Direct Contracting: A Prescription for Lower Health Care Costs

The subcommittee on health, employment, labor, and pensions will come to order. I note that a 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. Ninety-eight percent of small employers offering health insurance are concerned the cost of providing courage 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 insure 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 how health outcomes. While there is great success with these models, barriers still exist, making it especially difficult for small and mid-sized employers to take advantage of them. One of those barriers is lack of data. Employers often struggle to exe access their own health 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, Mister Chairman, and I want to thank all the witnesses for being here today. In the wealthiest country in the world, Americans are still too forced to choose between filling in prescription and paying their rent or putting food on the table. Despite our differences across the aisle, and as the 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 healthcare 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 fifteen thousand dollars approximately double the amount spent in other developed countries. One third of all Americans insured or not reported having to sacrifice daily necessities to pay for health care in twenty twenty five.

Mm.

And sixty six percent of Americans who file for bankruptcy cite health care cost as a 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 de- deal with the urgency and the challenges that Americans face. large employers have benefitted from direct contracting models, I'm concerned that my colleagues are more interested in tickering 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 rein 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 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 can make health 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 health care. 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 ki- we would continue to find ways to work together on legislation that make me- 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 eighteen 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 c- uh credits last year. It's caused millions of Americans to be priced out of the health ins- out of their health insurance. Americans are rightfully demanding that their government work for them, not billionaires and big corporations. But instead of working to get a 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 sky-rocking 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. Chair.

The ranking member yields. Uh, pursuant to committee rule eight C, 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 five p m, fourteen days after this hearing. And without objection, the hearing record will remain open for fourteen 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 Doctor Chad Savage, President of DPC Action and Founder and Physician at Your Choice Direct Care in Brighton, Michigan. Our second witness is Mister Mark Newman, CEO and Founder of Naomi, Naomi uh Health in Orem, Utah. Our third witness is Mister Brad Woodhur Woodhouse, President of Protect Our Care. Our la last witness is Mr. James Gelfand, President and CEO of ERISA Industry Committee in Washington, DC. We thank the witnesses again for being here today, and we look forward to your testimony. Pursuant to cr- committee rules, I ask that each uh of you limit your oral presentation to a three minute 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 eight D 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 Doctor Savage for your testimony. Sir, you have five minutes.

Thank you, Mister Chairman, I appreciate the kind introduction, uh, ranking member, distinguished members of the subcommittee. A dollar bill is point one one millimeter stick. 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 twenty-seven thousand dollars, 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, 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 fifty percent on overhead. This means those doctors can offer affordable membership models for all the care that they provide with no co-pays. Same for next day availability, extended thirty to sixty minute visits, and many have onsite pharmacy and laboratory services, which can save eighty to ninety percent. Because they're able to have more reasonably sized patient panels, they're able to provide concierge-like care without all the cost. This results in improved outcomes. Direct primary care patients have a forty percent lower ER utilization rate, and have about a twenty percent 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, HRAs, FSAs, and ICRA-based plans. This puts purchasing power into the hands of the employees, consumerizing them, making them informed 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 the process by creating tool kits uh model contract language and pilot programs to ease implementation of direct primary In summation, direct primary care saves money, improves care, and strengthens the American workforce. Thank you.

The gentleman yields now. I recognize Mister Neumann for your testimony.

