The subcommittee on health, employment, labor, and pensions will come to order. I note their quorum is present. Uh without objection, the chair is authorized to call a recess at any time. Employee sponsored care is the core of America's health system and education workforce committee members understand
that employers want what is best for their employees. Although they are not required to offer health coverage, small businesses often choose to do so to attract and retain top talent. As a former small business owner myself, I learned that investing in the health of my employees paid long-term divid
dividends both in productivity and the morale in the company. Unfortunately, it's becoming more challenging for businesses of all sizes to offer competitive health care benefits. 98% of small employers offering health insurance are concerned the cost of
providing cover coverage will soon become unsustainable. As health care costs continue to rise, employers are increasingly turning to innovative models such as direct contracting and direct primary care to deliver high-quality health care at a
lower cost. Direct contracting allows employers to negotiate directly with providers, helping reduce costs, improve quality, and ensure more health care dollars are spent on patient care rather than the administrative overhead. Direct contracts may also include direct
primary care, which allows patients to access primary care services for a flat membership fee. This model decreases the total cost of claims and patients are getting more comprehensive care and experiencing better h health outcomes. While there is great success with these
models, barriers still exist, making it especially difficult for small and midsize employers to take advantage of them. One of those barriers is lack of data. Employers often struggle to ac plan and spending data. Without this
information, employers and providers are unable to identify waste, access quality and savings, and design health benefits that best meets the needs of their workers. Today we will hear how these models are benefiting providers, employers and
employees and discuss ways we can remove barriers that stand in the way of greater innovation and lower costs. And with that, I yield to the ranking member for his opening statement. >> Thank you, Mr. Chairman. I want to thank all the witnesses for being here today. In the wealthiest country in the world,
Americans are still to forced to choose between filling a prescription and paying their rent or putting food on the table. Despite our differences across the aisle, and as chairman and I are both former small business owners who spend a lot of time at night trying to
figure out our profit loss statements, we agree that the American health care system is broken and we need to work on it to fix it with a sense of urgency as people are struggling to pay their health care costs and struggling to keep loved ones alive.
To put this in a perspective of numbers, Americans per capita health care spending has risen to nearly $15,000, approximately double the amount spent in other developed countries. Onethird of all Americans, insured or not, reported
having to sacrifice daily necessities to pay for health care in 2025. And 66% of Americans who file for bankruptcy cite health care cost as the primary reason. This is an acute crisis. I worry that
the focus of this hearing is inadequate, although important for this and an important thing to consider, but it is inadequate to really deal with the urgency and the challenges that Americans face. While a number of large
employers have benefited from direct contracting models, I'm concerned that my colleagues are more interested in tinkering around the edges rather than putting forward bold solutions to this affordability crisis. This is a matter of life or death to millions of
Americans. Instead of relying solely upon private sector to reign in costs and hoping for the best, it is imperative that while we respect that, that Congress take bold action to look at other developed countries and see what models work better than the United States to help
with health care and prescription drugs affordability for every family, not just the wealthiest Americans. Not long ago, when Democrats were in the majority, we delivered for the American people and showed that Congress could make healthc care more affordable. It wasn't enough,
but it was dramatic in what we were attempting to do. We enacted the American Rescue Plan, the Inflation Reduction Act to lower costs for working families and deliver historic investments in healthcare. These laws brought the number of uninsured Americans to the lowest levels in
history. Today, we are fighting to pass the Lower Drug Costs for American Families Act, a bill that will make drugs more affordable for all Americans. The bill builds on the historic progress made in the Inflation Reduction Act, which gave Medicare the power to negotiate lower drug prices for seniors.
The bill extends those negotiated prices to privately insured companies and consumers, including those who receive their health care through their employer. It also prevents pharmaceutical companies, from raising prices faster than inflation, and increases the number of drugs that
Medicare can negotiate each year. Committee Democrats have also released a new report on how wrongful health insurance denials make care less affordable for working families. Given the importance of these issues to our constituents, I would hope that we would
we would continue to find ways to work together on legislation that make meaningful difference and help with the affordability for the American people in addition to extending people's lives and decreasing the suffering by American families.
Unfortunately, that has not been the case during the last 18 months. Instead, my colleagues in the administration have taken a historic step backwards through the big ugly bill, which has devastated Medicaid Medicaid through nearly one trillion in cuts and slashed hundreds of
billions of dollars from food assistance programs, all to pay for tax breaks for the wealthiest amongst us. To make matters worse, Republicans refused to extend ACA premium tax bill credits last year has caused millions of Americans to be priced out of the health out of their
health insurance. Americans are rightfully demanding that their government work for them, not billionaires and big corporations. But instead of working together to lower health care cost and tackle big pharma, the big ugly bill just made things much
worse just to transfer more wealth, a historic level of wealth to the wealthiest amongst us during the highest level of inequality in the history of the country. To deliver real results for suffering Americans, we must reverse the damage done by the big ugly bill, tackle
big pharma, address skyrocketing premiums that should not be a partisan issue. I look forward to the hearing and the opportunity that direct contracting may be a part of the solution, but just a part of the solution. Thank you, Mr. Chairman.
The ranking member yields. Uh, pursuant to committee rule 8C, all members who wish to insert written statements into the record may do so by submitting them to the committee clerk electronically in Microsoft Word format by 5:00 p.m. 14 days after this hearing. And without
objection, the hearing record will remain open for 14 days to allow such statements and other extraneous material noted during the hearing to be submitted for the official hearing record. I will now turn to the introduction of our four distinguished witnesses and
thank you for being here this morning. Our first witness is Dr. Chad Savage, president of DPC Action and founder and physician at Your Choice Direct Care in Brighton, Michigan. Our second witness is Mr. Mark Newman, CEO and founder of
Naomi Nomi uh Health in Oram, Utah. Our third witness is Mr. Brad Woodhouse, president and protect our care in Washington DC. Our la last witness is Mr. James Gelfin, president and CEO of Orisa Industry Committee in Washington
DC. We thank the witnesses again for being here today and we look forward to your testimony. Pursuant to committee rules, I ask that each of of you limit your oral presentation to a threeminut summary of your written statement. The clock will count down from three minutes
as committee members have many questions for you. However, pursuant to committee rule 8D and committee practice, we will not cut off your testimony until you reach the five minute mark. I would also like to remind the witnesses to be aware of their responsibility to provide accurate information to the
subcommittee. I will first recognize Dr. Savage for your testimony. Sir, you have five minutes. >> Thank you, Mr. Chairman. I appreciate the kind introduction. Uh, ranking member, distinguished members of the subcommittee. A dollar bill is.11
millime thick. It takes around three trillion of these stacked upon each other to reach all the way to the moon. In the United States today, we spend the equivalent on health care alone every single year of a stack of dollar bills going all the way to the moon and then
almost twice as far. This is a colossal problem for employers as around half of the American populace is covered by employer-based insurance. At around $27,000 for the premium of a family plan alone, insurance has ceased being the hedge against catastrophic financial loss and
itself has become that very catastrophic financial loss. And what do we get for all this spending? You would think long lives and great care, but we get long waits for rushed visits and lots and lots of bankruptcies. Simply put, the third party system has failed. Direct
primary care is part of that solution. It's a membership model of medical care where doctors contract directly with employers and patients, bypassing the complexity of the third-party system, saving around 50% on overhead. This means those doctors can offer affordable membership models for all the care that
they provide with no co-pays. same or next day availability, extended 30 to 60 minute visits, and many have on-site pharmacy and laboratory services, which can save 80 to 90%. Because they're able to have more reasonably sized patient panels, they're able to provide
concier-ike care without all the cost. This results in improved outcomes. Direct primary care patients have a 40% lower ER utilization rate and have about a 20% lower hospitalization rate. It works extremely well with inexpensive coverage products as well. Whereas
direct primary care in that situation functions as an affordable form of first dollar coverage. Employers can offer direct primary care to their employees pre-tax via HSAs, HASS, FSAs, Orisa and Ikra based plans. This puts purchasing
power into the hands of the employees, consumerizing them, making them inform consumers of medical services where they go around, shop around, and exert downward price pressure, constraining the excesses of medical pricing. Most importantly, it gives them the power to
purchase the care that they want, not what the insurance company simply allows them to have. And it frees the employers to focus on their core business. I request that Congress and the agencies assist the adoption of direct primary care by looking at the incentive the incentives for insurance agents and plan
designers to ensure that they are able to offer to employers with equal consideration direct primary care and other innovative models. Also to ease the fear of adopting these kind of tax preferred options by employers. ease of the process by creating toolkits uh
model contract language and pilot programs to ease implementation of direct primary care. In summation, direct primary care saves money, improves care, and strengthens the American workforce. Thank you. >> Gentleman yields now recognize Mr.
