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Roundtable Hearing Of The Senate Committee On Health, Education, Labor And Pensions - Addressing Insurance Market Reform In National Health Reform

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SEN. BINGAMAN: Okay, why don't we get started? We've got a few people here, and let me thank everybody for coming.

Senator Enzi, I'm told, is snowed in in Wyoming and is not able to be here. Senator Roberts is going to fill in for him and is on his way, but since we've got several senators here, why don't we go ahead and get started?

Let me make a few comments here and then ask any other senator that wants to make comments to do so, and then we'll turn to our witnesses. And we sort of set this up as a roundtable discussion so that we don't have it as formal as usually is the case with hearings.

This is the second in a series of hearings that were designed to explore key issues surrounding legislation to provide meaningful and affordable health insurance for all Americans. Today's hearing focuses on the insurance market reforms that are needed to achieve that goal. Particularly it's focused on small group and individual insurance markets.

And we thank all the panelists for being here.

Approximately 60 percent of Americans receive their coverage today, their private insurance coverage, from large employers, that is, employers with 50 or more employees. Insurance offered through these employers includes many protections, such as requirements that insurance companies provide coverage to all interested employees, the creation of large risk pools to spread the cost of coverage, prohibitions on excluding coverage for specific pre-existing conditions.

In contrast, the coverage in the individual market is much less predictable and regulations governing this market vary considerably from state to state. Individuals may or may not have important protections to ensure that coverage is meaningful and affordable. For example, individuals may have critical health conditions that are excluded from coverage or they may have very high cost-sharing agreements or requirements or be excluded from coverage altogether based on broad non-medical characteristics. For example, older individuals on average are charged six times more for a policy than younger individuals, and women may be charged as much as 50 percent more for coverage than their male counterparts.

The National Women's Law Center indicates that it is still legal in nine states for insurers to reject individual applicants on the basis of having experienced domestic violence. In the end, about 30 percent of individuals applying to the individual market, the individual insurance market, are either denied a policy or are forced to pay significantly more for coverage and only about 15 to 17 million Americans purchase policies on the individual market.

As to the small-business or small-group market, that's frankly a market very relevant in my state, where most of the employers are small employers. In this market, like in the individual market, it is more difficult to spread risk because of the small size. Similarly, small employers have less bargaining power to negotiate affordable and meaningful coverage. In many cases small businesses have found it difficult to find affordable and meaningful coverage and have chosen not to provide health insurance to their employees. According to the Kaiser Family Foundation, less than two-thirds of small businesses offer health benefits to their employees, and this problem is apparently getting worse. Ninety percent of the decline in employer- sponsored coverage has been attributed to small businesses.

So we want to explore these issues with this group of panelists. I was told that Senator Roberts was going to come and stand in for Senator Enzi here. He's not here. Let me just see if Senator Hatch -- excuse me? Oh, here he arrives right now. Okay.

SEN. PAT ROBERTS (R-KS): What are you doing down there? (Laughter.)

SEN. BINGAMAN: Come on down here. We're waiting for you to tell us what you know on this subject.

While I'm doing that, let me just --

SEN. ROBERTS: I haven't read the bill. (Laughter.)

SEN. BINGAMAN: I'll just call on Senator Hatch and any other senator who wants to make any initial statement here before we get into this.

SEN. ORRIN G. HATCH (R-UT): You want me to go?

SEN. BINGAMAN: Go right ahead.

SEN. HATCH: Well, we welcome all of you experts here today.

It's very important because we know that insurance is one of the most important issues that we have in all of health care and I don't believe you can do a health care bill without resolving some of the problems that exist in the insurance industry.

And you folks, you do a lot of good for the industry, but there are also a lot of things that are challenges and problems that we've got to work out. You know, insurance market reform, there's no question about it -- it's a critical piece of any kind of health care reform if we're going to do it at all.

And I think virtually everybody agrees that reform is necessary and the question is what reforms should be implemented, both on the state and federal levels? So I'm going to be very interested in what you have to say here today. And we've chatted with a number of you in the past and we're very, very, very impressed with this panel.

So we welcome you to the Senate.

We look forward to hearing from you.

Thanks, Mr. Chairman.

SEN. BINGAMAN: All right.

Senator Roberts, did you want to go ahead?

SEN. ROBERTS: Yes, sir. Thank you very much.

I apologize to the group for being late. I was just finishing up finally reading the entirety of the stimulus bill. That's a joke. (Laughter.) That's not -- well, it's not; it's not a joke. But  (laughter) -- all right.

SEN. BINGAMAN: Please continue to tell us whenever you do a joke. (Laughter.)

SEN. ROBERTS: Yeah, okay. (Laughter.) Okay. (Laughter.)

Mr. Chairman, I want to thank you for holding this roundtable today and I want to pass on Senator Enzi's thanks as well as the rest of the members of the committee. I know he'd like to be here with us today, but the weather in Wyoming is not a very good situation. The weather had other ideas. He is starring in the movie, "I Am Snowed in in Wyoming."

I understand the staff's worked very closely to plan today's roundtable as well as set an agenda for two additional roundtables in the future. This is a very good thing. I appreciate that. I know Senator Enzi does as well, as does the chairman. I think we have a stellar panel. I'm looking forward to hearing from our experts and getting into the details of insurance market reforms.

I believe it is very helpful to hear from people that have actually enacted policies in the real world. This is called reality, a reality hearing. You can tell us what you did right, what you did wrong, and how you would improve things moving forward.

As a senator from the state of Kansas, I could not be more proud that one of these experienced people on our panel today is Kansas insurance commissioner, former Kansas legislator and my very good friend, Sandy Praeger. Commissioner Praeger was first elected as the Kansas insurance commissioner in 2002, went on to re-election in 2006. Her health insurance expertise and her leadership abilities have also been recognized at the national level. She is the most immediate past president of the National Association of Insurance Commissioners.

In addition, she has experience as a past mayor of the city of Lawrence, no small task. Lawrence, that's the home of the Jayhawks, right? Right.

That comes from a Wildcat, Mr. Chairman. You'd have to understand that if you were from Kansas.

And a past member of both chambers of the Kansas legislature. I am so pleased that Sandy could be here today to share her considerable experience with health insurance market regulation with this committee.

So thank you, Sandy.

And thank you to all of our panelists for taking time out of your very valuable schedule to be here today. I look forward to hearing from you.

I hope the members of this committee can learn from all of our witnesses and use that knowledge to better inform their decisions on health care reform legislation. Health care reform will be difficult. There will be trade-offs with any policy we devise. Insurance reforms all result in trade-offs.

Rating rules are a perfect example. We must be cautious when considering reforms that may result in unaffordable prices for our young and healthy. We need those folks to participate because they help keep costs down. However, ensuring access to quality insurance for those struggling with health conditions is, I hope, our top priority. Our job here is to find a balance that accomplishes our goals but doesn't create a disruption in our insurance marketplace.

While it is critical we get the policy of insurance market reform right, I would be remiss if I didn't at least mention the perils of the process. Without the right process, we can't move forward on the best health care reforms for the American people. I doubt seriously if we can do this in 100 days. If those in the majority attempt to use the budget reconciliation process to put health care reform through the Senate -- or a better word would be jam -- they will be sending a clear signal that they are not interested in a truly bipartisan effort.

With that, I will look forward to our witnesses to make recommendations on how we should shape policies of health care reform.

Mr. Chairman, thank you again for holding this roundtable.

SEN. BINGAMAN: Well, thank you again. Thank you.

Let me just see if Senator Brown or Senator Coburn or Senator Hagan wish to make any statements.

SEN. SHERROD BROWN (D-OH): Just a few comments.

Thank you, Mr. Chairman, for your leadership.

And thank you all, members of the panel, for your distinguished service to our country and for being here today.

Recently, a couple of weeks ago, my office conducted a seminar, if you will, for the five new Ohio House members elected last year, bipartisan, some in both parties, new House members from my state to talk about case work and to sort of help them work their way through these first months in office in dealing with all the problems that people bring to our offices. And obviously one of the issues that comes up so frequently is how do you deal with health insurance companies?

And I think we all, our offices, if we're paying attention, all of our offices spend an awful lot of time fighting with insurance companies on behalf of our constituents -- insurance companies that often, and by the perception of many, discriminate based on age and gender or medical history, insurance companies that seem to put onerous restrictions on treatments and prescription drugs that patients get, the wait for reimbursement, the wait to pay claims, pre- existing conditions, all the issues that we have disagreements on and it's our job as elected officials to fight for our constituents to be treated fairly.

Let me share one real quick story about all of this that may bring this home in some sense. A woman named Deborah from Summit County, Ohio -- the city of Akron is the county seat there -- she's one of the 50 million Americans locked out of our health care system because she lacks insurance, can't get insurance. Her income's too high for Medicaid or pre-existing conditions. She's had two heart attacks. She has a spinal injury. Those conditions disqualify her from finding private insurance in the private market or finding affordable insurance in the private market, no surprise there.

She wrote to me: "My only option is to start paying for my funeral. While everyone on Capitol Hill argues the point, people are suffering and dying. America proclaims itself the wealthiest and most powerful nation in the world. If that's the case, why do we have people suffering and dying for lack of simple health care?" We know what we need to do this year and I think Deborah's words speak it certainly more persuasively than any of us could.

The last point, Mr. Chairman, I think that the president's right when he said there should be an option like the original Medicare, some public option to bring competition. Competition is, we hear from our friends in the insurance industry and hear from people on all sides of political debates, competition is the American way. It's healthy for our society. I think competition in health care with the public option, whether it takes the form of FEHBP in some sense or a public more Medicare look-alike option, is a good thing I think for the insurance industry, it's a good thing for the country, and it's something that this committee I think should and will pursue.

I again thank the chairman for having the hearing today.

SEN. BINGAMAN: Senator Coburn?

Senator Hagan?

SEN. KAY HAGAN (D-NC): Thank you, Mr. Chairman.

Is that on?

SEN. BINGAMAN: I think that's on.

SEN. HAGAN: And anyway, I just welcome all the panelists here.

I think this issue is one of the biggest issues facing the nation right now, the affordability, accessibility and in particular the portability of insurance so that people can change jobs, especially those with pre-existing conditions, and I think this roundtable will help bring some of this to light. And I think it's certainly a huge issue facing our country today and I'm thrilled to be at the table. Thank you.

SEN. BINGAMAN: Well, thank you.

Let me just very briefly introduce this distinguished group of witnesses we have here.

Janet Trautwein is the executive vice president and CEO of the National Association of Health Underwriters in Arlington, Virginia.

Thank you for being here.

Ronald Williams is chairman and chief executive officer of Aetna, a leading diversified health insurance company.

Karen Pollitz is a research professor at the Health Policy Institute at Georgetown University.

Thank you for being here.

Karen Ignagni -- am I pronouncing that right? Okay, president and CEO of American Health Insurance Plans, the trade association that represents the nation's health maintenance organizations.

Len Nichols directs the Health Policy Program at the New America Foundation and has a distinguished background in these issues as well.

And Katherine Baicker is professor of health economics at the Department of Health Policy and Management at Harvard School of Public Health.

Thank you very much for being here.

And Ms. Praeger was just introduced, Commissioner Praeger, so we welcome you as Kansas's 24th commissioner of insurance.

And we appreciate you all being here.

I guess the idea here was to have you each take a couple of minutes and tell us the most important things you think we need to be aware of in trying to understand the issue and how to proceed. I think that, at least from my perspective, you know, the real issue is what are the most critical reforms that we need to try to enact in these areas?

So Ms. Trautwein, why don't you go ahead and then we'll just go down the panel, and after we've heard from all of you, then we'll have questions.

MS. TRAUTWEIN: Thank you, Mr. Chairman.

I really am very pleased to be here today. This is a very, very important topic. You know, the rising cost of health insurance is a problem that's driven by the rising cost of health care itself, and so as a part of any health reform package, I just want to stress that it is essential that we do everything possible to lower health care costs. Keep in mind that of every premium dollar, 88 percent nationwide goes to cover claims, which is health care itself.

But I do also believe and NAHU believes that any health reform package should also include some very important health insurance reforms and that we can do this in a way that is both effective and affordable.

Now, our members are benefit specialists. They help individuals and businesses purchase coverage on a daily basis. After the coverage is purchased they also work with them through any problems that come up, and we're very familiar with the kinds of problems those are. In fact, this service aspect of their jobs is the biggest part of their jobs and it's something that most people are not aware of. And so there is a lot to do with not only getting coverage in place but keeping it in force.

It gives us kind of a unique ability, this very frequent interaction with consumers, to understand what the greatest issues are, and I would share what some of those are very briefly. You know, the biggest response that we get from most people who are covered by employer-sponsored plans, as you indicated, is that they love their employer-sponsored plans and so I would just start off saying that we strongly believe that any reform package should include employer- sponsored coverage as its core, and that is for large and small employers.