Chairman, Ranking Member, and member of the subcommittee. My name is Mark Neumann, and I'm the founder and CEO of Nomi Health. Not here today as a provider or an insurance company. Nomi powers over twenty-five hundred 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 health care 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, eleven years ago, was not only life-changing as a first-time parent, but gave me a rude awakening into why the health care system works the way it does. At the time, my four hundred employee company just dealt with a fifteen percent increase on our health plan. Uh, and but as we left the hospital, they offered me a thirty percent 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 health care? And why it wasn't available to everybody, uh, 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 health care, 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 contractually 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 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 thirty percent. That's the unlock to US health care. At NOMI, when our employers save ten, fifteen, thirty percent on their health care costs, ninety percent 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 two hundred thousand plus providers like Henry Ford Health in Michigan ProMedica in Ohio, Northside Hospital in Georgia, all fighting to transform employer health care. And in Michigan alone, the employers using our model are spending twenty-nine percent less than the traditional cost of commercial coverage in their state. So as a committee, you continually demonstrate a commitment to tackling health care costs for employers and workers. You hold the pen on policy like employer data ownership, price transparency, and direct contracting. An unlocking invasion here is the real opportunity. Although it seems nearly impossible, we can actually do something about health care 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 f- solve U. S. health care 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, Uh, Ranking Member Dissonier and distinguished members of the committee, thank you for the opportunity to testify. My name is Brad Woodhouse. I am President of Protect Our Care. Our mission is to make high quality, 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 health care affordability crisis in America. H R one 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 health care affordability Americans are facing today. And frankly, nothing can distract from the reality that H. R. One cut one trillion dollars from Medicaid and the Affordable Care Act, which will rip lifesaving coverage away from fifteen million Americans, including senior children and people with That same bill handed out one trillion in tax breaks to the top one percent, and seven hundred and thirty billion in tax breaks to corporations. Today, not even a year later, eight million people have already lost health care. 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 health care to the number one issue in American politics. A recent Gallup poll showed an increasing number of Americans are unable, uh, to afford health care. Americans are seeing prices for specialized drugs continue to climb as a result of H. R. One. Republicans expanded the exclusion of orphan drugs from Medicare drug price negotiation, delaying popular cancer drugs, Keytruda and Obdivo from being included in price negotiation. Deferring drug price negotiations for orphan drugs, out-of-pocket costs for patients and Medicare spending, delaying or excluding orphan drugs only means higher costs for patients, but will also cost the federal government eight point eight billion over the next decade in lost Medicare savings which go directly in the pocket of big pharma. Meanwhile, Democrats were fighting to lower drug costs for all Americans last year. Congressman Pilon, Neal and Scott introduced a Lower Drug Costs for American Families Act, cosponsored by the ranking member and representatives Courtney Hayes and Mannion. 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 costs on prescription drugs, caps insulin at thirty-five dollars a month for everyone, and closes drug pricing loopholes in H R one. 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 H R one'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. nursing homes which have shut down, cut services, or are at risk of doing so. Over seventy hospital wards have shuttered, including forty maternity wards. Nearly three hundred clinics have been forced to close. Over four hundred and fifty 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 five hundred dollar per hospital 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 health care in history, nearly five hundred thousand health care 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 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, uh the cuts to people's care. Um, every day presents a chance to stop this health care crisis, to reverse the damage done uh by H R one, but this administration has not lifted a finger to fix the crisis they created through the passage of H R one. 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, Mister Woodhouse, and now lastly I recognize Mister Guilfem for your testimony.

Thank you, Chairman Allen, Ranking Member Designier and members of the subcommittee, for the opportunity to testify today. I'm James Guilfin, President and CEO of the ERISA 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 helps sustain the employer-sponsored insurance system that covers more than a hundred and sixty 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 the 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 fourteen percent, reduced specialist spending by eleven percent, and increased the use of digital and virtual care by thirty-two percent. 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 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 twenty-nine percent lower than state averages. One company rolled out a direct contract specifically to help employees access behavioral health providers. a service and critical shortage throughout the country. It's fully covered for patients and will solve a long-time 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 all-expense 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, Mister Gelblom, 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 uh i some uh material from uh Milton Friedman, 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 health care. Uh, Mister Gilson, employee participation in direct contracting programs is associated with reduction in health care cost, improved health outcomes,

Thank you, Mr. Chairman. Thank you, Mr. Chairman. Direct contracting can help shift the focus from volume to value. 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, hospitals, 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 lower-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 twenty-one days or more team-based DPC can offer same and next day Right.

And uh this improvement in health outcomes, uh did it help contribute to uh happier, more productive em employees?

Yes, in fact, that MESA program achieved a net promoter score of eighty-eight. So that's the - the score that patients were giving at eighty-eight, whereas they gave most health care fifty-eight percent, 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 one thousand five hundred

Uh, Mr. Neumann, in a free market economy, the, uh, the,

Mm.

