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23–825 2017

REIMAGINING THE HEALTH CARE MARKETPLACE 

FOR AMERICA’S SMALL BUSINESSES 

HEARING 

BEFORE THE

COMMITTEE ON SMALL BUSINESS 

UNITED STATES 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED FIFTEENTH CONGRESS 

FIRST SESSION 

HEARING HELD 

FEBRUARY 7, 2017 

Small Business Committee Document Number 115–002 

Available via the GPO Website: www.fdsys.gov 

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Congress.#13
(II) 

HOUSE COMMITTEE ON SMALL BUSINESS 

STEVE CHABOT, Ohio, Chairman 

STEVE KING, Iowa 

BLAINE LUETKEMEYER, Missouri 

DAVE BRAT, Virginia 

AUMUA AMATA COLEMAN RADEWAGEN, American Samoa 

STEVE KNIGHT, California 

TRENT KELLY, Mississippi 

ROD BLUM, Iowa 

JAMES COMER, Kentucky 

JENNIFER GONZA ́ LEZ-COLO ́ N, Puerto Rico 

DON BACON, Nebraska 

BRIAN FITZPATRICK, Pennsylvania 

ROGER MARSHALL, Kansas 

VACANT 

NYDIA VELA ́ ZQUEZ, New York, Ranking Member 

DWIGHT EVANS, Pennsylvania 

STEPHANIE MURPHY, Florida 

AL LAWSON, JR., Florida 

YVETTE CLARK, New York 

JUDY CHU, California 

ALMA ADAMS, North Carolina 

ADRIANO ESPAILLAT, New York 

BRAD SCHNEIDER, Illinois 

VACANT 

KEVIN FITZPATRICK, Staff Director 

JAN OLIVER, Chief Counsel 

ADAM MINEHARDT, Minority Staff Director 

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(III) 

C O N T E N T S 

OPENING STATEMENTS 

Page 

Hon. Steve Chabot ................................................................................................... 1 

Hon. Nydia Vela ́zquez ............................................................................................. 2 

WITNESSES 

Mr. Tom Secor, President, Durable Corporation, Norwalk, OH, testifying on 

behalf of the National Small Business Association ........................................... 5 

Mr. Keith Hall, President and Chief Executive Officer, The National Association for the Self-Employed, Annapolis Junction, MD ........................................ 6 

Mr. Kevin Kuhlman, Director of Government Relations, National Federation 

of Independent Business, Washington, DC ........................................................ 8 

Ms. Dania Palanker, Assistant Research Professor, Center on Health Insurance Reforms, Georgetown University, Washington, DC ................................. 10 

APPENDIX 

Prepared Statements: 

Mr. Tom Secor, President, Durable Corporation, Norwalk, OH, testifying 

on behalf of the National Small Business Association .............................. 32 

Mr. Keith Hall, President and Chief Executive Officer, The National 

Association for the Self-Employed, Annapolis Junction, MD .................... 45 

Mr. Kevin Kuhlman, Director of Government Relations, National Federation of Independent Business, Washington, DC ......................................... 51 

Ms. Dania Palanker, Assistant Research Professor, Center on Health 

Insurance Reforms, Georgetown University, Washington, DC ................. 58 

Questions for the Record: 

None. 

Answers for the Record: 

None. 

Additional Material for the Record: 

Women Impacting Public Policy (WIPP) ........................................................ 67 

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(1) 

REIMAGINING THE HEALTH CARE MARKETPLACE FOR AMERICA’S SMALL BUSINESSES 

TUESDAY, FEBRUARY 7, 2017 

HOUSE OF REPRESENTATIVES, COMMITTEE ON SMALL BUSINESS, Washington, DC. 

The Committee met, pursuant to call, at 11:00 a.m., in Room 

2360, Rayburn House Office Building. Hon. Steve Chabot [chairman of the Committee] presiding. 

Present: Representatives Chabot, King, Luetkemeyer, Brat, 

Radewagen, Kelly, Blum, Comer, Bacon, Fitzpatrick, Marshall, 

Vela ́zquez, Evans, and Lawson. 

Chairman CHABOT. The Committee will come to order. Good 

morning. We want to thank everyone for being here with us today 

so that we can discuss a critical issue facing America’s small businesses, what I could consider to be a catastrophe our health insurance marketplace. 

In my opinion, and in the opinion of many, President Obama’s 

signature legislation has proven to be a disaster, especially for 

America’s small businesses. From the very beginning, promises 

were made which turned out to be untrue. The American people 

were told that premiums would decrease by $2,500. Instead, average premiums and job-based coverage have increased by $3,775. 

President Obama famously promised, and I quote, ‘‘If you like your 

doctor, you can keep your doctor. If you like your healthcare plan, 

you can keep your healthcare plan.’’ Nothing, as it turned out, 

could have been further from the truth. 

As a result of losses in the market, major insurers have bolted 

for the exits. Their withdrawal from Obamacare-established marketplaces left little to no competition within the exchanges, leaving 

consumers fewer choices in health insurance options. Doing nothing 

is not an option because the current system is in, quite frankly and 

literally, a death spiral. We need to enact real patient-centered reforms that lower costs, improve portability, and ensure coverage for 

the millions of Americans who are struggling to find affordable and 

reliable health insurance. 

In 2016, the National Federation of Independent Businesses, 

NFIB, published a survey which found that the cost of health insurance continues as the number one problem small businesses 

face. NFIB members are not the only ones concerned. In late 2015, 

the National Small Business Association, NSBA, released a survey 

that found that while the majority of employers think offering 

health insurance is very important to recruiting and retaining good 

employees, just 41 percent of firms with up to 5 employees offered 

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2 

health benefits, and that is down from 46 percent in 2014. Overall, 

the NSBA survey found that 65 percent of small firms reported offering health insurance in 2015, down from 70 percent in 2014. 

Survey results like these track with what we have been hearing 

from our constituents for the past 8 years. We all hear from small 

business owners in our districts who want to provide health insurance for their employees, not just as a recruitment and retention 

tool, but also out of a sense of duty to do the right thing for their 

workers and their families. It is important to remember that the 

damage done by Obamacare was not limited to the new problems 

it created for the healthcare marketplace. It also exacerbated and 

made worse longstanding problems in that marketplace. 

While we have a badly damaged system right now, I believe 

there is light at the end of the tunnel. We have a real opportunity 

to enact positive change, and we are going to do it the right way, 

and I believe a better way. America’s small businesses will not be 

an afterthought or a bill payer this time around. We are going to 

listen to what they are telling us because they are on the frontlines 

and can help us create the step-by-step solutions that will improve 

access, lower costs, and fix a broken system. 

We have an excellent panel of witnesses today, and I want to 

thank each and every one of them for coming here, and very shortly here, testifying before us. We thank you for your time, and I 

would now like to yield to the ranking member for her opening remarks. 

Ms. VELA ́ ZQUEZ. Thank you, Mr. Chairman. I am going to try. 

If not, I will ask Mr. Evans to read my statement. Can you understand me? Yes? Okay, good. 

Seven years ago, the president signed into law the Affordable 

Care Act. For the over 20 million people that have secured coverage, it has not been a disaster. This gain has been significant for 

small business employees. Between 2013 and 2015, the number of 

uninsured small business employees dropped by 4.1 percent million, and their uninsured rate fell from 27 percent to less than 20 

percent. These individuals not only gained insurance coverage, they 

gained high-quality insurance coverage. The ACA instituted reforms to—can you read this? 

Mr. EVANS. Many of these reforms were particularly important 

for small businesses. Before the ACA, one employee’s rare illness 

could cause insurers to drastically raise rates for the entire firm. 

Now the insurance companies are not allowed to charge higher premiums based on health status, insurance claims, or gender. The insurance market is fair and more consumer-friendly than it was 

seven years ago. The ACA has ushered in a period of freedom for 

entrepreneurs who no longer will have to choose between starting 

their own business and retaining their health benefits. 

I recently held a healthcare event in my district. One New York 

entrepreneur said, and I quote, ‘‘I would not be able to own my 

business without the Affordable Care Act.’’ The act has also contributed to reducing healthcare cost growth. In recent years, premium rates increases in the employer market has been modest. Between 2010 and 2015, premiums raised 27 percent, significantly 

lower than the 69 percent increase from 2000 to 2005. 

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3 

As with any major law of this complexity, there have been challenges in implementation for many eligible firms have not taken 

advantage of the small business tax credit. Similarly, markets have 

had mixed success in the Small Business Health Option Program. 

I look forward to hearing testimony today on these programs that 

could be improved. 

However, rather than working together to develop targeted reforms, Republicans want to throw out the baby with the bath 

water. For years, they proposed little more than repeal with vague, 

at best, planned replacement. Even today, there is no agreement 

upon a concrete plan or legislative path to replacement. Experts 

agree that even with a partial repeal without a concurrent replacement will destabilize the market. 

The Congressional Budget Office estimated that repealing the Affordable Care Act, the reconciliation would cause 30 million people 

to lose coverage over the next decade. This coverage drop would 

cause nearly $1.7 trillion in lost revenue to hospitals, doctors, and 

other providers between 2019 and 2028. At the same time, demand 

for uncompensated care would skyrocket. 

CBO also predicts that premiums in the non-group market would 

increase by 20 percent to 25 percent. This increase would reach 

about 50 percent in the years following the elimination of the Medicare expansion and the marketplace subsidies. Even if the Affordable Care Act is repealed with a delay, uncertainty in the marketplace would likely cause a significant premium increase in insurance market exists. These sweeping proposals are careless and will 

cause a great deal of damage to our healthcare system and every 

American who relies on it. 

Small firms are not being served by our healthcare system and 

face many challenges before the Affordable Care Act. The Affordable Care Act sought to provide small firms with greater stability, 

flexibility, and cost controls. Though we have seen considerable 

gains, more work remains through a thoughtful and bipartisan examination of the policies, we can make targeted improvements that 

better serve small firms. I hope my Republican colleagues will join 

me in this examination and abandon their dangerous and disruptive plan for repeal. 

Thank you, Mr. Chairman. I yield back. 

Chairman CHABOT. Thank you very much. The gentleman and 

gentlelady yield back. 

If Committee members have an opening statement prepared, I 

would ask that they be submitted for the record. 

And I will take just a moment to explain our timing and lighting 

system here. We operate by the 5-minute rule, both the witnesses 

and the folks up here, so we ask that you stay within that. There 

will be a green light that is on there for 4 minutes. Then the yellow 

light will come on to let you know that you have got a minute to 

wrap up. And when the red light comes on, we would ask you to 

stay within that. We will give you a little leeway, but not a whole 

lot, so we would ask you to follow that, if you would. 

