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74–642 2001

SMALL BUSINESS ACCESS TO HEALTHCARE

FIELD HEARING

BEFORE THE

COMMITTEE ON SMALL BUSINESS

HOUSE OF REPRESENTATIVES

ONE HUNDRED SEVENTH CONGRESS

FIRST SESSION

ARLINGTON HEIGHTS, IL, JULY 9, 2001

Serial No. 107–16

Printed for the use of the Committee on Small Business

(

(II)

COMMITTEE ON SMALL BUSINESS

DONALD MANZULLO, Illinois, Chairman

LARRY COMBEST, Texas

JOEL HEFLEY, Colorado

ROSCOE G. BARTLETT, Maryland

FRANK A. LOBIONDO, New Jersey

SUE W. KELLY, New York

STEVEN J. CHABOT, Ohio

PATRICK J. TOOMEY, Pennsylvania

JIM DEMINT, South Carolina

JOHN THUNE, South Dakota

MIKE PENCE, Indiana

MIKE FERGUSON, New Jersey

DARRELL E. ISSA, California

SAM GRAVES, Missouri

EDWARD L. SCHROCK, Virginia

FELIX J. GRUCCI, JR., New York

TODD W. AKIN, Missouri

SHELLEY MOORE CAPITO, West Virginia

BILL SHUSTER, Pennsylvania

NYDIA M. VELA ́ ZQUEZ, New York

JUANITA MILLENDER-MCDONALD,

California

DANNY K. DAVIS, Illinois

WILLIAM PASCRELL, New Jersey

DONNA M. CHRISTIAN-CHRISTENSEN,

Virgin Islands

ROBERT A. BRADY, Pennsylvania

TOM UDALL, New Mexico

STEPHANIE TUBBS JONES, Ohio

CHARLES A. GONZALEZ, Texas

DAVID D. PHELPS, Illinois

GRACE F. NAPOLITANO, California

BRIAN BAIRD, Washington

MARK UDALL, Colorado

JAMES R. LANGEVIN, Rhode Island

MIKE ROSS, Arkansas

BRAD CARSON, Oklahoma

ANI ́BAL ACEVEDO-VILA ́ , Puerto Rico

DOUG THOMAS, Staff Director

PHIL ESKELAND, Deputy Staff Director

MICHAEL DAY, Minority Staff Director

(III)

C O N T E N T S

Page

Hearing held on July 9, 2001 ................................................................................. 1

WITNESSES

Kuhn, Michelle, President, Aeffect, Inc. ................................................................ 5

Weber, Douglas, President and CEO United Way of Lake County, Green

Oaks, IL ................................................................................................................ 7

Davis, Sammy, President and Owner, Handyman at Work, Mundelein, IL ...... 10

Canary, Patrick H., Owner, PHC Enterprises, Inc., DBA Alphagraphics,

Vernon Hills, IL ................................................................................................... 11

Berman, Erika, Senior Human Resources Manager, The Revere Group, Limited, Deerfield, IL ................................................................................................. 13

APPENDIX

Opening statements:

Manzullo, Hon. Donald .................................................................................... 30

Christensen, Hon. Donna ................................................................................. 32

Biggert, Hon. Judy ........................................................................................... 38

Prepared statements:

Kuhn, Michelle .................................................................................................. 41

Weber, Douglas ................................................................................................. 44

Davis, Sammy ................................................................................................... 47

Canary, Patrick H. ........................................................................................... 50

Berman, Erika .................................................................................................. 52

(1)

SMALL BUSINESS ACCESS TO HEALTH CARE

MONDAY, JULY 9, 2001

HOUSE OF REPRESENTATIVES,

COMMITTEE ON SMALL BUSINESS,

Washington, DC.

The Committee met, pursuant to call, at 10 a.m., at the Wheeling

Township Offices, 1616 N. Arlington Heights Road, Arlington

Heights, Illinois, Hon. Donald A. Manzullo [chair of the Committee]

presiding.

Chairman MANZULLO. Good morning. The United States House

of Representatives Small Business Committee will come to order on

the field hearing that we’re having here in Congressman Kirk’s

Congressional District. At the beginning of this year, I became

Chairman of the House of Representatives Committee on Small

Business. We’re charged in the broad oversight to investigate

issues involving extremely important component of our economy,

the small business community, which represents 99.7 percent of all

employers and employs 53 percent of the private work force.

When my friend from the 10th District of Illinois asked me to

hold a health care access field hearing, I jumped at the opportunity

to investigate a such timely and significant issue. More timely than

I thought. The Patients Bill of Rights is coming before the House

of Representatives next week.

Unfortunately, small business people have great difficulty providing health insurance for their families, employees, and others.

This dilemma is uncharacteristic and it’s ironic. Unlike larger corporations where CEO’s are solely charged to provide a bottom line

profit before the company shareholders, and rarely interact with

employees, most small entrepreneurs have the unique opportunity

to maintain personal relationships with their workers.

Small entrepreneurs are not just employers. They’re friends and

neighbors. In fact, it’s not uncommon that a small entrepreneur

with limited resources will choose to insure his or her employees

before providing for his or her own families.

A lot of that is because health—cost of health insurance premiums is not a hundred percent deductible for the employer, but

it is for the employees. Figure that one out. Small businesses are

not simply offered the accessibility to the quality health care coverage at afforded cost. I know this from personal experience where

a family that is involved in Italian restaurant business for years,

and has 13 tables and 13 bar stools; my brother is the operator of

it, and his cost of health and accident insurance just for him and

his wife is seven hundred dollars a month. It’s frightening. They

don’t even offer health and accident insurance to their employees

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because it would be cost prohibitive and they couldn’t stay in business. The best health care system for America is grounded in the

free enterprise system.

Congress can still work to eliminate areas in the tax and regulatory code that punish small businesses from purchasing affordable health care.

At this time, I would like to recognize Mrs. Biggert, a fellow

member of Congress from an adjoining Congressional District for

an opening statement, and then to Congressman Kirk.

Mrs. BIGGERT. Good morning. I want to thank my colleagues,

Chairman Don Manzullo, for holding this field hearing and for Representative Kirk in hosting this field hearing in this area.

I grew up in the 10th District, so I feel right at home. I guess

it’s safe to say that today’s hearing just proves the theory that you

can go home again. So, it’s nice to be back in the area.

As a member of the House Committee on Education and the

Workforce, I was very pleased when Congressman Manzullo asked

me to join in today’s hearing, even though I’m not on the Small

Business Committee. And probably you’re asking, then well, why

would a member of the Education and Workforce Committee want

to be included in a hearing about health care and small business?

Well, it’s because the Education and Workforce Committee has jurisdiction over ERISA and ERISA issues. And what is ERISA?

ERISA is the Employee Retirement and Income Security Act, and

is the law that applies to employers who are self-insured, so that’s

why I’m here. And it’s because the Patients’ Bill of Rights is a

workforce issue.

And it’s also an issue that has dramatic impact on whether employers continue to offer health care coverage as an employee benefit in the future.

For most employers in America, health care coverage is far and

away the largest employee benefit offered to workers. But for so

many small business owners, employee health care is a benefit that

they would very much like to offer, but they cannot afford to do so

under the system as it exists today.

And for many self-employed business owners and their families,

health insurance is treated as a luxury under our tax code, which

does not allow them full deductibility. So, health care certainly has

moved to the forefront of Congress’s agenda, and rightly so. Depending on which estimate one uses, there are at least 43 to 44

million Americans that currently do not have health coverage, and

these are frightening numbers in themselves, but it seems that

they’re getting lost in the clamor to pass a Patients’ Bill of Rights.

So, what we need to do, and our challenge really is to work with

state officials and health care providers, and employers to enact patients protection for those who currently are covered, while at the

same time reduce the numbers of uninsured Americans. And this

last point is particularly challenging and relevant to today’s hearing, as the majority of uninsured Americans are in families where

at least one person is working full-time and usually in a small

business. So I think that we the Congress will be able to address

that problem, really in three ways. First would be the long-term solution is to financially empower the health consumer, and the second and short term answer lies with employers, businesses, large

3

and small, and I think we’ll hear probably from our witnesses that

will testify today that Congress has to do more.

And then the third is the most immediate solution, is for Congress to do no harm. And by that I mean that we should not pass

any measures that will increase the number of uninsured Americans by increasing health care costs, and to discourage employers

from offering health insurance as a result of expanded liability and

unnecessary red tape. Mr. Chairman, I don’t see how any of us can

really justify increasing the specter of litigation that we’ve heard

a lot about in the Senate Patients’ Bill of Rights, and ratcheting

up health care costs in the name of protecting patients. So, I think

sometimes even the most well intentioned proposals that end up increasing the number of uninsured are bad public policy and a step

in the wrong direction.

So, with that in mind, I think that we’ll be able to hear what the

witnesses have to say, and I know that there is a bill that’s been

proposed by Dr. Ernie Fletcher in the U.S. House—I keep going

back to my roots of the Illinois General Assembly—But, that has

put together a strong Patients’ Bill of Rights, so that I hope that

the witnesses will address some of that. And I think that we’ll see

floor action on that, as you said, next week. But, I know that our

witnesses today who own and manage or work in a small business

will have their own insider view of Dr. Fletcher’s bill and the Senate Patients’ Bill of Rights.

So, I’m eager to hear from all of our witnesses today, because

they are the ones that are truly impacted by Washington’s actions,

and we want to be able to match their views with what our colleagues in the Senate and the House are proposing. So again, Mr.

Chairman, thank you for allowing me to participate in today’s

hearing, and I look forward to hearing from our witnesses, and to

working with Congressman Kirk on the efforts to ensure that

Americans have access to quality, affordable health care insurance.