We do have, though, today already about 14.5 million Americans that are already in the private individual health insurance market because either they choose to purchase individual coverage or employer-sponsored coverage is just not available to them, and it's for this reason that we've looked very, very carefully at the individual market, which we think is a key place to start with reforms.

We've put together 10 very specific policy recommendations, which I'm happy to go through during the course of our discussion today, but in general what those recommendations do is ensure that coverage is available to everyone regardless of their health status, that everyone can afford coverage that is not only there and available to them, but they can pay for, that's affordable to them. And I have included a lot of detail in my written statement.

I would also say that some of our recommendations also have to do with portability and greater portability than what people have today. They have to do with what happens when they leave a group plan and they are -- let's say they're going to start their own business and what faces them and how do they -- what are the options in the event that they have a chronic health condition, but they still are going to start this business, what's available to them. So this is what our recommendations revolve around.

And I do just want to applaud you for putting this together. I think this discussion is so important and I think we have a lot of -- my fellow panelists are just excellent and I think that we'll have a good discussion this morning.

SEN. BINGAMAN: Thank you very much.

Mr. Williams, please.

MR. WILLIAMS: Good morning, Mr. Chairman, and members of the committee.

It's a pleasure to be here and to see so many of my colleagues that I've had the privilege to work with over the past few years. I'm Ronald A. Williams, chairman and chief executive officer of Aetna, a leader in providing diversified health care benefits.

As the health care system hurtles toward $4.3 trillion in annual spending in 2017, we have an opportunity and an obligation to achieve meaningful reform that guarantees access and makes health insurance more affordable for all. You have my commitment to work with you to transform the health care system.

It is worth noting at the outset that our industry, my company and the expectations of our customers and members have changed a good deal over the past several years. Health insurance is not about just paying claims anymore.

At Aetna, our spending on technology and innovation, more than $1.8 billion since 2005, and the composition of our work force of 35,000, nearly 40 percent of whom are clinical and technology professionals, are much different than they would have been just 10 years ago.

Transforming our health care system will require us to work collaboratively to address the key roadblocks that stand in our way and build a sensible path to reform. That means building on an employer-based health care model that already works for more than 177 million Americans and accelerating our efforts to harness the power of health information technology and confronting the challenges associated with rising health care costs.

In our view, the following are critical components of reform. First, we need to get all Americans covered through an enforceable individual coverage requirement combined with subsidies and other changes to make coverage affordable. It must be coupled with sliding- scale subsidies to ensure that income is not a barrier for any individual, and we should offer tax credits for small businesses to encourage them to offer and subsidize employee coverage.

Second, we need to take steps necessary to bring affordable coverage within reach for everyone. This begins by using health information technology as a tool to bend the cost curve and addressing our country's pervasive quality issues. We also need payment reform because the traditional fee-for-service payment structure often rewards physicians and hospitals for the volume of services they deliver rather than the value or quality of care they provide.

Third and finally, we need to engage consumers in their own health care, focusing on prevention and wellness and provide them the tools to be good consumers.

The health care system needs fundamental reform, and that will require (unprecedented ?) determination and collaboration across the health care system. We are ready and willing to work with you because we know that success will be rooted in a public-private cooperation to create and implement practical solutions that drive systemic change.

Thank you.

SEN. BINGAMAN: Thank you very much.

Ms. Pollitz?

MS. POLLITZ: Good morning, Mr. Chairman, members of the committee. I'm Karen Pollitz and I direct research on private health insurance at Georgetown University.

And very briefly, I think the challenges facing this committee are daunting but doable. I think the first thing that you need to do to get health insurance to work the way you want it to is to stop it from discriminating against people based on health status, their age, their gender. The cherry-picking, lemon-dropping activities that are common in the insurance market today need to end.

You also need to stop the sale of health insurance that is inadequate. We have 57 million Americans who are struggling with medical debt today and most of them have health insurance; 22 percent of insured cancer patients nonetheless burn through their life savings paying medical bills.

These practices are defended because they make health insurance cheaper, but it's not really a good kind of cheaper because it makes protection flimsier, so we need to make insurance affordable by providing subsidies for good coverage and dependable coverage that's always there. And to make sure that these prohibitions on these kinds of bad practices are followed, you are going to need an unprecedented level of accountability and transparency in market practices so that you can assure that they actually stop.

And then I think you need to reorient the market and organize it to compete in ways that we want it to. And in particular, I think introduction of a public plan, public health insurance plan option, in health insurance markets is a good thing. It can cue the market to compete in the ways that you want it to, to be a tough price negotiator, to be an innovator and to share those innovations widely, not just bottle them up as trade secrets.

I think there'll be a lot of talk about a private market -- or a public health insurance plan today and sort of whether that's a fair thing or not, and I would just encourage you not to get too caught up in that. I don't think a public plan should be there to bully private insurers, but I don't think it's fair to prop it up either. I think you want the market to have very specific goals and have an entity out there that is cueing the market to get it to move in the direction of those goals.

Thank you.

SEN. BINGAMAN: Thank you very much.

Ms. Ignagni?

MS. IGNAGNI: Thank you, Mr. Chairman, members of the committee. It's a pleasure to be here.

Members are providing health insurance services to over 225 million people through a diversified product mix. We are committed to reform, as Mr. Williams indicated. He's a member of our board of directors and has been a leading member of the committee in the board that's worked to propose solutions to the problems that you're talking about today.

Our members believe that health insurance reform needs to be done this year. We want to participate with you in helping to get legislation passed. We believe the legislation needs to have three parts -- universal access, cost containment and modernization -- to bring us into the 21st century and begin to pay for value not volume. We've offered very specific proposals in each of these areas that are outlined in our testimony.

In addition, as to the matter before you this morning, we took the responsibility to look at the issues that affect our industry. We've considered them very carefully and we've proposed major changes that can be made to ensure that no one will fall through the cracks, that no one is discriminated against because of a pre-existing condition and that there is guarantee issue.

Secondly, today we have sent a letter to the committee to outline jointly with the Blue Cross Blue Shield Association a package of solutions that if implemented together can phase out the practice of varying premiums based on health status. We're committed to giving Americans health security. There have been certain aspects of the market that has caused it to work the way it does.

We're very much interested in engaging with you about what those issues are, how we believe we can solve them, and how we can demonstrate to the committee and to the nation that our members can be counted upon to offer transparent, equitable, safe, fair health insurance products.

And we're delighted to be here this morning. Thank you.

SEN. BINGAMAN: Thank you very much.

Dr. Nichols?

MR. NICHOLS: Mr. Chairman, it's a real honor to be before you and the work of this storied committee today.

My name is Len Nichols and I direct the health policy program at the New America Foundation. And I'm here to say that our insurance markets are failing us. They lead to inefficiency, unnecessary human suffering, death and loss of productivity from that premature death and prolonged morbidity.

But it's important we recognize that the fault lies not with the people who run the insurance companies; the fault lies in the rules we have set for them. By and large, they follow the rules, and those rules are stupid. We need to acknowledge that smart rules can make markets more efficient and work better. They can make markets more efficient and more fair.

The role of policy, in my view, is to set rules that channel self-interest to serve the public interest. Our goal should be to create marketplaces wherein insurers that adopt socially responsible business models will thrive.

The obsolete business model that has led to all this inefficiency and human suffering is centered on aggressive underwriting and risk selection, so the simple thing to do is outlaw it. We want insurers to compete on price, clinical value added and consumer satisfaction, not on avoiding the sick and strategically denying valid claims.

Therefore, to that end, I think it's very clear you need to think about rules that would end discrimination based on health status -- you've heard a lot about that; it sounds like we've got a consensus; let's just do it this afternoon, end discrimination based on health status -- guaranteed issue, sell to all comers, guaranteed renewal; some kind of modified community rating so you don't use health as a discriminating factor. And then I would say you need to avoid adverse selection; you've got to have an individual mandate to require people to purchase that insurance. If you're going to ask insurers to take all comers, you've got to make sure the population they're covering is the full population and not just the sick.

Thank you very much.

SEN. BINGAMAN: Thank you very much.

Dr. Baicker?

MS. BAICKER: Thank you. It's an honor to be here to talk with you about the crucial issue of making our health markets work better.

Our system should provide both high-quality care and high-value insurance, and those aren't necessarily the same thing, although they're surely related.

High-value health care would end the overuse of intensive procedures of questionable value and the under-use of procedures of high health value and usually low intensity that we see in varying degrees across the country. There are parts of the country that spend two or three times as much money as other parts to deliver care that's of no higher value to the recipients.

High-value health insurance would deliver protection against the risk of needing expensive health care not only this year but against the risk of developing conditions that would require much more expensive health care in years to come. Market reforms can make that kind of high-value health insurance more widely available to everyone, but they work best when everyone gets insured early because insurance is about that risk. We don't need health insurance because health care is expensive. We need health insurance because health care is uncertain and expensive, and that's when we value health insurance the most.

Health insurance can do a good job in the private market of redistributing money. If you want to redistribute money to high- health-risk people, you need to also include a bundle of social insurance to wrap around private market insurance. And that social insurance need not be socialized; it can be a risk-adjusted voucher or other mechanism to ensure that vulnerable, low-income, high-risk populations also have access to the lifesaving health care that their insured counterparts enjoy. Thank you.

SEN. BINGAMAN: Well, thank you very much.

Commissioner Praeger, go right ahead.

MS. PRAEGER: Good morning. Thank you, Senator.

And it's always a pleasure to see my own Senator Roberts. Thank you for that nice introduction.

And it is a pleasure to be here representing the nation's insurance commissioners. I'm optimistic after what I've just heard from this very distinguished panel that there's an awful lot of agreement among the panel members about both the problem and I think some potential solutions.

I just have four points I want to make on behalf of our national association.

First, any solution I think, as we've all said, must address the rising cost of health care. And you can't expect the insurance mechanism, which is the payment system, to fully address the rising cost, and I think that is going to require some aggressive action on the part of you all at the federal level.

Whatever solutions are proposed, we certainly hope that consumer protections will still be in place and enforced at the state level. States have already taken great strides in putting in place patient protection legislation, solvency standards for companies, fraud prevention programs and oversight mechanisms that enable us to answer those questions, as Senator Brown talked about in his opening comments. When consumers feel that they are being unjustly treated by their insurance company, it's our insurance commissioners across the country that are on the ground day in and day out with those consumer protections, so we hope that any solution first and foremost recognizes those important elements of consumer protection.

It's easy as we look at solutions to create an opportunity for adverse selection. We would just obviously caution against that. I think rating reforms are necessary. I also agree that rating based on health status should be eliminated. I think individuals should be required -- all people should be required to have coverage. But there needs to be consistency across markets so that -- if you have different rating rules at the state level and you have a national plan that does eliminate health status rating, then you will get adverse selection into that national plan which will make it eventually very costly and unaffordable. So avoiding adverse selection is critically important.

And then again I would just emphasize the importance of preserving a state role in the process. I think we recognize that states alone cannot solve the problem. It will require working collaboratively with the federal government on a number of issues -- sliding-scale subsidies, for example, for low-income folks. Assisting us with a reinsurance mechanism for the high-cost utilizers -- we have in place the high-risk pools; Congress has helped us through grants back to the states for high-risk pools -- but that's another area where certainly state and federal cooperation and collaboration is important.

And I would point out that our national association has expertise here in Washington ready, willing and able to assist in hammering out the details of any legislation that's put forward. We've been actively involved with Senator Durbin. His SHOP Act I think has some very good components. Several years ago we were actively involved with Senator Enzi of this committee. So we want to be a resource. We want to assist. We know the system is broken and it's time to address it.

SEN. BINGAMAN: (Off mike.) Thank you all very much.

Senator Hatch has to go to the floor to manage a bill, and so why don't I call on him first for any comments or questions?

SEN. HATCH: Well, thank you so much, Mr. Chairman.

We're delighted to have all of you here. You're just wonderful leaders in this area, and we appreciate the time that you've taken to come and discuss these matters with us.

Let me just ask one question before I leave and that is: Although the term "enforceable mandate" is often mentioned in our health care reform discussions, I have a sneaking suspicion that the definition of the word enforceable varies depending upon the stakeholder group, and I would like each one of you to tell us your definition of the term "enforceable individual mandate," if you would.

MR. WILLIAMS: I'll go first.

I think, simply put, it is a way by which the Congress, should it choose to implement such a law, would assure that we got everyone into the insurance mechanisms that were deemed appropriate. And I think we can look at Massachusetts as one example of how it's been done through the tax system. I think there may be other models that people choose to do as a way to achieve it.

But the notion, simply put, is that we have the ability to offer insurance to everyone on a guaranteed-issue basis as long as everyone is in the insurance pool.