And I would now like to introduce our very distinguished panel 

here today. 

Our first witness is Tom Secor, president of Durable Corporation, 

a small manufacturing and master distributor of loading dock 

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4 

bumpers and floor matting, primarily serving the material handling and janitorial supply industries, located in Norwalk, Ohio 

since 1941. He has been with Durable since 1993, which currently 

employs 37 people. Mr. Secor is an active small business advocate, 

serving on the Board of Directors for the National Small Business 

Association, who he is testifying on behalf of today, and the Ohio 

Chamber of Commerce. We welcome you to the Small Business 

Committee. 

Our second witness is Keith Hall, President and Chief Executive 

Officer of the National Association for Self-Employed, NASE. As a 

23-year member of the organization, Keith has served as Chief Operating Officer, Chief Financial Officer, and National Tax Advisor. 

He has also spent time on the board of directors. He began his career with the international accounting firm of KPMG, and later 

served as the chief financial officer for a medium-sized bank and 

a long-term care provider. Mr. Hall is a certified public accountant 

and has provided consulting and tax services to small businesses 

for over 20 years, and we welcome you here as well this morning. 

And up next is Kevin Kuhlman, the director of Government Relations at the National Federation of Independent Business, NFIB. 

He manages NFIB’s House of Representatives lobbying team in advocacy strategy, specializing in healthcare and health insurance 

issues. He also closely follows the regulatory process and comments 

on regulations that impact the NFIB’s membership. Before joining 

NFIB in 2011, he handled healthcare, labor, education, and small 

business issues for Congressman Peter Roskam from Illinois. He 

started his career in Capitol Hill in 2006 as a support research 

staff member for the Committee on Ways and Means. We thank 

you for being here as well. 

And I will now yield to the ranking member for the introduction 

of our fourth witness. 

Ms. VELA ́ ZQUEZ. Thank you, Mr. Chairman. 

It is my pleasure to introduce Dania Palanker. She is an assistant research professor at the Center on Health Insurance Reforms 

at Georgetown Health Policy Institute. She analyzes state and federal insurance market reforms and is an expert on health benefits 

provision of the ACA and ERISA. She is also chair of the Plan 

Management Advisory Committee of the District of Columbia 

Health Benefits Exchange. Ms. Palanker holds a J.D. from Georgetown University and an MPP from the Harvard Kennedy School. 

She received her B.A. from Middlebury College. Welcome, and 

thank you for being here. 

Chairman CHABOT. Thank you. And Nydia, I think you will acknowledge, I did not do it, did I? I had nothing to do with this? 

Ms. VELA ́ ZQUEZ. I guess that—well, I do not know. 

Chairman CHABOT. All right. We will begin with Mr. Secor. Mr. 

Secor, you are recognized for 5 minutes. 

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5 

STATEMENTS OF TOM SECOR, PRESIDENT DURABLE CORPORATION; KEITH HALL, PRESIDENT AND CHIEF EXECUTIVE 

OFFICER THE NATIONAL ASSOCIATION FOR THE SELF-EMPLOYED; KEVIN KUHLMAN, DIRECTOR OF GOVERNMENT RELATIONS NATIONAL FEDERATION OF INDEPENDENT BUSINESS; DANIA PALANKER, ASSISTANT RESEARCH PROFESSOR 

CENTER ON HEALTH INSURANCE REFORMS GEORGETOWN 

UNIVERSITY 

STATEMENT OF TOM SECOR 

Mr. SECOR. Good morning, Chairman Chabot, Ranking Member 

Vela ́zquez, and members of the House Small Business Committee. 

I want to thank you for the opportunity to address this body in reference to the current conditions that small businesses are facing 

since the passage of the Patient Protection and Affordable Care 

Act, ACA, and offer some solutions as Congress works to improve 

the law. 

My name is Thomas E. Secor, and I am the president of Durable 

Corporation and a board member of the National Small Business 

Association, NSBA. 

Fewer and fewer small businesses, especially those with less 

than 50 employees, offer health insurance as an employee benefit. 

This is not because they do not want to; it is because they simply 

cannot afford to offer a plan. At Durable, I had to make the difficult decision, in 2014, to no longer offer health insurance due to 

the increased cost and complexity of having to move to an ACA-approved plan. Then the Obama administration ruled we can continue our non-ACA approved plan due to the failure of a small 

business market developing. And each year since, we wait to hear 

if we can continue. To date, we still offer health insurance. Even 

with a non-ACA approved plan, our average total cost per employee 

has risen 51.7 percent between 2013 and 2017. 

According to NSBA’s Health Care Survey, offering health insurance as an employee benefit is something the majority of small 

businesses think is very important in terms of recruiting and retaining good employees. Yet, with the huge healthcare cost increases and the continual struggle to navigate significant confusion 

and complexity within ACA, fewer firms report that they offer some 

kind of health-related benefit. NSBA’s survey found that when it 

comes to ACA, the average time it takes for small businesses to 

stay abreast of all the changes to health care is 13 hours per 

month. That is nearly 4 workweeks every year, and 90 percent reported premium increases at their most recent renewal, with 1 in 

5 firms reporting increases exceeding 20 percent, while 69 percent 

reported an annual increase exceeding 20 percent over the last 5 

years. 

It is no wonder one in four small firms are purposely not growing 

as a result of the ACA. Complexity and uncertainty give rise to a 

system that inappropriately overshadows and often stifles the ability of business owners and individuals to succeed, innovate, and 

pursue entrepreneurship. The NSBA survey shows that one-third 

of small businesses held off on hiring a new employee, and more 

than half say they held off on salary increases for employees as a 

direct result of high insurance costs. This continuous uncertainty 

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6 

and never-ending cost increases are not sustainable. Our employees 

who get up and go to work every day deserve better, deserve more 

certainty, deserve more consideration, deserve to have access to affordable health insurance and high-quality healthcare services. 

NSBA is focused on reform efforts to fix some of the issues most 

burdensome to small businesses, understanding that the ACA as 

passed was primarily about expanding access, not reducing cost. 

Efforts should be made to prioritize healthcare cost containment 

and reduce the rate of medical utilization while improving 

healthcare quality and empowering consumers. Incumbent on any 

requirement to purchase health insurance is a need to ensure that 

appropriate and affordable coverage is available for all. With a goal 

of universal participation, there is a need to strike a balance between the population served, the premiums charged, and the underwriting risk. Wasteful, inefficient, and improper health care is 

contributing astronomical sums to the overall cost of U.S. health 

care and will likely continue absent engaging consumers in their 

own health care. 

The Institute of Medicine estimates that $105 billion of annual 

waste in healthcare spending can be attributed to the lack of competition and excessive price variation. A lack of public information 

on the price of healthcare services contributes to this waste by denying employers, purchasers, and consumers the information they 

need to make smart choices. 

The small business community needs substantial relief from the 

ACA. This level of relief can only be achieved through a broad reform of the current healthcare system with a goal of reducing cost 

and added expenses, focusing on individual responsibility and empowerment, creating the right market-based incentives and persistent emphasis on improving quality while driving out unnecessary, wasteful, and harmful care. 

Again, thank you for what I consider a true honor to be able to 

address this Committee of elected officials in our Nation’s capital, 

and I look forward to answering any of your questions. 

Chairman CHABOT. Thank you very much. 

Mr. Hall, you are recognized for 5 minutes. 

STATEMENT OF KEITH HALL 

Mr. HALL. Thank you, Mr. Chairman, Ranking Member 

Vela ́zquez, members of the Committee. Thanks so much for having 

this hearing on this obviously very important topic. 

My name is Keith Hall. I work with the National Association for 

the Self-Employed. We have about 150,000 members in all 50 

States. We represent over 27 million self-employed business owners. Virtually all of those businesses have very few employees. 

About half of them work out of their home, and their average gross 

family income is about $90,000. It is estimated by the year 2020, 

that number is going to be 50 million self-employed. Now, to put 

that in perspective, the IRS processes about 150 million tax returns 

a year. So by 2020, one out of three tax returns will have a selfemployed business attached to that tax return. My point, of course, 

is this is a very important part of our economy, of our culture, and 

of our healthcare decisions. So thanks again for holding this hearing. I think this is very, very important. 

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The ACA concentrated on three areas: quality, access, and affordability. In a lot of ways, the ACA got some stuff right, especially 

as it relates to quality and access. There are over 11 million Americans who are covered today that would not be covered without the 

ACA. Those with preexisting conditions and those with incomes 

below the thresholds now have coverage that they would not have 

had before. Those people can now go to the doctor with pride and 

with dignity. I like that. I think we made a difference. 

I think we, as citizens, as Americans, are called to help people 

that need help. And I like that. I do believe whatever solution we 

find needs to include some level of subsidies for those that need 

help, and an exclusion from screening against preexisting conditions. I think that is very important. 

I think quality and access have been helped, but I think it has 

been a struggle. The number of actual health plans has dramatically decreased, and the number of insurance companies, as the 

chairman mentioned, has dramatically decreased. Some have given 

up. Many places only have one ACA option. I think considering 

opening up interstate ability to expand some plans may give more 

options, and I think we should certainly look at that. I think the 

discussion should also include access to healthcare, not just access 

to health insurance. 

Now, I would like to spend most of my time talking about affordability. I think that is where we really struggled. I think it is important to note that the self-employed business owner considers 

this a business expense. The self-employed is unique in that we 

really have to pay twice. We have to pay the cost, but then, also, 

if we are sick or out of work, our business suffers, also. 

Now, as I mentioned before, the average family income is about $90,000 for this group. Now, that is right at the threshold where 

they do not get subsidies, and so that makes it extra difficult. As 

an example, a family in Cheyenne, Wyoming, will pay about 

$14,000 a year for a Silver Plan. That is about 16 percent of their 

income. We have got to concentrate on lowering that cost. Some options could be incentives for younger and healthier people, give 

them incentives. Maybe reducing some of the mandated benefits 

that exist now, and then maybe some of the expansion of ability 

to go interstate could help as well. This is the toughest part of the 

discussion because how do we pay for all that we want? 

And I know at some point the cost is going to be the cost. But 

this is the most important thing I want to say today. Even after 

we do all that we can do to reduce cost, the self-employed business 

owner will still pay 15.3 percent more for their health insurance 

just because of the tax code. That same family in Cheyenne, Wyoming, is going to pay $2,100 more for their health coverage just because they are a self-employed business owner. That just does not 

make sense to me. The reason is their health insurance is not deductible as a business expense. And this is easy to fix. Congress 

can just move the deduction off of page 1 of their tax return over 

to the Schedule C. That saves 15 percent right here, right now. 

