House Energy and Commerce Health and Oversight and Investigations Subcommitees Hearing, entitled, “The Affordable Care Act on Shaky Ground: Outlook and Oversight”
The House Energy and Commerce Health and Oversight and Investigations Subcommittees held a hearing yesterday, entitled, “The Affordable Care Act on Shaky Ground: Outlook and Oversight.” The hearing focused on reviewing the current status of the Affordable Care Act (ACA), particularly on the health insurance exchanges and Medicaid expansion.
Republicans continued to press the Centers for Medicare and Medicaid Services (CMS) Acting Administrator Andy Slavitt on premium increases, insurer participation, the Consumer Operated and Oriented Plan (CO-OP) program, and risk corridor payments. Witnesses from the Government Accountability Office (GAO) and Department of Health and Human Services (HHS) Office of the Inspector General (OIG) discussed reports on how implementation of the law could be improved. Democrats used the hearing to chastise Republicans on continued efforts to impede the ACA, rather than work to improve it, and cited recent statistics on the number of Americans who have gained coverage since the law’s passage. In addition, Democrats pushed back at the concerns raised in the GAO’s recent reports. Both sides used constituent or personal examples and anecdotes to illustrate either the failures or successes of the law.
Frequently cited during the hearing were recent GAO reports entitled:
- Health Care: Results of Recent Undercover Testing for Patient Protection and Affordable Care Act Coverage, and Review of Market Concentration in the Private Insurance Markets
- Patient Protection and Affordable Care Act: Final Results of Undercover Testing of the Federal Marketplace and Selected State Marketplaces for Coverage Year 2015
- Patient Protection and Affordable Care Act: Results of Undercover Enrollment Testing for the Federal Marketplace and a Selected State Marketplace for the 2016 Coverage Year
- Patient Protection and Affordable Care Act: Most Enrollees Reported Satisfaction with Their Health Plans, Although Some Concerns Exist
In addition, two reports from the Energy and Commerce Committee Majority Staff were discussed, entitled, “Implementing Obamacare: A Review of CMS’ Management of the Failed CO-OP Program” and “Implementing Obamacare: A Review of CMS’ Management of the State-Based Exchanges.”
Witnesses at the hearing were:
Andy Slavitt, Acting Administrator, Center for Medicare and Medicaid Services (CMS)
Gloria L. Jarmon, Deputy Inspector General for Audit Services, Offices of Audit Services, Office of Inspector General, U.S. Department of Health and Human Services
Seto J. Bagdoyan, Director, Forensic Audits and Investigative Service, U.S. Government Accountability Office
Health Subcommittee Chairman Joe Pitts (R-PA) discussed ongoing issues with the health insurance exchanges in his opening statement, particularly focused on recent news of insurers withdrawing from some markets and the failure of the ACA to meet its promises of increased competition and lower health care costs. He also discussed his concerns with the program integrity issues raised in the GAO’s reports, and he mentioned the Committee’s Majority Staff reports on the exchanges.
Health Subcommittee Ranking Member Gene Green (D-TX) noted in his opening statement that 20 million more people now have health insurance and the percentage of Americans uninsured is at an all-time low, crediting these improvements to the ACA. He discussed the insurance market before the ACA and the market improvements and protections contained in the law. He urged further expansion of Medicaid in those states that had not expanded, and he called for Congress to work to improve the law.
Oversight and Investigations Subcommittee Chairman Tim Murphy (R-PA) used his opening statement to discuss the Majority Staff report on how state-based exchanges used federal dollars, characterizing it as waste due to excessive careless management and oversight, noting that few states today still have state-based exchanges. He also discussed the collapse of multiple CO-OP insurers.
Oversight and Investigations Subcommittee Ranking Member Diana DeGette (D-CO) expressed frustration in her opening statement that six years after the law and over 40 hearings, efforts to undermine the ACA continue. She criticized House Republican efforts to scrutinize the implementation of the law while not working to improve it. She noted that Medicare Advantage and Medicare Part D both have been improved since passage and encouraged the same bipartisan work to be done with the ACA.
Chairman Fred Upton’s (R-MI) opening statement also focused on issues with the exchanges, and he expressed concern with higher insurance premiums, sharing constituent concerns from Michigan.
Ranking Member Frank Pallone (D-NJ) discussed the GAO’s fake shopper report in his opening statement, criticizing the issues it had identified as improbable for fraud, since it required those committing fraud to pay premiums. He also cited the success of the ACA in reducing the uninsured rate.
Slavitt discussed CMS’ continued efforts through the ACA to provide access to quality health care regardless of health or financial status, calling the ACA the greatest shift in how our health care system works since the creation of Medicare. He discussed building a strong exchange and the constructive efforts of the GAO and HHS OIG in strengthening processes and controls. He also cited statistics about the strength of the exchanges, noting that the majority of marketplace consumers can choose a plan for less than $75 per month.
