World something really big happened on monday. And that was there was agreement to actually increase the cpp. So we had a change in government last october. That was a positive on enhancing the cpp. Frankly, ontario would rather do something nationally with the other provinces than do things on their own. So the between ontario and the federal government and doing some further work, there was actually agreement on monday to do two things with respect to the canada pension plan. One was to increase the benefit, and number two is to increase the amount of income thats going to be covered by the benefit. So its a big deal in canada right up there with stabilizing the cpp in the 1990s. So theres a lot of detail to be worked out as to okay, exactly you get down to the bottom line what does it all mean in terms of implementation. A long window on implementation, starts 2019. Sevenyear window to implement the whole thing. That got agreement thats what got agreement from the hesitant provinces to have a very long runway. So that now changes the conversation in canada in terms of, okay, given were going to do that, what else do we need to do . Its quite a change in conversation. So good things can happen. There can be agreement between governments, apparently, if you get the right vibes and somebody called trudeau in the room and it happened. So where does that leave you all here . Three things. One is that i think its important to have the ideal system in mind. Ideally if you could wave a magic wand, what would it look like . And then number two is realistically, how close can you get there . Because there are a lot of barriers, a lot of path dependency on how they got to where they are today, some of them nonchangeable, but still i think this notion of the ideal, what can we do, you know at the margin, where should we be spending our time . And it seems to me, firstly, that the Poverty Alleviation for seniors is one major issue that i would look at in terms of what can we do about that, and then i think with respect to middle income workers without pension plans, the question really does become is you know, how forceful can you become about getting that participation up . And its interesting that in the uk, they went through this and they said, you know, youve got to mandate it, and now in canada through expanding the canada pension plan, it is mandatory. So all employers will have to be involved in this. So i think the question for you is to what degree can you require, number one, participation, but also, number two, getting the contribution rate up to a level where it actually matters, where you can get the income replacement. So those are my opening thoughts. Thanks. [ applause ] thanks so much, keith. So weve got about 15 minutes left. And i want to make sure we have lots of time for well, lots of time, some time for audience questions. So i would say i would like to pose one question to all of you that you can answer or not, as the case may be, based on things that everyone has said. Everyones pointed out that coverage is a huge issue. Keith has just put on the table the idea that the key to it internationally is compulsory participation. Is that the key to it . And, you know, related to what the way he framed it at the end which i thought was really useful, right, is like theres an ideal system in mind and then theres realistically how close can you get there . We all know the prospects for compulsory systems in the United States are particularly challenging in the aftermath of the Affordable Care act, so comment, if you would, on whether you think compulsory is the solution or what a different alternative might be that would get us there. Do you want me to start . Sure. So id say to start, the first thing i would suggest is we dont use the term compulsory. How about mandate . Probably not that one either. So ive been at a number of events with the folks from n. E. S. T. And others from the uk that were part of their reforms. They always start using the term compulsion. And i think, boy, that will never sell here. To be here later, and i think the critical thing is to think about how we build on, you know, the start that they got on the auto ira and think about the framing in a way that makes people in policy circles comfortable with the fact that were not talking about compulsion or a mandate. Were talking about putting in place a series of defaults that puts people on a path towards Retirement Security, towards success, and that if we dont, were doing the same thing, were just choosing a negative default. Were putting them on a path toward failure. So why as a society would we do that . I mean, it just doesnt make any sense, and i think if you frame it that way, its a lot easier to get the 90 of the way there that we can get to and not make the search, the for the ideal be the enemy of good enough here. Thats my thought. Thank you. Sure. I like the term universal as opposed to compulsory. I like the sense that everyone, all workers, would be covered, would have some way of providing for retirement. And targeted universalism perhaps by that i mean doing something for those who are the lowest earners through tax credit, expanding the savers credit and making it refundable, something to that effect so that there is an additional boost in terms of ensuring that there is enough for them at their retirement age. [ inaudible ] maybe this is the time where im supposed to remember to say my views are my own and dont reflect the trustees, et cetera, et cetera. I think you really need to focus on how to best draw employers in as part of the solution. We modeled what would happen if auto iras were basically available on a national basis, and of the 4. 13 trillion in Retirement Savings shortfalls, we were only able to decrease it by 6. 