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Congress to Hold Hearing on Obamacare; Secretary Sebelius Appears Before Congress

Aired October 30, 2013 - 09:00   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.


MIKE LEAVITT, FMR. HEALTH AND HUMAN SERVICES SECY.: Well, let's just say I don't think that Secretary Sebelius made all those decisions to defer them. I think that was in large measure a decision made, I suspect, by the White House as they were navigating through an election at that point in time. And that was a political call they made and they're now making -- now having to deal with the consequence of that.

WOLF BLITZER, CNN ANCHOR: That's a pretty serious blunder. If it's done for political reasons -- when this is the signature achievement of President Obama, healthcare for everyone in the United States, something that officials in Washington have been working on for decades, they finally get it passed and you're saying for political reasons because of an election they were delaying certain critically important elements leading up to the release of this plan, is that what you're saying?

LEAVITT: Wolf, they will have to answer as to why those regulations weren't issued. But I think it's clear they had three years to do it. There was a period of time when nothing happened, at least nothing publicly happened. And those regulations -- decisions were made not to issue them and I think at the very root of this problem is the fact that they were very late in issuing the regulations that the contractors needed and those who had to respond to them needed in order to set the system up to work properly.

BLITZER: There you see she's now seated, Kathleen Sebelius, the former governor of Kansas, the secretary of Health and Human Services. Fred Upton, the chairman from Michigan, is about to hit the gavel and make sure that this hearing starts. He'll open up with a statement as I said, Henry Waxman who used to be the chairman of this committee, is always outspoken himself, he will have an opening statement, Marsha Blackburn, and then she will deliver her statement.

As we a wait, let's bring Brianna Keilar over at the White House. Even as she's testifying today, Brianna, the president is getting ready to deliver a major speech on this subject later today?

BRIANNA KEILAR, CNN WHITE HOUSE CORRESPONDENT: That's right. President Obama will be heading to Boston and I think what's really interesting about his trip there is he'll be delivering remarks, he'll be at Faneuil Hall, and there's a reason for that; that's because that is where Mitt Romney signed his healthcare reform or Massachusetts' healthcare reform program into law with Senator Kennedy standing by watching him. So it's a little bit of a statement as President Obama responds to some of the Republican criticism that he's also getting, and also he'll be contending obviously for headlines with his secretary.

BLITZER: Here is fred upton, chairman of the committee.

(BEGIN LIVE FEED)

REP. FRED UPTON, R-MICH., CHAIRMAN: Good morning.

The Energy and Commerce Committee welcomes the president's point person on health care, Secretary Sebelius, as part of our continuing oversight of the health care law.

And we look forward to a thoughtful conversation on a number of issues including transparency and fairness. Over the months leading up to October 1 launch, the secretary and her colleagues at HHS repeatedly looked us in the eye and testified that everything was on track. And despite the numerous red flags and lack of testing, they assured us that all systems were a go.

But something happened along the way. Either those officials did not know how bad the situation was, or they did not disclose it.

And, sadly, here we are now, five weeks into enrollment and the news seems to get worse by the day. Healthcare.gov was down last night at 5:00 p.m. It was also down on Monday, and it crashed last weekend.

And even this morning when we attempted to view the site before the hearing, we were hit with an error message.

But this is more than just a Web site problem. That was supposed to be the easy part, remember? Americans were assured that their experience would be similar to other online transactions, like purchasing a flight or ordering a pizza, and that their sensitive personal information would always be secure.

But, after more than three years to prepare, malfunctions have become the norm, and the administration has pivoted from saying they're on track to setting a new target date of November 30th.

And for those few Americans who have successfully applied, will the Web site glitches become provider glitches come January 1st?

Americans are scared and frustrated, and this situation should rise above politics. Many folks at home watching us today have spent hours or even days trying to sign up. They continue to take time away from work or loved ones, but have made little progress.

And soon they may worry about being on the wrong side of their government, facing potential penalties.

I recently spoke to a woman from Buchanan (ph), Michigan, who was excited to sign up, but has since become very disillusioned after spending hours on the phone and Web site with little success.

There are also millions of Americans coast to coast who no doubt believe that the president's repeated promises that if they liked their plan that they would be able to keep it, no matter what.

They are now receiving termination notices. And for those who lose their coverage, they, like -- they may be losing their faith in their government. Today's hearing is about fairness for the American people who are losing their coverage or seeing their premiums skyrocket as high as 400 percent.

This hearing is also about transparency. While the administration continues to boast the number of Americans that have applied, they intentionally withhold precise enrollment numbers.

Why? These numbers are critical to fully understand the status and gauging the progress of implementation.

