washington, but this year,
there has been a serious jolt to the system.
Initially, we had two counties in the State of Washington
that did not have any health insurers. We solved that problem,
thankfully, but I am nervous about what is going to happen next
year. Because of the growing uncertainty and actions by the
Administration, our individual health insurance markets are in
serious peril.
The proposed average rate increases that we have seen for
2018 are 23 percent. In years past, it has been under 10
percent. Nine rural counties have only one insurer. One major
insurer largely pulled back in our State completely from
western Washington where most of the people live.
The next 2 weeks are going to be very telling. Insurers
will be making their final decisions as to whether they are
going to participate in the health insurance marketplace or
not. Congress must act quickly to address these growing
uncertainties.
You must permanently fund the Cost Sharing Reduction
payments. That is something that is going to help a great deal
in our marketplace. It affects some 72,000 people in the State
of Washington. For a low-income family in the State of
Washington, the deductible is the difference of being $1,200
with the CSRs or $14,000.
I urge you to create a Federal reinsurance program this
year. Doing this would show your commitment to stabilizing the
market. It worked very well in the State of Washington for the
first 3 years that we had a reinsurance program. We would like
to see it continue and go forward.
It is another way of reassuring the insurance market and
insurance carriers. It does not help them financially, but it
gives them predictability and helps us hold down the rates.
Make sure that you maintain the coverage and affordability
guardrails in the 1332 Waivers. We are willing to play by the
rules. What we do not want to see is Essential Health Benefits
and the guarantees on out of pocket costs eroded away. Those
are consumer protections that nobody wants to see leave the
marketplace.
In closing, let me say that you must take bold action now
to shore up these markets. Millions of hardworking families and
individuals are counting on us. In Washington State, we have
firsthand experience with what can happen when violating basic
insurance principles are allowed to occur, and they are
occurring right now.
We tried this in the 1990s and we saw the individual market
in the State of Washington totally collapse. Believe me, that
is something no one wants to go through.
Let me be a harbinger here and say this. It can and will
happen if you do not take action now. That is how critical it
is out there in that insurance market and to make sure we do
not have that kind of collapse we saw in Washington happen for
the whole country in the individual market. Lives depend on it.
Our lives rest on your bipartisan efforts.
Thank you, Mr. Chairman.
[The prepared statement of Mr. Kreidler follows:]
Prepared Statement of Mike Kreidler, O.D.
summary
Washington State's individual market insures 330,000 people. Most
of these people are self-employed, early retirees, or work for
employers who don't offer coverage.
This is a vulnerable population of individuals who have no
negotiating power, and the market is increasingly unstable, especially
in today's regulatory climate.
Washington State successfully implemented health reform, and until
this year, has had a stable individual health insurance market with
many insurers and lower-than-average rates.
This year was a jolt to our system. We're seeing higher proposed
rates, fewer plans being offered, and a major insurer pulling back from
Western Washington.
All of these actions are a direct result of growing instability in
the individual market and the lack of predictability for insurers.
To stem this trend, Congress must take swift, bipartisan action in
three areas:
Permanently fund cost-sharing reduction subsidies.
Create a Federal reinsurance program.
Maintain coverage and affordability guardrails of 1332
waivers.
Washington State has firsthand experience with the dangers of
ignoring signs of instability in its insurance market.
We passed reform in the 1990s that ignored basic insurance
principles and saw a total collapse of our individual market in only a
few years.
Let our experience be your warning. This can and will happen on a
national level if Congress does not take appropriate action now.
______
Chairman Alexander, Ranking Member Murray and committee members,
thank you for the opportunity to testify today regarding the challenges
facing our individual health insurance market and possible solutions to
address those challenges. I welcome the commitment of the Health,
Education, Labor, and Pensions Committee to work on a bipartisan basis
to address this critical issue.
In Washington State, approximately 330,000 people (or about 5
percent of our population) purchase their own individual health
insurance coverage. Most work for employers who don't offer health
insurance, are self-employed or are early retirees. People who buy
individual insurance often have no other option for coverage; the
individual market is their safety net.
As Washington State's insurance commissioner, it is my
responsibility to do everything in my power to ensure that these
Washingtonians have access to a stable insurance market. But I cannot
do it alone--my success depends upon a strong partnership with the
Federal Government. Now, this month, critical Federal actions are
needed to stabilize the individual health insurance market in
Washington State, and in the country. This burden rests on you.
It is with the well-being of my State's residents clearly in mind
that I offer my testimony today.
Following enactment of the Federal Affordable Care Act (ACA),
Washington State launched a bipartisan effort that fully embraced all
aspects of the new law. We acted quickly to establish our own State-
based marketplace, the Washington Health Benefit Exchange (Exchange),
and to implement Medicaid expansion. I strongly believe that these
early decisions are why we have cut our uninsured rate by 60 percent.
Today, the percentage of people in our State without health insurance
is at a record low of about 6 percent.
There are several additional reasons for our success. We are
fortunate to have ``home grown'' local insurers who have made a strong
commitment to our State. We have the benefit of being a lower health
care cost State--our use of hospital services is among the lowest in
the Nation. And in 2014, I, along with 22 other States and the District
of Columbia, made the difficult decision to not allow legacy or non-
ACA-compliant plans to continue to be offered in the individual market
so that our individual market risk pool could be as large and as
healthy as possible.
As a result, since 2014, Washington State has enjoyed a stable and
competitive individual health insurance market. Before this year, we
have experienced an average annual premium increase of near or below 10
percent. For 2017, we had 13 health insurers offering 154 plans in our
individual health insurance market.
Let me be clear, the Affordable Care Act is not perfect even in
Washington State. I am concerned about bringing as many healthy, young
people into coverage as possible. And, like other States, we have seen
a recent trend to narrower health plan networks. Deductibles and cost-
sharing are growing, presenting real affordability challenges for some
consumers. We share the national challenge of rising pharmaceutical
costs. Yet, despite all this, the ACA has had a major positive impact
on our overall market, providing life-saving benefits to many of our
most vulnerable citizens.
This year, our progress forward is threatened by uncertainty around
the fate of the ACA, including continued payment of cost-sharing
reductions, weakened enforcement of the individual mandate, and Federal
investment in outreach and marketing to promote enrollment in health
coverage.
For plan year 2018, this uncertainty has caused a serious
disruption to our individual health insurance market in these ways:
Insurers have proposed rate increases averaging 23
percent.
After evaluating proposed filings in June, we discovered
two ``bare'' counties without any individual plans offered for sale.
Working closely with our health insurers to see who was willing to step
up to this challenge, we ultimately achieved statewide coverage.
We anticipate having nine rural counties with only one
insurer offering coverage on the Exchange.
One major insurer left all counties in Western Washington,
the most populous part of our State.
Eleven insurers filed 74 plans for the 2018 individual
health insurance market.
The number of proposed health plans offered through our
Exchange dropped substantially. Two insurers will no longer offer
bronze plans on the Exchange.
These 2018 filings cause me grave concern for the fundamental
stability of our individual insurance market.
The next 2 weeks will be telling, as insurers decide whether to
follow up on their proposed filings for 2018 and commit to actual
participation in the Exchange and in all of the counties they have
proposed to serve. Congress must act quickly to address the uncertainty
in the individual health insurance market. Clear opportunities are
readily available to substantially strengthen it.
cost-sharing reductions
First, and foremost, Congress should bring certainty to cost-
sharing reduction payments by making a permanent appropriation for
them. Cost-sharing reductions are not insurance company bail-outs; they
benefit lower-income people and families by directly reducing their
health care costs. For those who struggle to meet basic needs such as
food and housing, cost-sharing reduction payments will make a
difference in whether they decide to purchase insurance. These payments
also make a difference in whether they can afford to see a doctor, even
when they do have insurance. The reduced cost burden will literally
make the difference between their seeking care or not.
To illustrate this impact, I offer the following chart showing
cost-sharing reductions by income level for various services. Consider
a 40-year-old man living in Pierce County, Washington earning wages at
150 percent of the Federal poverty level, around $23,000 per year.
Suppose he chooses to buy a silver plan with the lowest premium. With
cost-sharing reduction payments, his annual deductible is $2,000.
Without them, it increases to $7,050. With cost-sharing reduction
payments, he can visit his primary care provider without having to make
a copayment.
40-Year-Old Non-Smoker in Pierce County Selecting the Lowest Cost Silver Plan*
----------------------------------------------------------------------------------------------------------------
Primary care Urgent care
visit to treat Specialist centers or
Income Deductible an illness or visit copay facilities
injury copay copay
----------------------------------------------------------------------------------------------------------------
150% FPL.................................................. $600 No charge $5 $50
200% FPL.................................................. $2,000 No charge $5 $50
250% FPL.................................................. $5,250 $15 $40 $75
400% FPL.................................................. $7,050 $30 $60 $100
----------------------------------------------------------------------------------------------------------------
* Ambetter Balanced Care 4 (2017).
Here and around the Nation, States have been spending countless
hours during the last several months trying to find an approach to rate
setting in 2018 that does the least harm to consumers if cost-sharing
reduction payments are suddenly curtailed. I can assure you there is no
solution that doesn't hurt consumers, especially those who do not
receive advance premium tax credits.
federal reinsurance program
Congress should enact a Federal reinsurance program with a minimum
duration of 3 years. This level of clear and sustained commitment by
the Federal Government is necessary, and will significantly help
stabilize the individual health insurance market. In Washington State
between 2014-16, we experienced the benefit of a Federal reinsurance
program. We have concrete evidence of the impact that a reinsurance
program can have on premiums and insurers' willingness to participate
in this market.
Some have asked whether enactment of a Federal reinsurance program
in late 2017 can impact rates in 2018. Health insurance rates for plans
that will be sold in late fall open enrollment are filed in the spring
and approved by late summer. At this time in the year, 2018 rates have
been filed and approved, and a Federal reinsurance program enacted now
would not change them.
However, it would have a strong effect on insurer participation in
the 2018 market. As I stated earlier, insurers have filed proposed
rates but have not yet committed to participate in the Exchange and the
counties they have identified. If insurers know that a Federal
reinsurance program will be in place for calendar year 2019 and beyond,
there will be greater confidence and certainty related to market
participation in calendar year 2018. Insurers will be motivated to
participate in the market. And in calendar year 2019, a Federal
reinsurance program would positively affect both premium rates and
participation. Insurer confidence means more insurers participate in
the market, which means more competition among insurers on price and
quality of care. Fostering healthy competition among insurers is good
for consumers.
In the short term, a Federal reinsurance program modeled on a
Federal transitional reinsurance program would provide the most
stability. Insurers are familiar with the program and can adapt quickly
to its implementation. They will have certainty regarding the level of
Federal funding available and the likely payment parameters, given
their previous experience with the program. This experience will
translate directly to lower premiums beyond plan year 2018.
If Congress has an interest in offering States more flexibility in
the Administration of market stability funding, I strongly urge you to
choose a funding allocation approach that fairly distributes funds
across States, without regard to the approach selected. States can be
valuable laboratories of innovation, and even-handed funding will
ensure the widest array of methods. I remind you that implementation of
a flexible option will require considerable lead time; States will need
time for stakeholder discussions to determine the appropriate use of
funding, to enact State legislation authorizing policy and spending
authority, and to implement program parameters. States will also have
to take into account the long lead time necessary for insurers to
incorporate new options into their planned filings.
Like several other States, Washington is currently exploring
reinsurance as a policy option to help stabilize our individual
insurance market for 2019. We will determine, given the number of
insurers in our market and our lower premium costs, whether use of a
1332 waiver would be viable in our State. Any program that we develop--
if viable and if the necessary State funding is available--would
supplement and enhance a Federal reinsurance program.
1332 waiver approval process
As an elected insurance commissioner, I believe that coverage and
affordability guardrails in the current 1332 waiver statute set an
appropriate national coverage benchmark. These guardrails ensure that a
1332 waiver will not result in reductions in the number of people
covered, the scope of their benefits, or affordability. By creating a
level playing field, they promote competition among insurers based upon
quality and choice in a more stable market. They also promote improved
population health.
I do agree that flexibility and efficiency could be improved in the
1332 waiver approval process. I believe that a 10-year economic
analysis is not necessary. In addition, given that proposed insurance
plans and rates are filed more than 6 months in advance of the plan
year, the current 9-month period for the Centers for Medicare and
Medicaid Services (CMS) to determine completeness and to review an
application creates too much delay for the States. This is compounded
for those States, like Washington, that have a part-time legislature.
It is my understanding that CMS is working to develop an expedited
process for review of 1332 waiver applications, and I strongly support
those efforts.
federal investments in outreach and enrollment marketing
A key to a stable individual health insurance market is maximizing
the number of people enrolled, especially those who are young and
healthy. As noted earlier in my testimony, Washington State has its own
Exchange. Yet the effectiveness of our own outreach and marketing is
greatly magnified by the Federal Government's outreach and enrollment
activities.
In the past, we have enjoyed an effective collaborative effort with
the Federal Exchange in the months leading up to the start of open
enrollment. Yet this year, that activity among the Administration,
other States and major stakeholder groups is not occurring. These
informative discussions included sharing of best practices, leveraging
community infrastructure, developing consistent enrollment messaging,
and sharing plans for marketing and advertising buys.
Pre-open enrollment emails and outreach support reports,
newsletters and social media announcements suitable for sharing with
our partners or socializing on our media channels are no longer being
prepared. These resources support the larger message at a national
level of the importance of having insurance, and for many of our most
vulnerable--those who have English as a second language or live in
harder-to-reach rural areas--they are a critical source of information.
Federal marketing and advertising of open enrollment on broadcast,
print and social media channels is a critical element of outreach
nationally. These ads provide essential open enrollment messages that
keep the need for finding, selecting and enrolling in health insurance
front and foremost during the busy holiday season. For many people,
these ads may be the only time they may see information on open
enrollment. Removing this key part of the strategic engagement strategy
is damaging not only to the Federal marketplaces but to all
marketplaces nationwide and, ultimately, come at the highest price for
our consumers.
washington state's past individual market failure
In Washington State, we know firsthand the consequences of an
unstable individual market. Following passage and partial repeal of
health reform legislation in the 1990s, our individual health insurance
market went into a death spiral. By 1998, we had no individual health
insurance options in the State other than a costly high-risk pool.
The failure of our individual market was caused by three factors:
Health insurance rules requiring guaranteed issue and
prohibiting pre-existing condition exclusion periods of more than 3
months.
Repeal of an individual mandate.
Lack of premium and cost-sharing subsidies to make
coverage affordable.
I make my recommendations to you today to ensure that other States
do not experience the same market failure that we did in Washington.
Millions of people--hard-working families and individuals--are relying
upon us to ensure that the individual health insurance market will be
there for them now and in the future. Yet uncertainty related to
payment of cost-sharing reductions, high premiums, and weakened
enforcement of the individual mandate have placed our individual health
insurance markets at serious risk. There are three concrete steps that
Congress must take to address this crisis:
1. Fund cost-sharing reductions for at least 3 years.
2. Establish a Federal reinsurance program with a duration of at
least 3 years.
3. Invest in enrollment outreach and education.
Thank you for this opportunity to share my recommendations with
you.
The Chairman. Thank you, Mr. Kreidler.
Ms. Wing-Heier.
STATEMENT OF LORI K. WING-HEIER, DIRECTOR, ALASKA DIVISION OF
INSURANCE, ANCHORAGE, AK
Ms. Wing-Heier. Thank you for the opportunity to testify
today about the health insurance market in Alaska and the need
for congressional action to help the people in the individual
insurance market in 2018 and beyond.
Alaska has amongst the highest cost of healthcare in the
Nation due to low population density and limited healthcare
provider or facility competition in much of the State. While
the individual mandate reduced the number of uninsured
Alaskans, an unintended consequence was that the high cost of
the individual health insurance premiums increased even
further.
Premiums in the individual market in Alaska have increased
by 203 percent since 2013. On average, an Alaskan in 2013 was
paying a monthly premium of $344 per month and in 2017, that
premium is $1,041 per month.
To stabilize this volatile market, the Division of
Insurance worked with Governor Bill Walker to create the Alaska
Reinsurance Program. The 29th Alaska State Legislature passed
the Governor's bill in 2016 with overwhelming bipartisan
support.
The Alaska Reinsurance Program is intended to provide
stability to the individual health insurance market, mitigating
rate increases by removing high cost claims. As planned, this
had an immediate impact on rates.
Prior to enacting the Reinsurance Program, indications were
that the rate filing from the single insurer in Alaska would be
close to 40 percent in 2017. After enactment, the rate increase
was a moderate 7.3 percent.
An independent actuarial analysis estimates the Reinsurance
Program will increase enrollment in the individual market by
1,650 individuals. Modeling also indicates that the program may
attract healthier members to the individual market further
reducing premiums.
After enacting the Reinsurance Program, Alaska then
applied, and was subsequently approved, for a Federal ACA
Section 1332 State Innovation Waiver.
Alaska waived the requirement of a single risk pool and
proposed that the Federal Government provide pass through
funding for a period of 5 years to secure the State's
Reinsurance Program. The pass through funding is based on the
savings generated as a reduction in the Advanced Premium Tax
Credits.
It is estimated that the Alaska Reinsurance Program will
save the Federal Government $51.6 million in Advanced Premium
Tax Credits in 2018 relative to what would have been the tax
liability had the Program not been put into place.
After the Federal pass through funds are accounted for, the
State will be responsible for providing approximately 15
percent of the $55 million Program cost necessary to stabilize
the individual market.
As you consider congressional action to stabilize premiums
across the country in 2018, we offer the following
perspectives.
We would urge Congress to not disrupt the health insurance
market, but instead, focus immediately on stabilization. Any
decision made after the filings are approved could cause
unintended, unfavorable disruption to insurance markets.
Uncertainty destabilizes the market.
Committing to funding Cost Sharing Reduction payments
through at least 2019 will keep premium rates from increasing
at an even higher rate.
We support collaborative reforms developed in consultation
with State regulators that strengthen markets with a goal of
health insurance not only being accessible, but affordable.
Programs that allow States to address the unique needs of their
citizens, such as the Section 1332 Waivers, are vital to the
long-term stability of health insurance markets.
Further deliberation on health insurance taxes is needed.
In particular, citizens of States like Alaska that already face
extremely high healthcare costs may be unfairly penalized by
the Cadillac Tax.
Additionally, exempting insurers from health insurance tax
in counties or States served by one insurer may be an effective
way to increase the choice or competition that will benefit
citizens, but should be considered for all States as a
moratorium.
Please consider continuing and funding the Navigator and
Assister Programs. In rural areas of Alaska, insurance brokers
and consultants are hard to find. These programs reduce the
number of uninsured citizens and maximize market participation.
Media and public announcements are vital to open enrollment
being successful.
A review of regulations may reveal some that are
unnecessarily burdensome and costly to both medical providers
and insurers.
We are also interested in coordinated efforts with
healthcare providers to address the underlying drivers of
healthcare spending.
Even under the extreme tight considerations you face to
address 2018 premiums, please make your decision in a
bipartisan manner after thorough analysis.
We are here to assist you in any way we can and I look
forward to your questions.
Thank you.
[The prepared statement of Ms. Wing-Heier follows:]
Prepared Statement of Lori K. Wing-Heier
summary
An unintended consequence of the Affordable Care Act was that the
already extremely high cost of health insurance in Alaska increased
even further. Premiums in the individual market in Alaska have
increased by 203 percent since 2013, the year before the ACA was
enacted.
To address the critical situation and stabilize the volatile
market, the Division of Insurance worked with Governor Bill Walker to
develop the Alaska Reinsurance Program, which the 29th Alaska
Legislature subsequently passed with overwhelming bipartisan support in
2016. The Alaska Reinsurance Program provides stability to the
individual health insurance market, mitigating rate increases by
removing high cost claims from the individual market. The program had
an immediate impact on rates.
Prior to the enactment of the program, indications were
that the rate filing from the single insurer in Alaska's individual
market would include an increase of close to 40 percent. After the
enactment, the 2017 individual rates had an average increase of just
over 7 percent.
Independent actuarial analysis estimates the reinsurance
program will increase enrollment in the individual market by nearly
1,650 individuals relative to what enrollment would be absent the
program. Modeling also indicates that the program may attract healthier
members to the individual market, further reducing premiums.
To solidify the Alaska Reinsurance Program, the State was awarded
an ACA Section 1332 State Innovation Waiver. Alaska waived the
requirement of a single risk pool and will receive Federal pass-through
funds for 5 years. The funding is based on the savings generated as a
result of the estimated $51.6 million reduction in the Advanced Premium
Tax Credits liability to the Federal Government in 2018, relative to
what it would have been absent the reinsurance program.
As you consider congressional action to stabilize premiums across
the country in 2018 and beyond, we offer the following considerations
from the perspective of the Alaska health insurance markets,
We urge Congress not to disrupt health insurance
markets, but instead to focus on stabilization.
Any decisions made after the filings are approved next
week could cause unintended, unfavorable disruptions to
insurance markets.
Committing to funding Cost Sharing Reduction payments
through at least 2019 will keep premium rates from increasing
at an even higher rate.
Until a viable alternative is proposed on the national
level or via State waivers, the individual and employer
mandates are necessary in the short term to keep markets
stable.
We support collaborative reforms, developed in
consultation with State regulators, that strengthen markets
with a goal of health insurance not only being accessible but
affordable.
Programs that allow States to accommodate the unique
needs of their residents, such as the Section 1332 State
Innovation Waiver, are vital to the long-term stability of
markets.
Further deliberation on the health insurance tax is
needed.
A review of regulations may reveal some that are
unnecessarily burdensome and costly to both medical providers
and insurers.
We are also interested in coordinated efforts with
health care providers to address the underlying drivers of
health care spending, considering all aspects including
pharmaceuticals, air ambulance, inpatient, and outpatient.
Even under the extreme time constraints you face to address 2018
premiums, please make your decisions in a bipartisan manner after
thorough analysis. My fellow insurance directors/commissioners and I
are here to assist you in any way we can to inform the difficult
decisions before you.
______
alaska's individual health care insurance market
The cost of health care is very high in Alaska, and access is
limited compared to other States, particularly for specialty services.
Low population density and limited healthcare provider and facility
competition in much of Alaska are primary contributors to Alaska's high
health care costs. With a population of 738,432 spread across 570,641
square miles, Alaska has a small population and is the largest and one
of the most geographically isolated States in the Nation.
Access to care has long been a challenge in Alaska due to its large
geographic size, rural population, and insufficient health care
provider competition. Because of these challenges, common managed care
practices such as legislated network adequacy levels, closed network
plans, and the development of Health Maintenance Organizations have not
been successful. Alaska has among the highest cost of health care in
the Nation; correspondingly, Alaska also leads the States in the cost
of health care insurance and workers' compensation insurance.
As intended, the Affordable Care Act's individual mandate increased
health care insurance enrollment in Alaska. Prior to the ACA's
enactment in 2014, Alaska's uninsured population was estimated at
approximately 134,000 residents, mostly non elderly adults. After 2
years of expanded ACA enrollment opportunities, the number of uninsured
residents in Alaska was estimated to be approximately 100,000 people.
However, the unintended consequence was that the already high cost
of health insurance in Alaska increased even further. Many Alaskans who
do not qualify for the Advanced Premium Tax Credits or subsidies are
unable to afford plans offered in the individual market. According to
data from the Division of Insurance and the Department of Health and
Human Services, as reported by the Office of the Assistant Secretary
for Planning and Evaluation in May 2017, premiums in the individual
market in Alaska have increased by 203 percent since 2013, the year
before the ACA was enacted. On average, the increase means that an
Alaskan in the individual market who was paying a monthly premium of
$344 per month in 2013 is paying $1,041 per month in 2017.
The high costs do not only affect those in the individual market.
Participants in group markets are not eligible to receive the subsidies
or tax credits available to those in the individual market. Even though
many Alaskans are covered by employer' sponsored plans, employer
contributions typically only apply to the employee's premiums; costs to
dependents are still prohibitive.
Therefore, many Alaska families in the group market are unable to
afford employer-sponsored insurance.
The Alaska Reinsurance Program Stabilizes Rates
To address the critical situation and stabilize the volatile
market, last year the Division of Insurance worked with Governor Bill
Walker to develop the Alaska Reinsurance Program (ARP).
The legislation (HB 374) received overwhelming bipartisan support
from the 29th Alaska Legislature.
The ARP is intended to provide stability to the individual health
insurance market, mitigating rate increases by removing high cost
claims from the individual health market. By removing high cost
conditions from the risk pool, the benefits of the ARP are shared by
the entire individual health insurance market regardless of income,
age, race and ethnic group, or any other demographic characteristic.
As anticipated, the program had an immediate impact on the rates in
the individual market. Prior to the enactment of the ARP, indications
were that the rate filing from the single insurer in Alaska's
individual market would include an increase of close to 40 percent.
After the enactment of the ARP, however, the 2017 individual rates had
a moderate average increase of just over 7 percent. Still, it should be
noted that Alaskans who had to switch insurers because their carrier
left the market in 2017 experienced increases of over 35 percent from
what they were paying in 2016.
Actuarial modeling indicates that the ARP will continue to help
reduce the rates necessary for insurers in the Alaska individual market
and thus the premium amounts charged to Alaskans. The slowing of the
growth of rate increases (and potential for rate decreases) due to the
ARP may also draw additional Alaskans into the market. Independent
analysis estimates the ARP will increase enrollment in the individual
market by nearly 1,650 individuals relative to what enrollment would be
absent the program. Modeling also indicates that the ARP may attract
healthier members to the individual market, further reducing premium
rates.
Additionally, there is potential that the ARP will encourage
competition in the State's insurance market. In 2014, Alaska had three
national insurers and one regional insurer participating in the
individual market. In 2015, two insurers departed the Alaska market,
cutting the number of insurers in half. In 2016, the insurer covering
approximately two-thirds of those enrolled in the individual market
also exited the market, leaving only one insurer to serve Alaska's
individual market in 2017. There is optimism that in subsequent years
there may be interest from other insurers to provide health care plans
if the market remains stabilized. If additional companies move into the
Alaska individual market, consumers will benefit from natural market
forces.
State Funding of the Alaska Reinsurance Program
Historically, like many other States, Alaska had a high-risk pool
to provide access to health insurance to those who were unable to
purchase insurance in the commercial market because of pre-existing
conditions. Unlike many other States, however, Alaska did not dissolve
the pool when the ACA was enacted because there were a few hundred
people that purchased Medicare supplement policies, which are not sold
in Alaska by a commercial insurer. The Alaska Comprehensive Health
Insurance Association (ACHIA) is financed by an assessment on health
insurers in the market and the State of Alaska.
HB 374 amended current statute, expanding the responsibilities of
ACHIA to include the ARP. The ARP legislation also appropriated $55
million from various premium taxes to stabilize the health insurance
market in 2017. Before being appropriated, these taxes would have been
forwarded to the State's general fund and used for other obligations of
the State, including matters such as education, economic development,
infrastructure, and public safety.
Alaska is using the funds to reimburse the one insurer in the
individual market for incurred claims from high-risk residents. The
high-risk residents are defined as people who have been diagnosed with
one or more of the covered conditions identified in regulation. The
insurer still administers the claims; ACHIA receives the State funding,
audits the claim requests, and upon acceptance of the claims, disburses
the funds to the insurer on a periodic basis.
Due to the State of Alaska's ongoing fiscal concerns, the State
legislature gave no assurances that the ARP would be funded beyond
2017, putting the sustainability of the ARP and the stabilization of
Alaska's individual health insurance market in jeopardy if longer term
sources of funding were not identified.
Federal Support of the Alaska Reinsurance Program
In early January of 2017, Alaska submitted an application to the
Department of Health and Human Services (Centers for Medicare and
Medicaid Services) and the Department of Treasury (Internal Revenue
Service) for a Section 1332 State Innovation Waiver. As authorized
under the ACA, an innovation waiver allows State-by-State amendments
within specific parameters. For instance, coverage must be at least as
comprehensive and affordable as what existed prior to the waiver, the
number of State residents covered must be comparable to the baseline
without a waiver, and the scenario must not increase the Federal
deficit.
