gowdy welcome everyone i apologize for being late we had a conference that ran a little longer than normal discussing some things you may have been reading and hearing about lately this is a hearing on the impact of obama care on job creators and their decision to offer insurance the committee will come to order consistent with the policy of the oversight committee i will read the mission statement we exist to secure two fundamental principles first americans have a right to know the money washington takes from them is well spent and second americans deserve an efficient effective government that works for them our duty on the oversight and government reform committee is to protect these rights our solemn responsibility is to hold government accountable to taxpayers because taxpayers have a right to know what they get from their government we will work tirelessly in partnership with citizen watchdogs to deliver the facts to the american people and bring genuine reform to the federal bureaucracy this is the mission of the oversight and government reform committee i will  i will recognize the gentleman from illinois for his opening statement while i am in the process of finding mine mister davis thank you very much mister chairman before i begin let me take the opportunity to acknowledge the presence of a dear friend of mine and certainly a friend to all of the people who have been in the house and in the senate a former distinguished member of this body who was also chairman of the small business committee law so he represents some of the proudest moments of my tenure here so i am delighted to see him thank you mister chairman for several years i have been a supporter of a national health plan good quality affordable health care should not be a privilege afforded to just a few the patient protection and affordable care act provided a pathway to bring affordable health care for the masses it balances the needs of businesses and workers with accessibility and affordability large and small businesses consistently express their concerns about rising health care c affordable care act addresses this concern with cost containment measures for the employer such as small business tax credits insurance market reforms rate reviews price transparency and the creation of health marketplace exchanges just to name a few the anticipated reductions on health premiums enabled job creators to hire more workers increase salaries to maintain the workforces and to reinvest in new technologies for their business growth the center for american progress estimates that health care reform that reduces premium growth will add two hundred and fifty thousand to four hundred zero jobs annually over the next decade the affordable care act also addresses the needs of workers the act eliminates job lock which discourages workers from seek new opportunities for fear of losing health coverage the aca supports the entrepreneurial spirit of the american workforce as nearly ten million self employed americans have the ability to purchase insurance for their families additionally the act makes health insurance affordable with premium assistance for eligible employees lastly a recent harvard study estimated that one american family filed for bankruptcy every ninety seconds in the aftermath of an illness three quarters of them had health insurance at the time of the precipitating health event in addition medical debt burdens families with the inability to pay for other expenses contributes to credit card debt and causes people to delay necessary medical care the affordable care act ensures that these nightmare scenarios will no longer be common in my district there are many medicare and medicaid recipients that have established community health centers as their medical home medicaid beneficiaries that rely on health centers for usual care were nineteen percent less likely to use the emergency room at a annually community health centers provide high quality health care regardless of the ability to pay and health centers in illinois have a tremendous impact on our economy and employment in two thousand and eight forty he centers operated over three hundred and fifty sites contributed almost one dollar billion to the illinois economy and directly employed almost six thousand illinoisans indeed for every ten people employed by an illinois health center an additional four jobs were created in their surrounding communities illinois health centers served over one point one million patients nearly eighty percent of whom had no health insurance helping them cope with chronic health conditions and general health issues to be able to work and care for their families repeal of the health care law would eliminate eleven dollars billion in support for our community health centers over the next five years funding that would nearly double the number of patients served today and greatly strengthens illinois's economy i know a little bit about health care given the fact that my congressional district has more than twenty twenty one to be exact four medical schools a large number of community health centers and other outlets and i can tell you that health care is the lifeblood of our community simply for your patience and for your willingness to lend us your insight and your perspective on what all of us agree is a very important issue as we sit here this morning washington is debating the relative merits and some of which is rooted in the calls that we need substantive reform and return to our founding principles quite simply government is too big out of control spending and over regulation have threatened america's credit rating and crippled business's ability to create jobs when asked what the single greatest impediment to job growth is in the united states today and i hasten to add i come from a state with about ten percent unemployment and some counties are as much as twenty percent but when ask what the greatest impediment to job growth is in the united states the founder of home depot simply responded the u s government that is a stinging indictment our dire economic situation requires us to take a hard look at every dollar we spend and fundamentally reform programs headed down the wrong path to fiscal insolvency at the same time we must be enacting pro growth policies paving the way for american companies to grow and expand creating the jobs that will spark a broader economic resurgence which brings us to why we are here today the current health care law was marketed to the american people as a means to provide high quality low cost health coverage options to every citizen in the country while ensuring that those who like their current coverage can keep it however time and time again we have discovered examples exposing this political myth the uncertainty surrounding the law's broader implementation and the expectation of future taxes have worsened an already dreary economic picture while we often hear about the looming debt crisis we are also in the midst of a job crisis one that obamacare has done nothing to ameliorate and in many instances has served to exacerbate from new taxes to increased government mandates and regulations to picking winners and losers based on arbitrary criteria the new legislation burdens businesses with confusion and uncertainty the exact wrong prescription for turning around our floundering economy further as the full impact of certain sections become more clear we are uncovering myriad disincentives and hidden taxes embedded within the law that served to negatively impact businesses bottom line while cbo estimates the law will reduce the number of jobs by eighty thousand by the end of the decade finally instead of allowing employees to keep the coverage they currently have tax subsidies in obamacare will cause many employers to drop workplace health coverage forcing workers to purchase their own insurance all the while skyrocketing and further deepening our nation's budget deficit in a recent survey mckinsey and company found that thirty percent of employers will definitely or probably drop health insurance in two thousand and fourteen a scenario not contemplated when the initial costs were calculated in a rushed predominantly hidden legislative process thus the federal government will yet again pick up the tab an outcome that is simply unacceptable and untenable given the current fiscal requirements mister gowdy with that on behalf of all of us other members will have seven days to submit opening statements and extraneous material for the record we will introduce our distinguished panel from my left to right your right to left andrew p is the ceo of cke restaurants which i have a parenthetical that says hardee's and carl's junior my history could very well be wrong i think hardee's may have its origin in the upstate of south