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 uh competing factors in uh 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, I 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, restaurants, uh, you know, um, uh, universities, unions, uh, school districts. And, you know, when we bring and and unleash their kind of market power in their, in their, in their, 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 wanna, and they wanna help and take care of each other. So, uh, you know, the, the iron, a pure 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 a dollar twenty or a dollar thirty cents to even get it. And at the end of the day, when that provider only collects seventy 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 them more than that, and make it super easy and simple.

Good. Thank you very much. And uh our yield, I am out of time and now I recognize Mr. DeConno from uh California for his uh five minutes questioning.

Uh, thank you, Mr. Chairman. Uh, Mister Woodhouse, um, five million Americans have been kicked off Affordable Care Act coverage just in the past year. You say it's eight million? Uh, how much more do you think uh, how many more Americans, uh will be kicked off of health care either through the a c a or uh medicaid cuts

well so the the cbo estimate um when hr one uh passed uh passed last year was that fifteen million collectively would lose coverage between the affordable care act uh tax credits went away uh and the and the medicaid cuts so

what's what's what's the estimate

fifteen million was that was the cbo estimate

fifteen million fifteen million are gonna lose to health care

altogether

um doctor savage does the increase in the uninsured uh put significant pressures on the rest of uh the health care system to deliver health care at an affordable price.

Not necessarily. Actually, the closest thing we've ever had to a randomized study on this was conducted in Washington and Seattle.

Oh, so not necessarily, 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 strong decision.

Yes or no, sir?

Uh, I abstain from

You don't, you you abstain. You don't, so you don't ha- you're not really sure.

Well, I can give you an answer, you listen.

So you really can't answer with great conviction that fifteen million people kicked off of health care in America won't drive up costs for everybody else.

Not health care, health insurance.

You can't say, you, h- health insurance,

Just give.

well, th- they're gonna be uninsured. Will that not put pressure on everybody else and the prices to go up for everybody else?

If most people if most people engage in the free market and purchase,

You're not sure. I I

they will get better prices.

Okay, you can answer the free market, but, you know, I'm gonna tell you that that I, in the immediate term, I think most people

No, I don't believe it would.

You don't believe so? Thank you. Mister Gatlin, again, Mister Gelfand.

So far we have not seen those particular numbers,

So far we've not seen,

and I have costs.

so far we've not seen, but you're not really sure. I would contend that most people with common sense would say that fifteen million people losing their

I mean, the, absolutely, i- 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 in 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 a

Thank you. Mister Gelman, th- th- 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,

Mm.

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 to those areas where there's only a single network. I mean that that the domination of incumbent carriers with bad service, terrible pricing and and bad policies that put providers out of business.

Yeah, but we're talking about so a single a single 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 gotta 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 it's it's

So you think that the shortage of rural providers is a result of the fact that uh, we have uh, we have

If we simplified the business of health care, the delivery of health care is a high net promoter score in America. The business of health care 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, cuz the insurance companies don't.

So how does that solve the problem, how does that 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

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, uh, I'm running out of time, uh, but I'd love to pursue this with you further. Thank you.

The gentlemen Yills, uh, now call on our Chairman. Uh, Mr. Wahlberg for his five minutes of questioning.

Thank you, Mister Chairman, and thanks to the panel for being there, though I have to say, Mister Woodhouse, um, your numbers are absurd. I checked with Doctor Under here and he found very easily, because media won't do the research but you can do the research, in the Marketplace, twenty-three million souls are on the Marketplace. And you're saying twenty million. I'm not asking you a question.

OK.

I'm getting for forth the absurdity of what you're saying. Fifteen to twenty million don't have health care when on the marketplace there are only twenty-three million, nearly twenty-three million. Correct, Dr. Under? Correct. Let's let's move on here. The shilling that goes on for the unaffordable care act is absurd as well. Uh, Mr. Neumann, thank you for coming all the way out from uh from uh Utah to be with us. Your written testimony highlights that employers using Nomi Health to direct contacts in my home state um has caused uh some of the the the Michigan medical spending per member fall by as much as twenty-nine percent. Uh, 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 ten to fifteen, uh, percent 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 tr- local insurance company that's 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 l- you know, at a direct real price of healthcare, solving their business problems, just like the story I told of 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 uh twenty to thirty percent 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 make do it as simple and efficient and easy as Visa and MasterCard, or American Express can, not at a fifteen or twenty percent margin, that any insurance company claims that they need.

