tonight on our companion network, c-span, a conversation about emerging infectious diseases and potential new pandemics. an author discusses "pandemic." in addition to crowding our people together, we're also crowding our animals together. we have more animals under domestication right now than in the last 10,000 years of domestication until 1960 combined. huge numbers of livestock that we're keeping right now and many of them live in these factory farms. we have a million or more individuals crowded together so

they're basically the animal equivalent of urban slums. and this similarly allows pathogens to amplify in ways. one is aif yan virus and it's normally in wild waterfoul and don't really make those birds very sick but viruses in the factory farms where the captive animals are crowded together they start to change and they replicate and mutate because that's what viruses do and they become more virulent and so we have had a more increasing problem with the forms and some of them have evolved in ways to infect humans. >> you can watch the entire discussion on emerging infectious diseases tonight on c-span at 8:00 p.m. eastern. and then at 10:00, landmark cases series, tonight marbury versus madison, the 1803 ruling found the supreme court has the power of judicial review.

allowing it to invalidate acts of other branches of government if they violate the constitution. ♪ this is my first election that i've been participating in. i think it's really important to be involved, especially without an incouple bept. i know a lot of people have been voting this election, especially seems more than normal. a friend worked the polls and said it's been the most crowded it's ever been. i'm excited to continue in the election and vote for who i'm going to vote for presidential candidate. >> the reason why i decided to vote in this primary elections is because this election season has probably for most people probably been the most captivating ever. and i feel like it's important to be represented in the election process. >> i'm voting in this election because with the extreme racial

disparity in this country as well as the economic inequality, it is essential that we choose a president who will represent all of america. the senate finance committee recently held a hearing about signing up for health insurance under the affordable care act. on federal and state based insurance exchanges. utah senator orrin hatch is chairman of the finance committee. >> the committee will come to order. it's been a little disruptive here this morning. we have a lot on our plate. it's pleasure to welcome everybody here this morning. today, we'll be speaking with represents from the department

of health and human services and from the government accountability office about their oversight work with respect to healthcare.gov and enrollment in the fedel government insurance marketplace. i want to thank both entities for their hard work and contributions that both have made to help this committee perform more accurate and timely oversight. now, it is no secret that i have never been a fan of the so-called affordable care act. as we approach the sixth anniversary of this law and look closely into how it's working and being implemented, the evidence overwhelmingly shows that i and the many others oppose this from the beginning has been right all along. the facts speak for themselves. since obamacare was sent into law, hhs, oig and gao have released at least six dozen reports detailing various operation and implementation issues demonstrating numerous areas where the law is falling short.

these reports are specific and focused on key operational failures like enrollment controls and systems issues. some of which we'll hear about today. let's keep in mind that gao and hhsoig are not bipartisan entities. they are independent watchdogs tasked with the responsibility of objectively and dispassionately assessing what is and what is not working in various federal programs, including those created or amended by the affordable care act. there's no better record showing how this happened than the reports we received from these offices. today we are going to specifically discuss operations issues related to healthcare.gov and enrollment problems at the federal insurance marketplace, otherwise known as the federal exchange. let's start with healthcare.gov launch.

as a result of the numerous problems and shortcuts take within the initial development and deployment of healthcare.gov and its supporting systems, customer custom customers, really consumers who encountered widespread performance issues when trying to create accounts and enroll in health plans. after numerous inquiries and reports, we now know what caused these performance issues. for example, there was inadequate capacity planning. the centers for medicare and medicaid services cms cut corners and did not plan for adequate capacity to maintain healthcare.gov and its supporting systems. there were also problems with the software that were entirely avoidable. cms and its contractors identified errors in the software coding for the website, but did not adequately correct them prior to the launch. we saw a lack of functionality. cms did not adequately prepare the necessary systems and

functions of the website and its supporting systems prior to the initial launch. cms also failed to apply -- recognize best practices for system development which contributed to the problems. admittedly, since the initial launch, cms has taken steps to address these problems, including increasing capacity, requiring additional software quality reviews and awarding a new contract to complete development and improve the functionality of key systems. however, many of the problems have still not been entirely resolved and continue to cause frustration, especially for consumers trying to obtain health insurance. now, i wish we could boil down all of obamacare's problems to the function of the single website. indeed, if this was just an i.t. problem all of our jobs would be a lot easier. however, the problems with obamacare and the federal insurance marketplace in

particular go much deeper and many of them remain unadressed. now, we know, for example, that the enrollment controls for the federal marketplace have been inadequate. during undercover testing by gao, the federal marketplace approved insurance coverage with taxpayer funded subsidies for 11 out of 12 fictitious online applicants. in 2014, the gao applicants, which once again were fake, make up -- made up people. obtained a total of about $30,000 in annual advanced premium tax credits, plus, eligibility for lower insurance costs at the time of service. these fictitious enrollees maintained subsidized coverage throughout the year, even though gao said either clearly

fabricated documents or no documents at all to resolve the inconsistencies. while the subsidies, including those branded the gao's fictitious applicants are paid to health care insurers, they nevertheless represent a benefit to consumers and a cost to the government. now, gao did find that cms relies on a contractor charged with document processing to basically uncover the -- to uncover and report possible instances of fraud. yet gao also found the agency does not require that the contractor has any fraud detection capabilities. and according to gao, cms has not performed a single comprehensive fraud risk assessment recommended best practice of the obamacare enrollment and eligibility process. until such assessment is

completed, cms is unlikely to know whether existing control activities are suitably designed and implemented to reduce inherent fraud risk to an acceptable level. in other words, cms isn't even sure if cms' fraud prevention systems are resigned correctly or if they are effective. lastly, while it was not the focus of the reports that is covered by the testimony today, another matter we've been tracking closely and where the gao is issuing a report today is cms' oversight of the health care co-ops. we had a hearing on this topic in late january where we examined a number of explanations for the abject failure of the co-op failure. today's report describes the effort to deal with the financial or operation issues at the co-ops, including the use of an escalation with serious

problems that may require corrective actions to correct oversight. as of november 2015, 18 co-ops had enough problems that they had to submit to a cms escalation plan, including 9 that have discontinued operations. just last week we heard that yet another co-op, this time the one many maine, is on the verge of financial insolvency despite the fact that it had been on a cms-mandated escalation plan. in other words, cms' efforts to address all the problems faced by co-ops appear to have failed just like virtually every other element of this program. the failure of cms to adequately implement the co-op program is well documented here on the finance committee and elsewhere. as with so many other parts of obamacare, the rhetoric surrounding this program has fallen short of reality. with nearly half of the co-ops now closed, the failed experiment has wasted taxpayer dollars and forced patients and families to scramble for new

insurance. with so many co-ops now in financial jeopardy, i believe cms should work with and not against states to safeguard taxpayer dollars. so, as always, we have a lot to discuss. i look forward to hearing more from the officials we have testifying here today. so with that, i'll turn to senator wyden for his opening remarks. >> thank you, mr. chairman. mr. chairman and colleagues, it is old news that the initial rollout of healthcare.gov three years ago was botched. it is new news that the inspector general of the health and human services department recently said, and i want to quote here, this is a quote from the inspector general. cms recovered the healthcare.gov website for high-consumer use

within two months and adopted more effective organizational practices. that's what the inspector general said. that the department recovered the website for high-consumer use within two months. that quote comes from one of two reports looking back at 2013 and 2014, that the finance committee will be presented with today. and i think we ought to start by recognizing that the story here is well-documented. after the launch went badly, some of the best minds in technology and a new contractor were brought in. they scrambled to overhaul the system and the exchange was soon up and running. and the center for medicare and medicaid services is now following up on each of the inspector general's recommendations, which the inspector general notes in its report. in the most recent enrollment period, nearly 10 million

americans used healthcare.gov to sign up for a plan or re-enroll automatically. in my home state, which had its own problems, close to 150,000 persons have used the website to sign up for a plan as of january 31st. that's up by more than 30% compared to last year. the committee will also hear an update from the government accountability office on what has been called the secret shopper investigation. the general account -- the government accountability office first brought this study before the committee in july of last year. and i'm going to repeat what i said back then. on this side of the aisle, we don't take a back seat to anybody in fighting fraud and protecting taxpayer dollars. one dollar ripped off is one dollar too many. but let's recognize that what was true last summer remains true today. this gao investigation has not

uncovered one single shred of real-world fraud in the insurance marketplace. it was built on fictitious characters with specially created identities, not real consumers and not real fraudsters. it's true that the government accountability office found that there are sometimes differences between the information on somebody's insurance application and their tax forms and citizenship records. but when it comes to these inconsistencies in people's data, this committee cannot differentiate between information and a tie to. meanwhile, health and human services did not look the other way when they found the red flags. in the year of the gao investigation, the center of medicare and medicaid services closed more than 100,000 insurance policies because documents didn't match or weren't provided. tax credits were adjusted for nearly 100,000 households. in 2015, health and human services closed more policies and adjusted more tax credits. if you come at this from the