Alaska's application waived the requirement of a single risk pool
and proposed that the Federal Government provide pass-through funds for
a period of 5 years to stabilize the ARP. The pass-through funding is
based on the savings generated as a result of a reduction in the
Advanced Premium Tax Credits (APTC). It is estimated that the ARP will
save the Federal Government $51.6 million in APTC in 2018, relative to
what the tax liability would have been absent the program.
Premium tax credits associated with the ACA will continue to be
paid based on Federal methodology, but the growth of such payments is
slowed by the ARP. Independent actuarial analysis showed that the
amount in APTC paid by the Federal Government to Alaskans was
significantly reduced when the ARP went into effect in 2017:
----------------------------------------------------------------------------------------------------------------
Baseline-No
Calendar year ARP APTC with ARP Difference
----------------------------------------------------------------------------------------------------------------
2017............................................................ $185,716,278 $185,716,278 $00
2018............................................................ $233,898,461 $182,260,689 $51,637,772
2019............................................................ $258,351,449 $202,372,542 $55,978,906
2020............................................................ $279,343,570 $219,162,267 $60,181,304
2021............................................................ $312,617,789 $247,210,983 $65,406,805
2022............................................................ $342,289,634 $272,477,673 $69,811,961
----------------------------------------------------------------------------------------------------------------
There was also difference in APTC paid during calendar year 2017,
but the waiver is not applicable until 2018; the ARP is wholly funded
by the State of Alaska in 2017.
In July, Governor Walker was notified that Alaska's waiver had been
approved. Director Seema Verma's letter to the Governor indicated that
the State will receive an estimated $322,652,234 to fund the ARP over
the next 5 years:
------------------------------------------------------------------------
Calendar year Estimated funding
------------------------------------------------------------------------
2018................................................. $48,362,287
2019................................................. $61,536,998
2020................................................. $65,716,251
2021................................................. $71,177,767
2022................................................. $75,858,931
Total............................................ $322,652,234
------------------------------------------------------------------------
After the Federal pass-through funds are accounted for, the State
will be responsible for providing approximately 15 percent of the
funding needed to stabilize the individual market through the ARP. In
2018, Federal funds will cover $48,362,287 and State funds will cover
$6,637,713 of the $55 million program costs.
Actuarial modeling shows that, at least in part due to the ARP,
Alaska's 2018 premiums are expected to decrease by approximately 20
percent. While the premium decrease may not directly affect those
currently receiving tax credits, Alaskans who do not receive Federal
tax credits will benefit from the premium reductions. Additionally, if
Federal funding of the Cost Sharing Reduction payments continues, the
decrease could be as high as 25 percent, bringing the cost in the
individual market back to within reach of many Alaskans.
The State will continue to pursue programs that would benefit
Alaskans both in the individual and small group markets, possibly
including a second Section 1332 State Innovation Waiver.
need for congressional and administrative action
The ACA was a well-intended piece of Federal legislation that
brought insurance to millions of Americans. The expectation was that as
provisions of the ACA alleviated insurance underwriting restrictions
that previously made it impossible for many people with pre-existing
conditions to obtain insurance, millions of uninsured Americans with
chronic or severe illnesses would become eligible for health insurance.
Through mechanisms such as the Advanced Premium Tax Credits and Cost
Sharing Reduction payments, low and moderate-income individuals who
would otherwise not be able to pay monthly premiums would also be able
to obtain health insurance. The insurance markets would be stabilized
by the 3Rs-risk adjustment, reinsurance, and the risk corridor.
The idea was that millions would enroll and that the premiums
generated would support the expenses of the whole. However, this well-
intended fundamental concept failed in most States, forcing insurers to
either withdraw from entire counties/States or increase the premiums in
the individual market to a point that ACA plans were not affordable to
consumers. The 3Rs had mixed impact on the markets and have not
stabilized the ACA as they were intended to do, which has also led to
some of the turbulence the health insurance markets are now facing.
As you consider congressional action to stabilize insurance
premiums across the country in 2018 and beyond, I offer the following
considerations from the perspective of the Alaska health insurance
markets,
We urge Congress not to disrupt health insurance markets,
but instead to focus immediately on stabilization.
Rate filings are to be approved next week. Any
decisions made after the filings are approved could cause
unintended, unfavorable disruptions to insurance markets.
Uncertainty destabilizes the market. Committing to
funding Cost Sharing Reduction payments through at least 2019
will keep premium rates from increasing at an even higher rate.
The individual and employer mandates keep the markets
stable. Eliminating the mandates would most likely result in
fewer individuals participating in the market, resulting in a
smaller health care pool and higher costs to all enrollees.
Until a viable alternative is proposed on the national level or
via State waivers, the mandates are necessary in the short term
to keep markets stable.
We support collaborative reforms, developed in
consultation with State regulators, that strengthen markets with a goal
of insurance not only being accessible but affordable.
Amendments to the ACA must be carefully vetted with
State regulators to examine whether expectations of the States
are reasonable and how the structure of potential programs may
adversely impact States. Program costs should not be shifted to
the States, creating undue financial burdens.
Programs that allow States to accommodate the unique
needs of their residents, such as the Section 1332 State
Innovation Waiver, are vital to the long-term stability of
health insurance markets.
Further deliberation on the health insurance tax is
needed. In particular, citizens of States like Alaska that
already face extremely high health care costs may be unfairly
penalized by the current structure of the Cadillac tax.
Additionally, exempting insurers from the health insurance tax
in counties/States served by only one insurer may also be an
effective way to increase choice/competition that will benefit
citizens.
Consider continuing the navigator and assister
programs. In rural areas of Alaska, insurance brokers are not
always available. These programs reduce the number of uninsured
citizens and maximize market participation.
A review of regulations may reveal some that are
unnecessarily burdensome and costly to both medical providers
and insurers.
We are also interested in coordinated efforts with health
care providers to address the underlying drivers of health care
spending, considering all aspects including pharmaceuticals, air
ambulance, in-patient, and outpatient. Last year, Alaska established a
health care authority feasibility study to begin to look at cost
controls. With the support of the Federal Government, a similar
national effort could go a long way toward addressing the underlying
market dynamics that are driving unsustainable increases in health care
costs.
We are down to days to address the number of insurers, the cost,
and the subsidies for 2018. Even under such extreme time constraints,
as you consider congressional action to stabilize premiums to help
people in the individual insurance markets, please make your decisions
in a bipartisan manner after thorough analysis. Any decision that you
make, large or small, will affect access to health care insurance, an
extremely important and deeply personal subject to all Americans.
My fellow insurance directors/commissioners and I are here to
assist you in any way we can to help inform the difficult decisions
before you.
Thank you.
The Chairman. Thank you, Ms. Wing-Heier.
Ms. Miller, welcome.
STATEMENT OF TERESA MILLER, J.D., INSURANCE COMMISSIONER OF
PENNSYLVANIA, HARRISBURG, PA
Ms. Miller. Good morning, Chairman Alexander, Ranking
Member Murray, and members of the committee.
I am honored to be here today and want to applaud the
committee for hosting such an important conversation at such a
critical point in time.
I am not going to sit here this morning and tell you that
the ACA is perfect. I think we all know that it is not. But the
narrative that the ACA is failing and imploding is just false
and ignores the coverage requirements that the law put in
place.
Millions of Americans have benefited from the ACA. The
employer markets, where the majority of people get their
insurance, have actually seen a moderation of costs since
passage of the ACA.
Pennsylvania's uninsured rate is now the lowest it has ever
been thanks to improvements in the individual market and
Governor Wolf's expansion of Medicaid in 2015.
Pennsylvania has about 426,000 people on the individual
marketplace and about 80 percent of these enrollees receive
subsidies to help them pay their premiums and more than half
benefit from Cost Sharing Reductions to help them pay their out
of pocket costs like co-pays and deductibles. So for most
individuals in this market, the ACA is working well.
The ACA has resulted in millions of Pennsylvanians no
longer being denied coverage due to a preexisting condition, or
facing financially devastating annual or lifetime limits, and
benefiting from quality, comprehensive coverage because of
preventative care and Essential Health Benefit requirements.
Pennsylvania's market has experienced difficulties, but our
individual market is not collapsing. Our individual market
insurers filed for an average increase of 8.8 percent for 2018,
assuming no changes to the ACA.
I am pleased to report that our insurers are finally seeing
improved experience with this market and that is reflected in
their rate increases. But I am also very concerned that that
stability is on fragile ground because of the ongoing
uncertainty surrounding the future of the ACA and, in
particular, payments for Cost Sharing Reductions.
I cannot stress enough how difficult this uncertainty is on
our markets. These payments have a significant impact on rates
and failing to make a long-term commitment will do nothing but
drive up costs for consumers. This will further hurt the 1 to 2
percent of Pennsylvanians, roughly 125,000 people, who do not
receive subsidies because those who do will be shielded mostly
from these premium increases if their insurer stayed in the
market, that is.
Ultimately, rates have to be finalized based on finite
assumptions. Pennsylvania consumers will be left to bear the
burden of premium increases or lessen choices necessitated by
continued uncertainty.
Congress should allocate money for these payments through
at least 2019 to give insurers the predictability they so
desperately need.
We also must make sure that we are properly encouraging
enrollment in the individual market. The health of any
insurance market depends on the strength of its risk pool and
reduced enrollment strains the risk pool and contributes to
rising costs for all of those in it. I worry steps the Trump
administration has taken could further erode the risk pool.
Just last week, we found out the extent of cuts to outreach
and enrollment efforts funded by the Federal Government. Health
and Human Services will spend just $10 million advertising 2018
open enrollment compared to the $100 million spent for 2017.
In addition to this, funding granted to health insurance
Navigator organizations to help people enroll was almost halved
from the levels given under the previous administration.
Reducing outreach efforts at the Federal level, combined
with a shortened enrollment period for 2018, will do nothing
but leave more people without coverage and could raise rates
for people left in the market.
In Pennsylvania, we are implementing our own outreach
program. We are working alongside insurers, healthcare
providers, consumer advocates, and other stakeholders to reach
our common goal of increasing covered Pennsylvanians.
Encouraging enrollment helps everyone. People have access
to coverage, insurers have a more robust risk pool, and
providers are more likely to receive compensation for care they
provide. Over time, a more robust risk pool should also result
in lower premiums for consumers.
As we work toward providing stability in the market, we
should consider all options to moderate the premium increases
caused by market instability.
A $15 billion reinsurance program in the context of a
careful, bipartisan approach to improving our healthcare system
would be a great place to start, especially if the individual
mandate were preserved and outreach was boosted to increase
enrollment.
The ACA's Reinsurance Program successfully moderated
premiums while it was in place and a reintroduction of a long-
term reinsurance program could be an effective way to scale
back the premium increases that we currently see.
Finally, I do think we need to have a serious national
conversation about healthcare costs in this country. These
costs are constantly growing and even if we bring stability to
our markets, we must still address healthcare costs if we want
to ensure that our current system is sustainable in the long-
term. This is a national issue and even as States work to
address rising costs in our own markets, we are not going to be
able to fix this completely on our own.
While the healthcare reform debate has been, without
question, partisan the goals that we are trying to achieve are
not and neither is recognizing the real problems that exist in
our system. We all want Americans to have access to the care
they need and be able to afford that care. We all want them to
have choices and that means supporting a competitive health
insurance marketplace that provides that choice.
I am grateful for your leadership, Chairman Alexander, and
I am so thankful that we are finally moving in the direction of
working together to find real solutions to ensure all consumers
have access to quality, affordable care.
Thank you.
[The prepared statement of Ms. Miller follows:]
Prepared Statement of Teresa Miller, J.D.
summary
As we discuss the importance of stabilizing the individual market,
we must recognize the impact the Affordable Care Act (ACA) has on
Pennsylvanians. Before the ACA, people often couldn't get health
insurance due to a pre-existing condition. If they did they often paid
significantly more, and these polices did not always cover their pre-
existing condition. Individuals faced financially devastating annual
and lifetime limits, and women could see higher premiums than men and
not have contraception or maternity care covered. Critical services
like mental health and substance use disorder treatments were often
difficult if not impossible to find coverage for.
Governor Wolf has been an active participant in a group of
Governors working to ensure Congress's approach to health care reform
is bipartisan and strengthens our Nation's health insurance system.
Additionally, the Governors urge Congress to take steps to make
coverage more affordable and stable in the interim. Governor Wolf and I
applaud the committee's efforts to work toward a solution on this
important issue. Because of the ACA, more than 1.1 million
Pennsylvanians have accessed comprehensive coverage through the ACA. We
need to buildupon this foundation and make targeted, common sense
changes that will improve the ACA.
Pennsylvania's market is on a path to stability and will not
implode unless the Federal Government takes adverse action. If cost-
sharing reductions payments are not made, this stability will be
jeopardized. These payments have a significant impact on insurers'
rates, and failing to make a long-term commitment will increase prices
for consumers in the individual market. Making these payments is the
simplest way to ``fix'' the ACA that I can offer. It will very soon be
too late to avoid rate increases for 2018, so Congress must act
quickly.
Improvements to the ACA's 1332 State innovation waivers and how
they are obtained could be made, but greater State flexibility should
not come at the cost of the baseline coverage improvements that the ACA
has made. Doing so would only create more plans that offer very little
coverage and have high out-of-pocket costs when care is accessed.
Both ACA replacement proposals considered by the U.S. House and
Senate did contain reinsurance programs for 2018. A $15 billion
reinsurance program in the context of a careful, bipartisan approach to
improving our health care system would be something I would view
favorably, especially if the individual mandate were preserved and
outreach was boosted to improve enrollment in individual market plans.
The ACA's reinsurance program successfully moderated premiums while it
was in place and the reintroduction of a long-term reinsurance program
could be an effective way to scale back the premiums we currently see.
The health of any insurance market depends on the strength of its
risk pool, and reduced enrollment strains the risk pool and contributes
to rising costs for those in it. I worry about some steps the Trump
administration has taken that could further erode the risk pool, such
as shortening the open enrollment period and making substantial cuts to
funds used to advertise the open enrollment period and support
enrollment efforts coordinated by health insurance navigators. In
Pennsylvania, we are working alongside stakeholders to increase covered
Pennsylvanians and inform them of important changes to this year's open
enrollment period so people are covered, insurers have a robust risk
pool, and providers are more likely to receive compensation for care
provided.
While the health reform debate has without question been partisan,
the goals we are trying to achieve are not, and recognizing the real
problems that exist in our health care system should not be either. I
am hopeful that we can move away from proposals that would jeopardize
the health and financial security of millions of Americans, and focus
on solving real problems with common sense solutions like these.
______
Good morning Chairman Alexander, Ranking Member Murray, and members
of the U.S. Senate Committee on Health, Education, Labor, and Pensions.
Thank you for the opportunity to be here today to speak about an issue
that is so critical for residents of the Commonwealth of Pennsylvania.
I am pleased to have been recently chosen by Governor Wolf to serve
as acting secretary for the Pennsylvania Department of Human Services
after having been insurance commissioner since shortly after Governor
Wolf took office in 2015.
Governor Wolf has been an active participant in a group of
Governors working to ensure Congress's approach to health care reform
is completed in a bipartisan manner that strengthens our Nation's
health insurance system. Additionally, the Governors urge Congress to
take steps to make coverage more affordable and stable in the interim.
Both Governor Wolf and I applaud the committee's efforts to work
toward a solution on this important issue. As we begin to talk about
the importance of stabilizing our individual health insurance markets
under the Affordable Care Act (ACA), we should first recognize the
impact that the ACA itself has had on Pennsylvanians and why it is
imperative that we fix the law rather than undoing the progress we have
made. Before the ACA, sick people often couldn't get health insurance
due to a pre-existing condition. If they were able to get coverage,
they often paid significantly more for it than someone without a pre-
existing condition. In some cases, these individuals would be offered a
policy, but it would not include coverage for their pre-existing
condition. Individuals with chronic medical issues or anyone who
underwent a costly procedure like a transplant could face financially
devastating annual and lifetime limits. Women could see higher monthly
premiums than men and perhaps not have contraception or maternity care
covered. Other critical services like mental health and substance use
disorder treatment services and prescription drugs were often difficult
if not impossible to find coverage for. Most importantly, more than 10
percent of Pennsylvanians and 16 percent of Americans nationwide went
uninsured.
Since the ACA's passage, the national uninsured rate has fallen to
8.6 percent and Pennsylvania's uninsured rate has dropped to 6.4
percent--the lowest it's ever been. More than 1.1 million
Pennsylvanians have accessed coverage through the ACA, and that
coverage is much more comprehensive than what was previously available.
There are 12.7 million Pennsylvanians, and more than 40 percent of
them--5.4 million--have pre-existing conditions and cannot be denied
health insurance coverage due to the ACA. Today, 4.5 million
Pennsylvanians no longer have to worry about large bills due to annual
or lifetime limits on benefits, and 6.1 million Pennsylvanians benefit
from access to free preventive care services. In addition to this, more
than 175,000 Pennsylvanians have also been able to access substance use
disorder treatment services through their exchange and Medicaid
expansion coverage. These services are critical as our commonwealth and
other States around the country strive to combat the overwhelming
impact of the opioid epidemic.
The positive impact of the Governor's efforts to expand Medicaid
and help Pennsylvanians access treatment services for substance use
disorder have become even more evident to me as I've taken the helm at
the Department of Human Services. These are expansions that are making
a significant difference in people's lives.
While the ACA has not been perfect, it is critical that we level
set and talk about the issues that exist and who those issues really
impact. The ACA has had minimal impact on the Medicare program and
enhanced the already very popular Medicaid program by expanding access
to millions more around the country. Further, since the passage of the
ACA, the employer markets, where small and large businesses can
purchase insurance products for their employees, have been stable and
even seen costs grow at a slower pace than before the ACA. The
individual market, where we see problems, is a very small market
relative to these others, covering only about 5 percent of
Pennsylvanians. However, this market is very important because it is
where individuals and families who do not have access to coverage
through their employer or public programs go to purchase insurance.
This market is heavily subsidized because of the ACA. About 80
percent of Pennsylvanians who purchase their coverage through the
exchange receive tax credits to help pay their premiums. Because of the
way the tax credits are structured based on income, these consumers do
not feel the full impact of premium increases. Currently more than half
of Pennsylvania consumers who enroll in the exchanges are also eligible
for cost-sharing reductions, additional financial assistance that helps
them pay for their out-of-pocket costs like deductibles and co-pays.
The payments the Federal Government makes to insurers to cover the
costs of this additional financial assistance are in jeopardy because
President Trump has not committed to making them longer than a month-
to-month basis. I am seriously concerned about the destabilizing effect
failing to commit to these payments could have on both Pennsylvania's
market and others around the country and how this will impact premiums
for people in the individual market, but I will address this at length
later in this testimony.
I believe we need to buildupon the foundation of the health care
system we have and make targeted, common sense changes that will
improve the ACA and make it work better for the people it is not
working perfectly for today. We still have a serious affordability
problem in the individual market, especially for the 1-2 percent of
Pennsylvanians who rely on the individual market for coverage but are
not eligible for financial assistance and those facing rising
deductibles. Their concerns are legitimate and must be addressed, but
starting over or moving backwards will not better serve Pennsylvanians
or Americans throughout the Nation. I applaud this committee's efforts
to work together to strengthen this law so it may better serve everyone
rather than undoing the good it has accomplished around the country.
With that context, I would like to offer Pennsylvania's thoughts on the
issues we currently face and what reasonable bipartisan solutions that
would improve the ACA for all could look like.
guaranteeing payments for cost-sharing reductions
While the individual market is facing issues, in some States more
than in others, I can tell you that Pennsylvania's market is on a path
to stability and will not implode unless the Federal Government takes
adverse action. Our market saw some issues last year and lost two
carriers, but I worked closely with our remaining insurers to ensure
that we did not have any bare counties for 2017. For 2018, our
individual market insurers filed for a statewide average increase of
just 8.8 percent, assuming no changes come from the Federal level. An
analysis on the drivers of 2018 premium increases puts our requests at
or below what we would expect based on trends in annual medical costs
and a Federal tax on health insurance plans that comes into effect for
the 2018 plan year. I am very happy that our insurers are finally
seeing improved experience with this market and that is reflected in
the rate increases they filed, but I am very concerned that this
stability is on fragile ground because of all the uncertainty here in
Washington.
When rates were initially filed, I asked our insurers to provide
information on what they would need to request if cost-sharing
reduction payments were not made or if the individual mandate was not
enforced. The differences are stark. If cost-sharing reductions are not
paid, they estimated that they would need to request a statewide
average increase of 20.3 percent. If the individual mandate is not
enforced, they said they would seek an estimated 23.3 percent increase.
If both changes occur, our insurers estimated that they would seek an
estimated increase of 36.3 percent, assuming they continue to
participate in the market at all. I'd be lying if I said these numbers
didn't worry me, especially as we prepare to finalize rates. At this
point, we have no more certainty on cost-sharing reductions than we had
in April when I, along with executives from all five of Pennsylvania's
on-exchange insurers, first wrote to Secretary Tom Price on this issue.
What's most frustrating about the situation we are in is that it is
entirely avoidable. I have sent multiple letters to Secretary Price
asking the administration to not take steps to undermine the progress
we have made and the pathway to stability that we put our market on. I
reiterated this urgent need for stability in an answer to a request for
information on how to stabilize the individual market issued by the
Centers for Medicare and Medicaid Services in June. Governor Wolf and a
bipartisan group of Governors have asked congressional leaders to
address stability, too. And, yet here we are, 2 weeks out from when
States need to send final rates for 2018 to the Department of Health
and Human Services (HHS)--a deadline that was already extended--and the
Trump administration still refuses to make anything longer than a
month-to-month commitment on these payments.
I cannot stress enough how difficult this uncertainty is on our
insurers. These payments have a significant impact on their rates, and
failing to make a long-term commitment will do nothing but drive up
prices for consumers in the individual market. This will further hurt
the 1 to 2 percent of Pennsylvanians--roughly 125,000 people--who do
not receive subsidies as those who do receive subsidies would be
shielded from most of the increases--if their insurer stayed in the
market at all. At the end of the day, rates have to be finalized based
on finite assumptions and insurers will sign contracts to participate
on the exchange or they won't participate at all. Pennsylvania
consumers will be left to bear the burden of premium increases or
lessened choices necessitated by this instability.
Failing to make payments for cost-sharing reductions does not serve
any goal aside from trying to make markets fail. According to the
Congressional Budget Office's analysis on the matter, doing so would
result in higher premiums, more counties without individual market
coverage options for 2018, and would increase the Federal deficit by
$194 billion through 2026 due to the payment of additional premium
subsidies because of higher premiums. The Congressional Budget Office
further estimates that premiums would rise an additional 20 percent in
2018. This will undoubtedly create more problems, especially for
individual market consumers who are not eligible for financial
assistance.
If the Trump administration is not going to do the right thing for
consumers and stabilize the law, Congress should allocate funds to
ensure payments for cost-sharing reductions continue for 2018. Making
these payments is the simplest way to ``fix'' the ACA that I can offer.
I fear that it will very soon be too late to avoid rate increases for
2018, so Congress must act quickly.
supporting opportunities for state innovation
Under Section 1332 of ACA, States have the opportunity to obtain
waivers on portions of the law as long as they do not increase the
Federal deficit, reduce affordability or quality of coverage sold in
the State, or have a negative quantitative impact on the State's
insured population. States currently must offer a public notice and
comment period, hold public hearings, and pass legislation outlining
the State's intent to pursue and implement a Section 1332 waiver.
Governor Wolf and I join the sentiments outlined in the bipartisan plan
presented by Governors Hickenlooper and Kasich to streamline the waiver
process in order to improve State flexibility.
Changes that permit States to easily buildupon waivers obtained and
successfully implemented by other States, coordinating the waiver
submission and approval process, and easing the process of applying for
waiver extensions would be viewed favorably. We would value the ability
to pursue a waiver without requiring action from our State's
legislature. If States are making small, targeted changes to stabilize
the market like what is needed now, the current process can be too long
and cumbersome when you consider a State's budget cycle and legislative
process. An extensive process should be in place if States were to make
significant changes to the structure of their market, but streamlining
the current process would allow States to use Section 1332 waivers to
make incremental changes as issues arise. The Wolf Administration would
also look favorably on the opportunity to combine multiple waivers into
a coordinated effort and consider deficit neutrality across the
comprehensive plan.
However, we strongly believe that the baseline coverage
improvements that must be maintained during the waiver process must be
preserved. Eliminating these provisions--often called ``guardrails''
would likely result in a race to the bottom. Insurance companies would
sell plans that offer less comprehensive coverage at a lower monthly
cost, leaving consumers vulnerable to large out-of-pocket costs when
care is accessed--something we all do at some point. These protections
exist to ensure that Americans around the country have access to
equitable, quality coverage regardless of the State in which they
reside. The baseline protections contained in the ACA and the coverage
improvements that have resulted should not be jeopardized as we
consider opportunities for greater State flexibility.
preserving the individual mandate
Since the ACA was passed, the individual mandate has historically
been an unpopular feature of the law. However, it is imperative to
making sure the law functions as it was intended.
The ACA included a ``three-legged stool''--the individual mandate,
non-discrimination requirements for people with pre-existing
conditions, and subsidies and cost-sharing reductions that helps
insurers balance the added risk of individuals with pre-existing
conditions while avoiding the risk of adverse selection where people
only enter the market when they are sick and need care. Proposals to
replace the ACA have eliminated the mandate in exchange for a
continuous coverage requirement. Because purchasing insurance would no
longer be mandatory under a continuous coverage requirement, the people
who seek coverage during the open enrollment period will likely be a
less healthy population and the risk pool would deteriorate, thus
driving up premiums for those who need coverage the most.
I know that the individual mandate is not popular, but we must have
adequate incentives to encourage people to purchase coverage and bring
healthy people into the market. Over time, this should help stabilize
and even lower premiums for everyone as more young and healthy people
enter the market and help offset the cost of sicker enrollees.
adequate funding for risk stabilization programs
When the ACA was passed, it contained three premium stabilization
programs to help insurers experiencing higher than anticipated claims
as they adjusted to the new market. Two of these programs--risk
corridors and reinsurance--were designed to be temporary and have
expired, but many insurers around the country, including those in
Pennsylvania, are still owed significant risk corridor payments. Last
year, Highmark, one of the Pennsylvania insurers, sued HHS for these
payments, and the Pennsylvania Insurance Department filed an amicus
brief in support of their suit because insurance companies who entered
this market under a set of expectations should be made whole for
payments they were anticipating. Many of these insurers experienced
significant losses in the first few years, and making these payments
would be a good way for the Federal Government to demonstrate good
faith and a long-term commitment to the success of this market.
Both ACA replacement proposals considered by the U.S. House and
Senate contained reinsurance programs for 2018. Implementing a
reinsurance program would be another effective way to demonstrate a
long-term commitment to the health of this market for insurers and
consumers who rely on this market for coverage.
A $15 billion reinsurance program in the context of a careful,
bipartisan approach to improving our health care system would be
something I would view favorably, especially if the individual mandate
were preserved and outreach was boosted to improve enrollment in
individual market plans. The ACA's reinsurance program successfully
moderated premiums while it was in place and the reintroduction of a
long-term reinsurance program could be an effective way to scale back
the premiums we currently see. Increasing participation in the
individual market would create a more stable, healthy risk pool, while
the reinsurance program would help off-set the costs of enrollees with
abnormally high claims costs. Together, these steps would moderate
premiums for all while retaining the critical protections and robust
benefits required by the ACA.
continuing enrollment outreach programs
Encouraging people to enroll in this market through active outreach
programs is extremely important to ensuring the market's success. The
health of any insurance market depends on the strength of its risk
pool, and reduced enrollment strains the risk pool and contributes to
rising costs for those in it. I worry about some steps the Trump
administration has taken that could further erode the risk pool, such
as shortening the open enrollment period and ending HHS's contracts to
support outreach and enrollment efforts for the marketplace. In total,
the Trump administration intends to spend $10 million nationwide on
advertising for 2018 open enrollment compared to $100 million spent
last year. The Administration also recently announced that funding
granted to health insurance navigator organizations to help people
enroll was almost halved from levels given under the previous
Administration. I worry that these decisions will result in fewer
people enrolling and relatively fewer healthy people enrolling,
exacerbating the issues that already exist in the risk pool.
