[House Hearing, 114 Congress]
[From the U.S. Government Publishing Office]

                      FREE	MARKET SOLUTIONS FOR A
                           HEALTHY WORKFORCE



                               before the

                        SUBCOMMITTEE ON HEALTH,

                         COMMITTEE ON EDUCATION
                           AND THE WORKFORCE

                     U.S. House of Representatives


                             SECOND SESSION




                           Serial No. 114-45


  Printed for the use of the Committee on Education and the Workforce


                   Available via the World Wide Web:
            Committee address: http://edworkforce.house.gov

                         U.S. GOVERNMENT PUBLISHING OFFICE 

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                          Washington, DC 20402-0001           

                    JOHN KLINE, Minnesota, Chairman

Joe Wilson, South Carolina           Robert C. ``Bobby'' Scott, 
Virginia Foxx, North Carolina            Virginia
Duncan Hunter, California              Ranking Member
David P. Roe, Tennessee              Ruben Hinojosa, Texas
Glenn Thompson, Pennsylvania         Susan A. Davis, California
Tim Walberg, Michigan                Raul M. Grijalva, Arizona
Matt Salmon, Arizona                 Joe Courtney, Connecticut
Brett Guthrie, Kentucky              Marcia L. Fudge, Ohio
Todd Rokita, Indiana                 Jared Polis, Colorado
Lou Barletta, Pennsylvania           Gregorio Kilili Camacho Sablan,
Joseph J. Heck, Nevada                 Northern Mariana Islands
Luke Messer, Indiana                 Frederica S. Wilson, Florida
Bradley Byrne, Alabama               Suzanne Bonamici, Oregon
David Brat, Virginia                 Mark Pocan, Wisconsin
Buddy Carter, Georgia                Mark Takano, California
Michael D. Bishop, Michigan          Hakeem S. Jeffries, New York
Glenn Grothman, Wisconsin            Katherine M. Clark, Massachusetts
Steve Russell, Oklahoma              Alma S. Adams, North Carolina
Carlos Curbelo, Florida              Mark DeSaulnier, California
Elise Stefanik, New York
Rick Allen, Georgia

                    Juliane Sullivan, Staff Director
                 Denise Forte, Minority Staff Director


                   DAVID P. ROE, Tennessee, Chairman

Joe Wilson, South Carolina           Jared Polis, Colorado,
Virginia Foxx, North Carolina          Ranking Member
Tim Walberg, Michigan                Joe Courtney, Connecticut
Matt Salmon, Arizona                 Mark Pocan, Wisconsin
Brett Guthrie, Kentucky              Ruben Hinojosa, Texas
Lou Barletta, Pennsylvania           Gregorio Kilili Camacho Sablan,
Joseph J. Heck, Nevada                 Northern Mariana Islands
Luke Messer, Indiana                 Frederica S. Wilson, Florida
Bradley Byrne, Alabama               Suzanne Bonamici, Oregon
Buddy Carter, Georgia                Mark Takano, California
Glenn Grothman, Wisconsin            Hakeem S. Jeffries, New York
Rick Allen, Georgia

                            C O N T E N T S


Hearing held on April 14, 2016...................................     1

Statement of Members:
    Polis, Hon. Jared, Ranking Member, Subcommittee on Health, 
      Employment, Labor, and Pensions............................     4
        Prepared statement of....................................     5
    Roe, Hon. David P., Chairman, Subcommittee on Health, 
      Employment, Labor, and Pensions............................     1
        Prepared statement of....................................     3

Statement of Witnesses:
    Corlette, Ms. Sabrina, Senior Research Professor, Center on 
      Health Insurance Reforms, Georgetown University's Health 
      Policy Institute, Washington, D.C..........................    23
        Prepared statement of....................................    25
    Franklin, Ms. Tresia, Director, Rewards and Employee 
      Relations, Hallmark Cards, Inc., Kansas City, MO...........    31
        Prepared statement of....................................    33
    McDonough, Ms. Amy, Vice President and General Manager, 
      Corporate Wellness, Fitbit, Inc., San Francisco, CA........     7
        Prepared statement of....................................    10
    Zern, Mr. John, Member, Executive Vice President and Global 
      Health Leader, AON, Chicago, IL............................    16
        Prepared statement of....................................    18

Additional Submissions:
    Courtney, Hon. Joe, a Representative in Congress from the 
      State of Connecticut:
        Report: Bureau of Labor Statistics.......................    58
    Dr. Roe:
        Letter dated June 19, 2015, to Ms. Bernadette Wilson, 
          Acting Executive Officer, Executive Secretariat, U.S. 
          Equal Employment Opportunity Commission................    89
        Letter dated January 28, 2016, to Ms. Bernadette Wilson, 
          Acting Executive Officer, Executive Secretariat, U.S. 
          Equal Employment Opportunity Commission................    98
        Letter dated March 18, 2016, from National Coalition on 
          Benefits...............................................   104
        Letter dated April 13, 2016, from Society for Human 
          Resource Management, SHRM..............................   106
        Prepared statement of the ERISA Industry Committee.......   108
        Letter dated April 15, 2016, from National Association of 
          Manufacturers..........................................   110
        Letter dated April 21, 2016, from Hallmark Cards.........   111
        Prepared statement of the National Association of 
          Worksite Health Centers................................   112
        Prepared statement of the U.S. Chamber of Commerce.......   115
        Prepared statement of Ms. Heidi B. Capozzi, Senior Vice 
          President, Human Resources, The Boeing Company.........   119
    Scott, Hon. Robert C. ``Bobby'', a Representative in Congress 
      from the State of Virginia:
        Letter dated July 13, 2015, to Hon. Jenny R. Yang, Chair, 
          U.S. Equal Employment Opportunity Commission...........    48
        Letter dated February 2, 2016, to Hon. Jenny R. Yang, 
          Chair, U.S. Equal Employment Opportunity Commission....    51
                      FREE-MARKET SOLUTIONS FOR A
                           HEALTHY WORKFORCE


                        Thursday, April 14, 2016

                     U.S. House of Representatives

                Committee on Education and the Workforce

        Subcommittee on Health, Employment, Labor, and Pensions

                            Washington, D.C.


    The Subcommittee met, pursuant to call, at 10:30 a.m., in 
room 2176, Rayburn House Office Building. Hon. David P. Roe 
[chairman of the subcommittee] presiding.
    Present: Representatives Roe, Walberg, Salmon, Guthrie, 
Messer, Carter, Grothman, Allen, Polis, Courtney, Pocan, 
Hinojosa, Bonamici, and Takano.
    Also Present: Representatives Kline and Scott.
    Staff Present: Bethany Aronhalt, Press Secretary; Andrew 
Banducci, Workforce Policy Counsel; Janelle Belland, Coalitions 
and Members Services Coordinator; Ed Gilroy, Director of 
Workforce Policy; Callie Harman, Legislative Assistant; 
Christie Herman, Professional Staff Member; Nancy Locke, Chief 
Clerk; Dominique McKay, Deputy Press Secretary; Michelle 
Neblett, Professional Staff Member; Brian Newell, 
Communications Director; Krisann Pearce, General Counsel; 
Alissa Strawcutter, Deputy Clerk; Juliane Sullivan, Staff 
Director; Olivia Voslow, Staff Assistant; Joseph Wheeler, 
Professional Staff Member, Tylease Alli, Minority Clerk/Intern 
and Fellow Coordinator; Austin Barbera, Minority Press 
Assistant; Pierce Blue, Minority Labor Detailee; Denise Forte, 
Minority Staff Director; Christine Godinez, Minority Staff 
Assistant; Carolyn Hughes, Minority Senior Labor Policy 
Advisor; Eunice Ikene, Minority Labor Policy Associate; Brian 
Kennedy, Minority General Counsel; Veronique Pluviose, Minority 
Civil Rights Counsel; and Elizabeth Watson, Minority Director 
of Labor Policy.
    Chairman Roe. A quorum being present, the Subcommittee on 
Health, Employment, Labor, and Pensions will come to order. 
Good morning, everyone. I want to welcome our witnesses. We 
appreciate you joining us today for an important conversation 
on health care and the future of employer-sponsored coverage.
    This hearing furthers the goals of the Task Force on Health 
Care Reform which was established to develop a plan to replace 
ObamaCare's one-size-fits-all with free-market, patient-
centered solutions.
    We have already held a number of meetings to take input 
from members, policy experts, and stakeholders, and to build 
consensus around policies that will deliver the results the 
American people want and deserve.
    Our vision is clear. It is time to modernize our health 
care system so we can empower every American with affordable 
coverage, provide more choice, promote quality for all 
patients, and strengthen health care security for retirees.
    Finally, as we will discuss today, we want to encourage 
innovation and harness the power of new technologies in order 
to foster lower prices and better treatment for patients.
    As a physician with more than 30 years of experience, I 
have personally seen the need for common sense reforms to 
strengthen our health care system, a system that is too costly 
and bureaucratic. As an elected official, I am constantly 
hearing from families who are struggling to access the care 
they need or keep up with their premiums that rise year, after 
year, after year.
    Unfortunately, the President's government takeover of 
health care is making these problems worse. Health care costs 
are going up, not down. Americans are seeing higher premiums. 
Families are losing access to the coverage they like and the 
doctors they trust. Small business owners are being forced to 
choose between providing costly government-approved health 
insurance and hiring new workers as they have struggled to 
navigate a web of burdensome mandates and regulatory 
    Just to give you an example, the city where I was mayor, 
Johnson City, Tennessee, had to hire a person to navigate all 
this so they could figure out whether they were complying with 
the law or not, a city with a fairly extensive HR department.
    The American people cannot afford this fundamentally flawed 
law, and that is why House Republicans are determined to 
deliver meaningful reform. We have a responsibility to put our 
health care system on a better course, one that is patient-
centered, not government driven.
    As part of that effort, we need to understand the vital 
importance of employer-sponsored coverage, which insures 
roughly 155 million Americans, and take a closer look at what 
is being done in the private sector to improve care.
    Employers have played a critical role in driving health 
care innovation. Despite unprecedented uncertainty in the 
health insurance market and drastic changes in employer-
sponsored coverage, employers of all sizes are still developing 
creative strategies to help control costs and meet the changing 
needs of the workforce.
    These strategies include wellness programs, which are now 
an essential tool to help control costs and encourage healthy 
lifestyles. The Kaiser Family Foundation reported in 2015 that 
50 percent of employers offering health benefits also offer 
wellness programs.
    That same year, I joined Chairmen Kline and Walberg in 
introducing legislation that would eliminate regulatory hurdles 
to implementing these programs, and I look forward to hearing 
from experts today on how we can make that goal a reality.
    Some employers have responded to costly mandates and rigid 
reporting requirements under current law by putting in place 
private exchanges. This, too, will reign in costs through 
competition, and unlike public exchanges, serve individuals, 
and both large and small employers.
    Accountable care organizations are another concept 
employers have adopted in recent years to improve the health of 
their employees and make coverage more affordable. ACOs improve 
patient experience by coordinating their care between doctors 
and hospitals and focusing on prevention and management of 
chronic disease.
    Employers are also incorporating telemedicine into their 
health insurance plans, providing patients more access to care 
at lower costs and much greater convenience.
    We are here today to examine how innovations in employer-
provided coverage are improving health care for workers and 
their families, and how Federal policies can support rather 
than discourage free-market solutions.
    I hope our conversation will bring us one step closer to 
achieving responsible reforms the American people desperately 
    With that, I will now recognize the ranking member of this 
subcommittee, Chairman Polis, for his opening remarks. You are 
    [The statement of Chairman Roe follows:]

  Prepared Statement of Hon. David P. Roe, Chairman, Subcommittee on 
                Health, Employment, Labor, and Pensions