left, you might say that's too harsh. if you come at it from the right, you might take a different view. but there's no basis whatsoever for the argument that health and human services ignores problems in people's records or leaves the door open to fraud. it seems to me, rather than rehashing old news, we ought to be looking at the facts and talking in a bipartisan way about how to move forward together. because of the affordable care act, the number of americans with now health insurance is at or near its lowest point in half a century. for the 160 million people who get their insurance from their employer, colleagues, premiums climbed 4% last year. let me repeat that. for 160 million people who get their insurance from their employer, premiums climbed only 4%. working-age americans in oregon and nationwide with pre-existing

conditions, 80 million people or more can no longer be denied insurance. so instead of battling out what happened three years ago, we ought to be pulling on the same end of the rope and solving some problems. for example, democrats and republicans ought to be working together to look at ways in which we can provide even more competition and bring costs down for consumers and a lot of you in this room have worked with me on that issue for some time. second, there are going to be spectacular new cures in the future and real questions as to whether our health care system is going to be able to afford them. here, senator grassley has worked very closely with me to put together a bipartisan case study which looked at one blockbuster drug involving hepatitis c. solving the cost of the blockbluster drugs is going to take a lot of hard work. it, again, can only be done on a bipartisan basis. and finally, i want to express my appreciation to colleagues on

both sides of the aisle because i think we are on the cusp of being able to make real progress on a huge opportunity for older people and our country and that is protecting the medicare guarantee. this very sacred guarantee we have for seniors while updating the program to look at the great new challenge, which is chronic illness. i want to thank senator bennett who was out in front of this issue for some time. he's not here but senator isakson and senator warner were champions, as well. i want to express my appreciation to the chairman for the progress that we are making. i have to comment on something we didn't know about until about an hour ago and that's this matter of the co-ops. what we have said is that we want to work in a bipartisan way to improve a variety of sections

of the affordable care act. now, this new material on the co-ops which neither me nor anyone on this side knew about, was available something like an hour ago, i intend to look at it with an eye on what can be done on a bipartisan basis going forward. but my work, and i think the work of colleagues here, always ought to come back to this idea of making health care policy more accessible and affordable. and from now, and i certainly haven't seen this report, i'm not participating in any celebration of people suffering because the co-ops were tied up in a congressionally induced economic straight jacket. thank you, mr. chairman. >> thank you, senator. i'm going to introduce today's witnesses. our first witness is ms. erin bliss, valuation and inspections in the office of inspector general or oig at hss.

ms. bliss has served in many roles at oig since her career began. i think your career began in 2000, if i got it correctly. she started as an analyst for the office of evaluation and inspections and later went on to serve as a senior adviser where she provided management advice and expert analysis to the inspector general and other senior executives on programatic priorities and internal policies and operations. afterwards, she worked from 2009 to 2014 as director of external affairs at oig and was responsible for overseeing and implementing oig's communications strategies and relationship management with the administration. congress, media, the health care industry and providers and the public. ms. bliss received her bachelor's degree in government

from the university of notre dame before receiving her master's degree in public policy from the university of chicago. our second witness is mr. seto bagdoyan, the director with forensics audits and investigative service mission team. during his gao career, mr. bagdoyan has served in a variety of positions, including as legislative adviser in the office of congressional relations and as assistant director for homeland security and justice. mr. bagdoyan has also served on congressional details with the senate finance committee and the house committee on homeland security. we're glad to see you back here again. am i pronouncing that right, bagdoyan? pretty close. okay. that's good. mr. bagdoyan has also held several consultancies in the private sector, including most recently focusing on political

risk and homeland security. he received his bachelor degree in international relations and economic from clairmont mckenna college and an mba in strategy from pepperdine university. want to thank you both for coming. we'll hear the witness testimony in order that they were introduced. so ms. bliss, just please proceed with your five-minute statement. >> thank you. good morning, chairman hatch and other distinguished members of the committee. thank you for the opportunity to testify today about the office of inspector general's case study which examines the management of healthcare.gov. this is the website consumers use to apply for health insurance through the federal marketplace. as is well-known, on october 1st, 2013, the healthcare.gov website failed almost immediately upon launch. yet, within two months, cms had substantially improved the site's performance. how did such a high-priority

project start so poorly and how did cms turn the website around? our case study provides insights into these questions and lessons learned to help healthcare.gov and other federal projects work better. we believe that our assessment of the intersection of technology, policy and management can benefit a broad range of programs. our report chronicles the breakdown and turnaround of healthcare.gov over a five-year period. this morning, i'm summarize the highlights. from the outset, the healthcare.gov project faced a high risk of failure. it was technically complex with a fixed deadline and many uncertainties. still, hhs and cms made many missteps in its implementation. most critical was the absence of clear leadership and overall project responsibility which had ripple effects. policy decisions were delayed

affecting the technical decisions. policy and technical staff were in silos and not well-coordinated and contract management was disjointed. changes to the project were not well-documented and progress not adequately monitored. this culminated in cms not fully communicating or acting upon many warnings of problems before the launch. cms failed to fully grasp the poor status of the build. one reason was that no one had a full view into all of the problems and how they fit together. red flags raised to leadership did not always float a staff working on the build and staff did not always alert leadership to problems on the front lines. cms was unduly optimistic. last-minute attempts to correct problems were rushed and insufficient. in the two months before the launch, cms added twice the staff to the project and cut

many planned website functions. in just 72 hours ahead, cms asked its contractor to double its computing capacity. even with these efforts, the healthcare.gov website experienced major problems within hours of its launch. the website received five times the number of expected users but the problems went beyond capacity. the website entry tool worked poorly and software coding defects caused malfunctions. cms and its contractors did not have coordinated tools to diagnose these problems. however, cms pivoted quickly to make corrections to the website. they brought in additional staff and expertise from across government and the private sector. one key was was creating a badgeless culture where federal employees and contractors worked together as a team. cms designated clear leadership, integrated policy and technical staff and developed redundant

systems to avoid future website problems. cms also took a more realistic approach to building website functions. it practiced what officials called ruthless prioritization, which focused on effectively developing the most critical functions, like re-enrollment and delaying other features. they measured progress and monitored problems to respond more quickly and effectively. these factors contributed to an improved website and important organizational changes. looking ahead, cms continues to face challenges in improving healthcare.gov and managing the federal marketplace. this includes addressing more than 30 recommendations from oig's other federal marketplace reports. we will continue to monitor cms' actions in response to our recommendations and its overall management of this and other programs. thank you again for inviting oig to speak with the committee

today, and i'll be happy to answer your questions. >> thank you so much. mr. bagdoyan, we'll turn to you. >> good morning, chairman hatch, ranking member wyden and members of the committee. i'm pleased to be here today to discuss results from our february 2016 report of controls of aca health care coverage obtained through the federal marketplace during the 2014 open enrollment period. our results are based on extensive forensic analyses of relevant data from cms and other agencies such as ssa, irs and dhs involving originally the entire 2014 applicant and enrollee universe and are independent of the undercover work we performed for that period. a central future of the enrollment controls is the federal data services hub is the primary vehicle for cms to initially check information provided by applicants against various federal data sources. in addition, the aca established

a process to resolve inconsistencies. ie, instances where information doesn't match application sources. in terms of context for our work, coverage offered through the federal marketplace is a significant expenditure for federal government. current levels of coverage involve millions of enrollees of whom about 85% receive subsidies. cbo has subsidy costs at $880 billion for fiscal years 2016 through 2020. i would note while subsidies are paid to insurers and not directly to enrollees, they present a financial benefit to them. as i've stressed before, a program of this scope and scale remains inherently at risk for errors, including improper payments and fraud. accordingly, it is essential that effective enrollment

controls are in place to help narrow the window of opportunity for such risk and safeguard the government's investment. against this backdrop, i'll now discuss our two principle analytical results. first, we found that cms does not track or analyze aggregate outcomes of data hub queries, either extent of which a queries agency delivers information responsive to a request or whether an agency reports that in this regard, for example, we found that ssa could not match 4.3 million queries related to names, dates of birth or social security numbers and 8.2 million queries related to citizenship claims. irs couldn't match queries involving about 31 million people related to income and family size, and within this, 1.3 million people had i.d. theft issues.

