Transcripts For CSPAN Senate Health Panel Focuses On Individual Insurance Markets Stabilization 20170912

The Senate Health committee continues hearings on individual Insurance Markets. Today experts are testifying to increase flexibility. This is the third of four hearings and then the committee hopes to have a bill in the senate shortly. Insurance companies have until september 27 to file rates for next year and federal contributions are due at the end of that day this is live coverage on cspan. Mr. Bragdon to all high value providers. Thank you. I encourage the committee to consider these two recommendations. Senator alexander thank you, mr. Bragdon. Mr. Tyson. Mr. Tyson to the chair and Ranking Member murray, members of the committee, its an honor to be here this morning to speak to you about this important issue. There are two important laws for the health and wellbeing of the American People who are not covered by an employer and or has the personal wealth to buy their own coverage. I think about this very often. They are, of course, the Social Security act that brought us medicare and medicaid in 1965 and the Affordable Care act of 2010. Because of these two laws and because of us, i actually remain optimistic that eventually in my lifetime we will succeed at making sure that every american has access to the front door of the American Health care system. That front door has a key and that key is called coverage. With the a. C. A. That was enacted in 2010 and the medicaid exchange, we now have given a key to almost 20 Million People, if not more than 20 more Million People who do not have it did not have it before. There are 30 million to go. So im trying hard to do whatever it takes to make Health Care Affordable and accessible for the 20 million that weve gained from the progress weve made with a law in 2010 and to figure out how do we make sure that the other 30 million has the key to the front door to the American Health care system. Ive had the privilege of working for Kaiser Permanente for 33 years. I started in the medical Records Department after finishing my graduate degree in health care administration, and today i sit as the chairman and c. E. O. Of an organization that takes care of nearly 12 Million People, has over 200,000 employees and our medical groups, over 22,000 positions who come to work every day trying to make highquality care affordable and accessible and available to everyone. Not only do we take care of almost 12 Million People, we take care of also the 60 millionplus who exists in communities in which Kaiser Permanente provides care and coverage. Of the 12 million members, almost 1. 5 million are in the a. C. A. They wonder every day, Kaiser Permanente, will i have you again next year . They call, they come in, they ask questions. Trying to figure out how they can continue to get care and coverage from organizations like Kaiser Permanente. I want to impress upon you three facts. One, Real Solutions exist. That this is not a situation where we have to throw out the baby with the bath water. I can show you markets where Kaiser Permanente exists and the Affordable Care act is working fairly well with some additional changes that needs to be made and in other markets we have more work to do. Number two, we own the success of the failure of the American Health care system together. Its not about the government or the marketplace. Its about both of us working together. And number three, is that the real focus of the narrative, i hope in the future, will shift to the actual cost of the Delivery System which is where all the cost is and to figure out how do we continue to reform the Delivery System to provide even Higher Quality and more accessibility. As i said in my paper that i submitted to you, i respectfully offer a sixpoint plan to repair the a. C. A. Immediately and in the long term. Number one is obviously the funding of the c. S. R. , and i would recommend that is a multiyear funding and i understand the dilemma of the debates thats been going on here. But what could work with a multiyear Funding Agreement with the c. S. R. Is how do get more of the insurers back in the market, how to create market stability and allow the marketplace to begin to act like a marketplace and which me and my competitors will start to figure out how do we compete in a market to attract and retain these wonderful people like we do in every other line of business. Number two, promote consumers protections while enhancing state flexibility. Number three, provide federal support for reInsurance Programs. Number four, to enforce the individual mandate. Number five, to reinstate full support and funding for enrollment outreach activities. And number six, to consider repealing the Health Insurer tax. And in return i would recommend that you demand me and my colleagues to step up to the plate. I can tell you with certainty that many will get back into the market. You dont have to take my word alone. Call them directly. I did. I recommend, for example, that you call my friend and colleague, joe, c. E. O. Of anthem, and mark, c. E. O. Of aetna. Thank you for the honor of sharing these thoughts with you. And i look forward to our question and answer. Senator alexander thank you, mr. Tyson. Ms. Tomczyk, welcome. Thank you. My a number is tammy and senior principal and consumer actuary for oliver wineman. Im also a fellow of the society of actuaries and a member of the American Academy of actuaries. Its an honor to have the opportunity to provide testimony to you today. Since passage of the a. C. A. , my colleagues and i have been actively involved in helping health plans, regulators and other stakeholders understand and react to the various changes brought about by the law. Most recently ive been working with states to help them assess the impact of potential policy changes could have on premiums and enrollment in their market and supporting states in their efforts to apply for 1332 waivers. Starting this year, states are afforded flexibility to waive certain provisions of the a. C. A. In an effort to develop innovative ways to provide access to Quality Health care and strengthen their local Insurance Markets. At the same time states must demonstrate through actuary and Economic Analysis submitted as part of their application that the proposed changes satisfy each of four criteria commonly referred to as guardrails. States that are granted a waiver may receive passthrough funding equal to reductions in federal spending that result from their waiver which may then be used to pay for a portion of their reforms. Only hawaii and alaska currently hold approved waivers. While hawaiis waiver was unique and that it sought to waive requirements for the shop program that conflicts with the longstanding state law, alaskas waivers focused on a staterun Insurance Program aimed at releaving programs with certain high cost conditions. Early indications appear to show alaskas waiver has been successful in starting to stabilize its individual market. Rate increases for 2017 were reduced from 42 to just over 7 with the introduction of the reInsurance Program. For 2018, alaskas only health plan currently offering coverage in the market recently filed for a 28 rate decrease. A number of other states are in the process of preparing or have recently submitted waiver applications to implement similar reInsurance Programs. Governors and state Insurance Commissioners have raised concerns about the length of time it takes to develop and receive approval for 1332 waivers. Actuaries will start to work on rates for 2019 in just a few months. Efforts to expedite the review and approval of applications and particular waivers where another state has already received approval will allows these positive effects to impact premiums sooner. Actuaries typically consider equivalents to be an aggregate measure, examining the impact of the change of policy and benefits has on the covered population as a whole. The guardrails, as written