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HEALTH CARE CHALLENGES FACING NORTH 

CAROLINA’S WORKERS AND JOB CREATORS 

FIELD HEARING 

BEFORE THE

SUBCOMMITTEE ON HEALTH, 

EMPLOYMENT, LABOR, AND PENSIONS 

COMMITTEE ON EDUCATION 

AND THE WORKFORCE 

U.S. HOUSE OF REPRESENTATIVES

ONE HUNDRED THIRTEENTH CONGRESS 

FIRST SESSION 

HEARING HELD IN CONDORD, NC, APRIL 30, 2013 

Serial No. 113–16 

Printed for the use of the Committee on Education and the Workforce 

( 

Available via the World Wide Web: 

www.gpo.gov/fdsys/browse/committee.action?chamber=house&committee=education 

or 

Committee address: http://edworkforce.house.gov 

(II) 

COMMITTEE ON EDUCATION AND THE WORKFORCE 

JOHN KLINE, Minnesota, Chairman 

Thomas E. Petri, Wisconsin 

Howard P. ‘‘Buck’’ McKeon, California 

Joe Wilson, South Carolina 

Virginia Foxx, North Carolina 

Tom Price, Georgia 

Kenny Marchant, Texas 

Duncan Hunter, California 

David P. Roe, Tennessee 

Glenn Thompson, Pennsylvania 

Tim Walberg, Michigan 

Matt Salmon, Arizona 

Brett Guthrie, Kentucky 

Scott DesJarlais, Tennessee 

Todd Rokita, Indiana 

Larry Bucshon, Indiana 

Trey Gowdy, South Carolina 

Lou Barletta, Pennsylvania 

Martha Roby, Alabama 

Joseph J. Heck, Nevada 

Susan W. Brooks, Indiana 

Richard Hudson, North Carolina 

Luke Messer, Indiana 

George Miller, California, 

Senior Democratic Member 

Robert E. Andrews, New Jersey 

Robert C. ‘‘Bobby’’ Scott, Virginia 

Rube ́n Hinojosa, Texas 

Carolyn McCarthy, New York 

John F. Tierney, Massachusetts 

Rush Holt, New Jersey 

Susan A. Davis, California 

Rau ́l M. Grijalva, Arizona 

Timothy H. Bishop, New York 

David Loebsack, Iowa 

Joe Courtney, Connecticut 

Marcia L. Fudge, Ohio 

Jared Polis, Colorado 

Gregorio Kilili Camacho Sablan, 

Northern Mariana Islands 

John A. Yarmuth, Kentucky 

Frederica S. Wilson, Florida 

Suzanne Bonamici, Oregon 

Juliane Sullivan, Staff Director 

Jody Calemine, Minority Staff Director 

SUBCOMMITTEE ON HEALTH, EMPLOYMENT, LABOR, AND PENSIONS 

DAVID P. ROE, Tennessee, Chairman 

Joe Wilson, South Carolina 

Tom Price, Georgia 

Kenny Marchant, Texas 

Matt Salmon, Arizona 

Brett Guthrie, Kentucky 

Scott DesJarlais, Tennessee 

Larry Bucshon, Indiana 

Trey Gowdy, South Carolina 

Lou Barletta, Pennsylvania 

Martha Roby, Alabama 

Joseph J. Heck, Nevada 

Susan W. Brooks, Indiana 

Luke Messer, Indiana 

Robert E. Andrews, New Jersey, 

Ranking Member 

Rush Holt, New Jersey 

David Loebsack, Iowa 

Robert C. ‘‘Bobby’’ Scott, Virginia 

Rube ́n Hinojosa, Texas 

John F. Tierney, Massachusetts 

Rau ́l M. Grijalva, Arizona 

Joe Courtney, Connecticut 

Jared Polis, Colorado 

John A. Yarmuth, Kentucky 

Frederica S. Wilson, Florida 

(III) 

C O N T E N T S 

Page 

Hearing held on April 30, 2013 .............................................................................. 1 

Statement of Members: 

Hudson, Hon. Richard, a Representative in Congress from the State 

of North Carolina .......................................................................................... 4 

Prepared statement of ............................................................................... 6 

Roe, Hon. David P., Chairman, Subcommittee on Health, Employment, 

Labor and Pensions ...................................................................................... 1 

Prepared statement of ............................................................................... 3 

Statement of Witnesses: 

Bass, Dave, vice president, compensation and associate wellness, 

Delhaize America Shared Services Group, LLC ......................................... 31 

Prepared statement of ............................................................................... 34 

Conrad, Marshall ‘‘Ken,’’ Libby Hill Seafood Restaurants, Inc., on behalf 

of the National Restaurant Association ...................................................... 15 

Prepared statement of ............................................................................... 16 

Haynes, Tina M., MS, SPHR, chief human resources officer, RowanCabarrus Community College ...................................................................... 9 

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

Horne, Chuck, president, Hornwood, Inc. ...................................................... 7 

Prepared statement of ............................................................................... 8 

Huff, Olson, M.D., FAAP ................................................................................. 39 

Prepared statement of ............................................................................... 40 

Searing, Adam, J.D., MPH, health director, North Carolina Justice Center ................................................................................................................... 12 

Prepared statement of ............................................................................... 14 

Silver, Bruce, president, Electronics Industries Corp.—TIA Racing Electronics ............................................................................................................ 41 

Prepared statement of ............................................................................... 42 

Tubel, Edmund, CEO, Tricor Inc., licensed franchisee, Sonny’s Real Pit 

Bar B Q Restaurants .................................................................................... 36 

Prepared statement of ............................................................................... 38 

(1) 

HEALTH CARE CHALLENGES FACING NORTH 

CAROLINA’S WORKERS AND JOB CREATORS 

Tuesday, April 30, 2013 

U.S. House of Representatives 

Subcommittee on Health, Employment, Labor, and Pensions 

Committee on Education and the Workforce 

Washington, DC 

The subcommittee met, pursuant to call, at 9:00 a.m., in room 

106, Building 1000, Rowan Cabarrus Community College, 1531 

Trinity Church Rd., Concord, NC, Hon. David P. Roe, [chairman of 

the subcommittee] presiding. 

Present: Representatives Roe and Hudson. 

Staff Present: Casey Buboltz, Coalitions and Member Services 

Coordinator; Benjamin Hoog, Legislative Assistant; Brian Newell, 

Deputy Communications Director; Todd Spangler, Senior Health 

Policy Advisor; John D’Elia, Minority Labor Policy Associate 

Chairman ROE. A quorum being present, the Subcommittee on 

Health, Employment, Labor and Pensions will come to order. 

Good morning, everyone. First, let me take a moment to thank 

our witnesses for joining us. We know you all are very busy, and 

we appreciate the opportunity to hear your thoughts on the very 

important issue of health care. Second, I would like to thank the 

people of Concord, North Carolina and the community college staff 

for their hospitality. 

The Herald-Sun recently reported on a job fair organized by the 

North Carolina Technology Association. Dozens of local companies 

attended the job fair, which was visited by people like Bernita 

Nichols. For the first time in 28 years, Ms. Nichols is looking for 

work after her employer went out of business. She described the 

labor market as ‘‘tight merely because of the number of people who 

are looking.’’ Richard Corridore also attended the job fair and 

noted, ‘‘The job market is not recovered; it’s still very difficult.’’ 

These remarks underscore the job crisis we continue to face. 

Nearly 12 million Americans are unemployed. Approximately 4.6 

million have been out of work for six months or longer. The number of men and women in the labor force is at its lowest level in 

35 years, indicating more people are giving up their search for 

work in this dismal job market. 

Though officials claim the recession ended almost four years ago, 

countless families and small business owners find that hard to believe. No doubt, many in the Tar Heel State feel the same way 

when roughly 1 out of every 10 workers in the state is unemployed. 

2 

As policymakers, we have an obligation to make job creation our 

number one priority. Ending wasteful government spending, opposing unnecessary regulations, preserving the safety net for seniors 

and vulnerable families, and moving toward a balanced Federal 

budget are all part of an effort to get this economy moving and help 

put people back to work. Today’s hearing is a small but important 

part of that effort. 

We can’t talk about jobs and the workforce without discussing 

health care. Approximately 160 million Americans receive health 

care coverage through an employer. They and their families know 

all too well the challenge of rising health care costs, which can result in more than loss of coverage; it can also lead to lower wages 

and fewer jobs. That is why it is absolutely vital we put in place 

reforms that will bring down costs and expand access to affordable 

care. 

However, President Obama and his allies in Congress took our 

nation in an entirely different direction. Despite significant opposition from the American people, the President signed into law a government takeover of health care that is wreaking havoc on our 

workplaces. Instead of responsible solutions to strengthen our 

health care system, we have empty promises that have made a broken system even worse. 

For example, we were promised if we liked our current health 

care plan, we could keep it. But according to the Obama Administration’s own estimates, millions of individuals will experience significant changes to their health care plan. 

We were promised the law would create 4 million jobs. Yet barely 

a week goes by that we don’t learn of employers who might be 

forced to reduce their work hours or cut the size of their workforce 

due to the law’s punitive mandates and tax increases. 

The President also promised his plan would reduce insurance 

premiums by $2,500. Instead, the premiums for the average family 

increased 4 percent last year and 11 percent the year before. Estimates suggest they will continue to rise in the years to come. 

Over the next decade, the law is expected to hit certain employers with $117 billion in higher taxes for failing to provide government-approved health insurance; levy $55 billion in new taxes on 

individuals who don’t purchase government-approved health insurance; and cost taxpayers close to $2 trillion in new spending. It is 

no wonder proponents of the law are beginning to question whether 

this law is sustainable. 

This flawed law is simply not in the best interest of workers, employers, and families. However, Obamacare is the law of the land 

and we have to examine how it is affecting our families and workplaces. I want to thank our witnesses again for sharing their perspectives and their ideas for responsible reforms that will better 

address our health care challenges. 

Just to let you know, as Chairman of the Health, Employment, 

Labor Subcommittee, I am your next-door neighbor over in Tennessee, in the mountains of East Tennessee, and my district goes 

from Mountain City to Gatlinburg. So I border a lot of North Carolina, and I feel like as many times as I fly through Charlotte, I 

should have a zip code or an address here. 

3 

I spent 31 years practicing medicine. I was an Ob/Gyn doctor in 

a group there. They started with four doctors, and we have grown 

that to 100 doctors, and now with 450 employees. So I spent my 

entire life as a physician practicing medicine. The problem with the 

American health care system is it costs too much, it is too expensive. Two, we had groups of people who didn’t have access to affordable coverage. That was the problem. Thirdly, we had a liability crisis. And basically this health care plan did increase access by 

increasing the number of Medicaid patients, which is already a system that hasn’t worked very well, and taking a lot of money out 

of Medicare, a system that is already in financial crisis. 

So that is why I am here. I have only been in Congress four 

years, and Richard, my friend here, Richard Hudson, has only been 

there for less than a year. So we are not career politicians. We are 

people that are trying to help solve problems of this country. 

I will now, without objection, I would like to yield to my good 

friend, Richard Hudson, for any opening remarks he would like to 

make. 

[The statement of Chairman Roe follows:] 

Prepared Statement of Hon. David P. Roe, Chairman, 

Subcommittee on Health, Employment, Labor and Pensions 

Good morning everyone. First, allow me to take a moment to thank our witnesses 

for joining us. We know you all are very busy, and we appreciate the opportunity 

to hear your thoughts on the very important issue of health care. Second, I would 

like to thank the people of Concord, North Carolina and the community college staff 

for their hospitality. 

The Herald-Sun recently reported on a job fair organized by the North Carolina 

Technology Association. Dozens of local companies attended the job fair, which was 

visited by people like Bernita Nichols. For the first time in 28 years, Ms. Nichols 

is looking for work after her employer went out of business. She described the labor 

market as ‘‘tight merely because of the number of people who are looking.’’ Richard 

Corridore also attended the job fair and noted, ‘‘The job market is not recovered; 

it’s still very difficult.’’ 

These remarks underscore the jobs crisis we continue to face. Nearly 12 million 

Americans are unemployed. Approximately 4.6 million have been out of work for six 

months or longer. The number of men and women in the labor force is at the lowest 

level in 35 years, indicating more people are giving up their search for work in this 

dismal job market. 

Though officials claim the recession ended almost four years ago, countless families and small business owners find that hard to believe. No doubt many in the Tar 

Heel State feel the same way. Roughly 1 out of every 10 workers in the state is 

unemployed. 

As policymakers, we have an obligation to make job creation our number one priority. Ending wasteful government spending, opposing unnecessary regulations, preserving the safety net for seniors and vulnerable families, and moving toward a balanced federal budget are all part of an effort to get this economy moving and help 

put people back to work. Today’s hearing is a small but important part of that effort. 

We can’t talk about jobs and the workforce without discussing health care. Approximately 160 million Americans receive health care coverage through an employer. They and their employees know all too well the challenge of rising health 

care costs, which can result in more than loss of coverage; it can also lead to lower 

wages and fewer jobs. That is why it’s absolutely vital we put in place reforms that 

will bring down costs and expand access to affordable care. 

However, President Obama and his allies in Congress took our nation in an entirely different direction. Despite significant opposition from the American people, 

the president signed into law a government takeover of health care that is wreaking 

havoc on our workplaces. Instead of responsible solutions to strengthen our health 

care system, we have empty promises that have made a broken system worse. 

4 

For example, we were promised if we liked our current health care plan we could 

keep it. But according to the Obama administration’s own estimates, millions of individuals will experience ‘‘significant changes’’ to their health care plan. 

We were promised the law would create four million jobs. Yet barely a week goes 

by that we don’t learn of employers who might be forced to reduce their workers’ 

hours or cut the size of their workforce due to the law’s punitive mandates and tax 

increases. 

The president also promised his plan would reduce insurance premiums by 

$2,500. Instead, premiums for the average family increased 4 percent last year and 

11 percent the year before. Estimates suggest they will continue to rise in the years 

to come. 

Over the next decade, the law is expected to hit certain employers with $117 billion in higher taxes for failing to provide government-approved health insurance; 

levy $55 billion in new taxes on individuals who don’t purchase government-approved insurance; and cost taxpayers close to $2 trillion in new spending. It’s no 

wonder proponents of the law are beginning to question whether this law is sustainable. 

This flawed law is simply not in the best interest of workers, employers, and families. However, ObamaCare is the law of the land and we have to examine how it 

is affecting our families and workplaces. I want to thank our witnesses again for 

sharing their perspectives and their ideas for responsible reforms that will better 

address our health care challenges. 

Mr. HUDSON. Thank you, Chairman Roe. On behalf of the people 

of Concord and of this district, please allow me to extend a warm 

welcome and offer my sincere appreciation to you for holding this 

hearing here today. I am particularly thankful also for Rowan 

Cabarrus Community College. The president, Dr. Carol Spalding, is 

here with us. Thank you for allowing us to host this hearing here 

on our campus. It says ‘‘their campus,’’ but I am saying ‘‘our campus’’ because I served on the Board of Trustees here from 2002 to 

2005 and I understand how important this community college is to 

our local community and how critical this college is and the colleges across North Carolina are to creating jobs and growing the 

businesses that we have here. 

To our witnesses, thank you for taking your time from your very 

busy schedules to be here with us today. It is important that this 

committee understand the real implications that the Affordable 

Care Act will have on jobs and on the industries you represent. 

North Carolinians are hard-working individuals who are extremely concerned with the ever-increasing role government plays 

in our daily lives. North Carolina currently has the fifth highest 

unemployment in the country. Some counties in my district have 

between 12 and 16 percent unemployment, and that is the reported 

unemployment. I tell folks all the time when they ask what are my 

top three priorities, they are jobs, jobs, and jobs. And so that continues to be my focus. Our priority as a state and a nation should 

not be implementing more mandates handed down by Washington, 

but doing all we can to roll back the regulations that are crushing 

small businesses and enable our employers to get back to creating 

jobs and hiring people. 

The problems facing America’s economy and workforce are immense, and the current regulatory environment simply creates confusion, anxiety, and a culture of uncertainty among small businesses. The extremely detailed and complex regulations that make 

up the Affordable Care Act only add to the hesitation businesses 

have with hiring people in a climate that is already clouded with 

regulations. The U.S. Chamber of Commerce recently conducted a 

5 

survey of small business owners in which 71 percent of the participants in the survey said that it will be harder to hire new people 

under the current health care law. 

I was recently talking to a business owner who owns a few oil 

change franchises, Quick Lube kind of places, and he told me that 

he bought land to build three new businesses, but he wasn’t going 

to do it. When I asked him why, he said because it will add about 

15 new employees, and that will put him over 50 employees total, 

which would make the Affordable Care Act apply to him. While 15 

jobs isn’t enough to turn this whole economy around, I sincerely believe that we are going to turn this economy around 15 jobs at a 

time, or 5 jobs at a time, or a couple of jobs here and a couple of 

jobs there as business people take risks and hire and expand their 

business. 

Some of the original leading proponents of the Affordable Care 

Act are starting to vocalize just how detrimental the effects of this 

law will be. Democratic Senator Jay Rockefeller recently stated, ‘‘I 

am of the belief that the Affordable Care Act is probably the most 

complex piece of legislation ever passed by the United States Congress,’’ and he has been there a while, so he has seen a lot of legislation. ‘‘It’s just beyond comprehension,’’ he concluded. Senate 

Democrat Max Baucus, who helped write the legislation, just a couple of weeks ago said, addressing the implementation of the law, 

said, ‘‘I just see a huge train wreck coming down.’’ Well, business 

people across this district have been telling me for a year now 

about this train wreck, but even the folks who wrote the law are 

starting to see it. 

I was not a member of Congress when the Affordable Care Act 

was passed into law. However, from the beginning, I joined the 

public debate in opposition to this government takeover of health 

care. Since being sworn in, I have taken numerous steps to stop or 

at least try and fix this dangerous health care law that will harm 

our job creators and workers if left in place. I recently co-sponsored 

legislation to repeal and defund the law entirely and have introduced legislation that takes an incremental approach to chip away 

at harmful provisions within the law. 

I know that good ideas don’t originate in Washington, D.C. 