Pennsylvanians are accustomed to having 3 months to enroll in
coverage. In the past, December 15 has been an important deadline
because it was previously the last day to enroll in coverage that was
effective January 1, but enrollment still continued for the remaining 6
weeks of open enrollment. During 2017 open enrollment, more than
130,000 Pennsylvanians enrolled in coverage after the initial December
15 deadline. That is roughly one third of our market. I am extremely
concerned that a shortened open enrollment period coupled with low
outreach from the Federal Government will catch consumers off guard and
result in people who want or need coverage being left out of the market
because they missed the enrollment window.
In Pennsylvania, we are working to ensure that our marketplace
population and potential enrollees understand this change through our
own insurance outreach program. We are working alongside insurers,
health care providers, consumer advocates, and other stakeholders to
reach our common goal of increasing covered Pennsylvanians and
informing them of important changes to this year's open enrollment
period. Encouraging enrollment helps everyone--people have access to
coverage, insurers have a more robust risk pool, and providers are more
likely to receive compensation for care provided. Overtime, a more
robust risk pool should result in lower premiums for consumers. I hope
the Trump administration ultimately sees the value in this outreach
too, but for now Pennsylvania will work to fill the gap created by the
Administration.
addressing underlying costs of health care
Stabilizing the individual market is an important first step to
addressing cost concerns we hear from consumers, but we still need to
get to the root of what really drives insurance costs: the cost of
health care. To put it simply, insurance is expensive because the
health care it pays for is expensive. Unfortunately, it gets more and
more expensive every year, which means premiums will continue to rise
every year even if there are no detrimental changes to the market.
We need to have a serious national conversation about how we can
moderate the unsustainable growth in health care costs, especially in
areas experiencing astronomical growth in cost like we currently see
with pharmaceutical costs. There is no silver bullet to reduce the cost
of health care and the conversation is not easy, but it is essential as
we look to the future and the long-term viability of our health care
system. We continue to look for solutions to these problems at the
State level, but these are national problems that I believe merit
national solutions. So, I am hoping all of you and your colleagues in
Congress will work alongside the States in tackling this complex and
multifaceted issue.
the need for bipartisanship
While the health reform debate has without question been partisan,
the goals we are trying to achieve are not, and recognizing the real
problems that exist in our health care system should not be either. I
am very thankful that we are finally moving in the direction of working
together, and I am optimistic that the ideas shared today will be a
strong foundation moving forward. We all want Americans to have access
to the care they need and be able to afford that care. We also want
them to have choices, and that means supporting a competitive health
insurance marketplace that can provide that choice. Let's start by
recognizing where consumers may not have that access or affordability,
and let's understand where we are not supporting the competitive market
we need. Then, taking a lead from Governor Wolf and the group of
bipartisan Governors, let's look for solutions that can solve those
problems, both in the short-term and in the long-term.
As my testimony outlines, I believe some of those short-term
strategies must be to provide clarity and stability of the rules in the
market by appropriating funds to ensure payment of cost-sharing
reductions and robustly enforcing the individual mandate while
enhancing outreach and enrollment efforts to get more healthy people
into the market and improve the risk pool. A reinsurance program could
also contribute to stability and the moderation of premiums and show
insurers that the government wants to work with them for the benefit of
consumers--your constituents--to make this market an attractive place
to do business. In the long-term, it is imperative that we begin to
look for ways to moderate the growth of health care costs to ensure our
health care system is sustainable and will meet the needs of those that
need it now as well as those that will need to rely on it in the
future. I am hopeful that we can move away from drastic proposals that
would jeopardize the health and financial security of millions of
Americans, and focus on solving real problems with common sense
solutions like these.
Again, thank you for allowing me to speak with you today. I would
be happy to take any questions that you might have.
The Chairman. Thank you, Ms. Miller.
Mr. Doak, welcome.
STATEMENT OF JOHN D. DOAK, COMMISSIONER, OKLAHOMA DEPARTMENT OF
INSURANCE, TULSA, OK
Mr. Doak. Thank you, Senator. Good morning, Chairman
Alexander and Ranking Member Murray.
One of the things, before we get started today, our hearts
and prayers are with those folks that are in the line of the
hurricanes. We want to keep them in our prayers today. We would
ask for speedy consideration of the Flood Reauthorization Act
with all that on our minds.
Good morning. I appreciate the opportunity to testify today
to provide an Oklahoma perspective on stabilizing the
individual health insurance market for 2018.
For years, Oklahoma has been dealing with the negative
consequences of Obamacare. I have been warning about spiking
rates, narrowing networks, rising deductibles, general market
instability for too long. My warnings have been ignored at the
Federal level. I look forward to seeing how Congress will
finally address these problems in time for carriers to meet
their 2018 deadlines.
The implementation of Obamacare in Oklahoma has been a
failure. It has created severe market disruptions without
meaningful reductions in the number of uninsured in our State.
In 2014, our citizens chose plans from five different
carriers on the federally facilitated marketplace. Those
carriers sustained heavy losses and by 2017, that number had
dropped to only one carrier. What is happening now cannot be
sustained and we can expect eventually Oklahomans will have no
market and no options.
Not only do Oklahomans have one marketplace carrier to
choose from this year, but over the past 4 years, rates in our
marketplace have increased by 130 percent. Studies estimate
that approximately 30,000 individuals, who do not quality for
premium assistance, exited the non-group market in Oklahoma
between 2016 and 2017. Small business owners and self-employed
individuals, who are the backbone of Oklahoma's economy, are
suffering.
As premiums have spiked, enrollees have experienced
deductible shock and cannot afford the coverage. Many people in
Oklahoma, where the average per capita income is just above
$25,000 annually, are being forced to pay higher premiums for a
policy they cannot afford to actually use.
Further, as carriers have sustained large losses in the
marketplace, they have responded by narrowing their provider
networks. It turns out, you cannot always keep your doctor.
Many other States are facing similar issues. Unfortunately,
all recent efforts to repeal and amend Obamacare have failed
and States like mine have been left holding the bag.
I am encouraged by the Trump administration's priorities,
particularly in encouraging State flexibility and autonomy. In
Oklahoma, Obamacare gives us no other options at this point.
Oklahoma has submitted a 1332 Waiver application under the
Obamacare framework. This application focuses on the creation
of a market stabilization program using Federal pass through
funding and State-based assessments. This would create a
reinsurance program for carriers operating in the marketplace.
This initial plan is estimated to reduce premiums and
increase enrollment in the marketplace in 2018. Subsequent
Waivers will regain State control over other Obamacare
requirements. However, I am not convinced that Obamacare
Waivers are going to be the solution to our problem.
What we really need is an innovative, long-term solution
that truly returns powers back to the States to implement ideas
tailored to fit each State's specific needs in health
insurance.
That is why I have been encouraged that proposals that are
out there, like ones from Senators Graham and Cassidy, which
would repeal the individual and employer mandates, and allocate
block grant dollars to the State. This is the kind of
leadership and flexibility to the long-term stability of our
markets.
If some States want to keep their regulations from
Obamacare, that is great if that works for them. But that is
not working for Oklahoma and we should have the opportunity to
do something different, or else we face an uncertain and
difficult future on this current flawed path.
In conclusion, former senator, Dr. Tom Coburn, recently
said, ``If you want to fix healthcare, fix the markets.'' I do
not think government will ever fix healthcare. Only markets
will.
For more information, please see my written testimony,
which includes letters I sent in January to House Majority
Leader McCarthy and Chairman Alexander. These letters outline
several other innovative solutions to our insurance problems.
Thank you very much, Mr. Chairman.
[The prepared statement of Mr. Doak follows:]
Prepared Statement of John D. Doak
summary
Insurance commissioners across the country have been dealing with
the consequences of the Affordable Care Act (ACA) on State markets
since its inception: rising rates, constricting networks, rising
deductibles, fewer consumer choices, and market instability. What we
have now in our individual market is the consequence of encumbering a
functional market with the burdens of becoming a Federal tax
distribution system.
The consequences of the ACA on Oklahoma's individual market have
been severe. We have seen a reduction in competition down to only one
carrier on the marketplace, drastic rate increases, constricting
networks, higher deductibles, and market instability. These problems
were not caused by uncertainty about cost sharing reduction (CSR)
payments, but have all occurred while CSR payments have been made to
insurers.
The construction of the ACA intentionally left States like mine
with limited ability to affect any real and lasting changes to these
Federal programs. However, I am encouraged by the shift in priorities
from a new Presidential administration and a focus on State flexibility
and autonomy. We are continuing to look for solutions while we await a
more comprehensive change at the Federal level.
Over the last few years I have worked on several State initiatives
in an effort to improve our health insurance markets. In 2012, the
Oklahoma Legislature passed a bill allowing small employers to purchase
group health insurance through an employer association. In 2017, the
Oklahoma legislature passed a bill creating a framework in which
insurers licensed in other States, such as those sharing geographic
borders and communities with Oklahoma, can sell health insurance
policies across State lines. These types of State innovations should be
encouraged by Congress, not preempted.
For the last year, Oklahoma's 1332 Waiver Task Force has been
working to formulate a number of recommendations for modernizing
Oklahoma's health insurance market. The first waiver application
submitted on August 16, 2017, focuses on the establishment of the
Oklahoma Individual Health Insurance Market Stabilization Program,
which proposes to utilize Federal pass-through funding and State-based
assessments to create a reinsurance program for carriers operating on
the FFM. I remain unconvinced that this Program is a long-term solution
to Oklahoma's health insurance problems.
While I would advocate for greater State flexibility and a return
of authority over health insurance regulation to the States, there are
many things that Congress can do within its existing authority to help
us, including: repeal all fees and taxes that increase the price of
health insurance; repeal the individual and employer mandates and
replace them with a meaningful continuous coverage premium discount or
a surcharge and waiting period for interrupted coverage; eliminate the
use of Navigators in the distribution of health insurance; allow States
to define what qualifies as a short-term medical plan not subject to
the requirements of the ACA; and adopt a series of proposals intended
to reduce the cost of health care and give individuals more control
over their health care dollars, including expanding the use of HSA's,
addressing the cost of prescription drugs, and supporting transparency
in pricing for the delivery of medical services.
______
introduction
Chairman Alexander, Ranking Member Murray, and members of the
committee, thank you for the invitation to testify today. My name is
John Doak, and I am the elected Insurance Commissioner for the State of
Oklahoma. On behalf of my State, I appreciate the opportunity to
provide you with information regarding Oklahoma's experience with the
Affordable Care Act (ACA) as well as my recommendations for the future
of individual insurance markets.
Insurance commissioners across the country have been dealing with
the consequences of the ACA on State markets since its inception:
rising rates, narrowing networks, rising deductibles, fewer consumer
choices, and market instability. Since my election in 2010, I have
opposed the type of top-down Federal intrusion into our health
insurance markets we have experienced with the ACA because this system
removes the traditional understanding of health insurance as a transfer
of risk. What we have now in our individual market is the consequence
of encumbering a functional market with the burdens of becoming a
Federal tax distribution system.
oklahoma's experience
The consequences of the ACA on Oklahoma's individual market have
been severe. During the first 4 years of federally facilitated
marketplace (FFM) activity, Oklahomans have seen a drastic decrease in
competition, leaving them fewer choices each year. In 2014, Oklahoma
consumers seeking coverage on the FFM could choose plans from five
carriers. This number dropped to four in 2015, two in 2016, including a
new entrant to the market, then finally to one in 2017. While the one
carrier remaining has indicated its continued commitment to the market
in 2018, the lack of competition limits plan options for consumers.
Oklahoma's FFM enrollees have also faced numerous significant rate
increases for their dwindling plan options. The last carrier left
standing endured over $300 million in losses for its first 3 years of
FFM business leading to a 76 percent average rate increase for 2017
qualified health plan (QHP) enrollees. Over the past 4 years, rates
have increased for Oklahomans on the FFM by 130 percent and
approximately 30,000 Oklahomans exited the non-group market because of
unaffordability. These increases are especially harmful for individuals
with QHPs who make too much money to qualify for Advanced Premium Tax
Credits (APTCs) or Cost Sharing Reductions (CSRs), or who purchase an
individual policy off the FFM. These people-- often small business
owners or self-employed individuals--are bearing the brunt of these
increases.
These rising premiums impact consumer decisions about other policy
provisions, like deductibles. As premiums have risen, enrollees have
been pushed to accept higher deductible levels in order to offset the
cost of coverage. These higher deductibles have frustrated the
intention of health insurance for many customers who cannot afford to
pay the out-of-pocket costs for their health care.
Further, as carriers have suffered losses on FFM business they have
responded by narrowing their provider networks, which can result in a
disruption in the primary care relationship for many consumers. In some
instances, all of the specialists involved in a procedure may not be in
the same network, resulting in surprise bills for the consumer. This
uncertainty only adds to the affordability and accessibility problem
the consumer already faces.
The question is frequently asked whether Congress should expressly
fund cost sharing reduction (CSR) payments to insurers. It should be
noted that the instability in Oklahoma's market, the spike in premiums,
the rise in deductible levels, and the constriction of networks have
all occurred while CSR payments were being made to insurers. While the
nonpayment of CSRs would exacerbate Oklahoma's numerous individual
market problems, CSRs are not the source of those problems. Oklahoma's
market instability is the result of the ACA's foundational flaw: it is
a top-down Federal Government intervention into health insurance
regulation that distorts natural, cost-controlling market forces and
stifles innovation in a sector in need of new ideas.
oklahoma's response
The construction of the ACA intentionally left States like mine
with limited ability to affect any real and lasting changes to these
Federal programs. However, I am encouraged by the new outlook and shift
in priorities from a new Presidential administration. It is clear that
President Trump and Health and Human Services Secretary Price want to
provide each State more flexibility and autonomy to develop solutions
to fit its particular needs. In Oklahoma, we are continuing to look for
solutions while we await more comprehensive change at the Federal
level.
In the last few years I have worked on several State initiatives in
an effort to improve our health insurance markets. In 2012, the
Oklahoma Legislature passed Senate Bill 1621, which allows small
employers to purchase group insurance through an employer association.
The bill requires associations to meet the requirements of a ``bona
fide'' association. In 2017, the Oklahoma Legislature passed Senate
Bill 478, which creates a framework in which insurers licensed in other
States, such as those sharing geographic borders and communities with
Oklahoma, can sell health insurance policies across State lines.
Allowing for increased State control over the benefits required in
health insurance plans through broader legislative changes could lead
to greater competition and stability in the individual marketplace.
These types of State innovations should be encouraged by Congress, not
preempted.
This April, I held a Healthcare Innovation Summit during which
presenters at the cutting edge of their fields discussed price
transparency and medical care value, innovative insurance product
design, health insurance underwriting, Project ECHO, digital delivery
models, and government participation in the health insurance and health
care markets, along with other current issues. These discussions are
available online to watch any time and I encourage the committee to
review these discussions as a part of your study on these issues.\1\
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\1\ A video recording of the Healthcare Innovation Summit is
available online at https://www.youtube.com/user/okinsurance411.
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Other agencies and groups in Oklahoma are looking for solutions as
well. For the last year, Oklahoma's 1332 Waiver Task Force has been
working to formulate a number of recommendations for modernizing
Oklahoma's health insurance market.\2\ The first waiver application
submitted on August 16, 2017, focuses on the establishment of the
Oklahoma Individual Health Insurance Market Stabilization Program
(``the Program'').\3\ The Program proposes to utilize Federal pass-
through funding and State-based assessments to create a reinsurance
program for carriers operating on the FFM. The impact of the Program is
unclear at this point, and several groups have expressed their interest
in submitting legal challenges to stop its implementation. I remain
unconvinced that this Program is a long-term solution to Oklahoma's
health insurance problems.
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\2\ A copy of the Task Force's concept paper can be found at
https://www.ok.gov/health/documents/
1332%20Waiver%20Concept%20Paper.pdf.
\3\ The 1332 waiver application can be found at https://www.ok.gov/
health2/documents/1332%20State%20Innovation%20Waiver%20Final.pdf.
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If the initial 1332 waiver is approved, the Task Force's focus will
shift to developing the next 1332 waiver to pursue its additional
recommendations. While well-intentioned, the Task Force's proposals
will always remain constrained by the overarching regulatory scheme
constructed by the ACA. States would only be able to exercise the
authority they once held through a system controlled by the Federal
Government. As I have stated repeatedly in my time as Insurance
Commissioner, this is authority that should have been left to the
States all along. What we really need is an innovative, long-term
solution that returns power back to the States to implement ideas
tailored to fit each State's specific needs. I have been greatly
encouraged by the recent proposals I have seen from Senators Graham and
Cassidy, which would allocate block grant funding to States to be used
as each State sees fit.
recommendations for congress
While I would advocate for greater State flexibility and a return
of authority over health insurance regulation to the States, there are
many things that Congress can do within its existing authority to help
us. On January 18, 2017, I sent a letter to House Majority Leader Kevin
McCarthy outlining my recommendations for reforming this sector.\4\ An
identical letter was sent to Chairman Alexander's office and shared
with every Representative and Senator from Oklahoma. I won't reiterate
every recommendation I made in the letter, but I would like to
emphasize a few key points.
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\4\ A copy of this letter can be found at https://www.ok.gov/oid/
documents/McCarthy percent20Letter%20Draft%20Final%20clean.pdf.
---------------------------------------------------------------------------
First, Congress should repeal all fees and taxes that increase the
price of health insurance, including the Patient-Centered Outcomes
Research Institute (PCORI) fees, the Health Insurance Tax (HIT), and
FFM user fees. Second, Congress should repeal the individual and
employer mandates and replace them with a meaningful continuous
coverage premium discount or a surcharge and waiting period for
interrupted coverage. Third, Congress should eliminate the use of
Navigators in the distribution of health insurance because the program
has disrupted the longstanding vital role of agents and brokers in the
marketing and sale of health insurance. Fourth, Congress should allow
States to define what qualifies as a short term medical plan not
subject to the requirements of the ACA.
Finally, Congress should look beyond health insurance and adopt a
series of proposals that would help reduce the cost of health care and
give individuals more control over their health care dollars. We should
expand the use of health savings accounts to allow people to choose
more affordable high-deductible health plans, work to address the
skyrocketing cost of prescription drugs in America, and support
transparency in pricing for the delivery of medical services like the
model instituted by the Surgery Center of Oklahoma so that market
forces can work as intended.
conclusion
Oklahoma is facing the collapse of our individual health insurance
market. We are down to only one carrier on our FFM and we have seen a
rise in premiums of 130 percent over the last 4 years. While many in my
State are taking steps within the existing regulatory framework to
hopefully stop some of the damage the ACA has caused, we still need
help in the form of regulatory rollback and clarity to establish a more
solid long-term footing. In addition, Congress should take steps to
encourage price transparency in the delivery of medical services and to
reign in the high cost of prescription drugs. It is time for serious
leaders to make serious decisions to help out the people of every State
as we move into 2018. I appreciate the committee's focus on this
important issue and I thank you for the opportunity to present this
testimony.
The Chairman. Thank you, Mr. Doak. And thanks to each of
you.
We will now begin a round of 5 minute questions. We will
begin with Senator Enzi.
Senator Enzi. Thank you, Mr. Chairman.
Statement of Senator Enzi
I want to thank the panel for, not only what you have said,
but what is in your testimony. It will be helpful to us in a
number of solutions.
I will begin with Ms. Wing-Heier. I know that Alaska has
been faced with some dramatic premium increases in the country
and potential loss of carriers on the exchange. You set up that
Reinsurance Program to address premiums and working through
that Section 1332 Waiver now that also includes several market
reforms.
Can you talk about what you are seeing from the Waiver, and
what you might look for, and what some of the impediments might
have been to getting the Waiver?
Ms. Wing-Heier. The Waiver process is somewhat onerous in
the fact that there is not a defined application to submit.
So the States that are applying are hoping that they are
providing the data requested by CMS including the actuarial
analysis, the economic impact, and proving that they are
staying within the guardrails to be given the Waiver.
After that is done, the part that is stifling States right
now is the 6-month waiting period before they receive final
approval.
The first part of the Waiver, as far as the application,
the actuarial analysis, and such can be done in a period of a
couple of months. But then you wait--after CMS has given the
first approval--for up to 6 months to know if you will receive
final approval, your funding, or the ability to go forward with
any State innovation that you may find would benefit the
citizens in your State.
I will tell you that CMS was very helpful to us, but it
still was a rather lengthy process.
Senator Enzi. So you can probably provide us with some
suggestions as you just did for simplifying that process.
Ms. Wing-Heier. We submitted and worked with CMS on some
reforms that we thought would help. I do not believe they have
been adopted. I am quite sure they have not been adopted. But
we did submit some comments to CMS on things that could improve
the Waiver process.
Senator Enzi. Thank you.
Mr. Doak, Oklahoma faces some similar challenges to
Wyoming. We are practically neighbors. We have only one insurer
offering individual coverage on the exchange.
Can you talk about the challenge that it creates with one
carrier holding all the risk? I know that Wyoming's Blue Cross
sustained some real losses last year--and I might talk about
those later--in their first year as the only carrier offering
coverage.
What changes would you suggest that could encourage more
competition in the individual market for States like Oklahoma
and Wyoming? I know you had some of that in your testimony, if
you could share that with us.
Mr. Doak. Yes, sir, Senator. Thank you very much for that
question. We do share some of the similarities with your State.
Our Blue Cross had a huge amount of losses, much like yours.
One of the things I think that we can do is as long as we
are under the current framework that we are operating under,
under Obamacare, the 1332 Waiver--and funding the CSRs--is the
right way, the path to go ahead unless we make other, dramatic
changes in the future. In my letter as you have stated, I see
many options for Oklahomans in the future to be able to----
Small businesses in Oklahoma are really bearing the brunt
of many of these unintended consequences. I think the
associational health plan bills, other types of vehicles that
can be used.
I, for one, believe that buying across State lines is a
possibility. But again, also offering maybe more catastrophic
type plans, as we talked about earlier this morning, for
Oklahomans to be able to have choices for what types of
carriers, and services, and deductibles they have.
The more choices we can give consumers, in my opinion, is
the right thing to do for my State and others.
Senator Enzi. Thank you.
I noticed that Ms. McPeak mentioned a stop loss of a
specific amount. Mr. Kreidler mentioned a Federal stop loss.
And unusual market changes were mentioned by virtually all of
you.
I know in Wyoming, we had a carrier that found out that two
boys each had a $30,000 prescription each year, but that was
bought out by the primary company. The generic went away and it
went to $1.3 million each. They had a $2.6 million hit from
just one family.
I appreciate your comments on that and my time is about to
expire here. I will be asking in writing for some suggestions
from you on ways to do that stop loss, a specified amount, and
how the Federal Government ought to have a role in it, and what
the States' role should be.
Senator Enzi. Thank you.
The Chairman. Thank you, Senator Enzi, and thank you for
staying within 5 minutes and setting a good example. We have
lots of senators here today.
Senator Casey.
Senator Casey. Mr. Chairman, thank you. I want to thank the
chairman and Ranking Member Murray for making this hearing
possible and the subsequent hearings, as well as the
roundtables.
When I was going across Pennsylvania in August, I was in 32
of our 67 counties, and when I could announce that we were
having bipartisan healthcare hearings, there was an audible
sigh of relief. So we are grateful for the opportunity.
Secretary Miller, I wanted to ask you in particular that we
have, I think, a broad consensus emerging, at least, about the
importance of the Cost Sharing Reduction payments, the so-
called CSRs. I think more discussion now, as well, about 1332,
the Waiver.
You said in your testimony that you felt that the 1332
Waiver process could be streamlined to minimize administrative
burden--I am paraphrasing here--while also protecting the
guardrails of the Waiver program.
Can you walk through that? In particular, the concerns you
have about maintaining those so-called guardrails. Explain
that.
Ms. Miller. Thank you, Senator Casey.
I think from Pennsylvania's perspective, as we think about
potentially looking at a 1332 Waiver, the current process is
very cumbersome. We would have to pass legislation. We would
have to go through public hearings and then go through the
process that, I think, Alaska is familiar with in terms of
working with CMS. So it is a long process to get there.
I think the more we could streamline that process, the
better off it would be. I think if States have the opportunity
to submit a letter from their Governor--as opposed to having to
pass legislation to move forward on a 1332 Waiver--that would
be very helpful in allowing us to respond to market changes and
trying to make sure our markets are stable going forward.
I do not mean to sound greedy, but if we could have some
planning funding available to help us really think through how
this would work, I think, that would also be very helpful.
Also, having flexibility around the 1332 Waivers and 1115
Waivers, the Medicaid waivers, to think about those in
conjunction with the terms of the budget neutrality
requirements, as opposed to looking at them individually for
those requirements. But I think as we move forward trying to
make----
The Chairman. Could you explain what you mean by that,
please?
Ms. Miller. Sure. The 1332 Waivers and the 1115 Waivers,
each have requirements for budget neutrality. I think for
States, if we want to be even more innovative, being able to
think about those Waivers together instead of having to think
about them separately, and having the overall budget neutrality
requirement looked at as a pool. From just a strict, ``Is this
budget neutral together?'' would be very helpful and would
allow States to be more innovative in thinking about that.
To your point, Senator Casey, I do think that the baseline
coverage requirements are really important in ensuring that
whatever we do does not result in fewer people covered or does
not erode the coverage.
I think a lot of us up here hear from consumers on a
regular basis about high deductibles and concerns about other
out of pocket costs that maybe they do not expect when they go
to use their care.
I think we want to keep those baseline coverage
requirements intact as much as possible, but the more we can
streamline that process, make it easier for States to respond
to market dynamics, that would be helpful.
Senator Casey. The other thing I wanted to ask you about is
what happens to folks in the age category of 50 to 64?
We know, for example, that the rate of uninsured adults
ages 50 to 64 dropped by some 47 percent from 11.6 to 6.1
percent between December 2013 and March 2015. Obviously, good
news there of a huge drop by almost 50 percent.
In the context of your experience in Pennsylvania, how has
Pennsylvania stabilized its marketplace while also protecting
older Pennsylvanians who are not yet eligible for Medicare,
meaning that 50 to 64 age category?
How have we done in terms of accessing more affordable
care?
Ms. Miller. I think the current system protects older
Americans and older Pennsylvanians. I think the 3-to-1 age band
that we currently have in the ACA helps makes sure that older
Pennsylvanians can afford that coverage.
I think a lot of us, as we think about stabilizing these
markets, are really focused on getting more young and healthy
people into the risk pool. And I think if we can find ways to
do that that are not on the backs of older Americans, that is
the way to do it.
I think a lot of us have talked about expanding enrollment,
funding, advertising, and funding Navigators so that we have
assistance getting people enrolled. All of those are ways that
we can boost enrollment without doing it on the backs of older
people.
Senator Casey. Great. Thank you, Mr. Chairman.
The Chairman. You have some time, if you have another
question here?
Senator Casey. I am good.
The Chairman. Thank you.
Senator Paul.
Statement of Senator Paul
Senator Paul. I think the Chairman has done a good job at
focusing on the problem and so has the panel. We have problems
in the individual market and it is 6 percent of the
marketplace.
I think, though, that we have ignored where they are and
what is working in the insurance market. If there are parts of
the insurance market that are working, maybe we should look at
those and try to figure out how we get more people into the
parts of the marketplace that are working and how we get them
out of the marketplace that is not working.
Six percent of the people are in the individual
marketplace, 36 percent of the people are in the large group
self-insured marketplace. This is the ERISA marketplace and I
think you can make the argument that it works better than
anything else.
