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S. HRG. 114–513 

EXAMINING JOB-BASED HEALTH INSURANCE AND 

DEFINING FULL-TIME WORK 

HEARING 

OF THE

COMMITTEE ON HEALTH, EDUCATION, 

LABOR, AND PENSIONS 

UNITED STATES SENATE 

ONE HUNDRED FOURTEENTH CONGRESS 

FIRST SESSION 

ON

EXAMINING JOB-BASED HEALTH INSURANCE AND DEFINING 

FULL-TIME WORK 

JANUARY 22, 2015 

Printed for the use of the Committee on Health, Education, Labor, and Pensions 

( 

Available via the World Wide Web: http://www.gpo.gov/fdsys/ 

COMMITTEE ON HEALTH, EDUCATION, LABOR, AND PENSIONS 

LAMAR ALEXANDER, Tennessee, Chairman 

MICHAEL B. ENZI, Wyoming 

RICHARD BURR, North Carolina 

JOHNNY ISAKSON, Georgia 

RAND PAUL, Kentucky 

SUSAN COLLINS, Maine 

LISA MURKOWSKI, Alaska 

MARK KIRK, Illinois 

TIM SCOTT, South Carolina 

ORRIN G. HATCH, Utah 

PAT ROBERTS, Kansas 

BILL CASSIDY, M.D., Louisiana 

PATTY MURRAY, Washington 

BARBARA A. MIKULSKI, Maryland 

BERNARD SANDERS (I), Vermont 

ROBERT P. CASEY, JR., Pennsylvania 

AL FRANKEN, Minnesota 

MICHAEL F. BENNET, Colorado 

SHELDON WHITEHOUSE, Rhode Island 

TAMMY BALDWIN, Wisconsin 

CHRISTOPHER S. MURPHY, Connecticut 

ELIZABETH WARREN, Massachusetts 

DAVID P. CLEARY, Republican Staff Director 

EVAN SCHATZ, Minority Staff Director 

JOHN RIGHTER, Minority Deputy Staff Director 

(II) 

C O N T E N T S 

STATEMENTS 

THURSDAY, JANUARY 22, 2015 

Page 

COMMITTEE MEMBERS

Alexander, Hon. Lamar, Chairman, Committee on Health, Education, Labor, 

and Pensions, opening statement ....................................................................... 1 

Murray, Hon. Patty, a U.S. Senator from the State of Washington, opening 

statement .............................................................................................................. 3 

Collins, Hon. Susan M., a U.S. Senator from the State of Maine ....................... 5 

Enzi, Hon. Michael B,, a U.S. Senator from the State of Wyoming .................... 29 

Warren, Hon. Elizabeth, a U.S. Senator from the State of Massachusetts ........ 31 

Roberts, Hon. Pat, a U.S. Senator from the State of Kansas .............................. 33 

Baldwin, Hon. Tammy, a U.S. Senator from the State of Wisconsin .................. 34 

Sanders, Hon. Bernard, a U.S. Senator from the State of Vermont ................... 37 

Franken, Hon. Al, a U.S. Senator from the State of Minnesota .......................... 39 

Murphy, Hon. Christopher, a U.S. Senator from the State of Connecticut ........ 41 

Cassidy, Hon. Bill, a U.S. Senator from the State of Louisiana .......................... 43 

Mikulski, Hon. Barbara A., a U.S. Senator from the State of Maryland, 

prepared statement .............................................................................................. 44 

Whitehouse, Hon. Sheldon, a U.S. Senator from the State of Rhode Island ...... 47 

Scott, Hon. Tim, a U.S. Senator from the State of South Carolina ..................... 48 

Casey, Hon. Robert P., Jr., a U.S. Senator from the State of Pennsylvania ...... 50 

WITNESSES—PANEL I 

Webb, Betsy M., Superintendent, Bangor School Department, Bangor, ME ...... 6 

Prepared statement .......................................................................................... 7 

Puzder, Andrew F., Chief Executive Officer, CKE Restaurants, Carpinteria, 

CA .......................................................................................................................... 9 

Prepared statement .......................................................................................... 11 

Holtz-Eakin, Douglas, President, American Action Forum, Washington, DC .... 17 

Prepared statement .......................................................................................... 18 

Fugere, Joe, Founder, Tutta Bella Pizzeria, Seattle, WA .................................... 22 

Prepared statement .......................................................................................... 24 

ADDITIONAL MATERIAL 

Statements, articles, publications, letters, etc.: 

More Time for Full Time Executive Committee ............................................ 53 

Letters: 

More Time For Full Time Executive Committee and Employer-Based 

Organizations ......................................................................................... 54 

American Federation of Labor and Congress of Industrial Organizations (AFL–CIO) .................................................................................... 61 

2015CKE HealthConnections Benefit Program Attachments ............... 63 

(III) 

(1) 

EXAMINING JOB-BASED HEALTH INSURANCE 

AND DEFINING FULL-TIME WORK 

THURSDAY, JANUARY 22, 2015 

U.S. SENATE, 

COMMITTEE ON HEALTH, EDUCATION, LABOR, AND PENSIONS, 

Washington, DC. 

The committee met, pursuant to notice, at 9:35 a.m., in room 

430, Dirksen Senate Office Building, Hon. Lamar Alexander, chairman of the committee, presiding. 

Present: Senators Alexander, Enzi, Burr, Collins, Murkowski, 

Scott, Roberts, Cassidy, Murray, Mikulski, Sanders, Casey, 

Franken, Whitehouse, Baldwin, Murphy, and Warren. 

OPENING STATEMENT OF SENATOR ALEXANDER

The CHAIRMAN. The Senate Committee on Health, Education, 

Labor, and Pensions will come to order. 

Yesterday we had one of our two new members here, Senator 

Collins. Today we have the other one in his Mardi Gras tie, Senator Cassidy. So we welcome both of them to the committee. 

This morning we’re holding a hearing examining job-based 

health insurance and defining full-time work. Senator Murray and 

I will each have our opening statement, and then we’ll introduce 

our panel of witnesses. After our witness testimony, Senators will 

have 5 minutes of questions. Today I’m going to defer my questions 

and call first on Senator Collins who, along with Senator Donnelly, 

Senators Manchin and Murkowski, have introduced the bipartisan 

bill to solve the problem that we’re here to discuss today. 

Let me begin by mentioning some things that are happening in 

Tennessee. In Murfreesboro, Middle Tennessee State University 

has started limiting hours for part-time workers. This means students can no longer accept multiple on-campus work assignments, 

and graduate assistants might have to wait tables instead of picking up extra on-campus, grant-funded research projects that would 

better further their careers. 

In Knoxville, Regal Entertainment Group, which is headquartered there, the Nation’s largest movie theater chain, announced 

last year it was cutting employee hours from 40 to below 30 in 

order to comply with Obamacare. According to a news report, 

‘‘One Regal Theater manager said the move has sparked a 

wave of resignations from full-time managers who have seen 

their hours cut by 25 percent or more.’’ 

In Johnson City, TN, Pam Cox, the director of Finance for Johnson City Public Schools, told a local news outlet about a year ago 

2 

that her district will have to hire more people to work fewer hours. 

She said, 

‘‘It will be challenging to find people. It will also hurt the 

employees because where they have been able to work as much 

as they wanted in these types of positions with no benefits attached to it, now you’re going to be saying we can’t let you 

work even though you want to and you’re good at your job. We 

can’t give you the hours or give you the pay, because we can’t 

afford to give you the insurance.’’ 

That’s the Johnson City Public Schools. 

So why are these things happening in Tennessee and across the 

Nation? Well, the answer is that Obamacare requires businesses 

with 50 or more full-time employees to provide health insurance to 

those employees or pay a penalty at tax time. That penalty is 

$2,000 for each employee whom the government says should have 

been covered by an employer plan, or $3,000 for every employee 

who receives a subsidy in the exchange. The law, passed without 

any Republican support, defined ‘‘full-time’’ as an employee who 

works more than 30 hours a week, a strange definition, one that 

sounds more like France than the United States. 

The average American between the ages of 25 to 49 works 8.8 

hours per day, or 44 hours a week, according to the American Time 

Use Survey, published by the Bureau of Labor Statistics. The 

Obamacare definition of ‘‘full-time’’ is nearly one-third lower. 

Many businesses can’t afford Obamacare’s mandate and must reduce their number of full-time employees. The result of all this is 

that thousands of workers are getting a pay cut. Their work schedules are being reduced to 29 hours a week and below. This isn’t 

enough money for these workers to earn a living. Many must take 

second jobs. A Hoover Institution study found that the 30-hour definition puts 2.6 million working-age Americans with a median income under $14,333 for individuals and $30,000 for families at risk 

of losing jobs and hours. The study found that 89 percent of those 

affected don’t have a college degree. Sixty percent are between 19 

and 34. 

Most at risk of lost hours are women, of which half have a high 

school diploma or less. These are Americans who are often working 

one of their first jobs, trying to work their way up the ladder. You 

have to start with a lower paying job, a job that doesn’t require as 

many skills, and hope that someday your hard work will lead to a 

higher paying one. Many of these Americans are working in a service industry such as hospitality, retail and restaurants. We’re going 

to hear from their employers today. But the Obamacare provision 

is affecting all kinds of employers. 

In September of last year, Investor’s Business Daily reported 

that at least 451 employers, county governments, public schools, 

community colleges and universities have laid off staff or reduced 

employee work hours. Our public schools can’t charge higher prices 

to cover these mandates. They have to cut special education teachers, coaches, and bus drivers. Three surveys published by the Federal Reserve Bank in August found that employers are increasing 

their proportion of part-time workers. 

There is bipartisan support for repealing this provision. As I 

mentioned earlier, this legislation is introduced by four Senators, 

3 

two Democrats, two Republicans, one of them Senator Collins, 

whom we’ll hear from in just a minute. Republicans have talked a 

lot about wanting to move as responsibly and rapidly as we can to 

repair the damage caused by Obamacare. We have also talked 

about wanting to get results. This bill should be an important step 

in doing both. 

In fact, this bill reminds me of why many of us like being on this 

committee, because the issues we work on affect so many Americans. When we talk about fixing No Child Left Behind, we’re talking about 50 million children and 100,000 public schools. When 

we’re talking about making it simpler to apply for a Pell Grant to 

go to college, we’re talking about simplifying a form that 20 million 

families fill out each year. When we talk about modernizing the 

Food and Drug Administration, making it easier for Americans to 

access life-saving drugs, we’re talking about something that affects 

nearly every American. And today, we’re focused on 2.6 million 

Americans who are mostly low-income, disproportionately women, 

and at risk of losing jobs and hours. 

I look forward to what our witnesses have to say. 

Senator Murray. 

OPENING STATEMENT OF SENATOR MURRAY

Senator MURRAY. Thank you very much, Chairman Alexander. 

Thank you to everyone joining us here today, especially our witnesses. And in particular, I am very proud to have a Washington 

State business owner here today, Joe Fugere, of Seattle’s Tutta 

Bella Pizza. 

Joe, thanks so much for coming all the way across the country 

to be here today. 

I’m looking forward to the opportunity to hear from all of you 

about how we can do more to strengthen our health care system 

for our workers and our families. I believe strongly that the work 

did not end when we passed the Affordable Care Act. Far from it. 

There is more we need to do to build on the law and make our 

health care system work better, and I’m ready to work with anyone 

on either side of the aisle who has good ideas about how to make 

health care coverage more accessible and more affordable. 

Unfortunately, just weeks into the new Congress, we have already seen bill after bill introduced that would roll back the 

progress we have made when it comes to providing millions of 

Americans with affordable, quality health care and improving coverage for those who already had it, and fighting back against the 

worst insurance company abuses. 

The legislation the Chairman is focusing on today is no different. 

By allowing businesses to get out of offering health insurance to 

any employee working less than 40 hours, this bill will actually create the problems it claims to solve. As conservative experts have 

noted, because of how it changes work-week requirements, this bill 

would actually give companies incentive to cut workers’ hours and 

deny them health care. 

As a result, the Congressional Budget Office projects this bill 

could eliminate job-based health insurance for up to a million 

Americans, 500,000 of them who could lose their insurance altogether. Think about how that would impact workers. What about 

4 

a nurse who works three 12-hour shifts, or the extra hours that 

teachers put in after class? They shouldn’t have to worry about 

their health care coverage being threatened. 

And this bill isn’t only bad for workers. It also would shift the 

cost of providing coverage from business to taxpayers, driving up 

the deficit by $53.2 billion over the next decade. In other words, 

this legislation puts big corporations and their profits ahead of 

working families and their health care. If it ever became law, workers across the country will have to worry about their health care 

being cutoff, their hours being rolled back, and their jobs being 

eliminated for part-timers. We should be rewarding hard work, not 

punishing it. 

It’s also important to note that in addition to denying workers 

health care coverage and driving up the deficit, the legislation my 

Republican colleagues are proposing would put businesses like 

Joe’s, businesses that want to help their workers stay healthy and 

economically secure, at a serious disadvantage. As he will talk 

about, Joe has offered health care coverage to his hourly employees, including many working below the current 30-hour threshold, 

since 2008. And as Tutta Bella has gone from one location to five 

in and around Seattle, Joe has seen firsthand that businesses succeed when their workers succeed. The Affordable Care Act offered 

businesses like Joe’s a more level playing field. 

But by letting businesses game the system and dump the cost of 

their workers’ health care onto the taxpayer, my Republican colleagues’ proposal would undo a lot of that progress. Their proposal 

would represent a very clear step in the wrong direction for workers who don’t want to see their hours or benefits cut, and for the 

many businesses around the country who want to do the right 

thing and help their employees stay healthy. 

So I hope that during today’s discussion my Republican colleagues will seriously consider the harm the 40-hour proposal could 

actually do, because the bottom line is the last thing any worker 

wants is fewer hours and higher health care costs. In fact, 66 percent of respondents to last week’s Fox News poll said they thought 

people who worked 30 hours a week should receive guaranteed 

health insurance from their employer, and Americans have been 

very clear they aren’t interested in partisan political fights about 

dismantling this law. They want to see Congress working together 

to build on the Affordable Care Act to make our health care system 

work better. They want patients and working families to be put 

first, not insurance companies, not big corporations trying to cut 

their costs at workers’ expense, but patients and working families, 

and that’s what I and many of my colleagues will be focused on. 

I hope our Republican colleagues will reconsider the approach 

we’ve seen so far and work with us to move our health care system 

forward, not backward, because I’m confident that if they do, there 

is a lot we could get done together. 

Thank you, Mr. Chairman. 

The CHAIRMAN. Thanks, Senator Murray. 

As I indicated earlier, I’m going to give Senator Collins my place 

in the order for questions. We’ll have a round of 5-minute questions. The procedure we’re following is those who were here at the 

gavel will go in the order of seniority, and after that it’s first to 

5 

arrive. So after Senator Collins will be Senator Warren, then Senator Enzi, then Senator Baldwin, then Senator Scott, and then Senator Sanders. Those are the first six. 

We’ll ask the witnesses to summarize their statements in 5 minutes because we have lots of Senators here who will want to ask 

you questions and we’d like to take full advantage of that. 

So the first thing we want to do is to hear from the witnesses. 

And I believe, Senator Murray, you have a witness to introduce. 

Senator MURRAY. Well, again, thank you very much, Mr. Chairman. 

I want to welcome a witness from my home State of Washington, 

as I mentioned, Joe Fugere. He is the founder of Seattle’s Tutta 

Bella Neapolitan Pizza that is the Pacific Northwest’s first certified 

authentic Neapolitan pizzeria, which he first opened back in 2004, 

and he now has, as I said, five neighborhood locations in the greater Seattle area, my favorite pizza place in Seattle, just so you 

know. 

He has modeled Tutta Bella to not only be a respected pizzeria 

but also a meaningful business that sets the standard for taking 

care of workers and social stewardship. Under his direction, Tutta 

Bella regularly leads socially responsible small business initiatives, 

and he’s been honored by a number of our local councils, organizations, and the White House. 

Joe, thanks so much again for coming all the way across the 

country today. It’s great to see you. 

The CHAIRMAN. And, Senator Warren, I believe you have a witness to introduce. 

Senator WARREN. I don’t think so, Mr. Chairman. 

The CHAIRMAN. You don’t? I’m sorry. 

Senator WARREN. But I’d be glad to introduce anyone. 

[Laughter.] 

The CHAIRMAN. That was yesterday. 

Senator WARREN. That was yesterday. That’s right. 

The CHAIRMAN. All right. I’m a day behind. 

Senator Collins has a witness to introduce. 

Senator COLLINS. Thank you, Mr. Chairman. 

The CHAIRMAN. Excuse me. 

STATEMENT OF SENATOR COLLINS

Senator COLLINS. I’m very pleased to introduce Dr. Betsy Webb 

to this committee. Dr. Webb is the superintendent of schools in 

Bangor, ME, a position that she has held since 2008. Under her 

guidance, the Bangor School Department has earned a national 

reputation for academic excellence. In 2013, Dr. Webb was named 

Maine’s Superintendent of the Year, a fitting tribute to her total 

dedication to her students, community involvement, professionalism, and fiscal management. 

In addition to being a well-respected authority on education policy, Dr. Webb also was the leader who brought to my attention the 

real-life problems that the 30-hour definition would cause in school 

systems. There’s been a lot of focus on the for-profit world. She 

opened my eyes to what the impact would be on school systems 

across the United States. 

6 

First-class education is a team effort, and Betsy is a top-notch 

team leader. As a citizen of Bangor, I’m very grateful for Betsy’s 

contributions to our community and delighted that she’s testifying 

before us today. I would also note, Mr. Chairman, that she got up 

at 3 a.m. in order to catch the 5:30 plane to be here today. 

The CHAIRMAN. Thank you very much. 

I’ll introduce two other witnesses. 

Mr. Andy Puzder is chief executive of CKE Restaurants, which 

is the parent company of Hardy’s and Carl Jr. fast food restaurants. He’s been CEO of CKE Restaurants for 15 years. His 

company currently owns or franchises about 3,375 restaurants in 

the United States and 28 foreign countries, and, with its 

franchisees employs over 70,000 people in the United States. 

Third to testify will be Dr. Douglas Holtz-Eakin. Dr. Holtz-Eakin 

is President of the American Action Forum, a domestic policy think 

tank here. Dr. Holtz-Eakin is the former director of the Congressional Budget Office, also served as chief economist on President 

George W. Bush’s Council of Economic Advisors. 

Welcome to all four of you. 

The order in which we’d like to go, please, is Dr. Webb, Mr. 

Puzder, Dr. Holtz-Eakin, and Mr. Fugere. So, let’s go in that order. 

Dr. Webb. 

STATEMENT OF BETSY M. WEBB, SUPERINTENDENT, BANGOR 

SCHOOL DEPARTMENT, BANGOR, ME 

Ms. WEBB. Chairman Alexander, Ranking Member Senator Murray, Senator Collins, and distinguished members of the committee, 

my name is Betsy Webb and I am the superintendent of schools in 

Bangor, ME. Thank you for asking me to testify today on the impact of the Affordable Care Act’s definition of full-time work on 

public schools. 

The Bangor School Department educates 3,800 students in seven 

elementary schools, two middle schools, and a high school. Our system employs 644 individuals, including 337 teachers, 110 educational technicians, and nearly 300 additional workers in various 

capacities who are critical to our mission of academic excellence. 

We also have approximately 30 tutors and 70 substitute teachers 

who are not included in the numbers I provided. 

We are fortunate to come from a community that places a high 

value on quality education for every child. The people of Bangor 

provide schools with extraordinary support, both financially and 

through the countless volunteer hours of hundreds of parents and 

community members. I am extremely proud of the faculty and staff 

commitment and the results our students achieve. 

Our students consistently score above average on standardized 

tests and are considered out-performers, especially when looking at 

our demographics. Our cost per pupil is $1,000 lower than the 

State average. 

Two of our schools have been recognized as National Blue Ribbon 

Schools of Excellence. Bangor High School has graduated more National Merit and Semi-Finalists than any other high school in 

Maine, public or private, and hundreds of teens from Bangor High 

have won State and national championships in a wide range of academic and athletic competitions. 

7 

We do all of this on a budget of about $43 million a year, an 

amount that has grown by just 3 percent during my tenure over 

7 years. We are recognized for making ends meet by being highly 

efficient, staying flexible, and pursuing what we call Bangor solutions in the best interests of students. We obviously watch our pennies very closely. 

The Affordable Care Act’s definition of full-time deprives us the 

flexibility critical to our success. For example, we have a core group 

of substitute teachers who often work more than 30 hours a week, 

filling in for teachers, some of whom are out for extended periods, 

such as for maternity leave. They help us maintain continuity in 

the classroom, which is so important to our students’ learning. 

Given our limited resources, we cannot afford to offer health benefits to these substitutes that would cost nearly $6,000 each, nor 

can we afford the $2,000 penalty for failing to do so. Unfortunately, 

unless something is done to adjust the 30-hour rule, we will be 

forced to limit their hours. 