Therefore, it is important that we hear from real people out here 

in the real world. That is why I live in Concord and commute to 

Washington every week to vote, but I come home every weekend. 

That is also why I was grateful to learn that the subcommittee was 

willing to convene this field hearing here today. The way I talk 

about it, I fly to Washington every week and take common sense 

with me. But this is an opportunity to bring Washington to the 

common sense. And so we are very thankful to have this today. 

Today’s hearing serves as an opportunity to examine the real-life 

effects of the Affordable Care Act’s implementation and I am looking forward to an open discussion about how we can work toward 

common-sense solutions that help expand access to affordable care 

for the American people. 

I would yield back, Mr. Chairman. 

[The statement of Mr. Hudson follows:] 

6 

Prepared Statement of Hon. Richard Hudson, a Representative in 

Congress From the State of North Carolina 

Thank you, Chairman Roe. On behalf of the people of Concord, please allow me 

to extend a warm welcome and offer my sincere appreciation for convening this 

hearing today. I am particularly thankful for Rowan Cabarrus Community College 

allowing us to host this hearing on their campus. I served on the Board of Trustees 

at this college from 2002-2005 and I know what an integral part of the community 

it is. 

To our witnesses, thank you for taking the time out of your busy schedules to be 

here today. It is important that this committee understand the real implications 

that the Affordable Care Act will have on job creators like you. 

North Carolinians are hardworking individuals who are extremely concerned with 

the ever-increasing role government plays in our daily lives. North Carolina currently has the fifth highest unemployment rate in the country—some counties in my 

district have between 12 percent and 16 percent unemployment. I tell folks all the 

time my top three priorities are JOBS, JOBS, and JOBS. Our priority as a state 

and nation should not be implementing more mandates handed down from Washington, but doing all we can to roll back the regulations that are crushing small 

business and enable our employers to get back to creating jobs. 

The problems facing America’s economy and workforce are immense, and the current regulatory environment simply creates confusion, anxiety, and a culture of uncertainty among small businesses. The extremely detailed and complex regulations 

that make up the Affordable Care Act only add to the hesitation businesses have 

with hiring people in a climate clouded with regulations. The U.S. Chamber of Commerce recently conducted a survey of small business owners in which 71 percent of 

the participants in the survey said that it will be harder to hire new employees 

under this health care law. 

I was recently talking to a business owner who owns a few oil change franchises 

and he told me that he bought land to build 3 more shops, but isn’t going to build 

them now. I asked why and he said because it will add about 15 new employees, 

which will put him over the 50 employee threshold. While we may not be able to 

turn the economy around with 15 jobs, we can turn it around 15 jobs at a time. 

Our government shouldn’t be penalizing businesses who want to expand, they 

should be encouraging it. Unfortunately, this is the reality under the President’s 

health care law. 

Some of the original leading proponents of the Affordable Care Act are starting 

to vocalize just how detrimental the effects of the law will be. Democratic Senator 

Jay Rockefeller recently stated, ‘‘I am of the belief that the Affordable Care Act is 

probably the most complex piece of legislation ever passed by the United States 

Congress. * * * It’s just beyond comprehension.’’ Senate Democrat Max Baucus, 

who helped write the legislation, recently addressed the implementation of the law 

saying, ‘‘I just see a huge train wreck coming down.’’ 

I was not a member of Congress when the Affordable Care Act was passed into 

law. However, from the beginning, I joined the public debate in opposition to a government takeover of health care. Since being sworn in, I have taken numerous steps 

to stop or at least fix this dangerous health care law that will harm our job creators 

and workers if left untouched. I recently co-sponsored legislation to repeal and 

defund the law entirely and have introduced legislation that takes an incremental 

approach to repealing certain harmful provisions in the law. 

I know that good ideas don’t originate in Washington, D.C. Therefore, it is important that we hear from real people out here in the real world. That’s why I live here 

in Concord and commute to Washington to vote. That’s also why I was grateful to 

learn the subcommittee was going to convene this field hearing here today. Today’s 

hearing serves as opportunity to examine the real life effects of the Affordable Care 

Act’s implementation and I’m looking forward to an open discussion about how we 

can work toward commonsense solutions that help expand access to affordable 

health care for the American people. 

Chairman ROE. I thank the gentleman for yielding. 

Pursuant to committee Rule 7(c), all members will be permitted 

to submit written statements to be included in the permanent 

hearing record. Without objection, the hearing record will remain 

open for 14 days to allow such statements and other extraneous 

material referenced during the hearing to be submitted for the official hearing record. 

7 

We have two distinguished panels of witnesses today, and I 

would like to recognize Mr. Hudson to introduce our first panel. 

Mr. HUDSON. Thank you, Mr. Chairman. It is my pleasure to introduce our first panel. 

First we have Mr. Chuck Horne, who is the President of 

Hornwood, Inc. in Lilesville, North Carolina. Hornwood, Inc. manufactures various textiles, including the fabric used in our infantry’s 

combat boots. Mr. Horne holds a Bachelor’s of Science in Textile 

Technology and has been named a distinguished alumnus of NC 

State University. 

Ms. Tina Haynes is the Chief Human Resource Officer at Rowan 

Cabarrus Community College in Salisbury. Before her current position at Rowan Cabarrus, Ms. Haynes was an Operations Manager 

at Humana Health Plans and Senior Vice President of Wachovia 

Financial’s Human Resources Division. 

Mr. Adam Searing is the Director of the Health Access Coalition 

in Raleigh. He has been named by President Obama as a Champion of Change. He holds a Juris Doctorate from UNC Chapel Hill. 

And Mr. Ken Conrad is Chairman of Libby Hill Seafood Restaurants in Greensboro. Mr. Conrad began as a cook in his parents’ 

restaurant, eventually becoming company president in 1983. He is 

Vice Chair of the National Restaurant Association in Washington, 

D.C. 

Thank you all for being here. 

Chairman ROE. Before I recognize your testimony, let me briefly 

explain our lighting system. We talked about this before. You have 

five minutes to present your testimony. When you begin, the light 

in front of you will turn green. When one minute is left, the light 

will turn yellow. When your time has expired, the light will turn 

red, at which point I will ask you to wrap up your remarks as best 

you can. After you have testified, members will each have five minutes to ask questions, and as I mentioned previously, we probably 

will have two rounds of questioning. 

Mr. Horne, we will begin with you. 

STATEMENT OF CHUCK HORNE, PRESIDENT, 

HORNWOOD, INC., LILESVILLE, NC 

Mr. HORNE. Thank you, and good morning. 

Chairman ROE. Did you push the ‘‘On’’ button? 

Mr. HORNE. Yes, I did. 

Chairman ROE. Pull the mic a little bit closer. 

Mr. HORNE. A little closer? 

My name is Chuck Horne, and I am a resident of Anson County, 

North Carolina. I am President of Hornwood, Incorporated, a family-owned textile business that has been in operation since 1946. I 

am second generation in the business and proud to say I have a 

son working with me that will be able to carry the business forward for another generation. We are the largest private employer 

in Anson County, with 350 employees which we call partners. Our 

business has managed to grow and prosper over the last 66 years 

because of the dedication of our partners. We are proud of our accomplishments, particularly in view of the devastating impact imports have had on the textile industry in the last 12 years. 

8 

Our company is self-insured and provides one of the best medical, dental and vision plans in the area. Hornwood pays 80 percent 

of the cost, and our partners pay the other 20 percent through 

weekly premiums. In 2012 the company’s expense for health care, 

above the premiums collected, was in excess of $2.5 million, approximately 5 percent of our revenue. We have a company nurse 

that works with our partners to promote healthy lifestyles in terms 

of diet and exercise, and she also works with them to get preventive services such as colonoscopies and mammograms which are 

provided at no cost to the partner. We have an on-site exercise facility and provide a free annual health screening in partnership 

with our local hospital. 

We don’t do this because we are forced to by any agency, but because it is the right thing to do. The health and well-being of our 

partners is an important part of controlling our costs and remaining competitive. When the Affordable Care Act was passed, I did 

not express much concern because I knew we offered a plan that 

far exceeded the mandates imposed on an employer our size. As 

time went by, we began to learn that we were going to have to pay 

more, but not for the benefit of our partners. For example, in 2014, 

we will have to pay $63 per covered individual to help pay for the 

adverse selection that will hit the insurance exchanges. The 

amount we pay will exceed $32,000. This provision continues 

through 2016. 

Like many private employers, we are a Subchapter S corporation, 

and as such the income of the company flows through me, which 

results in an income in excess of $250,000. As a result of the Affordable Care Act, I will have to pay an additional nine-tenths of 

a percent in Medicare taxes and an additional 3.8 percent tax on 

investment income starting this year. This will result in more 

money being taken from the company, money that could have been 

invested in new equipment or training for our partners to help 

keep us competitive. 

One of our frustrations with the Affordable Care Act is the lack 

of knowledge we and our health care advisors have with the law. 

Aside from the additional expense, it places an administrative burden on us to try and comply with the provisions. It is difficult to 

get definitive answers to our questions. Our human resources department has spent countless hours trying to understand the law. 

I thank you for your time and your service and will do my best 

to answer any questions. 

[The statement of Mr. Horne follows:] 

Prepared Statement of Chuck Horne, President, Hornwood, Inc. 

Good morning. My name is Chuck Horne and I am a resident of Anson County, 

NC. I am the president of Hornwood, Inc.,a family owned textile business that has 

been in operation since 1946. I am second generation in the business and proud to 

say I have a son working with me that will be able to carry the business forward 

for another generation. We are the largest private employer in Anson County with 

350 employees which we call partners. Our business has managed to grow and prosper over the last 66 years because of the dedication of our partners. We are proud 

of our accomplishments, particularly in view of the devastating impact imports have 

had on the textile industry over the last 12 years. 

Our company is self-insured and provides one of the best medical, dental and vision plans in the area. Hornwood pays 80% of the cost and our partners pay the 

other 20% through weekly premiums. In 2012 the company’s expense for health 

care, above the premiums collected, was in excess of 2.5 million dollars, approxiVerDate Nov 24 2008 15:02 Mar 06, 2014 Jkt 000000 PO 00000 Frm 00012 Fmt 6633 Sfmt 6621 G:\DOCS\113TH\HELP\113-16\HED120.020 DICK
9 

mately 5% of our revenue. We have a company nurse that works with our partners 

to promote a healthy lifestyle in terms of diet and exercise and she also works with 

them to get preventive services such as colonoscopies and mammograms which are 

provided at no charge to the partner. We have an on- site exercise facility and provide a free annual health screening in partnership with our local hospital. 

We don’t do this because we are forced to by any agency, but because it is the 

right thing to do. The health and well-being of our partners is an important part 

of controlling our cost and remaining competitive. When the Affordable Care Act 

was passed, I did not express much concern because I knew we offered a plan that 

far exceeded the mandates imposed on an employer our size. As time went by, we 

began to learn that we were going to have pay more, but not for the benefit of our 

partners. For example, in 2014 we will have to pay $63 per covered individual to 

help pay for the adverse selection that will hit the insurance exchanges. The amount 

we pay will exceed $32,000. This provision continues through 2016. 

Like many private employers, we are a subchapter S corporation and as such the 

income of the company flows through me which results in an income in excess of 

$250,000. As a result of the Affordable Care Act, I will have to pay an additional 

.9% in Medicare taxes and an additional 3.8% tax on investment income starting 

this year. This will result in more money being taken from the company, money that 

could have been invested in new equipment or training for our partners to help keep 

us competitive. 

One of our frustrations with the Affordable Care Act is the lack of knowledge we 

and our health care advisors have with the law. Aside from the additional expense, 

it places an administrative burden on us to try and comply with the provisions. It 

is difficult to get definitive answers to our questions. Our human resources department has spent countless hours trying to understand the law. 

I thank you for your time and your service and will try my best to answer any 

questions. 

Chairman ROE. Thank you, Mr. Horne. 

Ms. Haynes? 

STATEMENT OF TINA HAYNES, CHIEF HUMAN RESOURCE OFFICER, ROWAN-CABARRUS COMMUNITY COLLEGE, SALISBURY, NC 

Ms. HAYNES. Thank you. I would like to thank you for the opportunity to testify today about the Affordable Health Care Act and 

its impact on the Rowan Cabarrus Community College. Considered 

a large employer under the definition of the Affordable Care Act, 

Rowan Cabarrus College has focused on emerging regulations, and 

we are alarmed at the extent to which regulations will affect our 

college. As currently published, the supporting regulatory framework has far-reaching and significant negative consequences. The 

regulations defining how benefits eligibility works will force us to 

reduce the number of courses we currently allow adjunct faculty 

members to teach, produce a costly and significant administrative 

burden, and potentially result in penalties. 

Further, it effectively reduces the income that dedicated adjunct 

faculty will be able to earn at Rowan Cabarrus, and it may slow 

our students’ ability to get degrees if we drop courses from the 

schedule. 

As a strategy for responding to the variability in course demand 

and controlling costs while maintaining high-quality instruction, 

Rowan Cabarrus relies on adjunct faculty. Like our sister institutions, we operate with a lean budget, remaining responsive to unexpected funding cuts and variability in demand that is driven by 

external forces such as high unemployment. 

10 

The use of adjunct faculty is the best approach to augment fulltime faculty without introducing an unsustainable cost for more 

full-time employees. 

In December of 2012, the IRS stated specifically that it is unreasonable to only consider the time spent in instruction toward benefits eligibility. Because of this change, our institution will have to 

reduce the hours that adjunct faculty can teach. A ratio of 3 hours 

of service time for every 1 credit hour of instruction was suggested 

by the IRS. While the Internal Revenue Service is still taking comments, it is unclear whether anything less than the 3-to-1 ratio will 

be acceptable. 

Underlying the IRS regulation is an inconsistent approach between the Department of Labor and the IRS. According to Department of Labor standards, faculty are exempt employees, and they 

are paid on the basis of instructional hours. They may work more 

hours at their discretion, like others who are classified professionals. Now the IRS has explicitly stated the hours outside of instruction time should be counted toward benefits eligibility, which 

is fundamentally different than the Department of Labor’s instruction on exempt employees. 

While it is true that the Department of Labor is defining compensable hours, and the IRS is defining benefits eligibility hours, 

it seems plausible that the basis for both would be the same. 

Further, the regulations that should result in greater access to 

affordable health care ultimately work against adjunct faculty. 

Dedicated adjunct faculty who have had steady, multi-course workloads for years will lose income and have less money to purchase 

coverage through those health care exchanges. 

This impact ultimately reaches our students. Rowan Cabarrus 

must consider reducing courses offered, and if students can’t get 

the courses they need, they can’t complete their degrees and can’t 

become employable. It is a financial impact to them, and it is a 

burden on the economic engine of our community since these students can’t contribute to the tax base, and they can’t become consumers of goods either. 

To administer the new regulations, our institution will incur onetime and recurring costs to determine eligibility, notification, enrollment, and there will be new billing, remittance and collections 

processes for health care coverage for former employees. When applying all the rules, the variation in employee populations and different measurement periods are complex, and as a population adjunct faculty may work one semester and then may skip the next. 

Employees who don’t work for us currently but worked for us during the prior measurement period are still qualified to participate 

in our health plan during the next stability period, but we can’t deduct for insurance premiums because they are no longer on our 

payroll. So that sets us up for collections and expenses if it is uncollected. 

In addition to complex rules and measurement, the regulations 

assess penalties for excluding employees from eligibility. Even with 

the 5 percent margin of error that is provided by the regulations, 

a single systematic error could inadvertently exclude individuals 

from coverage and result in disastrous and crippling penalties. 

11 

Like our sister institutions, we must reevaluate course schedules, 

and we are acutely aware that our students will be affected when 

courses are eliminated from the schedule. We ask for your support 

for us and for other public institutions that can’t shut down registration, and we can’t limit the number of freshmen coming in for 

the next semester as a means to control our benefits costs. We need 

the flexibility to develop and apply rules that, while consistent in 

approach to providing health care eligibility, provide the flexibility 

that respects the unique and varied nature of courses being taught. 

Again, I thank you for the opportunity to present the impact of 

the Affordable Care regulations on our institution. We are hopeful 

that our remarks today highlight the very real impact of these regulations on our institution, our employees, our community, and our 

sister institutions across the nation. Thank you. 

[The statement of Ms. Haynes follows:] 

Prepared Statement of Tina M. Haynes, MS, SPHR, 

Chief Human Resources Officer, Rowan-Cabarrus Community College 

I would like to thank you for the opportunity to testify about the impact of the 

Affordable Health Care Act on Rowan-Cabarrus Community College. Considered a 

large employer under the definition of the Affordable Health Care Act, RowanCabarrus Community College has focused on emerging regulations and guidance, 

and we are alarmed at the extent to which this act will affect the college and its 

workforce. As currently published, the supporting regulatory framework has farreaching and significant negative consequences for the college and our employees, 

our students, and our community. The regulations defining how health care coverage eligibility works will force us to reduce the number of courses we currently 

allow adjunct faculty members to teach, produce a significant and costly administrative burden and could further harm the institution through egregious penalties if 

errors are made in identification of those who qualify for health care coverage. Further, it effectively reduces the income that our long-time, dedicated adjunct faculty 

will be able to earn, and it may slow our students’ ability to get degrees if we must 

eliminate courses from the academic schedule. 

IRS guidelines will force the reduction in courses adjunct faculty can teach 

As a strategy for responding to the variability in course demand and controlling 

costs while maintaining high quality instruction, Rowan-Cabarrus has relied on adjunct faculty since its origin in the 1960’s. Employment of adjunct faculty is the best 

approach for providing high quality, experienced instructors with current, real-world 

experience to supplement our full-time faculty without introducing an unsustainable 

expense of additional full- time faculty. Like our sister institutions, we operate with 

a lean budget; we must remain responsive to unexpected funding cuts and variability in demand that is driven from external forces such as high unemployment. 