Chairman MANZULLO. Thanks very much.

[Mrs. Biggert’s statement may be found in the appendix.]

Chairman MANZULLO. Congressman Kirk.

Mr. KIRK. Thank you, Mr. Chairman, and welcome to Arlington

Heights, America’s hometown. And I first want to thank the Wheeling Township officials for helping establish this hearing. This is a

vital hearing for us. We have 41 million Americans without health

care insurance. I think that government policy should close that

gap so that more people have insurance rather than less. Northwest Community Hospital, other hospitals that we have here, their

emergency room only collects 25 cents on every dollar of care given

because of so many uninsured Americans getting care there, and

it’s done in the most expensive way at latest stages. If they had

health care, they would come earlier to the doctor and be treated

less expensively.

Half of all Americans work for small business owners, like the

men and woman we have here today. Some of them are able to

offer health care insurance to their employees. I want to particularly highlight what we’re going to hear from Doug Weber on the

United Way of Lake County, one of our leading charities, which are

facing a 29 percent increase in health care insurance premiums.

But also, Sammy Davis Jr., running Handyman at Work, who does

4

not offer health care to his employees, and is not able to. I think

that we should make sure that health care is affordable for you;

that we get tax advantages to you, and we make it at all possible

through association, membership, or Medical Savings Accounts to

make you able to care for your people and their families. We need

to make sure that we expand health care coverage. I am strongly

in favor of a Patient’s Bill of Rights. We need to make sure that

you have access to a second opinion, that you have a right to designate your OB/GYN as your primary care provider, or especially

your pediatrician for your kids. But as we implement a Patient’s

Bill of Rights, and I think we will, we have to be careful. We have

to make sure that we emphasize care, not court. I don’t see how

unleashing a liability wave and ending up in a lot of lawsuits helps

the health care system.

I think that what we want to do is create a system which emphasizes that you get the care you need right away. The legislation

that Congresswoman Biggert mentioned, also authored by Congresswoman Nancy Johnson of Connecticut, has another approach,

separate from the Senate approach. It would establish an independent review panel of doctors appointed by the Secretary of

Health and Human Services, and in urgent cases, within 24 hours

they would be able to override a decision not to provide care

through your HMO. If the plan still insisted on not providing care,

then you go to court. Now, I don’t know any plan that would override expert opinions and launch a lawsuit against itself. And I

think this is a way that we emphasize care over court. Because I

don’t see how ending up in years-long litigation helps you. I think

we need to reverse the decisions made to emphasize that you get

care for yourself and for your family.

And I’m worried that the Senate bill has been estimated to raise

health care premiums by an extra 4.2 percent, according to the

Congressional Budget Office, and we want to make sure that we

realize as we increase health care premiums, we make the pool of

uninsured Americans larger. I think we should do the opposite, and

make—and everyone have access to health care insurance, and that

is particularly through the small business community that we’re

going to hear from here. So, Mr. Chairman, thank you. Thank you

for coming.

Chairman MANZULLO. Appreciate it very much.

Mr. KIRK. And I’m happy that you’re here.

Chairman MANZULLO. Glad to be here in your Congressional District. Your district is very compact, mine—my district runs from

McHenry County all the way to the Mississippi River, and with redistricting, we go even further. We go from Algonquin to Fulton,

Illinois; pick up three more counties, so nine counties; a lot of challenges there.

The rules are your testimony should be limited to five minutes,

but I don’t see a clock, Paul. Paul, do you?

Mr. DENHAM. We don’t have a clock.

Chairman MANZULLO. Well, what you’re going to have to do, is

why don’t you sit here behind me. When you get to four and-a-half

minutes, maybe tap me on the shoulder, or bang me on the head

or something, and then I’ll sort of get a little fidgety (knocking

gavel) and that gives you about a minute to finish up. I’m going

5

to have to leave here at eleven o’clock. We’ve been working on a

Gulf War Syndrome Bill for four years now, and that’s coming up

very quickly tomorrow and I have to be in Washington later this

afternoon, so I’ll give you the gavel to conduct the hearing then.

Mrs. BIGGERT. Mr. Chairman, could I have unanimous consent to

enter my statement?

Chairman MANZULLO. Absolutely. All the statements of the members of Congress, plus all the witnesses, can be entered into testimony. In fact, if there are any spectators out here that have any

statements that they would want to be put into the record, I will

allow that also. Make sure it’s two or three or four pages and not

a tome, because this is printed—the printing cost could be pretty

expensive.

Mr. KIRK. That’s gotta be expensive.

Chairman MANZULLO. That’s correct. Okay.

First witness is Michelle—is it Kuhn?

Ms. KUHN. Kuhn.

Chairman MANZULLO. Kuhn.

Ms. KUHN. Uh-huh.

Chairman MANZULLO. And she is the president of——

Ms. KUHN. Aeffect, Incorporated.

Chairman MANZULLO. Aeffect, Incorporated, from Deerfield, Illinois. And, Michelle, we look forward to your testimony.

STATEMENT OF MICHELLE KUHN, PRESIDENT, AEFFECT, INC.,

DEERFIELD, IL

Ms. KUHN. Okay. Thank you. Good morning. My name is

Michelle Kuhn and I’m president of Aeffect, Incorporated, a small,

woman-owned business located in 10th District of Illinois. Aeffect

is a marketing and communications research firm that consults

with large corporations and federal government organizations.

I would like to begin this morning by first stating what we, as

a group, may already recognize. That is, America needs small business, not only to allow people within this country to pursue the

American dream, but also to provide our country with new products and services to facilitate economic growth and ensure America’s leadership worldwide. It is important for our Government to

nurture the growth of small businesses in order to allow them to

survive.

My company, Aeffect, Incorporated, has been in business now for

seven years, and many individuals conclude that we have passed

the critical three to five years mark where most small companies

fail. In fact, within the last few years, we made the transition from

micro-company with a handful of employees, to a company that

now employs approximately 20 full-time individuals and other freelance or part-time and freelance employees. This transition has allowed us a unique perspective on the impact of health care costs

for the emerging company.

When our company was first established in 1994, we experienced

considerable difficulty obtaining health care coverage, given that

we had but a few employees. Moreover, the cost of this coverage

per employee was relatively high, and in total, represented five

percent of our annual revenue. Our health care costs were also

6

quite unpredictable from year to year and were unrealistically high

by claims made by only one or two employees.

Since our size and employee count has grown beyond 10 employees, however, our perspective on health care coverage has changed

dramatically. Once we exceeded 10 employees, our size classification pushed us into underwriting scenarios with different rate

structures that made health care benefits somewhat more affordable. Additionally, with more employees, our health care plan cost

per employee has been reduced somewhat. From the company’s

perspective, the cost of providing a fully sponsored PPO plan for

our employees actually represents now less than one percent of revenue on an annual basis. Comparatively, the cost of our labor is

our highest expense, representing about 35 to 40 percent of revenue.

Over the past few years, however, we have seen the cost of our

health plan increase considerably, despite the fact that we’ve generally remained loyal to our insurer, and have not incurred major

claims. Last year, the cost of our plan rose about 18 percent, while

our insurer simultaneously reduced reimbursement proportions for

in-plan expenses. Clearly, reduced coverage takes a larger share

out of the take-home pay of our employees, and is specifically significant for single parents who must pay the cost of adding several

dependent children onto the plan.

While I recognize that health care costs are rising rapidly, so too

is the level of care that our employees are receiving. I do not support efforts on behalf of Congress to trim health company margins,

given that I believe doing so will hamper research and development

efforts that might some day save your life or mine.

In fact, I think our world’s HIV epidemic provides a very good

example of how alternative forms of government intervention may

lead to reduce costs in the long run for small companies. As a small

business that operates in an industry that has seen many individuals affected by HIV—that is the advertising and marketing industry—we believe that Government needs to escalate its efforts to encourage people to routinely practice safe sex and to engage in HIV

testing. Small businesses, especially in our industry, struggle with

how to balance compassion for the worker infected with HIV, and

the cost associated with their care. Strong investments in insuring

effective preventative communication can, over the long run, reduce

the burden of health care costs for small companies.

Similarly, the Government can help small companies, like

Aeffect, by helping us keep our people healthy. As a result of their

resources and influence in the managed care market, larger companies provide and obtain special employee health education programs to prevent high cholesterol, hypertension, et cetera in employees and to prompt healthier behaviors such as physical activity.

Such preventative and health education programs are nearly always absent from small company environment. Help us keep our

employees healthier, by investing in health education and national

prevention campaigns that over the long run can reduce our health

care costs.

Government can also help small businesses by ensuring they are

treated equitable and fairly when it comes to obtaining and providing a health care insurance coverage for their employees. SpeVerDate 11-MAY-2000 05:48 Sep 07, 2001 Jkt 074642 PO 00000 Frm 00010 Fmt 6633 Sfmt 6602 E:\HR\OC\A642.XXX pfrm02 PsN: A642
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cifically, government can ensure that rates a small business pays

per covered life are not dramatically higher than rates paid by

larger companies. Because large companies pay lower rates, they

can afford to expand coverage to the employee and his dependents.

This makes it more difficult for small companies to be competitive

in hiring and retaining employees in a market occupied by larger

companies.

Similarly, government can help small businesses control other

costs of operation—— Chairman MANZULLO. We are getting to a point, Michelle, okay?

Ms. KUHN. Okay. I’m just wrapping.

Chairman MANZULLO. All right.

Ms. KUHN. In order to offset rising health care costs. Specifically,

government can streamline processes for government acquisitions,

set aside contracts, SBA certifications, and SBA loan guarantees.

