And im sorry but what you mean is when people are buying insurance if the Health Benefits are changed and insurance policies are allowed to not cover certain things is it going to become more complicated to buy insurance. Thats right, senator. I dont think others is the way to im happy to respond, senator. There is a bit of ambiguity, in my view. There is a concept thats often used referred to actuary equivalency rather than to try to look at a list of benefits and say they have to be provided at the same level you can create some flexibility. If this were a car we would say its a 25,000 car. You need a motor but some believe its also essential to have a backup camera. You could have a 200 horsepower motor or you could have a 300 horsepower motor all for 25,000. You choose the list of options and how you will weigh them. Its my view that the state flexibility would be profoundly enhanced if rather than just speak of comprehensiveness, if it could be equivalent comprehensiveness if they had an option to provide either the state or even consumers the ability to weigh plans that choose them differently. Thank you. I think your question is really on point. First of all states have flexibility with essential Health Benefits. I think of state flexibility it should be a game of addition, not subtraction. Right now states could subtract things off of the Health Benefit list. I think part of the conversation about additional state flexibility should instead look at how can you vary our things that can reduce costs besides reducing the number of benefits. How can you change actuarial values . How could you have greater flexibility when it comes to cost sharing. I think with state flexibility you want to use all of these different tools so people have lower cost options. Whats happening now in the unsubsidized market is that people are choosing nothing rather than something that it is at a price they cant afford or not willing to pay for what they are buying. So you want to increase that state flexibility so essential Health Benefits are already on the table. I actually view the benefits as being the tires on the caret set that. I believe after being in this market for so long and before the aca the way the Insurance Companies and others got to cost down was either to eliminate some of the benefits and or continue to increase the deduktabldeduk deductibles. When they needed it they found it completely useless to get access and get to the care Delivery System. I do believe there is room for flexibility. We should explore that between the government and the Health Care Delivery system. Im not stuck that theres only one way but i think that the essential benefits provides a Great Foundation that gives a predictable set of benefits to be expected that we all then compete against. My understanding is also that the current law allows the flexibility to altar the Health Benefits. Its one of the comprehensiveness of coverage and that they can be altar te altered at the state level. If you take something away you have to put Something Else in. The package at a state level, each state may have different needs. I think the flexibility for states to design their own package is a good thing and again, i think the law says that if you take something out the value of what you end up with at the end of the day has to be the same. If we Start Talking about different packages at the consumer level within the state i think we just have to be really careful about adverse election. In other words one consumer can choose not to have a certain benefit or one consumer can choose to swap out a different benefit. Well have to loolk k at that closely to make sure they are not selecting those and the cost are not spread broadly across a robust pool. Of. Thank you for the question. Thank you for that. We can go back to it after the first round, senator young. You mentioned a couple of times in your testimony here today that we should address the underlying cost by providing for greater price trance transparency and also ensuring this is access to enable consumers to act on that transparency. Y are there any initial indications about how that law is working for consumers . Well, thank you for the question, senator. The main law was actually built upon a program for state employees in New Hampshire that has been replicated in other states as well. It says patients need to have true Price Transparency but it went one step further because as networks are getting narrower and narrower patients are being shut out of providers and theres a lot of incentives in the Health Care System to encourage that. So what the main law, which is going into effect beginning next year, but it gives patients that right to choose a provider even if it is out of network. There are incentives. What the employee plan saw just with making the market more transparent, new providers came in at a lower cast because patients could see they could go somewhere cheaper and they voted. So are there barriers that would be unique to the federal level of this right to comparison shop that we should be concerned about if this committee were to embrace that approach . No. Very good. You also have spoken with some specificity about targeted invisible risk sharing. Can you elaborate on this idea . What exactly do you mean by targeting . Sure. Several different actuaries have talked about the biggest premium driver as a result of the aca was saying all individuals with preexisting conditions need to have access. The idea is how do you maintain that access but take that unpredictability out of the system . In the past states used to do it by segregating folks. The main approach, and this is quite similar to the Program Starting in alaska. The main approach said rather than doing that lets specifically take those individuals with high cost preexisting conditions, lets take them and lets limit Insurance Companys exposure. Lets take away the unpredictability on them. So you keep the policy choice of giving everyone access but limit the cost by targeting reinsurance just to those individuals. I see, and you advocating at the federal level to expand this idea in other states, right . I share what i thought what were the concerns about this being an