It probably has the lowest increase in rates over time.
People are protected. They have large groups. They can have
leverage to get cheaper prices. They have a pool of people that
they are a group of, where they are protected against one
person getting sick.
I would argue that the worst place, an impossible place in
the whole world to be is in the individual market. You should
not want to be there.
My question is a more fundamental question: can you fix it?
And is it morally or ethically right to take money from the
taxpayer and give it to insurance companies to subsidize people
in the individual market?
Maybe we ought to give people an exit. Let us let people
get out of the individual market.
Mr. Doak has talked a little bit about this with the health
associations in his State. I would go a step further.
There are 2 million fast food restaurants in our country.
About 15 million people work in the fast food industry. These
are our lower wage, working class citizens. These are the
people who are struggling. These are the people who are still
not even insured under Obamacare. These are the people we
should want to help.
Let us let them become part of the ERISA plans. Let us have
nationwide health associations.
What if one person was negotiating for 15 million people,
fast food restaurant workers? You are bound to get a better
price. It is the phenomenon of Wal-Mart. Wal-Mart gets a better
price because they are a bigger purchaser of things.
Let us legalize that. It would cost the taxpayer nothing.
Let us just say, ``People can associate with other people and
buy insurance.'' Get the heck out of the individual market.
I would prefer there be no individual market. I think it is
an artificial construction of attaching insurance to your
taxes. When we did that, we created the individual market and
then we have Big Insurance come to Washington with their hands
out.
They made $6 billion a year in profit before Obamacare.
They now make $15 billion a year. CSRs are money you are giving
to the insurance companies. All this money is being given to
Big Insurance. Do not give it to them.
Let the individuals get into the group marketplace and
guess who pays for that? It comes out of the $15 billion in
profit they make in the group market.
What a scam. They come here and they make billions of
dollars in the group market, but then they whine that they
cannot make it in the individual market. They cherry pick. They
love the group market, and they stay in it, and they say, ``We
are not going to sell in the individual market.''
Let us equalize the individual and give them the power to
negotiate with the insurance company. It does not cost
anything. All we are doing is legalizing collective bargaining
for consumers. We should like it on this side of the aisle.
While Senator Sanders and I do not often agree on things,
if there are a few people left that are uninsurable or have a
preexisting condition, I would rather buy them healthcare than
give money to the insurance companies.
It makes no sense to try to buy insurance for people who
cost $1 million a year who we already know what is wrong with
them. Put $1 million in for somebody and buy them healthcare.
Do not buy them insurance.
You can do all these fancy reinsurance things and all these
backstops. They do not work. We are subsidizing an individual
market that does not work. It just is nonfunctional. You can
never get there.
People say it is too expensive. New cars are too expensive.
Why do we not subsidize it? You can have a stabilization fund
for new cars, for iPads, for iPhones, college education;
anything that costs too much. We can just put a bunch of
taxpayer money in and say we are going to make it lower by
giving money to the people who provide these things; people who
make the iPhones, people who supply college.
I think we ought to look at it a different way. Let us do
not try to fix the individual market. Let us try to give people
an exit ramp to get out of the individual market completely.
For those who cannot or who do not that we have to provide
healthcare for, why do we not look at actually buying
healthcare for them rather than buying insurance for them?
Mr. Doak, if you want to respond. If you have any numbers
on what your health associations have done and whether or not
it has put a little bit of a dent in helping people from the
individual market get into the group market, I would appreciate
it. Thank you.
Mr. Doak. Yes, sir. Thank you.
At this current time, the Oklahoma health, we have the
legislation in place at the State level, but there are some
frameworks around the bona fide, the actual definition of an
association which, I think, needs a closer scrutiny to be to
open up.
I do agree with you that associational healthcare plan
bills, while I may differ from my colleagues respectfully, but
I do think that there is, that could be a very viable market
for folks to band together. Whether they are, as you mentioned,
folks in the restaurant business, or whether they are from the
flower industry, wherever that might be to band together to
purchase coverage. We know that there are folks that can
facilitate that in the marketplace.
I do agree with you on that, Senator.
Senator Paul. Thank you.
The Chairman. Thank you, Senator Paul.
Senator Franken.
Statement of Senator Franken
Senator Franken. Before I begin, I want to thank you,
Chairman Alexander, and I want to thank the Ranking Member,
Senator Murray, for holding this series of hearings on the
individual insurance market reforms.
Healthcare is such an important personal issue that affects
millions of Americans. That is why I am heartened that we are
having these bipartisan hearings to discuss common sense
reforms that will stabilize markets and lower healthcare costs
for consumers.
I just wanted to spend a moment on the correct
pronunciation of insurance, which is insurance not in-surance.
[Laughter.]
Thank you.
Whether the commissioners here today pronounced it
correctly, I think you all agree that we should have
reinsurance or rein-surance. I believe that all but Mr. Doak
who, by the way, mispronounced it, spoke explicitly on the
importance of continuing the cost sharing and all of those who
talked about cost sharing for multiple years.
Mr. Doak, are you for continuing the cost sharing?
Mr. Doak. Is that Franken or Frank-en?
[Laughter.]
Senator Franken. I cannot mispronounce Doak.
Mr. Doak. That is good. That is good, sir.
My position is that under the current Obamacare network, we
must continue under the current framework we are working under
unless it is changed. We do need to continue the cost sharing
agreements.
Senator Franken. Right.
Mr. Doak. So I think we have consensus.
Senator Franken. Good. We all have consensus on this panel
of actual people--who are the heads of insurance in their
States--that we should continue cost sharing and that we should
do reinsurance.
Commissioner McPeak, it is nice to see you again. As you
know, Minnesota has applied for a 1332 Waiver to set up a
Federal-State reinsurance program to help reduce health
insurance premiums. My hope is that the Administration will
approve this Waiver quickly.
As documented in a ``New York Times'' article that ran this
past weekend, my State insurance program has bipartisan support
and passed in the State legislature, bipartisan support. If
approved, it would reduce health insurance premiums by about 20
percent.
As the article notes, this reduction would help all
Minnesotans buying health insurance on the exchange, not just
those with the most costly healthcare needs. Other States like
Mr. Doak's Oklahoma are considering similar proposals.
Senator Alexander, I would like to ask unanimous consent
that this article from ``The New York Times'' be submitted for
the record.
[The New York Times article referenced above may be found
at https://www.nytimes/2017/09/02/us/politics/minnesota-health-
care-reinsurance.html.]
The Chairman. It will be.
Senator Franken. Commissioner McPeak, in your testimony you
talked about the importance of a Federal reinsurance program.
What advantages does a Federal reinsurance program offer
compared to a State-based approach?
Ms. McPeak. Thank you for the question and I will try to
pronounce insurance correctly, but I am from the south, so I do
not have any guarantees there.
[Laughter.]
I will say the Federal reinsurance program has a benefit
for States like mine. It may not have the ability to upfront
the seed money to get our own program started, even in a 1332
Waiver process.
Then, to use the Waiver process to create our own State
fund would require the legislative approval that can sometimes
be very difficult to obtain, even when your legislature in the
State is in session, which ours is not again until the first of
the year 2018.
I see the additional benefit of the reinsurance program,
not only to reduce premiums for consumers, but I think that it
would add market competition. It would entice insurers back
into the market because it would provide the economic certainty
about a stop loss attachment point for a reinsurance program,
so insurers could better estimate the risk of entering the
market.
Senator Franken. Would anyone else care to--Ms. Wing-Heier,
I know that Alaska has a reinsurance program. You have had the
1332 Waiver.
Would anyone care to talk to the wisdom of a permanent
Federal reinsurance program like the one that was established
under Medicare Part D?
Mr. Kreidler, I see you nodding. I like people nodding when
I say something.
Mr. Kreidler. Certainty is one of the things that we are
really looking for, for 1332. Tell us if our application is
going to be accepted. Do tell us whether it meets the criteria.
Speed is what we are really interested in.
In answering it, we are exploring it right now as one of
our options in the State of Washington. We are also looking at
a public option particularly in counties where there are not
any other insurers that we could make available, either through
our public employees, or expansion of the Medicaid program, or
we have a high risk pool; some other way of being able to
guarantee it.
But when it comes to the 1332, because of the 6-month
waiting period that we have right now in filing the
application, because we have to go back to the legislature, it
really compresses.
We are trying to make a difference and see if we can make a
change for 2019. We will not be able to do it for 2018, but we
are pretty confident in our State that things are going to be
stable for 2018. We are really worried about what is going to
happen in 2019.
Getting the CSRs funded will help in 2018 because it starts
to restore their confidence. But give us some certainty on the
1332 Waivers.
We do not want to see our backs turned to the issues of the
Essential Health Benefits or the protections on out of pocket
expenses.
Senator Franken. The guardrails that----
Mr. Kreidler. The guardrails.
Senator Franken [continuing]. Ms. Wing-Heier talked about
this morning.
Mr. Kreidler. Exactly. And you have heard that from other
commissioners too. We are concerned about the guardrails, that
they are not eroded away. Thank you.
Senator Franken. I am out of time.
I just want to say one thing, which is all of these
things--cost sharing, reinsurance--have virtual cycle that
bring down the costs of premiums and ultimately bring healthier
people in. So does enforcing the mandates. So does more
advertising and more people to help you navigate.
That is what I am for.
The Chairman. Thank you, Senator Franken.
Senator Collins.
Statement of Senator Collins
Senator Collins. Thank you, Mr. Chairman.
Commissioner McPeak, it is good to see you back again. I
want to followup on the reinsurance issue as well.
Since the soaring costs of premiums in the individual
market is a major concern of mine, and I would say of all of
us, we heard today of the success of the reinsurance pool that
Alaska has set up.
Similarly Maine, between 2012 and 2013, had a reinsurance
pool that was successful in lowering rates in the individual
market by 20 percent, on average. I think if you look at the
experience of those two States alone, it shows the benefit of
reinsurance pools.
As a practical matter, however, many States are simply not
in a position to immediately stand up a reinsurance or a high
risk pool. Therefore, I have two questions for you.
One, do you see a role for the Federal Government in the
short term in either establishing a high risk pool or assisting
States in doing so?
Second, the analysis that I have seen by Milliman has
suggested that the cost to replicate the kind of reinsurance
pool that Maine had would be about $15 billion annually.
Does the NAIC agree with that and could you comment on both
of those issues?
Ms. McPeak. Certainly. Thank you for the question.
I do believe that the reinsurance mechanism, or a high risk
pool, either one, has the effect of removing from the risk pool
the highest cost claims, which provides certainty to the
insurers. It helps them actually price products for those other
individuals in the risk pool. It should bring premiums down
remarkably.
Plus, as I said, I think it would also entice insurers to
write in areas where you have very limited options because you
have an idea of what your ultimate risk might be for writing in
that area.
As for the Milliman report, I do not know that we have
provided any analysis on that figure. Fifteen billion dollars
does seem like that would be a good place to start to set up a
Federal mechanism until States could get on their feet to have
their own system, which might be a reinsurance program or it
could be a high risk pool, depending on the individual State
needs.
I think in Tennessee, we would be more interested in
creating a reinsurance program. But as you mentioned, we do not
have the ability to set that up immediately and certainly not
to affect the 2018 rates.
Senator Collins. Thank you.
Ms. Wing-Heier, thank you for being here and sharing your
experience. One of the keys to driving down rates in the
individual market is to broaden the market and to get as many
people as we can enrolled. Let me ask you about two ideas and
one comes from conversations that I have had with insurance
experts in the State of Maine.
Right now under the Affordable Care Act, if you are over
age 29, you cannot purchase the Copper Plan and get the
subsidies that would be available even if your income would
warrant that subsidy. And if you do not qualify for the
subsidy, you are also prohibited from buying the Copper Plan
unless you are under age 29.
Should we change that, is my first question to you?
Ms. Wing-Heier. We believe that being able to have a
catastrophic or a Copper Plan available for a younger
population is beneficial to growing the market; getting the
healthier individuals in.
We also think that it should probably be combined with a
Health Savings Account. It will be somewhat of a learning
experience for the younger population, the healthier
population, to come in, and purchase insurance that they are
not now doing mostly because of the prohibitive cost.
So we are in support of finding, if you call it the Copper
Plan or a catastrophic plan, bundled with an HSA for the
younger population.
Senator Collins. That is a great combination because then
the HSA can be used to help pay the out of pocket costs.
Ms. McPeak, I have only 8 seconds left, so you may have to
answer this for the record. But another idea, which Senator
Cassidy and I proposed many months ago, was auto-enrollment
instead of an individual mandate where someone could opt out.
But we know from the experience with 401(k) plans that if
people are automatically enrolled, they are likely to stay
enrolled.
Do you have any thoughts on that as a way to help broaden
the individual market?
Ms. McPeak. I will just say very briefly. I do think that
auto-enrollment could assist people in staying enrolled.
The issue is if we have more than one carrier, which I hope
that we return to that competitive environment some day, I
would like to have the ability for consumers to choose because
there are such detrimental options with provider networks and
drug formularies that I would want to have some ability to make
sure that you are enrolled in a plan that works for your
family.
Senator Collins. Thank you.
The Chairman. Thank you, Senator Collins.
Senator Bennet.
Statement of Senator Bennet
Senator Bennet. Thank you, Mr. Chairman.
I also want to thank you and Patty Murray, the ranking
member, for holding this hearing. It is long overdue that we
begin to approach this in a bipartisan way. I was so pleased to
see so many senators at the session this morning that you held.
It suggests very strong bipartisan interest in trying to figure
out how to fix this.
I also think it is important to underscore something you
said at the beginning of the hearing, Mr. Chairman, because it
is an important perspective for people to have. We are talking
about 6 percent of the folks that are insured in America. If we
can solve these issues for that 6 percent in a bipartisan way,
that would be a very important book of business for us to take
care of, but it is not the end of what needs to be done.
When I hear from people in my State whether they support
the Affordable Care Act or whether they oppose the Affordable
Care Act, they are deeply dissatisfied with the way their lives
intersect with America's healthcare system.
I think it is because they know they are being forced to
make choices that people in other industrialized countries do
not have to make about healthcare, about their business, about
the predictability of being able to go to a doctor. A lot of
that has to do with the underlying costs in our healthcare
system and a lack of transparency in our healthcare system that
we still have not found a meaningful way to address.
My hope, more than a plea, is that once we get this piece
of work done that we will continue to work in a bipartisan way
to try to deal with the root causes of what this panel is
talking about today, which is that we spend too much money on
our healthcare without getting the result that we should have
reason to expect.
The question that I would like to ask the panel is that to
me the most solid critique of the Affordable Care Act, as
opposed to our healthcare system generally, is when people say
to me, ``Michael, you are forcing me to buy something,
insurance, that costs too much because there is no competition
in my area.'' This is very often in rural parts of the State,
in mountainous parts of the State. ``The deductible is so high
that it is of no use to my family.''
I think that is a legitimate criticism of the Affordable
Care Act. I was somebody who supported the Affordable Care Act,
but I am willing to take criticism.
The question is, how do we solve that problem? How do we
introduce more competition into these rural areas than we have
to drive the price down?
Mr. Kreidler, maybe I will start with you just because you
were saying that Washington State was considering the
possibility of a public option for some of these counties. I
would be interested in other thoughts that other folks on the
panel have as well.
I understand the backdrop of reinsurance and all of that.
We probably do not need to revisit all of that. But just
specifically talk about what has happened in rural areas.
Mr. Kreidler. Thank you, Senator Bennet.
Something to remember is that rural counties were a problem
before the Affordable Care Act. They have been historically a
challenge for every State.
We have nine counties right now that have only one insurer
in them and they are all rural counties.
Mr. Bennet. We have 14 and it is the same.
Mr. Kreidler. Yes. I think what we can wind up doing is
offering some incentives for carriers to go out there, but then
there is always the potential of looking toward a public
option. That is what we are considering right now in the State
of Washington on a very broad group of insurers and providers.
Our health insurance exchange is working very closely with
us and we are doing a joint effort here as to how we can
analyze the various options. The 1332 Waiver is one of them. I
do not know if it will work for the State of Washington.
But we do have the opportunity here to take a look at a
public option that might exist for those counties so that we
are offering them something, which is, right now, not
acceptable to be in a position either with very limited
competition or no competition.
Senator Bennet. Do you need the 1332 Waiver to do the
public option or are those two separate ideas?
Mr. Kreidler. These are two separate ideas.
Senator Bennet. Thank you. I have 1 minute left if there is
anybody else who would like to answer.
Ms. Miller. I would just say there was a bipartisan group
of Governors that sent a letter to Congress last week and in
that letter, they have some recommendations around offering
choices in underserved counties.
One of the proposals, which I thought was interesting, was
allowing residents in underserved counties to have access to or
to buy into the Federal Employees Health Benefits Program.
I think ideas like that would be great places to start.
Senator Bennet. Ms. McPeak, do you have something quickly?
Ms. McPeak. Thank you.
I would just like to suggest that if we could provide some
flexibility to States to provide maybe a less robust schedule
of benefits still within the EHB categories, but providing
first dollar coverage for things like preventative care, but on
a lesser scale than what is currently in the market in the
Silver Plan.
That could really attract a lot of folks into the market
with a more affordable option because we hear the same thing
that you do is that, ``I am forced to buy something that, at
the end of the day, I really cannot use to access healthcare.''
Senator Bennet. I am out of time, but I just would respond
to that by saying also that it is really important for
Americans not to be forced to buy lousy insurance. Insurance
that no one else in the industrialized world has to settle for.
It needs to be real, but I appreciate the desire for
flexibility.
Thank you, Mr. Chairman.
The Chairman. Thanks, Senator Bennet.
Senator Murkowski.
Senator Murkowski. Thank you, Mr. Chairman.
I want to follow-up with some of the comments that Senator
Bennet has just made, also, to thank the chairman and the
ranking member for this very important beginning of a good,
constructive dialog.
Speaking to the issue of how we deal with those in our
rural areas and, of course, Alaska is always the Poster Child
when it comes to real rural.
When we are talking about our individual market, it is a
group of 18,000 people. We cannot construct a market off of
18,000 people. In Alaska, we have been looking at where could
they fit?
I was actually pleased to read the letters from the
Governors in suggesting that maybe it might be a workable idea
to have residents in underserved counties to buy into the
Federal Employees Health Benefits Program. I do not know if
that is the place.
[Applause.]
I do not know if it is the State employees program. I do
not know if it is the other programs that we have out there.
We have a big V.A. population in Alaska. We have a big
population of our Native people that are served through IHS. So
trying to construct something for 18,000 people, to me, just
does not seem like a measure that works.
Another proposal that has been out there a lot, and Mr.
Doak, you raised the opportunity for purchasing across State
lines and Ms. Wing-Heier, I would ask you to address that as a
viable alternative for us in Alaska.
As people have asked me, I have said, ``We are not
attractive to anybody. We are high cost. We are high risk. Why
does anyone want to adopt Alaska into their pool?''
But is that something that has merit, even for a State like
ours?
Ms. Wing-Heier. It could possibly have merits. There is
some concern with consumer protections in selling across State
lines, which we have discussed.
But Alaska is unique in the fact that when insurers look at
us, as we are right now, I do not know that it is going to
matter if we are joined with a Wyoming or an Idaho. I mean, we
have looked at possibly doing a co-op or an arrangement with
other western, rural States to see if we could come up with the
numbers that 18,000 here, 20,000 there, if we could develop our
own co-op, so to speak, of enrollees.
But we still have not come up with the numbers and right
now our experience has been so bad that you are exactly right
when we have talked. No one has wanted us because of our cost
of healthcare and what that translates, then, into insurance.
We would be bringing the rest of the market down and that is
not a position that we want to be in.
It is just the fact of living in Alaska. Very rural,
limited facilities in very rural areas that are hard to access.
There is no magic answer for us.
But selling across State lines is certainly something we
could explore, but right when we have talked prior to insurers
and when we have talked to other States, we have not been an
attractive risk.
Senator Murkowski. Let me ask about the issue of cost
sharing. It has been raised by everyone. I think we recognize
that uncertainty within the market is deadly. You cannot move
with accuracy.
There have been some that have suggested, I believe it was
the chairman in his remarks, said that we need to extend the
cost share subsidies through 2018. Another date that has been
out there is 2019. I think the Governors, in fact, ask for
extension at least through 2019.
If we were to do it just through 2018, does that provide
sufficient certainty, or does it need to be a longer year,
2019, or even beyond to give the certainty? Right now, we are
going month-to-month and we know that that does not work.
Can you all speak to that?
Ms. Wing-Heier. I believe it has to be at least 2 years. I
think that right now there is enough consternation in the
market that the insurers looking to remain are looking for more
than a 1-year commitment.
Senator Murkowski. I am seeing two head nods; at least
2019?
Mr. Kreidler. Senator, I would say it even needs to go
further than that because insurers right now are already
planning the 2019. So we are, so to speak, 2 years out already.
In order to give them that predictability, you have to give
them a little bit more certainty going into the future that it
is going to be there so that they do not bolt and leave the
market. That is the biggest concern that I have is that
somebody will yell, ``Fire!'' in a crowded theater and they
will all leave.
We have seen it happen in Washington State in the 1990s and
it should not be replicated for the rest of the country.
Senator Murkowski. Thank you, Mr. Chairman.
The Chairman. Thanks, Senator Murkowski.
Senator Baldwin.
Statement of Senator Baldwin
Senator Baldwin. Thank you, Mr. Chairman.
I want to underscore what many of my colleagues have
already said that I am deeply grateful for your bipartisan
leadership, both of you.
I really believe we can find common ground to stabilize the
health insurance markets, to improve coverage, and to reduce
costs for the constituents we represent.
Yet, while this committee is working together to achieve
this goal, the Administration continues to play dangerous
political games that are destabilizing the market and causing
premiums to rise.
Wisconsin insurers are requesting between 10 and 46 percent
premium increases. They are pointing to President Trump's
failure to provide certainty in the markets and the threats to
end the Cost Sharing Reduction payments as they announce these
plans.
I would also note, in addition, it has gotten a little bit
less attention, although some of you did raise it in your
testimony. The 90 percent reduction in funding for enrollment
programs that get the word out, especially to young people and
healthy people to help with the enrollment process.
The cuts to the Navigator programs that in my State have
provided such useful assistance to those enrolling; the shorter
enrollment period; all of these add up. Beyond that then the
issue of whether the individual mandate will be enforced at
all.
I want to focus a little bit more deeply on some of those
today and invite my republican and, frankly, my democratic HELP
colleagues to partner as we explore policies to enhance
enrollment, again, particularly among young and healthy people.
Mr. Kreidler, why is it critical to market stability and
affordability, particularly in this upcoming 2018 enrollment
period, to boost the coverage of younger and healthier
individuals? What do we need to do in this stabilization effort
that we are talking about on a bipartisan basis to achieve that
right now?
Mr. Kreidler. Yes, Senator. It is critically important that
you have good risk along with bad risk in the insurance pool.
If you only have bad risk, no one can afford the insurance.
You have to have good risk. Typically, the younger individual
is going to represent better risk in the overall market as
opposed to somebody who is older. One part of that is certainly
doing that kind of outreach effort.
We are a State exchange. I think I am the only one who does
have a State exchange here at the table. So I am not in the
position of really having to rely on the Federal Government.
But there are a lot of help to come because of the marketing
approaches that they have taken at the national level. We are
in the slipstream. We pick up benefits even though we have our
own State exchange.
I would certainly encourage that we continue to have a very
strong outreach that it allows us to really get the message out
to individuals. There are problems with individuals to sign up
for it if they are younger and healthier.
We need to make sure that they get health insurance. They
need to listen to mom on these issues and that, ``Health
insurance is something you should not be ignoring.'' To the
extent that that message is being delivered, it becomes much
more effective.
Senator Baldwin. That is great.
Ms. Miller and Mr. Doak, for both of you, I would like to
hear your comments on this because, as noted, Washington has a
State exchange. You are working in a different context.
Ms. Miller. Thank you.
I think from Pennsylvania's perspective, we are very
concerned about the decrease in funding for advertising for the
exchange, which we rely on, for the decrease in funding around
the Navigators, and the critical assistance they provide to get
people enrolled. All of those things, I think, we are very
concerned about the mandate and the enforcement of that
mandate. That has an impact on premiums.
Even if we get Cost Sharing Reduction payments paid into
the future, which is critical, I think there is still a lot of
concern. We hear from our insurers in Pennsylvania that because
we are not sure how effective that mandate is going to be going
forward because of all the conversations about eliminating it,
I think we are going to see that uncertainty built into our
rates going forward. So that is a major concern for us.
Senator Baldwin. Thank you.
Mr. Doak. Senator, I would just like to make a comment
regarding a couple of your earlier statements.
We are here because many things have failed. We have had
increases in Oklahoma even while we have had cost sharing in
place.
Your other comment about Navigators is I would ask for the
full senate committee to do an audit of the Navigator program
to find out are they doing the job that they are supposed to be
doing? Where are the checks and balances there for the millions
of dollars that have been spent in that area? Has it achieved
the outcomes that you thought it did? Navigators are not
incentivized regarding healthcare.
I fallback to the position of that always should have been
handled by licensed agents and brokers in the United States
and, in particular, in Oklahoma because I have been in every
county of Oklahoma, all 77 counties. There is an insurance
agent on every corner that is readily available and they are
the insurance professionals that should be helping folks.
I think that the Navigator program needs some oversight.
That is one of the things we are going to be looking at in
Oklahoma is, where those dollars were spent and were they
worthwhile?
The Chairman. Thank you, Senator Baldwin.
Senator Cassidy.
Statement of Senator Cassidy
Senator Cassidy. I had the privilege of being with you this
morning, so some of what I say will be built upon that.
I am going to set a context, and layout three questions,
and ask you all to respond very quickly and concisely to that
which you pick.
We spoke this morning, Ms. Miller, regarding the individual
mandate. Jonathan Gruber, the so-called architect of Obamacare,
has an article both in the ``New England Journal of Medicine''
and the ``NBER,'' which says that the individual mandate really
does not do anything. It is actually Governors. If a Governor
gets engaged, my gosh, things happen, but the individual
mandate? Minimal effect.
Then, as I have learned about this, Maine and Alaska have
done great things, innovative things as regards the reinsurance
program which, in turn, have lowered costs and a potential to
increase coverage.
I say that and here is the first of my three questions. In
the Cassidy-Collins plan, in the Graham-Cassidy-Heller plan, we
want to give States flexible block grants allowing States to do
what they wish to do. That is an overview, and my colleague
from Maine may say, ``Well, wait a second. There is a nuance
here,'' and she is absolutely right.
But the reality is we allow States to innovate. That is No.
1. Commissioner, you had said earlier, that you want to make
sure the money is there. As much as possible, we know the money
for Obamacare is there, but maybe not because I can tell you it
is already a little bit threatened.
Let us just assume the money is going to be there. Would
you prefer a flexible block grant? Could you do more with it?
You have to spend it on healthcare.
Second, I am concerned about Oklahoma. My State,
Louisiana's ability to afford a 10 percent match on the
Medicaid expansion, that 10 percent match on the Medicaid
expansion is going to be huge in my State, $310 million. We are
an oil State. Revenue is down. We are sucking wind right now.
Can we afford that?
Third, even aside from expansion versus non-expansion,
there are some States that have dramatically increased costs of
care relative to others. Washington State has done such a good
job in controlling costs; others not so good. How do we
compensate for that?
Should we attempt to equalize the payment that goes to
States or should we prejudice toward high cost States, frankly,
as opposed to those which manage costs well?
Take your pick. You have 2 minutes 45 seconds. Try and be
concise.
Ms. McPeak. I will begin. I will say that your comments on
the individual mandate really reflect the experience in
Tennessee. I do not know that it has driven a lot of our
consumer behavior.
We see a lot of our individuals being willing to risk the
penalty for not having ACA-compliant coverage, actually
accessing other products available in the market, both non-ACA
compliant plans or other cost sharing mechanisms which would
still require a penalty to be paid if the mandate were
enforced.
