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Congress Holds a Hearing Regarding Obamacare

Aired October 30, 2013 - 09:30   ET


SECY. KATHLEEN SEBELIUS, HEALTH AND HUMAN SERVICES: 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...


REP. MARSHA BLACKBURN, R-TENN.: OK, let me -- let me come back to that, because I want to get to this issue of exactly who is in charge of this project. Because you're now blaming it on the contractors and saying it's Verizon's fault.

So let me ask you this: Did you ever look at outsourcing the role of the system integrator -- and obviously you did not from the contractors that we had last week -- you all -- they had several different people, whether it was you or Gary Cohen or Michelle Snyder or Henry Chao, that they thought were in charge. So who is responsible for overseeing this project? Is it you or your designee?

SEBELIUS: Let me be clear, I'm not pointing fingers at Verizon. I'm trying to explain the way the site operates. We are -- we own the site. The site has had serious problems. I...


BLACKBURN: Who is in charge, Madam Secretary?

SEBELIUS: The person now in charge as an integrator is QSSI, one of our...

BLACKBURN: Who was in charge as it was being built?


SEBELIUS: ... CMS was in charge up...


BLACKBURN: At that team, who is the individual...

SEBELIUS: Michelle Snyder is...

BLACKBURN: Michelle Snyder is the one responsible for this debacle?

SEBELIUS: Well, excuse me, Congresswoman. Michelle Snyder is not responsible for the debacle. Hold me accountable for the debacle. I'm responsible.

BLACKBURN: Thank you. I yield back.

REP. FRED UPTON, R-MICH., CHAIRMAN: Chair would recognize Mr. Dingell from the great state of Michigan.

REP. JOHN D. DINGELL, D-MICH.: Thank you for your courtesy.

I have a few questions I'll be asking you on behalf of Congresswoman Shea-Porter, but I'll do that by writing. I ask unanimous consent that I be permitted to revise and extend my remarks.

UPTON: Without objection.

DINGELL: Mr. Chairman, I would like to begin by thanking you; welcoming the secretary to a room in which her distinguished father, former governor of Ohio, served for so many years.

I begin my questions by quoting from an expert for whom I have enormous respect. He said as follows: "As I mentioned earlier, the new benefits and its implementation are hardly perfect. Rather than trying to scare and confuse seniors, I would hope that we could work together as we go through the implementation phase to find out what is wrong with the program, and if we can make some changes to fix it.

"Let us do it, and let us do it in a bipartisan fashion. It is too big a program and is too important to too many people to do that. But having said that, it does appear that it is working. Let us admit it, you know, and not keep beating a dead horse."

My beloved friend, Mr. Barton -- who I think gave us the beginning of our efforts today.

Madam Secretary, I've seen reports that consumers receiving plan cancellation notices from their insurance companies saying that plans are no longer available. Does the ACA require insurance companies to discontinue the plans that people had when the law was passed, yes or no?

SEBELIUS: Not when the law was passed if the plans have not changed, no, sir.

(CROSSTALK) SEBELIUS: That's the grandfather clause.

DINGELL: Now, that's because the plans existed prior to the passage of the law are grandfathered in, as you have said?

SEBELIUS: That's correct.

DINGELL: So if an insurance company is no longer offering a certain plan, that's because that insurance company made a decision to change their policies, and that caused them to take away the grandfather status from their insurance purchasers, is that right?

SEBELIUS: That's correct.

DINGELL: Now, Madam Secretary, I want you to submit for the record a statement of what it is we can do about insurance companies that run around canceling the policies of their people. And I don't have time to get -- get the answer, but I want to get a very clear statement from you as to what you can do so we can take some skin off some folks that have it coming.


Now, Madam Secretary, it's my understanding that these decisions of a business character are most common in the individual insurance market, and that much turnover already exists and existed prior to the enactment of the legislation.

SEBELIUS: That's correct.

DINGELL: Is that correct?

SEBELIUS: Yes, sir.

DINGELL: Is it correct that 35 percent to 67 percent (ph) of the enrollees in the individual market leave their plan after one year for different reasons?

