good morning and thank you for coming. welcome to this session which is a joint session of the brookings institution and the rockefeller institute of government. we're going to talk about the results of a five-state study on how competition is working in the affordable care act marketplaces and what we might learn from this study and how we think about competition in the marketplaces going forward. and to officially open us up, i welcome my colleague, richard nathan, from the rockefeller institute, to the platform. >> thank you, alice. i don't work at brookings so maybe i shouldn't welcome people, but i worked here 11 years. it is a while ago. and this is one of my favorite places to it be able to work with colleagues. it is a pleasure today to welcome you to this conference, as alice said. the brookings and rock fefeller institute field network study of the competitive -- she mentioned this -- competitiveness of marketplaces in health insurance, individual, non-group health insurance marketplaces in five states -- california, florida, michigan, north carolina, and texas. and we have a summary report and we have five reports almost big enough for a book from the five authors or author groups of the individual states that i just mentioned. the author of the summary report is mike the -- michael morrissey. mike's at texas a&m and is the author of "a wia widely used an current, of informative health book on insurance. he knows a lot about the subject and i learned a lot. he is the lead author of our summary report. alice ribling who is co-director of the network with the rockefeller institute, tom gaye as head of the rockefeller institute is here. worked there a long time, too. alice is co-director with me of the rockefeller-brookings field network research, and is the second author of the summary report that mike is going to present. the writing group includes other people. me and mark hall. and mark hall is here. he is the author of the north carolina report. you'll hear from him twice. mark is the fred d. and elizabeth turnidge professor of law at wake forest. copies of the summary report are here today and i want to add, as i tell you that, caitlyn brant and the staff of the brookings institution center on public policy research have done a wonderful job on organizing this conference and producing these reports in a form that i think is very accessible. i hope you'll download all the reports and read the summary report and it will be helpful and contribute in this turbulent time for health insurance policy making. the five states that we're studying -- and there are 40 states in our whole network. the five states we're study iin are different. the story of what is happening in the country, throughout the country, in states that -- not only in states as michael weinberg, our california colleague often reminds me, in local markets. tip o'neill said all politics is local. and indeed health insurance markets are local. even within markets there are differences that we've learned about and we've written about. we're out in the field, in-depth, interviewing experts, using every piece of economic, demographic and program data we can bring to bare to understand institutional change when something as big as this happens, institutions change. governments change their roles. state governments. federal governments. health insurers change their roles. providers change their roles. advocates change their roles. so you need to not only know the numbers, but you need to know the numbers and put them together with understanding of what is happening in implementation. that's a big subject that i will's just touch on. but anyway, this is typical of american federalism. we will have a chance today to hear next from mike to present our summary findings. and that will be followed by a panel of individual field researchers. what they see, what they wrote about, how their story fits in to the overall story. that panel will be moderated by my colleague -- we spent a lot of time working together -- tom gates of the rockefeller institute. alice will chair a second panel of national experts on health insurance. he people who can look at our work and help us think about what we're learning, along with two of our associates. michael luke from colorado who is head of the colorado health institute, which is a very strong group. many states have health institutes. they're very valuable resources for the kind evof work we do because they have all the expertise and local and state and regional knowledge to understand what is happening to any policy as it plays out in a country as big and complicated as ours with a federal structure. our new studies focus on the changed role particularly of insurance companies. they're doing something different now. ufz's you've got a moment in whicher that banned from doing medical underwriting so everybody can come in. pre-existing conditions. and guaranteed issue. that's fundamental to the health insurance and health insurance is as big, if not bigger, than any other industry and sector in our economy. so we've been, for five years -- i started this five years when i thought i retired. my wife said, no, you really didn't. set up this network. we have 40 people on the rockefeller institute website. bob bullock from the rockefeller institute is here. we've issued 27 baseline and follow-up reports on what states decided to do. we expected most of them would say, we're not letting the feds in here. we're going to do it. but indeed, the feds are operating most of the marketplaces. so this gets to the heart of how american health care has changed institution institutionally and relying heavily on many sources of data and many people's expertise. we've examined 25 local markets. five in each of the states. you can read about them in the reports. so i turn next to my colleague, mike morrissey, and my teacher. he will describe what we have learned collaboratively about health insurance, market competition, based, as i said, on closely examining national, state and local economic, demographic and financial data and extensive interviews with different people in different places in the world of health care in america. how have the exchanges worked? how are they working now? how are they not working? what do we know about the exchanges that affect the cost and character of health care which most of all, of course, affects millions of people who are in these mammoth systems, which isn't the whole of it. there is a whole lot more to health insurance than what we are looking at, individual, non-group markets. mike, platform is yours. . >> thank you, dick. i'm blighted to be here. if i knew you were going to do that sort of introduction, i guess i would have prepared a mid-term for you. what we'd like to do is walk you through some of the highlights of what we've done with the five-state study. as dick has indicated, this is a really a team effort. i have to say, it really sort of relied heavily on alice ribling's ability to sort of put all of this together and keep us focused and keep our feet to the fire in answering questions that we were charged with. i can't say enough about dick nathan and his ability to sort of put together a network of field researchers across 40 states, calling people up out of the blue to say we're doing this interesting project, would you like to be with us. and people have just joined right in. and then we've got a really strong set of field investigators throughout these states. as dick has indicated, across all the states. so what are we about? what we want to do is begin to understand the experiences in the states and how the aca has affected the insurance exchanges in those areas. we want to describe the potentially idiosyncratic nature of the marketplaces in each of the states, and indeed it was our presumption going in that the state's were going to be very different. thirdly, we want to develop h h hypotheses about how the exchanges have evolved and how they might evolve and to offer those as testable opportunities to other researchers, but also to perhaps sort of serve as a road map for all of us as we look at repeal, replace and repair. there isn't much background that i think i have to provide for this audience, but there are a couple of key things that i think are worth focusing on. as we all know, the aca marketplace has just completed their fourth open enrollment period. what our field investigators did was to examine all of the open enrollment periods from the beginning through the opening of this, the fourth one. it's important to appreciate that within the aca, there are rating areas in each of the states. rating areas are geographic areas in which an insurer, if they offer coverage in that area, must quote the same premium to people of the same age and smoking status. but the thing to appreciate is the states are very different in how they configured their rating areas. some use individual counties. others, metro areas, are have unique rating areas and the rural counties make up last rating areas in the state. others use geographic sections of the state. but it is important to appreciate that all of the states approach their definitions of the market somewhat differently. and it is important to appreciate that insurers don't have to participate in all of the rating areas, nor do this he have to participate in all of the counties in the given area. it is important to note that states are very important and very different kinds of insurance responses within the states because of the flexibility that's granted by this rating area approach. why these states. we chose california because it's a democratic state that expanded medicare and it adopted a state-based exchange of the active purchaser variety and in fact it is the only state that has done that. we chose michigan. it is a state with republican leadership that expanded its medicaid program in late 2014 and adopted a partnership model of exchanges. florida is an oppositional state that didn't expand medicaid and used the federally facilitated exchange. the particularly interesting thing they're going in is it is 1 of 2 states in which each county is its own rating area. north carolina. another state that was politically opposed to the aca. it didn't expand medicaid. the reason for wanting to include north carolina is there was early evidence there that insurers were working with local providers to co-brand products that would allow them to compete with a dominant insurer. we wanted to see how that was working out. texas is indeed an oppositional state. it didn't expand medicaid, either. it uses the federally facilitated exchange. it's also one of the few states that doesn't approve premiums or, for that matter, assist the exchanges in essentially any way. early evidence though suggested that there was the potential at least for some substantial competition in some areas of the state. so we wanted to see how that all played out. overall we looked for some geographical diversity. as you see from the states, there's also some racial and ethnic diversity in all of this. and we look for places where we have strong research teams. we've got what i think is a very good set of places to observe. a little bit on methods. i'm