Lead contractor, CGI, testified only last week that they had the data, but needed the administration's permission to release it.

We asked the secretary on October 8th for those figures, but we still have not received a response. We hope to get one today. The American people deserve answers as well as the peace of mind that promises will be kept. The secretary has an opportunity today to embrace transparency and start restoring the public's faith in the administration and the government.

I yield to my colleague, ranking member of the committee, Mr. Waxman.

REP. HENRY A. WAXMAN, D-CALIF., RANKING MEMBER: Thank you, Mr. Chairman.

I'm pleased Secretary Sebelius is here today. She's here to discuss the Affordable Care Act. Just like with Medicare Part D, the launch of the new Web site has not gone well. But, just like Medicare Part D, the early glitches in this rollout will soon be forgotten.

A lot of the discussion today will focus on that Web site. This is an important issue, and I want to learn what the secretary can tell us about the problems being experienced and how they will be fixed.

But we should keep this issue in perspective. The Affordable Care Act is working. It has been improving the health security of millions of Americans for the past three years.

Because of the Affordable Care Act, more than 7 million people on Medicare have saved more than $8 billion on their prescription drugs. More than 100 million Americans have access to free preventive coverage and no longer face lifetime limits on their coverage. Over 10 million Americans have received rebates from insurance companies.

And, finally, this January, the worst abuses of insurance industry will be halted. Never again will a family be denied coverage because their child has a chronic health condition. Never again will individuals see their premiums shoot up because they got sick or faced an unexpected medical expense. Never again will a woman have to pay twice as much as a man for the same insurance.

That is why allowing insurers to continue offering deficient plans next year is such a bad policy. The law says that all plans except those that were grandfathered in 2010 must meet the new consumer protection standards. If we don't enforce this policy, insurance companies can continue offering flimsy coverage that disappears when people actually need it, and no one should want that.

It is understandable that there will be a focus today on what isn't working, but we must also remember what is working. The health insurance plans that are being offered in the exchanges are good plans. Their premiums are much lower than expected. Sixty percent of the uninsured individuals shopping in the new marketplaces will be able to get coverage for less than $100 per month. Half of the young adults will be able to get coverage for less than $50 per month.

And since Congress adopted the Affordable Care Act, health care costs across the whole economy have grown at their lowest level in decades.

The success of the Affordable Care Act is due to the efforts of many people, but one individual more than any other is responsible for all the good that has been accomplished, and that is our witness today, Secretary Sebelius.

WAXMAN: So I would urge my colleagues to stop hyperventilating. The problems with healthcare.gov are unfortunate and we should investigate them, but they will be fixed. And then every American will have -- finally have access to affordable health insurance.

Thank you, Mr. Chairman.

UPTON: Thank you.

Before we swear in Secretary Sebelius, I want to clarify Energy and Commerce Committee practice for the swearing in of witnesses.

The committee typically has two types of hearings, oversight hearings and hearings that focus on legislation and policy.

Secretary Sebelius, for example, has testified previously before our committee to discuss issues related to the HHS budget or other policy matters. As is the case with all policy witnesses, Secretary Sebelius was not required to take an oath prior to testifying.

Today's hearing is different. It is an oversight hearing. It is a long standing committee practice to swear in all witnesses at oversight hearings whether they be private citizens or cabinet secretaries.

WAXMAN: Mr. Chairman, I thank you for your comments. And I just want to join you in simply explaining that it -- swearing in of the witness before an oversight committee hearing has always been under oath.

That is a standard procedure in this committee when we're conducting an oversight hearing, so it may seem strange to have the secretary of Health and Human Services have to be sworn in, but all witnesses in an oversight hearing are sworn in and that is our procedure.

UPTON: Thank you.

So I would now like to introduce our witness for today's hearing. The Honorable Kathleen Sebelius is the secretary of the Department of Health and Human Services. She was appointed to this position in April of 2009 and was sworn in as the 21st secretary on April 28th, 2009.

So I will now swear you in if you would rise. As Ranking Waxman and I just discussed, the committee is holding an investigative hearing and when doing so have had the practice of taking testimony under oath.

Do you have any objection to testifying under oath?

SEBELIUS: (Inaudible).

UPTON: And the chair now advises you that you are -- see -- I would now read you -- do you swear that the testimony you are about to give is the truth, the whole truth and nothing but the truth?

SEBELIUS: (Inaudible).

UPTON: You are now under oath and subject to penalties set forth in Title 18, Section 1001 of the U.S. Code. You may now give a five- minute summary of your written statement.

Welcome again and thank you for being here.