5 . The reason is, of course, you dont have any employer money coming in and you dont have any incentives for the employees to go beyond the 3 . So whether were calling it mandatory or universal or compulsory, i think we should do everything we possibly can to incentivize the employers to become part of this process and to come in as contributions. The other thing i think you have to be really careful on is what is your objective . I mean, do you really want to have every single employee, quote, covered every single year . We look at these snapshots and we look at a huge percentage of individuals that dont necessarily have coverage or arent participating in a particular year, but that doesnt mean theyre going to go through their entire career without participating or without coverage. So you have to look basically over a full lifetime. Then you get to the end and what is it that you want to have available for these people . We find in our modeling that a lot of individuals look like theyd be in good shape financially, and then because of nursing home costs for one or both spouses, basically, the account balances are ravaged. Is it really a problem with not enough savings, or is it a problem we are retirement expenditures that are not being dealt with sufficiently. Whether its through Long Term Care insurance or some government program, what have you. Thank you. Im going to give you the last give you the last word on this and well open it to the audience if thats okay. [ inaudible ] i think behavioral economics is important and understanding it. The framing is really critical. I was going to give an example of that and this relates to my friend david knox this goes back to the inventor of gpi. Hes on a mission to invent the back ends on dc plans, income for life back ends. And we just had a work shop in toronto on that. And i wrote it up, and i used in my language, i used income for life guarantees in my draft. And he came back and he said dont use the word guarantees. Use protection. Income for life protection. And, again, i think its classic example of something that goes down a lot easier because, again, with protection, its not necessarily a guarantee. I mean, you can actually do a lot of shifting between the people that die too soon and the ones that live longer than theyre supposed to without guarantees. And thats the focus. So i think theres a whole open question of the language we use and how we rethink getting to where we want to go using language that facilitates rather than creates barriers. Thanks, keith. Thats a great point. Lets go to audience questions. I would ask remind you that were on cspan, not because anybody should be afraid that are on tv. But if you would wait till we get a microphone, stand up and also if you would please identify yourself before you start. I think melissa, did you have a hand up . Thanks, melissa kahn. And i agree about all the comments about language. Language is very important and framing is very important. I like the term of universal as opposed to mandate. Lou, im sorry to put you on the spot. Were a member and support you greatly. Im curious, you know, i think auto enrollment, escalation, changing safe harbors is important here. But i still think you have the gap of workers who dont work for companies, especially in the small employer sector who dont and wont have access. So how would you get them covered . Yeah, great question. So i think the first thing you want to do is understand as jack was alluding to who is left out of the system and i think we often reflectively fall into the trap of looking at a snap shot that at any given time theres a significant percentage, maybe an overreported percentage, but a significant percentage of the population that at that moment in time is not covered. A significant number of those people that are not covered are going to cycle back into coverage and maybe out of it and back in. So i do think its important for us to understand through a working lifetime, you know, whether people have access to enough coverage to get them where they need to be. But that aside, who is left out . So parttime employees are clearly in a position where theyre more often than not left out. We need to figure out what the incentives are in the system right now that are causing employers to leave their parttime employees off the table. I think there are rules in place qualification rules that are probably an akronistic we need to rethink. We need to make sure the incentives are to cover people and not leave them out. It goes well beyond that. The selfemployed are often out of the system. You would think theres a way for us to incentivize them to take care of themselves. I think thats going to be further exacerbated as we see the emerging gig economy where a lot of people are technically selfemployed even though they feel like theyre working for others. And then, you know, we clearly have issues with very very small employers and with the service industry. And you know, i think once we sort of define where that coverage gap is, it helps us to think through what the appropriate solutions are. You know, there are definitely different paths to take. I do like the idea of focusing on the framing around universality. I think there is going to have to be a nudge there somehow. I think practically its a nudge and not mandate. But, you know, it has the same effect. You know, ultimately i think the other thing is it may be a little beyond the scope here, but we have to think about the Critical Role that Social Security plays in providing for the Retirement Security of the least among us. And you know, Social Security was conceived as a social insurance program. Weve gotten to thinking about it as a Retirement Savings program. And i think as part of the conversation we have to think about there is going to be a portion of our population that whatever we do are not going to have enough periods of coverage through working to provide for their Retirement Security needs. We have to make sure that their security is provided through Social Security. I think its a critical part of the total calculus. Other questions . Thanks so much, everyone. Im justin king from new america. Congressman crowley did a great job offering up the idea of the need for savings, for a variety of needs over the course of ones life. And id love to solicit reactions from the panel about the tension between peoples Emergency Needs and Retirement Savings. And whether or not theres potential to adapt the Retirement Savings system to more holistically meet the needs of americans. Whether we can address withdrawals and leakage in a way that supports families, Emergency Needs and the fact that life happens going forward. Anyone want to take that . Thats a very good question. Definitely there is the need to acknowledge that people are going to have requirements for the use of savings before they get to retirement. And to have multiple ways of saving. We have research that shows that people of all income levels can and do save when they have the structures in place to facilitate savings. Like upper income households have had for a long time. So there are options to have bifurcated savings strategies so some are going into retirement accounts, at the same time some savings are going into accounts for other uses. Which could be emergency savings. I think we need to keep those on the table and explore that as we go forward. I want today quickly comment, so i think it goes beyond programs. I think we have a real need for cultural change. We need to change the mindset, change the beliefs in our country around the savings and the taking