CSPAN - Hearing on Health Care Affordability

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Aug. 1, 2025 02:07-03:36 - CSPAN

01:28:56

Hearing on Health Care Affordability

Participants

Main

bernie sanders

sen/d 11:02

bill cassidy

sen/r 11:10

Appearances

andy kim

01:28

ashley moody

sen/r 02:58

maggie hassan

03:06

roger marshall

sen/r 03:41

Clips

barack obama

d 00:02

bill clinton

d 00:02

donald j trump

admin 00:09

george h w bush

r 00:02

george w bush

r 00:04

jimmy carter

d 00:03

ronald reagan

r 00:01

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Speaker	Time	Text
unidentified		February 29th, mid-air collision over Washington, D.C. that claimed 67 lives.
unidentified		And a reminder, you can also watch these events live on the free C-SPAN Now video app or online at c-span.org.
jimmy carter ▲ ● ▼		Democracy is always an unfinished creation.
ronald reagan ▲ ● ▼		Democracy is worth dying for.
george h w bush ▲ ● ▼		Democracy belongs to us all.
bill clinton ▲ ● ▼		We are here in the sanctuary of democracy.
george w bush ▲ ● ▼		Great responsibilities fall once again to the great democracies.
barack obama ▲ ● ▼		American democracy is bigger than any one person.
donald j trump ▲ ● ▼		Freedom and democracy must be constantly guarded and protected.
unidentified		We are still at our core a democracy.
donald j trump ▲ ● ▼		This is also a massive victory for democracy and for freedom.
unidentified		And now a discussion on the cost of drug prices and health care affordability from the Senate Health, Education, Labor and Pensions Committee.
		during the nearly hour-and-a-half hearing.
		Senators and witnesses also highlighted the role of pharmacy benefit managers in the health care system.
bill cassidy ▲ ● ▼		The Senate Committee on Health Education, Labor and Pensions will please come to order.
		Like everybody in this room, everybody watching agrees that the cost of health care is too high.
		I'm a doc who worked in a hospital for the uninsured and the underinsured for decades, and I have seen patients struggle with health care bills, but to limit it to those at a hospital for the uninsured would not do justice.
		I've seen middle-income families struggle with health care costs.
		So to make health care affordable, Congress must make a serious effort to navigate a whole kind of raft of perverse incentives throughout the health care system.
		Now this includes taking a look at health insurance benefit design, the impact of price transparency, regulatory barriers, the negative effects of government discount programs, the negative effects that they have on the prices that Americans pay in the commercial market.
		And I could go on.
		And why?
		It's important to realize that American workers' wages, their take-home check, is not growing because more of the check is going towards health care.
		That's pre-tax.
		They never see it.
		So they don't get it in their pocketbook, but it's being sucked away.
		If we want to increase wages in this country, the number one thing that we have to do is to tackle health care costs.
		That is pro-worker, pro-family, pro-patient.
		Now, a key part of this conversation is the employer-sponsored insurance, or ESI.
		That provides health coverage to over 160 million Americans, and that is over half of all Americans who are not on Medicare.
		Now, over the past decade, health benefit costs have risen dramatically for employers and workers, and as I mentioned, resulting in lost wages.
		I hope that the committee can address ESI in a bipartisan way.
		When we work together, we can have a powerful impact.
		Now, there are many actors within the healthcare system, and it's really interesting whenever you talk to one of them, like, you know, what's the problem here?
		They always point to the other guy or the other gal, but it's like never pointing at themselves.
		And so, what we hope to do here is recognize that the problems are diverse, they're intertwined, and just as Christmas lights can't be untangled with a pair of scissors, that we look at the root causes of the nation's health care cost increases and attempt to tease them out.
		We need substantiative bipartisan reforms to realign the health care system to give the patient the power.
		Now, the committee has a long history of working together to achieve this goal.
		And last Congress, Senator Sanders and I worked together on a PBM reform act addressing misaligned incentives affecting PBMs and to lower the price patients paid for prescriptions.
		I tell people when I go to church, and I got a Bernie Sanders supporter here and a Donald Trump supporter here talking about the same thing.
		Usually, it's about health care costs or prescription drug costs in particular.
		So, Bernie, you make it to my church, man.
		You know what I'm saying?
		So, now the President is committed to reevaluating the role of PBMs, and I would argue we as a committee should see this as an opportunity to get this signed into law.
		We all agree that price transparency is important.
		Senators Marshall and Hickenlooper are leading the Patients Deserve Price Tags Act, codifying price transparency rules issued during President Trump's first term, requiring hospitals and insurers to publicly post the prices they charge patients in a machine-readable format.
		Another area of bipartisan interest is the 340B program.
		The common understanding among legislators, whether true or not, their understanding, is that the discounts received by hospitals are supposed to make health care services more affordable and accessible for low-income and uninsured patients.
		But the law is actually unclear, and some hospitals do this and some don't.
		In fact, many don't pass discounts on to patients, requiring them to pay less price for drugs when the hospital itself is getting a markedly reduced cost.
		In fact, a recent study by the National Pharmaceutical Council found that 340B may make employer-sponsored insurance more expensive, costing workers an estimated $4.5 billion from 2017 to 2023.
		So, not only are the discounts not passed on to patients by some, but there is, if you will, an hydraulic effect.
		If you decrease the profit the insurance, the pharmaceutical company makes there, they jack up the price over here, and that over here would be the commercial market for the employer-sponsored insurance sector.
		Put simply, patients pay more.
		Beginning last year, my staff and I conducted an investigation into how health care entities use 340B revenue, and we recently released recommendations to improve transparency in the program.
		This is an important topic to consider if the committee wants to comprehensively address health care affordability.
		My colleague Angus King once said, There is no silver bullet for some issues, but there is silver buckshot.
		The purpose of this hearing and the responsibility of this committee is to look at that silver buckshot.
		Now, for the record, I'm not really talking about shooting a gun at anybody, but I am saying that if we can look at the different ways that on the margin we can reduce the cost for the consumer, for the patient, for the employer paying for the insurance, then that marginal cost put together becomes significant and we're saving money.
		It's pro-worker, pro-family, pro-patient.
		Now, we will have to tease apart that web of perverse incentives if we wish to find that silver buckshot.
		I urge us to put aside politics to deliver for the American people.
		And with this, I recognize Senator Sanders.
bernie sanders ▲ ● ▼		Mr. Chairman, thank you very much.
		And thank you for holding this hearing on an enormously important subject.
		But let me begin by kind of disagreeing with you.
		If one's goal is to provide quality health care to all Americans in a cost-effective way, clearly the current health care system is broken.
		It is dysfunctional and it's cruel and it's failing.
		I don't think anyone denies that.
		But that is not the function of the current health care system.
		The function of the current health care system is to make huge profits for the drug companies and the insurance companies.
		It is succeeding.
		We have a very successful health care system.
		Last year, the drug companies, who charge us the highest prices in the world for their products, made $100 billion of profits.
		That's successful.
		What's the problem?
		The insurance companies who deny health care every day to millions of Americans, they made $70 billion.
		What's the problem?
		You've got a successful system.
		Drug companies are running all over this place with their lobbyists.
		Insurance companies here, it is working.
		On the other hand, if you're an ordinary American, as you indicate, Mr. Chairman, the system is totally broken and it is dysfunctional.
		And while I'm sure that we have an excellent panel today, at some point, Mr. Chairman, if we are serious about addressing this issue, we have to ask a simple question.
		How is it that in the United States of America, where we are spending the astronomical and insane $14,500 per person for health care, and yet we've got 85 million uninsured, how come other countries around the world are able to provide quality care to all people, often at less than half the cost per person?
		That's the question that we should be asking.
		And the answer, obviously, is that every other country has a national health care program.
		Every other country understands that health care is a human right, not a commodity to be made huge profits off of.
		Further, Mr. Chairman, I do find it a bit ironic that we're holding this hearing this morning just a few weeks after President Trump signed the largest cut to Medicaid in the history of our country.
		The CBO has estimated that this bill, along with the expiration of the enhanced premium tax credits, will cause over 15 million people to lose the health insurance they have.
		The bill, for the first time, talk about making health care more expensive, forces millions of Medicaid recipients who make as little as $16,000 a year to pay a $35 copayment when they need to go to a doctor and allows hospitals to turn patients away if they can't pay that amount.
		As a result of these policies, my friends and the American people, the Kaiser Family Foundation has estimated that health care premiums will go up by more than 75% on average for some 20 million Americans.
		Not exactly a way to lower health care costs in America.
		Further, the Urban Institute recently estimated that these policies will increase health insurance premiums by nearly $3,000 a year for working class Americans who earn $60,000 a year.
		George Washington University has found that this bill will cause more than 10 million Americans to lose the primary health care they currently receive at community health centers.
		When millions of Americans lose access to primary health care, where do they go?
		Well, everybody knows.