    This hearing furthers the goals of the Task Force on Health Care 
Reform, which was established to develop a plan to replace ObamaCare's 
one-size-fits-all approach with free-market, patient-centered 
solutions. We've already held a number of meetings to take input from 
members, policy experts, and stakeholders, and to build consensus 
around policies that will deliver the results the American people 
    Our vision is clear: It's time to modernize our health care system 
so we can empower every American with affordable coverage, provide more 
choice, promote quality care for all patients, and strengthen health 
care security for retirees. Finally, as we will discuss today, we want 
to encourage innovation and harness the power of new technologies in 
order to foster lower prices and better treatment for patients.
    As a physician with more than 30 years of experience, I've 
personally seen the need for commonsense reforms to strengthen our 
health care system, a system that is too costly and bureaucratic. As an 
elected official, I constantly hear from families who are struggling to 
access the care they need or keep up with premiums that rise year after 
    Unfortunately, the president's government takeover of health care 
is making these problems worse. Health care costs are going up, not 
down. Americans are seeing higher premiums and a lower quality of care. 
Families are losing access to the coverage they like and the doctors 
they trust. Small business owners are being forced to choose between 
providing costly, government-approved health insurance and hiring new 
workers, and they're struggling to navigate a web of burdensome 
mandates and regulatory requirements.
    The American people cannot afford this fundamentally flawed law, 
and that's why House Republicans are determined to deliver meaningful 
reform. We have a responsibility to put our health care system on a 
better course--one that is patient-centered, not government-driven. As 
part of that effort, we need to understand the vital importance of 
employer-sponsored coverage--which insures roughly 155 million 
Americans--and take a closer look at what's being done in the private 
sector to improve care.
    Employers have played a critical role in driving health care 
innovation. Despite unprecedented uncertainty in the health insurance 
market and drastic changes in employer-sponsored coverage, employers of 
all sizes are still developing creative strategies to help control 
costs and meet the changing needs of the workforce.
    These strategies include employee wellness programs, which are now 
an essential tool to help control costs and encourage healthy 
lifestyles. The Kaiser Family Foundation reported in 2015 that 50 
percent of employers offering health benefits also offer wellness 
programs. That same year, I joined Chairmen Kline and Walberg and 
introduced legislation that would eliminate regulatory hurdles to 
implementing these programs, and I look forward to hearing from experts 
today on how we can make that goal a reality.
    Some employers have responded to costly mandates and rigid 
reporting requirements under current law by putting in place private 
exchanges. This tool helps rein in costs through competition, and 
unlike public exchanges, serves individuals and both large and small 
employers. Accountable Care Organizations are another concept employers 
have adopted in recent years to improve the health of their employees 
and make coverage more affordable. ACOs improve the patient experience 
by coordinating care between doctors and hospitals and focusing on 
prevention and management of chronic diseases. Employers are also 
incorporating telemedicine into their health insurance plans, providing 
patients more access to care at lower costs and greater convenience.
    We are here today to examine how innovations in employer-provided 
coverage are improving health care for workers and their families and 
how federal policies can support--rather than discourage--free-market 
solutions. I hope our conversation will bring us one step closer to 
achieving the responsible reforms the American people desperately need.
    Mr. Polis. Thank you. You referred to me as ``Chairman 
Polis.'' I do not know if we are expecting a change or not. 
Ranking Member Polis and someday chair, perhaps.
    But I want to thank the chairman for convening this. This 
is a great conversation. I think we are all interested in the 
role of employers, the role of wellness. The discussion that 
has occurred in Congress and will continue to really runs the 
gamut from should employers even be involved with the provision 
of health care to what can employers do to encourage wellness 
among employees and share in the benefits of reduced costs that 
can accrue from the right kinds of wellness programs.
    I was in Congress when we passed the Affordable Care Act. I 
remember various predictions that occurred, many of them were 
about many employers dropping health care coverage or 
skyrocketing costs. I am glad to say that many of those 
doomsday predictions have not occurred.
    Of course, we can find instances of employers who made 
decisions to drop, employers that made decisions to add health 
care, but in the aggregate, for better or worse, there has not 
been a market shift from the employer-based system of health 
    In fact, there has been a delay in the tax provisions that 
would have encouraged that shift to occur, namely a tax 
referred to as the ``Cadillac tax,'' which I think was in part 
designed to transition from an employer-based health care 
system to an individual or exchange-based health care system.
    I have started several businesses myself as an employer 
before the ACA. I knew how frustrating health care costs were. 
Health care choices were difficult, expensive for small 
businesses. The administrative burden to small businesses it 
was and is large. I certainly think anything we can do through 
the exchanges to reduce the administrative burden of 
administering health care programs for small- and mid-sized 
businesses would be greatly beneficial.
    The fact is that receiving health care through an employer 
is still the most popular option. In my own state, the 
proportion of Coloradoans with large employer coverage is 
actually increasing, and it increased about 3 percent over the 
last five years, and currently 156 million Americans are 
covered by their employers.
    The ACA made a number of changes to improve access to 
insurance. I think it is a baseline of having insured more than 
10 million people, 10 million more people that we can build 
upon. I think we are also very interested in cost reduction 
measures. Wellness initiatives can certainly be among those.
    Last fall, as an example, my State legislature in Colorado 
passed a law allowing physicians to write prescriptions using 
remote telemedicine technology. In instances like that, 
examples like that can be used to reduce costs.
    Additionally, we can share findings on things to reduce 
costs through the Division of Insurance and use data in pursuit 
of more innovative solutions to control costs. I think that 
will be the key with regard to measuring the effectiveness of 
wellness programs at employers.
    There is a lot of hype, and we really have to see what 
actually accrues in cost savings, to the shared benefit, one 
would hope, of the employee and the company that offers the 
wellness program with, of course, room for private contractors 
to make a profit as well who actually provide those types of 
wellness programs.
    I hope that we can find a better, more streamlined way to 
deliver care. It is also important that we do not forget the 
importance of policies like paid sick leave and paid family 
leave that are very important to employees and important to 
overall wellness and job satisfaction.
    Remind, I want to use this occasion to remind our chair 
that over 40 million workers do not have access to paid sick 
days and paid family leave, which I think are really helpful 
and the basis of some of the important wellness policies that 
we need to initiate.
    I look forward to hearing from our witnesses, look forward 
to a thoughtful discussion about how we can control health care 
costs through innovative partnerships between the government 
and the private sector, and hearing a little bit more about the 
role of employer-based health care now and in the future, and I 
yield back the balance of my time.
    [The statement of Ranking Member Polis follows:]

    Prepared Statement of Hon. Jared Polis, Subcommittee on Health, 
                    Employment, Labor, and Pensions

    I thank the chairman for yielding to me, and I thank all of our 
witnesses for providing us with their time and expertise this morning.
    Since the passage of the Affordable Care Act in 2010, over 20 
million uninsured Americans have gained access to health coverage.
    In Colorado, 15.8 percent of folks in our state lacked insurance 
before the ACA. Last year that number fell to 6.7 percent, a historic 
    The ACA is working, despite some flaws, and this is largely due to 
a shared push by individuals, federal and state governments, and 
employers to increase coverage nationwide.
    I was in Congress when we passed the ACA, and I remember the 
doomsday predictions that were being thrown around at the time, about 
workers losing coverage or about costs skyrocketing.
    But thankfully, many employers have stepped up to the plate and the 
pundits have been proven wrong.
    I have started several businesses myself. And as an employer I know 
that before ACA, health care costs were climbing at an out-of-control 
rate for employers and employees. Health care choices were slim to none 
in many states, and people had to choose health insurance over 
strategic career moves when considering job opportunities.
    The six years since the ACA has been implemented have not always 
been perfect, but premiums are down and choices are up for employees 
and businesses.
    In fact, ACA has lowered costs and spread the responsibility among 
everyone - both employers and employees. Before the passage of the ACA, 
the annual premium increase for employer-sponsored family insurance 
hovered at 9.5%. By 2015 it had fallen to 2.7%.
    The fact is that receiving health insurance through your employer 
is still a really popular option for many people. In my home state, the 
proportion of Coloradans with large-employer coverage is actually 
increasing, growing by 3.5 % over the past two years. Currently, 156 
million Americans are currently covered by their workplace.
    In a tightening job market, health insurance benefits are one way 
that employers can attract top talent. I don't see how the ACA dampened 
that fact.
    Furthermore, under the ACA, employer-sponsored insurance plans are 
required to be more comprehensive. And everyone benefits from the 
coverage of preventive services without cost sharing, such as free 
access to flu shots or mammograms.
    The ACA improved access to insurance, and we must move forward from 
that baseline. We cannot return to a time when these basic health 
services were not guaranteed.
    Of course, we can always do better. As members of Congress, we have 
a responsibility to improve upon the model of health insurance we put 
in place six years ago, and to support innovations that may produce 
healthier outcomes for Americans across the country.
    I am proud to say that my home state of Colorado is leading the way 
in terms of collaboration to bend the cost curve of health care.
    Last fall, the state legislature passed a law allowing physicians 
to write prescriptions using remote telemedicine technology. Not only 
does this boost convenience by saving an employee a trip to the doctor 
during work hours, telemedicine can actually lower costs. Certain 
insurers have started allowing calls or emails directly between a 
patient and physician, which ends up being less expensive than a full 
visit. I am enthusiastic about the ways that technology can empower 
consumers with information, support, and near-immediate access to care.
    Colorado has also been doing some fascinating work in health care 
data transparency. We were one of the earliest states to adopt an all-
payer claims database. The Center for Improving Value in Health Care 
(CIVHC:: pronounced ``civic'') has a mandate from the Governor to 
collect and analyze claims from both private and public payers.
    They track how Coloradans are spending their health care dollars, 
and share this information with the general public. Workers deserve 
full disclosure when it comes to health insurance, it's certainly a 
common request I hear from constituents who call my office with 
questions about their premiums. Organizations such as CIVHC are playing 
an important role in educating people about their options.
    Additionally, they also share these findings with researchers and 
the Division of Insurance, who use this data in pursuit of more 
innovative solutions to control costs and provide higher quality care. 
This type of collaboration is precisely the kind of partnership that we 
should see more of.
    I personally recognize the ability of the private sector to 
redesign outdated models with an agility that Congress simply does not 
have. For health outcomes, this is particularly valuable.
    I would issue a request, however, that in this insatiable hunt to 
find a newer, more streamlined way to deliver care, we don't forget the 
value of evergreen policies such as paid sick days and paid family 
leave. These relatively simple investments have been linked to 
healthier employees, higher rates of job satisfaction and lower 
turnover overall, but currently, 40 million workers don't have access 
to them.
    I look forward to hearing from our witnesses, and discussing ways 
that we might be able to control health care costs through innovative 
partnerships between the government and the private sector.
    Chairman Roe. I thank the gentleman for yielding. Pursuant 
to Committee Rule 7(c), all subcommittee members will be 
permitted to submit written statements to be included in the 
permanent hearing record. Without objection, the hearing record 
will remain open for 14 days to allow statements, questions for 
the record, and other extraneous material referenced during the 
hearing to be submitted into the official hearing record.
    It is now my pleasure to introduce our distinguished panel 
of witnesses. First, Ms. Amy McDonough, who is the vice 
president and general manager of Corporate Wellness at Fitbit 
in San Francisco, California. She works with employers and 
partners in corporate wellness, supplying businesses with the 
tools to effectively engage employees in corporate wellness 
programs. You have a fun job, I think. Welcome.
    Mr. John Zern is the executive vice president and global 
health leader with Aon in Chicago, Illinois. Mr. Zern is 
responsible for the strategic direction, client satisfaction, 
revenue growth, and operational and professional standards of 
Aon's health business. Welcome.
    Ms. Sabrina Corlette, J.D., is the senior research 
professor at the Center on Health Insurance Reforms with 
Georgetown University's Health Policy Institute here in 
Washington, D.C. Ms. Corlette directs research on health 
insurance reform issues and has published many papers regarding 
the regulation of private health insurance and the development 
of health insurance marketplaces under PPACA. Welcome.
    Ms. Tresia Franklin is the director of Total Rewards and 
Employee Relations at Hallmark Cards, Inc. in Kansas City. I 
think there is not anybody in here that has not used your 
    Ms. Franklin oversees Hallmark's compensation and benefit 
programs, human resource information systems, and employee 
relations. Welcome to Washington.
    I will now ask our witnesses to stand and raise your right 
    [Witnesses sworn.]
    Chairman Roe. Let the record reflect that the witnesses 
answered in the affirmative, and you may take your seats.
    Before I recognize your testimony, let me briefly explain 
our lighting system. You have five minutes to present your 
testimony. When you begin, the light in front of you will turn 
green. With one minute left, it will turn yellow. When your 
time has expired, the light will turn red. At that point, I 
will ask you to wrap up your remarks as best as possible, and 
members will have five minutes also to ask questions.
    We will begin with Ms. McDonough for five minutes. You are 