and finally, dhs could not match 510,000 queries related to citizenship and immigration status. accordingly, cms foregoes opportunities for gaining valuable insights about significant integrity issues, including vulnerabilities to potential fraud as well as information useful for enhancing overall program management. second, we found that cms didn't have an effective process for resolving inconsistencies for applicants using the federal marketplace. for example, 431,000 applications with about $1.7 billion in associated subsidies still had about 679,000 inconsistencies unresolved as of april 2015. that's four months after the close of the 2014 coverage year. within these, cms didn't resolve

social security number inconsistencies with about 154 million in associated subsidies or incarceration inconsistencies of 22,000 applications with about 68 million in associated subsidies. by leaving inconsistencies unresolved, cms risks granting eligibility to and making subsidy payments on behalf of individuals who are ineligible to enroll in health care plans. according to irs, accurate ssns are vital for income tax compliance and advanced premium tax credits through filing tax returns which is a key back-end control under aca. in closing, our work today collectively shows that cms has assumed a generally passive approach to managing fraud risks in aca, weakening the program's integrity.

accordingly, we continue to underscore that cms needs to make aca program integrity a priority and implement effective controls to help reduce improper payment and fraud risks and preclude them from being embedded early in the program's life cycle. in this regard, we made eight recommendations to cms in our february report which are intended to help mitigate the vulnerabilities and risks we identified. while the agency agreed with the recommendations, it is in incumbent on cms to implement them in a timely fashion and achieve and sustain measurable results. mr. chairman, this concludes my statement. i look forward to the committee's questions, and i appreciate the indulgence for an extra 30 seconds. >> happy to give that you extra time. and ms. bliss, previous reports at the office of inspector general criticized health care and the marketplace describing

important problems with internal controls such as inadequate procedures for checking the eligibility of enroll lees. how does the case study differ from previous reports from inspector general on the same topic? >> thank you for your question, mr. chairman. the case study is one of a dozen report that is oig issued on the federal marketplaces. most of those were more targeted audits or evaluations, examining aspects of eligibility controls, payment accuracy, contracting and security of information. the case study took a different approach and cast a wide lens as cms's management of the project in its entirety from multiple perspectives and over a long period of time in order to glean lessons learned object what went wrong and what went right in an effort to help improve both this health care.gov project and other federal projects moving forward.

>> thank you. sir, your report pointed out the key role played by the, quote, data services hub. unquote. which is the electronic clearinghouse for checking applicant information against federal databases. now, you said that cms needs to make better use of this important enrollment control process. would you explain that a little bit? >> i'd be happy to do that, mr. chairman. basically, the data hub is a key cog, if you will, in the overall control environment for aca. it's up front. it processes a lot of queries for information. a lot of those queries -- all of those queries, are, in fact, not captured for future analysis. we believe that such capture and analysis would provide cms with a lot of insight into potential indicators of improper payments as well as fraud. so, a comprehensive control system would, theoretically,

enable that sort of analysis for the long term, and we do actually have a recommendation to that effect to cms. >> thank you. we've been long told by cms, don't worry, even if there are issues with the wording subsidies, everything eventually gets fixed when people file their income taxes, unquote. but gao found practices that undermine tax compliance. am i right about that? >> yes. a number of the inconsistencies we identified. out of the 431,000, i believe we had about 35,000 that involved tax, or ssn inconsistencies. and according to irs, whom we discussed this at length, they told us that this was not only important for tax compliance purposes but also for the tax reconciliation process to

reconcile the advanced premium tax credits at the end -- this is the third main back end control, if you will, in the overall setup. so, without that information that's accurate and reliable, irs pointed out that their job is made much more difficult to not only do the tax return processing, but also reconcile the subsidies. so, it's a long-term problem if it's not addressed. >> all right. ms. bliss, what are the most important lessons learned from healthcare.gov for the administration? and do you think that the lessons learned from your case study apply to other large programs and projects, whether being planned by the department of health and human services or other government agencies? >> thank you. we certainly do. the intersection between policy, technology and management is not

only essential for healthcare.gov, but we believe these lessons will apply to other federal projects and federal programs. we gleaned ten lessons learned, and i will highlight what i believe to be the three most significant. first is establishing clear leadership. we found that the lack of clear leadership and overall responsibility and clear lines of delegation had ripple effects, caused a number of cascading problems across the project and made problem resolution more difficult. we also found the disconnect between those working on the policy and making decisions and those working on the technical aspects of the project created problems on both sides and delays in policy decision-making compressed an already tight time frame for achieving the technical build successfully. so, better integration across lines of business, policy and technical, as well as across government and contractors through this badgeless culture

are some of the keys we saw to correction and success. and finally, taking a posture of continuous learning, which means being flexible and adaptable, especially with a start-up project like healthcare.gov was. we felt that cms got stuck on an unwinnable path, and it was too late before they realized and tried to make changes. so, keeping that continuous learning posture, being innovative and flexible and constantly monitoring for problems to adjust plans where needed. thank you. >> well, thank you. senator stabenow, we'll turn to you. >> thank you very much, mr. chairman, and welcome and thank you to both of you. ms. bliss, i'm wondering, just yes or no question. based on your case study, do you think that healthcare.gov website should be taken down and completely new website be built?

>> no. >> okay. thank you. like many of my colleagues, we're very frustrated about what happened in the past. clearly, you've laid out the problems with the launch, and i think everyone agrees that there were serious problems with the launch of healthcare.gov, and it created a lot of difficulties. and certainly, for people in michigan to get coverage in 2013. but that's six years ago, and we're now in year three of the affordable care act marketplace operations. and so, when we look at the reports, you know, the report is really looking backwards, and we can agree, problems. the question is moving forward and how do we address the fact that over 20 million people have received health care coverage because of the affordable care act, and literally saving people's lives. that's not just a rhetorical statement. i've talked to people who were able to get surgery or be able

to get care for their children that they've never been able to receive before and save lives. and i think that is a good part of things when we talk about the numbers, you know, real-life experiences of people. the uninsurance rate is the lowest it's ever been. and medicaid expansion has resulted in literally millions of our most vulnerable families receiving the care that they deserve. so, given the fact that the aca's the law of the land, and it's our responsibility to make it better, i first want to say that i hope that all of us will work on how do we make it better. and that's why we appreciate your recommendations as we look forward, not just on this particular website and process, but in others as well. but the question is, how do we make it better. so, it's, we want to make sure that we have quality access to health care for every american, whether it's medicare, medicaid, the children's health program and so on and so on.

so, with that in mind, mr. bagdoyan, let me ask about any other recommendations from a gao standpoint that you haven't already spoken of today on how we can make things better, because frankly, i want the over 20 million people that have health insurance today that didn't have it before and have the peace of mind of going to bed at night to know they're going to be able to take their children to a doctor if they get sick -- i want to keep that. and so -- and i'm hopeful we can even get, you know, as close to zero as possible in terms of the number of people in our country that don't have access -- that have access to health care that, you know, that we can get to zero the number of people who don't. so, i'm interested in your recommendations on how we go forward to work together to make this system work better. >> sure. thank you for your question, senator stabenow. as you mentioned, we operate

under the premise that this is the law on the books, and my charge is to help make it work as intended. with that in mind, our report makes eight specific recommendations. we try not to be too prescriptive to allow cms some latitude to explore various options. however, the key recommendation, i believe, the big-picture recommendation, is for cms to conduct a comprehensive risk assessment of the entire program, sort of top to bottom, and identify the control vulnerabilities and the risks for improper payments and fraud. and in that regard, gao issued in july of 2015 its framework for managing fraud risk in federal programs. so, that's a comprehensive leading practice compilation from the private and public sectors that would provide the agency with quite a solid

roadmap to perform that risk assessment. so, everything should flow from that assessment in terms of the types of actions, policy changes, control improvements and so forth. >> and are you working with cms? what is their reaction on this? are they objecting to that? >> no. i think i should give cms credit that they accepted all eight recommendations, including this one. but as they say, the proof is in the pudding. they need to execute, do so successfully, and then achieve results and sustain them over the long term. this is not a one-and-done proposition by any means. >> sure. but so, just to be clear, you've made the recommendations, they've accepted all eight recommendations, and they're in the process of doing them.