carolina and specifically perhaps in business majority welcome consistent with committee rules all witnesses must be sworn before they testify so i would ask you to please rise and raise your right hands do you sol they traditionally mean in our culture green means go yellow means speed up and try to get under the light and red means stop thank you for inviting me to testify today on the impact of the patient protection and affordable care act on job creation as the chairman noted my name is andrew f puzder i am ceo of cke restaurants with me today are cheryl soper our vice president of benefits in case you have any really difficult questions for me louis fareous who is our vice president of government relations and also my sons matt and john cke owns and franchises three thousand one hundred and eighty two restaurants in forty two states and twenty three foreign countries under the carl's junior and hardee's brand names with our franchisees in the united states we employ about seventy thousand people our company is a job creation machine we create jobs by building new restaurants each restaurant employs about twenty five people and we invest over one dollar million in the community where we construct the restaurant but our job creation goes way beyond our building of restaurants last year we spent over one dollar twenty five cents billion for job creating capital projects media advertising supplier products and services for example we spent one dollar billion on food and paper products which gives jobs to everybody from the farmer who plants the seeds or tends the herds to the people that process and manufacture our products to the guy who drives the truck and delivers it to the back door we spent one hundred and seventy five dollars million on media advertising employing people in television stations radio stations and newspapers we spent thirty dollars million on repairs and maintenance employing people that wash the windows cut the lawn fix the air conditioner and slurry the blacktop our franchisees own seventy percent of the restaurant so they spend you would assume about seventy dollars million in addition to that thirty we spent sixty dollars million on capital expenditures building restaurants remodeling restaurants and investing in our infrastructure the people we employ in these concentric circles that really grow out from our restaurants went to grocery stores went to the movies spent their kids to school bought cars bought houses just creating jobs on a very broad basis which is the way free enterprise system works and you can see other businesses with concentric circles growing out from them that overlap and really drive the greatest economy the world has ever known i am very concerned that in the coming years we will be unable to create as many jobs as we could like due to the increased expenses necessitated by laws such as will start with the law's menu labeling provision that requires disclosure of the caloric content of our products on our menu boards now as a company we support nutritional disclosure we have and have for years had comprehensive effective and economic nutritional disclosure in our restaurants and broadly available online at our website we estimate that should we have to replace the menu boards in all of our restaurants the cost would be approximately one dollar fifty cents million  that is seventeen percent of the eight dollars eighty cents million we invested last year on job creating new restaurant construction independent research done to date demonstrates that caloric menu labeling has no impact on consumers eating habits in other words this was a politically correct solution that is ineffective and imposes unnecessary costs on american businesses that could better spend their money and their time creating jobs and economic prosperity nutrition disclosure can be accomplished effectively comprehensively and economically the current law simply fails in all three of these respects now on to the aca's mandatory medical coverage provisions i am not an expert on health care law other than how it impacts our company i also know that there are people who believe universal health care coverage is beneficial and i am not here to debate that however there is a sacrifice that must be made to gain that benefit the question is whether the costs are worth the benefits the aca will eliminate job creation and opportunity our best estimate the aca will increase our health care costs approximately eighteen dollars million per year should it be implemented as we currently understand the regulations that a one hundred and fifty percent increase from the twelve dollars million we spent on health care last year and approximately double the eight dollars eighty cents million we spent on job creating new restaurants at this point we do not intend to drop coverage for our employees but the money to comply with the aca must come from somewhere we use our revenue to pay our bills and expenses to pay down our debt and we reinvest what is left in our business that is how we create jobs there is no corporate pot of gold we can go to to cover increased health care costs new unit construction will cease if we have to allocate the monies for that construction to the aca and building new restaurants is how we create jobs would also have to reduce our other capital spending and capital spending not only creates jobs but is important to maintaining and growing our business we would need to reduce the number of our full time employees and increase the number of our part time employees we would need t automate positions where we could and reduce compensations for the positions that we retain as i speak with franchisees and encourage them to build new restaurants i am constantly met with concern about their economic futures they are concerned about poorly conceived government regulation as the aca's menu labeling provision they are concerned about the aca's mandatory health care coverage provisions stifling growth and possibly requiring that they close restaurants that are marginally profitable now but which would be unprofitable once the aca comes into effect the result is stagnation the simple fact is that regulations such as those growing out of the aca do impose costs and those costs do result in reduced growth stifling both job creation and prosperity prosperity is republican nor democrat it is neither liberal nor conservative it is a bipartisan issue people are unsure about their futures american people are suffering because they don't have jobs american businesses want to create jobs and we respectfully request that congress review the aca to determine which provisions can be administered in a way that reduces costs for the businesses they impact we would further request that congress review the aca's provisions to determine which provisions on balance  detrimental to our nation's economic prosperity and eliminate such provisions if done effectively this review would encourage job creation and prosperity as well as better government thank you  mississippi tennessee georgia florida south carolina and virginia we supply cut lumber and assembled wood products to manufacturing companies for their shipping and crating needs as well as logistics and supply chain management services our company was started in  with five people tody we are celebrating our th anniversary with four hundred and fifty employees and eleven plants over one hundred and twenty of our people today have been with us over five years and twenty two of those over fifteen ours is a commodity business which works off low margins in each of our markets we compete against companies that have fewer than fifty employees as well as importing crating companies that we compete against these companies will not be subject to the penalties imposed under the new law it will give them an unfair cost advantage over our locations according to the sba we are a small business but not so by the affordable care act we are caught in the no man's land between assistance and exemptions for smalls and waivers for large corporations and other powerful ent we started our medical plan in the s and offered coverage to all employees most of our production line employees opted out due to cost to meet federal discrimination laws we were forced to create groups of employees and significantly reduce the number to whom in surance was offered this remains today we offer coverage to approximately one hundred and forty employees and struggle each year to get seventy five percent participation the company pays approximately fifty five percent of the total premium cost ours is a fully insured plan the new discrimination rules created by the law have the effect of pushing us immediately into a self insured alternative or face a fine of up to five hundred thousand dollars