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Sebelius Testifies in House on ObamaCare Web Site; Discussion of the Hearing; Interview with Rep. Lee Terry and Rep. Peter Welch

Aired October 30, 2013 - 12:30   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

KATHLEEN SEBELIUS, HHS SECRETARY: Policies will cover maternity coverage for the young and healthy.

ELLMERS: Including men.

SEBELIUS: Under 30-year-olds will have a choice also of a catastrophic plan which has no maternity coverage.

ELLMERS: The catastrophic, but the men are required to purchase maternity...

(CROSSTALK)

SEBELIUS: Well, an insurance policy has a series of benefits whether you use them or not. And one of the benefits will be maternity coverage, mental health coverage...

(CROSSTALK)

ELLMERS: And that is why the health care premiums are increasing because we're forcing them to buy things that they will never need.

Thank you, Madam Chairman.

SEBELIUS: The individual policies cover families. Men often do need maternity coverage for their spouses and for their families. Yes.

ELLMERS: Single male, age 32, does not need maternity coverage. To the best of your knowledge...

(CROSSTALK)

ELLMERS: ... has a man ever delivered a baby?

UPTON: The gentlelady's time has expired.

(LAUGHTER)

The gentlelady, Ms. Cathy McMorris Rodgers?

MCMORRIS RODGERS: Thank you, Mr. Chairman.

And Madam Secretary, you know, although we were told repeatedly that if you liked your health insurance plan, you'd be able to keep it. We're now being told by the government that they have determined many existing plans to be lousy, sub-par.

In reality, this law is becoming quickly less about helping Americans purchase affordable coverage and more about compelling millions of Americans into a struggling Medicaid program.

In my home state of Washington, 90 percent of enrollees will be in Medicaid; 16,000 of them coming into a program that they were already eligible for; Colorado, 89 percent; Kentucky, two-thirds; Maryland, 97 percent. And this is -- these are states that are already struggling with their budgets, wondering how they're going to cover Medicaid, which is, as we all know, for the most vulnerable population.

So isn't it true that in states like Washington, they're going to have new, unexpected costs associated with a dramatic influx into Medicaid?

SEBELIUS: Well, Congresswoman, the Medicaid expansion provision of the Affordable Care Act is...

MCMORRIS RODGERS: Could you -- are states going to face new costs...

(CROSSTALK)

SEBELIUS: Federal government pays 100 percent of the costs of newly insured for the first three years, and gradually reduces...

(CROSSTALK) MCMORRIS RODGERS: These are existing -- these were people that were already eligible. And we know that two out of three doctors don't accept new Medicaid patients. We know that current provider rates are going to drop at the end of 2014. So isn't it true that existing Medicare -- Medicaid enrollees are going to further compete for scarce resources in these states?

SEBELIUS: If the citizens of Washington who are signing up were eligible for Medicaid, they certainly will be entitled to enroll in Medicaid now. The newly insured will be fully paid for. The doctors have additional...

(CROSSTALK)

MCMORRIS RODGERS: I'm concerned that the most vulnerable in this country are going to lack access to the care that they think they're going to receive. And I know time is short...

(CROSSTALK)

SEBELIUS: Well, I think that's absolutely true. And in states that are choosing not to expand Medicaid, it's particularly dire. So I would love to work with you on that...

(CROSSTALK)

MCMORRIS: It's existing Medicaid. Finally, I just wanted to inform the secretary, you told us several hours ago when the hearing started, that the website was down. If you look at the screen several hours later, healthcare.gov is still down. You promised the system would be ready on October 1st. You're clearly wrong. So before I leave you today, I would just impress upon you this is more than a broken website. This is a broken law. Millions of Americans are getting notices their plans are being canceled.

(CROSSTALK)

UPTON: The gentlelady's time is expired.

I just -- I would do a couple of things here. First, I'm going to ask unanimous consent that the written opening statements for any member on the committee be introduced into the record. And without objection, the documents will be there.

I also would ask unanimous consent to put the document binder and other documents presented to the secretary during questioning into the record. Without objection, so ordered.