The 30-hour rule will also affect our 110 educational technicians 

who work more than 30 hours a week, and we have no intention 

of reducing their hours. The pay ranges from $14 to $18 an hour, 

and even though the district pays 77 percent of their health coverage or the majority of the cost, for many ed techs the employee 

share exceeds the affordability limits in the Affordable Care Act, 

triggering a $3,000 penalty on the district for each ed tech who rejects our plan and gets subsidized coverage in the exchange. We can’t afford this $3,000 penalty, nor can we afford to pay a 

larger share of their health care benefits to avoid the penalty since 

doing so would potentially cost an additional $110,000 a year. 

Further, we are concerned about the combinations of positions 

and are worried that we will have to limit people to only work one 

position. 

I am hopeful my testimony helps explain why it is so important 

to adjust the 30-hour rule and to restore 40 hours as the threshold 

for full-time. 

Senator Collins and Senator Donnelly have proposed the 40 

Hours is Full Time Act, and myself and my colleagues are hopeful 

that members of the committee will support this bipartisan legislation. Thank you. 

[The prepared statement of Ms. Webb follows:] 

PREPARED STATEMENT OF BETSY M. WEBB

SUMMARY

Dr. Betsy Webb is the Superintendent of Schools in Bangor, ME. The Bangor 

school system educates 3,800 students in seven elementary schools, two middle 

schools, and one high school. The system employs 644 individuals—including 337 

teachers, 110 ed techs, and nearly 300 additional workers in various capacities. The 

district also employs about 30 tutors and 70 substitute teachers. 

Bangor’s students consistently score above average on standardized tests, while the district’s cost per-pupil is $1,000 lower than the State average. Two of Bangor’s 

10 schools have been named National Blue Ribbon Schools of Excellence. Bangor 

High School has graduated more National Merit and Semifinalists than any other 

high school in Maine, public or private. Teams from Bangor High have won State 

and national championships in a wide range of academic and athletic competitions. 

The district’s budget is about $43 million a year, an amount that has grown by 

just over 3 percent since Dr. Webb became superintendent in 2008. Bangor achieves 

its results by being as efficient as possible, staying flexible, and by watching its pennies very carefully. 

8 

The ACA’s definition of ‘‘full-time’’ work will deprive the district of flexibility critical to its success. For example, the district has a core group of substitute teachers 

who work more than 30-hours a week filling in for teachers who are out for extended periods, such as maternity leave. These substitute teachers help maintain 

continuity in the classroom, which is so important to students. Bangor can’t afford 

to offer health benefits to these substitutes—that would cost $6,000 each—nor can 

Bangor afford the $2,000 penalty for failing to do so. Unless something is done to 

fix the 30-hour rule, the district will be forced to reduce the hours of these substitute teachers. 

The 30-hour rule will also affect Bangor’s 110 ed techs, who work more than 30 hours a week at rates of pay ranging from $14 per hour to $18 per hour. Even 

though the district pays most of the cost of their health coverage, for many ed techs 

the employee-share exceeds the ‘‘affordability’’ limits in the ACA, triggering a $3,000 

penalty on the district for each ed tech who rejects the district’s plan and gets subsidized coverage in the exchange instead. Bangor can’t afford this $3,000 penalty, 

nor can it afford to pay a larger share of the ed tech’s health benefits to avoid the 

penalty, since doing so could cost $110,000 a year. 

Dr. Webb is also concerned about Bangor’s hall monitors, who sometimes serve 

as assistant coaches or have other part-time school jobs. The 30-hour rule will force 

them to drop one job entirely, just to stay under an arbitrary limit that no one truly 

believes is ‘‘full-time.’’ 

Dr. Webb hopes members will support bipartisan legislation introduced by Senator Collins and Senator Donnelly, the ‘‘Forty Hours is Full-Time Act,’’ to fix the 

30-hour rule and restore 40-hours as the threshold for ‘‘full-time’’ work under the 

ACA. 

Chairman Alexander, Ranking Member Murray, Senator Collins, distinguished 

members of the committee, my name is Betsy Webb, and I am the Superintendent 

of Schools in Bangor, ME, our State’s third largest city. I have had the privilege 

of serving in this position since 2008. 

Thank you for providing me the opportunity to testify today on the impact on our 

public school system of the Affordable Care Act’s definition of ‘‘full-time’’ work. Before I describe that impact, allow me to set the stage with some background information: the Bangor school system educates 3,800 students in seven elementary 

schools, two middle schools, and one high school. Our system employs 644 individuals—including 337 teachers, 28 administrators, 110 ed techs, and nearly 300 additional workers in various capacities who are critical to our educational mission, such 

as food service workers and lunch aides, secretaries, IT workers, custodians, and 

coaches. In addition, we have about 30 tutors and 70 substitute teachers who are 

not included in the numbers I just listed. 

All of our employees work together to provide an outstanding education to the students in our system. We are fortunate to come from a community that places a high 

value on quality education for every child, and contributes to our efforts both financially and through the countless volunteer hours of hundreds of parents and dedicated school supporters. We have an incredible Parent-Teacher Organization and 

Parent Boosters network. 

I am proud of the work we do together, and the results we have achieved. Our 

students consistently score above average on standardized tests, while our cost perpupil is $1,000 lower than the State average. Two of our ten schools have been 

named National Blue Ribbon Schools of Excellence. One of these, the James F. 

Doughty Middle School—earned this distinction despite the fact that roughly 60 percent of its students are eligible for free or reduced lunch. The other—Bangor High 

School—has graduated more National Merit and Semifinalists than any other high 

school in Maine, public or private, and has been recognized by Newsweek with a 

top 5 percent high school rating. The academic excellence for which Bangor High 

is noted has carried over to State and national championships in Speech & Debate, 

JETS, JROTC and Poetry Out Loud competitions, while teams from the school have 

also won State championships in Basketball, Baseball, Football, Soccer, Swimming, 

and Track. 

We do all of this on a budget of about $43.3 million a year, an amount that has 

grown by just over 3 percent during my tenure—less than one-third the rate of inflation. This is truly a bare-bones-budget. In fact, in 2011 and 2012, funding for the 

school system was cut, in absolute terms, and this past August I was forced to 

freeze all non-essential spending due to an unanticipated spike in the price of natural gas. We manage to make ends meet by being as efficient as possible, staying 

flexible, and by pursuing what I like to call ‘‘Bangor solutions.’’ Suffice it to say we 

watch our pennies very carefully. 

9 

Which brings me to the topic of today’s hearing. The fact is, by setting the definition of ‘‘full-time’’ work at just 30 hours a week, the Affordable Care Act deprives 

us of the flexibility we need to stay within our budget while continuing to achieve 

excellence in education. For example, we have about 70 people on our substitute 

teacher list who can be called-in on an as-needed basis. We value each and every 

one of these teachers, but we especially rely on a core group who teach more than 

30 hours a week and will be considered ‘‘full-time’’ under the Affordable Care Act. 

This core-group of substitutes allows us to maintain continuity and excellence in the 

classroom by taking the place of full-time teachers who are out for extended periods, 

often on maternity leave. The district cannot afford to offer health coverage to these 

substitutes—which would cost us $6000 each—nor can we afford the $2,000 employer mandate penalty for failing to do so. Unfortunately, unless something is done 

to fix the 30-hour rule, we will have little choice but to reduce the hours of these 

substitute teachers. 

We should not be forced into this no-win situation by the 30-hour rule. The district doesn’t win—we want these substitute teachers in the classroom. The substitutes don’t win—they want to work more than 30-hours. And our students don’t 

win—they deserve to learn in classrooms that aren’t disrupted by the comings and 

goings of different substitutes every few days. 

Another example of how the 30-hour rule forces us into no-win choices is how it 

affects the 110 ed techs who work in our schools. These ed techs work more than 

30 hours a week, at rates of pay ranging from $14 per hour to $18 per hour. The 

school district pays 77 percent of the cost of coverage for these ed techs, leaving 

them with 23 percent as their employee share. Yet even this amount exceeds the 

‘‘affordability’’ limits in the Affordable Care Act, triggering a $3,000 penalty on the 

district for each ed tech who rejects our plan and gets subsidized coverage in the 

exchange instead. The district cannot afford this $3,000 penalty, nor can we afford 

to pay the additional $700 to $1000 per employee that we would need to pay to 

make our plan ‘‘affordable’’ to these employees, since doing so could cost us $110,000 

annually. Once again, as a consequence of the ACA’s 30-hour rule, we will be forced 

to cut back the hours of employees who want and deserve to work more. 

Another group of employees that I am worried about aren’t provided benefits 

under our plan today, but could be affected by the 30-hour rule. For example, ‘‘hall 

monitors’’ often work another part-time job for the district, such as serving as the 

assistant coach for one of our athletic teams. Taken together, these two part-time 

jobs will put some of these individuals over the 30-hour a week threshold. Since we 

won’t be able to afford to extend health coverage to these part-time workers, the 

30-hour rule will force them to choose to drop one job entirely, just to stay under 

an arbitrary limit that no one truly believes is ‘‘full-time.’’ 

I am hopeful that my testimony will help highlight why it is so important to fix 

the 30-hour rule and restore 40-hours as the threshold for ‘‘full-time’’ work under 

the ACA. I know that Senator Collins and Senator Donnelly have proposed doing 

exactly that with the ‘‘Forty Hours is Full-Time Act,’’ and I am hopeful the members 

of the committee will support that bipartisan legislation. 

Again, I thank you for the opportunity to testify on this important issue, and I 

look forward to answering your questions. 

The CHAIRMAN. Thank you, Dr. Webb, and thank you for sticking 

so closely to the 5 minutes. 

Mr. Puzder. 

STATEMENT OF ANDREW F. PUZDER, CHIEF EXECUTIVE 

OFFICER, CKE RESTAURANTS, CARPINTERIA, CA 

Mr. PUZDER. Chairman Alexander, Ranking Member Murray, 

and members of the committee, thank you for inviting me to testify 

on an issue of importance to all American workers, the 40 Hours 

is Full Time Act. 

CKE Restaurants has 2,920 domestic restaurants in which we 

employ about 20,000 people. Our franchisees employ roughly another 55,000. As CEO, our restaurant managers often tell me how 

difficult the Affordable Care Act’s 30-hour threshold makes it for 

them to give crew members the hours they need just to get by. 

In an effort to keep consumer prices down, remain competitive 

and earn their bonuses, our general managers, who are 62 percent 

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minorities and 66 percent women, are always doing what they can 

to keep costs down. That’s the way American business men and 

women succeed. 

The ACA’s math is simple: three employees working 40 hours a 

week will produce 120 hours. Five employees working 24 hours a 

week also produce 120 hours. Under the ACA, employers must offer 

the three full-time employees health insurance or pay a penalty. 

They have no such obligation to the five part-time employees, making part-time employment less costly. In this way, the ACA unintentionally encourages our general managers to reduce employees’ 

hours to under 30 a week. This result shouldn’t come as a surprise 

to anyone. If you make something more expensive, people will use 

less of it. If you make something less expensive, people will use 

more of it. This is the rationale behind sin taxes, and it applies to 

other costs, including labor. 

For example, when passing the Fair Labor Standards Act in 1938 

and establishing the modern 40-hour work week, Congress and 

President Roosevelt didn’t make working over 40 hours a week illegal. They simply required that employers pay overtime to employees who worked over 40 hours, making employees who work over 

40 hours less economical than employees who worked 40 or fewer 

hours. The result was the commonly accepted 40-hour work week. 

By making employees who work 30 or more hours a week less 

economical than employees who work under 30 hours a week, the 

ACA has the same economic impact, encouraging businesses to reduce employees’ hours to less than 30. 

We like to see our employees insured. For many years, and as 

long as I’ve been CEO, we’ve offered our general managers and 

above ACA-compliant insurance. We felt that employees at this 

level were likely to be the prime support for their families and, as 

a group, far more desirous of receiving their compensation partly 

in the form of health insurance than the employees they supervised. We have 1,447 who have enrolled for coverage. 

We also elected to offer coverage to over 5,000 additional employees who work 30 hours or more a week rather than paying the employer penalty and sending them to the exchanges. Only 420 enrolled. 

Since I’ve been CEO, we’ve also offered employees who are ineligible for our company-sponsored insurance access to inexpensive 

group coverage. Currently we offer our part-time employees access 

to group coverage through what is called indemnity medical insurance. About 200 of our 13,100 part-time employees have enrolled. 

As these numbers indicate, it’s difficult to get our employees to 

sign up for insurance. First, they’re young. They don’t believe they 

need insurance. And if the penalty is cheaper, they’ll just pay it, 

assuming the IRS can collect it. 

Second, they believe they can get medical care for free at the 

emergency room. 

And finally, they believe that if they become seriously ill, they 

can simply wait for the next open enrollment date and get insurance on one of the exchanges because insurers can no longer turn 

them down or charge them more if they’re sick. 

The tradeoff for this low enrollment rate has been a reduction in 

the hours of thousands of our employees, and I believe hundreds 

11 

of thousands, if not millions, of American workers. I respectfully 

submit that the tradeoff isn’t worth it. I’m strongly in favor of making more insurance options available to more employees, particularly if this can be done in a way that offers coverage to those who 

want it without hurting employment opportunities for those who 

don’t. 

Should we return to a 40-hour work week, the White House is 

concerned, and Senator Murray, that businesses would reduce the 

hours of 40-hour-a-week employees. I’d submit this is a minimal 

risk. First, we offered general managers and above ACA-compliant 

coverage before the ACA without an hourly threshold. For us, 

that’s 1,447 employees, or 78 percent of those who enrolled. We 

would continue to do so even if the threshold increased to 40 hours 

a week. 

Of the 420 additional employees who enrolled, only 197, or about 

1 percent, work 40 hours a week. Reducing their hours would be 

problematic as we need their expertise in the restaurants and we 

could lose them to competitors. However, even if we marginally reduced the hours of all 197 employees, the benefits of potentially increasing the hours and incomes of thousands of our other lower 

wage employees would, I believe, again more than offset this cost. 

In closing, I respectfully urge you to consider the negative impact 

of the ACA’s 30-hour-a-week coverage threshold and the benefit to 

American workers of a fix, returning that threshold to 40 hours. 

Thank you, and now I can take a breath. 

[Laughter.] 

[The prepared statement of Mr. Puzder follows:] 

PREPARED STATEMENT OF ANDREW F. PUZDER

SUMMARY

• CKE owns the Carl’s Jr. and Hardee’s restaurant brands. In our 800 domestic 

company-owned restaurants we employ about 20,000 people. Our franchisees employ 

roughly 55,000 additional people in their 2,120 domestic restaurants. 

• The Affordable Care Act (‘‘ACA’’) encourages employers to reduce workers’ hours 

to less than 30 a week, reducing the incomes of low-wage workers who can least 

afford it. Three employees working 40 hours per week will produce 120 labor hours. 

Five employees working 24 hours per week also produce 120 labor hours. Under the 

ACA, employers must offer the three full-time employees health insurance or pay 

a penalty. They have no such obligation to the five part-time employees, making 

part-time employment less costly. 

• I believe this has resulted in employers reducing hundreds of thousands (if not 

millions) of jobs to under 30 hours a week. By raising the ACA’s coverage threshold 

to 40 hours a week, the Forty Hours is Full Time Act would remove this incentive 

and encourage employers to increase low wage workers’ hours and incomes. 

• The White House is concerned that increasing the threshold for coverage to 40 

hours would (i) cause a substantial number of people to lose their coverage and (ii) 

encourage employers to reduce employees’ hours to under 40 hours a week to avoid 

offering them coverage. Based on our experience, these concerns are unfounded. 

• Of our 20,000 employees, 6,900 were eligible for coverage, 1,447 already had 

ACA compliant coverage leaving 5,453 eligible employees of whom only 420 chose 

to enroll. That’s 2 percent of our total employees or 6 percent of eligible employees. 

• While these 420 employees potentially could lose their coverage if the standard 

were 40 hours, this change would have the benefit of encouraging our managers to 

increase working hours and incomes for thousands of our other employees. 

• With respect to reducing the hours of employees who currently work 40 hours 

a week, we offered 1,447 of such employees (78 percent of those insured) ACA compliant coverage without an hourly requirement or any other government compulsion 

and would continue to do so should the standard change to 40 hours a week. 

12 

• Of the 420 additional employees, only 197 (less than 1 percent of our employees) 

work 40 hours a week. Reducing their hours would be problematic as we need their 

expertise in the restaurants and could lose them to competitors. • However, even if we marginally reduced the hours of all 197 employees (which 

we would not), the benefit of potentially increasing the hours and incomes of the 

thousands of our other employees would again more than offset this cost. • Accordingly, I respectfully urge you to consider the negative impacts of the 

ACA’s 30 hours a week coverage threshold on working Americans and the benefits 

to such workers of a fix that would return the threshold to 40 hours. 

INTRODUCTION

I want to thank Chairman Alexander, Ranking Member Senator Murray and the 

members of the Health, Education, Labor, and Pensions Committee for giving me 

the opportunity to discuss the Forty Hours is Full Time Act, legislation that is of 

importance to American workers and businesses alike. My name is Andrew F. 

Puzder and I have been the CEO of CKE Restaurants Holdings, Inc. (‘‘CKE’’) for 

over 14 years. 

I’m hopeful that this hearing will help open a dialog between legislators, workers 

and the business community on the unintended adverse impact on the American 

workforce of the Affordable Care Act’s (‘‘ACA’’) definition of full-time employment as 

30 hours a week. It has encouraged employers to reduce workers hours, particularly 

in the retail segment, lowing wages and reducing consumer spending. 

The Forty Hours is Full Time Act represents a bipartisan solution to this problem. 

By protecting the best interests of the people the ACA was intended to benefit, Congress can provide immediate relief to employees who need more hours to meet their 

economic needs. 

COMPANY DESCRIPTION AND JOB CREATION IMPACT

CKE is a quick service restaurant company headquartered in Carpinteria, CA 

with regional headquarters in Anaheim, CA, and St. Louis, MO. Carl N. Karcher, 

an Ohio native with an 8th grade education, and his wife Margaret, a California 

native, started our Company in 1941 with a hot dog cart in South Central Los Angeles. 

There are 3,560 Carl’s Jr. and Hardee’s restaurants in 42 States and 33 foreign 

countries. Our franchisees are planning on opening restaurants in two additional 

States (New York and New Jersey) during the first quarter of this fiscal year. Of 

our 3,560 restaurants, 2,920 (82 percent) are in the United States. All of our international restaurants are franchised. Our company currently owns and operates approximately 800 of our domestic restaurants and our franchisees own and operate 

the remaining 2,120 (73 percent of our domestic restaurants). Our domestic restaurants (company and franchised, Carl’s Jr. and Hardee’s) average over $1.2 million in sales per year. Each restaurant employs about 25 people and has one general 

manager. 

We employ approximately 20,000 people in the United States. Our domestic 

franchisees employ roughly an additional 55,000 people. As such, along with our 

franchisees, we account for about 75,000 jobs in the United States. 

We provide significant employment opportunities for minorities. About 62 percent 

of our company employees are minorities. We also provide significant employment 

opportunities for women. About, 62 percent of our employees are women. We’re 

proud of the company’s diversity. 

The average hourly rate for restaurant level employees is $9.28. Last year, CKE 

spent $329 million on restaurant level labor or about 28 percent of total companyowned restaurant sales. 

As CEO, I’ve watched young men and women enter the labor force in our restaurants for over 14 years. I’ve seen the pride and determination that leads to success in their careers and lives. Some move on to other jobs and challenges equipped 

with the experience you can only get from a paying job. Others stay, aspiring to 

move up to managerial positions. There’s nothing more fulfilling than seeing new 

and unskilled employees work their way up to managing a restaurant. 

On average, our general managers each run a $1.3 million business with 25 employees and significant contact with the public. They’re in charge of a million-dollar 

facility, a profit-and-loss statement and the success or failure of a business. If that 

business succeeds, they benefit just as the owner of a small business would. 

Our company-owned restaurant general managers are 62 percent minorities and 

66 percent women. They are 41 years old on average. However, their ages range 

from 21 to 65. They earn a management-level salary starting around $36,000 and 

13 

going as high as $65,000—the average is around $45,000—plus benefits. They additionally have the potential to earn a substantial performance-based bonus. 

They can progress through our management ranks as high as their ambition may 

take them. Our executive vice presidents responsible for Carl’s Jr. and Hardee’s 

both started as crew employees who worked their way up to general managers. Several of our senior vice presidents started as restaurant employees and learned the 

business as restaurant general managers. 

Our franchisees, who are generally small business owners and entrepreneurs 

themselves, also often started out as general managers in our restaurants or our 

competitors’ restaurants. Many run family businesses that have passed from one 

generation to the next. We have 230 franchisees nationwide. A few of our 

franchisees own a hundred or more restaurants, but most own 20 or less. Of our 

230 franchisees, 44 own one restaurant and 20 own two restaurants (generally putting them at or near the ACA’s 50 employee applicability threshold). All of these 

franchisees exemplify the American entrepreneurial spirit on which we built our 

Company and they instill that spirit in their 55,000 employees and managers. 