Yeah.

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 p- 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-serv- no service and bad transparency. And if you bring it open, if you simplify the system, down to its core where 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.

Yeah.

That's the nugget that we unlock everything in employer health care.

Common sense like other p- other products and purchases, in great degree.

If if if we ran restaurants like health care, every restaurant would be out of business in America.

Let's not start that then. Thank you. Um, Doctor Savage, thanks for coming in all the way from Brighton, Michigan.

Thank you, Brian.

Glad to have you here, uh, especially since your practice is in the field as well. Uh, health care costs continue to rise at an unsustainable rate. Uh, national health expenditure data showed a seven point two percent growth in health care spending in twenty twenty-four and total of um five point three trillion in health care 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's 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 taxes. advantage as people who obtain it through their employers. This had had a massive domino effect which would benefit the whole system, freeing employers to focus more on their core business instead of being de facto 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 arbiters of medical pricing which would exert downward price pressure constraining the excesses of the whole

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 has expired. I yield back.

The gentleman yields, and now I'll call on the ranking member of the full committee, uh, Mister Scott, for your five minutes of questioning.

Thank you, Mister Chairman. Um. Mister Mister Gelman, obviously it's I don't think it's much of a challenge to be able to

When we canvassed our members to ask them what kind of direct contracting they were doing last week, and we actually heard from many members that they had comprehensive direct contracts that were covering if not their entire employee population, uh 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 lower premiums.

But if you're if you're not p- 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 uh the um bills that uh the prices that you negotiate public

So

Mr. Gelman?

so we do have to disclose in our transparency and coverage um disclosures what we pay for health care.

Uh, so if someone were sued for going to the emergency room and not paying, they could obtain what they'd 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 pa- they're accepting rates from others.

Um Mister 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 uh and how does um what does c- cost shifting of uncompensated care mean?

Well, I mean I think, you know, the big concern is we have fifteen million people potentially are gonna lose health care eight million already have five million uh on Medicaid, three 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. This HR one 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, how 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 uh i i don't um i'm not taking any issue with the issue of this direct contracting as i think we we think virtually everything should be on uh should be on the table but i will tell you right now what the american people are focused on in terms of their health care costs. I mean, obviously people losing coverage are very concerned. The twenty million people who have seen their ACA premiums skyrocket because their tax cuts were taken taken away are very concerned. But ninety percent 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 are concerned about in terms uh of cost in the American health care 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 in 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 the, lose coverage, five 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 health care 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? You all make choices here. You chose to do one point seven trillion dollars 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 Fein uh from Florida for your five minutes of questioning.

Thank you, Mr. Chairman. Mister Woodhouse, do you think it's okay to lie

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 fifteen million Americans would lose their health care. Do you stand by that statement?

That is what the CBO said when it evaluated your

OK, do you know what an American is? Do you know what an American is?

That is what a CBO

Do you know what an American is? Uh, no, that is not what the CBO said.

said.

Do you know what an American is?

Absolutely, well, absolutely what the CBO said.

OK, 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 health 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 I didn't lie. OK, don't think anyone else in this committee has to tell your time is done I will move well great, I'm I'm not interested in then you have to say, I'm not interested in then you have to say. on you can shut your mouth you lied to Congress doctor said mister Mr. Newman. You're lying,

Point of order, mister chairman.

mister Newman, Mister Newman mister Newman. you're lying in your response to these.

Point of order.

Mister 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. Mister Newman you testify that for every

Mr. Chairman, I demand that his the the the members' words be taken down. He's accusing somebody of lying. He's lying.

He did lie. You wanna debate it? He lied. That's not in debate. Fifty, no one has said, he said he didn't.

Mr. Chairman, I ask that his words be s- 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. I even asked him, does he know what an American is?

Yes, we

What what color is this?

Okay. Just pause just a moment.

Right. So

But then it cannot acceptable under any means to portal.

Any form.