To put this in perspective, my company’s health care cost would

have to increase nearly a hundred percent each year to equal the

labor investment required to secure an SBA loan guarantee.

In summary, I would like to encourage the Committee on Small

Business to think creatively and outside-the-box when comes to

helping small companies bear the burden of rising health care

costs. The answer to the issues at hand may lie in helping small

business in ways that have nothing at all to do with health.

Chairman MANZULLO. Thank you very much. Appreciate that.

Ms. KUHN. Uh-huh.

[Ms. Kuhn’s statement may be found in the appendix.]

Chairman MANZULLO. Our next witness is Doug Weber. He’s the

president and the CEO of the United Way of Lake County in

Libertyville.

Mr. Weber, look forward to your testimony.

STATEMENT OF DOUGLAS E. WEBER, PRESIDENT AND CEO,

UNITED WAY OF LAKE COUNTY, GREEN OAKS, IL

Mr. WEBER. Thank you very much. I’d like to welcome members

of Congress also to our community and thank you, Congressman

Kirk, for bringing this to Lake County and to the community.

I’m president and CEO of the United Way of Lake County, but

I’m not a for-profit business, so I don’t own United Way; it’s owned

by community and owned by the donors and cooperates with individuals who contribute to our organization. The rising costs of

health care in America are having a negative and severe impact on

the ability of health and human service organizations to help people in our community and our country.

According to the Internal Revenue Service, there are over eight

hundred thousand non-profit, 501(c)(3) health and human service

organizations in the United States. It estimate that at least 90 percent of these non-profit organizations have 25 or fewer employees.

For most of these organizations, the largest budgetary expenditure

is the salary and benefits of people who work for these organizations, many of who are not able to afford health care.

The staggering cost of increased health care insurance is impacting many non-profit organizations because they’re not able to hire

staff to perform needed services. Turnover rates at many non-profit

organizations are 50 percent, or more, per year because of inVerDate 11-MAY-2000 05:48 Sep 07, 2001 Jkt 074642 PO 00000 Frm 00011 Fmt 6633 Sfmt 6602 E:\HR\OC\A642.XXX pfrm02 PsN: A642
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creased health care deductibles and out of pocket costs. The effect—this affects productivity and the ability of the organization to

provide the services that they are in business to deliver.

More and more employees and lower paying health and human

service sector jobs are paying a much higher percentage of their

pay for health care costs for themselves and their dependents. The

United Way of Lake County is a relatively small employer, with 29

full-time paid staff. This year alone we experienced an increase of

40–47 percent in our HMO health insure costs. This is on top of

increases in the past two years of 36 percent and 22 percent respectively.

We’ve had to eliminate our prescription drug card this year and

increase our annual deductibles and out-of-pocket maximums to

lower the actual impact our health insurance premiums, passing

more of the cost on to our employees. Our primary source of revenue is from donations from individuals and corporations. During

our last annual campaign, we raised over 11 million dollars last

year in Lake County, thanks to the generosity of many, and are the

second largest United Way in the State of Illinois, and 60th out of

1,400 in the nation. Our donors would not tolerate annual administrative costs increases in same proportions as our health care insurance costs increases. We have left several positions unfilled and

cut other costs, in addition to our health plan changes, to accommodate our huge health care cost increases. We pride ourselves in

only having a 12 percent administrative and fund-raising costs; we

are working hard to maintain that.

Our organization is not able to afford the cost of dependent coverage, either, for our employees, and our employees must bear a

hundred percent of the cost to cover a spouse, children or both. Yes,

we offer a Cafeteria 125 Plan so employees can pay these expenses

with pre-tax dollars, but a large portion of their pay is still going

for health care costs. For each employee, this translates to an actual cost of $287.00 per month to cover the children, $416.00 to

cover a spouse, or $703.00 to cover the entire family for each employee; and they pay a hundred percent of these dependent costs.

Organizations still are able to provide coverage for the individual

employee at $319.00 per employee, but this is becoming difficult. A

number of our employees, who are single parents, and are paid in

the twenty-five thousand to twenty-nine thousand dollar range,

must pay 15 percent of their gross income to provide their children

with health care insurance. This is in addition to the $500.00 annual deductible and two thousand maximum out-of-pocket costs

they must incur. One of our employees, who earns thirty-two thousand dollars annually, is paying $8,436.00 to provide health care

insurance for his spouse and children. That translates to 26 percent of this individuals gross annual income. That does not include

the $3,000.00 in deductible and out-of-pocket costs that they must

incur.

That is outrageous.

Many other non-profit health and human services agencies in

Lake County do not have the ability to provide employees with

health care coverage at all. Something must done to control the

staggering increases that health care providers are passing on to

9

small business, both non-profit and for profit, and to provide affordable access to health care for all.

United Way of Lake County’s insurance premiums are based on

the health care costs for our small group of 29 employees. While

we’re a relatively healthy bunch, we have experienced a few major

medical claims that pushed up our health care experience costs.

We are told that our significant health care premium increases

are direct correlation to the medical and prescription costs of our

small group. Something must be done to allow smaller employers

to pool together and spread the insurance costs among larger

groups of employees and control health care costs.

The United Way of Lake County is the umbrella organization

that supports 104 programs run by 48 separate non-profit health

and human services organizations in Lake County. While most of

these organizations are relatively small employers, ranging in size

from one to 200 employees, when combined together, their total

employment is over 2,800 individuals. If we could develop a pool for

health insurance among these smaller organizations, we’d provide

a much larger group to share health care costs. Nationally there

are 1,400 local autonomous United Way organizations who are

members of United Way of America, our national association based

in Alexandria, Virginia.

In the past we’ve look for ways to pool health care insurance

costs and programs, but have been challenged by difficulties in offering some time of national health care plan. There are potentially

tens of thousands of non-profit agency staff in local United Way organizations and the agencies we support, that could pool resources

and share health care insurance costs. There needs to be some type

of national HMO or insurance plan to offer large groups of small

employers.

Virtually all of the non-profit organizations in Lake County and

around the country are experiencing devastating health care insurance cost increases. This is crippling their ability to provide the

much needed human care safety net for people in need. Within increased health care costs like we are experiencing, non-profit agencies have to make very difficult choices. Do we cut staff; do we cut

staff who are the lifeblood of the organization; do we reduce or

eliminate health care coverage for our employees, resulting in lost

staff and high turnover; or do we eliminate needed services.

Non-profit organizations rely on the generosity of individuals,

corporations, foundations, and local state and federal government

sources for their financial support. These contributors are investing

in the good work that is done by each of the hundreds of thousands

of these organizations they support. Something needs to be done to

control the increasing rate of health care costs so that these donors’

government investments in needed human services are going to

help people and not to paying skyrocketing health care expense.

I would like to thank you for the opportunity testify before the

U.S. House of Representatives Committee on Small Business on

this most important issues facing our nation and it’s small employers, and I urge you to consider solutions that will impact that

health care crisis in America. Thank you very much.

Chairman MANZULLO. Thank you, Mr. Weber. We appreciate

your testimony here.

10

[Mr. Weber’s statement may be found in the appendix.]

Chairman MANZULLO. Next witness, pretty famous name,

Sammy Davis, Jr.—now, I have met Sammy Davis, Jr., about an

hour ago—is with us today with a group called Handyman at

Work, testifies that an employer that cannot afford to offer health

and accident insurance. Is that correct?

Mr. DAVIS. That’s correct.

Chairman MANZULLO. Mr. Davis, come forward for your testimony.

STATEMENT OF SAMMY DAVIS, JR., PRESIDENT AND OWNER,

HANDYMAN AT WORK, MUNDELEIN, IL

Mr. DAVIS. Thank you. Good morning Mr. Chairman and congressional members. Handyman at Work is a small business, a

newly launched business and I am president/owner of Handyman

at Work, and in addition, another business called Breakaway Advantage, so I’ve got a unique perspective, I think, with the impact

of health care on small businesses.

There’s really three primary areas that we’ve have been hit with,

and that’s access and affordability; there’s also the issue of the

complicated procedures of the processes, and lastly, there’s an issue

with protective health information to the employers.

In terms of access and affordability, based on the high cost of

health care insurance, we actually did our business plan and financial plan about a year ago, before we launched this business, and

we had allocated costs for health care insurance. In going back and

revisiting that plan about every 90 days, we found it was escalating

right off the chart. And it was beyond every projection that we had

imagined, and at that point we decided would were not going to

offer health insurance or health care to our employees. We have

been fortunate and it has kind of changed the graphics of employees that we have. Every one of our employees are married. Their

insurance coverage is through their spouses, so they do have some

form of health care coverage. In revisiting this, though, the costs

are skyrocketing right off the charts for their affordability, too, and

they’ve asked for the company, as an employer, to help them offset

those costs.

We’ve looked at a number of different options at this point. Some

of the larger insurers, some insurance brokers, and so forth, and

that’s where it goes into the second area, which is complicated procedures and processes.

At this point, it seems one of the ways to lower the tier for some

of the insure costs are taking on additional administrative responsibilities as a business owner. And at this point, we don’t feel we

have that kind of expertise to do this properly, and with the complicated procedures, and what the employees are asking for at this

time, we really don’t have the resources to do that. So, we’ve kind

of pushed back from there.

One of the other things that have happened is because we are

small, we have four dedicated full-time employees at this point,

and we’ve noticed that from the insurance quotes that we’ve been

getting for health care coverage, if we get to the eight to 10 employee tier, there seems to be a significant drop. Another drop at

20 employees and above. So, it seems to be this is a severe penalty

11

for start-up businesses and businesses with small numbers of employees.