Newman for your testimony. chairman, ranking member, and member of the subcommittee. My name is Mark Newman, and I'm the founder and CEO of Nomi Health. Not here today as a provider or an insurance company. Nomi powers over 2500 self-insured employers
to analyze, contract with, and pay providers directly. To know us even more, we are deep in the fight to conquer employer healthcare costs. I've spent my career building HR tech companies that unlock opportunities for workers and their families.
However, the day my son Milo was born 11 years ago was not only life-changing as a first-time parent, but gave me a rude awakening into why the healthcare system works the way it does. At the time, my 400 employee company just dealt with a 15% increase on our health plan. Uh, but
as we left the hospital, they offered me a 30% discount off the insurance negotiated bill if I could pay before leaving. I was blown away by this experience. Why did this happen? Was that the real price of healthcare? And why wasn't it available to everybody to
all my employees? Despite being a supposed expert in the industry, I felt I had totally failed the people that worked for me and went on a journey to figure it out. It turns out in traditional healthcare providers have to build in the risk of non-payment, months of collections, write offs, denials, and
billing overhead into their rates, only collecting at the end of the day a portion of what they actually or contract contractually should. Even worse, employers are charged an enormous number of fees on top of the cost of health care paying for something that providers don't even receive. Direct
contracting at scale for all services removes that spread. Providers are immediately paid in full and they don't have to spend months fighting claims. There's the 30%. That's the unlock to US healthcare. At Nomi, when our employers
save 10, 15, 30% on their health care costs, 90% of those savings go back to workers and show up as no co-pays, zero deductibles, and wage increases. For me, there's no better feeling than this. So what started as a simple insight and a
shared frustration has now turned into a nationwide platform and a rebel alliance of 200,000 plus providers like Henry Ford Health in Michigan, Prometica in Ohio, North Side Hospital in Georgia, all fighting to transform employer healthcare. And in Michigan alone, the
employers using our model are spending 29% less than the traditional cost of commercial coverage in their state. So, as a committee, you continually demonstrate a commitment to tackling healthcare costs for employers and workers. You hold the pen on policy like
employer data ownership, price transparency, and direct contracting. And unlocking innovation here is the real opportunity. Although it seems nearly impossible, we can actually do something about healthcare costs in America. But we have
to fight for it. And this week reminds me though that the American story has never been defined by the problems we tolerate. It's actually defined by the solutions we work incredibly hard to forge. The fight to solve US healthcare
for employers is here and it's right in front of us, but it's worth fighting and I thank you for having me to be part of the discussion on what to do about it. >> Thank you, Mr. Newman. Next, I recognize Mr. Woodhouse for your testimony. >> Thank you so much. Uh, Chairman Allen,
uh, Ranking Member Donier, and distinguished members of the committee, thank you for the opportunity to testify. My name is Brad Woodhouse. I'm president of Protect Our Care. Our mission is to make highquality, affordable health care a right and not a privilege for every American. Um, I'm
here today because that mission is under direct threat. We are facing a healthc care affordability crisis in America. HR1 made the largest cuts to health care in American history to fund tax breaks for billionaires and big corporation.
And the subject of today's hearing put in the best possible light won't scratch the surface in addressing the crisis in healthcare affordability Americans are facing today. And frankly, nothing can distract from the reality that HR1 cut
$1 trillion dollars from Medicaid and the Affordable Care Act, which will rip life-saving coverage away from 15 million Americans, including seniors, children, and people with disability. That same bill handed out 1 trillion in tax breaks to the top 1% and 730 billion
in tax breaks to corporations. Today, not even a year later, 8 million people have already lost healthcare. But that's not all. Costs are skyrocketing for millions of Americans. Families are being forced to make impossible choices between paying for groceries and seeing
a doctor. Small businesses are closing. The ripple effect of these cuts has catapulted healthcare to the number one issue in American politics. A recent Galllet poll showed an increasing number of Americans are unable uh to afford healthcare. Americans are seeing prices
for specialized drugs continue to climb as a result of HR1. Republicans expanded the exclusion of orphan drugs from Medicare drug price negotiation, delaying popular cancer drugs, Kitruda and Obivo from being included in price negotiation. Deferring drug price
negotiations for orphan drugs increases out-ofpocket costs for patients and Medicare spending. Delaying or excluding orphan drugs only means higher costs for patients, but will also cost the federal government 8.8 8 billion over the next decade in lost Medicare savings which go
directly in the pocket of big pharma. Meanwhile, Democrats are fighting to lower drug costs for all Americans. Last year, Congressman Palone, Neil, and Scott introduced the Lower Drug Cost for American Families Act, co-sponsored by the ranking member and representatives Courtney Hayes, and Manion. The bill
allows Medicare to negotiate more drug prices each year. Makes the negotiated prices available to the commercial insurance market. Limits out-of- pocket cost on prescription drugs. caps insulin at $35 a month for everyone and closes drug pricing loopholes in HR1, but also
hospitals, nursing homes, and other care facilities across the country are in their own crisis. Uh many are shutting down, they're cutting services, or they're at great risk since HR1's devastating cuts to health care. When a hospital closes its doors, everyone feels the pain. Patients have to travel
further. Families face longer wait times and overwhelm emergency rooms. Moms are left without maternity care, putting their lives and babies lives at risk. Entire communities will be left without access uh to care while CEOs and billionaires get even richer. We have
some key numbers. Protect our care has a hospital crisis watch tracker. We are now tracking over a thousand hospitals, clinics, and nursing homes which have shut down, cut services or at risk of doing so. Over 70 hospital wards have shuttered including 40 maternity wards.