the irs has just delayed enforcement of the new nondiscrimination testing until regulation can be written however our plan can be tested and penalized as early as next year without changes in these harsh penalties we may be forced to drop our plan completely prior to the state based exchanges even becoming available in two thousand and fourteen we option would be estimated at over one dollar million option three is to discontinue all policies and pay a non tax deductible penalty of two thousand dollars for each employee for our four hundred and fifty employees plus some portion of a penalty for employee turnover during the pay bonus programs and people we have no tax loopholes we are a tax paying company we are a company caught in the middle as the law stands now our thirty year business is at risk of being legislated out of business how can this be our lives earnings is overwhelming for a company our size we have seen bad markets before though none as bad as this one our current capital expansion and business development plans are and will be stopped by this law because expansion and hiring requires cash single giant slide on a postage stamp piece of property along the boardwalk along the sea in wildwood new jersey it now consists of three piers two water parks and one hundred and twenty rides or attractions our operating season is primarily f memorial to labor day however we operate shoulder seasons weekends starting easter and concluding on halloween we have one hundred and ten year round benefitted staff members and we grow to an additional one thousand five hundred seasonal staff members during that time i am privileged also to be the vice chair of our international association of amusement parks and attractions which represents three thousand fixed site supplier and individual members in the united states and i will be chairman of that organization in two thousand and thirteen by way of perspective on the industry our total domestic economic impact is approximately fifty three dollars billion we employee seven hundred thousand of which six hundred thousand are seasonal employees typically young people in their first jobs retirees school teachers and others supplementing their incomes during the summer months now there is a tremendous amount of uncertainty related to this bill from my perspective but there is one thing that i know at morey's piers we can be certain about and that is the inclusion of seasonal workers and the definition of full time employee and the lack of suitable recognition of seasonal employees within our industry will cause severe negative consequences to our business now i am here to be constructive and i would really like to be a part of the solution but the fact is as it will have a substantial negative impact to our industry on our seasonal employees and our permanent employees as well from our point of view the law is a large expense it is an administrative nightmare it is hard to see any appreciable benefit to anyone working  morey's piers but it is easy to see the negative impact on our ability to provide jobs and run our business productively now it is important to note that our industry seasonal workers are hired for short temporary periods they have very different set of expectations and responsibilities than full time employees and they were clearly an element of the workforce that congress did not pay close attention to in drafting the bill the law will force businesses like morey's piers to provide health insurance to seasonal workers and as a result we have the following concerns immediate loss of jobs including full time positions due to decreased profitability negative economic impact on the communities surrounding attractions such as ours as operating schedules are adjusted and employment is curtailed and the promotion of a seasonal labor society that schedules employees under thirty hours per week or terminates employment before ninety days this will happen across the entire country hurting both seasonal businesses and seasonal employees and very importantly and close to my heart is the ability to be able to reinvest capital is an incredibly important part of the attraction industry and reinvesting in our businesses is critical to creating growth and future jobs additionally the administrative and compliance issues are simply put extreme the majority of these workers are employed five months or less by the time the ninety day administrative period passes they will have insurance for less than two months at most many of these seasonal workers get their health care from other sources parents university their primary full time will opt out of our coverage yet we still have to do the following ensure compliance track work days track average hours per week offer the insurance educate and present the insurance program auto enroll into the insurance program get  program and maintain records for all of the above consider a workforce that swells from one hundred and ten to one thousand six hundred employees with individuals starting and ending their employment every day of the week throughout the season just ima tracking and managing this information this is unreasonably burdensome and will provide little to no benefit to the seasonal employees now the bottom line is the inclusion of seasonal workers in the definition of full time employee will needless cause severe negative consequences to businesses like morey's piers to seasonal and full time employees and to their communities ultimately if this law is to go into effect it should be amended to properly recognize the real world of seasonal employees and their tremendous importance to our industry and to our national economy i would like to conclude just by mentioning that we really want to be a great business we want to grow we want to support our community we want to create as many career opportunities we can that is what life in america is about so please don't burden us with a needless compliance and other issues that come along with this bill thank you for your attention and consideration of this important matter strategies we are truly a small business my business at this point has three full time employees and two interns and we deal with small businesses that is our client base we deal with companies that have twenty to three hundred employees  in two thousand and two i started braden benefits strategies with one employee in the basement of my home our business model was to be a resource for small businesses headquartered in georgia advising them on employe benefits specifically group health insurance my business plan was to expand our small group market base and then to grow a large individual market practice in two thousand and eight i moved the company into a building took the risk rented a space based on my long term plan at the end of our move i was employing three full time people one part time person one intern and myself in addition we sold our backroom services to three other health insurance agents which kept their business viable i had visions and a business plan to grow to eight to ten full time employees however in december two thousand and nine we looked at that and it was time to add our individual health product which is what we had looked at for our expansion put in a call center hired a full time person and put an aggressive marketing campaign together march th the day after ppaca passed i had looked at my business plan before knowing that it could be coming and i made sweeping changes to my business i eliminated our expansion to the individual health market which i still to this day believe  a good decision since individual market will most likely go to the exchange i terminated that full time person i lost revenue from the sales we already had which accounted for thirty five thousand dollars annually and to these other gentlemen that just a small amount to me it is a person it is huge i also terminated a part time claims administrator and then i terminated my part time accountant and outsourced that that law eliminated my plans to grow and now have turned me into what could possibly be no business at all in two thousand and fourteen on top of that we advise small businesses on their health insurance options and that has become very expensive my company has had to go out and educate ourselves on the health insurance when we get bad information or conflicting information because the bill is so intensive we have to hire a lawyer have to ask the lawyers for the differences and oftentimes we go between three law firms worth nothing at the end when ppaca goes into effect on january st two thousand and fourteen and i think this is probably the basis of why i am here we expect twenty two of our sixty five clients to immediately drop their group health insurance the size of the clients that we