SEBELIUS: A third are in about less than six months in the individual market and over 50 percent are in for less than a year, yes, sir.

DINGELL: Now, in the cancellation letters, which move around from the insurance companies, some insurance companies are suggesting an alternative plan at a higher price. Do they have the right to do that?

SEBELIUS: Well, they have a right to do that, sir, but consumers have a right to shop anywhere to compare plans and they have choices now that they've never had before -- and some financial assistance...

DINGELL: And they have no right...

SEBELIUS: ... coming their way for about 50 percent of those people.

DINGELL: ... to enforce that demand on the insurance company?

SEBELIUS: Oh, absolutely not. No one is rolled over into a plan. And in fact, individuals for the first time ever will have the ability to compare plans, to shop, and to make a choice inside or outside the marketplace. DINGELL: Looks to me like the insurance companies are trying to inflict on their -- on their customers the view that this is their right and that this is the only option available to them, is that correct?

SEBELIUS: Well, I -- I think that insurance companies would like to keep their customers. Having said that, customers for the first time have a lot of choices, because they can't be locked out...


DINGELL: But the insurance companies have no right to enforce that view on the customer?

SEBELIUS: There is no rule that says you have to stay with your company or you have to be rolled over...


DINGELL: And you don't...

UPTON: Gentleman's time is expired.


DINGELL: ... when they come forward and tell you that you've got to buy a particular policy, is that right?

SEBELIUS: Absolutely.

UPTON: Gentleman's time is expired.

Chair would recognize the gentleman from Texas, Mr. Barton.

BARTON: Thank you, Mr. Chairman.

Before I ask my questions, we have a former member of the committee on the Democrat side from the great state of Kansas in the audience, Mr. Slattery. And we are -- we're glad to have you.

And Madam Secretary, we're glad to have you too.

SEBELIUS: Thank you, sir.

REP. JOE L. BARTON, R-TEXAS: There is a famous movie called the "Wizard of Oz," and in the "Wizard of Oz" there is a great line. Dorothy at some point in the movie turns to her little dog Toto and says, "Toto, we're not in Kansas anymore."

Well, Madam Secretary, while you're from Kansas, we're not in Kansas anymore. Some might say that we are actually in the "Wizard of Oz" land given the parallel universes we appear to be habitating.

Mr. Waxman and most of those on the Democrat side think things are great. You apparently, although you did apologize and you have said it's a debacle, you also seem to think that the Affordable Care Act is great. Well, myself and others have a different view. Ultimately the American people will decide.

Now, last week when the contractors were here, I focused my attention on the apparent lack of privacy in the website. If we'll put up the first slide that I had last week -- if we can.

This -- this is what's public, Madam Secretary. And it's -- it's basically a disclaimer that says that any unauthorized attempt to upload information or change information on the website is prohibited. It really doesn't say anything about privacy. But you do have to accept that in order to go forward with the application.

The next slide shows what's not public. And this is in the source code. We tried to determine this morning if it was still in the source code, but it's (ph) been pointed out, the website's down.

This is much more what I would say -- frightening to me. It says, "You have no reasonable expectation of privacy regarding any communication or data transiting or stored (ph) on the information system. At any time and for any lawful government purpose, the government may monitor, intercept, search and seize any communication or data transiting or stored (ph) on the information system. Any communication or data transiting or stored (ph) on this information system may be disclosed or used for any lawful government purpose."

Cheryl Campbell of CGI Federal said she was aware of it, but said that it wasn't her responsibility to put that in the source code. Were you a aware of it? And was it your responsibility to put this in the source code?

SEBELIUS: Mr. Barton, I did not put things in the source code. I can tell you, it's my understanding that that is boiler plate language that should not have been in this particular contract, because there are -- the highest security standards are in place, and people have every right to expect privacy.

BARTON: All right.

Now, the last time we could check, this was still there. You are given almost unlimited authority under the Affordable Care Act to administer it. Will you commit to the committee and to the American people that, one, you do want to protect their privacy and, two, you will take this out, fix it, make sure that it -- it doesn't have bearing on people that try to apply through the website?