Nearly 300 clinics have been forced to close. Over 450 hospitals remain at deep risk of closure or cuts. Everyone is paying the price because Congress put tax breaks for billionaires and big corporations above the needs of working
uh people. When hospitals close, costs rise by an estimated $500 per hospital stay at nearby facilities. This means higher uh insurance premiums for everyone regardless of where they get their coverage. As the sixth largest employer in the country, hospitals are
key economic drivers, especially in rural America. But because Congress passed the largest cuts to healthcare in history, nearly 500,000 healthcare workers could lose their jobs. Communities are so desperate to save their local hospitals, counties and states from California to Alabama are
instituting higher property taxes uh to stop their hospitals from closing. Protect our care. We've been criss-crossing the country uh to sound the alarm on these cuts, the cuts to hospitals, the higher premium costs, the cuts to people's care. Um every day presents a chance to stop this
healthcare crisis, to reverse the damage done uh by HR1, but this administration has not lifted a finger to fix the crisis they created through the passage of HR1. Congress should be focused on making health care affordable and accessible, not ripping it away to give
tax breaks to the rich. Thank you for the opportunity to participate and I look forward to your questions. >> Uh thank you Mr. Woodhouse and now lastly I recognize Mr. Gilaman for your testimony. >> Thank you Chairman Allen, Ranking Member Dier and members of the subcommittee for the opportunity to testify today. I'm
James Gelfin, president and CEO of the Orisa Industry Committee or ERIC. ERIC is the only national association that advocates exclusively on behalf of large employers on health retirement and compensation policy. Our member companies employ people in every state and help sustain the employer sponsored
insurance system that covers more than 160 million American workers and their families. ERIC member companies pioneered the concept of direct contracting between group health plans and providers. We know that it works. Direct contracting can increase access to care, improve chronic disease
management, drive better health outcomes, and reduce health care spending. We generally see three types of direct contracting amongst our members. First, an employer may contract directly with a health system in a market where the plan has many patients who need care. Second, an employer may
contract with specialized and accomplished providers or health systems, often referred to as centers of excellence. And third, an employer may contract for capitated cost and population health management, including through direct primary care and accountable care organizations. Here are
a couple examples from our member companies. One company implemented direct primary care to bring high-quality coordinated primary care to their employees. The results have been meaningful. The pilot program reduced emergency room utilization by 14%,
reduced specialist spending by 11% and increased the use of digital and virtual care by 32%. Patients rated the program significantly higher than the national average. One patient said, "I never have to wait for care and they really know me." Another
described a visit as the best medical experience I have ever had, saying that they left feeling seen, heard, and with a real plan to move forward with their care. The company has continued to expand the model across several states, including Washington, Missouri, Arizona,
and Texas. Another ERIC member created a model that allows employers to contract directly with physicians, labs, and specialists. In the Midwest, employers and employees using these arrangements saw medical costs that were often 29% lower than
state averages. One company rolled out a direct contract specifically to help employees access behavioral health providers, a service in critical shortage throughout the country. It's fully covered for patients and will solve a longtime challenge of continuity of care. And another company engaged
with several centers of excellence, including the Mayo Clinic, the Cleveland Clinic, and Geisinger. Patients who need cancer care, spine surgery, or hip and knee replacements get an alexpense paid trip to these top rated systems where they receive superior care that lowers
costs for them and for the plan. I hope these examples show why direct contracting matters. These models save money, improve access and outcomes for patients, offer predictability and consistency to providers, and minimize arbitrage from middlemen. Thank you, and
I welcome any questions. >> Uh, thank you, Mr. Gilpin for your testimony. And uh under committee rule nine, we will now question witnesses under the five-minute rule. I will recognize myself for uh five minutes. Um
I was recently reading uh some some material from Milton Freriedman and he said, you know, it he would like to privatize everything. Uh but the government has to do some things. The only problem with the government is it costs twice as much to do it. And uh
that seems to be the dilemma we have in healthcare. Uh Mr. Gelfin, employee participation in direct contracting programs is associated with reduction in health care cost, improve health outcomes, and increased productivity. Can you share share some of the quality
metrics that may be used to measure health care volume and cost and the improvements you've seen in patient care? >> Thank you, Mr. Chairman. Direct contracting can help shift the focus from volume to value. Employers and providers measure success through outcomes, access, and patient experience
metrics, as well as through costs. Quality measures typically include improved utilization of preventive screenings, chronic disease management, reductions in ER visits, hospital admissions and readmissions, medication adherence, patient reported outcomes,
and timely access to care. Cost measures focus on total cost of care, including overall spending trends and the substitution of lowerc cost interventions rather than potentially avoidable hospitalizations and ER visits. For example, direct primary care has helped improve access and chronic
condition management. While traditional primary care wait times might average around 21 days or more, team-based DPC can offer same and next day access through inerson, virtual, or digital options. That access changes utilization patterns. In DPC arrangements, lowerc
cost virtual visits account for 15 to 34% of visits compared with only 4% in a nonDP setting. Um, one member company's direct primary care arrangement near Mesa, Arizona, showed 14% reduction in ER utilization. That's not because people who needed to go to the ER didn't
go. It's because they were taken care of and they never needed that visit in the first place. >> Right. And this improvement in health outcomes uh did it help contribute to happier, more productive employees? >> Yes. In fact, that MESA program achieved
a net promoter score of 88. So that's the the score that patients were giving at 88 whereas they gave most health care 58%. So much higher rated. Um broader benchmarks show similar results. A company called Hint Health partnered with DPC practices nationwide to measure
patient experience. um more than 1,500 direct primary care patients across multiple states. They rated at 89% including a 97% score for cont contact and access. Um the study also yielded yielded an NPS score of 85. So in
healthcare that score reflects unusually strong patient trust, satisfaction, and willingness to recommend the care model. >> Uh Mr. Newman in a free market economy the the the only way to bring down pricing is competition
and uh we've heard today about how large employers are able to create savings through direct contracting. What barriers do smaller employers face in entering into similar contracts because they don't really have uh competing
factors in securing their health care and uh you uh you have created that and how does that work? >> Yes, thank you for the question. Um you you you are right you know that we always think of solutions as being for
the only the large uh but in fact Nomi's core mission is to do it for the small and the midsize who don't have other options or don't have other paths to access those things. You know, when you think about analytics and payments, it is wildly national, but networks are very, very local, right? It's the town,
it's the county, it's the state that you're in. It's actually a level playing field for small and midsize employers when they're concentrated in a single area. And these employers are manufacturers, hospitality, restaurants, uh, you know, um, uh, universities,
unions, uh, school districts. And you know when we bring un unleash their kind of market power in there in in in this place it's a question of how do we make it easy? We need to make it easy for the provider to participate. We need to make it easy for the employer to participate
because guess what? They're all hometown heroes and they want to and they want to help and take care of each other. So uh you know the the irony when you're talking about price and marketing competition is that the opportunity to save is is right in front of us. Um, a price isn't a price isn't a price in
healthcare. A dollar of negotiated care isn't a dollar to any provider who ever expects to get it for whatever price they list and an employer's paying $120 or $130 to even get it. And at the end of the day, when that provider only collects 70 cents on the dollar, we
don't have to fight over contracted rates or you name it. Let's pay them what they actually end up receiving at the end of the day. pay him more than that and make it super easy and simple for the the any employer of any size to tap into it and that's the real opportunity. The money is right in front of us.