The last aspect that we run into has to do with—it’s linked to

health care and the Patients’ Bill of Rights. And this is where the

employees and self-employed individuals, they’re expecting informed consent on what’s going to happen with disclosure of personal health information. And there’s a number of restrictions with

that and responsibilities.

What we do find, though, is that in a lot of cases, as an employer, we aren’t informed of what is going on with the employee

in terms of medications, sometimes with health care, and we’re

open to a lot of risks that we’re not aware of. And in our case, in

the Handyman business, we’ve got people on medications that

could expect dizziness and other things, and they could be on a second floor of a roof, they’re doing things for individuals; there are

a fleet of vans on the road. And we really need to have access to

a lot more medical information to make some very informed decisions and to have a safe work environment.

Chairman MANZULLO. Appreciate that very much.

[Mr. Davis’s statement may be found in the appendix.]

Chairman MANZULLO. The next witness is Pat Canary. Is that

how you pronounce it?

Mr. CANARY. Yes, that’s right.

Chairman MANZULLO. Or as an Irish, a cannery, is that—— Mr. CANARY. It’s Irish.

Chairman MANZULLO. Okay. All right. Pat Canary is the owner

of PHC Enterprises, Inc., and d/b/a AlphaGraphics out of Vernon

Hills, Illinois. Welcome here to the Small Business Committee and

look forward to your testimony.

STATEMENT OF PATRICK H. CANARY, OWNER, PHC

ENTERPRISES, INC., DBA ALPHAGRAPHICS, VERNON HILLS, IL

Mr. CANARY. Thank you very much. It’s a privilege to be here

this morning on this very important topic, and the chance to

present one man’s view of health care issues facing small businesses. I’ve owned a small quick printing business for the past 11

years, and typically we have six to seven full-time employees, so

we’re under that magic 10, where the health care, their quantity

discount. Our employees include two experienced graphic designers, two experienced offset press operators, and customer service

and sales representatives.

We have a significant investment in state-of-the-art equipment,

technical equipment, including computers, digital printing equipment, a new computer-to-plate technology.

Our business is service-oriented, fast-paced, and price-competitive. Recruiting, training, and retaining key, experienced employees

has been a crucial factor in our success of our business.

Before taking the plunge into small business ownership, I

worked in the corporate world for 25 years; spent 15 years with

Deloitte & Touche in management consulting, achieving partnership, and then spent 10 years with a large international transportation company as an operations executive. And as a corporate executive, I can tell you that I always took health care insurance for

granted. It was always there, administered by the personnel deVerDate 11-MAY-2000 05:48 Sep 07, 2001 Jkt 074642 PO 00000 Frm 00015 Fmt 6633 Sfmt 6602 E:\HR\OC\A642.XXX pfrm02 PsN: A642
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partment. The benefits were good; the company paid a significant

share of the premium; and cost to me was relatively insignificant.

When I became a small business owner, my view of the health

care insurance dramatically changed. When I started my business

11 years ago, a lot of similar small companies did not provide any

health care insurance for their employees. However, in a few short

years, I noticed that small companies like my own were starting to

do that. And because I wanted to recruit and retain good people,

I felt I needed to do so. I wanted to provide group coverage wherein

the company contributes to the employees premium.

After researching the alternatives, and there were not many, I

opted to retain a reputable employee leasing company. Employee

leasing companies take on many small businesses to provide payroll services and group health care insurance, and other personnel

related services. That idea—the idea that they could provide that

group with better rates for the health care, this approach seemed

to work for a while. But then suddenly my rates for both payroll

services and health care rose sharply. I shopped around and went

through the hassle of changing employee leasing firms.

Again, this worked for a while, and then suddenly my rates rose

again. So, at that point, I decided employee leasing companies

wasn’t the answer anymore, so I engaged a payroll service to handle that, and I engaged an insurance agent to help me look for a

plan that we could come up with that could fit, and we came up

with an alternative where—an appropriate PPO insurance plan for

my employees, and that was reasonable, again, for a short period

of time. But then the increases started coming.

One of my key employees found that he could get insurance less

expensively out of our group, on his own, but after a year came

back, because that didn’t work for him after all. In the last two

years, my insurance rates have gone crazy. From 1999 to 2000, we

had a 19.7 percent increase in our health insurance rate. And from

2000 to 2001, we had a 16.8 percent increase on top of that. With

these rate increases, I instructed my insurance agency to get—insurance agent, to get rate quotes from a number of other insurance

companies. After analyzing the rates and benefits, we found there

was no advantage in shifting companies. It was the same.

In the meantime, another one of my key employees came to me

with a situation wherein he used some health care services, and

with his co-pay, and then invoices they sent following, he—he was

not getting covered very well. And he had an increase in his premium. He, too, was able to opt out of our plan because, fortunately,

he had gotten married to a lady who is on a big company’s plan,

and that, as you say, was another option. But that isn’t always the

case.

As the rates go up, the small businessman, and particularly the

10 and under, we are in a—between a rock and a hard place. We

have to watch our cash flow and maintain our costs to stay in business and be healthy, and yet we still want—need to retain good key

employees.

So, you look for your alternatives, and there aren’t many for the

small business company. You know, large corporations, labor

unions, large specialized industry association, have the opportunity

13

to put groups together for health care cost efficiency. Small business has no such option.

My research has taken me to look at some other things that are

going. Some of the Chambers of Commerces are starting to try to

put groups together. Some associations, like the Tooling Manufacturing Association located in Park Ridge, has put together a plan

for their industry group, and I would urge you to call Bruce Baker,

their president, to find out. They’ve been doing it for 40 years, and

they’ve learned a lot about putting together groups of companies in

they’re association. Unfortunately, it doesn’t help me because I’m

not in their industry, but they are somebody to talk to, and I—their

name and phone number is in my written testimony, as well as the

Chamber in Libertyville is working on it; the Chamber in

Naperville have been working on it for six or seven years. I’m hoping something can come out, but they’re not ready yet and they’re

all concerned about these spiraling costs and what we are facing

now.

So, in closing, let me just say that as an experienced business executive, and now a small business owner, I am extremely frustrated and concerned about the future of small business and health

care. Small businesses appear to have few options at this point, but

must find a way to stay in business.

And if the Patient Bill of Rights, which has—you all are facing

right now, if those implications aren’t thought through, and if rates

continue to spiral upward, and if small businesses can be sued,

then speaking for small businesses, forget about it.

Chairman MANZULLO. Well, you do have opinions.

Mr. CANARY. Thank you.

Chairman MANZULLO. I told you I admire you, sir. And thank

you for your testimony.

Mr. CANARY. Thank you for having me.

[Mr. Canary’s statement may be found in the appendix.]

Chairman MANZULLO. Our next witness will be Erika Berman.

Erika is a Senior Human Resources Manager at The Revere Group,

Limited, in Deerfield, Illinois. We welcome you to the Small Business Committee and look forward to your testimony.

STATEMENT OF ERIKA BERMAN, SENIOR HUMAN RESOURCES

MANAGER, THE REVERE GROUP, LIMITED, DEERFIELD, IL

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

Kirk, Mrs. Biggert. My name is Erika Berman and I’m the Senior

Human Resources Manager of The Revere Group, located in Deerfield, Illinois. I am pleased to be able to testify today on behalf of

the U.S. Chamber of Commerce at this field hearing on the issue

of small business and health coverage.

The Revere Group is an established business and technology

consultancy. We help companies adjust technology and business

challenges in areas such as Enterprise Application Development,

Supply Chain Management, Customer Relationship Management,

and Project Management. The Revere Group was founded in 1992.

We are headquartered in Deerfield, Illinois and have offices in Milwaukee, Charlotte, Boston, Cleveland and Denver. We currently

employ approximately 400 employees. In 1999, we had revenue of

14

58 million, and in 2000, revenues of 68 million. So I realize I’m on

big side of this panel today.

The topic of your hearing is both important and very timely. For

The Revere Group and for thousands of businesses in Illinois and

around the country, being able to provide quality health coverage

is essential to our ability to do business. But finding and keeping

affordable health coverage is not easy. Once you have coverage you

like with a doctor and hospital network that you’d become accustomed to, huge premium increases can force companies to change

plans. That is exactly what we were forced to do.

As highlighted in my previously submitted written statement,

with our health and dental plan expiring June 30th, 2001, The Revere Group began the renewal process in April. Our provider at the

time presented us with a 29.4 percent increase in our health insurance premiums, and a 14.8 increase in our dental premiums. This

would be a combined increase of approximately $450,000.00 that

would be shared by The Revere Group and our employees. Given

the recent economic downturn, and the softness in the business and

technology consulting arena, this increase was not something we

could afford at this time.

With the assistance of an insurance broker, The Revere Group

was presented to a number of potential providers. Our goal during

this process was to be able to offer our employees comparable or

better coverage than they currently had, and to contain costs as

much as possible for both the employees and the company. This

was coupled with the challenge of finding a national provider who

could support all our locations.

After reviewing proposals from three potential carriers, we settled on one for our health insurance. The new provider offered a

15.3 percent increase from our current premiums, guaranteed our

first year rates for the initial 12 months of the contract, and also

agreed to a second year rate cap guarantee provision, depending on

our incurred lost ratio. While the coverage with our new plan is

better in most situations, we were no longer able to offer a managed care option, only a PPO option. We chose to offer two PPO’s,

a high coverage option and a lower cost, low coverage option. The

high option plan is most like our old point of service managed care

option. For those employees previously enrolled in the Point of

Service, they had over a 30 percent increase in their portion of the

premiums to receive comparable coverage. The one-third of employees who were on the PPO plan with the old carrier actually experienced a decline in their portion.