		Go to an emergency room, which happens to be the most expensive form of primary health care in America.
		I don't think we disagree on that.
		So, Mr. Chairman, if we are serious about making health care more affordable, I believe a good place to start would be to repeal all of the huge cuts to health care that were contained in Trump's budget bill, bill that passed the Senate by one vote.
		But, Mr. Chairman, in my view, we've got to do much more than that.
		In America today, we spend almost twice as much on health care per capita than nearly any other country on earth.
		We spend $14,570, Japan, $5,640, United Kingdom, $6,931, and France, $7,100.
		Despite our huge health care expenditures, one might think if you spent that much, my God, we got the gold plate, we got the best health care system in the world because we're spending twice as much.
		We don't.
		Our health care outcomes in area area are worse.
		Unbelievable.
		I mean, this is, you mentioned some of the instances the middle-class and working-class families have, and you're quite right.
		But here's, this is the system we have today: 42% of cancer patients in our country, Mr. Chairman, deplete their entire life savings within the first two years of their diagnosis, while one out of every four declared bankruptcy or lost their homes to foreclosure eviction in 2022.
		In other words, unbelievable.
		If you're diagnosed with cancer, the physician I'm sure you're aware of, it's a terrible diagnosis.
		You're scared to death.
		And now people have got to worry not only about trying to get healthy, they're going to lose their homes, they're going to go bankrupt because of this absurd system.
		Mr. Chairman, as you indicate correctly, this is also a burden on small businesses.
		Businesses can't invest if they're spending so much on health care.
		The reason I say all these things is that the current system is broken.
		We need to move to a new system.
		We need to learn from the rest of the world.
		And that's why I recently introduced Medicare for All with 15 co-sponsors in the Senate and over 100 in the House.
		This legislation would provide comprehensive health care coverage to all without out-of-pocket expenses.
		And unlike the current system, it would provide full freedom of choice regarding health care providers.
		No more networks, et cetera.
		No more insurance premiums, no more deductibles, no more co-payments, no more filling out endless forms and fighting with insurance companies.
		Would a Medicare for All system be expensive?
		Yes, it would.
		But while providing comprehensive health care for all, it would be significantly less expensive than our current dysfunctional system because it would eliminate an enormous amount of the bureaucracy, profiteering, administrative costs, and misplaced priorities inherent in our current for-profit system.
		The director of the CBO, who I should point out was appointed by the Republican leadership in Congress, estimated that the Medicare for All bill that I introduced would save the American people $650 billion a year.
		That's real money.
	$650 billion a year.
	You want to save money?
	Cost of this, how do we lower the cost of health care?
	$650 billion is a big reduction in costs.
	In addition, the RAND Corporation found that moving to a Medicare for All system would save a family making less than $185,000, about $3,000 a year.
	Also, let's be clear, this is exactly what the American people want.
	According to a poll that came out just this month from The Economist, 59% of the American people, including 67% of moderates and 57% of independents, support Medicare for all.
	So, why don't we have Medicare for all?
	Well, that touches on another issue, Mr. Chairman, and that is a broken and corrupt campaign finance system which prevents the United States Congress from representing the people of our country rather than the insurance companies or the drug companies.
	And with that, I yield.
bill cassidy ▲ ● ▼		Now I will introduce the witnesses.
		We'll introduce each witness before her or his testimony.
		We'll start with Chris Deacon.
		Ms. Deacon, thank you for being here.
		She's the principal owner and founder of Verson Consulting, previously served as the director of the state health benefits plans for New Jersey, has first-hand experience in health insurance benefit design, and can attest to the need for transparency throughout the health care system.
		Thank you for being here.
unidentified		Thank you, Chairman Cassidy.
bill cassidy ▲ ● ▼		And everybody, try and hold your comments to five minutes.
bill cassidy ▲ ● ▼		We gave a poor example, but if you can do it, that would be great.
unidentified		Thank you, Chairman Cassidy, Ranking Member Sanders, esteemed members of the committee.
		Again, thank you for the opportunity to appear before you today on a matter that touches every American life and every American budget, the affordability of health care.
		As introduced, I am a health care policy expert with a focus on employer and commercial market reform, and I formerly served as the Director of State Health Benefits for the State of New Jersey, where we covered 820,000 public sector lives.
		In my work, I have seen firsthand what employers, state governments, and working families face: health care costs that rise faster than wages, premiums that outpace inflation, and a payment system where neither the purchaser nor the patient can see where the money is going.
		My colleague and friend behind me, Mr. Kevin Lyons, represents the New Jersey Police Benevolence Association.
		His members have seen a 115% increase over the last five years in their premiums.
		A PPO for family coverage is over $67,000, $23,000 of which is covered by his members.
		That's $23,000 coming out of their paychecks every year.
		Transparency is not a talking point.
		It is absolutely a prerequisite to affordability, competition, and accountability.
		Without it, we cannot see the drivers of cost.
		We cannot see how financial incentives are misaligned, and we cannot see which entities are extracting value and which are delivering it.
		And because we cannot see it, we cannot fix it.
		Transparency is a through line of my testimony, not just as a principle, but as the starting point for any serious effort to lower health care costs and realign incentives.
		My written testimony more fully outlines how this systemic opacity across hospital pricing, claims data, PBM practices, and the 340B program undermines employer oversight and distorts pricing.
		The hospital price transparency rule, which took effect in 2021, was a good first step, but we need to go much further.
		We need hospitals to post real prices in a format that's standardized and usable, and we need meaningful enforcement.
		The transparency and coverage rule was supposed to help self-funded employers see what prices were negotiated on their behalf, but the files are a mess, and the most sophisticated firms can't use the data without major effort.
		Most egregious, the employers who are responsible for providing this TIC information are being denied access to it by the very vendors that they hire.
		And that brings us to the biggest gap and opportunity that I see for employers today, and that is access to claims data and full disclosure of conflicts of interest by their covered service providers, like third-party administrators, PBMs, et cetera.
		Employers pay the bills.
		They take on the financial risk and they are expected to manage the plan, yet they still can't see what they are paying for.
		They're denied access to basic medical and pharmaceutical claims data, even though Congress banned so-called gag clauses in 2021.
		Whether through contract language, creative NDAs, restricted formats, or controlling who can actually analyze their data, Cigna, Anthem, United, Aetna, they all routinely deny employers access to their own claims data, and then they turn around and monetize it for themselves.
		When employers can't see claims, they can't reconcile what their plans are spending.
		Employers are told to manage costs, but they are not allowed to see costs.
		They cannot wield purchasing power on behalf of the 165 million Americans covered by ESI if they do not know what they are purchasing, from whom they are purchasing it, and at what price.
		And this begs the question: why?
		Why do carriers, PBMs, hospital systems, and other healthcare industry insiders, why are they so reluctant to operate in a non-transparent manner or in a transparent manner?
		One reason that lies in the increasingly no distinction between the buyer and the seller, the lines have blurred.
		What looks like a negotiation between payers and providers is often a deal between subsidiaries within the same parent company.
		United Health Group owns United Healthcare the Insurer, Optum RX the PBM.
		They own private label drug distributors like Novila.
		They own offshore rebate aggregators like MSR Pharma Services.
		And they are the largest employer of physicians in America.
		They are literally sitting on every side of the transaction.
		The examples abound.
		No amount of benefit design or ingenuity or consultant analysis can compensate for a total lack of absence of data and disclosure.
		These aren't theoretical conflicts and they drive costs without scrutiny across the entire market, from Medicaid to Medicare to commercial coverage.
		Whatever policy this body chooses to pursue to address the affordability crisis, whether through public programs, private markets, or a combination of both, we cannot ignore first that health coverage is not the same as health care when nearly half of insured Americans report delaying or skipping care due to cost.
		And cost shifting without confronting what's actually driving cost is a recipe for failure.
		Without structural transparency, every fix is just cost shifting, whether to taxpayer, patients, or public.
bill cassidy ▲ ● ▼		Can you wrap up?
unidentified		Thank you, and I welcome any questions.
bill cassidy ▲ ● ▼		Thank you.
		Mr. Ippolito.
		Let me introduce you.
		Mr. Ippolito is a senior fellow at the American Enterprise Institute.
		He is an expert in health economics with a PhD in economics from the University of Wisconsin-Madison.
		He will speak to possible solutions for policymakers to consider.
		Thank you, sir.
unidentified		Thanks, Chairman Cassidy and Ranking Member Sanders, members of the committee.
		My name is Bennett Polito.
		I'm an economist at AEI, where most of my work, either directly or indirectly, focuses on issues related to health care costs.
		Those costs, which I think we're getting close to $5 trillion a year, represents, let's say, a persistent challenge, to put it lightly, for policymakers.
		Obviously, spending in the big federal programs places enormous stress on the federal budget, and it's a major contributor to our long-run fiscal imbalance.