Jarmon discussed the HHS OIG’s oversight of the ACA’s exchanges. In particular, Jarmon noted that that the OIG reviewed internal controls for health insurance enrollment and made recommendations for improvements. In addition, the OIG conducted reviews of how state grants to establish exchanges were used and recommended states provide refunds of grant money in some instances.
Bagdoyan discussed the recent GAO reports, noting the importance of strengthening the application process given the large amount of financial risk for the federal government due to the insurance subsidies provided through the exchanges. Bagdoyan noted that while Advanced Premium Tax Credit (APTC) payments are made directly to insurers, this reduced cost would still constitute a benefit to someone committing fraud by reducing overall cost for insurance. Bagdoyan also discussed the exchanges ongoing vulnerability to fraudulent enrollment applications since 2014, with concerns that new controls checking for APTC reconciliation on tax returns still have vulnerabilities.
In general, most of the questions were directed at Slavitt and either focused on problems with the exchanges or successes of the ACA, depending on party. Some Members also inquired on other issues at CMS.
Health Subcommittee Chairman Pitts (R-PA) inquired on the GAO’s findings on fictitious enrollment applications, particularly on the applicants from 2014 that were again able to obtain health coverage without proving taxes were filed for 2014. Bagdoyan explained that four of the 15 fictitious applications were revived applications from 2014. Rep. Pitts asked Slavitt why the exchanges allow self-attestation of APTC reconciliation through tax returns. Slavitt explained that the exchanges initially allow this because some filers may have sought extensions. However, of the 19,000 people who attested to filing taxes, many have shown they did pay, while a few thousand have been disenrolled for not showing this proof. Rep. Pitts then yielded the remainder of his time to Rep. Cathy McMorris Rodgers (R-WA) who made a statement on the high premium increase requests in her state.
Health Subcommittee Ranking Member Green (D-TX) discussed exchange enrollment in Texas, noting the state’s refusal to expand Medicaid, and citing other benefits of the ACA to his constituents. Rep. Green led Slavitt on a series of leading questions with quick yes or no answers on the insurance market before the ACA, including whether a sick person could be charged more for insurance (yes); whether insurers avoided sick people (yes); whether there was a mechanism for premium increases to be reviewed (no); and if there were protections from high out-of-pocket costs (no). Rep. Green reiterated that Congress should work to improve the law.
Oversight and Investigations Chairman Murphy (R-PA) challenged Slavitt on his statement that premiums are lower than estimated before the ACA. Slavitt explained that 2016 premiums were 12 to 20 percent lower than previous estimates of what 2016 would have been. Rep. Murphy expressed concern with actual premiums today and issues of adverse selection and increased copays and deductibles. Rep. Murphy then inquired on states continuing to spend federal dollars on state exchanges. Slavitt responded that this was not new money, but existing money being spent down, and Murphy questioned the sustainability of state exchanges. Rep. Murphy then asked about the CO-OP failures. Slavitt explained some of the challenges faced by the CO-OPs, including issues with capital.
Oversight and Investigations Ranking Member DeGette (D-CO) focused on the GAO’s reports, questioning whether GAO had uncovered any actual examples of fraud using the methods its reports are concerned with, as this fraud requires someone to still pay a premium. Bagdoyan acknowledged that no actual examples of fraud using these methods had been found, but the possibility of it exists. Rep. DeGette then asked why the Committee was not discussing another recent GAO report that found most exchange enrollees reported satisfaction with their health plans. Rep. DeGette then shifted to the recent reports on the number of uninsured Americans and discussed these statistics with Slavitt, who noted the Centers for Disease Control and Prevention and Census Bureau figures.
Rep. John Shimkus (R-IL) focused on administration claims that Americans could keep their plans and doctors and would see savings from the law. Slavitt responded to various parts of these questions, and Rep. Shimkus discussed constituent concerns in Illinois stemming from the ACA.
Ranking Member Pallone (D-NJ) discussed the drop in the number of uninsured Americans and asked Slavitt for his perspective. Slavitt noted that in his career, there had not been a meaningful reduction in the uninsured rate until the ACA and it would be lower if more states expanded Medicaid. Rep. Pallone inquired how CMS would work to reach people who still do not know about their options for exchange coverage and financial assistance. Slavitt noted that several million people eligible for coverage for under $75 per month are not aware of it and that CMS has made significant effort to reach these people. However, he noted the challenges of selecting health insurance if a person has never had it before.