control of your financial future. There are definitely programs that can put in place i would suggest outside the Retirement Savings system instead of detracting from it. I think its important we get people focused on a gut level on the need for taking control of their financial future. Thank you. So i think we have time for one more question. Lenny, i saw your hand up. First of all, thanks for a wonderful and comprehensive panel. I wanted just to note that what was about closing the coverage gap is more than just about providing options for Retirement Income. Its also addressing an issue with social justice and helping us become a more perfect union. I wanted just to ask jack a question about the 3 glitch in the ppa itself. Is there somewhere in the bill, jack, where theres a reference to 3 as a starting point and youre not necessarily required to escalate from there . Because perhaps that legislation inadvertently caused a lot of people to use 3 and create the issue that the wall street journal story brought up. Havent read ppa for about ten years, so i might be a little bit rusty on the details. I dont know if mark is here yet, but i would bet anything that the vast majority of the people who came in at 3 were coming in because of what was written back in the 90s when they were getting the guidance that a 2 or 3 default was going to be okay with irs and the treasury. Whether or not you are basically going to be compelled to follow 3 for anything other than safe harbor, i dont think that was the intent of ppa, certainly. Great. So were going to move on to our next thing. Please join me in thanking a wonderful panel. [ applause ] and ida is going to introduce our keynote speaker. Thanks, jeremy. So when i started out this morning saying there was a room full of experience, was i wrong . Its really been an amazing conversation. And honestly an amazing set of careers dedicated to these issues and the path forward. So its my pleasure to get the opportunity to introduce yet another one of the leaders who has amassed many years of experience and many years of expertise to share with us today from an industrys perspective on the unfinished agenda of the ppa. From one particular companys perspective. So please join me in welcoming edward f. Murphy who im going to call ed for the rest of the introduction. He is president of empower retirement with over 8 million savers, 35,000 plans. And serving all segments of the employer sponsored Retirement Plan market. Ed brings as i said over 30 years of experience to his role with empower and has been with putnam since 2009 and in 2014 took over the role as president of empower. Prior to that he was head of defined contribution and investment and prior to 2009, he was in executive leadership with fidelity for 20 years. A lot of publications, a lot of thought leadership exhibited by you, ed, and also youre frequently here in d. C. I think it might be your second home. Speak ing with congress, department of labor, department of treasury, the irs, around many of the kinds of conversations about reform and inclusion and expansion of retirement saving systems and their effectiveness to our policy leaders. Earlier this week, at the spark conference, an industry conference that was here you got headlines for your call to your peers in industry to speak with one collective voice on Public Policy issues relating to expanding and improving retirement saving systems in this country. So i want to thank you for that leadership. I cant wait to hear what you have to say. I know we have slides for you, ed, if i can invite you up and everybody please give a warm welcome to ed murphy. [ applause ] good morning, everyone. Thank you, ida, and thank you to the Aspen Institute for hosting this event. I do think its timely, particularly in light of the election and what we can expect in 2017. I think were optimistic about the opportunity for retirement legislation. Today is an interesting day for us at empower, we have 5,000 associates. And were really busy today. Our call volumes are up 25 . As weve got 8 million americans that we support, but one of the things thats interesting is unlike years ago when we would have periods of volatility like this in the market, were not seeing the panic selling and capitulation. I think investors through their own experience, are not reacting hastily. They realize that the investments they have in Retirement Plans are 20, 30, 40 year investments. So i think thats good to see. Particularly with the market down 500 points. I think this is a great group we have here today. Many of you were involved in helping to shape the pension protection act of 2006 and others are working on the next iteration as we look to build off the ppa. I have a little bit of a multimedia show here, but some really interesting data, Empirical Data we want to share with you. Im going to cut right to the chase. And say the keys to solving americas Retirement Savings challenge are right in front of our noses. First, as a baseline, we must all foster the political will to make Social Security solvent. We heard the Previous Panel address this and also the congressman. Beyond that in the savings arena weve conducted a mass investing experiment for well over a generation now. And the results are in. And we know that it works. In fact, we can trace the most beneficial factors that lift Retirement Readiness directly back to the ppa itself its endorsement of automatic plan features, qualified default investments, legal safe harbors for Plan Sponsors who offer these features was a qualitative change in the American Retirement policy. Indeed, the benefits of the best practices that the ppa endorsed literally jump off the page in the Lifetime Income score survey that empower retirement has been conducting for the past six years. These surveys take stock of the total net worth of more than 4,000 working americans ages 1865. Its weighted to match u. S. Census parameters. The assets we count are comprehensive. Social security, db planned benefits. Contribution rates, other savings. Real estate, equity in the home, equity in Small Businesses to the extent it applies. Our analysis projects the share of preRetirement Income that people are on track to replace once they stop work. To generate a Lifetime Income score or lis. Because we see income replacement as the prime goal, the best, arguably the only measure of success or short fall for any retirement system or plan. You can see on the far left of this slide, we project income replacement of just 44 at the median for 20 million plus households who have no access to savings plans on the job. And that was a topic of discussion in the Previous Panel. At the far right, nearly 11 million households who stand at the median to draw incomes in retirement well over full replacement. 