service will have no cost to the employer to not have insurance there will be no insurance and no fine of those companies i expect seven hundred and sixty nine people to be added to the exchange rules through ppaca the taxpayer is now subsidizing the cost when that happens of small business employees health insurance  conservative estimate of four hundred and sixty two will be the first year and other businesses will leave shortly after that we always said the young and the healthy would take this bill and make it worthwhile it will not because the young and the healthy will find a way around the bill we have already seen that through the self funded small business pieces that are being developed i would just ask you to reconsider not only the job loss of the bill but the cost of the bill both to employers and to the lockton benefit group of lockton companies llc in kansas city on behalf of lockton and our clients i thank you for the opportunity to appear here today lockton is the largest privately held insurance brokerage and consulting firm in the world most of our two thousand five hundred employee benefits clients are middle market clients those with five hundred to two zero employees our professionals are experts on last year's health reform laws provisions affecting employer growth health plans they have been instrumental in educating our clients regarding the law and analyzing its impact on our clients employee benefits programs and their budget in may of this year we also conducted a survey of our clients soliciting their views on th costs and other implications of the reform law we do believe that we are uniquely positioned to articulate the law's effect on employer based health insurance plans mister chairman the employer community is the single largest employer of health insurance in america the majority of our clients want to continue to supply health insurance but they struggle with the cost and the federally imposed complexity of plan administration health care reform adds to rather than mitigates the cost complexity of providing employer sponsored health insurance for example the federal government requires fifty two separate notices disclosures and reports to enrollees in health insurance programs nineteen of these and that is just so far were added by health reform this frustrates our clients immensely they question why during a recession when employers are struggling mightily just to stay afloat much less supply this valuable fringe benefit congress would make the process more expensive more onerous and more complicated they tell us the additional cost complexity and uncertainty wrought by the law affects their ability to hire additional workers or even retain current full time employees clients find it difficult to plan strategically in light of the uncertainty the law brings to their world one client in our survey summed up the view of many regarding this law calling it a job killer nearly twenty percent of our survey respondents said they will consider terminating their group insurance plan in two thousand and fourteen and they cite cost and complexity as the main reasons that they will consider doing this in our survey sixty three percent of respondents said they were concerned or very concerned about the cost of the law's immediate benefit mandates seventy one percent said they were concerned or very concerned about the cost of implication of the pay or play mandate on employers and sixty percent about the cost of automatic enrollment our actuarial modeling of over two hundred and fifty middle market clients validates our clients concerns taken together the law immediate benefit mandates waiting period limits and auto enrollment requirements on average add six point three percent to our clients health insurance costs on top of current health insurance inflation and it is more in certain industries the employer pay or play mandate in two thousand and fourteen poses additional problems for employers because of the sizeable difference between what most employers pay to supply coverage for an employee and the penalty they would pay if they terminated coverage the vast majority of our clients have a significant financial incentive to exit the group insurance market in two thousand and fourteen on average our clients outside the retail restaurant and hospitality industries would save forty four percent off their current health care budget by terminating their group plans leading nearly twenty percent to tell us they would consider doing just that in two thousand and fourteen about eighty percent of our clients indicate they don't expect to consider terminating coverage but the reason they give is the perceived need to provide health insurance to attract and retain clients we are concerned that the moment they see they don't have to offer competitive health insurance that eighty percent number could drop significantly this would result in huge increases in exchange participation and subsidy liability for taxpayers seventeen percent of our survey respondents said they would work to avoid play or pay penalties by substituting more part time employees for full time workers forty four percent said they would reduce the employer subsidy toward employee coverage and forty three percent they said they would reduce the employer's subsidy towards dependent coverage that does not bode well for working americans thank you for the opportunity to appear before you today in assessing the impact of this legislation i urge you to place yourselves not only in the shoes of those americans who need and deserve access to affordable health care coverage but also in the shoes of the employers who supply valued coverage to one hundred and sixty million of us as one of our survey respondents wrote this plan doesn't fix the health care problems but shifts the burden to employers to take care of the issue without any type of assistance in covering the increase in cost we look forward to answering your questions and working with you to address the issues raised by our employer clients thank you health care cost i am terry gardiner i am vice president of policy at small business majority small business majority is a national nonprofit small business advocacy organization founded and run by small business owners i myself have spent most of my career i was kind of shocked to add it up and to think i started my first business forty years ago as a self employed commercial fisherman in alaska where i grew up  business owners we are well aware that government policies can take either of two courses they can help promote job creation and help promote business and at the same time there can be other laws and regulations in our experience that can definitely be a burden on business and discourage growth so we are not unaware of those situations from our own personal experience but the problem facing small businesses those twenty two million self employed out there one third of whom don't have coverage and the nearly six million small businesses with under one hundred employees they keep saying that health care costs ever rising are their number one problem we have done a lot of polling scientific polls across the  an average of eighty six percent of those companies who do not provide coverage said they couldn't afford it seventy two percent of those offering health benefits said they were does face alternatives we could do nothing about our health care system or we could try to change it so it works better so we looked at those alternatives doing nothing is a job killer  gruber's projection showed that over the next decade small employers would pay two dollars forty cents trillion in health care costs there would be a loss of one hundred and seventy eight thousand jobs there would be negative impacts for employees too eight hundred and thirty four billion in reduced business wages and a reduction in profits so doing nothing is not a great scenario so that moves us to where we are at now where we have the affordable care act as the law in the country that we are here today discussing projected by cbo that it would have the benefit of reducing the federal deficit by two hundred dollars million over the next ten years and one dollar trillion over the following decade which is a positive for all businesses and all citizens  t the point for small businesses is to reduce their cost so that they can keep more money in their bank account which is what they use as fuel to expand and create  jobs and there are many provisions in the aca that are going to help small businesses many of which do not offer health coverage now and many self employed simply can't afford it so there are new mechanisms here  in the aca tax credits for small employers there are health insurance exchanges that will be established in the fifty states some states