>> that's correct. we had informal discussions as well as the formal letter responding to our recommendations. >> thank you, mr. chairman. >> thank you, mr. chairman. i want to thank our two witnesses. lord knows where we would be if we didn't have gao and inspector generals. the alarming malfeasance and incompetence of the rollout of this plan is just stunning. and here we are, you know, we can't just simply brush it off and say, well, this was a bad start, but everything's going great now. the cost to the taxpayer probably we'll never know. but thank goodness that we have your organizations providing us information and spurring on a seemingly bureaucratic nightmare that exists within the federal government in terms of handling these kinds of programs. anybody in the private sector that had done this would have been bankrupt. investors would have lost all their money. it's just stunning to continue to observe what it takes to get

these agencies to -- i think they're well intended. it's just overwhelmed in terms of the complexity of getting this done. i go to the floor of the senate every week and talk about waste of the week. and mr. bagdoyan -- did i pronounce that right, bagdoyan? i've referenced your name, not as a part of the problem, but as part of the solution. and the information that you've provided here for me continues to stun people when they hear about some of the incompetencies. i was particularly interested because i think it speaks to a bigger problem, was your, what was called the secret shopper, where you deliberately made applications as a test.

you made applications for compliance with the affordable care act and received in subsidies. and 11 of the 12 -- i think my numbers are right -- everything you submitted was fraudulent, but 11 of the 12 were accepted. and even after it was -- even after it was revealed that it was accepted, follow-up phone calls pretending to be that person who is given notice that they were not eligible were accepted. that percentage is pretty high. and if you multiply that out, it just really makes you wonder if just the whole thing wasn't gamed, or at least so intent on providing numbers to make it

look successful that we really weren't getting the information -- the verification that we needed. and then there was the question with cms at one point releasing a statement -- well, we're not in the verification business. i think, basically, on what you've just said, that they are now taking a different stand on that. but i wonder if you could respond to where are we now in terms of verification capacities so that we don't have this fraudulent and wasteful situation moving on?

i'm happy to have either one of you or both of you address that. but this social security -- it just seems easy that, you know, an evaluation of social security numbers to determine their validity would make it fairly easy to make a determination as to whether they qualified or whether they didn't qualify. but then where is cms in terms of putting that process in place, and what is the success to date of that process? >> sure, if i may, ms. bliss, take first crack of that, on that. first, i appreciate the plug on the floor, senator. >> sure. keep sending the stuff, i'll keep going to the floor. >> so, in terms of where cms is with the controls, what we call the control environment, which is a series of controls designed to verify information and identify potential indicators of fraud and so forth. as our undercover work indicated, both for 2014 and 2015 where we were equally successful, there is a semblance of controls in place -- >> a semblance? >> a semblance of controls in place, some basic things in place, like identity-proofing, the document reconciliation

process to clear inconsistencies, for example. but in each case, we were able to work around those reasonably easily and obtain coverage, both for 2014 and 2015. so, the vulnerabilities are still in place. now, with the recommendations we made in this report, actually in late february, we made eight recommendations, as i explained to senator stabenow. the big one is to perform a comprehensive risk assessment. now, that's going to take time, it's going to take time for cms to absorb the results and then craft, hopefully, appropriate solutions for the future. so, this is a long-term proposition. it's not going to be an easy fix. >> well, i think this speaks to the point that we got a bad start and everything's going great right now. everything's not going great right now. there are major -- as you said, this is going to take a long-term effort to try to put

these verification procedures in place and to be able to say that we are successfully avoiding fraud and waste at an inefficiency and taxpayer cost level that is just absolutely astounding. so, due respect to my colleagues, to tout this as something that has happened in the past but is corrected now and we're sailing into the bright future, i think we've got a lot of work to do. thanks, mr. chairman. >> thank you, mr. chairman. and i want to again say that we said the initial rollout was botched and appreciated the inspector general making it clear that a couple months in there was serious progress. so, you all reported that after the first open enrollment you said the agency demonstrated a strong sense of urgency to take

action, accepted new work ®í the healthcare.gov website substantially within two months." i think it'd be helpful, ms. bliss, if you could tell us two things -- what were the operational and strategic changes that were made after that first open, you know, enrollment, and do you feel they're better equipped to deal with the challenge now? >> thank you, ranking member wyden, for that question. as we discussed in the case study, some of the key strategic and operational changes that were made as part of the correction were to, one, establish more clear leadership and designate roles and responsibilities. and this time, they did it in a way that brought together staff and contractors across all of the important business lines that were affected and needed to

be involved in the correction. that included the policy people, the technical, the communications and the contractors all coming together. with the influx of experts from across government and the private sector, there was the potential that it could have become more chaotic, but in fact, we saw that the reverse was true. it was well organized, folks were working together in a badgeless culture as a team, there was better communication, there was better measurement and monitoring of problems and progress in order to apply solutions more quickly and effectively. >> so, in effect, after the first few months, which everybody has acknowledged were not ideal, your characterization was essentially well organized? >> it was much better organized. and they continue to make progress. >> how would you word it? okay, good. mr. bagdoyan, first, i'm probably the biggest users of gao products here in the congress. i so admire the professionalism

of the agency. and i think you heard me say i don't take a back seat to anybody when it comes to cracking down on actual, real-world fraud. and my question to you is, isn't it correct that when you testified before the committee last year, you stated that the secret shopper investigation failed to uncover a single real-world example of fraud? >> yes, that's what i said, senator wyden, and i would also couch that very carefully for you and the committee. the intent of that investigation was not to uncover fraud but to flag control vulnerabilities as well as identify indicators of potential fraud, which i think we did quite successfully. so, i just want to make clear, my charge is not to find fraud.

fraud is determined through a separate criminal proceeding in court to definitively determine that. so, my job, again, is to look for vulnerabilities in controls as well as identify indicators of potential fraud or improper payments. >> so, let's go then from last year when there was not one single, real-world example of fraud to where we are now. is it correct to say that the entire investigation failed to identify any actual fraud? >> well, again, i would refer you to my answer. that was not our intent. so, if i'm not looking for fraud, i'm not going to find it. what i am looking for is vulnerabilities in controls and indicators of potential fraud, such as the inconsistencies with the social security numbers, as well as in the case of the irs, 1.3 million people having potential i.d. theft issues, which is a significant red flag.

>> and i think that as is always the case, you all are right to talk about various issues that ought to be part of the debate. that's not what's going on here. what people are saying is this is fraud. fraud, fraud, fraud. and i appreciate your taking us through this in, i think, better balanced view. ms. bliss, hhs, you all do audits. oig does audits. have you uncovered in connection with this any confirmed cases of fraud? >> no, we have not had any cases that have resulted in criminal convictions or civil settlements to date. we do have a few investigations that are ongoing, and i can't predict what those outcomes will be. >> and you know, look, i don't

know how many times i've said in this committee that when there are big, important issues -- and certainly, the affordable care act is right at the top of it -- we need to work in a bipartisan fashion, and there isn't a program anywhere in government that you can't find opportunities to work together and be bipartisan. i ticked off a number of them -- the chairman and i working together on what i think is the future of the medicare program, chronic care, senator grassley and i finishing what i think is a blockbuster study looking at hepatitis-c, and it raises the question of when we have cures, will people be able to afford them? what i think is important is that to do bipartisan work, we've got to move away from, first the past, because everybody has acknowledged that the first few months were botched. i don't know how many times you can say it, but you all -- and i

read your comment -- after the first few months, you said they had made substantial improvements. i think i can come back to it, and perhaps read it, you know, one more time. "center for medicare services recovered the health care government website for high consumer use within two months." now, that's the new news. that's just a few weeks old. that's the new news. and i want people to hear that and i want people to hear that there were no actual, real-world cases of fraud uncovered. now, one final question, if i might, for you, ms. bliss. do you disagree with the statement that i made with respect to the accomplishments of the affordable care act?

that is not your formal role as inspector general, but does anything strike you as being inaccurate there with respect to the uninsured rate or anything of that nature? >> as an independent oversight agency, we don't take positions on whether particular programs should exist, but we look to make sure they're operating correctly, yes. >> the question was about the facts. and what i think, again, is this is a hard fact that's not in dispute, that the uninsured rate is now at or near the lowest level recorded across five decades of data with about 20 million previously uninsured americans gaining coverage since the act's provisions went into effect.

so, i'll keep the record open so that if you or your agency has any information suggesting that's wrong, i'd sure like to know about it, okay? >> thank you. i don't have any information suggesting that that's wrong. >> wonderful. mr. chairman, thank you. >> senator scott? >> ms. bliss, do you have any information suggesting that those numbers are right? >> i cannot validate those numbers. i don't have any reason to believe they're not. >> but you have no indication either way, actually. >> i have no basis for knowing. >> so, if i tell you the number's 30 million, you have no reason to believe that it's not 30 million. >> i don't have a basis for validating that number. our case study did note -- >> that's great. mr. bagdoyan, our ranking member asked you several questions about fraud, and i certainly understand and appreciate why so many americans look at this process and become disenchanted. your objective was never to

figure out how much fraud was in the system, your objective, it appeared to me, to be to show us how fraud would be -- could happen. is that accurate? >> yeah, essentially, senator, you're correct. the big picture we're looking at is any vulnerabilities in the controls that are in place and also for any indicators of potential fraud that pop up. for example, our ability to circumvent the controls we encountered during our undercover work. we did that for 2014, and we repeated that experience in 2015, which case we were successful 17 out of 18 attempts. now, i would have to caution that, of course, further to the point that senator coates made earlier, that is not a projectable number. >> yes. >> so, we have to be very careful that that doesn't represent the actual universe. that is just a data set that we used to continue our work in this area. >> yes. thank you very much.