Rowan-Cabarrus Community College is certain that we will have to reduce the 

total hours that adjunct faculty can teach because of IRS regulatory changes related 

to the Affordable Health Care Act. In December of 2012, the IRS published guidance 

that requires us to consider more than instructional time when calculating benefits 

eligibility, stating specifically that it is ‘‘unreasonable to only consider the time 

spent in instruction’’. A ratio of 3 hours of service time for every one credit hour 

of instruction was suggested by the IRS since faculty are exempt employees by Department of Labor standards and don’t require tracking for actual hours worked. Effectively, this means that an instructor cannot teach more than three, 3-credit hour 

courses without exceeding the 30-hour threshold for health care coverage eligibility. 

While the IRS is taking comments on this point, it is unclear whether anything 

other than the 3:1 ratio will be acceptable. 

The regulations that should result in greater access to affordable health care ultimately work against the adjunct faculty. Reducing the course load for adjunct faculty is the only way that Rowan-Cabarrus can avoid the unfunded liability of additional health care cost. This further compounds the problem for adjuncts who still 

aren’t covered by health insurance, and now, have a reduction in income because 

we reduced the number of hours they will be working for us. 

The impact ultimately reaches our students. Rowan-Cabarrus must consider reducing courses offered if we don’t have an adequate number of faculty to teach. Students can’t get jobs if they can’t get the courses they need to complete degrees. This 

12 

is a tremendous economic impact for them, but it is also a drag on the economic 

engine of our community since they can’t be contributors to the tax base or consumers of goods without an income. 

The administrative burden of affordable health care 

Not only does the Affordable Health Care Act negatively affect adjunct faculty income and slow student progress toward employability, it introduces a massive administrative burden that comes with unanticipated costs. Rowan- Cabarrus will 

incur one-time costs to establish processes needed and will have recurring costs related to managing the workforce, determining eligibility, notification, and enrollment. There will be new billing, remittance and collections processes for health coverage for former employees who no longer work for us. 

As a population, adjunct faculty may work one semester and not the next or teach 

multiple courses one semester and teach only one course in the next semester. 

Measurement periods have to address the intermittent and varied nature of their 

work. When applying safe harbor rules, the multiplicity of periods and the variations in employee populations are complex. Employees who don’t even work for us 

currently, but worked for us during the measurement period, are still qualified to 

participate in our health plan during the next stability period but insurance premiums can’t be payroll deducted since they aren’t working for us. Since by state regulations we can’t debit a checking account, we face collection issues and expense for 

premiums if not reimbursed. 

Penalties 

The Affordable Health Care Act brings a set of complex regulations and associated 

penalties, which if unintentionally breached, could have catastrophic results. Even 

with the 5% margin of error provided by regulations, a single, systematic error that 

inadvertently excludes individuals from coverage could result disastrous and crippling penalties. 

Summary 

Like our sister institutions, Rowan-Cabarrus must reduce the number of hours 

that adjunct faculty can teach. As we evaluate course schedules for the fall semester, we are acutely aware that our students will be affected when courses are eliminated from the schedule. Their employability is slowed, which in turns affects our 

local economic engine since they won’t be earning and contributing. Dedicated, adjunct faculty who have had steady, multi- course workloads for years will lose income as their course loads are reduced. Consequently, these employees will have 

less disposable income to put back into our economy and less money to buy health 

care through health care exchanges. 

Thank you again for the opportunity to present the impact of Affordable Health 

Care regulations on our institution. We are hopeful that our remarks today highlight the very real impact of the Affordable Health Care Act on our institution, our 

employees and on our community. 

Chairman ROE. Thank you, Ms. Haynes. 

Mr. Searing? 

STATEMENT OF ADAM SEARING, DIRECTOR, 

HEALTH ACCESS COALITION, RALEIGH, NC 

Mr. SEARING. Okay. Thank you very much, Mr. Chairman, Representative Hudson. I appreciate the opportunity to come and 

speak today. I run our healthcare work at the Health Access Coalition of the North Carolina Justice Center. We are an anti-poverty 

organization. We have been working to reduce poverty and expand 

opportunity for all North Carolinians since 1994. 

Ms. Haynes, one thing that was just running through my mind 

when you were talking about the problems you are having with 

having part-time faculty, I was just looking at Governor Pat 

McCrory’s budget and saw that he is cutting the amount of money 

that is coming to the community colleges, and I sure wish that he 

would reconsider that and give more money to our community colVerDate Nov 24 2008 15:02 Mar 06, 2014 Jkt 000000 PO 00000 Frm 00016 Fmt 6633 Sfmt 6602 G:\DOCS\113TH\HELP\113-16\HED120.020 DICK
13 

leges so they all can hire full-time faculty, because I think that 

would be better for everybody. 

Anyway, as I said, I have had the privilege to work on this issue 

for a long time, and as sort of the designated hitter this morning, 

saying why the Affordable Care Act isn’t the end of civilization, let 

me just go ahead and start by giving a few of the benefits that 

have been coming to North Carolinians since the passage of the Act 

in 2010. I have been hearing so much about how the sky is falling 

this morning that I was looking outside to see if it was actually 

coming down, but it is still up there. 

So, for instance, I bet many folks in this room know somebody 

or actually have a child who is under 26 who is able to stay on 

their parents’ health care plan now. That is a huge benefit. I have 

met many people in my travels around the state who have been 

able to keep their kids on the plan whether they are in college or 

not, whether they take a job, Chairman Roe, like you were talking 

about when the students are working in that theme park in your 

district and they are able to stay on their parents’ plan, a great opportunity. 

The other things that are happening, there is no more co-insurance co-payments for preventive services. This just makes sense. I 

mean, come on. If you are going to get people to come in to the doctor to get a checkup and get screened for diseases that we can treat 

early, it just makes sense to make that is easy as possible. 

Another change. We’re moving towards the situation where you 

can’t charge women more for exactly the same health coverage that 

men buy. It doesn’t seem right that we charge women more money 

for exactly the same health coverage. I am not talking about maternity care. I am talking about exactly the same health coverage. 

That doesn’t make any sense. That is another thing that is going 

away with this law. 

There are tax credits for small businesses that are in this law, 

and those are going to be expanded come 2014. 

So, for over 1 million of us, however, really the biggest changes 

are about to come. Now, if you have health insurance already 

through your job, you are going to be doing all right, what these 

gentlemen provide here, Mr. Horne, Mr. Conrad, in their large 

businesses. But if you are working in a small business or you are 

out on your own, you are not getting your coverage through your 

job, you are going to be able to go to this health exchange, get a 

tax credit—that is the key to what Chairman Roe was talking 

about. You can just look on your iPad. Well, you are not going to 

get the tax credit to buy health insurance if you are just looking 

on your iPad. You have to go through this health exchange. You 

go through this health exchange, buy coverage if you are a business 

owner or working in a small business. 

The other part of the change is that no longer will health insurance companies be able to charge people more because someone has 

a pre-existing health condition. Now, I am sure that everybody sitting up at that table up there and back here, and myself included, 

who has talked to anybody in the last 10 years knows somebody 

who has not been able to go and buy health insurance on their 

own, has been quoted a price of $1,000, $2,000 a month from North 

Carolina Blue Cross-Blue Shield because they had a pre-existing 

14 

health condition. Well, Blue Cross and other insurance companies 

are no longer going to be able to do that. 

Let me tell you a story how the Affordable Care Act could make 

a huge difference for a business owner that I know. In Raleigh, 

there is a fellow who was a restaurant owner and he was a chef. 

His full name was Hamid Mohajer. Everybody called him Mo. He 

came to this country as an immigrant. He went to Campbell College when it was a college, before it became university. He had to 

drop out because of financial issues. He worked on a tobacco farm, 

Chairman Roe, and he ended up working at Darrell’s in Raleigh 

bussing tables. He was such a good chef, though, he eventually got 

to go and open his own restaurant. 

Well, he had a pre-existing condition, like I was talking about. 

He couldn’t go buy health insurance. His wife went out and took 

a job in a chain restaurant, got some coverage. Unfortunately, he 

got bone cancer, ended up in the hospital. This was just devastating. What was even more devastating was that health plan 

was so weak and had so many limits on it that he ended up dying 

with hundreds and hundreds of thousands of dollars in bills. So Mo 

left his wife not only with a restaurant to run but also having to 

do fundraiser after fundraiser to pay off these medical bills that 

they had incurred. 

Under the Affordable Care Act, it came too late for him, but he 

would have been able to buy coverage that took care of that. He 

probably would have gotten sick and, unfortunately, would have 

passed away anyway, but the Affordable Care Act would have 

made sure that he would have been able to buy a health plan for 

him and his business. 

I hope we can go forward and think about the positive effects. 

Thank you very much. 

[The statement of Mr. Searing follows:] 

Prepared Statement of Adam Searing, J.D., MPH, 

Health Director, North Carolina Justice Center 

Mr. Chairman, Representative Hudson, and committee members—thank you very 

much for the opportunity to speak today. The North Carolina Justice Center is a 

statewide organization created in 1994 committed to reducing poverty and expanding opportunity for all North Carolinians. 

I have had the privilege to direct our health care work at the Center for the past 

fifteen years, and I am very excited to be a part of implementing the Affordable 

Care Act here in North Carolina. 

Millions of North Carolinians are already seeing some benefits from the Act—like 

kids under 26 able to stay on their parents’ health plans to freedom from copayments and coinsurance for basic preventive health services for people both on Medicare and on private coverage to a fairer marketplace where women can no longer 

be charged more money than men for exactly the same health coverage. 

For over one million North Carolinians however—many of us owning or working 

in small businesses—the best is yet to come. Starting later this year, employees in 

businesses that choose not to provide health coverage will be able to sign up for new 

health plans in the health exchange. If their family income is under about $88,000 

a year, they will qualify for tax credits—and the lower your income, the higher the 

tax credit—that will be worth thousands of dollars and will make that insurance 

affordable. And business owners will be able to buy coverage in the exchange too. 

In addition, business owners and employees will no longer have to worry that a 

pre-existing health condition will mean insurance companies will quote them unattainable monthly premiums. I cannot tell you how many people over the years I 

have met around our state who, because of a pre-existing health condition, have 

been quoted premiums of $1,000, even $2,000 a month! In just a few months, that 

will be a thing of the past. 

15 

Yes—employees will now have a place to go for coverage no matter what. 

Let me tell you a story about how the Affordable Care Act will change lives. 

In Raleigh the restaurant owner and influential chef Hamid Mohajer could not 

get health insurance due to a preexisting condition after he started his restaurant. 

(he attended Campbell College and worked on a tobacco farm before his successful 

restaurant career—Mo’s Diner) His wife had to take a part-time job at a chain restaurant to get some form of coverage. In 2010 Hamid got bone cancer and needed 

extensive treatment. The flimsy policy offered by his wife’s employer capped benefits 

and didn’t cover everything Hamid needed. After he died his wife not only had to 

worry about sustaining the family’s business, she had to host regular fundraisers 

to pay off the medical bills. That’s no way to run a business or a health care system. 

The changes for our business owners and employees come too late for Hamid, but 

will be most welcome by many of the people I meet every day across North Carolina. 

Finally, let’s get some things straight about the Affordable Care Act and North 

Carolina: 

1. Any business with less than 50 full time employees—95% of the businesses in 

NC—has no penalties and has no requirements to meet under the ACA. None. Owners and employees of this vast majority of businesses in our state do get access to 

the health care exchange however along with tax credits to buy affordable coverage 

for many families. 

2. Governor Pat McCrory’s decision to follow the General Assembly and reject over 

a billion dollars a year from the federal government under the ACA to provide Medicaid health coverage to families earning under $29,000 a year was a real mistake. 

There are many employees who would gain coverage under this provision and it is 

not right that they will be left out. Business benefits when workers come to work 

healthy and having health coverage—no matter how low income you are—is a part 

of that. Medicaid coverage also can help some businesses who have more than 50 

full time low income employees avoid paying penalties since their workers can be 

covered by Medicaid. 

3. Finally—we are doing some really innovative things aimed at small businesses 

in NC with our Medicaid Community Care program and NC Blue Cross—we are 

starting to test letting Blue Cross- insured businesses use our excellent health care 

networks under Community Care. This can save money, lower premiums and improve health care at the same time by coordinating our health care better, while 

using evidence to drive the kind of health care we deliver. This is the kind of innovation we need to see more of. 

Thank you. 

Chairman ROE. Thank you, Mr. Searing. 

Mr. Conrad? 

STATEMENT OF KEN CONRAD, CHAIRMAN, LIBBY HILL 

SEAFOOD RESTAURANTS, GREENSBORO, NC 

Mr. CONRAD. Thank you, gentlemen, for the opportunity to testify before you today on behalf of the National Restaurant Association. My name is Ken Conrad, and I am Chairman of the Board 

of Libby Hill Seafood Restaurants. I currently serve as the Vice 

Chair of the National Restaurant Association. On any given day, 

13 million Americans go to work in 980,000 restaurants in the 

United States. Our industry faces a number of challenges in implementing the law due to the unique characteristics of our workforce. 

I wish to highlight three of those for you today: one, the definition 

of a full-time employee; the complexity of a large employer determination; and potential harm that automatic enrollment provision 

could cause for some employees. 

Libby Hill is a seafood distribution and restaurant company 

begun in 1953 when my father, Luke Conrad, first opened our 

doors. I am proud to say that my son, Justin, is the third generation of Conrads in this business. Our first restaurant is still located 

within the city limits of Greensboro, North Carolina. We have eight 

additional units in the state and Southern Virginia. We operate our 

16 

sales for those units, and we lease the remaining to the management team on location. 

Libby Hill Restaurants employs 141 team members, of which 32, 

by the full-time definition as defined in the healthcare law, 32 are 

considered full-time. We have always used a 40-hour work week to 

determine who is full-time and part-time. So we will have to make 

changes on the new definition. 

Today we offer a full medical plan and pay 80 percent of the premium for our corporate employees. That includes office staff, warehouse employees, truck drivers, et cetera. We try to drill down 

deeper in this carve-out program, but we could not get enough of 

the restaurant employees to come forward to have 75 percent covered under the plan. So we continue to pay all but one of our corporate employees to take this plan. 

What employees will choose to do in 2014 when they are required 

to obtain coverage or pay a tax penalty remains an unanswered 

question that will impact our cost of offering coverage. The statute 

lays out a very specific and complicated calculation that must be 

used by employers to determine if they are applicable to be a large 

employer. As you might imagine, operators on the bubble of 50 fulltime equivalent employees, which we are, are especially concerned 

in trying to understand what we must do to complete this complicated calculation. It is creating a lot of concern as these businesses, who have always considered themselves to be small, are 

now considered to be large. 

At first brush, our company, we are on the verge of becoming a 

large employer. We must offer healthcare or face a substantial penalty, knowing from past experience that we are unlikely to get to 

the 75 percent participation level. We must do this calculation 

every year, and if we remain on the threshold of becoming a large 

employer, then we will not open any additional units because this 

insurance provision would be a game changer for our company. 

The automatic enrollment requirement is a concern to many in 

the industry or that 200 full-time employees are automatically enrolled in healthcare. We think it is redundant and we think it is 

already covered. I want to thank Congressman Hudson and Congressman Robert Pittinger for proposing H.R. 1254 to repeal this 

part of it, and we appreciate your work on that. 

In conclusion, since the enactment of the law, the National Restaurant Association has worked to constructively shape implementing the regulations of the healthcare law. Nevertheless, there 

are limits to what can be achieved through the regulatory process 

alone. At the end of the day, if this law remains in effect as it is 

currently written, restaurants and food service operators will face 

serious challenges. 

Thank you again for this opportunity. 

[The statement of Mr. Conrad follows:] 

Prepared Statement of Marshall ‘‘Ken’’ Conrad, Libby Hill Seafood 

Restaurants, Inc., on Behalf of the National Restaurant Association 

Chairman Roe, Ranking Member Andrews, and members of the Subcommittee on 

Health, Employment, Labor and Pensions, of the House Committee on Education 

and the Workforce, thank you for this opportunity to testify before you today on behalf of the National Restaurant Association. It is an honor to be able to share with 

17 

1 2013 Restaurant Industry Forecast. 

you the impact the 2010 health care law is having on businesses like mine, and the 

restaurant industry as a whole, particularly on our ability to create and grow jobs. 

My name is Ken Conrad, and I am Chairman of the Board of Libby Hill Seafood 

Restaurants, Inc., a seafood restaurant first opened by my father Luke Conrad back 

in 1953. I am very involved in the seafood and restaurant industry here in the state 

and am the former Chairman of the North Carolina Restaurant Association. I currently serve as Vice Chairman of the National Restaurant Association. 

The National Restaurant Association is the leading trade association for the restaurant and foodservice industry. Its mission is to help its members, such as myself, 

establish customer loyalty, build rewarding careers, and achieve financial success. 

The industry is comprised of 980,000 restaurant and foodservice outlets employing 

13.1 million people who serve 130 million guests daily. Restaurants are job creators. 

Despite being an industry of predominately small businesses, the restaurant industry is the nation’s second-largest private-sector employer, employing about ten percent of the U.S. workforce.1

The Libby Hill Seafood Restaurants story 

My family continues to own and operate Libby Hill Restaurants and I’m proud 

to say that my son Justin is the third generation of Conrad’s in the business. Our 

first restaurant is still located within the city limits of Greensboro, North Carolina 

with locations scattered across North Carolina and Virginia. Four of the restaurants 

are part of Libby Hill Restaurants, Inc., with the remaining 5 separately owned and 

operated by others. My company also includes a seafood distribution company. We 

cook some of the best seafood in the area, and you know that every Libby Hill Restaurant is a family-friendly kind of place. 

Libby Hill Restaurants, Inc. employs 32 full time employees and 109 part-time 

employees based on the new definition of full-time employment within the health 

care law. We have always used a 40 hour work week to define who is full-time and 

part-time within our company, and so we will have to makes changes based on this 

law’s new definition of full-time at 30 hours a week on average in any given month. 

Today, we offer a full medical benefits plan and pay 80 percent of the premium, 

but only 10 employees take the plan. As a result we have a carve-out plan for our 

corporate office staff, our warehouse employees and our truck drivers. We have tried 

to offer coverage to our restaurant employees in the past, but not enough employees 

opted in for the company to even be able to purchase a plan. To offer coverage, we 

needed a minimum participation of 75 percent of the eligible employees to take our 

offer of coverage, but that was not the case when all of our staff was included. As 

a result, we had to limit the eligibility pool to a smaller group of employees to be 

able to offer coverage to anyone. Level of participation in restaurateurs’ plans has 

been a long-standing challenge in our industry. I am concerned that even with the 

new law’s requirements for individuals, employees who are eligible for our offer of 

coverage will not accept it and choose to pay individual mandate tax penalty instead. 