While we and our franchisees directly account for about 75,000 jobs in the United 

States, our company’s impact on the Nation’s employment rate goes well beyond the 

number of people we directly employ. The hundreds of millions of dollars we and 

our franchisees spend on capital projects, services and supplies throughout the 

United States create thousands of additional jobs and generate broader economic 

growth. 

THE ACA—HOW MANY EMPLOYEES ENROLLED?

The ACA’s employer mandate took effect January 1st for employers with 100 or 

more full-time employees. The last open enrollment date for our company was December 4, 2014. As of the enrollment date, our company had approximately 20,000 

employees, 6,900 (34.5 percent) of whom were managers or worked 30 or more hours 

per week and were eligible for our employer-sponsored ACA compliant health insurance. We elected to offer them coverage rather than paying the employer penalty 

and sending them to the ACA’s health-insurance exchanges where, if the workers 

qualified, they could obtain Federal subsidies to help pay for insurance. 

The remaining 13,100 (65.5 percent) of our employees do not qualify for ACA compliant coverage as they work under 30 hours a week. 

Of the 6,900 eligible employees, 1,447 already had ACA compliant insurance 

through our pre-existing company plans. That left 5,453 employees eligible to enroll 

for our employer-sponsored ACA compliant insurance. 

Out of these 5,453 eligible employees, only 420 actually chose to enroll. That’s 2 

percent of our total employees or 6 percent of eligible employees. 

The ACA will impose a penalty on the 5,033 eligible employees who elected not 

to enroll, unless they have compliant health insurance from another source. Of these 

5,033 employees, 2,640 (53 percent) were single and over 26 years of age. So, assuming that the remaining 2,393 all had insurance coverage through a spouse or a parent (which is clearly not the case as not every parent or every spouse would have 

insurance), at a bare minimum, 2,640 will pay the penalty. That’s over 6 times as 

many people as enrolled. 

For 2015, the penalty will be equal to the higher of $325 or 2 percent of their 

yearly household income above about $10,000. The 5,033 employees who declined insurance make, on average, $24,663 a year ($13.55 an hour assuming a 35 hour work 

week). As such, the employees without insurance generally will pay the $325 penalty as you have to make about $26,250 before the 2 percent penalty is higher. 

The employee portion of the annual premium available to our full-time employees 

for our least expensive ‘‘bronze plan’’ is $1,104. As our very low enrollment rate indicates, if you don’t believe you need health insurance, $325 is better than $1,104. 

Unfortunately, the employees the ACA compels to pay this penalty can ill afford it 

and still won’t have compliant insurance. 

Although the ACA does not require us to do so, we also offer our 13,100 part-time 

employees access to inexpensive group health care coverage that, while not compliant under the ACA’s strict guidelines, may adequately meet their particular needs. 

The policies are called Indemnity Medical Insurance. Insurers are able to offer these 

policies because they are excepted benefits as defined by IRS, Labor Department 

and Public Health Service Act regulations and, as such, are not governed by the 

ACA. The insurer pays a set amount each time the insured receives a covered service. The insurer pays the same amount regardless of the fees charged by the provider. (I’ve provided the committee a copy of the benefits description pamphlet 

which also includes access to dental, life, disability, accident and vision insurance). 

About 200 part-time employees are enrolled. 

14 

In addition, when we hire new shift leaders or crew people, we provide them with 

a letter entitled ‘‘2015 GET INSURED’’ (I’ve provided the committee with a copy). 

When these newly hired variable-hour or part-time employees call our Call Center 

to enroll or find out about coverage, our Benefit Specialists walk them through the 

ACA’s requirements and the individual mandate. The Benefit Specialists explain 

that the Medical Indemnity Plan does not help them to meet the individual mandate. They also offer these employees the option to get a quote through the Insurance Exchange. It is our intent to give all our employees easy and informed access 

to explore their options. 

THE EMPLOYER MANDATE

Because the ACA requires that employers either offer health insurance to their 

employees who work 30 or more hours per week or pay up to a $3,000 per employee 

penalty, it has had the unintended consequence of encouraging employers to convert 

full-time jobs to part-time jobs (more particularly, jobs where employees work less 

than 30 hours a week). 

The logic for businesses is simple. If you have three employees working 40 hours 

per week they will produce 120 labor hours. Five employees working 24 hours per 

week also produce 120 labor hours. Employers must offer the three full-time employees health insurance or pay a penalty. They have no such obligation to the five parttime employees, making part-time employment less costly. 

I believe this has resulted in employers reducing hundreds of thousands (if not 

millions) of jobs to under 30 hours a week. Make something more expensive and employers will use less of it; make something less expensive and they will use more 

of it. While this is common sense and consistent with comments from the business 

community, there is some disagreement about the impact of the ACA’s 30-hour 

threshold. 

Part of the problem lies in interpreting the Bureau of Labor Statistics (‘‘BLS’’) employment data. The BLS and the ACA define part-time employment differently. The 

BLS defines ‘‘full-time workers’’ as ‘‘[p]ersons who work 35 hours or more per week.’’ 

(BLS Glossary of Terms). So, the BLS considers individuals working under 35 but 

above 30 hours per week part-time while the ACA considers them full-time. There 

are a significant number of such individuals. In fact, according to BLS, in December 

2014, American workers averaged 34.6 hours a week. (BLS Economic News Release 

(‘‘ENR’’) Table B–2). 

If employers reduce the hours of employees who work less than 35 hours a week 

to under 30 a week (say from 34 hours to 24), there is no change in the BLS data 

on full- or part-time employment but, under the ACA, such workers transition from 

full- to part-time employment. The impact on the workers’ earnings is obviously significant. As such, the BLS data on part-time and full-time jobs understates the 

ACA’s impact. 

Another problem with the data is that the BLS ‘‘counts persons, not jobs.’’ (BLS, 

Industry Hours and Employment, 5/1/14). For example, the BLS would count someone who works two 20-hour-a-week part-time jobs as one full-time worker. We have 

many employees who now work part-time in our restaurants and also part-time in 

competitors’ restaurants as a means to increase their hours. 

According to the BLS, in 2014 (on average per month) there were nearly 2 million 

(1.955 million) multiple job holders working two part-time jobs. This is higher than 

in any year since 1994 when the BLS began tracking the data. This number has 

steadily increased over the past 5 years and is 150,000 people higher than it was 

in 2010 despite the fact that the number of people the BLS counts as part-time has 

declined. The highest month on record was October 2014 (2.172 million people), the 

second highest was November 2014 (2.127 million people). Over twice as many 

women work two part-time jobs. By definition, each of these 2 workers actually 

works two part-time jobs (accounting for 4 million part-time jobs). But, BLS counts 

the ones working a combined 35 hours or more as one full-time worker. As such, 

there are more part-time jobs than show up in the BLS part-time workers data. 

(ENR Table A–16, historical data). 

There have been a number of articles discussing the ACA’s impact on businesses 

reducing workers hours below 30 a week. I’ve written two articles on this issue. 

ObamaCare and the Part-Time Economy, WSJ, 10/10/13; Take It From a Restaurant 

Executive, ObamaCare is Shifting Workers into Part-Time Jobs, Forbes, 9-17-14. 

Investors Business Daily (‘‘IBD’’) compiled a list of job actions showing ‘‘strong 

proof ’’ that the ACA’s ‘‘employer mandate is behind cuts to work hours or staffing 

levels.’’ As of September 5th, IBD’s ‘‘ObamaCare scorecard included 450 employers 

that have reduced employees’ hours with more than 100 school districts among 

15 

them.’’ ObamaCare Employer Mandate: A List Of Cuts To Work Hours, Jobs, IBD 

9–5–14. 

Even the Urban Institute has acknowledged that completely eliminating the employer mandate, 

‘‘would not reduce insurance coverage significantly, but it would eliminate the 

labor market distortions that have troubled employer groups and that could 

have negative effects on some workers.’’ 

Why Not Just Eliminate the Employer Mandate? The Urban Institute, 5-9-14. 

Notably, the BLS also reported that in December 2014, 6.8 million Americans 

were working part-time for economic reasons (i.e., their hours were cut back or they 

were unable to find full-time jobs) and not by choice. (ENR Table A–8); (BLS Labor 

Force Characteristics). 

To address this issue, on January 7, 2015 the House passed the ‘‘Save American 

Workers Act by a bipartisan vote of 252 to 172. This bill would change the definition 

of ‘‘full-time employee’’ back to the traditional 40 hours a week threshold from the 

ACA’s full-time definition of 30 hours a week. The bill would redefine a full-time 

employee as one who works 40 hours a week or 174 hours a month based on a 52- 

week year. 

Here on the Senate side, co-sponsors Senators Collins (R–ME), Donnelly (D–IN), 

Murkowski (R–Alaska) and Manchin (D–WV) have introduced the bipartisan Forty 

Hours is Full Time Act which would accomplish the same goal. 

This bill is not intended to repeal or replace the ACA nor would it eliminate the 

employer mandate (as the Urban Institute advocates). It is simply intended as a fix 

for an unintended consequence that is negatively impacting American workers. 

Nonetheless, the White House has expressed concern that this legislation would 

(i) meaningfully reduce the number of Americans with employer-based health insurance coverage and (ii) encourage employers to reduce the hours of employees currently working 40 hours a week to avoid providing coverage. (White House Statement 1/7/15). I respectfully submit that, based upon the experience at our company, such concerns are unfounded. 

HOW MANY EMPLOYEES WOULD LOSE THEIR EMPLOYER-SPONSORED HEALTH INSURANCE

COVERAGE?

As noted above, a very small percentage of our Company’s eligible employees 

would lose coverage if the standard where changed to 40 hours a week. Of our 

20,000 employees, 6,900 were eligible for our ACA compliant health insurance coverage, 1,447 already had ACA compliant insurance through our pre-existing company plans leaving 5,453 employees eligible to enroll. 

Only 420 enrolled. 

That’s 2 percent of our labor force and 6 percent of eligible employees. The other 

94 percent of eligible employees declined the opportunity. 

Of the 5,033 who failed to enroll, at a bare minimum 2,640 (53 percent) elected 

to pay the penalty for not having insurance. As noted above, the actual number of 

individuals paying the penalty is certainly much higher. Again, at a bare minimum, 

that’s six times as many people of the ACA’s 30-hours threshold. 

Consistent with the Urban Institute’s findings, our experience indicates that a relatively limited percentage of employees would lose their employer-sponsored health 

insurance should Congress move the ACA’s definition of full-time from 30 hours a 

week back to the traditional 40 hours. At our company, 420 employees could lose 

their employer-sponsored insurance if the ACA’s coverage threshold were 40 hours 

a week (although, as noted below, not all would lose their coverage). I respectfully 

submit that the benefit of potentially increasing the hours and incomes of the thousands of our other employees would more than offset this cost. 

HOW MANY 40 HOUR A WEEK EMPLOYEES ARE IMPACTED?

With respect to reducing the hours of employees who currently work 40 hours a 

week, the White House is concerned that moving to a 40 hour standard would ‘‘create incentives for employers to shift their employees to part-time work’’ by reducing 

40 hour a week employees to 39 or fewer hours. (White House Statement 1/7/15). 

This concern is also unfounded. 

Part of the problem again appears to be a misunderstanding with respect to the 

BLS reporting on full-time employment. As stated by the White House, ‘‘[a]ccording 

to data from the Bureau of Labor Statistics, since the Affordable Care Act became 

law, more than 90 percent of the increase in employment has been in full-time jobs.’’ 

(White House Statement 1/7/15). However, as noted above, the BLS defines ‘‘fulltime workers’’ as ‘‘[p]ersons who work 35 hours or more per week’’ and in December 

2014, Americans workers averaged 34.6 hours a week. 

16 

As such, there are a large number of workers that BLS defines as full-time that 

work 35 to 39 hours a week rather than 40 and would not have their hours reduced 

should the standard change. 

In addition, because the BLS counts persons not jobs, it would count an individual 

working two part-time jobs totaling 35 hours a week as a full-time worker even 

though neither job is full-time. According to the BLS, there were nearly 2 million 

multiple job holders working two part-time jobs. (ENR Table A–16, historical data). 

Simply stated, because of how the BLS defines full-time workers and the fact that 

it counts workers not jobs, the BLS data is an unreliable indicator of either the percentage of ‘‘full-time’’ jobs where people are working 40 hour a week or the impact 

of the ACA’s 30-hour threshold on full-time employment. 

With respect to our employees who actually work 40 hours a week, of our 1,867 

employees who have enrolled for ACA compliant coverage, 1,447 (78 percent) already had such coverage through our pre-existing company plans. We offered these 

employees such insurance pre-ACA without an hourly requirement or any other government compulsion. If the hourly requirement went to 40 hours, we would continue 

offering these employees employer-sponsored group coverage regardless. 

Of the 420 additional employees who enrolled for ACA compliant coverage, 197 

(less than 1 percent of our workforce) work 40 hours or more. Reducing these employees’ hours would create problems. We would lose some of them to competitors. 

For others, we need their expertise in the restaurants (such as experienced cooks 

or shift leaders) so reducing their hours would make no sense. 

However, even if we wanted to marginally reduce the hours of all 197 employees 

to under 40 hours a week (which we would not), certainly the benefit of potentially 

increasing the hours and incomes of the thousands of our other employees who work 

under 30 hours a week would more than offset this cost. 

CONCLUSION

In conclusion, I want to thank you for the opportunity you’ve given me to speak 

about the Forty Hours is Full Time Act. The bottom line question is whether the 

ACA’s 30-hour per week eligibility threshold is worth it. Some would argue sincerely 

that it is, pointing to the previously uninsured who now have employer-sponsored 

health insurance. As I shared with you, in our company, that would be just 2 percent of total employees and 6 percent of eligible employees. To achieve those results, 

I believe the ACA has caused hundreds of thousands (if not millions) of full-time 

jobs to become part-time (under 30 hours a week), and has imposed a penalty/tax 

on lower income workers who can ill afford it. 

This is an issue that concerns me not only as the CEO of a company but as an 

American who began his career in the same kind of jobs that the ACA has put at 

risk. My first job was scooping ice cream at Baskin and Robbins for minimum wage 

(I think it was $1 or $1.25). To get through college and law school while supporting 

my family, I painted other people’s houses, cut other peoples’ lawns, played in 

bands, worked in a music store and busted up concrete with a jack hammer, among 

other things. I appreciated the opportunities each of these jobs gave me to earn a 

living while I pursued an education. I want to provide those same opportunities to 

our employees and other like them. 

As our company’s low enrollment rate and public opinion polls indicate, the ACA 

remains extremely unpopular. But, this doesn’t mean Americans want to return to 

the pre-ACA status quo. The ultimate solution may well be bipartisan market-based 

health care legislation that is comprehensible, workable and, most importantly, provides access to affordable coverage for those who want it. 

In the meantime, the Forty Hours is Full Time or Save American Workers Act 

would be a positive and bipartisan step in the right direction, addressing a serious 

problem for American workers and businesses. It is not an attempt to repeal or replace the ACA nor is it an attempt to eliminate the employer mandate. As stated 

by Senator Donnelley, who voted for the ACA in the House and continues to support 

it, the Forty Hours is Full Time Act is an attempt to, ‘‘make this bill stronger. . . . 

[C]ommon wisdom is that full-time is a 40-hour work week, and the health care law 

should reflect that.’’ 

Accordingly, I respectfully urge you to consider the negative impacts of the ACA’s 

redefining full-time employment as 30 or more hours a week and the benefits of a 

fix that would return American workers to the traditional 40-hour week. 

Thank you. 

The CHAIRMAN. Thank you, Mr. Puzder. 

Dr. Holtz-Eakin. 

17 

STATEMENT OF DOUG HOLTZ-EAKIN, PRESIDENT, AMERICAN 

ACTION FORUM, WASHINGTON, DC 

Mr. HOLTZ-EAKIN. Thank you, Mr. Chairman, Ranking Member 

Murray, and members of the committee. It’s a privilege to be here 

today to talk about this issue of 30 versus 40 hours as the norm 

for full-time employment under the ACA. I’ll just make a couple of 

points and look forward to your questions. 

Point No. 1 is that 30 hours is just simply at odds with the data 

on the labor market in the United States. Seventy-two percent of 

workers work over 40 hours, and 50.2 percent work exactly 40 

hours. So defining it at 30 is at odds with what we see in the data 

out there in the United States every day. 

The second point, as you’ve heard, is that this provides an incentive to reduce hours to those in order to avoid providing insurance. 

So there is going to be a group of workers who don’t have insurance 

now who would have to be provided insurance, and you can avoid 

doing that by reducing hours, and the stakes are quite high in this 

case. If you move someone from 40 to 29 hours a week at the average hourly earnings in the United States, we’re talking about 

$14,000 a year for those workers. So it’s a big impact on their livelihood. 

The people most at risk of having their hours shortened are 

those who are close to 30 under current law, so maybe 30 to 35 

hours a week—you can get them down by dropping an hour a 

day—and 40 to 45 hours a week under the proposal. Well, if you 

look at those working 30 to 35 hours, only 27 percent have insurance, so there’s a large number of them who don’t have insurance 

right now, the 73 percent. That’s 9.8 million people who are at risk 

of having their hours reduced to avoid giving them the insurance. 

If you look at people working 40 to 45 hours a week, the vast majority have insurance. Eighty-eight percent have insurance. There’s 

only 12 percent who are at risk of having their hours reduced to 

avoid being given insurance. That’s 9.3 million workers, roughly. 

So by moving from 30 to 40, you do two things. No. 1, you reduce 

by a substantial amount the number of people at risk of having 

their hours reduced. And No. 2, the 11 million workers who are 

working between 30 and 40 are completely freed of any risk of having their hours reduced. So you’re taking enormous income and 

hours lost off the table by making this change. 

The last point is that there has also been a second incentive that 

people talked about, the notion that you’ll make workers who currently have insurance drop it and put them in the exchanges. I 

think that’s a secondary consideration in thinking about 30 versus 

40 hours. The reality is that regardless of the hours, for any worker making up to about 250 percent of the Federal poverty line, it’s 

possible for the worker to stop getting insurance from his employer. 

The employer would then pay the penalty. He could also pay the 

worker additional cash benefits. Those cash benefits could be taxed. 

The worker could take the after-tax raise plus the subsidies, go to 

the exchanges and get insurance that is just as good as what the 

employer was offering. The employer meanwhile can pay more penalties, pay more wages, and still come out ahead by dropping the 

insurance. 

18 

* The views expressed here are my own and not those of tha American Action Forum, the 

Partnership for the Future of Medicare or the Center for Health & Economy. I thank Ben Gitis 

and Christopher Holt for their assistance. 

There is an enormous incentive to drop coverage under the ACA 

regardless of the definition of full-time employment. So I don’t 

think we’ll see a big change in that. That’s baked into the cake. 

The real issue is people having their hours reduced to avoid providing new insurance, and I think that’s the central issue the committee should focus on. 

So I thank you for the opportunity to be here and I look forward 

to answering your questions. 

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

PREPARED STATEMENT OF DOUGLAS HOLTZ-EAKIN* 

SUMMARY

I would like to make two main points today regarding the ACA’s employer mandate and the definition of full-time work as 30 hours per week: 

• The definition of full-time employment as a 30-hour workweek has unintended 

consequences in the labor market, is at odds with labor market norms, and creates 

incentive to reduce hours and pay; and 

• The ACA will cause many who would otherwise have employer-sponsored health 

insurance to lose it, no matter how ‘‘full-time’’ work is defined. 

CONSEQUENCES OF THE EMPLOYER MANDATE AND DISTORTING FULL-TIME WORK

Changing the ACA’s definition of full-time employment to 40 hours per week 

would significantly mitigate the negative consequences of the employer mandate. 

First, anyone working between 30 and 40 hours per week who does not receive 

health insurance from their employer would no longer be vulnerable to losing hours, 

pay, or their jobs. In 2013, this population represented 8.3 percent of the workforce, 

which today are about 11.6 million workers who would immediately be protected. 

With this change, instead of those working 30 to 35 hours per week being the most 

likely to lose hours, those working 40 to 45 hours would be the most likely to lose. 

Some are concerned that since far more people work between 40 and 45 hours each 

week (55.6 percent of workers or 77.9 million people) than 30 to 35 hours per week, 

a much larger number could see a reduction in hours. According to the payroll processing firm ADP, however, 88 percent of full-time workers are already offered health 

insurance. So the population of workers who could potentially see this reduction 

would fall to 9.3 million. That’s 500,000 less than the 9.8 million directly impacted 

if full-time were defined as 30 hours per week. 

WORKERS WILL LOSE INSURANCE REGARDLESS OF THE WORKWEEK DEFINITION

Concerns that changing the definition of full-time work to 40 hours would lead 

to dropped coverage are superfluous. Roughly one-half of the $900 billion of spending in the ACA is devoted to subsidies for individuals who do not receive health insurance from their employers. So the obvious question is how employers will react 

to the presence of an alternative, subsidized source of insurance for their workers. 