no one's going to mistake me for a fan of obamacare or the aca, without any question, for a number of reasons. i'm not a fan of the website nor the actual policy itself, the legislation. i think of the independent payment advisory board, which some have referred to as death panel, the ability to ration care into the future, this is one of the classic examples of why so few americans have the same appreciation that others have talked about of the aca. think about the fact that we're talking about taxing americans, whether it's their income or their profits, an additional 3.8% tax, raising somewhere over $120 billion. another reason why so few americans have the same positive opinion that we've heard from some of our friends on the other side. think about the whole notion of how the health care law is going to regulate the posting of calories at pizza parlors, grocery stores, all over the

place, and by default, increasing the price of these groceries, these pizzas, and other nonfood items. reducing the number of employees' hours, talking about the impact on middle-income america. so many americans losing, perhaps up to 25% of their income because of the aca. we can see why as so many americans have found themselves frustrated with where we are with the aca that it's not old news to them. it's not old news, actually, when you think about the fact that so many americans are facing higher premiums. we've heard so many different numbers this morning. we know that at least some states have seen an increase of more than 25% of their health care cost. two states have seen those numbers go over 35%. those are real dollars for struggling americans who cannot afford the cost of health insurance.

and not only are the premiums higher, the deductibles are higher, the out-of-pocket expenses are higher. the only thing that's actually lower are the doctors to choose from and the hospitals to go to. we've seen a catastrophic occurrence under this health care law. and even at one of the most recent democrat town halls, a young lady who supported president obama, who supports the health care law, said that her premiums have doubled, tripled. her concerns were strong, clear. here's one real case example that ms. bliss, i hope this is no longer happening. a young man named tom duguele from elgin, south carolina, who created an account on healthcare.gov was called shortly thereafter by a man named mr. dugel, from a guy named justin hadley from north

carolina, who had done the exact same thing, gone online to healthcare.gov and created an account. but what he found populating his account was information from mr. dugle. he called hhs and could not get any assistance. finally, they called our office, and during one of the hearings, we were able to get that situation solved, or at least the beginning of that situation solved. can you guarantee me that that situation is no longer occurring anywhere within healthcare.gov? >> i cannot guarantee that. we've overseen and conducted reviews of the controls to ensure that both the website and other parts of the program and e en verification, knowledg verification are working properly, but we have raised concerns about some flaws or weaknesses in those controls, similar to gao, and i can't make that guarantee, but we're certainly working hard to identify where there's a vulnerability of that happening and make recommendations on how to improve it. >> my last question, since i'm out of time so quickly here today, back to you, ms. bliss, is that it appeared that, as we

have celebrated the success of improving the system in the first couple of months, i will note a new $1 trillion program, one of the recommendations was for clear leadership. earth-shattering. thank you. >> senator isakson. >> thank you, mr. chairman, and i apologize for missing your testimony and i apologize for being late, but i do have one question based on a letter that i have sent previously to cms, and i want to ask this question to mr. bagdoyan? is that correct? you agree that increasing the utilization of existing, tested data sources is one easy way that cms can reach the mutual goal of expanding program integrity and management and better access to fraud risk? >> yes, that's, in fact, one of our recommendations to cms is to consider doing that on an active

basis, both to capture the data and then analyze the data for whatever indicators that they may throw off and act upon those, yes. >> then do you have any idea when cms is going to move forward to actually take advantage of that and do it? >> well, as i stated before in response to several senators' questions, cms has accepted those recommendations. they are on record in writing as having done so. and as i said in my opening statement, it is now incumbent on the agency to take action on a timely basis. but as i said, it will take time to work through this. it's not an easy fix, it's not a short-term fix, it's not a one-and-done fix. >> well, i apologize for being late, because obviously, you covered it in your opening statement, but there is readily available data and companies that are available to provide information that are already under contract to cms that could greatly enhance the integrity of the program and uproot fraud a lot easier, and i appreciate your testimony to that effect.

>> yeah, the data are available, definitely. >> thank you. >> thank you, mr. chairman. >> thank you. i want to thank our witnesses for appearing here today. the work that each of you do is very important, as far as we're concerned. you and your organizations, it's vitally important to this committee, and we're thankful for the quality product that both the hhs, oig and you do in oversight efforts. i also want to thank my colleagues in their participation in this hearing. i think the hearing has been insightful, enlightening. unfortunately, i think this hearing further revealed that we are only now getting to the water level of the obamacare iceberg, it seems to me. as premiums continue to skyrocket and insurance options become more and more limited, an increasing number of americans are being, you know, hung out to dry. over the past year, we had a reasonable amount of consensus on several of the unworkable and failed provisions of obamacare, but for some reason, many still

have their heads stuck in the sand, hoping that things will finally start working out at some point. now, i implore my democratic colleagues to work with me and my republican friends to repeal and replace the so-called affordable care act, before it's altogether too late. insurance premiums and health care costs continue to rise, and little's being done to stem the tide. it's high time to put partisan politicking and bickering aside and find workable, bipartisan solution. there's more we can do. there is more we, it seems to me, have to do. and honestly, i earnestly believe that we can do it. the american people deserve better than what they have right now, and more importantly, than what they are about to have in the next few years. so, i encourage each of my colleagues to meet with me and find workable solutions, and i encourage both of you to keep doing the jobs that you're doing. they're very important to this

committee, and i think to our country at large. i would ask that any written questions for the record be submitted by thursday, march 31st of th year. and with that, this hearing will be adjourned. thank you for being here.

tonight on c-span, american highest court. john marshal served for more than 0 years as chief justice of the supreme court. at 9:10 a conversation on the 100th anniversary of service on the supreme court. this evening, bush versus gore case which stopped the florida recount after the 2000 election and made george w bush the nation's 43rd president.

american history tv in prime time tonight on c-span 3. tonight on c-span, the supreme court cases that shaped history with the landmark cases, historic supreme court decisions. our 12-part series explores real life stories and cons tugal dramas behind some of the most significant decisions in american history. >> john marshal said this is different. a constitution is a political document. it sets up the political structures but it is also a law and if it's a law we have courts to tell what it means and that's fine in other branches. >> it what sets it apart is that it is the ultimate anti-precedented case. exactly what you don't want to do. who should make the decisions about the debates? and the supreme court setting said it should make the decisions of the debates.

the supreme law in the united states and affirming of the supreme court's power of the judicial review, tonight at 10:00 eastern on c-span and c-span.org. mike hoover spoke recently about the role of congress. he said congress, not the executive branch, is responsible for what he believes is increased executive power.

just a programming note at the outset. obviously, i'm not bill crystal. unfortunately, he can't make it due to a last-second thing that came up, a funeral for a family friend. and so, you're stuck with me for another 45 minutes. fortunately for you, you have senator lee here to speak to these issues. we have already begun discussing. it is a real pleasure for you to join us here at the hoover

institution. thank you for coming. somebody with the background, not just obviously right now in the senate but your previous work in the judicial branch and the executive branch here. uniquely well positioned to speak to the fundamental issues of separation of powers, executive power and legislative power we have been discussing today. let me just offer a brief introduction as to your work over the years. you have been elected to the united states senate by the people of utah in 2010. and you have been a vocal proponent of restoring congress's attention to the constitution. you have been both in terms of the constitution with limits op federal power generally but also in terms of restoring congress's power in the central role of the national government. you've been a student of the constitution all your life, thanks to your father, assistant attorney general for president reagan. your degree from brigham young university. then twice clerked for justice

alito, first on the third circuit when he was still a judge. now on the u.s. supreme court. senator lee also served as general council to the government of the state of utah and assistant u.s. attorney and in the mold of the late senator moynihan, you're an author. you have already published at least three books. first one on the freedom agenda while a balanced budget amendment is necessarily to restore constitutional government. flaen 2013, why john roberts was wrong about health care. and most recently, our last constitution, the willful sub version of a signing document. you have returned to subject 1 of the article of the constitution with your new article 1 project. we are happy to have you here today to discuss more generally about the constitution separation. [ applause ]

>> as we've been honoring the late justice anthony scalia, i'm continually reminded that a number of circumstances when i heard justice scalia speak about the constitution. one of the things he liked to say in part because it was provocative, it got people thinking, was that of all the provisions that are in the constitution that are important, he didn't necessarily think of the bill of rights first. he said, i love the bill of rights. we need to enforce the bill of rights. but, and this is his term, not mine, but any ten-horn dictator around the world could have a bill of rights. and that bill of rights may or may not mean anything depending or not what structural is built in the constitution. there are structures built into the constitution that are probably as important as if not more important than anything else in there. the protection that we call federalism and horizontal

protection we call separation of powers. the horizontal one, that i want to discuss tonight and it is the primary focus of the article 1 project that i saw helps to start in congress. a book i came out with called lost constitution, all 12 people who have read that book enjoyed it. and you could be the 13th and congress relinquished its authority. members of congress like to speak of themselves as though they were somehow victims. of an overbearing state and executive branch run amok that is beating up on the poor old

congress. when in reality congress is the perpetrator, not the victim pf congress has voluntarily done this, done it to itself over the last eight decades. and it has done so steadily it has done so with the understanding that every time it relinquishesity law-making power, it becomes less for the people. it is bad in every single respect imaginable and every policy respect and constitutional respect. it is good for only one thing. which is facilitating the perpetual reelection of as many members of congress, both houses, beth parties as possible. this is the only respect in which you can defend it. and yet this is not a good constitutional reason nor is it a good policy reason. i keep two stacks of documents in my office. one is a if you inches tall and few inches long.