117 in fact. Overall, as the dotted line shows, we estimate that the median working americans are on track to be able to replace roughly 62 of their current incomes in retirement. Clearly tens of millions of americans may face a sharp falloff in Living Standards in retirement or at least real financial stress. Thats the challenge. But what id like to suggest to you today is that the chart also provides us with Something Like a road map or action check list to identify priorities and solutions for americas entire retirement challenge. For example, since our data includes protected Social Security income, we can see how vital this program is and why making it solvent should be retirement policies job one. Lets take a look. Heres how Retirement Readiness would drop in the absence of Social Security. Tens of millions of people would fall into absolute destitution. Many millions more would be sorely stressed. Thats why all of us who care about retirement policies should urge our political leaders to make Social Security solvent. Its a high priority because the system is under threat and time is not on our side. Many of you know roughly 17 years from now, the systems own trustees protect the last of the trust funds will be drawn down. All recipients will face a cliff drop of 23 or more in their Social Security benefits. Unless we act soon to make the system solvent. Every american under age 48 today who plans to retire at age 65 in 2033 and beyond, faces a nasty Retirement Income pay cut. Thats the very predictable price of inaction. So lets hope the next president and congress have the courage to take on this challenge. Compromise fairly and shore up the foundation of americans Retirement Security. And lets help them do that. They need prodding, they need support and compromise and sacrifice. If People Like Us here today thats getting every working american access to savings plan on the job. Heres the difference between having a payroll deduction plan and not having one. Pretty stark. Access alone raises income replacement by fully 35 . From 44 to 79 . At empower we believe that everyone who pays mandatory fica to set aside part of their paycheck for retirement. Data from the Employee Benefits Research Institute shows roughly 70 of workers earning 30,000 to 50,000 who do have access to work place plans choose to save at some level. Workers who dont have a payroll savings plan, less than 5 open up an individual retirement account. Payroll deduction is roughly 14 times more effective than the tax incentive itself. To us this suggested the only real path to Retirement Readiness runs straight through the workplace. This isnt rocket science. Thats why we support Robust Solutions to the access or coverage gap. At the national level. Auto iri, simplified 401 k are things that will improve access to savings. We know the primary reasons why Small Business owners do not create new plans is tied to complexity, the concerns about fiduciary responsibility and cost. And it can be addressed by the industry and many of us are working on it. Savers who draw on professional advice, for example, step up their Median Income replacement rate to 87 at the median. It remains to be seen whether the dol fiduciary rule will help. Particularly among small savers who need the advice more than ever. Workers whose Companies Adopt auto enrollment in their plans take a further step up. They are on track to replace 92 of their work life incomes. Again, at the median. Firms that go on as they all should, to add automatic savings escalation bring their median you workers replacement rates to just over 100 . Which i think we would agree is success by any measure. Lastly, we come to the highest success category on the far right. These are workers who not only enjoy fully automated savings plans on the jobs but who are deferring rates of 10 or more. A median replacement rate of 117 this cohort of workers may be able to step up their Living Standards in retirement. This group, by the way, is not some tiny number of well heeled outliers. It includes between 20 and 30 Million People from a variety of income levels. We have advocated for the ten plus savings deferral rate for years. We are very pleased to see the Financial Services round table endorse the goal through their great save ten campaign which weve been very much a part of. So we dont expect to win the nobel prize by pointing out more is more and that higher savings compound over time. But we do think that setting a target of 10 system wide is actually an ambitious target and well worth pursuing. Todays defined contribution participants Savings Rates, deferral rates are just over 7 . What were calling for with a save ten is a step up of nearly 40 in the Savings Rates of tens of millions of americans in d. C. Plans today. We dont serve anybody well by allowing them to believe theyre on track for Retirement Readiness at Savings Rates of 3 or 5 . Or 7 . If americans want Financial Security for 2030 years after their work lives ends, well simply have to save more and a lot more than were doing today. So lets just tell people the truth. One last point on this six step xray of Retirement Readiness. You might think that what lifts people to the solid readiness we are seeing on the far right is sheer income. But thats just not the case. Its true that higher income people are somewhat more able to save. Though surprisingly large number of higher income people dont. But our survey also finds that plenty of low and moderate income people do reach high levels of readiness because of plan design features that get them engaged in savings and allocate them to solid default investments. Planned Design Matters critically. It is possible and should be our goal to create a defined contribution system that makes success easy and failure hard. One example of this years survey suggests progress towards the goal may be gaining traction. Were seeing uptick in Retirement Readiness of young workers, millennials, 81 in this years survey. This data set is too short to be definitive. We suspect it reflects the fact that many more companies have been adopting auto enrollment. We see that in our own business, particularly new hires, recent years. Were going to continue to watch this space to see if we see consistency and momentum going forward. I dont think we need a lot more data to tell us the main policy implications of the great Retirement Savings experiment that americans have been living through over the past 30 years. We simply must spread the best practices found in the universe as widely as humanly possible. Access itself is vital. With 50 million americans outside of the dc system is a scandal. Besides coverage we need auto plan design as universal as possible. We want to support measures that can close the coverage gap and make success contagious by make being these best practices and plan design the national norm. Because our data tells us we can really solve the accumulation of the retirement challenge just by implementing the proven successes that ppa helped foster. Once we do that we should move on to finish the job that the ppa started and that means solving for the distribution phase. The next slide i want to touch on, at empower we call our vision for the next generation a workplace savings in this country, workplace savings 4. 