Additional efforts to control costs included increasing doctor visit

co-pays and introducing a three-tier formulary drug program. For

dental insurance, we chose to the stay with our previous provider

because we were unable to find comparable coverage. This was a

14.8 increase to premiums, and included some minor plan cases to

the managed care option and implementing a Blind PPO option.

What my written testimony did not include that I’d like to take

a moment to point out, was the time involved in actually making

this transition. Similar to other small businesses, we have small

corporate functions. The Revere Group’s human resources department is made up of a staff of two and-a-half employees, a benefit

administrator, a part-time manager, and myself. During the

15

months of May and June, approximately 60 percent of my time,

and close to 80 percent of the administrator’s time was spent on

this transition.

Like many small employers who offer health coverage, we do so

because it’s good business practice, and helps us retain and attract

employees. The Revere Group competes for business and talent

with companies like Accenture, Ernst and Young Cap-Gemni

Sapiant, a number of other technology consulting firms and other

businesses that employ technical professionals. Not offering high

quality affordable health insurance is not an option for us.

We hope Congress does not pass legislation like the KennedyMcCain Health Care Bill that passed the Senate last month. Our

business cannot afford to take on unlimited lawsuits, nor can we

afford to the pay the extra cost that allows unlimited lawsuits

against our health plan. The numerous health plan mandates here

in Illinois and in other states, and the double digit increases to insurance premiums, has shown that those liability costs that come

with the Kennedy-McCain Bill will not be absorbed only by the insurance industry. Ultimately, employers have paid for every single

one of these well-intentioned but costly health plan benefits. We

need some health plan relief just like the tax relief passed earlier

this year. Unlike large businesses, The Revere Group doesn’t have

the resources to self-insure under federal ERISA laws.

Furthermore, like us, more and more small businesses have employees in two or more states. Under legislation like the Small

Business Health Care Fairness Act, sponsored by Representatives

Ernie Fletcher and Cal Dooley, small business could purchase coverage through associations and other organizations that meet federal requirements.

In addition to the Fletcher-Dooley legislation, permitting Association Health Plans under ERISA, some other ways Congress can

help small businesses and working families with their health plan

costs include: Modifying the Medical Savings Account program to

allow both policyholders and employers to make contributions;

lower the deductible thresholds and permit full MSA funding of the

deductible; permitting individuals who pay their health insurance

premiums without employer assistant to take a full tax deduction

to those costs; and establishing a refundable tax credit for low to

moderate income individuals and families for the purchase of private health coverage, including premiums to participate in workplace coverage.

Small businesses are the backbone of our nation and we have

driven much of the economic boom of the 1990’s. We are also seeing

our share of the economic bust. So when we get hit with large

health plan rate increases, we need to make adjustments in our

overall business plan to compensate. Our bottom line is not growing at the same rates as our health plan increases. Health coverage

helps insure access to care when you need it, and economic security

for working families. Congress needs to make access through affordable health coverage for small business a priority for the health

of our families and for the health of our economy.

Chairman MANZULLO. Thank you very much.

[Ms. Berman’s statement may be found in appendix.]

16

Chairman MANZULLO. I’m going to take a few minutes and ask

some questions, initially, then unfortunately, I have to get back to

Washington because of that huge Gulf War Bill. In fact, we—a lady

from Freeport, Illinois, Donna Steel, her husband is probably the

youngest Gulf War veteran to die of what we know as Gulf War

Syndrome. We’ve been working on that now for about three years

and we have been fighting the Veterans Administration. Apparently, it doesn’t make any difference whether it’s Democrat or Republican President, it’s always the veteran versus the VA, so I’ve

got an appointment back in Washington this afternoon.

I’ve got a couple jurisdictional questions, and I want to start with

you, Ms. Berman.

Ms. BERMAN. Okay.

Chairman MANZULLO. You stated on page 8, ‘‘Unlike large businesses * * *’’—now you’ve got four hundred employees, ‘‘* * * Revere Group does not have resources to self-insure under federal

ERISA laws.’’ That means you’re operating under state laws in several states?

Ms. BERMAN. We can self-insure. We just don’t have the funds

to do it. So self insurance was an option that we looked at as we

went through this renewal, but we were unable to do it because of

the costs.

Chairman MANZULLO. But are you still under ERISA in terms of

being free of state mandates?

Ms. BERMAN. I’m not sure of the answer to that question. I mean,

I know that we are under ERISA guidelines and we are still under

state mandates in terms of having to offer certain health provisions.

Chairman MANZULLO. You’re under state mandates because—

okay, so then you’re not total a hundred percent ERISA.

Ms. BERMAN. I think so. I’m not sure.

Chairman MANZULLO. Judy, would you know the answer to that?

Ms. BIGGERT. I think probably the preemption takes effect if they

have insured under——

Chairman MANZULLO. If they self-insure——

Ms. BIGGERT. If they self-insure, but if they don’t, then under the

state mandate.

Chairman MANZULLO. Okay, thank you.

The other question I have, and I can’t tell you how timely this

is. Mr. Weber.

Mr. WEBER. Yes.

Chairman MANZULLO. We have been looking at the Associated

Health Plan that is in the Fletcher—Dr. Fletcher Bill of Rights—

I’m sorry, Patients’ Bill of Rights, and from what I gather from

your testimony is what you want is to be able to get into the Association Health Plan.

Mr. WEBER. We’d like to be able to pool small, non-profit employers together.

Chairman MANZULLO. Right. That would be an AHP, but the

problem that I see with the definition—Do you have language there

Congressman? Paul, do you have it? Where is it?

Mr. DENHAM. It’s right here.

17

Chairman MANZULLO. It’s in the back of the book. It’s under Section 801. Association Health Plans does not appear to pick up the

definition of a not-for-profit.

Mr. KIRK. Right.

Chairman MANZULLO. So, I’d be willing to work with you, Congresswoman Biggert, and you, Congressman Kirk—— Mr. KIRK. I think we have an amendment form.

Chairman MANZULLO [continuing]. For an amendment. And,

Doug, I would get a hold of your folks in Washington, and they

need to start waving some red flags on that immediately. I mean,

Red Cross can’t get in, United Way can’t get in.

The churches, they may have the many—may have similar problems. And—— Mr. WEBER. Well, there’s hundreds of thousands of people employed in the non-profit sector in the country and they’re mostly

small employers, and so if there is a way to pool these groups

together—— Chairman MANZULLO. Well, that’s what the AHP would do; it

would allow you to do that. But I just think this is an error in

drafting.

There is no reason why you should not—not-for-profit should not

be included in that.

So, Paul, if you could get on the horn right away and draft an

amendment on that and put all three of our names on that; do you

want to do that? I’m sure you can be pulled into it.

Mr. WEBER. Our national association will be called today and let

them know about this. I think that would be great. It would provide assistance.

Chairman MANZULLO. The other question I have is somebody testified that insurance went up 47 percent.

Mr. WEBER. Yeah, yes.

Chairman MANZULLO. I mean, I just, you know.

Mr. WEBER. That’s a cost increase based on our experience in the

plan, and that was from our local insurance provider.

Chairman MANZULLO. Because of the small number of employees.

Mr. WEBER. Because of the health—we had a catastrophic

health—a heart—heart issue, and we had—several people had catastrophic health issues. They’re fine now, they’re back to work, but

the costs—they’re trying to recoup their premium, basically, is

what they’re doing.

Chairman MANZULLO. Just from you?

Mr. WEBER. Correct.

Chairman MANZULLO. Why can’t insurance companies, and they

can, take a hundred employers and all their employees and treat

them as one group?

Mr. WEBER. I don’t know. I can’t answer that question.

Chairman MANZULLO. They can.

Mr. WEBER. They can.

Chairman MANZULLO. They can under the present laws. The

question is, why aren’t they doing that?

Mr. WEBER. Our premiums are directly in relationship to the cost

experience of our group. It’s experience rated group.

Chairman MANZULLO. I noted, I think, Erika, when you changed

companies, did you keep one of the old companies of the PPO?

18

Ms. BERMAN. We kept—no. We went to—for our health insurance, we went to a completely new provider.

Chairman MANZULLO. Right.

Ms. BERMAN. We had been offering a managed care option, and

then we went to offering two PPO options.

Chairman MANZULLO. Right. But the PPO option that was similar to the old plan, it was actually a decrease?

Ms. BERMAN. For those people that had been PPO plan with our

old—in our previous option, we had a Point of Service and a PPO.

Chairman MANZULLO. Right.

Ms. BERMAN. And those people that had been on the PPO with

the old plan and transferred over to the new PPO had a decrease

in their premiums.

Chairman MANZULLO. Well, that’s interesting. Was that the

same insurance company or different insurance company?

Ms. BERMAN. Different insurance company.

Chairman MANZULLO. That rated that PPO?

Ms. BERMAN. Well, we think what had happened is that when we

started really getting deep in the cost is that our previous provider

had been passing along a flat rate increase to us all along, and

what should have happened is when—we’re, again, an experience

rated, so they look at experience ratios. When you looked at the experience ratio, we should have been increasing our Point of Service

employee’s cost more than our PPO people. Our PPO employees,

which was about one-third of our employees, their experience ratios

were in the 50 percentile.

So, the insurance company was making a lot on those people,

and then on our experience ratio on the Point of Service, employees

was over a hundred percent, so they weren’t making anything on

those people, they were losing money. And we had been just passing off a flat rate increase, but when we actually had to split it out,

we were charging the PPO people a lot more than we should have

been, not understanding how the costs were playing out. So, when

we actually split it this year, we were able to find that we had been

overcharging them, because we had thought it was the higher cost

option, and we brought their cost down to be in line with the new

options.