Easy to do. 

Now, I wish I had a great solution. I wish I could stand in front 

of this Committee, lay out a specific plan that covers everybody, everywhere, for everything, and then show you an easy way that we 

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can pay for it. But, I am not that smart. I do, however, believe 

strongly in the American small business. My only formal request 

is that those self-employed business owners have exactly the same 

rules as big businesses do. If big businesses get a deduction for 

their health insurance cost, small businesses should as well. If big 

businesses can use flexible spending accounts, health reimbursement arrangements, then small businesses should as well. If big 

businesses get a lower net tax on their net income, small business 

owners should have that lower tax rate benefit as well. 

I know this is really sappy, but I believe in small business. I believe in what the American spirit can do. Small business owners 

are creative, intuitive problem solvers. They will figure this out. 

Tell us the rules, but then let the rules be the same for everyone. 

And thank you so much for the opportunity to be here. I really 

appreciate what you guys do for us every day. So thank you. 

Chairman CHABOT. Thank you very much. 

Mr. Kuhlman, you are recognized for 5 minutes. 

STATEMENT OF KEVIN KUHLMAN 

Mr. KUHLMAN. Thank you, Chairman Chabot, Ranking Member Vela ́zquez, thank you, and members of the Committee. Thank 

you for the opportunity to testify at this important and timely 

hearing. My name is Kevin Kuhlman. I am the director of Government Relations at the National Federation of Independent Business. 

The Affordable Care Act has led to higher healthcare costs, increased compliance burdens, and decreased flexibility for small 

businesses. These consequences resulted in a significant 25 percent 

reduction in the offer rate for small businesses between 2010 and 

2015. For the first time, fewer than 30 percent of small businesses 

offered health insurance to their employees in 2015. As Congress 

considers a partial repeal of the ACA through reconciliation and a 

repair of the health insurance markets, please prioritize affordability, flexibility, and predictability for small businesses. Health 

reform that works for small business will work for the rest of the 

country. 

The cost problem predates the ACA, but the law exacerbated this 

problem. The ACA was the most significant Federal overhaul of the 

individual and small business health insurance markets ever. 

Forty-one percent of small business owners purchase health insurance in the individual markets and 33 percent purchase insurance 

through their business. The ACA added new insurance requirements and taxes to these markets that drove up plan costs. These 

costs are passed along to small business owners and employees in 

the form of higher health insurance premiums and out-of-pocket 

costs. 

For small business owners, increased costs are unlikely to be offset by tax credits. Only 6 percent of small employers received an 

advanced premium tax credit in the individual exchange marketplace. Many of the 9 million unsubsidized individuals in the broader individual market are small business owners. Few small businesses qualified for the Small Business Health Insurance Tax 

Credit, and the credit expired last year for the few businesses that 

did initially qualify. This population needs the most cost relief. 

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The ACA implementation by the Departments of Health and 

Human Services, Labor, and Treasury increased compliance and 

paperwork burdens for small businesses. The biggest current compliance headache is the employer mandate. Businesses must track 

the cost of coverage for each employee monthly, provide current 

and former employees with a Form 1095, and provide the IRS with 

a Form 1094. Whether outsourced to a payroll company or handled 

within the business, these increased compliance requirements 

again result in higher costs for small businesses. 

IRS regulations limited flexible arrangements that were a common market practice for small businesses. Fewer and fewer small 

businesses can afford the high cost of group health insurance. Instead, to assist employees with healthcare costs, many small businesses directly paid for or reimbursed employees’ individual market 

health plans and qualified medical expenses. NFIB estimated 16 

percent of businesses reimbursed employees for insurance they purchased on their own in the year 2015. The IRS prohibited these arrangements and threatened $100 per employee per day penalties. 

Penalties of this magnitude would be catastrophic for small businesses, forcing many to close their doors. 

Repeal will eliminate taxes and mandate penalties, but more action must be taken to lower costs and increase coverage options for 

small business. Congress cannot only pass repeal legislation without considering replacement legislation that focuses on affordability, flexibility, and predictability for small businesses. 

On affordability, reconciliation rules prevent reconsidering the 

increased health insurance requirements in repeal legislation. Adjusting tax and insurance rules with a laser-like focus on affordability will organically increase coverage for the small business 

population. 

On flexibility, NFIB continues to advocate for innovative offering 

arrangements. NFIB supported the Small Business Healthcare Relief Act that allowed businesses to contribute to their employees’ individual market plans with tax preferred dollars. The ACA eliminated these innovated offering arrangements, as I mentioned earlier, but NFIB, with some other small business organizations, 

helped lead the effort to restore them on a limited basis in the 21st 

Century Cures Act, and we appreciate Congress for doing so. Expanding these arrangements will allow small businesses to tailor 

benefits that fit their employees’ needs and could help stabilize the 

individual insurance market. 

On predictability, during the repeal-and-repair process, Congress 

and the administration must avoid disrupting the fragile individual 

and small business health insurance markets. Congress or the administration should allow individuals and businesses to keep their 

transitional plans by relaxing grandfather plan regulations and extending the Obama administration’s grandmother plan extension 

policy. These policies could also enroll new individuals and business customers to ensure true choice. 

Small business was an afterthought during ACA consideration 

and implementation. NFIB remains committed to advocating for solutions that promote affordability, increased flexibility, and ensure 

predictability for small businesses. 

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Thank you for allowing me to testify today. I look forward to any 

questions. 

Chairman CHABOT. Thank you very much. 

Ms. Palanker, you are recognized for 5 minutes. 

STATEMENT OF DANIA PALANKER 

Ms. PALANKER. Chairman Chabot, Ranking Member 

Vela ́zquez, and members of this Committee, thank you for the opportunity to participate in today’s hearing about the healthcare 

marketplace for small businesses. 

My name is Dania Palanker. I am an assistant research professor at Georgetown University Center on Health Insurance Reforms. However, the views I share today are my own and do not 

represent those of the university, its faculty, or staff. 

Small businesses have long struggled to provide health insurance 

to their workers facing high and often volatile premiums. These 

struggles have existed for decades. One of the goals of the Patient 

Protection and Affordable Care Act was to lessen these burdens. 

In 2012, before the ACA was fully implemented, only half of businesses with 3 to 9 workers, and less than three-quarters of businesses with 10 to 24 workers offered health insurance. The small 

group market provided coverage to only one in five small business 

owners with less than 25 workers. And workers of small businesses 

who received insurance historically had less generous coverage 

than those working for large employers, with higher deductibles 

and lower contributions for their dependents. 

Health plans for businesses with less than 15 employees were 

not required to cover maternity services in 35 States and the District of Columbia, leaving some workers and their family members 

or their spouses without coverage for tens of thousands of dollars 

for the costs of childbirth and prenatal care. A Cesarean delivery 

was actually about—the average cost was about the same cost of 

median income. 

Health insurers in 23 States were not required to include mental 

health coverage in small group plans, and there was no Federal requirement to cover substance use disorder treatments, such as 

opioid addiction, and small businesses could purchase a plan without prescription drug coverage. 

Today’s small businesses have more choices. They can offer their 

workers the same plan if the issuer made the decision not to terminate the plan. Small businesses can choose to purchase in the traditional small business market or through the shop marketplace. 

And they can help workers purchase coverage through the individual market, including providing premium support as we have 

heard because of the recent passage of the 21st Century Cures Act. 

There is no penalty for employers with fewer than 50 employees 

that do not provide health insurance. And finally, small business 

owners and individuals who are self-employed can enroll themselves and their families through the individual market. 

Prior to the ACA, the individual market was not an option for 

many small business owners, the self-employed, and their workers. 

Applicants were denied coverage because of preexisting conditions, 

including a history of a Cesarean section, a cancer diagnosis, even 

acne. And those who did receive coverage often would have the covSBREP-219A with DISTILLER

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erage for preexisting conditions excluded. People experienced job 

lock where they would feel locked into their job because that was 

the only way they could access health care. And that also prevented people from starting their new business, preventing entrepreneurship. 

And small business owners and entrepreneurs are getting coverage through the ACA. Almost 10 percent of small business owners purchased coverage through the individual health insurance 

marketplaces in 2014, and as marketplace enrollment has grown 

since then, we expect that more have been covered since then. In 

States that expanded Medicaid, there is a healthcare safety net for 

entrepreneurs if they start a business that is not profitable in the 

first few years. 

The uninsured rate for small business workers has fallen by 10.8 

percentage points in just the first year of the marketplaces in 2014. 

And this was due to people enrolling in individual insurance and 

Medicaid. And small businesses are also benefitting from an unprecedented slowdown in healthcare cost growth. So while premiums are growing, they’re growing significantly slower than they 

were prior to the Affordable Care Act. For small employers with 

less than 50 employees, a national survey found that there was 

only an average 4 percent rate increase for single coverage and 4.2 

percent for family coverage between 2010 and 2015, and the rate 

increase was actually only 1 percent between 2014 and 2015. 

Before the Affordable Care Act, a small business could see a 

large double-digit rate increase because only one or two workers 

had high medical costs, such as one employee having an HIV diagnosis or a premature baby being born that had to spend many days 

in the NICU. Small businesses with female workforces paid higher 

premiums. Some employers were charged more because of the industry and the occupation of their employees. For decades the 

small group market has actually failed small businesses and their 

workers, and the result was that many went without insurance. 

And the ACA has improved and is continuing to improve access to 

coverage. Thank you. 

Chairman CHABOT. Thank you very much. 

We will now ask questions, and I will yield myself 5 minutes to 

begin. And I will begin with you, Mr. Kuhlman, if I can. 

Towards the end of your statement you made, I thought, a very 

strong comment. I will repeat it. You said that small business was 

an afterthought in consideration and implementation of 

Obamacare. Could you expand upon that? You know, why do you 

think that is the case and what is a better alternative, especially 

since you are here before the Small Business Committee? 

Mr. KUHLMAN. Thank you for the question. During consideration, NFIB was active throughout the consideration and trying to 

be productive and helpful through the discussions with Chairman 

Baucus to House discussions, designing a health insurance tax 

credit. We provided a suggestion and we were told, no, we are 

going to do this one instead. And the one that ended up being created was just too limited on many factors, and that was clear from, 

I think, the results. Four million postcards were sent out advertising the credit, and I think we are under fewer than 200,000 

SBREP-219A with DISTILLER

12 

business have been able to take advantage of it. Just too many limitations. 