We need users to make it fun to Mm-hmm. put channels. He's next point.

is he the

he releases

is he the truth or not maybe he can clarify his sort

believed in his own religion

yeah i agree

but he didn't believe it was all americans it was it was souls

Only the with the witness have a chance to respond.

Shitty. Transcripts. No, I mean, I mean, uh, That that's not the way it is, guys. I mean, we're speaking the truth. Here it's double-sided, statement is false. and it's meant for the minority, Definitely. sorry i need to do this right now and this is not no no no no no no no no no no you're right but this is also like putting the weight on the product that i'm supposed to do i do not know mmm So it violates the quorum. It's not a process.

What is the penalty for a witness giving false testimony?

is entitled to be a liability.

For the witness to give false testimony? No, this is not about anything. You need to change your fashion. No, this is not about anything. You just can't move. It is. Not the way we define it. These were not all American. Not about what you're saying.

Okay, that's fine.

Yeah.

It's just, I can figure this out.

Okay.

Okay.

Alright.

No problem. Yeah.

Yes.

How long?

Uh, if the witnesses will just stand by, we are going to recess uh for a few minutes to work through the legalities of this. Uh, basically, legalities are such, uh a witness is then charged with misspeaking and we need to go through that

Misspeak.

It's a child mispronouncing.

because that is a uh that's that's a crime and so

No. No. No. Mister Chairman, the the problem is he's violated the decorum, the rules of decorum. Mister Fein has. He's accused a witness, Mister Fein 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.

ok so So we're gonna recess and work this through and just bear with us until we get this done. Thank you. I need you to Yeah. forward. Okay, the Kimmy will reconvene and come to order following our recess. Uh, and with that, uh uh, mis- uh, Mr. Fein will, okay. Mm-hmm.

Well, thank you. Thank you, Mr. Chairman.

Hold on. No, hold on. Oh, ask him to suspend. Yeah, suspend, just for a minute. Okay. The gentleman from California. Mm-hmm. Okay, uh, a little bit of uh business here. The gentleman uh from California has asked the gentleman Take his wor- for his words to be taken down. Does the gentleman wish to ask in any extent to withdraw or modify the words to which the gentleman objective? Mister Fine, do you

No, I'm not taking my words down, so no.

Okay. Okay. Well, let's go first. All right. And the chairs prepared to rule in the opinion of the chair of the gentlemen's words are in order.

Mr. Chairman, I'd like a voice uh a vote, please.

Okay, so we'll take a vote.

Oh, please fight.

Uh, so we'll take a vote, all those in favor, sign by say by saying aye. Aye. All those opposed, no.

No.

No.

In opinion of the chair, the ayes have it. And the motion to table is not agreed to. And the gentleman has three minutes and fifty-four 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 gonna move on to the questions I was going to ask. Mister Newman,

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 misprelief dollar that went from

Mm. Mm.

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 any hosp- public hospital system, regardless of plan type source, right, Marketplace, Self-insured, Medicare, Medicaid, you name it, there is an average r- write-off of seventy-five percent of patient balances uh tied to deductibles and other things like that, that they, That is regardless of market type. So, uh, right out the bat, if in a, if in your market, uh, you know, you're reliant on thirty percent of your revenue coming from patients, well, guess what? There's twenty-two points right out the door, right? You know, it 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 five to ten percent of seepage, you know, off of this. And then your typical health system, because of the complexity of US healthcare 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 twelve and fifteen percent of their operating budget just trying to figure out how to get paid I mean you've run businesses a fifteen percent cost to get paid is not a functional market place so that all adds up to that twenty to thirty percent 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 a medical loss ratio but in the it shows up as adam uh um 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 a renovation, cuz 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 healthcare 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 healthcare we've broken that, because if if you have a copay of ten dollars to If you think you're gonna get eleven dollars worth of value going to the doctor, then you're gonna go to the doctor. Even if going to that doctor costs two hundred dollars, 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 health care, 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 a call on Mister Owens uh from Utah for his line of questions.