0 because it follows three previous sometimes overlapping generations of workplace savings. 1. 0, if you will was the initial explosion of dc savings plans from the mid80s to mid90s. Workplace 2. 0 took hold in the mid90s when progressive Plan Sponsors and providers began experimenting with features like target day funds and trying out auto enrollment and savings escalation. Workplace 3. 0 began in 2006 with the protection ake and essentially codified these best practices. But today with nearly 10,000 baby boomers moving into retirement every day, were entering a new phase in the evolution of workplace savings. We still have to finish implementing ppa endorsed best practices, take the dc system to a new level and then move on to solve the new challenge of Lifetime Income. This slide shows our workplace 4. 0 agenda in a nutshell. We start by preserving all existing savings incentives and seeking to correct the bogus scoring methods that make Retirement Savings such a juicy target for budget hawks. The ask here is for honest arithmetic. Distinguish between tax deferrals in once and gone tax expenditures and doing that before any major tax reform. The next major goal is close the access gap at the national level. So we will actively support regulatory efforts to do that. As i mentioned earlier auto i. R. A. , starter plans, simplified 401 k s. We favor more generous and refundable tax credits to encourage employers to establish plans as was touched on earlier today by others and we support efforts to engage the large and growing share of the workforce doing parttime work or contract work. Thats the big challenge, because these workers have no regular w2 payroll income to take deductions from. They need strong, new incentives to engage Retirement Savings. Across existing workplace system, its time for regulators to guide, nudge and even mandate the adoption of full auto plan designs. These designs are qualitatively better than purely voluntary plans without auto features. They have vastly more, in short, they work. To get to a new auto system will require legislation and planned legal safe harbors for planned sponsors who do the right thing. We need to continue efforts already under way led by treasury to make it easier for workplace savings plans to include guaranteed or as keith would say protection options. Annuities, partial and deferred annuities, longevity insurance, guaranteed drawdown plans, these are all going to be critical as we move through the massive demographic shift thats occurring in our country. We would prefer tax preference, perhaps allowing workers to draw first 10,000 a year in guaranteed income taxfree. Last but not least we believe congress should deliver major help to many millions of retirees by allowing taxfree withdrawals from qualified plans to cover medical expenses and Health Insurance. These changes taken together will go far towards fleshing out next generation of workplace savings in america. I want to close by emphasizing the great opportunity that all of us in Retirement Services have to make this country more prosperous, more dynamic, and, indeed, more just. Imagine america in 2020 where every worker has strong incentives to save and plans designed to actually deliver a dignified retirement. With those savings flowing through the markets to finance growth, entrepreneurship and job creation, imagine a country that knows that it can meet real challenges because it has just done so. Thats what solving our retirement challenge can do for america. So lets go from here to empowerment. Lets set the agenda for change in retirement policy this year and then drive it forward in 2017. Thanks for listening. [ applause ] i know stand between you and lunch. We have a few minutes. Anybody have any questions for ed . Just an opportunity to push an 8yearold book called fixing the future, how candidates usually fractious government Work Together for pension plan. Its a very interesting story, the same issue as the Social Security except we ended up with a situation where we actually doubled contribution rate in a relatively short period of time and built up a reserve fund that stabilized contribution rate into the foreseeable future. Its a fascinating story, actually. You have to figure out how to carry out the u. S. Equivalent of that story. I think its a great point. As you and i discussed earlier, were owned by a canadian entity and weve spent a lot of time studying the canadian system and the way public and private came together to shape pension policy in canada. Thank you, everyone. Once again, i want to thank you for asking me. [ applause ] i had a rough upbringing and i got involved in the streets and they were selling drugs. And i started selling drugs, we were selling marijuana and cocape, and crack cocaine, and we started selling that. I was in the streets from ages 13 to 18 years old, five years. Cory mcgee will discuss his book, he talks about his former life as a drug dealer and a police officer. I criticize the police, but im talking about the bad police, and its a small percentage of the overwhelming majority of cops, they are just doing their jobs. You dont hear about them. You hear about the cases the bad cops or bad policing, and once Law Enforcement starts to weed them out. Every time you see a case, where a man gets killed, seven complaints of use of force, five s substantiated and the guy is a mess, and we dont find out about it until he has killed someone. Next the discussion on the legality of the cost sharing in the healthcare law. Good morning, we know theres a number of things happening over the Capitol Building and on the floor, we will move as quickly and readily as possible, i appreciate members patience and trying get through to the witnesses. Thank you. If somebody can get to door in the back of the room, i appreciate that. This is a hearing on the Cost Sharing Reduction Program. We say the constitution is clear, no money shall be drawn, this means that the executive branch cannot spend money