Chairman MANZULLO. Let me—This may not be a word of comfort, members of Congress do not get a fancy—and I don’t care— we have Blue Cross-Blue Shield; do you have that?

Mr. KIRK. Standard option.

Chairman MANZULLO. Standard option. No chiropractic coverage,

very little dental coverage, no orthodontic coverage. And I’ve got

three teenagers. Fortunately, two have straight teeth and the other

one was three thousand dollars and we had to write the check ourselves on it. The only difference is in the Federal Employee Health

Benefit Program, you have your choice of programs. But as it turns

out, if you are a member of Congress, there is only really one

choice because you live in two different cities, and that’s Blue

Cross-Blue Shield.

You know, I’m not criticizing Blue Cross-Blue Shield, because

they have worked, along with many companies, in trying to keep

down the cost of it. What we’ve been trying to do, and it’s been a

subject of a hearing that we’re going to have on Wednesday, on the

19

HCFA—the horror stories, is to show that a lot of the costs of

spikes in health and accident insurance premiums, has to do with

the manner in which the government, the Health Care Financing

Administration, also called ‘‘Hell Can’t Find Anybody,’’ the manner

in which they are treating the medical providers. As many times,

as second class citizens, dragging ’em into court, outrageous fines,

unreasonable guidelines, no guidelines, and, in fact, we’re going to

have a local chiropractor who got a bill for two hundred fifty thousand dollars from HCFA. By the time we were done with him, it

got down to zero because the people at HCFA don’t know the difference between X-rays and X Files. That the total incompetent

federal government organization that is running the entire health

care industry, and they’re the ones that another party wanted to

be in charge of prescriptive drugs of the entire country.

So, I appreciate you’re being here. I’ve got to leave, unfortunately. I’m going to turn over the gavel to Congressman Kirk, and

thank you, Congresswoman Biggert, for coming. Appreciate it very

much.

Mrs. BIGGERT. My pleasure.

Chairman MANZULLO. Thank you.

Mr. KIRK. Well, the Chair recognizes Congresswoman Biggert.

Mrs. BIGGERT. Thank you.

Miss Kuhn, you mentioned in your testimony that with the rising

health care costs that are taking a larger share out of the takehome pay of your employees, is the company passing on more of the

health care costs to the employee, or is it just—— Ms. KUHN. No, we’re not. We are bearing the burden of those increases, but what’s happening is that as our cost as a company is

going up, what the insurer is doing is reducing coverage levels. For

example, we had a plan, a PPO plan, that covered employees for

one hundred percent of their expenses if they went to a preferred

provider. Not only did we experience the 18 percent increase, but

the insurer took that level down to 90 percent.

Mrs. BIGGERT. Are some of the employees not taking coverage,

then, because of costs? Is there any employee that’s saying, well,

I can’t afford to take the coverage?

Ms. KUHN. I have some people who are insured by spouse’s plans

in larger companies.

Mrs. BIGGERT. Right, but is there anybody that doesn’t have any

coverage at all? Is that true of any of you?

Mr. CANARY. Yes. I have one young fella looks at what—even

though the company would pay part of his premium, he has to pay

the remainder of it, and he looked at it and he said, ‘‘Well, I’m

young and healthy. I ain’t paying it. Nothing is going to happen to

me.’’ And that may be true for ‘‘x’’ number of years, but at some

point he might need it.

Mrs. BIGGERT. Would that have any effect on his chances of getting health insurance in the future? Is there any penalty that they

pay?

Mr. CANARY. I’m not aware of any.

Mrs. BIGGERT. Mr. Davis.

Mr. DAVIS. I have had situations where individuals have turned

down the offer of employment because of the lack of health care

coverage, and in those cases they were either young, single individVerDate 11-MAY-2000 05:48 Sep 07, 2001 Jkt 074642 PO 00000 Frm 00023 Fmt 6633 Sfmt 6602 E:\HR\OC\A642.XXX pfrm02 PsN: A642
20

uals that didn’t have an option of getting insurance other places,

or they were single parents and needed the additional coverage.

Mrs. BIGGERT. But they wanted to make sure they had a job

where they had the coverage?

Mr. DAVIS. That’s correct.

Mr. CANARY. Could I add just one thing to your question?

Mrs. BIGGERT. Yes.

Mr. CANARY. And that is, I’m not sure what happens if this

young person decides later to join the insurance plan, he might

have to have a physical for the insurance company or something;

whereas, if he’s hired on, he’s got 30, 90 days, or whatever, he

doesn’t need it.

Mrs. BIGGERT. But if he comes back and decides in the second

year of his employment or something, that he should take it, there

is nothing that bars him from coming into the plan, other than

maybe his physical—— Mr. CANARY. That’s my understanding.

Mrs. BIGGERT [continuing]. Abilities.

Mr. WEBER. We do have several employees who receive reimbursement through the Kid Care Insurance Program, which, I

think, is something available to all employers, small and large,

that I encourage Congress to continue supporting. That’s a federally funded program, and it does—one of the greatest challenges of

employers don’t want to recognize that there they’re paying their

employees at a lower wage, so they’re reluctant to bring the Kid

Care Program to the employee’s awareness, and so we have been

trying to get employers to promote the Kid Care program. It is an

insurance, direct reimbursement of the portion of the premium, so

that’s an excellent benefit for smaller employers.

Mrs. BIGGERT. And in Illinois that’s been hard to get the word

out, I think, for—— Mr. WEBER. Yes, it has been.

Mrs. BIGGERT [continuing]. For people to sign up for that. I know

I was in the Illinois legislature when it came through Illinois from

the federal government. It’s been a problem that we had so few; I

think we started out with forty thousand or something, and it was

not up to speed.

Mr. WEBER. But it’s a good benefit for lower paid employees.

Mrs. BIGGERT. So, would you think of some ways to advertise

that to employees?

Mr. WEBER. There is a variety of individuals and organizations

who are enrollers. United Way of Lake County has been an enroller

of people, and we’ve gone out to companies to offer seminars and

work shops and spread the information around, make it available.

The Lake County Health Department, many of the hospitals in

Lake County, are all participating as enrollers, and an employee

has to sign up. Based on their income, they can receive a portion

back of what they’re paying their out-of-pocket insurance premium

costs. So, it’s a great program.

Mrs. BIGGERT. In so many cases it seems like we have the Bill

of Rights, and there’s concern about the HMO’s denial of care and

the liability issue, and yet we’re seeing HMO leave Illinois and pull

out of the insurance, which really concerns me that we’re not going

to have even the health care providers to be able to give the care,

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depending on how we enact legislation or what we do. And that’s

why I am concerned about doing no harm in some of these cases.

Have you had companies that have actually left Illinois; just give

up and said, well, it costs too much? I know we had to provide

more reimbursement to the HMO’s, as well as hospitals, in our last

appropriations bill, in ’98/’99, and now we are looking at this again.

Have you had—has anybody had any coverage that was lost?

Mr. KIRK. Yeah, we’ve lost all of our Medicare HMO’s in Lake

County, yeah, under Medicare.

Mr. WEBER. A number of non-profit organizations have closed

programs, or shut down programs, because of staffing costs.

Just this past week, Catholic Charities of the Archdiocese of Chicago announced it was laying off 36 employees and not filling another 32 vacancies, 68, approximately, employees, because of an increase of only one-half of one percent in their funding, primarily

from the state, but that was direct relationship to cost increases in

the organization, much of which is tied to employee benefits and

health care.

Ms. KUHN. We haven’t experienced that exact scenario, but when

we had fewer than 10 employees, we actually had a difficult time

finding a plan that would provide coverage for fewer than 10. In

fact, we were never able to identify a dental plan for fewer than

10 employees.

Mrs. BIGGERT. I know that I’m from the 13th Congressional District and my predecessor Harris Fawell, who was head of the Workforce Protection Subcommittee of the Education Committee, and he

had for many years sponsored the Patient Access Bill and I know

that it passed last year and it passed the year before that in the

House and it has passed the Senate, but somehow it has never

been signed into law. This is to ensure that those 43 million people

will find insurance, or be able to be insured, particularly through

the associations. That would certainly help the non-profit, but is

there anything that you see as far as what we should be doing with

access to insurance that we haven’t talked about that we can do

for those people that have to have the spouse insurance, that we

can be able to offer through legislation, like the savings accounts?

I know we’ve talked about that; is there anything else that you can

think of?

Ms. KUHN. I think one of the things that Sammy mentioned and

that I also heard it from Erika, was that putting a plan together

for small company takes a considerable amount of time and effort.

If Congress can put some effort toward prepackaged plans, I think

that would save us a lot of time, because when you have just two

or three employees, chances are you’re not going to have a Human

Resources, HR expert, on your staff, and that puts a great burden

on the other employees who don’t have specialties in those areas.

Mrs. BIGGERT. Well, somehow, I don’t know if Congress can be

the medical provider in putting together a plan, but I think that

what we can do, really, is to remove the obstacles and the barriers

for those companies to be able to operate without the rules and regulations, that we have. Having been in the Illinois Legislature, I

know that there are also bills that are passed within the Illinois

Legislature that are also mandates for health insurance. Do you

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have any ideas on what is happening in Illinois that causes a barrier for you to be able to provide affordable insurance?

Ms. Berman.

Ms. BERMAN. Just some thoughts on that.

I think the mandates that have been passed are all good. I mean,

there are things like fertility and contraception, and I think those

things are all important, and I don’t think that those are the things

that have added huge, huge costs, you know, to our plan. But some

of the—I remember just in recently signing our contract with our

new provider, we had to—there are some thoughts on mental

health, providing comparable mental health that I think could be

very costly. And then we also had to sign something saying that

we weren’t going to offer trials in cancer treatments. So, I mean,

those types of things, if they become mandated, I could definitely

see more severe increases, too, in our health premiums.