AAF concluded that the incentives for dropping insurance are quite powerful for 

workers with incomes up to 250 percent of the Federal poverty level. Due to the 

ACA, employers will have motives to drop coverage for workers who already have 

health insurance, whether full-time work is defined as 30 hours per week or 40 

hours per week. 

CONCLUSION

The ACA’s 30-hour workweek risks imposing substantial costs on the workers it 

aims to help. So, it is necessary that Congress revise this inappropriate definition 

which is clearly out-of-touch with the norms of the labor market. Moreover, the benefits of conforming to that reality are quite clear. Changing the ACA’s definition of 

full-time employment from 30 to 40 hours per week to mirror the actual labor market would dramatically reduce the harm caused by the employer mandate. 

19 

1 Ben Gitis, Conor Ryan, & Sam Batkins, ‘‘Obamacare’s Impact on Small Business Wages and 

Employment,’’ American Action Forum, September 2014, http://americanactionforum.org/research/obamacares-impact-on-small-business-wages-and-employment. 2 Ben Gitis, ‘‘Changing the ACA’s Definition of Full-Time Work,’’ American Action Forum, January 2015, http://americanactionforum.org/research/changing-the-acas-definition-of-full-timework. 

Chairman Alexander, Ranking Member Murray, and members of the committee, 

thank you for the opportunity to speak with you today regarding the Affordable 

Care Act’s (ACA) definition of full-time work and its impact on the labor market. 

I would like to make two main points today regarding the ACA’s employer mandate 

and the definition of full-time work as 30 hours per week: 

• The definition of full-time employment as a 30-hour workweek has unintended 

consequences in the labor market, is at odds with labor market norms, and creates 

incentive to reduce hours and pay; and 

• The ACA will cause many who would otherwise have employer-sponsored health 

insurance to lose it, no matter how ‘‘full-time’’ work is defined. 

CONSEQUENCES OF THE EMPLOYER MANDATE AND DISTORTING FULL-TIME WORK

When evaluating the ACA, the employer mandate, and the 30-hour workweek, 

there are two central concerns. The primary concern is the unintended labor market 

consequences it creates for those who do not already have health insurance. The second concern is the potential for employees who already have employer-sponsored insurance (ESI) to be dropped from their plans, which some believe could be exacerbated by increasing the ACA’s definition of full-time work to 40 hours per week. 

Let’s first examine the primary concern. When employers are required to provide 

health insurance for workers who do not already receive it, their business costs will 

naturally rise and companies are more likely to offset those costs by cutting jobs 

or compensation. Employers may also opt to avoid the mandate by reducing hours 

and substituting part-time for full-time work. However, since the ACA defines fulltime as 30 hours per week, it gives employers an incentive to potentially dramatically cut hours to avoid the mandate. 

In 2014, American Action Forum (AAF) research revealed significant evidence 

that the employer mandate and other ACA regulations have been negatively impacting employment and pay. The employer mandate and other ACA regulations have 

made employers more sensitive to health care costs, which they offset by reducing 

pay and employment. As a result, since ACA’s passage, the rise in premiums has 

cost employees an average $935 per year and has reduced employment by 350,544 

jobs nationwide.1

AAF also found evidence that the labor force was absorbing these detrimental 

costs before the government began enforcing the most stringent ACA regulations. 

These costs likely understate the consequences of these regulations and are a result 

of businesses preparing for the employer mandate, providing health insurance to 

workers, and losing access to low-cost coverage. 

Instead of paying for the mandate by cutting worker pay or reducing hiring, other 

employers may decide to avoid the mandate altogether by reducing their employees’ 

hours and reclassifying them as part-time. The chart below (using 2013 data) reveals that the ACA’s definition of ‘‘full-time’’ work as 30 hours per week is at odds 

with the empirical realities. AAF found that 72 percent of employees in 2013 worked 

at least 40 hours per week. Further, 50.2 percent worked exactly 40 hours per week. 

As a result, with the full-time threshold at 30 hours per week, the employer mandate could subject millions of workers to a dramatic reduction in hours.2

20 

3 Bureau of Labor Statistics, Department of Labor, http://www.bls.gov/data/. 4 ‘‘ADP Annual Health Benefits Report, 2013 Benchmarks and Trends for Large Organizations,’’ ADP, http://www.adp.com/tools-and-resources/adp-research-institute/research-andtrends/∼/media/RI/whitepapers/2013lADPAnnualHealthBenefitsReportlFINAL.ashx. 

The employer mandate could be particularly costly for a full-time employee who 

works 40 hours per week and does not receive health insurance through the employer. If the employer wants to avoid the cost of the mandate and decides to reduce 

the worker’s hours to reclassify him or her as part-time under the ACA, it would 

cost the employee 11 hours to go from 40 hours to 29 hours per week. If the worker’s 

hourly earnings rate is $24.57 (the December 2014 national average), this means 

the employee would lose $270.27 per week or $14,054.04 per year.3

While it is possible that some workers would see such a large decline in their 

weekly hours, those most likely to lose hours are those who are just above the ACA’s 

‘‘full-time’’ threshold and work 30 to 35 hours per week. AAF found that only 27 

percent of that population already receives health insurance from their employer. 

Therefore, the vast majority or 73 percent are very likely to lose hours. This group 

is composed of 9.8 million workers and represents 7 percent of the workforce. For 

someone working 35 hours per week, going to 29 hours would on average cost 

$147.42 per week or $7,665.84 per year. 

Changing the ACA’s definition of full-time employment to 40 hours per week to 

more accurately reflect the labor market would significantly mitigate the negative 

consequences of the employer mandate. First, anyone working between 30 and 40 

hours per week who does not receive health insurance from their employer would 

no longer be vulnerable to losing hours, pay, or their jobs. In 2013, this population 

represented 8.3 percent of the workforce, which today are about 11.6 million workers who would immediately be protected. 

Second, it would shield most full-time workers without health insurance from 

being subjected to the possibility of losing 11 or more hours per week. Instead of 

having to dramatically cut back hours, employers could avoid the mandate simply 

by reducing the workers hours from 40 to 39 per week. The average worker discussed above would only lose $24.57 per week or $1,277.64 per year. 

With this change, instead of those working 30 to 35 hours per week being the 

most likely to lose hours, those working 40 to 45 hours would be the most likely 

to lose. Some are concerned that since far more people work between 40 and 45 

hours each week (55.6 percent of workers or 77.9 million people) than 30 to 35 hours 

per week, a much larger number could see a reduction in hours. According to the 

payroll processing firm ADP, however, 88 percent of full-time workers are already 

offered health insurance.4 So the population of workers who could potentially see 

this reduction would fall to 9.3 million. That’s 500,000 less than the 9.8 million directly impacted if full-time were defined as 30 hours per week. As a result, changing 

the definition of full-time to 40 hours per week would save most workers from a potentially massive loss in hours, while the number of workers who are still directly 


92973-1.eps
21 

5This is likely an upper bound estimate as there is a positive correlation between wage levels 

and the probability of having insurance. 6Douglas Holtz-Eakin & Cameron McCosh, ‘‘Labor Markets and Health Care Reform: New 

Results,’’ American Action Forum, May 2010, http://americanactionforum.org/sites/default/ 

files/OHClLabMktsHCR.pdf. 

impacted by the mandate is less. The employer mandate would still hurt worker pay 

and hours, but it would be a vast improvement from current law. 

WORKERS WILL LOSE INSURANCE REGARDLESS OF THE WORKWEEK DEFINITION

No matter how ‘‘full-time’’ work is defined under the ACA, the law gives employers strong incentive to drop already covered workers from their health plans or, 

more likely, never begin to offer health insurance. The second concern that changing 

the ACA’s definition of full-time work to 40 hours per week would make it easier 

for employers to drop existing coverage is a secondary consideration because it overlooks evidence that the ACA’s large health exchange subsidies already provide employers with the incentive to drop insurance. 

Roughly one-half of the $900 billion of spending in the ACA is devoted to subsidies for individuals who do not receive health insurance from their employers. 

These subsidies are remarkably generous, even for those with relatively high incomes. For example, a family earning about $59,000 a year in 2014 could receive 

a premium subsidy of about $7,200. A family making $71,000 could receive about 

$5,200; and even a family earning about $95,000 could receive a subsidy of almost 

$3,000. 

By 2018, subsidy amounts and the income levels to qualify for those subsidies 

would grow substantially: a family earning about $64,000 would receive a subsidy 

of over $10,000, a family earning $77,000 would receive a subsidy of $7,800, and 

a family earning $102,000 would receive a subsidy of almost $5,000. 

So the obvious question is how employers will react to the presence of an alternative, subsidized source of insurance for their workers, which can be accessed if 

they drop coverage for their employees. The simplest calculation focuses on the 

tradeoff between employer savings and the $2,000 penalty (per employee) imposed 

by the ACA on employers whose employees move to subsidized exchange coverage. 

Consider a $12,000 policy in 2014, of which the employer would bear roughly three 

quarters or $9,000. A simple comparison of $9,000 in savings versus a $2,000 penalty would seemingly suggest large-scale incentives to drop insurance. 

Unfortunately, the economics of the compensation decision are a bit more subtle 

than this simple calculation. Health insurance is only one portion of the overall compensation package that employees receive as a result of competitive pressures. Evidence suggests that if one portion of the package is reduced or eliminated—health 

insurance—then another aspect—wages—will ultimately be increased as a competitive necessity to retain and attract valuable labor. Thus, the key question is whether the employer can keep the employee ‘‘happy’’—appropriately compensated and insured—and save money. 

AAF has found that the answer is frequently ‘‘yes’’—thanks to the generosity of 

Federal subsidies. Specifically, if employers were to drop workers from their health 

plans, the exchange subsidies limit the pay hike employees require to remain as 

well off as they were with ESI. In many cases, the money employers save from dropping insurance (employer contribution to health plan less the $2,000 penalty), far 

outweighs the wage hike workers require to stay ‘‘happy.’’ As a result, many employers on net would save money by dropping workers from their health plans. 

AAF concluded that the incentives for dropping insurance are quite powerful for 

workers with incomes up to 250 percent of the Federal poverty level. Only for higher 

income workers do the advantages of untaxed health insurance make it infeasible 

to drop insurance and re-work the compensation package. 

So how many workers could be dropped due to the subsidies? AAF found that 

there are about 43 million workers for whom it makes sense to drop insurance.5

While CBO estimated that only 19 million people would receive subsidies, AAF’s research suggests that number could easily triple. As a result, the CBO’s cost estimate 

could grow from $450 billion over the first 10 years to $1.4 trillion.6

Clearly, concerns that changing the definition of full-time work to 40 hours would 

lead to dropped coverage are superfluous. Due to the ACA, employers will have motives to drop coverage for workers who already have health insurance, whether fulltime work is defined as 30 hours per week or 40 hours per week. 

22 

CONCLUSION

The ACA’s 30-hour workweek risks imposing substantial costs on the workers it 

aims to help. So, it is necessary that Congress revise this inappropriate definition 

which is clearly out-of-touch with the norms of the labor market. Moreover, the benefits of conforming to that reality are quite clear. Changing the ACA’s definition of 

full-time employment from 30 to 40 hours per week to mirror the actual labor market would dramatically reduce the harm caused by the employer mandate. 

The CHAIRMAN. Thank you, Dr. Holtz-Eakin. 

Mr. Fugere. 

STATEMENT OF JOE FUGERE, FOUNDER, TUTTA BELLA 

PIZZERIA, SEATTLE, WA 

Mr. FUGERE. Good morning, Chairman Alexander, Ranking 

Member Murray, and fellow Senate committee members. Thank 

you for inviting me to share my company’s story and my testimony 

about why I think it is important not to modify the definition of 

full-service employee as outlined in the Employer Shared Responsibility Requirements of the Patient Protection and Affordable Care 

Act. 

My name is Joe Fugere and I’m the founder and owner of a business in the other Washington, Washington State, just celebrating 

11 years in business. Neapolitan Pizzeria is a neighborhood restaurant group made up of five locations in the greater Seattle area, 

with just over 200 employees. 

Let’s start with the fact that when it comes to the American people and small businesses in particular, that I’m an optimist. In my 

employer peer group in Seattle, I know business leaders who are 

driven to do the right thing, not always because they reap shortterm rewards but because they know that their employees are the 

foundation of helping them achieve their true purpose and values 

and making all of their stakeholders successful over time. 

I believe that the Affordable Care Act was a step toward giving 

some support to the uninsured in our country, but it also encouraged business owners to do the right thing. 

At Tutta Bella, our stated purpose is to nourish lives by sharing 

traditions, authentic food, and love. We aspire to enrich and invigorate the communities by providing memorable experiences. We 

hope to inspire others by setting a standard for social stewardship 

and fiscal responsibility. 

Part of the reason that I’m here today to testify and I agreed to 

testify is because I think it’s important to share our story and 

share some real-world examples of this vision in action. 

We’ve been offering health care, medical, dental, and vision benefits to our salaried managers since 2005, and to all of our hourly 

managers since 2008, well before the passage of the Affordable 

Care Act. We set the minimum hours threshold for health care 

qualification at 24 hours per week to maximize the number of enrollees. As a company, if we raised it to 40 hours, almost every one 

of our current hourly employees would not qualify for enrollment. 

I think it needs to be stated explicitly that this industry has and 

always will be comprised of part-time workers. It is inherent in the 

fabric of restaurants to accommodate the workforce that often 

craves a more flexible schedule—students, caregivers, aspiring artists, for example. I understand that the backers of this legislation 

believe that it would give 2.5 million low-income wage earners a 

23 

raise. The reality is that very few employees in our industry would 

be scheduling more than 30 hours a week regardless of the threshold. 

Our industry is teeming with employees from the Millennial 

Generation. In a recent article on BusinessInsider.com, the U.S. 

Bureau of Labor Statistics predicts that Millennials will make up 

approximately 75 percent of the workforce by 2030. The article also 

mentions that this generation is struggling for financial independence compared to previous generations, with 24 percent who participated in a survey reporting the need to move back home at 

some point after entering the workforce, versus 10 percent of 

GenXers and 5 percent of Baby Boomers. 

At the other end of the age spectrum, some employees in the restaurant business need to continue to bring in income even after 

they start to reach a more standard retirement age. I can think of 

one of our longest and most loyal employees, Renee. When I was 

opening our first location in the Columbia City neighborhood in Seattle, Renee was so excited about Tutta Bella opening in our neighborhood that she offered to work for free. I didn’t take her up on 

the offer of free labor, but she did become our first server. 

Eleven years later, Renee is now 60 years old and has become 

a cornerstone of our culture and beloved by our staff and guests 

alike. She has been fully enrolled in our benefits package for years, 

and it is a huge relief to her as a single person. Even if it was possible to schedule an employee like Renee at 40 hours, recommended 

in this amendment, it would be a challenge for her physically to 

manage working that many hours. With the U.S. restaurant industry projected to have employed over 13 million people in 2014— 

that’s about 1 in 10 working Americans—it pains me to think of 

the potential hundreds of thousands of people like Renee who 

would be impacted by this change in definition. 

There’s limited evidence that the current health care reform has 

caused any significant shift toward part-time work in any industry. 

Rather than focusing on the few employers who will be led solely 

by profits and cost savings, let’s focus instead on those employers 

who I believe make up the majority of business owners in this 

country, the ones trying to do the right thing by investing in their 

employees while at the same time reaching their financial goals. 

It’s a balancing act, for sure. I work hard to achieve this with my 

team every day. But I’ve seen the direct results of offering a robust 

health care package—higher morale, lower turnover, increased productivity. You can really take that to the bottom line. Not to mention the big, bright smiles of happy, healthy, and productive employees. 

In closing, I want to be a business leader in a country that is progressing as a society, not taking steps backward. As we continue 

to shift more toward a service-based economy, we need to provide 

people in this workforce more opportunities to be successful and 

healthy in the years and decades ahead. One out of 33 people in 

the State of Washington are food service employees. As one of 

those, it would be my dream if we all did the right thing. Thank 

you. 

[The prepared statement of Mr. Fugere follows:] 

24 

* Bowen Garrett and Robert Kaestner, Little Evidence of the ACA Increasing Part-Time Work 

So Far, Urban Institute, September 2014, http://www.urban.org/UploadedPDF/413217-LittleEvidence-of-the-ACA-Increasing-Part-Time-Work-So-Far.pdf. 

PREPARED STATEMENT OF JOE FUGERE

SUMMARY

I am the founder and owner of a business in Washington State. Tutta Bella Neapolitan Pizzeria is a neighborhood restaurant group comprised of five locations in 

the greater Seattle area with just over 200 employees. 

In my employer peer group in Seattle, I know business leaders who are driven 

to do the right thing. Not always because they will reap short-term rewards, but 

because they know that their employees are the foundation of helping them live true 

to their purpose and values, as well as to make all of their stakeholders successful 

over time. I believe that the Affordable Care Act was a step toward giving some support to the uninsured in our country, but also to encourage business owners to do 

the right thing. 

At Tutta Bella our stated purpose is ‘‘To nourish lives by sharing traditions, authentic food, and love.’’ We aspire to enrich and invigorate communities by providing 

memorable experiences. We have been offering healthcare (medical, dental, and vision) benefits to salaried managers since 2005, and all hourly employees since 2008, 

well before the Affordable Care Act’s employer-shared responsibility requirements. 

We set the minimum hours threshold for health care qualification at 24 hours per 

week to maximize our number of enrollees. As a company, if we raised it to 40 

hours, almost every current hourly employee would not qualify for enrollment. 

I think that it needs to be explicitly stated that this industry has and always will 

be comprised of part-time workers. It is inherent in the fabric of restaurants to accommodate a workforce that often craves a more flexible schedule. I understand that 

the backers of this legislation believe that it would give 2.5 million low-income wage 

arners a raise. The reality is that few employees in our industry would be scheduled 

more than 30 hours a week, regardless of the threshold. 

Our industry is greatly comprised of employees from the millennial generation, 

the aging workforce who are getting close to retirement and minority workers—I 

will share ways that this change in legislation would adversely impact them. 

There is limited evidence that the current health reform has caused any significant shift toward part-time work in any industry.* Rather than focusing on the few 

employers who will be led solely by profits and cost savings, let’s focus instead on 

those employers who I believe comprise the majority of business owners in our country . . . the ones trying to do right by investing in their employees while at the 

same time reaching their financial goals. I’ve seen the results of offering a robust 

healthcare package in higher morale, lower turnover and increased productivity. 

In close, I want to be a business leader in a country that is progressing as a society, not taking steps backward. As we continue to shift toward a more service-based 

economy, we need to give large numbers of people in this workforce more opportunities to be successful and healthy in the years and decades ahead. 

Good morning, Chairman Alexander, Ranking Member Murray and fellow Senate 

committee members. Thank you for inviting me to share my company’s story and 

my testimony about why I think that it is important not to modify the definition 

of full-time employee as outlined in the employer-shared responsibility requirements 

in the Patient Protection and Affordable Care Act. 

I am the founder and owner of a business in the other Washington . . . Washington State. Just celebrating 11 years, Tutta Bella Neapolitan Pizzeria is a neighborhood restaurant group comprised of five locations in the greater Seattle area 

with just over 200 employees. 

Let’s start with the fact that when it comes to the American people and small 

business owners in particular, I am an optimist. In my employer peer group in Seattle, I know business leaders who are driven to do the right thing. Not always because they will reap short-term rewards, but because they know that their employees are the foundation of helping them live true to their purpose and values, as well 

as to make all of their stakeholders successful over time. 

I believe that the Affordable Care Act was a step toward giving some support to 

the uninsured in our country, but also to encourage business owners to do the right 

thing. 

At Tutta Bella our stated purpose is ‘‘To nourish lives by sharing traditions, authentic food, and love.’’ We aspire to enrich and invigorate communities by providing 

25 

1 Jacquelyn Smith, 8 Things You Need To Know About Millennials At Work, November 18, 

2014; http://www.businessinsider.com/what-you-should-know-about-millennials-at-work-2014- 

11. 

2 National Restaurant Association, http://www.restaurant.org. 3 Bowen Garrett and Robert Kaestner, Little Evidence of the ACA Increasing Part-Time Work 

So Far, Urban Institute, September 2014, http://www.urban.org/UploadedPDF/413217-LittleEvidence-of-the-ACA-Increasing-Part-Time-Work-So-Far.pdf. 

memorable experiences. We hope to inspire others by setting the standard for social 

stewardship and fiscal responsibility. Part of the reason that I agreed to give this 

testimony is because I think it’s important to share our story and some real-world 

examples of this vision. 

We have been offering healthcare (medical, dental, and vision) benefits to salaried 

managers since 2005, and all hourly employees since 2008, well before the Affordable Care Act’s employer shared responsibility requirements. We set the minimum 

hours threshold for health care qualification at 24 hours per week to maximize our 

number of enrollees. As a company, if we raised it to 40 hours, almost every current 

hourly employee would not qualify for enrollment. 