unless grass says it k yesterday, the assistant secretary for tax policy testified before the ways and means committee, if congress does not want the monies appropriate, it could say, dont appropriate the money from that account, its a direct quote. Its in contradiction to law. We are hear today to examine the recomme ramifications of the legal decision. We are not here to discuss whether or not the decision illegal, a Federal District court has decided that it is. We are here today to talk about the consequence of the attempt to grab the power of the purse from congress. The program was established and not funded. It was requested for an appropriation in the 2014 budget request. Congress however denied that request. A few months later, csr payments were made anyway. How . With he will they raided the tax refunds and credits fund, which violated law. In february, 2015, along side the committee on ways and means this committee launched an investigation in to the administrations actions. They sought to understand the acts behind the decision to fund the program. Through a permit appropriation. Our questions were straight forward and included when and how the decision was made and who made it from the on set the administration has refused to we were able to shed light on the administrations decision. The details and findings are outlined in the joint report that was released yesterday and this is the report. You should all have it. Dont judge my actions judge my intentions is what it boils down to. Again, this administration seems to believe its above the law, and let me be clear, are none of us are. Its not about the ability to provide healthcare for anyone, i believe we should be doing to help those that are low income, struggling with health issues, but this is about a constitutional question and will had this committee and congress uphold the constitution and we should all agree that we must all follow the law. Todays hearing will companion the consequences of the findings of the committees investigation in to the decision to unconstitutionally fund the program through a permit appropriation. The impact of the aca and appropriations law and congressional oversight, there are clear problems with the law. Its not just a csr program, theres problems with the transitional Reinsurance Program, the risk corridors of basic health program, the lists go on. The constitution states that the power of the purse lies not with the executive but with congressional branch. This provides congress an important check on the executive branch and that applies to any president of any party at any time. The president has turned the constitution on its head and threatened the important power of congress. Finally we must confront the executive branchs position. Oversight is critical to a functioning democracy that is why the constitution grants congress extensive authority to oversee executive branch activities. Its now we eliminate waste, fraud and abuse from government. As its made clear, the executive branch has gone to Great Lengths to keep the information from the congress and the american people. If they think what they are doing is legal, i invite them to come before the committee and explain it t subcommittee cannot and will not accept any any witness tactics to delay and deny. In fact, again today, we have another instance of the administrations obstruction, the committee invited secretary burwell or a someone of her choosing but the department has failed to provide anyone. This administration is trying to avoid congressional execuscruti and that begs the question, is someone trying to hide something. We look forward to the hearing the witnesss experts opinions. I want to personally thank the committee for what was done for Mental Health reform, particularly my friend, stead faf fast in investigating an important question of the nation. Its powerful what came through and i want to thank you for that. Now i recognize mr. Gat for five minutes. Thank you, mr. Chairman and thank you for the praise on the Mental Health bill, it was really a joint effort, there were a lot of bumps in the roads and difficult negotiations, that is an example of what this committee can do when we really Work Together. And as i said, in this committee, and on the floor, its a really good first step, now we need funding and i think we all know that. Unfortunately, todays hearing is not a productive hearing like all of our Mental Health hearings were and its really not intended to improve the aca, or to improve the affordability of healthcare for low income and middle income people, its another opportunity to bash the administration as they tried to implement the Affordable Care act. This is the 17th hearing that this committee has had since the aca was passed in to law in 2010. And the congress alone, nearly onefifth of the hearings have focused on aca oversight, as i have said repeatedly in my statements in the committee. I would not mind that if there was an attempt to do something to improve the way the aca works. Now, obviously, we try to enact constitutional legislation in this congress, thats our job. Thats the thing we were sworn to uphold. But we do have a judicial branch, which is there to give checks and balances just in case people get it wrong. And in this case, the House Republicans decided that they thought the csr program was unconstitutional. Well its not this committees job to determine whether this program is unconstitutional or not. Its the courts job, and guess what, the House Republicans filed a lawsuit in federal court. They asked the judge to decide between conflicting interpretations of the law, and guess what, the Trial Court Judge ruled on the merits of the case and the judge ruled for the House Republicans and said, in fact, according to that judges position, that the this provision of the aca was not constitutional and now the administration is appealing that decision. So, what are we doing here today . This matter is in the courts. Im not here to say whether its my opinion, even though im a lawyer, about whether this is constitutional or not. But i will say, that everything i knew in the deliberation of this bill was everybody believed this provision to be constitutional. And so, once again, we are having this oversight where we are hauling in the administration, we are hauling in other people to talk about whether this provision, this Cost Sharing Reduction Program is constitutional, or not. But in fact, what we should be talking about is what are we going to do to improve the aca so that the middle class and lower income taxpayers can afford healthcare. Mr. Chairman, i was glad to hear you say that its not about the merits of healthcare, or