an economist and do a lot of regression kinds of things and a lot of policy analysts do that same sort of thing. field research isn't like that. field research actually asks people who potentially know something -- and indeed do know something about the questions at hand to talk to people in the communities who know something about what's going on. and so it's and opportunity to sort of build on local expertise. the team developed a series of discussion questions. they focused on participation and withdrawal from the markets. it looked at issues of structuring theness works within the ensurer plans and it be looked at changes in the environment that potentially took place as we watched the years unfold. having said that, it is just a set of questions that we follow by route. it is a more fluid that discussion that follows from the discussion that precedes it into where the issues are from the point of view of the people on the ground. we come away with i think a very nuanced and rich sense of what the states look like. the field teams conducted 15 to 90-minute interviews, some in person, some by phone. with health insurers, are providers and providers networks, with state insurance regulators, with insurance agents and brokers and with navigators and with other policy experts. sometimes the media in the states. now of course there is a point of generalize ability here. you can't generalize from five states. particularly when one of your key conclusions is they're all very different. there are of course though a number of themes that emerge from what we found. that's what i want to tell you a little bit about now. first, as dick indicated, the key finding in all of this is that health insurance markets are local. i've been looking at health insurance markets for 20 years or more. it's only in the last three, four years and certainly through the field work that we've been doing here that i've appreciated just how local these markets are. it is a mistake to sort of think of idaho as a market. it is a mistake to think of texas as a market. the insurance markets are much more local than that. what that means is what we found is that there is a lot of divergence within the states. certainly it is the case that the extent of competition differs between urban settings and rural settings. but that's just the beginning of it. there are big differences between urban areas. as our individual state reports show, it turns out, for example, that the nature of insurance competition in san francisco is much less intense than it is in los angeles. it is the case that miami is much more competitive than tampa. that detroit is more competitive than flint. the nuances matters and the nature of the local markets matter. and the reason they matter is because insurers are managed care entities. they form networks. and to be able to be successful in a local market, you have to have a network of hospitals and physicians and other providers who agree to prices that you a believe can make it competitive. if it is the case that you can't establish a network, it's -- well, not impo to well, almost impossible to offer insurance in that setting. clearly that's the case in lots of rural america, it's also the case in modest size urban areas. there's a single network. sometimes a single hospital. you decide you want to come in and compete against the dominant carrier in the state, you've got to be able to negotiate meaningful prices with that provider. that turns out to be difficult to do to give you a competitive advantage in the insurance side. it also turns out to be a problem sometimes in large metro areas. in texas, for example, we talked to one insurer who said, we were pretty successful in putting together what we think was a very good network in houston but we could never get something to work in dallas. so it is just a matter of sort of we are here, we're in the state and because we can provide it on the eastern side of the state, we can provide it on the western, too. it depends on the local market. it is unrealistic to expect to find similar results or similar solutions everywhere. second, premiums as we have found are lower in areas where you have greater numbers of hospital and other providers. without that competition at the provider level, it is difficult to see lower prices at the insurer level. indeed, we have been told from our insurance views that the decades of consolidation that we've seen going on in the provider markets have made it difficult for insurer to comp e compete. having said that, if indeed these markets are local, that suggests that there is opportunities for regional insurers and other insurers who co-brand with local providers to establish a successful niche in their local market where they can compete pretty successfully, or at least we think they can. we've seen some evidence. the other point though is if indeed these markets are local and they depend on the nature of those local networks of providers, that says that -- at least to us -- that meaningful interstate competition among health insurers may be very difficult to achieve. it is not enough that regulatory barriers are reduced. it's putting together the networks, and that's the difficult thing. second major finding. claims costs substantially exceeded the insurer's expectations. in the first year or two of the exchange, the insurers actually had very little information. they had been insuring this pool of individuals. they had some information perhaps from their existing individual market. they had some information perhaps from a small group market. maybe they went to national data like maps but in any event they had remarkably little data on these individuals. as a consequence, a lot of them were very timid about entering the market. but after that first year where they saw premiums sort of drove enrollment and that enrollment was relatively low, we saw lots of new entry in 2015. again, on the expectation that they could experiment in the market. we saw entry and we saw potential for real competition there. but then 2016 rolled around and insurers had data their actuaries believed. they were scary. they were high utilization largely across the board. that led to concerns about high utilization and adverse election. it led from withdrawal from local markets and states. it is important to point out, it is not just some national carriers withdrew from full states, carriers withdrew from some markets and some counties and some rating areas and withdrew some of the products that they were ever oing while still remaining in the n exchanges. it was also the case that we've seen substantial premium increases as a consequence to all that. the implications of this is that there's certainly an open question as to whether those rather large premiums that we've seen in 2017 are able to get ahead of the losses that the insurers have anticipated. there's concern about the extent of adverse election due to the general sickness of the risk pool and what carriers are able to do about it. and there is an open question about those special late open enrollment provisions. as i'm sure you have all heard, there are opportunities where people can enroll in an exchange plan after open enrollment period closes. and some insurers have argued that that was an enormous drain on them, that late enrollees were extraordinarily expense iv. and the administration is sort of working on alternatives to tighten those. it turns out that there were -- from our review, mounting losses that stemmed from high utilization and that those losses can overwhelm competition. in all of our states we saw the withdrawal of insurers. in north carolina and texas, some metro areas went from five and nine insurers to suddenly having only three. florida had three insurers withdraw. michigan and california also saw withdrawal of carriers. their view was that this was not as big a problem as elsewhere. we saw the plateauing of alternative forms of insurance innovation. and certainly insurers have viewed themselves as having enrolled super folks. that suggests that there is an issue of risk mitigation. there's a view across many of our states that the risk adjustment mechanism and short-term other transitional mechanisms were inadequate to deal with the adverse election that they saw, particularly true in florida and texas. as one insurer told me in texas, so in the first year we set our premiums relatively high and we got -- in my words -- a sick draw of the population. so we lowered our premiums to try to attract more people and a healthier draw and we did, but six months -- and we made money. then six months later we got the risk adjustment fee and we lost money. so we set our premiums high and we loz money, lose money, we se premiums low and lose money. they withdrew from the market. issues matter. think the point there is if why want to prohibit insurers from using pre-existing conditions to set premiums as the aca does and as many have said must continue to be the case in the future, that means we must somehow deal adequately with the risk adjustment/risk mitigation problems. maybe that's the better funding of some of the existing mechanisms. maybe that looks at looking at other mechanisms like high-risk pools. another finding is clearly what we've seen in all this is a shift in -- there is very good evidence over the last 20 years that narrower networks allow insurers to negotiate lower prices with providers by essentially trading volume for price. there's clearly -- clearly that is in the mind of insurers as they have moved largely from ppos to hmos. there's an underlying threat in all of this as well though. that has to do with whether or not moving to a narrower network can affect adverse election or your fear of attracting high-risk folks. if one excludes premium providers, potentially that leads people with those related diseases to seek insurance elsewhere. there's some evidence of that. but there's also evidence that premier providers are some of those who have been working with insurers to co-brand. it is certainly the case that many managed care plans have -- while they have their own relatively unique nature of their networks, they have also sort of provided access to coverage in some of the premier networks. some of the premier providers. excuse me. narrower networks continue. there's concern amongst brokers and agents and policy experts that consumers are only beginning to be aware of what the narrower networks mean to them. there is very good evidence that narrower networks are cost reducing. but in some sense this can be misleading given the nature of the local markets that we've talked about. as one provider said to us, so we're the only hospital in town. the insurer moved from a ppo to an hmo. really didn't have much of an impact here. outreach to consumers may be critical to enhancing enrollment. insurance is complicated. even for those of us who have full coverage. consumers ha errs been largely on price but increasingly navigators tell us that they are able to appreciate the deductibles and co-pays. new challenges have to do with narrower networks, with balanced billing and plan withdrawals and having to move from one plan to another. some states have been very