MS. POLLITZ: Senator Hatch, I think in its simplest form, an enforceable mandate is also an entitlement.

People are entitled to coverage and they're obligated to have it.

And you can certainly track people's enrollment and have them report on their insurance status throughout the year and then assess a penalty for not complying with that, but I think more importantly, a mandate is only enforceable if it is reasonable. And so to tell people that they need to go out and buy an insurance policy which will be expensive, you need to make a lot of subsidy money available.

Health insurance -- good health insurance that covers people when they're sick is always going to be expensive, even if we succeed beyond our wildest dreams in cost containment. It will always be expensive. I've had cancer; it's expensive to be sick and to have coverage that pays those bills will cost a lot of money. So people are going to need help to afford good coverage.

And I think they're going to need assurances that the coverage will really take care of them, and that's why I think transparency and accountability throughout the marketplace, policies that are simple, that are understandable, that are straightforward, that behave, that pay claims when they're supposed to, that don't accidentally lose people along the way once they start making claims, all of that needs to be provided for as well for you to have an enforceable mandate.

MS. IGNAGNI: Senator, I think Mr. Williams and Ms. Pollitz have said it exactly right.

We need a mandate that is enforceable so that we can build a system, as you indicated in your opening remarks, that really meets the test of what every American wants, which is it's fair, it's equitable, it's transparent.

Ms. Pollitz is absolutely right that we need to think about subsidies to make sure that people have a helping hand so they can afford coverage, but at the same time -- and I know we'll get into this discussion -- we also need to have a very specific strategy on containing underlying costs in addition to providing subsidies.

So we agree with both comments that have been made and we think that with those pieces in place, those building blocks, you can change the rules to be the kinds of rules that the American people are telegraphing they want.

And we have done a great deal of work and we're looking forward to talking about that, but it's with that idea of taking responsibility to look at, when you change the rules, what is possible and/or what circumstances. And that's the way our board has proceeded in its activity and very significantly deep dive.

MR. NICHOLS: Senator, I believe an individual mandate is about having everyone pay their fair share but no more than their fair share, so there's got to be subsidies, as Karen said.

But I also think it really is possible to use modern technology to help us enforce it in a way that might not have been so easy 15, 20 years ago. Let me give you an analogy from car insurance.

I grew up in rural Arkansas and my brother taught me the time- honored tradition of going to buy your car insurance, register your car, driving home, calling up and canceling your car insurance so you don't have to pay your premium anymore. Well, it turns out that leads to about half the states not doing such a good job of enforcing car insurance mandates, as you know.

It turns out some states have figured this out. Georgia, for example, which is not known as a big brother place, figured out that the insurer could send e-mail to the DMV and tell the DMV that Len Nichols just canceled his car insurance, at which point the DMV will mail a letter to the insured and say we understand you just canceled your car insurance; you just lost your driver's license; have a nice day.

So it turns out if you share information in a very feasible way across settings, you can find out who is and is not paying their fair share. We can enforce this in my opinion, sir. Look at how Georgia went from 78 percent compliance to 98 percent compliance in two years with this kind of technique. You can do this and make it completely enforceable in our world.

MS. BAICKER: Just a quick note that the lines between the carrots and the sticks that we're talking about are more blurred than one might think that they are.

I don't think anyone is suggesting that people who don't comply with an individual insurance mandate should go to jail. The usual penalty is something like not being able to get a tax benefit that you would otherwise be entitled to. On the other side, if you're trying to design a carrot, the way many of the carrots are designed are giving you a tax benefit if you are insured.

So removing a tax benefit if you're not insured versus giving a tax benefit if you are insured might have very similar effects if the dollars at stake are similar, although there are clearly psychological issues. Placing a mandate really changes the way people perceive the obligation, the responsibility on them. So it could have different effects, but it's not such a bright line I think.

MS. TRAUTWEIN: Can I just comment on that real quickly because, you know, I think all of us think that we have to get everybody into the system if we're going to be able to effectively make these reforms and that they'll actually save money.

But not to throw a wet blanket on the whole discussion, but I think we have to be realists about how easy it may or may not be to enforce a mandate. And I agree with Len that we have technology that we haven't had before, but this mandate and making it effective and enforceable is going to take a long time. We have 300 million people in this country. We are not the size of Massachusetts or one of the European countries that have been able to enforce it.

And it's not that we don't want to do this. I think we just have to look and see what we need to do during this time in which the mandate is becoming more enforced because we'll have to figure this out. There's going to be multiple checkpoints we'll have to do.

And one of the things that we've talked about in our recommendations is that we have to make sure that there's some system of risk adjustment or a modified reinsurance arrangement to make sure that during this time when we don't really have everyone in the system yet that we have adequate means so that we haven't made coverage more expensive and done something that's exactly opposite than what we set out to do.

So I just want to mention that, that it's not that we disagree but we also need to say yes, we need to do this and we also need to do this other thing, too, just in case it takes us awhile to get the hang of it.

SEN. BINGAMAN: Ms. Praeger, did you want to make --

MS. PRAEGER: I just want to add, too, that eventually we have to have everyone insured. We'll never get our arms around the rising costs of health care if we don't have everyone in the system.

And I think Massachusetts has set a good example in terms of their program that phases in the individual mandate so that -- and there are some penalties, but the penalties are fairly minor initially. And so any kind of a mandate ought to be phased in, recognizing the impact that it's going to have on individuals and small groups.

And I don't think we can mandate people have something they can't afford, so we have to -- hand in hand goes both subsidies and cost reduction measures.

SEN. HATCH: Mr. Chairman, as you said, I have to leave, but if each of you would take time and just write to us and be even more specific than you've been here.

This is a very tough issue, as you know. It's not easy to resolve, although it may be easier than some of us think. But I'd like to have each of you take time and give us the best that you can give us on this, and I'd personally appreciate it very much.

I have a lot of other questions, but I'll submit them for the record. Okay? We hope you can answer all of the questions that we submit.

Thanks so much. Sorry I have to leave.

Thanks, Mr. Chairman.

SEN. BINGAMAN: Thank you very much.

Let me ask one question and then just open it up to anyone else who wants to ask questions here.

This letter, Ms. Ignagni, you referred to the letter that you and the head of Blue -- the president and CEO of Blue Cross Blue Shield Association sent and you have -- this is dated today -- sent to Senators Kennedy and Baucus and Grassley and Enzi saying that by enacting an effective and forceful requirement that all Americans assume responsibility to obtain and maintain health insurance, we believe we could guarantee issue coverage with no pre-existing condition exclusions and phase out the practice of varying premiums based on health status in the individual market.

That seems to me to be a significant part of what Dr. Nichols was advocating we need to do in the individual market. Let me just perhaps ask Dr. Nichols if he thinks that gets the job done.

MR. NICHOLS: Well, sir, first I would have to say the statement that came from AHIP in that letter is such a long way from where we were as a nation in 1993 we should all take a deep breath and have a round of applause. There's no question about that. This is real progress. I mean that.

I would say it's no question what we want to do is end health status rating across the board. I would not limit it to the individual market. When you began your remarks you mentioned the fact that two of our markets aren't working very well. One is small group and the other is individual. And when a lot of us with gray in our beard and losing hair on top have been thinking about this a long time, we think maybe there's no better way to get these things fixed than to put them together.

So I wouldn't want to have one set of rating rules for the small- group market and one set of rating rules for the individual market. In my view, you want to put them together. The economies of scale are never going to be achievable that we want for everyone if the small group market continues to buy in groups of 10, 20, seven, four, whatever. So you want to put them all together.

So what I would say is it's a great way to start. What you want to do is have a goal of moving toward the end of health status rating across the board. I mean, I'd ask Mr. Williams and Aetna, when they do the big employers, which is a large part of their business, as I understand it, they don't do health status rating. They do basically community rating across the board for those big groups. Why not have the same kind of thing for everybody else?

And I think therefore we can move to a world where you make a new marketplace for small group and individual and in that marketplace you have the same rules for everybody. And the big guys, you can leave them alone because the big guys are doing fine relative to everybody else.

That's my perspective.

MR. WILLIAMS: Yeah, I would comment on that by saying I think there's a general misunderstanding that small groups are really not rated on their own health experience as a group.

They really are part of a small group insurance pool that represents all of the small businesses in that geography that Aetna would aggregate together, that an individual case has no credibility and an actuary or underwriter would not attribute the experience of that group to its premium until the group is well over close to 400 employees or so. So when a small group gets an increase, that increase is not the result typically of the health experience of the individuals in that group. It's a reflection of the health care costs in that geography for all the small businesses pooled together.

Now, I think there are opportunities to create one-stop shopping and there are other things that we can do working with perhaps the brokers and others, other agencies, to simplify the purchase process, but I think there's a misunderstanding about the pooling nature of the small-group market.

SEN. BINGAMAN: I believe Senator Roberts had a question.

SEN. ROBERTS: Dr. Nichols, in your written testimony you've discussed two options for assuring that all Americans have adequate health insurance benefits: first, a minimum benefits package requirement, which you've just talked about, and then an actuarial value target. Can you tell me who does that? Would that be done by states or would that be done by something called a national actuarial exchange? The pros and cons of this I think are obvious, but I don't want a national actuarial exchange morphing into a CMS in regards to the insurance industry.

Would you care to comment?

MR. NICHOLS: Sure. A fair question, and I would say, Senator, the basic idea behind having a minimum benefit package that specifically specifies -- let's just take a concrete example of the federal employees Blue Cross Blue Shield standard, which is kind of a benchmark that a lot of people know.

The idea behind specifying that is to say that's the package we want all insurers to make their initial bid upon so we can compare apples to apples and see how their efficiencies rate. And then the idea, at least in my head, is to allow insurers to offer supplements above that as long as they're priced separately.

An alternative way to think about setting that minimum benefit package to permit apples-to-apples shopping is instead of saying Blue Cross Blue Shield standard with its specific deductibles and its specific co-pays and all that stuff, allow insurers to offer another plan that would be actuarially equivalent.

So you could say the actuarial equivalence of Blue Cross Blue Shield standard, but that would, for example, allow people who wanted to to offer higher deductibles with different kinds of health savings account arrangements. It would allow HMOs that might want lower deductibles and more access to care, but they expect to do more care management. It allows the marketplace in many ways to breathe.

And what I believe and my actuarial colleagues have convinced me is that if we define that actuarial target appropriately enough, sir, it would allow the marketplace to actually be more competitive and allow more freedom of choice with some risk of adverse selection being created. However, if you define the target appropriately, most actuaries I know, the people I listen to, believe it's actually manageable.

So that's the idea. The idea is not to impose some standard from God. I would suggest that in fact what you want is --

SEN. ROBERTS: I wouldn't refer to CMS as God.

MR. NICHOLS: Well, neither would I. (Laughter.) Sorry about that. But it --

SEN. ROBERTS: Well, you might have it sort of described in between there with some words in between God.

MR. NICHOLS: Yes, sir.

SEN. ROBERTS: But that's beside the point. (Laughter.)

MR. NICHOLS: I'll let you go ahead.

But what I would say is what you don't -- what I believe you want, sir, is a set of federal rules about the way all markets will work, but I could not agree with my colleague Sandy Praeger more. It's got to be enforced at the state level. And you probably want to let states have some breathing room out there.

SEN. ROBERTS: Well, that was my next question. I just don't -- pardon me for the noise -- a federal one-size-fits-all approach to this issue, we have to preserve state flexibility and consumer choice, (to be frank with you ?), the rural health care delivery system. Senator Coburn knows this -- Dr. Coburn knows this firsthand.

I'm just trying to save what we've got and improve upon, but every provider out there is getting reimbursed 70, 80 percent and then choices are being made in regards to Medicare that are not good. We're rationing health care and it scares me when we get into the individual mandate stuff.

So thank you, sir.

SEN. BINGAMAN: Thank you.

Senator Brown?

SEN. BROWN: Thank you.

Mr. Williams, your comments about fee for service and the difficulty of the cost of fee for service took me back to something Senator Harkin said at the White House summit on health care where he said that you pay for quantity you get quantity, you pay for quality you get quality.

Would you each talk about how we manage costs better than we have? It's pretty clear we -- you know, Doctor, I remember my first year in the Congress in 1993, and we brought in an orthopedic surgeon to speak to the Subcommittee on Health in the Commerce Committee, which I sat on.

And he said, "If I have 10 people come to see me with lower back pain, what I should do is say take a couple of aspirin, go home, get some rest, come back in two weeks if you still have paid," he said. But what I do is I order tests. I order tests for three reasons: one is I make more money if I order tests; two, if I don't order tests, I might get sued; and three, if I don't order tests, the patient will go to another doctor." It's a bit simple, but not too far off perhaps.