    Ms. McDonough. Thank you, Chairman Roe and Ranking Member 
Polis, for the opportunity to testify at today's hearing. As 
the fifth member of Fitbit, Inc., and vice president and 
general manager of Fitbit Wellness, I come today to share my 
passion for innovating around engaging data driven health 
solutions for employers.
    Fitbit Wellness, our offering for corporate wellness, was 
born in 2010 in response to market-stated need. We are driven 
by a belief that the right data, tools, and guidance can 
empower people to take charge of their health and fitness, and 
that community is key to fostering healthy behavior.
    With six years of experience behind us, we remain deeply 
committed to helping companies innovate in this space. We have 
a specific vision of wellness, one that addresses the diverse 
needs of both organizations and the people that power them.
    The fundamental goal of any wellness program should be to 
provide opportunities for individuals to improve their health 
and wellness. The need for wellness programs has never been 
greater, and employers are uniquely positioned to improve 
population health by starting right in the workplace. Wellness 
should always be inclusive, voluntary, and should protect the 
privacy of the people it is aiming to serve.
    While the use of our technology in the corporate wellness 
setting continues to evolve rapidly, the results our customers 
have seen so far are significant. Let me briefly share a few 
    Indiana University Health, Indiana's most comprehensive 
health care system, has been a Fitbit Wellness customer for 
more than two years. They found that 40 percent of participants 
decreased their BMI and 60 percent of program participants with 
diabetes decreased their A1C levels.
    For one of our other customers, BP, who we work with 
through a partnership with StayWell, Fitbit data was a factor 
in reducing their overall health care spending by 3.5 percent. 
BP also saw that for employees who participated in a lifestyle 
management program over a one year period, their health risks 
declined by 11.1 percent.
    Appirio, another Fitbit Wellness customer, cut its 2015 
insurance premiums by 6 percent, a savings of $280,000, after 
showing its insurer data about engagement with their wellness 
program, including aggregate data from the 400 Fitbit devices 
it had provided to its employees.
    Fitbit Wellness is built around the understanding that 
better people-oriented technology enables stronger results. We 
focus on engaging people first, incentivizing health and 
wellness through rewarding community driven experiences using 
wearable devices that consumers love.
    Companies have traditionally worried about investing in 
wellness due to lack of participation. Traditional wellness 
programs generally show about an average 24 percent 
participation rate. Fitbit Wellness' participation rates vary 
from company to company, but are often much higher, sometimes 
more than 80 percent.
    Across industries, we are seeing results that point to the 
very real ways that wellness works to keep employees healthy, 
reduce health care costs, and increase productivity. When 
workplaces make the healthy choice, the easy choice, health 
outcomes are profound.
    Employers are uniquely positioned to improve population 
health in the workplace by fostering wellness initiatives that 
are inclusive, fun, voluntary, and protect the privacy of the 
people they aim to serve.
    Corporate wellness is evolving as we speak, and is 
increasingly seeking to represent a more holistic picture of 
what influences health. Wellness professionals are beginning to 
look beyond tradition measures, like diet and exercise, to 
everything from sleep and mental health to financial wellness 
and stress management. Wellness programs aim to help people 
live healthier, happier, and more active lives.
    Inherent in that mission is the responsibility to implement 
appropriate data security and privacy policies. As the leader 
in the connected health and fitness market, Fitbit is committed 
to protecting user data and ensuring that the health 
information tools people turn to for help are used properly.
    Fitbit believes that participation in wellness programs 
should always be voluntary. Employees should be given the 
choice to opt in to participate and there should be no 
penalties for abstaining from participating in a program.
    Companies should provide participants with an understanding 
of how their data will be used. However, the regulations 
governing wellness programs are not always clear, and this 
confusion has left some employers on the sidelines.
    We at Fitbit are supportive of efforts to clarify and 
streamline the applicable laws and regulations that govern the 
structure of wellness programs.
    Thank you for inviting me to participate and to share 
Fitbit's passion for data-driven, community-oriented health 
    [The statement of Ms. McDonough follows:]
    Chairman Roe. Typical of Fitbit, you finished right on 
time. Perfect.
    Ms. McDonough. Thank you.
    Chairman Roe. Mr. Zern, you are recognized for five 


    Mr. Zern. Mr. Chairman and members of the subcommittee, 
thank you for the opportunity to testify at this important 
hearing on the value proposition that employer-sponsored 
coverage brings to our Nation's health care system.
    More than 150 million Americans receive their health 
coverage through their employer.
    Facing an increasingly diverse workforce and employees' 
desire for greater choice and control over their health care, 
employers are creating a more consumer driven experience for 
their employees, arming them with the right balance of tools, 
resources, and incentives to improve their health and their 
choices, along with the guidance, advocacy, and support needed 
for those individuals with serious and ongoing medical needs.
    Aon is a leading global provider of risk and human services 
solutions. We serve over 5,000 employers in the U.S., and we 
administer benefits for over 10 million employees and retirees.
    Employers are looking for new and innovative ways to change 
the way health benefits are offered. These programs include 
wellness, new technology, innovative delivery systems, private 
exchanges, and greater transparency in the cost and quality of 
health care services.
    While we have experience in these and other types of new 
and innovative programs that employers are offering, today I 
will focus the discussion on one program in particular, Aon's 
development of a private health exchange. Employers face a 
significant challenge today of providing quality, affordable 
health coverage for employees in our complex health care 
    Employers are focused on promoting consumer engagement, 
reducing health care spending, and continuing to ensure that 
employees and their families have comprehensive coverage.
    Our 2016 health care survey reveals that employers support 
the value proposition of offering health benefits to their 
employees, and only 5 percent of employers say they will stop 
offering health benefits in the next three to five years.
    But, healthcare costs continue to rise at rates higher than 
CPI. Employers are evaluating better solutions that empower 
consumers with more choices in their health plan and benefit 
offerings. A private health exchange is a competitive retail-
based, Web-enabled marketplace offering employer-sponsored 
group coverage.
    Aon gives employers the ability to offer benefits through a 
private health exchange. These private health exchanges combine 
cost accountability with meaningful choice. The employer 
remains a vital part of the health care delivery system. 
Employers continue employer-sponsored coverage, pay the 
employer premium for the group, and remain subject to ERISA.
    Employers determine how much of the coverage costs to 
subsidize, and employees use this subsidy to choose from a menu 
of plans and insurance providers that best fit their needs and 
their financial situation.
    Employees select among varying out-of-pocket differences 
and network requirements. It is a win-win for employer-based 
sponsored coverage and for employees who have the ability to 
select a plan that meets their needs and the needs of their 
    What we have learned is that most employees will select a 
plan based on their physician and provider network, their 
experience with that insurance carrier, the coverage of 
prescription drugs, and then price.
    Many employers that currently offer their medical benefits 
through the Aon Active Health Exchange are also pursuing other 
workplace programs that encourage greater well-being and 
management of chronic illnesses.
    Employers using the private exchange experienced a 3.3 
percent cost increase for 2016, compared to an average health 
care cost increase of 5.5 to 6.5 percent.
    We appreciate talking about private health exchanges as one 
way to maintain affordable employer-sponsored health coverage 
and expand the role of consumers in health care decision-
making. We are also eager to help employers find other 
innovative ways to engage their employees, and we urge the 
Committee to support these efforts.
    Rising costs, recent market shifts, and health care reform 
are challenges to maintaining coverage for Americans. Employers 
are the key to the success and need flexibility in the design 
and management of their benefit plans. They need congressional 
support to preserve and enhance the value of benefit plans 
offered to their employees and their families.
    Thank you for permitting me the opportunity to testify 
today. I will submit for the record more comprehensive 
information about the development and growth of private health 
exchanges and other innovations that employers are adopting to 
engage their employees and their families.
    Thank you.
    [The statement of Mr. Zern follows:]
    Chairman Roe. Thank you, Mr. Zern. Ms. Corlette, you are 
recognized for five minutes.


    Ms. Corlette. Thank you, Chairman Roe and Ranking Member 
Polis, for inviting me to participate in today's hearing.
    As has been said, over 150 million Americans receive their 
health coverage through their employer. It is consistently 
rated as one of the most popular benefits that employers 
provide, second only to paid leave.
    In my testimony today, I would like to emphasize two 
primary points. Number one, our foundation of ESI is strong in 
this country, but affordability remains a challenge. Number 
two, to address affordability, requires a multi-stakeholder 
effort that actively engages in local delivery system reform 
    In spite of early fears, the ACA has not caused employers 
to drop coverage for their workers, nor has it resulted in 
reductions in employment. What is clear is that employers have 
benefitted over the last few years in a significant slowdown in 
health care price growth.
    But even with these promising trends, affordability remains 
a huge challenge for too many families. Worker contributions to 
premiums grew an estimated 83 percent between 2005 and 2015, 
and nearly one-quarter of people with ESI report problems 
paying medical bills.
    A report released just yesterday by the Kaiser Family 
Foundation finds that between 2004 and 2014, average out-of-
pocket expenses for workers increased 77 percent, largely due 
to high deductibles, and people with high deductible plans 
report problems paying medical bills two times more than those 
in low deductible plans.
    Thanks to the ACA, there are some financial protections for 
these families with high costs, but they are still significant 
burdens. The bottom line is that employers and employees are 
struggling under high health care costs, and tackling 
affordability requires a multi-stakeholder effort, and 
employers have a particularly important role to play.
    Many employers, both on their own and in concert with other 
local purchasers, are engaged in innovative efforts to push 
back against high and rising health care prices, while not 
sacrificing the quality of care provided to their employees.
    The ACA has spurred activity in payment and delivery system 
reform across public and private sectors, building momentum to 
improve health care value. For example, a multi-payer 
initiative in Arkansas is leveraging partnerships with 
Medicare, Medicaid, state employees, and Walmart to expand 
primary care medical homes.
    Many of new models sparked by the ACA provide opportunities 
for employers to partner with major government purchasers to 
pressure providers to reduce inefficiencies and improve 
    For many employers, workplace wellness programs are 
intuitively appealing, and these programs, if well designed, 
communicated and executed, can make a big difference. Most of 
us spend most of our waking hours at work, and there is much 
that employers can do to support a working environment that 
supports health.
    However, some of these programs tie an employee's 
achievement of a particular health outcome to their health 
insurance premiums or cost-sharing, but there is very little 
evidence that doing so actually improves health, increases 
productivity, or lowers costs.
    What they do instead, unfortunately, is raise the barriers 
for many individuals to access the support they need to achieve 
better health outcomes.
    There is also disturbing evidence that some wellness 
programs place employees' privacy at risk. Wellness vendors can 
and do harvest vast amounts of personal health information, but 
there is no Federal law that restricts what these companies 
share with business partners for marketing purposes. Yet, many 
employees face tremendous pressure to participate in these 
programs, especially when up to 30 percent of the cost of a 
family premium is at stake.
    Just as with workplace wellness programs, some benefit and 
network changes sound promising on the surface, but may 
ultimately be more about cost shifting than actually improving 
health outcomes.
    For example, network tiering has been touted as a way to 
encourage consumers to seek care from higher quality, lower 
cost providers, but there is limited evidence to suggest that 
providers in the lowest cost tiers are selected with quality 
taken into account. Their ``preferred'' status is sometimes 
just a function of price.
    A fundamental challenge for employers and their workers 
today is the cost of health care, but many proposed reforms do 
not get at the primary cost drivers - providers, many of whom 
use local market clout to demand reimbursement that is 
disproportionate to the actual value they deliver. With 
increasing consolidation among provider systems, this problem 
may only get worse.
    Ultimately, it is going to fall to employers in partnership 
with other purchasers to drive reforms that will ultimately 
reduce costs and achieve better health care outcomes.
    Thank you so much for the opportunity to participate today.
    [The statement of Ms. Corlette follows:]
    Chairman Roe. Thank you very much. Ms. Franklin, you are 
recognized for five minutes.