in current law, appear to take this same aggregate approach, ensuring average premiums do not decrease and the total number of individuals insured is the same or greater. However, in december, 2015, h. H. S. Issued guidance that includes printive rules that seemingly go beyond these aggregate requirements and in some cases may limit a states ability to implement certain changes even if those changes are expected to drive down average premiums and increase the overall number of individuals with insurance. The guidance also specifies that compliance with the guardrails must be met each year, allowing states to meet these guardrails over the lifetime of the waivers could allow for more impactful and innovative waivers, including those that may have a rampup or phasein period before they become effective. My written testimony provides states flexibility to have customized solutiones that work locally. These include permitting states to submit coordinated 1115 and 1332 waivers, affording states more flexibility in essential Health Benefit definitions, allow for more flexibility around plan design that would permit states to explore additional valuebased benefit plans, allowing states to waiver alter certain provision of the a. C. A. And providing grants to states that support their efforts to study and apply for these waivers. Thank you, again, for this opportunity and i look forward to your question. Senator alexander thank you for your really helpful suggestions. Now go to fiveminute rounds of questions. Ill try to keep the questions and answers to about five minutes so all the senators will have a chance to have one round of questions and then we may go to two. Senator enzi. Senator enzi thank you, mr. Chairman. I am going to thank you for the excellent summary you did of last weeks roundtable suggestions in your opening statement. I want to thank senator murray for working with you coming up with another group of outstanding people to provide testimony. This really is helpful. One theme thats emerged from the course of the hearings we had in the individual market is need for meaningful, tangible reforms on the 1332 waiver. Governor leavitt, from your testimony you have some hands on experience with the waiver and that process. I thank you for any wisdom you can shed on specific changes you would make right now to the process for the waiver. You mentioned tweaking the 1115 and 1332 and also that neutrality. Could you expand on that a little more. Governor leavitt i mentioned three years that i think would fall into that category. The first would be having a menu of standardized waivers. That have actually come through their experience if they have permitted a reinsurance facility in alaska. Minnesota shouldnt have to wait if it met the same criteria. And a menu of those could be developed so you maintain the guardrails, the National Standards, if you will, but you give states the capacity to use their own a series of different options to create to craft their solution. The second, you eluded to was that right now waivers under medicaid fall under section 1115. Waivers related to exchanges fall under 1332. Those are often codependent. In other words, i cant do what i need to do on 1332 unless im able to do something with medicaid under 1115. Currently those are parallel processes. Theres no reason they couldnt be done together. But the law would need to be amended to allow that. And lastly, i mentioned the fact budget neutrality, one of the important guardrails that i believe would be wide agreement on is currently required to be achieved in every separate fiscal year. Oftentimes when a state or the federal government makes an investment that spans five or 10 years, theres an upfront cost that has to essentially be amor tiestized in the following years. If this could be achieved in the waiver period as opposed to every specific year it would enable states to find those solutions while maintaining the national the National Standards that make up the socalled guardrails. Senator enzi thank you. I have some additional written questions regarding that. Mr. Bragdon, i want to thank you for the millmanwhite paper. It gives quite a bit of information about the main invisible risk pool and flexible models we might be able to use. Could you give me a few more details, though, on your any competitor purchase . Mr. Bragdon thank you for the question, senator. The maine law really looked at how do you achieve this bipartisan consensus over two aspects of the cost of health care . One is, if you will, on the republican side, it was there was concern about everincreasing costs and everincreasing deductibles and in the Maine Legislature on the democrat side there was concern as insurers get narrow networks, how do you maintain high access to providers who are being shut out of networks . And so the legislation that passed unanimously in maine says that if were going to empower patients we have to give them two things. We have to give them true Price Transparency, building off of Massachusetts Law in 2012 that said, heres what the actual negotiated prices for you as a patient in this particular insurance plan. But the second piece was that if you could find a provider that was lower than the average cost, even if that provider was out of network, you as a patient had a right to go to that provider and the Insurance Company to treat it as an innetwork expense. So it was this combination of giving patients the information and then the power to shop that in state Employee Plans and other selfinsured plans shows thats the way to reduce the cost of health care. Senator enzi thank you. My times almost expired. I will submit some questions in writing, particularly for ms. Tomczyk, to get information on a more actuarial standpoint on what weve been talking about. Thanks, panel. Senator alexander thank you, senator enzi. Senator murray. Senator murray thank you, again, to all of our panel. Its very helpful. Otoole, in the past couple years i know you took steps to adopt a basic health plan, limit insurers financial risk to keep them in your market and provide premium rebates for enrollees to keep your coverage affordable. And as you mentioned in your opening remarks, youre hopefully within a few days of getting a 1332 waiver. And its purpose is to establish a reInsurance Program, correct . Ms. Otoole thats right, yes. Senator murray im glad you agreed to a longterm federal Insurance Program as well. We hear a lot of bipartisan support for that approach at last weeks hearing. And as you know, today were talking about how we make it easier for states to get these waivers. And my priority is we protect the socalled 1332 guardrails that give states flexibility without hurting people with preexisting conditions. Did those guardrails do anything to prevent minnesota from applying for its waiver . Ms. O toole no, we didnt. Those are within the guardrails. Senator murray i want them to bring down cost of coverage while maintaining the quality of care. But i want to make sure we avoid proposals that actually increase deductibles or other outofpocket costs and your waiver request made sure you maintain that, correct . Ms. O toole thats right. Senator murray mr. Tyson, thank you for your testimony. To live up to its end of the bargain and provie certainty and stability. Thats important. So that there is a level Playing Field for competition mock insurers among insurers that helps drive down the cost of people seeking coverage. Its up to insurers like keyser to come to the table and provide high quality Coverage Options for patients and families. In your testimony, you provided a number of options for stabilizing the individual market. I wanted to ask you, what are the two or three most important things the federal government can do to stabilize the Insurance Market in the short term . Thank you very much. I know that its a difficult time right now in terms of etting a bipartisan agreement. Ms. Tomczyk i think you have to ms. Otoole i mr. Tyson i think you have to solve it for the year. Were thinking about 2019. 