I also ask our insurers to break out a provision on 2018
rate increase requests attributable to non-enforcement of
mandate and it was negligible. It was about 5 percent increase
where the CSR uncertainty was about 14 percent.
Senator Cassidy. So really, it is the State getting
engaged.
To my other points, what do you all think about it?
Mr. Doak. Senator, I might just respond to your comment
about the cost of the expansion is that there is, and I was
trying to find some notes, and we will get it sent to you.
Former Oklahoma Governor Frank Keating wrote a really good
article on the ultimate cost to the State of Oklahoma, which is
something that needs to be taken into account.
On your other point, I am 100 percent in favor of all the
funds coming to the State of Oklahoma, giving the State of
Oklahoma, our legislature, our Governor, and the people of
Oklahoma the ability to put together the best plan.
If California wants to come up with universal healthcare,
let California do that. If Washington, my friend from
Washington, if they want a different type of policy.
I think the laboratory of democracy and the success we
could all learn from each other, but get those moneys back to
the State where we can take care of Oklahomans.
Senator Cassidy. Amen, brother. Anyone else?
Mr. Kreidler. Senator, I would certainly hope that the
block grants would not vary from one State to another just
because----
Senator Cassidy. On a per beneficiary basis; you would have
to do it per enrollee. Correct?
Mr. Kreidler. We do a good job in the State of Washington
holding down spending on healthcare better than most States. It
is really not appropriate that we should wind up being
essentially punished for doing a good job.
Senator Cassidy. Equity across States, you think would be
important?
Mr. Kreidler. Equity and make sure that it is guaranteed
going forward so that we do not wind up seeing a diminishment
as opposed to an entitlement program, as we have to today.
Senator Cassidy. Ladies, I have 20 seconds left. Any
comments?
Ms. Wing-Heier. I would add that in the block grants, we
would ask that you take into consideration the cost of
healthcare and the rural-ness of Alaska because of our cost of
healthcare and the diminished facilities that we have just due
to what Alaska is.
Senator Cassidy. Simple answer: we do.
I yield back. Thank you.
The Chairman. Thank you, Senator Cassidy.
Senator Murphy, good entrance.
Statement of Senator Murphy
Senator Murphy. My timing is never going to get better than
that.
The Chairman. That is right.
Senator Murphy. Thank you very much, Mr. Chairman.
Ms. McPeak, I wanted to ask you to expand a little bit on
your opening comments, in which you talked about predicting
last year that your marketplaces were on the verge of collapse,
and as you testified today, they have not collapsed during that
time.
I guess it speaks to a worry that I have about how the
rhetoric gets overheated with respect to the stability of these
exchanges and the overall stability of the Affordable Care Act.
I am so appreciative of the process that both Senator
Alexander and Senator Murray have begun. I acknowledge the fact
that we need to make some changes. Changes the democrats want
and changes the republicans want in order to provide some
certainty.
Maybe you can talk a little bit about what happened over
the last year. You said you were on the verge of collapse. You
did not collapse. What does that say about how these
marketplaces are, and have been holding together?
Just tell us a little bit about that story.
Ms. McPeak. Thank you.
Certainly, I am very grateful that the market, in fact, in
Tennessee has not collapsed. But I would still say that we are
on the verge of being in a very difficult situation and
probably still on the verge of collapse.
What we have experienced is carriers fleeing the market
year over year. We did have one of our nine rating areas that
did not have any options when Humana decided to withdraw from
the exchange earlier this year.
We did, in fact, receive coverage for that area through one
of our other carriers. But still, 78 of 95 counties having one
option on the exchange is not a place where I like to be. We
need to have a competitive environment so that our consumers
actually have choice and we can do something to address premium
rates.
When you have one insurer that is threatening to pull out
of rating areas, it is very, very difficult to really challenge
the rate increase requests that we are receiving on a lot of
different factors. The worse possible situation would be for a
carrier to flee the market and our consumers not have any
choice in the market.
We are still very much concerned about that possibility
until the QHP contracts are signed at the end of this month by
the carriers.
Senator Murphy. Thank you. Yes, I just think it is a
caution for everybody to be a little careful about how fast we
declare that the sky is falling. Here the popular phrase is
``death spiral.'' And yet, during the period of time that we
have been debating the bill, there have been less and fewer
bare counties rather than more. So I appreciate that
explanation.
Mr. Kreidler, I wanted to talk to you about the importance
of advertising and marketing. I think Senator Baldwin raised
this question. You are an interesting State because you have
pretty much every type of population that exists: rural
communities, suburban communities, communities with easy access
to information resources, places where it is a little bit hard
to get the word out.
There is a study out of Kentucky that looks at what
happened when the marketing efforts effectively stopped. You
had a democratic Governor who is doing robust marketing and
then the new republican Governor has effectively shut down
funding for ACA advertising.
What happened there was that there were 450,000 fewer page
views per week on the website for the State marketplace. There
were 20,000 fewer unique visitors per week to the website. And
guess what? ACA enrollment fell by 100,000 people to 94,000
people in 2016 to now 81,000 people.
So there seems to be a pretty direct correlation between
telling people that these options exist and people actually
going and taking a look at the information that would lead them
to get coverage. That speaks to what is happening right now
with a 90 percent reduction in Federal funding.
I just would love to hear you talk about how you
communicate effectively and how instrumental those
communications are in making effective marketplaces that
insurers want to be a part of.
Mr. Kreidler. Senator, actually we saw an increase in the
number of people who were signing up through our health
insurance exchange even while the Federal exchanges were
showing a slight decrease, we were actually showing an
increase.
I think part of that is we do have a very active website
through our health insurance exchange. It makes it very
convenient and easy for people to go there and shop. It was not
as robust an increase as we had anticipated.
That really is because of the effect that you have when
they are doing it on a national basis, the kind of sharing of
information and strategies going forward. That really assists
us a great deal and helps to address the issues around
language, which are a particular issue for many of us.
I think that is where we can really make a difference from
the standpoint of getting people to sign up for health
insurance if you have that kind of outreach out there. It helps
to offset the enforcement of the individual mandate, though I
would argue quite strongly that you need an individual mandate
that is effective. If it is not the one we have now, then you
have to come up with something that is comparable.
Senator Murphy. I support the Chairman's goal of getting a
narrow package that can pass quickly.
But I hope that we do include in our discussion this
dramatic reduction in advertising and marketing funding which,
I think, does have a fairly, just positive effect on the health
of these exchanges.
Thank you, Mr. Chairman.
The Chairman. Thank you, Senator Murphy.
Senator Burr.
Statement of Senator Burr
Senator Burr. I have listened intently to this discussion
and I am reminded, as we talk about how to bring healthcare
costs down, that each State is unique, but healthcare cost
reduction is a function of a change in outcomes. Change
outcomes, you change the cost of healthcare. So let us not lose
focus on what the most important thing is.
Ms. Miller, I have to admit that I was moved by a statement
you made that everybody should be able to buy into FEHBP that
cannot fit in a box. I came from the private sector, and my
experience in Government is my healthcare went up and my
benefit went down.
Then the ACA came and I am now a participant in the DC
exchange. My premium costs went up, my deductible went up, and
my benefits went down. I would love to buy into FEHBP as a
Member of Congress again, wholeheartedly.
I am not sure that is the answer, though, for a population
that is scattered, most of it rural, most of it without the
delivery system that is needed to change the health outcome.
This is not just about coverage. This is about placing them
in some type of delivery system. I am going to start at this
end and I am going to go up to Mr. Doak.
All I want to know, yes or no, are you supportive of your
State having control over how your healthcare plan looks in
your State? In other words, you have a 1332 Waiver, or a 1215
Waiver, you can decide exactly how it is going to look. We will
figure out the financing.
Yes or no, Ms. McPeak?
Ms. McPeak. Absolutely. I think Tennessee can better mange
our health outcomes for our consumers.
Senator Burr. Mr. Kreidler.
Mr. Kreidler. I would very much like to see, the answer
would be yes, but let us make sure we protect consumers and not
take away their protections.
Senator Burr. You would have full control over that, so you
would be the one to be held responsible.
Ms. Wing-Heier.
Ms. Wing-Heier. One State size does not fit all and Alaska
needs to be in control of its health insurance program for its
residents.
Senator Burr. Ms. Miller.
Ms. Miller. As long as we are not talking about reduced
Federal funding and requiring States to come up with that
funding, which Pennsylvania could not do, then yes. I think we
are in a great position to regulate our markets.
Senator Burr. All right. So we have agreement that one of
the things we should look at is to empower States to design
their healthcare, to structure their healthcare system to meet
the unique delivery system capabilities within their States.
I think we have made tremendous progress.
The Chairman. What about Mr. Doak?
Senator Burr. He already answered that they were supportive
of it. That is what I played off of.
Ms. McPeak, in order to solve the healthcare crisis facing
our country today, we need to think of ways to leverage all of
the new tools provided through innovation in healthcare.
The insurers have access to tremendous amounts of data on
the individuals enrolled in their plans in a way that was not
imaginable just a decade ago. With this new information,
healthcare insurers have the opportunity to design plans that
incentivize the best possible health outcomes for their
customers.
As an insurance commissioner, have you had an opportunity
to review plan designs for your State?
Ms. McPeak. No. Unfortunately in the individual market, the
carriers are limited by the ACA to the plan design and
underwriting factors in the law.
Senator Burr. Do you believe that should be also a function
of the commissioner in the State?
Ms. McPeak. Absolutely, I do.
Senator Burr. Is that, in your estimation, a way to
leverage healthcare data to offer more health insurance?
Ms. McPeak. I do and actual benefits that are accessible
and usable by our consumers.
Senator Burr. Do you believe you have the tools you need to
review innovative plan designs working to keep pace with the
new capabilities of healthcare data?
Ms. McPeak. I believe we do because we review those plans
and rates for the employer markets and small group market
already today.
Senator Burr. I am reminded that we are headed for a decade
of disruption, where technology is going to impact every sector
of our economy; probably healthcare as big, if not bigger, than
anywhere else.
Some of the challenges we are trying to build into our
construction of policy today will be trumped--for the lack of a
better word--by our capabilities of connecting an individual in
a rural or non-covered area where there is not a hospital, not
a doctor.
But because every American has this device that there is
going to be software that enables them to send their own vitals
that are needed to a lab that will give them a reading without
a hospital, without a doctor, without a nurse.
How do we take advantage of this incredible innovation if,
in fact, we have constructed in concrete what insurers can and
cannot do?
Mr. Doak.
Mr. Doak. Yes, sir. Great question and you are absolutely
right with the mobile phone devices the innovation is
definitely taking on.
One of the things, we just held an Innovation Summit in
Tulsa in partnership with Oklahoma State University and the
University of New Mexico. They presented on a Project ECHO
which actually has dramatically helped and assisted rural
outcomes across the country.
I think when you take a look at this program, it is in my
report, and see what they are doing and the partnerships that
they are doing. They are able to drive great healthcare sent
through programs to rural America. The innovation is happening
at such a quick level that you are absolutely right.
I think that is why the NAIC, and the leadership under
President Ted Nickel from Wisconsin, formed the Innovation
Committee that we really have to stay ahead of the curve. So
you are on the right track, sir.
Senator Burr. Mr. Chairman, could I ask all of the
witnesses to provide, in writing for the committee, thoughts
that they might have on offering multiyear access to plans?
In other words, for individuals in the individual market,
not signing up for 1 year, but signing up for 5 years or
longer. So that we can truly see the benefits of the investment
by the insurer to get people healthy, to keep them healthy, and
to eliminate the risk that drives up these premiums so
drastically.
Senator Burr. Thank you, Mr. Chairman.
The Chairman. Thank you, Senator Burr. That would be very
helpful if you could do that.
Senator Hassan.
Statement of Senator Hassan
Senator Hassan. Thank you, Mr. Chairman and Ranking Member
Murray for holding this hearing and the hearings we are going
to have.
I know I share with what Senator Casey said. People around
New Hampshire, when I said we were going to have bipartisan
hearings and listen to experts who actually deal with the
nitty-gritty of how health insurance and healthcare works,
there was a real sigh of relief. So I am very grateful for the
hearings.
I am very grateful for a panel that pronounces insurance in
all different ways because I am the daughter of a southerner
and a New Englander. You sound like my family to me.
[Laughter.]
I also think it is really important that you are all here
because it is essential that we really drilldown to how things
actually work as opposed to just talking about big concepts.
One of the concerns I have from when we talk about letting
people buy into ERISA or employer sponsored plans is, that
sounds great, but most people have their employer subsidize the
plans. Remember when we enacted COBRA, so people who terminated
their employment could still buy their plan, a lot of people
could not afford it once the employer subsidy went away.
It is really important as we have these discussions that we
hear from all of you about how things work.
To that point, Secretary Miller, I would like to just start
with you. Right now, about 5 percent of people who buy health
insurance coverage in the individual market represent almost 60
percent of healthcare claims' costs.
We have talked about reinsurance. We have talked about the
importance of what a Federal reinsurance plan could have as
kind of the biggest bang for the buck idea.
I wanted to ask you a little bit about how the temporary
reinsurance program that the ACA had at the beginning of the
program, how did it successfully moderate premiums in your
State?
Ms. Miller. Senator, in Pennsylvania in the last year of
the program, we saw between a 4 and 7 percent increase because
of the end of the program. In other words, it moderated
premiums by 4 to 7 percent and that is when we saw an increase
happen between 2016 and 2017 was when that program went away.
Senator Hassan. Thank you.
That brings me to another question which is for
Commissioner Wing-Heier. When you talked about using the 1332
Waiver to establish Alaska's reinsurance program, as I
understand it, the 1332 Waiver program initially was not really
to help States establish reinsurance. It was to help them
innovate within the insurance market in their State in ways
that could really help move us forward, and gain efficiencies,
and really tailor the insurance programs to the State.
The question I have is if we had a Federal reinsurance
program, could the States then turn to 1332 Waivers to do some
of the other work that we all need to do and that States need
to do to tailor their insurance to their State?
Ms. Wing-Heier. You most certainly could. The flexibility
should be great within the Waivers. It should be only limited
by the innovation that the State can come up with.
At the time, Alaska was down to one insurer, as we still
are.
Senator Hassan. Yes.
Ms. Wing-Heier. And we felt that we were in enough of a
crisis mode that we took the appropriate action at the
appropriate time.
Our legislature agreed to fund for 2 years the reinsurance
program, which led us to then apply for the Section 1332
Waiver, which will allow us for a 5-year funding mechanism for
this.
We will certainly be looking at other waivers in the future
to benefit our citizens and to make sure that our program is
uniquely designed for Alaskans and our conditions.
Senator Hassan. And I applaud you all for doing what you
did. I just think if we had the Federal reinsurance program,
like the first one we had as a part of the ACA for the first 2
years, then you all could be doing that second stage of work
that you are approaching now.
Secretary Miller, I want to come back to another issue. I
know that your State is grappling with the opioid addiction
crisis as so many of our States are, and as you may know, New
Hampshire has been particularly heavy hit by it. I know that
you have been both an insurance commissioner and now, as I
understand it, you are Acting Secretary of Health and Human
Services.
So if the Administration decided to cutoff the Cost Sharing
Reduction payments, how would that affect access to coverage
for people who are suffering from opioid addiction?
Ms. Miller. Senator, I think Pennsylvania, as all States
right now, we are grappling with this issue and it is having
such a huge impact on our communities.
We need to stabilize this market so consumers have options
in terms of quality coverage. The Essential Health Benefits and
that requirement ensures that people have access to that
coverage if they have ACA-compliant coverage.
So we need to stabilize this market, keep insurers in it,
and by doing that, we will have more competition.
The problem right now is that it is not a very attractive
market to be in because of all the uncertainty and that is
hurting the competition.
That is why this conversation we are having today is so
important because if we can stabilize this market, we can
increase the competition, make sure consumers have options that
include that quality coverage that has that treatment available
for people who are struggling with addiction.
Senator Hassan. Thank you very much.
And thank you, Mr. Chair.
The Chairman. Thank you, Senator Hassan.
I am going to go ahead and ask my 5 minutes of questions
now because I want to ask the whole panel about reinsurance, as
all of you have mentioned it.
I have two questions. I will ask them and then let you just
answer them.
One is, how can we make it easier for you to use the 1332
Waiver to set up a State reinsurance program as Alaska and
Minnesota have done?
As I understand it, Ms. Wing-Heier, you are not getting any
more Federal money than you did before. You are just using it
better because you are able to use some of the Federal money to
pay for 85 percent of the reinsurance program. The State pays
for 15 percent and you lower premiums 20 percent with basically
the same amount of Federal dollars.
Is that basically right?
Ms. Wing-Heier. That is correct. Our innovation waiver was
based on the fact that the reinsurance program reduced the
liability of the Federal Government to pay the advanced premium
tax credits----
The Chairman. Right.
Ms. Wing-Heier [continuing]. That would have been paid.
The Chairman. Then here are my two questions.
If we need reinsurance, why can States not do it? They are
the same taxpayers. Let us take Maine, for example. Not a rich
State.
Maine set up a reinsurance program, $4 per month applied to
all policies and insurance plans, plus insurance seeded 90
percent of the premiums of the risk given to the pool, and paid
the first $7,500 in claims.
The Federal Government has a $20 trillion debt. The Federal
Government is paying an average, according to the Congressional
Budget Office, of $4,200 for each individual in the individual
market who qualifies for a subsidy.
If a reinsurance program is such a good idea--and Alaska
was able to set one up using some State funds and Minnesota was
using some State funds--why do States not do it? All it takes
is money. State budgets are balanced. The Federal Government is
$20 trillion in debt, already contributing a lot.
All of you could put a $4 tax on every policy, create
enough money to take the sickest people out of your individual
market and lower premiums for everybody else.
So my questions are: why do you not do it? No. 1.
What can we do to make it easier for you to use Section
1332 to pay for it? And if the answer is, ``Well, our
legislature will not approve any more money,'' that is not a
very good answer to those of us in this legislature who have a
$20 trillion debt.
Who wants to answer that?
Ms. Wing-Heier. The States that I have talked to like the
concept of the reinsurance waiver and the application. But the
requirement for Alaska was that we seeded the program for the
first year.
We do hear from States that they cannot get the funds from
their legislature for that first year to show that there is an
impact to the rates that would bring down the rates so that
there is the money in the premium tax credits.
It is a chicken and an egg. That they want to see the
results of the premiums coming down so there is that savings in
the premium tax credits to then put the pass through funding
back to the State.
The Chairman. But there is nothing to keep you from raising
taxes or putting a charge on every policy in Alaska to help pay
for your insurance fund. Right?
Ms. Wing-Heier. That is true, but I would tell you that in
the State of Alaska, we would have a hard time putting that tax
through strictly because we are such a small market.
The Chairman. Yes.
Ms. Wing-Heier. We would be taxing the market we are trying
to help.
The Chairman. Yes.
Ms. Wing-Heier. The 18,000 that we are trying to help.
The Chairman. Who else has an answer?
Why cannot States do it and what can we do to help you use
1332 to set up your own reinsurance fund, at least initially?
Mr. Kreidler. Senator, what you can do is certainly make it
an easier process than we have right now so that when you file
for a waiver that you have a quicker turnaround time; that you
get definitive answers on much shorter notice.
We also heard the description here of saving us from having
to wait until our legislature is in session before we have to
return to them. The States like Washington and Oklahoma where
we are elected as Insurance Commissioners turn it over to the
insurance commissioners to make that decision and the other
States can leave it to the Governors to make the call.
We are not asking to increase the national debt at the
Federal level when it comes to 1332. What we are asking for is
to make it more predictable as to whether it is going to work
or not.
In the end, even though you might wind up having some
impact on the Federal budget, it is one that is going to have
to meet the budget neutrality standard and I am in favor of
that. I think that is not unreasonable to have that standard
apply when it comes to these 1332's.
We are not asking for more money. Just make the process
work a little bit smoother than what we have right now. It is
with some certainty.
The Chairman. Thank you.
Mr. Doak. Senator Alexander.
The Chairman. Yes, and then we will stop there.
Mr. Doak. I agree with my other elected colleague from
Washington is that let the States make more of their decision.
In Oklahoma, it is going to be a $2.15 charge for folks in
the self-insured market to come up with approximately $325
million, which is going to have the reinsurance program pick up
everything from 15 to 400,000. It is a fee. It is a tax
disguised as a fee, basically, on Oklahomans.
It is up to Oklahomans to decide how they should put this
together and how we should actually come up with that money
with a State that is having a very challenging time as you are
probably going to hear from some of the other Governors'
tomorrow. That is kind of where we are in Oklahoma.
The Chairman. Thank you, Mr. Doak. My time is up.
Senator Kaine.
Statement of Senator Kaine
Senator Kaine. Thank you, Mr. Chair.
Again, to the chair and ranking member, I am so happy we
are here in this set of hearings hearing from the people who
are affected about what is good, what is bad, and what needs to
be fixed about our healthcare system.
I would like to make sure everybody knows what you do. You
are expert witnesses. You are in the box and you are giving us
some recommendations, and there is some significant consistency
between you, whether you work for democratic or republican
administrations.
I am correct that each of you, Ms. Miller until your recent
promotion, each of you are the chief insurance regulator of
your State.
Is that correct?
[All nod affirmatively.]
Senator Kaine. Are all of you active in the National
Association of Insurance Commissioners?
[All nod affirmatively.]
Senator Kaine. And you are the incoming president of that.
Is that not right?
Ms. McPeak. That is correct.
Senator Kaine. The NAIC has a mission statement. Each of
you, I know, have different State laws, so there is some
peculiarities about your States.
But the NAIC says,
``The mission of the NAIC is to assist State
insurance regulators, individually and collectively, in
serving the public interest and achieving the following
fundamental insurance regulatory goals in a responsive,
efficient, and cost-effective manner consistent with
the wishes of its members.''
``The five goals of the NAIC: protect the public
interest, promote competitive markets, facilitate the
fair and equitable treatment of insurance consumers,
promote the reliability, solvency, and financial
solidity of insurance institutions,'' and five,
``Support and improve State regulation of insurance.''
Recognizing that each of your States have your own legal
peculiarities, is that a mission that you generally accept in
the work that you do as the chief insurance regulator in your
own States?
[All nod affirmatively.]
Senator Kaine. Let me then ask this, and Ms. McPeak, you
presaged this a little bit in your testimony.
All of you support--Mr. Doak with a qualification--all of
you support the CSR payments continuing. You said if we choose
not to alter the current structure that would be necessary.
All of you support, to some degree or another, State or
Federal reinsurance. There are other areas of commonality.
None of what you are proposing to us today, though, is
because you are trying to bailout insurance companies. Correct?
Ms. McPeak. That is correct.
Senator Kaine. Because I have heard colleagues in this
body, the other body, and outsiders say things like, ``CSR
payments that is bailing out insurance companies.'' Or
reinsurance, ``That is bailing out insurance companies.''
But as the chief insurance regulator in your State, who has
pledged to basically follow these goals, you are not here to
bailout insurance companies. Correct?
Ms. McPeak. That is correct.
Senator Kaine. Let me talk about one of these, reinsurance,
because both the CSR and reinsurance things have been talked
about as if they are insurance company bailouts. I am going to
use my PowerPoint to see if I understand what reinsurance does.
In a health market or any market, because we use
reinsurance at the Federal level for crop insurance, flood
insurance, Medicare Part D. We used it for the Affordable Care
Act.
But healthcare, families have different costs. Some have
low medical claims, some have medium medical claims, some have
really high medical claims.
If an insurance company has to write a premium to cover all
that, they are going write a premium up here. If you can
provide a backstop on the high cost claims, they do not have to
write the premium here; they can write the premium down here.
Generally, reinsurance is a tool that you are all familiar
with that, for the low- or moderate-costs, or the normal
claimant, can have a significant effect in reducing premiums.
Is that not correct?
[All nod affirmatively.]
Senator Kaine. Then when you get to the high claim side, by
providing reinsurance, what you are doing is you are providing
a backstop, Senator Enzi called it a stop loss, a backstop and
that has the effect of providing people protection. But it
also, by providing a backstop, keeps insurers in the market
that might otherwise vacate the market.
Is not one of the reasons that many insurers are vacating
the individual market is because they are worried about these
high cost claims? Is that not one of the main reasons they are
vacating the market?
Ms. McPeak. Yes, Senator, if I could respond.
You are exactly correct. And in addition to that, when you
have very limited carriers in a market like the majority of my
State, if you are the one carrier writing in that market and
you know that you have guaranteed issue, guaranteed
renewability, and no ability to capitate risk because of no
lifetime maximums, you have to rate everyone high because you
are taking all comers and it is guaranteed renewability.
If you are able to say this is the backstop and this is the
ultimate level of risk that you would have for writing in this
market, it does entice additional insurers to write in that
market because they can better estimate the risk.
Senator Kaine. And so the backstop ends up having a double
benefit. It encourages insurers to stay in the market, but it
also allows them to do a premium that does not have to take
into account all of the super high cost claims. But that
premium, then, is more favorable to the average person.
By reducing premiums on most, because so many folks get the
advanced premium tax credits, the subsidies, when you bring the
premiums down on most, you also reduce the Federal premium
payment, which has a countervailing effect.
Reinsurance costs something, but it also brings down the
Federal Government's obligation by reducing the advanced
premium tax credit.
Is that not correct?
[All nod affirmatively.]
Senator Kaine. That is what you are using in your State to
try to use that reduced Federal obligation down the road as one
mechanism for paying for what Alaska is doing with its State
reinsurance program.
Correct?
Ms. Wing-Heier. Yes, sir.
Senator Kaine. Senator Carper and I have a reinsurance bill
in that would basically go with what we did with the first 3
years of the Affordable Care Act and put a reinsurance
provision back in. That we think would accomplish all of those
goals.
It would reduce premiums for the overwhelming majority of
individuals in the individual market. It would provide a
backstop that would keep insurers in. And by reducing premiums,
it would also reduce the Federal obligation to pay the advanced
premium tax credit, which would have a countervailing effect in
reducing the cost of a reinsurance program.
I know that may not be the immediate issue on the table, I
understand. But I am happy to hear that, to some degree, this
is a concept that these witnesses support.
Thank you, Mr. Chair.
The Chairman. Thank you, Senator Kaine.
Next we have Senator Young, then Senator Murray, then
Senator Roberts, then Senator Warren.
Statement of Senator Young
Senator Young. I want to thank our panelists for being here
today.
I think each of you recognize that if we do not control the
cost of healthcare delivery in this country, we are going to
continue to see an increase in the cost of health insurance,
whether that is at the consumer level, or among taxpayers, or
some combination thereof. A number of you spoke to that in your
testimony, and I thank you for bringing that important topic
up.
I would like to focus a couple of questions on that area
for each of you.
What do you think the primary drivers of healthcare cost
increases are based on your professional experience? And, what
are your ideas for actually bending the cost curve down as we
head into the future?
I will start with Ms. McPeak because I know in your
testimony, you spoke to the importance of incentivizing
preventative care. Perhaps you could fill in some details on
that.
Ms. McPeak. Thank you, Senator.
Our experience is that our claims costs in Tennessee are
extremely high. Those are real dollars going out for real
healthcare services that are being provided.
The majority of those seem to be going to prescription
drugs and also to co-morbidities, real claims and issues that
need to be addressed for our population. Bending the curve down
is certainly something that can be affected through
preventative care and wellness initiatives.
Certainly, an examination of the reimbursement costs to see
is there a discrepancy that is reasonable from area to area in
my State and then also from Tennessee to surrounding States.
Senator Young. What is the best way, to your mind, to
incentivize preventative care?
Preventative care can be quite broad. Right? From a gym
membership, to seeing your primary care physicians, what have
you. It is a better wellness program for your life.
Ms. McPeak. We would certainly appreciate the ability to
manage those outcomes for Tennesseans.