ongoing federal responsibility, do you share that concern . I think the ideal situation is to jump start it but to allow states to customize it. Are there thingings we might do to prevent them from saying we would like continued funding as states are incentivized to do . You could structure it as a grant but something once the program the moving and functioning to capture. I would have to think it through more clearly. I think what you suggested is a danger. Okay. Thank you. I yield back the balance of my time. Thanks senator young, senator bennett. Thank you for holding this hearing. I wanted to start with you mr. O toole. Part of this problem is understanding the nature we are trying to solve. I think it would help the committee if you could walk through what the historic volatility have been in the market. Im not talking about what we are dealing with today although it may come to that but the volatility people have faced. So the context of my question and im happy for you to use as much time as you need to answer. In minnesota we have experienced a lot of volatility. I think when we were getting going it was not as clear on the risk pool. I talk to consumers all of the time and they are confused whats going on. I think it has had a big impact on our market. I think the opportunity to settle down our market is going to have a huge benefit to consumers. I think thats why youll hear me talking about our reinsurance waiver and the importance to do that. I also think that our flexibility as a state based exchange has helped us move forward more quickly in minnesota because we have the reigns at a local level. We know what we need to do and we are doing that. We need longer term help from all of you. Does this mean that you have some means for knowing who providers across the state charge for a hip replacement . Is that what youre talking about . That is the first part of it. It is builds on a Massachusetts Law in 2012. The last question i have is it your understanding that the 1332 waiver would allow a state to apply to have a public option in their state some option other than private or nonprofit insurance . I believe that it does. Is that a consensus view . I would agree. I would agree. One of the ways i would think about is it before aca and they were not covered or if they got coverage they bought it at a very expensive price. And what you have now with aca is we are trying to make sense of how do you put this risk inside of a coverage of the eggme segment of the population. And then the second thing you have is a lot of people who historically have not had coverage to get care except for when they needed care they showed up in the emergency department. As we have taken on more of this population and they have access to get care we are discovering different kind of illnesses and areas to focus onto get them to really perform in a preventive way going forward. That adds to the cost in the short term but if managed correctly in the long term youll end up with better managed care. It also relates my time is up so ill yield back to the chairman but it relates to the misery to the 93 that are not the 7 we are talking about here are also feeling. I also shared the view as a couple of you suggested that one of the great unhappinesses i hear from people about is when they buy their insurance and when its time to use their insurance they are denied the opportunity to use their insurance. Its not like you consume it today or this week. Its very different than that. I thank the witnesses. I know youre very interested in the alaska waivers. I gave him a little extra time. If you need it for your questions please take it. Thank you. I appreciate the question from senator frankin. I think it does go to the core of what we are try to go get to here. I Pay Attention to your introductory remarks. It seem to me theres a path forward here to get a consensus product out of this committee. Thats something i wholeheartedly endorse and embrace and have been very consistent about it seems one of those pieces is what we do in dealing with the time on that i think we can work that through. It is this issue we have identified as one avenue being through the 1332 waiver program. I am not sure whether or not state flexibility is being interpreted or code for something nefarious to take place. So i wanted to go back to senator murrays requirement here. What we are looking to do here in this committee with this targeted approach is to stabilize the individual market in this short term period here without increasing the premium costs. As one who comes from a state with really high preem umium co quite honestly going from a thousand dollars a month to 800 a month is still no screaming deal. This is important to me as well. Im going to ask you as the actuary at the table, in terms of some of these proposals that have been laid out here on ways that we can better enhance the 1332 waiver, whether or not any of them actually would have a consequence of increasing premiums, whether its coordination between the 1332, the menu of waivers as governor levit has indicated, the budget neutrality issue, whether its in each year or over the course of the waiver. Can you speak to whether or not these proposal that is are being discussed would have an impact on premium and premium increases . Yes. Thank you for the question. I think with any of these proposals it may differ by state. Each state is starting from a different place in terms of whether they expanded medicaid or have transitional policies. If any were found to increase the number of uninsured individuals my understanding is that would not be approved because its not passing the guardrails. I think there are some other options and flexibility that could be provided with that december 2015 guidance that i mentioned right now is maybe keeping states from looking at where they would work to reduce premiums and they would work to increase the number of individuals who are insured but its that looking at the, you know, one level down at the sub populations thats perhaps preventing some of those things from being explored further. But effectively streamlining a process is not going to increase premiums. Absolutely. I dont think so. Or allowing for a menu