You got to use that mike. You don't know how many people want to hear you this morning.

(LAUGHTER)

KATHLEEN SEBELIUS, SECRETARY OF HEALTH AND HUMAN SERVICES: Thank you, Chairman Upton, Ranking Member Waxman, members of the committee.

I left my position as governor of Kansas 41/2 years ago for the opportunity to continue work I've been doing for most of my over 35 years of public service, to expand the opportunities for all Americans regardless of geography or gender or income to have affordable health coverage.

During my years as the state legislator, as an elected insurance commissioner, as head of the National Association of Insurance Commissioners and as a two-term governor and now as HHS secretary, I have worked on that effort that I care deeply about.

There are still millions of Americans who are uninsured as well as underinsured, people who have some coverage at some price for some illness but have no real protection from financial ruin and no real confidence they'll be able to take care of themselves and their families if they have an accident or an illness. And for them a new day has finally come.

In these early weeks, access to healthcare.gov has been a miserably frustrating experience for way too many Americans including many who have waited years, in some cases their entire lives for the security of health insurance. I am as frustrated and angry as anyone with the flawed launch of healthcare.gov.

So let me say directly to these Americans, you deserve better. I apologize. I'm accountable to you for fixing these problems. And I'm committed to earning your confidence back by fixing the site. We're working day and night and will continue until it's fixed. We've recently added new management talent, additional technical expertise and a new general contractor to identify, prioritize and manage fixes across the system in two broad categories: performance, which deals with speed and reliability and function, which deals with bugs and problems in the system.

Our extensive assessment has determined that healthcare.gov is fixable. And I want to just outline a couple of the improvements we've made to date.

We now have more users successfully creating accounts. We can process up to 17,000 account registrations per hour or nearly five per second.

Instead of some of the users seeing a blank screen at the end of the application process, they can now see whether they're eligible for financial assistance and make more informed decisions.

Because we've improved performance, customers can now shop for plans quickly; filtering plans takes seconds and not minutes. Users are getting fewer errors and time-out messages as they move through the application process and the system has been strengthened with double the size of servers, software that's better optimized and a high-capacity physical database which replaces a virtual system.

The chairman referred to outages this weekend and again yesterday. And I would suggest to the committee that if you read the statement of Verizon who hosts the cloud service, it is the Verizon server that failed, not healthcare.gov, and it affected not only HHS but other customers.

We still have a lot of work to do. We have a plan in place to address key outstanding issues. It includes fixing bugs in software that prevented it from working the way it's supposed to and refreshing the user experience so folks can navigate the site without encountering error messages, time out and slow response times.

And by the end of November, we're committed that the vast majority of users will be able to review their options, shop for plans and enroll in coverage without the problems way too many have being experiencing. But consumers are using the site every day and continue to do so. And problems are being solved. But we know that we don't have a fully functioning system that consumers need and deserve. We are still at the beginning of a six-month open enrollment which extends through the end of March and there's plenty of time to sign up.

And just to put it in perspective, the average open enrollment for an insurance plan is two to four weeks. The new marketplace has a 26-week open enrollment and those who enroll by December 15th will be able to access their benefits on day one.

Even with the unacceptable problems with healthcare.gov, which we are committed to fixing, the Affordable Care Act by any fair measure is working for millions of Americans who are benefiting from new health security, young adults, Americans living with pre-existing health conditions, seniors on Medicare.

Eighty-five percent of Americans who already have health coverage are protected with new rights and benefits.

The 15 percent of our neighbors and friends who are uninsured have affordable new options in a competitive market and cost growth for health care is lower than it's been in years. Millions of Americans are clearly eager to learn about their options and to finally achieve health security made possible by the Affordable Care Act.

And my commitment is to deliver on that promise.

Thank you, Mr. Chairman.

UPTON: Well, thank you very much.

Yes, if you -- the mike got pulled a little bit from you.

Yes, let's start this clock. Can you fix that? (Inaudible).

I appreciate you being here this morning and we've worked with our leadership to see that we don't have votes on the House floor this morning so we won't be interrupted.

I appreciate your time for sure and in an effort to allow every member to ask a question, we're going to be reducing the time for questions to be just four minutes, so hopefully we can get through all the members that are here. And I'm going to be pretty fast with the gavel, let me just say.

So we have got plenty of questions. So let's try and get through them.

(Inaudible).

You know, I think everyone in America remembers the president's words. If you like your health care plan, you can keep it, period. Under the Affordable Care Act insurance policies that were in effect on March 23rd, 2010, when the law was enacted, would be grandfathered. Then a few months later, despite the president's word, HHS helped promulgate a new reg that in your own review showed that it effectively could deny perhaps as many as more than 50 percent, maybe even higher, of those holding individual policies the right to renew their own insurance plan.