Just your comment generally, Mr. Williams, since you maybe think of it, start with you, but I'd like to hear all of your thoughts on when you pay for quantity you get quantity.

MR. WILLIAMS: Well, I think that there is a huge opportunity to realign the incentives in the system, both at the physician level as well as at the member level.

And by that what I mean is that the best investment we can make is in how we manage the chronic conditions -- the asthma, the diabetes, the hypertension -- because the most effective thing we can is avoid the health event so that we don't have to pay for the activity. And so what we need is a health care system that emphasizes primary care, emphasizes prevention.

And if you look at the way the values are set for what physicians are paid, the system that's been put in place utilizes something called the RUC committee. It's a committee of the AMA that operates under legislation of Congress, as I understand it. That committee has 26 physicians on it; 23 of them are specialists and three are primary care. And what happens is the reimbursement for primary care is at the low end of the spectrum and the reimbursement for procedures is greater.

What that means is as a system we're not paying primary care family practice pediatricians to invest the time to help the patient understand their condition and stay healthy. So we need to change the system in terms of paying for activity to really paying for more managing the population.

I think also we do have to address the tort reform issue in the sense that we need to recognize bad things do happen, people need to be compensated. But we're placing a physician in a place, as your colleague described, they're going to be put on the witness stand and asked was there any other test you could have conducted, no matter how remote the indications were of that patient for. And that physician wants to say no, I did every conceivable test, and that drives cost.

And so we need to think about the evidence base, the guidelines and give physicians some way to say that they're practicing consistent with evidence-based guidelines and applying their own clinical judgment, and that if something bad happens, there's a way through health courts or other mechanisms that states have come up with to give us an opportunity to deal with that.

SEN. BROWN: Ms. Pollitz?

MS. POLLITZ: Senator, I think that was very excellent, and I would add to that that we need to also look at some very basic design elements of our insurance policies.

With respect to chronic conditions, we have to remember that people who have chronic conditions use care all the time for a long period of time, sometimes for their whole lives. And research shows that even little co-payments, things that we would think are, you know, $6 co-payments for a prescription, will confound the ability of many patients with chronic conditions -- diabetes, asthma, arthritis, depression -- from taking the drugs that they need. They don't fill their prescriptions as often. They split pills, they get by, because it's not just $6, it's $6 times three prescriptions that they have to fill every week.

So we need to really focus, I would agree, very much on chronic conditions; that accounts for 75 percent of our medical spending. And we need to take down barriers, including the barriers that we build into our insurance policies, and not keep dinging people a little bit here, a little bit here, because it really adds up.

And I think we need to examine when we -- back to Senator Roberts' questions -- when we look at the design of our health insurance policies and what should be covered in what is minimum critical coverage, in addition to any actuarial standard that we may decide upon, what we feel like sort of is within our overall budget goals.

I know this is going to be hard to afford. We need to line up those policies against what the very specific care needs will be for people who have chronic conditions and say how much are they going to be left to pay out of pocket? And if it gets very high, we need to recognize the fact that they won't be able to manage their conditions. However much we may pay doctors to try to do a better job, they just won't be able to afford the cost share.

SEN. BINGAMAN: Senator Coburn?

SEN. BROWN: (Off mike.)

SEN. BINGAMAN: Oh, did you -- do you have --

SEN. BROWN: (Off mike.)

SEN. BINGAMAN: Oh, I -- go ahead.

SEN. BROWN: I wouldn't mind hearing from others, if that's okay.


MS. IGNAGNI: I'll be very quick.

SEN. BINGAMAN: If you could give a brief answer so we could get on to another question, too.

MS. IGNAGNI: Yes, sir.

I think Senator Brown has asked a very important question. And quickly, there are three buckets I think you want to look at.

A number of the stakeholder groups have been working together on quality performance and how we can make recommendations to all of you. We've conferred with your staff about how you map all of this, and so I won't spend too much time but to say there needs to be uniformity of performance measurement so physicians and hospitals aren't frustrated that many different payers, whether public or private, use different systems. They need to be very oriented toward what are the goals, what are we measuring, number one -- one bucket.

Number two, there's a very significant need to -- there's been underinvestment in research. The Institute of Medicine has repeatedly pointed to this. This is very important as we transition to a 21st century system. How do we get that research diffused into practice? That's a second issue in that bucket.

Third bucket --

SEN. BROWN: That's comparative effectiveness in that --

MS. IGNAGNI: Well, it's not exclusively comparative effectiveness. It's actually -- comparative effectiveness will talk about the effectiveness of drug to drug, drug to device, drug to bio, drug to therapy.

What the investment in research in addition to that then I'm talking about is the Institute of Medicine has pointed to gaps in research in specific areas. So we need to have not just more evaluation of what works -- that's very, very important -- but, in addition, research the gaps in evidence. How do we get the best practices that the professional societies are coming up with, very importantly, diffused into practice? Atul Gawande has talked about an institute of best practice. There are many things in that area.

Third bucket -- and I know, Senator, you want to move on, so I'll be very quick about this: the whole idea of moving away from paying for a particular body part to be treated, bundling services, episodes, global payments, capitation, a range of issues that were brought out in the '90s.

And from a health plan perspective, we understand what caused abrasion with physicians in the '90s and we've worked very, very hard. Now in the area of imaging, for example, you have physician to physician conferring about what's being ordered and what would be better based on physician practice guidelines, so there's much more sophistication about this. That's just one example.

But care coordination, as Karen said, Ken Thorpe has done terrific work here, how we can bundle things more effectively, do early intervention, keep people healthy.

So I know, Senator, you want to move on, but those are just the highlights of the buckets, and we could provide more information.

MR. NICHOLS: I'll be very brief as well.

I just wanted to point out there are two dimensions I would say, and I agree with everything that's been said so far, on how to reduce costs.

In the insurance case specifically, if you outlaw underwriting and aggressive risk selection and you make it not profitable, they will stop it. When they stop it, you will get money back. The difference between a premium and the claims cost -- that is to say, medical loss ratio -- is made up of a lot of activities, all of which are designed to make money for the company or help it break even. If you take away that incentive to do that, that will save a bunch of money.

That's the fundamental difference between the load, by the way, in a large employer and a small employer. Ron's right. They don't risk rate individual employers when they're small, but they do put them into classes. There's a bunch of classes. What's interesting is the load they pay in that small-group market is much higher than in the large-group market. What we want to have is a country where all of us get the large-group load.

The second way is everything Karen just said about buying smarter. The way I would put it, we want to realign incentives so that hospitals and clinicians -- and I mean across all sites of care, including drugs and devices -- all of them should be aligned with the payers and the patients. We want high-quality care the first time, the best kind of care the first time. We want everybody to pay their fair share. But we want the docs and the hospitals to have the same interest in achieving that level of efficiency. To do that, you've got to bundle.

There's a lot of experiments going on right now. A lot of us are thinking about this really hard. A lot of smart people are working on it. I would just tell you, stay tuned. But I do think you've got to move toward paying for a bigger bundle of services and -- (inaudible).

SEN. BINGAMAN: Senator Coburn.

SEN. TOM COBURN (R-OK): Thank you.

First of all, let me thank you for being here. There's a lot of approaches for us getting to where we have a broad insurance market. I'm convinced we don't have a market today. I don't think there's one that's really out there.

The idea of stopping cherry picking, if in fact we had a real transparent market, a truly transparent market where everybody could see, and we had true risk adjustment based on a penalty based on what that risk is, why would that not work in terms of averaging out the cost to everybody and averaging away from the cherry picking and having real insurance where we spread the cost of this all over everybody, including the highly sick and the highly well? Why would that not work?

MS. BAICKER: Let me give a 30,000-foot view and then let the experts weigh in.

One of the reasons the small and non-group market I think works so badly is the different risk rating that goes on in large groups versus small groups. And if there's an opportunity for low-risk people to move across markets and see their premiums drop, then you have a devolution of risk pooling that's always churning underneath.

How could you avoid that? Well, if each individual person were paying his or her expected costs and sick people were paying a lot more and healthy people were paying a lot less, you wouldn't have insurance -- you wouldn't have any incentive for insurance companies to cherry pick and you wouldn't have any churning between markets, but we don't find that acceptable because we don't want sick people to have to pay a lot more for their health care than healthy people.

There are ways to get around that such as the risk-adjusted vouchers I mentioned where individuals are contributing the same amount to their health care regardless of whether they are high or low risk, but then insurers are getting paid more if they have a sicker pool and less if they have a less-sick pool, and that could --

SEN. COBURN: That's what a risk adjustment does.

MS. BAICKER: Exactly. And so that I think would both undo the incentive for cherry picking and would also undo the pressure that destabilizes market pooling.

And that could be done through side payments between insurers or it could be done more centrally through public funds being paid out to higher-risk groups and taxes being levied on lower-risk groups.

SEN. BINGAMAN: Okay. Anyone else want to comment on that?

MR. WILLIAMS: Yeah, I would just comment briefly.

I would first say that I think that there is an insurance market, particularly in the commercially insured sector, where we have 177 million people in that sector and where the purchasers are incredibly innovative.

And, for example, one of the things that we're working with our clients is a value-based insurance design that recognizes that for a person who has cancer, their medication has a very different implication for them than someone who's taking a convenience drug that you can do without based on their physician's judgment, and that for the patient who needs that medication, their co-pay may be zero. In some instances we have clients we're thinking about paying them to take the medication.

And so the level of innovation that goes on in the commercial sector is much greater than goes on in other sectors.

Now, I think transparency is enormously important. But I think we focus a lot on transparency in the insurance component of the sector, but consumers need transparency at the physician's office.

SEN. COBURN: You bet.

MR. WILLIAMS: They need it in the hospital.

And, for example, at Aetna any one of our members can go online and find out what the Aetna negotiated rate is for their physician and understand what they're going to pay for those top 30 procedures before they go see the physician.

Now, we also would love to enrich the level of quality data that we have, but we do believe it should be national standards and should be easy for physicians and quality data the physicians believe is clinically meaningful.

So I think what you miss is the level of innovation. I mentioned we spent -- one company -- $1.8 billion, which is almost 10 percent of the entire amount that we're committing to health IT in the country. And so the question is what for-profit companies do is we invest in innovation that really is about managing health care.

Two-thirds of our customers are self-insured, Fortune 100 companies who very much have a population long-term point of view, and their interest is I've got the employee now, I'm going to have them mid-career, and they're going to work for me up until they retire. And so there's just an enormous amount of innovation that goes on that would be missed.

SEN. COBURN: Well, let me just say in follow-up, we spend twice as much as any nation per individual on health care. The closest to us is Switzerland. They're 25 percent below us.

I don't think we need to put another dollar into health care. What I think we need to do is let market forces truly work and we can do that through universal access -- we can have everybody covered -- and we can still get great quality health care. And the idea of adding another 80 or 90 billion dollars a year to enhance that, all that's going to do is make our problem worse; it's not going to make it better.

And I appreciate so much the idea we have incentivized sub- specialization in this country -- to a lot of benefit; there's no question -- but we've disincentivized primary care to a tremendous "disbenefit" to everybody in this country. And we're never going to get the prevention dollar savings until we start incentivizing primary care.

SEN. BINGAMAN: Senator Merkley?

MS. IGNAGNI: Could I just make one --

SEN. BINGAMAN: Oh, yes. Did you want to make a comment on that?

MS. IGNAGNI: Just a quick comment.

I think Senator Coburn has said something very important here. And one of the issues we've been working very closely with the specialty societies in the primary care area and it's very clear that there are shortages of slots in medical schools for primary care physicians. There aren't enough medical students going into primary care.

And one thing the committee might consider as it constructs its recommendations is giving very significant help, if not free tuition, for the best kids to go through in primary care a sort of national merit scholarship --

SEN. COBURN: That doesn't solve the problem.

Here's how you solve primary care is you pay them what they're worth. You pay for prevention. We have a differential from -- a pediatrician makes a third what the average physician in this country makes.

MS. IGNAGNI: I agree.

SEN. COBURN: If you want people to go into pediatrics, you've got to pay them.

MS. IGNAGNI: I agree. We totally agree with that.

SEN. COBURN: And that means you may have to decrease some on the top side.


SEN. COBURN: But to incentivize them to go there when they're not going to be able to pay the med school loans afterwards, they're not going to stay there.

And that's what happens. We have internists all the time -- 2 percent of the medical school graduates this year went into primary care; that's one in 50. Forty-nine went into specialization or sub- specialization. And it's going to accentuate our costs. It's going to drive the costs higher, much like the orthopedics.

MS. IGNAGNI: And, Senator, you just hopped in right before I took the breath to say exactly what you did, which is that I think you could attack this on two ends very productively, but a small investment in the beginning of the pipeline could help considerably in addition to exactly what you've just said.