		In the private market, high costs depress wage, it puts downward pressure on unemployment, it increases premiums, out-of-pocket spending, and it also presents problems for the federal budget.
		So, obviously, there's a lot of benefits to lowering health care costs.
		That said, I don't think it really argues in favor of indiscriminate cuts.
		We don't spend $5 trillion on things that aren't worth anything.
		A lot of that goes towards very valuable services or products.
		And so, the idea is to try and think about whether we can identify areas where we're pretty confident that we're spending money where the outlays or the prices do not actually reflect the value to consumers.
		And so, there's a lot of areas I think one could point to.
		I think one flag for that is markets where we see imperfections like a lack of information or a lack of realistic choice.
		In those kinds of markets, you have prices that are high, but it's not because somebody really loves that, say, hospital, because they don't have any other hospitals to choose from.
		And so, targeting those kinds of settings are a good opportunity to try and target spending without having as big of a downside of reducing welfare for patients.
		So, there's a lot of different policies Congress can look towards to move in that direction.
		I'll just give a couple examples that have been in conversations recently.
		One obvious one is that Congress obviously can help regulators and policymakers just get better insight into what's happening in these markets.
		So, in my written testimony, there are options to give the FTC and DOJ better oversight of what's going on in markets, new ways in which consolidation is happening, and impede that.
		That has a direct implication for choice.
		In other cases, we just heard about it.
		Congress can ensure that market actors actually have the information they need to make realistic choices.
		I won't belabor the point, but this comes up a lot with things like pharmacy benefit manager services.
		If employers can't actually evaluate the contracts very well, it's very difficult to reward the lower cost or the higher quality PBM.
		There's many policies that accomplish similar goals that aim to try and address cases where we have public programs or we have federal policies that unintentionally lead to consolidation or otherwise interrupt market actions.
		So, there's lots of examples.
		One is the 340B program that's been talked about quite a bit recently.
		This is a program that gives hospitals big discounts on drugs, and the idea is to give them more resources to treat lower-income people.
		Well, they also have a huge arbitrage opportunity over doctors and other institutions that don't have that discount.
		And so, there's this big incentive to consolidate with those folks and prescribe more medicines and earn this big profit margin.
		The goal of the program isn't bad, but we may want to think about whether we can target it a little bit better to make sure that we're actually targeting the money towards those people in that care that we're trying to subsidize and maybe avoid some of these problematic incentives like consolidation.
		Another one that's been talked about a lot is it's well understood that paying hospitals more than physicians' offices to provide certain services, certain services that can be provided by physicians in a standalone facility, incentivizes hospitals to consolidate with those physicians.
		It also makes it very difficult, if you're a physician, to operate a standalone operation.
		You have this major disadvantage: the hospital gets paid more to do the same thing.
		So, that gives a huge incentive to consolidate, and it's a great example of how consequential and how challenging it is to really specify these full price schedules like we have to do in programs like Medicare.
		And so, that is not an exhaustive list, but I think it gives some examples of tangible policies that work in a cohesive direction and try to target spending where we think that the trade-off with welfare for patients and consumers is not as bad.
		So, thank you very much.
		I look forward to questions.
bill cassidy ▲ ● ▼		Dr. Miller, let me get here.
		Dr. Brian Miller is a practicing hospital medicine physician and an associate professor of medicine at Johns Hopkins University.
		He's an expert in many areas of health policy and can speak to the value of transparency from a physician's perspective.
		He's also a commissioner on the Medicare Payment Advisory Committee, MedPAC, and a trustee for the North Carolina State Health Plan.
		Thank you for being here, sir.
unidentified		Thank you.
unidentified		Chair Cassidy, Ranking Member Sanders, and distinguished members of the committee, I appreciate the opportunity to share some practical thoughts.
bill cassidy ▲ ● ▼		Is your microphone on?
unidentified		It is.
bill cassidy ▲ ● ▼		Just pull it a little bit closer, please.
unidentified		There.
		I spent last week working in the hospital and last weekend, so I come here from a point of pragmatism.
		I should note that I'm here in my personal capacity, and my views don't necessarily reflect those of Hopkins, AEI, MedPAC, or the North Carolina State Health Plan.
		Lists of disclosures aside, I wanted to talk about three areas.
		One is hospital price transparency.
		So I'm sort of a car nut.
		So I looked at some stats and I saw in 2022 Americans purchased 13.6 million new cars amongst 275 models.
		They obtained service at over 273,000 independent shops and an equal, if not larger, number of dealers.
		So consumers can make trade-offs on price, reputation, trustworthiness, and brand.
		We should empower them to do the same thing for health care, especially for non-emergent services.
		The hospital price transparency rule, that was a Trump administration policy that was supported by the Biden administration, it was not supported by the hospital administration.
		If we look at the last OIG report, we saw that 37 out of 100 hospitals complied with the two major components of the rule.
		Frankly, that's, in my view, a crime against patients.
		So I think there are a couple things we should do.
		One is we should codify price transparency.
		We should also routinely audit large health systems with a focus on tax-exempt institutions.
		And then we should couple this with implementation of penalties and publicization of non-compliance.
		Think the walk of shame from Game of Thrones.
		I also think that facility fees are a big problem.
		It's a problem because consumers don't know.
		I know, and I still have to check: what is a hospital outpatient department?
		Do we think that a consumer is going to understand that it's greater than 250 yards away from the originating facility and less than 35 miles and was acquired in billing as an HOPD before November 2nd, 2015?
		When I say that, we all agree that that sounds absurd.
		So we should have a requirement of transparency for HOPD facility fees.
		And frankly, I think CMS and the FTC should investigate these marketing practices.
		I also think that we need to put patients and physicians together in the driver's seat.
		Put the price in the electronic health records so that patients and doctors can have that conversation.
		ONC can do that.
		PBMs are unpopular, very unpopular.
		And I want to spend a moment talking about those.
		I believe in pharmaceutical product innovation.
		When I was a medical student, if you had advanced melanoma, it was a death sentence.
		Now, you can live for several years.
		But there are also 20,000 prescription drugs.
		Pharmaceutical product manufacturers understandably have an interest in promoting the value of their drug, not the relative value of their drug.
		And physicians and patients know a lot, but the PBM serves as sort of the filter for that.
		That's why we have PBMs.
		But there are problems.
		One is planned sponsors and employers don't always have full insight into how rebates work, what the fee schedule looks like.
		And so I think we need transparency for plan sponsors, because that would, or for PBMs, so that plan sponsors can have a good idea of what they're buying.
		You want PBMs and employers to have choice of contracting, but it needs to be an informed choice.
		I also think we need to look at the consolidation in the marketplace.
		We have three or four PBMs that control most of the market.
		The FTC approved these mergers over the last 20 years.
		The FTC should do a retrospective merger review and take a look at their past choices.
		Because I looked up some of these cases and the FTC thought that they would lower prices, not raise them.
		So clearly, we're doing something wrong in our analysis.
		And then we also need to take a look at ERISA fiduciary responsibility for PBMs and study that.
		I also want to close by saying that employers do have agency.
		I'm on the board of the North Carolina State Health Plan, which had a half a billion dollar deficit.
		We redesigned the benefit.
		We implemented a network.
		I would call it preferred providers light, sort of like Coke Zero.
		It's going to save costs, drive volume, improve quality.
		We also have a good retiree product, which is richer because it uses managed care tools, trades off cost, quality, and access.
		So I think that there are a lot of things that we can do practically that will improve transparency, lower costs, and empower consumers.
		And I appreciate the opportunity to share those thoughts with you and look forward to your questions.
bill cassidy ▲ ● ▼		Thank you.
bill cassidy ▲ ● ▼		I now recognize Senator Sanders to introduce his witnesses.
bernie sanders ▲ ● ▼		Thank you, Mr. Chair.
		I'd like to introduce Dr. Adam Gaffney, a critical care physician, assistant professor, and health services researcher at Harvard Medical School.
		Dr. Gaffney is a past president of Physicians for a National Health Plan.
		His research focuses on health care affordability, access, and reform.
		Dr. Gaffney, thanks so much for being with us.
unidentified		Chairman Cassidy and all the members of the committee for having me here to testify today.
		There we go.
		Thank you for having me here today.
		So we're here to discuss health care affordability.
		So let's first take stock of where we stand today before the One Big Beautiful Care Act takes effect.
		27 million Americans have no health coverage.
		One in four working-age adults with insurance have health coverage they can barely afford to use because of co-pays or deductibles.
		One in five American households is burdened by medical debt.
		Health care spending is projected to take a whopping 20% of our GDP, nearly double the level of other high-income nations.
		And administration and bureaucracy consumes about one-third of our total health care dollars, even as tens of thousands of Americans die every year for lack of health coverage.
		I've witnessed many of these harms firsthand as an intensive care unit doctor.