    Ms. Franklin. Thank you, Chairman Roe and Ranking Member 
Polis. I appreciate very much the opportunity to testify before 
the Committee today on behalf of the American Benefits Council, 
of which Hallmark is a member.
    Briefly, Hallmark is a family owned $3.5 billion company, 
and as you have acknowledged, mostly in the greeting card 
business and other social expression products. We have about 
5,000 benefits eligible employees and another 2,000 retirees 
who are eligible for our programs.
    Our culture strongly reflects the family ownership. Our CEO 
is third generation. The average number of years of service at 
Hallmark is 18 years. We are very planful and careful as we 
offer these programs to our employees.
    I want to start our conversation today focusing on our 
wellness programs. Hallmark has a very long, rich history of 
commitment to employee wellness. Hallmark even has a subsidiary 
company that helps other companies develop their wellness 
strategy and communication.
    Our founder, J.C. Hall, started healthy onsite food 
services in 1923. That tradition continues to this day. In 
1956, we opened an onsite medical facility which provided 
employees convenience and extra care for support.
    These programs have evolved, and today, the Hallmark Health 
Rewards Program is a program that rewards Hallmark employees 
with points to be redeemed for gift cards, health care premium 
credits, and HSA contributions for participating in activities 
that encourage doing the right thing, getting a routine 
physical, attending onsite health seminars, et cetera.
    I next want to focus a little bit on what I believe has 
been an innovative approach to our health care strategy. In 
January 2015, Hallmark joined the Aon private exchange. This 
was a strategic decision. As Hallmark evaluated its role in 
health care, we adopted an approach of educating our employees 
about their choices and how to make decisions to best meet 
their individual needs.
    The complexities of health care, the significant changes, 
and the ever growing costs of health care benefits, resulted in 
Hallmark seeking this innovative approach.
    We had grown frustrated with increasing deductibles and 
employee premiums, and sought an approach that leveraged market 
competition between carriers, simplified programs, and could 
change the dynamics of health care.
    The new approach allows carriers to develop services to 
compete in a geographic marketplace, standardizes plan design 
across carriers, and provides our employees with state-of-the-
art decision-making tools. We moved from self-funded to a fully 
insured model as part of this move, which we felt moved risk 
and accountability to the carriers who are best equipped to 
manage these complexities.
    We are no longer in the middle of increasingly complex 
decisions regarding formularies, network reimbursements, 
reference-based pricing, or specific appeals by employees 
around their coverage. We have left these issues to carriers to 
structure their best approach and compete for our employees' 
    This model also permits our employees to post public 
comments about their experiences with the carrier in a true 
consumer feedback model.
    We continue to believe that employers play a critical role 
in our employees' health care. I want to highlight three 
specific aspects. First, we provide a significant contribution 
to their premiums. However, we pay the same funding amount 
whether an employee chooses the most expensive or the most 
inexpensive or richest benefit. Employees who choose a gold 
option pay more, from our standard contribution, employees who 
choose a less costly bronze plan pay less.
    Second, we provide onsite and online education facilities 
and seminars for our employees, and finally, we provide Aon's 
ongoing service support to answer employee questions and serve 
as advocates for employees.
    I have described for you the path Hallmark has chosen. We 
have found that the previous one-size-fits-all approach that 
put Hallmark in the middle of being a health care delivery 
expert no longer worked for us. Rather, the private exchange 
model provides employers with this innovation.
    However, and this is very important, it is critical to 
recognize that our path is not necessarily fit for every 
employer. While this strategy has been right for Hallmark, 
other employers may decide that more direct involvement with 
administration and design of their benefits will result in the 
innovation they seek.
    And finally, I think it is very important to consider the 
legislative framework that makes possible affordable and 
meaningful benefits. I know tax issues are not within the 
jurisdiction of this Committee, but within our written 
testimony we have highlighted two very important elements.
    First, the so-called ``Cadillac tax,'' should be repealed, 
and we want to commend Congressman Courtney for his leadership 
in authoring bipartisan legislation to do so, and I want to 
thank you, Chairman Roe, and those members of the Committee 
that have co-sponsored repeal legislation.
    Finally, I want to mention the tax exclusion and how 
critical that is. I would be happy to address this during 
questions as well.
    Thank you again for this opportunity.
    [The statement of Ms. Franklin follows:]
    Chairman Roe. Thank you, all. You have been an amazing 
panel. Everybody came in under five minutes. I hope the members 
will be as good as you are.
    I would like to take this opportunity to recognize Chairman 
    Mr. Walberg. Thank you, Mr. Chairman, and the heat is on, 
right, to perform. I thank each of the panelists as well.
    Ms. Franklin, appreciate your testimony. It is a Hallmark 
    Ms. Franklin. Thank you, sir, appreciate it.
    Mr. Walberg. We know that employer-based wellness programs 
generally have two thrusts, one at least most of the employers 
that I meet in my district truly care about their employees. 
You might find an occasional one that is more materialistic. 
For the most part, they really care about them and what to see 
them be successful, healthy, and continue to work.
    On the other side, there are certain cost savings to have 
coverage for employees that are healthy as opposed to ones that 
have repairable or preventable health issues. We understand at 
least when you look at it in common sense, why would not an 
employer want to encourage healthy employees in using wellness 
programs to do that, but we are also understand more 
importantly there are employers that are very fearful of what 
EEOC is looking at, in direct contradiction to what is being 
pushed in the Affordable Care Act, with the First Lady's 
nutrition proposals, et cetera, and so with the liability 
concerns that go on there, there are challenges.
    I would like, if you would, to speak more fully on the 
importance of employer-based wellness programs to a healthy 
workforce, and then secondly, what are some of the hurdles that 
you encounter as a result of what I believe is EEOC's 
    Ms. Franklin. Well, as I said, our programs are part of our 
culture. Today, as I sit here, in fact, it is the Hallmark 
Health Week in Kansas City, and employees are having the 
opportunity to do onsite biometrics screening and other 
    It is an element where, I think, does send a message, that 
this is part of our culture that we care about our employees. 
You know, I often get asked, well, are you saving money as a 
result. I have taken a different approach with that. Of course, 
when my boss asks me that, I say yes, but I will say what we 
have focused on is a program that really allows our employees 
who do the right thing to reduce their health care costs 
through these rewards.
    So, when you get a physical and you get a paycheck credit 
for doing that, it creates the incentive that we think is good 
behavior for employees to do that.
    You are right, Congressman. The myriad of legislation does 
create a minefield for us to work through, whether it is EEOC, 
whether it is GINA, whether it is other elements of this that 
has created that.
    In the end, I think our programs do send a message that we 
care, and it does send a message that if you do the things that 
make sense for your health, you will pay less for your health 
care by these rewards.
    Mr. Walberg. It does work, does it not?
    Ms. Franklin. I believe so.
    Mr. Walberg. Thank you. Ms. McDonough, as you well know, 
the EEOC has recently become very engaged in employer sponsored 
wellness programs, and will soon issue new regulations as it 
relates to the ADA and GINA.
    How has the EEOC's involvement chilled wellness programs 
affected you specifically?
    Ms. McDonough. Thank you for the question. Employers, who 
you suggested this in your introduction, employers come to us 
for a variety of reasons, a lot of them come to get more 
participation, more engagement with their programs, some are 
looking at health care savings, some are looking at 
productivity, so they have a variety of reasons of they are 
coming to work with Fitbit.
    They are looking to bring something effective and engaging 
and that has longevity into their workplace. In terms of how we 
see the EEOC guidelines affect that, I think our goal and the 
goal of all of our employers is to make programs voluntary, to 
make them effective, to make them fun, but I think there is, 
and as I stated in my testimony, some further clarity that 
could allow them the ability to run more effective and engaging 
    I think clarifying those guidelines so they have a very 
strong understanding of what is within the guidelines would be 
very helpful for employers in developing greater wellness 
programs or launching them to a greater population.
    Mr. Walberg. Also, for the employee, it certainly makes it 
feel more voluntary if they understand the benefits to them.
    Ms. McDonough. Absolutely. Communication and transparency 
up front is what leads to great participation rates. So, a 
shared commitment to health, a culture of health or wellness, 
and really understanding that the employer and employee what 
data is being shared, how it is being used, and how that is 
going to impact the culture within the organization.
    Mr. Walberg. Thank you, I yield back.
    Chairman Roe. I thank the gentleman for yielding. Mr. 
Polis, you are recognized for five minutes.
    Mr. Polis. Thank you. Real interesting testimony. I wanted 
to address to Ms. McDonough and Ms. Franklin, obviously very 
exciting ways to encourage wellness and health at the employer 
    What mechanisms have you seen for incentivizing employees 
to participate and for some of the savings to accrue to the 
benefit of the employee as well as the employer? I will go to 
Ms. McDonough first, and then Ms. Franklin.
    Ms. McDonough. Sir, thank you for the question. So, in 
terms of mechanisms for and incentives that we have seen, it 
really does vary from employer to employer based on the 
sophistication of their program. In our six years of history, 
we have had the opportunity to work with thousands of small- 
and medium-sized businesses as well as Fortune 500 companies.
    The way they incentivize may be very different based on the 
sophistication of their program. In general, I think they try 
to align their incentives with the goals of the program. That 
is where I think Fitbit can actually be very effective.
    For example, if you want someone to take a health screening 
or to get more active, running a collaborative or competitive 
program that ties into social responsibility and other things 
that are part of the culture of the organization actually has 
everyone's incentives aligned that good health. So that's a 
very common model.
    Mr. Polis. In your case, they also get a free Fitbit, 
    Ms. McDonough. There is a variety of models in which that 
works. So, oftentimes, it is a cost-shared commitment between 
the employer and the employee.
    Mr. Polis. What is the typical cost of a Fitbit device?
    Ms. McDonough. They range between $60 and $250, based on 
the features set and . . .
    Mr. Polis. So, the employee benefit might be half the cost 
of a Fitbit, so it might be $50 or $100, something like that, 
towards the cost of it?
    Ms. McDonough. That is correct, or even less--
    Mr. Polis. Or the whole cost?
    Ms. McDonough. Exactly.
    Mr. Polis. In any case that is great, Ms. Franklin?
    Ms. Franklin. Thank you, Congressman. I want to emphasize 
our program is voluntary, and so the way we encourage, the 
dollars, the rewards themselves, are the biggest incentive. Our 
employees can earn up to $400 in a year doing the various 
    As I said, we try to make it fun. We do challenges, whether 
it is a thousand or a Walk to the Moon, we did a Walk to the 
Moon once, and people accumulated steps as part of that. We did 
Lose a Ton, people came together in teams. That was one of the 
more exciting ones because I think the prize was a trip 
    It encourages people to have fun, to create networking 
opportunities within the company.
    Mr. Polis. Hopefully, where this will go, and maybe someone 
will comment on this, you know is tying the data on the actual 
savings back to what the incentive is and how that can earned 
along with savings to the company. Does anybody want to address 
that frontier of how we can tie data back to provide the right 
incentive for employees and save money for employers? Mr. Zern?
    Mr. Zern. I am happy to, thank you. So, there is no doubt 
data analytics is becoming more prevalent in the health care 
environment, and how do we tie it back to the return on 
    I think employers are certainly looking at health benefits 
differently today. They are looking at it more as an investment 
in their population and driving a healthier population as maybe 
in the past where sometimes it was viewed more as an expense.
    The engagement of the senior leaders of employers of all 
shapes and sizes, they are asking those questions. They want to 
tie data back, and they want to understand their population 
across the healthiest parts of the population and those equally 
that need assistance in getting healthier, so it is across the 
    Mr. Polis. In a follow-up question, if there is a second 
round we will go more into this, and I think there might be 
depending on how many questions from the panel there are, but 
how do we weed out wellness programs that do not increase 
    And by the way Mr. Zern, there seems like there would be a 
lot of those, because there are hundreds or thousands of folks 
with various wellness programs, I do not know, maybe half of 