I think that it needs to be explicitly stated that this industry has and always will 

be comprised of part-time workers. It is inherent in the fabric of restaurants to accommodate a workforce that often craves a more flexible schedule . . . students, 

caregivers, aspiring visual and performing artists, for example. I understand that 

the backers of this legislation believe that it would give 2.5 million low-income wage 

earners a raise. The reality is that few employees in our industry would be scheduled more than 30 hours a week, regardless of the threshold. 

Our industry is teaming with employees from the millennial generation. In a recent article on Business Insider,1 the US Bureau of Labor Statistics predicts that 

millennials will make up approximately 75 percent of the workforce by 2030. The 

article also mentions that this generation is struggling for financial independence 

compared to previous generations, with 24 percent who participated in a survey reporting the need to move back home at some point after entering the workforce vs. 

10 percent of Gen Xers and 5 percent of Baby Boomers. With the Affordable Care 

Act allowing young adults to stay on their parents’ health care until age 26, this 

generation is offered some much-needed support in trying times. As an employer, 

we are proud to help our millennial staff during this time of transition to independence by offering more of them health insurance when they need it, whether it’s before or after the age of 26. 

On the other end of the age spectrum, some employees in the restaurant business 

need to continue to bring in income even as they start to reach more standard retirement age. I think of one of our longest and most loyal employees, Renee. When 

I was just opening our first location in the Columbia City neighborhood in Seattle, 

Renee was so excited about the potential of Tutta Bella invigorating the ‘‘main 

street’’ of our neighborhood that she even offered to work as a server for ‘‘free.’’ I 

didn’t take her up on the offer of free labor, but she did become our first server. 

Eleven years later, Renee is 60 years old and has become a cornerstone of our culture and beloved by staff and guests alike. She has been fully enrolled in our benefit 

package for years and it is a huge relief to her as a single person. Even if it was 

possible to schedule an employee like her with the 40 hours recommended in this 

amendment, it would be challenging for her to physically manage working that 

many hours. With the U.S. restaurant industry projected to have employed 13.5 million people in 2014 (about 1 out of 10 working Americans),2 it pains me to think 

of the potential hundreds of thousands of people like Renee who could be impacted 

by this change in definition of full-time employee. 

Our industry also shows incredible growth in minority ownership and employment. In 2012, 59 percent of first-line supervisors/managers of food preparation and 

service workers were women, 14 percent were African-American and 17 percent 

were of Hispanic origin.3 Part-time shifts are the foundation of the restaurant industry. Increasing the full-time hours to 40 hours per week is a regressive measure 

that will negatively impact minority Americans . . . many of whom may be receiving health benefits from an employer for the first time. 

There is limited evidence that the current health reform has caused any significant shift toward part-time work in any industry. Rather than focusing on the few 

employers who will be led solely by profits and cost savings, let’s focus instead on 

those employers who I believe comprise the majority of business owners in our country . . . the ones trying to do right by investing in their employees while at the 

same time reaching their financial goals. It is a balancing act for sure . . . one I 

work hard to achieve with my team every day. I’ve seen the results of offering a 

robust healthcare package in higher morale, lower turnover and increased producVerDate Nov 24 2008 15:48 Jan 17, 2017 Jkt 000000 PO 00000 Frm 00029 Fmt 6633 Sfmt 6621 S:\DOCS\92973.TXT CAROL
26 

4Washington Restaurant Association, http://warestaurant.org. 

tivity . . . not to mention the big, bright smiles of healthy, happy, productive employees! 

In close, I want to be a business leader in a country that is progressing as a society, not taking steps backward. As we continue to shift toward a more service-based 

economy, we need to give large numbers of people in this workforce more opportunities to be successful and healthy in the years and decades ahead. 

One out of 33 people are foodservice employees in Washington State.4 As one of 

them . . . it would be my dream if we ALL did the right thing! 

The CHAIRMAN. Thank you, Mr. Fugere. 

Now we will begin a 5-minute round of questions. We will endeavor to end the hearing by noon or before, and we’ll begin with 

Senator Collins. 

Senator COLLINS. Thank you very much, Mr. Chairman. 

Dr. Webb, you did a terrific job of outlining what the impact 

would be on substitute teachers, on the ed techs, on people who are 

working two different jobs within the system. Could you talk to us 

about what the impact of the law’s definition of full-time work 

would be on the students? 

Ms. WEBB. Absolutely. I first became aware of this when I was 

researching purchasing a software package to manage substitute 

teachers, and the sales person talked to me about how the software 

would limit substitute teachers below the 30 hours in order to 

avoid having to provide health coverage, and I started thinking 

about the impact on learning. 

When you consider—I think every one of us can remember having a substitute teacher in our classroom. The environment was 

different. The pace of learning was not the same, and there was a 

real give and take of getting to know that new person that was 

going to guide our learning. 

So if you could picture, I would have maybe a teacher on maternity leave and have one substitute teacher from Monday through 

Thursday, but to avoid having that person go over the 30 hours a 

different substitute teacher on Friday, what a huge concern that is. 

I believe it’s the full range of learners, whether it’s the advanced 

placement class where students are following a rigorous curriculum 

with a high-stakes test in May that determines whether they are 

going to obtain college credit. Bangor High School had 544 AP tests 

last year, 80 percent of them earning college credit. 

I worry about changing substitutes in that room, but I also worry 

about the 54 percent of our students that are on free and reduced 

lunch status, and we know they have at-risk factors, and we know 

from research that the consistency of the person in the room and 

the relationship they have with that person has a great impact on 

learning. 

So to me, when I heard about this software tracking to avoid incurring additional expenditures, it didn’t make common sense 

when considering the impact on learning. 

Senator COLLINS. Thank you. 

Dr. Webb, I was particularly struck when you described the 110 

ed techs in your system who worked between 30 and 34 hours a 

week and do, in fact, receive health insurance now, and the district 

pays 77 percent of the cost of the premium. And yet, because of the 

way the Affordable Care Act works and the definition of full-time 

work, you will have to pay a third of up to $3,000—no, it would 

27 

be a $3,000 penalty for each of those employees—that’s your outside risk—because the insurance that you’re providing would not be 

considered affordable. Well, if my quick math is correct, that is 

$330,000 in new costs to the system. 

Just yesterday the National Education Association sent me a letter in which it said that many school districts mistakenly believe 

that the only way to avoid the penalties is to cut employees’ hours. 

I would note the irony, because the NEA a year ago sent me a letter, sent all Senators a letter urging a yes vote on a proposal that 

I made to the budget calling for a more reasonable definition of 

full-time work, and in this letter just a year ago said that it was 

a critical issue to their members, that educators face great uncertainty about their eligibility for coverage, et cetera. So there seems 

to have been a flip. 

But I guess I would ask you to respond to the NEA saying that 

you mistakenly—not you personally but superintendents mistakenly think that cutting hours is the only option. Is asking for a 

huge budget increase a viable option for you and most superintendents? 

Ms. WEBB. No, that is not an option. I mean, 95 percent of our 

employees are offered insurance, and the school department pays 

a large portion of that, anywhere from 77 to 80 percent of the cost, 

and there is no intention to cut hours of the people that are consistently employed, whether teachers or ed techs, custodians, secretaries, administrators. 

But where it becomes problematic is the affordability piece for 

the ed techs, and then those substitutes where we’d rather hire the 

core substitutes that really know the Bangor way. 

We have looked. We’ve researched the look-back method and predicting the stability, a 90-day period ahead. My concern is the resources that would be required to administer that kind of a program. We hire substitutes weekly. I would say it’s almost every single day someone is coming to our office with an application, and although we have a core group of substitutes, this past month we’ve 

been hit very hard with the flu, and so we’ve gone well beyond. So 

you can imagine the administration kind of operation you would 

need to continually do a 6-month look-back to determine the 90 

days ahead. 

When we look at this calendar year for the school, which would 

begin July 1 to June 30th, we have 5 months that someone could 

hit that threshold as a substitute of the 130 hours. So if we had 

someone on maternity leave at the beginning of the school year and 

the substitute that we hired worked during September and October, we would hit the 130-day threshold in both of those months. 

So when I think of our system administration being only 2.4 percent of our budget, my fear is that resources have to be utilized one 

place or the other. And when you consider that 80 percent of our 

budget is personnel, we only have 7 percent of our budget that’s 

truly discretionary. So there lies my concern; where do those resources come from? 

Senator COLLINS. Thank you. 

The CHAIRMAN. Thank you, Senator Collins. 

28 

We want to do our best to keep each Senator’s time close to 5 

minutes, although we want to hear a full answer from our witnesses. 

Senator Warren. 

Senator WARREN. Thank you, Mr. Chairman and Ranking Member Murray. 

The CHAIRMAN. Excuse me. Senator Murray. 

Senator MURRAY. We have to train him how to be a chair. 

[Laughter.] 

The CHAIRMAN. That’s twice in 1 day. 

Senator MURRAY. Well, thank you, Mr. Chairman. 

You know, for a long time, Democrats and Republicans agreed 

that job-based insurance was an important workplace benefit, and 

Mr. Fugere has been putting this value into practice, as he said, 

long before the Affordable Care Act. But the Congressional Budget 

Office has estimated that almost a million workers would lose jobbased coverage if businesses are allowed to get out of offering 

health care coverage to those working 40 hours or less. 

Mr. Fugere, in your statement you said that increasing the 

threshold would be a step backward for working Americans. Can 

you just tell us why you think employers offering health benefits 

is good for business? 

Mr. FUGERE. Of course. Listening to the testimony this morning, 

it is a bit challenging to hear employees referred to in statistics 

and numbers, almost like a commodity. I look at running a business, a fiscally responsible business, and there are certain things 

that are line item expenses. For example, 3 percent of our budget 

goes to napkins and straws. Less than 1 percent of our budget is 

in health care, and I feel like rather than looking at it as an expense, it’s an investment, an investment that pays off. Lower turnover, higher morale, more productivity, these are not just altruistic 

and philanthropic aspirations. They make really good business 

sense as well, and can be directly attributed to the bottom line. 

Senator MURRAY. If this were to become law, do you expect some 

other Seattle area restaurants to cut benefits for their employees? 

Mr. FUGERE. I think it’s inevitable that not every business owner 

thinks the way I do. So in order to do something that would level 

the playing field, if you will, I believe that, yes, there would be people that would drop benefits, unquestionably. 

Senator MURRAY. Would you? 

Mr. FUGERE. No, we wouldn’t. 

Senator MURRAY. And that’s one of my concerns, because if this 

bill passes, it would allow Mr. Fugere’s competitors to cut benefits, 

and actually what would happen is Tutta Bella would be subsidizing irresponsible behavior of those employers who don’t cover 

their employees and push them actually onto public programs, and 

I don’t think that’s fair, and I hope that we can really consider that 

as we move forward. 

Dr. Webb, I wanted to turn to you. I really appreciate your 

thoughtful testimony. I am focused on doing everything we can to 

put our students first, and I’m very concerned that the 40-hour bill 

will actually do more harm than good. We all know our teachers 

work extremely hard. They plan lessons, they do extra-curricular 

29 

activities, they grade papers, and those are often outside those regular hours. 

I wanted to ask you how important is the time that teachers do 

put in after class to achieving the best results for their students? 

Ms. WEBB. Extremely important. 

Senator MURRAY. And everyone knows that when you include 

time spent out of the classroom, teachers actually put in a lot more 

than 40 hours a week and actually don’t log those hours in the 

classroom, correct? 

Ms. WEBB. Correct. 

Senator MURRAY. Well, one of my concerns is that if we raise the 

eligibility threshold to 40 hours a week, it will mean that when 

teachers do sit down to negotiate their next contract, we’re going 

to find some schools that are trying to cut back on the time they 

spend preparing lessons or grading papers or providing this really 

important one-on-one help to students outside the classroom, and 

I’m worried that qualified people are going to walk away from the 

profession. So I think we have to think about those unintended 

consequences. 

I just have a minute left, Mr. Puzder, but you currently do offer 

insurance to workers whose hours exceed 30 hours a week, right? 

Mr. PUZDER. Absolutely, and under. 

Senator MURRAY. And CKE Restaurants employs about 20,000 

workers in the United States, including in the States of Texas, 

Oklahoma, Louisiana, Missouri, and Alabama, correct? 

Mr. PUZDER. Yes. 

Senator MURRAY. Well, unlike my home State of Washington, 

Mr. Chairman, those are all States that have not expanded their 

Medicaid programs, and workers in those States earning the average hourly rate for restaurants that Mr. Puzder references in his 

testimony could be at risk of losing their insurance. 

For example, a single mom earning the average restaurant wage of $9.28 an hour would be at serious risk. I think that a lot of us 

can’t support a bill that jeopardizes employer-sponsored health coverage for a lot of our American workers. We can’t take away this 

benefit for them, and it is actually surprising as we look at this because the CBO has said that this will raise the deficit by over $50 

billion for a very clear reason, and that’s because these people will 

go on government-sponsored programs. 

So I think it’s really important that we think about that as we 

move on this legislation. 

The CHAIRMAN. Thank you, Senator Murray. 

Senator Enzi. 

STATEMENT OF SENATOR ENZI

Senator ENZI. Thank you, Mr. Chairman. Thank you for holding 

this hearing. 

I did a tele-town hall meeting last night, and the very first call 

was from Rock Springs, WY, which we would consider to be one of 

our bigger towns, but out here it would be considered a pretty 

small town. And it was from a person working for the school district, and they wanted me to know the difficulties they’re having 

right now, particularly with bus drivers and coaches who are kind 

of volunteer contract workers, not really part of the school district, 

30 

never expected to get any health insurance out of it but are now 

placing the district in a situation where they are going to have to 

expend that or eliminate the service. Of course, a lot of the bus 

drivers like going on some of the extended trips to see some of the 

games, sometimes even in other States, and they’re seeing that 

they’re not going to get to do that now because of a health care law 

that they’re not all that interested in. 

Would that be a similar situation to what you were describing 

earlier? 

Ms. WEBB. Yes, it would. It’s those combination positions that 

really can put us at a disadvantage, and I can think of one particular person, a substitute that also is an assistant coach in soccer 

season and in the winter season for hockey. It would have to be one 

choice or the other, or a penalty, or offer insurance. 

Senator ENZI. And there are some pretty serious constraints 

sometimes on the budget, as you already pointed out. I appreciate 

that. 

For Dr. Holtz-Eakin, one of the problems that I’m seeing in Wyoming with the health insurance requirements is that when they 

have 50 employees that are working over 40 hours or more, then 

they come under this law. For a startup business, it’s a particularly 

big problem. I’ve run into a number of people who have said, man, 

I’ve got this great location in the next town over, got a good price 

on the building. What do you think about me moving over there 

and starting? And my first question is, how many employees do you 

have, and how many is it going to take? And their answer is usually about 45 at the current place, and they’ll need 45 at the new 

place. They so far have all decided against expanding their business. 

So there are a bunch of jobs going lacking out there. I would be 

interested in your reflection on whether that’s actually stopping 

businesses. And also the little bit of a problem of if they get cut 

back to 29 hours, they probably have to have another job. In Wyoming we consistently have one of the lowest unemployment rates 

in the Nation, so we need more people for the jobs that are available. But some of them, when they get cut back to 29 hours, they 

have to take another job, and that employer is going to want them 

to work 29 hours as well so they can get as much benefit as they 

possibly can. Now we’ve got a person working 58 hours with no 

overtime. Is there any law that covers that? 

Mr. HOLTZ-EAKIN. Let me talk about the first question about the 

incentives for expansion. I think this is an important unintended 

consequence of the Affordable Care Act. I mean, this is essentially 

a tax on the growth of small businesses. When they cross the 50- 

person threshold, every employee becomes more expensive, and 

they have to deal with that. Many people have an incentive to 

avoid crossing that threshold. You might think this is just abstract, 

but we actually did some work at the American Action Forum 

where we looked at those firms that are under 50, so they’re not 

going to be subject to any of this, those firms that are between 50 

and 100 and going to be subject to it, and we compared their sensitivity to health insurance premiums before and after the passage 

of the ACA. 

31 

What you see clearly is that for those who are going to be subject 

to this, you get a negative impact of these premiums, essentially 

higher health care costs, and it shows up in lower employment and 

lower wages, and that’s the real-world manifestation of the kinds 

of incentives that are built into the ACA. It’s a deep concern at this 

point in time. 

On the latter, I think the short version is if you’re out of step 

with labor market norms, as the 30-hour rule is, you distort all 

sorts of labor market behaviors. Two part-time jobs instead of one 

full-time job is just one example of that. 

Senator ENZI. Thank you, and I’ll have questions for the other 

panelists, as well as some more questions for you, if you’ll take 

those in writing so I don’t use up other people’s time. 

But, Mr. Fugere, I want to congratulate you on your successful 

business. I used to be in the shoe business, and I used to provide 

those benefits to my people. Of course, it wasn’t forced on me by 

the Federal Government either. I really appreciate those that build 

those in as a basic part of their business but recognize that some 

of those startup businesses don’t have that same advantage as they 

startup, and we hope that there will be a lot more startups for jobs. 

I want to thank all the panelists. 

The CHAIRMAN. Senator Warren. 

STATEMENT OF SENATOR WARREN

Senator WARREN. Thank you, Mr. Chairman, and thank you, 

Ranking Member Murray. 

So for the past few years, Republicans have been very clear that 

they want to limit families’ access to health care by slashing Medicaid and by cutting tax credits that families use to buy health insurance. I don’t support either move, but if I did, I’d have real 

problems with the Republicans’ first proposal on health care, which 

would let corporations drop health care coverage for anyone working under 40 hours a week. 

According to the Congressional Budget Office, the Republican 

proposal would increase the number of people on government 

health programs, including Medicaid and the subsidized exchange 

plans, by at least half-a-million people. In other words, the Republican proposal would expand the reach of Obamacare. 

Republicans also say they want to reduce the deficit, but again, 

according to the Congressional Budget Office, the bill for pushing 

people out of these employer-sponsored plans would increase the 

deficit by $53.2 billion. 

So if this bill pushes more people onto government health programs and increases the debt, two things Republicans say they are 

against, why are they supporting it, Dr. Holtz-Eakin? 

Mr. HOLTZ-EAKIN. I can’t speak for why they’re supporting it. 

You’d have to ask them. 

Senator WARREN. Fair enough. Do you have any dispute with the 

numbers from the Congressional Budget Office? 

Mr. HOLTZ-EAKIN. I think if you look at the score, the notion of 

employer drops is a sideshow. In the CBO score, there is the presumption of an expansion in Medicaid and insurance subsidies, but 

that’s offset by the increased tax revenue that comes from the emVerDate Nov 24 2008 15:48 Jan 17, 2017 Jkt 000000 PO 00000 Frm 00035 Fmt 6633 Sfmt 6601 S:\DOCS\92973.TXT CAROL
32 

ployees getting cash instead of health insurance, and that’s basically a wash. It’s about $24 billion each. 

Senator WARREN. Let me just stop you there. 

Mr. HOLTZ-EAKIN. Let me finish. The $50 billion increase in the 

deficit comes from the assumption that there will be $50 billion, 

roughly, less in employer penalties paid when you move the threshold from 30 to 40. If you look in the data, there are about 11 million people there, and if every one of them has a $2,000 penalty, 

that’s $23 billion. I don’t know where the rest of that is coming 

from. So, yes, I’m a little uncertain about that. 

Senator WARREN. Do you think the Congressional Budget Office 

just made up these numbers? They say it will increase the deficit 

by $53 billion, and let’s be clear. Conservatives, like Yuval Levin 

at the Ethics and Public Policy Center, have said, 

Putting the cutoff for the employer mandate at 40 hours 

would likely put far, far more people at risk of having their 

hours cut than leaving it at 30 hours’’. 

So we’ve got both problems. We’re pushing people out between 30 

and 40 and, at least according to a conservative economist here at 

the Ethics and Public Policy Center, he says he believes that what 

happens if we switch from 30 to 40, we will have more employers 

cut hours, and that means we’ll have fewer people working, which 

is what we’re worried about here. 

As I think you stated your testimony, there are more people 

working at 40 hours a week than there are people working at 30 

hours a week. So, far more employers could reduce their obligations 

by simply slicing 1 hour off people’s time that they work. 

Mr. HOLTZ-EAKIN. So let me say two things. First, let me just 

stipulate at the outset that as a former director, I have nothing but 

the highest regard for the CBO. 

Senator WARREN. Good. 

Mr. HOLTZ-EAKIN. And they don’t simply make up numbers. 

Senator WARREN. Good. 

Mr. HOLTZ-EAKIN. That’s a good-faith estimate. I’ve made the 

same good-faith estimate, and we’ve come down in different places. 

I think it’s open to question. 