The second portion is the Small Business Exchange. Again, we 

tried to be productive during consideration, and even formulation 

through the regulations, and it just did not really offer anything 

different than what already existed. The exchange was eventually 

where you could claim the tax credit, but again, I do not think it 

was anything innovative or different enough to incentivize businesses to begin offering or to move toward that and shift from what 

they already do offer if they were on the outside market. 

Chairman CHABOT. Thank you very much. Thank you. 

Mr. Secor, I will move to you at this point. As a small business 

owner who has continued to try to offer the best insurance options 

possible to your employees, has Obamacare made it easier or harder to continue to offer insurance to your employees? What changes 

would you specifically like us to make that would make it easier 

for you as a person in small business trying really to do the best 

for your employees as far as their health care goes? 

Mr. SECOR. The ACA, if it would have been fully implemented, 

would have put us out of the insurance market. It was just totally 

unaffordable. The rates we got we could not pay. And the complexity, I believe it was over 10,000 pages added to the Federal 

Register. The amount of time it takes us to—you know, when you 

look at 4 weeks a year, workweeks that you are spending trying 

to figure out things, we do not have, you know, corporate attorneys 

and staffs of people to sort through this stuff. We tend to find out 

about stuff like that when a regulator is knocking on the door and 

it is not a pleasant situation. So, you know, the complexity is huge 

in this. 

I think the intent, you know, it is fine, but the intent was too 

focused on expanding coverage. You have to address cost. And you 

can talk about any additional coverage you want, and there is a lot 

of good quality reasons to add this coverage or that or whatever, 

but if you add a coverage and now it is not affordable and a company has to drop their insurance, well, this person got coverage 

and these 10 people lost everything they had. And that is where 

we need some—we sort of think the idea of a bare-bones medical 

plan, if you will, or medical insurance like we used to have years 

ago, coupled with an HAS, maybe would allow the individual to 

sort of spend their money where they need to spend it on a personal basis and yet still have that umbrella coverage that if they 

or their children break an arm or were in a car accident or did get 

some disease, they would have a coverage. But that basic level of 

coverage, the cost has to be affordable. 

Chairman CHABOT. Thank you. 

I have only got about a minute left. Mr. Hall, I am going to ask 

you to work miracles here and see if you cannot answer two questions for me. One is, you voiced your support for allowing insurance 

companies to sell their insurance across state lines, I assume to increase the competition to bring costs down. So if you could talk 

about that and why you think that is a good thing. 

Secondly, under the 21st Century Cures Act that we passed last 

year, it lifted some of the restrictions on the use of health reimSBREP-219A with DISTILLER

13 

bursement accounts, but there are still some restrictions that remain, how would you like to see those changed? 

Mr. HALL. Okay. As far as opening competition, I do think that 

is a good thing. I am certainly not an economist. I am not smart 

enough to understand all the implications of that, but I do recognize that when you are in Lincoln, Nebraska, and you only have 

one option, it is difficult for them to choose what is best for you 

and your family. 

Back to the overall cost. If increasing competition by allowing 

carriers to go into other States would provide us an opportunity to 

increase choice and reduce cost, then that has got to be a good 

thing. If that does not work, then it seems to be pointless, but it 

still goes back, as you probably heard through a bunch of different 

people, it still comes down to the cost. 

The HRA is one of my personal pet peeves. The smallest businesses struggle with the cost of a group plan. It is very difficult for 

a business who has three employees to get a Blue Cross Blue 

Shield, ACA-compliant, major medical plan and stay in business. 

But if they can provide $1,000, $2,000, $3,000, whatever their 

budget will allow to help their employees with the cost, then we 

should promote them being able to do that. And an HRA, a health 

reimbursement arrangement, is exactly how they do that. 

So I would prefer removing all restrictions, and if there is a 

qualified medical expense, as defined in the Internal Revenue 

Code, that an employee incurs, the business ought to be able to reimburse that with a tax benefitted status. It just seems like an 

easy decision to me. 

Chairman CHABOT. Okay. My time is expired. 

The gentlelady is recognized for 5 minutes. The ranking member. 

Ms. VELA ́ ZQUEZ. Thank you, Mr. Chairman. 

Ms. Palanker, is it not true that before the ACA premiums in the 

small business market were skyrocketing and employers were dropping their coverage? 

Ms. PALANKER. Yes, that is true. The increase in employer premiums, including for small businesses, did not start with the passage of the Affordable Care Act. It had been happening for many, 

many years, which was one of the reasons that the Affordable Care 

Act was needed. And there actually was a dramatic cut in small 

employers offering health insurance before the Affordable Care Act 

passed. And I will also add that some of the employees who used 

to get coverage through a small business that are not anymore are 

now able to get coverage through the individual market. 

Ms. VELA ́ ZQUEZ. Thank you. 

Mr. Secor, like nearly 96 percent of all American firms, you have 

fewer than 50 employees, correct? 

Mr. SECOR. Yes. 

Ms. VELA ́ ZQUEZ. So automatically, you are exempted from the 

employer mandate? 

Mr. SECOR. That is correct. 

Ms. VELA ́ ZQUEZ. Correct. So given that you are not subject to 

the mandate, what aspects of the Affordable Care Act specifically 

have been a regulatory burden to you? 

Mr. SECOR. Well, if we are going to offer insurance, then you 

end up offering through the ACA. And once you get in, you have 

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14 

all the rules and regulations still apply. The fact that we have 

fewer than 50 employers, you are correct, we do not have to offer 

insurance. 

Ms. VELA ́ ZQUEZ. Correct. 

Mr. SECOR. But morally, those employees—— 

Ms. VELA ́ ZQUEZ. No, if you offer it through the ACA, you are 

going to get more options than you got before. 

Mr. SECOR. Actually, we got less. We had one carrier that was 

willing to offer insurance is what our insurance agent told us, that 

there was one. Now, here again, I am in a rural section in Ohio, 

and I think that is part of the difficulties, and that is where you 

see some of the things have occurred is that, you know, in the 

State of Ohio, we have 88 counties and we have 3 what I will call 

major cities for us: Cleveland, Columbus, Cincinnati. And we have 

a handful of other ones, but most of Ohio is rural and so we do not 

get the kind of coverage. If you are in Cleveland, Columbus, Cincinnati, you had options. We did not. And it was explained to me 

that is why they allowed us to continue to offer that insurance is 

because we did not get the option. 

Ms. VELA ́ ZQUEZ. So, Ms. Palanker, based on your research and 

data, does it reflect that in rural America you get less coverage 

than prior to the enactment of the ACA? 

Ms. PALANKER. Health insurance varies and the issuers vary 

tremendously across the country, and it has always been true that 

in small rural areas there have been less options for health coverage than large areas, and there have been certain States that 

have more competition than others. But I would add that we do 

have now the added—I think the individual market option for 

small businesses is very important because for those that cannot 

afford the coverage or do not have those options it is something 

there now for their workers. 

Ms. VELA ́ ZQUEZ. Thank you. 

Mr. Kuhlman, the ACA instituted a number of reforms that serve 

to create a more predictable small business market. One such reform was prohibiting different prices for coverage based on health 

status or gender of employees. Do you think we should go back to 

a scenario where some small businesses, such as those who hire 

predominantly women, are charged higher premiums? 

Mr. KUHLMAN. I do not believe that. I think you are referring 

to underwriting. And there were winners and losers in that older 

system and there are likely winners and losers in this new system. 

But I do not think we need to go back to a heavily underwritten 

thing. But I would encourage more flexibility. 

Ms. VELA ́ ZQUEZ. Okay. Ms. Palanker, Republicans have not 

agreed upon a concrete proposal to replace the ACA. However, most 

offered plans have a few common elements, including expanding 

health savings accounts, establishing new tax credits for health 

coverage, and restructuring Medicaid through the use of block 

grants. Could you please discuss the merits of these proposals and 

likely impact on consumers, particularly those from low- and middle-income families? 

Ms. PALANKER. These proposals are good if you are wealthy 

and healthy, and if you have health problems, if you are moderate 

or low income, they really provide a lot of struggles. The health 

SBREP-219A with DISTILLER

15 

savings accounts work for people who have the disposable income 

to put into the health savings account and for the people who do 

not end up using that entire account for their health care. If not, 

it is really just shifting from the insurance paying for the cost to 

people paying out of pocket. 

For Medicaid, we have a longstanding process of Medicaid being 

a State and Federal partnership, and if it is significantly restructured into a block grant, you are actually taking a situation where 

when we have economic downturn, the risk of that downturn is 

now put on the States who are forced to, unfortunately, cut benefits 

or cut employees, people off of Medicaid at a time when it is most 

important to have. 

Ms. VELA ́ ZQUEZ. Thank you, Mr. Chairman. Thank you for 

your indulgence. 

Chairman CHABOT. Okay. The gentlelady’s time has expired. 

The gentleman from Iowa, Mr. King, is recognized for 5 minutes. 

Mr. KING. Thank you, Mr. Chairman. I want to thank the witnesses for your testimony today. 

And I direct my first question to Mr. Hall. I am using a little bit 

of thinking about how businesses start and grow into Fortune 500 

companies and how often it is an entrepreneurial individual in a 

garage or a shop somewhere that has an idea. Or I am thinking 

about the local carpenter who went to work for the construction 

company and decided to go out on his own, take his tools. Now, the 

day that he goes out there and starts to pound his own nails in his 

own little self-employed little company with no employees, is his 

health insurance deductible on that day? 

Mr. HALL. Well, interesting question. And thanks for the question. But on that day when he becomes self-employed, if he has exactly the same cost, exactly the same policy, nothing changes other 

than who cuts a check to him for his services, he pays 15.3 percent 

more for his health insurance beginning that day simply because 

the insurance is not deductible. 

Mr. KING. It is whether or not he has employees? 

Mr. HALL. It is whether or not he, himself, is an employee. Now, 

interesting, because as a small business owner, if he hires employees, he has got three people and he has the ability to pay for their 

insurance, he does get a full deduction for his employees’ insurance. But his insurance, for him and his family, 15.3 percent more 

just because he is self-employed. 

Mr. KING. But if he is running a sole proprietorship and he is 

not drawing his salary out of that and not paying himself, but he 

is paying the expenses out of the business itself without any corporation, just a sole proprietorship, then can he then deduct his 

health insurance premiums? 

Mr. HALL. His premiums are deductible, but only on the face of 

his 1040, on page 1, not as a business expense. 