Let me just say in conclusion, we do look forward to having you back in December to get an update on where we are. And we'll work with your schedule to find a right time and date early that -- that week.

I want you to know we're going to want real numbers. You'll have them by then. Is that right, in terms of the signup? You'll have them in the next couple of weeks.

SEBELIUS: That's correct. We'll have them by mid-November.

UPTON: We look forward to getting those done.

We appreciate -- we really do appreciate your time this morning to take questions. I apologize to all the members who we had to shorten the time, but those things happen when we have this much interest. And we look forward to continuing to get an update and look for your continued work.

WAXMAN: Mr. Chairman?

UPTON: Yes?

WAXMAN: From our side of the aisle, we want to work with you. And I would hope on the other side of the aisle, they would take that same approach. Let's do something constructive, not just negative attacks against a bill that I think is going to be a God-send for millions of Americans.

Thank you for being here.

SEBELIUS: Thank you.

UPTON: Thank you.

The hearing is adjourned.

WOLF BLITZER, CNN ANCHOR: All right, so there you have it.

Three and a half hours of testimony, Kathleen Sebelius, clearly in the hot seat today, testifying before the House energy and commerce committee, Fred Upton, the chairman, Henry Waxman, the ranking Democrat, two very, very different approaches to the healthcare reform law, the Affordable Care Act, or ObamaCare as it's called, the Democrats almost to a person supported it, the Republicans almost to a person opposed it, tough questions for Kathleen Sebelius.

She did make some important news in the course of these three and a half hours. She made it clear that, yes, there may be some security problems.

Mike Rogers, the chairman of the House intelligence committee, is a member of this committee, as well. He raised all sorts of issues.

Joe Johns is here. We're going to talk about that in a moment.

She repeatedly insisted the system has not yet -- has not formally crashed, even though the system is down right now. It's been down now for many hours.

Here are some of the highlights what we heard over the past three and a half hours.

(BEGIN VIDEO CLIP)

KATHLEEN SEBELIUS, HEALTH AND HUMAN SERVICES SECRETARY: I am as frustrated and angry as anyone with the flawed launch of healthcare.gov, so let me say directly to these Americans, you deserve better. I apologize.

(END VIDEO CLIP)

BLITZER: All right, so we've got -- that's just for starters. It's been going on, as I said, for three and a half hours, an extraordinary amount of testimony.

She answered all of the questions. She was pretty blunt. She was pretty direct. A lot of it got very, very testy, Kathleen Sebelius clearly in the hot seat.

Some of those Republicans very angry at her for what unfolded. In fact, there were some blistering questions as far as the Affordable Care Act is concerned.

Listen to a bit more of the highlights.

(BEGIN VIDEO CLIP)

REPRESENTATIVE MARSHA BLACKBURN (R), TENNESSEE: This is what is happening right now with this Web site. It is down. It is not working.

What is your cost estimate?

SEBELIUS: So far, Congresswoman, we have spent about $11 million on the Web site itself, and about $56 million has been expended on other i.t. to support the Web.

BLACKBURN: Who is responsible for overseeing this project? Is it you or your designee?

SEBELIUS: Let me be clear. I'm not pointing fingers at Verizon. I'm trying to explain the way the site operates.

We are -- we own the site. The site has had serious problems.

BLACKBURN: At that team, who is the individual.

SEBELIUS: Michelle Snyder is the --

BLACKBURN: Michelle Snyder is the one responsible for this debacle?

SEBELIUS: Hold me accountable for the debacle.

BLACKBURN: OK.

SEBELIUS: I'm responsible.

REPRESENTATIVE JOE BARTON (R), ENERGY AND COMMERCE COMMITTEE: There is a famous movie called "The Wizard of Oz," and in "The Wizard of Oz," there's a great line.

Dorothy at some point in the movie turns to her little dog to and says, "Toto, we're not in Kansas anymore."

Well, Madam Secretary, while you're from Kansas, we're not in Kansas anymore.