Second is, as I said in my testimony, I think moving 30 to 40 

doesn’t change the calculus for dropping insurance very much at 

all. The reality is that the subsidies are so rich in the exchanges 

that it is a profit-making opportunity to stop offering your employee insurance, pay the penalties, pay them raises, and make 

more money. And for the employee, they are just as well off or better because they’re getting insurance of the same quality out in the 

exchanges. 

So that’s the math. And the open question, the one no one knows 

the answer to yet is just how many businesses will probably not 

drop but never get in the business of offering health insurance and 

simply get in the business of sending people to the exchanges. 

That’s an important consideration as well. Yuval Levin has his 

opinion, I have mine, and we disagree. 

Senator WARREN. Well, all right. I can only go with the numbers 

that have been given to us by the Congressional Budget Office, but 

I think I would analyze this to add one more part to it, and that 

is that this bill is corporate welfare. Big corporations would get to 

33 

cut health benefits for millions of workers, push people out of their 

employer insurance plans. Some of those people will lose their 

health insurance altogether. Others would be pushed onto Federal 

programs, expanding the reach of Obamacare, and taxpayers would 

get stuck with the tab. According to the Congressional Budget Office, that would be $53 billion. 

I’m against adding $53 billion to the deficit so that corporations 

can push their costs and responsibilities onto the government. I 

don’t think that’s how we build a better future for our families. 

Thank you, Mr. Chairman. 

The CHAIRMAN. Thank you, Senator Warren. 

Senator Roberts. 

Senator ROBERTS. Amazing. 

Senator Baldwin, I said good morning. That was it. I was making 

signs and people thought I was probably a little bit—whatever. 

[Laughter.] 

STATEMENT OF SENATOR ROBERTS

Senator ROBERTS. Mr. Chairman, thank you for this, and a special thanks to Senator Collins, who has led this effort. 

Today, President Obama is speaking at the University of Kansas. 

He will be likely expanding upon many of his proposals that he 

outlined earlier this week in his State of the Union address. I am 

a very strong supporter of free speech, and it’s certainly an honor 

for the University of Kansas to host the President of the United 

States. The University of Kansas is a great Kansas institution, 

known for our academics and for basketball. Maybe the President 

will get a full court press; who knows. And I know he will get a 

very warm Jayhawk reception. 

I’m glad the President has chosen to visit my State because I believe we offer a good dose of Kansas common sense. That said, in 

the case of Obamacare’s 30-hour work week, we might also offer a 

cautionary tale. The University announced last summer they have 

reduced undergraduate student employment hours from 30 hours a 

week to 20 hours a week, and capped the graduate student hours 

at no more than 28 hours a week as a result of the new 30-hour 

rule. That’s 5,000 students. 

Elizabeth Melton, a senior out there, works at the library 25 

hours a week. With the cutback, she’s going to have to take out 

more student loans. I will leave her quote for the record. And then 

we have Rachel Prather who said, ‘‘I can’t really imagine how I’m 

going to buy groceries on 20 hours less a week,’’ and was working 

for the University. These are not statistics, these are people. And 

basically it goes on, and I won’t go into the rest of the students, 

but I will submit that for the record. 

[The information referred to was not available at time of press.] 

Senator ROBERTS. Regardless of this fact, the President has already announced he would veto legislation, along with six others, 

six other vetoes, to help restore hours and therefore wages for 

these hard-working students. 

Kansans want solutions, and everybody in the country wants solutions. The 30-hour rule is clearly one of the more harmful provisions of Obamacare for many of our workers, and I hope the President will revisit his refusal to at least address it and work with us. 

34 

President Doug Holtz-Eakin—a president I can work with. Mr. 

Eakin, can you share some thoughts on how this reduction in hours 

will hurt the student worker? Could we see more loans taken out, 

higher debt for students upon graduation? 

Mr. HOLTZ-EAKIN. Absolutely. As I noted in my testimony, 

there’s an enormous amount of income at stake here. Moving from 

40 to 29 hours is a big reduction, moving down to 20 even more. 

So you’ll have to fill that resource hole one way or another, and for 

students the most likely outcome is they’ll borrow more. 

Senator ROBERTS. I know research from the Hoover Institute has 

shown that women, younger workers, and workers without a college degree would be disproportionately affected by this 30-hour 

rule. Do you agree with that, and can you explain why that is? 

Mr. HOLTZ-EAKIN. I do agree with that, and that is simply a reflection of the composition of part-time work in America. Those are 

the groups that are most likely to be working part-time and the incomes that they make. 

Senator ROBERTS. Well, we talked a lot about the problem with 

the 30-hour full-time definition with Obamacare. I think another 

major problem for the job-based insurance is the health insurance 

tax. Is this tax, which is being passed through to small businesses 

in the form of higher premiums, also a factor in hiring full-time 

employees? 

Mr. HOLTZ-EAKIN. Absolutely. We’ve done a fair amount of work 

on the health insurance tax, and it has big impacts on premiums. 

Those premiums translate directly into costs for firms, and they cut 

back either their pay increases for the workers they have or they 

don’t hire as much, and we’re seeing those impacts right now. 

Senator ROBERTS. I appreciate your response. 

I yield back my time, Mr. Chairman. 

The CHAIRMAN. Senator Baldwin. 

STATEMENT OF SENATOR BALDWIN

Senator BALDWIN. Thank you. I share my colleagues’ concern 

that this proposal that we’re discussing would increase the deficit 

by $53.8 billion, put health benefits for 1 million hard-working individuals in jeopardy, and make many more workers vulnerable to 

having their hours cut than currently face that risk or threat. 

That said, I recognize that the Affordable Care Act is not perfect, 

and I’m ready to work across the aisle on commonsense fixes that 

strengthen and protect working families and their access to quality, 

affordable coverage. But I don’t believe that this proposal is the 

way to get us there. 

I think we could be having, and I hope we are going to shortly 

be having a real discussion of possible improvements that could 

help businesses and safeguard access to strong job-based coverage. 

I was serving in the House of Representatives during the initial 

debate on health care reform, and as we were having that debate 

we were looking at this issue of employer responsibility and sort 

of took a different look at it in terms of if this sort of debate on 

30 or 40 hours is a proxy for the size of the employer who should 

be included in the provision or not, there are other ways to make 

that cut, and the House had a robust debate and a different version 

of this employer responsibility provision. 

35 

Also, in Massachusetts, prior to the passage of the Affordable 

Care Act, they had a different way of getting at this particular 

issue. If we want to work on this, let’s put a workable proposal on 

the table. But I really feel like this is another politically driven attack on the health care law that is going to undermine economic 

security for our families. 

Mr. Fugere, thank you for being here. I am very encouraged that 

you offer comprehensive health coverage to your employees who 

work at least 24 hours a week, and it’s worth restating that this 

is even more generous than the Affordable Care Act requires and 

that you did it before the Affordable Care Act was even passed. 

The Affordable Care Act guarantees families not just access to 

coverage but access to high-quality and comprehensive health care 

coverage—there are standards in there—through their employers. 

So I want to ask you what some of the differences are between the 

robust health care plans that you have long offered and other minimal coverage policies like fixed indemnity plans. Why did you 

choose to offer the more comprehensive coverage before the Affordable Care Act was even law if there are other less expensive options that could have maybe been easier for you—that path might 

have been easier for you to take as a small business owner? 

Mr. FUGERE. Well, we looked at a lot of the options that were 

available to us, and we really wanted to do something that would 

send a message to our employees that we cared about their service, 

and we wanted to I guess make a statement that we wanted to invest in them. In fact, our program not only meets the bronze level 

of the ACA plan but it exceeds the platinum level in just about 

every respect. 

Senator BALDWIN. Ranking Member Murray made a reference to 

an issue that I’d like to explore a little more with you. I’m concerned that by raising the definition to 40 hours a week, it would 

unfairly reward employers seeking to circumvent the law and cut 

benefits while disadvantaging other business owners like yourself 

who want to strengthen your workforce by offering this robust coverage. 

Under this proposal, what would be some of the impacts on your 

business and your employees should other, arguably, competitors 

drop coverage for workers who are under 40 hours a week? 

Mr. FUGERE. Well, just like other industries, the restaurant industry is highly competitive. We run on very thin margins and we 

have to be very careful about where we allocate our resources. So 

this is just one of many things—menus, different competition coming into our marketplace—that we would contend with, and it 

would just be one more burden for those businesses that are trying 

to do the right thing, in my opinion. 

Senator BALDWIN. Thank you. 

The CHAIRMAN. Thank you, Senator Baldwin. 

Mr. Puzder, you pointed out that the Congress has deliberately 

placed into law an economic incentive to discourage employers from 

paying overtime, correct? 

Mr. PUZDER. Correct. 

The CHAIRMAN. And do you see much difference between that 

and Congress putting into the law an economic incentive to disVerDate Nov 24 2008 15:48 Jan 17, 2017 Jkt 000000 PO 00000 Frm 00039 Fmt 6633 Sfmt 6601 S:\DOCS\92973.TXT CAROL
36 

courage employers from increasing their health care costs for employees who work part-time? 

Mr. PUZDER. It has the same impact on our business. I’m really 

sorry that the Senator left because I really would like to respond 

to the corporate welfare point, which is, I’m not here saying that 

we can’t pay this. I’m not here asking you to give us any welfare. 

Four hundred and twenty people signed up. It’s going to cost us $2 

million. Last year it was almost $200 million. It’s not a big deal 

to us. Nobody—I wouldn’t say nobody signed up. A very small percentage of the people—the over 5,000 people that we offered 

Obamacare coverage to, or ACA coverage, didn’t—they don’t want 

it. We had 420 people that signed up. 

I’m not here asking you to give us corporate welfare. What I’m 

asking you to let us do is take the thousands of people that have 

had to take part-time jobs and let us move them back over to 30 

hours a week. They need the work. They need the hours. They 

would prefer to have the hours to the coverage because they didn’t 

take the coverage. We offered it to them. In fact, we offered 13,100 

employees lesser coverage. I mean, it doesn’t cover 22-year-old boys 

for pregnancy, but it does give coverage if you break your ankle or 

you need to go to the doctor. And we had 200 people take it. 

The problem here isn’t corporate welfare. The problem here is 

with the thousands and thousands, if not millions of American 

workers who have had their hours reduced to below what they 

need to get by, and that’s what this is about. It’s not about corporate welfare. 

You know, companies like ours, we figured this out. I mean, it’s 

a very little expense. The penalties that you’re talking about losing, 

they’re from small employers for whom it’s better to pay the penalty than it is to give the insurance. Of the 5,000 people who didn’t 

take insurance, 2,640 of them were over the age of 26 and unmarried. So at a minimum, those 2,640 people have chosen to pay the 

penalty. These are people who can’t afford that penalty. Those are 

the penalties you’re losing. They’re small businesses and they’re 

the people that can’t pay. 

Our business, it’s a hit to us. You know, you don’t like to take 

$2 million and pay it out, but I’m happy to pay that amount for 

these people for insurance. And even if you change it to 40 hours, 

about half of them would still be over 40 hours. 

So the corporate welfare argument is interesting to hear, and I 

love the Congressional Budget Office, I refer to them all the time. 

I think Doug is a great guy. But have they ever estimated anything 

that was accurate? I mean, really, has there been one estimate that 

was correct? I’m telling you what’s happening in the world, in the 

business world. People aren’t signing up, at least at our company. 

The CHAIRMAN. Thank you. As a matter of fact, in defense of the 

Congressional Budget Office, they did do a pretty good job of estimating the number of jobs that would be lost by increasing the 

President’s minimum wage proposals. So they are often correct. 

And following up on that point, Mr. Holtz-Eakin, the Congressional Budget Office for the House-passed bill, which would restore 

the definition of full-time to 40 hours a week, I think we ought to 

think about this. I asked at a hearing one time, where did this 30 

hours ever come from? It does sound like it’s made in France. They 

37 

do apparently have in France inspectors who go around in parking 

lots to make sure you’re not working more than 30 hours. 

I think maybe it was just a mistake. I mean, 30 hours doesn’t 

reflect any reality in the American workplace. It doesn’t reflect the 

standards and the customs that have been recognized by the Fair 

Labor Standards Act for many years. And the obvious effect of putting a major economic disincentive to adding a cost to hiring somebody who works a certain number of hours, the obvious effect is 

going to be that employees would respond to that. 

Mr. Holtz-Eakin, the Congressional Budget Office scored the 

House-passed bill and it says employers whose current workforce 

is comprised mostly of 40-hour workers have tended to offer health 

coverage at a greater rate than employers whose employees typically work between 30 and 35 hours per week. 

Is it fair to say that the 30-hour definition of full-time is doing 

more to reduce wages than it is to increase the number of employees with insurance? 

Mr. HOLTZ-EAKIN. I think that’s fair. I mean, we know that those 

working 40 hours or more, 88 percent have insurance. Those working in the range of 30 to 35 hours, 27 percent have insurance. So 

it’s not insuring people. It’s a big incentive to cut their hours, and 

that’s going to be the major impact of changing from 30 to 40, that 

you’ll get rid of that disincentive for cutting hours. 

The CHAIRMAN. Thank you. 

Senator Sanders 

STATEMENT OF SENATOR SANDERS

Senator SANDERS. Thank you, Mr. Chairman. I promise you that 

in the coming weeks I will be highly engaged in this debate, but 

I want to make an observation about this discussion. 

I think if this hearing were televised internationally, people all 

over the world would not know what the hell anybody here was 

talking about, because in every major country in this world, whether it’s 100 miles away from where I live in Burlington, VT, or 

throughout Europe, or throughout Scandinavia, people would literally not understand one word of this discussion. The argument 

of whether you provide health insurance to people who work 30 

hours a week or whether they work 40 hours a week—whoa. In 

every major country on earth, health care is a right of all people. 

It is a right of all people 100 miles away from where I live under 

a conservative Prime Minister in Canada. 

No. 2, we have business people on this panel who know something about economics. You are aware that in the United States, 

after the modest gains of the Affordable Care Act, and I voted for 

it, 10 million more people have insurance. We still have 40 million 

Americans without any health insurance. And then, despite all of 

that, we end up paying, per capita, almost twice as much as any 

country on earth for health insurance. 

So, Mr. Chairman, this is a very interesting discussion, but we’re 

not discussing what’s relevant. And what’s relevant is should 

health care be a right of all people, or should businesses, Mr. 

Fugere’s and the others, have to spend a great deal of time and energy figuring out how they provide health care to their people or 

how they do not? 

38 

So let me ask a question, and I’m not sure I know what the answer would be. I can tell you in Vermont, and I suspect there’s no 

reason to think it’s different in Maine or other States, every year 

the budget comes around, communities don’t have a whole lot of 

money, are arguing whether or not we raise the budget, right? A 

very serious issue. And a lot of times health care becomes a key 

component. 

Is that right, Dr. Webb? 

Ms. WEBB. Yes, that is correct. 

Senator SANDERS. Let me ask you, and I don’t mean to put you 

on the spot here, or I don’t want to go through the whole panel, 

but if we did what virtually every major country on earth did, say 

that health care is a right of all people, not a right for a business— 

we have the absurd situation where Mr. Fugere feels that it’s his 

moral responsibility to provide good health care for his workers, 

and thank you very much for that. But the guy who owns the pizzeria across the street may not feel the same way, and you are at 

a competitive disadvantage because you’re doing the right thing. 

What would it mean for our country and for small businesses if 

you could go about your business of producing the best pizza possible at the lowest possible price rather than worrying about health 

care, if we took that burden off of your shoulders? Mr. Fugere, 

would that be a good thing for you? 

Mr. FUGERE. I would absolutely support that. 

Senator SANDERS. Dr. Webb, you’re trying to have the very difficult job—and I appreciate all the hard work you and other educators do—of educating kids. I don’t know that you took your job— 

you worry about how kids achieve in this world, right? Did you 

really want to get into the health care business when you took that 

job? I mean, if we lifted that burden off of you—we have town 

meetings every year arguing about the budget. I guess it’s similar 

in Maine. 

Ms. WEBB. It is very similar, and we are being asked to do more 

with less and less. I mean, it’s interesting to me that I became superintendent in 2008, and for the last figures presented in 2013 by 

the Maine Department of Education, my per-pupil costs are the 

same. They are virtually the same. And so trying to do more with 

less. 

For me, it’s really about the resources, and my fear is that, 

whether it’s on the administrative side or it’s on the penalty side, 

or it’s on offering insurance to what I would call very temporary 

employees, it’s resources, and we have had to cut programs and options, and that has an impact on the students. 

Senator SANDERS. I know it does, and it’s very similar in 

Vermont. Would your life be easier if maybe all you had to do was 

worry about providing education to the kids and not worry about 

health care for your employees? 

Ms. WEBB. I mean, a question like that, sure. But what is the 

reality? 

Senator SANDERS. Well, the reality is that maybe it should not 

have to be the responsibility of the Bangor School District to provide health care, that maybe it should be a right of all of our people—whether they work in McDonald’s in Bangor, whether they 

work for the school district—to have health care. 

39 

Mr. Puzder, what do you think? 

Mr. PUZDER. If what you’re saying, Senator, is that if we had a 

bill that was debated, that was vetted through congressional committees, and we looked at the health care system and really tried 

to come up with a more rational solution, I would say you’re absolutely right. You would disengage business from providing health 

care. 

You and I might not agree on the ultimate solution to this, 

but—— 

Senator SANDERS. I assume you would rather focus on producing 

your products rather than worrying about health care, right? 

Mr. PUZDER. From your lips to God’s ear. This has been such— 

it’s not only been such an incredible pain in the butt for business 

people, but it’s hurting American workers. We need to change this. 

It needs to be addressed. You’re not helping. I know you think you 

are. I know you want to. I know the intent was there. This isn’t 

helping, and it’s not that expensive for us. I’m not here saying, you 

know—— 

Senator SANDERS. OK. Let me ask—I am sorry, Mr. Chairman. 

I yield. 

The CHAIRMAN. It was good, though. 

Senator Sanders is always good, so we always look forward to his 

comments. 

Senator Franken. 

STATEMENT OF SENATOR FRANKEN

Senator FRANKEN. Thank you, Mr. Chairman, for holding this 

hearing on job-based health insurance under the Affordable Care 

Act. 

You know, my focus on the ACA—I’d like to identify my remarks 

with Senator Baldwin’s—it’s about making sure that the ACA 

works as well as possible for people in my State and our Nation, 

and it really has helped a lot of people. 

In my State of Minnesota, for instance, because of the health reform law, we’ve cut the uninsured rate by more than 40 percent. 

We now have 95 percent of Minnesotans insured. We’re second only 

to Massachusetts, which had a form of this before. 

But I’ve heard concerns from people who are understandably 

anxious and frustrated by the complexity of the Affordable Care 

Act and the process of implementing it, so we absolutely need to 

fix what’s not working about the law. What we shouldn’t try to do 

is get rid of it. We can’t go back to the days when insurers could 

deny coverage to people with pre-existing conditions or drop people 

who became sick because they’d hit their lifetime cap. That’s incredibly reassuring to every American, I think. 

We shouldn’t charge women more simply because they are 

women. And we’ve seen some tremendous benefits. We’ve had the 

lowest inflation growth in health care costs in 50 years. This is 

working. 

So what I think we need to do is fix what’s working, and one of 

the things—I’ve offered some legislation. One is on the family 

glitch. This is complicated to explain, so maybe I just won’t take 

the time to explain it here. But the crux of this hearing is this: 

you’ve got to draw a line somewhere, right? Forty hours, 30 

40 

hours—this is about where to draw the line. And there are going 

to be tradeoffs everywhere, right? This is what this is about. 

So today we’re talking about the tradeoffs, the negative aspects 

of 30. We’re hearing that testimony. 

The negative aspects of doing it at 40, Dr. Holtz-Eakin, you started off your testimony by saying this is going to be much better to 

do it at 30 because most people, more than 50 percent of people 

work 40 hours, exactly 40 hours. Most people work more than 40 

hours. So you would lose a lot more if you were cut from 40 hours 

to 29, right? Didn’t you start your testimony that way? 

How likely is that? Mr. Fugere, how likely is it that people are 

going to be cut from 40 to 29, versus being cut from 40 to 39? 

Mr. FUGERE. Well, for one, not a single one of our servers works 

that many hours. And second, I think that in my industry, our 

managers schedule for the business’ needs and for what the customers’ needs are, regardless of a threshold. It’s more about what 

the business needs and what the customer needs are. I think that 

trying to get them under a certain amount of hours to meet some 

type of savings comes secondarily. 

Senator FRANKEN. What I’m saying is that the reason we put it 

at 30 and the reason that the tradeoffs are such that 40 makes so 

much less sense is because, as the CBO scored it and looked at it, 

this would take insurance away from 500,000, and up to a million. 

That’s the point. 

So, yes, we can go through instances where anywhere you set 

this line, anywhere you draw the line, but I want to fix this thing. 

Dr. Holtz-Eakin works for the American Action Forum. That’s 

aligned with the American Action Network. You go to the homepage of the American Action Network and what they say in a banner across the line is, ‘‘Help Us Stop Obamacare.’’ So I do trust the 

CBO and their good-faith look at this. I’m not sure that when 

you’re aligned with a group that has a banner across the line that 

says, ‘‘Help Us Stop Obamacare,’’ that your estimates are necessarily in good faith. 