Mr. KING. Standard deduction? 

Mr. HALL. Not standard. It is on page 1, self-employed, line 29, 

instead of being a business expense. So he pays taxes for FICA, 

Medicare, self-employment tax, basically 15.3 percent. If he worked 

for the old carpentry company as an employee, even if he paid his 

own health premiums, most likely the company had a cafeteria 

plan, a 125 plan that he paid for all of those expenses pretax. So 

SBREP-219A with DISTILLER

16 

bottom line, at the end of the day, my example, the family in, Wyoming, at the end of the day, that family has $2,100 less in cash. 

No other differences. 

Mr. KING. That is what you describe in your testimony, the $2,100 difference. And so here is some of the narratives that come 

to me. We have a lot of farming families that surround me, thankfully, and if they do not have an employee, they tell me they are 

allowed to deduct the health insurance premiums as an expense if 

they are a partnership or a husband-and-wife team. Would you 

concur with that? 

Mr. HALL. Well, again, and this is a critical point, I appreciate 

you bringing this up. I will pay you later for planting this question. 

But the important point is most people do not understand the difference in how the premiums are, indeed, deductible. So point 

blank answer to your question, yes, those premiums are deductible. 

But not in the same way as big businesses. So, yes, they are deductible, but not in the right place on the return. 

Mr. KING. Okay. 

Mr. HALL. So that farmer still is paying 15.3 percent more for 

their health insurance. 

Mr. KING. And then if he hires a part-time employee and pays 

for the health insurance for that part-time employee, does that 

change the deductibility of the farmer and his wife? 

Mr. HALL. Negative. Still the same. 

Mr. KING. Okay. 

Mr. HALL. And if you do not mind, if I could expand, the thing 

that really hurts my heart is that carpenter or that individual that 

did not take that plunge into their American dream for being selfemployed, but they became self-employed kind of by accident: the 

company laid them off, the company decided for whatever reason 

we no longer have employees, we are only going to deal with independent contractors, you are going to do the same thing for us you 

did before, yet you do not have vacation, you do not have paid time 

off, and you do not have health insurance. That person now still 

pays 15.3 percent and they did not even make the choice. They are 

like a necessity entrepreneur. Those are the ones that really reach 

out and touch me. 

Mr. KING. Let me pose another thing that I heard here, and that 

is all very interesting and I am awfully glad you are here as a witness to clarify these delicate points that they are. When I am listening to the discussion about selling insurance across State lines 

and the discussion about what should be mandated in health insurance premiums, does anyone on the panel have the ability to describe how we can have a successful competition established between the 50 States if we repeal the components of McCarran-Ferguson that allow for States to write monopolistic legislation? Can 

we maintain Federal mandates and still allow for competition between State lines or does that nullify? And I would ask Mr. Hall 

while I have got you here. 

Mr. HALL. My first thought is that probably that would take an 

act of Congress, so that is up to you guys. I do believe that is a 

possibility. I think as we go through the concept of mandates, of 

shared responsibility penalties, people who chose not to have an 

ACA-compliant plan, we encourage them to get an ACA plan with 

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17 

a negative encouragement. We said if you do not do it, we are going 

to penalize you. I like both. I like the negative penalty, but I also 

like encouraging people. So if part of this nationwide group could 

include incentives for younger people, healthier people to get into 

the pool, I am not an actuary, but that helps the math—— 

Mr. KING. Thank you. 

Mr. HALL. —if more healthy—— 

Mr. KING. I would ask unanimous consent for an additional 

minute. 

Chairman CHABOT. Seeing no objection, the gentleman is recognized for an additional minute. 

Mr. KING. Thank you, Mr. Chairman. I will try to go fast. 

I would like to turn to Mr. Secor and ask you, as I see this, if 

we have mandates that are put on at a Federal level and we are 

trying to establish competition between the States. And if it is for 

the opioid addiction, as the gentlelady mentioned, or OB care or 

preexisting conditions even or whatever it might be, can you see 

how we would end up with competition between the States if we 

loaded them up with mandates that all States had to comply with? 

Mr. SECOR. I guess our focus from the NSBA side is still on 

cost. And the more mandates you put on, the higher the cost of the 

product is going to be. So whether there is competition or not, you 

are still going to be driving the cost of that basic coverage up and 

then it does not become affordable. How that works in that market, 

to be quite honest, I really do not know. 

Mr. KING. That is still a clear answer, and so I appreciate it. 

And I thank you, Mr. Chairman. I yield back. Thanks. 

Chairman CHABOT. The gentleman yields back. 

The gentleman from Pennsylvania, Mr. Evans, is recognized for 

5 minutes. 

Mr. EVANS. Thank you, Mr. Chairman. 

Ms. Palanker, the question I would like to ask you is what can 

you share your thoughts on the small business tax credit? And 

what are your thoughts on how to make the incentives more appealing to small employers? 

Ms. PALANKER. For the small business tax credits that were eligible and used the tax credit, it was very helpful to make coverage 

more affordable. I believe the tax credit could be expanded for higher—you know, for employers with higher wages. It did sort of go 

out very quickly once an employer started having more employees. 

So it could be really a more robust credit that could also go longer 

and is an option to look at to help make coverage more affordable 

for small businesses. 

Mr. EVANS. Do you have any thoughts or suggestions in terms 

of people taking advantage of it, sort of incentives? 

Ms. PALANKER. Well, I think for the small business tax credit, 

although there were postcards sent, there still was research shown 

that people did not know it was available. One piece is people do 

need to know that the credit is available. In addition, when it 

rolled out, it rolled out at the time that SHOP was very new. You 

had to buy the coverage through SHOP. So I would say to sort of 

continue the credit and get more people to enroll, it is really trying 

to both make sure that the employers know it is there and that it 

SBREP-219A with DISTILLER

18 

is designed to both work with the employers and work with the insurance options available. 

Mr. EVANS. Thank you. 

Mr. Kuhlman, you stated that during the repeal-and-repair process, Congress and the administration must avoid disrupting the individual and small business health insurance market. In your view, 

what is the leading components that must be implemented by a replacement proposal? 

Mr. KUHLMAN. I am a broken record, so I just say focus on affordability, flexibility, and predictability. You know, I do not have 

a plan to present to you today, but we remain very interested in 

working together as that plan proceeds. 

Ms. VELA ́ ZQUEZ. Will the gentleman yield? 

Mr. EVANS. Yes. 

Ms. VELA ́ ZQUEZ. And do you think the Republicans have a 

plan? 

Mr. KUHLMAN. I think there are many plans out there. I have 

read the A Better Way plan. A lot of things that we agree with in 

that plan. 

Ms. VELA ́ ZQUEZ. What are those things that you agreed on 

with those plans? 

Mr. KUHLMAN. Well, in that there is a little bit more affordability, flexibility, and predictability. There is an expansion of the 

Small Business Health Care Relief Act. 

Ms. VELA ́ ZQUEZ. Well, can you help me identify what piece of 

legislation contains those elements? 

Mr. KUHLMAN. Well, I mentioned the Small Business Health 

Care Relief Act that we supported last Congress that was partially 

put in the 21st Century Cures Act. 

Ms. VELA ́ ZQUEZ. Okay. That was last Congress. But I am talking about today. People are talking about repeal, though I hear 

now they might just—thank you. 

Mr. KUHLMAN. I would love to be helpful. 

Ms. VELA ́ ZQUEZ. Yeah. Well—— 

Mr. EVANS. Let me follow up. Your view is that Congress should 

equalize the tax treatment between the group market and the individual market. Can you share your thoughts on the small business 

tax credit? 

Mr. KUHLMAN. Again, I just think it was too limited. When it 

was designed, I feel like it said, here, we have a box. Now, let’s fit 

this into the box. And it was driven by a cost target. So it was estimated $40 billion worth of tax relief, and that sounds pretty good. 

I think more recently that estimate has been revised downward 

three or four times to less than $10 billion now. And for folks who 

did take advantage of it, it is over. I had one business from Pennsylvania who said, you know, as the ACA started, I moved to the 

SHOP, small business, because I was able to take the tax credit. 

Now it is over. Comparing plans inside SHOP to outside SHOP, the 

outside SHOP ones were better. So I was in the SHOP with the tax 

credit and then that credit disappeared, so now I am out. So I 

would be happy to work with you on that or to simplify or broaden 

any tax credit. 

Mr. EVANS. Thank you, Mr. Chairman. 

SBREP-219A with DISTILLER

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Chairman CHABOT. The gentleman yields back. The gentleman’s time is expired. 

The gentleman from Mississippi, Mr. Kelly, who is the Chairman 

of the Subcommittee on Investigations, Oversight, and Regulations, 

is recognized for 5 minutes. 

Mr. KELLY. Thank you, Mr. Chairman. And thank all you witnesses for being here. 

Mr. Secor, you know, us southerners do not do pronunciations 

very well, but in your written testimony you talk a little bit about 

how your workforce has gotten younger in recent years and how 

that is affecting your health insurance rates. In your experience, 

what are the reasons that young people are declining coverage? 

And then as an ancillary to that, it appears to me if younger people 

are entering the workforce, that insurance rates should go down 

because they have less health costs, but, in fact, what is happening 

is that it is less because they are declining. So if you could comment on that, Mr. Secor. 

Mr. SECOR. Well, I think one of the things that happened in 

ACA is they narrowed the bands. There was five bands of coverage 

and they went down to three. And I think possibly one of the 

thoughts was, okay, we are going to start, you know, here and 

work down and at the bottom, work up, so to speak. Well, they 

really did not do that. They started at the top and worked down. 

So the health—because from the insurance perspective, okay, here 

is our major risk. We are going to try to price this accordingly. And 

what it did is it made it just extremely unaffordable for those 

younger employees. I mean, and that is what—as we have seen retirees and these young employees come in, I mean, I talk to them 

and they just say, you know, we really cannot—it is not worth the 

money. And they look at themselves sometimes as indestructible 

being young people. And I guess I was probably that way a long 

time ago, too. But nonetheless, you know, we have to broaden that 

market. And increasing the bands would be, I think, a possibility 

to at least provide different rates. 

Mr. KELLY. And also for you, you and I are both from rural 

areas. And can you talk about the importance of access to telemedicine and urgent care clinics? And do you think your employees consider these alternatives when deciding on which health insurance 

plans to use? 