provision of healthcare to low income people, but isnt that really what we should be worried about . Shouldnt we let the courts worry about the ins and outs of the constitutionality and if in fact the Appeals Court upholds the trial court decision, shouldnt it be our job to try to figure out how to give some sort of subsidies and offsets to low and middle income people so they can afford healthcare . Theres nothing i have seen since 2009 to indicate that there was any illwill on behalf of the administration with respect to the low cost fund or the Cost Sharing Reduction Program. Theres no, no indication that the administration knowingly violated the constitution. They in fact thought that it was constitutional. So, why are we here . Once again, we are here to bash the aca, to rake the administration through the mud, and to continue to question this policy. I think it would be much more useful for this committee to look at legislation or to look at policies that would help fix this program and help make it affordable to get healthcare. With that i yield back. Recognizing mr. Upton for 5 00. Thanks, mr. Chairman, kudos on Mental Health, it passed the full committee, 530, that is not a bad mark. It was nearly 18 months ago. When former weighs and means chair paul ryan sent our first request, requesting documents and information of the source forthwith the csr program. Chairman brady now continued on with me in this investigation, after he became chairman of ways and means late last year and we believed then and still believe today, that the president illegally and unconstitutionally funded this program through a permanent appropriation used primarily to pay back tax refunds. We have spent more than a dozen letters and interviewed just as Many Administration officials. We have been forced to send subpoenas for document on the issue. We have learned a lot during this time, despite the obstruction from the administration, but theres basic facts that the administration is withholding from the congress. Yesterday, the majority staff of this committee, along with the majority of staff of ways and means released this report, detailing our investigation. We did it because folks at home and my state of michigan, but frankly across the country and elsewhere deserve to know how the government is spending their hard earned tax dollars. And we are taking billions, talking billions in this instance. The federal government has an obligation to each and every taxpayer to spend the money with full transparency in accordance with the law. With the csh program, im sorry to say that the federal government has failed to do so. This administration has gone to Great Lengths to prop up the health law. Going as far to break the signature law to keep it afloat and here the administration will not even give congress the documents or the testimony that we need to fully understand how they came to the decisions that they made to fund the program in my view, illegally. Without access to the information from the executive branch, we cannot conduct effective oversight, and without that, we cannot protect the publics interest. I introduced a proposal to replace the Affordable Care act once and for all. I believe our plan offer as better way forward. One that makes better changes to improve access and decrease costs. And a way that wont require the federal government to secretly shuffle around billions of dollars and violate the law like we have seen this administration do from our report with the Affordable Care act. Yesterdays hearing of ways and means oversight subcommittee focused on the findings detailed in the report. Today we are here to talk about the longterm implications of the findings. Our findings go far beyond the csr program are important to the Affordable Care act, appropriation law and principals and our powers in the legislative branch. We deserve answers and we are not going to rest. Our work continues and i yield to dr. Burgess the balance of my time. I think the chairman for yielding. And i certainly want to second his comment about the Department Health of Human Services owed us a designee to continue to investigate this issue. As we discovered the administration has transferred money from the authorized and funded premium tax credit account to the cost shares program. Throughout the investigation, the administration has gone to unprecedented lengths to delay providing the information, often citing not authorized legal privilege. This trend toward an all powerful Administration Must not continue in the next administration. I look forward to hearing from the witnesses, about the importance of transparency and oversight and what the committee could do to prevent this type of activity in the future. I thank the gentleman for yielding and to the answer as to why we are here today, we as congress have oversight, and that is exactly what we are doing because we have found that theres money that is being reprogrammed and shifted as dr. Burgess said from one account to another without our agreement and appropriation. It is called article 1 powers. We are talking as chairman upton said, about billions of dollars. It is inappropriate, we should be doing the oversight and making the determination of what is happening, with the dollars and with that i yield back the balance of my time. I thank you, and now recognize mr. Green of texas for five minutes. Thank you, mr. Chairman. Its my job to give our ranking members Statement Today because i think he is locked down in the capitol, but, before we do that, the issue of litigation brought by the republican majority is not unusual. The litigant would not show up and come to a hearing while are you in the course process. We know the District Court made a ruling and thats on appeal. I dont think theres any problem with somebody from the administration not showing up simply because we can decide, you know, we have an opinion between all of us on what is constitutional. That doesnt matter. The folks that make the decision are sit engine black robes in the Supreme Court building. Since the litigation was brought by the majority and lets let the courts work their way through that. But, now, i go to my colleagues opening statement, when we pass the Affordable Care act in to law six years ago, we dramatically changed the healthcare landscape in the United States. The law has made access to affordable healthcare a reality for the american people. And at the close of the third open enrollment earlier this year. Nearly 13 Million People had selected health plans or were reenrolled in to federal or state exchanges. An insured rate has fallen to historic low. And estimated 20 million previously uninsured adults have gained coverage since the passing of the bill. To help limit hoik costs and consumers the law includes several mechanisms. The cost sharing or csr program. Assists low and middle income americas to affordable their deduction ables. Csr are a help that outofpocket healthcare costs do not place a crippling financial burden on american families. Many have taken advantage of the benefits offered by the csr program of the approximately 11. 