U.S. GOVERNMENT PUBLISHING OFFICE

WASHINGTON : 

For sale by the Superintendent of Documents, U.S. Government Publishing Office

Internet: bookstore.gpo.gov Phone: toll free (866) 512–1800; DC area (202) 512–1800

Fax: (202) 512–2104 Mail: Stop IDCC, Washington, DC 20402–0001

21–306 2016

THE INDIVIDUAL AND EMPLOYER MANDATES 

IN THE PRESIDENT’S HEALTH CARE LAW 

HEARING 

BEFORE THE

SUBCOMMITTEE ON HEALTH 

OF THE

COMMITTEE ON WAYS AND MEANS 

U.S. HOUSE OF REPRESENTATIVES 

ONE HUNDRED FOURTEENTH CONGRESS 

FIRST SESSION 

APRIL 14, 2015 

Serial No. 114–HL01 

Printed for the use of the Committee on Ways and Means 

( 


dkrause on DSKHT7XVN1PROD with LOCATORS
ii 

COMMITTEE ON WAYS AND MEANS 

PAUL RYAN, Wisconsin, Chairman 

SAM JOHNSON, Texas 

KEVIN BRADY, Texas 

DEVIN NUNES, California 

PATRICK J. TIBERI, Ohio 

DAVID G. REICHERT, Washington 

CHARLES W. BOUSTANY, JR., Louisiana 

PETER J. ROSKAM, Illinois 

TOM PRICE, Georgia 

VERN BUCHANAN, Florida 

ADRIAN SMITH, Nebraska 

LYNN JENKINS, Kansas 

ERIK PAULSEN, Minnesota 

KENNY MARCHANT, Texas 

DIANE BLACK, Tennessee 

TOM REED, New York 

TODD YOUNG, Indiana 

MIKE KELLY, Pennsylvania 

JIM RENACCI, Ohio 

PAT MEEHAN, Pennsylvania 

KRISTI NOEM, South Dakota 

GEORGE HOLDING, North Carolina 

JASON SMITH, Missouri 

SANDER M. LEVIN, Michigan 

CHARLES B. RANGEL, New York 

JIM MCDERMOTT, Washington 

JOHN LEWIS, Georgia 

RICHARD E. NEAL, Massachusetts 

XAVIER BECERRA, California 

LLOYD DOGGETT, Texas 

MIKE THOMPSON, California 

JOHN B. LARSON, Connecticut 

EARL BLUMENAUER, Oregon 

RON KIND, Wisconsin 

BILL PASCRELL, JR., New Jersey 

JOSEPH CROWLEY, New York 

DANNY DAVIS, Illinois 

LINDA SA ́ NCHEZ, California 

JOYCE MYER, Staff Director 

JANICE MAYS, Minority Chief Counsel and Staff Director 

SUBCOMMITTEE ON HEALTH 

KEVIN BRADY, Texas, Chairman 

SAM JOHNSON, Texas 

DEVIN NUNES, California 

PETER J. ROSKAM, Illinois 

TOM PRICE, Georgia 

VERN BUCHANAN, Florida 

ADRIAN SMITH, Nebraska 

LYNN JENKINS, Kansas 

KENNY MARCHANT, Texas 

DIANE BLACK, Tennessee 

JIM MCDERMOTT, Washington 

MIKE THOMPSON, California 

RON KIND, Wisconsin 

EARL BLUMENAUER, Oregon 

BILL PASCRELL, JR., New Jersey 

DANNY DAVIS, Illinois 


dkrause on DSKHT7XVN1PROD with LOCATORS
iii 

C O N T E N T S 

Page 

Advisory of April 14, 2015 announcing the hearing ............................................. 2 

WITNESSES 

Sabrina Corlette, Senior Research Fellow, Georgetown University Health Policy Institute, Center on Health Insurance Reforms .......................................... 35 

Douglas Holtz-Eakin, President, American Action Forum ................................... 19 

Scott Womack, President, Womack Restaurants, Incorporated ........................... 29 

SUBMISSIONS FOR THE RECORD 

American Academy of Actuaries ............................................................................. 78 

Associated Builders and Contractors (ABC), Inc. ................................................. 83 


dkrause on DSKHT7XVN1PROD with LOCATORS

dkrause on DSKHT7XVN1PROD with LOCATORS
(1) 

THE INDIVIDUAL AND EMPLOYER MANDATES 

IN THE PRESIDENT’S HEALTH CARE LAW 

TUESDAY, APRIL 14, 2015 

U.S. HOUSE OF REPRESENTATIVES, 

COMMITTEE ON WAYS AND MEANS, 

SUBCOMMITTEE ON HEALTH, 

Washington, DC. 

The Subcommittee met, pursuant to call, at 10:08 a.m., in Room 

B–318, Rayburn House Office Building, Hon. Kevin Brady [Chairman of the Subcommittee] presiding. 

[The advisory announcing the hearing follows:] 


dkrause on DSKHT7XVN1PROD with LOCATORS
2 

ADVISORY 

FROM THE COMMITTEE ON WAYS AND MEANS 

SUBCOMMITTEE ON HEALTH 

FOR IMMEDIATE RELEASE CONTACT: (202) 225–3943 

Tuesday, April 7, 2015 

No. HL–01 

Chairman Brady Announces Hearing on 

the Individual and Employer Mandates 

in the President’s Health Care Law 

Congressman Kevin Brady (R–TX), Chairman of the Subcommittee on Health, 

today announced that the Subcommittee will hold a hearing on the individual and 

employer mandates and associated penalties in the President’s health care law. The 

hearing will take place immediately following a brief Subcommittee organizational meeting on Tuesday, April 14, 2015, in Room B–318 of the Rayburn 

House Office Building, beginning at 10:00 a.m. 

Oral testimony at this hearing will be from the invited witnesses only. However, 

any individual or organization may submit a written statement for consideration by 

the Committee and for inclusion in the printed record of the hearing. 

DETAILS FOR SUBMISSION OF WRITTEN COMMENTS: 

Please Note: Any person(s) and/or organization(s) wishing to submit written comments for the hearing record must follow the appropriate link on the hearing page 

of the Committee website and complete the informational forms. From the Committee homepage, http://waysandmeans.house.gov, select ‘‘Hearings.’’ Select the hearing for which you would like to make a submission, and click on the link entitled, 

‘‘Click here to provide a submission for the record.’’ Once you have followed the online instructions, submit all requested information. ATTACH your submission as a 

Word document, in compliance with the formatting requirements listed below, by 

the close of business on Tuesday, April 28, 2015. For questions, or if you encounter technical problems, please call (202) 225–3625 or (202) 225–2610. 

FORMATTING REQUIREMENTS: 

The Committee relies on electronic submissions for printing the official hearing record. As always, submissions will be included in the record according to the discretion of the Committee. 

The Committee will not alter the content of your submission, but we reserve the right to format 

it according to our guidelines. Any submission provided to the Committee by a witness, any materials submitted for the printed record, and any written comments in response to a request for 

written comments must conform to the guidelines listed below. Any submission not in compliance with these guidelines will not be printed, but will be maintained in the Committee files 

for review and use by the Committee. 

1. All submissions and supplementary materials must be submitted in a single document via 

email, provided in Word format and must not exceed a total of 10 pages. Witnesses and submitters are advised that the Committee relies on electronic submissions for printing the official 

hearing record. 

2. All submissions must include a list of all clients, persons and/or organizations on whose 

behalf the witness appears. The name, company, address, telephone, and fax numbers of each 

witness must be included in the body of the email. Please exclude any personal identifiable information in the attached submission. 

3. Failure to follow the formatting requirements may result in the exclusion of a submission. 

All submissions for the record are final. 


dkrause on DSKHT7XVN1PROD with LOCATORS
3 

The Committee seeks to make its facilities accessible to persons with disabilities. 

If you are in need of special accommodations, please call 202–225–1721 or 202–226– 

3411 TDD/TTY in advance of the event (four business days notice is requested). 

Questions with regard to special accommodation needs in general (including availability of Committee materials in alternative formats) may be directed to the Committee as noted above. 

Note: All Committee advisories and news releases are available on the World 

Wide Web at http://www.waysandmeans.house.gov

f 

/. 

Chairman BRADY. The hearing is called to order. 

With the successful replacement of the flawed formula for paying 

local doctors under Medicare nearly complete, I want to welcome 

everyone to the first hearing of the Health Subcommittee in the 

114th Congress. 

I would like to offer especially a warm welcome to the new Members of our Subcommittee: Ms. Jenkins, Mr. Marchant, Ms. Black, 

and Mr. Davis. 

Joining us today are three qualified witnesses: Doug Holtz-Eakin 

of the American Action Forum; Scott Womack of Womack Restaurants; and Sabrina Corlette, a Senior Research Fellow, Project 

Director, and Adjunct Professor at Georgetown University. 

Welcome, as well. 

Tomorrow marks the end of the tax season and, with it, the annual ritual of navigating a needlessly complicated maze of IRS 

forms and regulations. 

New this year is the controversial mandate within the President’s Affordable Care Act that requires all Americans to buy government-approved health care or pay the Internal Revenue Service. 

Also, this year, local businesses with more than 100 full-time workers will be forced to comply with an ACA mandate to offer qualified 

health care or pay the IRS. 

Now, we have been told that these mandates are an essential 

part of President Obama’s health care law, that they are absolutely 

necessary to control costs and keep everyone insured. Without 

these mandates, we are warned, health insurance markets would 

not be able to function properly. 

Here is the irony: Before the ACA, too many Americans couldn’t 

afford to buy insurance because it was too expensive. Now the 

President’s law makes insurance even more expensive, then forces 

people to buy it. 

What ObamaCare does is force people to pay for healthcare plans 

they don’t want, can’t afford, and, for some, this meant losing the 

coverage they already had. This should come as no surprise. The 

Affordable Care Act doesn’t let people pick a plan that fits their 

needs. Instead, the law forces Americans to choose from a list of 

plans that Washington picks for them and forces them to buy. 

This is not how affordable healthcare reform should work. Washington should not be in the business of telling Americans how 

much health care they need and then penalizing them if they decide to go their own way. 

Even the President at one point was against this mandate, stating, ‘‘A mandate means that in some fashion everyone will be 

forced to buy health insurance. But I believe the problem is not the 


dkrause on DSKHT7XVN1PROD with LOCATORS
4 

folks trying to avoid getting health care; the problem is they can’t 

afford it.’’ 

We should empower families and patients and put them at the 

center of the healthcare system, not government bureaucrats. So I 

believe we can do better. I think we can both lower the cost of 

health care and encourage people to buy coverage, all without taxes 

or mandates or penalties. 

One idea is to give people a portable, advanceable tax credit that 

you could use to help pay for any healthcare plan you buy regardless of where you buy it. Another is to give people more choices. 

Let them choose plans that work for them, like high-deductible 

healthcare plans and health savings accounts. These are just some 

ideas that would lower costs and encourage more people to buy coverage, and nobody would have to buy something they don’t want. 

I know Members on both sides of the Committee have strong 

feelings about the law’s individual and employer mandates, so I 

look forward to our discussion today. 

Before I recognize Ranking Member McDermott for the purposes 

of an opening statement, I ask unanimous consent that all Members’ written statements be included in the record. 

I now recognize the Ranking Member, Dr. McDermott, for his 

opening statement. 

Mr. MCDERMOTT. Thank you, Mr. Chairman. 

I feel like it is springtime. And farmers plow their field; they 

have to plow the dirt before they go to work. And we are out with 

our plow today. It is the same plow we had in January of 2011. We 

have the same cast of characters here, and we will probably have 

the same hearing, I suspect. 

I would like to ask unanimous consent to enter into the record 

an article from Atlantic Monthly, October 2000, called, ‘‘Health 

Care: A Bolt of Civic Hope.’’ 

Chairman BRADY. Without objection. 

[The submission of The Honorable Jim McDermott follows:] 


dkrause on DSKHT7XVN1PROD with LOCATORS
5 


dkrause on DSKHT7XVN1PROD with LOCATORS21306A.001
6 


dkrause on DSKHT7XVN1PROD with LOCATORS21306A.002
7 


dkrause on DSKHT7XVN1PROD with LOCATORS21306A.003
8 


dkrause on DSKHT7XVN1PROD with LOCATORS21306A.004
9 


dkrause on DSKHT7XVN1PROD with LOCATORS21306A.005
10 


dkrause on DSKHT7XVN1PROD with LOCATORS21306A.006
11 


dkrause on DSKHT7XVN1PROD with LOCATORS21306A.007
12 


dkrause on DSKHT7XVN1PROD with LOCATORS21306A.008
13 


dkrause on DSKHT7XVN1PROD with LOCATORS21306A.009
14 


dkrause on DSKHT7XVN1PROD with LOCATORS21306A.010
15 


dkrause on DSKHT7XVN1PROD with LOCATORS21306A.011
16 


dkrause on DSKHT7XVN1PROD with LOCATORS21306A.012
17 

f 


dkrause on DSKHT7XVN1PROD with LOCATORS21306A.013
18 

Mr. MCDERMOTT. This is an article that was written by Matthew Miller after an interview he had with Jim McCrery, who was 

then the Chairman of the Ways and Means Committee, and me 

about what the healthcare plan would look like when it happened. 

This is now 15 years ago. 

Everything, practically speaking, that we discussed in that article is in the bill. And all of it Jim agreed to because he knew that 

you had to make some compromises on a whole bunch of things, 

one of which was, if you are not going to have a single payer system, then you had to have everybody in. And that meant that employers had to be in and all the people of the United States had 

to be in. 

