May 18,2016

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Hatch: Serious Solutions Needed to Curb the Cost of Healthcare

Utah Senator Says, "Obamacare is not working and can’t work the way it was designed.”
WASHINGTON – In a speech on the Senate floor today, Finance Committee Chairman Orrin Hatch (R-Utah) said the rising cost of healthcare under the President’s health law is putting a financial squeeze on middle-class families and called on Congress to work together to find a viable path forward to lower costs for the American people.
“The costs of health care is the number one financial concern for American families.  It is an issue that deserves the attention of everyone in this chamber,” Hatch said. “Finding a solution will require, not only that we acknowledge the failings of the system created by the Affordable Care Act, but that we also work together to address these failings in a productive, less political way.”
Hatch went on to outline his commitment to finding a solution for Obamacare’s failings and outlined the next steps to bring down the cost of healthcare.
“I plan to do something that the authors of Obamacare never did: Listen,” Hatch said.  “I’m going to take the time to engage with stakeholders from across the spectrum to get a clear sense of what needs to be done to bring down health care costs for American families and get skyrocketing premiums, deductibles, and out-of-pocket limits under control.”
The complete speech as prepared for delivery is below:
     Mr. President, I rise today to speak once again about the rising cost of health care in the United States.
     It’s been a few months since I came to the floor to comment on the state of our health care system.  Sadly, over that time period, we’ve seen little, if anything, in the way of good news.  Indeed, while the U.S. has some of the best health care in the world, the recent headlines point to serious problems with how that system is working.
     A little over six years ago, the Democrats on both sides of the Capitol and on both ends of Pennsylvania Avenue forced the so-called Affordable Care Act on the American people without any Republican votes or any serious attempt to get bipartisan consensus.  The result was an attempted overhaul of roughly one-sixth of the American economy crafted with the input and support of only one political party.
     As I’ve said before, given its size and scope, the passage and signing of Obamacare was probably the largest exercise of pure partisanship in our nation’s history.  And, quite frankly, our country hasn’t been the same since.
      At the time the law was passed, Republicans made a number of predictions about the negative impact the law would have for people buying health insurance and for our economy overall.  And, six years later, many of those predictions have already come to pass, with many more on their way.
     Still, looking back on it all, I think we may have undersold our case at the time.
     I don’t think any of us could have predicted just how detrimental the law would be, not only for health care in the U.S., but on our nation’s public discourse and our government institutions.  As a result of Obamacare, the divide between Republicans and Democrats has gotten deeper, voters have become more cynical and distrusting of our government and our leaders, and the government itself has expanded its powers well beyond the authority granted in the statute.  
     At the time the law was passed, many of us issued warnings of what was to come, but much of that seemed to have been drowned out by the sounds of celebration emanating from the Capitol and the White House.  
     To quote some of my friends on the other side, passage of this law was a “big bleeping deal” because, once the law was passed, the American people would finally get a chance to see what was in it.  And, in the midst of all that self-adulation, many promises were made about what the law would do for individuals and families throughout the country.
     Chief among those many promises was the claim that, as a result of this law, the cost of health care for the average American family would go down.
     That’s what the American people were told in 2010.
     Now, in 2016, the law has been implemented and in effect for three years.  And, despite those many promises, average health insurance premiums have gone up every single year.  And, as insurers begin to make decisions about rates and availability for the 2017 plan year, we are looking at significantly higher premiums – double digit increases in some places – for the fourth straight year.
      Reports about theses premium increases seem to be coming in on a daily basis.
      For example, in Virginia, we know that, among the five largest carriers in the state, premiums could go up anywhere from nine to 37 percent, with a likely average of about 18 percent.  
      In Iowa, tens of thousands of people who buy their insurance from one major carrier will likely see increases in the neighborhood of 40 percent.
       In Oregon, the state’s largest insurer in the individual market has requested a premium increase of nearly 30 percent.
      That number – 30 percent – is similar to the rate hikes requested by some of the largest insurers in Maryland as well.
         I can go on and on here, Mr. President, I’m not just cherry-picking states.  This is a trend, and, unfortunately, it is having a real-world impact.  People are concerned, and they have every right to be.
        According to a Gallup poll a few weeks back, health care costs are the number one financial concern for families in the U.S.  People are more concerned about health costs than they are about low wages, housing, education, or even debt.  I can imagine that, as premiums go up, the number of families concerned about health care costs will continue to go up as well.
        In addition to higher premiums for 2017, we’re also hearing many insurers will be opting to drop out of exchange markets.   
        For example, one of the country’s largest insurers has, so far, decided to pull out of more than two dozen state exchanges due to mounting losses.  This is the same company that currently offers plans in 34 different states, but has said it will only continue to do so in a small number of states going forward.
        In Utah, we recently saw the closing of an Obamacare CO-OP that covered roughly 45,000 people, all of whom had to find new health insurance at the beginning of this year.  Indeed, 12 out of the 23 CO-OPs around the country have already closed, further reducing the number of health insurance options available to people throughout the country.
        Now, the Obama Administration is trying to downplay these reports and convince people that a smaller number of insurers in various markets won’t be a problem.  But, Mr. President, the impact should be obvious: When an insurer–let alone many insurers–drops out of a market, the patients and consumers in that market are left with fewer choices.  And, in any market for any product, when consumers have reduced options, it generally leads to both lower quality and higher prices.  That’s definitely true in the health insurance market.
         The question many are asking is: Why is this happening?  Why are so many insurers raising premiums or choosing not to participate in the Obamacare exchanges?