>> Good. Thank you very much. And I yield. I am out of time and now I recognize Mr. Danho from California for his five minutes of questioning. >> Uh thank you, Mr. Chairman. Uh Mr. Woodhouse, um 5 million Americans have been kicked off Affordable Care Act
coverage just in the past year. You say it's 8 million. it is. >> Uh how much more do you think uh how many more Americans do you estimate will be kicked off of health care either through the ACA or uh Medicaid? >> Well, so the the CBO estimate um when
HR1 uh passed uh passed last year was that 15 million collectively would lose coverage between the Affordable Care Act uh tax credits went away uh and the and the Medicaid cuts. >> What's what's what's the estimate? >> 15 million was 15 million. 50 million
are going to lose their healthare >> all together. >> Um Dr. Savage, does the increase in the uninsured uh put significant pressures on the rest of the health care system to deliver healthcare at an affordable price? >> Not necessarily. Actually, the closest thing we've ever had to a randomized
study on this was conducted in Washington in Seattle. >> So, not necessarily. Not necessarily. That doesn't seem like a very uh strongly uh held uh opinion. Yes or no? Well, that's a that's not a >> yes or no, sir.
>> Uh, I abstain from >> you don't you abstain. You don't So, you don't have you're not really sure. >> You really can't answer with great conviction that 15 million people kicked off of healthcare in America won't drive up cost for everybody else. >> Health insurance. >> You can't say you health insurance.
Well, they're going to be uninsured. Will that not put pressure on everybody else and the prices to go up for everybody else? >> You're not sure. I >> most people engage in the free market and purchase, they will get better prices. Okay, you're going to answer the free market, but you know, I'm going to tell you that I and in the immediate term, I think most people would answer
that question. Yes. >> Mr. Newman, >> answer the same question. Will 15 million people kicked off of healthcare in the next year or so drive up uh put pressures uh upward for everybody else? >> No, I don't believe it will. >> You don't believe so? Thank you, Mr. Get
Mr. Gelfin. >> So far, we have not seen those. >> So far, we've not seen So far, we not seen, but you're not really sure. I would contend that most people with common sense would say that 15 million people losing their health care insurance as a beginning. U what else
would do you want to opine on this? I >> I mean the absolutely there is no doubt that all these millions of people losing coverage. We all know everyone here knows about the issue of uncompensated care. People show up at the emergency room. They have to be cared for. There is a requirement to care for someone at
an emergency room whether they have coverage or not. those costs move on through the health care system. It makes coverage, it makes everyone's premiums uh go up across the board. Premiums in the private marketplace are going up more this year because the anticipation
of uncompensated care than they did last year. And then premiums are obviously going up for the people that lost the tax credits. That's over 20 million people. >> Thank you, Mr. Gman. You know, this contracted care is very interesting to me and I do believe that it will drive efficiencies and bring down costs for large employers. you seek to make it
possible for mid and small employers. You talk about local networks. Um what about rural America where there's a shortage of both uh family practice uh family providers and specialized care and the problem of private equity buying
up uh providers and uh in some areas we have maybe just one provider network. Um how how will direct contracting lower costs in those situations? Direct contracting is an alternative to those those areas where there's only a
single network. I mean that that the domination of incumbent carriers with bad service, terrible pricing policy providers out of business. >> A single network, but we're talking where there may be just a shortage of providers period or where there's one
provider group that you got to negotiate with. >> Yeah, you lose providers because they can't stay in business. They're burned out dealing with insurance companies and junk plans trying to collect to get paid and patients who can't afford care. >> So you think that the shortage of rural providers is a result of the fact that
uh we have uh we have an inability to to keep them in the community. >> If we simplified the business of healthcare, the delivery of healthcare is a high net promoter score in America. The business of healthcare is the sickest patient on the planet. And if we made it easy for rural providers or
urban providers or big providers or small providers to actually get paid for the work that they do, which employers are willing to do on their behalf because the insurance problem, how does it solve the problem of of uh of rural hospitals closing? >> It keeps them in business. Most hospitals don't go out of business
because of lack of revenue. They go out of business because of lack of cash. and the lack of cash to keep them in business is a direct uh direct dist uh derivative of the terrible policies that big insurance companies inflict on America. >> Well, I would say I wish you luck. Uh
you know, big employers being able to self-insure. Uh I don't know how we uh arrive at the same I'm running out of time. Uh but I'd love to pursue this with you further. Thank you. >> Absolutely. Be fun. >> The gentleman yields. I now call on our chairman uh Mr. Wahberg for his five
minutes of questioning. >> Thank you, Mr. Chairman, and thanks to the panel for being there, although I have to say, Mr. Woodhouse, uh, your numbers are absurd. I checked with Dr. Ander here, and he found very easily because media won't do the research, but you can do the research on the
marketplace. 23 million souls are on the marketplace. And you're saying 20 million. I'm not asking you a question. >> I'm getting for forth the absurdity of what you're saying. 15 to 20 million don't have health care when on the marketplace they're only 23 million
nearly 23 million correct Dr. Ander correct let's let's move on here the shilling that goes on for the unaffordable care act is absurd as well uh Mr. Mr. Newman, thank you for coming all the way out from from uh Utah to be with us. Your written testimony
highlights that employers using Nomi Health direct contacts in my home state um has caused some of the the Michigan medical spending per member fall by as much as 29%. That's great. Could you expand on how
employers were able to see a reduction in cost despite the statewide commercial market average continuing to rise by 10 to 15 uh% annually? >> Excellent. Yeah, thank you and thanks for all the work that you do to address this issue. Um incumbent dominated
markets uh Michigan is one of those right where there's a very dominant local insurance company has generally abused their market position for a very long time and there are three paths to solving this problem. The first is ultimately in the simplest lower contracted rates. But how do you get to
those lower contracted rates? Well, you have to solve actual business problems for providers and not be the ones continually trying to drive them out of business. So, we contract with providers at a, you know, at a direct real price of healthcare, solving their business problems. Just like the story I told being able to pay at the time of service
in full for the claims and the service that they deliver, there is a real price of healthcare that exists and that solves our 20 to 30% problem in America. But second, the admin fees that employers are are thrown at uh are, you know, are are just as heinous. This
shows up as junk medical loss ratio, margin coverage, whatever it might be, to uh ASO fees to clawbacks and all the other bells and whistles that get thrown in. Employers know how to buy and pay for things and we should do it as simple and efficient and easy as Visa and
Mastercard or American Express scan, not at a 15 or 20% margin that any insurance company claims that they need. And then third, all the other parties around this system for self-insured employers like stop-loss carriers and other people, they have traditionally been completely
cut out of any data, any rate visibility uh or any direct relationship as as a party to catastrophic risk or other things in those parts of it. And all they do is have to price in that risk of non you know non-payment, non-ser no service and bad transparency. And if you
bring it open, if you simplify the system down to its core, where a provider can deliver care and get paid for it, and if a consumer can do it, great. But if not, an employer can do it on their behalf. >> That's the nugget that we unlock everything in employer healthcare.