So this issue is—we have been over it before. If this were an honest discussion, my Republican colleagues would tell you how the individual mandate has balanced risk pools and reduced adverse selection in the health insurance market, or they would tell you how 

the employer mandate has forced big corporations to pull their 

weight and cover every employee who works a full workweek, or 

they might mention how both requirements have taken this country closer than ever to universal coverage. 

But we are not going to talk about those things today, and there 

is a reason for that: Because the hearing isn’t about the individual 

mandate or the employer mandate. What this hearing is about is 

scoring political points at the expense of the Affordable Care Act. 

We did it in 2011. We have done it a number of times. It is about 

continuing a tired, baseless line of attack that will generate no new 

ideas whatsoever about how to make the law better. 

We have been through this before. The House has staged 56 

votes to repeal or undermine the law. The Ways and Means Committee has held no less than a dozen hearings to attack the sharedresponsibility requirement. In fact, in the 2011 committee hearing, 

Republicans invited the same two witnesses. Mr. Holtz-Eakin and 

Mr. Womack were here at that time. 

Unfortunately, not one of those hearings has generated a productive discussion of what should be done to improve the law. Not one 

has led to a meaningful proposal that would ensure greater health 

security for the American people. I do know that Ms. Black has a 

bill in that would improve the employers’ reporting. So I know that 

some people are thinking about it, but we haven’t had a hearing 

about it. 

And not one has resulted in an alternative plan if my Republican 

colleagues succeed in dismantling the law. If the Court takes it 

down, there is nothing on the table. Years of attacks through hearings, lawsuits, press conferences, television ads, op-eds, speeches, 

and repeal votes, but still no plan to replace it. 

Now, while my Republican colleagues have focused on destroying 

healthcare reform, we have focused on trying to make it work. And, 

over the past 5 years, the law has been an indisputable success. 

Middle-class families now enjoy greater health security than ever 

before. More than 16 million Americans have gained coverage, 

thanks to the law. The uninsured rate is at the lowest in history 

in this country. And 129 million Americans with preexisting conditions can no longer be discriminated against by insurance companies. 


dkrause on DSKHT7XVN1PROD with LOCATORS
19 

The economy is looking better and better, much to the distress 

of the Republicans. Since the law was enacted, over 12 million jobs 

have been added to the economy. Now, we were told it was going 

to cut jobs and there weren’t to be any jobs in this country and everything. We have 12 million new jobs since this all happened. 

Healthcare spending has grown at the lowest rate in five decades, 

shrinking as a share of GDP for the first time since the 1990s. 

But we all know there is more work to be done. I have never said 

this was a perfect bill. I never thought it was. It wasn’t my bill. 

I didn’t like some parts of it. But no legislation is perfect when it 

is first passed, and it is the duty of Congress to refine and improve 

the laws it has implemented. Our success in finding a permanent 

solution to the SGR could be a reminder that it is possible to solve 

problems and pass legislation through regular order. 

And I encourage my Republican colleagues to move beyond the 

cynical attacks on this law and join me in working to make the law 

better. It is the law of the land. Until the Supreme Court rules in 

May or June or whatever they do, it is the law of the land, and 

we will see what happens then. But that is what the American people expect from us. They expect compromise, and they deserve the 

Congress to do that. 

And I yield back my time. 

Chairman BRADY. Mr. Holtz-Eakin, you are recognized for 5 

minutes. Thanks for joining us today. 

STATEMENT OF DOUGLAS HOLTZ-EAKIN, 

PRESIDENT, AMERICAN ACTION FORUM 

Mr. HOLTZ-EAKIN. Chairman Brady, Ranking Member 

McDermott, Members of the Committee, thank you for the chance 

to be here today. 

I have a written statement for the record. Let me just make a 

few points about that, focusing on the individual mandate. 

Taken at face value, the individual mandate is a policy to eliminate the uninsured. Everyone must have insurance. And if you 

evaluate it from that perspective, it is clear the individual mandate 

is not working. We have over 6 million people paying a penalty 

rather than having insurance, and tens of millions more remain 

uninsured. So I don’t think it really should be even evaluated on 

that standard. It is simply not going to work. 

Instead, it is best viewed as a complement to the rating rules in 

the Affordable Care Act—in particular, the guaranteed issue rule 

and the community rating of the insurance policies. Without it, a 

mandate, those rules combine to guarantee that someone can wait 

until they are sick, apply, and get insurance. Those who are 

healthy stay out, those who are sick are in. The risk pools are not 

balanced, we get very high premiums, and the system is unworkable. 

So the individual mandate is intended to offset the impact of 

those particular rating rules. And for that to work, you have to 

have an individual mandate that is effective and tight and with 

people complying with it. And I don’t think you can make that case 

with the ACA’s individual mandate, certainly not so far. 


dkrause on DSKHT7XVN1PROD with LOCATORS
20 

In looking at alternatives to the individual mandate, there is a 

table in my written statement, Table 1, and I would just walk 

through it real quickly and show you some of the implications. 

You could repeal the individual mandate, and our estimates are 

that this would lead to 7 million fewer people being covered with 

insurance. And, as a result of the 7 million fewer, there would be 

less in the way of exchange subsidies. Somewhere around $200 billion in subsidies would be saved. 

This is quite simply the impact of higher premiums. If you repeal 

the mandate, the young and healthy leave the risk pools, premiums 

go up, fewer people are covered with insurance, and you get the impact. 

Now, the trick is to get rid of both the mandate and the rating 

rules. And, in the table, we have two different ways of doing that. 

One way is to repeal the individual mandate along with the community—the rating restrictions, so relax the age bans and allow 

the young, in particular, to have relatively low premiums. Or the 

alternative way to do it is to simply allow people to buy the insurance they want outside the exchanges in nonqualified health plans, 

something that has been done temporarily by the Administration. 

Both of those have roughly the same effect, right? You have the 

ability to buy a policy at a lower price. That offsets some of the insurance loss. The real big difference between those two is that, if 

you do it the first way and rely on the exchanges, you still have 

to pay the exchange subsidies. On the other hand, if you allow people to buy policies that they want outside, they are not subsidized. 

You get about the same coverage implications and very different 

budgetary implications. 

And then the final row in the table basically says, suppose you 

just do all of this, you allow the relaxation in the community rating, you drop the individual mandate, you allow people to buy policies that they want outside the exchanges, and, essentially, the 

message there is: You can achieve the same coverage that the Affordable Care Act is achieving, and you can do it at roughly the 

same budget cost without forcing people into the exchanges and 

with the individual mandate. 

So it is clear that there are alternatives that are workable that 

can get the same end result that we are seeing right now. And I 

would be happy to answer questions about alternatives in what follows. 

Thank you. 

[The prepared statement of Mr. Holtz-Eakin follows:] 


dkrause on DSKHT7XVN1PROD with LOCATORS
21 


dkrause on DSKHT7XVN1PROD with LOCATORS21306A.014
22 


dkrause on DSKHT7XVN1PROD with LOCATORS21306A.015
23 


dkrause on DSKHT7XVN1PROD with LOCATORS21306A.016
24 


dkrause on DSKHT7XVN1PROD with LOCATORS21306A.017
25 


dkrause on DSKHT7XVN1PROD with LOCATORS21306A.018
26 


dkrause on DSKHT7XVN1PROD with LOCATORS21306A.019
27 


dkrause on DSKHT7XVN1PROD with LOCATORS21306A.020
28 

f 


dkrause on DSKHT7XVN1PROD with LOCATORS21306A.021
29 

Chairman BRADY. Thank you, Doctor, very much. 

Mr. Womack, you are welcome, and you are recognized for 5 minutes, as well. 

STATEMENT OF SCOTT WOMACK, 

PRESIDENT, WOMACK RESTAURANTS, INCORPORATED 

Mr. WOMACK. Chairman Brady and Mr. McDermott, thank you 

for the invitation to testify at this hearing. 

My name is Scott Womack, owner and president of Womack Restaurants, an 11-unit IHOP—or, excuse me, Popeyes franchisee in 

Kansas City. I am pleased to be here today to testify on behalf of 

the U.S. Chamber of Commerce. I also come before you today as 

a restaurant industry veteran with over 25 years of experience to 

represent my company, my industry, and small-business entrepreneurs. 

My first jobs were as a busboy and cook, and, after college, I 

joined the grocery industry. After 5 years, I got fired, and I found 

myself starting over. I was very lucky to land a job with IHOP as 

a manager, and, with a $15,000 loan from my parents, I bought my 

first IHOP franchise. 

Over the following 20 years, I built an additional 15 IHOP restaurants. In 2013, we purchased a group of Popeyes restaurants in 

Kansas City. And, last fall, we sold our IHOP restaurants. 

Now, I frequently say that the restaurant industry is a story of 

first opportunities and second chances. First jobs, first careers, and 

a first shot at small-business ownership. And second chances for 

people starting over—a forced career change, reentering society 

after incarceration, or a second job for those digging out of a financial hole. 

That story is my story. I am very thankful for the opportunities 

I have been given and the opportunities that our company has been 

able to provide. No other industry can tell this story of turning 

lives around. 

It has been 5 years since the Affordable Care Act was passed, 

and I want to provide you a real-world update from the front lines 

of the restaurant industry. 

First, I have to note an important point of context. Small-business restaurant owners and franchisees, we sign leases, mortgages, 

and franchise agreements with terms of 15 to 20 years. We personally guarantee those agreements. A lease for a single restaurant is 

usually an obligation for at least a million dollars over its lifetime. 

There is no escape clause in these agreements for Federal legislation. So when costs go up, if you can’t adjust, you default and likely 

go bankrupt. There is no agency to bail us out. Please keep these 

numbers in mind as you consider future legislation, because we 

have put it all on the line. 

Now, like most of you, I didn’t get a chance to read the ACA before it was passed, but I heard the promise of lower insurance premiums and lower actual costs, improved insurance coverage, and 

affordable access for everyone. 

At the time, my company offered generous health coverage to our 

salaried management and office staff. Our fears were that the cost 

of offering coverage to our entire workforce would bankrupt us. 

After careful consideration, we chose to offer coverage to everyone. 


dkrause on DSKHT7XVN1PROD with LOCATORS
30 

Now, our reality today under the ACA is very different than 

what was promised. Over the last 4 years, our insurance premiums 

have risen 60 percent. Our single coverage now costs $6,400 annually. Family coverage costs $19,200 annually. However, we have 

also had to double our deductibles to $2,500 and raise the out-ofpocket limits by two-thirds. 

While our insurance offering complies with the ACA as affordable, only 4 percent of our hourly staff have enrolled. And as I sampled fellow franchisees, I found that 3 to 4 percent enrollment is 

the rule across the industry. 

Now, we are required to offer the same benefit to all our staff. 

We had been paying a portion of our managers’ dependent coverage, but now we are unable to do so due to the potential cost 

across the entire company. This is a big loss for our management 

and office staff. As you may be aware, my offering of coverage to 

employees in many cases makes them ineligible for subsidies for 

their dependents. 

The reporting required is costly, complex, and confusing. All employers have had to either write new software or buy new software 

or contract with a service to do so. And, as I write this, it is still 

unclear as to whether the Federal Government can actually use the 

data in these systems. 

It is clear that the assumptions inherent to the ACA were wrong. 

Five years later, our costs have gone up significantly. The controls 

and mandates did not help. Hourly employees do not want to buy 

policies that they were not buying before, even at a generous price. 

When a single surgery can still leave them with several thousands 

of dollars in bills, they do not want to get in the game. And the 

result of expanding coverage to all of our staff is a reduced benefit 

to our managers and office staff. 

While our industry was initially alarmed at the potential cost of 

covering everyone, we at least hoped the costs would indeed come 

down. It was clear to me then that the promises of the ACA were 

in conflict with each other—expanding coverage, improving health 

care, while lowering cost—but, sadly, it is clear to me now that the 

law has not delivered. 

Thank you. 

[The prepared statement of Mr. Womack follows:] 


dkrause on DSKHT7XVN1PROD with LOCATORS
31 


dkrause on DSKHT7XVN1PROD with LOCATORS21306A.022
32 


dkrause on DSKHT7XVN1PROD with LOCATORS21306A.023
33 


dkrause on DSKHT7XVN1PROD with LOCATORS21306A.024
34 

f 


dkrause on DSKHT7XVN1PROD with LOCATORS21306A.025
35 

Chairman BRADY. Thank you, sir. 

Ms. Corlette, you are recognized for 5 minutes. 

STATEMENT OF SABRINA CORLETTE, SENIOR RESEARCH FELLOW, GEORGETOWN UNIVERSITY HEALTH POLICY INSTITUTE, CENTER ON HEALTH INSURANCE REFORMS 

Ms. CORLETTE. Good morning. Thank you, Mr. Chairman, 

Ranking Member McDermott, Members of the Committee. My 

name is Sabrina Corlette, and I am a Senior Research Fellow at 

Georgetown University’s Center on Health Insurance Reforms. 

Thank you for the opportunity to testify here today and for the 

leadership of this Subcommittee in conducting oversight of the Affordable Care Act. 

This hearing today is a timely one, just a few weeks after the 5- 

year anniversary of the law. It is important, thus, I think, to spend 

some time taking stock of how the law’s reforms have affected people’s access to affordable, adequate health coverage. And to understand how the ACA has affected health coverage, I think it is important to understand what the world looked like before the law 

was passed. 

On the eve of the law’s passage, approximately 50 million Americans were uninsured and approximately 10 million got their health 

insurance through the individual market. And that market was an 

extremely inhospitable place, particularly for people in less than 

perfect health, and that is about 129 million of us. Before the reforms in the ACA, in most States, applicants for health insurance 

could be denied a policy because of their health status or charged 

more in premiums because of their health or gender. 