2020 is around the corner. I would strongly recommend that you consider at least a multiyear solution for the c. S. R. At least three years if not more permanent. But i understand that there are issues that you have to work through to get to that point. What you want to do is create stability and credibility where the insurers will come back more into the marketplaces around the country. I think the payback to you will be that once the market starts to behave as a market, once the competitors begin to really compete against each other, to add value by the way, play by the rules. The guardrails are the rules that have been established, you then get us to begin to act more like what you see in kaiser where we compete on value. We compete on price. We compete on coverage. We compete on access. There is a difference between getting coverage but not being able to afford to go see the physician or go into the Delivery System. And obviously on service and quality. The second area we recommend is around the reinsurance and to solve to the reinsurance issue that would also create better stability in the marketplace. And then probably the third area would be around the what is currently a tax holiday with the tax is to consider that which drives costs out of the system. I would recommend you focus in those areas. The messenger thank mrs. Murphy thank you very much. You talk about outreach and assistance to get people to the marketplace. The Trump Administration cut the federal marketplace outreach funding from 100 million to 10 million. And cut the budget for navigators. We heard at our hearings last week about how navigators, people with complex financial situations and Health Conditions choose coverage thats right for them. Based on your experience, how important is funding for Consumer Outreach and assistance . I think its critical. I think its critical not only to meet our mission of enregion informing as many consumers as we can about their Coverage Options, but its also critical in balancing that risk tool. Ms. Otoole we see the oler people sign up first and it takes extra effort to get ealthier and younger minnesotans in the fool. That involves not only on the ground assistance, in person assistance, but also a robust marketing campaign. We work with both navigators and brokers a minnesotans in the fool. That involves not only on the they are really critical to our success. Senator murray thank you very much. Thank you, mr. Chairman. Chairman alexander thank you, smart murray. Senator collins. Senator collins governor leavitt thank you for your testimony and the guideline of National Standards state solutions. I think thats a great motto for the bill that were crafting. We know from the experience in some states, including the state of maine, that a high risk or reinsurance pool can help drive down the cost of premiums. And in looking at the costs, if the federal government were to play a role, has the range of costs. But if youre going to cover everyone all individual market policies that could be as high as 16. 7 billion. On the on the other hand, if you took the alaska approach, it could be far less. We have had some conversations with Financial Association of Insurance Commissioners and its in the neighborhood of 3 billion. My question to you is this. Give the savings that reinsurance can provide on the premium side, do you think that it would make sense for the federal government, for a brief period of time, say a couple years, to provide some seed money to help states set up reinsurance pools . Lets acknowledge that money was readily available to states, more would do it and do it more quickly. Governor leavitt in the long term, there is a need for states to have reinsurance facilities that are integrated with the balance of their priorities. And i believe can be developed in a way that essentially are not just budget neutral at the federal government, but also at the state level. I am a strong advocate for reinsurance facilities. But i do think they have to integrate into a much broader construction of a Health Care System than the federal government can contemplate in every state. Therefore they need to be done at the state level. But what we can do at the federal government to facilitate it should also be a significant part of the discussion. Senator collins right. Im not suggesting that the federal government should take tate how its set up. Maine had an invisible highrisk pool that neither providers nor beneficiaries knew that they were assigned to the highrisk pool. And it was funded through premium dollars with the seeded risk, but also by a 4 per month surcharge seengsly essentially that was built into premiums for all plans. But a lot of states dont have funding available right now. I know alaska ponied up some 55 million originally, but its because that was very impressive. But down the road they are using the savings from the advanced premium tax credits to help finance the pool. Is should weestion be trying to expand reinsurance polls by initially providing some assistance to states . Just in the short term. Governor leavitt that will be an appropriation decision obviously of the congress. But i think its safe to say if the congress were to do that, it would be an acceleration of state pools, and i think from my view that would be a positive thing. On the other hand, i think its important that its not an ongoing federal responsibility. Senator collins im talking short term. Thank you. Tomczyk,ut sick ms. The issue with the guidance that was put out by the Obama Administration in december of 2015 that required that states demonstrate budget neutrality nd they had to o do so in each year of the waiver. Isnt it very difficult to produce savings from innovation in the very first year that you try a new approach . Ms. Tomczyk it can be. It depends on what type of program you are trying to put in place. Certainly one of the challenges with the market today and instability of good functioning Insurance Market needs a broad Cross Section of risk and were having trouble drawing in the young and healthy individuals. There may be Innovative Solutions and programs that can be put in place to draw those people in, with you it may take some time but it may take some time. Many people may have come to the exchanges and looked for coverage and saw it was too high. After programs are put in place to bring those premiums down, we need to get those people to come back and take a second look. That may take some time to implement. So i think if you can meet the deficit neutrality requirement over the long term, even though it may in the in the first year, that that should be something to consider. Senator collins thank you. Chairman alexander senator franken. Senator franken thank you, mr. Chairman. The chairman i the chairman and i have been around after the coffee today as a number of you did to discuss the interplay of state flexibility and the essential Health Benefits. Id like to get some clarity i want to include all of you. On what 1332 waivers currently allow regarding seengs Health Benefits, and essential Health Benefits, if the law were modified to permit additional state flexibility in terms of changing the guardrails or what states were able to waive upped these 1332 waivers, what potential implications would be for individuals with preexisting condition . I feel its really important this is a basic concept for us to get our on the committee and in congress to get our hands around. Its important we educate our seavens the public on this issue. As i ourselves and the public on this issue. I understand all plans covered on the exchange cover the same essential Health Benefits, broad categories for coverage, including coverage for emergency services, maternity care, Mental Health and Substance Abuse disorders, states then identify and shurens plan that serves as a benchmark for what it will consider as meeting the