		Patients who have foregone treatment for high blood pressure and wound up with strokes, heart failure, or kidney failure as a result.
		Those with diabetes forced to ration insulin and who developed life-threatening complications such as diabetic coma or ketoacidosis.
		And patients with asthma or emphysema gasping for breath because they couldn't afford their medications.
		But make no mistake, the one big, beautiful bill will make such medical tragedies only more common.
		That bill will swell the ranks of the uninsured by some 10 million and health care costs to surge for many more.
		In a study colleagues and I published recently in the Annals of Internal Medicine, we estimate that the trillion-dollar Medicaid cuts inflicted by this law will cause nearly 2 million people to lose a personal physician, 1.3 million to skip needed medications, 1.2 million to accrue medical debt, and more than 16,000 Americans to die before their time because of these cuts.
		And not only those with Medicaid will suffer.
		Americans with ACA marketplace plans will see their premiums skyrocket on January 1st when key subsidies expire.
		And for hundreds of thousands of low-income seniors, the reconciliation law will mean higher drug costs and more preventable deaths.
		Healthcare affordability, in other words, is about to go from bad to worse.
		So let's now shift to solutions.
		Two being discussed today, price transparency and pharmacy benefit manager reform, are reasonable, but totally insufficient.
		Price transparency will offer little for many of the most expensive illnesses.
		You can't comparison shop your way into an ICU with a heart attack or in the many communities where there is only one hospital system.
		And it's hard enough to deal with a serious illness.
		Patients suffering from cancer shouldn't have to be comparison shop for their life-saving surgery.
		As for drug prices, it's true that PBMs, middlemen who purchase drugs from pharmaceutical manufacturers on behalf of insurance companies, add an extra layer of fat to the system.
		PBMs, and so reforms that prohibit their worst practices could be helpful.
		But let's be clear, PBMs take advantage of the sky-high drug prices set by pharmaceutical companies, at least twice what other countries pay.
		In sum, these sorts of reforms are not true solutions.
		To make health care truly affordable for every American, we need to cover everyone, but also make sure that coverage provides real protection.
		No copays, no deductibles, no narrow networks, and an end to the hours and hours that patients and their doctors spend on the phone with insurance companies, driving everyone crazy.
		Of course, to afford that sort of expanded and upgraded coverage, we'll need to find savings elsewhere.
		And there's an obvious way to do that.
		We can eliminate the gargantuan waste imposed by private health insurers.
		They essentially light your dollars on fire.
		The traditional Medicare program takes about 2% of its total revenue for its overhead.
		The rest goes towards actual health care.
		Medicare Vantage plans and other private insurance companies, in contrast, take at least five-fold more than that for their overhead and profit.
		And the reconciliation law will actually add to administrative bloat in our health care system, adding new bureaucracies in each state to monitor and quadruple check poor people's documentation of their work efforts.
		That red tape will cost taxpayers billions, as colleagues and I recently reported.
		In contrast, the Congressional Budget Office projects that a Medicare for all reform could save more than $400 billion annually just by simplifying health care payments and cutting out private insurers.
		In conclusion, Americans' health care lies at a crossroad.
		Down one road, the road we are currently treading lies more uninsured Americans, increasingly unaffordable care, ever-expanding bureaucracy, and more patients dying due to lack of care.
		Down another road is a simpler, more effective system that provides full coverage to every American, protecting both their financial welfare and their health.
		And thank you so much.
bernie sanders ▲ ● ▼		Mr. Chairman, thank you very much, Dr. Guffning.
		I'd like to introduce Wendell Potter, President of the Center for Health and Democracy.
		Mr. Potter is a former insurance executive turned industry whistleblower.
		He has advocated for reform in the health care industry, and his organization recently published a report on consolidation at United Health Group.
		Mr. Potter, thanks so much for being with us.
unidentified		Thank you, Ranking Member Sanders, Chair Cassidy, members of the committee.
		When I first testified before Congress 16 years ago, I warned about the business practices of a rapidly consolidating insurance industry.
		I said that during my 20 years as an executive, I saw how insurers confuse their customers and dump the sick, all so they can satisfy their Wall Street investors.
		That's even more true today due to insurers' vertical integration, enabled by a bipartisan consensus that insurers could be trusted to lead a public-private partnership.
		Their siren song of a public-private partnership has been irresistible.
		Twice, Congress handed them the keys to them, first with the Medicare Modernization Act of 2003, which created the Medicare Part D program and the Medicare Advantage program, and again with the Affordable Care Act in 2010.
		Although both laws included guardrails, insurers crashed through them and have made huge profits.
		I supported both bills because they sought to reform harmful insurer practices, but no one anticipated the industry's ability to turn regulatory lemons into very profitable lemonade.
		Both laws tried to curb insurers' confusing business models and their habit of dropping sick enrollees.
		The MMA introduced a risk scoring system to pay insurers more for sicker patients, but insurers have gamed that system.
		By exaggerating patient illness, they will collect an additional $84 billion of our tax dollars this year alone, which I know Congress never intended.
		Before the ACA, insurers were spending less and less of our premium dollars on care every year.
		That law introduced a medical loss ratio provision that requires insurers to spend 80 to 85 percent of our premiums on medical care.
		But industry found a workaround.
		Because the rule does not apply to health care providers, insurers began buying physician practices, clinics, home health agencies, pharmacy benefit managers, hospice operations.
		They now pay themselves, satisfying MLR requirements while shifting more money to corporate profits.
		United Health now transfers nearly one-third of its total revenue to provider entities that it now owns.
		My team and I published a report earlier this month, which I brought with me that United has almost 3,000 subsidiaries, most involved in health care delivery, making it the third largest company in America.
		The consolidation gives United Health control over nearly every patient interaction, from finding a doctor via healthgrades.com, which it owns, to seeing a physician that the company employs, to filling a prescription through its PBM, to receiving home care from its many subsidiaries, and even accessing veterans' benefits.
		The company profits at every step, often in ways that regulators cannot track, and it reportedly pays its own physicians more than it pays independent doctors.
		These internal transfers are reported as medical spending under MLR rules, but in reality, they contribute to profits funneled through a white coat.
		In banking, this kind of self-dealing is illegal.
		United Health's intercompany transfers now account for 31 percent of its total revenues, and the more it charges, the more it profits.
		And know this: the company now derives more than 75 percent of its health insurance revenue from public programs like Medicare Advantage, Medicaid, and VA contracts.
		Despite having far more commercial enrollees, it collects billions in profits from your constituents by gaming the systems you put in place.
		Meanwhile, independent physicians and rural providers are being squeezed, sadly, because of their need for capital.
		Most already have sold out to hospitals or insurance companies.
		That, of course, has led to further consolidation, higher prices, and reduced patient choice.
		And make no mistake, patients are paying the price at a very high price.
		High-deductible plans and confusing cost-sharing rules are forcing people to delay or skip the care that they need.
		I promoted those plans as an industry executive until I saw hundreds of patients lining up for free medical care in animal stalls at a county fairground near where I grew up because they couldn't afford their deductibles.
		Today, more than 100 million Americans carry medical debt.
		Most of them have health insurance.
		And physicians are burning out from battling insurance companies to get the care approved for the patients.
		To restore affordability and access, we must act with a sense of urgency.
		We must fix the rules first.
		We need to close MLR loopholes and require full transparency and ownership and acquisitions.
		Insurers should not be allowed to use tax dollars to fund stock buybacks, dividends, and misleading ads.
		And we ought to consider expanding the use of global budgets like Maryland has, which has saved the state's taxpayers over $1 billion while keeping the state's hospitals open.
		We also need to give people greater choice by offering them a public option or allowing folks to buy into traditional Medicare.
		And fourth, we must put an end to anti-competitive practices.
		I encourage you to pass the bipartisan Patients Before Monopolies Act to separate PBMs from pharmacies.
		For-profit insurers also should probably be barred from owning physician practices and medical facilities.
		And we need to phase out insurer-owned PBMs in our public programs like Ohio has done.
		In closing, I urge you to scrutinize this public-private partnership that insurers have seized control over.
		As long as they are in control, they will continue to prioritize profits over people.
		It's time to take the keys away from them and demand transparency, accountability, and a system that serves patients, not shareholders.
		Thank you.
bill cassidy ▲ ● ▼		Thank you all.
		I'll begin.
		Okay.
		Ms. Deacon, Dr. Hippolito.
		I'm a business guy, business gal, watching from home, and we all talked in a lot of kind of language that we understand.
		I want lower premiums.
		Now, you were saying, Ms. Deacon, that if they had machine-readable files, that this would be the way to get to holy, to lower premiums.
		Let's translate that.
		You're saying that if you tell me what you say, but say it in plain English so that somebody watching here knows how price transparency is going to lower the amount they're paying for health care, put more money in their pocket.