SEN. COBURN: We did it with the stimulus package. The fact is it's not going to work until you make payment equitable.

MS. IGNAGNI: We have to make payment equitable.

SEN. BINGAMAN: Senator Merkley?

SEN. JEFF MERKLEY (D-OR): Thank you very much, Mr. Chair.

And some of you have touched on this but I want to try to address it straight on and that is incentives or adjustment in the structure of insurance related to health-smart behaviors. We had the CEO of Safeway here a few weeks ago and he has really been driving the concept for self-insurance in their organization, addressing issues of smoking, of weight. I believe exercise was somehow incorporated into the model. And so that individuals see financial rewards, if you will, for behavior that reduces the health care impacts, thereby making their quality of life higher and the costs for the organization much lower.

And I just wonder if you all, as you'd like, like to address the appropriateness of this in a broader health care strategy?

Ms. Pollitz?

MS. POLLITZ: I would absolutely agree that prevention and wellness is an overwhelming public health issue. It goes way beyond the bounds of insurance coverage.

And having worked in my younger days at the Department of Health and Human Services and having come to appreciate the unsung heroes in the public health service and how difficult it is to promote public health, I think the more you can invest in that the better.

I would add, though, that you will need to be very careful, and here's another area where accountability and transparency in your insurance products is going to come into play. You're going to need to be very careful about designing insurance products in ways that promote wellness or penalize not wellness.

The Bush administration rewrote the rules. Congress passed a rule in 1996 that said group health plans may not discriminate against members based on their health status. Everyone in the group is the same, they get treated the same, they get the same benefits, they pay the same. There was a small exception for modest premium surcharges or discounts that could be provided for wellness, but those were very much hemmed in so that you could get a discount, for example, a wellness discount in your insurance premium if you took a smoking cessation class but not only if you could quit smoking because they didn't want to kind of cross the line into treating people differently based on how healthy they were.

The Bush administration re-wrote those rules and said that now group health plans can have penalties as big as 20 percent of the entire cost of the health insurance premium for people who not only don't enroll -- who enroll in wellness programs but who actually meet health care targets.

And days after this regulation took effect, new products came on the market that offered to small employers now who had been buying, say, a $500 deductible for their group to give them a $2,500 deductible and then require all the employees to come in for a health screen. And every time you pass a test, you get a $500 reduction in your deductible, so if you reduce your blood cholesterol, if your body mass index is the right amount, if you don't use tobacco products, if your blood pressure is not high, then you get a low deductible. But if you can't pass those things, now you're in a $2,500 deductible.

And the effect of that is to split up the pool, and it puts the sick people in the high-deductible plan and it puts the healthy people in the low-deductible plan. And that maybe a wellness incentive, but it also makes it hard for people who have high cholesterol all of a sudden to afford their cholesterol medication because it's subject to a $2,500 deductible.

And when you look at the website of the company that's offering this, right on their Q&As for employers, "How can you save money with this?" it says some of your sick people will go somewhere else; they won't like it; they'll sign up for their spouse's plan that doesn't have this.

So I think we want to create opportunities for wellness -- many, many opportunities for wellness, make it hard for people to not lead healthy lives -- but we want to be very careful about penalizing them in their health insurance and in particular in their deductibles and co-pays and charging them more when they get sick because that's now crossed a line into discrimination and it's going to be counter to good public health.

SEN. BINGAMAN: Ms. Praeger, did you want to comment?

MS. PRAEGER: I would like to comment on that because it does go back to the realignment of payment incentives.

A primary care physician can be a great partner in helping a person achieve wellness, but they get no reimbursement. They get no reimbursement for spending the time that would be necessary to help counsel that person.

So realigning the payment mechanism, I think, is one of the real keys to achieving some overall maybe not cost reduction but certainly slowing down this escalating rising cost where the payment incentives are just --

SEN. MERKLEY: Ms. Ignagni?

MS. IGNAGNI: Yes, Senator, the plans in your areas, and I know you know, have been doing pathbreaking work with primary care physicians. They're paying them significantly over the Medicare rates to actually take responsibility to help coordinate the care and support these healthy choices. There's great data, so we'd be happy to provide it to you.

But you have some pathbreaking things going on in your state they should be very proud of, particularly in the area of Medicare Advantage.

SEN. MERKLEY: Mr. Williams and then Ms. --

MR. WILLIAMS: Just a couple of comments.

I would agree wholeheartedly that this area is a slippery slope, but I think that we see a tremendous level of enthusiasm among the employer community to implement well-thought-out, appropriate programs.

And I can tell you from our own experience with 36,000 employees, our medical costs went up 3 percent last year, and the reason it went up only 3 percent was because our employees engage in wellness, in fitness -- strictly on a voluntary basis -- and each employee had an opportunity to earn an incentive based on their participation in exercise and wellness and fitness and really doing things that they were very comfortable with -- strictly voluntary basis. We see this among a large number of employers, and I think, given the obesity epidemic we have in the country and the tremendous problems with chronic conditions, it's very important.

Now, one final comment is, again, another example of innovation: We're working with five large employers and with President Clinton's foundation and actually working with pediatricians so that children who are obese do not have to be diagnosed with a particular health condition in order for Aetna to pay for nutritional counseling, extra income for the pediatrician, and counseling sessions for the family with a dietician so that the family can have a dietician who is culturally appropriate to their background and can help them figure out what they need to do.

It's another example of innovation really tackling what we all, I think, would agree is a fundamentally important problem.

SEN. BINGAMAN: Ms. Trautwein?

And then Senator Burr had a question.

MS. TRAUTWEIN: I just want to mention one more thing on the wellness and just to add onto what everyone else's said here.

You know, you can set up these wellness programs and most of them are set up based on a patient designing what their own objectives are, and any rewards that they might receive are based on the plan that they've put together. So certainly someone that's in a wheelchair will have different objectives than someone who runs marathons, and that is critically important to know that the plan is not the same for everyone.

I really don't think that we do enough to encourage employers today to put these programs together. I think our incentives should be greater not less, that they should be able to provide bigger incentives and some of them have nothing to do with insurance. There are all kinds of things that employers can do, and I think engaging employers is the key to making this whole thing work because, in fact, that's where most of the people are every day.

SEN. BINGAMAN: Senator Burr?

SEN. MERKLEY: Mr. Chairman, will we be allowed to submit written questions?

SEN. BINGAMAN: That's fine with me if the witnesses are willing to answer them.

SEN. MERKLEY: Thank you.

SEN. BINGAMAN: I think it's a good idea.

Senator Burr?

SEN. RICHARD BURR (R-NC): Thank you, Mr. Chairman.

More importantly, thank you for taking some written questions because I certainly have more than the chairman seems scheduled to take.

Let me just make a comment on this last question and that's that individuals who receive some benefit participate in wellness and prevention programs at a much higher rate. Self-insured employers have proven it, and they don't have to be punitive in the way they apply it.

But if you want prevention and wellness to play a centerpiece of health care in the future, then you have to provide the individual to feel the financial benefits of the decisions that they make. It's tough to run two miles in the afternoon, but when you see a financial benefit come to you for doing it, you're more inclined to do that and then to diet in conjunction with it because that might benefit the cost of your overall health care plan as well.

Now, prior to the last two questioners, I was somewhat dumbfounded that -- of the words that I hadn't heard. I read them in your testimony, but I didn't hear them in the verbal testimony -- medical home prevention and wellness. I was beginning to think maybe we were going to miss out on some things that I thought were absolutely staples of reform.

The words I did hear the most often -- subsidies and incentives. You know, that's troubling because it sort of suggests right at the beginning that you can't change the model so it works without subsidies or incentives. I remember when Dr. Coburn and I offered an alternative to the SCHIP proposal a month or so ago that covered all children under 300 percent of poverty and it did it some $100 billion cheaper than the proposal.

It didn't pass.

You can with the right level of creativity offer an expansive coverage from the standpoint of the population and do it for less money, but you've got to be willing to change what you're willing to try to achieve and how you're willing to structure that.

I want to move Ms. Pollitz for just a minute because I think if I heard you correctly you insinuated that co-payments, especially as it related to chronically ill patients, would alter whether they would get care. It may force them to get less care. It may force them not to get the preventative care that they need.

The RAND health insurance experiment found that people that paid nothing for their health care consumed 30 percent more than those who had some skin in the game -- co-payment, deductible.

So how do we balance between what the RAND Corporation went out and found -- and that's that when we have no skin in the game there's a 30 percent higher rate of consumption by those individuals -- when you require some degree of responsibility for payment you begin to have at least less care delivered, and I think their conclusion was more appropriately the care that they needed versus the care that they just wanted.

MS. POLLITZ: Well, I think the finding, Senator, of the RAND experiment was that cost sharing is a blunt instrument, that it deters people from seeking necessary care as well as from seeking care that they could do without.

SEN. BURR: Well, as a matter of fact, what he found was a greater consultation with their doctors about the care that they did receive that it was appropriate, that it was needed but, more importantly, that it would benefit their health outcome. I think that's the conclusion they came to.

MS. POLLITZ: Well, and to go back to your original -- your opening about, you know, how much incentives versus how much medical home, I think you're right, we need to find a balance.

But at the end of the day, once someone has been diagnosed with diabetes, they need to test their blood four times a day. They need to take their insulin and their diabetes medications. They need to have regular physician checkups, labs, eye visits, check of their feet. They need these things. This is not optional care; this is what it takes to manage diabetes well. And when they don't get that, they develop severe and expensive and life-threatening complications. They lose their eyesight, their kidneys fail. RSRD program on Medicare, that's the most expensive health care program that's out there when people's kidneys fail, and half the people who are enrolled in that program have diabetes.

So when we try to save money, you know, just pay me $1 every time, you know, for a co-pay for every one of your things -- every one of your doctor visits, every one of medications, all of your diabetes supplies -- we're erecting barriers to people getting that care because some just can't do it.

And so we need to -- I think we need to examine the role of co- payments and financial incentives and say for things that we know are tried and true or, as Mr. Williams said, once somebody gets cancer, I want them to take their antiemtics so that they can complete their chemotherapy course. I don't want them to pay 50 percent of a cost of a $1,000 drug.

SEN. BURR: I think what Aetna's experience has been is that once they educate their beneficiaries on why they follow the path that Aetna and the health care professional lays out that, one, the outcome is better and, two, the amazing thing is that the cost is less. So it actually suggests that if it takes co-payments to get people in a different conversation with their health care professional, that's probably a good thing.

Now, you did say as well in your testimony that the public plan, I guess it's this public competition that we're talking about with the private sector, should be a tough negotiator. Is Medicare and Medicaid a tough negotiator?

MS. POLLITZ: Well, Medicaid, I think, is an example of a stretch program that is underfunded --

SEN. BURR: Okay, let's just talk about Medicare.

MS. POLLITZ: -- and it absolutely underpays and we should fix that.

Is Medicare a tough negotiator? Medicare pays what it pays. We have --

SEN. BURR: Do we adequately address prevention and wellness in Medicaid -- Medicare, excuse me.

MS. POLLITZ: Oh, I think we have improved over the year coverage of certain preventive services, but no, I think we could do a better job.

SEN. BURR: Certain preventative services may be six of them that we added --

MS. POLLITZ: Exactly.

SEN. BURR: -- in the 1990s and we fought tooth and nail to get that.


SEN. BURR: But when you look at those six services and you talk about prevention and wellness, they fall so far short from a standpoint of what's covered.

MS. POLLITZ: I agree.

SEN. BURR: And that is a public plan. That is the U.S. government. That is CMS. That is basically a plan that has been unlimited from a standpoint of what they could spend.

But I think an example of a serious flaw in architecture compared to exactly what all of you have described today -- the architecture of the future.

MR. NICHOLS: Senator, if I could jump in, I would just say I agree with you --

SEN. BINGAMAN: Why don't you give that answer and then I'll call on Senator Hagan.

MR. NICHOLS: Okay, sir.

I agree with you. We have essentially tied Medicare's hands from becoming a very prudent purchaser, a value-based purchaser, and there's a lot of discussion about how to make Medicare a better buyer, but it ends up kind of making your fundamental point, that is, motivation and incentives are all part of this, but at the end of the day we need to recognize it's in our interest if the chronically ill get appropriate services early.

And that's really what Karen's talking about. She's talking about ways to try to figure out how do we make that happen.

I remember Ron talking about how at Aetna now they've got a product where they're actually going to have zero co-pay for certain things and maybe even pay people to do certain things because we're all better off if those diabetics manage their care with their clinician absolutely appropriately and stay out of the hospital. And that's really what we're all trying to work toward here, I think.

SEN. BURR: Thank you, Mr. Chairman.

SEN. BINGAMAN: Senator Hagan and then Senator Harkin.

SEN. HAGAN: Thank you, Mr. Chairman.