Business owners crave certainty and one of the most difficult things to predict 

about the impact of this law is the choice employees will make. Will they accept our 

offer of minimum essential coverage? Will exchange coverage be less expensive than 

what we can afford to offer under the law? Will our young workforce choose to pay 

the individual mandate tax penalty instead of accepting our offer of coverage in 

2014, 2015 and beyond? Future take-up rate of coverage is very hard to predict 

given many new factors, but could mean increased costs for employers when offering 

coverage. 

Complying with the health care law is challenging for restaurant and foodservice operators given the unique characteristics of the industry 

Since the law was enacted in 2010, me and my staff have educated ourselves 

about the requirements of the law, the details of the Federal agencies’ guidance and 

regulations, and to understand how to implement the necessary changes within our 

organization. Understanding our compliance requirements has been time consuming 

and burdensome. Currently we do not have human resources personnel on staff responsible for administering the health benefits program as part of their duties. Instead, we are relying on our lawyers and outside vendors to help us determine our 

options and implement the law within our business. This is typical of restaurants 

of similar size to our operations. Our Chief Financial Officer has primary responsibility for developing our strategy and plan to comply with the law. Both he and I 

have spent a significant amount of time trying to understand the impact so that 

educated business decisions can be made. 

18 

2 Bureau of Labor Statistics, U.S. Department of Labor. 

3 2013 Restaurant Industry Forecast. 

4 Internal Revenue Code, §414 (b),(c),(m),(o). 

Until the January 2, 2013 Federal Register publication of the Treasury Department’s Proposed Rule regarding the Shared Responsibility for Employers provision, 

employers did not have any firm rules on which they could plan and make business 

decisions. Up until this time, proposals and guidance had been issued with numerous opportunities for public comment, but nothing had the weight of regulation. This 

proposed rule, while not finalized, does provide employers assurances that the rules 

proposed can be relied upon until further rules are issued. 

Our Association has been educating the industry since enactment and doing everything we can so that operators know that now is the time to take action to comply. While many rules and guidance have been proposed, questions still remain regarding exact implementation of many of the employer requirements. 

The unique characteristic of our workforce creates compliance challenges for restaurant and foodservice operators. As a result, many of the determinations employers must make to figure out how the law impacts them—for example the applicable 

large employer calculation—are much more complicated for restaurants than for 

other businesses who have more stable workforces with less turnover. 

Restaurants are employers of choice for many looking for flexible work hours and 

so we employ a high proportion of part-time and seasonal employees. We are also 

an industry of small businesses with more than seven out of ten eating and drinking 

establishments being single-unit operators. Much of our workforce could be considered ‘‘young invincibles,’’ as 43 percent of employees are under age 26 in the industry.2 In addition, the business model of the restaurant industry produces relatively 

low profit margins of only four to six percent before taxes, with labor costs being 

one of the most significant line items for a restaurant.3

All of these factors combine to complicate what a restaurant and foodservice operator must consider when implementing the necessary changes in their business to 

comply with the law. My company is a great example as we have spent a large 

amount of time trying to understand the law and what we must do to comply, but 

still do not know the answers to many questions. 

Applicable large employer determination 

The statute lays out a very specific calculation that must be used by employers 

to determine if they are an applicable large employer and hence subject to the 

Shared Responsibility for Employers and Employer Reporting provisions. Because of 

the structure of many restaurant companies, determining who the employer is may 

not be as easy as it would seem. 

Aggregation rules in the law require employers to apply the long standing Common Control Clause4 in the Tax Code to determine if they are considered one or 

multiple employers for the purposes of the health care law. While these rules have 

been part of the Code for many years, this is the first time many restaurateurs, especially smaller operators, have had to understand how these complicated regulations apply to their businesses. The Treasury Department has not issued, nor to our 

knowledge, plans to issue, guidance to help smaller operators understand how these 

rules apply to them. Restaurant and food service operators must hire a tax advisor 

to determine how the complicated rules and regulations associated with this section 

of the Code apply to their particular situation. It is common that business partners 

of one restaurant company own multiple restaurant companies with other partners. 

These restaurateurs consider themselves to be separate businesses, but because 

there is common ownership, under the rules many are discovering that all the businesses can be considered as one employer for purposes of the health care law. 

Once a restaurant or foodservice operator determines what entities are considered 

one employer, they must determine their applicable large employer status annually. 

This is not an easy calculation. My business is on the bubble of being an applicable 

large employer defined as employing 50 full-time equivalent employees on business 

days in a calendar year. We must consider the number of full-time employees now 

based on 30 hours a week, as well as the hours worked by all our other employees. 

Given we are an industry of small businesses and that restaurants are labor intensive and require many employees to operate successfully, many small businesses 

will have to complete this calculation annually to determine their responsibilities 

under the law. I may be one of them. 

As you might imagine, operators like myself who are on the bubble of 50 full-time 

equivalent employees are trying to understand what they must do to complete this 

complicated calculation each year. Generally, an employer must consider the hours 

of service of each of their employees in all 12 calendar months each year. However, 

19 

the Treasury Department has allowed for transition relief in 2013 for businesses to 

use as short as 6 months to do this calculation. The Treasury Department recognized the fact that small businesses, who may not currently offer health coverage, 

will need time to determine their status and then negotiate a plan with an insurance carrier. However, there remain questions about the process in later years when 

January through December must be considered for status beginning the following 

January 1st. Will small employers just reaching the applicable large employer 

threshold find that they determine they are large on December 31, 2014, for example, and must offer coverage a day later on January 1, 2015? Rules are needed to 

clarify when such employers must offer coverage in future years. 

The applicable large employer determination is complicated. For compliance beginning in 2014, employers must determine all employees’ hours of service each calendar month, calculate the number of FTEs per month, and finally average each 

month over a full calendar year to determine the employer’s status for the following 

year. The calculation is as follows: 

1. An employer must first look at the number of full-time employees employed 

each calendar month, defined as 30 hours a week on average or 130 hours of service 

per calendar month. 

2. The employer must then consider the hours of service for all other employees, 

including part-time and seasonal, counting no more than 120 hours of service per 

person. The hours of service for all others are aggregated for that calendar month 

and divided by 120. 

3. This second step is added to the number of full-time employees for a total fulltime equivalent employee calculation for one calendar month. 

4. An employer must complete the same calculation for the remaining 11 calendar 

months and average the number over 12 calendar months to determine their status 

for the following calendar year. 

This annual determination is administratively burdensome and costly, especially 

for those just above or below the 50 FTE threshold who must most closely monitor 

their status—most likely small businesses. Many restaurant operators rely on thirdparty vendors to develop technology or solutions to help them comply with these 

types of requirements but vendors are backlogged and solutions are not widely 

available today. 

Offering coverage to full-time employees 

The 2010 health care law requires employers subject to the Shared Responsibility 

for Employers provision to offer a certain level of coverage to their full-time employees and their dependents, or face potential penalties. The statute arbitrarily defines 

full-time as an average of 30 hours a week in any given month. This 30-hour threshold is not based on existing laws or traditional business practices. In fact, the Fair 

Labor Standards Act does not even define full- time employment. It simply requires 

employers to pay overtime when nonexempt employees work more than a 40-hour 

workweek. As a result, 40 hours a week is generally considered full- time in many 

U.S. industries. Certainly in the restaurant and foodservice industry, operators have 

traditionally used a 40-hour definition of full-time. Adopting such a definition in this 

law would also provide employers the flexibility to comply with the law in a way 

that best fits their workforce and business models. 

This is complicated by the fact that sometimes it is difficult to know who the fulltime employees will be in a restaurant. For restaurant and foodservice operators 

who are applicable large employers, it is not easy to predict which hourly staff 

might work 30 hours a week on average and which will not. Many employees’ hours 

can be unpredictable week to week. 

During periods of high customer traffic during the year, employees are scheduled 

to work more hours to maintain the customer’s expected level of service, but then 

hours are reduced as business slows. Some weeks an employee might pick up extra 

shifts to earn a little extra in their paycheck that month, and others they prefer 

a few less hours because of commitments outside the restaurant. This is one of the 

attractive benefits of our industry—the flexibility to change your hours to suit your 


80426.eps
20 

own personal needs. However, for the first time under this law, the federal government has drawn a bright line as to who is full-time and who is part-time. As a result, employers with variable workforces and flexible scheduling must be deliberate 

about scheduling hours because there is now potential liability for employer penalties if employees who work full-time hours are not offered coverage. 

The industry appreciates that the Treasury Department has recognized that it 

may be difficult for applicable large employers to determine employee’s status as 

full-time or part-time on a monthly basis, causing churn between employer coverage 

and the exchange or other programs. Such coverage instability is not in the employee’s best interest and so the restaurant and foodservice industry is pleased that the 

Lookback Measurement Method is an option that applicable large employers may 

use. 

The Lookback Measurement Method’s implementing rules are complex but it 

could be helpful for both employers and employees. Employers will be better able 

to predict costs and offer coverage to employees they are required to offer to, and 

employees whose hours fluctuate have the peace of mind of knowing that if their 

hours do drop, coverage will not be cut short before the end of their stability period. 

The Lookback Measurement Method can only be applied to variable hour or seasonal employees. Employers cannot consider the length of time of service of these 

employees, only that their hours are unpredictable and that they fluctuate. 

Automatic enrollment requirement 

Applicable large employers who employ 200 or more full-time employees are also 

subject to the Automatic Enrollment provision of the law. This duplicative mandate 

requires the employer to enroll our new and current full-time employees in our lowest cost plan if they have not opted-out of the coverage. This provision also interacts 

with the prohibition on waiting periods longer than days and effectively means that 

on 91 day, we must enroll a new full-time hire in our lowest cost plan if they do 

not tell us that they do not want to be enrolled. Employee premium contributions 

will begin to be collected and the industry is concerned that it could cause financial 

hardship and greater confusion about the law, especially amongst our young employees. Since 43 percent of restaurant employees are under age 26 and more likely 

to be moving from job to job or eligible for enrollment in parents’ plans, many are 

likely to inadvertently miss opt- out deadlines and will be automatically enrolled in 

their employer’s health plan causing significant, unexpected financial hardship. 

Automatically enrolling an employee and then shortly thereafter removing them 

from the plan when the employee opts-out only increases costs unnecessarily without increasing our employee’s access to coverage as the law intended. Since the 

health care law’s employer mandate already subjects large employers to potential 

penalties if they fail to offer affordable health care coverage to full-time employees 

and their dependents, the auto-enrollment mandate is redundant. It adds a layer 

of bureaucracy and burdens businesses without increasing employees’ access to coverage. 

Some compare automatically enrolling employees in health benefit plans to automatically enrolling them in a 401(k) plan, but this isn’t a good parallel. The financial contribution associated with health benefits can be much larger, for example: 

9.5 percent of household income toward the cost of the premium for employees of 

large employers versus an average 3 percent automatic 401(k) contribution. The financial burden on employees of automatic enrollment in health benefit plans would 

be much greater than that of 401(k) plans. Additionally, 401(k) rules allow employees to access their contributions when they opt-out of automatic enrollment; however health benefit premium contributions cannot be retrieved. 

Restaurateurs will educate their employees about how this provision impacts 

them, but if an employee misses the 90-day opt-out deadline, a premium contribution is a significant amount of money, which can be a financial burden. Since the 

same full-time employees must be offered coverage by the same employers subject 

to the Automatic Enrollment provision and the Shared Responsibility for Employer 

provisions, we believe the automatic provision is unnecessary and should be eliminated. 

I want to acknowledge and thank Congressman Richard Hudson for his leadership 

in introducing H.R. 1254, the Auto Enroll Repeal Act recently, together with Congressman Robert Pittenger. Enactment of this measure would eliminate this requirement that could hurt both employees and employers. The National Restaurant 

Association supports of passage of H.R. 1254 and looks forward to working with 

Congressmen Hudson and Pittenger and this Subcommittee to move the bill forward 

in Congress. 

21 

Challenges for applicable large employers offering coverage to their full-time employees and their dependents 

Once an applicable large employer has determined to whom coverage must be offered, he must make sure that the coverage is of 60 percent minimum value and 

considered affordable to the employee, or he may face potential employer penalties. 

Minimum value is generally understood to be a 60 percent actuarial test; a measure of the richness of the plan’s offered benefits. This is a critical test for employers 

especially as it relates to what an employer’s group health plan covers and hence 

what the premium cost will be in 2014. Business owners like certainty and that 

means the ability to plan for their future costs. 

Employers are eager to know what their premium costs will be under the new 

law. Minimum value is key to determining that information. 

On February 25, 2013 the Health and Human Services Department did include 

the Minimum Value Calculator, one of the acceptable methods to determine a plan’s 

value, in its Final Rule, Standards Related to Essential Health Benefits, Actuarial 

Value, and Accreditation. Minimum value can now be determined using this calculator but still it is difficult to know premium costs so far in advance. For our January 1st plan year start date, we do not anticipate being able to obtain premium pricing for several more months. With a potential increase in cost, this gives us a short 

timeframe within which to make business decisions in advance of the new plan 

year. Any plan design or other changes to help control our costs will be part of our 

budgeting process going forward. 

Employers must also ensure at least one of their plans is affordable to their fulltime employees or face potential penalties. A full-time employee’s contribution toward the cost of the premium for single-only coverage cannot be more than 9.5 percent of their household income, or else the coverage is considered unaffordable. Employers do not know household income, nor do they want to know this information 

for privacy reasons. However, employers needed a way to be able to estimate before 

a plan is offered if it will be affordable to employees. What employers do know are 

the wages they pay their employees. Almost always, employees’ wages will be a 

stricter test than household income. Employers are willing to accept a stricter test 

in the form of wages so that they know they are complying with the law and are 

provided protection from penalty under a safe harbor. The Treasury Department 

will allow employers to use one of three Affordability Safe Harbors based on Form 

W-2 wages, Rate of Pay or Federal Poverty Line. We believe that the option of utilizing these methods will be helpful to employers as they determine at what level 

to set contribution rates and their ability to continue to offer coverage to their employees. 

Our company has looked at this particular issue within the law, but we do not 

believe we will have to worry about the affordability of our plan for our employees, 

at least in the first year. As I previously mentioned, our company pays 80 percent 

of the total premium cost for the plan we offer. The remaining 20 percent of the 

premium, that we currently ask our employees to contribute, is less than 9.5 percent 

of our employees’ wages. Hence, if premiums do not increase we believe that our 

current practice will satisfy the affordability test and changes to employee contributions are not necessary for our next plan year. 

The law speaks to affordability for employees but is silent regarding whether the 

coverage required to comply with the Shared Responsibility for Employers section 

of the law is affordable to employers. We anticipate added costs as a result of this 

law, either through required changes impacting plan design or additional fees—such 

as the PCORI Funding Fee, the Exchange Reinsurance Program Fee, the Health Insurance Provider Fee—that will continue to drive up premiums for employers and 

employees as others pass along these increased costs. In addition, new taxes such 

as the ‘‘Cadillac’’ tax on certain employer-sponsored coverage, will also squeeze restaurateurs when it begins in 2018. 

As restaurant and foodservice operators implement this law, considering all of the 

interlocking provisions that impact employers, some will be faced with difficult business decisions between offering coverage which they cannot afford and paying a penalty for not offering coverage that they equally cannot afford nor want to do. We 

encourage all policymakers to address the cost of coverage so that the employersponsored system of health care coverage will be maintained. 

New nondiscrimination rules applied to fully-insured plans 

The health care law applies the nondiscrimination rule, that self-funded plans 

cannot offer benefits in favor of their highly-compensated individuals, now to fullyinsured plans. This rule is not in effect as the Treasury Department has put implementation on hold until further guidance has been issued in this complex area. 

Under the new law, these rules apply to all insured plans, regardless of where they 

22 

are offered by an applicable large employer or a small business. The restaurant and 

foodservice industry is watching this rule closely as it may impact what plans may 

continue to be offered to employees. 

Current group health plan participation often forces operators to carve out the 

group of employees who will participate in the plan. In our members’ experience, 

these are almost always a group that would be considered in the top 25 percent 

based on compensation. 

However, management carve-outs are not just for upper level executives who may 

receive richer benefit plans than the rest of the employees. In the restaurant and 

foodservice industry, management-only plans are sometimes the only option that operators have to provide health care coverage to those employees who want to buy 

it and pass participation requirements at the same time. As a result, these plans 

are quite common in the industry. This was the situation I encountered when we 

tried to offer coverage to more employees several years ago. 

The rules the Treasury Department writes to apply non-discrimination testing to 

fully- insured plans will have an impact on our industry. Regardless of how they 

are written, restaurant and foodservice operators will need sufficient transition time 

to apply these rules as it could create upheaval for plans and employers alike. 

Applicable large employer reporting requirements 

A key area of implementation that employers have not received guidance on are 

the employer notice and reporting requirements: the Fair Labor Standards Act Notice to Employees from the Department of Labor, the notices and appeals processes 

with Exchanges from the Department of Health and Human Services, and the required information reporting under Tax Code §6055 and §6056 from the Treasury 

Department. These employer notice and reporting requirements are a key link in 

the chain of the law’s implementation. They represent a significant employer administrative burden as well as rules that will help employers ensure that their employees are well informed about their options under the law. Operators are aware of this 

requirement and ask often when guidance and a template for this notice will be 

available from the Labor Department. 

Of particular concern to the industry, is the flow of information and the timing 

of reporting employers must make to multiple levels and layers of government. 

Streamlining employer reporting will help ease employer administrative burden and 

simplify the process. The information provided by employers under Tax Code §6055 

and §6056 is critical in this process and can be used by the Treasury Department 

to verify if an individual had an offer of affordable minimum essential coverage of 

minimum value from an applicable large employer. The information provided by employers must be compared by the Internal Revenue Service to verify eligibility determinations made by the Exchanges for premium tax credits or cost-sharing reductions. The information can also be used to determine employer penalty liability. The 

restaurant and foodservice industry, along with other employer groups, have advocated for a single, annual reporting process by employers to the Treasury Department each January 31st that would provide prospective general plan information 

and wage information for the affordability safe harbors, as well as retrospective reporting as required by §6056 on individual full-time employees and their dependents. 