SEBELIUS: Yes, sir. And we have had those discussions with CGI, and it is under way. I do absolutely commit to protecting the privacy of the American public, and we have asked them to remove that statement. It is there in error. It needs to be taken down, and we should be held accountable for protecting privacy...


BARTON: Well, thank you, Madam Secretary. I -- I sincerely appreciate that, and I'm sure the American people do too.

My last question -- or it's really a comment. I've introduced H.R. 3348, which says, let's make this system voluntary for the first year since we're having so many problems and let the American people decide. What that means is, if people choose not to participate they will not be charged the penalty for non-participation. Would you support such a reasonable approach to this while we work out the problems in the system?

SEBELIUS: No, sir.

BARTON: OK. Well, that's an honest answer.

UPTON: Gentleman's time is expired.

BARTON: Thank you, Madam...


UPTON: Chair would recognize the gentleman from New Jersey, Mr. Pallone.

REP. FRANK PALLONE JR., D-N.J.: Thank you, Mr. Chairman.

I know we're not in Kansas, but I do believe increasingly we're in Oz because of what I see here.


So this "Wizard of Oz" comment by my colleague from Texas I think is particularly apropos, given what we hear (ph) on the other side of the aisle. I don't know how you keep your cool, Madam Secretary, you know, with this continuous effort on the part of the GOP to sabotage the ACA, to scare people and bring up red herrings. And I think that this privacy issue is another red herring. And I'm gonna ask you a question about that.

But before that, I just wanted to say, this whole idea that's being brought up today that somehow, you know, policies are being canceled and people don't have alternatives is just another red herring. You know, what I think my colleagues on the other side forget is that this is not socialized medicine. This is in fact private insurance in a competitive market.

And if I'm an insurance company and all of a sudden everyone else is selling a better policy with better benefits at a lower price, I can't continue to sell a lousy skeletal policy that doesn't provide benefits and cost more because I'll be out of the market. And so that's what's happening here. Insurance companies are canceling lousy policies with high prices because they can't compete. And that's what's gonna happen when you have a private insurance market, which is what we have here. We don't have a government-controlled system. We have private markets.

So I just wanted to make that point.

But I have to drill down on what Mr. Barton said here. You know, before reform, the individual insurance market was dysfunctional, premiums would shoot up if people got sick, their coverage could be canceled if they had a pre-existing condition, and they did not have secure, quality coverage.

Now, I've heard my Republican colleagues say that patient health information will be at risk in this application process, and this is flat out false. In fact, the ACA makes a giant leap forward for protecting health insurance by taking it completely out of the insurance application process by banning discrimination based on pre- existing conditions.

Mr. Barton, again, is, you know, raising this red herring just like the cancellation of insurance by talking about privacy. But Madam Secretary, prior to the ACA when people applied for insurance coverage, did insurers make them provide a long, detailed, invasive medical history, but now because the law bans discrimination based on pre-existing conditions, individuals will not have to provide this information in their applications?

So regardless of this clause, please comment on the privacy issue and why it's irrelevant.

SEBELIUS: Well, Mr. Pallone, in the past, any individual American who was in an employer-based coverage, in government coverage like the ones we enjoy in Medicare, in Medicaid, the V.A., a whole variety of plans, that's about 95 percent of insured Americans had no medical underwriting, had group protections, had consumer protections.

The people who were outside that consumer-protected space were individuals buying their own coverage in an individual market. Medical underwriting demanding health records and often going through extensive doctor interviews and getting health records was a standard for that market. Pricing could vary widely depending on gender, depending on health condition. People could be denied coverage and were frequently. That's the market that is currently being reformed with consumer protections.

If a person had a policy in place in March of 2010 like that policy and the insurance company made no changes to disadvantage the consumer, those policies are in place, you keep your plan, you like it, and that goes on.

For the people who, though, had a medically underwritten policy, were paying more than their neighbor because they happened to be female, could not get their health condition for a fixed hip written into their insurance plan, they will have a new day in a very competitive market; 25 percent of the insurers are brand new to the market and they are offering competitive plans.

PALLONE: Mr. Chairman, could I just ask that this document...


UPTON: Sure. Put it into the record without objection.