essential Health Benefits requirements. Under section 1332, states may seek to revise the list of benefits that must be covered on plans sold through the marketplace. They may even seek the change seek changes to the essential Health Benefit plans as long as these changes meet certain Consumer Protections that were established in the a. C. A. Some folks refer to those jeckses as guardrails. These guardrails require any proposed change that any proposed change guarantee that coverage under the proposed waiver would be as comprehensive as coverage absent the waiver, as affordable, cover at least as many people as the a. C. A. , and be budget neutral. My republican colleagues want more state flexibility and are seeking changes to the 1332 waiver. I oppose changes that would weaken the Consumer Protections in the law or the essential Health Benefits package. Id like all the panelists to clarify whether i am correct about what is allowed upped existing law and what and also about what problems you could foresee if the guardrails or the essential Health Benefits packages were changed under section 1332. Ms. Otoole, youre from minnesota, you go first. Chairman alexander this is going to take longer than the five minutes but im going to with the consent of the other members, this goes to the heart of something were going to have to resolve if we want to get an agreement. Id like for each of you to answer have time to answer senator frankens quefment ms. Otoole thank you, senator. I believe you are direct on what you stated is the law. That has always been very important, those Consumer Protections so important in minnesota. So i share your focus there. I think the potential problem that i see i talk with minnesotans all the time and i know you do, too. I was out at farm fest in great minnesota, western minnesota, great gathering. I hear consumers two concerns, two top concerns. One, they are worried their coverage is going to be there for them, that they are going they wonder if they are going to get coverage this year and into the future. They are worried about just basic coverage. The second goes to one of my previous answers. They need to know what they are buying. They need clarity about what they are buying and what their coverage is. And what they are going to pay out of pocket. I think what i see as a potential issue, and im hoping we can all help the committee thread this needle, but consumers really need that clarity in their coverage to make good decision force their families. Decisions for their families. Senator franken what you mean is when people are buying insurance if the essential benefits are changed and insurance policies are allowed to not cover certain things, is it going to become more complicated to buy insurance . Ms. Otoole thats right. Chairman alexander one of the other witnesses please answer senator frankens question. Im happy to respond, senator. There is a bit of ambiguity in my view on how this is laid out. Governor leavitt the statute lists 11 seengs benefits. At the same time it uses the word comprehensiveness. I think being able to determine what is comprehensiveness as it relates to those 11. There is a concept thats often used in federal statute referred to as actuarial equivalency. Rather than try to look at a list of benefits and say they have to all be provided at the same level, you can create some flexibility. If this were a car, for example, we would say its a 25,000 car. Now, you need a motor, but some people believe its also essential to have a backup camera. So you could have a 200 horse power motor and backup camera, or a 300 horse power motor. All for 25,000, but you choose the list of options how you will weigh them. Its my view that the state flexibility would be profoundly enhanced if rather than just speak of comprehensiveness, if it could be actuarial equivalent comprehensiveness so the states had the ability to construct an option menu of benefits and provide either the state or even consumers the ability to shooze plans that weigh those different choose plans that weigh those differently. Mr. Bragdon i think your question is on point. In the current 1332 statute states have flexibility with essential Health Benefits. I think of state flexibility, it should be a game of addition not subtraction. So right now states could sub tract things off the essential Health Benefit list assuming they passthrough those guardrails. I think part of the conversation about additional state flexibility should instead look at how can you vary other things that can reduce cost besides just reducing the number of benefits. How could you change actuarial values . Some of the comments the governor made. How could you have greater flexibility when it comes to cost sharing . I think with state flexibility you want to use all these different tools so that people have lower cost options. Because whats happening now in the unsubsidized market is people are choosing nothing, which is unlimited cost sharing, if you will, rather than something that it is at a price they cant afford or not willing to pay for what they are buying. You want to increase that state flexibility, but essential Health Benefits are already on the table. R. Tyson i view the essential benefits as being the tires on the car, steering wheel, seats, etc. Being in ve after this market for so long and of the a. C. A. , the way the Insurance Company and others got the costs down was either to eliminate some of the benefits and or continue to increase the deductibles. What you ended up with was a lot of people buying something that when they needed it they found it completely useless to get access into the front door of the care Delivery System. I do believe that there is room for flexibility. And we should explore that in partnership between the government and the health care Delivery System. So im not stuck that there is only one way, but i think that the essential benefits provides a Great Foundation for us to build on that gives a predictable set of benefits to be expected that we all did to compete against. Ms. Tomczyk my understanding is the current law allows the flexibility to alter the essential Health Benefits. And that they can be altered at the state level but they have to be actual equivalent. There cant be the take away being described. If you take something away you have to put Something Else in. That package at a state level may eave state may have different needs. I think the flexibility for the states to design their own package is lines of consistent across the state is a good thing. And again i think the law says whatever if you take something out, the value of what you end up with at the end of the day has to be the same. If we Start Talking about different packages at the consumer level within the state, i think we have to be really careful about adverse selection. In other words, if you have one consumer can choose to not have a certain benefit or one consumer can choose to swap out a different benefit, well have to look at that closely to make sure that folks arent selecting just the packages that work for them and therefore the cost of those benefits are not spread broadly across a very robust broad risk pool. Chairman alexander thank you. Thank you, senator, for the question. We can go back to it after the first round. Senator young. Senator young mr. Bragdon, you have mentioned a couple times in your testimony here today that we should address the underlying cost of health care in part by providing for greater Price Transparency, true Price Transparency as has been done in massachusetts. And also ensuring that there is actual access that enables consumers to act on that transparency. You say the maine law that passed in a bipartisan fashion earlier this year. Are there any initial indications that you can speak to about how that law is working for consumers . Mr. Bragdon thank you for the question. The maine law was built upon a program for state employees in New Hampshire thats been