Health insurance was and remains a very expensive product, and 

it is particularly expensive for people buying on their own. Before 

the Affordable Care Act, roughly 70 percent of people with health 

problems reported it very difficult or impossible to find an affordable plan. 

In addition to being unaffordable, coverage prior to the ACA 

could be inadequate because of preexisting-condition exclusions in 

which insurers were allowed to permanently exclude from coverage 

any health problem that you might have. And insurers also were 

able to sell stripped-down policies that didn’t cover critical services 

such as maternity, prescription drugs, and mental health. 

And, before the ACA, policies often came with extremely high 

deductibles; $10,000 or more was not uncommon. 

The failures of the individual market also resulted in job lock, in 

which people were tied to jobs they would otherwise leave in order 

to maintain access to health coverage. 

The ACA included numerous reforms to address the rising number of uninsured and the shortcomings of the individual market, including a requirement to provide coverage to people who apply for 

it regardless of their health condition. Because the law prohibits insurers from discriminating against people with preexisting conditions, a mechanism is needed to prevent people from waiting until 

they get sick to sign up for insurance. This is known as the individual mandate. 


dkrause on DSKHT7XVN1PROD with LOCATORS
36 

The Congressional Budget Office has estimated that just a 5-year 

delay in the mandate would result in 13 million more people being 

uninsured and premium increases of up to 20 percent. 

The ACA’s employer mandate is in place because all stakeholders 

should contribute to a sustainable and equitable health system. 

Those employers that don’t offer coverage are acting as free-riders, 

and they should be required to pay a little something when their 

workers receive taxpayer subsidies to get coverage. And this is 

something the American people understand. According to polls, 60 

percent support the employer mandate. 

And the evidence now is in that the ACA’s reforms are working. 

Just yesterday, Gallup reported that the uninsured rate continues 

to fall. It is now at 11.9 percent, down from 18 percent in 2013. 

Approximately 16.4 million Americans have gained coverage, which 

means that 16.4 million people are more likely to receive necessary 

medical services and gain financial security. 

There is also strong evidence that coverage under the ACA is 

providing better financial protection. A recent national survey 

found significant declines in the number of people reporting costrelated access problems. 

At the same time, in spite of dire predictions that the law would 

cause premium growth to explode, since the ACA was passed, we 

have seen the slowest growth in healthcare prices in 50 years. 

There have also been dire predictions about the ACA’s impacts 

on job growth, yet here, too, the data undermines the rhetoric. Unemployment rates will largely be unaffected by the ACA, and, if 

you look at job data starting with the months that the ACA became 

law, the economy has generated 12 million new jobs. And there is 

no evidence of a rise in involuntary part-time work. The bottom 

line: The idea that the ACA is a job-killer has been thoroughly debunked. 

Thank you for inviting me to testify today about the market reforms in the ACA. And while there remains uncertainty about the 

law’s long-term impact, early data suggests that it is meeting its 

objectives and that concerns about people losing coverage, rising 

premiums, and job losses are and have been unfounded. 

I look forward to your questions. Thank you. 

[The prepared statement of Ms. Corlette follows:] 


dkrause on DSKHT7XVN1PROD with LOCATORS
37 


dkrause on DSKHT7XVN1PROD with LOCATORS21306A.026
38 


dkrause on DSKHT7XVN1PROD with LOCATORS21306A.027
39 


dkrause on DSKHT7XVN1PROD with LOCATORS21306A.028
40 


dkrause on DSKHT7XVN1PROD with LOCATORS21306A.029
41 


dkrause on DSKHT7XVN1PROD with LOCATORS21306A.030
42 


dkrause on DSKHT7XVN1PROD with LOCATORS21306A.031
43 


dkrause on DSKHT7XVN1PROD with LOCATORS21306A.032
44 


dkrause on DSKHT7XVN1PROD with LOCATORS21306A.033
45 


dkrause on DSKHT7XVN1PROD with LOCATORS21306A.034
46 


dkrause on DSKHT7XVN1PROD with LOCATORS21306A.035
47 

f 


dkrause on DSKHT7XVN1PROD with LOCATORS21306A.036
48 

Chairman BRADY. Thank you. 

Mr. Womack, thank you for bringing your real-life perspective to 

this issue. We have a lot of experts in Washington who have never 

had to actually live under this law, other than those who were 

forced into it, who are now paying higher premiums and much 

higher deductibles. 

Like you, I have a local restauranteur who, you know, has instructed his four store managers they will never again hire a fulltime worker. He has been advised by his accountants that he, because of the ACA, would actually be more profitable by closing 

three of the stores and going with one, which is exactly what he 

doesn’t want to do. He wants to grow. And I have a small pizza 

business in Willis, Texas, who would like to expand to two neighboring communities but, primarily because of this, simply can’t afford to do so. 

So thank you for bringing this and this may be one of the reasons this is the most disappointing economic recovery in 50 years. 

We actually have fewer adults in the workforce today than we did 

when the recovery began 5 years ago. We have actually gone a little backward in that area. So it has an impact. Thank you for 

bringing that to us. 

Dr. Holtz-Eakin, thanks for bringing some of these thoughtful alternatives to the table. You know, your numbers are so different 

from other models we have seen. Can you expand a little on why 

these alternatives would work and why others place such a high 

priority on the coercive model? 

But it seems to me there is a dramatic difference between forcing 

someone into a plan they can’t afford and don’t want or pay the 

IRS, or providing incentives—for example, a lower deductible—if 

you maintain continuous coverage, which actually is an incentive 

financially to be actually doing what we hope to do, which is to 

keep people insured. 

Mr. HOLTZ-EAKIN. Well, our estimates are built off, you know, 

a computer micro-simulation model. But the real reason we get results that are different from others is that the data underneath 

that are based on the actual choices made by employees when offered a wide variety of health insurance plans at different premiums, deductibles, and copays. And the evidence is people respond to those incentives. 

And so what you find in looking at these results is that we are 

tracking the impact of changes in premiums and people’s response 

to them much more carefully than many of the alternatives do. 

Chairman BRADY. And so one of your points, too, if I get it correct, is that, in addition to the mandates on workers to buy government-approved health insurance and businesses to offer government-approved, there are mandates within the ACA itself that 

drive up the cost of health care. 

And if you thoughtfully rethink some of those mandates and offer 

plans that are more tailored to patients, to people, rather than 

Washington, that you can actually lower the cost of those, attract 

more into buying those plans, and provide incentives so that they 

have a reason to stay on the plan rather than, frankly, go without, 

pay the IRS, and then when they get sick they go to a plan, which 

drives up, what, costs for everyone else? 


dkrause on DSKHT7XVN1PROD with LOCATORS
49 

Is that sort of the overall thought? 

Mr. HOLTZ-EAKIN. Yeah. That is the message. 

So there are three important mandates and rating rules. One is 

the essential health benefits. And the, sort of, generosity of that is 

going to peg the base premium that people are going to pay. 

Then the second is the guaranteed issue, that people must be 

able to buy a policy. 

And the third is the community rating rules, which say that you 

can’t, you know, have big differences in premiums across ages. And 

that raises premiums for the young and healthy as a transfer to 

the older and sicker. 

Chairman BRADY. Can you talk a little about community rating 

restrictions and repealing that helps provide incentive for people to 

buy plans without the coercive mandate? 

Mr. HOLTZ-EAKIN. The big impact is on the younger and 

healthier, who saw dramatic increases, double digits, in their premium costs because of the community rating, right? Because we 

are really forcing them into the pool—that is the mandate—forcing 

them to pay higher premiums—that is the community rating—so 

as to cover the cost of the older and sicker and the poor. 

Chairman BRADY. And, prior to the ACA, younger workers who 

were healthier had a greater band of prices versus those who were 

older and sicker. The ACA restricted those, in effect, shifting costs 

from those who are older and usually had more healthcare costs to 

those who are younger and who don’t. Is that correct? 

Mr. HOLTZ-EAKIN. Absolutely. Yes. 

Chairman BRADY. All right. Thank you. 

The Urban Institute just issued a paper claiming that continuous-coverage provisions supported by Republicans is tantamount 

to the individual mandate in the law. 

And, in your opinion, is that the case? Is forcing all Americans 

to buy coverage the equivalent of providing incentives to maintain 

coverage? 

Mr. HOLTZ-EAKIN. So the continuous-coverage notion is one 

where you would say, okay, if you buy health insurance—say, at 

26, you leave your parent’s policy—if you buy health insurance and 

you maintain continuous coverage of any form—individual, small 

group, employer—at no point may you be medically underwritten, 

right, we can’t go back and underwrite that person for any health 

problem they develop, that is a powerful incentive to get in when 

you are young and cheap. 

Chairman BRADY. Yeah. 

Mr. HOLTZ-EAKIN. The pool is, as a result, balanced. And the 

actuaries can figure out the likelihood of developing any sort of 

health problem over the course of that person’s life, and you can 

price policies pretty clearly. 

So that is a pretty simple idea, but it is not a mandate to buy 

health insurance. It is a set of rating rules. And we have rating 

rules all the time. Every State insurance commissioner has to 

worry about rating rules, and there are things you can and cannot 

rate on. And it is no more than that. 

Chairman BRADY. So the world-will-end-without-an-individualmandate claim, if you structure incentives right, we know that they 

can work. 


dkrause on DSKHT7XVN1PROD with LOCATORS
50 

Mr. HOLTZ-EAKIN. You can get balanced pools, you can get a 

lot more options for people in the variety of insurance products, 

and, as a result, they can get both the kinds of coverage they need 

and the prices they want to pay, much more tailored to their 

tastes. 

Chairman BRADY. Right. Thank you, Dr. Holtz-Eakin. 

I now recognize Dr. McDermott for his 5 minutes. 

Mr. MCDERMOTT. Thank you, Mr. Chairman. 

I would like to explore a concept with you. We have probably 20 

million people presently without health insurance coverage. Is that 

about what you think it is? 

Mr. HOLTZ-EAKIN. It is somewhere in that vicinity, yeah. 

Mr. MCDERMOTT. Now, none of them are going to get sick this 

year. We all know that. They are all healthy. And none of them are 

going to get sick. There is not going to be automobile accidents or 

skiing accidents or leukemia or anything. Nothing is going to happen to them. 

Is that a premise on which you are basing this? 

Mr. HOLTZ-EAKIN. No. Why do you—— 

Mr. MCDERMOTT. Who, then, pays for their health insurance? 

Mr. HOLTZ-EAKIN. They don’t have health insurance. 

Mr. MCDERMOTT. Well, excuse me, for their health care. Or are 

we going to let them die in the street? 

You don’t assume they are going to die in the street. They are 

going to come into the healthcare system. Who pays for it? 

Mr. HOLTZ-EAKIN. Those costs are spread broadly through the 

system—— 

Mr. MCDERMOTT. So they are free-riders. 

Mr. HOLTZ-EAKIN. They are spread broadly through the system 

in terms of, you know, uncompensated care. 

Mr. MCDERMOTT. Now, you are setting forth the concept that 

free-riding is okay in America, that people ought to sit and say, ‘‘I 

am not going to pay.’’ You would have that concept in your neighborhood? ‘‘I am not going to pay my property taxes because my 

house never caught on fire. So why do I have to pay for the fire 

department?’’ You wouldn’t accept that, would you? 

Mr. HOLTZ-EAKIN. So the question is, what is the nature of 

these costs? Is this essential medical? They will essential medical 

here at a hospital; that is the law of the land. But they won’t be 

able to undertake any sort of discretionary health care unless they 

pay for it out of their pockets. 

So they aren’t going to shift all their costs. They can’t do that 

uniformly. It is only for the key, core, medically necessary, you 

show up at the emergency room and great treated. 

Mr. MCDERMOTT. But you are telling—— 

Mr. HOLTZ-EAKIN. How big is that? So the next question is, 

how big is that? And if you look seriously at the numbers, this is 

a small number. So there may be some free-riding going on, but 

this is $10 billion, $15 billion in a several-trillion-dollar healthcare 

system. 

It is not the driving force behind premiums. And it is certainly, 

in my view, not such a big problem that it is worth a wholesale rewrite of the healthcare system and an individual mandate to force 

people in. It strikes me as a disproportionate—— 


dkrause on DSKHT7XVN1PROD with LOCATORS
51 

Mr. MCDERMOTT. Let me interrupt you. Because you are saying that in America it is okay for me to expect everybody else to 

pay for stuff and I get it for free. That is what you are basically 

saying. Because the healthcare industry is going to have to take 

care of me. If I get sick and they haul me down to George Washington Hospital, if I don’t have health insurance, they by law must 

take care of me, right? 

Mr. HOLTZ-EAKIN. That is true. That is fine. 

Mr. MCDERMOTT. And that cost will be paid to you, and that 

is okay with you? 

Mr. HOLTZ-EAKIN. I view that as a problem. No world is perfect. But that problem is not a big problem in our healthcare system. 

Mr. MCDERMOTT. It is estimated that it is about $1,000 a year 

on your healthcare premiums—— 

Mr. HOLTZ-EAKIN. That is too high. 

Mr. MCDERMOTT [continuing]. Going for uncompensated care. 

Mr. HOLTZ-EAKIN. I would be happy to get back to you for the 

record, but we did a lot of work prior to filing an amicus brief with 

the Supreme Court cases, and I believe those numbers are just too 

large. 

Mr. MCDERMOTT. They are what? 

Mr. HOLTZ-EAKIN. Too large. A thousand dollars, no. 

Mr. MCDERMOTT. You don’t think it is nearly that much. 