BLACKBURN: I will remind you some people like to drive a Ford, not a Ferrari and some people like to drink out of a red Solo cup not a crystal stem. You're taking away their choice.

REPRESENTATIVE JOHN SHIMKUS (R), ENERGY AND COMMERCE COMMITTEE: Can you provide a list of insurers in the federal exchange who do not offer as part of their package abortion coverage?

SEBELIUS: I will get that information to you. The Web site has never crashed. It is functional, but at a very slow is speed and low reliability.

REPRESENTATIVE MIKE ROGERS (R), ENERGY AND COMMERCE COMMITTEE: You accepted a risk on behalf of every user that put their personal financial information at risk because you did not have the most basic end-to-end test on security of the system.

Amazon would never do this. ProFlowers would never do this. Kayak would never do this.

REPRESENTATIVE MICHAEL DOYLE (D), ENERGY AND COMMERCE COMMITTEE: I understand that you've said approximately 700,000 people have applied for coverage via the healthcare.gov and the state exchanges.

SEBELIUS: They've completed an application.

DOYLE: Right, which is different from enrollment.

SEBELIUS: That's correct.

DOYLE: So my question is, are you expecting, I know you don't have exact numbers yet, but are you expecting a large number or a small number of enrolments during the first month? What is your thoughts on that?

SEBELIUS: Well, our projections prior to launch were always that there would be a very small number.

(END VIDEO CLIP)

BLITZER: That was news. She was projecting that there would be a very small number of people in the initial enrollment phase. I was surprised to hear that.

The -- she said the -- but then she repeatedly said something that also raised some eyebrows.

Let me play this clip.

(BEGIN VIDEO CLIP)

SEBELIUS: The Web site has never crashed. It is functional but at a very slow speed and very low reliability and has continued to function.

(END VIDEO CLIP)

BLITZER: All right, so those words raised some eyebrows.

Let's bring in Laurie Segall our tech correspondent from CNNMoney. Laurie, what do you make of this?

Because even as we speak right now, it certainly looks like the Web site has crashed. You go there and it says it's not operable.

LAURIE SEGALL, CNNMONEY.COM TECH CORRESPONDENT: I've got a computer right in front of me. I just went in and, technically, it is crashed right now.

It was a very interesting statement. I actually -- after hearing it, I e-mailed a tech guy, an entrepreneur friend of mine. I said, is there -- are we wrong? Has this crashed?

He said absolutely it's 100 percent crashing. As a matter of fact, it's crashing right now.

The definition of a crash, he told me, is having the services unavailable due to significant bad programming issues or other related issues.

What you're looking at right now is essentially a Web site crashing.

So that statement, part of what she said was true, which is that there have been slow services.

But the part about her saying it didn't -- it hasn't crashed, talking to tech folks I know just doesn't necessarily line up.

BLITZER: Maybe she's dealing with a nuance that it's crashed because Verizon, their responsibility, has forced it to crash, not necessarily directly the government.

SEGALL: Sure, I mean, what you -- first of all, regardless, the Web site, it seems has crashed.

But what you do hear her saying and what we kept hearing during this hearing is no one seemed to understand about responsibility. She kept saying I'm accountable.

But a lot of folks were saying, well, who's accountable for this and who's accountable for that?

And what we really see from a tech standpoint is there were so many cooks in the kitchen, you know, when something happens and the Web site crashes or goes very slow, as she said, you don't really know where to point the finger because every single contractor, every single person, everyone's building a different type of technology.

You put it together and without the end-to-end testing, which is what she essentially said, they didn't really have much end-to-end testing, you see that it's going to crash quite often.

When you put together the parts, they didn't necessarily fit as expected, Wolf.

BLITZER: And one other thing, Laurie, before I let go, Congressman Michael Burgess of Texas, he referred to an article that was posted on CNN.com in recent days, saying it was -- for people it was relatively easy to hack in and get someone's name and get some sensitive information.

In fact, let me play the clip from Congressman Burgess.