good, florida in particular, california and north carolina as well. it's important also to appreciate that it isn't just the nature gators that provide information. safety net providers often play a critical role in opportunities like enrollment fairs to encourage enrollment and brokers and agents certainly feel they have lacked incentives to be able to participate. the ability to increase enrollment in the plans i think we conclude depends critically on the ability to have informed set of consumers and to provide mechanisms to do that. an additional point is that insurers may indeed be waiting in the wings. yes, we've seen a lot of withdraw from the exchanges, but for the most part insurers who have have withdrawn from the exchanges have remained in aca client exchange plans. much of that has to do with the fact that if you withdraw from the state entirely, it's five years before you can come back and so there's a sense in many of the communities we've looked at that insurers have hedged their bets. they've withdrawn from the exchange products but they've kept exchange products there so they can rejoin the fray if the economic and political circumstances change. and so what that suggests is a replace/repair aca may see rapidly relatively reentry of insurers and indeed if that's the case, much of that new growth may be local and regional insurers rather than national players. the other interesting finding has to do with medicaid managed care prokts. they have been particularly successful where the more conventional insurers have struggles. it's an open question as to why that's the case. the medicaid managed air type of insurers made up of safety net providers. they also have a pool of enrollees who often transition back and forth to medicaid. to what extent that kind of experience can be generallyized to the rest of the populations and indeed whether or not it can. finally, while the individual states don't talk about the effect of medicaid expansion per sewhen you look across our five studies what you see is those states where there was a medicaid expansion, the role of that expansion was not discussed but in the other three states it was and the assertion by people in the field was that medicaid expansion would have been' helped. it would have been taken those people at the 100 to 138% of the poverty line put them into medicaid and arguably taken them out of the risk pools that the insurers faced and it may also be the case that the provision of medicaid expansion brought people in, they discovered they weren't eligible for medicaid but they were eligible for a subsidy and they enrolled. there seems to be a very strong sense that medicaid expansion matters. there's also point in north carolina that was emphasized about as you may recall in the first year of the exchanges, states have the option to allow nonclient plans to continue or not and the argument is by preventing those from continuing that mitigated some of the potential adverse selection problems. so future research for us. we think that we need to know a whole lot more going forward about how insurance competition is going to fare post repeal/repair. if they can offer a wider range of coverage, how does this affect availability, premiums and enrollments. how well do new risk mitigation approaches work? do local regional insurers grow and prosper? does a continue provider consolidation inhibit competition? what about acos enhance or retarred it. what's the future of narrower networks? to say the obvious, there's much to learn and little time. thank you. [ applause ] thank you very much. i'm tom gaze. we will have our state panelist. you can sit anywhere you want. all right. thank you very much. we've -- there's always been a discussion about the field research network and how they operate. we've been doing this -- okay, we're getting adjusted right now. thank you very much. okay. we are adjusted. i do want to thank brookings, i want to thank alice and dick and everyone else that's been wonderful in putting this together. the rockefeller institute does have a long history many thanks to dick nathan for putting together these field networks which we've done in medicaid, we've done in welfare reform, workforce development, many other areas as well. and we've often had some very good researchers in our research teams across the countries when we have these multi-state systems but this team is particularly great. we have some very distinguished folks and they're all quite diverse too and that's one of the nice things about it as well. this is a kind of inducktive research approach and it's nice to have people with different backgrounds, different disciplines to be able to have develop incites, different types of incites in understanding and observing how these national initiatives are implemented on the ground. this team in particular and especially the five people here do have a lot of differences. we've got differences in disciplines, we have two economists, we have a political scientist, a lawyer and a public health specialist and their careers have been different as well. three of them are traditional academics, not too traditional. they've also been very applied, very active people. when nonprofit research advocacy organization and then one former top government executive who's now leading the research center at a major university. so all of them bring different sensitivities, different trainings actually to bear in their thinking. what i want to do since you do have your bios of everybody. you've already been listed in terms of -- in terms of their major titles. i will just simply say that we're going to start off with just a few minutes of a summary of their major findings for each one of them and then we're going to have a series of questions. i'll ask a few questions and then at some point i'll let everybody else ask questions as well. and your questions will be brief and to the point when i give you that opportunity. we're going to start off with the blue state of california. we're going to end with the red state of michael moreysy in texas. michigan will be second, third will be florida, fourth will be north carolina. michael wineberg is president bay area council of economic institute. for michigan we have mary phillips for health care research and transformation at the university of michigan. patricia borne will talk about florida. she is the payne hojs eminent scholar in risk management insurance at florida state university. patty since we've already used 15 seconds of your time you get less time. >> fred deand elizabeth l. turn ij and a nonresidence senior fellow brookings, same with you mark. and then finally we have texas and mike. so mika, start off. >> all right. well i'm intending on winning the oscar for best presenter today. and to do so i'm going to tell a story about "la la land." now in this case by la land" i mean region 16 of covered california, california's aca marketplace. that is the western half of los angeles and what i talk about will really reinforce the conclusions that michael just shared with the entire group and i'll give you some local flavor. the western region of los angeles actually in and of itself has 5 million people who live in it, so it's as large as many states. very diverse population obviously, a very urban area and there is both a lot of provider competition in los angeles as well as a lot of insurers competition. on the provider side and the broader los angeles area there are actually over 80 hospitals. there's not as much hospital consolidation in los angeles as there is in places like san francisco and other urban areas and on the insurer side there are actually seven different insurer competing in this area and there of many different types so you've got kaiser permanente which is our closed network integrated delivery system. you have some conventional insurers putting together ppos and hpos, our anthem plan and blue sheeltd plan. you have oscar, the plan sort of new wave. we're going to use a lot of tell health. and i'm sure we'll get a tweet to get more enrollment pretty soon because that's totally a legitimate thing to do and then you have very interesting couple of medicaid managed care plans. and so the state active purchasing exchange did a lot of different things. it's not just negotiating with insurers for prices it's really thinking about do these marketplaces work, do they have enough competition and is there something we can do to bring more competition into the marketplaces. funny thing about california is, since a bunch of people that would like prefer to be implementing a single pair system that actually did the best job of implementing a marketplace reform. i guess we like this now. and really thought about if we're going to have competition we need to have competitors. no competitors, no competition. hsas don't make competition when there's one hospital in your town. a lot of competition in los angeles and one of the really interesting things, so you hear these big headlines insurers raising premiums 45%. of course almost everybody doesn't pay that because they're subsidized but in los angeles a big issue was that last year ma leana is an insurer that lowered its premium in absolute terms. it's a primarily a medicaid managed care plan competing in the individual marketplace in california and actually lowered their premium. now the issue with lowering your premium is that means that all of your competitors, you know, who are raising their premiums and the people who are purchasing through them actually see a really substantial premium increase and we've seen that consumers increasingly or shopping on price and the first couple of years in california they didn't do it because they didn't know what was going on and let's just default to the brands we heard of. in the last couple of years they really started chopping on price. they'll buy me lynna and la care. and they seemed fairly pleased with these networks. that's something that folks are finding ultimately most health care doesn't work and you die. so no matter what facility you choose, ultimately you're going to be disappointed with this consumer product because you'll be dead. so, you know, they choose l.a. care or whatever and they seem fairly happy with this product and it's substantially lower priced. so this is creating a tremendous amount of pressure on the higher cost hospitals in los angeles and we are seeing them negotiate absolute rate concessions with the insurers to remain competitive in these networks. this is bending the cost curve. there's a lot more to say but the thing that just makes me completely want to tear my hair out, you know. i ran into marc hall, the beer say lot more gray since the last time i saw you, but the reason it's more gray is that i actually see like shocker, you implement a law and it works, right? so one of our conclusions is, if you just don't do this huge part of the law, maybe it doesn't work that well. well, surprise, right? if you are an oppositional state and do everything you possibly can to keep a law from working, then you complain the law isn't working, it makes no sense. you've got somebody -- you want them to run a hundred yard dash and you cut their legs off at the knees and