Mr. HOLTZ-EAKIN. No, I do not. 

Mr. MCDERMOTT. So the penalties that we are charging people 

for not insuring themselves you don’t think are too—I mean, what 

was it this year? Ninety-eight dollars or—— 

Mr. HOLTZ-EAKIN. Look, the vast majority of people are exempted. So, I mean, this individual mandate—— 

Mr. MCDERMOTT. Okay. 

Mr. HOLTZ-EAKIN [continuing]. I mean, there are 20 million 

people, as an estimate, who have been exempted. So it is not much 

of a mandate, sir. 

Mr. MCDERMOTT. So you are saying that we should just let 

that continue out there. They don’t have any kind of healthcare 

coverage in advance—— 

Mr. HOLTZ-EAKIN. No. 

Mr. MCDERMOTT [continuing]. So they don’t have any preventive care. So we want to wait until they have had—— 

Mr. HOLTZ-EAKIN. No. 

Mr. MCDERMOTT [continuing]. The stroke. You don’t do anything about their—— 

Mr. HOLTZ-EAKIN. That is not what I am saying, sir. 

Mr. MCDERMOTT [continuing]. Blood pressure before. 

Mr. HOLTZ-EAKIN. No one disagreed at the beginning of this 

debate, going back to 2007, 2008, 2009, that we needed better insurance options and higher quality care at lower cost. There was 

no dispute about that. The question is, how do you get there? 

I believe we could harness market incentives to produce a much 

better insurance system than we saw circa that time and probably 

better than the one we have right now, and people would want to 

buy insurance then. 


dkrause on DSKHT7XVN1PROD with LOCATORS
52 

Insurance is a valuable product. It is something that gives them 

a financial security against the costs of both inpatient and outpatient care. And people buy insurance for that reason. 

Mr. MCDERMOTT. How about the people who are not in now? 

How do they get into the system you are talking about? They have 

to pay, the first year, some high price to get—— 

Mr. HOLTZ-EAKIN. People have to buy products in America, 

yes. I mean—— 

Mr. MCDERMOTT. But if it covers the cost, you don’t care what 

the coverage is as long as they have a piece of paper that says, ‘‘I 

have insurance’’; is that right? 

Mr. HOLTZ-EAKIN. No. I am not sure what you are saying. 

Mr. MCDERMOTT. Well, we have mandatory insurance on automobiles. You have to have a certificate for your insurance before 

you can get your license plate in most progressive States. 

Mr. HOLTZ-EAKIN. Sure. 

Mr. MCDERMOTT. And that means that you have to pay for it 

up front. 

Mr. HOLTZ-EAKIN. Certainly, there will always be some sort of 

standard that qualifies as insurance, because most plans that I 

have seen include a subsidy for people who cannot afford to get insurance. And, prior to the ACA, that standard was the standard 

option FEHB in most States. And so there will always be something that satisfies the requirement of being insurance. 

Chairman BRADY. Thank you. 

Mr. Johnson is recognized. 

Mr. JOHNSON. Thank you, Mr. Chairman. I appreciate you 

holding this important hearing. 

You know, just about half of Americans receive health insurance 

through employer-sponsored health plans. Unfortunately, due to 

ObamaCare, it is actually becoming harder for employers to provide their employees with affordable coverage. Out-of-pocket costs 

and premiums are skyrocketing, and employers face piles of paperwork to try to, you know, comply with the burdensome employer 

mandate. 

If we want to promote affordable employer-sponsored health insurance, it certainly isn’t through an employer mandate. Rather, 

what employers should have is the ability to provide coverage that 

best meets the needs of their business and their employees. 

Mr. Holtz-Eakin, it is good to see you again. Thank you for being 

here. 

I want to ask you about two proposals I think can play an important role toward achieving that goal. 

First off, last week, I met with a constituent by the name of Jeff 

Scheumack from Plano, Texas, who is president of Bioautomation 

Corporation. We talked about an issue that I have worked over a 

decade to try to fix. That issue is association health plans. 

You see, Jeff’s company only has 14 employees and, therefore, 

doesn’t face the employer mandate, but Jeff wants to do the right 

thing and offer insurance. However, because the company is a 

small business, the group insurance plan for his business would be 

more expensive than for a large business. Jeff would like to have 

an association health plan so he and other small businesses can 

join together to purchase more affordable health insurance. 


dkrause on DSKHT7XVN1PROD with LOCATORS
53 

What are your thoughts about association health plans as one of 

the ways to help employers, particularly small business, get affordable health insurance? 

Mr. HOLTZ-EAKIN. The goal is always to broaden the pools. 

And small pools, 14 employees, are going to run into this problem. 

So an association health plan is one way to get a bigger pool and, 

as a result, have better purchasing power and a better spreading 

of risks and would certainly be of some assistance to him. 

Mr. JOHNSON. Well, I would like to talk to you about another 

constituent of mine by the name of Scott Burday, who is owner of 

Trinity Integrated Solutions in Frisco, Texas. 

Also a small business, Trinity Integrated Solutions is not required to provide health insurance, but, for over 16 years, employees have been able to purchase their own insurance plans that best 

meet their needs in the individual market. Trinity Integrated Solutions then reimbursed workers for 100 percent of their premiums 

on a tax-free basis, just like the tax benefit for employees covered 

under a group health plan. 

But now Mr. Burday faces a fine of $100 a day if he continues 

to do this. Why? Because ObamaCare deemed these health reimbursement accounts inadequate coverage. So now Scott is forced to 

stop doing what has worked for his business and workers for the 

last 16 years. Instead, he will have to choose between offering no 

coverage to offering a group health plan that is 15 percent more 

expensive. 

I am going to ask you, shouldn’t we give small businesses, such 

as Trinity Integrated, the flexibility to reimburse its employees’ 

health insurance premiums even if the employee purchases that 

coverage under the individual market? 

Mr. HOLTZ-EAKIN. The health reimbursement accounts were a 

great tool for small businesses. Their employees could get the coverage they wanted. There was a lot of flexibility involved. And, 

with the ACA, the IRS has deemed them to be illegal, essentially, 

that you cannot verify they are buying quality coverage that meets 

the essential health benefits standard. And it is $36,000 fine for everyone. 

It strikes me as a real step backwards from the point of view of 

offering small businesses the tools to manage their costs. 

Mr. JOHNSON. It is supposed to be a free country, isn’t it? 

Thank you, sir. I appreciate your testimony. 

Thank you, Mr. Chairman. 

Chairman BRADY. Thank you. 

Mr. Thompson, you are recognized. 

Mr. THOMPSON. Thank you, Mr. Chairman. 

Mr. Johnson, you can call Scott Burday and tell him help is on 

the way. Mr. Boustany and I have a bill—we would love to have 

you as a coauthor—that fixes the problem that you just outlined. 

So if you want to have your staff talk to either my staff or Charles’ 

staff, we will get you on board. 

Mr. JOHNSON. Thank you. 

Mr. THOMPSON. I was interested, Dr. Holtz-Eakin, in your comment about the small number of people, to Mr. McDermott’s question. 


dkrause on DSKHT7XVN1PROD with LOCATORS
54 

You know, in my district, at the time—districts have changed, 

but, at the time, the uncompensated-care costs in my congressional 

district were running about $50 million a year. And I suspect they 

are about the same in every congressional district across the country. And, you know, you start adding that up, and pretty soon you 

are talking about real money. It is, I think, about $22 billion a year 

based just on those numbers. 

But your comment reminded me of the guy that called my office 

to tell my staff that we didn’t need to do healthcare reform and he 

was living testimony. He was in a car accident, he spent 3 months 

in a hospital, 7 months in recovery after that, and he didn’t have 

any insurance, and he was perfectly fine today. And my staff asked 

him, they said, ‘‘Well, how did you pay for it?’’ He said, ‘‘I didn’t 

pay for it. I told you, I didn’t have the insurance. I don’t have any 

money. But I am fine today.’’ And I don’t understand how you could 

think that that type of model wears well with the American public. 

Folks believe that everybody should, in fact, pay their fair share. 

But my—— 

Mr. HOLTZ-EAKIN. So—— 

Mr. THOMPSON [continuing]. Question is to Ms. Corlette. And, 

based on current data, it appears that more than 95 percent of employers have fewer than 50 full-time employees and, therefore, are 

not subject to the employer mandate. 

So would it be accurate to say that, in reality, the employer mandate only affects a small number of employers? 

Ms. CORLETTE. Yes, I think that is accurate. Not only that, sir, 

but roughly 98 percent of employers with 200 or more workers already provide health insurance. And I think that number is about 

94 percent for employers between 50 and 199 workers. So we are 

talking about a fairly small number of free-riders who are not currently providing health insurance who we—— 

Mr. THOMPSON. What? 

Ms. CORLETTE. Ninety-eight percent of employers with more 

than 200 workers do provide health insurance. And I think it is 

about 94 percent in that 50-to-199-worker category. So we are really talking about a small number of employers that would actually 

have to pay a mandate. 

Mr. THOMPSON. So, in your opinion, notwithstanding the mandate, what drives employers to offer their employees health insurance? 

Ms. CORLETTE. Well, you know, employers, for a long time, 

have been offering health insurance to maintain and recruit a 

healthy, productive workforce. And they have been doing that voluntarily because it makes good business sense. 

And I think one of the ironies here, of course, is that the Affordable Care Act was designed to build on our employer-based system, 

and there was a deliberate intention not to disrupt or overturn that 

employer-based system but, rather, to build on it. But if you are 

going to build on it, then everybody needs to contribute. 

Mr. THOMPSON. Based on your work, do you think that the 

mandate would deter employers from offering coverage? 

Ms. CORLETTE. I do not. 

Mr. THOMPSON. Do you think that employers will continue to 

offer coverage with or without a mandate? 


dkrause on DSKHT7XVN1PROD with LOCATORS
55 

Ms. CORLETTE. I do. Yes. And, in fact—— 

Mr. THOMPSON. Why? 

Ms. CORLETTE [continuing]. Ninety-nine percent of employers 

report in national surveys that the Affordable Care Act is really 

not changing any of their decisions regarding employee benefits. 

Mr. THOMPSON. So, on January 1, the employer mandate 

kicked in for employers with at least 100 workers. Have we seen 

any evidence to date that suggests that most employers stopped or 

will stop offering coverage based on that mandate? 

Ms. CORLETTE. We have not, sir. 

Mr. THOMPSON. Thank you. 

I have no further questions. Yield back. 

Chairman BRADY. Thank you. 

Mr. Roskam, you are recognized for 5 minutes. 

Mr. ROSKAM. Thanks, Mr. Chairman. 

Serving in the House of Representatives I think is some of the 

most interesting work I have ever done in my life, because there 

is this very unusual juxtaposition that a Member of Congress experiences almost on a weekly basis. And I am having one of those moments right now, and I want to explain it to you. 

Saturday morning, I am in front of 200 people at the Wheaton 

bowling alley in Wheaton, Illinois, talking to them about what is 

going on here. And they were not a happy group, shall we say. A 

lot of concerns about the direction of the government and all that 

sort of stuff I hear all the time from people like Mr. Womack—do 

you pronounce it ‘‘Womack’’ or ‘‘Womack’’? 

Mr. WOMACK. ‘‘Womack.’’ 

Mr. ROSKAM. ‘‘Womack.’’ We have a ‘‘Womack’’ here, so you will 

be hearing this all day long. Mr. ‘‘Womack.’’ 

I hear from a lot of people like Mr. Womack who describe this 

situation as it relates to this new health care law, and it is very 

jarring and it is unsettling. 

And yet your testimony, Ms. Corlette, was very disconnected 

from what he said. And so I am wanting to hear from you how you 

reconcile the testimony of somebody—and let me reread two of the 

paragraphs in his testimony and then juxtapose that with what 

you said. And help me square it up, because it just doesn’t make 

sense to me. 

So this is the guy on the front line that says this: ‘‘Our reality 

today under the ACA is very different than what was promised. 

Over the last 4 years, our insurance premiums have risen 60 percent.’’ This is his company. ‘‘Our single coverage now costs $6,400 

annually, and family coverage costs $19,200 annually. However, we 

have also had to double our deductibles to $2,500 and raise the outof-pocket limits by two-thirds.’’ 

Okay. Pause on that. Enter your testimony. 

And, at the conclusion of your testimony, you say, ‘‘Concerns 

about’’—you said a lot of things that were pretty declarative. In 

fact, of all the speakers so far, you have been the most enthusiastic 

about the Affordable Care Act. You are more enthusiastic than Mr. 

McDermott, who basically said, ‘‘Hey, I didn’t write that thing. I 

voted for it, but I want to improve it.’’ But you are a cheerleader 

for this. 


dkrause on DSKHT7XVN1PROD with LOCATORS
56 

And your cheerleading I find a little unsettling, because you said 

this: ‘‘Concerns about rising premiums’’—and I am using ellipses 

here—‘‘have been totally unfounded.’’ ‘‘Totally unfounded.’’ That 

means it is a false claim. That means there is no foundation. That 

means it is almost insincere or naive or just plain foolish for him 

to assert that the Affordable Care Act is having an impact on these 

costs. 

So is that true? Is everything that he said that I characterized, 

is that just not true? How do you square up what you said with 

what he said? 

Ms. CORLETTE. Thank you, Congressman Roskam, for the question. 

So, first of all, I give Mr. Womack credit for trying to offer comprehensive decent health insurance to his workers. It is the right 

thing to do. 

Second of all, Mr. Womack is, I think, an example of employers 

struggling with rising costs, which employers have been doing for 

a long, long time. And, in fact, their costs have been rising for a 

couple of decades now. 