We are anxious for guidance to be issued on all of these interrelated issues, as 

employers cannot just flip a switch and produce the detailed information reports required by the law. It will take time for employers to set up systems, or contract with 

vendors, to track and maintain the date needed to comply with the law. When I 

think of our own company and the detailed information we will have to track and 

report on all full-time employees and dependents, it is a large amount of data. The 

reporting will include not only the employees who remain with the restaurant for 

the entire year, but even our seasonal staff and others who may only stay for a couple of months. Health plan benefit information as well as individualized payrollsourced information must be merged to produce the report needed under the law. 

Transition relief 

Within the Proposed Rule for Shared Responsibility for Employers, the Treasury 

Department provided targeted transition relief. While appreciated, we believe that 

further transition relief is critical. The timeframe for compliance is short and getting shorter and safe harbor protections for good-faith compliance by employers in 

the law’s early phases is necessary. Employers are still missing essential pieces of 

guidance and regulation necessary to construct their systems, make plan design 

changes and communicate with their employees with 8 months until the first of the 

year. Under the threat of heavy penalties for not getting this exactly right the first 

time, some employers may opt-out of offering coverage to their employees and 

23 

choose to pay the penalties instead. This is not what the restaurant and foodservice 

industry wants, but it may be a likely result of employers having to make difficult 

decisions under extremely uncertain conditions. The process should not discourage 

employers and employees from participating in the new system and the application 

of a good-faith compliance standard is appropriate. As with implementation of any 

law this size, it will take some time for the hiccups in the processes to be worked 

out and employers should be allowed adequate time to come into compliance. 

Conclusion 

Since enactment of the law, the National Restaurant Association has worked to 

constructively shape the implementing regulations of the health care law. Nevertheless, there are limits to what can be achieved through the regulatory process alone. 

Ultimately, the law cannot stand as it is today given the challenges employers such 

as restaurant and foodservice operators face in implementing it. 

Broader transition relief is needed for employers attempting to comply with the 

law in good-faith as time is short to make the significant changes required by the 

law. The duplicative automatic enrollment provision should be eliminated as it could 

unnecessarily confuse and financially harm employees. Key definitions in the law 

must be changed: The law should more accurately reflect the general business practice of 40 hours a week as full-time employment. The applicable large employer determination is too complicated, and over-reaches to include more small businesses 

than it should. 

The National Restaurant Association looks forward to working with this Committee and all of Congress on these and other important issues to improve health 

care for our employees without sacrificing their jobs in the process. We also continue 

to actively participate in the regulatory process to ensure the implementing rules 

consider our industry’s perspective. 

Thank you again for this opportunity to testify today regarding the impact of the 

health care on the restaurant and foodservice industry, and the challenging environment it will cause for job creation and growth. 

Chairman ROE. Mr. Conrad, thank you, and thank you to the 

panel for your very, very good testimony. I read every bit of it last 

night. 

I would like to start by just saying a few things about how I 

share the vision and goal of providing health insurance coverage 

for everybody in this country. I live in rural East Tennessee, in Appalachia, and I have seen many, many people who don’t have 

health insurance, and as an OB/GYN doctor, I have delivered almost 5,000 babies, and I did find out that when you run for Congress, delivering your own voters worked out pretty well for me. 

[Laughter.] 

So I would recommend, if you are a doctor, deliver a lot of babies. 

They grow up and vote, and I saw some yesterday. 

Obviously, we have made this incredibly complicated. As I stated, 

I am on the Veterans Affairs Committee, and I spent two hours 

and 15 minutes this week just looking at the effect of the Affordable Care Act on veterans. After two hours of testimony, we 

couldn’t figure it out. Nobody walked out of the room—and these 

were smart people, IRS, Treasury, the chief medical officer of the 

VA. 

Mr. Searing, to your comment, there are many parts or parts of 

this bill that I agree with, the under 26. I had three kids of my 

own. The problem with it is that we took something that was very 

affordable, and what we did for young people was, actuarially, 

someone my age would pay six times—that is the risk I have—six 

times more than a young person. What we did was, by this law, 

you can now only charge at 3-to-1. So a young person who had very 

inexpensive, affordable coverage, we just doubled or tripled the cost 

of their coverage. I have had insurance agents already tell me in 

24 

the small group market, the individual market, those rates are up 

25 percent, 35 percent. Bill Gates is not going to be able to afford 

healthcare if we don’t do something. 

The OMB, the Office of Management and Budget, estimated that 

in 2016 the average family of four’s health insurance coverage will 

be $20,000 a year. I mean, that is not sustainable. 

We took a bill, this bill, which I read every word of it, which 

doesn’t say much about my intelligence but I read all 2,700 pages 

of it, there are now over 13,000 pages of rules and regulations that 

these business people right here have got to go over. Let me give 

you an example. 

Mr. Horne—and I am going to let him answer this—we had the 

self-insured market. When I was the mayor of Johnson City, I practiced full-time and I was mayor of Johnson City. It is not a big 

town, about 60,000 people, so I did both. We were self-insured. 

Well, now we find out that when you are self-insured—and one 

company that came to me, I won’t mention it but it is a national 

company, is totally insured. They don’t have any reinsurance or 

anything. They pay every nickel that they pay. They derive no benefit from the Affordable Care Act whatsoever. But guess what they 

get? They get $63, not per family, per person covered. It is a $25 

million hit for them this year. 

And you know what that money does? It indemnifies the private 

health insurance companies so that they won’t have a risk in the 

exchange of more than a $60,000 loss. So here is a company doing 

exactly the right thing. I couldn’t think of anybody, Mr. Horne, 

doing more right for your employees than you are, providing preventive services, totally free for them, a nurse on site to take care 

of problems, and what do you do? You get penalized for that. 

So how much—would you go through what the cost is for your 

business again in your small business of 350 employees? 

Mr. HORNE. We have 350 employees, and there are 515 covered 

individuals. So that $63 will be times 515 people in our case, a little over $32,000. 

One of the issues also is that we keep learning things. Just yes- terday, I learned that we will now pay $2 per covered individual 

to pay for the Patient Centered Outcome Research Institute, whatever that is. We just keep learning these things as time goes by. 

Chairman ROE. Well, another point on the thing that we use and 

would recommend is our high-risk pools for people with pre-existing conditions. We explained to the administration you did not put 

in—we have a high-risk pool in Tennessee. You did not put enough 

money into the high-risk pools. So they didn’t. They ran out of 

money, and right now they are not enrolling anybody else in highrisk pools. So if I had patients that came to me that developed 

breast cancer, that is the most common cancer that I saw, and the 

cure rates now for early breast cancer is 95 percent. It is phenomenal. And yet, these patients now have a pre-existing condition. 

So they go back into the workforce after their treatment and they 

couldn’t find coverage. So we have a high-risk pool to help cover 

that. 

The Obama Administration is now taking money out of preventive services, which we tried to prevent, to pay for advertising for 

the Affordable Care Act. So money is being taken out of a service 

25 

that you, Mr. Searing, mentioned, to help people, and we knew that 

the high-risk pools were underfunded, greatly underfunded. They 

need to be funded where someone who has that can go to that pool 

and buy insurance at the same rate that I can or someone else who 

is healthy can. 

Ms. Haynes, I thought your testimony was really very, very good. 

We have two community colleges in my district, and I say this 

tongue-in-cheek. I sort of overdosed on education. I went for 23 

years, and my dad kept saying when is that boy ever going to get 

out of school. I was raised on a farm, and my dad was a factory 

worker. So I used education, public education, not private. I never 

went to a private school in my life, all to public schools, how important that is to be able to make sure that these young people, with 

the cost of education being what it is today—would you elaborate 

on that a little bit for me? 

Ms. HAYNES. Certainly. I think the important point here is that 

it costs us about $450 a month per employee to provide health care 

coverage. Any coverage that we provide, obviously, at some point 

in time the student is going to incur the cost because we are funded through taxpayer dollars, obviously, and anything that costs the 

college ultimately costs the students. So in order to provide that 

coverage, it is a path through to the students. 

The difficulty I think becomes, with this too, is that the adjunct 

faculty have an impact that was unintended. We have no way to 

fund insurance. We believed that the healthcare exchanges would 

be the appropriate way for them to be able to purchase that coverage that they need. And yet, now they will have less income because we cannot provide them the number of courses that they 

would have had to have taught before in order to be able to purchase that as well. 

So it is an impact across the board. You have students now who 

won’t get classes that they potentially would have had in the sequence that they would have been able to do, so it slows their 

progress. They don’t become taxpayers and contributors as quickly. 

So there is a tremendous impact there. 

Chairman ROE. I thank you, and I now yield to Mr. Hudson. 

Mr. HUDSON. Thank you, Mr. Chairman. 

I thank the witnesses for your excellent testimony. 

Mr. Conrad, I was listening to your testimony, and you said that 

you do not employ any outside HR folks to help you deal with those 

issues. Now with the new law, are you going to need to probably 

bring in some HR folks? What kind of cost are you looking at for 

trying to comply with this law? 

Mr. CONRAD. To begin with, we have been scratching the surface. 

I have gone to accountants, I have gone to lawyers. I haven’t 

brought the certified HR people in. But on first brush, the low 

number was $160,000 a year to over $200,000 a year, just to expand on what we are presently doing, the 80 percent for corporate 

people. So we know it is going to be quite expensive, but we just 

don’t know how expensive. 

I don’t think all those numbers, Congressman, are going to come 

out until November. I think we are all, the experts, just sort of 

playing a guessing game until then, because until they get into the 

26 

fourth quarter, they are not going to give us any rates for 1 January 2014. 

Mr. HUDSON. So what is the impact of this uncertainty on you? 

What are you doing to prepare for whatever the eventuality might 

be? 

Mr. CONRAD. Well, let me back up and say that the restaurant 

business in itself is one of the very lowest profit-per-employee industries in the United States. With 10 percent of the workforce employed in a restaurant or a food service operation today, and that 

is directly, not all the indirect people that depend on that, we are 

in dangerous territory. The mortality rate for a restaurant today on 

the average is they are not going to last 36 months. So if you stop 

and look, it is a changing industry. It is one, when you look at the 

profit per employee, why did we ever go into the business to begin 

with? But we were just born into it and we love it. 

Mr. HUDSON. I appreciate that, and I love eating the fried fish 

that you serve up. [Laughter.] 

So you talk very specifically about a couple of different items in 

the law that are having an impact on you, and we are working on 

one of those together, on the auto enrollment. But which of these 

do you think is the most critical, or could you talk a little more 

about it? 

Mr. CONRAD. I think right now the defining deal with 30 hours 

a week, a lot of employers right now are trimming their workforce 

back to 29, 29 hours, and people are having to find multiple jobs. 

I think if you were to go to a more realistic number of 35 to 40, 

that may give an umbrella to some of those people that are going 

to be impacted. 

I think the definition of large employer/small employer is very 

critical because the equivalency of—somebody mentioned talking 

about the three people working in—I think it was you, Chairman— 

that were working in the summer to relieve their college deals, and 

then you add their hours up, and that equates to one full-time employee. And so I think that could be relaxed somewhat, the equivalency part of it. 

Mr. HUDSON. Thank you for that. 

I have a little bit of time left. Mr. Horne, I would like to go back 

to you. I introduced you to the Chairman earlier as an endangered 

species because you are a textile person who has been very successful, and you have a reputation in your community of being an outstanding corporate citizen, and I hope folks noted that you didn’t 

call your employees ‘‘employees.’’ You call them partners, and I was 

very impressed the more I learned about the things you do preventive care-wise and others to provide benefits to your employees. 

But with the costs coming down the pike, $63 per individual and 

so forth, what kind of impact is that going to have on your ability 

to continue to provide these benefits to your workers, your partners? 

Mr. HORNE. Well, I am sure we will continue to provide the benefits. There is no question about that. The conversations that we are 

having right now are what are we going to do to help control our 

costs, and oftentimes that comes down to not replacing people, 

using attrition to reduce the numbers. So I think that is going to 

27 

be the likely outcome of all this. Certainly, we are going to pay 

quite a bit more. 

There is another issue, too, and that is that we think there is 

going to be a morale issue here. We have some young employees 

who choose not to take our health insurance. It may not be the best 

decision, but we have that, and, of course, we are going to have to 

automatically enroll them. They have no choice in that. And I feel 

like the response is going to be to be angry at us about that as opposed to the law, and it is going to be difficult to explain that. Of course, our premiums for single individuals is $23 a week. So it is going to cost them a little over $1,000 when we enroll them. 

They can easily withdraw and pay the penalty, and they would be 

much better off. 

Mr. HUDSON. Thank you. 

My time has expired. Mr. Chairman, I will yield back to you. 

Chairman ROE. I thank the gentleman for yielding. 

We will have a second round of questions. Let me start off by 

saying there is a large fast food chain in Tennessee that has 70 

percent full-time employees and 30 percent part-time. Instead of 

growing their business this year, their model is going to be to flip 

that number to 70 percent part-time and 30 percent full-time. 

Let me give you an example in my own—I asked Secretary 

Sibelius, and she will be in front of our committee on the 15th of 

May. But I asked Secretary Sibelius last year, I said, look, I am 

in a medical practice, and we pay about $6,000 per employee for 

health insurance coverage. We have covered our employees and 

have been proud to do it since 1967 when we opened our practice. 

So I said we have 400 employees. We are paying $6,000 each. If 

I pay a penalty of $2,000 each, that costs me $800,000, and I can 

save myself $1.6 million. Why won’t I do that? And she had no answer. 

Mr. Horne had the answer, is because we want to do the right 

thing by our employees. We think we get better employees. So, 

therefore, you want to do that. 

We had testimony from a guy, an HR firm last year, who came 

in and said one of his clients said I am not going to be the first 

one to drop my health insurance coverage, but I am not going to 

be third either. And what he meant was that he will be at a competitive disadvantage if some of his competitors drop that and they 

can put that money to their bottom line. I can tell you, I know of 

one large company, a Fortune 500 company that is in Tennessee 

that can put $40 million to their bottom line by simply putting 

their employees into the exchange, and let me tell you why that is 

a bad idea for the employees, because the subsidy that they get 

through the exchange is not as much as their employer is currently 

paying, and the difference between those numbers that the employee will have to pay is not tax-deductible. 

So once again, I will go back to the first premise I made. The biggest problem with healthcare in this country is the cost of it, how 

much it costs people. If it were all cheap, we would all have it. I 

absolutely believe that there is enough money in our system to 

cover all of our citizens. 

Let me just give you a brief example of Tennessee when we reformed our Medicaid program. We are going to get to that in our 

28 

second panel. The problem in Tennessee in the early 1990s, we had 

a lot of people—we are not a wealthy state. Our per capita income 

is less than the national average. We wanted to provide health insurance coverage for as many people in Tennessee as we could. So 

we reformed in a managed care plan called TennCare. 

We found out we were spending $2.5 billion in 1993. In 2003, we 

were spending $8.5 billion. Our costs had over tripled in 10 years, 

and half the people who had health insurance coverage, half the 

people who got on TennCare dropped their private health insurance and got on the public, and the reason they got on that was 

it was a better plan than I could afford in my office. 

So the state, what it did was, our Democratic governor, to his 

credit, in 2005, basically how he rationed care was he just cut the 

rolls. That is what he did. 

So I have seen this health care reform done before. I had written 

an article about it three years ago about how I see it going down. 

Look, healthcare decisions ought to be made between a patient and 

the doctor and that patient’s family. It shouldn’t be made between 

an insurance company telling you what you can have done or the 

Federal Government telling you what you can have done. That is 

the most personal decision you can possibly make, and that is who 

should be making it. 

I admire all of you. Every bit of testimony here has been spoton correct. 

Mr. Conrad, I want to go back to the auto enrollment. My kids 

are all above 26 now, but when they were less than 26, I think 

they would have made a decision, instead of paying $300 a month, 

to pay $95 a year, opt out, and the whole premise of this Affordable 

Care Act is that you are basically going to extract healthy people. 

Look, the healthiest people in the world are people under 26 years 

of age. The only thing you are insuring a less than 26-year-old boy 

for is just stupidity. They are going to do dumb stuff. [Laughter.] 

I have two boys. I understand what they do. You are insuring 

stupid. You are not insuring disease. 

So what you are doing at that point is you are taking people who 

don’t have much risk and forcing their costs up. When they figure 

that out, and they will in about 10 minutes, they are going to opt 

out of the auto enroll. 

Mr. Conrad, what you mentioned about how you can dual enroll 

people, I don’t think most people understand that a husband and 

wife can be working, both get auto-enrolled at different jobs and 

both be on an insurance plan when only one of them needs to be. 

Mr. CONRAD. And then the children also are covered under mom 

and dad’s plan, and they are not needing to be there. We just think 

the redundancy of the 200 employee limit, it is already in the large 

employer. It is already there. You have to offer that health insurance. Just like the gentleman said, he is offering it to all of his employees. Not all will take it. 

The auto enrollment is going to create ill will for those people 

who really didn’t want health insurance and all of a sudden they 

get that check on the 91st day and it has them enrolled in health 

insurance and they didn’t sign up for. All of a sudden, you have another problem with the morale of your employees. We just feel like 

29 

H.R. 1250, whatever it is, is the right bill to come out of Congress 

to get rid of this. 

Chairman ROE. Well, I thank you. 

One last comment, and then I will yield to Mr. Hudson. 

The only people I know of who define a 30-hour work week as 

a full work week would be the French. [Laughter.] 

I yield to Mr. Hudson. 

Mr. CONRAD. And see where it got them. 

Mr. HUDSON. Mr. Chairman, I don’t know how to follow that. 

Ms. Haynes, I would like to talk some about the issue you raised 

with adjunct professors. You discussed calculating the hours 

worked both inside and outside the classroom for the purpose of the 

30-hour part-time calculation and the healthcare law. By your 

math, an adjunct faculty member would not be able to teach more 

than three 3-hour credit courses at one time. How much of a departure is this from current practice, and what is going to be the real 

impact? Have you calculated how many courses we may lose at the 

college with this? 