Thank you. 

Mr. HOLTZ-EAKIN. I’d be happy to sit with the Senator and walk 

him through our estimates so you can see exactly how they’re done. 

Senator FRANKEN. Well, can I respond to that? Because in your 

testimony, you have a figure that says that—excuse me, the study. 

You say, 

‘‘Since the ACA’s passage, the rise in premiums has cost employees an average of $935 per year and has reduced employment by 350,544 jobs nationwide.’’ 

I’m sorry, but that seems an absurd statement to me, 350,544— 

not 543, not 545. I don’t know how you can make some kind of statistically sound finding that gets it to the job, and I looked at the 

study and I was looking at what years this data was based on, and 

it was based on data from years 2003 to 2012. 

So how can you say that as a result, not looking at data from 

2013, not looking at data from 2014, that you come up with the 

exact number of jobs supposedly lost by the Affordable Care Act? 

The CHAIRMAN. Dr. Holtz-Eakin, you can answer the question, 

and then we’ll go on to Senator Murphy. 

41 

Mr. HOLTZ-EAKIN. I’ll be brief. It’s a regression analysis that delivers a point estimate of jobs lost. That’s the point estimate. Every 

point estimate comes with some uncertainty, and there’s a standard error around that. There’s no question about it, and I don’t 

think there’s any reason to apologize for that. It’s the best method 

available for doing this kind of an analysis. 

The CHAIRMAN. Senator Murphy 

STATEMENT OF SENATOR MURPHY

Senator MURPHY. Thank you very much, Mr. Chairman. 

Thank you to the panel for taking the time to be here with us 

today. 

I just wanted to briefly comment on Mr. Puzder’s suggestions 

about the fallibility of CBO. I think they generally do a pretty fair 

job, but it is true that they were pretty wrong in estimating the 

health care expenditures of the United States in the wake of the 

passage of the Affordable Care Act. They got it so wrong that we 

have spent about $2 trillion less on health care since the passage 

of the Affordable Care Act than the CBO had initially estimated. 

We’re spending, on average, about $1,000 less per Medicare beneficiary than we had initially thought. Dr. Holtz-Eakin and I and 

others have had discussions about how much of this is attributable 

to the Affordable Care Act and how much is attributable to other 

economic factors, but there’s pretty good evidence that the ACA is 

a big part of that story. 

This is a panel full of employers and economists. We don’t have 

any employees on this panel, and I think we’d be helped by hearing 

the stories as part of this debate from the employees who are going 

to have their lives changed by this piece of legislation we’re debating here today. 

In the audience here today are two of my constituents. Janice 

Stauffer and Irene Jadge are ICU nurses at a hospital in Connecticut. They work three 12-hour shifts in the ICU, maybe some 

of the most important work that gets done in our health care system today, and they total 36 hours a week. It’s their health care 

benefits that provide health care to their families, and if we move 

from 30 to 40 hours, their health care would be in jeopardy, not 

just for them but for their families. 

So I want to maybe use their story as a way to ask you, Dr. 

Holtz-Eakin, because I really respect your thinking a lot on this, 

a few questions. 

First, you initially sort of framed the risk to the 12 percent of 

those working 40 hours a week who don’t have insurance, but you 

also say that you believe that the health care law is set up in a 

way that provides an incentive for employers to move employees off 

of their coverage onto the exchanges, right? So that means—and I 

think Senator Franken was getting at this—that when you go from 

a standard that only affects about 6 or 7 percent of workers to a 

standard that affects 50 percent of workers, you’re going to have 

a lot more people that are at risk of moving from the ranks of employer-sponsored insurance to being subject to either the exchanges 

or Medicaid or some other way of getting insurance. Is that how 

you read this? 

42 

Mr. HOLTZ-EAKIN. So, I believe they’re at risk at 30, 31, 32, 33, 

35, 40. So the issue of the incentive for employers to get out of the 

business of providing health insurance and putting people on the 

exchanges is not materially affected by this particular piece of legislation. 

Senator MURPHY. Except that the standard that we have today 

is operative on a much smaller number of employees, right? So if 

the standard stays at 30 or 35, you’re talking about a much smaller 

number of employees because the majority of employees are at 40 

or 41 hours, unless you assume that employers look similarly at 

the risks to their business of moving from 40 to 29 as they do moving from 40 to 39. 

Mr. HOLTZ-EAKIN. If the risk is reducing hours, there are two 

risks. One is to reduce hours, and the other is reduced coverage. 

Those are the two incentives that are at play. I believe the latter, 

the reducing coverage, is not materially affected by this. It’s there. 

It’s a real concern to me, quite frankly, but it’s not about 30 versus 

40. 

For hours, it’s not the case that you expect employers to move 

from 40 to 29. The question is who is in the couple of hours around 

40 and who is in the couple of hours around 30 who are at risk, 

and my answer would be there are fewer at risk around 40 than 

around 30. So we’re going to have less disruption in people’s working hours, their incomes, if we have a 40-hour standard. That’s the 

argument. 

Senator MURPHY. I guess we’re just looking at different numbers 

here because you have 50 percent of employees who are at 40, you 

have 7 percent who—— 

Mr. HOLTZ-EAKIN. But they’ve all got insurance. There’s no reason to—80 percent have insurance, so why reduce their hours? 

Senator MURPHY. Right. But you said that the Affordable Care 

Act, according to you, is, in and of itself, an incentive to move from 

employer-sponsored care to other forms of health care. 

Mr. HOLTZ-EAKIN. And that’s true at 30 or 40. So the question 

is—— 

Senator MURPHY. And there are more employees at 40. 

Mr. HOLTZ-EAKIN. So what changes with this law? And the answer is—— 

Senator MURPHY. That more employees are at risk of being subject to that incentive. 

Dr. HOLTZ-EAKIN [continuing]. Of losing hours, because there’s 

no reason to dodge the hours in order to have to provide the insurance. They’ve already got the insurance, so it’s done. At 30, that’s 

not true. You’ve got 27 percent who have insurance, so this is a big 

consideration. How many more people am I going to have to supply 

insurance to? How costly is it going to be for my business? That’s 

a big incentive to move them. That’s it. 

Senator MURPHY. We’re reading this very differently. I would 

just make this one—— 

Mr. HOLTZ-EAKIN. I agree, we’re reading it differently. 

Senator MURPHY [continuing]. Quick last comment. The two 

nurses that I’m talking about likely aren’t going to receive subsidies, and if they do, they will be relatively small subsidies. So 

even if they were to get a boost in income, it is not going to make 

43 

up for the entirety of the money that their employer paid toward 

their health care. And if they’re not going to receive subsidies in 

the exchange, they come out net losers. If you get a subsidy, it may 

be that you end up being whole in the end. 

But we have to admit that there are going to be a lot of people 

who—even if they do get an increase in income because the employer is no longer paying insurance—are going to be at risk for a 

whole lot more money out-of-pocket. 

But I’m over my time, so I’d be pleased to continue this conversation with you. Thank you. 

The CHAIRMAN. Senator Cassidy 

STATEMENT OF SENATOR CASSIDY

Senator CASSIDY. Yes, thank you. 

I think I can answer that a little bit. Nurses will probably not 

be affected if we go to 40 because there’s so much competition for 

nurses. I’ll go into that later and discuss what we found after researching the topic. 

Mr. Fugere, when you quote the Urban Institute study—we 

pulled that—it takes all workers, the CEO down to the person 

pushing the broom, even highly trained ICU nurses who can go 

anyplace and get a lot of overtime. Really, the group that is most 

impacted is the lowest quintile. This is small so hopefully you can 

see it, but that red line is the lowest quintile, and that is the percent of those workers who are working full-time. 

As you can see, post-recovery, every other quintile is moving up. 

Our most vulnerable workers are the ones being hammered. ICU 

nurses do not qualify for that—I say that as a doc—because, my 

gosh, what those two women know, right now, if one of you goes 

down with a heart attack, you want them taking care of you, not 

me, the gastroenterologist. I would put the paddles in the wrong 

place. 

[Laughter.] 

Mr. Fugere, I have a couple of questions, please. What is your 

cost share for your employees insurance? 

I apologize. You said only 1 percent of your company’s expense 

is for health care? 

Mr. FUGERE. That’s correct, less than 1 percent. 

Senator CASSIDY. Whoa. 

Senator MIKULSKI. Mr. Chairman, excuse me. Not to interrupt 

the dialog, but I need to excuse myself to go to a meeting with Senator Cochran. I’d like the record to show that I was here and ask 

that my statement be in the record. Not to interrupt their debate, 

but I’m trying to move the Homeland Security bill. 

The CHAIRMAN. Thank you, Senator Mikulski. We appreciate you 

coming for the time that you could. 

[The prepared statement of Senator Mikulski follows:] 

PREPARED STATEMENT OF SENATOR MIKULSKI

Thank you Chairman Alexander and Ranking Member Murray 

for convening this Health, Education, Labor, and Pensions Committee hearing to examine how the Affordable Care Act is working. 

44 

There has been a lot of talk, debate, and misinformation about 

the Affordable Care Act. But let’s talk for a moment about the 

facts. Because of the Affordable Care Act, approximately 10 million 

people who were previously uninsured now have health insurance. 

About 4 million young people are now on their parents’ health insurance plans. Over 8 million seniors pay less for prescription 

drugs. These seniors have saved approximately $1,400 each. Because of the Affordable Care Act, there is no more gender discrimination, pre-existing condition exclusions, and annual or lifetime 

caps on benefits. 

I’d like to share how the Affordable Care Act is working in Maryland and I am going to let my constituents tell the story. The following are four stories I received from Marylanders. 

The first is from Barry from Gwynn Oak, MD. Barry’s wife lost 

her job at the end of 2011 and decided to return to school. Barry 

is self-employed and did not have access to employer-provided coverage. He and his wife had been on his wife’s health insurance and 

COBRA, but decided to see how they would fare in the Maryland 

marketplace. They successfully signed up in 2013 and their new 

coverage went into effect January 1st. They signed up for a Platinum Plan and their premiums were MUCH lower than what they 

were paying through COBRA. They saved approximately $400 per 

month and just over $5,000 a year. Barry also expressed his concerns about what would have happened to them if they had to look 

for insurance in the old ‘‘individual market.’’ His wife had a preexisting condition, so insurance would have been very expensive for 

them. 

The second story is from Marilyn from Oxford, MD. Marilyn got 

the information she needed from the new Maryland health insurance exchange. She got a new insurance plan from the same company and with nearly all the same conditions for $6,000 less a 

year! The new law saved her $6,000 a year. She had been overcharged for years due to a minor pre-existing condition but now she 

can get a fair price for her insurance. She wrote, 

‘‘Members of Congress who oppose this law have no idea 

what it is like to have to buy their own insurance on the open 

market. This law is a Godsend for those of us who do.’’ 

The third story is from Robert from Frederick, MD. Robert’s 

household is especially grateful for the ACA on two fronts. For one, 

Robert has a daughter with a pre-existing condition that would 

interfere with her being able to get her own health insurance had 

we not eliminated pre-existing condition denials. And second, Robert and his family are thankful that they can continue to carry 

their daughter on their health insurance plan up to the age of 26. 

His daughter will graduate from Emory University in May 2014. 

He and his wife are greatly relieved and grateful that their daughter did not have to worry about obtaining health insurance thanks 

to the provisions of the ACA. 

The final story is from Robyn from Silver Spring, MD. Here I 

quote from the letter she sent me. 

‘‘This is my story. I am a single mother of the most absolutely adorable son. Every day I watch him seizure. He has 

done so since he was 2 months old. I went to school and had 

45 

a job that I loved. I lost that job when my son was about 3 

years old. We lived for almost 3 years without health care. Before the passage of the Affordable Care Act, my son was denied 

health care. My son’s medications were about $500 a month. 

I worked 3 to 4 relief jobs to keep a roof over our head and 

afford the medication that saves his life. But now, the ACA 

means that no insurance company can say that Joshua’s illness 

costs them too much. It means that when he gets older, he 

won’t get denied health care because he has reached his cap. 

I would like to thank you for your efforts to keep the Affordable Care Act.’’ 

I want everyone here to know that I am open to ANY constructive ideas, Republican or Democrat, about how to improve the Affordable Care Act. But I am NOT open to proposals that seek only 

to harm, undermine, or destroy a law that so many Marylanders 

depend on. Marylanders like Barry, Robyn, Marilyn, and Robert. 

Thank you. 

Senator CASSIDY. I’m struck, only 1 percent. That is so much less 

than another company that tells me their top item now is health 

care expenses. What percent of your employees participate in your 

health insurance plan? 

Mr. FUGERE. Seventy-seven percent of our eligible employees are 

enrolled in some insurance plan, meaning either the one we offer 

or one that their spouses or somebody else might offer, and of that, 

75 percent are enrolled of that 77 percent. 

Senator CASSIDY. So 75 percent of the 77 percent is enrolled in 

your plan? 

Mr. FUGERE. Correct. 

Senator CASSIDY. What is the cost share on that plan? For example, the deductible. What is their out-of-pocket exposure? 

Mr. FUGERE. For employees, it’s $188 per month. 

Senator CASSIDY. So that’s on average. 

Mr. FUGERE. On average. 

Over time it goes down because we pay a higher percentage. For those people that stay with us longer, it’s closer to $120. That’s pretax, by the way. 

Senator CASSIDY. You have management and you have wait staff. 

You have highly paid and you have lowest quintile, if you will. Do 

you have it broken down as to what percent of those lowest quintile 

are participating in your health care plan? 

Mr. FUGERE. Yes. Let’s see. We have a total of 55, and of those, 

there are 20 of those who are higher paid. 

Senator CASSIDY. So the 35 remaining, how many of those participate in the plan? I’m assuming that the 20 total do. 

Mr. FUGERE. Right. 

Senator CASSIDY. So how many of the lower paid employees? 

Mr. FUGERE. Participate in the plan? 

Senator CASSIDY. Yes. 

Mr. FUGERE. All of them. Are you asking which ones that are 

qualified—— 

Senator CASSIDY. Of your lowest quintile workers, of your lowest 

paid workers, how many participate in your plan that they have to 

put up $180 a month? 

Mr. FUGERE. Twenty-three. 

46 

Senator CASSIDY. Twenty-three out of what number? Fifty-five? 

Mr. FUGERE. I’m sorry. I’ve got a lot of numbers in front of me. 

Senator CASSIDY. I understand. 

Mr. FUGERE. So we have a total enrolled in our plan of 55 people. 

Of those, 20 are managers. 

Senator CASSIDY. Twenty are managers. 

Mr. FUGERE. Yes. 

Senator CASSIDY. OK. Obviously, the numbers are a little confusing here. 

So you mentioned the employer should do the right thing. We 

have school boards that are unable, because of their tax base, to 

pay people for more than 30 hours per work week. In Lincoln Parish in Louisiana, 400 custodial and food service workers were converted from full-time to part-time. The school board was very explicit: we don’t have the tax base to pay for the penalties and cost 

of compliance with Obamacare. 

What would be the right thing for that employer to do, seeing 

how they don’t have the tax base but they have to provide educational activity? Do you see what I’m saying? 

Mr. FUGERE. I do. 

Senator CASSIDY. There’s a tradeoff here, and there’s a moral 

judgment when you say. ‘‘should do the right thing.’’ 

Mr. FUGERE. Right. 

Senator CASSIDY. I would say the school boards are doing the 

right thing by concentrating dollars in the classroom. Would you 

agree with that’’ 

Mr. FUGERE. I would agree with that, and I think the bigger 

challenge here is that we should be looking at reducing cost, not 

so much reducing hours. 

Senator CASSIDY. I need to make one more point. Senator Murphy is absolutely right, the cost of health care has been mitigated 

since before Obamacare, but it’s continued under Obamacare. The 

cost of health insurance has gone out the wazoo. 

Mr. FUGERE. Right. 

Senator CASSIDY. Again, as a gastroenterologist, I’ll say that. 

And the profits for insurance companies are up like 200 percent. 

I’m struck that premiums are up 250 percent for some people, and 

yet the cost of health care itself has mitigated. So the President 

speaks of the cost of health care being mitigated, but if you look 

at what people are paying out-of-pocket, they are bearing an incredible burden. 

I will say, for your low-wage workers, if that’s an individual policy, not a family policy, they are paying roughly $1,400 a year, and 

not knowing what you pay them, that’s going to be a sizable percentage of their income. I’m surprised you have such a high uptake 

in people—— 

Mr. FUGERE. We do in the State of Washington have the highest 

minimum wage in the country. We don’t have a tax credit. Many 

of our servers are making $25 an hour. 

Senator CASSIDY. OK. 

I yield back. Thank you. 

The CHAIRMAN. Thank you, Senator Cassidy. 

Senator Whitehouse. 

47 

STATEMENT OF SENATOR WHITEHOUSE

Senator WHITEHOUSE. Well, Mr. Chairman, I appreciate you having this hearing, but I have to say I’ve got the exact same concerns 

that Senator Franken and Senator Murphy have, and to me, it 

makes no sense. If there is an economic incentive to dump employees off of health insurance, it happens at a margin. Right now, that 

margin is 30 hours. 

Dr. Holtz-Eakin has said that the risk zone of that incentive hovers around the margin point. So if it’s 30, you’re at worst risk if 

you’re at 31 hours, or perhaps 32 hours, less risk if you’re at 50 

or 60 hours of being dropped to 30, and that’s the problem we’re 

trying to deal with. 

You can move the 30-hour margin point, and the incentive 

doesn’t go away. That’s also been Dr. Holtz-Eakin’s testimony. You 

can move it to 25, you can move it to 35, you can move it to 30, 

you can move it to 40. At wherever you go, the incentive, if you 

want to dump your employees off of health care, remains. 

The problem is, as I see it, that the population that is in Dr. 

Holtz-Eakin’s risk envelope at a 30-hour margin is actually pretty 

small. They may or may not have health care now, but if you move 

it to 40 hours, you pick up the majority of the entire American 

workforce, and you put them into that risk margin where they 

weren’t before, right? 

And the theory that because they already have health care the 

incentive goes away, no. You save just as much money by dumping 

somebody off health care as you would lose by adding them on 

health care. It’s the same dollar amount either way. The incentive 

is identical. 

It seems to me that we’re engaged in a discussion that is fundamentally meaningless because all we’re doing is moving a significant margin point and its incentives up and down. But to the extent that the decision is made to go from 30 to 40, it’s actually 

making it worse for Americans and putting ordinary 40-hour working Americans at risk in the same way that now there’s this risk 

for 30-hour Americans. 

I’ll echo what Senator Sanders said. The thing that our Republican colleagues have fought so hard and determinedly against for 

a generation is a universal health care system that gets rid of all 

these artificial problems. I’m all for getting rid of this artificial 

problem by going to a universal health care system. Or if you don’t 

want a universal health care system, at least a public option. So 

if a particular company wants to have a special kind of health care 

or gold-plate its health care option for very high-end income or extremely valuable workers, fine, you can do that. But it is the insistence of the Republican Party that we not have universal health 

care that puts us into the position where we have to make these 

divisions in the first place. 

Now, to move it from the little population around the 30-hour 

margin to the very large population around the 40-hour margin 

puts more people at risk. This is going backward, not forwards, 

even by the terms of the conversation we’re having here. 

And just to echo what Senator Murphy said, an oncology nurse 

from Warwick, RI wrote to me in the exact same circumstance as 

48 

the two Connecticut nurses who are here. She does three 12-hour 

shifts. She’s at 36 hours. You move it from 30 to 40, she is suddenly at risk. She’s not only working the 36 hours, she’s also the 

mom to four kids. So to say, well, that’s too bad, just take on a 

fourth 12-hour shift a week and you’ll be fine, that doesn’t work in 

her life. 

I’d be interested to know what the number is of the people who 

this move would knock off their health insurance who are like my 

oncology nurse from Warwick, because she is very much at risk at 

that point. Why we’re moving this around to hurt these nurses and 

to expand the population that is at risk of being put at this employer incentive for those employers who want to dump their employees off of health insurance, this makes no sense to me, Mr. 

Chairman. And I hope perhaps as we debate this further it will 

come to make some sense, but I believe that everything I’ve said 

so far has been supported by even the testimony of the witnesses 

on your side. 

So, go ahead, we can have this discussion, but we’re in a very 

strange place from the point of view of logic when we think we’re 

helping Americans by putting—what’s the percentage of Americans 

you would say who are within 2 hours of a 30-hour work week, Dr. 

Holtz-Eakin? 

Mr. HOLTZ-EAKIN. I don’t have that number. I can get it for you. 

Senator WHITEHOUSE. It’s about an 8 percent, 8 or 10 percent 

order of magnitude? And the percentage of Americans that are 

within 2 hours of a 40-hour work week is 60 percent? So we’ve just 

multiplied by six the population that’s at risk of getting their insurance thrown off. 