Rep. David McKinley (R-WV) inquired about premium increases for exchange plans and asked what incentive insurers have to keep rates low, if the plans were being subsidized. He also noted a specific constituent concern with high premiums. Slavitt noted the drop in the number of uninsured people in West Virginia and noted that plans must pay rebates if insurance companies bring in too much in premiums. Rep. McKinley then shifted topics to site neutral payments for hospitals under construction, describing the situation of a hospital in West Virginia, and asked whether additional flexibility on the cut-off date would be provided by CMS. Slavitt stated that CMS is in the middle of rulemaking on this and will take his concerns into account.
Rep. Doris Matsui (D-CA) asked about the uninsured rate and Medicaid expansion. Slavitt responded that the two were linked, and the uninsured rate would be reduced by three to four million people if all states expanded Medicaid. Rep. Matsui noted that states with expanded Medicaid have lower exchange premiums, and then asked why premium increases this year may be higher than in other years. Slavitt explained that there are multiple effects this year, particularly the end of the three-year risk programs, as well as insurers now adjusting premiums based on data of actual health costs of plan enrollees. Matsui asked how shopping around can help enrollees facing premium increases. Slavitt reiterated that many people can purchase insurance for $75 or less per month on the exchange.
Rep. Morgan Griffith (R-VA) asked a detailed line of questions on risk corridor payments and lawsuits by insurers. He cited the recent CMS announcement on risk corridor payments that notes CMS is willing to negotiate and inquired whether CMS thinks that insurers should be made whole without appropriations. Slavitt stated that the invitation to discuss a resolution of claims at the end of the announcement was a standard comment on lawsuits but he was not comfortable discussing it further. Rep. Griffith asked whether the settlement fund would be used to make these payments. Slavitt demurred, stating that this issue was at the Department of Justice (DOJ). Rep. Griffith pressed for the names of CMS staffers who had talked to the DOJ about this issue and whether any settlement was discussed. Slavitt stated he would work to provide Rep. Griffith with this information, but this issue was at DOJ. Rep. Griffith also asked whether Slavitt had discussed this issue with former-CMS Administrator Marilyn Tavenner, and Slavitt responded he had not. Rep. Griffith asked whether the DOJ approved the memo CMS released on risk corridors, and Slavitt stated that he believed it was reviewed. Rep. Griffith then shifted to discussing high deductibles for exchange coverage and the issue of being underinsured. Slavitt noted that the average deductible had decreased from $900 to $800.
Rep. John Yarmuth (D-KY) discussed Kentucky Governor Matt Bevin’s efforts to move away from a state-based exchange and the state’s proposed Medicaid expansion waiver, expressing his concern that the waiver was designed to be rejected in order to dismantle Medicaid expansion. Slavitt noted that CMS had a dialogue with Kentucky but was reviewing the waiver. Rep. Yarmuth expressed his concerns with Republicans sabotaging the ACA instead of working to improve it.
Rep. Billy Long (R-MO) directed his questions towards Kevin Counihan, Director and Marketplace Chief Executive Officer for CMS, who had been invited to the hearing but could not attend. Rep. Long’s questions focused on Counihan’s travel and activities with insurers in Arizona and Connecticut, and CMS’ deadlines for insurers to submit information to CMS for participation in the exchange. Slavitt explained that he was not familiar with Counihan’s travel and schedule and explained that CMS may extend deadlines in order to properly review data and plans as well as do what is in the best interest of consumers. Rep. Long noted recent constituent concerns with the ACA’s definition of a full-time employee and its effect on teachers.
Rep. Kathy Castor (D-FL) discussed exchange options in Florida as well as the risk of the Zika Virus. She also noted that Florida has not expanded Medicaid, but seniors were benefiting from the ACA’s changes to the Part D donut hole. She asked Slavitt about how Medicaid expansion brings down exchange premiums. Slavitt noted a study showing that Medicaid expansion reduces exchange premiums by seven percent. Rep. Castor noted that Florida’s tax dollars are going to other states that have expanded Medicaid instead of coming back to Florida.
Rep. Larry Buschon (R-IN) discussed the ACA’s age-rating ratio restrictions in pricing premiums based on age. He cited concerns that the 3:1 ratio of the ACA is increasing costs for younger people and leading to sicker insurance pools. He asked whether a 5:1 ratio would have an immediate impact on cost for people enrolling in exchange plans. Slavitt responded that the issue would need to be studied for its effects on cost and coverage. Rep. Buschon noted his legislation to change the ratio. He then shifted to discussing global payments in the Medicare Access and CHIP Reauthorization Act (MACRA) and his concerns that CMS is requiring all providers to report on surgical codes, rather than a representative sample. Slavitt responded that CMS has sought this kind of feedback on the proposed rule and that he is committed to getting this right in the final rule. Rep. Buschon asked about the Innovation Center’s Medicare Part B Outpatient Drug Demonstration and whether CMS had considered the additional costs of patients being shifted to more expensive hospital-based treatment. Slavitt noted that CMS was seeking comments on the unintended consequences of the proposal.