I had the privilege to sit in on the state employee health plan for the state of North Carolina, where we covered about 800,000 people, and what we're talking about right now was the fact that so much of the cost was really for chronic disease -- diabetes, cardiac failure, all of those -- and that's where so much attention needed to be given, one, to be sure people did take their medication on a timely basis.

What I really wanted to ask about right now having to do with cost -- and Mr. Williams, this question's addressed to you -- so many of the physicians that I talk to say if health insurance plans had a standardized format, just the standardization of forms, they could save so much money in their individual offices from just, you know, handling the forms. Why can't we do that?

MR. WILLIAMS: I would say that I think there are important and significant opportunities to administratively simplify so that physicians are spending less time on paperwork. We have a major initiative across the industry that I'm chairing taking a look at what we can do to standardize processes and, most importantly, also automate processes.

For example, in our plan we get over 80 percent of our claims electronically. We handle -- over 26 percent of physician inquiries are handled over the Internet, where the physician gets the data they need electronically. We're trying to put in place a multipayer portal so the physician can go one place and reach out to any health plan and get eligibility data.

I think it's a fair criticism and I think it's an opportunity for the industry to really work hard to administratively simplify what we do.

SEN. HAGAN: And to the whole panel, do you think this is something that Congress should weigh in on?


MS. IGNAGNI: Senator, I think you should expect stakeholder responsibility.

Mr. Williams said it very well. He's chairing a major effort that we are undertaking with the Blue Cross Blue Shield Association together to look at every area where we can simplify administrative processes and costs and reduce costs.

I think you should expect us to come forward and identify that, talk about what the government in a health care reform effort could facilitate as you move forward in developing legislation, what should be expected in the private sector, and we hope by doing that that might start a series of stakeholder responsibility conversations about the area, the broad area, of cost containment and the opportunity to take a point or a point and a half off future growth.

We gave you a chart in our testimony. If we were able to do that as a society, just over 10 years if you took 1.7 percentage points off future rate of growth, the projections, you're talking about savings in the neighborhood of $3.5 trillion. Those are quite significant.

But you should expect us to come forward and identify that.

SEN. HAGAN: And I do think with the initiative that we've just done from the health IT perspective that that's going to drive quite a bit of the standardization of these forms.

I had one other question having to do with the minimum benefit package. And I know a lot of regulation has to go on at the state and the federal level, but I know a lot of states have different individual requirements on benefits that they mandate that are covered at the state level.

This question has to do with how would a minimum benefit package be put together that would be available across all 50 states.

MR. NICHOLS: I'd be glad to --

SEN. HAGAN: Mr. Nichols, that was directly in one of your --

MR. NICHOLS: I would say that the way you want to think about this, first of all, let's all get the same set of facts in our heads.

A lot of discussion about the cost of benefit mandates out there; a lot of empirical work that would show in fact benefit mandates don't really add that much to cost. The serious econometric work that is in my profession suggests 3 to 5 percent. CBO has concluded that. The state of Texas Department of Insurance -- not a noted left-wing organization -- concluded 3 percent in the state of Texas. And by the way, they include in-patient adult rehab and alcohol counseling, so it's serious benefits there.

The point is this: How we pay for and manage care is far more important than the benefits that are covered. The reason those econometric studies find there's very little net impact with specific benefit mandates is because they compare the small group-products where those things are relevant to the large-group products.

The large-group products are uniformly more generous and yet they have lower costs, so let's ask ourselves, how do they do that? A, they do what Ron said a moment ago -- the big employers really have the time and potential and resources to work with the third-party administrators to try to be smarter about what they buy. And they also negotiate better contracts with the clinicians because they have buying power. So the point is we need to extend that bargaining power and that information utilization potential to all of us and not just some of us.

So I would say the one thing Congress could do in the short run is to mandate transparency about how different activities are spent. That'll encourage the industry and the clinicians to work together.

But on sort of selecting the benefit package itself, I would come back to at some level it's got to be a federal decision. You don't want 50 different benefit packages around the country. What you do, however, want is to allow the market to breathe. You do not want this to be something that is absolutely written in stone and force, say, very efficient, integrated health systems who are very good at managing care and patient satisfaction; you don't want to force them to a certain kind of deductible. Similarly, you don't want to force folks who manage care differently to have a particular product. So in my view, you want an actuarial value standard and let the market go.

SEN. HAGAN: Ms. Pollitz?

MS. POLLITZ: I would just add to that that while I agree you need to set a federal standard -- I mean, if people need coverage, they need coverage; it doesn't matter where they live. To the extent that you're going to allow some flexibility through an actuarial equivalent standard -- and I appreciate Len's stress on sort of the positive implications of certain kinds of different benefit designs -- but I think you need to be very careful in actuarially equivalent. Two actuarially equivalent plans might on average cover the same thing, but this plan covers 100 percent of what cancer patients need but nothing of what diabetics need, and this one 100 percent of what diabetics need and nothing -- so we can't just sort of say actuarially equivalence is close enough.

And I think in the quest for transparency in monitoring this over time, you will also need to develop some better measures of uncompensated care and medical debt and check those frequently. And to the extent that we find that our actuarially equivalent plans that are meeting our standards are still leaving people in medical debt and check them by condition, then you need to go back and tweak it.

But I think we -- you know, we buy health insurance in case we get sick, so the standard that you set needs to take care of people when they have cancer and diabetes and heart attacks and when they get pregnant, and it can't leave them with thousands of dollars of medical bills every year that they have to keep paying in addition to what we're asking them to pay for their premiums.

SEN. BINGAMAN: Senator Harkin?

SEN. TOM HARKIN (D-IA): Thank you, Mr. Chairman.

I've been trying to get my head around how insurance is utilized more effectively in the field that everyone's mentioned here earlier and that is in prevention and wellness. How do we get insurance involved in that?

I mean, just a couple of observations. Seventy-five percent of all Medicare spending is on chronic illnesses, chronic diseases, most of which are preventable. So the old saw, you know, you cut where the path's the thickest.

And I saw a picture, what I'm thinking of, PowerPoint that Dean Ornish, Dr. Dean Ornish, put up one time and the first picture was of a sink that was overflowing with water and you had people on the floor mopping it up. And his point was that most of our health care today is we're mopping up the floor, but no one's shutting off the sink. (Laughter.) And it seems to me that's what insurance -- the insurance is paying for mopping up the floor but not paying much to think about shutting off the sink.

And so I've been trying to figure out how do we get -- how do we make it so -- I mean, Mr. Williams, your company, you have to pay your shareholders. Your obligation is to your shareholders. You have to make a profit. All insurance -- well, maybe get mutuals, but that's a different situation.

But how do we get insurance up front? We all know about prevention and wellness. Everyone's mentioned it. We have to focus more on that. But what is the role of insurance in insuring people for engaging in healthful lifestyles, for businesses to be involved?

I can figure out the taxing system. I can figure that one out. I mean, I can figure tax incentives for businesses and individuals and things like that on how we can motivate, provide the kind of financial incentives and things like that. That's not a heavy lift.

Please explain for me how we get the insurance companies involved in this.

MR. WILLIAMS: Sure. I would first start off by describing our business model today versus a number of years ago. A number of years ago we were a financing mechanism. We paid the claims and we provided customer service.


MR. WILLIAMS: Over the past 10 years we have transformed and added a whole set of prevention and wellness and clinical support and health informatics functions and capabilities. And I'll be more specific. Twenty percent of the people who work at Aetna are nurses, doctors, pharmacists, behavioral health specialists, and 20 percent more are IT professionals.


MR. WILLIAMS: IT. And what the IT professionals do is help us identify from the claims data, the pharmacy data, the lab values, the health risk assessments patients or members who are on the path to becoming a diabetic or on the path to becoming a hypertensive.

Now our job is not to treat them. Our job is to identify them and offer them on a voluntary basis education, information, counseling support so that when they go see the doctor they are in a position to really fully engage in understanding their health status, because if you're a diabetic and you take better care of yourself there are fewer claims.

SEN. HARKIN: You're a pre-diabetic.

MR. WILLIAMS: Pre-diabetic. Well, even if you're in an early stage of being a diabetic, what happens is most of these conditions are progressive. You start out pre -- you enter the early, you go through the mid stage, and then you go through the late stage.

So what we spend our time doing is first identifying people who have the condition, understanding the stage they're at, and trying to make certain they're educated and understand what they need to do to slow down the progression through that process.

SEN. HARKIN: Yeah. Let me ask one question. Medicare right now -- Medicare will pay for nutrition counseling --


SEN. HARKIN: -- if you're diabetic.


SEN. HARKIN: But they will not pay for nutrition counseling if you're pre-diabetic, on that pathway.


SEN. HARKIN: Well, that doesn't make sense.


SEN. HARKIN: Now let me ask you: Does your insurance company -- do you have policies that say to your policyholder that if you go in and get tested and you meet certain indices for pre-diabetic we will pay for you -- we will cover you to go get nutrition counseling?

MR. WILLIAMS: Yes, we do have -- yes. The short answer's yes.

SEN. HARKIN: You have policies that do that?

MR. WILLIAMS: That's correct.

SEN. HARKIN: Covers everybody.


SEN. HARKIN: Or is it a special thing that you have to get in a policy?

MR. WILLIAMS: No. Well, what would happen is the policy choice is always the employers' choice, but I would say the vast majority. And let me answer more broadly.

There's a set of recommended prevention guidelines recommended by the U.S. Preventive Services Task Force.

SEN. HARKIN: I'm very familiar with it.

MR. WILLIAMS: We cover it, period. If it's recommended as a preventive service, we cover it.

Then there are a set of things that relate to chronic conditions, and we have the flexibility to identify what we believe is a good investment to slow down the rate of increase. So we would pay for nutritional counseling. We'd pay for a whole host of things that would be appropriate services to slow down the rate of progression through a chronic condition.

At our heart, our business is today managing that.

SEN. HARKIN: So that would be a minimum benefit in every one of your policies?


SEN. HARKIN: Smoking cessation, anything that's on the U.S. Preventative Health Task Force, the A or B?

MR. WILLIAMS: Yes, we would typically cover. I mean, there'd be rare exceptions, but, I mean, just to be clear I'd easily -- just sitting here today I'd say 85, 90 percent would easily, easily cover everything.

SEN. HARKIN: Right now only 7 percent of employers offer wellness and prevention programs to their employees -- 7 percent in the United States. Seven percent offer some form of wellness and prevention programs to their employees. So we've got a long way to go to get business.

Now again, we can figure that one out with tax incentives and things like that. That's not a heavy lift. We can figure that one out.

I still wonder about getting up front on the prevention side, because a lot of what you're dealing with in insurance is the result of something that happens before insurance ever kicks in.

For example, Mr. Williams and Ms. Ignagni, I mean, representing the two insurance industries here, you should be in the forefront of the fight to get sugary sodas out of our schools --


SEN. HARKIN: -- and junk food out of our schools and getting kids exercise in schools. You know? You've got to be in the forefront of that. You know, because kids learn their bad habits there.

What do we say to our kids when they go to school and they see soda machines and vending machines and all the junk food? What message are we sending them, you know? That's okay, fine, you go ahead and do that.

And again, this is not in your insurance realm, but it would seem to me as insurance companies you ought to be in that battle, in that fight to have better -- and also advertising to kids. Right now a kid, a child -- I'm a little off here now, between seven and 12, somewhere in that neighborhood, five to 12 -- sees an average of I think it's pretty close to 20, maybe -- in the thousands of ads on TV every year, okay? It's in the several thousands of ads they see every year for food, just food ads. How many of those ads are for fruits and vegetables and good eating and nutrition? None of them. They're all for sugar, starches, sodium, things that just lead to bad habits.

Well, you know, if we don't correct that, we're mopping the floor. And your insurance company's paying for mopping the floor, and I as a policyholder, I'm paying more for mopping the floor and I don't want to pay any more for that.

So I just urge you to get engaged in that now. Now, I didn't mean to give a speech on that, but every one of you mentioned prevention and wellness as part of this battle. Well, it seems to me we've got to do both. We've got to figure out how the insurance companies handle that later on and then how we move up forward and start early, early programs -- early programs.

And I don't know how insurance gets involved in that. You've just got to do it as a public policy thing. Well, maybe as a bottom line -- looking ahead it would be a bottom-line benefit for you if less people became obese or less people smoked and less people had chronic illnesses. It would be better for your bottom line, too, I guess, now that I think about it.

Let me ask one question. My time is running. I want to ask about a public plan. I think Mr. Brown, Senator Brown, brought it up.

Can a public plan coexist with private insurance plans? That seems to be a question I'm getting all the time. Can we have a health reform that has all these private plans and then have a public plan?

MR. WILLIAMS: Yeah. I would --

SEN. HARKIN: What do you think? I don't know.