We have used some of those programs on our TennCare side
that have been pretty effective for disease management, for
health coaching, smoking cessation, and then certainly the
physical movement and wellness attributable to the fitness
activities.
Senator Young. Thank you.
I am going to go down to Mr. Doak because in your
testimony, you spoke to the importance of price transparency,
empowering the consumer based on the information of services
provided and the perceived value of those services.
Is a lack of transparency to your mind a primary driver of
healthcare costs and thus health insurance premiums? And if so,
how do we improve the functioning of the market so that there
is a more transparent market?
Mr. Doak. Great question. Thank you, Senator.
One of the answers is--as I mentioned in my earlier
discussion that was very near and dear to former Oklahoma
Senator Coburn--talking about price transparency. We have seen
that.
I would ask the committee as we said earlier this morning
to possibly invite the CEO of the Oklahoma Surgical Center here
to testify on behalf of what he has been able to do with
transparency in Oklahoma City and where some of those things
are going.
The more transparent we can be with our costs all through
healthcare is that you are going to provide and empower
consumers to be able to see the outcomes that Senator Burr was
talking about relative to the cost expenditures. There are
various places around the State of Oklahoma that are doing that
very well.
That is a true opportunity.
Senator Young. But you do not have particular
recommendations here at the Federal level regarding obstacles
we could remove or regulations we could put in place so that it
would facilitate more transparency?
Mr. Doak. I think that is something worthwhile to consider.
I am a bit hesitant to have anything further done here in
Washington. I would rather see it done at the local and State
level, quite frankly.
Senator Young. Oftentimes a health instinct from my
perspective.
I am going to give others an opportunity to speak to this
issue.
Mr. Kreidler. Senator, I would certainly put a high
emphasis on pharmaceutical drugs.
That is the one area where--if you remove the shackles that
are on the States right now as to what they wind up doing and
contracting, either through their Medicaid program or other
programs that they have at the State level--we can have a very
strong impact, particularly if we joined together with
likeminded States to take on that same approach toward
bargaining when it comes to these drugs.
That is the No. 1 driver in the individual market and we
see it with our filings. It is on the cost of pharmaceuticals.
Senator Young. I am pretty much out of time here. So I will
give others an opportunity to respond to that question in
writing.
I would just say in pharmaceutical costs, we want to make
sure that we do not absorb an opportunity cost to future
research and development, lives saved, and approved into the
future by adopting some of the suggestions you have put
forward.
Thank you.
The Chairman. Thank you, Senator Young.
Senator Murray.
Senator Murray. Thank you very much.
This has been really great. A lot of senators are
participating and I think they all really appreciate all of
your testimony. Thank you for being here.
Commissioner Kreidler, I wanted to ask you. In your
testimony, you talked about the Cost Sharing Reductions are the
difference between whether a 40 year old in Tacoma earning
$23,000 per year has a $2,000 deductible or a $7,000
deductible.
Consumers have really come, I think, to rely on these
measures to lower their own healthcare costs. The same way that
employer contributions help keep costs down for people who get
insurance through their jobs.
Something changed this year. President Trump has made
patients, and families, and insurance companies, and State
regulators play this guessing game about whether or not those
payments are actually going to be made.
We know that failing to make those payments is going to
spike premiums for the most popular plans in the marketplace by
20 percent, leading an increase to the Federal deficit of $200
billion. So this is really an important issue.
I wanted to ask you, what did you have to change about the
way you review and approve insurance premiums this year because
of that guessing game?
Mr. Kreidler. Senator, it is one where we have to sit down
with the health insurers and really press them on it.
But the point has been made that if you get down to just
one carrier in a particular county, you do not have a lot of
bargaining flexibility. They are in the position of saying,
``Well, if you do not give me the rate increases I want, then
we are looking toward the highway,'' and then you do not have
an insurer there. We are under a lot of pressure.
Stabilizing the market is No. 1. You have to stabilize that
market. The CSRs are No. 1 from the standpoint of what you can
do immediately. It can have a direct impact and get away from
this idea of funding on a month-by-month or even a year-to-year
basis.
It really has to be multiyear with some real predictability
in the market.
Senator Murray. So my additional question to you is we have
heard 1 year, 2 years. Tell me what the difference between, if
we just did a 1-year, what a difference that would make rather
than a 2-year?
Mr. Kreidler. Clearly, 1 year is a whole lot better than
month to month. But even 2 years is very tough because of the
range of which the insurers are planning right now as to what
the rate increases are.
Any degree of increase in predictability that goes beyond
this situation we have right now of being so tentative right
now with just month to month is going to help. The longer we
can give it, the better it will be to help stabilize.
Senator Murray. The more certainty, the lower the costs of
the care?
Mr. Kreidler. Absolutely, absolutely.
Senator Murray. All right.
I wanted to ask you, Commissioner Wing-Heier, because I
noticed when Senator Baldwin asked about the Navigators and the
money there that I think you testified that it is really needed
in many remote parts of Alaska, and used across the country in
really important ways.
The budget for Navigators has been cut by 40 percent. Tell
me what impact that is going to have on you in Alaska.
Ms. Wing-Heier. We are very concerned it will have a major
impact in our enrollment.
I know that Commissioner Doak testified that he does have
insurance brokers and consultants throughout much of his State.
We do not.
In most of Alaska, outside of Fairbanks, Anchorage, Juneau,
and other cities, there is not an insurance broker or
consultant to be found. We rely on the clinics and the
Navigator programs to explain benefits and enrollment to the
people living in rural Alaska.
This will be devastating to our population to know what
their options are, to understand basic things from the dates of
enrollment.
There is also a part that is very cultural in Alaska in the
fact that we have a variety of languages. And the Navigators
cross that bridge in being able to speak the Inupiaq language
or the Native languages of Alaska and other languages. They
provide that service.
We do not have that very readily in the insurance
community, unfortunately.
Senator Murray. Right.
Commissioner Kreidler, quickly, our State is looking at a
1332 Waiver.
When applying for that kind of waiver, States have to show
that they are going to cover the same number of people, the
same types of services, and the same amount of out of pocket
costs for consumers. Those are the guardrails in the Waiver.
Can you talk really quickly about how important those
guardrails are as you look at the Waiver?
Mr. Kreidler. Senator, we have changed the environment that
we have right now with healthcare delivery through insurance
because of the ACA. We are now competing on quality and service
because we have the standardize benefits, the Essential Health
Benefits; limitations on out of pocket expenses. It has changed
the dynamic of the game tremendously.
If we want to go forward and have the insurers in there, we
have to participate. It is absolutely critical that we wind up
making sure that those guardrails are not eroded away. But to
focus on what can really make a difference.
For one, stabilize and then second, be in a position to
allow the insurance companies to innovate without being
punished with the reinsurance program to back them up.
Senator Murray. OK.
Mr. Chairman, I do want to submit four letters for the
record. They are actually signed by hundreds of leading
patients' disease, physician, provider insurance, and business
organizations. They are requesting multiple years of certainty
for out of pocket reductions, and Federal investment in risk
mitigation programs like reinsurance we have heard so much
about, and preserving the protections for preexisting
conditions including the Essential Health Benefits.
I would like to put them in the record for today.
The Chairman. Thank you. They will be.
[The information referred to can be found in additional
material.]
Thank you, Senator Murray.
Senator Roberts.
Statement of Senator Roberts
Senator Roberts. Yes, thank you, Mr. Chairman.
Thank you to all the witnesses for taking time, your very
valuable time out of your schedule to come and visit with us.
As rates are filled and not filled by some plans, obviously
exiting the marketplace like we have seen in Kansas City, an
action that serves absolutely nobody. So thank you for holding
this hearing.
I think it is important we focus on permanent or longer
term reforms so we can help slow the growth of premiums and
maintain or increase insurance options for consumers, as
opposed to simply patching or providing an influx of cash to
these markets which has been touched on by the witnesses.
I know many are focused on the uncertainty surrounding the
Cost Sharing Reduction subsidies, but I think it is important
to note that, at least in Kansas, we have had insurers leaving
the exchange market before this Administration, or the court
ruling on this matter, and with the CSRs in place. Premiums
still doubled in Kansas since Obamacare has been in place. And
I think that is only one piece to the puzzle with regards to
ASR's.
Tighter age rating bands can be an answer. I know that is
controversial. The health insurance or HIT tax, that is just a
tax that is passed onto the consumer or the patient. Other
mandates that you have talked about all add to the premium
increases.
We had 60,000 families paying $13 million in penalties in
2014. $6 billion, I think, was the figure with regards to the
Nation as a whole.
So as premiums continue to increase, we had something in
the recent reform proposals that did not pass, obviously,
considered by the House and Senate. They took two different
approaches to encourage, not mandate, folks to maintain
continuous coverage.
From your position as insurance commissioners, which do you
see as more effective, as well as which would be easier to
operationalize a penalty on premiums for lack of continuous
coverage, or a waiting period for enrollees upon returning to
enroll in coverage, or anything else you might suggest?
We will start with Ms. McPeak.
Ms. McPeak. Thank you.
I have a preference for the waiting period over the premium
penalty for not maintaining continuous coverage because there
is an administrative issue for our insurers that have been
participating in the exchange market with individuals coming in
and out of coverage, and really trying to catch up with premium
payments through grace periods.
From my perspective, a waiting period would be more
effective to incentivize consumers to maintain continuous
coverage.
Senator Roberts. Appreciate it.
Sir.
Mr. Kreidler. Thank you, Senator.
I think one of the things that has really been challenging
for the States is not all States have truly embraced the
Affordable Care Act.
The expansion of the Medicaid program had a very profound,
positive impact; the creation of our own exchange, so we were
more in control of our own destiny. Establishing network
adequacy standards that reflected our values in the State of
Washington is something that we did.
Most States did not take those actions and as a
consequence, they have seen more in the way of rate increases.
Our rate increases have not gone up until this last year.
We were under 10 percent per year, and now we have seen a
marked increase.
Stabilizing the market is going to be the thing that is
really going to make a difference from our standpoint.
Senator Roberts. Right. I appreciate that.
Next, please.
Ms. Wing-Heier. It is a tough call because you hate to see
anyone be without insurance, but we have the special enrollment
periods for a reason. And that, in itself, brings you into your
waiting period because you cannot, in all circumstances, just
go and enroll if you missed open enrollment. There are very few
criteria that allow you to enroll if you miss open enrollment.
Alaska would probably be looking more at the penalty.
Senator Roberts. Yes, ma'am.
Ms. Miller. I think we all want to do everything we can to
make sure our risk pools are as robust as possible. I have not
seen an alternative to the individual mandate that would be as
good an option to make sure that we have the young and healthy.
I am not saying that the mandate has been perfect by any
stretch, but I have not seen an alternative that would do as
well as that in terms of keeping the young and healthy in.
Senator Roberts. Oklahoma.
Mr. Doak. I am not in favor of a mandate, you might be
surprised, but I think that there are other ways to reach plan
design, to reach this group that does not have insurance. Avail
themselves of more creative plan design relative to
catastrophic plans for the young, invincible, to move them into
possibly using Health Savings Accounts, as Director Wing-Heier
mentioned. But I think there are ways.
I am not sold on this marketing campaign that a few of the
senators talked about either. Insurance companies have been
marketing at every football game we watch. Possibly if they
incentivized agents and brokers to sell this type of product,
they might have a better result than use Navigators.
Senator Roberts. Is that football game when Oklahoma comes
to Kansas State?
Mr. Doak. Yes, sir.
Senator Roberts. I appreciate that.
I have a real quick question and I am out of time. I
apologize for this.
How would increasing the age rating curve to 5-to-1 or
maybe 4-to-1 as opposed to 3-to-1, that would be an
intermediate change, if you so choose with regards to the
individual or trying to get more younger people into the plan.
Are you for it, against, against it, what? Yes or no. We
can start with Oklahoma and rundown real quick.
The Chairman. We are out of time, so if you could be quick
about it and then submit it.
Senator Roberts. They could submit it for the record, Mr.
Chairman. I appreciate that. Thank you.
The Chairman. You can make a short answer. That is OK.
Mr. Doak. What was the question, sir?
Senator Roberts. The question is on the rating band, the
exchange market does not have enough of the young.
Mr. Doak. Yes, I would be in favor of changes.
Ms. Miller. I would have some concerns about increasing the
rating band.
Ms. Wing-Heier. We have concerns with increasing the rating
band strictly because our rates for the older population, the
three, are so high right now. We would price them out of ever
being able to afford it.
Senator Roberts. We say ``more mature'' in the senate. But
go ahead.
[Laughter.]
Mr. Kreidler. Washington likes 3-to-1. We have in statute
3.75-to-1 currently before the ACA. So we were not far off of
3-to-1 to even begin with.
Ms. McPeak. I would be in favor of expansion to 5-to-1 to
bring the younger, healthier into the risk pool with more
affordable premiums.
Senator Robert. Thank you.
The Chairman. Thank you, Senator Roberts.
Senator Warren.
Statement of Senator Warren
Senator Warren. Thank you, Mr. Chairman.
And thank you, Mr. Chairman, for holding this hearing.
Thank you, ranking member. I think it is important that we are
having a bipartisan conversation about how to improve
healthcare instead of destroy healthcare in America.
At the same time that we are having this conversation,
President Trump is actively working to sabotage our healthcare
system. He is using a lot of different tactics, but two of them
include reducing Federal help to keep out of pocket costs low,
and cutting 90 percent of the advertising efforts so that
people know about affordable health insurance.
We have talked some about this, so let me just see if I can
do this first part quickly. I just want to ask about the first
one, withholding the Federal dollars that keep costs lower.
Commissioner McPeak, are American families better off or
worse off if the President refuses to make cost reduction
payments?
Ms. McPeak. If those payments are not funded, the American
consumer is worse off, certainly. Not only the individuals that
are eligible for those reduced co-payments and deductible
amounts, but the individuals that would have to pay the
increased premium dollars from the carriers associated with
that lack of funding.
Senator Warren. OK.
Commissioner Kreidler, if the Government cuts advertising,
fewer people will sign up for health insurance. But how does
that affect the costs for the people who do sign up for health
insurance?
Mr. Kreidler. You want to encourage the people that are
probably the least likely to sign up, to enroll because they
are more likely to be healthier individuals that are now
protected. They do not become the free riders in our system
that relies on uncompensated care to care of them. It adds cost
to the system.
The more accountable you make healthcare, the better it is
for all of us.
Senator Warren. Very strong points on both of these.
The President has been perfectly clear about what he is
doing, sabotaging healthcare and driving up costs for families.
It is petty and it is going to hurt millions of people. If he
will not stop on his own, then Congress should stop him.
But for me, that is just the beginning of what we need to
do to really improve health insurance in this country.
Secretary Miller, did the ACA put in place any sort of
restrictions on how high an insurance company can raise its
premiums in a given year?
Ms. Miller. Senator, I think aside from the fact that in
many States, we approved those rates.
Senator Warren. I am going to ask you about the States. I
am asking about the ACA.
Ms. Miller. There are no restrictions in the ACA.
Senator Warren. That is right. The ACA makes no
restrictions at all. Right? But some States impose tough rules
to protect consumers and they insist that the insurance
companies have their rates approved by the insurance
commissioner before those rates can go into effect.
Let me ask, Secretary Miller, in the past years before all
the chaos that has come to the markets lately, did you let
insurers in Pennsylvania charge whatever they wanted for their
plans?
Ms. Miller. I did not, Senator.
Senator Warren. You did not?
Commissioner Kreidler, I understand that in Washington
State, like Pennsylvania, insurance companies have to get
permission ahead of time.
Do insurers always come up with reasonable premiums the
first time around?
Mr. Kreidler. No, they do not.
Senator Warren. Someone laughed out loud during that. Go
ahead.
Mr. Kreidler. We have applied a very vigorous review; in
fact, we are among those States that are the most vigorous. In
fact, we are recognized by the Federal Government as being a
State that can do that hard review. I think several of us are
in that position.
Senator Warren. Hard review and I think you have some data
on how much you pushed down one of the most recent premium
requests.
Mr. Kreidler. We do and I cannot remember exactly which one
that was.
Senator Warren. Maybe a 30 percent drop in average rates.
Mr. Kreidler. It was something like that, yes.
Senator Warren. All right. Good, good.
I should say it the other way. Yes, a 30 percent drop in
average rates.
The reason I raise this is because letting insurance
companies charge whatever they want opens up price gouging.
Rate review programs among the various States have saved
consumers about $1.5 billion in premium costs in just 2015
alone, in a single year. Unfortunately, not every State is
stepping up on this and the difference is huge.
From 2010 to 2013, just that short time period, premium
increases in States with the weakest review programs were 10
percent higher than in States with the strongest review
programs. That is a lot of money that a lot of families paid
out. For me, it just shows the kind of work that we need to do.
Right now, Medicare restricts premium increases for most
beneficiaries, but the ACA does not. Medicare has high
standards for the Medicare Advantage plans, while the ACA in
many cases has lower standards. Medicare and Medicaid plans
cover everybody who qualifies. ACA plans can pick and choose
who they get in the game with.
Let us be blunt. We can either make these markets work
better for consumers or we can let insurance companies hold
people hostage in order to maximize their own profits.
In my view, if we were really serious about trying to make
these markets work, we need to talk about the kind of rules
that make them work best for consumers.
Thank you, Mr. Chairman.
[Applause.]
The Chairman. Thank you, Senator Warren.
Senator Whitehouse.
Statement of Senator Whitehouse
Senator Whitehouse. Thank you, Chairman.
Let me first, as a former Insurance Commissioner in my
State, welcome our distinguished panel.
Again, thank the chairman and the ranking member for
trusting this committee to do a fair and thoughtful bipartisan
process. We did it in education with great success to a
unanimous, significant bill out of this committee, and I am
confident that we can do something very worthwhile here.
I want to open by pointing out that our health insurance
commissioner in Rhode Island has written that,
``The ACA has worked in Rhode Island and we have a
remarkable story to tell.'' I am quoting a letter from
this January.
``Rhode Island has enjoyed market stability, and has
avoided dramatic increases in premiums seen in other
States. Over the last 3 years premium increases in the
individual and small group markets have been relatively
modest. For plan year 2017, average premium changes in
the individual market will range from a 5.9 percent
decrease to a 5.9 percent increase based on issuer. In
the small group market, average premium changes in 2017
will range from a decrease of 3.1 percent to an
increase of 3.6 percent based on issuer.''
To my colleagues, please follow the Hippocratic Oath and do
no harm to those of us who have States where this is all
working very well.
The last point I will make before I go to questions is that
I hope that the bipartisan process that we are embarked on
here, with respect to shoring up the markets, can continue and
be extended into other areas. Patient safety and medical errors
remains a huge issue with tens of thousands of American
casualties every year.
There is nothing republican or democrat about ending
hospital-acquired infections. The wild variations in care and
outcomes are issues that we can address. It ought to be
bipartisan to find the best States and the best practices, and
encourage those.
There is nothing republican or democrat about high
administrative overhead and continuing feuding between insurers
and providers over payment.
The care that patients want at the end of life ought to be
something we can make sure that they actually get. There ought
to be no partisan difference about honoring a patient's and a
family's wishes as they near the end of life.
Finally, payment reform so that doctors are compensated for
keeping people healthy rather than starved on that front and
compensated only when they do late stage procedures once
somebody's health is already compromised; another great area
for bipartisan action.
I hope that we will continue on those fronts.
My questions are primarily going to be to Director Wing-
Heier. I appreciate you coming all the way from Alaska. That is
pretty impressive. I want to ask you about the 1332 Waiver
process through which you created your reinsurance program.
You created it, not based on hitting a financial number, a
dollar number in claims and then having the reinsurance kick
in. You created it based on the diagnosis, based on conditions.
Correct?
Ms. Wing-Heier. Yes, sir. We did.
Senator Whitehouse. Why did you make that choice and how
did you choose the conditions?
Ms. Wing-Heier. We did what we call a ``data call'' and had
all the insurers that were in the market the first 2 years
submit their claims.
We submitted those, that data to an independent actuary,
who then we had segregate the claims from the highest to the
lowest based on the condition, so we could see what we were
dealing with. What was causing the market for our rate
increases to be roughly 40 percent for 2 years in a row?
We then made the determination that if we removed the top
10, the top 20, the top 30, we could put a correlation to how
that would impact the market as far as how our rates would
stabilize or, hopefully, decrease.
Senator Whitehouse. Why pick conditions rather than, say,
stop loss at $100,000 per claim or some other more numerical
figure?
Ms. Wing-Heier. We are looking at the biggest impact we
could have to stabilize a market that was losing its----
We were down to one insurer. We needed to stabilize the
market to the greatest extent we could. Removing the entire
claim or the entire person from a very small pool had the
biggest impact or the biggest bang for our buck on our rates.
Senator Whitehouse. What happens year to year as somebody
goes into a new enrollment period or perhaps shifts their
carrier? Does the new carrier know that your reinsurance for
that individual because they have the requisite diagnosis will
follow them, or do they have to stay with their--how does it
work in terms of future enrollments?
Ms. Wing-Heier. No. If we had a second carrier, based on
the condition, that person would be seeded the first of every
year or the first time they treated and continuing the
diagnosis, be it a chronic condition or a new condition.
Senator Whitehouse. So the reimbursement, the reinsurance
for the carrier follows the individual year to year for as long
as the diagnosis or condition remains in place. Correct?
Ms. Wing-Heier. As long as they are treating.
Senator Whitehouse. Did you consider setting up a risk pool
rather than a reimbursement system for those individuals?
Ms. Wing-Heier. Yes, we did.
Senator Whitehouse. Why did you choose the reimbursement
system rather than the risk pool?
Ms. Wing-Heier. We chose the reimbursement system, again,
to have the biggest impact on a very small market: 20,000
people.
Senator Whitehouse. So the administrative problem of
setting up a separate risk pool would have been a problem for a
small number of patients like that?
Ms. Wing-Heier. We feel that we had a pool to begin with
and with the 20,000 that were in it at the time was not
succeeding. So to create a pool within a pool, we needed to get
those high cost claimants out of the pool.
Senator Whitehouse. Right.
Ms. Wing-Heier. So that the entire individual market, we
could reduce the rates and people could afford the premiums.
Senator Whitehouse. Got it.
My time is running out here, but I would like to ask a
question to each of you. This will be a question for the record
given the timing.
But if an insurance company came to you, to your
organization, proposing to sell health insurance in your State,
I would like to know what steps, particularly setting up a
provider network you would expect or require of that insurer?
And conversely, to turn the question to the other side,
what concerns would you have about an insurer showing up in
your State purporting to offer health insurance who was not
prepared to create a provider network and go through whatever
other steps you would require?
With that, I am out, but I would be really interested in
your answer to those questions.
Thank you.
The Chairman. Very good questions. Thank you, Senator
Whitehouse.
This has been a very good discussion, both the hour before
we started and this.
I want to ask Senator Murray if she has concluding remarks.
Senator Franken, do you have some concluding remarks?
Senator Franken. I was going to ask a question about
prescription drugs, but I see you want to conclude, and I
respect that.
The Chairman. No, go ahead, if you would like.
Senator Franken. I just want to ask a rhetorical question
about the cuts by HHS in advertising for the exchanges.
Mr. Doak said that insurance companies advertise at every
football game that we watch. Are those insurance companies just
stupid or maybe insurance advertising works. That is the
rhetorical question.
I think there is a reason those insurance companies
advertise.
Mr. Doak. I guess the question is, are they funded by the
Federal Government. Does that make sense or not?
Senator Franken. I think the issue is, does advertising
work? If you are cutting it by 90 percent, you are probably
cutting the effectiveness of the advertising, whoever pays for
it.
Mr. Doak. We have thousands and millions of licensed agents
and brokers all across the United States, Senator, that have
been doing a great job in the health insurance market before
Obamacare and could be doing the same after.
Senator Franken. I really meant it as a rhetorical
question, which I said.
The Chairman. Good luck with that.
Senator Franken. But good luck with that is right.
The point is that they advertise for a reason whether or
not they sell it through brokers or not. Advertising does work
and that is why they advertise.
I had a question on pharmaceuticals, but I really do not
want to eat up time. Although, I would like to thank the
chairman as we had a hearing on pharmaceuticals.
I think, as you all have said in one way or another, that
the pharmaceutical spikes in the last 3 years or so has been
one of the things responsible for the premiums going up.
I would love to hear your thoughts on how we can get those
under control, and maybe we can do that in a written answer so
that the chairman and the ranking member can include it.
One other thing, my favorite moment in the hearing so far
was Senator Whitehouse thanking Ms. Wing-Heier for the hardship
of coming from Alaska.
My favorite moment was seeing Senator Murkowski's
expression when he did that.
[Laughter.]
The Chairman. Thank you, Senator Franken.
Senator Murray, do you have any concluding remarks?
Senator Murray. You are easily entertained, Senator
Franken.
I want to thank all of our witnesses today. This has been
an extremely important first step. I know we have three more
hearings. We do have a very short timeframe within which to do
this and we need to seize this opportunity.
Mr. Chairman, I know my side looks forward to working with
you and I appreciate the opportunity today.
The Chairman. Thanks, Senator Murray.
And I thank the witnesses too. You have been very patient.
You have given us a lot of time.
I thank the senators. We have had maybe half the senate
involved this morning in this discussion. That is pretty
unusual and mostly on our best behavior. That is pretty unusual
too. We welcome that.
I would like to conclude with these remarks; one, just
these facts from CMS on the Navigator program. I am not sure
what the right amount of money is for the Navigator program.
According to CMS, in 2016, Navigators received $62 million
of Federal money to enroll 81,000 people; less than 1 percent
of the total enrollees. Seventeen Navigators enrolled less than
100 people each at an average cost of nearly $5,000 per
enrollee. The top 10 most costly Navigators spent a total of
$2.7 million to enroll 314 people in the Affordable Care Act.
One grantee received $200,000 and enrolled one person. Only 22
percent of all Navigators achieved their own performance goals.
Maybe it is an area that needs some oversight.
Let me go to a point that several senators have made
including Senator Franken and several others. I have been
thinking this especially.
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 the 6 percent of 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 healthcare 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, as was mentioned, we have the phenomena
of 5 percent of those who receive healthcare consume 60 percent
of the costs. So we should be doing more on the larger question
about addressing healthcare costs. There is no question about
that.
Looking at what we pay to visit the doctor or how to get a
test at the hospital, that is the transparency Mr. Doak talked
about.
What we spend on prescription drugs, several of you talked
about that.
How much excessive paperwork and administrative burdens
increase our costs.
What more can be done to encourage wellness? That is really
the low hanging fruit in the whole issue of health costs.
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 healthcare, which is the best way to reduce the cost of
health insurance.
What I have heard today, just to summarize, has been very
helpful. It has been a focused hearing on a narrow part of the
market where we have most of the problems; the 6 percent, the
people with insurance.
What we asked you to do was to focus on what could we do,
especially this month, that might affect 2018. I heard three
things mostly: reinsurance, Cost Sharing Reductions, and more
flexibility from 1332.
Reinsurance. One way to do reinsurance, of course, is the
way Minnesota and Alaska did it, which is to use some of the
Federal money you are already getting to do that. I am not
suggesting that is the long-term solution. Senator Kaine has
proposed a long-term solution.
Reinsurance has broad support among republicans, I know.
This is not a very complicated idea. It is just take this very
narrow market, which is an odd market, a small market, and
recognize that some people are very sick and we need to find,
create a fund to pay for the costs of some of those people in
order to lower the premiums for everybody else. That is what we
are talking about.
There are a variety of ways to do that, Federal tax
dollars, State tax dollars. You can do what Maine did and
charge everybody something on their premium. There are various
ways to do that.
But clearly, reinsurance is one part of the solution to a
long-term fix for the individual market.
Now, for the short term, for something we might sit down in
10 days and say, ``OK. We can agree on this much,'' and try to
ask the House and the Senate, and the President, and all to do
it in time to have an effect on 2018. Maybe what I have heard
is, ``Adjust 1332 in any way that makes it easier for you to
create your own short-term reinsurance next year.'' That may be
hard.