Mr. SECOR. You know, I am amazed at how smart our employees are. I mean, I get to go to work every day with 36 fantastic individuals. But when it comes to health care, what is interesting is 

buying health insurance, they are not prepared for. In their lives, 

they have never purchased this product. And the idea that they can 

just go out and buy this product, I selected annually with a health 

insurance specialist. You know, without that person at my side, I 

have the same problem. But if you have things in the plan that 

give them incentives, such as things like you mentioned where you 

have a health unit or whatever, I know specifically as our 

deductibles went up, MRIs—I had to have an MRI years ago and 

I was talking to some people on the shop floor. They said, no, no, 

no, do not go to this hospital. Go over here to this clinic. The hospital was $3,000. The clinic was $1,500. They knew this. They actually knew which store to go to get which kind of prescription drug 

SBREP-219A with DISTILLER

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because certain stores had a lower price than others. So there are 

parts of this they are very able and willing to embrace. 

Once again, the complexity of the overall insurance packet is extremely difficult, and especially, you know, when I look at employees that have been with us for 30 years and they have never 

bought this product in their lives, ever, and now all of a sudden 

it is like, okay, go buy health insurance, that is a tough one. 

Mr. KELLY. It is. 

And Mr. Hall, I am going to try to do this one real quickly. I 

think a lot of times we talk about the cost of insurance plans. However, I am from a poor State, so we do not have—if you make 

$90,000 in Mississippi, you are a rich person. And I mean that. You 

are in the upper echelon. So we talk about health care and the cost 

of the premiums, but we rarely talk about the cost of the 

deductibles. And even I, as a private employer, my deductibles 

went from being $500 a year to now it is not uncommon to have 

$5,000 or $10,000 deductibles. Well, if you add that to your premiums, the net effect is you are paying a tax and you are getting 

zero coverage until you expend like $15,000 or $20,000 a year. Do 

you think we are taking into account the high deductible as well 

as the cost of the plan? 

Mr. HALL. Well, I think we are. I think we are probably not taking it into account enough because it is a factor. I was actually 

doing a seminar in Eugene, Oregon, and was talking to a lady who 

is a hairdresser. She makes $40,000. Her husband is disabled, 

works part-time, makes some money, but they make $70,000 combined. They do not get any subsidies, but they pay $12,000 a year 

for an ACA plan and their deductible is $6,000. So the math does 

not work that they have to pay $20,000 or $18,000 before it kicks 

in because there is an out-of-pocket maximum, also, but the overall 

cost, that out-of-pocket is material. It is a material factor. 

And if I can go back to the previous question, you know, those 

kids that are over 26—and I am an authority on this because I 

have three kids that are in this age range—but they are at this 

point where there is like an age line and you can decide which side 

of the age line you are on. But if you get an illness, if one of my 

daughters, they feel like something is wrong, the very first thing 

they do is they go to Google and they research it and they find out. 

They are knowledgeable. They know what is going on. The telemedicine idea, expanding options, that is what they do. My mom, 

same situation. She felt something was bad. She made an appointment with her doctor. And I think that is a material difference 

with the young people and incenting them to be part of this pool 

is giving them different options, maximizing use of technology. All 

of those things can be very creative solutions to help get the young 

people into the pool. 

Mr. KELLY. Thank you, Mr. Chairman. My time is expired. 

Chairman CHABOT. The gentleman’s time is expired. 

The gentleman from Florida, Mr. Lawson, is recognized for 5 

minutes. 

Mr. LAWSON. Thank you very much, Mr. Chairman. And anyone can respond to this. 

I have been in the insurance business for over 36 years and have 

done quite a bit of health insurance group coverage for employees 

SBREP-219A with DISTILLER

21 

and so forth. The problem that I see here is one that we are having 

to deal with, there are fixes for the Affordable Care Act, but it does 

not seem to be that anyone really wants to work and take care of 

the fixes it is so politicized, until one group says we just have to 

do the repeal and we are going to come up with something. And 

then you have the people on my side who are pretty much saying 

that no one has asked to get us involved and to make these fixes. 

And when during the course of the campaign, when I was campaigning, every rural community and every place I went they say 

take this message up to Congress. We want them to fix it, you 

know. And so, but how do you get there? 

You all have recommendations. We have an educator here, Ms. 

Palanker, and we are looking to get some recommendations, you 

know, so people can sit down and say the most important thing is 

health care regardless of who takes the credit. We are not worrying 

so much about who is going to have all the credit, but for people 

to have a pathway to get health care. And that is the thing that 

is kind of frustrating to be here for 30 days and to hear all the 

rhetoric coming from it. 

Mr. HALL. Well, I appreciate those comments, and I guess I do 

not want to say anything that will get me uninvited from any other 

opportunity to visit for this group. But one of the things I do hear 

that seems to be uncomfortable is I hear, you know, one group of 

people say if we do this, costs are going to go up. Then I hear another group of people say if we do this—if we do not do this, costs 

are going to go up. And it seems like the one consensus is that 

costs are going to go up. 

And back to what we have heard so much today is the affordability of the solution we choose is paramount. We have got to find 

a way, in my opinion, to expand the pool of covered individuals. Everyone having access to coverage. Everyone having access to health 

care I think is what you just said. It is difficult for me to see anyone who would stand up and say I disagree with that, everyone 

having the opportunity to get the medical care they need. Still, how 

do we pay for that? 

And my little platform, you know, my issue is, my number one 

goal is I would like for everyone to be on the same playing field. 

Now, I do not mean that every single person regardless of your income pays the same thing because obviously there should be different tiers, different subsidies, but the tax code should be treated 

the same for all businesses. Individuals should be able to have 

choice. And I think expanding those type of things is what we all 

should be talking about together. At least that would be my opinion. 

Ms. PALANKER. And I would say I think the starting point 

should be on the improved health insurance market. We have corrected some of the problems that small businesses faced prior to 

2010 and prior to 2014, because we do have a system now where 

more people are covered and it is a system that is more fair and 

that has ended some discrimination. And that is very important. 

The other piece is when you consider cost, there are two sides of 

cost. There is cost of premiums and there is cost of health care. 

And if the way that you are bringing down cost of premiums is by 

limiting what the benefits are that are offered, somebody is still 

SBREP-219A with DISTILLER

22 

paying for that. It is just instead of the employer and the employee 

paying that through premiums, the employee that happens to need 

that health service that is no longer covered is facing paying that 

entire cost of that health care. Or if they are not paying for it, they 

are going without needed health care, which can be extremely detrimental to their health. 

Mr. SECOR. I would like to thank you for representing the people that sent you here, and I guess from the rural part of the country, the most important word in USA is the first one. 

Chairman CHABOT. Is the gentleman finished? The gentleman 

yields back. Thank you very much. 

The gentleman from Missouri, who is the Vice Chairman of this 

Committee, Blaine Luetkemeyer is recognized for 5 minutes. 

Mr. LUETKEMEYER. Thank you, Mr. Chairman. And thank the 

panelists this morning. I appreciate always having some small 

business folks who sit in that chair where they have to make lots 

of tough decisions, and sometimes that means going without a paycheck yourself in order to make sure that your employees get paid 

and make sure at the end of the day the rest of your bills get paid. 

So I understand what you go through and I appreciate you being 

here today and telling some of your stories. 

You know, it is interesting. I saw statistically 74 percent of the 

uninsured—or, excuse me, 74 percent of the people who are uninsured are employed, which tells me that it is a great way to deliver 

health insurance if we can find a way to allow the employers to be 

able to afford it. So it is not doable in every situation from the 

standpoint that businesses have to make enough money to be able 

to afford that. By the same token, if we can find a way to enable 

the employers to be able to afford it, it is a great way to deliver 

health care to the employees should they desire to take that. 

So I want to talk to Mr. Kuhlman for a minute here. What would 

your suggestions be, sir, if in order to be able to enable the small 

business folks to be able to find a way to deliver health care? 

Mr. KUHLMAN. I think a theme throughout everyone’s testimony is just to help lower the barrier of entry. If the product is 

too expensive for new businesses or small businesses, to start offering—you get into the situation you are describing, or if it gets to 

those who are offering too expensive to continue to offer, again, you 

just add to that 74 percent. 

So one of the specific ideas that a couple of us have mentioned 

is instead of having to—that group coverage be an option, but instead of being the only option, allow businesses to help their employees with their individual market plans. I thought the SHOP’s 

opportunity would be to do something like that, be like the private 

exchanges that allow you to give a contribution. Your employees go, 

they have a menu of options, they pick whatever best fits their employees’ needs. It did not go that direction, but I still think there 

is opportunity either through private exchanges or just in the existing individual market. 

Mr. LUETKEMEYER. You know, there was an editorial in one 

of the local newspapers recently, individuals talking about small 

businesses, the entrepreneurs, and how difficult it was to manage 

the business. And they were talking about the new SBA director 

nominee and advising that individual on about five or six different 

SBREP-219A with DISTILLER

23 

things that they needed to be able to overcome to be able to help 

the small businesses, the entrepreneurs, and one of them was 

Obamacare. One of them was the regulation that is so difficult to 

comply with, so costly to comply with. 

And I can tell you when I go home and I talk to my small business people, regulation is always at the top of mine, and the number one regulation they talk about is health care because they want 

to provide it. It is an important thing they want to provide to their 

employees, yet it is a very costly benefit. And some of them will 

swear they are going to keep it in place so they can make sure that 

they keep good employees, but at the end of the day it is still about 

cost, whether you can actually afford something like this. 

You know, as we go through all this, you know, the mountain of 

paperwork and mandates that have been caused by the healthcare 

law, would you guys, Mr. Secor and Mr. Hall, would you like to 

talk just a little bit about some of the mandates and some of the 

costs that you incur to be able to comply? 

Mr. SECOR. I agree wholeheartedly with what your constituents 

are telling you in terms of the small business side in terms of regulatory compliance. And the big issue is the unknown. It would be 

simple if it came out and said, okay, here are the rules. Boom. 

Here is a sheet of paper. Follow these rules. You know, when it is 

10,000 pages, it is tough. And it is tough trying, you know, trying 

to afford to get the expertise to tell you how it affects your specific 

business, because so much of that in there, most of it does not even 

apply to you, but you do not know which does and does not, and 

you need somebody to sort that out. And it is expensive. 

Mr. LUETKEMEYER. So do you hire somebody to do this for you 

or do you have a person on staff that takes care of all this for you? 

Mr. SECOR. Well, we are not in the ACA. 

Mr. LUETKEMEYER. Okay. 

Mr. SECOR. And so, you know, when we made the decision that 

because of cost and complexity, I sat down and looked at it with 

our healthcare professional and I actually—and it was not a fun 

decision—I met with all of our employees. We actually had a discussion about this. And we decided we just cannot do this and try 

to run a business. There are just too many moving parts. 