replicated in other states as well. So the approach simply says that patients need to have true Price Transparency, not the charge, but the actual negotiated price. It went one step further because as networks are getting narrower and narrower, patients are being shut out of providers, even providers that are lower cost. There is a loss of perverse incentives in the Health Care System to encourage that. What the maine law, which is going into effect beginning next year, i doesnt have the results, but it gives patients that right to choose the high value provider even if it is out of network. There are incentives. What the New Hampshire state employee plan saw was just with making the market more transparent, new providers came in at a lower cost because patients now could see that they could go somewhere cheaper and they voted with their feet. Senator young are there barriers that would be unique to the federal level . Federal implementation of this right to comparison shop approach that we should be concerned about if this committee were to embrace that approach . Mr. Bragdon no. Senator young very good. You also have spoken with some spess physicality in your testimony specificity in your testimony about targeted and invisible risk sharing. Can you elaborate on this idea. What do you mean . Mr. Bragdon sure. Both several different actuaries have talked about the payingest premium driver as a result of the a. C. A. Was guarantee issue. Saying all individuals with preexisting conditions need to have access. So the idea is how do you maintain that access but take that unpredictibility and high cost out of the system . The in the past states used to do it by segregating folks to a highrisk pool that had different plans and treated differently. The maine approach, this is actually quite similar to the Program Starting in alaska, the maine approach said that rather than doing that, lets specifically take those individuals with highcost preexisting conditions, in maines days with case when they walked through the door, alaska, after the fact, take them and limit Insurance Companies explow sure. Take away the high cost and take away the unpredictionibility on them. So you keep the policy choice of giving everyone access, but you limit the cost by targeting reinsurance just to those individuals. Senator young you have advocated jumpstarting or providing seed capital at the federal level to expand this idea in other states, right. I share what i thought i heard governor leavitts concerns about this being perhaps an ongoing federal responsibility. Do you share that concern . Mr. Bragdon i think the ideal situation is to jumpstart it at the federal level but allow states to customize it. Maine chose eight preexisting conditions, alaska chose 33. There is real reasons for that variety. I think that the ideal is to get it started at the federal level so you can get premium relief as quickly as possible, and transition to the states so they can customize. Senator young are there things we might do mr. Bragdon or governor leavitt to prevent states from comecoming back to the federal government two or three years down the road and saying we would like continued funding for whatever reason as states are incentivized to do . Mr. Bragdon. Or governor. Governor leavitt you could structure it not as a grant but something the federal government expects over time once the program is moving and functioning to be able to recapture some of the savings that are developed at the federal level. I would have to think that through more clearly. What you suggested is a danger. Senator young thank you. I yield back the balance of my time. Chairman alexander thanks, senator young. Senator ben net. Senator ben net thank you, mr. Chairman. Thank you for holding this hearing. Ms. Otoole, i wanted to start with you because are you on the frontlines of this. Our solving a problem is making sure we understand the nature of the problem were trying to solve. I think it would help the committee if you could walkthrough what the sources of the historic volume tillity had been in the individual market as you understand it. Ill tell you about what were dealing with it, it may come to that, but the historic volume tillity people face. As the chairman said, what concerns us today is something that relates to 7 of the people that are inshurebed in america insured in america. There is so much more we need to deal with in our Health Care System than that. We have had a challenge because our politics has been focused on this 7 . A lot of the reason for that i think is because of the volume tillity you describe. The context for my question volatility you describe. The context of my question just like many other states, we have experienced a lot of volume tillity. Ms. Otoole when we were getting going i think the cures were not as clear on the risk pool. We had two major carriers withdraw right in the first couple years. And we saw premiums increase dramatically. I would be lying to say a lot of the confusion lately is around the politics, but i see because i talk to consumers all the time and they are confused about whats going on. I think the volatility has had a big impact on our market. I think the flexibility we see now and the opportunity to settle down our market is going to have a huge benefit to consumers. I think thats why you hear me talking about our reinsurance waiver and the importance of that flexibility to do that. I also think that our flexibility as a state base exchange has helped us move forward more quickly in minnesota because if it rains at the local level we know what we need to do. And were doing that. I think some of these solutions are very short term and we need some longer term help from all of you. Mr. Bennett i dont want senator bennett i dont want to get lost again. But does this mean in maine you will, if you are going in to get a hip replacement, that you have some means for knowing what providers all across the state charge for a hip replacement . Is that its most basic level . Mr. Bragdon thats the first part. It goes on a Massachusetts Law in 2012. Senator bennett the last question i have for you folks is, is it your understanding the 1332 waiver as its written now would allow a state if it wanted to to apply to have a public option in their state, some option other than private or nonprofit insurance . Ms. Otoole i am happy to dive in. In minnesota our governor has proposed paub lick option t would be a buyin to our minnesota care program, basic health plan, that idea is still percolating, but it is envisioned if it ever comes to fruition it would be to a waiver. Senator bennett is that a consensus . I would agree. I would agree. Just to add to the perspective. One of the ways i think about it and would offer for your consideration is what was appening before a. C. A. Mr. Tyson you had situation where individuals with preexisting conditions in essence were not covered and or if they got coverage, they bought it at a very spentionive price. What you have now with a. C. A. Is were trying to make sense in the market of how do you now put this risk inside of the coverage for a segment of the population. And the expert is sitting next to me about how you deal with the actuarial data and everything around that. Then the second thing you have a lot of people who historically have not had coverage to get care except for when they needed care they showed up in the emergency department. And as we now have taken on more of this population, and are providing them coverage and they have access to get care, were discovering different kind of illnesses and areas we have to focus on to, in essence, get them to really perform in a preventive way going forward. That adds to the cost in the short term but if managed correctly in the long term youll end up with bert managed care. Senator bennett my time is up. I yield back to the chairman. It also relates to the misery a lot of others the 93 that arent the 7 were talking about here