them do, half of them do not, or 90 percent do not and 10 do, 
whatever it is.
    How do we actually make sure that--by the way, the ones 
that do not enhance wellness may very well have other benefits 
like employee morale, retention, or other things, but not 
health care costs and wellness.
    How do we weed out--not weed out. I guess how do we 
differentiate between what a wellness program is or what is a 
straight employee morale retention program?
    Mr. Zern. There is no doubt the marketplace is a little 
crowded. But most importantly, employers are looking at how do 
they continue to communicate effectively what their goals are 
with their benefit programs.
    It could take on a variety of forms, healthy lifestyle, 
better eating. There are a variety of them. The challenge, I 
think, that employers face is how do they understand which ones 
align with their corporate goals most effectively, and then how 
do they communicate them. That is the big thing.
    Mr. Polis. Thank you. I yield back the balance of my time.
    Chairman Roe. I thank the gentleman for yielding. Mr. 
Guthrie, you are recognized.
    Mr. Guthrie. Thank you, Mr. Chairman. My first question 
will be for Ms. McDonough. On Fitbit, employer benefits are 
becoming more valuable to employees, and you described--I was 
going to ask you specifically of a case, but you described a 
case earlier of someone who said saved $280,000, I think you 
said, because of Fitbit and the data.
    I guess my question is are the insurance companies--you 
have it for a year, you provide the data and they expect to 
have lower health cost coverage because people are exercising 
or taking care of their health more, or is it over a longer 
period of time, you have to actually show the experience?
    The one year they start the program, the next year, people 
go to the hospital less, therefore, they know it is going to be 
cheaper, or are they accepting the data and having an 
expectation of better performance?
    Ms. McDonough. Sure. Thank you for the question. Again, 
employers come to us for a variety of reasons. So they will 
come to us for return on investment in terms of health care 
savings and costs. We did have the example of Appirio. I am not 
sure if you are familiar with them. They are a small business, 
700 employees or so, very distributed population.
    They needed something virtual to bring their program 
    We work with a lot of companies of that size.
    There is also a ``value on investment'' termed VOI, which 
includes the productivity and absenteeism and those kinds of 
    Employers are actually looking really holistically across 
that. There is not an expectation at this point for most 
employers that there is going to be a direct health care 
savings cost in the next year.
    What is great is that the data will be able to show those 
outcomes over a period of time.
    Mr. Guthrie. How long did it take to get that $280,000 in 
savings? Was that over a couple of years, five years?
    Ms. McDonough. That was actually over just one year, so 
they did a one year program in 2014, and then affected their 
premiums in the following year.
    Mr. Guthrie. That is fantastic. Yeah you're right in the 
other values there. What kind of roadblocks if an employer 
wants a Fitbit or a program such as this? What kind of 
roadblocks are they facing? Do they get discouraged? Or is it . 
. . Or are they always happy?
    I know what they are trying to get to, but are there some 
problems to get to that point that you have seen?
    Ms. McDonough. Specifically, do you mean for the employee 
or the employer?
    Mr. Guthrie. For the employer bringing in a program, what 
kind of roadblocks they may have and they say this is not worth 
it, or is it worth it. What do they have to fight through?
    Ms. McDonough. Sure. I think this is now the minority, 
which I think is a great thing, but often times, they do need 
to sell the program up to an executive suite, so there is a 
financial commitment, and it has to be a culture commitment to 
healthy employees and really wanting to make their employees 
    So that's when . . . I also think that the adoption rate, 
so the 24 percent average participation, can sometimes be a 
barrier, but again that is what is great about bringing 
consumer technology into this, you're being able to capitalize 
on a movement literally that is already happening in the 
marketplace, and being able to bring that and increase those 
participation rates.
    I think that by bringing those technologies into the 
corporate marketplace, we are able to push back a lot of those 
    Mr. Guthrie. Thank you very much. Mr. Zern, during an open 
enrollment period, have you seen employees change coverage from 
year to year? Do they shop around year to year? What kind of 
drives them? Is it the network choice, the cost, or they had a 
pleasant experience with a carrier or an unpleasant experience 
with a carrier and wanted to just change insurance companies 
because they did not want to deal?
    Mr. Zern. Thank you for the question. It is all of the 
above. In our active exchange, I think that is one of the 
liberating things for the consumer, for the employee. What the 
employer community really likes is that it gives a tremendous 
amount of choice to the employee supported by very strong 
decision support tools.
    Left to their own devices, it can be overwhelming, but with 
great decision support tools, you get employees that are--they 
normally start with what is the right level of coverage for 
their situation, whether they are an individual or a family 
situation. Then they will go into looking at networks, their 
experience with insurance companies.
    Our survey results show that price is really kind of the 
last determinant of their selection. It is plan design, then 
network, experience with the insurer, and then its cost.
    Mr. Guthrie. Thanks. I am in the manufacturing business or 
I was, and in human resources involved in here is the health 
insurance plan, and people just took it and you moved forward.
    I understand you have to allow your employees to rate the 
carrier. Has that changed the insurance companies' behavior by 
actually having ratings from their customers?
    Mr. Zern. It is one of our newer parts of our innovation of 
our active exchange. Consumer ratings are certainly piquing the 
attention not only of our insurance companies that are part of 
our exchange, but also their employers. I think that is also 
factoring into how they view their partners on the exchange.
    It really kind of cuts across all the key stakeholders, 
from the employer, provider, and the insurer.
    Mr. Guthrie. It is really bringing the customer into the 
    Mr. Zern. Exactly.
    Mr. Guthrie. That is innovative and appreciated. I have run 
out of time, so I yield back.
    Chairman Roe. I thank the gentleman for yielding. Ranking 
Member Scott, you are recognized.
    Mr. Scott. Thank you, Mr. Chairman. I think it is important 
to remind people where we were when we passed the Affordable 
Care Act. We were experiencing cost increase routinely in 
double digits for thousands of people; at one point 14,000 
people a month were losing their insurance. Those with 
preexisting conditions, if they could get insurance, they paid 
exorbitant rates. They usually could not get insurance, and 
millions others did not have insurance.
    The proposal for a government takeover single payer plan 
could have solved these problems and reduced overall health 
care budgets significantly, but the government takeover did not 
pass. We instead passed a more modest market-based approach, 
patterned after RomneyCare in Massachusetts, a Republican plan, 
but that has been successful.
    The costs have increased since the Affordable Care Act are 
the lowest in decades, probably half a century. Those with 
preexisting conditions can get insurance at the average rate. 
We have the highest portion of people with insurance in 
recorded history, children up to 26 years old can stay on their 
parents' policies. Women are no longer paying more for 
insurance than men. We are closing the doughnut, the 
prescriptive drug doughnut hole, preventive services, annual 
check-ups are without co-pays or deductibles.
    Since the Affordable Care Act, those that had warned of job 
loss, are forced to explain the longest continuous number of 
months of job growth since records have been kept. So that's 
where we are. That is where we are since the Affordable Care 
    Ms. Corlette, one thing that has not been completed is the 
Medicaid expansion. Some states have not expanded Medicaid. Can 
you comment on the effect that has had on the people who are in 
the gap for insurance - in the Medicaid gap - that is caused by 
the failure of some states to expand Medicaid?
    Ms. Corlette. Certainly, Congressman, and thank you for the 
question. I think this is something that I hope that Congress 
will address soon in whatever way it can, and also for the 
states that have not yet expanded Medicaid, this is a true 
moral failing.
    I believe we have I think an estimated three million people 
who because their incomes are too low cannot get access to the 
kind of help with premiums to buy health insurance that people 
who have incomes above 100 percent of poverty have.
    I think that kind of inequity is simply wrong and it is 
also demonstrated that it is having not just an impact on the 
families that cannot afford the insurance but actually on many 
local providers, hospital systems and others that are really 
suffering because the people that they serve cannot afford the 
    Mr. Scott. The failure to expand Medicaid also affects 
those with insurance because they have to cover the cost 
shifting. People who are in the gap without insurance get sick, 
go to the hospital. Can you make a comment on that concept of 
cost shifting?
    Ms. Corlette. Sure. That is a problem. I do not know that 
it has been exactly quantified, but essentially the problem is 
that just because you do not have insurance does not mean that 
you do not ever have health problems.
    So what happens is that many people because they cannot pay 
for care, they wait until the last possible minute when the 
problem has become perhaps even a crisis or much more severe 
than it otherwise would have been. They must go to the 
emergency room, and somebody has to pay for that care.
    Typically, what the hospital does is shift those costs over 
to other payers, privately insured, and other payers. We all 
pay for it in some way, so it is penny wise and pound foolish 
for these states that have not expanded it and continue to fail 
to do so.
    Mr. Scott. Ms. Corlette, can you make a comment on the 
issue of privacy in the wellness plans, whether or not people 
are coerced into revealing private information as a result of 
participation in wellness plans?
    Ms. Corlette. Sure, absolutely. I should just first of all 
say that I think workplace wellness programs can be incredibly 
important and effective. But you have identified one particular 
area of concern, which is that under current Federal rules and 
under the proposed EEOC rules, somebody making $50,000 a year 
could be asked or told that if they do not complete a health 
risk assessment or if they do not agree to have personal health 
information turned over to a wellness vendor, as much as $5,000 
of health care premiums could be at stake. In other words, they 
could be asked to pay more in health premiums, as much as 
$5,000 or more.
    It is really hard for me to understand how that would not 
be considered coercive for somebody making that amount of 
money. I think they would feel under tremendous financial 
pressure to complete that health risk assessment and 
participate. So to me, that is not voluntary, and it does not 
fall under anybody's common sense definition of what voluntary 
    Mr. Scott. Thank you. Mr. Chairman, can I ask unanimous 
consent to enter two documents for the record, one, a comment 
to the EEOC regarding the proposed rule on wellness programs 
and its effect on the Americans with Disabilities Act, and 
another comment to the EEOC regarding the proposed rule related 
to wellness programs and the Genetic Information Non-
Discrimination Act?
    Chairman Roe. Without objection, so ordered.
    [Additional submissions by Mr. Scott follows:]
    Mr. Scott. Thank you.
    Chairman Roe. Mr. Carter, you are recognized.
    Mr. Carter. Thank you, Mr. Chairman, and thank all of you 
for being here. This is certainly an important subject that we 
all need to be paying particular attention to, and I want to 
thank Chairman Roe for his efforts in bringing this to light 
before this subcommittee.
    I am a small business owner. I am a pharmacist by trade. I 
own three--excuse me--my wife now owns three independent retail 
pharmacies with about 19 to 20 employees. We value that 
relationship very much between with our employees, and some are 
very long term, been with us for 28 years, and that is 
certainly very important.
    Their health is important. Their health is important to me 
as an employer, I need them to show up for work. I depend on 
them. Obviously, I could not do what I am doing here without 
them being there. This is very important.
    However, like all small business owners, I have been faced 
with the dilemma of trying to reduce health care costs, and 
that is something that has really been a struggle recently, as 
you can imagine. I am not any different from any other small 
business owner in that respect.
    Ms. McDonough, I want to speak to you. First of all, I 
think we are all familiar with Fitbit and what it does and the 
benefit it can have. As we get to a more socially conscious 
health care society, if you will, these are the type of things 
that we are looking at. I am concerned because--not concerned, 
inquisitive as to the collection methods.
    As I understand it, if I were to provide my employees with 
the Fitbit, if I wanted to get the information, I would have to 
get their permission to get it first of all?
    Ms. McDonough. Absolutely.
    Mr. Carter. Okay. That data that is relayed to me, how can 
we make sure that it is going to be private and it's going to 
be secure? They are going to want to know that and they should. 
If they do not want to know it, they should want to know it.
    Ms. McDonough. Absolutely. Privacy and security of our 
user's data and the trust of our customers is paramount at 
Fitbit. We have a very clear, easy to read privacy policy that 
we share with all the consumers. It is written in plain English 