then you say they're not running fast enough. this is a failure. if you actually focus on making the affordable care act work then shocker it might actually work. it's not going to work there either. you actually need to choose a system and implement that system and when you do it in a place like california, it can work. the important thing that i'll just conclude on is again, local markets, local competition. so you can't put together competing networks in an area with only one hospital system. so if we really care about competition, we need to care about competitors. and the competitors we care the most about are actually not the insurance plans but rather the providers. so, you know, you've got -- somebody like david brooks who should know better writing a column about can you shop in health care and talking about do hsas work or don't they work. that besides the point. you can't shop in health care if you have no choices to shop among. that's what we should care about if we care about shopping and markets and all the rest of these things and that's something that's totally nonideological. it's important for whatever kind of policy framework you put in place and los angeles shows it. so that's my comments. >> i just have to say you can tell who's not the academic in this group. >> academic by training but i thought i'd have some fun. >> i'm not the academic but i'm not competing for the oscar because i am from the heart lands. i'm from the purple state of michigan. you may not blame us for where we are today but you may have had a contribution. so i want to add something -- i thought mike's summary was fantastic and i thought michael what you said i totally agree with but i want to add something to the perspective that michael gave you because i think it's really fundamental to understand in part why it's unfortunate we are in the change discussion that we're in right now. because health care markets, health insurance markets take time and to build something takes a tremendous amount of time and where we are today in the affordable care act is very much built on the history of where, i think all of our states have come from and to see what's happening now you'll have to understand that history. i want to go back a little bit in history for you to understand a little bit about michigan. in many ways i would say michigan is kind of the model of what the affordable care act intended the health insurance marketplace to look like. we are a state that even though we have a republican governor and an all republican legislature we are a state that approached practicing mat i cannily. it wasn't oppositional. we wanted to make it work. our governor, governor snider is a business man by background. he got the economics of it. in fact, he said after the law was passed even amidst all of the rhetoric about how terrible the law was, he said if it had been up to him he would have created an exchange independent of the federal law because he understood that it would make health insurance easier for consumers and he wanted to make the market work better dpoormz. he and his administration always approached the health insurance exchange market from that standpoint. in a similar way they approached the medicaid expansion from that stand point. it was controversial with the lettingure. passed by only one vote and that was a vote that switched from a no vote to a yes vote after three hours of forced trading but we did get the medicaid expansion which was implemented in april of 2014 so there was a little bit of a gap but mostly early on. we were one of the early -- certainly one of the first republican states to go for the medicaid expansion and again it was a very pragmatic decision based upon the economics. there was a coalition built across the state that included all the business leaders, all the providers, all the consumer advocates. it was all the health plans. there was just widespread support because of the economics. it's a state that got the affordable care act and as a result we have actually a fair amount of competition even today with the affordable care act. we have ten insurers. in 2014 when the act passed we had 13 issuers in the state so, yes we lost a couple. we lost the coop. we lost a couple of national insurers from the exchange but they were very small in the marketplace to begin with. they were sort of irrelevant to the market and frankly aetna, united they don't really know how to work with the individual market. they never expected they would be successful. we continue to have a robust market. we now have -- i think we started with something like 70 different plan options among the 13 insurers. we have 167 plan options. so it's a robust market. yes, not everywhere in the state. the upper peninsula of michigan which some people think is better aligned with wisconsin, they have two issuers, both blue care network which is hmo and blue cross and blue shield of mish u, the ppo so there's not tremendous competition and as a result premiums are higher. but they still have choices of plans and we just completed at our center some consumer surveys. we've been surveying consumers since 2009 and actually consumer satisfaction on the individual market is higher than it's ever been with the plan choices they have and i think there's been some collective memory loss about how bad markets were before the affordable care act for people in the individual market. two words about the history of michigan so you can understand why we're in the place we are today and then i'll turn it over to my colleagues. so michigan has always been a state that has provided coverage on a guaranteed issue basis for the individual market and actually if you want to know what will happen with the requirement for preexisting conditions to be covered with guaranteed issue without a mandate, look at michigan. because blue cross and blue shield of michigan since it was formed in 1939 was required to be the insurer of last resort. tend to cover all comers, could not exclude anybody based upon health status and as a result they had the sickest population and indeed a failing individual market, the rates were heavily regulated. they were losing millions of dollars and had been lobbying the legislature for years to change their structural status which they achieved in 2014 with the passage of the implementation of the coverage expansions of the affordable care act. so they dominated the individual market. it was a very old and very sick market. i think the average age in their individual market prior to the affordable care act was 55 and as i said they were losing millions in that market. they had 72% of the individual market. with the advent of the affordable care act, many new entrance came into the market predominantly as mike said managed care plans, many of whom had been predominantly serving the medicaid market. i think that's the other piece of history that's important to understand in michigan. michigan medicaid converted to a predominantly managed care market in the 1990s that has heavily gone to managed medicaid so those plans were ready to the networks they needed to serve a population like the individual market. i think it's why they've been successful. many of them are making money in these market. the blues are not. they have lost market share. they're happy about that in the individual market. the health plan, the hmos have gained markets so the blues i think are 60% of the individual market while the managed care entities have gone up quite a bit but they're all staying in the market. we can talk a little bit in the questions about what is going to happen in 2018, very possess missistic just because the chaos that is happening in the market right now and some of the utilization trends we're seeing of consumers who are afraid they're going to lose coverage in the market so i can answer your question now. the rates that were set in 2017 for the 2017 market michigan went up 16.7% prior to sbids and subsidies 87% get subsidies, those rates are underpriced now for the utilization we're seeing because of the fear that has been sewn in the population. lots to talk about for 2018 but a picture of michigan. >> thank you very much. >> okay. i want to give a little bit of a context on florida's as well now moving from states that supported the implementation to an opposition state and give you first the main takeaway from my research in florida despite the support of the state with the affordable care act and any real active efforts by the regulator in florida, it's been a real success story over most of the state. so i want to tell you a little bit about the main points, the things that i think have led to that, have drawn out this success, but i want to give you some of the history, what's going on in the state, a little bit about the market. i'll talk about my main points and you can tell i'm a lecturer, so i tell you what i'm going to tell you here first. i want to go through some of the concerns that i got from the stakeholders that i interviewed with, some of which might be common to all of our research here, but some specific things that might have been a concern of the stakeholders i talked to in florida. so florida's the third largest state. he has population over 20,000,008% of the population is receiving insurance through the marketplace. that's a pretty big percentage. we opposed the implementation of the affordable care act, also opposed the expansion of medicaid by default, the rating areas that were selected for the federally facilitated exchange are the counties so we have 67 counties, that's the most rating areas in any state. i think south carolina is next with about 46 rating areas. so i have 67 different markets to try to evaluate and just in case you're wondering have they ever thought about combining any of these the regulator said no. he's not interested. passive approach to this. that was the default. they stuck with the default. they haven't gone back to revisit whether adjacent areas might make a better market. so the state also -- prior to the implementation of the affordable care act, one of the highest uninsured rates in the country. and although the rate is still higher than the national averaged it's dropped from 20% to 15% at least by 2015. the market -- we have seven carriers that are participating statewide but only one carry yaer that participates in all the exchange that's blue cross blue shield of florida through different names. florida blue, florida select, different plans that they're offering. most of these carriers are also offering coverage in the individual market off the exchange. blue cross and blue shield i want to say a few things about them. they have been the dominant carrier in florida for seven years operating in the group market as well as in the individual market, and they also rank highest in consumer satisfaction in studies so people are really happy with the coverage that they're getting from blue cross and blue shield. they have reportedly in my conversations with different representatives from them, they've been very happy with their experience on the exchange with the ability to form networks. they already had a lot of networks in place. they had relationships with providers