>> Common sense like other other products and purchases, great. >> If if we ran restaurants like healthcare, every restaurant would be out of business. >> Let's start that then. Thank you. Uh Dr. Savage, thanks for coming in all the way from Brighton, Michigan. Glad to have you here, especially since you're
practicing in the field as well. >> Uh health care costs continue to rise at an unsustainable rate. Uh national health expenditure data showed a 7.2% growth in healthcare spending in 2024 and total of
5.3 trillion in healthcare spending that year. What would be the single most impactful thing that could be done to reduce health care costs in the United States? Yeah. Well, one of the best mechanisms to access what we've been talking about are HSAs because they're pre-tax, but right now they're limited in their
potential because they're mandated to be linked to high deductible health plans. I think that that should be severed that they can exist on their own and that the pre-tax basis of those could be used to purchase a variety of coverage products that the patient wants, not necessarily that they're mandated to obtain. What
this would do is free employers from needing to provide coverage because the reason it's provided through employers right now is because it's done on a pre-tax basis. This would get people who buy it on their own essentially the same tax advantage as people who obtain it through their employers. This would had
a massive domino effect which would benefit the whole system, freeing employers to focus more on their core business instead of being deacto insurance brokers. And also it would allow patients to own their own coverage. So they're not stuck in job lock because they own it over time.
They're less susceptible to pre-existing condition issues. And it would um engage them uh to become arbittors of medical pricing which would exert downward price pressure constraining the excesses of the whole system. >> Uh again, simple common sense ideas that
can work around an unaffordable care act that's caused significant problems. Thank you so much. My time is expired. I yield back. >> Gentleman yields. And now I'll call on the ranking member of the full committee, uh, Mr. Scott, for your five minutes of questioning.
>> Thank you, Mr. Chairman. Um, Mr. Mr. Gman, obviously I don't think it's much of a challenge to be able to lower cost, improve access for a few people. Is there any chance that this could be comprehensive or a universal
strategy for everybody? When we canvased our members to ask them what kind of direct contracting they were doing last week, we actually heard from many members that they had comprehensive direct contracts that were covering if not their entire employee population um but the entire population
in certain areas where they had a large volume of care. And what they found was independent studies showed that the rates that they were getting in those direct contracts were lower, which means that every patient that was covered through one of those plans that was a direct contract plan ended up having >> if you're not if you're not part of that
um negotiating plan, you're not getting the benefits of that plan. Is that right? >> That is correct. >> Now, the are the um bills that are the prices that you negotiate public. So, so we do have to disclose in our
transparency and coverage um disclosures what we pay for healthcare. >> Uh so if someone were sued for going to the emergency room and not paying, they could obtain what they negotiated with you for the price and compare it to what they'd been sued for.
>> Yes, potentially that would be a very good idea. If you're sued by a hospital system, you should look at transparency and coverage data and see what they're pay they're accepting rates from others. Um, Mr. Woodhouse, if a employer gets a good price, what happens to everybody else's
price? >> I mean, everybody else's price would would benefit if an employer gets a good price. >> Um, would um and how does um what does cost shifting of uncompensated care mean? Well, I
mean, I think, you know, the big concern is we have 15 million people potentially going to lose health care. 8 million already have 5 million uh on Medicaid, 3 million uh on the ACA marketplace already. And these people will get sick.
They will they will need care. And we know from study after study and talking to insurance companies who we who we talk to about these issues that there are upward prices on premiums when uncompensated care moves costs throughout the system. And look, like I
said, these costs are not just um are not just higher premiums. We have higher costs to taxpayers for in many states that are trying to keep rural hospitals open. HR1 cuts to Medicaid and elimination of the ACA tax credit is a cascading
disaster for the health care system. It's much more immediate, much more existential than anything else we're discussing here today. >> Now, h how effective can a plan be if it can can a strategy be if it depends on employers competence in negotiating
health prices? Right now, all they do is guess if they get three bids from insurance companies and hope for the best. But if they have to negotiate with hospitals and doctors, how effective as an overall strategy would that be? Well, look, I it I don't um I'm not taking any
issue with the issue of this direct contracting as a I think we we think virtually everything should be on should be on the table, but I will tell you right now what the American people are really focused on in terms of their healthcare costs. I mean, obviously people losing coverage are very
concerned. The 20 million people who have seen their ACA premiums skyrocket because their tax cuts were taken taken away are very concerned. But 90% of the American people want more done on drugs. And that is that is one of the biggest drivers of people's concern about cost
in the health care system. The bill that you've introduced uh with your with your colleagues would go very far in dealing with a lot of the issues the American people were concerned about in terms of cost in the American healthcare system. >> Has it ever been effective to rely on
consumers to compare prices with doctors? >> Not in my experience. And how if the idea is to get Americans uh needed health care, how helpful is that what they call big beautiful bill
and the decision not to extend the enhanced tax credits? >> Well, it it it's it's a real it's a real problem. We've seen three million people drop coverage in the in lose coverage in the marketplace. 5 million are losing it uh through Medicaid. But that just scratches the surface. I mean, remember every study, KFF, other studies have
shown that those people who are deciding, many people are taking a lower plan, what you'd call a bronze plan, high deductibles, high out-of- pocket uh costs, and then many are paying, you know, double and triple premiums to have healthcare coverage. And then they have to make decisions about how they can
afford groceries, how they can afford how they can afford rent. And this was a choice, right? Y'all make choices here. you chose to do $1.7 trillion in tax cuts to billionaires and corporations instead of continuing health care for millions uh millions of Americans. That
was a choice and uh and so that is why many Americans are seeing higher health care costs and losing coverage. >> Thank you, Mr. Chairman. >> The ranking member yields. Now I'll call on Representative Fine from Florida for your five minutes of questioning.
>> Thank Mr. Chairman. Mr. Woodhouse, do you think it's okay to lie to Congress? I don't know. Are you lying to Congress? >> All right, that's I'll take that as a no. You said in your testimony that 15 million Americans would lose their health care. Do you stand by that statement? >> That is what the CBO said. >> Do you know what an American is? Do you
know what an American is? Do you know what an American is? >> CBO. >> No, that is not what the CBO said. Do you know what an American is? >> Absolutely. Absolutely. What the CBO? >> Okay. So, so when the CBO said that millions of even in that nonsense statistic you gave, that included health care for non-Americans. So you clearly
don't understand what the difference between an American and a foreigner who's getting healthc care coverage is given that you sat here and lied and I gave you the chance to correct yourself. I'm not interested in anything else you have to say and I don't think anyone else in this committee has your time is done. I will move on. You can shut your
mouth. You lied to Congress. Dr. Mr. Mr. Mr. Newman of order >> Mr. Newman >> he's accusing the witness of lying. >> I am and I proved that he lied and I'm moving on with my questions now. Mr. Newman, you testify that for every dollar of care delivered, employers pay a dollar.