PALLONE: Thank you.

UPTON: Chair would recognize Mr. Hall.

REP. RALPH M. HALL, R-TEXAS: Thank you, Mr. Chairman.

Madam Secretary, I think Congresswoman Blackburn asked you about the federal government and how much they'd spent today and they're spending some money as we speak, aren't they?

It's down right now, isn't it?

Is that -- are you had -- you projected ongoing problems?

SEBELIUS: I'm sorry, sir. I'm having a hard time...


SEBELIUS: ... hearing.

What was the...

HALL: She asked you how much it had spent today and I'm asking what you expect to pay in addition to that on the repairs that the website is going to require and they're requiring them as we speak here.

So those are things you projected; you knew they would happen and they will happen. But you surely looked ahead and you have some estimate of what is going to happen.

SEBELIUS: Yes, sir.

HALL: And going to cost.

SEBELIUS: For our two major contractors who are USSI, a subsidiary of United and for CGI, there are obligated amounts. For CGI, who is in charge of the entire application, there has been $197 million obligated and that is to last through March of 2014.

And as I said before about $104 million has been expended in that obligated amount.

HALL: I'm going to try to be here on 2014 to be sure that your testimony is correct, OK?


I'm just joking with you.



HALL: And if -- were you born in Kansas, Meade (ph) -- Kansas?

SEBELIUS: I was not. I was born in Cincinnati, Ohio. I married a Kansan and went to Kansas.

HALL: All right. I was in the third grade there. And I thought I saw you on a tricycle there one day.


SEBELIUS: Well, it was an illusion.

HALL: Let me ask you a question, have you ever rejected a financial bill from one of the contractors?

Have you ever?

SEBELIUS: Have I ever...

HALL: Rejected a financial bill from one of them?

SEBELIUS: Sir, again, I -- our...

HALL: Well, I guess you can say yes or no.

SEBELIUS: ... our accounting office does a routine audit and review of every bill that comes in before they do it. I do not personally. I want to be very accurate about -- I don't personally pay contracts, negotiate contracts. By law and by precedent that's really illegal for someone who isn't a warranted contract officer to engage in the debate or discussion around federal contracts.

HALL: How much has the administration spent on the exchanges in total?

Not just but all of the exchanges?


HALL: How difficult is that figure to give me or if you can't give it to me...


SEBELIUS: I would like to get it to you in writing very quickly.

HALL: Madam Secretary, I'd like to talk -- I don't know how much time I have got left but I would like to talk about a couple of businesses in my district who are struggling with how to move forward. One is a manufacturing and one is in the pet boarding and training business. One has 85 employees and the other has 56.

Here's some quotes from some of their recent letters: "The situation we're in is we would have to pay $170,000 in penalties under Obamacare. This is another example of the government picking the winners and losers. We're the losers. There is no way I can be competitive if I have to raise my prices to cover $170,000. Here are my options: do not pay the penalty, raise my prices and go out of business. Eighty-five people lose their jobs, lay off 35 employees who don't have to pay the penalty and move more production to this country, reduce 35 jobs."

And here's a quote from the other: "Since they are high labor low margin, business cannot afford to pay for insurance for our employees we're faced with either closing our business perhaps through bankruptcy, though there are heavy financial obligations that would continue whether we operate or not.

"Fire enough employees to get under 50 employees limits and close some of our business. Even if we close the location we cannot escape many expenses such as rental agreements."

What am I supposed to tell these people?

SEBELIUS: Well, sir, I think that in the employer market, about 95 percent of all American businesses are exempt from any kind of requirement to cover employer -- employee insurance, and they are outside the law. They continue to be outside the law, but they will have some new options for those who want to cover their employees and some new tax credit possibilities.

For large employers, about 96 percent of them already cover their employees. And as you know, the penalty that your constituents referred to is not a penalty that is imposed in 2014. It is being discussed with businesses about what kind of information is exchanged and it will take place in 2015.

UPTON: The gentleman's time...

HALL: He's going to use the gavel on me if you don't hurry.


UPTON: Gentleman's time is expired.

HALL: I yield back my time.