all over the state for their individual members. it was very easy to just expand that and say we'll start offering the exchange plans so for them participating on the exchange was not a really big question as it was for other insurers that didn't have as much of a presence in the individual market. there are four other carry yerz in florida that did not have a -- not real active in the group market but were very active in medicaid managed care and those plans have become key players in the exchanges. i know that is a point that's come up several times now. these plans that have medicaid experience and i would add to that plans that had a lot of individual coverage experience in the state are the ones that have been best suited for the exchange and maybe experienced the best success there. there have been some major withdraws in the exchanges so between the first year and the second year there was several carriers that joined and the next year some carriers backed out again. cigna, united health care and aetna have all withdrawn from the exchanges across the state and blue cross and blue shield is the only plan -- the only carrier that's operating everywhere statewide. blue cross and blue shield had strategic advantage in negotiating with providers. i think that points to some success there in florida that may not see in other places. another major point, maybe this comes across from specific conversations i had with nature gators is the importance of the navigator network. there was a lot of money put in through grants to the university of south florida where there is a particular person there, jody gray who is a shining star there with implementing the exchanges, getting people enrolled. she is formed alliances across the state in rural areas, in urban areas and some of these florida chain family health care foundation, the ep lep sis foundation. she's made alliances with all of them to reach out to people and i think that's probably one of the key reasons we've had so many people sign up for the exchanges in florida. my other major point i already touched on to had to do with the medicaid providers. major concerns of the stakeholders. let me just come back around to some of these. the navigators are not that concerned about what's happened with competition. they said there are plans available for people everywhere, even in the rural counties which is one that i focused on. there are 13 plans. they're all being offered by one carrier but the navigator said the people are satisfied with being able to choose one of those. the prices are high but the navigators did not express a lot of concern about that. the regulator also was not that concerned about the number of carriers that are in the market. is not doing anything actively to try to encourage them. he's had conversations most of the carriers say we can't make money and he said, okay, i understand. that's been maybe a problem and maybe a problem going forward, however, the regulator in some of the stakeholders argued that they did not think that -- even though they see a potential for a death spiral with prices rising and more carriers dropping out, that it will level off. most of them in the regulator especially said that he thought that this next year we would start to see the premiums leveling out and the utilization as well leveling out. i think i'm running out of time. i'll move on because i think i touched on most of the main concerns that i had addressed. thank you. >> so when i made that crack about whose the academic, i didn't mean anything about substance or style, i meant all the academics had notes in their laps. so to read my notes, i'm going to put on my glasses. including oppositional state, no medicaid expansion, high uninsured rates previously. very effective navigator outreach and so florida north carolina are often ranked side by side in terms of the largest percentage of eligible population who have enrolled. but also very high prices and so -- paraphrase dickens, i think north carolina is the best of markets and the worse of markets. despite having very high prices and sort of pleasantly so because the health care cost index is not among the highest in the country but the aca premium rates are among the highest. much of that is a buffer because almost 90% of the enrollees are subsidy eligible and almost two-thirds of those are below 250% of poverty so receive substantial subsidies. the price remains quite affordable. i want to focus more in terms of market structure and entrance and exits. so similar to florida, blue cross is the only statewide carrier, prior to the reform they had 90% of the -- 85% of the individual market and the other carriers had less than 5%. there was no competition previously. people would say well blue cross owned the market and what have you. post aca blue cross dropped from 85 to 65 still the largest but aetna and united each rose up into the middle of the high teens in terms of market share, sort of similar market shares to become quite significant. and so aetna was there from the beginning mainly in the one quarter of the state that composes half the population, charlotte, raleigh, and where i'm from. then aetna which had nationally stayed on the sidelines the first year entered the second year and interestingly they eechd entered with quite distinctive market network structures. so aetna's strategy was to partner with named health care systems, this cobranding that mike referred to so initially with duke in the raleigh area and then with one of the premier systems in the charlotte area, carolina medical center that also covers part of south carolina and it was saw -- the could have entry -- the duke could have entry -- i forget the trade name. and then when united entered they came out with gate keeping hmo. they went back to old style 1990s plan structure and part of the way is creating a network because contractually they were able to do that focusing on the physician contracts by selecting a certain groups of primary care physicians they thought would be good gate keepers and putting in referral requirements for specialists and didn't have to go out and renegotiate networks with hospitals. so that was an interesting move and so you had these sort of standard ppos that blue cross offered side by side with accountable care organization structure because the coconvenient tri slash -- and such and i heard stories of really using the aca as an opportunity to create this new type of product with a critical mass where you could put it out there and if you price it right, it would be pretty confident in getting 20, 30,000 lives which is enough to get the thing up and running and then start to sell it to small groups and eventually large groups. so really, you know, sort of health policy, you know, dream come true. i almost called up allen and said managed competition is working, just the way competing brand health systems being driven by sort of defined contribution, consumer level shopping. it all sort of fell apart. aetna pulled out nationwide for corporate reasons that we've read about -- united pulled out nationwide first. and then aetna pulled out nationwide and of course there is controversy about aetna's reasoning. many people feeling that it had to do with the merger review by the department of justice but in any event i heard about why aetna didn't select actively remain in some markets including north carolina but as mike said they still are on the sidelines suggesting this potential of reentry. and some of these networks that had been formed still exist in the group market so you have this positive spillover -- negative words to convey positive ideas like spillover sounds bad but it's actually good so when something good happens in one market and it spills over to the other you see that happening in the -- with some of these networks. the other important spillover thing that blue cross responded to these new network structures by creating its own limited network, one was straightforward price discounting. that said all this vibrant competition was happening in the urban areas that you don't see this happening in the rural areas where there's only one system and one group of specialist to deal with and even in the urban areas it wasn't true. so those things are resonate with what mike said. one of the things about competition in north carolina is that principally aside from the blue, the carriers were national carriers. we don't have local regional carriers. they haven't yet formed insurance companies. but that might change -- so when decisions were made nationally they impacted our state market across the board. prior to that you saw these national carriers expanding their state so they weren't contracting so united started half the counties and expanded to three quarters. could have convenient tri started with about a quarter and was expanding to about a thirty but the national entities pulled them both out. many people i spoke to said that that's inevitable. that this condition of blue cross being the sole carrier will last as long as the market's stabilizes. the big open $64,000 question were the two years of steep price increases enough to stabilize the market. we'll find out soon. but if that's the case, most people felt that there would be new entry into the market. aetna's still poised to reenter. importantly medicaid hasn't expanded but traditional medicaid in our state has not been managed care but we've recently embraced medicaid managed care. so there's a lot of activity right now forming new carriers entries for national carriers looking at our state and the thought is they enter the state for the medicaid managed care market. it's a good chance they'll enter into the exchange market regarding the similarities we've seen elsewhere. it's an interesting thing. at the moment there's very little or no competition among carriers but everybody seems to think there's this potential competition that is poised -- in fact, cigna did enter the raleigh market for this current open enrollment just a single rating area. no one said that this market isn't viable, that there's sort of regulatory barriers that keep people from doing business. the rate increases proposed were generally approved. it does appear to be mainly just a process of actuaries catching up with utilization. the points that mike made about not knowing what the population was at first and then the next year having to put in your rates before you really had good data and by the third year your insurance -- your risk payments were frozen by marco rubio and then the fourth year your reinsurance has phased out. every year there's something else to catch up with and so, you know, the points you already know there's reason to believe it's found equally lib rum but there's also reason to be concerned that thaent. i've heard both stories that prior to the trump election people at least were carriers were continuing to watch this market carefully and remain sort of flexible in terms of reentry or new entry and meanwhile, what had developed with the network, the provider networks was really i think most encouraging. >> thank you very much. >> i suppose the best sort of single line about texas that really plays off of mark's comment