And the overall—and, again, I am looking at overall data, right? 

And what I can tell you is, in the 5 years since the Affordable Care 

Act was passed, the overall growth in healthcare prices has been 

at the slowest rate in history. 

Mr. ROSKAM. So you are arguing—just in the interest of 

time—— 

Ms. CORLETTE. Uh-huh. 

Mr. ROSKAM [continuing]. You are arguing that his costs would 

have gone up, and you are saying, don’t focus in on what the Affordable Care Act promised. You are saying, focus in on what was 

happening before the Affordable Care Act. 

I mean, the first half of your testimony was a reflection in looking back. It was not talking about the claims of the Affordable Care 

Act. 

So you are making the argument, hey, Mr. Womack, this problem 

is going to be your problem no matter what, and it has been mitigated and made better? 

Ms. CORLETTE. I think the evidence is pretty indisputable that 

the growth in healthcare costs and premiums has slowed since 

the—— 

Mr. ROSKAM. I know, but—— 

Ms. CORLETTE [continuing]. Passage of the Affordable Care 

Act. Now, that may be—— 

Mr. ROSKAM [continuing]. Go back to him now. 

Ms. CORLETTE [continuing]. Cold comfort to somebody like Mr. 

Womack, who every year gets a little bit of a percentage increase 

in his premiums. But what the Affordable Care Act promised—— 

Mr. ROSKAM. Right. 

Ms. CORLETTE [continuing]. To do—— 

Mr. ROSKAM. So my friend—— 

Ms. CORLETTE [continuing]. Was to—— 

Mr. ROSKAM [continuing]. Going back to my friend, who just 

said 60 percent. Sixty percent. Come on. 


dkrause on DSKHT7XVN1PROD with LOCATORS
57 

Ms. CORLETTE. But that is not in 1 year, correct? That is over 

4 years. The Affordable Care Act reforms did not go into effect 

until last year. So—— 

Mr. ROSKAM. Okay. 

Ms. CORLETTE [continuing]. A lot of that growth—— 

Mr. ROSKAM. God bless you. You are what a true believer looks 

like. 

So let me reclaim—oh, my time is gone. It went so fast. It was 

so interesting. 

Thank you for taking the time. 

Chairman BRADY. Thank you. 

Mr. Pascrell, you are recognized for 5 minutes. 

Mr. PASCRELL. Thank you, Mr. Chairman. 

Mr. Chairman, thank you for your introductory remarks on the 

bipartisanship we saw in passing SGR repeal. However, I am very 

disappointed to learn, Mr. Brady, that the Senate, in considering 

SGR, will vote on an amendment repealing the individual mandate—the only nongermane amendment. We worked to keep politics out of the SGR. This is very, very disappointing. I think it is 

going to go down the tubes, but that is what they are introducing. 

You would think that my colleagues—cobble together all of the 

time they have spent together trying to undermine the Affordable 

Care Act—and not make it better. How different, 9, 10 years ago, 

with part D, what we did compared to what they did. After we 

voted against it, we cooperated. But that is immaterial to you— 

they would have been able to come up with an alternative. They 

haven’t come up with an alternative. 

In this Committee alone, we have had over a dozen hearings just 

on issues related to the individual and the employer mandates, not 

to mention nearly 64 votes to repeal or undermine. And how many 

have we had on this elusive alternative I keep hearing about? Zero. 

The reality is that this Act is working. It is not perfect, as Mr. 

McDermott said. We have never passed perfect legislation, now 

that I think of it. 

More than 11 million Americans have health insurance coverage 

through the marketplaces. It is startling that only a little more 

than 11 percent still don’t have insurance when you compare it to 

1 year ago, 2 years ago, 10 years ago. 

We have to end the day of the freeloader, because healthcare 

costs affect the economy. That is what we set out to do, and we are 

on our path here. Not perfect. Better than zero, though. 

Additionally, 6 million young adults, half of whom might have 

otherwise been uninsured, have been able to stay on their parents’ 

health care. 

Mandating that everyone must be covered is counter to a free 

lunch. The individual and the employer responsibility provisions 

have been key to the success of the law in keeping premiums 

steady. 

How many times have I been through hearings on social issues 

since I have come to the Congress and heard many people on the 

other side question whether the real people or the right people are 

getting the benefit? ‘‘Do they really need it?’’ All of a sudden, we 

have changed our attitude and our altitude. 


dkrause on DSKHT7XVN1PROD with LOCATORS
58 

The individual responsibility provision keeps free-riders who 

could afford to purchase health insurance from forcing everyone 

else to ultimately pay for the health. You saw the problems we had 

when major corporations started to part-time their workforce. And 

then we discovered where those folks got their health care and who 

was paying for it, and you are looking at him. 

Let us all remember that the individual mandate was a bipartisan idea. Challenge me on that. I will tell you chapter and verse. 

It is interesting that only when Democrats enacted comprehensive 

health reform that the other side became opposed to the idea of individual responsibility. 

I have a letter here, Mr. Chairman, from one of my local newspapers. Since we have had anecdotal stories today, let me introduce 

it. JoAnn Lucchetti of Wallington, New Jersey, in my district, discusses her decision to retire after 30 years in advertising sales. She 

put off retirement because, before the ACA, she could not afford to 

buy insurance on the individual market and she was not yet old 

enough to enroll in Medicare. Got the picture. 

She writes, ‘‘That all changed on January 1, 2014. ObamaCare 

allowed me the freedom to walk away and explore other options on 

a part-time basis. And, by the way, my resignation resulted in the 

hiring of two recent college graduates.’’ 

I ask unanimous consent that her letter be entered into the 

record, Mr. Chairman. 

Chairman BRADY. Without objection. 

[The submission of The Honorable Bill Pascrell follows:] 


dkrause on DSKHT7XVN1PROD with LOCATORS
59 

f 


dkrause on DSKHT7XVN1PROD with LOCATORS21306A.037
60 

Mr. PASCRELL. Ms. Corlette, can you talk a little bit about the 

challenges that people like Ms. Lucchetti, who are wanting to retire 

before they are eligible for Medicare, or those who leave jobs to 

start their own businesses or attend to family matters—many of us 

are in that situation—were facing in the individual insurance market before the Affordable Care Act? 

Chairman BRADY. Ms. Corlette, I am afraid time has expired. 

Mr. PASCRELL. If you have a couple of seconds. 

Chairman BRADY. I think if you could answer that by letter or 

perhaps when another Member questions you. 

Ms. CORLETTE. Certainly. 

Chairman BRADY. Time has expired. 

Dr. Price, you are recognized. 

Mr. PRICE. Thank you, Mr. Chairman. I want to thank you, as 

well, for holding this hearing on this important topic. 

And we have heard our friends on the other side talk about this 

isn’t a perfect law. And we would agree, it is not. What we are trying to get to here is how to address the law and make the policy 

at the Federal level consistent with patient-centered health care. 

As a physician, formerly practicing physician, I can tell you that 

right now we are moving down the path of government-centered 

health care. And your constituents, our constituents, the American 

people aren’t fond of government-centered health care, because the 

decisions are removed from them, the choices are removed from 

them. 

We have heard that the growth of healthcare prices has been the 

slowest for a significant period of time. And I would ask the American people to ask themselves, for whom? For whom is the cost 

less? And the answer to that question is the government. Prices are 

down for the government. But if you are an individual out there 

making $30,000 or $40,000 a year and you have health coverage 

and the deductible is $6,000 or $12,000, which some of them are, 

let me suggest to you that you don’t have health coverage, because 

you aren’t able to afford the deductible. 

And we see that in my former practice. I have my former colleagues call me and talk to me about the challenges that they have 

because of the coverage that they currently have, and they are not 

able to make any arrangements to make payment. They turn 

around and walk out of the office because they can’t afford the 

services that they need. So the quality of health care is actually diminishing because of this law. 

I want to talk a little bit about the consequences of the employer 

mandate on workers and full-time work. 

Mr. Womack, you mentioned that your costs have gone up 60 

percent for health coverage. Now, that money that is now going to 

provide health coverage that is oftentimes more lavish than people 

even desire, and you are being dictated, mandated to do so, how 

many folks could you have hired if you had been able to push that 

money back into your business to be able to provide more jobs? 

Mr. WOMACK. Oh, it would be hard for me to give you a number, but, you know, without a doubt, that is the one area of our 

business that, you know, we would spend more money on, is hiring 

more people. 


dkrause on DSKHT7XVN1PROD with LOCATORS
61 

Mr. PRICE. So we hear from Ms. Corlette that there is, ‘‘no evidence of involuntary part-time work.’’ And I know that she would 

likely say that there is no evidence of any decrease in jobs created 

by the ACA. 

Would you agree with that? 

Ms. CORLETTE. Job growth has actually been at its fastest pace 

in the last year since 1998. 

Mr. PRICE. So you would agree that there has been no effect on 

jobs. 

Now, Dr. Holtz-Eakin, I have in my hand here—in fact, I ask 

unanimous consent to insert into the record an article from Investor’s Business Daily—— Chairman BRADY. Without objection. 

Mr. PRICE [continuing]. On the employer mandate effects of 

ObamaCare. 

Here is an article with a list of cuts to work hours and jobs due 

to the employer mandate, 18 pages long. And I will just site a couple of them on the first two pages from the State of Georgia. 

Southern Polytech State University limited students to 20 hours 

per week. Georgia Tech capped hours for students and temp workers at 25 hours a week. Chatham County reduced hours of parttime and seasonal workers to lower than 30 hours a week. The city 

of Gainesville began limiting part-time work hours, Kennesaw 

State limiting teacher loads, et cetera, on and on and on. 

That is 18 pages, 18 pages, small type, of job after job after job, 

person after person, American after American, who are having 

their hours cut, their job limited, because of the employer mandate. 

So I would respectfully suggest that you edit your talking points 

because they are simply not accurate. 

From an anecdotal standpoint, I have a car dealership in my 

community; 168 full-time workers before the law, now 2. Now 2. 

One hundred sixty-six individuals were moved to part-time work. 

That is real stuff. That is real consequences for people out there. 

Let’s talk about a little money consequence. Dr. Holtz-Eakin, the 

President’s spokesperson, recently said that he didn’t think it was 

accurate that millions of individuals—‘‘millions of individuals were 

going to get a tax bill as a result of the ACA.’’ 

I know that you have done some work on this. What is your estimate on the number of folks who will have to pay more taxes because of the ACA, the Affordable Care Act? 

Mr. HOLTZ-EAKIN. Our estimate is there are 6.3 million who 

will pay the penalty this tax year. 

Mr. PRICE. And how much money is that, do you recall? 

Mr. HOLTZ-EAKIN. I don’t, but I can certainly get that number 

to you. 

Mr. PRICE. My understanding is—— 

Mr. HOLTZ-EAKIN. There is also the additional piece, which is 

mistaken subsidy payments which they have to repay. 

Mr. PRICE. And so what we are doing is taking more money out 

of the pockets of American people to do not what they want but 

what the government is forcing them to do. And so, in the area of 

health care, choices are being significantly limited not just for individuals but for physicians as well. 

And I yield back. 


dkrause on DSKHT7XVN1PROD with LOCATORS
62 

Chairman BRADY. Thank you. 

Mr. Davis, you are recognized. 

Mr. DAVIS. Thank you very much, Mr. Chairman. 

Can I ask each one of our witnesses, if you would just take about 

30 seconds and describe what you would consider to be the purpose 

of the Affordable Care Act. 

Mr. HOLTZ-EAKIN. I believe its intent was to cover more Americans with quality health insurance and to provide higher quality 

care at lower cost. The intent I don’t think there is any dispute 

about. 

Mr. DAVIS. Thank you. 

Mr. Womack. 

Mr. WOMACK. I would agree with that. 

Ms. CORLETTE. I would also agree with that. 

Mr. DAVIS. Mr. Womack, let me ask you—and let me commend 

you on your efforts to provide coverage for your employees. How 

many employees do you have? 

Mr. WOMACK. We have about 200 employees right now. 

Mr. DAVIS. And do you go on the open market to get the coverage? Or have you tried any of the alternatives, such as exchanges 

or—— 

Mr. WOMACK. I don’t think we are eligible for exchange coverage. That is a good question. I don’t think we are. But we have 

been on the open market. 

And just for the record, we did not cut hours for our employees 

either. So I just wanted to get that out there. 

Mr. DAVIS. I really commend you, again, for that effort, because 

it seems that you are doing what some people say can’t be done, 

but you are doing it. 

Listening to this discussion just sort of reminds me of something 

my father used to always say, and that is, ‘‘Where one sits will 

often determine where they stand,’’ when it comes to issues and decisions and rationale that is used. 

Ms. Corlette, I mean, there are many of us who feel that the Affordable Care Act has done exceptionally well, especially when you 

consider where we started or where we have come from. How do 

we improve it? Can we? What do we do? 

Ms. CORLETTE. Thank you, Congressman, for that question. 

And while I do believe the Affordable Care Act was an important 

step forward and has led to an unprecedented expansion in coverage and is meeting its goals, I am not a completely unadulterated 

cheerleader, in the sense that I believe there are areas for improvement. 

And, actually, I think it was Congressman Price, perhaps, or 

maybe it was Congressman Roskam who mentioned one of them, 

and that is around the area of consumer deductibles or cost-sharing. While the ACA did take an important step forward in terms 

of limiting people’s out-of-pocket costs so that there is a maximum 

in any year that somebody would have to pay if they had a car accident or cancer or something like that, many people are finding the 

deductibles in the new health plans to be a significant barrier to 

accessing services. 


dkrause on DSKHT7XVN1PROD with LOCATORS
63 

So I think that is something that we need to look at and provide 

some more financial protection, particularly for folks at the lower 

end of the income scale. 