>> Chairman, I demand that his the the members words be taken down. He's accusing somebody of lying. >> He did lie. You want to debate it? He lied. That's not in debate. 15. No one has said >> chairman, I asked that his words be taken down. >> He lied. He lied. I gave him the chance
to correct it. He chose not to. And it was a lie. It's objectively false the testimony he gave before this committee. >> Not allowed to speak. I even asked him, "Does he know what an American is?" >> Yes, we uh Okay,
just pause just a moment. He can be chairs to do that under anyone's Jesus Jesus. Wonderful. It's the worst. doublesided and it's meant for the
minority. It's got the highlight. Sorry for the double Amen. Sorry. They're witness. You need to change. Okay. >> Yes.
Uh if the witness will just stand by, we are going to recess for a few minutes to work through the legalities of this. uh basically legalities are such that uh a witness has been charged with
misspeaking and we need to go through that because that is a uh that's that's a crime and so >> Mr. Chairman the the problem is he's violated the decorum the rules of decorum he's accused a witness Mr. fine
has of committing a crime based on his own opinion and that's a violation of decorum. That's why I asked for his words to be struck down. >> Okay. So, we're going to recess and work this through and just bear with us until we get this done. Thank you.
I need you. >> Yeah. Okay. The committee will reconvene and come to order following our recess. Uh and with that, uh
M, uh Mr. Fine. We'll Okay. >> Well, thank you. Thank you, Mr. Chairman. >> Ask him to suspend. >> Yeah. Suspend just for >> Okay. Uh, a little bit of uh business here. The gentleman of California has
asked the gentleman take his word for his words to be taken down. Does the gentleman wish to ask unanimous consent to withdraw or modify the words to which the gentleman objective? >> Mr. Fine, do you? >> No, I'm not taking my words down. So, no. >> Okay.
>> All right. And the chair is prepared to rule in the opinion of the chair. The gentleman's words are in order. >> Mr. Mr. Chairman, I'd like a voice a vote, please. >> Okay. So, we'll take >> fight. >> Uh, so we'll take a vote. All those in
favor sign by saying by saying I I all those opposed, no. >> No. >> In the opinion of the chair, the eyes have it and the motion to table is not agreed to. And the gentleman has 3 minutes and 54 seconds remaining. >> Well, thank you. Um, and I I want to
thank the ranking member for pointing out that lying to Congress is a crime. Um, I'm going to move on to the questions I was going to ask. Mr. Newman, you testify that for every dollar of care delivered, employers pay a $130 in plan costs. Providers receive 80 cents. Could you help us understand
what accounts for the remaining 50 cents or approximately 62.5% of the amount paid to providers? Where in the system are those costs incurred? >> Excuse me. Thank you for the question. Um the committee has spent an enormous amount of time bringing transparency to
PBMs, right? And there's this concept of spread where it was, you know, a mispriced dollar that went from one place to another. The medical side and the difficulty of it comes because this that that spread comes from a variety of sources and places. Um for the provider
side, here's the reality. Uh if you look at any public filing from anyos public hospital system, regardless of plan type source, right, marketplace, self-insured, Medicare, Medicaid, you name it, there is an average write off of 75% of patient balances uh tied to
deductibles and other things like that that they that go uncollected. That is regardless of market type. So right out the bat, if in if in your market uh you know you're reliant on 30% of your revenue coming from patients, well, guess what? There's 22 points right out the door, right? You know, has that
shift. The second part of that is payers don't pay uh you know on here. We've all you've dealt with countless hearings around insurance companies and the prior authorizations and denials of claims and all those things. That adds another 5 to 10% of seepage you know off of this. And then your typical health system because
of the complexity of US health care figuring out how to get paid, who to get paid by, when to get paid, chasing after them, you name it, is spending somewhere between 12 and 15% of their operating budget just trying to figure out how to get paid. I mean, you've run businesses, a 15% cost to get paid is not a
functional marketplace. So, that all adds up to that 20 to 30% in any place, in any market, in any provider. On the employer side, um on on fully insured plans, this has been the margin on top of medical loss ratio. But in the self-insured space, it shows up as Adam
uh um admin fees, transaction fees, clawback fees, um consultant broker, you know, kind of fees, uh stop-loss carrier rates that are inflated because of the fact that they have no data and no visibility. That's the the the problem with this grift is that there isn't one
single boogeyman, right? That's why we have to rebuild the system and simplify it. It's not a renovation because it'd be the renovation from hell. >> Well, thank you and thank you for your answer. Look, I think that we've got real problems in the health care system. I think the biggest one is that we've
detached who pays for the service from from what the service costs. And when you can buy something and you don't know how much it actually costs, you tend to buy too much of it. There's a reason the market works. When prices go up, people are willing to supply more of it, but
they typically are willing to purchase less of it until you reach that equilibrium. In health care, we've broken that because if if you have a co-pay of $10 to go to the doctor, if you think you're going to get $11 worth of value going to the doctor, then you're going to go to the doctor. Even
if going to that doctor costs $200, you're not thinking about the right way. I think your model helps us do this. But no matter what our issues are as it relates to healthcare, if we're going to solve them, it is essential that we deal in the world of facts, that we deal in the world of reality, and we deal in the
world of truth. So, thank you all for being here, and hopefully moving forward, we can begin to do that a little bit better. Thank you, Mr. Chairman, and I yield back. The >> gentleman yields. Now, I call on Mr. Owens uh from Utah for his line of question. >> Thank you, Mr. Chair. Um well, we can first of all agree on one thing. Health
care, healthcare costs, it's way too high. Um the answer is not more government. It's been 16 years of Obamacare and here we are discussing government doing more. Um there's no question we need to bring innovative entrepreneurial thought process. Uh
explore opportunities to lower costs and direct contracting as a model with a promise to give employees employers a new way to work with providers, reduce administrative costs and focus more on patient care. By giving employers greater flexibility on how they provide health care, they are better able to
meet the needs of the employees at an affordable price. We need more innovation and solutions like this provided by direct contracting. Uh Dr. Savage, in your written testimony, you shared uh how emergency department usage, inpatient hospital ad
emissions, and overall health care service demands all dropped with direct contracting uh uh patients. Can you explain how these reductions translate to employer employer medical spending? >> Thank you for the question. Um, so I can't tell you on specific employers. Actually, my fellow uh witnesses may be
better in giving you the exact numbers, but I can talk about a societal scale. In the United States today, we are close to $6 trillion in total health care spending about a third of which goes to hospitals. So that's around $2 trillion. The Society of Actuaries is the one that
conducted the study suggesting there's about a 20% reduction in hospitalization. And this seems to be approximated by some of the numbers I'm hearing here today. So substantiating this claim, if you do the math on that, that means it's around $400 billion a year in savings potential for our our
country by more widely adopting models like direct primary care. ER utilization is the same thing. Primary care is the cheapest place to access care, but instead we're diverting, we're saturating the inexpensive option, primary care, and we're saturating the
ERs. By freeing up space within the primary care arena, we will actually have lower ER utilization, which helps everyone. If anybody goes to an ER right now, they are waiting for hours, if not days sometimes, for care, which and there have literally been people who've gone into heart failure waiting in an
ER. These are travesties. My ER colleagues will be thrilled if they stop dealing with rashes and colds and are be able to focus on the truly life-threatening and return those issues back to the arena where it should be primary care. So, you don't want to saturate the primary care field. This is what direct primary care accomplishes
and you want to leave capacity in the ER for for true emergencies. >> Thank you, uh, Mr. Newman. uh many small employers are offering healthc care insurance health insurance are concerned by providing it to the employees will become unsustainable if small businesses
had released from financial burden what benefits do we see in the economy as I said in my opening testimony uh 90% of the savings that employers experience from using our our model of direct payment to providers at the time of service um they actually turn back to
their workers and no co-pays, no deductibles and and increased wages. Our typical customer that we work with has 90% of their workforce that makes less than $100,000 a year because uh in this country they've unfortunately become functionally healthcare poor, right? You've talked about putting off services, putting off care that they get
and go they need. So imagine that population all of a sudden taking 15% on a most basic level off of a $35,000 per family cost. $5,000 when in each worker's pocket. That's transformational
for the business. That's transformational for the worker. And not only that, they're now given a program uh that they can invest in themselves, you know, to live their best life and have the best opportunity they have because they can go get the care that they need and that they can access and that they can afford.