UPTON: And I would guess that there are a lot of us on this panel today that are hearing from angry and confused constituents who are now being forced to go onto an inept website, whether they like it or not, to shop for a new replacement policy. They're finding premiums often more than 100 percent what they were paying before, some even as high as 400 percent, as I've heard from, and rising deductibles as well.

So when was the president specifically informed of the regulation change? And if so, was it pointed out that this totally undermines his biggest selling point? And I would note, that on the screen, in a statement that he made more than three years after the regulation change was promulgated, the President said again, "So the first thing you need to know is this. If you already have health care, you don't have to do anything." So he's been on the same page from the very start, yet the regulations changed months after the bill was enacted that are now causing perhaps millions of Americans to be denied the ability to renew their individual coverage.

Why was that change made, and did the President know it?

SEBELIUS: Well Mr. Chairman, there was no change. The regulation involving grandfathered plans, which applied to both the employer market and the individual market indicated that if a plan that was in effect in March of 2010 stayed in effect without unduly burdening the consumer with reducing benefits and adding on huge costs, that plan would stay in effect and never have to comply with any of the regulations of the Affordable Care Act. That's what the grandfather clause said. The individual market which affects about 12 million Americans, about 5 percent of the market, people move in and out, they often have coverage for less than a year. A third of them have coverage for about six months, and if a plan was in place of March of 2010 and again, did not impose additional burdens on the consumer, they still have it. It's grandfathered in.

UPTON: But why not let the consumer decide whether they want to renew it or not? Why was -- why were regulations promulgated in the summer of 2010 that then undermined the ability for those folks to re- sign up, which is one of the reasons for the large number of cancellation notes?

(CROSSTALK)

SEBELIUS: And there were no regulations changed We outlined the grandfather policy so people could keep their own plan. We then began to implement the other features of the Affordable Care Act, so if someone is buying a brand new policy in the individual market today, or last week, they will have consumer protections for the first time. Many people in the under -- individual market are medically underwritten. That will be illegal. Many women are charged 50 percent more than men. That will be illegal. You cannot, again, eliminate someone because of a pre-existing health condition. You cannot dump someone out or lock someone out, so those provisions. But if again, a plan is in place, and was in place at the time that the President signed the bill and the consumer wants to keep the plan, those individuals are grandfathered in and that's happening across the country in the individual market.

UPTON: We're learning in fact that folks who did have a plan who liked it in fact are being told that it's canceled in the -- in the last -- my time is expired. Let me yield to the Ranking Member, Mr. Waxman for four minutes.

WAXMAN: Thank you Mr. Chairman. I have to smile at your line of questioning because everybody expected this hearing was about the website. That's all we've been hearing about is the website. But that's not the only complaint we've been hearing about since the Affordable Care Act was adopted. We were told by our Republican friends that millions of jobs would be lost and in fact, there have been a gain of 7 million jobs. They said that they -- the -- the cost for health care would skyrocket, and in fact, the opposite is true. They said there would be a massive shift to part-time jobs, and the evidence doesn't support that. They said tens of millions will lose their insurance, but in fact, everybody in this country has got to have access to health insurance because they won't be discriminated against. They said that it would explode the deficit, and yet all the reputable organizations like the Congressional Budget Office have told us that it's going to save us $100 billion over 10 years, so we've had a litany of objections for the Republicans about the Affordable Care Act which have driven them to such a frenzy they even closed the government.

So now we have you before the committee. And you're being asked, I suppose later you'll be asked about the website. But let me pursue this question about individuals who have gotten notices, that they're going to have their individual insurance policies canceled. They'll be able to get another plan, won't they?

SEBELIUS: Actually, it's the law that they must get another plan. Continuous coverage is part of the law.

WAXMAN: So the ...

(CROSSTALK)

SEBELIUS: That wasn't the case in the past.

WAXMAN: So the Affordable Care Act said we're going to end the worst abuses of insurance companies. We're going to create consumer protections in the marketplace that they will be able to buy a policy even if they've been sick in the past. That women won't be charged more than me. That we're not going to let insurance companies deny coverage because of pre-existing conditions, and we're not going to let them put these lifetime caps. And there'll be an essential benefit package, so you're not just buying some things and not having other things covered. You're going to have the minimum that everybody should have, prescription drugs, mental health coverage, doctors and hospitals. Are these important consumer protections?