(BEGIN VIDEO CLIP)

REPRESENTATIVE MICHAEL BURGESS (R), TEXAS: Mr. Chairman, it just came to my attention that on CNN, CNN's Web site, that the site was hacked just last week.

UNIDENTIFIED MALE: OK.

BURGESS: And I will be happy to make this available to you. I don't think this --

SEBELIUS: The CNN Web site?

BURGESS: The -- CNN ran a story that the healthcare.gov Web site was hacked last week. And, again, I will get this to you and would appreciate your response to that.

(END VIDEO CLIP)

BLITZER: Laurie, that wasn't exactly precise. Tell our viewers what we posted on our Web site.

SEGALL: Yeah, let me clear it up.

At CNNMoney we put an article out that essentially said that, theoretically, with a string of vulnerabilities available on the Web site, someone could theoretically get in and reset your password.

And let me get into the nitty gritty here. Essentially, if you were to go in, and you were to try to sign up and put in a user name, it would tell you if that user name was correct or not.

If it was correct, there was code available on the Web site and it's since down that would initially enable you to go put in that code and say reset password.

You would then get a string of security questions, and if you couldn't answer them, it would give you an e-mail.

So for anyone kind of hacking and social engineering here, if they have your e-mail, they can easily plug it into the Internet, plug it into social media and find out sensitive information about you that would enable them to likely be able to answer those security questions.

So, you know, it's a lot of theoreticals, but I will tell you this, Wolf, talking to folks in the hacker community, this kind of thing is very easy for people to do and they don't even have to be that tech savvy.

And I'll also say this. I spoke to one of the guys who found some of those vulnerabilities, and he said that he's been looking at the code and it's riddled with vulnerabilities.

So, if the conversation we're having now is the site's just not working, the conversation I guarantee we will be having is the security flaws in the system.

BLITZER: Laurie Segall, thanks very much.

Joe Johns is watching what's going on. Joe, that brings us to the next series of questions about the security of the entire system.

You heard several ...

LAURIE SEGALL (ph): Security flaws in the system.

WOLF BLITZER, CNN ANCHOR: Laurie Segall, thanks very much.

Joe Johns is watching what's going on. Joe, and that brings us to the next series of questions about the security of the entire system. You heard -- you heard several Republicans complain that there were serious security -- cyber security problems. The system wasn't completely tested. You're looking into all of this as well. What are you hearing?

JOE JOHNS, CNN CORRESPONDENT: Absolutely, Wolf.

This issue has been running in the background on the Obamacare website for a long time. All the way back in August, the Office of the Inspector General for Health and Human Services raised questions about whether the site could be hacked. And now we have this memo dated September 27th of this year. It was sent to Marilyn Tavenner, the administrator of the Centers for Medicare and Medicaid Services, signed by her, in fact. It essentially says that aspects of the system had not been tested as of that date, which was just a few days before go live. It said that it exposed a level of certainty that was high risk. It said there were parts of the system that had not been fully tested.

Now we don't know which security concerns they were specifically addressing in this memo. However, we do know, in fact, that a number of questions had been sort of raised along the way. And the system again, the big question has been whether it was vulnerable to hackers. We actually have a sound bite. I think we can play it for you now, where they talked a bit more about that in today's hearing

(BEGIN VIDEO CLIP)

REP. PETE OLSON (R), TEXAS: When did you know the exchange were going down? A month? A day? A quarter? And did you tell the president what you knew?

KATHLEEN SEBELIUS, HEALTH AND HUMAN SERVICES SECRETARY: Sir, I was informed that we were ready to launch on October 1st. The contractors who we had as our private partners told us and told this committee that they had never suggested a delay, and that is accurate. Our CMS team felt we were ready to go. I told the president that we were ready to go. Clearly I was wrong. We were wrong. I -- we knew that in any big, new complicated system, there would be problems. No one ever imagined the volume of issues and problems that we've had. And we must fix it.

(END VIDEO CLIP)

JOHNS: A big picture sound bite there from the secretary of Health and Human Services on the overall readiness and the functionality of the system, which has been a question throughout, Wolf.