Rep. Janice Schakowsky (D-IL) discussed the benefits of the ACA in her state and then asked how the increase in prescription drug costs has affected insurance premiums and whether Congress should do more to control the growing cost of prescription drugs. Slavitt responded that this was an important question, because along with the 85 percent Medical Loss Ratio of the ACA, we should care about the topline costs of the health care system. He noted that large price increase are troubling, and said we should attempt to find ways to control those costs while balancing the need for innovation and access to drugs. Rep. Schakowsky asked about CMS’ efforts to increase transparency of drug prices and why it is important. Slavitt responded that the significant amount of money spent by Medicare on prescription drugs makes transparency important. He noted that while Medicare cannot negotiate drug prices, it is important to see what prices are and where there have been increases in order to address root causes.
Rep. Gus Bilirakis (R-FL) asked Jarmon about an automated payment process for APTC to identify improper payments. Jarmon explained that CMS had tested the system and the OIG will be reviewing this issue further in 2017.
Rep. Markwayne Mullin (R-OK) inquired on the reinsurance program and a $500 million payment due to the Treasury Department. Slavitt explained that in November or December CMS expected it would make this payment. Mullin asked whether reinsurance payments had been made to insurers, to which Slavitt said yes. Rep. Mullin challenged Slavitt on CMS’ interpretation of the law, arguing that CMS should have already paid significantly more money to the Treasury, citing $5 billion instead of $500 million. Slavitt defended CMS’ interpretation of the law, as it was unclear what to do with amounts of money collected below $12 billion.
Rep. Paul Tonko (D-NY) discussed the Congressional Budget Office’s (CBO) projections for premiums, noting higher projections than current premium rates. Slavitt responded that current premiums are lower than CBO’s estimates because of competition and innovation, but acknowledged the various factors contributing to premium increases this year.
Rep. Chris Collins (R-NY) expressed his concern with premium increases in his state and how the collapse of a CO-OP in New York was handled. Slavitt discussed the challenges of CO-OPs and how CMS handled the situation in New York. Rep. Collins described CMS’ handling as negligent and incompetent and that it harmed other insurers in the state.
Rep. Tony Cardenas (D-CA) did not ask any questions, but used his time to share how the ACA is helping people, describing the challenges his family faced when he was a child not having health insurance.
Rep. Brett Guthrie (R-KY) discussed the Medicaid waiver proposal for Kentucky and work requirements for able-bodied persons that treats them more like those in the traditional insurance market. Slavitt responded that he would not comment on the status of the waiver because it was currently open for public comment.
Rep. Eliot Engel (D-NY) noted the need for Congress to work on legislation to improve the ACA, and he asked Slavitt to discuss the different experiences of states that have worked to implement the law versus other states that have worked to impede it. Slavitt noted the differences in uninsured rates and noted that Medicare Advantage and Medicare Part D both were both improved through further legislation.
Rep. Renee Ellmers (R-NC) inquired about transparency for 2017 premium rate requests. Slavitt noted that states typically make this information public. Ellmers pressed on whether premium information would be available for the start of open enrollment on November 1, 2016. Slavitt responded that he anticipated it will be and the federal exchange website generally lets people review prices and options before November 1st. Rep. Ellmers noted that she has introduced legislation to require this information to be available to consumers on November 1st. She then asked about insurers reducing plan offerings. Slavitt responded that the ACA is not just a change for consumers, but insurers as well, and they have to adjust to offering insurance not priced on health status.
Rep. Susan Brooks (R-IN) inquired about CMS recouping money from failed state exchanges. Slavitt explained some confusion in numbers cited, $200 million versus $1.7 million, explaining that funds were deobligated versus being recouped. He further explained that Maryland recently repaid $14 million to CMS and he expected the amount of recouped funds to increase.
The hearing entered a second round of questions with each side permitted to ask one follow up. Health Subcommittee Chairman Pitts (R-PA) pressed further on Rep. Griffith’s questions on risk corridors, reiterating the question of how CMS would make insurers whole if there are no appropriated funds. Slavitt would not say, citing that it was the subject of a lawsuit. Rep. Pitts then noted that the Majority Staff’s recent report recommends exempting individuals from the individual mandate. Slavitt said he had not reviewed the report as he only received it the night before.
Health Subcommittee Ranking Member Green (D-TX) followed up on Rep. DeGette’s questioning on the GAO’s reports, inquiring why only five states were reviewed for exchange plan consumer satisfaction. Bagdoyan explained he had not worked on that report but GAO would follow up on the question. Rep. Green reiterated that the Committee should be working to improve the ACA, and he asked Slavitt to provide the committee with a list of recommendations to make the ACA more successful. Slavitt responded that he would be glad to do that.