UPTON: At which time the Chair would recognize the gentlelady from California, Ms. Eshoo.

REP. ANNA G. ESHOO, D-CALIF.: Thank you, Mr. Chairman. Welcome, Madam Secretary. You're a distinguished woman, you have distinguished yourself and your state, the offices that you've held, and now working for the American people and I salute you for it. I -- I want to really congratulate my Republican pals for being absolutely 1000 percent consistent. You love what's wrong with the website, and you detest what's working in the Affordable Care Act. And I think that that is on full display here. But let's get back to the website, because that's what the hearing is about.

It's my understanding that November 31st (sic) is a -- is a hard date for having everything up and running. Do you have -- now, HHS did testify in September that they were 100 percent confident that the site would be launched and fully functional on time on October 1st. That didn't work. Do you have full confidence in this new hard date? SEBELIUS: Congresswoman, I can tell you that the assessment that we have made is that it will take until the end of November for an optimally functioning website. I know that the only way I can restore confidence that we get it right is to get it right, so I -- I -- I have confidence, but I know that it -- it isn't fair to ask the American public to take our word for it. I've got to fix this problem, and we are underway doing just that.

ESHOO: But are you confident that -- I think I said November 31st, which is, which does not exist, but November 30th. You have confidence in November 30th?


ESHOO: Is there any penalty to QSSI or CGI for not delivering on what they promised?

SEBELIUS: Well, I think the, as you can see, we have a -- obligated funds for a contract. We certainly have not expended all those funds, and we expect not only the CMS team, but our contractor partners to fulfill their obligations and have to be...


ESHOO: But if they fail to fulfill their obligations. I don't know what's in the contract. Is there a penalty?


SEBELIUS: Well, I understand, but, there isn't a built-in penalty, but I can tell you that paying for work that isn't complete is not something that we will do. QSSI, as you know, has taken on a new role as integrator of the hub that they built and have in operation is -- is working extremely well, not only for the federal exchanges, but all the state-based markets are using the hub, and that's why we had confidence in their ability to actually take this next role on and coordinate the activities moving forward, which have to be driven with a very clear set of outcomes, very accountable timelines and deadlines, and they will be helping to manage that process.

ESHOO: On the issue of security, there was a security breach that arose recently, that I read about at any rate. And what I think is very important here, because the issue of privacy has been raised, and I think that that has been answered. Very importantly, there isn't any health information in these systems. But there is financial information, so my question to you is, has a security wall been built, and are you confident that it is there and that it will actually secure the financial information that applicants have to disclose?

SEBELIUS: Yes, ma'am, I -- I would tell you that there was not a breach, there was a blog by a sort of skilled hacker that if a certain series of incidents occurred, you could possibly get in and obtain somebody's personally identifiable...

(CROSSTALK) ESHOO: But isn't that telling? Isn't that telling?

SEBELIUS: And we immediately corrected that problem, so there wasn't a -- it was a theoretical problem that was immediately fixed. I would tell you we are storing the minimum amount of data, because we think that's very important. The hub is not a data collector. It is actually using data centers at the IRS, at Homeland Security, at Social Security to verify information, but it stores none of that data, so we don't want to be...

ESHOO: Thank you, Mr. Chairman.

UPTON: Gentlelady's time has expired. The Chair would recognize Mr. Shimkus.

SHIMKUS: Thank you, Mr. Chairman. Welcome, Madam Secretary. Madam Secretary, before I start my questions, the Washington Post gave the administration, the President, yourself, four Pinocchios on this whole debate of if you like the insurance you have, you can keep it. Would you recommend to the President that he stop using that term? Wouldn't it be helpful in this debate?

SEBELIUS: Well, sir, I think he used the term at the time that the law was passed, and he continues to say...


REP. JOHN SHIMKUS, R-ILL.: And as of September 26th, also, so...


SEBELIUS: That's why we wrote...


SHIMKUS: So the answer is you don't buy -- you don't believe that the Washington Post, and therefore...


SEBELIUS: I haven't read the Washington Post, but thank you.

SHIMKUS: Well, we'll hand this down to you so you can see it. Have you ever shopped -- I know you have, but this is for a -- at a grocery store with a coupon? Ever used a coupon?