I mean, go for it, but my time has expired. 

The CHAIRMAN. Thank you, Senator Whitehouse. 

Senator Scott. 

STATEMENT OF SENATOR SCOTT

Senator SCOTT. Thank you very much. 

Dr. Webb, thank you for your marvelous work, your amazing 

work at Bangor School District. Certainly, we all should celebrate 

your success and the success of the students at your school. 

The employer mandate and the 30-hour work week is having a 

major impact on schools throughout the country, specifically two 

schools that I’m aware of in South Carolina. Spartanburg Community College and Quincy University both say because of the parttime labor force the impact on those schools could be a million dollars of additional cost for health care. 

The question for you is how do you think this law is going to affect the ability of our Nation’s kids to receive a high-quality and 

affordable education? It seems like we’d be moving further away 

from that, not closer to it, because of the impact of the law, No. 

1. 

The second question is, in particular, in less affluent areas that 

have zero flexibility when it comes to budgets, how will that impact 

those kids? And most of those kids are typically on some type of 

a work-study program looking for the opportunity to get as many 

hours as possible. 

49 

Ms. WEBB. I believe it will have a great impact. When I talk to 

my colleagues across the Nation, I happen to be on the American 

Association of School Administrators Governing Committee, and I 

checked in with some of them across the Nation, as well as my colleagues right in the State of Maine, and we’re all concerned. 

I think the impact on the quality of the education, if we all think 

back to our own education, it took a whole team of employees to 

provide that core experience. And I liked the example of the bus 

drivers. We often talk with students about why are they successful, 

tell us the triggers, the moments in time that they really feel that 

they saw that they could be a high performer, and I’ll never forget 

one girl saying to me that the bus driver every day told her how 

smart she was and that she was going to find a way out of this 

neighborhood that happened to be a subsidized neighborhood. 

So to think that even the bus driver, who maybe spent an hour 

with her each day, half-an-hour to school and half-an-hour home, 

played an impact. But it also was when that bus driver was with 

her on the trip to the debate in the southern part of the State, and 

she really saw him as someone that was pivotal in her success, and 

she has done incredibly well in her post-secondary learning. 

I do think that schools across the Nation are facing limited resources. I can understand the less affluent communities, but I 

think even in the communities that have been more affluent, that 

we are being forced to do more with less. So I look at this and I 

hear the different conversations. We have collective bargaining 

agreements for all units of employees. We are going to offer insurance. We pay a large portion, 77 to 80 percent. The last 2 years 

our insurance increases have been 9 percent, 13 percent, 12 percent. So obviously, both the employer and the employee are picking 

up larger costs. 

But it’s when we then have to say those combination positions 

or those substitutes that we now have to struggle with, where do 

those resources come from? For us in Bangor, which I think is similar to many communities across the Nation, it is now down to the 

point of programs and course offerings. 

Senator SCOTT. Thank you, ma’am. 

A quick question for you, Dr. Holtz-Eakin. While on the topic of 

this hearing, I think it is also worth noting that, I think it was 

January 2016, the small exchange market goes from 50 employees 

to 100 employees. I am hopeful that the administration will allow 

States to keep their small group market at 50 beyond 2016. Congress I think should take a look into whether expanding the small 

group market makes sense or not. 

My question for you, sir, is have you given any thought to how 

this will impact small businesses and the small group market, or 

whether expanding the small group market makes sense at all? 

Mr. HOLTZ-EAKIN. I’m not an expert on every State, but by and 

large those in the 51 to 100 range are not subject to the same kind 

of rating bans and other regulations that the small group markets 

are, 0 to 50. 

Senator SCOTT. Yes. 

Mr. HOLTZ-EAKIN. So if you put them into that regime, we’ll have 

roughly the same experience we had in the individual market, 

which is the regulatory regime will increase premiums, so that’s 

50 

going to be a cost to small businesses. The small business will have 

a variety of incentives. If you’re 51 to 100, a pretty big size, you 

might try to self-insure and thus get out of this. If that happens, 

the people who self-insure are going to be the good risks, not the 

bad risks, and we’ll end up segmenting the market into self-insured 

with good risks and the bad risks in the now merged small group 

market, and we’ll see premiums rise further. That stylized pattern 

has worked out in the individual market, and I expect that’s what 

will happen in the small group market. 

Senator SCOTT. Thank you, sir. 

The CHAIRMAN. Thank you, Senator Scott. 

Senator Casey, you’ll have the final 5 minutes. 

Senator CASEY. Mr. Chairman, thank you very much. I know 

that doesn’t mean I get extra time. 

The CHAIRMAN. Oh, no. 

STATEMENT OF SENATOR CASEY

Senator CASEY. But we’re grateful for the hearing. 

I wanted to make one point—two points, really. One was that— 

and we’re grateful for the testimony of the witnesses. I know you 

have to prepare testimony, you have to get here, and we’re grateful 

for that. 

No. 1 is I’ve tried to be, as a strong supporter of the ACA, I’ve 

tried to examine and to support reasonable changes to the law, and 

I’ve done that. I’ve got a good record on that. But I don’t put this 

in that category. I won’t support it, and I wanted to explore some 

of it with you in the time we have. 

But I also would say, by way of bragging, to the two restaurant 

business leaders here, that one issue that I know your industry has 

come to us on over a number of years, Senator Cornyn and I have 

a bill that deals with the depreciation when you add, whether it’s 

a restaurant or retail establishment, by keeping that depreciation 

schedule to 15 years as opposed to the old 39 years. In other words, 

giving you a bigger slice over a shorter timeframe makes sense by 

way of deprecation. A lot of advocates on behalf of the Restaurant 

Association and others have put that as their No. 1 priority. I know 

it’s not today’s topic, but I wanted to put in that commercial there. 

Mr. FUGERE. Well, thank you for your work on that, Senator 

Casey. 

Senator CASEY. Thanks very much. I didn’t do it to elicit that, 

but I’m grateful you did that. 

But, Mr. Fugere, I wanted to ask you about your business and 

some of the broader points that you made. No. 1 is, you have—am 

I right—200 employees? 

Mr. FUGERE. Yes. 

Senator CASEY. And when you focus not only on that number but 

also when you focus on the one individual you focused on, Renee, 

tell me why you think this doesn’t make sense for her, if you could 

walk through that again. 

Mr. FUGERE. Well, for one thing, working 40 hours a week is a 

challenge. And for many of our employees in the restaurant business, it’s made up of 4-hour shifts. If you think about dinner and 

lunch, dinner is typically the 11 to 2 shift, and dinner may be 5 

to 9. So the reason that we set our threshold at 24 hours is because 

51 

we’re looking at ways to try to get people onto the plan, so we lowered the threshold so we could schedule people as much as possible. 

For Renee, she’s on the other end of the spectrum where she’s 

getting more hours because she’s been with us for a long time. It 

gets to a point where working in the restaurant business and being 

on your feet all day long creates some stress and difficulty. So for 

her to work 40 hours would be nearly impossible. 

Senator CASEY. And you made a point in your testimony—and I 

was here for the summary. I’m not sure if this is in the written testimony, and you may have already made this point. But you said 

at the bottom of page 2, and I’m quoting, ‘‘In 2012, 59 percent of 

the first-line supervisors or managers of food preparation and service workers were women.’’ A big number. ‘‘Fourteen percent were 

African-American. Seven percent were Hispanic.’’ And then you go 

on to say, ‘‘Part-time shifts are the foundation of the restaurant industry.’’ And then finally, ‘‘Increasing the full-time hours to 40 

hours a week is a regressive measure that would negatively impact 

minority Americans.’’ 

Is there anything you wanted to add to that? 

Mr. FUGERE. One thing, Senator. I’d like to thank you for reading 

that because that’s included in my submitted testimony, but unfortunately, because I didn’t have enough time, I wasn’t able to say 

it. So thank you for bringing attention to that. 

Senator CASEY. Oh, good. 

And finally I guess I’d say, in light of the discussion we had, this 

is a good discussion to have, and we’re grateful that you helped us 

shed some light on it. What Senator Whitehouse said, I take to 

heart. We don’t want to, by making a change, adversely impact or 

put at risk more folks than have some kind of stress right now. I 

know that’s a point of contention, but I’m grateful for the hearing. 

Thank you very much. 

The CHAIRMAN. Thank you, Senator Casey. 

Senator Collins, did you have a letter that you wanted to introduce to the record? 

Senator COLLINS. I do, Mr. Chairman. I have letters from the 

National Association of Home Care and Hospice, which strongly 

supports this bill, as well as from the National Restaurant Association, that I would ask permission be included in the record. 

The CHAIRMAN. It will be. 

[The information referred to was not available at time of press.] 

Senator COLLINS. I would also ask permission that a written 

question to Dr. Holtz-Eakin be submitted that gets into an issue 

of the impact of the ACA on income inequality, and it picks up on 

a statement I didn’t get to in my questions, and I would love to 

have a written answer to that as well, with your permission. 

The CHAIRMAN. Thank you. 

[The information referred to was not available at time of press.] 

The CHAIRMAN. Senator Murray, do you have any other comments? 

Senator MURRAY. No. I just think this was really a good hearing, 

and I think many of the members on our side expressed our real 

concern about reducing benefits for employees and the cost on the 

Federal Government as these people are put onto the Medicaid program. 

52 

We all look forward to working with you to find ways to improve 

this bill, but not at the expense of workers. 

The CHAIRMAN. Thank you, Senator Murray. 

I want to thank the witnesses for coming today. It’s been very 

helpful. I know you made an effort to come here. Some come from 

very long distances, got up early in the morning. We’re grateful for 

that. 

What we’ll be doing is sending our opinions to the Finance Committee, which has jurisdiction on whether or not to report a bill to 

the Senate floor. The House has already passed the bill. 

I have a letter from the More Time for Full Time Coalition I’d 

like to submit for the record. It’s signed by more than 400 business 

groups in support of the Collins-Donnelly Manchin-Murkowski 40 

Hours is Full Time Act. 

[The information referred to may be found in Additional Material.] 

The CHAIRMAN. The hearing record will remain open for 10 days. 

Members may submit additional information and questions for the 

record within that time, if they would like. 

If the witnesses have other comments that they would like to 

make that they didn’t have a chance to offer, we’d like to have 

those. 

Our next hearings will be next Thursday on employer wellness 

plans. 

Thank you for being here. 

The committee will stand adjourned. 

[Additional Material follows.] 

53 

PREPARED STATEMENT OF THE MORE TIME FOR FULL TIME EXECUTIVE COMMITTEE

Chairman Alexander, Ranking Member Murray, and members of the U.S. Senate 

Committee on Health, Education, Labor, and Pensions (HELP), thank you for this 

opportunity to present testimony today on behalf of the More Time for Full Time 

Executive Committee. Specifically, we would like to highlight the significant harm 

that the new definition of ‘‘full-time’’ in the Affordable Care Act (ACA) is inflicting 

on both workers and businesses alike. 

The More Time for Full Time initiative (www.moretimeforfullltime.org) was 

launched last fall by employer groups from across the country wishing to harmonize 

the ACA’s new ‘‘full-time’’ employment definition of 30 hours per week with the traditional full-time employment standard of 40 hours per week. In just a few months, 

the initiative has grown to include over 400 State, local, and national organizations—from the Maine, Indiana, Alaska and West Virginia State Chambers of Commerce to the Tennessee Hospitality Association and the Washington Restaurant Association. On behalf of the companies and employees that they serve, these hundreds of employer-based organizations are all urging their U.S. Senators to co-sponsor S. 30, the Forty Hours is Full Time Act of 2015. (See attached letter.) 

Therefore, we greatly appreciate the bipartisan response and attention being 

given to the ACA’s problematic new definition of ‘‘full-time.’’ On January 6, 2015, 

Senators Susan Collins (R–ME) and Joe Donnelly (D–IN), along with Senators Lisa 

Murkowski (R–AK) and Joe Manchin (D–WV), introduced legislation, S. 30, the 

Forty Hours is Full Time Act of 2015, to restore the 40-hour definition standard. 

As you know, on January 8, 2015, the House passed similar bipartisan legislation 

to address this critical issue: H.R. 30, the Save American Workers Act of 2015. 

Given the broad bipartisan, bicameral interest in ameliorating this problem and 

the strong national consensus outside of Washington, DC as well, we urge the Senate to bring a vote on this matter to the floor. When asked, close to 80 percent of 

Americans identify full-time work as being 40 hours or more per week. However, 

in our visits around the Senate, we have been told that supporters of keeping the 

current arbitrary definition of full-time in the ACA at 30 hours per week are also 

proposing lowering it even further to 20 hours per week. Only about 1 percent of 

Americans believe that 20 hours per week should be the definition of full-time work. 

We urge the Senate to move quickly because many employees are already losing 

wages and hours, due to the law’s perverse incentives. This is particularly true for 

part-time workers, who until now, were working below the traditional 40 hours per 

week standard. 

To be sure, data is available to demonstrate that the ACA is incentivizing some 

employers to limit the hours part-time employees can work. Beyond private sector 

employers, even some States, cities, counties, public schools and community colleges 

around the country are limiting or reducing the hours part-time employees can 

work. These decisions are necessitated by the economic reality that for many employers it is not feasible to bear either the cost of health care coverage or the penalties for failing to do so. 

This workforce restructuring is significant. In the past 2 years, the proportion of 

part-time employees working just below 30 hours a week has been rising. At the 

same time, the proportion of those working just over 30 hours a week has been declining. The reason is simple: until the ACA, most employers have used the traditional full-time definition of those working 40 hours per week, in accordance with 

the Federal overtime rules found in the Fair Labor Standards Act. Now, the ACA’s 

30-hour, full-time definition is forcing employers, private and public, to start making 

significant workforce changes to comply with this new standard. 

As a result, employers with variable-hour workforces and flexible scheduling must 

also be deliberate about specific workforce hours because of the greater financial impact and potential liability associated with employer penalties. 

One of the attractive benefits for workers in industries with flexible scheduling 

is the ability to change their hours to suit their own personal needs and even pick 

up additional hours to earn additional income when needed. In particular, part-time 

jobs with flexible scheduling are not only appealing but are critical for students, single parents, and other individuals struggling to balance various obligations and commitments. 

We appreciate the hearing’s effort to draw greater attention to this issue. We urge 

the HELP Committee to send a strong message that harmonizing the definition of 

full-time employment in the ACA with the traditional 40 hours per week definition 

would benefit both employees, through more hours and income, and employers, now 

able to focus on growing their business and creating jobs, rather than administrative burdens and restructuring their workforce. 

54 

Aligning the ACA’s definition of full-time employment with the traditional 40 

hours standard would help avoid any further disruptions to employees’ wages and 

hours, and would provide financial stability and significant relief. 

The More Time for Full Time members look forward to working with this committee and the entire Senate to improve the well-being of our employees without 

sacrificing their jobs in the process. 

Members of the More Time for Full Time Executive Committee: 

Angelo Amador, National Restaurant Association, aamador@restaurant.org, 202- 

331-5913 

Brian Crawford, American Hotel & Lodging Association, bcrawford@ ahla.com, 

202-289-3147 

Chatrane Birbal, Society for Human Resources Management, 

Chatrane.Birbal@shrm.org, 703-535-6476 

Chirag Shah, Asian American Hotel Owners Association, chirag@aahoa.com, 202- 

507-6157 

John McClelland, American Rental Association, john.mcclellandl@ararental.org, 

202-289-4460 

Jon Taets, National Association of Convenience Stores, jtaets@nacsonline.com, 

703-684-3600 

Katie Mahoney, U.S. Chamber of Commerce, kmahoney@uschamber.com, 202-659- 

6000 

Matt Haller, International Franchise Association, mhaller@franchise.org, 202-662- 

0770 

Neil Trautwein, National Retail Federation, trautweinn@nrf.com, 202-626-8170 

MORE TIME FOR FULL TIME, 

JANUARY 22, 2015. 

DEAR SENATOR, The More Time for Full-Time initiative (www.moretime 

forfulltime.org) was launched by employers from across the country to restore the 

traditional definition of full-time employment to 40 hours per week. Today, we are 

writing to urge you to co-sponsor S. 30, the Forty Hours is Full Time Act of 2015. 

Many employees are being hurt by lost wages and hours because the 30 hours 

per week definition in the Affordable Care Act (ACA) is forcing employers to restructure their workforce by reducing their employees’ hours to alleviate the burden of 

compliance. Harmonizing the definition of full-time employment in the ACA with 

the traditional 40 hours per week definition would benefit both employees, through 

more hours and income, and employers, now able to focus on growing their business 

and creating jobs, rather than restructuring their workforce. 

If this is not addressed soon, our country will experience significant workforce disruptions and individuals as well as companies will lose valued workforce flexibility. 

We urge you to work in a bipartisan way to restore the traditional 40 hours per 

week definition of full-time employment, as called for in the Forty Hours is Full 

Time Act of 2015, by harmonizing the Affordable Care Act’s full-time definition with 

the traditional standard. 

Many Americans are drawn to part-time jobs with flexible hours to suit their personal needs. Further, employers with variable-hour workforces and flexible scheduling have been appealing and critical for students, single parents, and other individuals struggling to balance various obligations and commitments. This critical 

flexibility will be lost if employers are forced to abandon current practices in order 

to avoid significant financial penalties. 

Aligning the law’s definition of full-time employee status with current levels 

would help avoid any unnecessary disruptions to employees’ wages and hours, and 

would provide significant relief. 

55 

Please consider our concerns and co-sponsor S. 30, the Forty Hours is Full Time 

Act of 2015, to address a fundamental challenge employees and businesses face in 

implementing this law. 

Sincerely, 


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AMERICAN FEDERATION OF LABOR AND CONGRESS OF INDUSTRIAL

ORGANIZATIONS (AFL–CIO), 

WASHINGTON, DC 20006, 

January 23, 2015. 

DEAR SENATOR: On behalf of the AFL–CIO, I urge you to oppose the Forty Hours 

is Full Time Act (S. 30). This bill will result in lost work hours for 6.5 million workers, and it will cause one million employees to lose employment-based insurance coverage, resulting in higher costs for government-subsidized health coverage. 

The Congressional Budget Office (CBO) and the Joint Committee on Taxation 

(JCT) found that the House companion of this bill would cause a million workers 

to lose their employer-based health coverage and that the ranks of the uninsured 

would increase by up to half a million. Further, losses in employer-provided coverage would result in higher government costs, including increased spending for 

marketplace premium subsidies of $14.2 billion over 11 years and for Medicaid and 

Children’s Health Insurance Program coverage of $7.8 billion. Altogether, the CBO/ 

JCT analysis finds that it will increase the Federal deficit by $53 billion. 

However, our primary concern is preserving workers’ hours and access to health 

care coverage. The Affordable Care Act (ACA) extends coverage to the uninsured by 

allocating responsibility for the costs among individuals, employers, and government. Under this shared responsibility framework, employers with 50 or more fulltime equivalent employees must pay their fair share by offering health care coverage to employees who work 30 or more hours a week or by paying a penalty if 

these workers access exchange subsidies instead. To ensure the success of the ACA, 

an employer responsibility requirement is needed to preserve current levels of employer-based coverage. Unfortunately, the 30-hour ‘‘cliff’’ created by the law has motivated some employers to reduce workers’ hours to avoid providing coverage. This 

has been a particular problem for workers employed at retailers, restaurants, public 

schools, and institutions of higher learning. 

Proponents of the Forty Hours is Full Time Act claim they want to help part-time 

workers by moving the threshold for employer penalties from 30 to 40 hours. But 

raising the threshold will only move the cliff and actually increase employers’ incentive to reduce workers’ hours. According to experts at the UC Berkeley Center for 

Labor Research and Education, moving the threshold to 40 hours will result in lost 

work hours for 6.5 million workers. That is nearly three times the number that are 

vulnerable to employers cutting their hours under the current threshold (2.3 million). The researchers also found that the policy would essentially eliminate the employer responsibility requirement, since employers’ costs in moving workers from 40 

to 39 hours per week are negligible compared to the costs of offering coverage or 

paying the employer responsibility penalty. 

Congress should strengthen the employer-shared responsibility requirement and 

eliminate the hours cliff, not simply move it. The employer responsibility requirement should be strengthened by lowering the threshold, requiring employers to provide coverage for workers who work 20 hours a week or more or risk a penalty, and 

by applying a pro rata penalty if workers with fewer than 20 hours are not offered 

coverage. This is the only way to protect groups of workers that will lose wages 

under the existing incentive to reduce hours. 

We look forward to working with you to strengthen the employer responsibility 

rules of the ACA, by extending coverage requirements to all workers and improving 

requirements related to the affordability and comprehensiveness of coverage. 

Achieving the coverage goals of the Affordable Care Act will depend upon enhanced 

employer responsibility for providing coverage to working families. 

Sincerely, 

WILLIAM SAMUEL, 

Director, Government Affairs Department. 

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[Whereupon, at 11:31 a.m., the hearing was adjourned.] 

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