of standard waivers and then to governor levits point you have National Standards but state solutions. Could it have impact or is it state specific . Well, i dont think having the menu itself to help treem line the process would add to the cost but again, depending what is on that menu, because each state is a little bit different it could potentially pass the guardrails on one state and not another if that makes sense. So like when we talk about reinsurance because the way it works, it brings down premium for all, some type of standard menu is probably going to work for just about every state. As we start looking at more unique and innovative and maybe they went beyond this simple menu, maybe it has to be simple straight forwardtype waivers but they are more innovative type waivers that may or may not work depending on the state specifics. Well, i appreciate that and i dont know whether or not anybody had anything they might want to add to that. It sounds like if we are talking from some of these basically improving on a provision that was already outlined in the aca by making it work as intended correct. It is something we should be striving for regardless of what we do. I have got yes. Everyone is nodding their head. It is the opportunity to explore that, the flexibility, yes. I agree. Yes. Thank you, mr. Chairman. Thank you. Senator white house. Thank you very much, mr. Chairman. I want to thank you and senator murray for the comments that you made at the beginning of the hearing and join the senator in endorsing and embracing what appears to be an immerging path towards a bipartisan solution here. To all of the witnesses i assume you will all agree that to the extent either tlhrough a risk pool or through reinsurance that you can lift the cost of certain very expensive conditions out of these markets that that will have the effect of lowering premiums in that market. Is that an agreed baseline fact here . Yes. All heads nod. And in turn the effect of lowering the premium would be expected to be attract more participation in the market. Is that also a baseline principal we can agree on . Yes. All heads nodding. So that takes us to the question and i would like to have mr. Bragdon address this. You have chosen, mr. Bragdon to do a reinsurance advised by your firm has chosen to do a conditions based mechanism. Do you see huge differences in advantage and disadvantage between a conditions based, once you have diagnosed you move into either the reinsurance to risk pool versus hitting a dollar cap level which makes your best case for either or let me know as long as the underlying job is being done. So i think both of those types or any type of reinsurance program, one thing it does is add predictability and stability to the market. It makes it easier to price when youre taking those most volatile claims out of the market. I think because the condition once established the set and you dont have to worry about chasing billing records and others to goat a speet to a spe, correct if. Yes. I think the main program is also condition based but folks enter the pool at the type of application. They look at the conditions they have and if they have one of those conditions where they go into the pool where individuals can develop those conditions throughout the year and they move over to the pool. So one advantage that i think that has from a predictability and pricing standpoint is the insurers protected against the large claims if someone develops them during the course of the year. Do you have a conditions based program that moves to that through your multiplicity of claims method . How does it work . So the main approach looked at eight preexisting conditions, time of application and then at the same time if certain individuals based on how they looked were going ton high cost insurers could voluntarily put them into the pool. I think whether you do the alaska approach or the main approach both are similar. They based on certain preexisting conditions. Okay. The last question which ill actually make because my time is running out is a question for the record comes out of mr. Tysons testimony. He said we need to encourage and reduce costs that the aca tried to incentives but did not do enough and that we need to move from sick care and models of care to a system that emphasizes well care for value and keeping people healthy. What i have asked other panels i will also ask you, which is to evaluate opportunity to improving patient safety, one, learning from the wide variat n variations and how to drive towards the better care and outcomes models within that range of variation. Three, reducing administrative overhead. Im kind of out of time. Ill standby for questions for the record. One general observation i would like to note, the other senator from maine is in the audience. It is not uncommon for me to see senator king showing up in the audience here in the Health Committee and i wanted to know that he is here also reflecting an admirable curiousty on the part of senator king that she turns up and sits quietly in the or maybe he has nothing to do. Pay no attention to the senator from minnesota. We are glad he has come. By the way, senator murrays comments, i saw people in the audience looking at me because im trying to advance. Let me be explicit. We are not trying to be part sa san. This is bipartisan. Turns out and they are paying over 31,000 a year for their bronze level plan with a family deductible. Nechb a state doing relatively well it is 47,000 out i have met with ten different democratic senators. Virginia does incredibly well. When you see the language youre state will get hundred of millions more to care for lower income virginians. We are taking the portion he agrees with and getting it to the state. He doesnt like the per cap cap but i will say it was that good work. Let me just commit. We have trying to be fair to all americans no matter where she or he lives. I hope partisan isnt something that unfortunately originates on one side of the aisle. Truly i have made an effort. I know other senators have to reach across the aisle on something which is bipartisan. Other states that do substantially better include missouri and florida. That said what have we hear