SHIMKUS: So, the coupon gives you the terms and conditions of when you go to the checkout to -- to get whatever's off the price of the goods. When you all added the "See Plans Now" option, you in essence gave the searcher in essence a coupon based upon what they're seeing there. And the desire was, let people know what the price is. However, as the -- the news reported, and I followed up in last week's hearing, was that if you are under 50 years old, you get quoted the price of someone who's 27. If you're older than 50, if you're older than 50, could be 64, you get quoted a price of someone who's 50 -- 50 years old. Isn't that misleading?

SEBELIUS: Well, sir, the "Learn" side of the website, which has been up since actually late... (CROSSTALK)

SHIMKUS: So that's truthful, then. If you quote a price...


SEBELIUS: It is clearly a hypothetical situation...


SHIMKUS: Oh, are you -- do you -- wait...


SEBELIUS: That for now people that...


SHIMKUS: OK, on the "See Plans Now" option, are you saying this is a hypothetical? That's not what it says on the site. It says, "This is the price, when you put in your age," and if your age is 49, it quotes you as if you're 27.

SEBELIUS: Sir, the only way someone can get an accurate information about their price is to get their individual eligibility (inaudible)...


SHIMKUS: Let me ask you another -- when did you decide to use this, the low 50 at 27, and above 50 at 50 years old. When did you make that decision?

SEBELIUS: That was decided by the team as...


SHIMKUS: By who? Who made the -- the...


SEBELIUS: I withhold (ph) that information.

SHIMKUS: The problem with the whole debate is y'all won't tell us who made the decisions.

SEBELIUS: Well, I can tell you I did not design the site.


SHIMKUS: So who?


SEBELIUS: I will get...


SHIMKUS: Well, who made the decision on the 27-year-old quote for someone who's 50?

SEBELIUS: I just said I will get you that information.

SHIMKUS: Thank -- thank you. Let me go to, because it's misleading and the White House insists it didn't mislead the public, and (inaudible) we find after you did. But let me -- let me finish on this debate. Another transparency issue. If someone, a constituent of mine or someone in this country has strongly held pro-life views...


(UNKNOWN): Oh, here we go.

SHIMKUS: Can you commit to us to make sure that the federal exchanges that offer that is clearly identified and so people can understand if they're going to buy a policy that has abortion coverage or not? Because right now, you cannot make that determination.

SEBELIUS: Sir, I -- I don't know. I -- I know exactly the -- the issue you're talking about. I will check and make sure that that is truly identifiable.


SHIMKUS: Here's -- here's -- OK, thank you. Well, here's -- here's our request. Can you provide for the committee the list of insurers in the federal exchange who do not offer, as part of their package, abortion coverage?

SEBELIUS: I think we can do that, sir.

SHIMKUS: Well, you should be able to do it, so...


SEBELIUS: I just said...


SHIMKUS: No, you said "If we can do it."

SEBELIUS: No, I think we can do that is what I said.


SHIMKUS: I think, or I know we can do it?

SEBELIUS: I -- sir, I -- I can't tell you what I don't know firmly right now. I know that is the plan, I will get that information to you. I -

UPTON: (INAUDIBLE) Time has expired. Chair recognizes Mr. Engel from New York.

REP. ELIOT L. ENGEL, D-N.Y.: Well, thank you, Mr. Chairman, Madame Secretary. I appreciate your coming here today to answer questions about the Affordable Healthcare Act. You know, my Republican colleagues' actions here remind me of a story I read when I was a little boy, and that's the story of Chicken Little, who ran around yelling "the sky is falling, the sky is falling,"

But unlike Chicken Little, my Republican colleagues are actually rooting for the sky to fall. Republicans are holding this hearing today under the auspices of an investigative hearing, as if they want to get to the bottom of what went wrong with the website, in order to help fix it. But I don't think, Madame Secretary, there's one person in this room who is naive enough to actually think that the Republicans want to see this law work.

They voted over 40 times to repeal the law, they shut down the government and threatened to force a default in order to stop it. They're rooting for failure.