Ms. HAYNES. Well, it varies by college, and it varies by subject 

matter. So it would be difficult to say exactly what the impact is 

going to be. But I can tell you that it can be substantial. I mean, 

at a point in time we can use adjunct faculty to teach four, five, 

or even six classes. And it depends on the type of class. All classes 

and all courses are not created equal. You have those that are 

purely lecture. They require an intense amount of preparation 

ahead of time. And then there are classes, like welding or some cosmetology, for example, where the instruction and the lab take place 

simultaneously. So most of the preparation and the instruction, everything, happens within the content and the context of that classroom. 

So there is not a lot of preparation that happens outside, nor 

supporting or needful activity outside of the classroom. It all happens within. So defining that and giving us a one-size-fits-all rule 

really just doesn’t work for the type of instruction that we deliver. 

Mr. HUDSON. Well, I appreciate that. You also mentioned the 

massive administrative burden on the college. Can you elaborate on 

that a little bit? 

Ms. HAYNES. Well, let’s see. I was thinking just before we came, 

there is the look-back period, the measurement period, the stability 

period, and then there is the initial measurement period for new 

employees, and administrative period, and all of that is followed by 

additional enrollment. So you just keep this going on and on and 

on. 

We also have employees who work for us, and faculty, for example, adjunct faculty, they will teach for us for a year and then, for 

whatever reason, they drop out a year, either by our demand or because they are going back to school. Whatever the reason, they may 

be with us a year, they leave a year. So during that measurement 

period, they are entitled under the eligibility rules to participate in 

our health plan, but they are no longer with us. So you have payroll deduction that would have occurred had they still been employed, but they are not there. 

So now we have to set up collections. You have to figure out how 

to get that money, and we believe that in most cases people are 

30 

honorable and they follow up on their debts. But sometimes, let’s 

face it, it is just difficult to collect, and that is part of what we are 

going to have to look at. 

In addition to that, you have to look at all of these different employee populations, and the penalties, I might mention, are tremendous. We couldn’t afford the penalty if we hit that penalty bracket. 

So we have to be extra careful. It is a massive undertaking to set 

up the administration to do the eligibility, to look at eligibility, to 

make sure that always you are defining every population for every 

measurement period and every stability period and every enrollment correctly. 

Mr. HUDSON. Wow. I heard you say in your testimony before 

what is going to happen to the added cost. Would you repeat that 

and highlight what you said? 

Ms. HAYNES. Well, if you consider that we have $5,400 roughly 

in employer costs when we cover someone, that cost has to go 

somewhere. Frankly, you and I both know as taxpayers, there is 

not a whole lot more in the taxpayer base, in our taxes, that we 

can apply towards that. And so ultimately, I think it will become 

a student expense. It has got to trickle through. That is really not 

where we want to put that cost. Students need to be able to kind 

of get that education, and frankly, that slows down our entire economy. We are looking to help that student along. We don’t want to 

be the impediment. We want to help them get their education and 

get in that workforce. 

Mr. HUDSON. Absolutely. And this college’s ability to respond to 

the needs of employers and the needs of students that need certain 

skills is why this college is so critical, and other colleges like South 

Piedmont that, Mr. Horne, you deal with. They supply the type of 

skilled workers you need in your business, and the ability to adapt 

to that, to get students who need those skills matched up with 

those skills. It really concerns me to hear that we may see increased costs to try and comply with this law that could then limit 

the access students have to those skills. So I appreciate you raising 

that issue. 

Mr. Chairman, I yield back. 

Chairman ROE. I thank the gentleman for yielding, and I want 

to thank the panel. 

Just to show you, Ms. Haynes, how I share in your confusion, I 

am supposed to be an expert in this healthcare law, and I can’t 

even tell you, I can’t even tell my employees in Washington and in 

my district office what their health insurance is going to be in September or October, when we have the opt-in period. I don’t know. 

I don’t know what I am going to do. So if you are confused, I am 

confused. 

And one last comment about I think the future of our country 

rests in the education system that we have, and today education 

debt, student debt exceeds credit card debt in this country. It is a 

humongous problem. The affordability of an education for kids— 

when I went to school, it was amazingly affordable. Today it is not. 

You all do a great job here in North Carolina. I asked about your 

fees. It is less than $1,000 per semester. That is still affordable in 

today’s dollars. 

31 

So, thank you all, all the panel. Great job, and I will now excuse 

you all and we will have our second panel come up. 

I would like to call the committee back to order. I would like to 

again thank the witnesses for taking the time to testify before the 

committee today, and I will now ask that the second panel come 

forward, which they have done. 

It is again my pleasure to yield to Mr. Hudson to introduce our 

second panel of witnesses. 

Mr. HUDSON. Thank you, Mr. Chairman. 

First we have Mr. Dave Bass, who is the Vice President of Compensation and Associate Wellness at Delhaize America, 

headquartered in Salisbury. They employ many area residents in 

their Food Line grocery stores, which are very popular with me and 

a lot of folks around here. 

Also, Mr. Ed Tubel is the Founder and CEO of Tricor, Inc., in 

Charlotte. Mr. Tubel operates a number of Sonny’s Bar-B-Q Restaurant franchises—we frequent the one here at Exit 49 in this 

area—and he is a recipient of the North Carolina Small Business 

Administration Entrepreneur of the Year Award. 

Dr. Olson Huff is a retired pediatrician from Asheville. He is a 

veteran of the United States Air Force. 

We thank you for your service, sir. 

He served as a flight surgeon in Vietnam. He received his medical degree from the University of Louisville. 

Finally, Mr. Bruce Silver is the President and CEO of Racing 

Electronics in Concord. Racing Electronics is the worldwide leader 

in providing radio communication products to the motor sports industry, and you can rent those, I believe, at the track. I have done 

that myself. He was named the 2011 Small Business of the Year 

by the Cabarrus Regional Chamber of Commerce. 

So, thank you all for being here. 

Mr. Chairman, I yield back. 

Chairman ROE. I thank the gentleman for yielding. 

Before recognizing you, we will go through again the lighting system. You will each have five minutes to present your testimony. 

When you begin, the light in front of you will turn green. With one 

minute left, it will turn amber. Then when your time has expired, 

the light will turn red, at which point we will ask you to wrap up 

your remarks as best as you can. After everyone has testified, each 

member will have five minutes, and we probably again will have 

a second round of questioning. 

I will now recognize Mr. Bass for your testimony. 

STATEMENT OF DAVE BASS, VICE PRESIDENT, COMPENSATION AND ASSOCIATE WELLNESS, DELHAIZE AMERICA, CONCORD, NC 

Mr. BASS. Thank you. Chairman Roe and Congressman Hudson, 

my name is Dave Bass, and I am the Vice President of Compensation and Associate Wellness for Delhaize America Shared Services 

Group, LLC. Perhaps as important, I am also a resident of Concord. In my role, I work on behalf of the companies of Delhaize 

America, including Bottom Dollar Food, Food Lion, Hannaford, 

Harvey’s, Sweetbay Supermarket and Reid’s, to understand and 

apply health and wellness best practices as it pertains to our assoVerDate Nov 24 2008 15:02 Mar 06, 2014 Jkt 000000 PO 00000 Frm 00035 Fmt 6633 Sfmt 6602 G:\DOCS\113TH\HELP\113-16\HED120.020 DICK
32 

ciates and our company. Thank you for the opportunity to appear 

here today to provide feedback on the implications of the Patient 

Protection and Affordable Care Act for Delhaize America’s business. 

Delhaize America is a leading supermarket operator in the 

United States, with over 105,000 associates working in 18 states 

throughout our network of 1,500 store locations, 10 distribution 

centers, and four corporate support centers. Despite the economic 

climate during the Great Recession and the narrow 1 percent profit 

margins traditionally associated with the grocery industry, in recent years our company has expanded into new markets and grown 

its Bottom Dollar Food banner in New Jersey, Ohio and Pennsylvania. 

In North Carolina, Delhaize America employs over 30,000 associates and operates more than 500 store locations. As you may know, 

Food Lion was founded in Salisbury, North Carolina in 1957, and 

we are proud of our long history in this great state. In all of our 

operating states, our company is dedicated to supporting programs 

and organizations that make a difference in the lives of our shoppers and neighbors. Last year alone, Delhaize America companies 

donated over 41 million pounds of food. Through corporate and 

foundation giving, local programs and individual associate involvement, millions of dollars and countless volunteer hours are devoted 

to helping our communities and our associates grow and prosper. 

Delhaize America’s vision is to enrich the lives of our customers, 

associates, and communities we serve in a sustainable way. Along 

with a culture of respect, Delhaize believes a primary way of supporting our associates in a sustainable way is through the provision 

of benefits to a large number of our associates. To meet the needs 

of our associates and support their overall health and wellness, 

Delhaize America provides comprehensive health care coverage, 

one of the most expensive benefit options, for its associates. 

Delhaize is proud to offer all our full-time associates the opportunity to enroll in healthcare, and has done so for many, many 

years. 

The Patient Protection and Affordable Care Act creates complex 

challenges for food retailers seeking to provide health care coverage 

to associates while maintaining a viable business in an exceedingly 

competitive consumer environment. Food retailers and their associates operate under fluctuating and unpredictable work schedules in 

order to meet varying consumer demand. Health coverage and compliance costs must remain affordable to Delhaize America in order 

for the company to maintain employee benefits and provide competitive consumer prices. 

Under the Patient Protection and Affordable Care Act, beginning 

in 2014, large employers, those larger than 50 full-time equivalents, must offer coverage to full-time employees, which the law defines as averaging 30 hours or more per week, and that employeroffered coverage must be affordable, which is defined as not costing 

the employee more than 9.5 percent of his or her household income, 

and provide a minimum value of at least 60 percent of the average 

benefit costs covered or face a tax penalty, a mouthful. While on 

the surface this may seem straightforward, there are many comVerDate Nov 24 2008 15:02 Mar 06, 2014 Jkt 000000 PO 00000 Frm 00036 Fmt 6633 Sfmt 6602 G:\DOCS\113TH\HELP\113-16\HED120.020 DICK
33 

plications that could impact the health coverage that Delhaize provides. 

As we look ahead to the implementation of the primary provisions of the Patient Protection and Affordable Care Act, our company foresees a number of challenges, and I would like to draw 

your attention to a few key issues for our business including: the 

definition of a full-time employee; affordability criteria; mandatory 

auto-enrollment; the temporary reinsurance fee; and Flexible 

Spending Account purchases. 

Under the Patient Protection and Affordable Care Act, as a large 

employer, Delhaize America must offer coverage to full-time associates who average 30 hours per week beginning in 2014. The companies of Delhaize America employ a significant number of both fulltime and part-time associates. Currently, 45 percent of our associates are in full-time hourly and salaried roles. Both full-time and 

part-time associates who meet eligibility criteria are able to receive 

coverage under our medical plan. Full-time hourly, salaried, and 

part-time associates working at least an average of 35 hours per 

week are eligible for coverage after two months of continuous employment. 

I will skip ahead here a little bit. 

Mandatory auto-enrollment. Delhaize America also is concerned 

about the Affordable Care Act’s mandatory auto-enrollment provision. Open enrollment for Delhaize America’s medical plan is held 

annually in October and November to give associates an opportunity to select coverage options for the next plan year. Associates 

with existing coverage under the company’s medical plan that do 

not actively engage in the enrollment process for benefits have 

their benefits rolled over to their existing selections. 

The Affordable Care Act’s mandatory associate enrollment provision under Section 1511 could inadvertently cost associates wages 

and create duplicative coverage if a parent or spouse already covers 

the insurance. 

To wrap up here today, as an employer and retailer who is trying 

to do the right thing by continuing to offer coverage to our full-time 

employees, I am concerned that even if I were to have the perfect 

playbook to try to make sure I have all of my full-time equivalents 

identified and I have offered the right coverage, my company may 

still get penalized because one of our employees is mistakenly 

awarded an ACA credit. I am either going to be in a position of 

demonstrating that we did offer affordable coverage and have that 

person, that associate, penalized, or Delhaize America is going to 

get penalized. 

Any steps that can be taken by the committee to mitigate the 

burdens employers are facing is greatly appreciated. Specifically, 

we need Congress’ help in addressing some of these burdens that 

puts at risk our company’s ability to offer health coverage that is 

affordable and of value to as many of our employees as possible. 

Representative Roe and Representative Hudson, thank you for 

your time. 

[The statement of Mr. Bass follows:] 

34 

Prepared Statement of Dave Bass, Vice President, Compensation and 

Associate Wellness, Delhaize America Shared Services Group, LLC 

Chairman Roe and Congressman Hudson, my name is Dave Bass, and I am the 

Vice President of Compensation and Associate Wellness for Delhaize America 

Shared Services Group, LLC. Perhaps as important, I also am a resident of Concord, 

North Carolina. In my role, I work on behalf of the companies of Delhaize America, 

LLC, including Bottom Dollar Food, Food Lion, Hannaford, Harveys, Sweetbay Supermarket and Reid’s, to understand and apply health and wellness best practices 

as it pertains to our associates and our company. Thank you for the opportunity to 

appear here today to provide feedback on the implications of the Patient Protection 

and Affordable Care Act for Delhaize America’s business. 

Delhaize America is a leading supermarket operator in the United States, with 

over 105,000 associates working in 18 states throughout our network of 1,553 store 

locations, 10 distribution centers and four corporate support centers. Despite the 

economic climate during the Great Recession and the narrow one percent profit 

margins traditionally associated with the grocery industry, in recent years our company has expanded into new markets and grown its Bottom Dollar Food banner in 

New Jersey, Ohio and Pennsylvania. 

In North Carolina, Delhaize America employs over 30,000 associates and operates 

more than 500 store locations. As you may know, Food Lion was founded in Salisbury, NC in 1957, and we are proud of our long history in this great State. In all 

of our operating states, our company is dedicated to supporting programs and organizations that make a difference in the lives of our shoppers and neighbors. Last 

year alone, Delhaize America companies donated over 41 million pounds of food. 

Through corporate and foundation giving, local programs and individual associate 

involvement, millions of dollars and countless volunteer hours are devoted to helping our communities and our associates grow and prosper. 

Delhaize America’s vision is to, ‘Enrich the lives of our customers, associates, and 

communities we serve in a sustainable way.’ Along with a culture of respect, 

Delhaize believes a primary way of supporting our associates in a sustainable way 

is through the provision of benefits to a large number of our associates. To meet 

the needs of our associates and support their overall health and wellness, Delhaize 

America provides comprehensive health care coverage, one of the most expensive 

benefit options, for its associates. Delhaize is proud to offer all our full-time associates the opportunity to enroll in healthcare—and has done so for many, many years. 

Challenges Facing Delhaize America and its Associates under the Affordable Care 

Act The Patient Protection and Affordable Care Act creates complex challenges for 

food retailers seeking to provide health care coverage to associates while maintaining a viable business in an exceedingly competitive consumer environment. Food retailers and their associates operate under fluctuating and unpredictable work schedules in order to meet varying consumer demand. Health coverage and compliance 

costs must remain affordable to Delhaize America in order for the company to maintain employee benefits and provide competitive consumer prices. 

Under the Patient Protection and Affordable Care Act, beginning in 2014, ‘large 

employers’ (which the law defines as companies with 50 or more full-time ‘equivalents’) must offer coverage to full-time employees (which the law defines as averaging 30 hours/week) and that employer-offered coverage must be ‘affordable’ (defined as not costing the employee more than 9.5% of his/her household income) and 

provide a ‘minimum value’ of at least 60% of the average benefit costs covered or 

face a tax penalty. While on the surface this may seem straight- forward, there are 

many complications that could impact the health coverage that Delhaize provides. 

As we look ahead to the implementation of the primary provisions of the Patient 

Protection and Affordable Care Act, our company foresees a number of challenges, 

and I would like to draw your attention to a few key issues for our business including: the definition of a full-time employee, affordability criteria, mandatory auto-enrollment, the temporary reinsurance fee and Flexible Spending Account purchases. 

The definition of a full-time employee 

Under the Patient Protection and Affordable Care Act (ACA; PL 111-148), as a 

large employer Delhaize America must offer coverage to full-time employees who average 30 hours per week beginning in 2014. The companies of Delhaize America employ a significant number of both full and part-time associates. Currently, 45 percent of our associates are in full time hourly and salaried roles. Both full and parttime associates who meet eligibility criteria are able to receive coverage under our 

medical plan. Full-time hourly, salaried and part-time salaried associates working 

at least an average of 35 hours per week are eligible for coverage after two months 

of continuous employment. 

35 

The revised definition of a full-time employee under the Affordable Care Act could 

result in the reclassification of many of Delhaize America’s associates from parttime to full-time. Such a change may impact store managers’ ability to provide for 

flexible scheduling, and associates’ hours could be impacted as a result. The definition of a full-time employee under the Act also may cause confusion among associates as they seek to understand which benefits they are eligible to receive should 

the individual only be considered full-time for the purposes of medical coverage. 

Affordability criteria 

Another complicating factor is that when coverage is offered to our associates, the 

premium must not cost the associate more than 9.5% of his/her household income 

and also must cover at least 60% of the average benefit costs. Again, while that may 

sound simple, it is challenging to analyze associate wages even under the current 

safe harbor provisions that allow employers to use an employee’s W-2 wages to 

verify affordability. 

Complicating matters, as I am seeking to define Delhaize America’s health plan 

and determine associate rates for 2014, the uncertainty created by the federal government’s delay in rule finalization affects my ability to understand how best to 

craft and comply with the Affordable Care Act as I look to finalize our company’s 

plan for next year. 

Mandatory auto-enrollment 

Delhaize America also is concerned about the Affordable Care Act’s mandatory, 

auto-enrollment provision. Open enrollment for Delhaize America’s medical plan is 

held annually in October and November to give associates an opportunity to select 

coverage options for the next plan year. 