MR. WILLIAMS: My opinion is no, it cannot.

SEN. HARKIN: It cannot.

MR. WILLIAMS: That the public plan Medicare does not negotiate. I've not yet met a physician who's negotiated with Medicare or negotiated -- or a hospital that's negotiated with Medicare. It sets a market rate and that's the rate.

It's extremely difficult for any one entity to be both the referee and a player in the game, and I think that there are many opportunities to improve the market by having the federal government play a role in the context of regulator and referee, which we've talked about extensively today.

I think that the problem we're trying to solve, which is making certain that everyone has access to health care services, can be addressed through the guarantee issue, no pre-existing exclusions, and some of the other reforms that we are describing.

I also believe that when we look at why private insurance costs so much we must confront the data I've seen that suggests that private employers are paying $90 billion more than they would otherwise pay because of the cost shift from Medicare to the private sector.

And so to the extent that we create a public plan that exacerbates the cost shift, we are on the slippery slope and I would say it probably would have been greased to accelerate our momentum toward a single-payer system.

I believe that the innovation that the private sector represents is extremely important. I think we have 177 million people in the sector that's working well. And I think if we can address the limitations we have to make certain that everyone has access to health care without pre-existing conditions and that we're not looking at health status as a means of rating that we can solve the problem in a way that would address the underlying issues.

SEN. HARKIN: Ms. Trautwein, do you have -- I'm just going to go down the line -- do you have any views on that?


I would just add to that and I also don't think that it is possible for a public and private sector to compete on a level playing field. I don't see any way that that's possible given the non-rate negotiation that Ron was talking about.

And I think when you don't have a level playing field what happens is one entity or the other is selected against, so I suppose the public program could be set up so that it gets all the bad selection, but more likely what's going to happen is, as Ron said, the private programs will be selected against even more than they are today, and the cost shifting would be exacerbated even more than it already is.

And I just think that's a recipe for disaster.

SEN. HARKIN: Ms. Pollitz?

MS. POLLITZ: Private health insurance and public plans co-exist today. Almost half of our health care spending is covered by public programs today.

When you talk about the cost shift, we have had to develop public programs because private insurance won't take care of people who are vulnerable. That's why we created the Medicare program, because private insurance wasn't taking care of people who were elderly or disabled or when their kidneys failed or when they got ALS, so we had to create a public program for that.

Two-thirds of the states have high-risk pools.

SEN. HARKIN: I'm sorry, say that again.

MS. POLLITZ: Two-thirds of the states have high-risk pools -- public plans -- when private insurance won't take care of people, won't cover them because they're uninsurable. You know, we've come up with concept of uninsurable, so we had to create public plans to take care of that.

Our latest eligibility category for the Medicaid program was underinsured women who have breast and cervical cancer. That is now a reason that you can get into the Medicaid program to get treatment, because the private sector isn't providing good coverage that takes care of what people need.

So of course they can co-exist; they do co-exist. And the cost shift overwhelmingly goes in the direction of the public plans. They do get -- they get all the expensive, vulnerable cases that private insurance won't take care of.

Now, granted, as Len said, we need to change the business model and change the way markets compete so that we can try to get private insurers to begin for the first time to compete to take care of people when they're sick and not just to avoid them. But I think given that the track record on that is pretty sparse that it is very helpful to have a public plan that you create for that very purpose. It cues the market. It says this is how we want -- this is the kind of behavior we want.

And you can charter that plan so that it doesn't just compete.

It certainly won't compete to maximize profits, but you can charter that plan to be an innovator, not to crowd out other private sector innovations but to be, you know -- public plans brought us DRGs and RBRVS and, you know, a lot of the innovations that we have in payment that have been widely adopted by private carriers. A public plan can do that and can be tasked in its charter with sharing what it learns and what it gains from that investment and not just, you know, not just trying to keep all those secrets for itself. I think it's absolutely essential.

SEN. HARKIN: Very good.

MS. IGNAGNI: Senator, we started our work from the proposition that the status quo was not acceptable. Everything we have proposed today and all the work we've done over the last two years is designed to change the market as it exists today. So we hope that you don't make judgments about what is the case today and what is to be the case tomorrow based on what are the rules today.

If we get everyone in, we can change the system dramatically to guarantee issue, to deal with the health status rating, to make the system more transparent and consistent across 50 states, and to create the kind of system that we believe the American people want.

To have a system, we do have a significant amount of cost shifting. We've provided some data -- based on California, (which is ?) the best data system in the country -- that shows you real cost shifting as government continues to underpay both in Medicaid as well as Medicare. So this is a very significant issue in terms of ever establishing a level playing field.

Secondly, all of the work that's being done in disease management, care coordination, medical homes that are working right now, pay for performance, upside, downsides and real measurement to actually do it in the way that all of you have suggested, all of that's being done and pioneered in the private sector.

We have data that's beginning to come in. It's very impressive. It's going to be shared. It'll be researched. It'll be third-party verified. So we have a lot to report about what's happening.

But clearly, the market today doesn't work because we don't have everyone in, and everything that is now in existence in terms of the regulatory structure works through that prism. When you change that and you create subsidies, there are a package of things you can do that will change everything. So what we have done is propose an aggressive system of government regulation that would supervise private sector competition and the competition that I think the people want.

MR. NICHOLS: Senator, yes, great question. I would say in some ways it's sort of the question of the week or month, at least.

SEN. HARKIN: Oh, yeah.

MR. NICHOLS: And I would say there really are two ways to start answering it.

The first is, to build on what Karen just said, the market is broken now. It's not working. And the consequence of that is that a lot of people have lost their trust. They've lost their trust in our ability to change the rules in such a way that all insurers will behave the way most of us think they would if you changed the rules. But that lack of trust is real and that need for, if you will, reassurance of some other kind of plan being available is a real profound, I would say, demand out there.

The second thing that we need to keep in mind is that if we just decide to put everybody into Medicare except for the private plans that would survive for maybe three years, I'll give Ron that, we're going to end up with a system that is basically going to be run from Washington and Baltimore. I don't think many of us are in favor of that either.

So what I would propose is you think about a public plan model more like what state employees do. Maybe we should ask Senator Hagan how it worked down there in North Carolina. But in general states, 34 of them today, decided to have a self-funded plan for which the state bears the insurance risk. That is to say, the state has appointed the leaders of the plan. They don't profit in anyway from the hint of denying care. They can't.

SEN. HARKIN: Thirty-four states you said?

MR. NICHOLS: Thirty-four, yes, sir. We can give you names and so forth.

And what they do with that plan, sir, is they let it compete with the private insurance industry. And in most cases where they've been doing this, they've been doing it more than 15 years. I'm not making this up. This has been going on for a long time.

So what's the deal? The deal is they wanted a plan where they had a -- basically it's typically a PPO-type arrangement, larger providers. They typically hire a private insurer to process claims and negotiate contracts with the providers, so they've got a big network. And they compete head to head on a fairly level playing field.

Now, it turns out -- we wrote a paper just last week and we'd be glad to send it to you and talk with you about it that would outline kind of how you could do this. We would suggest even stronger firewalls between the people who run the new marketplace and the people who run the plan, but the point is these states have been doing it without the kind of firewalls we would recommend you consider and still it functions effectively and has led to, in many cases, better performance in that part of the insurance market than any other part of a lot of states.

So I do think there's a model between Medicare and nothing that could get us where we need to be.

MS. BAICKER: Very briefly, I agree that in theory there could be great gains to having a public plan. I worry that in practice one ends up doing more harm than good, so it very much depends on the implementation details.

With your indulgence, just one sentence or two on your last question about why we don't see more investment in prevention and wellness by insurers. I think there's an upstream problem and a downstream problem, that as people age onto Medicare, the problems that they develop in middle age they bring with them to another insurer, so private insurers may not have the incentives to invest in wellness when the costs or benefits accrue much further down the line.

Similarly, a lot of the problems that private insurers inherit happened at a time way before they had any control over what was going on and that is a key case for public policy intervention, that when we're talking about health reform -- not just health insurance reform but health reform to get all Americans access to better health through a lifetime -- that has to be investment in wellness in the availability of healthy foods. If you go to poor neighborhoods, there aren't supermarkets in a lot of places and that's a matter of public policy. There aren't green spaces to exercise in. That's a matter of public policy.

So I think we have to look at health reform as a much broader endeavor, and that may be much more cost-effective than anything we can do within the health care or health insurance system.


MS. PRAEGER: Thank you. And I just have to comment on the supermarket.

If you go to a supermarket in an affluent neighborhood, the fresh produce is like you're in an art museum. (Laughter.) It looks gorgeous. It's beautiful. It's perfect. And if you go into low- income neighborhoods, if they have fresh produce at all it doesn't look very good and it's kind of expensive. So it's no wonder the diet issue is a problem.

The public plan -- and I've read Dr. Nichols' report; it's a good read and a fast read, and I think he makes some very good points --

SEN. HARKIN: You mean we could probably understand it? (Laughter.)

MS. PRAEGER: Well, I could, so I -- yeah. (Laughter.


But the public plan, if it's competing on a level playing field with the private marketplace, I think there can be some benefits to it. But I think first you need to make sure that that public plan is charging a premium that's sufficient to pay the claims, and that's critically important for the long-term viability and for the competitiveness of it.

It should -- the public plan should comply with all of the state regulations that are in force in that state where that public plan is offered, and Kansas is a state that has a state-run -- state public plan for its state employees and it does work side by side with the private market plans. And then the payment system should be based on a negotiation and not just dictated that this is what providers will be paid.

So if you have equal rules and are treating the public plan the same as the private plan, it can help drive market changes because of the ability to perhaps bring some standards across the states, and I think eventually there are areas where standards set at the federal level are pretty important.

Some of the things that we've done through state regulation that we're advocating should happen in all states are things that would address some of the administrative costs that Senator Hagan referred to a few minutes ago. Utilization review ought to be standardized, and we've worked with our health insurance plans to get model legislation drafted so that utilization review is handled in the same way so that companies don't have to comply with different rules in different states.

External review: same.

Rate and form filing: We have a system for electronic rate and form filing through our national association and that needs to be extended to health insurance as well, so uniform standards.

So there are a lot of things that the states are working on that could benefit and inform and perhaps lead to greater uniformity by those things being adopted at the federal level.

SEN. BINGAMAN: Senator Casey's the only one who hasn't had a chance to ask some questions. Go ahead.

SEN. ROBERT P. CASEY JR. (D-PA): Thank you, Senator Bingaman. I appreciate it.

And it was interesting to listen to that line of questioning that Senator Harkin was propounding to the witnesses. I appreciate that. Whenever Senator Harkin's speaking, we listen and we learn.

SEN. HARKIN: Thank you.

SEN. CASEY: He's got a lot of wisdom.

And I have you for the next two -- no, I'm only kidding -- I was going to say two hours. (Laughs.) I've got -- we've got some time here.

I wanted to pick up -- I'm serious about one of the lines of questioning that Senator Harkin focused on. I'll deal with two things: One is the question of what we're going to do going forward on individual and -- the individual market and small-group market, but before I get to that I wanted to get back to prevention because he asked some important questions.

And I guess, Dr. Baicker, I wanted to start with you. So many Americans I think today understand what we're talking about here when we talk about prevention and wellness. They get it. We may not practice it enough. The statistic about 7 percent of employers having it in place -- even if that were tripled, it wouldn't be enough. So I think people understand it, but they also understand that we're not there yet.

Tell me two things, if you can -- and I can ask anyone else to chime in -- what are the strategies on prevention and wellness that we know work, that it's irrefutable that the strategy works? And secondly, tell me the mechanics of getting there. How do we -- it's great to have something that works; we can point to programs that work; we can point to strategies that work and a whole series of, whether it's health care or other parts of our economy, but you have to have -- we have put in place a strategy that we know will work. We also have to have the mechanics to make sure it gets implemented so that it actually will work and not just theoretically works.

But tell us about that. Tell us what we know that's -- not that's a Democratic idea or a Republican idea -- tell me what we know about the consensus of what works strategically for prevention and wellness.

MS. BAICKER: That's a great question and I wish I could give you a complete answer, but I'm not sure we have a complete answer. I'll give you my best answer.

They --

SEN. CASEY: In other words -- let me just interrupt for one second. If you had a magic wand and you had total control over what the U.S. Senate does on health care, what are the three things you'd do on prevention and wellness? (Laughter.) What would you put in the statute?

MS. BAICKER: (Laughs.) You're going to want to take the wand back. (Laughter.)

SEN. CASEY: Give it a try. (Laughter.) This is not a real formal hearing; give it a try.

MS. BAICKER: I know there's no wand.

I would like to un-bundle the idea of, you know, prevention or wellness as a monolithic thing because I think there are many different things with different implications for cost and effectiveness that frequently get bundled up together and I think that damages the debate.