is and then it all fell apart. texas is certainly an oppositional state. it didn't expand its medicaid program. it uses a federally facilitated exchange. it enacted legislation requiring additional training for navigators before they could go into the field. and indeed there are -- there are only a handful of formal anavigaters throughout the state. but i wanted to make one point before going into the collapse. and that is that the nature of those individual markets truly are sometimes very unique. one of the features with texas is we have a number of border counties and there the challenge is so let's see i'm an insurer and i'm telling a bronze or maybe a silver product with a rather large deductible and then access to u.s. providers. and the majority hispanic population in mccal lum for example, many can cross the border where there is a vibrant health care market, where they get a favorable exchange rate and where prices are lower. and it's really difficult with that sort of opportunity for alternative sources of care to make an exchange product of the sort that we've talked about today really work. i just want to throw that as an example of the -- sometimes very different markets that insurers are trying to function in. then to talk about sort of the nature of the collapse in texas. alice keeps saying to me you're too negative, you're too negative. i was very enthusiastic about what was happening in texas over the first two years. in the first year as i indicated more globally there was some reluctance on the part of insurers to enter into the market, blue cross blue shield is the dominant carrier present in all 224 counties. but after that first year, we saw substantial entry into markets. we saw expansion by those who were already there. we saw carriers lower their prices relative to the blue cross blue shield prices and to appear to be competing pretty significantly. at least in some markets. certainly, for example, in houston and austin where we saw eight and nine carriers competing by the second and third year. but then the data became available and when the data became available as mark indicated, big indications that there were losses. and it was those losses together with the perceived inkwas of the risk adjustment mechanisms that led to withdraw. houston depending on how you count, third or fourth largest city in the country, had eight insurers. they now have three. blue cross blue shield and two medicaid managed care plans. the other thing that went on is the shift from a variety of ppo offerings, blue cross, blue shield offered ppos in all of its market along with hmos. very quickly it decided to withdraw from the ppo offerings as did all of the other carriers. you cannot buy a ppo product on the exchanges in texas. hmos are the only ones there. there is certainly a view of significant adverse selection in that it was the sicker folks who enrolled and as a consequence that undermined the premiums that the carriers had set with a high degree of uncertainty. i would say given the michigan experience where there's not a sense of a death spiral, there is a sense of a death spiral in texas. had the election not occurred and the additional complications layered on top, there was from my sort of back of the envelope calculations sort of 50/50 sense that blue cross blue shield would still be in the market next year and blue cross raised its premiums rather substantially, 40 to 50 plus percent. in the first year they appeared not to have known what the utilization experience was. they announced they had lost $440,000. they responded by moving from ppos to hmos which is sort of a classic response that an insurer would make to deal with those cost problems and they lost $770,000 in the individual market. clearly there's concern and they have responded with rather large premium increases and as we've said, it's an open question whether or not those are going to be adequate to deal with the lightization experience they've seen. now having said that, the medicaid managed care plans truly are a surprise and i think a surprise even amongst themselves as one of them said, we have succeeded beyond our wildest dreams in terms of the sorts of enrollment that they were able to garner. they said we basically didn't know how to price particularly. we followed blue cross, made a mistake but their premiums have remained low. they actually rose up in the middle years and have come back down. malina as others have indicated have lowers their prices in every year, at least in some of the markets in texas. so there are bright spots and there are those carriers potentially waiting in the wings to reenter, but texas is a market that i had great hopes for early on because i saw lots of entry and i saw price competition and all the sorts of things that an economist would say, this is all moving the way you would hope it to move. and i guess better data quashed that. so what can i say, alice, it's the best i can do. >> very good. even though it's not the case that it works, it seems to be -- the system seems to be working in all these situations. it does seem that from what you have been saying that the aca model seems to work best in urban areas with nonconcentrated provider communities. now i wondered and not that it works in all urban areas with nonconcentrated provider communities, but i wonder what can be done to make this model work better in the other communities? it's the rural community or maybe the smaller city communities that might have more concentrated providers or relatively small number of hospitals or increasingly since the industry seems to be consolidating any way, a lot of our cities even pretty sizeable cities are going to have a fair amount of concentration. is it something that could be done within the aca itself or should we be doing something about really building up our provider infrastructure with a separate set of policies? so what do you think? anybody? >> i actually think it was very clear. i think frankly all of the issues that we've experienced in all of our states were fixable issues. now that is not what is happening right now and, in fact, as i said there's a lot of chaos in the market but this was very clear what we could have done and that was the public option. you cannot overcome and i can't remember which of you said, maybe it was you, mike, when you have limited number of providers in a community the health plans don't have market leverage to negotiate lower rates, right? you need to give them market leverage so look at what's happened with medicare advantage. it has worked very well in many of those communities and it's because they have the leverage of the medicare rates. so clearly i think that would have been a way to fix it. i think we're not going anywhere near that at this point. >> yeah, yeah. mark? >> same thing. we planned all this much earlier in the year and did most of the interviews late summer, prior to the election we thought that there would be discussion of public option so we actually asked people and what we heard in north carolina, in the eastern part of the state which is the thinly populated, more often than i expected in a fairly conservative state and not just from the liberal advocates, i suppose there's nothing left other than the public option and who knows exactly what that would mean. does it mean you would buy in the state health plans or something much left up in the air but they were sort more openness to thinking about some version of a public option than i expected to hear. we didn't pursue that in great depth but suffice it to say, it seems it's so far off the relevant policy. so that's one answer. if this model of managed competition which is what we're talking about isn't viable, then that's the logical alternative. >> i don't know. swing to the other side maybe in your perception of my political preferences, public option is given up on the system and blowing it up, right? if we allow one of the quote/unquote, competitors in the marketplace to have a completely different essentially set of rules and to leverage the combined purchasing power of the state and all the mechanisms of the state, it's not a competitor at all. and it's not setting up a fair system of competition and it doesn't address your question. you look around the world. they've got single payer systems. you couldn't find a way more market leverage, yet they've seen substantial trends upward trends in their health care premiums and utilization and so on and so forth. the issue is still competition, right? not of provider -- not of plans but of providers. so this is a really important issue whether or not we move to a single payer system or do the very interesting ideas from the folks on the right wing in the sense of blowing up employer -- we still need to think about what do you do in noncompetitive marketplaces. you could actually be serious about antitrust in urban areas but -- it doesn't work that well when it's one hospital. i don't know if you can put a tape down the middle of it and you guys are over here, but it's really important. tell health may be one way to get traction on that issue. these are like the real issues, not the imaginary. >> let me pick up on that because i agree with you. if the issue is the lack of competition amongst providers, one of the things we've seen is over the last couple of decades is really the willingness to allow providers to consolidate. so let's revisit the antitrust issues, let's revisit some of those consolidations and see to what extent we can unscramble the egg and in some markets we may be able to do that. in rural areas probably not. there are urban areas that have scolded into -- the issue is competition it's not the other stuff. >> let me say one other word since i spent 25 years of my career at a health plan doing all of this, negotiation, et cetera, the other way to think about this problem is back to a point that you raised about the specificity of the rating area. so when i was a blue cross and blue shield and we looked at the market as a statewide market rather than a regional market, the rural areas were not as big a problem because we were letting them be cross subsidized by other regions. they have relatively small impact on a profit margin so we could afford to pay higher rates to the providers and still keep premiums lower if we looked at it from a statewide basis. the way aca is set up now each market stands on its own. rating area structure and think about statewide plans where there can actually be some cross subsidies. >> absolutely. >> you don't want to get bogged down, when i was in the discussions when we came up with our 16 rating areas and we talked about do we have 100 counties, whatever, four, whatever. a lot of the balance was explitly about this cross subsidization then you don't really reward the plans that do negotiate the discounts with the more centralized health systems. there are tradeoffs but that be would be the other approach. >> i mention that in the beginning of my discussion of florida, that 67 rating areas may just be too many. one that i chose was the poorest county in florida, but it borders tal haassy and on leon county which is where the legislature is. in fact, people that need