Associates with existing coverage under the company’s medical plan that do not 

actively engage in the enrollment process for benefits have their benefits rolled over 

to their existing selections. Allowing for the automatic enrollment of associates who 

have previously chosen to receive coverage saves associates time and ensures continued coverage. 

Whereas, the Affordable Care Act’s mandatory associate enrollment provision 

under Section 1511 could inadvertently cost associates’ wages and create duplicative 

coverage if a parent or spouse already covers the associate. When associates who 

do not want employer coverage fail to opt-out of the auto-enrollment process, the 

employer is required to deduct a premium from the associates’ paycheck. Delhaize 

America supports Congressman Hudson’s introduction of the Auto Enroll Repeal Act 

(H.R. 1254) that would repeal the Affordable Care Act’s mandatory enrollment provision, helping to ensure that associates take an active role in coverage determinations. 

Temporary reinsurance fee 

On top of all the compliance costs associated with offering health coverage under 

these rules is a ‘temporary’ reinsurance fee for employers offering self-insured plans 

that will charge our company $5.25 per month per capita in benefit year 2014 ($63 

per capita for all of 2014) and onward. 

Flexible spending account purchases 

Additionally, under a little known provision of the Affordable Care Act, Flexible 

Spending Account (FSA) and Healthcare Reimbursement Account (HRA) funds may 

no longer be used to buy over-the-counter (OTC) medicines unless they are prescribed by a doctor. This prohibition restricts individuals’ access to OTC medications 

by requiring an unnecessary and more costly visit to the doctor’s office for an OTC 

prescription while also putting our store locations without pharmacies at risk of losing FSA shoppers. It was just five years ago, in 2008, when Food Lion retrofitted 

its registers to comply with Internal Revenue Service regulations to accept customers’ FSA/HRA cards for approved healthcare and pharmacy items. 

Many of our customers rely on over-the-counter medicines to manage existing conditions, and Delhaize America supports legislation that would reinstate FSA/HRA 

purchases of over-the- counter medicines without a prescription. In the 112th Congress, the Restoring Access to Medication Act (H.R. 2529) was introduced to restore 

this valuable benefit, and we would encourage the committee to evaluate options for 

the introduction of similar legislation in the 113th Congress. 

Conclusion 

Since the Affordable Care Act became law, I have been focused on trying to understand all of the applicable rules so we can determine how our companies’ health 

plans fit into this structure. I understand that the Administration has attempted 

to provide some flexibility to employers, but many of these rules were only recently 

36 

released and many rules are still pending. As a human resources professional, I cannot afford to build a health plan based on so many uncertainties, particularly given 

the complexities of these rules. Unfortunately, there is no one place or handbook 

that is available for me to figure out all of the rules and ensure that our plan is 

in place and our employees understand their options—as the need to finalize my 

plan design quickly bears down on me. 

As an employer and retailer who is trying to do the right thing by continuing to 

offer coverage to our full-time employees, I’m concerned that even if I were to have 

the perfect playbook to try to make sure I have all of my FTEs identified and I have 

offered the ‘right’ coverage, my company may still get penalized because one of our 

employees is mistakenly awarded an ACA tax credit. I’m either going to be in a position of demonstrating that we did offer affordable coverage and have that person— 

that associate—penalized or Delhaize America is going to get penalized. 

Any steps that can be taken by the Committee to mitigate the burdens employers 

are facing is greatly appreciated. Specifically, we need Congress’s help in addressing 

some of these burdens that puts at risk our company’s ability to offer health coverage that is affordable and of value to as many of our employees as possible. First, 

we need Congress to amend the ACA’s full-time employee definition to be in line 

with current workforce standards. Second, employers need a ‘transition’ or ‘good 

faith’ period through 2014 to figure out all of these rules, test how our eligibility 

measurements and health plans perform without fear of being penalized—and our 

associates to similarly understand what is available to them. And as a retailer, we 

need Congress to restore the use of Flexible Spending Account debit card purchases 

without a prescription. By no means are these suggested reforms ‘cure-alls,’ but the 

changes would potentially alleviate some of the burdens to our business. 

Delhaize America is grateful for the opportunity to appear before you today. We 

welcome the opportunity to work with you in your efforts to address and clarify provisions within the Affordable Care Act. 

Representative Roe and Representative Hudson, thank you for your time. 

Chairman ROE. Thank you, Mr. Bass. 

Mr. Tubel? 

STATEMENT OF ED TUBEL, FOUNDER AND CEO, 

TRICOR INC., CHARLOTTE, NC 

Mr. TUBEL. Chairman Roe, Congressman Hudson, thank you for 

this opportunity. My name is Ed Tubel, and I am Founder and 

CEO of Tricor Inc., a licensed franchisee of Sonny’s Real Pit BarB-Q. Today I will attempt to provide a realistic overview in regards 

to the impact the Affordable Care Act has on my small business. 

I was fortunate to start Sonny’s in the Carolinas in 1978 with 

an SBA guaranteed loan. Over 34 years, we have built 27 restaurants in four states. We currently operate five locations in 

North and South Carolina and employ 178 full and part-time people. Tricor/Sonny’s has a very strong reputation locally as a family 

restaurant that provides for both our customers and our people. 

Our current health program is an HRA and a mini medical 

where we contribute to our 75 full-time and 103 part-time workers. 

Operating under the Affordable Care Act has negative consequences on our company. In essence, it is really not affordable. 

Since its passage, we have studied and participated in numerous 

seminars to estimate our most realistic cost in implementing this 

program. Based upon this information, it would cost our company 

from $140,000 to $200,000 to meet this mandate. This is disastrous 

financially since we are only projecting 2013 net profit of $240,000. 

Our loan covenants require us to maintain a coverage ratio of 1.5 

to 1. This burdensome cost would reduce our coverage ratio to 

below 1, thereby placing our loan in default. Our bank could either 

increase our interest rate by adding to our costs, call our loan, 

37 

which is absolutely unaffordable, or allow us to remain in default. 

I believe we all know the current financial atmosphere of the banking industry today. 

We have evaluated our choices to abide by the law as presently 

interpreted to include, one, increasing our menu prices to cover the 

additional costs, making us less competitive and affecting our sales, 

which eventually could lead to losses. The restaurant industry is 

very competitive and has experienced a very traumatic down slide 

since 2008. Research by the National Restaurant Association shows 

that since the recession, 70 percent have changed their eating-out 

habits by either reducing or even eliminating dining out. Increasing menu prices would be my last resort. 

We could reduce scheduled hours of 30 employees to less than 29, 

reducing our people’s hours and income and the resulting effect on 

the local economy. This could require valuable employees to either 

obtain a second job or quit and seek full-time employment elsewhere. 

Split the company into four or five companies with different ownership is another option in order to stay under the 50 full-time requirements. This is difficult, and also costly. 

Or finally, we could just pay the penalty for not providing coverage under the Affordable Care Act. 

Major companies have legal advisors who will successfully guide 

them through this legislation. Small businesses such as ours must 

obtain as much information as possible and do their best to live by 

the letter of the law. Even after attempting in good faith to abide 

by the law, because this act is so complicated, we hope and pray 

we do not get penalized. 

The majority of our employees are below the age of 40. Many are 

students attending local schools, working during breaks and holidays part-time to supplement their income. The restaurant business has a history of high turnover due to this nature of being a 

second occupation, a supplement for school, or even a beginning 

job. Using W-2s to compute the total number of full-time equivalents under this mandate would unfairly influence these results. In 

addition, the majority of our full-time employees believe this 

healthcare will be free. Many mistakenly believe the 9.5 percent 

cost is coming from Tricor rather than required from them, which 

many cannot afford, not to mention the administrative nightmare 

of our small company just having to enforce. 

Finally, we invest the majority of our cash flow into updating 

and remodeling our facilities to try to stay competitive. However, 

current profit levels are not sufficient to allow us to remodel or 

even consider expanding, which could provide an additional 50 jobs 

per location. 

The information I provided to you today is our best indications 

of observing the Act. We respectfully request that Congress reevaluate this mandate in relation to small business concerning 

both the 50 full-time threshold and calculation of full-time equivalents. With new interpretations being issued regularly, we can only 

hope and pray that we will be able to sustain our 34-year-old business and survive for both our employees and our customers. Thank 

you. 

[The statement of Mr. Tubel follows:] 

38 

Prepared Statement of Edmund Tubel, CEO, Tricor Inc., 

Licensed Franchisee, Sonny’s Real Pit Bar B Q Restaurants 

Ladies and Gentlemen: My name is Edmund Tubel and I am CEO of Tricor Inc 

a licensed franchi see of Sonny’s Real Pit Bar B Q Restaurants. 

Today I will attempt to provide as objective a position in regards to the impact 

the Affordable Care Act has on a small business such as our company. 

I was fortunate to start Sonny’s in the Carolina’s in 1978 with an SBA guaranteed 

loan. Over 34 years, we have built 27 restaurants in four states. We currently operate 5 locations in North and South Carolina and employ 178 full and part-time people. Tricor/Sonny’s has a very strong reputation locally as a family restaurant that 

provides not only for their customers but also their own people. 

Our current health program is an HRA and a mini medical where we contribute 

to both our salary and hourly employees. 

Our census includes 75 Full time and 103 part time workers with less than 30 

hours per week. 

Our interest today is to illustrate not only the complexity of operating under this 

legislation but also the negative consequences the Affordable Care Act will have on 

our Company. In essence it’s really not affordable. 

Since its passage, we having observed and studied various outlines and participated in numerous seminars, to develop our best estimate in implementing this program as currently outlined. Based upon this information, it would cost our company 

anywhere from $150,000-$200,000 to meet this mandate. This is disastrous financially since we are only projecting 2013 net profit of $240,000. 

Our loan covenants require us to maintain a coverage ratio of 1.5 to 1. This burdensome cost would reduce our coverage ratio to below 1 thereby placing our loan 

in default. Being in default would require the bank to 1) increase our interest rate, 

adding to our costs, 2) calling our loan, or 3) allowing us to remain in default. I 

believe we all know the current atmosphere of the financial community. 

Therefore we have evaluated our choices to abide by the law as presently interpreted. These include: 

1. Increasing our menu prices to cover the additional costs thereby making us 

less-competitive in the marketplace and affecting our sales which eventually could 

lead to losses. The restaurant industry is very competitive and has experienced a 

very traumatic downward slide since 2008. Research shows that since the recession 

70% of people have changed their eating out habits by reducing or even eliminating 

dining out according to the National Restaurant Association. Increasing menu prices 

should be a last resort. 

2. Reduce scheduled hours to less than 29 in order to stay below the 50 full time 

employee equivalent, thereby reducing our people’s hours and income and the resulting effect on the local economy. 

3. Split the company into 4-5 separate companies with different ownership in 

order to stay under the 50 full-time requirements. 

4. 0r just pay the penalty for not providing coverage under the Affordable Care 

Act. 

Major companies I am sure have legal advisors that will successfully guide them 

through this legislation. Small businesses such as ours must obtain as much available information as possible and do their best to live by the letter of the law. Then 

because this act is so complicating hope and pray we do not get penalized. 

Many of our employees are very young. Many are students attending local schools 

working during breaks and holidays part-time to supplement their income. The restaurant business understandably has a history of high turnover due to its nature 

of being a second occupation or a supplement for school or even a beginning job position. 

Therefore using W-2’s to compute the total number of those full time equivalents 

under the mandate would unfairly influence these results. In addition, the majority 

of our FTE employees will not be able to afford this healthcare. Not to mention the 

administrative nightmare of our small company having to enforce. 

The information provided today is our best indications of observing the act. We 

respectfully request that Congress reevaluate this mandate in relation to small business concerning both the 50 fulltime threshold and calculation of full time equivalents. 

With new interpretations being issued regularly we can only hope and pray that 

we will be able to sustain our 34 year old business and survive for our employees 

and customers. 

Chairman ROE. Thank you. 

39 

Dr. Huff, thank you for your service to our country. 

STATEMENT OF OLSON HUFF, PEDIATRICIAN, ASHEVILLE, NC 

Dr. HUFF. Good morning and thank you very much for allowing 

me to be here today, Chairman Roe and Congressman Hudson. I 

think that we are an example of democracy at its best, and I really 

appreciate the opportunity of sharing in that with you. 

I have to say, however, as a pediatrician, Chairman Roe, I may 

need to talk to you afterwards about some of those 5,000 children 

you gave me to help take care of during these years. [Laughter.] 

Chairman ROE. Well, Dr. Huff, they are all good Republicans. 

[Laughter.] 

Dr. HUFF. I really appreciate the fact that we are in this discussion, and in the many years, 50 or more now, that I have been in 

medical practice in North Carolina and in other parts of the world, 

I have dealt with countless families. I have seen them at their best, 

and I have seen them at their worst. 

There are three things that I have noticed about the families and 

the children I have cared for which is certainly common to all of 

us. Number one, when we are sick, we want to get well. Number 

two, when we are injured, we want to be mended. And number 

three, when we have pain, we want relief. That basically is the scenario that has been handed to me as a medical professional and to 

all of those who are my colleagues: How do we respond to those 

particular issues of health? 

My perspective from this presentation that I want to make to you 

this morning comes not from a particular business or an institution 

to which I may belong, but from the representation that I hope that 

I have to say about the health of all of our people. 

As a practitioner, I have been faced over these 50 years with a 

magnificent amount of change. We have seen changes in technology, we have seen changes in the scientific advances, and we 

have seen changes in how we become educated about those. As a 

result, we have increased the cost of medical care significantly in 

order to respond to those changes. That cost has been shared by 

patients, it has been shared by payers, it has been shared by private and by public institutions. 

One of the things that I remember specifically as a young patient 

of mine by the name of Alice, she has cerebral palsy. She came into 

my clinic always with a bright smile and a high-five for everyone. 

I asked her mother one day, ‘‘What do you need to make sure that 

Alice gets the best care?’’ She said, ‘‘I need to make sure that someone is taking care of her who knows their business. I need to get 

as much of the care for her in one place, and I need to make sure 

that it is covered by some way, that it is paid for, so I can get her 

the care she needs.’’ 

That is the question that is in front of us, and I want to give two 

very specific reasons that I feel it is important to answer Alice’s 

mother. 

First of all, North Carolina has missed a major opportunity when 

it failed to expand Medicaid, a portion of the Affordable Care Act 

that would extend care to significant numbers of people that would 

increase their opportunity for preventive health care. In North 

Carolina, we lost 25,000 jobs. We failed to add to our gross domesVerDate Nov 24 2008 15:02 Mar 06, 2014 Jkt 000000 PO 00000 Frm 00043 Fmt 6633 Sfmt 6602 G:\DOCS\113TH\HELP\113-16\HED120.020 DICK
40 

tic product over the next 10 years, at least $1.2 billion. But more 

importantly, we failed to ensure and guarantee that access to the 

relief of pain, the relief of sickness and the mending of bodies that 

are broken for 500,000 people. 

Translate that into another factor. We have about 122,000 births 

in North Carolina each year, and almost 10 percent of those are 

born too early. The premature birth rate at our hospital costs us 

a little over $10,000 a year, compared to under $2,000 a year for 

a full-term newborn baby. We can prevent prematurity by offering 

better resources for preventive health care, and Medicaid is one of 

the ways in which women can get that preventive health care. 

We have talked a lot about cost today, and we will continue to 

talk about cost as it is related to health care. One of the things, 

however, that I think is tremendously important for us to understand is that there is a return on investment here, and rather than 

spending so much time on cost, I would love to see us spend more 

time on the benefits of what it means to insure all of our people 

and guarantee them the relief that is so necessary that we practitioners, hospitals, and institutions of medicine need to provide. 

Thank you for your service to our country. I continue to hope we 

will dialogue about this together. 

[The statement of Dr. Huff follows:] 

Prepared Statement of Olson Huff, M.D., FAAP 

For more than thirty-five years I have provided health care to countless children 

in North Carolina and have entered the lives of their families in substantial and 

enduring ways. I have seen them at their best and their worst. In those years, I 

have learned many things. Three stand out: 

1. When, ill, there is a desire to be well. 

2. When injured, there is a desire to be mended. 

3. When in pain there is a desire for relief. 

My task as a medical practitioner has been to address those issues and to bring 

a resolution to those desires whenever and wherever possible. To do so required me, 

and all my fellow medical colleagues, to rely on an extensive network of health care 

resources. Chief among those resources is and has been the economic strength necessary to support an ever-expanding medical system engaged in technological, scientific and educational advances. 

From my perspective as a medical practitioner, I wish to address two specific 

issues affecting children and their families in North Carolina and the economics surrounding them. 

They are: 

1. Medicaid Expansion 

2. Premature births 

Let me first state that these two issues are only a fraction of the many faces of 

health care today and both are centered squarely in the center of preventive care, 

a must if health care costs are to be reduced. 

Medicaid expansion in North Carolina. This opportunity of the ACA would have 

produced 25,000 jobs in North Carolina, added between 1.2 and 1.7 billion dollars 

to the GDP of the state and provided badly needed health care access to 500,000 

uninsured citizens. This would have been a bold step for prevention as the most reliable index of better health and therefore decreased medical costs is reliable access 

to health care. 

Premature births. In North Carolina each year, approximately 122,000 babies are 

born. At the last counting, 15,569 of those were born too early. Not to even mention 

the human cost and impact on the economic and emotional health of a family with 

a premature baby, the average cost of caring for that baby is about $50,000.00 compared to $4550.00 for a full term healthy infant. 

The figures speak for themselves. Improved access to care, and a reliable resource 

to pay for it yields better health, better prenatal and infant care, a lowered rate 

of premature births and a healthier and more dependable work force to drive the 

engines of commerce our state so badly needs. 

41 

Expanding Medicaid is one easily achievable way to guarantee that access to a 

population most likely to benefit and thus most likely improve the economic bottom 

line that will add greatly to the future needs and development of all of North Carolina’s citizens. 

Chairman ROE. Thank you, Dr. Huff. 

Mr. Silver? 

STATEMENT OF BRUCE SILVER, PRESIDENT AND CEO, 

RACING ELECTRONICS, CONCORD, NC 

Mr. SILVER. Thank you. My name is Bruce Silver. I am the President and CEO and Founder of Racing Electronics. We are based in 

Concord, North Carolina. I am very proud to be here today, and I 

want to thank the Congressman Hudson and Chairman Roe for allowing me to speak today. 