MS. BAICKER: We talk a lot about should preventive care be covered, should preventive care have no co-payments, shouldn't we invest more in preventive care. By and large, preventive care does not save money. There are lots of chunks of preventive care that are cost-effective, meaning you spend some money and you get a lot of health for it. The best, most cost-effective items in what we generally call preventive care do save a little bit of money -- flu shots for toddlers. There's some interventions that, when you spend money on them, you actually reduce health care spending over the short run, but they're very few.

SEN. CASEY: Let me stop you there for a second.

Tell me about the ones that preventive strategies that are helpful to the individual but don't save money.

MS. BAICKER: So there are -- and there's a great article on this in The New England Journal of Medicine --

SEN. CASEY: It's still a good idea to do them, but, yeah.

MS. BAICKER: -- that I'd love to send your way, not authored by me. There are a chunk of tests that yield life savings at a reasonable cost, so the metric that I'm using is how much does it cost to save a life year?

For the most cost-effective things -- flu shots, you actually save money and save a life year. Then there's a chunk of things that cost money but buy you life years at a very reasonable rate, at a rate that we think boy, that's worth the money spent on it, instead of spending it on other things besides health care. So things like, you know, screening people who are at risk of hypertension or who are at risk of diabetes for other complications.

Now, that same screening procedure that's done on a person who has risk factors, if instead you do that on a much older person or a person without those risk factors, it becomes cost-ineffective. So the very same procedure is cost-effective for some people and not cost-effective for others based on the underlying risk, based on the individual circumstances.

So some of the innovation that Mr. Williams was talking about at Aetna is how do you tailor your insurance design to promote the kind of consumption that's high value while not promoting the kind of consumption that's low value? And that's tricky when the same procedure sometimes falls into one category, sometimes falls into the other.

Now, there's some procedures that are almost never cost saving and those -- or never cost-effective -- that are still preventive, but they're tests that really yield very low returns in terms of health. Those you probably don't even want to think of as preventive care.

How do you get there for preventive care -- and then I'll do a quick recap on wellness -- on preventive care, value-based insurance design is one promising angle where you pay people to get the care that is of high value and you charge much higher co-payments for the care that's of lower value. And lots of things are going to fall differentially along that spectrum based on the individual patient's risk characteristics.

That makes for a very tricky contract, and the logistics of how you write that down in a way that promotes stretching our health care dollars as far as possible while not being discriminatory or unenforceable or tricking people into thinking that they're getting protections when they aren't, that's an important regulatory question.

On the wellness side of things, I think the reason we're seeing a rising role of employers in that market where you would naturally think why aren't the insurers doing this is that employers often have a longer-run relationship with their employees than insurers have with their covered lives. If you're going to be at an employer for a decade, your health and productivity matters more to that employer than it does to the insurer when you might only be in their plan for a few years. Employers also accrue some of the benefits of having you be more productive in terms of being a more productive worker.

So we'd like to think that individuals should just do this on their own for their own health, but there are all sorts of barriers to individuals being able to successfully implement a lifelong wellness program, where an employer might be able to step in with an environment that promotes it eight hours a day instead of the few interactions that you have with your insurer or even with your physician.

So what works on the wellness front, evidence is still coming in on that. But I think there's strong evidence that it matters a lot that there be day-in day-out enforcement of health behaviors, reinforcement of good health behaviors. And the workplace is one place for that. Communities are another place, and you want integration of community efforts and employer efforts, and again, that's a matter of public policy, not one that I think insurers can implement on their own.

SEN. CASEY: Let me stop you there for a second. I'm going to put you on the spot with regard to employers.

Give us a large employer example of the strategy just on wellness that's working. Do you want --

MS. BAICKER: I'm hesitant to name a particular employer, but -- (laughs) -- Len says Safeway. (Laughs.) But there are --

SEN. CASEY: What do you say?

MR. NICHOLS: Pitney-Bowes.

MS. BAICKER: That's another good example. There are --

SEN. CASEY: Tell me what they do.

In other words, around here there aren't always a lot of original ideas in Washington. We borrow all the time. And there's nothing wrong with being a copycat if it's a good idea.

Tell me about -- if you don't want to specify a company, tell me what are the elements that are in place for those big companies that we should put in the bill?

MS. BAICKER: Those are two different questions and I think it's a key distinction.


MS. BAICKER: The things that seem to work are highly integrated efforts where it's not just a class once a week or once a month. It's not a bonus at the end of the quarter if you've reached a goal. It's every day at lunch there's a class. Every morning there is stretching exercises. You have time off from work to participate in those activities. The employer provides --

SEN. CASEY: Lots of opportunities.

MS. BAICKER: -- you know, so there -- it's an environment. It's not just a limited program.

Now, those are the things that work.

SEN. CASEY: A culture, right?

MS. BAICKER: I hesitate to say that you can legislate a culture -- (laughs) -- that way. I don't know how you'd write down a bill that promoted that kind of culture without being so prescriptive that you shut down the innovation that you're trying to foster.

SEN. CASEY: Good point. Okay.

Yes? And we have others.

MS. POLLITZ: I would just add I think an investment in public health --

SEN. CASEY: Pull the mike in.

MS. POLLITZ: -- an investment in public health is so important. That tens of billions of dollars that you just invested in IT, you should at least match that for new investment in public health.

Prevention may not score savings, but public health does save and we under-invest in public health more than just about any other developed nation. The root cause of so much of our health care spending is in junk food, as Senator Harkin said, gun violence, speed limits, people who don't wear helmets, lack of family planning, food safety problems. I mean, I'm not buying peanut butter still.

So, you know, we need to invest in public health in a big way. And with Senator Harkin here -- I think you're still on Approps, right, so you can -- (laughs) -- authorize the spending here and send him next door to make the money available in the budget.

But we do under-invest. And I know. I know you're a champion, Senator, of our public health service agencies. And I know they always eat last at the trough after everybody else comes in. But we need to stop that. And that is such a cost-effective investment and it will just embrace all of these other things that we're talking about. I just think that has to be a priority in this legislation.

SEN. CASEY: I want to run -- I want to go to the other question, but anyone else have anything on --

MR. WILLIAMS: Yeah, just quickly.

SEN. CASEY: Mr. Williams, you've been dealing with this at the insurance company level.

MR. WILLIAMS: We deal with it quite extensively, and I think that the large employers we work with, which I described earlier -- it's two-thirds of our almost 19 million medical members -- are very focused on this fundamentally as a productivity issue in the context of their employees. Smoking cessation is absolutely critical.

I think the other area that we haven't talked about which I think was addressed through the mental health parity bill is the under- treatment of depression and being certain that the whole issue of depression is thought about holistically and that we don't send the person over here for their medical care and other there for their behavioral health, but it's thought about holistically. And the person who has a heart attack is screened for depression because they may very well be depressed. They might not take their medications, they might not engage in their rehabilitation, and therefore their recovery is prolonged.

So I think that's a huge area.


MS. IGNAGNI: And, Senator, just a footnote on that. Fifteen years ago there was a lot of discussion about managing care. It went out of favor but the concept -- we threw the baby out with the bathwater. And clearly over the last 15 years, our plans have been reinventing the tools. And now care management is about doctor to doctor, using specialty society guidelines, best practice, et cetera.

We are about to issue a study on disease management and care coordination for Medicare Advantage participants, many in your area, and we can show a reduction, significant reductions, because of disease management in ER usage, in days per thousand. So as Mr. Williams said, there are phases of intervention -- early, middle and late -- but if you get the chronically ill organized into care systems that are supported by physicians, organized by physicians, you can see some major implications here that are quite productive.

If you marry that with the kind of public health investment that Ms. Pollitz is talking about, I think particularly in the area of obesity -- we attacked smoking in a very significant area a number of decades ago; the surgeon general stood up before the American people and said we have to attack this -- similarly for obesity because it runs through every chronic illness.

The area of disparities, there are a number of things that we put in our testimony that Congress can do now in addition to what's being done in the private sector. Our health plans are monitoring disparities. In some cases we can't collect data; there are barriers at the state level from doing that. That should be addressed. We now can target early individuals who are at risk of certain things.

So we can go on and on, but there is quite a body of evidence and experience now to really begin to answer your question of where do we intervene, how do we do it, and how do we do it in the way that is most effective, cost-efficient and provides the highest value?

SEN. CASEY: Thank you.

I know we're running out of time. Senator Harkin may say we're out of time. (Laughs.) He's in charge now; I have to be cognizant of that, but just a few more moments.

I wanted to -- and at the risk of being redundant here because I know I missed the first 45 minutes or so -- with regard to one topic and one example, the topic is the individual and small-group market for insurance and the example is Massachusetts.

What, if anything, have we learned from their experience with the exchange concept and -- well, A, what have we learned and, B, no matter what we've learned, can we apply that lesson to what we do in a federal or a national sense?

Anybody want to try to take that? Doctor?

MR. NICHOLS: Senator, I would certainly start by saying what we learned is you can achieve bipartisan agreement on how to reform a health system.

Let's go back to Governor Romney, who was at the time a Republican presidential aspirant willing to willing to use the word "all." And you had a Democratic legislature -- maybe among the bluest on the planet -- willing to accept the world "limit." That was an appropriation bill, not an entitlement.

So what you had there, I think, is a very good lesson for how you all can move forward.

SEN. CASEY: Good point.

MR. NICHOLS: Second, I would say what they've done technically is they were -- believe it or not, even though it was Massachusetts -- they were humble. They didn't try to do it all in 60 days. They tried to do it all over a couple of years. They phased it in.

And they were very intentional about signaling where they were going -- we are going to essentially eventually meld the individual and small-group markets; we're going to build on what we've got now; we're not going to blow up the employer system; we're not going to do away with Medicaid -- in fact, we're going to strengthen both. But we're going to move into a world where we absolutely outlaw discrimination based on health. And we encourage people to buy and we're going to give them incentives to buy. We're going to give them subsidies to buy, but we're going to require them to fulfill their part of the bargain, which is to make sure they achieve the level of coverage so that they can get the care they need so there are no more free riders.

They exempted people they thought couldn't afford it, so they were mindful of the affordability. That's a very small number of Massachusetts, but it's nonetheless a very important principle.

And then I would say the final thing they did was they made it clear that we're going to have a penalty on not buying coverage, but we're going to phase it in. So we're going to live -- we're going to take Janet's point. You can't move there in a very fast way. You've got to be cognizant of human nature. At the same time, made it very clear where they're going, and I think it's a very interesting model.

SEN. CASEY: So you think it's readily applicable to what we're trying to do here?

MR. NICHOLS: I think all of those things are readily applicable.

The details will certainly have to be different. Massachusetts is not Utah or Pennsylvania or Iowa, so you're going to have a little bit of different things on the ground in those places. But at a minimum, that structure is a very good structure to go with, yes.

SEN. CASEY: Thank you. Anybody else?

MS. POLLITZ: The health care costs still will need to be addressed, because I do think it is becoming increasingly more expensive. So I think any reform, again, has to address the underlying increasing cost of just the health care delivery system.

And I want to re-emphasize also the point about public health. I think public health is a critical component. We all have the opportunity in our states to advocate for clean water, clean air, healthy schools, healthy environments for our schools. We need to partner with the schools to get junk food out of school cafeterias and out of the vending machines. There are just a lot of things that we can do from a public health standpoint that I think will serve us well for the next several generations.

SEN. CASEY: I know we've got to wrap up. Anyone else who didn't have a chance or -- yes.

MS. IGNAGNI: Senator, I think that I agree with my colleagues, the observations they've made.

I do think this point about proceeding to line up cost containment and universal access together, I don't think they did enough in Massachusetts early on. And I think that most people there would agree with that now and they're trying to catch up and figure out what to do. So that's point number one. This is the hardest thing to do, to actually achieve consensus on cost containment.

The second thing is to the extent that you have the kinds of rules, aggressive rules and robust rules that everyone on the panel is talking about, to what extent do you need purchasing through a connector or is that connector there to supervise, provide information about plan selection, track subsidies, et cetera, et cetera, and I think there'll be a lot of important discussion around that principle.

SEN. CASEY: Well, unless anyone else -- oh --

MS. POLLITZ: I would just add -- I'm not sure if I'm disagree with Karen or I misheard her, but I agree that you need to address getting everybody coverage and addressing rising costs, but I wouldn't, I absolutely wouldn't urge that you wait to cover everybody until you figure it out, how to cover costs.

I think we've been doing that for decades and we need to cover everybody now because people are in need and we do need to figure out how to control costs, and I think, as Sandy Praeger said earlier, that will be easier to do once we've got everybody invested in the system.

SEN. CASEY: Well, thanks everyone.

I don't have the gavel near me, but I'm going to -- (laughter) -- bang the gavel. Hearing adjourned.

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