have already moved forward massachusetts utah we have exchanges that have been in effect for fifteen years in connecticut and provides a lot of insurance to small groups so we know there are problems you have heard about some of them here today with the aca we are not here to say they are perfect but we think focusing on these and fixing them would be a better course of action than going backwards thank you mister gowdy thank you mister gardiner i will recognize myself  only thing we are certain about is that they are going to go way up we are uncertain what is going to happen with energy with the epa we are uncertain about unionization with the nlrb there is a lot of uncertainty out there when businesses are going to invest and create jobs they generally want to come up with a five year business plan which shows you get a return on your investment at about twenty percent a year and at the end of five years you have gotten a return on your initial investment if you can't do a forecast because you don't know your costs you don't know your expenses and what you do know you don't like you are not going to invest and american businesses are stalled i think that chart shows it up there people are not investing because they can't show a profitable return of their investment and if you think your expenses are going to go way up and you have two choices on what to do with your money retain it so you can cover your expenses or invest it to grow and create jobs you are going to hold on to your cash so we are not seeing the kind of investment we should be seeing and if the government would just work to create some certainty for the business community i think you would see an explosion of job creation mister gowdy some of us like to say that our tax regulatory litigation structures create the uncertainty t by the implementation of obamacare mister payne well in our company it is going to impact all of us it spreads completely out through the organization we can't necessarily cut sections out we are kind of statement true plan and they are well taken care of in that area but it is unclear to us whether or not that is going to be the case or not and when we look at things like the burden of the seasonal issue that i have been speaking of and what that means to us in terms of cost and compliance that endangers our ability to be able to provide the coverage that we are providing now mister gowdy mister gardiner i only have a little bit of time left so if i could get just a yes or no response from you on whether or not you support some other initiatives that might some of our individuals who want to purchase health insurance should they have the same favorable tax treatment as employers mister gardiner yes mister gowdy medical malpractice reform does your organization support that mister gardiner yes and we did during the seriously impacted by all of your businesses your courage your determination the tenacity the fact that you have been able to make conscious use of yourselves to build strong businesses and provide opportunities for other people to work mister gardiner can i ask you have you ever had any employees who didn't earn enough money to pay for health insurance we do offer them a very low mini med affordable plan i really can't say that i have ever done any research on that but we probably have part time employees who couldn't afford the plan mister davis well let me ask you this question can you think of anything in life more about the abolition of slavery and every time somebody would come up with a way to do it there would be a reason why it couldn't get done and he ended up saying that there are those who reminded him of people who might have wanted the rain but without the thunder and the lightning or they wanted the crops without plowing up the ground or they may have even wanted the ocean without the roar of the mighty water so it seems to me that there are things that we want to happen but somehow or another we can't bring ourselves to the point of doing what is necessary do we believe in tax credits let me ask have any of you ever used tax credits in any facet of your businesses mister puzder i am sure that whenever they are available we davis and so if tax credits are made available for small businesses to help provide health insurance for employees that might be one way of helping some of those individuals who had no other way of being insured mister puzder i think it would congressman but i will tell you that we offer all of our employees health care coverage inexpensively and i think of our seventeen thousand part time employees about six percent choose to take the health care coverage over the cash so it is ninety four percent would rather have the job and the davis oh i would certainly agree and i guess when you say small business it would be kind of difficult for one to suggest that your company was a small business i mean by pretty much any well let me ask you do you believe that health care should be a right and not a privilege mister puzder that is a difficult question you know we have created a system where people don't have to buy health care to get health care  would certainly like to believe that it is a right i think that there are fundamentally some better ways that we could go about some of this and i will tell you that our firm has been historically pro on health reform  is exactly what you said it is just the form that that takes mister davis well see i think that at the base of the discussion is what we believe in terms of individuals who live in our society  a handful of employers out of my group that can actually take advantage of that and those employers are all nonprofits so they are taking advantage of it against their fica taxes so that piece of it i don't see as far as health insurance being a fundamental right so is being healthy and people have a responsibility to that and we are not seeing that in any of our small groups we are not seeing folks going out and actually working to be healthy which would then bring down the health and thank you panel for appearing here today there are so many questions in so many directions i would like to go today after hearing your testimony and i don't think i have ever sat through a hearing where the testimony was almost so self explanatory discuss obamacare now sometimes we get chastised for using that term obamacare it is known as the affordable health care act after laying out your three options do you agree that it is affordable payne it is not affordable to us the way it is structured and talking about the credits for small business we consider ourselves a small business and some of the exemptions for less than fifty employees really hurt us we don't get those exemptions yet we are competing against the people that do so it ought to be more of a level playing field but to answer your question no it is not affordable is the current system  of the affordable care act more needs to be done and we have faced these kind of racing costs if you look at a graph as i did when i retired and got into health care these costs have been going up like a rocket for decades but we as a congress i wasn't here at the time but we then passed massive sweeping health care reform that we didn't ask for we don't want and apparently we certainly can't afford so here we are moving forward with what say we need to pass this bill so we can find out what is in it from what i am hearing from this panel up here today i doubt that anybody sat down with business folks like this and listened to what they have to say before this bill was constructed and i can tell you as a physician i don't think they sat down with health care professionals either to see whether or not this was feasible so now we have this problem you are sitting here wondering how we are going to continue to employ people in this nation the greatest crisis facing our country right now is unemployment and spending and everything about this bill that i can see is nothing but driving up cost and government spending and frankly government spending is nothing more than taxes our government doesn't generate any revenue outside of taxes so anyway i wanted to ask a few more made up of small hardworking well intentioned people i don't know how much interaction they have with people who have employees and payrolls and have to make these decisions but i can tell you we dealt with about three thousand of them last year and the year before that and the year before that so i think the incentives that we uncovered in our actuarial studies as well as the information we got as a result of our survey would suggest to  will the health care law lead you to automate more services or replace full time workers with part time staff absolutely people who are currently full time employees we will have to make part time