it is 80,000 pages long, in one two. laws passed by congress last year, the long stat is 11 foot tall, 80,000 page-long stack consists of last year's federal registrar, the aaccumulative index as all regulations proposed, notice and comment and later for finalization. a significant portion of that 80,000-page stack consists of legally binding documents. for all intents and purposes, those are laws. but laws put in place not by elected senators, but instead by executive branch bureaucrats who have never stand for election. i want to make one thing clear at the outset of my remarks, in a addition to the fact i blame congress as the culprit and not the executive branch, i want to make very clear that i'm also not trying to disparage the well-intentioned and generally highly-specialized men and women

that work within the bureaucracies. they are just doing their job. i think some of them come out with policies that are horrible, policies that make your nation weak are or less powerful or less fair. but they are more or less doing the job given to them by congress. this true think is a problem that congress created and congress has to fix. one of the reasons why i joined together with congressman jeb hencerling and we put together an eternal think tank in congress consisting of ten members, with the senate and eight members of the house of representatives including very louder cynthia and a handful of others. and with the idea of helping congress to reclaim and begin to exercise anew, its legislative power, it is no accident that

first section of the first article of the constitution reads quite simply all legislative powers here shall be vested in congress which shall consist of senate and house of representatives. that that power, power to make policy, to establish rules, in the force of applicable law to be exercised by anyone not elected. so our think tank is there to come up with ways to land regulatory power, legislative power of congress, to limit executive discretion, reclaim the power of the purse and to end the practice of government yearning by cliffs and all share commonalities and all of which have a steady dem nugs of this horizontal separation of powers that we have in place and we need to follow. so of the four parts of the article, those in terms of a first i'd like to begin with the very beginning which is james

madison who we spent a lot of time discussing in the previous panel, said in federal 10 legislative department is everywhere extending its fear of activity and drawing all power into its impettus vortex. that is no longer the case or your argument, that has caused this change that you now have to stand up and stand up for congress again as congress. instead of the scenario, the founder sphere, which is congress standing up too much and pushing too hard against the other branches of government. >> it is as though the polarity has been switched suns the time madison was federalist 10. and i believe you wrote something about this a couple of years ago. talking about how congress now has an incentive and has reacted to the incentive. to not only accumulate more power, to accrue more power to itself or get rid of it as much as possible, to not exercise

that power. for the simple reason it tends to be a political insulator. we don't exercise the law making power. we can pass it along to somebody else. imagine a hypothetical or not so hypothetical scenario where congress passes a law or considers a law that says we shall have clean air. what idiot will vote against that? everyone wants clean air. they want to breath clean air. they understand that clean air or dirty air moves from one state to another. that there is very much an interstate channel through which pollution travels. and so this is not an inappropriate exercise of congress's power to legislate in this area. and yet, when you look at the fine print of a bill like that, if the fine print says and we here by delegate by the epa the task of defining clean air and pollution and the task of coming up with penalties that will be imposed upon polluters, and

filling in basically every other detail behind that law, you're going to have a few interesting things happen. number one, people at epa will not write the same laws that members of congress will write. and i don't care if it is run by democrats or republicans. i don't care if it is epa running under the leadership of the democratic or republican. an elected representative institution, congress, and the other is not. and so when that happens you have this odd feeling that occurs where members of the public will come into congress and say, look, just to cite one example, epa now fe fined, come up with an earlier rule that set the ozone limits below the naturally occurring ambient ozone levels in many parts of the country. in many parts of my state. we have ozone. that as it exists in the state

of nature is higher than where epa set the limit. and the people say this makes no sense. and members of congress say oh, i agree with you. barbarians at epa. you know what i'm going to do? write a harshly-worded letter and that's about the end of it. we will write to one of the four pillars with the problem of regulation. and there's two parts to it. the substance which you just set, delegation of powers and also the procedural side of things. the way that congress makes sure, agencies feels about its work. and both parts of what you have been focussing on. are you focussing first and foremost of the substantive side of the delegations? >> we are focused on both of them. there are two sides of the same coin. you can't really address one without the other and they both need to be addressed. and so yeah we are focussing on both of them at the same time. >> so if the idea as to

substantive draws back the delegations -- >> yes. to drive back delegations and it take care in the future additional attempts to delegate legislative power. need to be handled diligently. i talk about this in my book that james landis, one of the members of fdr's brain trust, with the original regulatory system, he recommended at the outset, that mr. president in order to make this work and in order to have it function properly under the constitutional system, these regulations, carry the force of law, really need to be run back through congress, treated by legislative proposals. passed by congress and sign need law by president. if you do it that way we will be following constitutional order. somehow either fdr never got the memo or never internalized the

memo but it never happened. they didn't start this with the legislative veto and said rather than having to go through the whole process again, let's make it so certain regulations can be validated by an act of congress alone. without submitting that act for signature or veto. this requires a lot of popularity between the 1930s and mid 1980s. the reagan administration said, this isn't quite right, something is wrong. it was challenged and supreme court agreed and in the mid 1980s the supreme court concluded that that violated a presentment clause. a lot of people would have predicted at that time and did predict, that this successful delegation would stop. after all, congress wouldn't be so crazy as it delegate the power without having the last word. without reserving to itself the ability to delegation.

but that didn't happen. quite the opposite happened. we went on a frenzy after that. i say we, i was in junior high when it was decided but congress is an institution. went on a feeding frenzy. continued as if nothing happened. if anything, it was accelerated. so what we need to do is go back and pass the rain act, a legislative proposal that's passed by the house every year for last four or five years in a row that says simply any time there's a new regulation that amounts it a major rule, because of the fact that it has a significant economic impact is measured by omv, that would be treated as a legislative proposal. it would be treated as a bill. and fast-tracked through congress and only after that, that proposal had been enacted by congress and sign need law by the president, could it become

law. that's one of the first orders of business. we want to fine tune that and make sure it does it the same way. we also need some type of regulatory budget legislation. so that we can look at the aggregate compliance in the country and put it in a box so that it can't exceed the volume of that box. in other words, when i was in law school, i was shocked to discover that federal regulations were costing americans $300 billion a year. that's $300 billion i learned that was being paid by america's poor middle class. like a back door in tax that nobody sees the bill for. now that number is up to $2 trillion. disproportionately affecting america's middle class. paying higher prices on goods and services and underemployment. not everybody is aware of that. that number is expanding.

we run budget legislation putting limits on how much we can -- how many regulatory compliance costs we can subject on the american economy. so when you add new regulation you have to take something else out. >> and related to this regulation as another pillar of the article is executive discretion more generally. and you want people in congress to be aware of the problem and we hand of a to the executive

branch. and secretary of health and human services and have pilot to make rules of x, y or z and we are making determinations of themselves. >> the statute fess they currently exist, this is called chevron for the courts that give significant to the agency's interpretation of the law as long as it is reasonable. it is hard for it not to be reasonable. >> in looking that the and one of the things that will be addressing through the article 1 project is the need for a legislative change, legislative modification to in fact an abandonment of the chevron

standard. look, this was a -- this was created at a whole cloth within the judiciary. there was no reason, no good reason, no reason that makes sense on this planet, why the courts should defer to an agency's interpretation of congress's legislative language given that agency power to act. and talk about have handing the keyes to the hen house over to the fox. this makes no sense. there's nothing in the apa that requires it or nothing in@a that allows it. that's one of the reasons by statute we need to get rid of chevron deference. it never made sense and doesn't today. >> i feel like i have to ask one more question about it. one of the justifications for the time was at least the agencies have some sort of

democratic accountability through the president. right? where as the courts when they are sitting in and interpreting these laws themselves there are unelected judges. that's at least one justification for it. but and that justification fails when you yield back the logical layers of it which aren't that deep. this is what courts do. those are the tools that i have. courts don't have a lot of other things. they don't have political accountability. one of the reasons they don't have political accountability is they have one task. which is to read the law and tell us what it means when two or more parties can't agree as to the law's meaning p. that's what they're there to do. so this really grew out of, i don't want it say laziness, because i respect our federal judiciary. we have our federal judiciary

despite faults that we can point to, is the of the world. it would stack up against in th certainly against the legal system of any in the world. and yet this one makes no sense. it makes no sense that the courts that have the interpretive tools at their disposal and know how to construe statutes should just say, you know what we're going to do? we're going to defer to this agency because after all, they should be in control of their own interpretation of their own statute that they are interpreting, that they are enforcing, and that they're using as a base from which to launch an independent legislative effort. >> now, separate from the work of writing the laws, congress's other primary constitutional task is to hold the power of the purse. and that's an issue we talked a