SEBELIUS: Well I would say, Mr. Waxman, they're very important. As a former insurance commissioner, I can tell you that the individual market in Kansas and anywhere in the country has never had consumer protections. People are on their own. They could be locked out, priced out, dumped out, and that happens each and every day. So this will finally provide the kind of protections that we all enjoy in our health care plans, as part of a group, as part of a plan that has pre- negotiated benefits, we enjoy that kind of health security, and individuals in the buying insurance on their own, farm families, young adults have never had that kind of health security.

WAXMAN: Well now they're going to have this health security, and most of the plans, as I understand it, that -- that they're no longer going to be able to keep, don't meet all the standards of the law.

SEBELIUS: Again, I think you may have heard Pat Geraghty from Florida Blues who was on some of the Sunday shows and he talks about the fact that the Florida plans want to keep their customers. They have new plans to offer, they feel that a lot of people, and these are Mr. Geraghty's words, "will have a much better plan at a similar or lower cost. Fifty percent of these 11 to 12 million people qualify for a subsidy, quality for financial help purchasing insurance for the first time ever."

WAXMAN: The bottom line is that people with good coverage like Medicare, Medicaid, employer coverage, can keep that. People with grandfathered plans in the individual market will be able to keep it. But if an insurance company sold you a new modified health insurance policy after the date of the enactment that does not meet the law's standards, then those people will be able to go into the exchange and buy a real solid health insurance plan that won't discriminate against them or anybody else. I think that's a good result. I'm pleased with it, and I think most people will be as well.

UPTON: The gentleman's time has expired. The Chair would recognize the Vice Chair of the committee, Ms. Blackburn.

REP. MARSHA BLACKBURN, R-TENN.: Thank you, Mr. Chairman. Madam Secretary, during -- before, during and after the law was passed, the President kept saying, "if you like your health care plan, you can keep it," so is he keeping his promise?

SEBELIUS: Yes, he is.

BLACKBURN: OK. What do you say to the 300,000 people in Florida you just mentioned, or to the 28,000 in Tennessee that cannot get health insurance? Their plans are terminated. Is he keeping his promise to them?

SEBELIUS: Well first of all, Congresswoman, they can get health insurance. They must be offered new plans, new options either inside the marketplace, or if they don't qualify for a financial subsidy, they can shop in or out of the marketplace. (CROSSTALK)

BLACKBURN: But would you say to ...

(CROSSTALK)

SEBELIUS: They absolutely will have new coverage.

BLACKBURN: What would you say to NBC news who says, "Millions are going to lose their coverage?"

SEBELIUS: Well, in all deference to the press corps, many of whom are here today, I think it's -- it's important to be accurate about what is going on, and I would defer, again, to the President of the (inaudible) plan.

(CROSSTALK)

BLACKBURN: Reclaiming ...

(CROSSTALK)

SEBELIUS: (inaudible) ongoing coverage, they will be offered new plans.

(CROSSTALK)

BLACKBURN: Madam Secretary, let me tell you something.

(CROSSTALK)

SEBELIUS: Fifty percent of them in the market right now will -- will qualify for ...

(CROSSTALK)

BLACKBURN: What do you say to Mark and Lucinda in my district who had a plan, they liked it, it was affordable, but it is being terminated and now they do not have health insurance?

SEBELIUS: Insurance companies cancel individual policies year in and year out. They're a one-year contract with individuals. They are not lifetime plans, they are not an employer plan. Your constituents will have lots of options.

(CROSSTALK)

BLACKBURN: Let me -- let me move -- let me move on. It's what they wanted, and I will remind you, some people like to drive a Ford, not a Ferrari, and some people like to drink out of a red Solo cup and not a crystal stem. Your taking away their choice. Let's put the screen shot up. I want to go to the cost of the website and talk about the website. This is what is happening right now with this website. We've had somebody in the back trying to sign on. It is down. It is not working. Last week I asked for the cost from each of the contractors that were with us last week. So can you give me a ballpark on what you have spent on this website that does not work, that individuals cannot get to? What is your cost estimate?

SEBELIUS: So far, Congresswoman, we have spent about $118 million on the website itself, and about $56 million has been expended on other IT to support the web.

BLACKBURN: OK. Would you submit a detailed accounting of exactly what has been spent? And when do you expect constituents to stop getting these kind of error messages?

SEBELIUS: Again, I was with the -- I talked to the president of Verizon over the weekend on two occasions. Verizon hosts the cloud, which is not part of the website. It is a host for a number of websites. The Verizon system was taken down Saturday night into Sunday. It was down almost all day Sunday. They had an additional problem that they notified us about yesterday and it continues on. So I'd be happy to talk to the president of Verizon and get him to give you...

(CROSSTALK)