employees which means they will have to have two jobs to get a full time salary we will automate positions such as the cashier right now they have those ordering kiosks like the atm or what you see at the gas station where you pay with your credit card we haven't used those because we like the personal touch and they are a little expensive but once you implement this health care bill i think those kiosks are going to become much more desirable so i will be reducing labor force and also automating desjarlais well i am out of time but just quickly do you believe most of your workers prefer a job or government health insurance mister puzder absolutely and i think the fact that only six percent of the seventeen zero part time employees we offer insurance to take it would be a very strong i was sitting here listening i could not help but think about my days as an employer of a small law firm we provided insurance for our employees and it took away from our profit but we did it we did it because we believe that it was the right thing to do there were only three lawyers but we had about five clericals and we did  it let me also say this i am not here to chastise anybody about anything but i take great offense when i hear the word obamacare there is no such thing members of this congress voted for this legislation and many of us have very strong feelings about it because we are seeing people in our districts without insurance we are seeing people literally die is a very serious thing so there has to be a balance here and i appreciate your comments because i can look at this thing from a small business employer for twenty years but i can also look at it from the standpoint of a legislat but you said something ms braden that i found very intriguing and very interesting and correct me if i am wrong you said something to the effect that you saw people that were not   thank you for asking if you look at people and healthy we are not talking health insurance when you go to the emergency room you are receiving health care and we sort of have taken those two subjects and melded them together and really i think what we need to do is separate them apart if you take health insurance what it does is support people in health care if people are getting health care that is one thing but if they are not taking care of themselves then they are driving up the cost of and another thing that we were trying to do was to try to drive down the cost that these insurance companies were charging for these policies is a hard thing to control ms braden well in insurance it is really easy it is premium paid in claims paid out so if you want to control health care costs you have to control claims paid out i mean insurance isn't hard it is a pass through the reason we have insurance was to make deals with doctors and hospitals at a reduced cost so that every individual company didn't have to go do those negotiations mister cummings i understand but did you realize that when we were going through this there were insurance companies literally out in california went up on their rates thirty percent thirty percent ms braden when i looked at some of those policies because we heard about bluecross blueshield out there and i called some of my folks out there that i work with there was one policy that they said fifty nine percent well that was five people act was to try to say to these companies that were spending say for example insurance companies spending thirty five percent on overhead forty percent on overhead that they had to control that and they had to put more into medicine another part of the health care act was to try to address this thing of preexisting conditions you know there are people who and god forbid it happen to any of you all you get a scare with cancer and if you have a gap in your insurance right now you will never get insurance i have had people in my family in that situation if they had one hundred thousand dollars to pay for insurance they couldn't get it so i think we have to be careful when we are looking at this because there are parts of the bill that you might like and there are other parts that you might not like but i think again we have to be careful well again we are trying to bring down the costs so that people will stay well because we are going to pay one way or  businessman so there is theory and then there is application so a lot of things look great on paper and i know every single one of you hear it in your board meetings every day but then there comes the reality of how does it actually implicated mister gardiner i know you cite a model you show that the small businesses actually benefit from government takeover health care i prefer that term because i can tell you and back that up that that is what it is however the model assumes much smaller growth in health care costs an assumption both the cbo and cms have rejected as being highly implausible and i think we have seen a lot of that discussion and looking back at equations and numbers making that instead of relying on an academic model and with faulty assumptions how many businesses are you aware of that are enthusiastic about this health care plan mister gardiner many and we could have some of them call  skip you for just a second because i am coming back to you okay mister morey how about you okay i love that so my colleagues on our side have been talking about or the opposite side have been telling us that the republicans have been never proposing any jobs and what we are really trying to do is get to the core matter of it we are not trying to put a band aid on it saw okay because you hit it and that is there is personal accountability personal responsibility and i do believe there was a little company in iowa that actually had a concept like this if i am not mistaken and what they basically did is they invested in the employee and they said listen we are going to make you see your family doctor and that preventative service whatever they come up with we are going to give you time during that workday to be able to do that but you have to stay on that preventative model and if i am not mistaken  then they made another caveat they said that as long as you stay on that caveat we will pay one hundred percent of your claims they said if you fall off you are going to pay twenty five percent co fall off again it is fifty percent co fall off a third time it is seventy five percent co and so forth and so on and guess what ms braden everybody went to the doctor mister gosar everybody went to the doctor and guess what you died with that company what a job creation that was because what happened is you had investment from the patient and the employer the health care benefit all the way across the board minimizing the red tape so thank you very much for making sure that we understood that we are not here about job we are here about building jobs and reducing red tape thank you from my home state of missouri thank you for being here as well as my friend mister puzder who runs a significant operation out in missouri thank you for your testimony today  let me start out by saying that the patient protection and affordable care act is the law of the land and it is a good law and like any law it could be improved however my colleagues on the other side of the aisle are not interested in honestly examining the positive and negative aspect of the law and i think they are just interested in repealing it it scoring a political victory over president obama this health care reform law is good for americans it is good for businesses and especially small b is very good for young businesses which are actually the ones that create the most jobs and i am so glad to hear the phrase job creation first time i have heard it in over six months in this committee some have raised concerns that businesses won't be able to afford compliance with the aca ninety eight percent of employers will be exempt from the insurance mandate and ninety five percent of the businesses that are not exempt already offer health insurance to their employees this misleading premise of this particular hearing is that starting this year consumers will receive more value for their premium dollar because insurance companies will be required to spend eighty to eighty five percent of premium dollars o medical care and health care quality improvement rather than on administrative costs if they don't the insurance companies will be required to provide a rebate to their customers starting in tw aca passed and currently were under those rates in those states already and the world didn't come to an end so we just see it as this means it is feasible for insurance companies in other states to do it and the twenty two million employees who are paying a lot more for insurance than other businesses that have more than ten