lot about in the previous discussion. especially james madison, the last quote, we've quoted a lot of madison today. his quote, this power over the purse may, in fact, be regarded as the most complete and effectual weapon with which any constitution can arm the immediate representatives of the people for obtaining the redress of every grievance. they saw this from the very beginning, but that process has broken down in recent years, right. and there was the question during the previous discussion about congress even giving away its power of the purse effectively to the agencies, allowing them to fund themselves. what is your project seen in that issue, appropriations? >> so just as on the legislative side of things and the policy-making and nonbudgetary side of things, congress does need to reclaim its power of the purse, its spending power. madison was absolutely right when he wrote that in federalist 58. and what was true when he wrote

those words remains true today, that this is the greatest weapon that the people have against encroachment by the government against the people. but it has to actually be exercised. you have to invoke -- you have to do it in order for it to work. in the same sense that if you don't use the brakes in your car, it will not stop. if congress doesn't pull on the reins when it comes to spending, that power will be rendered sort of like the appendix. and so we have to start doing it. in order for that to work, we've got to reform the way we spend and we've got to stop governing by cliff. one of the sad things that i've seen happen over the last few years is that congress has tended to push all spending decisions into a single bill. sometimes we call it an omnibus. sometimes we call it a

continuing resolution. there are significant differences between the two. but i find that when i tried to explain the difference between a continuing resolution and an omnibus, most people stop listening to me, and they get very bored. but when all spending decisions are put into a single bill, when spending that has been authorized by the money that's been appropriated for the previous fiscal year is about to expire and then somebody rolls out a 2,242-page omnibus spending bill 48 hours before that funding stream is going to expire, and then members of congress are told you've got a binary choice. you can vote for this and everything in it, over a trillion dollars, 2,242 pages long, and by the way, you won't have any opportunity to amend it, to improve it, or even adequately to read it.

but you'll have that warm, fuzzy feeling from knowing that you kept government funding. or alternatively if you want to be a jerk, you can vote against it and risk shutting down the government. that is a very horrible way to run a government, especially a government that is supposed to be government in a free republic, a free republic can't operate as a free republic unless the elected representatives of the people in a free republic actually have some say in it. they don't have any meaningful say in it when it runs like that. >> so what's the alternative? >> the alternative is to put forth legislation much earlier in the year long before the cliff arises so that meaningful debate and discussion can happen. now, there are those who insist upon the absolute need to have at least 12 spending bills put forward and passed independently. i don't dispute that we would be better off having a dozen or

even more separate spending bills. come up for consideration and passed and debated and discussed independently. that is, after all, what the budget act contemplates and requires. we typically don't do that. we haven't done that in many years. it just hasn't worked that way. but that part of it is not in the constitution. that part of it was not written either on parchment in 1787 nor was it carved into stone tablets and handed down on mount sinai. that part of it is something that people came up with in the early 1970s. it is what it is. far more important to me than having, whether you have a dozen or 112 or 150 or 200 separate spending bills or just one spending bill, far more important to me is the amount of time that we spend debating, discussing, improving and amending that legislation. that's what allows the people to

have input into the spending process, and that's where it needs to happen. i would much rather have one spending bill with a very lengthy amendment and debate process than i would a dozen or even 100 spending bills that are not adequately debated and subject to amendment. >> now, in the previous discussion, you've touched on a point that i thought was very smart. this point that a lot of the problems we see in the growth of executive power are actually really just rooted in or exacerbated by the growth of federal powers, generally. before you were talking about the problem of administration and congress's lack of authority relative to the president. you spoke at length and wrote at length about federalism more generally. how does that fit into this new article 1 project? >> it always makes me really happy whenever i can merge a discussion of the dilution and the erosion of the horizontal protection that we call separation of powers, with the

erosion of the vertical protection that we call federalism. they really are connected. the fact is, the federal government is doing too many things that it was never intended to do. and i don't mean this to be a politically charged statement. in fact, it is not. this is an issue that in and of itself is neither liberal nor conservative. it's neither republican nor democratic. this is a simple point that the founding fathers understood that there was a distinction between purely local activities even purely local activities that were economic in nature that had an impact on interstate commerce and activities that are themselves interstate and economic. we have lost that. i think one of the most pivotal moments in american history, when the constitution was changed in a very dramatic way, was not the moment when any of our 27 amendments were drafted or proposed by congress or ratified by the states. it was instead on april 12th,

1937, which as i explained in my book is the day the supreme court decided seminal case of nlrb versus jones steel. this is when congress started shifting toward a commerce clause which is essentially open-ended. an interpretation of the commerce clause fully embraced and evolved within five years after that in another case called liquor v. fillborn. regulating channels and instrumentalities in interstate commerce and objects moving in interstate commercial transactions. congress may also regulate any and every activity that when measured in the aggregate has a substantial effect on interstate commerce. it is fair to say that under this standard virtually every aspect of human existence, virtually every human activity may be regulated properly at the federal level. so how does this relate to the horizontal separation of powers? well, it does precisely because when we load too many things onto the federal government, we make it virtually impossible

that one legislative body, and for that matter one executive, but especially one legislative body can effectively manage and oversee all of the machinery that goes into that. it just isn't humanly possible. and so unless we are to become comfortable as a society with the notion that we will just outsource all of this to experts, experts in washington, d.c., experts who are neither elected nor accountable really to anyone who is elected, if we're honest about how it really works. then this is never going to work. unless we follow the vertical protection and consider ourselves bound by it, we will never fully be able to restore the horizontal protections. >> that's an argument that will resonate among conservatives and libertarians and those who share your criticism of those new deal era commerce clause interpretations. but what does the reassertion of congressional power over executive power, what does that sort of -- what's the benefit there for those who wouldn't agree with the premise that

federal government is too large? how does the article i project speak to those on, say the left side of the political aisle? >> okay. that one's easy. i thought you were going to ask me the question of how you make federalism sexy for liberals, and i'm happy to answer that one, too, if you want me to get there. but the question you have asked me is even easier to answer. if you are a liberal or if you aren't, imagine that you are for a moment. if you are a liberal or can imagine that you are one, perhaps you're very content right now with the fact that you've got someone most would regard as a pretty progressive democratic president. a few years from now, a few months from now, that might no longer be the case. we might have someone in the white house who was a republican, perhaps even a very conservative republican. and at that point, you might be concerned with the way that president might act. you might see that president

pushing through the administrative machinery a whole lot of changes to the law. and as long as that president goes through the motions, follows the apa and otherwise dots the right "is" and crosses the right "ts," then that president is going to almost single-handedly change a whole lot in the law. you don't really want that, do you? and in fact, the branch of the federal government that is most accountable to the people, the most regular intervals is congress. wouldn't you really want that protection there? i mean, this one really is not politically charged. it shouldn't be. and i actually expect that the moment we have a republican president, worry going to see a huge shift. you're going to see a whole lot of democrats get on board with the raines act. the raines act was introduced for the first time just a few years ago, about the time i was elected to the senate, either just before or just after. i'm an arge co-sponsor of it in

the senate. it has enjoyed very little democratic support. i predict right now that that will change as of january 20th of next year, if, in fact, a republican president is elected. can i get to the federalism part? i'll be brief. this one's -- this one's not always as obvious, but i still think there is a compelling case to be made. and even if you are a liberal, let's say you're a very progressive democrat. maybe you have a much broader vision of what the role of government is. a vision that is far broader than your conservative or libertarian friends might be willing to embrace. perhaps you believe that the best kind of health care system is a single-payer government-run health care system. there are states in the country where that is the majority view. i'm told, for example, that in vermont, most of the people and most of the people's elected representatives in their state legislature are firmly of that view. but for the fact that we've completely neglected federalism

as a constitutional mandate, a state like vermont would be much more capable of setting up its own single-payer government-run, government-funded health care system entirely within the state. it's almost impossible to do that given how heavily invested and heavily involved the federal government is in the health care system. and so that makes it almost impossible for a state like vermont to experiment with something like that. if they want to move in that direction, they ought to be able to. and there are lots of other examples that we could point to. >> we have a few more minutes and i just have a couple more questions for you. thank you very much for your time. nature reports a vacuum, and it's often been said that the reason why this particular administration has sort of jumped in with policies without congressional action is that the administration is acting where congress wouldn't. and so i'm curious, to what extent would reassertion of congressional power require

congress to set aside things like the filibuster or other procedural constraints that delay or prevent congress's own action? >> yeah, i don't -- i don't accept the premise that congressional inaction is brought about by procedural protections like the filibuster. that's there to ensure open, robust debate to the extent we follow it, it enhances debate and discussion in the senate. it doesn't allow it to be chilled. and i think the people as a whole benefit from it. the fact that there is congressional inaction on a lot of things has a lot to do with the fact that there isn't adequate consensus on a whole lot of issues and that the trust between the white house and the capitol has broken down. but as much as anything, i think it has to do with the fact that we've made it very possible.