		Plain English, 30 seconds.
unidentified		When you pay your premium to your employer coming out of your paycheck, that employer is responsible for purchasing health care on your behalf.
		If that employer cannot see what they are paying to a hospital, what the price is they're paying, what's coming out of the bank account, and what the price is that their insurance company has negotiated on their behalf, they are unable to control that cost.
		It might surprise that person that if they went to hospital A for a service, they could pay cash and it would be $10,000.
bill cassidy ▲ ● ▼		So the insurer, so the business would be able to look at these prices, perhaps have somebody help the business person, and say, wait a second, why don't I have this hospital in network if the cost of a colonoscopy is, I think you use the example of $6,000 here and $1,200 there.
		If the cost of a colonoscopy is so much less, why aren't they in my network?
		It gives the employer the ability to say, hey, I could pay less if I had them.
		Is that fair?
unidentified		Yes, absolutely.
		And I do want to stress, this isn't just for shopping pre-service.
		Data transparency in the form of MRFs and employer access to data is machine-readable files are absolutely essential for high-cost services as well, because it's the employer that is going to, and their vendors, that are going to look at those prices and make sure that what they're paying for is accurate.
bill cassidy ▲ ● ▼		So I think Dr. Miller spoke of buying a car, probably going to Consumer Reports, seeing where my best deal is.
bill cassidy ▲ ● ▼		In a sense, the patient or the employer could go to whatever, Consumer Reports, and come, what is the best deal for me in my market on a suite of services that we anticipate using?
unidentified		Yes, not only what is the best deal, but also what did I pay for and making sure that that's accurate and that's what came out of my experience.
bill cassidy ▲ ● ▼		Now let's bring it down to the patient herself, Dr. Miller.
		You speak about facility fees, about how you could spend, I don't know, what would be a typical facility fee in a hospital.
		And explain what a facility fee is, because a lot of people don't know they're paying it until after they're charged for it.
unidentified		So a facility fee, when you get care at a hospital outpatient department, you end up paying about 60, 70 percent more because the hospital is allowed to tack on an additional charge, known as a facility fee, in theory to support additional infrastructure.
unidentified		But often what it means is that the hospital just purchased the clinic, pasted their corporate name on it, and are charging you more.
bill cassidy ▲ ● ▼		So I can get my blood drawn here, and a facility, typical facility fee would be what, $200, $500?
unidentified		A couple hundred dollars.
bill cassidy ▲ ● ▼		A couple hundred dollars.
bill cassidy ▲ ● ▼		Or I can go across the street to the commercial lab and get maybe the lab less, but certainly not have to pay the facility fee.
unidentified		That's right.
bill cassidy ▲ ● ▼		And that's currently not transparent to the patient.
unidentified		The consumer has no idea, so you can get stuck with a several hundred dollar bill, and there's no way, no way that a consumer would know.
bill cassidy ▲ ● ▼		Now, Ms. Deacon and Mr. Potter, you all both spoke of the fact that there's vertical integration.
		That vertical integration allows costs to be, if you will, passed on.
		But Mr. Potter, you come from the insurance realm.
		Theoretically, I'm going to buy the policy which is less expensive.
		And so if one company is padding by having vertical integration, kind of looping costs within, that would drive up the cost of the policy.
		I'm asking, I'm asking honestly, why would I not just take a lower cost competitor as opposed to the one who's padding the cost?
unidentified		I think it's because there's, first of all, there's not a lot of competition.
		They operate very similarly.
		You do see quite a bit of change in that an employer will shift from one carrier to another, thinking that they might be getting a better deal for the near term, but often those rates go back up.
bill cassidy ▲ ● ▼		Mr. Epolito, you spoke about giving different authorities to different people.
bill cassidy ▲ ● ▼		Were you speaking of justice having the authority to go after this vertical integration, which allows a kind of incestuous payment process?
unidentified		Yeah, that's certainly a good example of somewhere where their expertise could help us understand it better and potentially impede actions that we think are anti-competitive.
unidentified		Sure.
bill cassidy ▲ ● ▼		Okay.
bill cassidy ▲ ● ▼		Well, I will finish 11 seconds early and see to Senator Sanders.
bernie sanders ▲ ● ▼		Can I take your 11 seconds?
unidentified		Nope.
bernie sanders ▲ ● ▼		According to the CBO, the Medicare bill, Medicare for All bill that I introduce would save the American people $650 billion each and every year.
		And the reason for that is simple.
		We do away with administrative costs and bureaucracy.
		Here is a chart that I think is extremely important.
		And I think this came from the Pete Peterson Foundation, a conservative group.
		Administrative costs per person in Japan, $82.
		In the United States, $1,055.
		Dr. Gaffney, in your experience, talk about administrative waste.
		Our goal is to put health care dollars into health care, into medical treatment, into disease prevention, et cetera, not to pad incredible amounts of bureaucracy and drive patients crazy trying to figure out how they could deal with their insurance companies.
		Dr. Gaffney, talk about bureaucracy and administrative costs within the health care system.
unidentified		Sure.
		I mean, our complex commercialized health insurance system is what drives those high administrative costs.
		One-third of U.S. health care dollars are spent on administration, as I mentioned, and that's double the proportion of Canada.
		Among hospitals, about a quarter of revenue goes towards administration alone.
		Again, that's about twice Canada.
		So, why is that?
		Two reasons.
		First, on the insurer side, private insurers have a whole host of costs that traditional Medicare does not.
		They need to pay high executive salaries.
		They need to pay dividends to shareholders.
		They need to build huge armies to fight with patients and providers to deny claims, right?
		And all of that costs a lot of money.
		Again, five-fold higher share of their revenue goes towards administration.
		Good.
bernie sanders ▲ ● ▼		Thank you.
		Let me ask Dr. Ebelito: does that chart concern you?
		Do you think that we are wasting hundreds of billions of dollars on administrative costs?
unidentified		I'm always open to opportunities to lower costs.
		I will say completely minimizing costs is not the right goal either, of course, because we want to combat things like fraud and inappropriate behavior.
		But sure, if there's opportunities to lower it, that's good to go after.
bernie sanders ▲ ● ▼		Ms. Deacon, does that chart concern you?
bernie sanders ▲ ● ▼		Is there something to be learned from that chart?
unidentified		I think that the chart is concerning, and for many of the reasons that I spoke about in my testimony, I do think that administrative waste is a huge problem and can be addressed by more transparency and disclosure.
bernie sanders ▲ ● ▼		Is health care, Ms. Deacon, let me ask all of you, go down the line.
bernie sanders ▲ ● ▼		In the United States, should we do what every other major country on earth does and look at health care as a human right guaranteeing health care to all people?
unidentified		I think it's how you depend health care, health care, health coverage.
bernie sanders ▲ ● ▼		It means that you can go to the doctor anytime you want and you leave without a bill.
unidentified		Again, I think it's how you define health care.
		I'm a lawyer.
		I'm going to say it depends.
bernie sanders ▲ ● ▼		Dr. Ebolito, do you think health care is a human right?
unidentified		I don't know the answer to that direct question, but I think there's plenty of- not a complicated question.
bernie sanders ▲ ● ▼		Everybody in this country has the opportunity to get all the health care they need, regardless of their income.
unidentified		We might have a different vision for what that system looks like, but I think it's a wonderful goal to work towards.
bernie sanders ▲ ● ▼		Dr. Miller?
unidentified		I think everyone should have access to health care, but that it should not be free to everybody.
bernie sanders ▲ ● ▼		Dr. Gaffney?
unidentified		Everyone should get top quality health care of this country, and we can afford to do it.
unidentified		We're the richest country in the world.
bernie sanders ▲ ● ▼		Mr. Potter.
unidentified		I believe it is, Senator.
bernie sanders ▲ ● ▼		Mr. Potter, you recently published a report on United Health Group, which found something pretty shocking.
		United Health has acquired about 2,700 different health care companies.
		It sounds to me like we are moving to a single-payer system run by United Health for their own financial advantages.
		Do you want to talk a little bit about what your findings, about your findings?
unidentified		Yeah, and this has occurred largely since over the past 10 to 15 years, as they have moved increasingly into health care delivery, is that vertical integration we talked about.
		And I would say it was somewhat incentivized by the medical loss ratio provision, which I do believe needs to be addressed because they can shift money internally.
		And if you look at their financial statements over time, you see that every year they are paying themselves a bit more.
		And on their earnings call this past week, they said that to get back into Wall Street's good graces, and they've been in the doghouse for quite some time now, that they are going to be narrowing their networks, they're going to be raising premiums by double digits, and they are going to be cutting benefits across the board.
		Their master is Wall Street and their shareholders, and their profit margin is what they are most concerned about.
		But to be able to deliver those profits and to stay within the letter of the law in the Affordable Care Act, the medical loss ratio provision, they are paying themselves.
		They're funneling more and more money that we pay them in premiums and as tax dollars into delivery entities that they own and operate.
bernie sanders ▲ ● ▼		Thank you.
bill cassidy ▲ ● ▼		Senator Marshall.
roger marshall ▲ ● ▼		Thank you, Chairman, Ranking Member.
		Welcome to our guests.
		You know, where to start?
		I think that we have today before us a 90 to 10 issue.
		Maybe it's 95 to 5 Americans concerned about the cost of health care.