employees are going to benefit from this too because they are in the small group market and we think the exchanges are really the critical and these exchanges can work and they have been proven to work and we think that is going to be the driving force for making it more available and more affordable for small business mister clay thank you so much for that do you think that this law will help shave cost on health care for your employees and when i say shave costs will it help reduce the cost of prescription medicine will it make the delivery of health care more efficient for your employees mister puzder i don't believe that it will as i said early on i am not a health care expert i can tell you how it impacts our company very good point there mister clay thank you i yield back mister gowdy i thank the gentleman from missouri with the indulgence of our panel and my colleagues on both sides we would like to have a second round which we sometimes refer to as a lightening round my colleagues do not need to today talking about the detriments to job creation and i think that point has been very strongly made in terms of the last question on shaving cost i worry more as a physician about shaving quality  because we are trying to increase the number of people into a health care market with really no means to pay for it but that is not entirely true because our friends on the other side of the aisle believe that obamacare's taxes which includes the employer mandate tax penalty an increase in the medicare part a tax a new tax on investment income a new tax on health insurance providers a new tax on drug manufacturers and a new tax on medical device manufacturers are paid by firms out of their massive profit buckets moreover they believe taxes only impact the top two percent of taxpayers based on your experience is this a fair portrait of reality and i will just open that to whoever would like to grab it  for insurance i think part of what we are all saying here is we can take those profits and put them into insurance but if we do that we can't invest them to grow our businesses and create jobs so we are not really in conflict on that but you can't like i said there is no think part of the solution of getting more dollars in the system is that everyone as has been talked about here every citizen has to be responsible and i think that is why there was an individual mandate put in you can't have a bunch of people who don't pay but yet can show up and get coverage and doing what people are talking about here so i don't think anybody has ever looked at this and said that you could have a sustainable health care system and not have exactly who was uninsured in this country now i heard numbers early on that there was thirty million uninsured we have asked people to define who those thirty million were apparently up to half may have been here illegally and not eligible for health care perhaps half of the remaining fifteen million are folks that would qualify for medicare but just haven't signed up and then the other half are some of the workers that are young and bulletproof and just opt not to have health insurance so in essence this new law of the land that was imposed upon people against their will and clearly the majority of people in this country still do not want this is what we are stuck with at this point and i think that is why we are having hearings to show the detriment of this health care law and what it is going to do to impact the economy and yet not really resolve the health care problem it was a poorly conceived it was passed in the middle of the night and people maybe have forgotten about how that occurred but let's get back to some more puzder no i don't think it is other than well there have been a number of studies on this and i have included in my written testimony that show that in fact that has no impact on people's eating habits in fact anecdotally we have noticed in some of the restaurants where there is already menu labeling required people think that fast food has more calories than it does and they actually end up ordering higher calorie products once they see what the caloric content actually is so it has been a very interesting experiment so far that clearly hasn't worked i am so pleased that opinions don't necessarily manage what we do all of the time i am amazed at some of the things that i  hear job killer if you create an opportunity for more than thirty million people in this country to have health insurance and go to the doctor on a regular basis and stay out of the emergency rooms of hospitals and to live longer the only business that i could see that gets hurt by this is the undertaker and he doesn't get hurt too much because eventually he is going to get you anyway i mean it takes a little bit longer could someone please share with me how creating opportunity for thirty million people over thirty million to get decent health care that creates the need over the next ten or fifteen years for one hundred and fifty zero additional doctors more than two hundred and fifty thousand nurses could someone tell health insurance benefit because i think the law requires health insurance they already get health care but let's just talk about the health insurance benefit benefits have costs the money to pay for those benefits has to come from somewhere our business makes a profit all of that profit is reinvested in the business when the profit is reduced you invest less in the business if the profit is eliminated you have nothing to invest in the business if you don't have anything to invest you can't grow and you can't create jobs so there is a benefit and i am not here to argue about that i just want you to know that there is a cost associated with the benefit and i think the businesses that are at this table here are telling you in some instances it might put them out of business mister davis but if i am dead because i couldn't get realities are if you even just deal with the question of fairness if you ask a bird is it fair for birds to eat worms and you turn around and ask the worm the same question chances are you are going to get a different answer so if you ask the thousands of employees in my congressional district who provide health care for people all over the world if somehow or another their ability to provide these services will drive down jobs or take away jobs they would probably disagree congressman davis there is another impact aspect of job creation and that relates to job lock and job lock has two impacts one employees at a company who don't want to leave because they go somewhere else maybe they wouldn't have health coverage and it is very vital for they and their family members the other is who is going to start those new companies and those are people in the workforce working at a job and they go through this same system and  harder it is for them to see their way to go out and launch in the first step to be a self employed person to found a company and they can't get benefits for them and their family and they are a responsible person they are going to stick with their job so  more complicated than just surveying existing companies there is a whole bunch of other factors about who starts businesses and how they grow at the bottom mister davis thank you very much  chairman i certainly agree in terms of our health delivery system we have much more of a sickness care system than we do a health care system so i would certainly agree with you ms braden on that point  if you are a business you should never complain about a profit that is what you should do that is what has to happen in order to create jobs and to have the ability to employ more the other thing that we have to look at is when government  impedes itself or impugns itself into any type of parts of our life to the degradation of that industry we see it flounder give you a good example you don't have to look very far with government intrusion in health care to look at the native americans boy there is a great unemployment rate there sixty percent at the navajo nation seventy five percent in the apache reservation all because of dictations by government and why do i bring that up well because this program is based on a flawed system that flawed it from the very get go as it demanded that you had to go to the emergency room you couldn't turn anybody away you couldn't even ask the questions where are you from how do you look you couldn't turn them away so what we have done is we have restricted care and medicine did that i am happy to say i am from dentistry we never went down that road and the reason i say that is that today for every dollar spent in dentistry fifty percent comes out of the patient's pocket so they have risk they find value that is why you see lots of dentists of course we are not doing so good right now