in fact, we've made it very easy for the president to act this way. i don't like it one bit when we have a president saying, you know, i've got a pen and i've got a cell phone and i can change the law as i want. i'm paraphrasing there, particularly with the end of that. but in a sense, we've kind of opened the door for that by passing laws over the course of many decades, giving the president and giving officials within the executive branch an enormous amount of discretion, by passing laws that aren't really laws but are mere aspirational statements. and that creates a big problem. but no, i wouldn't blame this on things like the filibuster. i don't think that's what this is about. >> now, in addition to the writing of laws and the power of the purse, congress's other -- the senate's other main tool is

its role in appointments. and obviously this is going to be quite a year in that respect, at least with respect to the supreme court. i've seen you write recently on the senate's role in the supreme court confirmation process. and i'm just curious if you could sort of give your vision of what a robust congressional role in the appointments process looks like. >> it's important to remember that this is a shared power. this is not a system in which the president has the power to nominate someone, and that person gets appointed unless congress vetoes it. that kind of model was proposed at the constitutional convention. and it was rejected. in fact, during much of the deliberation during the summer of 1787, the thought was that

the senate itself would have the appointment power, that it would belong to the senate. ultimately, what was adopted was something that was based, i believe, on the massachusetts constitution of 1780 in which it really was a shared power, so the president has the power to nominate, and if the senate gives its advice and consent, then the president may appoint people to those positions. there's nothing in there that requires us to act within a particular time frame or to act at all. this is a contingent power, in other words, the power to appoint contemplates not only nomination but also confirmation. without both of those two things, neither of which can be deemed guaranteed with respect to any individual with respect to either the president or the senate. you do not have appointment.

and so this is one of the many reasons why i think this part of it really is up to the senate. i understand that not everyone is pleased with the way we choose to exercise our power when it comes to advice and conse consent, but i respectfully but strongly disagree with them when they say that we are somehow subverting the constitution by making a choice not to process a particular nomination. >> now, hopefully the conversation can continue when we move on to the refreshments afterwards. i do have one last question. and in a sense, this is a little bit biographical for you. some of the things we've discussed today, the growth of executive power, the role of chevr chevron deference, the presidents' role over the agencies, a lot of these were

accomplishments of republican administrations, especially the reagan administration. and so what would you say to your fellow conservatives who are now looking at sort of the end point of some of these accomplishments, right? maybe this pendulum has swung too far in one direction and it's time to reverse course the other way. i mean, many conservatives, including those who lived through a lot of those battles in the '80s and afterwards, in some ways you're asking them to reverse course slightly or reconsider some of the implications of their accomplishments. what would you say to conservatives who are looking at reforming the achievements of past conservatives? >> i don't view it that way. i don't believe i'm proposing anything that undoes anything accomplished by the reagan administration. i mean, yeah, the reagan administration did push back in response to what it perceived in many instances appropriately perceived as encroachment by the legislative branch on its

domain. and yeah, this thing can go both ways. it was a bold move by the reagan administration, for example, to file suit or to take the position it did, rather, in ins v.chata. jogdish rai chata was a kenyan of indian descent whose stay of deportation granted by the attorney general had been itself subject to a legislative veto within congress. and ordinarily it would have been the job of the justice department to defend the congressional -- the act of congress that was the subject of this challenge. ordinarily that is what the justice department does and when it gets to the supreme court, it's the job of the solicitor general to defend the constitutionality of that law.

but that that krcase, the reaga administration decided to act boldly and take the unusual step of saying we agree. this is uninstitutional. congress shouldn't have and it doesn't have, consistent with the presentiment clause of article i, section 7, the power unilaterally to undo that bell which has been rung by the executive branch agency. they were writing a constitutional wrong. and there's nothing about this that undoes that. nor is there anything about this that undoes another executive branch theory that's popular among conservatives which involves the unitary executive theory. the idea that the executive branch as a whole does need to be is properly under the control of the president of the united states. it's what the executive branch is. it's an extension of the president. there's nothing about this that is inconsistent with that either. >> do you have another book in mind?

>> you know, one of these days my wife tells me i need to write a book about vampires or something that people -- >> another book about bureaucracy. >> yeah, exactly. when i decided to write our lost constitution, she questioned whether a book about article i was really going to sell. and she was right. >> well, thank you very much for your time. this has been very enjoyable. thank you.

tonight on c-span, a discussion about emerging infectious diseases and potential new pandemics. author sonja shaw discusses her new book "pandemic." >> in addition to crowding her people together, we're also crowding our animals together. we have more animals under domestication right now than in the last 10,000 years of domestication until 1960 combined. huge numbers of livestock that we're keeping right now. and many of them live in these factory farms. we have a million or more individuals crowded together. so they're basically the animal equivalent of urban slums. and this similarly allows pathogens to amplify and change

in ways that can make them more virulent. one example of that is avian influenza. avian influenza virus normally live in water fowl, they don't really make those birds very sick. but when those viruses drop into these factory farms where all these captive animals are crowded together, they start to change, and they replicate and mutate because that's what viruses do, and they become more virulent. and so we've had an increasing problem with these more virulent forms of avian influenza. and some of them have even evolved in ways that can affect humans. >> you can watch the entire discussion on emerging infectious diseases tonight on c-span at 8:00 p.m. eastern. and then at 10:00, c-span's landmark cases series. tonight, marbury versus madison. the 1803 ruling found the supreme court has the power of judicial review, allowing it to invalidate acts of other bran of mentf they >> im a hiyf.ution.

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obm t coagwh e wee t dso o i d,f ur, 'sota o. su tua, e pame ohola ecitansoor >>i pria y sin enunrdit bedn gevit. i embeal w llwacoanr sth legtabt ist atwe dhenfmaweou e istu cinov. wjuadtia res ierctt. ansoi eayppcie ur utng fusn is cae a -yokn, too e rkn e rentn d eaen ' fngn ha t e teonou b y gnict cae so see rhtow an tt t st dls w tt es newos e edo afc t.d trostanotrs sit iorntorur hoeld cutyasel enn, foow e thg cath ,ouno kd erivtoeeou

pacaci bldg efrtinegn inan nho aquel a beau,oun eay,e n'do d'ttoo a d e veme tt me dhebif he t suorthrd eor gatislsanmptaarofhi a y. > anirn. fisti'li soat ys t esio a coen osetoseio. thk e eaf ve a -rgetregfo wi mdlea a vle hasms s iorntprec meanth sulbe te mehsi. iul iol t mli wod,racotrndth ntes iomndheenoro bngg atp. i'd like to go back to the budget and pull back a bit. we're facing a series of challenges. the one is a huge debt. now approaching $19 trillion that we're passing on to our children that i think is utterly irresponsible. the second is what i call the interest time bomb.

right now we're in never neverland of low interest rates. it's very unusual. if interest rates return to 5%, kind of average over many years, just interest on that national debt will be almost equal to the entire discretionary budget today. $950 billion. way more than the entire defense budget. just the increase from 2% to 5% would almost equal the defense budget. that's money that's got to be paid, and that's an impending disaster out there. the third fact is that all of our discussions here today and in the other committees about the nondefense discretionary budget, the total of what we're talking about is a little over 20% of the total federal budget. 50% is mandatory expenditures, which is being driven largely by demographics. we're all getting older. and health care expenses.

and then, another 25% to almost 30% is tax expenditures. which are rarely discussed but which now exceed the entire revenues of the discretionary budget, over $1 trillion a year. so we're trying to solve a huge problem looking at only one piece of it. it's as if you had a big problem in your family budget and you said, we're going to solve this whole problem just by focusing on our electric bill. and that's where we are. and if you trend the lines out, we're already at the lowest point in 70 years in defense spending as a percentage of gdp. we're at the lowest point in 70 years as nondefense discretion. and we're struggling within this box that was created in 2011 to try to solve a problem that we can't solve within that -- within that space of that 21% of the overall federal budget. so it seems to me that you're doing a mighty job of working

within the constraints. but if we don't go back and revisit the decisions of 2011, particularly in light of the reality of the world that we face today, we're facing a long-term catastrophe. i mean, you're a student of long-term federal budget. is this an accurate assessment, mr. secretary? >> it is. and it's -- i say it again this year. i said it at -- when i presented the budget last year, when i became secretary of defense. that's not something we can solve in defense. but we observe it. >> but we're trying -- we're being forced to try to. that's what bothers -- >> you're exactly right. and we're trying to solve an entire problem on the back of discretionary spending. and it's not enough. and it's not sustainable. now, all those other parts of the budget have to be in the picture. i understand that. i think that is what is