		Since I got here four years ago, eight years ago, four years ago, Senate, I've talked about the pillars to driving that price down, but maintaining quality was transparency, more innovation, and consumerism, letting patients be consumers again.
		So it's wonderful that we get an opportunity to address solutions.
		We've all described the product, the problem.
		Now let's talk about solutions.
		Very proud of one of our signature, maybe our signature legislation we've been working on for eight years, Patients Deserve Price Tags Act.
		Appreciate Senator Hickenlooper's support, Senator Hassan, Grassley, she, he, and Ernst their support as well.
		Could you imagine walking into a grocery store, going to the meat department, and not seeing the prices on the different meats?
		Could you imagine going to a clothier store and not knowing what the prices are in the suits?
		Most of us, we walk up there, we look at a suit, what's the first thing I do?
		I look at the price of it.
		But in health care, they've buried the prices.
		So what our legislation attempts to do is to get price tags on health care.
		What a novel thought.
		And try to, a couple thoughts, what our bill does and get your reaction.
		Ms. Deacon, I'll start with you.
		As a consumer, you have a choice of getting your hip replaced at one facility for $10,000, another one is $50,000.
		And that's not an unreasonable numbers to compare.
		A hip replacement, 10 versus 50.
		How would you as a consumer, how would that impact the eventual cost of health care?
		If you're in a self-insured plan and you're running that plan, how could it impact your decisions to drive down the cost of health care?
unidentified		I mean, as a consumer, absolutely, if I had out-of-pocket, I would both evaluate for quality and cost to determine value, and I would likely find myself at the $10,000 clinic.
unidentified		But as an employer sponsor, if all of my members were to have such information, it would dramatically lower the cost of premiums every year, especially for our self-insured employers, because more consumers would be able to evaluate such tools.
roger marshall ▲ ● ▼		And this is a wild guess.
		Could it drive down the cost of a health insurance for an employed, self-employed fund 10, 20, 30, 40 percent perhaps?
		I mean, it's a big number.
unidentified		Yes, and we've absolutely seen employers that are able to do that save 30 to 40 percent on premiums.
roger marshall ▲ ● ▼		Exactly.
roger marshall ▲ ● ▼		Okay, Dr. Ippolito, did I do that right?
unidentified		Yes.
roger marshall ▲ ● ▼		Okay, Dr. Ippolito, another component of our bill ensures that group health care plans have access to their own claim data.
		Can you believe it?
		I have a self-insured plan, and I can't look at my own claim data.
		Would that be helpful to us specifically a self-insured plan?
unidentified		Well, sure.
		I mean, at a minimum, if you're sitting there trying to think about what services are we going to use next year, what kind of plan looks good for us, if you don't know what services you use, you can't do that.
		And so in terms of those basic tasks that your employer, who's your agent in this world, for many of us, is tasked with providing, they need that information.
		So yeah, it seems like a baseline, a prerequisite.
roger marshall ▲ ● ▼		So is there anyone on this panel that disagrees that price tags could not be helpful in driving down the cost of health care?
		Does anyone want to counter that argument?
		Okay, good.
		I want to turn to delinking just for a second.
		Of course, talking about pharmaceutical benefit, PBMs, right?
		Very horizontally, vertically integrated, four companies, three companies controlling 85% of the industry.
		And many of you talked about the oligal monopolies that they're forming here.
		Specifically, Senator Kaine and I have a bill called delinking, and it delinks the money the pharmacy benefit managers make from the cost of the drug.
		So PBMs create formularies that really prevent you from using the generic drugs at less cost.
		They push you to the more expensive ones.
		So I'll start with Mr. Potter.
		Would reforms such as delinking PBM compensation from the list price of medicines benefit patients in meaningful ways and drive down the cost of drugs?
unidentified		I absolutely agree.
		It would.
		I think it's very important legislation.
		I think there should be delinking.
		That game incentivizes drug companies to have a higher list price.
		And then the middleman that you were showing up there on that board are sucking so much money from the pharmacy supply chain.
		When I was at Cigna didn't own a very big PBM, it bought Exprips recently, a few years ago, and now it is largely a PBM that also has insurance plans.
roger marshall ▲ ● ▼		Quickly, Dr. Miller, what of use to patients do PBMs fulfill?
roger marshall ▲ ● ▼		Why are they in this food chain?
unidentified		So I think that the PBM is a constructor of the formulary, right?
		There are over 20,000 prescription drags.
		Us as physicians, there's no way we're going to remember that.
roger marshall ▲ ● ▼		How does it help patients?
roger marshall ▲ ● ▼		Could we do it if we remove them from the food chain, wouldn't we be better off?
unidentified		I actually don't think so because I think we want someone besides the government making decisions about it doesn't have to be the government.
roger marshall ▲ ● ▼		Okay, I appreciate the answers.
		Thank you, everybody.
		Thank you.
bill cassidy ▲ ● ▼		Senator Kim.
unidentified		Thank you, Chairman.
		Thank you to the five of you.
		Ms. Deacon, I'd like to start with you.
		You had a very helpful testimony.
		You've written a lot of detail here.
		There's one part that really stood out to me.
		You were talking about the use of repricing and negotiation vendors.
		And you talked about this one case where the single claim, actual amount paid to the medical provider, was around $875,000.
andy kim ▲ ● ▼		However, the total amount paid by the health plan was over $4 million, of which Cigna retained about $2.5 million in administrative and other fees, and Multi-Plan retained around $677,000 based on its repricing agreement.
andy kim ▲ ● ▼		Can you explain to me and to the American people what is happening here in that example that you talked about?
unidentified		Right.
		In this example, a member goes to seek claim.
		In this case, it was a particularly high-cost claim.
		And the claim was submitted by the provider to the insurance company, in this case, Cigna.
		Cigna engages behind the scenes a third-party vendor to help negotiate the price of that claim down.
		The way that the incentives are structured, however, behind the scenes, Cigna gets to keep a pretty big chunk of the savings that are generated, as do their third-party vendor.
		So in this case, a claim was submitted, again, a high-cost claim.
		It was negotiated down to $875,000.
		So that's what the provider actually got for providing health care.
		And as you mentioned, Cigna kept $2.5 million, and Multi-Plan got $677,000 in order to negotiate that down.
		Now, when we're talking about administrative waste and bloat in health care, $875,000 of that $4 million claim paid was health care.
		The other 79% of that $4 million is not health care.
		I mean, $79,000.
		It's mind-boggling to me just when I hear that.
		And the question is, what value does that bring?
andy kim ▲ ● ▼		What value is that 79% compared to the cost of what the actual medical provider got for the care that they provided?
andy kim ▲ ● ▼		And I just, you know, it just frustrates me so much in terms of how to justify these costs.
unidentified		I see the importance of what you're saying about transparency, because that's a perfect example of that.
andy kim ▲ ● ▼		But I will also say that that alone obviously is not what we need to be thinking about.
unidentified		And I thought you encapsulated well.
andy kim ▲ ● ▼		You said here in a different par, profit seeking is expected in any corporate structure, but in health care, it's concurring in a system that lacks the most basic market safeguards.
unidentified		Transparency is one, but so is competition and accountability.
andy kim ▲ ● ▼		I think the five of you have all talked about how much we're lacking, especially when it comes to competition and accountability.
unidentified		Dr. Miller, I wanted to just ask you, I was intrigued by what you said about retrospective merger review.
		Can you go into that a little bit more?
		So the FTC is a smart organization, and when things don't go the way that they expect, they tend to take their industrial economists and have them study what they did wrong.
		So for a long time, the FTC lost at hospital mergers, and then they undertook a retrospective merger review to figure out what their analysis and strategy was getting wrong and changed their strategy and analysis and has done a much better job and has actually kicked butt on hospital merger review.
		I think we need to do sort of the same thing with PBMs.
		The FTC approved a lot of PBM mergers thinking that they would decrease price and not result in monopsony power in purchasing when facing pharmacies.
		And independent businesses have struggled.
		And so I think we need to have the FTC take a look at all the PBM mergers that they approved over the last 25 or 30 years, figure out what their analysis got wrong and how they need to change the strategy of looking at these going forwards.
		Mr. Potter, what's your thought on that?
		I agree with that 100%.
		One of the things that we found in our research is that these companies are getting far more money, in many cases, from their PBMs and their other delivery organizations than they are from their health plans.
		At CVS, which owns Aetna, that company gets more money, revenue, and profits from its PBM than it does from the company's almost 10,000 stores and from the Aetna health plans.
		It is a huge cash cow.
andy kim ▲ ● ▼		Yeah, one thing I just want to add here as I end here, it's not just about the costs, it's also about the care.
unidentified		You know, a year ago, my father had major surgery, had to go to a subcube facility.
andy kim ▲ ● ▼		We learned at that point that he had signed up for Medicare Advantage, which literally limited the number of days that he could be there in terms of getting the kind of rehab that he would.
		They didn't care at all what the doctor said he needed to be able to get back on his feet and be able to proceed.
		So it just, when we're talking here, it's not just about the costs that people are incurring.
		It's literally limiting and affecting the quality of the care that people are getting.
unidentified		With that, I'll yield back.
		Thank you.
		Thanks for all being here.
		I appreciate the Chairman having this hearing today.
		We're talking about savings.
		We're talking about administrative costs, but health care has been the number one driver of inflation in America in the 21st century.
		You look at Medicaid, Medicaid costs have gone up 6.5%, private health insurance costs 5.3%.