so that they can understand that. That is for all the consumers 
who use Fitbit products.
    When we work with an employer on an employer wellness 
program, they actually have to opt in and give active explicit 
consent to share data with their employer. And that is a subset 
of the actual data that is collected by Fitbit overall.
    Some of the devices collect things like heart rate or GPS 
when you are out running if you are using that functionality. 
That data is not shared with an employer when they work with 
Fitbit directly.
    The type of data that might be shared would be steps and 
distance and active minutes. So data that would be beneficial 
and useful for them to run an effective and engaging program. 
The employee has the opportunity to--again, the programs are 
voluntary, so they do not have to agree to share their data, 
and they can also opt out at any time.
    Mr. Carter. Okay. One final question for you, as a small 
business owner, we have asked about the barriers the employers 
have, but what about small business owners? What kind of 
barriers do they typically have?
    Ms. McDonough. I am so glad you asked this question because 
I am really passionate about supporting small businesses, and I 
actually think it is through the use of technology that small 
and mid-sized businesses can actually have really effective 
wellness programs.
    There are a number of vendors who will only work with very 
large employers. We work with and we are ourselves a small 
business. I am very passionate about it and real excited about 
    The barriers tend to be that it is one person who is 
responsible for all of H.R. and benefits and staff--
    Mr. Carter. That is usually the owner.
    Ms. McDonough. Exactly. You have been there. What is great 
about the advent of the technology that we can provide is we 
make it very easy and streamlined, and we take a lot of pain 
points for the small business owner and we also solve those for 
    Mr. Carter. Great. Very quickly, Mr. Zern and Ms. Franklin, 
I know that private exchanges, they offer a lot more 
flexibility. I am just wondering--Ms. Franklin, I believe 
Hallmark has recently changed to a private exchange. I am just 
wondering about the experience you have had with that.
    Ms. Franklin. It has--Thank you, Congressman. It has been a 
very positive impact to our workforce. It has given employees 
the opportunity to learn how to determine what health care 
plans best meet their needs. It is not an one-size-fits-all 
approach, as I mentioned.
    It very much empowers the individual to be part of the 
process. That has been very, very valuable. It gives our 
employees choice. They can choose from a variety of national or 
even local carriers. I think it introduces the opportunity to 
truly make health care a consumer focused product.
    Mr. Carter. Great. Thank you. Mr. Chairman, I yield back.
    Chairman Roe. Hopefully, the H.R. director is doing okay at 
your business.
    Mr. Carter. You know I got problems with it, but I am 
dealing with it.
    Chairman Roe. Mr. Courtney, you are recognized.
    Mr. Courtney. Thank you, Mr. Chairman. Thank you to the 
witnesses for your outstanding testimony today.
    Again, just to follow up on Mr. Scott's comments, I come 
from the State of Connecticut, which is a State that fully 
embraced the Affordable Care Act. In 2010, our uninsured rate 
was about 9 percent. Last fall, the latest statistics that came 
out, it is now 3.8 percent.
    The exchange, which again I think has been touted as the 
highest functioning exchange in the country by Forbes Magazine, 
the individual policies, private policies, that were sold 
through the exchange, the actual premium price went down by 5 
percent. I am going to say that again, went down by 5 percent, 
in terms of what was offered last year.
    Again, like many of us, I am a former employer and believe 
in the employment-based component of the system. Again, what we 
are seeing in Connecticut is that despite some of the hysteria, 
that employment-based benefits are alive and well and that some 
of the really good solid initiatives like wellness programs or 
private exchanges are totally free to operate, and that is all 
    Like any measure, particularly one that had 440 sections, 
there are provisions which even those of us who voted for it 
had concerns with, and as was mentioned by Ms. Franklin, the 
excise tax, which we pushed against the administration back in 
2010 and got delayed til 2018, we again succeeded last year in 
terms of delaying it to 2020.
    H.R. 2050 has 186 co-sponsors, 70 percent of the House 
Democratic caucus to strike this provision from the law, and 
there is nothing, I think, contradictory about that. As I said, 
any law always can use sprucing up and improvements.
    The administration actually with their budget that came 
over this year kind of acknowledged some of the criticisms that 
we have been weighing against it because they at least tried, I 
think, vainly, to come up with some actuarial adjustments, 
which again, I just think at the end of the day is just not 
really--no one is that smart and no one is that capable in 
terms of coming up with those kinds of fixes. So, we should 
strike from it.
    But you know--Stepping back and looking at the big picture, 
one of the things again that was predicted was it was going to 
be this huge negative impact in terms of America's health care 
    Last month, the Bureau of Labor Statistics, which came out 
with again another positive jobs report, 215,000 jobs added to 
the U.S. economy, 37,000 of those jobs were in the health care 
sector, 10,000 in hospitals, and about 27,000 in ambulatory 
care. In the hospital sector in the last 12 months, the 
employment in that sector has grown by 183,000 jobs in the last 
    Mr. Chairman, I would ask that those figures from BLS be 
entered into the record.
    Chairman Roe. Without objection.
    [Additional submission by Mr. Courtney follows:]
    Mr. Courtney. Again, we still have work to do to make 
improvements, but there is no question that certainly when 
people actually step up and figure out how to make it work, as 
in Connecticut, both in terms of cost and access, I think we 
can point to real tangible results.
    Ms. Corlette, just to shift the conversation a little bit, 
we are also a State that was the first to adopt paid sick 
leave, of up to five days, very controversial when the State 
legislature passed it. There was a business survey that was 
just done recently. Three-quarters of employers now in the 
State support it.
    I just wonder if you could talk about that sort of feature 
as a way of improving workplace coverage in health and 
    Ms. Corlette. Thank you, Congressman. So, in full 
disclosure, this is not my area of expertise, my area of 
expertise is health insurance. But as I did note earlier in my 
testimony, paid leave often - changes places year to year -as 
the most popular employee benefit that employees cite as 
something they appreciate about their employment.
    I can really only speak as an individual about the 
importance of paid leave, and also as a mother, and how 
critically important it was to me after I had my children. I 
would also say as a consumer of goods and services, I would 
like to know that the people that serve me in restaurants and 
establishments are not working because they are sick because 
they cannot afford to take a day off to get better. So, that is 
the best I can do. Unfortunately, it is outside my expertise.
    Mr. Courtney. That is fine. I appreciate that. What is 
interesting is the survey that took place that I mentioned a 
moment ago. A third of employees who were eligible to use the 
statutory paid leave did not even use it.
    Again, the notion that it is just going to trigger this 
huge utilization, in fact has not happened, people are 
committed to their jobs, but like you said, they should not be 
forced to be there when they are too ill to do it at the 
highest level, and also to keep the public safe.
    With that, I yield back, Mr. Chairman.
    Chairman Roe. I thank the gentleman for yielding. Mr. 
Allen, you are recognized.
    Mr. Allen. Thank you, Mr. Chairman. Obviously, we have 
tipped the scales with healthcare prevention toward healthcare 
prevention. In fact, one of the early meetings with the most 
recent president of our medical school in Augusta, I think he 
said then we were spending about 25 percent of every healthcare 
dollar on preventive, and about 75 percent on critical, and we 
could cut health care costs tremendously if we could just move 
that to 50-50. And he felt like that was possible.
    Ms. McDonough, I have been very interested in what you have 
had to say about that, and congratulate you on your work.
    You know -- we--The public ObamaCare exchanges are failing, 
as we all know. I actually introduced legislation, the 
Transparency and Accountability of Failed State Exchanges, H.R. 
4262, it requires failed State exchanges to return unused 
Federal funds for deficit reduction, requires an audit of how 
Federal taxpayer dollars were spent.
    In our own State, our governor was criticized for not 
opting to take the Federal dollars and to open up a State 
exchange, but he obviously knew. In Georgia, we have to balance 
our budget. He did not want to have to write a blank check. We 
know that Oregon now is wanting to opt out as well as Kentucky.
    Mr. Zern, can you talk about your free-market competitive 
exchange and how it saves employers and employees money, and 
how that might help having these private exchanges influence 
employee choice for health care?
    Mr. Zern. Sure. Thank you for the question, Congressman. 
First I would start by establishing that our exchange is an 
employer sponsored group plan, compliant with ERISA. It has 
some core themes or governing areas to it that I would share. 
First is standardized plan designs that really help the 
employee navigate the various choices.
    Secondly is multiple insurance companies offering networks, 
so there is different network options for the consumer from 
which to select. The third is around strong decision support 
    If you think about consistent plan designs, multiple 
carriers with network options for the consumer, and strong 
decision support tools, what those really lead to is an outcome 
around the engaged consumer and the empowered consumer, making 
a choice that works for them personally and their family 
    It addresses choice which all of our survey data shows that 
employees and employers want to offer more choice around plan 
designs, multiple networks, and then it gets to transparency 
around costs and quality, which is kind of the third key 
governing thought for me.
    So, our exchange, as I mentioned in opening comments, is 
driving a 100 to 200 basis point reduction over the standard 
health care cost increase.
    Mr. Allen. One thing I have found about the American people 
is they want choice, and that is the big problem with the 
mandatory government health care program.
    We know in the business world and we talked about it--
    Ms. Franklin. Congressman, could I just tag onto that very, 
very quickly?
    Mr. Allen. Yes.
    Ms. Franklin. One other element that I think is fundamental 
in the private exchange is that there are different geographic 
markets. In our experience when we moved to the exchange, is 
that not one carrier has the best price everywhere. By having 
the localities compete, there is an opportunity for better 
products and cost savings as well.
    Mr. Allen. We are having problems in Georgia, frankly, 
because of the status of health of a lot of our citizens there 
and particularly in my district.
    You know we know that the only way to bring down costs in 
the business world, which I have been a small business owner 
for years, is by competition. Of course, the health insurance 
industry, they are consolidating as we speak. There are less 
and less companies offering health insurance. There are 
companies who are also saying they are going to get out, they 
are not going to serve this area or this exchange. They are 
just making calls.
    How do we -- And Mr. Zern I will start with you and we have 
just a few seconds How do we introduce competition back into 
the marketplace? For example, ophthalmology. To get your vision 
corrected, it used to cost $3,000. It is a couple hundred 
dollars today. How do we do that real quickly? You got 25 
    Mr. Zern. Sure. I would say that in our exchange absolutely 
the fundamental piece is promoting market competition amongst 
the insurers. Quickly, on behalf of our employers, when the 
announcement was made about the potential consolidation, we did 
two pretty significant surveys.
    The information coming back from employers is they are kind 
of on a wait and see as to if consolidation happens, what they 
are going to, what that is going to mean, but none of them 
stopped advancing their health care strategies, not a single 
    Mr. Allen. Thank you very much, panel, and I yield back, 
Mr. Chairman.
    Chairman Roe. I thank the gentleman for yielding. Ms. 
Bonamici, you are recognized.
    Ms. Bonamici. Thank you very much, Mr. Chairman, and thank 
you, Chairman Roe and Ranking Member Polis for holding this 
hearing, and thank you all for your testimonies. It has been 
great to hear about some of the innovative approaches and the 
work that several companies are doing to make sure that they 
have a healthy workforce.
    My home State of Oregon has often been a leader in finding 
more efficient and effective ways to deliver health care and 
improve health outcomes. Following up on Mr. Courtney's 
comment, our Oregon legislature did just pass paid sick days, 
which is really important, to make sure that we have a healthy 
    We also in Oregon expanded Medicaid. A year between 2013 
and 2014 saw a 63 percent drop in the number of uninsured in 
    Recently, I visited a company called Provata Health in 
Oregon. It is an Oregon based health technology company, 
focused on workplace wellness, and they use digital 
technologies. They have an evidence-based series of wellness 
programs that are scientifically designed to create a healthier 
and more productive workforce. They have been the subject of 
peer reviewed studies and showed both increased cost savings 
and improved health outcomes.
    I wanted to ask first Ms. Corlette, can you talk a little 
bit about how employers might evaluate the potential cost 
savings, and what kind of methodologies could be used to 
determine those?