Mrs. BIGGERT. That is something that we find in balancing, because we have all the different groups coming in and saying if we

don’t have the funds for the research and development, we’re not

going to be able to find the cures. Then all the people that are in

health plans want the money coming out of the same pocket, but

it still is something, you know, that we are really looking at.

And I can remember what we used to call the drive-by deliveries,

or the drive-by mastectomies. You know, women weren’t allowed to

stay in the hospital more than 24 hours after having a baby, and

I think that we in Congress thought that was unreasonable, as did

the State of Illinois. But those things do all necessitate an added

cost, too.

So, the balance there is difficult.

Ms. BERMAN. I think on those things, though, you know, those

are short hospital stays, so they don’t have a big bottom line impact to our experience ratios, so that might be ten thousand, but

a possible cancer case, or, you know, long-term catastrophic illness,

could be hundreds of thousands of dollars.

That hits our bottom line experience ratio, and when those numbers start to rise, that’s what affects our bottom line premiums.

Mrs. BIGGERT. There was talk, too, of the privacy issue, and the

costs that go up. Does that bring in something like DNA, too? You

know, we also have the bills, for when somebody goes in for a test

and their genetic background shows that they are predisposed to

a certain disease, or cancer or whatever. And if the insurance company knows that, they might not insure them, and that’s been a

big factor in not allowing that to be known to insurance companies.

Because people wouldn’t be able to get coverage. And who knows

if they would ever get that even if you have a predisposition, so

that’s another factor, too, of knowing whether to insure somebody.

Mr. WEBER. Just to get back to an earlier question about the

state. One of biggest issues in Illinois is the COLA increases, cost

of living allowance, that the very small amounts that non-profits

are getting in their contracting, and they’re still experiencing these

high insurance premium rates, health insurance rates, that they’re

having to eliminate staff or cut staff positions, and in the non-profit

sector, as you know, there is no tax credits or tax incentive. They

don’t affect the non-profit sector because we don’t pay taxes like

the for-profit sector, so nothing that we pay in terms of premiums

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or any kind of health care costs are deductible because we are tax

exempt organization. So, whatever is done for relief needs to also

be factored into the impact on the non-profit tax exempt sector as

well.

Mrs. BIGGERT. Well, I’ll yield to the Chairman now.

Mr. KIRK. Thank you.

General question. None of you oppose a basic Patients’ Bill Of

Rights that guarantees a second opinion or access to specialty care,

right? Because I think, you know, broad based support for that.

Let me ask a bit tougher question. Except for Sammy that’s already out of the business, what increase would cause you to drop

coverage? I guess, Pat, this is directly for you. What would you see

would be untenable for AlphaGraphics?

Mr. CANARY. Well, if we continue to have the same increases as

I mentioned we had the last two years, that would. You know, I

don’t know how long we can keep covering it, because as you raise

the question, it’s those increases have taken place, we haven’t

passed those last two increases along to our employee’s portion of

the premium. We have absorbed that as our company, which affects our cash flow. And we have to manage that very carefully. So,

I would say, if that keeps going up like that, at some point we’ll

just have to say, ‘‘We’ll give you some money. Now go find it. We’re

not.’’ That, coupled with the chance of being sued. And you can tell

me, you all better than—I can read the newspaper. The Senate bill

of Patient Bill of Rights does or does not allow the employer to be

sued?

Mr. KIRK. Well, my understanding of the legislation is, if I allege

in the Senate Bill that are you directly managing your health care,

and I will turn that word into anything that I want it to mean,

then you are now open up to a suit.

Mr. CANARY. And that’s what I meant my concerns are. The spiraling cost and the chance—as a small businessman, we can’t afford the lawsuits that seem to prevail this whole area. Larger companies can, but small businesses, if they get involved in a lot of litigation, they’re out of business. I’ve seen it in my industry. I’ve seen

it in other—with small businesses, the litigation can be, hey, that’s

it. That’s why I said forget about it if that’s gonna happen.

Mr. KIRK. Let me ask the rest of you. If you were directly open

to suit, would you recommend ending your health care, or would

you stick to it?

Mr. CANARY. I would.

Mr. WEBER. I don’t know what impact that would have on the

non-profit sector. We do have liability insurance to cover employeetypes of suits. You asked about when will we drop the insurance.

We would be losing employees before we would drop the insurance.

I think that’s the issue. We would have the costs so cost prohibitive

that somebody wouldn’t work for us. I think that would be biggest

challenge, and we have people now that are close to getting welfare

if—with all the costs they’re paying for their insurance, they’re better off not to work and collect unemployment or collect other type

of government assistance, that—— Mr. KIRK. That’s the last thing we need is less people working

for United Way—— Mr. WEBER. Exactly.

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Mr. KIRK [continuing]. Because it’s sort of a safety net.

Mr. WEBER. Exactly. I mean, the programs and services we support are in business to help the people who have the greatest

needs, and they’re the people that are getting hurt the most by increased health care costs.

Mr. KIRK. Now, Michelle, in your testimony you emphasized the

HIV epidemic, and I’m, you know, coming from Deerfield where we

invented the AIDS test right here. It’s certainly something we’ve

dealt with almost longer than anyone else. Talk about how that experience of the exceptionally high health care costs is affected.

Ms. KUHN. Our industry?

Mr. KIRK. Yeah.

Ms. KUHN. Well, I think that HIV has affected many people in

the advertising and the marketing community, and what we’ve

really seen across the board is really high escalations in companies

that provide those services, provide insurance coverage. And I also

think that we haven’t been able, as small companies, to provide the

health education that’s necessary in order to stop the epidemic or

to reverse it.

Mr. KIRK. Okay. For Doug. You talked about United Way is facing a 36 percent increase in premiums in 1998; 22 percent increase

in 1999; and a 47 percent increase in 2000. And it costs $703.00

a month to cover dependent care for a family.

Mr. WEBER. Right, right. Right.

Mr. KIRK. Now, we have 29 people working for Lake County

United Way. How many people work, roughly, for United Way in

Illinois?

Mr. WEBER. Well, each United Way, we’re second largest, there

is approximately 125 people that work in Chicago for the Crusade

of Mercy, and then I would guess, probably 200, 250 or so, in total,

they’re smaller. Many one-, two-person shops. That’s just the organization itself. Each of them have many non-profits that they support.

Mr. KIRK. If we could pool, even with that 250, you would be at

the lower levels.

Mr. WEBER. Sure, sure.

Mr. KIRK. Then, you’ve got 2,800 people working for agencies you

support?

Mr. WEBER. In Lake County.

Mr. KIRK. In Lake County alone you would be one of the larger

employers if could you offer an Association Health Plan.

Mr. WEBER. Right. When you add up the total non-profit employment in any community, it generally is one of the larger—for the

private sector, non-profit organizations, generally one of the larger

employers, and we don’t include hospitals and other non-profits in

that; strictly the agencies we support.

That’s a pretty large employment base.

Mr. KIRK. Right. See, I think this is one of the main reasons why

the Johnson-Fletcher-Peterson Bill is a good one, because if we

clarify this thing on non-profits, because we have a huge opportunity and this is something that I want to get to Pat. You know,

AlphaGraphics is a franchise operation, right?

Mr. CANARY. Right.

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Mr. KIRK. And when you went to the franchise convention or

group, was there ever a talk of an AlphaGraphic’s health care plan

to the franchisees.

Mr. CANARY. Yes, there have been over the years. There’s been

a couple of attempts made. I think one of the things that affects

it is—franchise, each operation is individually owned; like I own

the Vernon Hills operation. And so, when you have individual owners, it’s a little harder to get them together as a group, particularly

when they are spread out all over the 50 states, and, ah, with the

different states, ah, regulations, and so on, it hasn’t—we are still

looking at it; we are still trying to figure out a practical way that

it can be managed.

Mr. KIRK. See, I think we can make your job easier with federal

uniform standards so that a national franchise can—— Mr. CANARY. I think so. I think that would—I mean, because we

have like 300 AlphaGraphics individually owned operations in the

United States, and we have another 75 around the world internationally. If we could somehow get them together, but it’s back to

the statutes and rules and regulations, it hasn’t been practical up ’til now. That’s the reason why in my written testimony I mentioned I did do a little research and came up with a couple of associations that I think are doing some good things, including this

Tooling Manufacturing Association. I’d love to be a part of something like that, if we could pool ours together, because they are

doing some good things there.

Mr. KIRK. Mr. Davis, you’re a lot of the reason why we are here

today.

Mr. DAVIS. Yes, sir.

Mr. KIRK. You are below every single price break in the business

at four. Have you heard anything here today that gives you hope,

or is it just we’re going to have grow ‘‘Handyman’’ until we get to

the larger—— Mr. DAVIS. Well, hopefully that will be the factor.

Mr. KIRK. It’s Handyman at Work in Mundelein?

Mr. DAVIS. That’s right. Thank you. I have heard some very encouraging things and some other alternatives, particularly the Kid

Care Program and so forth. That’s something we didn’t examine before. One thing that does kind of concern me, though, is that right

now we are kind of reallocating what I feel are health care insurance responsibilities to our employees, to other organizations; be it

to spouses and so forth. And our employees don’t have the choices

that they need to compare which plan is better for them. There’s

other implications to that, and when you asked earlier about taking

on, you know, litigation and things likes that. When I pull the plug

on a program, at this point I would say I would, because with the

costs that are involved in some cases, based on even the numbers

that Doug had here, 25 percent, 26 percent, we were looking basically at same thing, between about 26 and closer to about 29 percent for health care costs for the individual. It’s such an important

benefit to them that they would be willing to go after the employer

for managing health care costs.