1 Million Consumers that were enrolled at the end of march. 57 or 6. 4 million individuals were benefitting from the csrs to make their coverage more affordable. The csr program has proven effective in accomplishing what it was designed to do. One study estimates that americans that are eligible would save 479 each year. If you listen to my colleague on the other side of the aisle, you would hear nothing about the benefits or the Affordable Care act at all and despite the overwomening success of the law, this committee has chosen to hold yet another hearing to attack and under mine the Affordable Care act. This is nothing new the republican majority spent six years promising to repeal and replace the Affordable Care act, but we have yet to see a meaningful piece of legislation until the last week. They recently unveiled a plan that falls laughably short in providing quality, affordable coverage for our constituents and their constituents. Those watching this hearing need to understand that the republican majority is exclusively focused on taking down the Affordable Care act. They have now voted 64 times to under mine and repeal the Affordable Care act. They have held hearings, sent letters, document requests, conducted interviews and issued subpoenas. They have challenged the Cost Sharing Reduction Program in court. Theres ways we could be conducting meaningful oversight of the Affordable Care act and im sure we could come together and approve the law and improve the law for our constituents. But this hearing and investigation is, will do no such thing. Hearings like this only serve to hurt americans, reverse the progress that was made for millions that now benefit from the law and its time our republicans stolen property litigating the past and to work with us to continue improving the healthcare quality of the country. And i anybody else want time . A minute . Well, i think the being former state senator, i could continue to talk for a minute, but im glad to yield back. Well, senator, thank you. I ask that the written Opening Statements are introduced in the record. Without objection they are entered into the record. First we have doug badger going to lead off the panel. He is a former white house and policy adviser, currently a fellow at the galen institute. And we want to welcome mr. Tom miller. A resident fellow at the American Enterprise institute, he studies healthcare policy including insurance and market based alternatives to the Affordable Care act. Thank you for appearing today and we appreciate your testimony. Next, we welcome legislative consultant, morton rosenberg. He is a specialist with the American Law Division of the Congressional Research service, where he focused on the scope and application of congressional oversight and investigative prag prerogatives. Finally, mr. Simon lazarus, we thank you for being here today, and thank all of the witnesses. Quite an steesteemed panel with century or more of experience. This committee is holding an investigative hearing, do any of you have an objection of taking testimony under oath . Do any of you desire to be advised by council, rise and raise your right hand, i will swear you in. Do you all swear the testimony you are about to give is the truth, the whole truth and nothing but the truth. Thank you, you are all under oath and subject to the penalties of the United States code, ask you each for a 5 00 summary of the schedule. Pay attention to the yellow and red lights there. Thank you, mr. Chairman. Ranking members of the subcommittee for this opportunity to appear before you this morning. To discuss the Affordable Care acts Cost Sharing Reduction Program. It is part of the aca implementation. Theres a serious miscalculation of demand for Health Insurance of young and healthy, people. My colleagues, brian of the center and Heritage Foundation and university of houston and i, have published the insured performance in the 2000 benefit year. Our first study provided information on how insurers faired selling qualified health plans. We found that the payments were made in the form of reinsurance payments and risk, card or claims, averaged more than 1100 per enrollee, or 25 of premium. Put another way, had risk card or payments been made in full, there was 1. 25 in revenue for every dollar collected in premiums and still lost money. Our second paper examined the perform as of the issuers that sold qhps in the individual and small group markets. We found that insurers lost three times as much per enrollee selling qhps to individuals than they did to small groups. Those losses occurred despite billions of dollars in individual and corporate subs y subsidies that were available for individual qhps and not for group qhps, the main reason, individual enrollees included medical claims that averaged 24 more per enrollee than group qhps, those groups were 110 of premium dollars. These losses continued after 2014, and mckenzie and company, estimated that they may have more than doubled in 2015. Now, why has this happened . I think they have laid out why the rules governing the individual qhps have produced such a disasterous result for insurers that billions in lawful and unlawful corporate subsidies cannot cure. He said, the aca largely replaced riskbased insurance in the individual market with income redistribution, based on age, health and income status. Congress cannot redistribute health. The acas rule structure for the individual market seeks to do this by requiring insurers to sell products that are not attractive to younger and healthier people. And over charge them for those products. While discounting premiums for people who are older and less healthy. The result is a socalled market that attracts high risk enrollies and repells low risk ones. Such a market is dysfunctional. The Administration Made a sudden series of policy reversals. This included unappropriated money. And the diversion of billions of dollars to the insurance companies, repeated restructuring of the Reinsurance Program to make payments 40 more generous to insurers than at the time they submitted their premiums and a slow retreat from the agencys prior position. An effort to turn it in to a tarp like fund that forces taxpayers to bear the cost of bad Business Decisions made by big corporations