services can drive 25 miles to all the best hospitals and providers in the state, but the network that's there offers them one hospital over in that side of their county and the consideration here of merging those counties in some way, the fact that that's not on the -- it's not being considered just yet surprises me. >> another thing, it does seem as if one major theme that comes out of your discussions is that when you do have something like the aca which is a very complex market based initiative that it's going to take a while for all the different actors, the consumers, the providers, the insurers, the regulators, everybody to sort of adapt to one another and understand things but it also seems that the consumers in particular sti need quite a bit of help in this system. and i know patty talked a bit about what sounded like a very good program coming out of the university of south florida but i was wondering if you have other suggestions about how, you know, are there ways in which we can actually sort of help consumers not only understand how to get into the system but how to use the services in a way that is more efficient, more effective, than they have so far. are there any particularly good practices you think that ought to be spread or you know, do we need a lot more person power in doing this sort of work? how can we improve consumers in dealing with this complex system? >> well, one approach is the agents and brokers have largely been excluded from all of this. and when they were participating, admittedly most of the focus is on the small group market, not in the individual market, but these are folks that have a depth of knowledge in how insurance works and how it could work for you. and it seems to me that one of the things that could be considered in that much broader milieu of what are you going to change and how are you going to do it is to reconsider the roles of brokers and agents and give them some skin in the game to be willing to help make -- help people make informed decisions in the individual and indeed, small group market on the health side. >> yeah. mike and i are going to spend the whole panel agreeing with each other. so -- >> that's why we sit on opposite sides. >> i spent all this time lobbying, i have covered california and i'm like so, you're setting up an insurance sales marketplace. maybe work with insurance sales people, you know, crazy idea, and we actually did compensate them a little better in the early going, the compensation has sort of gone down, brokers and agents in california are almost doing this as a charity at this point. but they are doing a tremendous job and they are actually still providing a lot of the enrollment in the system. so that's a piece of it. >> okay. >> just chiming in on the broker/agent situation, it came up a lot in discussions in my interviews in north carolina like in other states, when united decided to pull out they stopped paying commissions or took them down to 1% or whatever. particularly during special enrollment because they cleared out open enrollment and said no more commissions. once they did that, then blue cross did the same. when blue cross zeros out commissions, the brokers get really worked up. and they only did it during special enrollment but i think it was because we can't be the only ones in the market paying commissions during a period when we think we are getting adversely selected. they reinstated commissions during open rollmeenrollment at lower level. brokers who had been engaged which were a minority were saying we are pulling out. that is a problem. and i think it really does pose concerns for the ongoing -- now, it becomes more profitable and there's more competition, there's no reason broker commissions couldn't go back up. meanwhile, the role of the navigators has been critical. one of the things i learned from this is that the navigators were important just to get previously uninsured individuals educated about insurance and deductibles but year by year because of this shift in pricing that might be referred to where the plan one year is low price, then another plan drops lower and that price becomes much, much higher because it's relative to the subsidy which the subsidy amount shifts and people in the room know that dynamic, suddenly people are having to take another look and when they change, they are changing providers and that gets pretty confusing. so kou cayou could call that tu you could call it active purchasing price driven but whatever it is, it requires more than just sort of punching up and seeing who's got the best price this year. >> i want to add one more thought to the dialogue because it comes back to something mike said earlier about the states that expanded medicaid and the states that did not. in the states that expanded medicaid, there actually is quite a robust network of organizations and individuals who are helping people getten rolled in medicaid and they are actually serving the same function for the exchanges. i think this is another case where you can see when you expand medicaid it has spillover effects into the individual market. >> before i turn it over to everybody, i will ask one question or one combination question and i want you to answer briefly. >> lightning round. >> light nuning round question. i have heard some discussion about the aca, some interest in possibly changing the aca [ inaudible ] level. i was wondering if you could offer your suggestions or your thoughts on what element of the ac aa do you think is absolutel necessary to sustain or what element should be strengthened or what element could be jettisoned without too much trouble. and you don't have to answer all three of these, anyone, but if anybody has any thoughts, any recommendations based on your research, based on your own state's research. mary ann? >> so on the jettison side, i think the employer mandate could be jettisoned. it's not served much of a function. it was sort of a throw-in at the end and it's very much of an irritant to employers. they are maintaini ining covera. we have not seen a drop-off in coverage. on the maintain side, the idea you have to have some incentives for people to enroll. you have to have a mix. we can spend quite a bit of time on talking about why high risk pools will not work as proposed, why health savings accounts are not the answer. you have to get healthy and sick people in the market. that is how health insurance works. so if it's not going to be the individual mandate that people hate, i'm very concerned about the continuous coverage requirement or frankly, the idea that we can do it like medicare part b. we need to strengthen i think the individual mandate, clamp down on special enrollment periods and some other things that have really caused problems. >> well grounded in michigan's experience. >> yes. >> okay. very good. >> so i'm guessing i will pull these from the main concerns the stake holders i talk to conveyed. we got to find ways to keep enrollees from opting in and out of coverage. there seems to be a sense especially among the regulators that people are signing up during open enrollment, using the first few months to get things taken care of, then they stop paying. and trying to convince individuals you are still bearing risk if you are not insured and you should consider paying for the whole year, so some ways to incentivize people to stay in. and as far as something, i don't think -- i don't have anything i really want to jettison, but i think the risk adjustment mechanism needs to be reconsidered somehow so that we can encourage those providers or the carriers that are taking -- getting adversely selected against somehow, there is some time period in which they can recover and stay in the system rather than feel like they didn't get duly compensated for the risk that they bore in a given year and decide to leave the market all together. >> okay. before somebody takes my one idea, let me jump in on that, which is -- >> that would be me, i guess. >> i do think particularly there are the three rs. we can spend all day talking about what each one means. just to emphasize, two are transitional risk corridors and reinsurance. it struck me through this process that the three-year transition was too short. the risk corridors were never adequately funded. and even with reinsurance, i think the market needs another year or two to kind of really get caught up and get comfortable with the level of risk and for the reasons we talked about, you can look to medicare part d and medicare advantage where the three rs are actually permanent and that's where the ideas came from. there, too, you had very similar managed competition type of idea where it was not hostilely opposed and was embraced, all elements worked together to try to make it work, but importantly, the risk mitigation things, i don't know that they need to be permanent, but only three years in a hostile oppositional environment and only supporter versus the other experience with medicare part d. >> okay. good. >> i would put two things on the list to worry about and keep. one is the exchanges themselves. they don't have to be run by states or the federal government but this idea of a single place where you can go and see what all of your options are is worth preserving and it can be preserved privately. e-health insurance.com prior to the aca was able to do that sort of thing. there's no reason that private entities couldn't do it as well, maybe better than state and federal entities but the idea is to insist that everybody who is offering coverage be on the exchange and be explicitly described as what they are doing. secondly, improving somehow the issue of dealing with adverse selection. as we have talked about, that's a really big issue. if you are not going to allow people to charge -- insurers to charge a higher premium for sicker folks and lower for healthy folks, then you have got to find some mechanism to account for that difference in expected utilization. maybe it's the three rs being improved. it may well be. maybe it's looking creatively at things like high risk pools. in any event, that issue has to be dealt with. if any of this is to succeed. >> i guess very quickly, guarantee issue and community rating are what i hope gets preserved. so as long as we do those, then you can move, you know, the pieces around a little bit. i think what can be jettisoned is a lot of the complexity. like the second lowest silver plan with the percentages and the cost sharing subsidies and everything and i talked to so many reporters and they would be like premiums are going up and i'm like no, they're not, it's actually way more complicated than that. they're like we can't possibly explain that to our audience, right. so if you have a law that you can't possibly explain, that might not be a feature. certainly looking at how we can simplify this and maybe simplify the broader health care system more generally. >> excellent. thank you very much. now, anybody, brief, we will get to you in a moment, dick. yes, ma'am. we have a microphone for you. >> hi. i'm from the american speech language hearing association. earlier, it was mentioned that interstate sale wasn't really a viable option but could you explain a little bit more why it's not a viable option? >> well, it's a testable hypothesis that it isn't and i early on thought that indeed, there's a lot of potential there. the problem is that if i'm an insurer and i want to be successful, i have got to negotiate prices with providers and most providers exist in local communities. so if i'm in -- if i'm headquartered in tennessee and i'm offering insurance in texas, i have still got to go to midland to negotiate a contract and that's time-consuming and i don't know what kind of market. i just don't think you see much of that happening at least very quickly. >> yeah. the sale of insurance across state lines either does nothing or does something we don't want it to do, right? if it is just like people being able to sell in other markets, they kind of can already do that. they have to abide by the state regulations and they have to figure these things out. however, if sale of insurance across state lines means there's a state that allows you to sell junk insurance and so you can now everywhere in the united states sell a plan that has a yearly maximum, well, that will get you to a lower premium but in a disastrous way. so it's either nothing or it's a big problem. >> next question. right over there. >> thank you very much. i would like to ask a question about the impact of dominant employers in states or regions, if you were in wisconsin it would be potentially kimberly-clark. ford potentially in michigan. they had employer plans. r.j. reynolds in winston-salem if they still have their headquarters. they still offer yahoo! or facebook, they still offer their employees health plans. 