    Ms. Corlette. Thank you, Congresswoman. So, we are in an 
interesting time when it comes to workplace wellness programs. 
Right now, in the marketplace, it is like 1,000 flowers are 
    That kind of innovation is both very exciting and provides 
some great opportunities, but I also think it can be very 
difficult both for employers as well as employees to sort of 
tease out of this myriad of programs that exist, what are the 
tools and incentives that really work both to change behavior, 
get to better health outcomes, and ultimately get to a lower 
cost growth trend.
    The truth of the matter is that the research out there is 
growing, but it can be very difficult to tease out what is 
working and what is not. I will say what we are seeing is first 
of all that wellness programs that are tied to some sort of 
premium based or cost sharing based cost financial incentives 
have really not been shown by themselves to change behavior.
    What does seem to work in terms of cost reduction, of 
course, are targeted disease management programs that really 
target, for example, people with diabetes or a heart condition, 
that kind of thing, with direct and personalized interventions.
    Also, frankly, changing the environment. Google is a great 
example of a company that has experimented with different 
wellness things but one of the most effective things they found 
was in their cafeteria, they moved all the healthy options up 
front and took the unhealthy options and sort of hid them in 
the corners, they reduced the sizes of plates and bowls, and 
that has made a tremendous difference in people's nutrition and 
overall health.
    Those kinds of environmental changes sometimes are very 
easy to do but can be incredibly cost effective.
    Ms. Bonamici. I know just a few days ago the Center for 
American Progress talked about some of the state initiatives. 
Can you talk a little bit about some of the successful state 
models that we have seen?
    Ms. Corlette. Sure. The ACA has really sparked a number of 
really innovative and exciting payment and delivery system 
models that are happening at the State and local level.
    Here is an area where I think employers are really 
critically important participants in those models.
    What the ACA has done is brought big government purchasers 
like Medicare and Medicaid to the table, but from providers' 
perspective, when you have Medicare telling them to do one 
thing and the commercial carriers telling them to do something 
else, and Medicaid yet another thing, those signals can get 
very confusing and administratively, very burdensome.
    When the signals are aligned and you are encouraging more 
efficiency, higher quality, that can lead to both better health 
outcomes and lower costs.
    Ms. Bonamici. I am going to try to get one more question 
in. We have a need for more healthcare literacy and the uniform 
Summary of Benefits and Coverage that was created under the 
Affordable Care Act, and I think it has made a difference.
    Can you discuss how that tool for workers can help them 
make more informed decisions, and are employees more confident 
in selecting a health plan now that will fit their specific 
    Ms. Corlette. Thank you. So, polling does show that the SBC 
or Summary of Benefits and Coverage, is consistently one of the 
most popular provisions of the ACA. I think people are really 
excited for sort of standardized, uniform information that just 
says okay, what does this plan actually do for me.
    Ms. Bonamici. Do the employers on the panel agree with 
    Mr. Zern. Yes, very similar feedback.
    Ms. Bonamici. Terrific, thank you.
    Ms. Franklin. I would add that decision support tools that 
are made available also encourage that kind of education as 
    Ms. Bonamici. Terrific. Thank you. My time has expired. 
Thank you, Mr. Chairman.
    Chairman Roe. I thank the gentlelady for yielding. Mr. 
Messer, you are recognized.
    Mr. Messer. Thank you, Chairman. Fascinating conversation 
today. You know, as we look at how we can control costs in the 
world of health care, I think most of us would concede that one 
of the most important things we can do is turn every American 
who receives health care into a health care consumer, where 
they are actually making consumer decisions.
    At the same time, Mr. Zern, as you highlighted in your 
testimony, you have over 150 million Americans getting employer 
provided health care. That is an important part of our system. 
You mentioned in your testimony that employers offering health 
care benefits are genuinely driven to promote health care 
awareness, reduce health care spending, ensure that employees 
and their families have comprehensive coverage and the like.
    There has been a lot of discussion lately about the overall 
viability and future role of employer-based health care. I was 
hoping you could just highlight for the panel, how do consumers 
behave differently when coverage is provided by their employer 
versus when they purchase health insurance on their own?
    Mr. Zern. So, I will be able to speak from the employer 
side certainly. Health care is complex. Employees look to their 
employer to continue to educate and communicate with them 
around a variety of issues, whether it is plan design, whether 
it is network configuration changes, what type of wellness 
programs I should be accessing or thinking about.
    The employer is, to me, exceptionally critical to 
continuing to advance the communication and the empowerment of 
the consumer.
    We have--The next stage, I think, that we really have to 
tackle is how do we get information in the hands of the 
consumer at the point of service. Right so, when you look at 
the waste in our health care system, how do we start to address 
that. I think that is the next set, and you can see that 
innovation through mobility apps and different things of that 
    The education piece from the employer to the consumer is a 
critical function for us.
    Mr. Messer. Following up on that, what are some of the 
obstacles preventing employers from signing up for private 
exchanges that you can identify?
    Mr. Zern. So I think, you know, to Ms. Franklin's comments 
earlier, a private exchange is a great solution for a 
particular client. I have been in health care consulting for 
close to 30 years. I have seen lots of different plan designs, 
and an active exchange, a private exchange is a really good one 
that drives consumer engagement, transparency, and choice.
    So, I think we are going to continue to see the evolution 
of exchanges, both public and private.
    Mr. Messer. I might open it to both Mr. Zern and others on 
the panel, we are here obviously today in Congress, what could 
Congress do to enhance the opportunities or to eliminate 
barriers for employers to be engaged in private exchanges?
    Mr. Zern. I am happy to jump in on that one, representing 
our the employers who are our clients. I think there is a 
desire for trying to drive a little more simplicity in the 
system. So, that would be an area that we would be happy to 
work with Congress on behalf of our employer community, too.
    How do we simplify some of the regulatory issues that our 
employers have to face that can push them to look at other 
areas, whether it is active exchange or other areas of 
innovation within the health care ecosystem.
    Mr. Messer. I presume part of your point there is when it 
gets so complicated, the individual employer just throws up 
their hands and decides to--
    Mr. Zern. It can be a little frustrating.
    Mr. Messer. Yes. Anybody else?
    Okay. Thank you. I yield back the balance of my time, 
    Chairman Roe. I thank the gentleman for yielding. Mr. 
Hinojosa, you are recognized.
    Mr. Hinojosa. Thank you, Chairman Roe, and Ranking Member 
Polis. The health insurance landscape has changed tremendously 
for employers and employees since the Patient Protection and 
Affordable Care Act implementation.
    Just last month, we celebrated six years since ACA's 
enactment and celebrated the 20 million previously uninsured 
Americans who now have access to quality, affordable coverage.
    In my region of South Texas, from San Antonio down to the 
Rio Grande Valley, we have close to 200,000 families receiving 
tax credits to help pay for coverage. In 2009, prior to ACA, 40 
percent of the families in my congressional district were 
uninsured. Today, in 2016, only 20 percent are uninsured.
    We have made great progress in this large region that has 
been growing so fast. Today's hearing focuses on alternative 
insurance models for employer provided health coverage, but in 
my view, any changes to employer coverage must be handled 
carefully as over 147 million people currently rely on employer 
sponsored benefits for health needs.
    As you well know, the governor and the Texas legislature 
did not embrace ACA in our State, and they did not allow 
expansion of Medicare, nor did they allow creation of the Texas 
health insurance exchange marketplace.
    However, in spite of those actions, Texas saw 1,306,208 
people enrolled in private plans for 2016 through the Texas 
exchange during open enrollment. I am encouraged that we are 
doing some things right and helping a lot of people who under 
the conditions that our ranking member, Bobby Scott, gave that 
could not afford it or had preexisting medical conditions, are 
now covered.
    So, my question that I have goes to--I have my papers a 
little mixed up here, excuse me. To Sabrina Corlette. Based on 
your expertise, how can Congress work together with health care 
service providers to ultimately reduce the cost of health care 
experienced by patients?
    Ms. Corlette. Thank you, Congressman. As I mentioned in my 
testimony, I think one exciting thing but often under 
publicized about the Affordable Care Act is that it really 
launched a number of experiments in payment and delivery system 
reform that are bringing both public purchasers, like Medicare 
and Medicaid, along with private purchasers, like employers and 
employer coalitions, together to start to work towards 
increasing health care value.
    By that, I am talking about things like patient-centered 
primary medical homes. As the Chairman mentioned earlier, 
accountable care organizations. Efforts to really re-emphasize 
primary, lets really Primary care, start putting more 
accountability into the system, reduce unnecessary and wasteful 
    These experiments are still in early days, and so they are 
showing, so we are starting to see some results, but still more 
time needed needs to tell. One thing that was very exciting 
about this particular hearing is the role of the employer and 
particularly self-funded employers, and how influential they 
can be at the local level in really driving change towards 
value and value-based care.
    Mr. Hinojosa. I agree with you. I want to be sure that the 
record reflects that across all 38 states, that use 
healthcare.gov, in the final week of the 2016 open enrollment 
period, eight of the 10 local areas with the fastest growing 
enrollment numbers were in Texas. It included Corpus Christi, 
Harlington, Laredo, El Paso, Odessa, Midland, San Antonio, 
Abilene, Sweetwater, and Lubbock.
    I am encouraged. I am an optimist and I believe if we can 
just tweak ACA a little bit, that we can make it work for so 
many more people, and with that, I yield back.
    Chairman Roe. I thank the gentleman for yielding. Mr. 
Grothman, you are recognized.
    Mr. Grothman. Thank you very much. I guess what we are 
coming down to is what can we do to make health care 
affordable. Yes, I strongly agree with Ms. Corlette that we are 
in the beginning stages of that. I think there are a variety of 
companies out there, Serigraph owned by John Torinus, in my 
neck of the woods, who have already found ways to greatly 
reduce the cost of their health care for employees.
    I give a couple of you guys, if you can kind of rattle off 
what your total costs, not just the cost to the employer, but 
the cost to the employer plus employee is, in each one of your 
businesses, or if you don't have I guess--I guess you are all 
businesses of one nature or another.
    We will start with Ms. Corlette since I just finished up 
with her. What is the total cost per employee at Georgetown 
    Ms. Corlette. I am sorry, sir. I actually do not know. I am 
not here to represent the university.
    Mr. Grothman. You will look into it? It is an important 
number. We should all know that. Ms. McDonough, what is the 
cost for health care at Fitbit per employee, in the programs 
that you cover?
    Ms. McDonough. Unfortunately, I am also not able to speak 
to that. I do not sit within the H.R. organization.
    Mr. Grothman. Mr. Zern, do you know?
    Mr. Zern. Unfortunately not.
    Mr. Grothman. We need new witnesses. Ms. Franklin, do you 
know for Hallmark, what is your total cost--
    Ms. Franklin. Yes, sir. I pay those bills. It is about 
$9,500 $9,800 per employee per year.
    Mr. Grothman. That includes the cost the employee is 
    Ms. Franklin. No, that is just the Hallmark cost.
    Mr. Grothman. What is the cost per employee?
    Ms. Franklin. You know, I do not have that on an average 
basis because employees can enroll in different levels of 
coverage. I apologize.
    Mr. Grothman. You should keep track of that. It is a little 
bit embarrassing. What I wanted to do was talk about the 
difference between costs in corporations, what they are, and 
costs in government, costs in Medicare, and what they could be. 
What they could be if you combined an HSA with a wellness 
program, with an onsite clinic, and you did some sort of co-pay 
so your employees could shop for the lowest cost health care.
    Since none of you know the answer to this, which you all 
should, since you are experts in the field, I can tell you I 
think a lot of companies could drop their total costs from 
about $20,000 to $12,000 per employee. It would be a difficult 
thing for the government to do since the government is so big, 
but I think if you had your own onsite clinics without the 
incentives to send people to expensive specialists, if you get 
a little bit wellness, even an HSA, so people had a little bit 
incentive not to run to the doctor at the drop of a hat, you 
would be amazed how much you four could find a drop in health 
care costs. It can be done by nonprofits, too.
    I think Ms. Corlette, if you get involved in Georgetown's 
health insurance, I think you would find you could save a lot. 
There are a lot of universities today that claim they need more 