>> Thank you. Um I just want to wrap up with uh first of all, this is such a timely conversation. uh earlier in the hearing the word common sense was thrown around a little bit. Uh you know common sense is using our free market. The reason why with the greatest country in history of mankind is that we use
innovation, competition, merit and allow people to experience the best process they can go through on their own. And so I'm excited about this. I'm thankful that we're having this conversation that across the country I'm hoping people listening and start looking at this as an option. The free market needs to work uh better and we're going to get that
done. Not government but free market. So thanks so much guys. Appreciate it. You're back. >> All right. The gentleman yields. Now I call on Dr. Under from Missouri for his line of question. >> Uh thank you, Mr. Chairman. Uh when we discuss skyrocketing or skyrocketing healthcare costs, there is a
misperception that physician payment and prescription drugs are driving costs. Uh this d this graph shows national total health care expenditures over the past uh 10 years uh which have risen from 3.2 trillion to5 trillion. Uh the dark line
at the bottom shows physician and clinical services roughly stable at about 20% of spending. Uh the middle blue line shows prescription um drug uh drug costs rising a little bit but roughly 10% of total spending. And then
the upper graph is everything else. The hearing this hearing is critical because we have to focus on this segment of health care costs that is not improving patient care. It's driving up cost for patients and employers. Um the the one
of the ways we can rein in these costs was alluded to earlier uh is through increased transparency. Employers have little visibility when it comes to knowing what they are actually paying for which fuels overpayment. Uh that's
why I worked with this committee on HR uh 9228, the health data act, which re would require insurers and other intermediaries to share data on all expenses when the employer is footing the bill. Um Mr. Gelfin, can you explain
how access to meaningful data can help root out wasteful spending and ultimately lower costs to patients and employers? >> Thank you, doctor. A meaningful health data can help employers identify waste, compare prices and quality, and direct employees to higher value care. Nearly
one in four healthcare dollars today, an estimated 760 to935 billion every year is spent on waste, including unnecessary care, administrative inefficiencies, and pricing failures. Um, with access to claims data and price and quality data,
employers could eliminate high-cost, low-v valueue care from their networks, and we could design smarter benefits that would lower costs for the 160 million Americans who get healthcare through their job. For example, if Congress passes the Transparency and Billing Act, employers will be able to
find and eliminate inappropriate facility fees. We will be able to spot upcoding and downgrade those charges to more appropriate levels and save billions of dollars for patients. And if Congress passes your bill, the Health Data Access Transparency and Affordability Act, employers will be
able to match the money that they pay to the bills that we receive and ensure that the right amount is sent. We'll be able to identify the best providers and systems and improve our networks and we'll be able to stamp out fraud that otherwise might go unnoticed because right now fraudulent bills just
essentially get paid on autopilot. So, we hope that Congress will pass your bill. >> Thank you, Mr. Gelfin. The other way we can tackle this portion of the chart that is driving health care costs is to cut middlemen out of the process and empower employers to negotiate directly
with physicians and hospitals. One of the largest employers in my district, Boeing, recently began offering direct primary care services to its employees. And it's extremely popular because the patient and the employer have predictable, reasonable expenses and
physicians can spend more time with patients and less time arguing with insurance companies. Um, in traditional insurance plans, it's been estimated that doctors spend on average two hours on administrative tasks tasks for every hour they spend with patients. Uh, Mr.
Dr. Newman, can you share um how Nomi Health facilities uh real-time payments to providers uh um uh how facilitates real-time payments to providers and um how you're able to do that to scale? >> Yes. And before before that, just thank
you for HR9228. It's a transformational piece of legislation. >> Thank you. >> We have to open up this black box. If we open up this black box, we know then what we can do about that black box, right? And kind of what's it what's in it. Yes. Um, when you go to a restaurant, you get the bill and you pay
for it. It's that simple. It doesn't cost much. There's might be a credit card fee, but in healthare, the cost to get paid for a provider, like you touched on, admin, administrative cost, burden, you name it, um, is weeks, months, is hours, uh, and is about 15 to
30% of the cost. Owing's model and others like that. When they just pay, it turns out healthcare is cheaper. >> Yes. >> Um, and we should, that's the model that we should adopt everywhere. Well, thank you. And m Dr. Savage, I I I want to emphasize something. You know, you said
the primary care is the lowest cost. And uh with direct primary care, we do not have a large, let's say, hospital employer looking over the doctor's shoulder saying, "You need to order more tests, more x-rays, refer to more of our employed specialists." You
have the doctor looking out for the patient. And I can say from my own experience the when I got a call on the weekend the patients I knew the best who I had been taking care of say their asthma that was my specialty for years or their allergic reactions for years.