are also feeling. Would also share the views as the couple of you suggested that one of the great unhappinesses that i hear from peam people about is when they buy their insurance, and then when its time for them to use their insurance, they are denied the opportunity to use their insurance. Insurance is not like buying a loaf of pred where you consume it today or this week. Its very different. I think thats what the Affordable Care act would try to recognize. I thank the witnesses for your excellent testimony. Thank you, mr. Chairman. Chairman alexander senator murkowski, i know you are very interested in the alaska waivers and i gave senator franken extra time. If you need it for your questioning please take it. Senator murkowski i appreciate the question from senator franken because i do think it does go to the core of what were trying to get to here. I Pay Attention very clearly to your introductory remarks as well as those of senator murray as the ranking. It seems to me that there is a path forward here to get a consensus product out of this committee. Thats something i full heartedly endorse and emfrase and have been very consistent about. And it seems that one of those ieces is what we do with the c. R. S. And dealing with the time on that. I think we can work that through. But its this issue of flexibility of the states that we have identified as one avenue being through the 1332 waiver program. Im not sure whether or not state flexibility is being interpreted at somehow or other cold for something in fairous to take place. I want to nefarious to take place. I want to go back. What were looking to do here in this committee with this targeted approach is to stabilize the individual market in this shortterm period here without eroding protections and without increasing the premium costs. As one who comes from a state with really high premium costs, even with the reductions that we have seen through the 1332, quite honestly going from 1,000 a month to 800 still is no screaming deal. This is important to me as well. Im going to ask you, ms. Tomczyk, as the actuarial at the table. In terms of some of these proposal that have been laid out here today and last week on ways we can better enhance the 1332 waiver, whether or not any of hem actually would have an unintended consequence of increasing premiums. Whether its the proposal for the coordination of the 1115 and 1332 the menu of waivers as governor leavitt has indicated. The budget neutrality issue, whether its in each year of course over the course of the waiver. Can you speak to whether or not these proposals that are being discussed would have an impact n premium increases . Ms. Tomczyk thank you for the question. I think with any of these proposals its going it may differ by state. Even things that we havent mentioned, each state is starting from a different place in terms of whether they have expanded medicaid, whether they have transitional policies in the market. Any proposal could have a different answer for each state. Thats the where the state flexibility is beneficial where states can look at what might work for them. I think around overarching this we still have the guardrails. I think if any the guardrails that are outlined in law. If any of the proposals were found to increase the number of uninsured individuals or increase premiums, my understanding is that waiver would not be approved because its not passing the guardrails. I think there are some other options and flexibility that could be provided that with that december, 2015 diedance i mentioned is maybe keep states from look at where they would work to reduce premiums and they would work to increase the number of individuals who are insured. But instead of looking one level down at the subpopulations, that perhaps preventing some of those things from being explored further. Senator murkowski effectively streamlining a process is not going to increase premiums. Ms. Tomczyk yeah. Streamlining the waiver process . I dont think sow. Senator murkowski or allowing for a menu of standard waivers and then to governor leavitts point, you got National Standards but state solutions. Could that have potential impact to premiums . Are you saying it depends . Ms. Tomczyk i dont think having the menu itself to help expedite and streamline the process would add to the cost, but depending what is on that menu because each state is a little different it could potentially pass the guardrails in one state and not another. Does that make sense . When we talk about reinsurance, because of the way it works, it brings down the premium for all. Some kind of standard menu for reinsurance waivers will probably work for just about every state. But as weigh start looking at more unique and innovative maybe they would be on this simple menu. Maybe the menu has to be simple, straightforwardtype waivers that would work in every state. They are certainly more innovative waivers that may or may not work depending on the state specific. Senator murkowski i appreciate that. Dont know whether anybody else had anything that they might want to add to that. It sounds from your answer if were talking about some of these basically improving on a provision that was already outlined in the a. C. A. By making it work as intended and allow for a level of efficiency is something we should be striving for regardless of what we do. Ms. Tomczyk yes. The opportunity to explore that, the flexibility, yes. I agree. Senator murkowski thank you. Chairman alexander thanks, senator murkowski. Senator whitehouse. Senator whitehouse thank you very much, mr. Chairman. I want to thank both you and senator murray for the comments that you made at the beginning of the hearing and join senator murkowski in endorsing and embracing what appears to be an emerging path towards a bipartisan solution here. To all the witnesses i assume that you will all agree that to the extent either through a risk pool or through reinsurance that you could lift the cost of certain very expensive conditions out of these markets, that that will have the effect of lowering premiums in those markets, is that an agreed base line fact here . Yes. All heads nod. In turn, the effect of lowering the premium would be expected to attract more participation in the market opposite of adverse selection s. That also a base line principle we can agree on . Yep, all heads nodding. That takes us to the question and id like to have mr. Bragdon and ms. Tomczyk address this. You have chosen, mr. Bragdon, to do a reinsurancetype mechanism. Alaska, miss tomczyk, advised by your firm, has chosen to do a conditions based mechanism. Do you see huge differences in advantage and disadvantage between a conditions based, i. E. Once are you diagnosed you move into either the reinsurance or he risk pool, versus hitting a dollar cap level, make your best case for either or let me know if you dont think thats an ordinary difference as long as the underlying job is being done. Ms. Tomczyk i think both those types, one thing it does it adds predictibility and stability to the market. And as an actuary it makes it easier to price when you are taking those those volatile claims out of the market. I think senator whitehouse once its established and set you dont have to deal with other things to get to a spending cap, correct . Ms. Tomczyk ill be corrected if im incorrect. I think the main Program Maine program, it is also condition based but folks enter the pool at the time of application. They look at the conditions that they have. If they have one of those conditions, they go into the pool. Alaska, individuals can develop those conditions throughout the year and then they move over to the pool. One advantage that i think that has from a predictibility and pricing standpoint, the insurer is protected against those large claims if someone develops them during the course of the year. Senator whitehouse mr. Bragdon, do you fundamentally have a conditions based program that moves through that