Thank you, Mister Chair. Um, well we can first of all agree on one thing, health care care her her health care costs is way too high. Um, the answer is not more government. It's been sixteen years of Obamacare and here we are, discussing government doing more. Um, it's no question we need to bring innovative entrepreneurial thought process, uh, explore opportunities to lower costs, and direct contract as a model with a promise to give employees that, employees is a new way to work with the pro- 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 their employees at an affordable price. We need more innovation and solutions like this, um, um, provided by direct contracting. Uh, Doctor Savage, in your written testimony you shared, uh, how emergency department usage, inpatient hospital am- admissions, and overall health care service demands all dropped with direct Can you explain how these reductions translate to employer employer medical spending?

Yeah, 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 six trillion dollars in total health care spending, about a third of which goes to hospitals. So that's around two trillion dollars. The Society of Actuaries is the one that conducted the study suggesting there's about a twenty percent 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 four hundred billion dollars 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 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 it there have literally been people who have 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 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 wanna saturate the primary care field this is what direct primary

Thank you. Uh, Mr. Newman, uh, many small employers are offering health care insurance. Health insurance, or concerned by providing it to the employees, will become unsustainable. If small businesses had release from financial burden, what benefits do we see in the economy?

Not, as I said in my opening testimony, Uh, ninety percent 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 in no co-pays, no deductibles, and and increased wages. Our typical customer that we work with has ninety percent of their workforce that makes less than a hundred thousand dollars a year because uh in this country they've unfortunately become functionally health care 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 fifteen percent on a most basic level off of a thirty five thousand dollar per family cost five thousand dollars in 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 wanna wrap up with uh, first of all, this is such a timely conversation. Uh, earlier uh in the in the hearing, the the word common sense was thrown around a little bit. Uh, you know, common sense is using our free market. The reason why we're 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 will be listening and start looking at this as an option. The free market needs to work uh better and we're gonna get that done, not government but free market. So thanks so much guys, appreciate it.

Have your back.

Alright, the gentlemen yield now, call on Doctor Under from Missouri for his line of questioning.

Uh thank you, Mister Chairman. Uh when we discussed skyrocketing or skyrocketing health care costs, there is a misperception that physician payment and prescription drugs are driving costs. Uh this dr- this graph shows national total health care expenditures over the past uh ten years, uh which have risen from three point two trillion to five trillion dollars. Uh, the dark line at the bottom shows physician and clinical services roughly stable at about twenty percent of spending. Uh, the middle blue line shows prescription um, drug uh, drug costs rising a little bit, but roughly ten percent of total spending. And then the upper graph is everything else. The hearing, this cr- 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 costs 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 n- uh, ninety-two, twenty-eight, 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, Mister 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 health care dollars today, an estimated seven hundred and sixty to nine hundred and thirty billion dollars 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-value care from their networks, and we could design smarter benefits that would lower costs for the hundred and sixty million Americans who get health care through their job. For example, if Congress passes the Transparency in Billing Act, employers will be able to find and eliminate inappropriate facility fees. We'll 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.

Yeah.

So we hope that

Yeah.

Congress will pass your bill.

Thank you, Mr. Gelfand. 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 emp- 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 with patients and less time arguing with insurance companies. Um, i- i- 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 Mister Neumann can you share um how Nomi Health Facilities uh real-time payments to provider uh um sh- uh how facilitates real-time payments to providers and um how you're able to do that to scale?

Yes, and f- before before that, just thank you for H R nine two two eight, it's a transformational piece of legislation.

Well thank you. 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,

Yes.

right, and kinda 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, it there's there might be a credit card fee. But in healthcare, the cost to get paid for a provider, like you talked on, admin- administrative cost, burden, you name it, um is weeks months is hours uh and is about fifteen to thirty percent of the cost

yes yes

owing's model and others like that when they just pay it turns out healthcare is

yes

cheaper um and we should that's the model we should adopt everywhere

yes yeah well thank you and and mr. doctor savage i i i wanna 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 pa- eh 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 myself. 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, Mister Chairman, and I yield back. Thank you all for your testimony.

The gentleman yields now. Call on Ranking Member Desogne for his five minutes of questioning.

Thank you, Mister Chairman. Um, Mister Woodhouse, I wanna give you a moment to explain yourself. What I heard you saying was referring to the Congressional Budget Office of HRI. Correct?