Mr. LUETKEMEYER. Actually, my time is expired. I apologize 

to Mr. Hall, unless the chairman wants to allow him to just say 

a few words. Thank you. 

Chairman CHABOT. Thank you. I missed what you said there at 

the end. 

Mr. LUETKEMEYER. My time is expired. If Mr. Hall would like 

to just—— 

Chairman CHABOT. Mr. Hall, go ahead. 

Mr. LUETKEMEYER. —like 10 or 15 seconds—— 

Mr. HALL. Thank you. I would love that. 

I think the normal smallest business is not a member of—does 

not go through the ACA, are not required to, but the compliance 

then relates to a tax issue because now the small business owner, 

for themselves and their family, they are making this decision of 

do I pay the penalty? Do I get an ACA plan? What is it going to 

cost me? What is it going to cover? And one unique thing we talked 

about for years is in order to determine whether you are eligible 

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24 

for a subsidy, you have got to guess what your income is for the 

next year. 

Mr. LUETKEMEYER. Right. 

Mr. HALL. Because it is based on current year, not last year. 

And this is a unique market. The self-employed person does not 

really know how much they are going to make. So they have this 

fear of estimating their income, they get a subsidy, they get to the 

end of the year, they had a great year, which is awesome for small 

business. Right? No, it is not awesome because now they have got 

to pay back their subsidy. And that just adds angst to them, maybe 

more than paperwork. But having to figure out the penalty, do I 

do it, what is my subsidy, what is my income in advance, crystal 

ball, just provides this uncertainty that is very uncomfortable to 

deal with. 

Mr. LUETKEMEYER. Thank you. 

Chairman CHABOT. The gentleman’s time is expired. 

Mr. LUETKEMEYER. Thank you, Mr. Chairman. 

Chairman CHABOT. The gentleman from Pennsylvania, Mr. 

Fitzpatrick, is recognized for 5 minutes. 

Mr. FITZPATRICK. Thank you, Mr. Chairman. 

Mr. Hall, just taking an objective, right-down-the-middle view of 

the ACA, you had mentioned that there are some good things about 

it. Obviously, like many statutes, there are winners and there are 

losers, there are roughly, approximately 12 million people that are 

on the ACA exchange, about 85 percent, approximately, get subsidies; roughly another 12 million on the Medicaid expansion program. Pennsylvania, my home State, is one of those participating 

States. So clearly, they are the beneficiaries. People who kept their 

current health plan and saw premiums skyrocket or deductibles 

raise significantly or people that lost their health plan altogether 

would say that they are not fans of that statute. That is from the 

patient side. From the business side, are there any benefits that 

you have seen on the small business side that did not previously 

exist before the ACA? 

Mr. HALL. I think whether it is individual side or small business 

side, my answer would be the same. You mentioned right down the 

middle. In the middle of myself, I have my head and I have my 

heart. And for the heart side of me, the fact that there are people 

who could not get health insurance before because they had a preexisting condition, whether that is my wife or whether that is one 

of my employees, I think the ACA did well in that area. I think 

it fixed a problem that perhaps was a very difficult problem. That 

is my heart. 

With my head, I still get stuck on I love doing that, that makes 

me feel right. I believe we, as Americans, are called to do that and 

I think that is very important. But at the same time, we still have 

to pay for it. And how does that work? 

And the thing that worries me most is not the 85 percent of the 

people that you mentioned that have a subsidy, that someone is 

helping them. My heart goes out to that $90,000 average American 

that is just outside the range of a subsidy that is paying 16 percent 

of their gross family income for an ACA-compliant plan. And to me, 

that hurts both sides of my right down the middle. That hurts my 

SBREP-219A with DISTILLER

25 

head from a cost standpoint, and it hurts my heart for that family. 

Those are the ones I am most worried about. 

Mr. FITZPATRICK. Thank you. 

Ms. Palanker, you had mentioned that some of the provisions of 

the Better Way plan were for the healthy and the wealthy. Does 

that only pertain to health savings accounts? Are there any proposals, any ideas that have been put forward on the Republican 

side that you think would benefit average Americans? 

Ms. PALANKER. It would depend on how they become implemented. You know, high-risk pools are put out there and they can 

work, but they can only work if they are adequately funded. And 

the Tax Policy Center has estimated to adequately fund high-risk 

pools would be a trillion dollars over 10 years nationally, so that 

they sort of have that piece. 

There have been some proposals around providing different forms 

of premium assistance, but I would say they are significantly lower 

than what is in the Affordable Care Act, which would make it more 

difficult for people to afford coverage unless the premiums are 

lower because fewer benefits are covered, in which we go back to 

what I had said earlier where the problem is people still need the 

health care, just instead of it being covered through insurance, they 

are paying for it themselves. 

Mr. FITZPATRICK. But what is the way to drive cost down? Because as many have acknowledged, having an insurance care in 

your pocket is not the same as having health insurance. And do 

you agree with out-of-state competition? Do you agree with antitrust exclusions? Do you agree with medical liability reform? Some 

of the proposals that were put forth are designed to reduce cost and 

expand access. 

Ms. PALANKER. I do not see those proposals as actually succeeding in reducing overall healthcare costs. I think, first of all, 

getting healthy people in will reduce health premiums, not necessarily—and that is an important piece of it. But to really reduce 

healthcare costs, it is really about changing how we deliver health 

care in the country which, you know, which includes trying to find 

ways to get people the right care in the best setting in the least 

costly manner. And it is really actually not as much about I would 

say the pieces that we have seen in some of the current proposals, 

but really gets back to how we deliver health care. 

Mr. FITZPATRICK. Thank you. I yield back, Mr. Chairman. 

Chairman CHABOT. The gentleman’s time is expired. The gentleman yields back. 

The gentleman from Kansas, Dr. Marshall, is recognized for 5 

minutes. 

Mr. MARSHALL. Thank you. Thank you, Mr. Chairman. 

Mr. Hall, what from the ACA has been successful? What would 

you like to keep from it? 

Mr. HALL. I would like to keep the no prescreening for preexisting conditions. I think whatever solution we have ought to be 

able to cover everyone, whether that includes a different rate band 

or whatever. I am not sure how that would work, but I think that 

part needs to be there. I think the subsidies for those people at certain income levels that have no other option. And my personal 

opinion is that we, as the taxpayers, are paying for the medical 

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26 

care for those people anyway, so they should be part of the insurance pool. Those are the two things that immediately come to mind 

for me that I think we should make part of any solution we come 

up with. 

Mr. MARSHALL. Okay. Mr. Kuhlman, kind of the same question. Would you add anything to what you would like to keep in 

the ACA? 

Mr. KUHLMAN. He did hit on some good ones that I think that 

NFIB members would support. I cannot think of anything specifically more to add. 

Mr. MARSHALL. Ms. Palanker, what is the holy grail of the 

ACA? What is most important to you? If you were in charge, what 

do you think is the most important thing we keep? 

Ms. PALANKER. It is a very hard question to answer because 

people have talked about the ACA as a three-legged stool and I 

have started talking about it as a three-legged stool made out of 

Jenga blocks because so many pieces are interrelated that to try to 

have one thing stay, you know, you really need the other pieces. 

And I also think it is really more the goal. There are these goals 

of improving access, reducing costs, getting people covered altogether, and it is hard for me to pick one thing because, yes, 27 percent of the population is impacted by preexisting conditions, which 

is huge. Fewer people hit their annual limits or their lifetime limits, but I actually have a friend who is 5 years old, who was 

born—— 

Mr. MARSHALL. Sure. 

Ms. PALANKER. —who was born with a congenital defect, who 

would have hit his limit in his first year of life. And, you know, so 

to me those are equally as important even though fewer people are 

impacted by one of them. 

Mr. MARSHALL. Okay. Ms. Palanker, I will follow up with you. 

What do you think of transparency? What would that do to costs 

of health care? 

Ms. PALANKER. Cost transparency? 

Mr. MARSHALL. Yes. And quality. Cost and outcomes, quality. 

Ms. PALANKER. I think cost transparency, quality transparency 

is very, very important. And I think it can in the long run reduce 

cost of health care and improve quality as well if it is done in a 

way that consumers of health care can access the information and 

can understand the information, which is sometimes very difficult. 

Quite honestly, some of those people who are experts in health care 

even have difficulty understanding and comparing costs right now. 

Mr. MARSHALL. Okay. Are any of the panelists aware of what 

the average deductible for a Bronze Family Plan is in ACA right 

now? It is $12,000. Is that truly health insurance at all? Just because you have health insurance and you have a $12,000 deductible, to most people that is like not having health insurance at all. 

And I just wanted to make sure we point that out for a second. 

Anybody on the panel have experience with high-risk pools? Go 

ahead. 

Ms. PALANKER. Not direct experience, but having looked at the 

high-risk pools that existed before we had the Affordable Care Act, 

as I said, where they were successful was where there was significant public funding and enough to provide adequate benefits. And 

SBREP-219A with DISTILLER

27 

there were three big problems in a number of States that had highrisk pools. One was that the annual limit was capped significantly. 

So people who had cancer, who had significant health costs, which 

was why they were there, actually could not get their health services covered. The other was extraordinarily high premiums that 

were unaffordable so people did not enroll. And the final piece was 

some States ended up with waiting periods. And if you have a highrisk pool with a waiting period, you have people uninsured while 

they are waiting to get in. 

I will add that if you also have a continuous coverage requirement, that could create a problem because someone could then get 

caught waiting to get in to get coverage and also hurt because they 

cannot have continuous coverage because there is a waiting period. 

Mr. MARSHALL. Thank you, Mr. Chairman. I will yield back my 

remaining time. 

Chairman CHABOT. Thank you very much. The gentleman 

yields back. 

The gentleman from Iowa, Mr. Blum, who is the Chairman of the 

Subcommittee on Agriculture, Energy, and Trade, is recognized for 

5 minutes. 

Mr. BLUM. Thank you, Mr. Chairman. Thank you to our panelists for being here today. I am a career small business person, so 

these issues are near and dear to me. 

As I think about this issue, I think back to 2008-2009 and HHS 

Secretary then, Kathleen Sebelius, famously said, we are going to 

bend the cost curve down with the ACA. Former President Obama 

followed that up and he said, ‘‘Every single good idea to bend the 

cost curve down is in this bill.’’ Over the last 4 years in Iowa, I 

have asked my constituents in almost every talk I have given about 

health care, give me an example where the Federal Government, 

535 suits in Washington, D.C., have bent the cost curve down on 

anything. Life today, 4 years straight, zero hands have gone up. 