		The overall cost of hospitals, 256% over that collectively.
		And we've talked about administrative costs, but even under Medicare and Medicaid, those are both increasingly administered by private companies.
		This is the reality of how those programs are work.
		More than 50% of Ohioans under Medicare have chosen to use a private option.
		And this is, you know, the big beautiful bill has been brought up today.
		You're still going to see increases in Medicaid on an annual basis go up over 3% with the efforts to try to eliminate duplicative payments and determine eligibility and to stop paying for people's health care who are not citizens of the United States.
		All of those things are really driving health in the government and in the private sector.
		And I want to talk about one tool that was given in the past to help make health care affordable that seemingly is not working in the prescription drug space, and that's 340B.
		The program mandates that drug makers give entities large discounts on drugs that doesn't require those drugs to be, that savings to be passed along to the consumer or private insurer, nor does it require the hospital to use those funds in any specific way.
		A hospital can, for example, purchase a physician-administered drug at a large discount but sell it to Medicare or private insurers at full market prices, keeping the price difference as a profit.
		I could go on.
		I'm interested in solutions to this.
		Mr. Ippolito, what thoughts do you have on how we can make 340B work better, put more safeguards in place, and pass along that savings to consumers?
		Yeah, I mean, so sure, as a starting point, I guess the thing I would say is that if the goal of the program is to try and help hospitals afford care for people who don't have coverage or can't pay, then we ought to try to target those subsidies to those patients.
		And right now, we don't really do that.
		Once you meet a threshold, you get this ability to buy drugs at a huge discount.
		So one proposed policy solution is just to say, look, these subsidies that we give these hospitals, we're going to tie them to those patients we're trying to actually subsidize.
		That way we don't need to wait.
		We don't need you to tell us how you're using the money.
		Money is all fungible anyway.
		It's kind of hard to evaluate.
		Just tell us how many of these people you treat, and we'll try and help subsidize the care for those people.
		That seems like a very natural way to do it.
		Anyone else have a thought on 340B, how we can make it work better?
		Yes.
		Sure.
		Dr. Miller.
		My idea I've heard wandering around town is that if hospitals need funds, give them the funds.
		If we want the pharmaceutical industry to pay for it, do it as a flat fee or a flat tax, whatever you want to call it, user fee tax, and that is clear and transparent so that the pharmaceutical industry has predictability and that hospitals have predictability about the subsidy that they get to support their operations.
		I mean, that's an idea that multiple people have talked about, which would solve a lot of the arbitrage problems, make sure that hospitals are supported and that the pharmaceutical product developers have clear predictability of costs.
		Thank you.
		And Dr. Ippolito, you published research in 2023 estimating the net cost of certain GLP-1 drugs.
		Through your research, you found that some of those drugs with relatively high list prices were rebated as much as 80% of the list price.
		Could you tell us more about that picture on certain medications and how we figure out the true costs?
		Yeah, I mean, this is a long-standing frustration with the pharmaceutical market.
		We all know drugs have very high list prices, but the actual transaction prices, the price that the insurance company pays for that drug is often much, much lower.
		It has become commonplace now for drugs to have 60, 70 percent rebates.
		I would say the one thing that would be good to work towards in this market is that sort of like with 340b, insurers don't make the patient's cost sharing a function of the lower net price.
		Make it often a function of the much, much higher list price.
		And so that seems to me to be one of the things to work on, is to try and get rid of this huge discrepancy and make it so that when the patient buys the product, they're benefiting from the fact that there has been a negotiation that's lowered the price.
		Yeah, I thank you for that.
		The challenge I think we are facing right now is there have been a lot of efforts by people in Congress over the years to find efficiencies, and the whole system seems to find a way around them.
		And we need to constantly police these things.
		And I think we've got some work to do in this committee to help.
		Senator Kaine?
		Actually, Senator Hickenlooper.
		Okay, Senator Hagenlooper.
		Thanks, Senator.
		I appreciate that, Mr. Chair.
		Thank each of you.
		I want to make sure to thank each of you for spending your time here, but all the work you're doing.
		I want to start talking a little bit just about the recent so-called One Big Beautiful Bill and its cuts to what are going to translate into major costs and a dramatic drop in coverage.
		Senator Sanders isn't here, but I am a firm believer that we should be able to get everyone health care coverage.
		And how that we get there is hotly debated.
		I'm a big believer in community health centers.
		But if you take away Medicaid or dramatically cut it, that's a primary source of revenue for so many of those institutions.
		I want to go into, since we are limited in time, I want to go into the transparency issue, because I think this is critical.
	Almost everything we've discussed, if we had a fully transparent system, whether you're talking about pharmaceutical costs or PBMs, their share of this or that, a transparent system allows us to begin to assess that and especially, as several of you have mentioned, allows businesses that are actually paying for the insurance for their members to really see what's going on and address how to correct it.
	And that market there is important.
	I'm with Senator Marshall on the Patients Deserve Price Tags Act because I think it's the first step.
	It's not all we need to do.
	I mean, I started working with community health centers 50 years ago.
	Actually, I tease Senator Sanders because I was in print in a letter to the editor of the Middletown Press saying that health care should be a right and not a privilege in 1978, which I think is about 10 years before he was first in press saying that.
	But beyond that, what can we do now?
	And the transparency is a big deal.
	So, Ms. Deacon, Mr. Miller, Mr. Pelito, do you think that bills like Patients Deserve Price Tags Act really will help further expand transparency and assuming that it does bring down costs?
	Let's start with Ms. Deacon.
	Thank you.
	I absolutely believe that the bill, Patients Deserve Price Tags, can be just a monumental shift as far as transparency on hospital pricing, expanding hospital price transparency, but especially for somebody that's focused in the employer space, it can be transformational.
	It will be transformational for employers in their ability to actually exert the market power that they should have to lower costs.
	Mr. Miller?
	Or Dr. Miller, I'm sorry.
	Absolutely.
	And I would say it is unethical for us not to have price transparency.
	So it is a must-do.
	Great.
	Mr. Palito?
	Yep, I agree.
	And I'll just highlight that it also helps us when we think about evaluating how these markets work and designing policy.
	Better information helps us.
	And I'll go down the whole list, Dr. Gaffney.
	Price transparency, I think, would be fine.
	It wouldn't do anything for the 15 million people who are going to become uninsured in the coming years, the 27 million who are currently uninsured, or people with very high deductibles.
	But I think it's useful.
	Fair enough.
	Mr. Potter.
	I think it would be very helpful.
	I think it should actually be broadened to include transparency about transactions like buying big clinics and things like that.
	So there's a lot of need for transparency across the board.
	And I do think employers should be able to get their claims data.
	Some employers have had to sue their carriers and not necessarily very successfully because of current law.
	So it's very important.
	Absolutely.
	Again, I think we look at all the different places where the lack of transparency gets in the way of value, the assessment of value.
	And, you know, again, once you have transparency, you can move towards better quality and measuring quality.
	That's got to be part of this as well.
	Mr. Potter, since you're talking, your testimony mentions the rising costs of medical debt in this country.
	I think that should alarm all of us.
	It greatly concerns me.
	You think the increased pricing transparency requirements for hospitals and insurance agencies in our bill, as well as the PBM reforms that our committee has worked on, other things, you think that will reduce the amount of medical debt that patients are faced with if we get these things done?
	It should.
	The Affordable Care Act allows families to be on the hook for getting close to $20,000 a year in out-of-pocket expenses.
	That needs to be addressed.
	But yes, transparency, reducing a lot of more transparency into the list price of things, as it was noted, people often have to pay out-of-pockets based on a high list price.
	So transparency ought to be helpful here.
	It should.
	Great.
	Well, I appreciate that.
	And I appreciate, again, all of your work on this.
	And I certainly want to make clear that I do believe everyone should be able to go to the doctor and have a medical home that they go to.
	And I think the cuts that were recently passed in the reconciliation package are disastrous.
	And that by cutting Medicaid so much and getting rid of so many of the subsidies from the Affordable Care Act, we are going to deprive many, many millions of people from the coverage they deserve as Americans and as human beings.
	I yield the floor back to the chair.
	Thank you so much, Senator Kickenlooper.
	Over here.
	Now we're down to business.
	All right.
ashley moody ▲ ● ▼		Well, thank you so much for all of you taking the time to be here with us today.
unidentified		I will let all of you know that in preparation for today's hearing, all of my staff said we have some really heavy hitters with us today.
unidentified		So you should all feel complimented, and certainly we are grateful for your time.
ashley moody ▲ ● ▼		I think we can all agree, no matter what side of the aisle, we have to address costs in health care and certainly the burden that we put on the taxpayer to pay for health care.
		And if, you know, I think it's estimated that the outlays in Federal spending for health care costs is now almost 30 percent of what we put out in terms of money.
