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[House Hearing, 107 Congress]
[From the U.S. Government Publishing Office]

                  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

                               __________

                    U.S. GOVERNMENT PRINTING OFFICE
74-642                     WASHINGTON : 2001

                      COMMITTEE ON SMALL BUSINESS

                  DONALD MANZULLO, Illinois, Chairman
LARRY COMBEST, Texas                 NYDIA M. VELAZQUEZ, New York
JOEL HEFLEY, Colorado                JUANITA MILLENDER-McDONALD, 
ROSCOE G. BARTLETT, Maryland             California
FRANK A. LoBIONDO, New Jersey        DANNY K. DAVIS, Illinois
SUE W. KELLY, New York               WILLIAM PASCRELL, New Jersey
STEVEN J. CHABOT, Ohio               DONNA M. CHRISTIAN-CHRISTENSEN, 
PATRICK J. TOOMEY, Pennsylvania          Virgin Islands
JIM DeMINT, South Carolina           ROBERT A. BRADY, Pennsylvania
JOHN THUNE, South Dakota             TOM UDALL, New Mexico
MIKE PENCE, Indiana                  STEPHANIE TUBBS JONES, Ohio
MIKE FERGUSON, New Jersey            CHARLES A. GONZALEZ, Texas
DARRELL E. ISSA, California          DAVID D. PHELPS, Illinois
SAM GRAVES, Missouri                 GRACE F. NAPOLITANO, California
EDWARD L. SCHROCK, Virginia          BRIAN BAIRD, Washington
FELIX J. GRUCCI, Jr., New York       MARK UDALL, Colorado
TODD W. AKIN, Missouri               JAMES R. LANGEVIN, Rhode Island
SHELLEY MOORE CAPITO, West Virginia  MIKE ROSS, Arkansas
BILL SHUSTER, Pennsylvania           BRAD CARSON, Oklahoma
                                     ANIBAL ACEVEDO-VILA, Puerto Rico
                      Doug Thomas, Staff Director
                  Phil Eskeland, Deputy Staff Director
                  Michael Day, Minority Staff Director

                            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

 
                  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 
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 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 todaywho 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 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 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 theAmerican 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 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. 
Specifically, 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 
workfor 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 increased 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 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.
    [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 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 department. 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 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 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 aBlind 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 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 
Kennedy-McCain 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.]
    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.
    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?
    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 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 take-home 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 individuals 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, 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 
goingto 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 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 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 
employee-types 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.
    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 
certainlysomething 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.
    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 businesses, 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 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 non-profits 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, 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 somethingnew, 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.
    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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
```