I think we should just keep this simple. The ACA has not decreased healthcare costs. The ACA has shifted healthcare costs. 

The only proven way that I know to decrease the cost of any product, and I am sure Mr. Secor would agree with this, and increase 

the quality, is the miracle of the free market system. We need to 

unleash consumers in this marketplace. We need to make patients 

consumers. 

Often, the patient today is described in this following analogy: 

You take your dog to the veterinarian and the veterinarian looks 

at the dog and he talks to the dog’s owner about the prescribed 

course of action. Everybody has an input into the decision on what 

we are going to do other than the dog, other than the patient. 

You know, as a business owner myself over the last 20 years, and 

some of my companies had over 300 employees, I have asked myself and my executive team, why are we making healthcare decisions? Why are we making health insurance decisions for 300 employees? That is over 1,000 people when you include their families. 

I would like to have your thoughts on this. I think we need to 

unleash the consumers. I think we need to let the miracle of the 

free market work. I think we need to make patients consumers. 

HSAs. I, as an employer, would rather deposit money into HSAs 

of every one of my employees and let them decide what is in their 

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28 

best interest and their family’s best interest. This will all work if 

we have competition. Competition is very important. But HSAs, the 

government can deposit in them. Employers can deposit into them. 

The employee can pretax deposit into them. They can go out and 

decide if they even want insurance and what is the best for them. 

I would like the panel’s thoughts on HSAs and unleashing the miracle of the free market called consumers. And Mr. Secor, if you 

would start. 

Mr. SECOR. I think it is an excellent idea. I think the one key 

component that has to happen is we have to have transparency in 

the cost and quality, and you have to come up—and I do not have 

the answer of how to create that, but we have to be able to get that 

out there. 

The other thing that has complicated this in recent years is we 

have seen hospitals buying doctors’ practices. For instance, well, 

now you go to the hospital to get the same care you used to go to 

the doctor’s office to get, and the care in a hospital is more expensive, even if you are going into an office. And so a lot of that has 

occurred. 

So I do not know how you sort of go back, if you can, or whatever, but whether it is the urgent care centers or whatever, but I 

think the transparency of getting that out so that they have something solid to work with, our people have done it. 

Mr. BLUM. That is a great point. I agree with you. 

Mr. HALL. I obviously agree as well. I think tax incentives are 

positive incentives. We talked about the penalty for not having an 

ACA, so we are trying to encourage people with negative stimuli. 

I think having positive stimuli is awesome. I would add the health 

reimbursement arrangements to the conversation so that you can 

have a whole range of individuals, of governments, the State, the 

Federal, lots of different people can share in the cost. I think the 

ACA was based on cost-sharing, but maybe the cost-sharing did not 

land the way we thought it was going to land. But HSAs, HRAs, 

expanding those, making everything on a level playing field makes 

a lot of sense. 

Mr. BLUM. Because 99 percent of the conversation in this town 

is about who is going to pay. I think 99 percent of the conversation 

should be how can we drive the cost down so everybody can afford 

it. 

Kevin? 

Mr. KUHLMAN. Yeah, you could sign us up. I think the business 

owners and employees would be the most responsible stewards of 

the money if they were controlling it themselves. And I think there 

are some restrictions on many of those accounts that need to be 

modified or lifted or raised in order to make them truly viable for 

everybody. 

Chairman CHABOT. The gentleman’s time is expired. But go 

ahead, you can answer the question. 

Mr. BLUM. Thank you, Mr. Chairman. 

Ms. PALANKER. I would start by saying that the employer insurance market, particularly the large group market, was created 

by the free market. Employers really created that on their own in 

the United States and that sort of led to a large part of our system. 

As far as providing HSAs with the idea of an HSA or an HRA for 

SBREP-219A with DISTILLER

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the individual employees to go and buy their own insurance, it 

needs to be recognized that, as we said, buying insurance is complicated and it is very, very hard for individuals to understand 

what they are purchasing. And one of the benefits of employers is 

having someone who really understands the business and the industry and how insurance works helping to find and purchase that 

insurance. 

Also, if HSAs are connected to increasing deductibles, then you 

do end up shifting the cost onto the employee or the individual enrolling in coverage, especially if the money going into the HSA by 

the employer does not cover the cost of premium and deductible. 

Mr. BLUM. I yield back, Mr. Chairman, the time I do not have. 

Chairman CHABOT. The gentleman’s time is expired. 

The gentleman from Nebraska, Mr. Bacon, is recognized for 5 

minutes. 

Mr. BACON. Thank you, Mr. Chairman. I want to thank the 

panel for being here. 

Thank you. The top complaint being either the cost of red tape, 

regulations, or the health care and ACA. Using just two examples, 

I had one small business share with me that they would hire nobody over 29 hours because it puts them over certain trip wires, 

and another small business said they would not hire anybody else 

because it would cost them $180,000 to provide more health care 

for the entire team. Is this a regular problem? I ask this to Mr. 

Secor and to Mr. Kuhlman. Do you see this a lot, that folk are 

making hiring decisions, not hiring more or not hiring people full 

time because of ACA? 

Mr. SECOR. In our survey with small businesses people, it is 

changing the attitude and direction of companies in terms of the 

30 hours, specifically, as well as in terms of, you know, looking at 

the limits in terms of 50 employees. And even when you are a 

small business, if you go look to pick up additional work, sometimes that additional work does not come in one employee; it comes 

in a new line. Well, that new line is 10 employees. So if I am at 

42, I cannot put the new line in. And those types of decisions are 

in our survey that we are getting that feedback. 

Mr. KUHLMAN. Yeah, I do not know if it figures out to the, like, 

national Census figures, but to those businesses, say, between and 

60 employees, they are hypersensitive about both of those thresholds, the 50 full-time equivalent employee threshold and the 30- 

hour full-time employee definition. So that is most significantly the 

population that I hear from, those that are underneath, what does 

it mean crossing it, and those who are above it saying, you know, 

I do not want to, but if I have to do what can be done to get underneath it. 

Mr. BACON. One more question for Mr. Hall. When I talk to the 

self-employed folks in our district, it seems clear to me that ACA 

is the number one issue. Many are paying $2,000 a month, $12,000 

deductibles, or a combination thereof. Is there any issue that is 

more pressing to the self-employed right now other than fixing 

ACA? 

Mr. HALL. For 20 years we have done surveys of our members, 

all self-employed. Very few of them have over five employees, so 

this is the marketplace that you are talking about. We always ask, 

SBREP-219A with DISTILLER

30 

what are your big issues? And for 20 years it has always been 

three things. It has been access to capital; I need funding. It has 

been the tax code is too cumbersome for me; I do not understand 

it. And it has been access to quality health insurance. Those kind 

of bounce back and forth, which one is the top depending on where 

we are. There is no question today that that third one, access to 

quality health insurance and, different thing, and access to quality 

health care is the number one issue. 

Mr. BACON. Thank you very much, and I yield back, sir. 

Chairman CHABOT. Thank you. The gentleman yields back. And 

unless somebody else shows up, the last questioner today will be 

the gentlelady from American Samoa, Amata Radewagen, who is 

the Chairman of the Subcommittee on Health and Technology. You 

are recognized for 5 minutes. 

Mrs. RADEWAGEN. Thank you, Mr. Chairman. And I want to 

thank the panel for appearing today. 

In my home district of American Samoa, almost 100 percent of 

our businesses are small businesses. Here is my question for each 

of you. Considering that the United States territories were left out 

of the Affordable Care Act altogether, what sort of challenges do 

you see for these small businesses in the territories when Congress 

addresses reform of the small business healthcare marketplace? 

Mr. Secor? 

Mr. SECOR. I am not sure what you have in terms of the system 

there now, so I guess it would depend on what you have today 

versus what you are going to get, so to speak. But my guess is if 

they include you in this, you will be in the same boat all the rest 

of us are and some may think that is good, some may think that 

is bad. But I think no matter where you are, if you are a small 

business, our people are telling us it is cost and availability, affordable product and care. And, but like I said, I really do not understand what your system is today. 

Mr. HALL. I think pre-ACA, during the debate for ACA and after 

it has always been about quality, access, and affordability. So I 

think if this discussion were expanded to include the territories, 

which I think could expand the pools, which I think overall actuarially is a positive thing, but my best guess is, same thing, at the 

end of the day, there would be an improvement in access for sure. 

I think particularly those with preexisting conditions and those 

with particularly low income would have access that perhaps they 

would not otherwise have, but then the issue would continue to remain cost. 

Mr. KUHLMAN. Agree. Cost and flexibility. And it is not for a 

lack of desire by the business owner. Just allow the business owner 

to help their employees because that is what they want to do. 

When you pile mandates or new requirements on top of them, that 

interferes with that relationship. So I think just sometimes the 

tendency to throw a heavy hand on top of it interferes with that 

relationship. 

Mrs. RADEWAGEN. Thank you. 

Ms. PALANKER. If we can expand the pieces that aim to make 

coverage for people more affordable to the territories, which does 

not exist right now, then coverage would be more affordable for individuals in the territories so that if things were not improved for 

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small businesses, but individuals could get premium tax credits, 

cost-sharing reductions, and also if there were consumer protections on the insurance benefits themselves. And the other piece is 

investing in the healthcare system is something that is very important, I know, for a number of the U.S. territories and making sure 

that we are making sure that our citizens have access to healthcare 

services. Good healthcare services. 

Mrs. RADEWAGEN. Thank you, Mr. Chairman. I yield back. 

Chairman CHABOT. Thank you. The gentlelady yields back. 

And in closing, I would just note that in my opinion there is 

probably no issue that this Congress, the 115th, will deal with in 

the next 2 years than dealing with the Affordable Care Act or 

Obamacare, or some people refer to it as the Unaffordable Care 

Act, whichever term you prefer. It affects so many Americans in so 

many ways and it is critical that the small businesses all across 

this Nation have a seat at the table. And this hearing was a part 

of that and you obviously saw that both sides had an opportunity 

to ask questions, and I think we had a very, very good panel here. 

All four of the witnesses I think did a great job, so we want to 

thank you for your participation as this debate continues over the 

upcoming weeks, months, and perhaps years. 

That being said, I would ask unanimous consent that members 

have 5 legislative days to submit statements and supporting materials for the record. Without objection, so ordered. And if there is 

no further business to come before the Committee, we are adjourned. Thank you very much. 

[Whereupon, at 12:41 p.m., the Committee was adjourned.] 

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Æ 

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