Mr. DAVIS. Dr. Holtz-Eakin, I am intrigued by this notion that 

somehow payment occurs for health care that individuals will receive, even if they are not insured, if they are not covered, that 

somehow or another the cost just filters back into the delivery system. But somehow it has to get paid for, because there is no such 

thing as a free lunch or free health care or free anything. 

How does that reconcile with the idea of individuals paying as 

opposed to the general public paying? 

Mr. HOLTZ-EAKIN. So let me try to be clear about this. Let’s 

take an upper-bound estimate of the uncompensated care, $100 billion. That is probably too high. It is probably somewhere in the $70 

billion to $80 billion range at most. We spend $3 trillion on health 

care in the United States. And insurance is a product designed to 

cover that healthcare bill by moving it from people who can’t afford 

it to people who can. 

But there is a $3 trillion bill. The uncompensated care is only 3 

percent of that bill. That means that insurance policies are 3 percentage points higher than they would be otherwise, at most. And 

so that is what the individual mandate is trying to solve, this onetime 3-percentage-point cost in the health insurance. 

Okay. Does it solve it? No. It is not a very strong mandate. There 

are tens of millions of people who are either not going to obey it 

or have been exempted from it. So we are not getting people in the 

pool. We are still probably making the free-riding worse because 

they can always come back later. We guaranteed that they can get 

in. 

So there is no consequence to free-riding for a lot of these folks. 

And so we have a very elaborate system that infringes on people’s 

liberty and doesn’t really solve a small problem. That is it. 

Mr. DAVIS. But if we are going to reduce the cost of health care 

overall—— 

Mr. HOLTZ-EAKIN. That has nothing to do with free-riding. 

That is the cost of health care. That is the delivery system. 

Mr. DAVIS. I yield back. 

Chairman BRADY. Thank you. Time has expired. 

Mr. Buchanan, you are recognized. 

Mr. BUCHANAN. Thank you, Mr. Chairman. 

And I want to thank our witnesses for the opportunity today. 

I want to pick up on Mr. Roskam, his point. Everybody brings 

a different background when they come here to Congress, but I 

have been in business 30 years. Before that, I was a franchise 

owner. I was a franchisee, then a franchise owner. And then I was 

a dealer, franchise again. So I appreciate the fact that so many 

franchise owners throughout the country and franchisors put it all 

on the line. 

I would love to have you come to my district to talk to a lot of 

people. I was chairman of our local chamber in Sarasota, Florida, 

maybe 15 years ago. The number-one issue was available and affordable health care and the rising cost. And those costs are still 

today continuing to rise. 


dkrause on DSKHT7XVN1PROD with LOCATORS
64 

It is not unusual, I go to townhall meetings, I meet with different 

people; it is $2,000 a month. I had one woman in Bradenton, another community I represent. She said that she has six employees. 

She is paying $2,000 a month. She said, I can get it for $1,000, but 

I have a $10,000 deductible. That is the reality that is going on out 

there every day. 

And I would tell you that cost—he mentioned 15. It is 15 percent, 

20 percent every year, including now. And, yeah, the employers are 

somewhat paying a little bit less, but guess what? It is getting 

pushed to the employees. It used to be where the employer, myself, 

over the years, you paid 100 percent for the family and everybody. 

Then it got down where you paid 75 percent of the family. Then 

you are just paying for the employee and the family is on their 

own. That is what is happening in America. 

I have some people that are in town today, who have 300 employees. They are in the restaurant business in our area. A lot of their 

employees were working 40, 45 hours a week. You have 300. Now 

they are working 29. He said, not only do they not have health insurance, but their wages got cut 30, 40 percent. That is the reality. 

I had another employer come to me. He had 80 employees. Now 

he is trying to find a way he can get under 50. 

So you don’t have the subsidy—some people get the subsidy, but 

if there are no subsidies, people are being buried with healthcare 

costs. To think the fact that someone is paying—he mentioned, was 

it $17,000 a year for health care for a family? How much did you 

mention? 

Mr. WOMACK. Nineteen thousand dollars. 

Mr. BUCHANAN. Nineteen thousand dollars a year. That is insane. Who can afford to pay that? That is why this system is still 

broken today. It didn’t work back 10 years ago, and it still doesn’t 

work today. 

But I guess I would be interested in getting your comments in 

terms of—you mentioned how many employees? You have 300 employees. I want to deal with reality, because your story is the reality I hear back home. So, maybe, why don’t you frame that again? 

How many employees? And what has happened to your employees 

in terms of their healthcare coverage? 

Mr. WOMACK. Well, it was 200 employees. And we made the 

offer—and before we made the offer of coverage, you know, we 

spoke with our staff just to get a feel for what the appetite was. 

And it was very clear to us that, without throwing my employees 

under the bus, they basically said, ‘‘I wasn’t paying before, and I 

am not paying now.’’ And that has been our experience. 

Mr. BUCHANAN. So how many people have full coverage for a 

family that you are paying or they are paying partly $19,000 out 

of the 200? 

Mr. WOMACK. Oh, very few. I don’t know the number of family 

enrollees that—— 

Mr. BUCHANAN. So, really, there is no coverage, or there is not 

much coverage. Or if it is minimal coverage, maybe it is for the employee. But if they want it for the family, they have to pay the difference. 

Mr. WOMACK. Correct. 


dkrause on DSKHT7XVN1PROD with LOCATORS
65 

Mr. BUCHANAN. So, as a result of that, nobody has much insurance. 

Mr. WOMACK. Correct. 

Mr. BUCHANAN. And that is the reality with a lot of businesses 

across the country. 

That is why I would ask you, Ms. Corlette, to come to Sarasota, 

Florida, come to Bradenton, come to some of our townhalls, meet 

with some of our business chambers. It was the number-one issue. 

I chaired the Florida chamber. It was the number-one issue, was 

rising cost. 

It is not unusual today to pay—I hear it every day—$1,700, 

$2,000 a month. And that is the reality. And it keeps going up 15, 

20 percent a month. 

With that, I yield back. 

Chairman BRADY. Thank you. 

Mr. Smith, you are recognized. 

Mr. SMITH. Thank you, Mr. Chairman. 

Thank you to our witnesses here today. 

Obviously, this is a complex issue, and the American people are 

very frustrated. I hear a lot of folks back home, and it is anecdotal, 

but there is a pattern. And I think it is very important, just like 

it was very important prior to this whole thing, that we listen to 

the American people. 

Ms. Corlette, you referenced that 70 percent, I think it was 70 

percent, of Americans thought their health care was expensive or 

extremely costly. I can’t remember the exact words. Is that accurate? 

Ms. CORLETTE. I believe that was from a survey that found 

that 70 percent of people with health conditions could not find an 

affordable health plan. 

Mr. SMITH. Okay. And yet we understood prior to the passage 

of ObamaCare that roughly 70 percent of the American people were 

happy with the coverage they had. Of course, they were told they 

could keep that, and that certainly has not been the case. 

But I want to speak more specifically, in terms of our meeting 

here today, about the employer mandate and the various coverage. 

CoOportunity Health was a program in Nebraska and Iowa that 

left 120,000 Nebraskans and Iowans without coverage, some of 

whom were, you know, on that plan, having lost the previous plan 

that they were told they could keep but they lost anyway. 

Should there be, in your opinion, an opportunity for those folks 

to be waived from the individual mandate while they continue to 

shop because they were removed from the plan that, while I guess 

it no longer existed—should they be able to take more time or have 

the waiver to find coverage? 

Ms. CORLETTE. Well, as I understand it, the insurance departments in Nebraska and Iowa are working very closely with other 

health carriers in the State to make sure there is a seamless transition for folks who were enrolled with CoOportunity Health. So, 

ideally, there would be very, very few people who would experience 

a gap in coverage of any significant length. 

I will also say that the mandate—— 

Mr. SMITH. Should they be required to pay a penalty? 


dkrause on DSKHT7XVN1PROD with LOCATORS
66 

Ms. CORLETTE. Well, the mandate penalty only kicks in if you 

have been uninsured for 3 months. So for folks who are able to 

move into another plan—and I think the goal for both States is to 

really ensure a seamless transition for folks—they really should 

not be without coverage for as much as 3 months. That would 

be—— 

Mr. SMITH. I can’t suggest anyone would be without coverage as 

a good idea. I mean—— 

Ms. CORLETTE. Right. 

Mr. SMITH [continuing]. Notwithstanding any mandate, I think 

it is a good idea to have health insurance. But the pattern that I 

have observed among Nebraskans is that the plans are more expensive, the premiums are higher, the copays are higher. In fact, 

the copays are so much higher that some providers are seeing people walk away from those high copays, still leaving uncompensated 

care. These patterns are there. 

And I suppose some numbers—you know, we can extrapolate 

from some numbers and say, well, it could be a lot worse. I have 

a hard time standing in front of Nebraskans and telling them that, 

especially when they have experienced what I would say are pretty 

extreme situations relating to their finances and the increasing 

cost of health care. 

Mr. Holtz-Eakin, can you reflect a little bit on overall choices in 

health care? Do consumers have more plans from which to choose 

today than prior to this ObamaCare debate? 

Mr. HOLTZ-EAKIN. I don’t have any numbers on that, but, certainly, the individual market in the exchanges, you are limited to 

four actuarial choices. And that is considerably different than many 

people had experienced, because we know they had plans that were 

essentially declared illegal, and that made them unhappy; they 

would have preferred to have them. So that limited their choices. 

Mr. SMITH. Uh-huh. 

Ms. Corlette, back to choices, if patients and providers could 

come up with something that they found amongst themselves as a 

good situation but did not comply with what planners in Washington, D.C., had in mind, do you see a path for accommodating 

those concerns? 

Ms. CORLETTE. Well, first of all, I find it kind of funny that 

people talk about this Washington-designed benefit—oh, pardon 

me. 

Chairman BRADY. I apologize. 

Ms. CORLETTE. That is all right. 

Chairman BRADY. Time has expired. Again, I would encourage 

you to be able to answer that, perhaps, in a future question or—— 

Ms. CORLETTE. I can submit it in writing. 

Chairman BRADY. Yeah, that would be perfect. Thank you. 

Mr. Kind, you are recognized. 

Mr. KIND. Thank you, Mr. Chairman. 

I want to thank our witnesses for the testimony here today. 

And, Mr. Holtz-Eakin, let me start with you, because I think you 

were understating the significance as far as the individual-responsibility component of what this is at. Of course, there is the freerider problem that we were trying to address. We were also trying 

to get at the guaranteed-issue problem, and that currently is a 


dkrause on DSKHT7XVN1PROD with LOCATORS
67 

major problem in the healthcare system, but also the preexisting 

condition issue, as well, which would make it very difficult to make 

sure that people with preexisting conditions could get the coverage 

they need unless everyone is in. I mean, that is what makes Medicare so popular. Virtually every senior in Medicare has some form 

of preexisting condition, yet none of them are denied coverage. 

And I don’t see how we can make that work unless you prohibited insurance companies from denying people who had a preexisting condition. Otherwise, if you do away with that requirement, the individual mandate, I think people are just going to sit 

around and wait until they do get sick or injured and then decide 

to go out and get healthcare coverage in their life. And there is no 

way any healthcare system could sustain that. There is no insurance pool that could sustain that. 

So, yeah, the free-rider and 3 percent issue is important to address, but I have a lot of rural hospitals, a lot of hospitals in Wisconsin who were complaining for years about the uncompensated 

care that they had to swallow or the cost-shifting that had to occur 

because of the number of uninsured. And that uninsured rate has 

come down tremendously. 

But I also think Mr. Buchanan raised a very important issue. 

And, Mr. Chairman, I would suggest as an appropriate topic at a 

future hearing is for us to have another hearing on why there is 

cost-shifting going on within the healthcare system. Because, clearly, there is. And I think there are a lot of market forces and dynamics that are at play there. 

I think, Ms. Corlette, you are right. I think per-person spending 

on health care is at a 60-year low. 

The Congressional Budget Office, Mr. Holtz-Eakin, that you 

came from is consistently revising down their forecast on Medicare 

and Medicaid spending over the next 10 years. In fact, in the last 

year alone, over a trillion dollars’ worth of savings since passage 

of the Affordable Care Act. And from January to March of this 

year, an additional $146 billion of less spending in Medicare and 

Medicaid over the next 10 years. That is moving the dial. 

When you look at the long-term unfunded financial obligations 

we face, most of it was being driven in the healthcare system. For 

those numbers to be coming back right now is a great untold story 

as far as our longer-term budget implications. 

But there is tremendous cost-shifting, and the average worker 

probably is seeing higher premiums, higher out-of-pocket, higher 

copays. And I think some of that is unrelated to the actual expense 

within the healthcare system. 

And as long as we remain the only developed Nation in the world 

that relies on employer-based healthcare coverage for their workers, we will always get businesses complaining about healthcare 

costs, and we will always have employees complaining about the 

additional premiums and copays and out-of-pockets, that they are 

expensive. And so we have to make a decision as a Nation, whether 

we want to continue with this type of system or whether the rest 

of the developed world has figured something out that we haven’t 

yet. 

But I am also getting tired, Mr. Chairman, of just having these 

hearings where you have one side that uses the Affordable Care 


dkrause on DSKHT7XVN1PROD with LOCATORS
68 

Act as a convenient whipping post to score political points, the 

other side doing their best to defend it and highlight and accentuate the positive things that are happening. And I have to believe 

there is a lot of bipartisan overlap on issues that both parties can 

agree to, that we can work on together, some common ground. 