They were the ones I was least likely to send to the emergency room because I knew the severity of their condition. I could reassure them. No, do this, do that, and this is my cell. Call me back if you need me. Someone who I didn't know at all. I was covering for another physician in another practice. I didn't
know them. I had to send them to the emergency room. So, thank you, Mr. Chairman, and I yield back. Thank you all for your testimony. >> The gentleman yields. Now, I call on ranking member Donier for his five minutes of questioning. >> Thank you, Mr. Chairman. Um, Mr. Woodhouse, I want to give you a moment to explain yourself. What I heard you
saying was referring to the Congressional Budget Office of HR1. Correct. >> That is correct. >> I don't That is correct. the the HR1's the CBO analysis looked at two things in terms of coverage losses. One was
roughly uh 10 million that would lose coverage through the Medicaid cuts to $1 trillion in cuts overtime. 5 million uh who would lose coverage as a result of losing the tax credits. That's 15 million people in America. Um that I was
not suggesting anything otherwise in my oral or my written testimony. >> Okay. Um, one of the things that's frustrating about healthcare, having dealt with it for a long time now, is in the public private sector as an employer, and I, Mr. Newman, your your
references to the restaurant business, I appreciate um, having met a payroll for many years in the restaurant business, including trying to provide health care for my employees. I remember once having a a manager in tears because she
couldn't make her deductible, so I paid her deductible. Um, so this hearing is sort of an example of what's wrong with Congress when it comes to healthcare. And Mr. Chairman, you and I have really good conversations, whether it's PBMs or denials by United Health uh or others,
we we could, if we analyzed health care the way we analyzed our businesses, I still think could make meaningful differences. However, when you have the kind of misrepresentation and political theater on the extreme that we had today, it takes away from our ability to
concentrate. Mr. Woodhouse, in that mixed market, I have a uh a private health care system, John Mir Health. My district is a fifth wealthiest in the United States, so there's a lot of private pay. Uh they're consistently in the top 20 hospitals in the United
States. 20 years ago, their payer mix was 98% private. Now they're almost 50% Medicare. That's not that's a mixed market. So they told me if the big ugly bill went ahead because of their payer mix now, they would have to close
hospitals and we're struggling with keeping them open. One of the wealthiest hospitals in the country. Could you sort of uh follow up on that that framing of how this to your point this is not an issue just for the genius of the private
sector. It requires ambulances, emergency response, public hospitals, public emergency rooms. This is a mixed market system. We have to fix it in that context. It takes some private sector, but it also needs some guardrails. It >> it does. And you know what we saw was
the the minute HR1 passed and was headed to the president's desk, the first hospital announced its closure because of of of what it anticipated was uh the financial pressure that it would receive. Now we're tracking over a thousand hospitals, clinics, providers
uh that are that are either either have closed closed award, cut a ward or are at threat um at threat of closing. And these are in many places the only opportunity people have uh to get uh to get care. They go somewhere else, it
costs more. It costs more uh throughout uh throughout the system. Uh I think you know we you know those of us that were in favor of passing the Affordable Care Act. We made a bargain with the private sector with the insurance companies that they that we would have this mixed market that we would have, you know,
they would have a broader market. They would have more patients. They would they would get rid of stuff like, you know, eliminating people because of pre-existing conditions. We'd keep premiums as low as we as we possibly could. And the cuts to HR1 u the trillion dollars in cuts have just put
so much more pressure on the market overall. >> So Henry Kaiser created the Kaiser health care system. He started it in the East Bay in California where I represent because he wanted his employers to have well he also started child care but healthcare. So it was a good model of a
public employ or a private sector employee meeting the needs of his employers but it's now in a closed system. It was a closed system then you had to be an employer but it works and it controls uh their costs but they still struggle with every little piece. So let's talk a little bit about
prescription drugs. Um and that's a it's not as Dr. O just said it's not a huge section but it's a significant section. Uh Mr. Uh Gailfield, could you respond to some of the things we've been able to do just to redo reduce prescription drug costs?
>> So already Congress has passed reform of pharmacy benefit managers. Thank you for your support there. That's going to make a huge difference. We hope this committee will also consider making PBMs a fiduciary to the health plans that they're involved with. Um we also have been very supportive of a number of
changes related to big pharma and the way that they extend their patents. For instance, the ethic act in which you would eliminate these patent thicket in which a drug might have five or six patents in Europe and 500 in the United States. There's a lot of little things that we could do to make prescription
drugs more affordable. >> Thank you, Mr. Chairman. Hel the gentleman yields. And um now I'd recognize the ranking member for your closing remarks. If there are no further questions, I think we'll close out. Mr.
Ranking member, um, your closing remark. >> Thank you, Mr. Chairman. Um, you know, I'd be curious if if what CBO says, and as I've quoted also Kaiser Family Foundation analysis of HR1 is true. And
I've heard the chairman uh of the full committee say that um I when testimony I was making, I was scaring people and misleading Americans by quoting CBO as Mr. Woodhouse did uh today. And um in my case, Kaiser Family Foundation, we
didn't accept that. Maybe the majority would accept a bill that would amend HR1 to say if these things come into fruition, how do we stop it? Um because this is disastrous. And you can see it in real time right now. In the district
I represent, we spent a long time going upstream to do clinics, to do primary care doctors in an integrated system between the private hospitals and the public hospitals. It worked. It got people out of the emergency rooms. I was out there recently and what they said was it's going back to the old model.
People will have higher acuity and when they seek help, it won't be from their doctor or primary care doctor. It'll be at the county's emergency room or the trauma center. I don't see how that works as a business model besides the hum inhumanity of letting Americans suffer like that as it's happening. So,
Mr. Mr. Chairman, I I would just say as always, I think you and I have a perspective as an employer, as employers, let's analyze what's happening with HR1 and put commitments to it that if what CBO says, what Kaiser says, what I think is going to happen
and I hear in my community happens anymore that we work to stop it and we can stop it in appropriations or we can stop it here through policy. But it's unfortunate that we had to have what happened today. I still uh very strongly feel I I I go with the process, the
rules. You ruled uh we were outvoted, but those words were unfortunate at the least and should have been strucken down. Mr. Woodhouse and all the witnesses, we appreciate your testimony and we want to protect all of your ability and your enthusiasm to testify
in in front of Congress without personal attacks as the rules require. Thank you, Mr. Chairman. I yel back. Thank you, ranking member. And obviously, we have a little disagreement on the there was not a personal attack. It was a matter of questioning whether
what the truth was here. And um and we took a vote on it as the procedure requires. Uh yeah, healthc care is so frustrating. I mean, it's uh uh and and we're spending twice as much
as any other uh industrialized nation. And uh they're two different very very different opinions on how to solve this problem. Um and uh so we've got a lot of work to do here in this body. I want to thank
all of you for your uh your your expertise in and actually what you're trying to do. I mean, every one of you out there trying to solve this problem and it's got to be solved because, you know, the one the one individual we haven't talked about out there today is
the taxpayer and and uh and the deficit and what this is going to cost uh long term. It's unsustainable. It will break the country. So, we better
come to uh agreement on how to solve this problem pretty quick. And I want to thank all of you for what you're doing in in in in doing that. Uh and you know, again, right now, we got to put a lid on it. I mean, health care costs are
continuing to rise and and and and businesses are just having to turn, which businesses do, uh to innovative ways to provide highquality health care for their employees at lower costs. And we've heard about those examples today. Uh, direct contracting gives employers a
way to work directly with providers to reduce administrative costs and focus more health care dollars on patient care. When employers have the flexibility to pursue arrangements such as direct contracting, workers and their families benefit more for uh more
affordable coverage as Dr. Under illustrated in his chart today. Uh I served on the healthy future task force and the way we do business is when we have a problem that gets out of hand we peel the onion it's it said and we look
at every penny. I could not get an answer from any healthc care expert in this country on where the money is going. Can you believe that? $5 trillion and
nobody knows where the money is going other than we have a lot of people that are very dissatisfied with the way we provide health care at the highest cost in the world. It's got to be fixed. Uh I believe that
when employers have flexibility to pursue re arrangements such as direct contracting workers and their families do benefit from that affordable coverage. I look forward to continuing to work with our ranking member and all members of this committee on the innovative free market health care
solutions that we talked about today. Again, I thank all our witnesses and for taking time to testify. Sorry for the little uh break in uh in the session, but thank you for hanging in there with us. And without objection, there being no further business, the subcommittee
stands adjourned. Thank you.