because we don't have a good economy but there is something inherently right about that so i kind roles where what we did is we look at the equations and we take away certain benefits so that we set them on medicaid this whole system is based on a flawed system it doesn't work anywhere along the line for job creation ms braden ms braden if you really look at what the  cost of health care is to an employer there is not one employer sitting here that can tell you that it costs less than three thousand dollars which is the fine per year every one of us pays on an individual basis pays more than three thousand dollars for our health care for our employees per year so now we have a fine that is less than what we are currently paying it doesn't take a rocket scientist to figure out what we are going to do mister gosar and let me ask you the next thing you talked about the administrative costs a lot of that administrative cost is it not true that it has to do where the american people need to stand up and businesses need to stand up mister morey how do you see this is going to affect those people those businesses that are under fifty jobs mister morey i see it very much the same way i would like to mention that the issue of tort want mandates shoved down our throat in how to do it and ultimately i think that the free enterprise system does a pretty good job the marketplace does a pretty good job of attracting the better employers attract better staff members the marketplace does work puzder you really drive my attention because equations you know when you are in business you are looking at all the parameters and what possibly could do have you run all the numbers are you comfortable with all the numbers based upon this bill and how it is going  impugn job creation mister puzder no congressman in fact we hired an expert in this area mercer they are one of the national experts on health care costs and while their best estimate is that our health care costs will increase eighteen dollars million which is that one hundred and fifty percent the range runs from seven dollars thirty cents million to thirty five dollars ten cents million now i have to tell you in any other aspect of my business if one of the people who works for me came to me with an estimate that ran from seven to thirty five million i would tell them to go back and sharpen their pencils but nobody can figure it out mister gosar one last question just a quick indulgence if you have a program in your business that is failing what do you do mister puzder terminate it replace it try and figure out what the next best he was on medicaid and he couldn't find a dentist because he was being turned away twelve years old and this was three years ago so because a dentist would not accept him and this was in maryland because a dentist turned him away and they spent two hundred and fifty thousand dollars trying to save his life at the end so i guess with regard to dental care and care period i just say that our country is better than that we are better than that and i understand believe me to all of you i understand what you are saying i understand it is  hard being in business for you all who have your own businesses a lot of people don't realize what you go through they don't realize all the folks you have to deal with the irs you have to deal with making sure the people of course are who make our businesses go and if they are not healthy that is a problem that is a real big problem and there are those who may not see health care a s a right i still happen to think so but i do believe that when we get to a point where we feel that it is okay to if i am a skilled lawyer and somebody comes in to me and they have a problem but that is a little different because i am not talking about life and death that is different but if i have a skill and like the doctors in my state not in arizona but in my able to take maryland from one of the worst states with regard to having dentists work with kids on medicaid to one of the top i think it is even number one or number two in a matter of two or three  years so the reason why i mention that is because my staff had mentioned to me like i said i was with a staff member that that statement was made and maybe i misunderstood it or misquoted it i am sorry i didn't hear it but i just want to make it clear that act was about and is about and as somebody said a little bit earlier no it is not perfect but a lot of its imperfections were because of people trying to satisfy both sides of the aisle to get a decent bill and  a lot of personal affection for i remember always being the last ones to leave church because folks wanted to ask my dad questions i remember holidays being interrupted but the thing i remember the very most are the people who would call at night and say my kid has been sick all day can you come see him tonight that is frustrating when somebody has been sick all day why you didn't take advantage of the office hours why you waited until the evening and my mom would say why don't you charge more and he never would do it so my question to you all is what is the role of personal responsibility in our health care system do we incentivize the right conduct and we these different models from what we have now to what is perceived as radical which is decoupling health insurance from employment it is perceived as radical but that is the way we existed up until one thousand nine hundred and forty four we didn't get our health insurance from our employer we got it ourselves i am not smart enough to know the difference between a right and a privilege i just know this personal responsibility has to be part of the equation or we are not going to make it as a republic so i would ask you this in conclusion and i will let you go from left to right give you all the last word although we only have about three minutes so apportion it accordingly what is the role of personal responsibility and how can our country government could do that would contribute to a better health care system i don't know if health care is a right or not congressman but i know it is the law i know an emergency room cannot turn you away what we are talking about here is health insurance not  health care health care people get now this is why they don't take up our offer on health insurance when we offer to pay even sixty percent they are getting health care this is about health insurance and how you allocate those costs the way they are allocated now they will destroy our ability to create jobs and prosper that doesn't mean that profits will go down but profits are what we reinvest to grow and if we can't reinvest to grow we can't create jobs and we can't create prosperity which is what american business has done for over two hundred years  for the coverage turn it in and get reimbursed well i understand people may not have money to pay to start with in our districts every plant that i have i have gone around and checked our people get medical coverage it is there our property taxes everything is paying cover in the program we provide a smoking cessation program that is for both the staff member and for their spouse these are the kind of things we do to try to help people help themselves that is where i think much of that responsibility lies and that is on the individual person braden when i look at it it can go so much farther and we all have a story and i respect that because i have them just in my practice alone with people that were offered health care and health insurance and didn't take it that is a private decision what exactly is our responsibility and does the government regulate it i am not sure i think if these guys really looked at their businesses they would say that the reason they offer the wellness that they do is because they know it improves their workforce and they get more out of it if we really wanted to look at health care we would start with dentistry and we if you don't have your teeth cleaned twice a year you are not entitled to basic and major dental because everything starts in the mouth so we are looking at health care and we are looking at wellness and we are looking at health insurance three different things brewer one of the things that aca did get right was increasing the opportunity for employers to incent people to well behavior we have a pretty sophisticated practice in our firm of helping clients design programs that incent people  employers are paying most of the time they don't realize how much it really costs and we have seen in all our surveys and meetings with small businesses where forty two percent of americans work that small businesses would  like wellness and prevention programs that fit small business and they don't have access we hope that it changes run by states can do this and i agree that dentistry has some good