So let me end with that question, with you, Mr. Holtz-Eakin, and 

then Ms. Corlette too. Do you see some areas of overlap that Republicans and Democrats share on changes that still have to be 

made within the healthcare system that we can start coming together on and working in a more positive fashion, rather than having these weekly hearings beating up ACA or defending ACA, 

which gets us very little traction as far as what we ultimately need 

to see happen in the healthcare system? 

So, Mr. Holtz-Eakin, let me start with you, and maybe you can 

take a crack at that. What are some areas of common ground here? 

Mr. HOLTZ-EAKIN. I think you just saw one of them, and that 

is the SGR repeal, which is just the leading edge of transforming 

Medicare into a social safety net program that is financially sustainable into the future and delivers better care. 

That involves, in my view, changing payment models not just to 

doctors but to providers broadly, getting much more coordinated 

care to our seniors, delivering care in what is a care-appropriate 

and cost-efficient setting, often in the home, using a variety of modern technologies. I mean, it is a 21st-century Medicare system. 

That, to me, is the most potent force for genuine delivery system 

reform. The Medicare system is a big payer, and if we—— 

Mr. KIND. I would agree with you on that. I think there has 

been a lot of bipartisan agreement, getting to a value- or qualitybased reimbursement system. If you align the financial incentives 

right, I think you are going to see a lot of innovation, a lot of creativity in how to deliver those results at a much better price. 

Ms. Corlette, do you have—— 

Ms. CORLETTE. Yeah, no, I actually completely agree. I think 

the Affordable Care Act, the idea was to get everybody in the tent. 

But the next big effort for policymakers is going to be healthcare 

costs. 

And we have been able to take a little bit of a breather because 

cost growth has been slower than anybody expected the last few 

years, but we can’t, you know, be sure that that will be the case 

forever. So I think the next big challenge on both sides of the aisle 

will be tackling those healthcare costs. 

Chairman BRADY. Thank you. 

And, Dr. Holtz-Eakin, just for the record, were you proposing 

eliminating the preexisting-condition provision? 

Mr. HOLTZ-EAKIN. No. The—— 

Chairman BRADY. You were talking about how to get to continuous coverage—— 

Mr. HOLTZ-EAKIN. We are talking about alternatives, yes. 

Chairman BRADY. Alternatives. Possibly bipartisan alternatives. 

Mr. HOLTZ-EAKIN. Yes. I think, for example, if you did the continuous coverage, there is an incentive for people to get into the 

pool before they develop a condition, and they can be medically underwritten. And if there are still people who need to get covered, 

high-risk pools are a good alternative. 


dkrause on DSKHT7XVN1PROD with LOCATORS
69 

Chairman BRADY. Got it. Thank you very much. 

Mr. Marchant, you are recognized. 

Mr. MARCHANT. Thank you, Mr. Chairman. 

Back in the 24th District in Texas, the Affordable Healthcare Act 

is not working. People in my district view it as a government intervention into their private and their business lives. And the number-one failure that they talk to me about is it has actually driven 

up the cost of their health care, which they were perfectly happy 

with before the Affordable Healthcare Act was passed into law. 

The biggest problem I hear from people is that it is costing them 

hours. Now, I have a very upper-middle-class district, but we have 

thousands and thousands of people that have had their hours cut 

back so that their employer no longer had to provide coverage for 

them. 

And now what we are finding out, once they have their hours 

cut, they have a loss of income. Then they are going to the exchange to try to struggle to find some kind of coverage, and they 

are finding that the coverage that is available to them, which is 

usually the bronze coverage, is actually a piece of paper that, de 

facto, doesn’t provide them very much health care. 

In fact, they show up at the doctor’s office or some of them are 

thoughtful enough to call ahead and say, I am coming in, here is 

the insurance I have, and, you know, what is the expectation, how 

much money should I bring. And what is actually happening is that 

people are finding out how much money they are having to pay and 

they are not coming, they are not going to the doctor. And if they 

go, they go in a catastrophic—they find themselves, they are in catastrophic situations where the $6,000 deductible actually is meaningful. And then the doctors and the hospitals are absorbing a fairly inordinate amount of uninsured cost, because they are actually 

having to pick up that first $6,000, because the people, they are basically indigent at that point. 

Yes, they have signed up for the Affordable Healthcare Act. They 

have signed up at the level that the subsidy is given to them. I 

think that the record will show, after the first couple of years, that 

people are not upgrading to the next plan up or the next plan up 

and they are just taking whatever is given to them. 

The other concern that I am beginning to hear from my constituents is that the penalties are about to ramp up. Now, $95, admittedly, was not much of a penalty at all to move people from point 

A to point B. And many of them weren’t paying—they are not paying any income tax anyway, so $95 out of their tax return is not 

going to matter that much. But the next level we go to, I believe, 

is $325, and that is 2016. At that point, it is going to really begin 

to challenge people. And then, in 2017, it goes to $695 per adult. 

Mr. Holtz-Eakin, when we go to those kind of levels, what will 

be the effect on the participation in the affordable healthcare plan? 

Mr. HOLTZ-EAKIN. It remains to be seen. But, you know, those 

are all numbers that would suggest people have a greater incentive 

to get some sort of coverage, whatever it may be, and, you know, 

we should see the exchange numbers go up or the Medicaid participation increase, other things being the same. 

Mr. MARCHANT. And that increased participation, will it drive 

the costs up, or will it bring costs down? 


dkrause on DSKHT7XVN1PROD with LOCATORS
70 

Mr. HOLTZ-EAKIN. When people are covered, they consume 

more health services, and it will drive up the national healthcare 

bill somewhat. 

Mr. MARCHANT. Okay. Thank you very much. 

Chairman BRADY. Thank you. 

Ms. Jenkins, you are recognized. 

Ms. JENKINS. Thank you, Mr. Chairman. 

And thank all of you for your testimony. 

I think this hearing is especially well-timed given that tomorrow 

is tax day. This is the first year that the taxpayers are facing the 

ObamaCare reckoning, if you will. 

Mr. Holtz-Eakin, after the President’s unilateral delay of the employer mandate last year, I introduced legislation to offer the same 

tax and regulatory relief to individuals by delaying the individual 

mandate penalty, as well. Unfortunately, the President threatened 

to veto the legislation. 

When I introduced the bill, I was concerned that this confusing 

law was still misunderstood by many Americans and that, in addition to failing to enroll millions, it would also be a liability for millions more on tax day. And I think our experience shows this to be 

correct. I think you said 6-million-plus Americans will pay the individual mandate tax because they did not enroll, while another 15 

million to 30 million will receive a hardship exemption. 

Mr. HOLTZ-EAKIN. Right. 

Ms. JENKINS. And, of those who did enroll, many are facing the 

reality of repaying Uncle Sam out of their tax refund to cover excessive subsidies given out by the exchange. 

HHS found that, of those selecting a health plan over the exchange last year, 87 percent were eligible for subsidies because of 

the high cost of the plans. H&R Block reported in February that 

52 percent of folks who received a subsidy would be paying back 

at least a portion of that money to the government when they paid 

their taxes. People may have to pay back their subsidy for any 

number of reasons—they switched jobs, they got married, or incorrectly reported information in the first place. The Kaiser Family 

Foundation estimates that the average repayment will be $794. 

So, Mr. Holtz-Eakin, I was wondering, this tax scheme does seem 

expensive and burdensome, so I would just like you to give us some 

advice and counsel and reiterate, if you will, what are the key 

guideposts that this Committee should keep in mind as we work 

toward an alternative system. 

And I know one fellow Member asked about bipartisan solutions, 

and I am not particularly concerned about that. I want to know 

what the right thing to do is that focuses us on patient-centered 

coverage, to make it affordable, to get everyone covered, that still 

maintains our freedoms and our liberties without the harmful effects to the pocketbooks for individuals, families, businesses, or the 

American economy. 

Mr. HOLTZ-EAKIN. Well, I certainly believe that greater flexibility in the insurance offerings is step number one. And I think 

the large number of insurance regulations that were imposed 

overdid it and harmed the choices people would have at premiums 

they could afford. And so reexamining the essential health benefits, 

the community rating provisions, I think, is the place to go. 


dkrause on DSKHT7XVN1PROD with LOCATORS
71 

In the end, you will have to have a system that is also much simpler. I did testimony in front of a Ways and Means Subcommittee 

last year on how complex the subsidy verification system is in the 

Affordable Care Act. It requires an enormous amount of information from individuals, their families, from employers and, you 

know, in my view, is probably four times as complicated as the 

EITC, which already has an error payment rate of something like 

20 to 25 percent. And I am skeptical that even with the best functioning software we will ever really get this right. 

So a simpler way to deliver to the American people subsidies that 

many of them will in fact need and which, you know, people agree 

should be made available so they can afford insurance, that is an 

important thing for this Committee to look at, better ways to implement the subsidy systems. 

And then the most important thing is to be much more, I think, 

interested in healthcare reform, delivery system reform, allowing 

innovative delivery models to sprout across the land. Because that 

is where the cost is, in the end. Insurance just covers the cost of 

the care. The care costs too much; that is the problem. My concern 

with the Affordable Care Act is it is very much a top-down, let’s 

pick a delivery system model and enforce it. That is a risky strategy. 

I would prefer to see, for example, a big reliance on Medicare Advantage, where there are lots of plans that cover lots of different 

geography and have real incentives to really coordinate care—that 

is where the accountable care organizations learned about care coordination—and to make those plans better and to, in the process, 

develop delivery systems that are cheaper and deliver higher quality care. 

Chairman BRADY. Thank you. 

Mr. Renacci, you are recognized. 

Mr. RENACCI. Thank you, Mr. Chairman. I want to really thank 

you for allowing me to be part of today’s hearing. 

Many of the mandates contained within ObamaCare continue to 

concern many Members of Congress, business owners, and individuals, with good reason. These mandates are not only onerous, the 

rules surrounding them are opaque and sometimes contradictory. 

I am especially concerned about provisions of the law dealing 

with the calculation small businesses must perform in order to determine whether or not they are required to offer insurance to their 

employees and to which employees they must offer insurance. 

For instance, due to a misaligned statute in regulation, an employee for a business may be considered a seasonal worker while 

not at the same time considered a seasonal employee. This creates 

confusion for employers that are trying to obey the law but can’t 

afford an expensive team of HR and tax professionals in order to 

ensure they are in compliance. 

This mismatch of policy also creates strange practical effects, in 

which an employer may be unable to rehire a seasonal worker to 

fill a temporary, short-term position without triggering a penalty. 

This issue, in particular, led me to introduce a bipartisan bill, 

Simplifying Technical Aspects Regarding Seasonality Act, or the 

STARS Act, H.R. 863. This legislation would provide one clear definition of ‘‘seasonal employment’’ rather than multiple definitions 


dkrause on DSKHT7XVN1PROD with LOCATORS
72 

applied to different aspects of the ACA’s employer provisions. This 

is just one example of a flawed mandate approach taken by 

ObamaCare. 

Mr. Holtz-Eakin, the contradictory definitions of ‘‘seasonal employment’’ I mentioned could lead to individuals gaining and losing 

employer-sponsored coverage several times over the course of a 

year, a process known as ‘‘churn.’’ 

Are you concerned that this could lead these individuals, through 

no fault of their own, to face either subsidy claw-backs or penalties 

under the individual mandate? And are there negative effects 

caused by the churn? 

Mr. HOLTZ-EAKIN. Congressman, I think this is a very important issue. I am not going to pretend to have mastered all the rules 

on seasonality. We had a little quiz before the hearing to see if we 

knew the answer. Suppose I have 51 employees, they only work for 

119 days, so they are under the 120, but they worked 13 hours 

every day. Are we obligated to offer them insurance? We think the 

answer is yes, but we would love to talk to you about it, as well. 

So I endorse, really, the effort to clarify this. It has bad business 

implications if you are churning your employees. You can’t run a 

business if you have to turn everyone over. It is also bad for the 

employee’s health care, because every time they churn through 

their insurance policy, they are likely getting a different set of providers and a different network. That is not good for their care. So 

this isn’t a good situation for anyone. 

Mr. RENACCI. Yeah. Well, this is exactly one of the issues I 

think Mr. Kind talked about earlier. This is a bipartisan issue, a 

fix that we need to really make. 

Mr. Womack, you mentioned an example of uncertainty caused 

by these complex mandates. Do you have any idea of what that 

costs you as an employer? 

I mean, I was an employer also for 30 years before I came here. 

I actually had seasonal businesses, car dealerships. You name 

them, I seemed to be a part of them, including a CPA firm. And 

I still have a lot of contacts back home that are telling me the ability to try and justify and come up with these costs of time and 

whether you are full-time, part-time—can you tell us a little bit 

about some of the issues that you are running into? 

Mr. WOMACK. Well, you know, we struggled with the decision 

whether to offer coverage or not. I mean, we spent a lot of time 

looking at that. A lot of people in our industry have decided to not 

offer coverage or, as some have indicated, to cut back hours in their 

workplace, and we decided not to do that. But it was really a calculated risk on our part as to whether employees were going to 

sign up or not. 

As far as putting a dollar amount on it, I can’t begin to tell you. 

I can tell you it did have an impact on my decision to sell my IHOP 

restaurants last year. Because, you know, when we had the opportunity to sell, quite frankly, it was something I jumped at. Because, 

you know, that part of the industry was a lot more labor-intensive, 

a lot more employees per dollar, and, you know, our concern was 

where this was all going to go. 

Mr. RENACCI. Thank you. 