That is correct.

I don't

That is that is correct. The the H R ones, the CBO analysis looked at two things in terms of coverage losses. One was roughly uh ten million uh that would lose coverage through the Medicaid cuts to one trillion dollars in cuts over time. Five million uh who would lose coverage as a result of losing the tax credits. That's fifteen million people in America. Um uh that I was not suggesting anything otherwise in my oral or

OK. Um, one of the things that's frustrating about health care, having dealt with it for a long time now, is in the public s- private sector as an employer, and I, Mister Neumann, 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 our deductible. Um, so this hearing is sort of an example of what's wrong with Congress when it comes to health care. And, Mister 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 in political theater on the extreme that we had it takes away from our ability to concentrate. Mister Woodhouse, in that mixed market I have a uh a private health care system, John Muir Health. My district is the fifth wealthiest in the United States, so there's a lot of private pay. Uh, they're consistently in the top twenty hospitals in the United States. Twenty years ago, their payer mix was ninety-eight percent private. Now they're almost fifty percent Medicare. That's not, that's a mixed market. So they told me if the bill 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

It it does. And, you know, what we saw was the the minute H R one 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 a ward, cut a ward, or are uh at threat um at threat 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 uh f- uh 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 uh as we possibly could and the cuts to hr one uh the trillion dollars in cuts have just put so much more pressure on the market overall

so henry kaiser created the kaiser healthcare system he started it in the east bay in california where i represent because he wanted his employers to have well they also started childcare but healthcare so it was a good model of a public or a private meeting the needs of its 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 m- it's not, as Doctor Osher said, it's not a huge section, but it's a significant section. Uh, Mister uh Gelfeld, could you respond to some of the things we've been able to do, just redu- reduce prescription drug costs?

So already Congress has passed reform of pharmacy benefit managers. Thank you for your support there.

Right.

That's gonna 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 tickets in which a drug might have five or six patents in Europe and five hundred 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. I go back.

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. President.

Ranking member, uh, your closing remarks.

Thank 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 hr one is true and i have 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 mister woodhouse did uh today and um in my case geyser family foundation we didn't accept that maybe the majority would accept uh a bill that would amend hr one 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. I don't see how that works as a business model besides the human- inhumanity of letting Americans suffer like that as it's happening. So, Mister 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 H R one and put commitments to it, that if what CBO says, what - what Kaiser says, what I think is going to happen and I hear in my community happens any more, that we work to stop it. And we can it in appropriations or we can stop it here through policy. But it's unfortunate that we um had to have what happened today. I still s- uh very strongly feel I - I - I go with the process, the rules you ruled. Uh we were outvoted. But those words were um unfortunate the least and should have been strucken down. Mister Woodhouse and all the witnesses, we appreciate your testimony and we wanna protect all of your visibility and your enthusiasm to testify in con- in front of Congress without personal attack. as the rules require. Thank you, Mister Chairman, I go back.

Thank you, ranking member, and obviously we have a little disagreement on the uh 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 uh requires. Um, yeah, health 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 uh very very different opinions on how to solve this problem um and uh so we got a lot of work to do here in this body I wanna thank all of you for your uh your your expertise and and and actually what you're trying to do I mean every one of you out there trying to solve this problem and it's gotta 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 gonna cost, uh, long term, is unsustainable. It will break the country. So we better come to uh agreement on how to solve this problem pretty quick. And I wanna thank all of you for what you're doing in in in in doing that. Uh, and, uh, y- you know, again, right now, we gotta put a lid on it. I mean, health care costs can are continuing to rise, and, and, and, and, and businesses are just having to turn, which businesses do, uh, to innovative ways to provide high quality health care for their employees at lower cost and we've heard about those examples to do- d- 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 Doctor Under it 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 health care expert in this country on where the money is going. Can you believe that? Five trillion dollars and nobody knows where the money is going, other than we have a lot of people that are very dissatisfied with the way pr- we provide health care at the highest cost in the world. It's gotta be fixed. Uh, I believe that uh when h employers have flexibility to pursue ar- arrangements such as direct contracting workers and their families, do benefit from that affordable coverage. I look forward to continuing to work uh 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.