20 years ago, they would have offered them kind of one health plan, whether you were an engineer or a janitor. so two questions. one, to what degree did having a dominant employer impact these various districts and states. even houston and dallas has dominant employers. and second of all, if there were repeal of the aca, how would that impact these employer plans? >> i can comment on the dominant employer because i think it goes to what i was trying to communicate earlier about the history of the states and how important that is and what got set up under the affordable care act. for example, in michigan which was for many years dominated by the auto companies and uaw in terms of the way health benefits were designed, because they concentrated their insurance market into blue cross and blue shield of michigan, it gave blue cross and blue shield of michigan tremendous leverage in negotiating with the providers in the state. that's what set the ground level and that's what kept premiums relatively competitive and relatively low in michigan. so they are less important now because for a variety of reasons, but i think they set up the foundation of what we are dealing with in the states and became very important. i don't think they are directly affected very much by the repeal. they may be by the benefits or whatever. they are 100% offering benefit coverage, most of them are moving to high deductible health plans, that is independent. people are confused about this. it's independent of the aca. i think they are still on that journey. >> yeah. just one more question quickly. actually, the aca has been fantastic for employers. particularly in states that did the medicaid expansion. in california, as an example, two-thirds of the adults who were enrolled in medicaid are actively engaged in the labor force. they are employed full-time, part-time. there are people that weren't necessarily on the employer-sponsored health plan. what happens when you have medicaid? you are more productive. your health status is better. so there are lots of positive impacts for the employers and for the economy of having these plans in place and for the people who may not be covered by employer sponsored insurance they have family members that are covered by individual. so it's not costless for employers if we get rid of the aca. >> thank you. dick? >> i would like to make two quick comments having lived with these wonderful characters for a long time. they did a great job, i think. i was pleased, patty, that you mentioned florida is number two in enrollment despite the politics. vermont is the only state that has higher enrollment. i was pleased because we both were there, that the navigator, jody, you mentioned her, she's quite special. the second point that i would just like to make as a quick point is that in regard to rural areas in low density areas, alice will remember, mike will remember, we did a five-state study for the assistant secretary in hhs, including alaska, and alaska now and we have a field researcher there and we know the field people and the state people and he was a state official like mary ann, they are trying to do something new in alaska and that's one of the kinds of things that didn't come out as much here because alaska, in fact, when they asked us to cover alaska, we thought my goodness, it's so different. but all states are different. the final point i want to make is sort of a philosophical point. mike mentioned, you mentioned david brooks' column where he talked about kenneth arrow saying people should choose. they should decide what they want. what's really here, the competition that's really here and then you mentioned alan, is competition among the plans. it's more than just insurers, more than just carriers. there are a lot of ways in which entities are playing a new role. in his book which i like, zeke emanuel at the end has a section at the end about how essentially insurer roles are going to change. it goes way beyond anything we are seeing here. but they are changing. we start talking about institutional change, talking about institutional change on the part of insurers is not just the government stuff, not just government stuff, it involves both sectors, public and private. i thought you guys did a great job, by the way. >> thank you very much. okay. we have -- i'm sorry, just a couple of minutes. i want to ask you to each state your question very briefly and then i will let them talk. okay. yes, sir. he will be over. >> i'm just wondering would we all be sitting here had the aca been universally embraced by all the states and what would have that done for competition premiums and risk pools. thank you. >> yes, sir. over the other side. this gentleman over here. it's coming. it's coming. >> to the extent that the premise is wrong that the current pricing properly adjusts for the risk pool, what should federal policy makers take away from the higher utilization rate and impact it had early on in terms of structuring a replacement bill? thank you. >> and this -- okay. right over here. this will be the third. i'm sorry. okay. two more. >> just quickly, what do we know about the impact on out of pocket expenses for families? obviously utilization might have gone up but they are now paying a premium and maybe deductibles. what is the state of play from the consumer budget standpoint? >> and one last one. >> i'm just wondering when the discussion or essentially the broader focus moves to effectively lowering the cost of service and essentially making the talk of premiums and subsidies which are essentially cost shifts irrelevant. >> very good. okay. some of these will have to be answered i think in the next session, maybe, but does anybody have any quick comments on any one of these questions? they are all great questions. >> just quickly, we are talking about the actual cost of care, when you are talking about competition among providers, if you are just talking about health insurance and cost sharing and so on, you are just moving the deck chairs around on the "titanic" if you are not actually dealing with the big issue which is, is there competition in your marketplace. that's what we are focused on. that's what any policy approach is going to have to focus on. just quickly to the question about out of pocket costs, there's an irony here, which is that the one thing that consumers have said they absolutely do not want more of in whatever the replacement plan is is higher out of pocket costs. but the only move that the republicans have proposed is higher out of pocket costs. so there's a disconnect that's going to have both policy and political consequences. >> on that point, the cost sharing subsidies were extremely important so many people who are at very low income scales have really benefited tremendously which of course are under attack in the courts at the moment so we will see what the republicans do with that, that is fundamental to the health plans that those cost sharing subsidies stay in effect. they really, you know, we really have underreported the financial help people have gotten through the tax credits and the cost sharing subsidies. they are really important. a comment on if everybody had embraced the plan, i think we would have such a different conversation today, because there are so many elements of this plan that are fixable and we are really not focused on what is fixable. these issues about people coming in to coverage for short periods of time in our case, people getting solvaldi and then dropped their coverage. there are a lot of things that are fixable if we had embraced it as a country. we would be in a very different conversation right now. >> i want to extend that and say if we had embraced it t affordable care act addressed financing issues and we are talking about costs still being kind of high. what needs to be considered still is what we are doing in the health care community. the pushing for more efficient health care services, affordable care act did not address incentives to providers as far as it could have to find cost effective treatments, to address places where there might be more efficiency in the health care system. there are some, but i think we could go further in that direction so even if we were sitting here saying everyone got insurance, we could still be wondering, everyone's got insurance, they are paying for it but the prices are high, what are we going to do next. now we have to figure out why everybody is spending all this money on health care. >> maybe we will bid pharmaceuticals. >> i think we have to cut it off. but i really appreciate the extra eight minutes we had. thank you very much. [ applause ] >> watch c-span as president donald trump delivers his first address to a joint session of congress. >> this congress is going to be the busiest congress we have had in decades. >> following his speech, the democratic response given by former kentucky governor steve bashir and your reaction to the president's speech along with comments from members of congress. live tonight at 9:00 p.m. eastern on c-span and c-span.org. listen live on the free c-span radio app. >> earlier today, olympic champion and gold medalist michael phelps testified on the state of the international anti-doping system and how it can be improved in the future. he gave his opening statement in front of the house energy and commerce subcommittee and here's what he had to say. >> mr. chairman, members of the committee, good morning. my name is michael phelps. i'm a retired professional swimmer and an

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