BLITZER: Joe Johns, thanks very much.

Gloria Borger is here. Elizabeth Cohen is here.

Gloria, how did she do?

GLORIA BORGER, CNN CHIEF POLITICAL ANALYST: Well, I think she was a little more forthcoming than we've heard in the past. I don't know if you all agree with me, but she took full responsibility for this. She said the buck stops here. She was very clear that she told the president we were ready to go, as she put it, and she said I was wrong. She also said that -- and this is something I found very interesting, that no senior official ever advised her to delay the launch, which I found kind of shocking actually after looking at the timeline that she actually agave us, which is, you know, in June, HHS sent a memo to another government agency, GAO, saying we're ready to go. Mid-August, problems were identified. And they were only ready to go, she said, the third week in September. Now we learn about this memo in late September about security problems and nobody ever suggested a potential delay?

BLITZER: And I want you to listen, Elizabeth, listen to this clip from the hearing today. Listen to this.

(BEGIN VIDEO CLIP)

SEBELIUS: The assessment that we have made is that it will take until the end of November for an optimally functioning website. I know that the only way I can restore confidence that we get it right is to get it right. So I have confidence, but I know that it isn't fair to ask the American public to take our word for it. I've got to fix this problem and we are underway doing just that.

(END VIDEO CLIP)

BLITZER: You know, the interesting thing, though, is that if - they get - let's say they get almost all of it right by the end of November. People will only have two weeks. They've got to get - they've got to sign up and pay by December 15th if they're going to be covered starting January 1st. That's not a whole lot of time.

ELIZABETH COHEN, CNN SENIOR MEDICAL CORRESPONDENT: It's not. And I'll tell you, I've been talking to people who are really, I think, frantic is a fair word to use. I was talking to a woman in Arizona. She has breast cancer. Her insurance runs out December 31st of this year. And she keeps trying. She spends hours and hours a day on the site and she just can't get in. And she is truly frantic about whether or not she's going to be able to get insurance by the end of the year.

BLITZER: All right, guys, don't go away. We've got a lot more to dissect. An historic hearing today up on Capitol Hill. We're speaking to a couple of lawmakers who were inside with very different perspectives as our special coverage continues.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

KATHLEEN SEBELIUS, HEALTH & HUMAN SERVICES SECRETARY: I am as frustrated and angry as anyone with the flawed launch of healthcare.gov. So let me say directly to these Americans, you deserve better. I apologize. I am accountable to you for fixing these problems and I'm committed to earning your confidence back by fixing the site.

(END VIDEO CLIP)

BLITZER: Kathleen Sebelius, the secretary of Health and Human Services, not mincing any words, apologizing for the disastrous rollout of this Obamacare website.

Let's discuss what happened today during the course of these three and a half hours of this testimony. Joining us, two members of the committee that just finished the questioning of Kathleen Sebelius, Republican Lee Terry of Nebraska, Democrat Peter Welch of Vermont.

Congressman Terry, first of all to you. Are you satisfied with what you heard?

REP. LEE TERRY (R), NEBRASKA: Well, not really because we didn't get a lot of answers. What we do know is that there's been almost $600 billion spent - million spent on a website that doesn't work.

BLITZER: Well, hold on a second. Let me - le me interrupt. She said it was under $200 million, the specific number she gave today, how much they've spent so far.

TERRY: Yes, but she only gave one of the contractors' numbers and she wasn't - and she didn't finish the rest of the answer, nor was the other questions asked. The contractors were in front of our committee a week ago said that it totaled up to about $600 million. But the idea (ph) is that it's flawed from the beginning.

BLITZER: Let me ask Congressman Welch - Congressman Welsh, do you accept that bigger number?

REP. PETER WELCH (D), VERMONT: I don't know what the number is, but I thought it was fair questions about the accountability. I mean we blew it when it came to the rollout of the healthcare.gov and that jeopardizes the effect of the health care bill.