Several suggestions for improving 1332 that ought not to be
too controversial; I mean, the 6-month waiting period.
No one mentioned the ``me too'' application. That is if
Washington puts something in that is approved, why can
Tennessee not come right along behind it and say, ``We want to
do what Washington did with one change?'' That ought to speed
things up.
The idea of letting the process go ahead with just the
application of the Governor, or as you have suggested the
insurance commissioner and not wait for the legislature to have
to pass a law, since some State's legislatures only meet every
2 years.
Alaska submitted a list of reforms that we will take a look
at. I thank you for mentioning those.
Planning funds, Ms. Miller mentioned that. That would seem
an odd thing to have to do for a bankrupt Federal Government to
give money to a balanced budget State Government for planning
funds, but I understand the problem of quick providing of funds
so that you can make your application for a longer term plan.
Then I was intrigued with the suggestion, I have heard it
often, of what can we do about the budget neutrality
requirement? And make sure that that does not keep you from
doing what you would do to make a long-term plan.
Is there any way to include the savings that you have in
Medicaid with what you are doing in the individual market; the
two different Waivers that the Federal Government has?
I know that New Hampshire has tried to do some things in
that area. And even though the democratic Governors and the
republican Governors both support it, they are not able to do
it, according to both the Obama and Trump administrations.
That is a short list of some things that might make some
real difference in the 23 States that have actually started the
process of applying for a 1332 Waiver.
I am hopeful that maybe some combination of continuing cost
sharing for a period of time--and we can discuss what that time
is--and significant changes in flexibility for States, probably
mostly through amendments to Section 1332 since it is already
in the Act, might provide a basis for action we could take this
month.
Then if we act, we will count on the House of
Representatives and the President to take advantage of that and
my hope is that they would.
That would not end the process. That would only be step
one, then we would go pretty quickly to step two on a long-
term, strong, vibrant individual market and other changes that
need to be made in the Affordable Care Act.
I hope we can begin to spend most of our time on the larger
issue of healthcare costs.
If you have other comments that you would like to give to
us, we would like to have them in writing pretty quickly
because we are moving pretty quickly.
The record will be open for 10 days for comments and
questions.
The Chairman. Tomorrow, our committee will meet again to
hear from five Governors to further discuss marketplace
stability and how to advance many of the topics mentioned
today.
We have two more hearings next week. Then we will see where
we are and see what we think we can accomplish.
Thank you for being here.
The committee will stand adjourned.
[Additional Material follows.]
ADDITIONAL MATERIAL
September 5, 2017.
Hon. Lamar Alexander, Chairman,
Hon. Patty Murray, Ranking Member,
Senate HELP Committee,
U.S. Senate,
Washington, DC 20510.
Dear Chairman Alexander and Ranking Member Murray: As providers of
healthcare and coverage to hundreds of millions of Americans, we
commend the HELP Committee's leadership in efforts to develop policy
solutions to stabilize and strengthen the individual health insurance
marketplace. These bipartisan discussions come at a pivotal time for
the marketplace given the timing of final participation decisions by
health plans for 2018.
As the Senate HELP Committee considers legislation to stabilize the
health care coverage and choices for the 20 million Americans who rely
on the individual market, we urge the committee to ensure that cost-
sharing reduction (CSR) benefits are continuously funded for at least 2
years (2018-19).
CSR benefits help those who need it most: low-and moderate-income
Americans with incomes under 250 percent of the Federal poverty level.
Nearly 60 percent of exchange-plan enrollees rely on CSR benefits,
which translates into comprehensive coverage and access for nearly 6
million individuals and families. The CSR program makes it more
affordable for patients to receive needed medical care and services by
reducing deductibles, copayments, and out-of-pocket maximums. As a
result, providers can better serve the needs of their communities and
employers do not needlessly face higher costs to provide coverage to
their employees.
Persistent uncertainty about CSR funding is a significant driver of
current market instability--pushing premiums higher and resulting in
fewer choices for individual market consumers. According to the most
recent analysis by the Congressional Budget Office, eliminating CSR
benefits would--
Increase average premiums for benchmark silver plans by 20
percent in 2018 and by 25 percent in 2020.
Increase the Federal budget deficit by $194 billion over
the next 10 years (2017-26).
Lead to fewer plan choices for consumers and greatly
increase the risk that some consumers would be left with no insurance
options in certain States and geographic areas.
We urge the committee to include continuous funding for CSR
benefits for at least the next 2 years (2018-19) as part of bipartisan
legislation to stabilize the individual market. Without 2 years of CSR
funding, uncertainty will persist and the Congress will need to address
these same issues early next year. In addition, without a break in
funding for the CSRs, we expect that this provision would not
contribute to the Federal deficit. By committing to CSR funding for 2
years, it would go a long way to bring much needed stability to the
individual market and promote access to more affordable coverage and
choices for millions of Americans.
Sincerely,
America's Health Insurance Plans; American Academy of Family
Physicians; American Benefits Council; American Hospital Association;
American Medical Association; Blue Cross Blue Shield Association;
Federation of American Hospitals; U.S. Chamber of Commerce.
______
September 5, 2017.
Hon. Mitch McConnell, Majority Leader,
Hon. Chuck Schumer, Democratic Leader,
U.S. Senate,
Washington, DC 20510.
Hon. Paul Ryan, Speaker of the House,
Hon. Nancy Pelosi, Democratic Leader,
U.S. House of Representatives,
Washington, DC 20515.
Dear Leader McConnell, Speaker Ryan, Leader Schumer, and Leader
Pelosi: The undersigned organizations representing consumers, patients,
and health care providers share the strong belief that everyone in this
Nation deserves high-quality, affordable health coverage and care. We
stand committed to building on the historic progress of the Affordable
Care Act (ACA) and working with you to secure meaningful and affordable
health coverage for all.
Continued uncertainty about funding for cost-sharing-reduction
payments, evidence of administrative attempts to undermine the law, and
concerns about future congressional attempts to repeal the ACA pose a
significant threat to the stability of marketplaces and the broader
individual market. It is now time for Congress to move past attempts to
repeal the ACA and cut the Medicaid program and turn its attention
toward bipartisan policies that would safeguard the stability of health
insurance markets for 2018 and beyond. Specifically, we urge Congress
to take swift action in three main areas:
(1) Guarantee funding for cost-sharing reductions (CSRs). We urge
Congress to immediately enact legislation that clarifies there is a
permanent, mandatory appropriation that ensures full funding of CSRs,
eliminating all questions raised by pending litigation. CSRs provide
critical financial protection for nearly 6 million people who obtain
private coverage on health insurance marketplaces.\1\ If CSRs end,
premiums would rise by an estimated 19 percent, and reduced plan
participation could leave many consumers without any coverage
options.\2\ Quick action that guarantees ongoing CSR funding is
critical to ensuring a stable individual market.
---------------------------------------------------------------------------
\1\ Centers for Medicare and Medicaid Services, 2017 Effectuated
Enrollment Snapshot, (Washington, DC: Department of Health and Human
Services, Centers for Medicare and Medicaid Services, June 6, 2017),
available online at https://downloads.cms.gov/files/effectuated-
enrollment-snapshot-report-06-12-17.pdf.
\2\ Larry Levitt, Cynthia Cox, and Gary Claxton, The Effects of
Ending the Affordable Care Act's Cost-Sharing Reduction Payments,
(Washington, DC: Kaiser Family Foundation, April 25, 2017), available
online at http://www.kff.org/health-reform/issue-brief/the-effects-of-
ending-the-affordable-care-acts-cost-sharing-reduction-payments/.
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(2) Restore premium stabilization programs. We urge Congress to
immediately appropriate ongoing funding for a premium stabilization
program that shields individual insurance markets from the volatility
of high-cost claims. The potential impact of such a program is
illustrated by the 10 to 14 percent drop in premiums that resulted from
transitional reinsurance under the Affordable Care Act.\3\ An ongoing,
fully funded premium stabilization program would also encourage
insurers to offer marketplace coverage.
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\3\ Letter to Senate Majority Leader Mitch McConnell and Senate
Minority Leader Chuck Schumer Re: The Better Care Reconciliation Act of
2017 (BCRA), from Karen Bender, Chairperson of Individual and Small
Group Market Committee, and Michael Nordstrom, Chairperson of Medicaid,
American Academy of Actuaries, June 30, 2017 http://actuary.org/files/
publications/BCRA_Comment_Letter_063017.pdf.
---------------------------------------------------------------------------
(3) Ensure continued funding for outreach and enrollment
assistance. We urge Congress to continue to appropriate adequate
funding for Federal Navigators and outreach, culturally and
linguistically appropriate education, and marketing activities through
the Department of Health and Human Services. This funding helps
consumers--particularly young and healthy people who will help balance
the risk pool--learn about and enroll into available coverage.
Thank you for considering our requests. We urge you to protect the
Medicaid program and preserve the coverage gains made under the ACA as
you turn your attention to market stabilization efforts. We stand ready
to work with you to address these urgent concerns in the short term
and, in the long term, to enact policies ensuring that everyone in our
Nation has high-quality, affordable health coverage and care.
Sincerely,
Families USA; Academy of Nutrition and Dietetics; ADAP Advocacy
Association (aaa+); The AIDS Institute; AIDS United; Alliance for
Retired Americans; American Academy of Pediatrics; American Association
on Health & Disability; American Federation of State, County and
Municipal Employees; American Federation of Teachers; American Muslim
Health Professionals; American Nurses Association; American Public
Health Association; The Arc of the United States; Asian & Pacific
Islander American Health Forum; Association of University Centers for
Disabilities; Autistic Self Advocacy Network; Bazelon Center for Mental
Health Law; Black Women's Health Imperative; Cancer Support Community;
Center for American Progress; Center for Law and Social Policy; Center
for Medicare Advocacy, Inc.; Center for Popular Democracy; Center for
Public Representation; ChangeLab Solutions; Children's Defense Fund;
Coalition on Human Needs; Community Access National Network (CANN);
Community Catalyst; Congregation of Our Lady of Charity of the Good
Shepherd, US Provinces; Consortium for Citizens with Disabilities;
Consumers Union; CPD Action; Disability Rights Education and Defense
Fund; Doctors for America; Easterseals; Epilepsy Foundation Family
Voices; Farmworker Justice; Foundation for Healthy Generations; Friends
Committee on National Legislation; The Greenlining Institute; Health
Care for America Now (HCAN); Hepatitis B Foundation; Hep B United; HIV
Medicine Association; Hogg Foundation for Mental Health; International
Union, United Automobile, Aerospace & Agricultural Implement Workers of
America, UAW; Justice in Aging; Lakeshore Foundation; Leadership
Conference on Civil and Human Rights; League of Women Voters of the
United States; Medicare Rights Center; The Michael J. Fox Foundation
for Parkinson's Research; NAACP; NASTAD; National Advocacy Center of
the Sisters of the Good Shepherd; National Alliance on Mental Illness;
National Association for Health and Fitness; National Association of
Area Agencies on Aging (n4a); National Association of Perinatal Social
Workers (NAPSW); National Association of Social Workers; National
Center for Lesbian Rights; National Center for Transgender Equality;
National Consumers League; National Council of Jewish Women; National
Council for Behavioral Health; National Disability Institute; National
Disability Rights Network; National Family Planning & Reproductive
Health Association; National Health Law Program; National Latina
Institute for Reproductive Health; National LGBTQ Task Force; National
Partnership for Women & Families; National Patient Advocate Foundation;
National Respite Coalition; National Viral Hepatitis Roundtable;
National Women's Health Network; NETWORK Lobby for Catholic Social
Justice; Organizing for America; Out2Enroll; Planned Parenthood
Federation of America; Public Citizen; Raising Women's Voices for the
Health Care We Need; Religious Institute; RESULTS; Sargent Shriver
National Center for Poverty Law; Service Employees International Union
(SEIU); Society for Public Health Education; TASH; Third Way; Trust for
America's Health; UnidosUS; Union for Reform Judaism; United Church of
Christ, Justice & Witness Ministries; United Methodist Church--General
Board of Church and Society URGE: Unite for Reproductive & Gender
Equity; YWCA ZERO TO THREE.
______
Mental Health Liaison Group \1\
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\1\ National Organizations Representing Consumers, Family Members,
Advocates, Professionals, and Providers c/o Laurel Stine, JD, American
Psychological Association at lstine@apa.org. Angela Kimball, National
Alliance on Mental Illness at akimball@nami.org., and Debbie Plotnick,
MSS, MLSP, Mental Health America at dplotnick@mentalhealthamerica.net.
September 1, 2017.
Hon. Lamar Alexander, Chairman,
Senate Health, Education, Labor, and Pensions Committee,
455 Dirksen Senate Office Bldg.,
Washington, DC 20510.
Hon. Patty Murray, Ranking Member,
Senate Health, Education, Labor, and Pensions Committee,
154 Russell Senate Office Bldg.,
Washington, DC 20510.
Re: Stabilizing the Individual Health Insurance Marketplace
Dear Chairman Alexander and Ranking Member Murray: Thank you for
leading a bipartisan effort to reform our health care system. With the
HELP Committee's hearings on stabilizing the individual health
insurance marketplace under the Affordable Care Act (ACA) scheduled for
September, the Mental Health Liaison Group (MHLG) writes to offer our
thoughts on issues associated with market stabilization that would
likely have an impact on coverage of mental health and substance use
disorder prevention and treatment services through marketplace plans.
The MHLG is a coalition of more than 60 national organizations
representing consumers, family members, mental health and substance use
treatment providers, State behavioral health agencies, advocates,
payers, and other stakeholders committed to strengthening Americans'
access to mental health and substance use services and programs.
Particularly in light of the ongoing national opioid addiction
epidemic, MHLG believes that ensuring the whole health of all Americans
requires maintenance of coverage for mental health and substance use
disorder benefits at parity with existing medical/surgical benefits in
all marketplace plans. Maintenance of those benefits has little meaning
without affordable and ready access to the plans providing that
coverage. Ensuring affordable and ready access requires retention of
the ACA's prohibition against denying coverage based on a pre-existing
condition, as well as the ACA's prohibitions against annual and life-
time limits on coverage.
We oppose eliminating or reducing the cost-sharing reduction
payments (CSRs) made to insurers to keep co-payments and co-insurance
requirements low for plan members. Congress should fund the CSRs on a
permanent basis to ensure insurers do not withdraw from markets,
leaving low-income enrollees who are sicker or older--particularly
those with mental illness and/or substance use disorders--without
affordable coverage. So many individuals with serious mental illness
and substance use disorders have limited-incomes that eliminating
premium assistance and cost-sharing subsidies, thereby rendering
coverage largely unaffordable, would--in essence--eliminate coverage
for these essential services for many.
We also strongly believe, as we know you do, that Congress must act
immediately to ensure that plans are available in each State-designated
marketplace for the 2018 benefit year. Furthermore, mental health and
substance use disorder benefit coverage must be preserved in
marketplace plans, and should not be subject to State waivers of
coverage or other existing ACA limitations under an expanded 1332
waiver authority. We do not believe that individuals with a serious
mental illness or substance use disorders should be denied coverage
based on the State in which they reside, as would be the case should
coverage vary from State-to-State under the proposed expanded waiver
authority.
As a threshold matter, MHLG believes that mental health and
substance use disorder benefit coverage must be preserved in all
marketplace plans, and should not be subject to State waivers of ACA
regulations or other existing ACA limitations under an expanded 1332
waiver authority. We do not believe that individuals with a serious
mental illness or substance use disorders should be denied coverage
based on the State in which they reside.
In addition, the permitted range of premiums and deductibles--
including the limits on age-banding of premiums--must remain as they
currently exist so that plans cannot impose premiums so high for the
provision of mental health and substance use disorder services that
they become unaffordable to the individuals who most need them. We
oppose reducing the Federal premium tax credits which lower income,
non-Medicaid enrolled insureds have received from the Federal
Government to maintain insurance coverage and which have, until now,
averaged 72 percent of the cost of premiums.
We do not believe the answer to keeping coverage costs low is the
short-term funding of a temporary Federal fund for State grants
targeted toward subsidizing plan coverage for individuals with serious
mental illness and/or a substance use disorder, as was contained in
H.R. 1628. Such a fund would, within only a few years, be totally
inadequate in meeting need for the populations that Congress worked to
serve with the passage of the 21st Century Cures Act and the
Comprehensive Addiction and Recovery Act (CARA) of 2016.
Moreover, it is important to remember that untreated serious mental
illness and substance use disorders intensify and increase the number
of comorbid medical conditions in individuals with those conditions,
increasing total individual insurance coverage costs in the long-run.
Those proliferating comorbid conditions and costs also have the
potential to increase costs in the Medicaid program for individuals
whose catastrophic health events leave them at income levels making
them eligible for Medicaid.
MHLG recognizes that the individual personal responsibility
coverage mandate is unpopular among some. However, the 30 percent
premium surcharge that would have replaced the individual mandate under
H.R. 1628 for failure to maintain continuous coverage is not an
appropriate solution, as it would have a disproportionate impact on the
lowest income enrollees who would have been struggling to maintain
premium payments for coverage. It would be particularly destructive for
those enrollees whose serious mental illness or substance use disorders
often render them cognitively impaired and thus less capable of
maintaining premium payment schedules until they recover, when the
sizable surcharge would leave them unable to pick up coverage.
Similarly, the waiting period for coverage after a failure to maintain
continuous coverage included within the Senate amendments to H.R. 1628
would be particularly harmful for individuals struggling with addiction
or serious mental illness who are left with no way to address those
issues in the absence of access to insurance coverage.
We urge you to continue to protect these vulnerable Americans'
access to and coverage of vital mental health and substance use
disorder treatment and prevention services, and to not reverse the
recent progress made with the enactment of key mental health and
substance use disorder prevention and treatment reforms under the 21st
Century Cures Act and CARA.
Sincerely,
American Art Therapy Association; American Association of Child &
Adolescent Psychiatry; American Association for Marriage and Family
Therapy; American Association for Geriatric Psychiatry; American
Association for Psychoanalysis in Clinical Social Work; American
Association on Health and Disability; American Dance Therapy
Association; American Foundation for Suicide Prevention; American Group
Psychotherapy Association; American Mental Health Counselors
Association; American Nurses Association; American Psychiatric
Association; American Psychoanalytic Association (APsaA); American
Psychological Association; American Society of Addiction Medicine;
Anxiety and Depression Association of America; Association for
Ambulatory Behavioral Healthcare; Bazelon Center for Mental Health Law;
Campaign for Trauma-Informed Policy and Practice; Children and Adults
with Attention-Deficit Hyperactivity Disorder (CHADD); Clinical Social
Work Association; Clinical Social Work Guild 49-OPEIU; Depression and
Bipolar Support Alliance; Eating Disorders Coalition; EMDR
International Association; Global Alliance for Behavioral Health and
Social Justice; International Certification & Reciprocity Consortium
(IC&RC); Mental Health America; National Association for Children's
Behavioral Health; The National Association of County Behavioral Health
and Developmental Disability Directors (NACBHDD); The National
Association for Rural Mental Health (NARMH); National Association of
Social Workers; National Association of State Mental Health Program
Directors (NASMHPD); National Alliance on the Mental Illness (NAMI);
National Council for Behavioral Health; National Disability Rights
Network; National Federation of Families for Children's Mental Health;
National Health Care for the Homeless Council; National League for
Nursing; National MS Society; National Register of Health Service
Psychologists; No Health Without Mental Health (NHMH); Psychiatric
Rehabilitation Association and Foundation; Residential Eating Disorders
Consortium (REDC); School Social Work Association of America; Treatment
Communities of America; Trinity Health of Livonia, Michigan; Young
Invincibles.
______
August 10, 2017.
Hon. Patty Murray, Ranking Member,
Senate HELP Committee,
154 Russell Senate Office Building,
Washington, DC 20510.
Dear Ranking Member Murray: In March, our organizations,
representing some of the Nation's leading patient and provider advocacy
groups, joined together to define a set of principles representing the
essential components of any patient-focused health care reform plan.\1\
These principles are specifically designed to protect the health and
well-being of the millions of individuals we represent and their unique
health care needs. The bills recently considered by the House and
Senate contained provisions that would have had substantial and
irreversible negative impacts on patients and their families,
providers, communities, and economies. As Congress continues its
efforts to reform the health care system, we urge policymakers to
consider these principles and work in a bipartisan manner to craft
proposals that improve access to care for our patients and strengthen
the Nation's health system in the near and long term.
---------------------------------------------------------------------------
\1\ Health Care Reform Principles: http://www.heart.org/idc/groups/
heart-public/@wcm/@adv/documents/downloadable/ucm_495416.pdf.
---------------------------------------------------------------------------
Today, millions of Americans, including many who are low-income or
live with pre-existing health conditions, rely on health care coverage
received through the Affordable Care Act (ACA). Our organizations have
long said the ACA is by no means perfect, but it made important gains
in access to coverage. It is clear that steps must be taken to both
stabilize the individual health insurance marketplace and bring down
premiums and other out-of-pocket costs. These changes are critical to
maintain and expand access to quality and affordable insurance for low-
and middle-income families across the Nation.
To this end, we believe that the current law can be strengthened by
focusing on the following critical issues:
Cost-Sharing Reductions (CSR)
A top priority that must be addressed immediately is ensuring
continued funding for the ACA cost-sharing reductions. In the absence
of expedited Congressional action, additional insurers could exit
markets very soon, leaving patients without coverage options while
forcing premium increases of at least 19 percent both on and off the
marketplace exchanges.\2\
---------------------------------------------------------------------------
\2\ C. Cox., What's the near-Term Outlook for the Affordable Care
Act? (Kaiser Family Foundation, Aug. 2017). http://www.kff.org/health-
reform/issue-brief/whats-the-near-term-outlook-for-the-affordable-care-
act/.
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Supporting Coverage in Counties Without Insurers
Congress should identify ways to ensure insurer participation on
the exchanges in bare counties. For instance, leveraging the Federal
Employee Health Benefits Program (FEHBP), which offers private
insurance coverage to Federal employees in every county in the country,
could help with this issue. Requiring private insurers who participate
in FEHBP to issue insurance on the exchanges could be required as a
condition for continued participation at the national level.
Alternatively, waiving the insurer tax for issuers in counties without
options could also be an appropriate stopgap measure.
Risk Reinsurance
Other key stabilization concepts Congress might consider include
development of risk reinsurance proposals, akin to the program
implemented in Alaska. Reinsurance reduces the risk to insurers of
covering high-cost patients thus creating stability in the markets.
This protects Americans from significant premium increases by
offsetting the costs of sicker and more costly enrollees. We would also
urge Congress to consider other innovative and financially sustainable
risk mitigation proposals at either the State or Federal level.
Outreach
It remains imperative that the administration and Congress devote
adequate resources to State health insurance marketplace outreach and
enrollment to ensure all eligible Americans have the opportunity to
sign up for health insurance coverage. We know States that devote
robust resources to marketing, outreach, and enrollment assistance
programs experience higher rates of enrollment than those that do
not.\3\ A focus on enrollment also helps ensure that more low-cost
individuals obtain insurance on the State health insurance exchanges to
help offset the costs of older, sicker patients. We would urge these
activities also be coupled with actions to streamline the application
and enrollment process.
---------------------------------------------------------------------------
\3\ J. Wishner, I. Hill, S. Benatar et al., Factors that
Contributed to High Marketplace Enrollment Rates in Five States in 2015
(Urban Institute, Oct. 2015). See also S.R. Collins, M. Gunja, M.
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Tax Credits
As members of both parties have noted, affordability remains a
barrier for many Americans to purchase adequate insurance. While we
recognize the challenge of increasing program costs, we would support
increasing financial support for individuals and families by expanding
income eligibility for health insurance tax credits. Many middle-income
families struggle to afford coverage with increasing premiums,
deductibles, and copays.
Long-Term Costs
While we agree that affordability at the individual and family
levels is a serious hurdle to securing coverage, we would also
encourage Congress to examine other major factors that contribute to
the rising cost of health care, including the rising costs of many
treatments. Much but not all of our Nation's health care spending is on
the treatment of chronic disease, much of which can be prevented
through evidence-based efforts. We urge you and your colleagues to work
together to evaluate the root causes of these growing costs and address
them directly.
Finally, while we remain ready to work on efforts to reduce
unnecessary health care spending and costs and to improve the health
insurance marketplace, this should not be done at the expense of
ensuring access to quality care for all patients, including those who
rely on the Medicaid program. Our organizations remain committed to
retaining important patient protections including the ban on pre-
existing conditions exclusions and premium rating, guaranteed issue,
the prohibition on annual and lifetime benefit caps and continued
coverage of critical essential health benefits. Essential health
benefits must also continue as a Federal benefit and must include
preventive benefits that help maintain and improve the health and
wellness of millions of Americans. Finally, we urge Congress to
maintain and support important health care safety net programs, such as
Medicaid and the related Medicaid expansion.
We look forward to working with Congress to ensure all Americans
have access to affordable and adequate health care coverage.
Sincerely,
ALS Association; American Diabetes Association; American Heart
Association; American Lung Association; Arthritis Foundation; Cystic
Fibrosis Foundation; Family Voices; March of Dimes; Muscular Dystrophy
Association; National Health Council; National MS Society; National
Organization for Rare Diseases; United Way Worldwide; Women Heart: The
National Coalition for Women with Heart Disease.
______
Response by Mike Kreidler O.D., to Questions of Senator Alexander,
Senator Burr, Senator Young, Senator Roberts, Senator Whitehouse and
Senator Franken
State of Washington,
Office of Insurance Commissioner,
Olympia, WA 98501,
September 15, 2017.
Hon. Lamar Alexander, Chairman,
530 Hart Senate Office Building,
Committee on Health, Education, Labor, and Pensions,
U.S. Senate,
Washington, DC 20510.
Dear Chairman Alexander: Thank you for the opportunity to testify
before the U.S. Senate Health, Education, Labor, and Pensions (HELP)
Committee last week. It was an honor to participate in the first of
your bipartisan hearings on health care reform. I appreciate the
Senator's efforts to understand the priorities of State insurance
regulators and to learn from our experience on the front line of the
individual insurance market.
During the hearing, several members of the HELP Committee posed
important questions to me from the dais. Please consider this letter,
containing those questions and my answers, as a supplement to the
hearing record.
I believe we can turn this market around and continue the successes
we have enjoyed in Washington State. I have real hope that your
committed efforts will result in bringing about the immediate relief
all five insurance commissioners were unified in requesting: funding of
the cost-sharing reduction payments through 2018, at the very least.
I'm happy to offer you any assistance that I can to develop long-
lasting solutions for a stable insurance market this year, and beyond.
Sincerely,
Mike Kreidler,
Insurance Commissioner.
______
senator alexander
Question. How can we use the 1332 waiver to allow States to benefit
from reinsurance?
Answer. The benefit of a reinsurance program can be a solid
reduction in premiums paid by the consumer. For example, in Washington
State, the Federal transitional reinsurance program resulted in an 8-10
percent drop in average premiums (from 2014 through 2016, the years the
program existed). A State reinsurance program should have the same
effect, but the cost of funding it is prohibitive for many States. The
1332 waiver is a good mechanism to assist with the necessary funding,
diverting realized Federal savings from advanced premium tax credits
(APTC's) into dollars to support a State reinsurance program.
There are some challenges in pursuing a 1332 waiver. One is the
length of time and the cost associated with the application process.
And State legislators must make a commitment to fund the State
reinsurance program without a specific Federal dollar commitment; this
can be a political challenge, and a timing challenge for States with
part-time legislatures.
The success of a State reinsurance program funded by a 1332 waiver
is based upon predicted APTC savings. Alaska's 1332 waiver was very
successful, in part because their premiums were very high, and they had
only one insurer participating in the market. Here in Washington, we
have an efficient health system with seven insurers in our State-based
Exchange, and our premiums are significantly lower. We are actively
working with a contractor now to analyze insurer data to predict the
potential premium impact of a reinsurance program. But without
significant premium savings resulting in significant Federal funds, it
is unlikely our State can independently implement the program.
senator burr
Question. What opportunity is there to stabilize the market with
the purchase of multi-year plans?