multipolicity of claims . How does it work . Mr. Bragdon the maine approach looked at eight preexisting conditions at the time of application. At that time if certain individuals based on how they looked at the time of application were going to be high cost, insurers could voluntarily put them into the pool. Whether you do the alaska approach or the maine approach, both are similar. You are correct in that they are based on certain preexisting conditions. The idea being if guarantee issue, policy choice has a premium increase because of the uncertainty and the high cost, then target the reinsurance to that driver. Thats the approach senator whitehouse you would both comfortable either way as long as we accomplish the goal allowing premium to come down and more participation in the market because premiums come down . Ok, good. The last question which ill actually make because my time is running out as a question for the record, comes out of mr. Tysons testimony. He has said very clearly we need to reform our Delivery System to encourage integration and esishency. That the a. C. A. Tried to support Delivery System reform but did not do enough and we need to move from sick care feeforservice models of care to a system that emphasizes well care with incentives for value and keeping people healthy. Ill ask each of you, in that context to evaluate the opportunities in improving Patient Safety and reducing infections. Learning from the wide variations in care and outcomes and how to drive towards the better care and outcomes models within that range of variation. Three, reduce administrative overhead. There is way too much warfare between payers and providers that produces no health care benefit. Four, improving our adherence to the wishes of patients at end of life. So they are not being dragged through a lot of procedures they dont want. And finally, reforming the Payment System to encourage health care rather than sick care. Im kind of out of time. Ill stand by for questions for the record. Mr. Chairman, just one general observation, i would like to note the other senator from maine is in the audience. It is not uncommon for me to see when there is a very interesting hearing going on, senator king just showing up in the audience. Judiciary hearings here in the health committee. I just wanted to note he is here also reflected maine and reflects and admirable curiousity on the part of senator king he turns up in hearings and sits quietly in the or maybe has nothing. Pay no attention to the senator from minnesota. Chairman alexander were glad to have both senators from maine. This isnt the first time senator king has come. Senator cassdy. Senator cassidy senator murrays comments, although not mention me by name, i saw people in the audience looking at me because obviously im trying to advance the bill. Were not trying to be partisan. This is bipartisan. Even ms. Otoole i mentioned in our premeeting turns out for a 0yearold person in minnesota family, they are paying over 31,000 a year for their bronze level plan with a family deductible of 13. 700. Even in a state doing relatively well, its 44,000 out in a bad year, plus a pharmaceutical deductible. We dont want to be partisan. I met with 10 different Democratic Senators as we discuss this. Under our plan, wisconsin does incredibly well. Virginia does incredibly well. When you see the language, your state will get hundreds of millions of dollars more over five years to care for lower income virginians. We have specifically tried to make this a nonpartisan. Taking the portions that senator collins agrees with and getting flexibility to the states. Senator collins for the record doesnt like the cap. But will i say it was just good work. Let me just commit were not trying to be part part zant. Were trying to be fair to all americans no matter where he or she s i hope partisanism isnt something that originates on one side of the aisle because truly i have made an effort. I know senator collins and other senators have to reach across the aisle on something which is bipartisan. By the way, other states representative by Democratic Senators that do substantially better including missouri and florida. That said, what we heard from our democratic and republican Insurance Commissioners and governors is they want flexibility. And they think they can do more with flexibility than the federal government can do telling them how to do it. Then they come and ask can we have an exception . Mr. Leavitt, i agree with like what had you to say. A combined 1115, 1332 waiver with guardrails is your recommendation of how to proceed. Is that a fair summary . Governor leavitt that is an option states should have. Bill cassidy if the would receive under status quote and gives it to them with guardrails a combined 1115, 1332 as you said in the premeeting, if you do this, this, this you have the money. Well watch to make sure. That seems consistent with the direction you think we should go in. Governor leavitt in many cases its not money. In many cases its authority to move and organize a system in a particular way. But in essence what you suggested is true. Senator cassidy i knew more about alaskas Health Care System than i ever thought i would know. I think 11,000 people in the individual market, the idea you can have risk pool based upon 11,000 people, i could make a joke about mare wapa being legal in alaska, the point is you just cant do it. You have to be hallucinating to think you can. Mr. Tyson, would you agree with that . You are the fellow that has to put together a plan as the heads of kaiser, a risk pool of 11,000 people would be difficult to score. Difficult to bid on . Mr. Tyson yes. Senator cassidy you mentioned in the premeeting the folks you have seen in the individual market has always been an unstable group f could you combined those with your Medicaid Expansion risk pool, which in california probably numbers in the millions, that would make it far more stable, fair . Mr. Tyson very fair. Senator cassidy as the governor suggested, you would have the option of combining the two, particularly for a state like alaska, would be a kind of bipartisan solution giving the governor the option to put together something that would take care of those in the individual market. Conceptually, thats a fair a that would be a fair approach . Mr. Tyson with the proper guardrails in place, as stated earlier, create those guidelines, create those guardrails and allow flexibility to look at the marketplace and how the marketplaces are unique in some cases but generic in others. To look at other ways of coming up with solutions. Senator cassidy those in california different from alaska . In terms of how would you design insurance . Mr. Tyson probably so. Senator cassidy ill finish where i started. We do not attempt to be partisan, were trying to be bipartisan allowing the state, a blue state and a deep red state, god bless you, to come up a solution which is specific for your state which works best for those lower income folks, at the same time delivering more dollars to states like wisconsin and virginia than they ordinarily have. I yield back. Chairman alexander thank you, senator cassdy. Senator a baldwin. Senator baldwin thank you, mr. Chairman. Thank you for sharing your expertise with us today. I am very encouraged about these hearings and the bipartisan approach that were taking to the issues of market stability and affordability. I agree that we should consider ways to help the states implement innovative reforms that work for their constituents. Particularly to help address High Health Costs like prescription drugs to name one. But i am concerned with proposals that would allow states to roll back the vital Consumer Protections and benefits that our families rely on today. Last week we heard from a panel of governor that is we should do more to help states share best practices. Best practices on innovative outreach efforts, to enroll more young and Healthy People. And i believe