But there was really something quite significantly different in tone. The Republicans who asked legitimate questions about the rollout had as a premise that this law has to be implemented and will be implemented. Up until this hearing, it's all been about repeal. And that tug of war is over. And it is fair and square and mutual concern to make sure that it works.

BLITZER: Do you accept that, Congressman Terry?

TERRY: Well, what I accept is that we have this website that was rolled out knowing that there was a lot of flaws. And, frankly, most of the flaws weren't discovered until afterwards. And then now we have a president in "The Washington Post" that has been given four Pinocchio's for saying if you like your insurance, you could keep it. So there's a trust issue here. The people that this -- HHS, who's in charge of developing that website, rolled it out with all of the flaws in it. How -- these are the same people that are going to really manage health care going forward and how can we trust them?

BLITZER: How do you answer that, Congressman Welch? WELCH: Well, there's a difference between a defective website. I mean we had that when George Bush passed Medicare Part D. There was a lot of problems there and the Republicans were defending it then. So there's a mutual interest in making this thing work. And, you know, some people may have to be held accountable that it didn't work.

The bottom line here, there's a lot of elements of health care that are really changing, including that there's minimum standards so that when people are buy insurance, they're actually getting coverage. There's been an enormous amount of rip-off of the American people by insurance companies that sell them policies that are good until you get sick. They then have, quote, a pre-existing condition, they get thrown off, they don't have coverage for the surgery room, they just have coverage for the hospital visit. So this minimum standard, it is creating some consternation. It's something that's long overdue.

TERRY: And, Wolf, I would answer in respect to that is that we could have dealt with those folks that really needed that access, that had pre-existing without reshuffling all of the chairs on the deck. And what they're causing now, there -- some will be insured, but now there's a lot of my constituents back home that sent me their cancellation letters saying that your policy is now canceled because of the president's health care law. They now have to go out into the exchanges or find something else. And what they're finding is it's a lot more expensive with less coverage, higher deductibles and more copays.

WELCH: And that's going to be the test of the coverage because a lot of those folks had policies that didn't provide much coverage and they'd get ripped off once they got sick. And the question is going to be, when they get a new policy with the premium support, is that going to be better coverage, better protection and affordable?

The other point is that the secretary acknowledged something that I think is really important. We've got to bring down the cost of health care. And, again, that's got to be a mutual effort no matter how you pay for it. And whether it's private pay, tax payer pay, if the cost of health care is going up two and three times the rate of inflation, wages and profits, we're not going to be able to sustain it. So system reform is essential.

TERRY: And I would agree with you, Peter. And that's one of the big missed opportunities with the president's health care is really dealing with the cost of the health care as opposed to focusing on who's going to provide it, government or private sector.

BLITZER: Congressman Welch, given all the problems of the website, including the fact that it remains down right now, these are critical days, obviously, in trying to encourage people to sign up, is it time to consider delaying some of the penalties for people who don't have the Affordable Care Act provisions by the required dates?

WELCH: I think common sense fairness is that you have to align the penalties with the access to the website. I mean you can't impose a penalty on somebody who didn't get the coverage because the website was broken. So I think we've got to be paying real close attention so that people have a fair amount of time in order to get on the website. And so I think a common sense approach is, let's see when this is working and make certain we're not shortchanging people and penalizing them for government failure.

BLITZER: Congressman Terry, you hear a lot of Democrats, they got this line fix it, don't nix it. What do -- do you want to fix this Affordable Care Act, or do you want to nix it?

TERRY: Well, I still have real opposition and thoughts about it. The president's health care bill, just like what I mentioned with my constituents that are getting their cancellation letters, now you're all of a sudden creating this new group of uninsured. Well, yes, sure, they're going to go out and get new insurance, but it's going to be a lot more expensive for less. So the -- we have to deal with those type of issues now.

BLITZER: Congressman Lee Terry of Nebraska, thanks very much for joining us. Peter Welch of Vermont, thanks to you, as well. This three and a half hour hearing was historic, very important. We're going to continue our analysis of what happened. Thanks very much.