money and tuition is so high, but you might find, Ms. Corlette 
- I recommend you should read Mr. Torinus' book. You might find 
you could save $6,000 or $7,000 per employee at Georgetown and 
not have those kids graduating with such excessive debt.
    Since people do not know that, I guess I will yield back 
the remainder of my time. That is what you should focus on, 
total cost including cost paid for by the employee in your 
businesses, and see what you can do to drag that down.
    Thanks much.
    Chairman Roe. I thank the gentleman for yielding. Mr. 
Takano, you are recognized.
    Mr. Takano. Thank you, Mr. Chairman. Following up on my 
colleague Representative Bonamici's comments about health 
literacy, Ms. Corlette, I wanted to relate some experience in 
my home State of California.
    Covered California recently announced--Covered California 
is the name of our exchange--recently announced that its 
contract with insurers for plan years 2017 through 2019 will 
include expanded tools to help consumers make their choice in 
plans that is best for them.
    Can you discuss how improving health literacy is a tool for 
workers to make more informed health care decisions?
    Ms. Corlette. Absolutely. There are a number of exciting 
components to that Covered California contract for 2017 that 
include both more support for consumers to make smart choices 
but also really starting to align incentives for insurance 
companies to start to deliver better value. So, I commend 
California for really being the leader in this area.
    On the issue of health insurance literacy, what we have now 
learned after a few years of enrollment through the health 
insurance exchanges is that there really is not much health 
insurance literacy in this country, unfortunately.
    Part of that stems from the fact that health insurance is 
such a complicated product. You are talking about premiums, 
deductible, co-insurance, co-payments, network issues, 
benefits. It is just very, very complicated.
    Then you couple that with once you are enrolled, figuring 
out where is the appropriate place to get care. All of these 
things require a tremendous amount of knowledge on the part of 
the consumer.
    One of the things the ACA has tried to do is provide more 
tools to consumers such as the Summary of Benefits and 
Coverage, to help them make informed decisions, but we are 
still a long, long way away from really getting to the decision 
support tools that are needed.
    Mr. Takano. This may be an obvious question, but I think it 
is important for us to kind of get the thinking out there for 
the public.
    I want to ask you a follow up. How does improved health 
literacy help to keep costs in check?
    Ms. Corlette. Well I think first and foremost, by helping 
people understand where an appropriate care setting is for a 
particular injury or illness or condition, that can help people 
get the right care at the right place at the right time.
    For example, you should not go to the emergency room for a 
sore throat or if you got the flu, you should go to a primary 
care setting, and that can lower costs dramatically. That is 
just one example. Just educating people about where the right 
place is to get care for a particular condition is important.
    Mr. Takano. Because people who have not been insured before 
really do not know the different aspects of a health care 
    Ms. Corlette. That is right.
    Mr. Takano. They need to learn these things, these terms, 
co-pay, co-insurance, all new to someone who has not really 
been insured before.
    Had we not acted and passed the ACA, do you believe 
premiums for workers likely would be higher than they are today 
if we had not acted?
    Ms. Corlette. Since the ACA was enacted, we have had the 
slowest growth in health care prices in just about a 
generation. It has really been remarkable. Some attribute that 
to the ACA. Some say it is the economy and other factors. We 
certainly have seen much, much slower growth than we had prior 
to the ACA.
    I think that one of the other exciting things about the ACA 
are these multi-payer efforts where private purchasers are 
pulling together with Medicaid and Medicare to start to get 
more efficiencies into the system. Those are still in the early 
stages, and need some time to bear fruit. I am hopeful that we 
can, as you say, bend the cost curve for the long term.
    Mr. Takano. One thing we know for sure is the sky did not 
fall, the world did not end, and we are not seeing lots of 
people being put out of work, lots of full-time people being 
moved into part-time jobs, all these claims that were made 
pointing to a dire disaster have not occurred.
    Ms. Corlette. Quite the opposite. We are seeing job growth, 
really strong foundation of an employer-sponsored health care 
    Mr. Takano. Thank you very much, and I yield back my time.
    Chairman Roe. Thank you, Mr. Takano. I will now yield to 
myself for five minutes. Why do companies form wellness 
programs? Well I think they do that, which is what the subject 
of this was today, to lower costs and improve the health care 
for their employees. I think that is why we do it. It makes 
sense to do it.
    Just to point out something, I think the way you do that, 
and you have all clearly pointed out, is empower consumers, 
transparency, and quality. If you do those things, people can 
shop, and Americans are the best shoppers in the world. We will 
drive across five lanes of Interstate to get gas two cents a 
gallon cheaper. I know if we have the knowledge, we absolutely 
will make smart consumers.
    I am a smart healthcare consumer. I have an HSA. What did 
the Affordable Care Act do? It discouraged consumerism, me 
being able to be in charge, not the insurance company, not the 
government, and one of the things you can do tomorrow, we could 
do tomorrow, is allow people to shop.
    In other words, I am forced right now to buy ten essential 
health benefits, half of which I do not need. We need to allow 
consumers to purchase what they and their family can afford and 
what they need.
    Let me just tell you what has happened in the real world, 
this all sounds great. In the real world, in the hospital where 
I practiced and taught at the medical school, 60 percent of the 
uncollectible debt in that hospital are people with insurance. 
Why? To meet these benchmarks of affordability, you raise the 
co-pays and out-of-pockets so high that people cannot afford 
    Now, it is left to providers, me and the hospitals, to 
provide that care when people cannot pay. If you have a $5,000 
out-of-pocket, and you are a police officer where I live making 
$35,000 a year, it might as well be $100,000 out-of-pocket. You 
do not have the money to pay it.
    We have to factor that in and figure out how not to do 
that. I think having consumers decide what they need to buy is 
the way.
    Medicare, for instance--Medicaid, I mean for instance, we 
tried that experiment 20 years ago. Right now with the Federal 
Government running a deficit and paying all the bills, it looks 
fine, except the quality of care for Medicaid patients in many 
cases is actually less than people with no insurance. I find 
that abhorrent that we have people in this country with 
Medicaid that get a lower standard of care than other people. I 
think that is absurd. We need to reform that program before we 
expand that program. It almost bankrupted our State of 
Tennessee, which is why we have not expanded it yet.
    Just a few things like that. I want to get back to a couple 
of questions that I would like to ask. By the way, the 
exchanges, which I found amazing, you all have set up these 
private exchanges at zero cost to the taxpayers, and we 
literally have flushed billions down the drain with the public 
    By the way, one of them was Oregon, Hawaii. I could go on 
and on. The co-op's, almost half, over half of them are 
bankrupt and out of business. We need to let the private sector 
do this. They have done it very well at no cost to the 
    I wanted to say those few things just to get started. 
First, Mr. Zern, I want to go to you, and Ms. Franklin, both. 
Do you see these private exchanges expanding? In other words, 
you went from a system where you were self-insured to an 
insurance plan. Did you see that happening? Is that going up? I 
love the idea of these private exchanges.
    Mr. Zern. We certainly see continued steady growth in the 
exchange portfolio, and across the definition of exchanges, we 
absolutely expect to see continued growth, not only within ours 
but just as the industry defines exchanges and what is 
happening in the private health care exchange.
    Chairman Roe. Why do you, Ms. Franklin--because when I was 
mayor of our local city, we had 1,000 employees, 1,500 teachers 
or so, and we were self-insured. What reason did you make at 
Hallmark to switch from a self-insured plan to--
    Ms. Franklin. The primary model that Aon has used is a 
fully insured model. Part of that model is to put the 
responsibility and accountability to the carriers as they seek 
innovation in health care.
    To your specific question about the growth of this program, 
I do think--we have seen with our employees coming into the 
workforce, they value choice, they do not want one-size-fits-
all, they appreciate being able to learn and customize a 
program that meets their needs.
    Chairman Roe. I think by allowing consumers to have that 
voice and choice you have empowered them. I think there is no 
question about that.
    The other thing I want to get in my little bit of time 
left, and this goes to maybe Fitbit, we need data to make 
clinical decisions. I mean I have to have that to make a 
rational clinical decision.
    Ms. Corlette, I certainly understand where you are coming 
from with maybe someone who is coerced into doing something, we 
do not want that either.
    We also need that data to be able to make decisions about 
are we doing the right thing. Otherwise, we keep doing, as Mr. 
Polis just said, at least some of these wellness programs may 
not work, and a gym membership is not a wellness program.
    How do we protect the data so I can use it? I don't know 
what My cholesterol is my cholesterol. I could put it out there 
you wouldn't know it was Phil Roe.
    Ms. McDonough. Thank you for the question. Fundamentally, I 
think it goes back to what you suggested, which is giving the 
consumer the choice to who and when and what data they share 
and with whom. There is a responsibility on Fitbit in this case 
to make sure that the data is secure and privacy is respected, 
and then by giving the employee or the individual the 
availability to share that data with their practitioner in the 
future so that they can have a better and more informed 
conversation, I definitely think is where the market is 
growing, given it is empowering the consumer and also the 
practitioner to be able to have that conversation.
    Chairman Roe. I am going to gavel myself, I am over time. I 
want to thank the witnesses today. You all have been terrific. 
I have thoroughly enjoyed this. It is always nice to have a 
hearing you know something about, which is health care. I 
really enjoyed hearing what you had to say. I think it has been 
very beneficial.
    We want to continue this discussion, and I want to thank 
you all for taking time to prepare to come today. At this 
point, I would like to ask Mr. Polis if he has any closing 
    Mr. Polis. I will be brief. Thank you, Mr. Chair. Thank you 
to our witnesses for a very thoughtful and thought provoking 
discussion about how we can reduce costs, improve health 
outcomes in our employer-based health care system. Employer-
sponsored insurance has been very popular, is very popular, 
will likely remain very popular.
    We need to do everything we can to make sure that 
businesses and health care consumers have the right incentives 
to provide additional wellness based options and new programs 
to employees to help save costs and to make workers healthier.
    I am excited about the role and the potential of technology 
and data to be very central to the decision making process at 
the employer level and within private exchanges as well.
    It is heartening to see companies that are taking a close 
look at new and more efficient models for delivery, that can 
cut costs and improve outcomes.
    I think we only scratched the surface today, Mr. Chair, and 
look forward to a lot more information for policymakers to make 
informed decisions about how we can encourage these kinds of 
activities in the marketplace, and I yield back.
    Chairman Roe. I thank the gentleman for yielding. Just to 
finish up, I agree with much of what Mr. Polis said. We have 
created a system in the public system, and Ms. Franklin has a 
premium support, basically, it is a defined contribution for 
health care. You get to choose as a consumer which one of 
    Mr. Zern clearly pointed out that consumers will decide 
where their providers, where they go to the hospital, what 
doctors they see, what medications they can receive.
    That is empowering people to make those decisions. We need 
to do more of that. What we have in Medicaid and Medicare is an 
archaic out of date system, and it needs to be completely 
redone, it is completely archaic. I mean we have a Medicare 
system that has an A, B, C, and D, and the day I turned 65, 
nothing happened except I got 65, and now I had an alphabet to 
go through about what kind of health care I wanted. I am 
exactly what I had the day before.
    Those are the kinds of things I think this hearing--you 
have really ferreted it out very, very well. I do believe, 
absolutely believe, that the wellness part and one of the 
questions I did not get to ask was how do we take this 
technology and do we--in a big company, at Georgetown, where 
they are highly educated people, it is really pretty easy to 
    As I walked into the office today, I walked by a lot of 
people who are not very sophisticated, and I have lived in 
areas that are not, and I want to know is how do we get that 
information down to where it can make a bigger impact, which is 
our lower income people and other folks.
    I think we did not delve into that, and maybe that is a 
subject for another hearing. I think it is critically 
important. That is where your biggest gains will quite frankly 
    With nothing further, I appreciate very much you being 
here. The hearing is adjourned.
    [Additional submissions by Dr. Roe follow:]
    [Whereupon, at 12:15 p.m., the Subcommittee was adjourned.]