		As the former Attorney General of Florida, one of the things that continued to frustrate me and anger me was watching the money that was spent and put out on unnecessary services,
		unnecessary medications, unnecessary nights in a hospital because somebody had really good insurance that they could bill, and really unnecessary products.
		So there's this gray area, first and foremost, within a legitimate structure of government assisting with health care, where It could be debatable whether somebody needs an extra stay in the hospital or a medication or a product.
		And then there's this whole other area of outright fraud where there's not even a patient out there, but the government is getting charged for a product and there was never a patient.
unidentified		Or companies that are brought in to deliver accountability in healthcare are having to pay out a lot of just outright fraud.
ashley moody ▲ ● ▼		As Attorney General, I think just in my time as Attorney General, we were up to going after about 200, almost 200 million in fraud.
unidentified		And think about the burden on the taxpayer for that.
ashley moody ▲ ● ▼		So you've got teachers and truck drivers and people trying to put food on the table and provide for their family having to spend money for health care.
unidentified		And a lot of that's going to criminals, outright criminals.
ashley moody ▲ ● ▼		And we can talk about fixing the structure of health care so that it is more efficient.
unidentified		And there are so many ideas for that.
unidentified		And I appreciate you being here.
ashley moody ▲ ● ▼		But I want to talk about today fraud because the fraud that is involved in the health care system right now, I don't think the average American understands what they are paying or what the government is paying in fraud.
unidentified		And that drives up premiums, it drives up deductibles, it drives up costs, ultimate costs.
unidentified		And so I just kind of want to talk about that for a moment, about detection and then reporting.
ashley moody ▲ ● ▼		Because a lot of times we have to rely on the patients to report who sometimes don't even understand that they're being there's fraud and the detection is often a problem.
unidentified		So I want to talk about that for a moment.
ashley moody ▲ ● ▼		I've heard of accountable care organizations that estimate that they're paying out tens of millions in fraud.
unidentified		And they're actually finding that they've paid for products and there was never a patient.
unidentified		And I think I'll start with you, Mr. Ippolito.
ashley moody ▲ ● ▼		Can you talk to me about improving detection and reporting of just outright fraud, criminals that have learned the system and are taking advantage of a very complex system and ultimately putting that burden on taxpayers?
unidentified		Yeah, I mean, it's a big question.
		I guess my mind immediately goes, perhaps because you're from Florida, Medicare has struggled for a long time in traditional Medicare policing fraud.
		And it speaks to something that the senator mentioned earlier.
		Complete zero administrative costs is not our goal.
		We want some administrative costs because we want to do exactly what you're talking about.
		We want to police the care that's being used, not to tell doctors how to behave, but to make sure that this is at least plausibly accurate care and reasonable care and so on.
		And so I think that's an example of an area where we have very, very little oversight and we rely on some pretty ad hoc detection mechanisms, as you mentioned.
		And so certainly a role for that in some of the big federal programs.
		I know you want to jump in here.
		I can see you're just anxious.
		Go ahead.
		I think that one of the biggest problems, certainly with detection and reporting, is we have so many situations where the fox is guarding the hen house in health care, where it does not benefit a company or somebody that might be seeing the fraud and patterns in provider behavior.
		They will not report it because they are financially benefiting from the fraud occurring.
		So again, whether that's on the PBM side or the carrier side, we have way too many foxes guarding the hen house, which leads to lack of notice and fraud detection.
ashley moody ▲ ● ▼		And Mr. Miller, I know you're probably wanting to jump in there on the doctor's side of things and unnecessary services, but Mr. Cassidy will probably yell at me if I go too far over my time.
ashley moody ▲ ● ▼		So I'll leave that to him and maybe you can add that in to another response.
bill cassidy ▲ ● ▼		Senator Hassan.
maggie hassan ▲ ● ▼		Well, thanks, Mr. Chair, and good morning to our witnesses.
		Thank you for being here and for your engagement on these issues.
		I want to start with a question to you, Dr. Gaffney.
		Patients across the country continue to pay ridiculously high prices for prescription drugs.
		Democrats passed the Inflation Reduction Act in 2022, which gave Medicare the ability to negotiate drug prices for the first time.
		Thanks to the first round of negotiations, seniors will see lower out-of-pocket prices for 10 drugs beginning in 2026, including medications that treat common conditions like high blood pressure, diabetes, and heart disease.
		Congressional Republicans opposed the Inflation Reduction Act in 2022 and are now working to undermine the negotiation program, starting with their move to exempt certain drugs from negotiation as part of the Republican budget bill that just passed.
		This will make some drugs, such as cancer drugs, more expensive for seniors in the coming years.
		Doctor, what will the impact be on seniors with cancer if their drugs become more expensive as a result of the Republican budget bill?
unidentified		It's not rocket science.
		When the price of drugs goes high, when it hits people's pocketbooks, they go without them.
		I could cite innumerable studies showing that.
		And what happens is people sometimes die.
		In fact, there was a recent study that showed that even relatively low copays cause people to go without their medications.
		There will be harms to their health.
maggie hassan ▲ ● ▼		Yeah.
		Thank you for that.
		Dr. Miller, one concerning trend that drives up patient costs is the practice of, and something I think Senator Cassidy has already talked about this morning.
		It's the practice where providers charge patients hundreds of dollars in extra hospital facility fees or room fees at outpatient facilities.
		For example, one of my constituents had a regular appointment with a urologist.
		The appointment was covered by my constituents' insurance, but he was then charged an additional and separate $1,000 room fee by the hospital that owned the practice.
		So he goes and sees his urologist.
		The visit's covered, but all of a sudden he gets a $1,000 bill.
		Can you speak about the recent growth in facility fee billing practices and the overall impact on patients when they can't afford their care?
unidentified		The impact is terrible because patients don't know.
		So how are you supposed to know that one of the thousands of that you're visiting one of the thousands of clinics that has a facility fee and is located more than 250 yards from the hospital and less than 35 miles and was acquired before I think it's November 2, 2015.
		So there's zero transparency.
		And so as a patient, when you go and see one of those sites, see a doctor at one of those sites, you essentially are paying 60, 70 percent more with no added clinical value and no economic knowledge that you are incurring that cost.
		So it is terrible for patients.
maggie hassan ▲ ● ▼		I appreciate the clarity there.
		Several states have banned facility fees for office visits and telehealth.
		And Senator Cassidy and I have been working on this issue together, and I hope the whole committee will be engaged in it.
		Dr. Gaffney, as you know, the Republican budget bill cut more than $1 trillion from Medicaid and the Affordable Care Act, kicking millions of Americans off of their coverage in the coming years.
		How will these cuts impact health care costs for all Americans, including Americans who are covered by group or employer insurance?
unidentified		There's going to be a multitude of effects.
		I mean, the premiums for people with ACA marketplace plans are expected to surge in the coming year.
		Health care prescription drug prices will increase for many low-income seniors with Medicare as a result of the bill.
		For patients who become uninsured, health care costs are going to soar because they're going to be hit with the full freight of the hospital bill.
		And finally, we have to incorporate the health impacts here, not only talk about dollars and cents.
		I'm expecting to see more patients with life-threatening complications of common chronic conditions because they didn't get the care they need, and that costs something, but it also is far worse when someone dies as a result.
maggie hassan ▲ ● ▼		Yeah, I appreciate that.
		And I will follow up with just one other area of concern because I've heard about it from the head of the American Academy of Pediatrics or the American Pediatrics Association.
		For those types of care like pediatrics, which are covered a lot by Medicaid, a good portion of that pediatric population, without Medicaid dollars to support those patients, there's a real possibility not only of the maternal health deserts that we already have in this country, but of pediatric health deserts.
		Have you done any work on that?
unidentified		I have not done research myself on that, but the reality is, is we know that these cuts could be devastating for the safety net providers, both in rural areas and suburban and urban, that take care of predominantly working-class low-income people.
		Look, these providers get a lot of their revenue that they use to take care of patients from Medicaid.
		So, what happens when Medicaid gets cut by $1 trillion?
		I think we can all do the math.
		Either they're going to cut services, cut staff, or close.
		It's not rocket science.
maggie hassan ▲ ● ▼		I appreciate that, even though it is a very stark picture.
maggie hassan ▲ ● ▼		Thanks, Mr. Chair.
bill cassidy ▲ ● ▼		Thank you, Senator Assin.
		First, I'd like to ask unanimous consent to enter several statements into the record.
		So ordered.
		Thank you all for being here.
		Really appreciate it.
		It was illuminating not just for the folks here, but for the folks who are watching.
		And I found that there was some common themes across everybody's, from Ms. Deakin to Mr. Potter and points in between, there was common themes.
		So thank you for that.
		For any senator wishing to ask additional questions, these questions for the record, these will be due by 5 p.m. on Thursday, August 14th.
		Again, thank you for being here.
		The committee stands adjourned.
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