Mr. Chairman, I yield back. 


dkrause on DSKHT7XVN1PROD with LOCATORS
73 

Chairman BRADY. Thank you. 

Mr. Young, you are recognized. 

Mr. YOUNG. Well, thank you, Mr. Chairman, for allowing me to 

be part of this Subcommittee hearing. I don’t typically sit on this 

Subcommittee. 

I want to thank all our witnesses, including Mr. Womack, a fellow Hoosier. 

I want to ask questions along the lines of the new 30-hour-workweek definition of full-time employment under the Affordable Care 

Act. You are all familiar with the fact that the ACA redefines a 

full-time workweek from the traditionally understood standard of 

40 hours down to 30 hours. 

And I have heard, as have all my colleagues, from employers, 

restaurants, you know, school, corporations, and others about the 

adverse impact of this, and not just on operations of an enterprise 

but on the workers themselves. Thirty-nine school districts in the 

State of Indiana have actually sued the Federal Government on account of this provision. Industries that employ low-skilled workers 

are particularly adversely impacted. Eighty-nine percent of workers 

impacted don’t have a college degree. 

And just to give some sense of the hourly impact on wages, an 

employee going from 35 hours down to 29 hours is effectively receiving a 17 percent pay cut courtesy of this health care law. An 

employee going from 39 hours down to 29 hours is losing an entire 

workweek’s worth of wages. 

So, Mr. Womack, as a restaurant owner, as someone who has 

owned businesses for a number of years, could you share with us 

the real-world impact of this new 30-hour standard on your business and perhaps speak to those who indicate that the 30-hour 

threshold is having no impact on business? 

Mr. WOMACK. Well, as I just indicated, I have seen numerous 

other people in the industry, you know, seek to meet that threshold. 

It is interesting, my industry, in particular, you know, we have 

a lot of flexibility, and we can adjust to a lot of things, and we have 

done that. But, as you indicated, there are numerous organizations 

out there—school systems are a great example, universities and so 

on—where, you know, they have fixed budgets coming from their 

States and they don’t have any flexibility. And so, you know, looking at this cost, they have had to make that cut. And we haven’t 

done that. 

I have a bigger concern, you know, that by offering coverage to 

our pool of employees, we have gotten numerous comments from 

our staff saying, hey, the fact that you have offered me coverage 

now makes me ineligible for exchange plans, ineligible for subsidies 

for my dependents, and so on. That is a big gap there. And, you 

know, there are just a lot of people at the lower end of the income 

scale who cannot play in this healthcare economy—— 

Mr. YOUNG. Yeah. 

Mr. WOMACK [continuing]. Even if they had the healthcare coverage. 

Mr. YOUNG. So there is a related burden on employers that we 

have heard much about, as well, and that is the reporting requirements associated with the ACA. 


dkrause on DSKHT7XVN1PROD with LOCATORS
74 

And, perhaps, Mr. Womack, you could indicate any resources you 

have had to invest in on account of the reporting requirements and 

maybe even tell us how much time and money have been involved 

in these investments. 

Mr. WOMACK. Well, a tremendous amount of time. 

We have spent the last several years looking at how we were 

going to report. And when the requirement first came out, we kind 

of thought, okay, we think we can do that. And then what we found 

was the data was not readily available. We do our own payroll. We 

do our own accounting. You know, we have our own bookkeepers 

in house. And what we realized was the data wasn’t sitting there 

in our system; we had to create it. 

And because of the requirement, the way it was written, it is literally something that has to be done on a monthly basis even 

though we are not doing it. 

Mr. YOUNG. So I come from a small-business family, and I know 

there is a limited pot of resources. And if they are diverted to do 

one thing as opposed to another, that has real-world consequences. 

Where might you have otherwise spent these resources invested 

in compliance? 

Mr. WOMACK. Well, absolutely into additional payroll, into 

more people. 

Mr. YOUNG. More people. 

Mr. WOMACK. We are in a business where the more people we 

can put into our restaurants, the better we can perform. So we are 

constantly having to choose between, you know, the service that we 

give and other things in our budget. 

Mr. YOUNG. Thank you. 

I yield back. 

Chairman BRADY. Thank you, Mr. Young. 

I know some lawmakers in Congress, probably on both sides of 

the aisle, are tired of these hearings. But my guess is, Mr. 

Womack, you are probably tired of struggling with higher healthcare costs and trying to juggle the impact of this law on your business. And you are like so many others who are trying to do this. 

There may be only a few, frankly, businesses percentage-wise 

that the mandate may hit directly, but I think it is probably 100 

percent that are impacted by this law in some way and that they 

are making business decisions to that effect. Would you agree? 

Mr. WOMACK. Absolutely. Yeah. 

Chairman BRADY. Mr. Holtz-Eakin, I think we are looking for 

bipartisan solutions. You brought together today ideas on how we 

can continue important provisions like preexisting conditions but 

encourage continuous coverage in a way that is smarter, more tailored to what the worker or those who wish to be covered—would 

work better for them and lower the cost. 

Any words of advice as we wrap up the hearing? 

Mr. HOLTZ-EAKIN. Well, I would certainly encourage the Committee to look at those alternatives. I think we are increasingly 

finding that this system, whatever its intentions, is not working in 

a way that is best for the consumers of the health insurance products but also for the other participants in the healthcare system. 

And so I really think it is important to not stop here and to actually push forward to a much more efficient healthcare system that 


dkrause on DSKHT7XVN1PROD with LOCATORS
75 

is really built from the ground up and allows a lot of choice on the 

ground. 

Chairman BRADY. Absolutely. Thank you. 

Ms. Corlette, I think, like Dr. McDermott, there are a wide range 

of opinions about why healthcare costs have slowed. There is no 

consensus that this is due primarily to the ACA. Most cite a combination of a pretty poor economic recovery so people are reluctant 

to spend, higher out-of-pocket costs for people, again, that drives 

down those healthcare costs, better or worse. And so I still think 

there is a great deal more to be seen before drawing the conclusion 

that 5 years of declining healthcare costs are due to the ACA. I just 

don’t see that. 

And I had breakfast with some of our local hospitals over the 

break, and they told me that the fastest growing part of uncompensated care for them is not the uninsured, it is the underinsured. 

It is people who, frankly, have an ACA exchange plan but they 

simply can’t afford the copays and deductibles. And I think that is 

a reality we have to deal with. 

Mrs. Black somehow raced back to the Capitol and made it in 

time for the hearing. As a new Member of our Committee and a 

valued leader in health care, Dr. McDermott and I are proud to 

give you the last question here today. 

Mrs. BLACK. Well, thank you. 

Mr. MCDERMOTT. He did a magnificent filibuster while he 

waited. 

Mrs. BLACK. And I am so grateful to both of you and to the panelists for giving me the opportunity to ask my question, because it 

is a little bit different than some the others have asked. 

And, Mr. Womack—and please excuse me if I am winded, but I 

ran that entire hall. It was pretty good for me. 

I wanted to ask you about the employer reporting piece. Because 

I am now hearing more and more about this and how it is affecting 

the employers in my district—in particular, the fact that the IRS 

was not very timely in getting the instructions out on even how to 

do this employer reporting. But my understanding is that these instructions are going to require pretty significant amounts of information about your employees on a monthly basis. 

Have you had any experience at this point in time with being 

able to make sure you are meeting that mandate? What is it taking? Have you had to hire additional people on, maybe in HR, to 

help you do that? Can you speak to that? 

Mr. WOMACK. Sure. 

We spent the last several years looking at this, and the disturbing thing to us was that the data didn’t exist in our systems 

for that. And so we had to get with our accounting software firm 

that provides us the software, and they were doing this for several 

clients, but they had to build a new report for us that actually does 

calculations every month. 

You know, one of the wrinkles in this whole thing is, when someone comes on board in the middle of the year, it is an entirely different process than someone who worked the prior year. And that 

calculation just occurs over and over and over, to the extent that 

you are doing this monthly and then setting that data aside and 

accumulating it throughout the year. 


dkrause on DSKHT7XVN1PROD with LOCATORS
76 

And it doesn’t sound like a big deal until you realize that it is 

not, and I would have to illustrate this some other time, but it is 

not data that you already have. And, you know, we have our own 

accounting system, our own payroll system. So you would think 

that it would have been simpler if we had simply been able to say, 

this person is eligible and this person is not. But, instead, we had 

to do a whole host of other calculations. 

And, you know, basically, no one had this. All of the big payroll 

companies had to create it. 

And, you know, as I shared in my testimony, you know, the other 

concern I have is whether the Federal Government is ever actually 

going to be able to do anything with the data I am creating. It has 

to go to the IRS and then go to the exchange, and then someone 

has to connect the dots later on to see if it actually applies. 

Mrs. BLACK. So can you estimate or have you done any numbers 

to see what the cost of this was to you, in setting this up? 

Mr. WOMACK. I know we spent about $8,000 on the software, 

but it is literally hundreds of hours that we spent. And part of the 

problem, as someone else shared, was that we really didn’t know 

what we were doing until recently. We spent a bunch of time trying 

to figure it out, and then we got conflicting information later. And 

it has been hundreds of hours. 

Mrs. BLACK. So the fact that the IRS didn’t give guidance until 

February, and then you were responsible for starting to collect this 

information in January—— 

Mr. WOMACK. In all fairness to the IRS, and I know it is hard 

to believe I would say that, but it is really the legislation, the big 

soup that was created in the legislation, that put the IRS in a very 

difficult position. 

Mrs. BLACK. And so it might be helpful if Congress were looking 

at that and listening to employers to figure out how it is that we 

might be able to help you out to be able to abide by the law, I 

would say. 

And I thank my colleague from Washington in mentioning that 

I am working on something that would really help to give some relief to our employers on that. 

And I think it is also interesting, as you related, that we are not 

even sure how this information is really going to be used, if the 

IRS or even if HHS has the ability to be able to use this information in a way that would say it was worth the money and the time 

that we are asking from our employers. 

Since you are an industry where, I would imagine, you have a 

number of part-time employees and a lot of turnover, is this going 

to affect you and those employees that you are giving insurance to? 

In trying to keep the records on people leaving and people coming, 

I would think that would cause an additional complication. 

Mr. WOMACK. Yeah. We have rolled with it, and we have figured out how to work it. It has taken a few years to do that. But 

it is definitely more of a burden. 

Mrs. BLACK. Well, I appreciate what you do for the employees 

that you have employed in your company. You are providing jobs 

for them. You are certainly someone who cares about them, obviously. You are providing insurance. 


dkrause on DSKHT7XVN1PROD with LOCATORS
77 

And I think I am going to take away one thing that you said that 

I am going to keep in my mind and repeat when I am back in the 

district as I meet with the employers, that no agencies are going 

to bail you out when these additional costs are put on you, these 

mandates that you don’t have a funding mechanism for. 

So thank you so much. 

Thank you again, Mr. Chairman. 

Chairman BRADY. Thank you. 

And, Dr. McDermott, would like to ask a followup question? 

Mr. MCDERMOTT. Thank you, Mr. Chairman. 

You suggest that there is too much detail, and it is not the usual 

HR kind of detail that you had to provide for the IRS. 

My assumption is that their rules and regulations were put in 

for you to give data so that they could pick up fraud, if people were 

trying to cheat. Is that correct? 

Mr. WOMACK. Absolutely. 

Mr. MCDERMOTT. Do you think that you could give data that 

would help them be able to do that? 

Because we all care about wasting money. We don’t want money 

to be wasted on these subsidies. So if the subsidies are going to be 

there, we have to construct a system. Do you think that it is possible to make a system that would give them the data they need 

and make it possible for a business to fill it out? 

Mr. WOMACK. Yeah, I do. I think the issue is, if you do it on 

a monthly basis and then turn that data in literally 15, 16 months 

later, you have really defeated the purpose. If we could have an annual-type eligibility and then rework the rules around that annual 

eligibility so that everybody knows, you know, January 1 what the 

status of a person is, that would just be wonderful. 

Mr. MCDERMOTT. And the correction would be done at the end 

of the year, whenever whatever happens. 

Mr. WOMACK. Correct. I mean, we are already in a situation 

where people are going to get to the end of the year and may have 

received subsidies that they shouldn’t have gotten. That situation 

already exists. The difference is we are collecting all this information that is not useful, at least in my opinion, and then turning it 

in late. 

Mr. MCDERMOTT. Okay. Thank you. 

I hope, Mr. Chairman, we could have a hearing on Ms. Black’s bill. 

Chairman BRADY. Thank you. 

I would like to thank the witnesses for their testimony today. 

There is a reason you have been asked back through the years; it 

is you are knowledgeable on a complicated issue. And we appreciate the insight very much. 

And we appreciate your continued assistance in getting answers 

to the questions that were asked where time may have run out. 

As a reminder, any Member wishing to submit a question for the 

record has 14 days to do so. 

If any Member submits a question to you, we ask for your timely 

response to that. 

With that, thank you for a good hearing. 

The meeting is adjourned. 

[Whereupon, at 12:01 p.m., the Subcommittee was adjourned.] 

[Submissions for the Record follow:] 


dkrause on DSKHT7XVN1PROD with LOCATORS
78 


dkrause on DSKHT7XVN1PROD with LOCATORS21306A.038
79 


dkrause on DSKHT7XVN1PROD with LOCATORS21306A.039
80 


dkrause on DSKHT7XVN1PROD with LOCATORS21306A.040
81 


dkrause on DSKHT7XVN1PROD with LOCATORS21306A.041
82 

f 


dkrause on DSKHT7XVN1PROD with LOCATORS21306A.042
83 

Æ 


dkrause on DSKHT7XVN1PROD with LOCATORS21306A.043