Answer. Multi-year health insurance contracts are not currently
permitted in any State, and there are significant obstacles to this
option. Consumers would have to be willing to give up an annual choice
of plan, and would likely require portability across State lines.
Insurers might object to the possibility of decreased competition, if
the cost of switching plans is too high, and could find it difficult to
reliably predict future costs within the contract time period. Plans
would have to be built with incentives for healthy consumers to stick
to them.
Because of these obstacles, I would not consider multi-year health
insurance contracts to be a meaningful stabilization strategy for the
2018, 2019 or 2020 plan year.
senator young
Question. How can States increase transparency?
Answer. This year, Washington State will bring online an All-Payer
Healthcare Claims database that will systematically collect all
medical, pharmacy and dental claims from private and public payers,
with data from all settings of care that permit the systematic analysis
of health care delivery. This system will help patients, providers and
hospitals make informed choices about care, and it will promote
competition based on quality and cost.
However, a recent U.S. Supreme Court decision, Gobeille v. Liberty
Mutual Insurance Company, found that ERISA preempts State attempts to
require self-funded plans to submit data to a State's database.
Congress could address that issue in Federal law; the result would be a
significant increase in the data Washington could collect, to the
benefit of consumers, providers and hospitals.
senator roberts
Question. Do you support increasing the 1:3 age band and why?
Answer. In 1995, our State set the mandated age ratio at 3.75:1.
This level reflects what we believe was a fair balance of affordability
for young and older enrollees. Upon passage of the Federal Affordable
Care Act (ACA), we adopted the mandated average of 3:1. I would support
a return to our State band of 3.75:1, but would not advocate for
adoption of a broader band at this time.
Prior to the ACA, most States has a 5:1 age band ratio. A major
concern with narrowing the band to 3:1 was the impact on younger
purchasers--if the cost rises too high, young healthy people are more
likely to stay out of the market. In our State, the impact on premiums
for young people younger people was less evident (shifting only .75
percent). And the impact of the rise in premium was cushioned by the
temporary Federal reinsurance program that dropped Washington State
rates by 8 to 10 percent. Younger enrollees, many of whom have lower
incomes, also received significant support in the form of APTCs and
cost-sharing subsidies. But even under these favorable conditions, the
enrollment of younger people was less than we had hoped.
Widening the age band might lead to incremental differences in
premiums for younger enrollees, but I'm not convinced it will make the
difference in bringing them into the insurance market Congress should
focus on keeping and enforcing the individual mandate, and increasing
penalties as contemplated by the ACA for those who stay out of the
market, until the decision to enroll becomes the clearly better
financial choice.
senator whitehouse
Question. What standards would a new insurer need to meet to do
business in Washington State? How would you feel about an insurer who
wanted to do business but couldn't meet those standards?
Answer. Washington has a business-friendly climate with a Top-10
ranking among States in a recent Forbes magazine survey of ``The Best
States for Business.'' Our regulatory environment is fair and
reasonable, and we use the National Association of Insurance
Commissioners (NAIC) Uniform Certificate of Authority Application
(UCAA) forms to review and process applications from insurance
companies quickly.
We are committed to a thorough review of potential health insurers
to ensure that companies can provide the level of quality and
commitment we want for our residents. In addition to the UCAA
requirements, Washington State law requires that we request
documentation of net worth, geographic areas and population groups to
be served, schedules of proposed rates and charges, and detailed
descriptions of almost every business process--from the enrollee
complaint system to the health care delivery system--to ensure that
services will meet State law requirements and will be of professional
quality.
Washington is an active rate review State; once a health insurer is
admitted in our State to sell to Washington consumers, we review all
filed plans and rates to be sure they are actuarially justified and
meet our State requirements.
Washington has a long history of strong consumer protections, and
many of our requirements are not found in the laws of other States. I
would not allow an insurer to do business here that did not meet our
requirements, and the prospect of lowering the high standards for
quality and service we receive from our currently admitted insurers
would be a big concern.
senator franken
Question. What can we do to bring prescription drug costs under
control?
Answer. The skyrocketing cost of prescription drugs directly
impacts people who purchase insurance, by driving up premiums and
hitting their out-of-pocket expenses in co-insurance.
One of the most important things we could do is prohibit ``pay for
delay'' deals between dealers of name brand and generic drugs. Generics
are important to cut costs, and consumers want them. We should not
permit drug companies to keep them off the market.
We should also demand increased transparency from drug companies.
Purchasers should be able to understand the true cost of drug research
and development. Consumers should be able to see prices, including
those charged to Medicare and other countries. The current pharmacy
supply chain, from manufacturer to pharmacist, should be clearly
documented, so we can find potential savings from transactional costs.
______
Response by Mike Kreidler, O.D. to Questions of Senator Whitehouse
State of Washington,
Office of Insurance Commissioner,
Tumwater, WA 98501,
October 11, 2017.
Hon. Sheldon Whitehouse,
530 Hart Senate Office Building,
U.S. Senate,
Washington, DC 20510.
Re: U.S. Senate Health, Education, Labor, and Pensions Committee
Hearing--Stabilizing Premiums and Helping Individuals in the
Individual Insurance Market for 2018: State Insurance
Commissioners
Dear Senator Whitehouse: Thank you for the opportunity to respond
to questions you posed during the U.S. Senate Health, Education, Labor,
and Pensions Committee hearing on September 6, 2017.
I am pleased and heartened by the bipartisan efforts to improve
health care delivery and insurance market stability in our States.
Washington, in particular, has long embraced efforts to find innovative
ways to deliver quality health care through stable insurance markets.
I appreciated the opportunity to share our State's history
regarding the individual insurance market; your questions raise other
areas where I hope Washington's experience can be of assistance.
Attached are your questions with my responses. I hope these prove
to be helpful to you. I would be happy to provide additional
information, should you need it.
Sincerely,
Mike Kreidler,
Insurance Commissioner.
______
Question 1. 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 1. Each of the areas you have identified have the potential
to lower costs and improve quality. We have done significant work in
Washington State to improve patient safety and the payment system, and
to reduce administrative overhead and reimbursement disputes. Below are
illustrations of some programs that have provided good results for our
State.
improve patient safety
Washington has adopted several programs into law that require
reporting of incidents to allow State oversight and intervention.
Adverse Health Events and Incident Reporting System. Washington
State law (Chapter 70.56 RCW) requires healthcare facilities to report
to the Washington State Department of Health whenever they confirm an
adverse event, as defined by the National Quality Forum. Facilities
required to report include psychiatric hospitals, State correctional
medical facilities, ambulatory surgical facilities, and child birthing
centers. Facilities that report an adverse event are required to
conduct a root cause analysis and identify corrective actions. This
requirement is intended to address prevention of such events in the
future.
Healthcare Associated Infections Program. This program requires
hospitals to report infection information to the Washington State
Department of Health, which annually produces an interactive map and
reports comparing hospital infection rates for central line-associated
bloodstream infections, surgical site infections and ventilator-
associated pneumonia. (See www.doh.wa.gov, Healthcare Association
Infections).
payment reform
We recognize the need for an objective comparative standard for
medical service pricing. In January 2018, Washington State will
implement an All Payer Claims database. (See Health Care--Price
Transparency Health Care). The database will assist consumers in making
informed choices about health care, promote improvements in health care
performance, and enable purchasers to increase their value-based
purchasing activities. Reports will include claims data from Medicaid,
Medicare, State employee health benefits, our State's workers'
compensation medical program, and commercial health insurers regulated
by my office.
At this point, submission of claims data from self-funded employer-
sponsored group health plans and Taft-Hartley plans is voluntary, based
on the U.S. Supreme Court's ruling that ERISA's preemption clause
prevents States from requiring self-funded group health plans to submit
claims data to State all-payer claims databases. (See Gobeille v.
Liberty Mutual). In the interests of transparency and payment reform, a
bipartisan discussion on the possibility of mandating self-funded group
health plans participation in State databases would be very welcome.
We also recognize that, as a major purchaser, the State can be a
positive force for system change. Currently, our State Medicaid program
and our State employee health benefit program are integrating
strategies to implement value-based purchasing and behavioral health
integration goals. Our ``Healthier Washington Initiative'' has goals of
building healthier communities through a collaborative regional
approach, integrating physical and behavioral health services and
financing to focus on the whole person, and improving how we pay for
services by rewarding quality over quantity. (See Healthier
Washington--Washington State Health Care Authority).
The initiative is taking a multi-payer approach. We have developed
a common performance measure set and are working to implement value-
based payment reforms. Washington State participates in the CMS
Medicare/Medicaid dual-eligible demonstration and has implemented a
Medicaid State plan health home program as a key component of our duals
demonstration participation. (Washington--Centers for Medicare &
Medicaid Services). Evaluation results for the first 2 years of the
demonstration show Medicare savings of $67 million.
Last, as you know, Washington is a full rate review State, meaning
that we closely review proposed health insurance premium rates to
ensure that the premiums charged reflect the benefits that are provided
under a health plan. We have seen continued increases in underlying
health care costs, particularly with respect to prescription drug
expenditures. Any bipartisan discussions related to prescription drug
pricing would be a high priority.
reduce administrative overhead and reimbursement disputes
We have also focused on establishing uniform and streamlined
administrative processes for the health care and insurance community,
aimed at reducing the potential for error, and improving care quality
and outcomes. My office partners in this effort with an organization
called OneHealthPort, a Washington cooperative owned by health plans
and health care providers. The goal of OneHealthPort is to reduce
administrative burdens by making information exchange more efficient,
with fewer errors, and to develop and recommend best practices for
providers and health plans. This year, my office adopted rules, for
example, to standardize processes across insurers for prior
authorization.
This year, I am re-introducing a bill designed to protect consumers
from payment disputes between insurers and providers who are out of
network. When consumers receive care from an out-of-network provider in
an emergency or in an in-network facility, they can receive a bill from
the provider for any balance due over what the insurer has paid. This
``surprise bill'' happens frequently, and the average bill is under
$1,000.00. The solution is passing a law to take the consumer out of
the middle, and establishing a predictable payment rate for the
provider along with a fair and objective resolution process.
Question 2. If an insurance company came to you proposing to sell
health insurance in your State, what steps, such as setting up a
provider network, would you expect or require that insurer to take
before you authorize the insurer to sell health insurance policies in
your State?
Answer 2. We would expect all insurance companies to meet our
stringent requirements. Washington State has a strong history of
consumer protection reflected in the requirements that insurers must
meet to be admitted to sell health insurance in our State. We have
adopted the National Association of Insurance Commissioners' (NAIC)
Uniform Certificate of Authority Application. We go beyond the NAIC's
requirements in two critical ways central to consumer protection:
requirements for financial solvency and provider network adequacy.
Washington State's financial solvency requirements set minimum net
worth requirements for health insurers that must be met in order to
sell insurance in our State. For example, health care service
contractors (e.g. our Blue Cross and Blue Shield insurers) must have a
minimum net worth equal to the greater of 3 million dollars, or 2
percent of the annual premium earned on the first $150 million of
premium earned and 1 percent of premiums earned in excess of $150
million (RCW 48.44.037). The insurer must maintain this minimum
solvency standard (RCW 48.44.039). A similar requirement applies to
health maintenance organizations (RCW 48.46.235-.247).
Equally important, Washington State has strong provider network
adequacy standards. As I am sure you are aware, in the face of rising
underlying health care costs, especially for prescription drugs, and
the uncertainty facing the individual health insurance market overall,
we have seen a trend of insurers moving away from preferred provider
organization health plans with broad provider networks to exclusive
provider organization or HMO plans. By design, these health plans offer
a somewhat narrower network of providers in an effort to offer more
affordable premiums and cost-sharing. A consequence of that movement is
that our network adequacy rules have become even more critical.
My agency has promulgated regulations that address both qualitative
and quantitative standards for provider network adequacy. The
qualitative standard is as follows:
1. An insurer must maintain each provider network for each health
plan in a manner that is sufficient in numbers and types of providers
and facilities to assure that, to the extent feasible based on the
number and type of providers and facilities in the service area, all
health plan services provided to enrollees will be accessible in a
timely manner appropriate for the enrollee's condition. An insurer must
demonstrate that, for each health plan's defined service area, a
comprehensive range of primary, specialty, institutional, and ancillary
services are readily available without unreasonable delay to all
enrollees, and that emergency services are accessible 24 hours per day,
7 days per week without unreasonable delay.
2. Each enrollee must have adequate choice among health care
providers, including those providers which must be included in the
network under Washington Administrative Code (WAC) 284-170-270, and for
qualified health plans and qualified stand-alone dental plans, under
WAC 284-170-310.
Our quantitative standards include minimum distance and appointment
time standards for primary care providers, as well as appointment time
standards for urgent appointments and specialty services (WAC 284-170-
200(13)). Washington State also has a strong mental health parity
statute. To ensure its robust implementation, we have adopted clear
standards regarding the types of behavioral health services that must
be included in provider networks (WAC 284-170-200(11)).
Question 3. What concerns would you have about an insurance company
coming to your State that was not prepared to create a provider network
or complete any other steps you may require?
Answer 3. I would have extremely strong concerns regarding an
insurance company coming to Washington State that was not prepared to
create a provider network or complete other steps required for an
insurance company to do business in our State. As described above, the
Washington State Legislature and my office have defined minimum
standards beyond those included in the NAIC uniform application. Those
requirements were established to protect consumers in our State. While
I respect the right of other States to set their own standards for
insurers that do business in their States, our ability to maintain
strong consumer protection standards is critical.
______
Response by Lori K. Wing-Heier to Questions of Senator Alexander
Department of Commerce,
Community, and Economic Development,
Division Of Insurance,
Juneau, AK 99811-0805,
October 10, 2017.
Hon. Lamar Alexander, Chairman,
Senate Committee on Health, Education, Labor, and Pensions,
U.S. Senate,
Washington, DC 20510-4704.
Re: U.S. Senate, Committee on Health, Education, Labor, and Pensions
``Stabilizing Premiums and Helping Individuals in the
Individual Insurance Market for 2018: State Insurance
Commissioners''
Dear Senator Alexander: Following my testimony on September 6,
2017, in the referenced committee hearing, Senator Sheldon Whitehouse
posed several questions for the record to me. The questions and my
responses for the record are listed below:
______
Question 1. 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 1. Improving patient safety and quality care are important
health care priorities, but the Alaska Division of Insurance's
regulatory authority does not generally encompass items a, b or d.
Addressing the underlying cost of health care insurance coverage is
key to meaningful reform. Alaska experiences a lack of provider
competition in many regions; therefore, insurance companies have little
to no leverage when negotiating contracts. The goal of insurance
companies in connection with these pricing contracts is to keep the
premium levels in check so that coverage is more affordable and
competitive. Through medical loss ratio standards, health care insurers
are closely monitored to ensure that pricing for services is based on
the actual cost of care and that profit margins are maintained at
reasonable levels. However, health care medical service providers and
health care providers engaged in manufacturing and distribution of
pharmaceutical and other health care equipment do not have a similar
form of cost control oversight in private markets. Establishing
standards to streamline reimbursement between insurance companies and
providers through more transparent pricing structures coupled with
limitations to curb price gouging and excessive profits could help to
control costs and greatly improve the affordability of health care
insurance coverage.
Regarding patient's wishes at the end of life, we would refer you
to La Crosse Wisconsin for their efforts. \1\
---------------------------------------------------------------------------
\1\ http://www.npr.org/sections/money/2014/03/0S/286126451/living-
wills-are-the-talk of-the-town-in-la-crosse-wis.
---------------------------------------------------------------------------
The common theme for preventive care is that reimbursements are not
focused on the dialog between a primary care provider and their
patient. Other items that are not health related but can later produce
costly medical expenses, especially behavioral health, include social
determinants.
Question 2. If an insurance company came to you proposing to sell
health insurance in your State, what steps, such as setting up a
provider network, would you expect or require that insurer to take
before you authorize the insurer to sell health insurance policies in
your State?
Answer 2. The first step would require the health care insurer to
apply for a certificate of authority under AS 21.09.110. In addition to
financial statements necessary to evaluate the company's solvency and
financial history, the company would be required to file policy forms
and rate approval request and receive prior approval from the Alaska
Division of Insurance before selling health insurance policies in
Alaska.
Question 3. What concerns would you have about an insurance company
coming to your State that was not prepared to create a provider network
or complete any other steps you may require?
Answer 3. The division's primary concern is to protect consumers by
ensuring an insurance company's financial solvency to pay claims.
Question 4. As you know, Alaska chose to base the eligibility
criteria for its reinsurance program on a list of 33 specific medical
conditions rather than a dollar amount based on claims. You stated
during the hearing that using conditions to determine eligibility for
the reinsurance program would make the ``biggest impact'' to stabilize
the market. Why did eligibility based on conditions lead to a ``bigger
impact'' than setting up a reinsurance program based on by a dollar
amount?
Answer 4. By establishing qualification based on 33 known
significant medical conditions, Alaska was able to define an objective
measure based upon market experience and projected risk. The focus has
centered upon chronic conditions since they are costs that are expected
to continue year after year. Random accidents that result in
significant medical costs do not necessarily belong in a separate risk
pool.
Question 5. You stated that setting up a reinsurance program was
better suited for stabilizing Alaska's individual market than a high-
risk pool. What aspects of a reinsurance program make it more effective
than a high-risk pool in Alaska's case?
Answer 5. Alaska's high risk pool administrator, Alaska
Comprehensive Health Insurance Association, previously handled
condition-based eligibility, so this was an easier transition than a
dollar-level based reinsurance program.
Question 6. How, if at all, does Alaska plan to reevaluate
eligibility for its reinsurance program? Will the State review the
effectiveness of its conditions list at insulating individual market
from the highest cost patients? Is there a mechanism by which the
conditions list can be modified in the future?
Answer 6. Yes, the Division plans on reviewing the conditions as
experience develops. The modifications would be made through State
regulation.
Question 7. Does Alaska's reinsurance program absorb 100 percent of
the claims cost for an eligible individual-market enrollee once that
enrollee has been ceded to the reinsurance program? Is there a cap on
the reimbursement provided to insurers for the claims of eligible
enrollees?
Answer 7. Yes, that's correct, the Alaska reinsurance program (ARP)
will receive 100 percent of the claims for an individual who has one of
the eligible medical conditions. There is no cap on individual
reimbursement. The total reimbursement to insurers is based on the
trended contribution from 2017 per actuarial modeling. SSSM trended
approximately 10 percent per year is the expected allocation for the
reinsurance program.
Question 8. From a patient's perspective, are there any differences
in benefits and/or cost-sharing for those in the reinsurance program
and those who are not?
Answer 8. No, the ARP consumers will not have any difference from
non-ARP individuals.
I am grateful for the bipartisan efforts of the Senate Committee on
Health, Education, Labor, and Pensions to establish solutions to help
stabilize individual health care insurance markets and ensure access to
quality, affordable health care. Thank you for the opportunity to
contribute ideas for consideration as you work to find solutions for so
many Americans.
Response by Julie Mix McPeak to Questions of Senator Whitehouse
Question 1. 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 1. As I mentioned in my written testimony, a direct causal
relationship exists between the costs of health care services and the
costs of health insurance. After, hopefully, approving Cost Sharing
Reduction (CSR) funding to stabilize individual markets, the HELP
Committee should address both the short-term as well as long-term
factors contributing to our current health care landscape. As my
Governor stated in his testimony before the HELP Committee on September
7,
``ultimately making health care more affordable involves
looking at a variety of factors which contribute to the high
cost of health care, including exploring incentive programs
which focus on the quality of patient care.''
Additionally, the committee could explore strategies to contain rising
pharmaceutical costs as well as review ways in which transparency of
costs could contribute to reductions in health care costs. The HELP
Committee could look at ways to incent wellness and prevention
initiatives or transparency measures surrounding health care costs.
Addressing items b and e above, Tennessee has been among the
Nation's chief innovators in establishing an episode-based payment
structure in our Medicaid program that is expanding into the commercial
market. The episodes of care model rewards high-quality care and
reduces ineffective and/or inappropriate care by aligning provider
payment incentives with successful patient outcomes. Payment
methodologies which aim to group health care services into episodes, if
implemented appropriately with timely and adequate disclosures of
metrics to physicians, have the potential to reduce costs and improve
patient outcomes. Of course, as mentioned earlier, incenting consumers
to make healthier choices could also have a positive impact on the
health of our constituencies.
Question 2. If an insurance company came to you proposing to sell
health insurance in your State, what steps, such as setting up a
provider network, would you expect or require that insurer to take
before you authorize the insurer to sell health insurance policies in
your State?
Answer 2. The most important factor that we, as insurance
regulators, review when considering company applications is the
solvency of the company; i.e. whether the company has sufficient
resources to pay claims. Upon receipt of an application for licensure,
the Department reviews the suitability and experience of company
management, company risk controls, and the information technology
capabilities of the company to ensure that the internal operations can
support the complexity of its business. This process, which would lead
to the issuance of a license, is distinct from the review of policy
forms and rates but can be performed simultaneously. It is important to
note, however, that a company may not write any health insurance
business until its plans and rates have been approved by the
Department.
The Department reviews proposed policies for compliance with State
and Federal law during the rate review process. The review of forms
also confirms that a carrier has adequate provider networks; typically,
that those networks have gone through the adequacy review process of a
national accrediting body. At the same time, we work with actuaries to
review rates to ensure that they are not excessive, insufficient, or
unfairly discriminatory.
Fortunately, Tennessee has experience this year with a company that
came to the Department proposing to sell health insurance on the
federally facilitated marketplace. While their coverage area is limited
to one service area, this still was a bit of welcome news, as our
consumers had previously witnessed carriers withdraw from offering
health insurance policies throughout our State.
Question 3 What concerns would you have about an insurance company
coming to your State that was not prepared to create a provider network
or complete any other steps you may require?
Answer 3. The Department would not license a company that we did
not believe would have sufficient resources to pay claims. Further, we
do not approve policy forms or rates until filings satisfactorily meet
State and Federal requirements, including network adequacy provisions.
In theory, a company could be licensed by the Department but not
authorized to write insurance. The company must meet both financial
standards and regulatory requirements before it can offer health
policies to consumers. This Department is dedicated to the protection
of Tennessee's insurance consumers, and we expect and require insurance
carriers to be able to meet their promises to policyholders.
Response by Teresa Miller, J.D., to Questions of Senator Whitehouse
Question 1. 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 1. I wholeheartedly agree with you that we need to have a
true national dialog about health care costs, and how we can rein in
the unsustainable growth of those costs without sacrificing quality and
innovation. While some of the solutions may be national and others may
be better implemented by States themselves, this is certainly an area
where I believe we can work across the aisle and seek bipartisan
solutions. With that in mind, I want to highlight some of the steps
already being taken by States, and particularly by Pennsylvania with
these critical goals in mind:
Several states have enacted and operationalized all-payer claims
database (APCD) laws. These databases are designed to inform cost
containment and quality improvement efforts by providing service-level
information such as charges and payments, the provider(s) receiving
payment, clinical diagnosis and procedure codes, and patient
demographics.
Governor Wolf included an APCD as part of his fiscal year 2017-18
proposed budget, and Pennsylvania's General Assembly is currently
considering APCD legislation, which has achieved support from
republicans and democrats alike. Policymakers, payers, providers, and
patients could all use APCD data to better drive, deliver, and seek out
value in the healthcare system. The committee could consider supporting
the States in this effort to increase cost and quality data
transparency through support of funding for States to establish APCDs
and by addressing Federal impediments to cost transparency, in
particular by working with the Department of Labor to ensure that
States have access to data from self-insured plans, which cover
approximately a third Pennsylvanians.
Reimbursement and provider contracting remains a critical part of
building an adequate network. One area of interest for many States,
including Pennsylvania, is reimbursement for services received by an
out-of-network provider, particularly in cases of ``surprise billing.''
A handful of States have enacted legislation related to out-of-network
reimbursement, and, in Pennsylvania, we have been working with
interested parties to determine how best to address the issue. In fact,
a proposal to resolve surprise billing has now been introduced in both
chambers of the Pennsylvania legislature with bipartisan sponsorship.
Pennsylvania's Department of Human Services is also working to move
our healthcare system away from predominantly focused fee-for-service
payment arrangements and more toward alternative payment arrangements
that are focused on value and outcomes. These are arrangements that
incentivize the healthcare system and our providers to deliver on the
triple aim: better care, better health, and lower costs. As just one
example, we have established targets for our Medicaid managed care
organizations to increase their use of value-based payments, and are
working to establish similar targets in our other program areas.
Pennsylvania's Department of Health is also leading an innovative
initiative in collaboration with Medicare, Medicaid, and private
insurers to transform the way that rural hospitals are paid for care.
Participating hospitals will be paid using all-payer global budgets,
which are set annually, rather than on a fee-for-service basis. This
will provide stable financing for rural hospitals, a critical community
asset, while allowing them to transform care delivery to increase their
focus on prevention and care management.
Support from the Centers for Medicare and Medicaid Innovation
(CMMI) has been vital in this initiative, and Pennsylvania looks
forward to continuing the partnership with CMMI.
Question 2. If an insurance company came to you proposing to sell
health insurance in your State, what steps, such as setting up a
provider network, would you expect or require that insurer to take
before you authorize the insurer to sell health insurance policies in
your State?
Answer 2. Companies must obtain a license from the Insurance
Department to do business in the State and have their provider networks
certified by the Department of Health as adequate. The licensure
process is critical in protecting consumers and serving the greater
public interest. Health insurance companies, along with other regulated
entities, must provide information such as biographical data, a
business plan, capital and surplus requirements, and proof of adequate
networks to be licensed to sell insurance in Pennsylvania. We also
review certain policy forms and rates prior to the sale of the policy.
While we recognize that these requirements represent an administrative
burden, we endeavor to streamline the process for insurers by
coordinating our regulatory oversight with those of other States
through use of NAIC models, best practices, and established national
standards. To that end, the requirements of a health insurance company
seeking to sell insurance in Pennsylvania will experience, and be able
to leverage, processes that are similar to the States in which they
already sell insurance.
Question 3. What concerns would you have about an insurance
company coming to your State that was not prepared to create a provider
network or complete any other steps you may require?
Answer 3. The steps we require for companies to sell health
insurance are important to ensure consumers are protected and will
ultimately have their claims paid. It's not easy to be a health
insurer, particularly balancing solvency (and profits) with consumer
service and affordability. Establishing provider networks is, without
question, the biggest obstacle for insurers who want to do business in
a new State. It's not easy working with all the hospitals, doctors,
clinics and other health care providers to ensure consumers will have
access to quality care and the doctors they want. But, it's critically
important for consumers who will be purchasing insurance that they have
access to services they need. Access to these networks, however, comes
at a price, and better negotiated rates in provider contracts means
better premium rates for consumers. This requires that companies strike
a balance with providers such that providers are given adequate and
fair reimbursement (including acknowledgement of volume discounts,
actual cost of care, etc.), and that consumers have access to
affordable care from a network that is able to meet their needs.
We have heard a lot about a proposal that would allow insurers to
sell health insurance ``across State lines.'' Proponents claim such a
proposal would increase competition and reduce costs for consumers.
While these are laudable goals, this proposal simply ignores the
fundamental nature of how health insurance works. It assumes the
barrier to entry for companies wanting to expand their footprint into
new States is the license they need to obtain from the insurance
department. As noted above, through established national standards and
shared best practices, many State insurance regulators have streamlined
the process to be licensed. However, if you ask health insurance
companies why they don't expand their footprints (including companies
who only do business in limited areas within a State), they will tell
you how difficult it is to establish the provider networks needed to
offer quality coverage.
[Whereupon, at 12:55 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 |
| Alexander, Lamar | A000360 | 8304 | S | R | COMMMEMBER | TN | 115 | 1695 |
| 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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