And I think that that would open us up to a lot of litigation

there, so, we would probably pull the plug on it. We are looking at

something that really can pool us together with other similar busiVerDate 11-MAY-2000 05:48 Sep 07, 2001 Jkt 074642 PO 00000 Frm 00029 Fmt 6633 Sfmt 6602 E:\HR\OC\A642.XXX pfrm02 PsN: A642
26

nesses, say, businesses that have less than 10 employees, and be

able to bring down that rate.

Mr. KIRK. But if we enabled you to have an Association Health

Plan, with, say, a small contractor community of Northern Illinois,

you’d avail yourself of that?

Mr. DAVIS. Definitely.

Mr. KIRK. I think that’s important.

Now, Erika, your testimony was great. A lot—88 percent of employers offer health care because it’s right thing to do. You said 30

percent of the employers of less than 10 firms are uninsured.

Here’s one that really stuck out. According to your testimony, it cost $400.00 more to insure someone in a small business than a

larger business, based on what you’ve got. Twenty-eight hundred

dollars for a small business, twenty-four hundred dollars for the

smaller one, just by virtue of your size.

Ms. BERMAN. We’re actually, Revere actually falls right in the

middle of that; twenty-six hundred per employee.

Mr. KIRK. And you’ve got here that ‘‘increasing costs by 10 percent, surveyed employers, 14 percent of employers would drop coverage.’’ And if we increase by 25 percent, which is less than United

Way faced, 28 percent of employers would drop coverage. So those

are powerful—I think it’s important to note that people in America

get health care coverage if they’re uninsured, but it is at the most

expensive, inefficient way, in the hospital emergency room at Cook

County, or any other local community hospitals.

Let me throw out—we have a big employer here in Illinois called

ADM. Let me throw out an ADM plan that could help address

some of these needs. ADM stands for Association Health Plans; full

deductibility for small business; and Medical Savings Accounts for

those who are on their own or want to be.

Give me your comments on that as a Congressional response for

what we can do to help you.

Mr. WEBER. The ‘‘D’’ doesn’t apply to the non-profit sector in

terms of deductible, but I think it really provides a framework on

around which to build a plan; accountability, or the association

with other smaller employers, I think, is really a critical issue. Real

critical issue.

Mr. KIRK. What else? Pat.

Mr. CANARY. I didn’t quite get—could you explain once more exactly what that is?

Mr. KIRK. Well, I’m thinking of three things we could do to help

you. Association Health Plans, so that AlphaGraphics as a franchise could offer health care, and United Way could. Full deductibility for self-employed, especially for Mr. Davis here, because you

can’t fully deduct your health care costs right now as a self-employed person; and Medical Savings Accounts, so that you save in

a tax deferred way just like an IRA. Congress has limited Medical

Savings Account, I believe, to seven hundred fifty thousand, just

because the Senate didn’t want Medical Savings accounts to work.

Mr. CANARY. But as I understood that, you tell me maybe, the

seven hundred fifty is how many they limit it to?

Mr. KIRK. Right.

Mr. CANARY. But then I heard only twenty or thirty thousand

people signed up for it, which tells me there is something wrong

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with the regulations surrounding the—there is something wrong

with it if nobody came to the tank to drink out of it.

Mr. KIRK. I’m not the greatest expert in the world, but I think

here’s what is wrong.

When Congress limited it to only seven hundred thousand, we

prevented a market from even being created. And that was the intent.

Mr. CANARY. So only twenty thousand——

Mr. KIRK. Because market is so small, with only seven hundred

thousand people, and nobody—I think Medical Savings Accounts

are a great opportunity that you put, say, two thousand dollars a

year in your Medical Savings Account; it builds up, and say you

reach age 65, and there is a balance, we then let you role that into

your retirement plan, because now you’ve joined Medicare. And so

for the truly entrepreneurial, you still get to use—have some

backup for your health care expenses.

Mr. CANARY. So, what is the status of that now? They put out

the seven fifty, only twenty—you know, real small percentage, so

it’s not going anywhere. What——

Mr. KIRK. My understanding is the Senate legislation says nothing on this. Here we go.

I got Paul helping me out here. The Senate legislation says nothing on this. House legislation will lift the limits and make other

changes that make these accounts much more real.

Mrs. BIGGERT. Lifts the caps as well as allowing the rollover of

the unused portion.

Mr. KIRK. Right. It becomes much more viable.

Mr. CANARY. The deductibility on medical expenses on personal

income tax, the threshold keeps increasing for most individuals

that it becomes—you have to have a catastrophic expense to deduct

anything. That’s an area that could be looked at to reduce that

threshold so that more individuals can deduct from their income

taxes their medical costs.

As employers are having to increase their cost passed on to individuals, there needs to be more of deductibility of that expense for

the individual person’s personal income tax. So that—while nonprofits doesn’t have a business tax deduction, the individuals from

their income perspective could take more of a deduction from their

taxes if they could deduct more of their out-of-pocket expense.

That’s an issue that needs to be looked at.

Mr. KIRK. This legislation also would allow contributions by employers in account owners and allow payments from the Medical

Saving Accounts for preventative care, which I think is a important.

Well, I have no further questions.

Mrs. BIGGERT. I just want to come back to the liability issue because I think that is an issue that we are really struggling with

in Congress. There were several bills that were passed last year,

and then this year, and the Senate versus the House version. Having been involved even in the tort reform when we passed that in

Illinois, and then it was overturned by the Supreme Court of Illinois, when we had the caps and tort reform, we saw liability insurance drop dramatically in the 18 months that it was in existence,

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and the frivolous lawsuits were also decreased enormously and

then went back up after this.

My concern is certainly with the liability, and even though you

say, well, employers are not going to be liable, doesn’t mean that

they’re not going to be liable. And even as tight as you can draw

it, there is still going to be the test in court over that, and that’s

where employers get really worried that they’re going to be subject

to the punitive damages, even those that are capped. And to go

back and relook at the health insurance and say, well, it is voluntary, and I think we always have to keep that in mind. That insurance by employers is voluntary, and is usually done, and I think

you have all mentioned, because you want to attract the best employees that you can, and you’re competing with other companies

for those employees, and so it does help if can you provide that

benefit, then it attracts those employees. And we don’t want to do

anything to change that. But we want to make sure that you’re not

liable, because that causes a problem.

And so that’s something that we’ll be looking at very closely and

I think that the bill in the Senate does not provide those safeguards, and once you get into the federal court, without having to

go through the external review process and exhaust all remedies

under that, it can go to the state court, but that’s exactly what is

going to happen under that bill.

Now, the House bill has more safeguards with having to exhaust

all those external review remedies, and yet is that still going to

protect employers from liability, and particularly, obviously, the

ones that are self-insured? It is my understanding that even just

picking a provider could have you directly influencing your health

plan. So, I think we have to be very careful on that issue. And

that’s what I think we’ll be facing when we go back on that.

I don’t know if any of you have any other words of wisdom for

us, and maybe you can submit something later.

Mr. KIRK. I have one last question. In the last year, how much

time have you spent on health care issues? How many days? Rough

estimate.

Ms. BERMAN. A solid, I’d say, you know, 30.

Mr. KIRK. Thirty days of this year.

Ms. BERMAN. And that’s not just on this transition, but it’s the

claim issues, you know, employees going to the doctor and then the

insurance company saying we’re not going to pay it, even though

they went to the doctor through the network. It’s a lot of time.

Mr. KIRK. Pat.

Mr. CANARY. Yeah. Each time, as I described, we changed something or tried something new, it took weeks deciding to change, and

what to change to, and then informing our employees. And it all

adds up.

I’d hate to say how many weeks, but it comes in spurts. Each

time you have to make a change, it’s incredible how much time you

spend on it for while.

Mr. KIRK. Sammy, how long does it take you?

Mr. DAVIS. Collectively, probably about two to three weeks.

Mr. KIRK. Two to three weeks for a four-person operation.

Mr. DAVIS. Exactly.

Mr. KIRK. Just on health care.

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Mr. WEBER. Just revisiting, I spent a number of days myself;

we’ve also got three other staff in our finance department that have

part of the responsibility for insurance, and they have spent weeks,

literally, looking at different options and it’s terrible.

Mr. KIRK. Michelle.

Ms. KUHN. Probably about a week, but I also have someone in

my company who has that responsibility, and I would say that she

spends probably 60 to 70 percent of her time in that area.

Mrs. BIGGERT. One of the estimates shows that in the Senate

bill, health costs will rise four to 10 percent if that’s passed.

We don’t know about the House, but I think that’s something

that we need to keep in mind also as we look at this, and if you

know of any increases in costs that you would have to go through,

we’d love to hear from you, so that we would have documentation

of that.

Mr. KIRK. Well, I want to thank Congressman Biggert for coming

down the road to be with us. This is, I think, a critical issue. I

want to make sure, when we meet again, I hope you have coverage,

and we’ve done the right thing, and we’ve done it in the way that

none of you have lost coverage, because we want to make sure we

have more Americans with health care coverage rather than less.

I want to thank Chairman Manzullo and Paul Denham for bringing this hearing to Arlington Heights, and my staff, Dodie

McCracken, David From, Ed Kelly and Carrie Garver, for helping

out with this, and also for the special support for Bill Shugers of

the Libertyville/Mundelein Chamber of Commerce for helping out.

And this meeting is adjourned.

[Whereupon, at 11:35 a.m., the committee was adjourned.]

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