          The answer is relatively simple: Obamacare is not working and can’t work the way it was designed.  I think it would be helpful at this point to briefly review its timeline.
         From the time the law was first drafted, the Affordable Care Act included a number of insurance coverage mandates designed to dictate what insurance companies had to offer and what coverage patients would have to buy.  Of course, imposing those kinds of requirements was bound to increase the cost of insurance across board.
        However, as you’ll recall, Mr. President, during the congressional debate over the law, the President and his supporters repeatedly claimed that, because the law was going to require everyone to have health insurance, more young and healthy patients would be coerced into the insurance risk pools.  And, according to their arguments, this shift in the market would more than compensate for the costs associated with the new insurance coverage mandates.
         In short, they claimed that they could expand coverage requirements AND keep premiums from going up.
        Now, fast forward to 2013, which is when the exchanges went online.
        At that time, insurers entered the exchanges and set premium rates, presumably assuming that the law would work as promised.  As it turns out, that assumption was, in many cases, ill-informed, and insurance companies across the board found that they had priced their premiums too low.  The expansion of younger, healthier, less risky market participants never came and, as a result, the industry suffered huge losses.
         According to a report released last month by the Mercatus Center, in 2014 alone, insurers nationwide suffered more than $2 billion in losses for plans sold on the exchanges.  This happened despite subsidies they received from the government to mitigate the risks of covering a mostly unknown population.
       And, as we fast forward once again to the present day, we see that this situation has not corrected itself over the first three plan years under Obamacare.  In fact, it’s only gotten worse.
       Premiums are going up.
       Enrollment is lagging far behind the initial rosy estimates.
      And, millions of the younger, healthier population of uninsured people the system needs to properly function are either opting to pay the fines for going without insurance, going undetected because they don’t file tax returns, or staying on their parents insurance for as long as legally possible.  
        A recent Blue Cross Blue Shield report compared three separate groups among the carrier’s membership.  Those groups were: 1) individual members newly enrolled in the Obamacare exchanges; 2) members who had individual plans prior to the passage of Obamacare; and 3) members currently enrolled in Blue Cross employer plans.  According to the study, the people newly enrolled in insurance under Obamacare are significantly less healthy and require significantly more services than the other two groups.  And, the cost of care among that group is, not surprisingly, significantly more expensive.
       That’s remarkable, Mr. President.
        If we assume what’s happening in this study is in any way reflective of what’s happening nationwide, not only did the Affordable Care Act fail to create more favorable risk pools for insurers and patients sharing the costs, the risk pools are, overall, more risky now than they were before.   
       While a number of complicated factors have likely contributed to this outcome, the major reason we’re seeing this result is relatively simple: Obamacare did little, if anything, to address health care costs.  As a result, young and healthy people who are less in need of health insurance are making the calculation that it would be less costly for them to go uninsured and pay a fine than to purchase insurance through an exchange.  
       Indeed, in countless polls and surveys of still-uninsured Americans, we’ve seen that the biggest reason people refuse to buy health insurance is that it costs too much.
        Under this status quo, insurers can only stay afloat in one of two ways.  They can raise premiums, which makes their coverage even more costly, driving more young and healthy people out of the market, further depleting the risk pools.  Or, they can exit unprofitable markets.
       Currently, we’re seeing insurers do both, ensuring that the exchanges – and with them, the entire system created by the Affordable Care Act – are becoming more unstable all the time.  
        Now, let’s be clear: There is no solution to this problem that keeps the current system in place.  
         There is no way to reset or rearrange the incentives under the current system.
        There’s no minor tinkering that can fix these problems.
        And, it’s not simply going to correct itself over time.
        The system is, quite frankly, damaged beyond repair.  The only thing we can do to give options to patients and bring down costs is create a different system.
        Some of us have put forward plans to do just that.  I have a plan that I put forward with Senator Burr and Chairman Upton over in the House.  It’s called the Patient CARE Act, which I’ve mentioned a number of times here on the floor.  
         However, ours isn’t the only solution out there.  There are a number of ideas.  We just need to get serious about addressing these issues.  But, that won’t happen so long as people refuse to acknowledge that there’s even a problem.  
        The supporters and authors of the Affordable Care Act have gotten pretty good over the years at mining the available data for favorable citations and moving the goal posts for what qualifies as “success” for this law in order to fool the American people.
        Fortunately, the people aren’t buying it.
        Since the day the law passed, 90 percent of national polls show that that more people oppose Obamacare than support it.  I don’t see that changing so long as premiums keep going up and people are left with fewer and fewer options.  
         However, as always, I’m an optimist.  I believe we can make some progress here.
         I currently chair the Senate committee with jurisdiction over many of the most consequential elements of Obamacare.  Over the next few months, I plan to do something that the authors of Obamacare never did: Listen.  I’m going to take the time to engage with stakeholders from across the spectrum to get a clear sense of what needs to be done to bring down health care costs for American families and get skyrocketing premiums, deductibles, and out-of-pocket limits under control.
        I plan to hear from experts, industry leaders, and advocacy groups to get their ideas in order arrive at a workable solution.  Then, I’m going to solicit the help of anyone in Congress – from either side of the aisle – who is willing to put in the necessary work to right this ship and craft meaningful legislation to address these problems.
         Like I said, the costs of health care is the number one financial concern for American families.  It is an issue that deserves the attention of everyone in this chamber.  Finding a solution will require, not only that we acknowledge the failings of the system created by the Affordable Care Act, but that we also work together to address these failings in a productive, less political way.
        That is my focus when it comes to health care, Mr. President.  I hope all of my colleagues will be willing to work with me in this effort.
        With that, I yield the floor.