that this is an essential element of stabilizing the Insurance Market. And we should pursue federal and state reforms that would allow more young adults to enroll in comprehensive and affordable coverage. So ms. Otoole, as a state xchange you implemented unique marketing and outreach campaigns in minnesota. Specifically for various communities, for example, ethnic minorities. Targeted to help more minnesotans enroll. Mr. Tyson, you have had similar experiences with targeted outreach on californias exchange. How can congress facilitate the sharing of best practices to help others learn from your efforts, and how states, including those with federal marketplaces, implement similar efforts to enroll more young and Healthy People and make the process more transparent . Id love to hear from each of you. Mr. Tyson do i believe that the Marketing Efforts that we have i do believe that the Marketing Efforts that we have deployed in california and other parts of the country have been very important to both educating the public, to really describing what it is that we can offer as a Health Care System in those markets around the country. And to deal with the uniqueness of the population in some cases in which they have not had the experience of getting coverage. So there is a whole educational piece. In addition to that, we had to add staff into our call centers to educate them after they make the purchase to understand how to access care to understand what it means to have a deductible versus a copayment. And kind of basic things that you educate the different populations on. I also think that the whole advertising of it has been very effective in california in which we tell our story around why this is a good thing for individuals and families. And i can tell you from my own experience of working in these vast communities around the country and now focusing in california is that these are individuals who really do want to provide coverage and care to their families and for them individually. And they really do want to understand how to get engaged in it. And the challenge continues to be how do we continue to make this more affordable to them . And ongoing reforming of the health care Delivery System i think is the best path to really deal with the affordability of care. Senator baldwin thank you. Ms. Otoole, i want to give you the opportunity to answer that question. Let me add an additional component that i think reflects on minnesota. You share that minnesotas flexibility in implementing special Enrollment Periods when needed for your constituents has helped you enroll additional thousands in the marketplace. In 2014 i secured a special Enrollment Period for wisconsin who were being transitioned by virtue of our governors decision of not expanding medicaid off of our badger care program, which resulted in about 2,000 more individuals receiving coverage. Can you talk also about that flexibility in your response . Ms. Tomczyk im happy to. Ms. Otoole im happy to. I think the critical part of outreach and enrollment and marketing is that we invest in it. Because i see that as meeting our mission of informing and helping as many people go into coverage as possible. Also it helps to stabilize the risk pool. I cant underscore that enough. When we have control over our outreach efforts, we also benefit from the federal investment. I think it is absolutely critical to continue that. In terms of special Enrollment Periods, our flexibility to do that has also been critical. We had a bipartisan agreement about premium relief. Almost a rebate for people who didnt benefit from the tax credits because we had upward of 50 premium increases last year. We gave that that law passed with a week to go in open enrollment, and that was not enough time for minnesotans to enroll. We add add week on to the end of open enrollment, kept our doors opened, had sisters all over the state working like mad to help people and we enrolled an additional 5,000 people in that week. Just critical they could take advantage of that relief. Chairman alexander thank you, senator baldwin. Thank you, ms. Otoole. Were running towards the end of hearing time. We have several senators remaining. Were going to try to keep to the five minutes on the questions and answers. Senator murphy. Senator murphy thank you very much, mr. Chairman. Let me underscore the importance of marketing. I was with the head of connecticuts exchange, one of the most successful in this country. This week well know whether our insurers are staying in for the next Enrollment Period. Folks that run our exchange couldnt imagine a worse time for the president to have announced the dramatic rollback of marketing, even though we do a lot of it ourselves, we rely on those National Marketing campaigns as well. One of our insurers is right on the precipice of walk ag way, this announcement may be the straw that breaks the camels back. I followed senator young out, following his question about how you make sure that any federal assistance on setting up reinsurance funds doesnt become a permanent burden, extra burden on federal taxpayers. I understand that to be a very legitimate concern many of our republicans will bring. I suggested to him and suggest it to you and leave it for the panel to think about. Maybe there is a way to place a bet that the cost savings that alaska has achieved will be achieved in other states, but do it in a timely fashion. If the savings are not achieved jeefrls, that of the federal contribution falls back. That may be a way to protect the federal investment while recognizing the states may not be able to make these investments up front. Maybe there is some middle ground where we can recognize that helping states set up these pools is important but froketting taxpayers are important as well. I have one question. Its frankly maybe a little bit of a devils advocate on a concept that i actually support, which is state based reinsurance perhaps backed up by the federal government. Waint to ask this of mr. Tyson. Your whole business moddle is built upon accountable care. We spent a lot of time talking about the importance of Building System of insurance and reimbursement based upon getting Insurance Companies and big physician groups and hospitals to care about outcomes. One of the risks of taking off of Insurance Companies the cost of very highly medically acute patients is that it then doesnt put the risk on patients who dont get Preventive Health services and who spiral out of control into the highest 5 tore 10 or 10 of spenders takes it away from the Insurance Company. As a representative of a company who thinks a lot about how you build accountable systems of care, imagine a world in which we do have a statebased universal system of reinsurance, how do you make sure that Insurance Companies who would still be providing the care for everybody else having in the Senate System in place to make sure that they just sort of look the other way if somebody gets medically complex because they dont have to worry about it on the back end . Mr. Tyson very, very good question and thought provoking question. Just preface my comments by saying that. I think its an excellent question t goes back for me to the earlier conversation we had this morning which is, if were not dealing with the Delivery System, reform of care itself, while we can watch cost goes down on a temporary basis if were focused on the claims side or just the coverage side, sooner or later they are going to have to access that system of care and thats going to ultimately drive the cost of care back up. So really figuring out how to bring the two together, which is both the coverage and the care aspect and to create an accountable system is going to be critically important in the long run for this to be successful. Added to that would be how do you make sure that you are innocenting the system to perform the way it is intended to perform we leave this hearing at this point. The u. S. House is with to gavel