As a small business owner, I am concerned about the effects of 

the Affordable Health Care Act, Obamacare, and how it affects me 

and my small business in the future. 

What was once a choice for Americans will now become mandates and requirements, not only for employers but for also employees. Our right to choose is going to be lost. 

Insurance companies have already seen new taxes on health 

care. These new taxes are already in place and already have increased our premiums. In 2012, our premiums at Racing Electronics rose by 28 percent. In this year of renewal, just this month, 

in April of 2013, we have seen a 40 percent increase this year to 

our health care premiums. We cannot continue to sustain this and 

absorb increases and the effects to our bottom line. 

In the past, we have increased our employees’ share of their paying for their health coverage, increased co-pays, and increased their 

deductibles. As a net result, our employees enjoy a much less rich 

plan than they enjoyed just three years ago. 

In the past we have competed in the marketplace, and still currently to this day we compete in the marketplace for employees. 

We have job applicants who come in wanting to know what our salary is, what their vacation time is, and what their insurance plan 

is. We compete by having affordable health care for our employees, 

by having substantial and equitable salaries to offer our employees. 

That choice for health care is being taken away. We can’t compete 

with that now. It is going to be mandated what we are going to 

have to give. 

We are looking for automated distribution. We distribute radios 

and scanners at the Nascar and Indy Car and NHRA races, mostly 

all over the USA. This week in Talladega, we will have 40 staff 

members. I am sure you have all seen the high-tech vending machines that have started to come to airports and malls around the 

country. We are looking at that right now. We are looking at what 

the benefits are if we would go and have 30 machines instead of 

30 staff members at the race, and the result—we don’t want that 

result, we don’t want that result. 

Since moving our headquarters to Concord in 2005, we have 

started to re-hire North Carolinians and put people back to work. 

While based in New Jersey in the early 1990s, we moved some of 

our production to Asia. I am very proud that we are pulling back 

42 

a lot of that production and putting people back to work in this 

country. Thank you. 

[The statement of Mr. Silver follows:] 

Prepared Statement of Bruce Silver, President, Electronics Industries 

Corp.—TIA Racing Electronics 

Talking Points 

Taxes Accessed to Healthcare Providers—How this affects premiums 

New Mandates—The effect of mandates related to premium hikes First year and 

future year costs (unknown) 

The disincentives for businesses to hire— 

• Avoid penalties, new costs and burdens 

• Turning to outsource work and turn to contractors and not hire new employees 

The elements regarding hiring/retention of employees (most desirable candidates)—Government in independent business 

The effects on companies of 50 or more employees—How part-time/seasonal employees will be classified and the affects 

Related Penalties/Calculations— 

• Tax affects 

• How much penalty payments will generate What plans the employer may be required to offer 

• Calculations of the employee contribution as it relates to the household income 

• Why the premiums will continue to soar and the effect on employee’s rising 

deductibles and out of pocket expenses 

Chairman ROE. Thank you, Mr. Silver, and thank the panel for 

your testimony, all again very good. 

In the right of full disclosure, the staff and I ate at a Sonny’s 

Restaurant last night, and we are still full. It was very good. 

[Laughter.] 

Chairman ROE. We know a little something about Nascar racing 

in East Tennessee at the Thunder Valley and the Bristol Motor 

Speedway, so we use your products there. 

Mr. SILVER. Thank you. 

Chairman ROE. We thank you for that, and we would like to see, 

of course, that business get back on its feet a little bit, too. They 

have been struggling a little bit, the racing industry has. 

Let me start by saying that I share a vision and a goal, and one 

of the reasons I left my medical practice and I told my wife I am 

either going to quit complaining or I am going to try to get elected 

to Congress and do something about the way I think the healthcare 

system is going in this country. I could see in my own patients this 

cost forcing people to lose their insurance, and you have seen this 

recession do that. We have fewer people now that have private 

health insurance coverage than before. So we have lost coverage 

because of our economy, and we are not going to increase coverage 

by losing jobs. We increase it by, as you, Mr. Silver, pointed out, 

bringing that manufacturing back, allowing people to get jobs and 

fill these positions that have health insurance coverage. 

And I went through this health care reform in Tennessee and I 

watched what happened, and I can see the same thing happening 

here on a national level. We have created a massive bureaucracy 

for the simplest transaction in the world, and that is a patient coming to see me and me getting paid for that transaction. It is unbelievable when you listen to all of the work that has to be done for 

that to happen now, and we have only begun to scratch the surface. 

We haven’t even talked about Medicare, which is extremely imporVerDate Nov 24 2008 15:02 Mar 06, 2014 Jkt 000000 PO 00000 Frm 00046 Fmt 6633 Sfmt 6602 G:\DOCS\113TH\HELP\113-16\HED120.020 DICK
43 

tant for me and extremely complicated when you look at the Affordable Care Act. 

So let me just talk about Medicaid expansion. Our state in Tennessee elected not to do it, to expand, and elected not to have the 

exchange. The Federal Government will set up the exchange. Let 

me just explain to you why we elected not to do it. 

Our governor, Governor Haslam, what he wanted to do was to 

have the flexibility to allow patients on Medicaid—by the way, if 

you want to, go pull this up. A large study was just published by 

the University of Virginia, 800,000-something patients, not a small 

study. Medicaid patients’ surgical outcomes were worse than people 

that did not have health insurance coverage at all. The outcomes 

were worse. Mortality was higher and so forth. Why do we take a 

flawed, failed system that doesn’t serve the patients well, why don’t 

we reform that system so that it serves them better? 

One of the things I think we can do with that is to allow the private market to work. The public it has served, and, Dr. Huff, in 

Tennessee, all women who don’t have health insurance coverage— 

because pregnancy is one of the things where you is or you ain’t. 

So it is not one of those things where I may be pregnant. So in 

Tennessee, we cover every pregnant woman. So they have access 

to coverage. And with SCHIP plan, all of our children have coverage for pediatric coverage. So that is happening right now in our 

state, and I would suspect a lot of it is happening here. 

What you are talking about is expanding the program to the uninsured in North Carolina, and I think certainly those folks need 

to have adequate coverage, but there is a better way to do it other 

than Medicaid. What we wanted to do is use the same good health 

insurance that I currently have, I would like to have lower-income 

people have access to that, and that is what we would like to do 

in Tennessee. 

Mr. Bass, I am going to ask you a couple of questions. It is extremely important what you brought out in your testimony, which 

was excellent. One was defining a 40-hour work week. I think that 

is very important. Two is would you go over, Mr. Bass, a good-faith 

effort you were talking about in 2014? And lastly, a lot of people 

don’t pay any attention to it, but it would help to fund the Affordable Care Act. To me, it was exactly the wrong way to go, to take 

a flexible spending account that I have right now and have me call 

my doctor to be able to get Prilosec over the counter instead of 

using your flexible spending account. You send it to the highestcost provider instead of just letting me go down and get my 

Prilosec. 

And by the way, this is a personal testimonial. Thirty-one years 

I have practiced medicine, took care of some of the sickest people 

in the world. I never took a Tums, and six months after getting to 

Congress, I take a Prilosec every day, to let you know how it is. 

[Laughter.] 

So if you would go over those three points I made? 

Mr. BASS. Sure can. Food Lion invested itself several years ago 

to support the IRS regs around over-the-counter medications and 

accepting FSA accounts, and obviously with the new laws, that investment is going to be in jeopardy. We would similarly argue that 

we think it is inefficient to have patients go to their doctor for overVerDate Nov 24 2008 15:02 Mar 06, 2014 Jkt 000000 PO 00000 Frm 00047 Fmt 6633 Sfmt 6602 G:\DOCS\113TH\HELP\113-16\HED120.020 DICK
44 

the-counter medications that they should be able to buy via those 

accounts without that interruption, I would argue. 

As far as a full-time associate, we strongly believe that for us, 

35 hours and up is an adequate definition, and we believe that the 

expansion of that to 30 hours will create confusion, added cost, and 

in a business, frankly, where everyone sells food, we are doing our 

best to serve our customers and our associates in the best way possible. So for us, that expansion is really something that is important to us, and we believe we should be re-examining that. 

Chairman ROE. One of the things that I wanted to bring up that 

I learned in a hearing in Evansville, Indiana, obviously in medicine, we don’t do this this way, but it is profit per employee. We 

had an IHOP owner that owned 12 IHOPs, had 800 employees, and 

he said he was very efficient. He made $2,800 per employee, and 

apparently in that business, that is very good. I didn’t know that. 

Other McDonald’s franchisee owners told me that $1,200 a year 

was very good per employee. 

He said, Doc, what do I do? He said, if I pay for the health insurance that I am required by the government, the essential health 

package, essential health benefits it is called—the government decides what you buy, not you, and what you can afford. He said, it 

is going to cost me $8,000. I am upside-down $5,000 per employee. 

If I pay the penalty and the taxes on that, I make no money. He 

said, what do I do? I said, well, by Washington speak, you charge 

me $10 for a pancake and you go out of business. I think that is 

exactly what you just described. I think I heard you say the last 

thing you wanted to do was raise the price for your customer. 

Mr. TUBEL. Exactly. 

Chairman ROE. Could you comment on that? 

Mr. TUBEL. Well, one of the problems we have is that we compete 

in a very competitive marketplace to where we compete with a lot 

of mom and pops. They won’t have to operate under the same mandate as we do, which would require us, if we raised our prices, to 

go across the street and get something for a lot less money than 

coming to us, notwithstanding the service or the quality of what we 

provide. 

But bottom line is, after all is said and done, we are lucky at the 

end of the day to, after taxes, to make 2 to 3 percent profit, which 

is more in line with about $1,200 per employee. 

Chairman ROE. I thank you. 

I yield to Mr. Hudson. 

Mr. HUDSON. Thank you, Mr. Chairman. 

I thank the witnesses for your testimony. 

Going back, Mr. Bass, talking about I guess these added costs, 

which I think Mr. Tubel is referring to, how is your business going 

to respond? You are operating on a 1 percent profit margin on grocery items already. Are you going to raise food prices? Do you impact the incomes of employees? Your organization does a tremendous amount of charitable work in the community. Is that where 

we will probably see the cuts? How are you going to respond to the 

costs that are coming down the pike? 

Mr. BASS. That is a great question and the key one that we are 

wrestling with right now. So for us, we are deep in the planning 

phase. I think, as was mentioned on the earlier panel, with many 

45 

new laws, we spend a fair amount of money, frankly, both for legal 

advice and for consulting advice, which could be used to grow our 

business in different ways, serve our customers differently and, 

frankly, serve our associates. 

We have already spent a substantial amount of money to try and 

determine how to comply with the regulations that are there already. So going forward, we continue to do that work. We are not 

quite sure exactly what the full impact will be. But as a competitive business who also believes we need to serve our employees as 

much as we serve our customers, we have a real strong conviction 

to continue to maintain health insurance. The form that it happens, the full impact of that, we are not quite sure, but it is very 

complex, and that is really why I think we need to consider some 

of the additional changes to those laws that have been discussed 

already. 

Mr. HUDSON. I appreciate that. 

Mr. Tubel, you talked about the impact on your profit margins. 

I don’t think folks who are not in business and, unfortunately, the 

people who are writing regulations for laws like this understand 

just how tight business people operate on margins, and especially 

in economies like this. 

You mentioned, I believe, how much time you are having to 

spend on legal advice and that sort of thing. What is the impact 

of that, just trying to understand the law, trying to figure out how 

to comply with the law? What kind of impact does that have on 

you? 

Mr. TUBEL. Well, what we try to do is participate in various seminars that are provided by the industry. The North Carolina Restaurant and Lodging Association has also brought us a seminar, 

and then our franchise company has brought in legal to try to separate the single operator to the mini operator to the big operator. 

So it takes time away. 

But our biggest concern is if we get to the point where we can 

understand where we are at in the law, that it changes again. It 

is like a moving target for us. So we try to keep that moving target 

within range so we know that we have a probability of meeting the 

demands of the Act. 

Mr. HUDSON. I know it is frustrating. I continue to try to beat 

that drum when we go to Washington just about what the uncertainty does to business people like yourself. So I will continue to 

be your advocate. 

Mr. Silver, thank you for your testimony. Can you elaborate a little bit on what you mentioned just in terms of the health care cost 

as a disincentive for hiring folks like you? 

Mr. SILVER. Sure. Right now, we have offered a very healthy, 

rich plan, didn’t try to incentivize people coming on board and 

working for our company. We are going to have to limit that. We 

are going to have to back down on some of the coverage and, frankly, we feel we’re going to lose some employees to other employers 

because we are not going to be able to sustain the level of health 

care that is going to be mandated. 

Mr. HUDSON. Well, you have certainly been a great citizen of this 

community, as was recognized by the Chamber, recognized U.S. 

46 

Business of the Year, and we appreciate what you do for the community and the type of quality jobs you provide. 

Mr. SILVER. Thank you. I am honored. 

Mr. HUDSON. In my opinion, the Federal Government ought to be 

doing everything we can to get out of the way of people who are 

manufacturing things in this country, and we hope you can continue to have real people handing me a scanner at the race and not 

a machine. 

Mr. SILVER. That is our goal. It will be a sad day for me and my 

company if we ever have to really go down that route. 

Mr. HUDSON. Yes, sir. Well, as we look at just sort of what is the 

impact on your business, what do you think is the greatest impact 

out of this law as we look at ways we might improve it and tweak 

it? What is sort of the biggest thorn, the biggest burr in your saddle there? 

Mr. SILVER. The lack of choice. We don’t have a choice. We are 

told what we need to do. We are told how we need to do it. Instead 

of letting business do what businesses do and compete in the marketplace with good products and for good employees, we are told 

that we can’t do that anymore. More regulation is not healthy for 

business. 

Mr. HUDSON. That is very well said. 

Mr. Chairman, before I yield back, during our break one of our 

citizens in the audience grabbed me and handed me an article 

about—it is titled, ‘‘Republicans and Democrats in Washington 

Conspire to Exempt Themselves from Obamacare,’’ and I just wanted to state on the record that I have nothing to do with those negotiations, and as far as I am concerned we need to live under laws 

that we pass. So I don’t support any efforts to exempt Congress, 

although I would love to find a way to exempt everyone from this 

health care law. 

But with that, Mr. Chairman, I will yield back. 

Chairman ROE. I thank the gentleman for yielding. 

I had an email about that yesterday, and my response was I 

would vote against me if I did that. So I would vote against myself. 

A couple of things that I want to sort of start by sharing with 

you to show you how complicated and complex this health care system this, and Dr. Huff brought it out. He spent his life taking care 

of poor children in western North Carolina, and that is a noble 

goal, something that just—literally across Mountain Sam’s Gap is 

where I live. Medicaid is one way to do it. It was started in 1965, 

as Medicare was. Medicare began as a plan that cost $3 billion, and 

the government in 1965, the government estimator said that in 

1990, 25 years later, it would be a $13 billion program, a $12 billion program. It is $110 billion. They missed it just a little bit, by 

a factor of nine. 

Medicaid has had the same explosive growth. Over 40, 50 million 

people now have Medicaid in this country as their primary. And 

again, if it were a system that were working for them, that would 

be one thing. Because you get a Medicaid card doesn’t mean you 

can get access to health insurance coverage. Our Medicaid patients 

tend to use more than the uninsured the emergency room, which 

is the most expensive, the worst thing you can do. And then there 

is the cost shifting that goes on. Let me explain what that is. 

47 

When you come in to the hospital or to the doctor’s office, it pays, 

Medicaid pays less than 60 percent of the actual cost of providing 

the care. So that cost is shifted onto the private sector, forcing all 

of these gentlemen up here who provide health insurance coverage 

for their employees to go higher. So the government program is actually shifting the cost to the private sector, and let me give you 

an example. 

When implantable defibrillators first came out, there was a man, 

a gentleman who needed one, and it was put in. Medicaid paid 

$800 for that device. The only problem with it, it cost $40,000. So 

that $38,000, $39,200—I am a public school guy; you see how I did 

in my math—that $39,200 was shifted to private insurers. So we 

have to stop this cost shifting that is going on right now, currently. 

And remember that hospitals and doctors have the responsibility 

by the EMTALA law that anyone who comes up, whether you are 

legally in this country or illegally in this country, have a right to 

health care. If you show up in the emergency room, Dr. Huff will 

see you if he is on call. If you show up in the emergency room, I 

will see you, and we will treat you whether you can pay or not, and 

no one is complaining about that. 

But we have to figure out a way to make this—as you heard 

these gentlemen say, their businesses can’t afford it, and they can’t 

afford more cost shifting. And it also occurs to a much lesser extent 

in Medicare. 

So I am going to finish up my questions, and I certainly appreciate this panel. It has been very, very informative. 

I think, Mr. Bass, you bring a point out that I had not thought 

of, which is the good faith period. I think we have to have a time, 

since I don’t believe the Federal Government is going to be prepared for this come January 1, 2014, and it is the law of the land. 

I mean, it is the law we have to comply with and live with, and 

the thousands of pages somebody has to read. You guys are spending an inordinate amount of money and time doing that. Smaller 

businesses like these, they don’t have an HR department to do 

that, so I don’t know how they get the information. But we do need 

a grace period. I am taking that back. That is something I think 

we do. 

And the question I have for all of you all, we have Secretary 

Sibelius in front of my committee on the 15th of May. If you had 

a question to ask her, what would you want me to ask? And I will 

take it back from right here and ask it. 

Mr. BASS. I would emphasize a grace period that you just outlined. Food Lion and Delhaize America are proud to be strong partners in our communities. We will support both the law of the land 

and the desires of the communities we work within. We are proud 

to do that. We will do our best to comply with the law, but there 

are fairly strong penalties involved for lack of compliance that—we 

will not comply because we want to. We won’t probably comply because we don’t have the knowledge and skills yet. So if there were 

a grace period, that would be a huge plus from our perspective, and 

we would ask you to ask her that question. 

Chairman ROE. And Secretary Sibelius is, by the way, for those 

of you in the audience who don’t know, is the Secretary of Health 

48 

and Human Services, who is responsible for the implementation of 

the Affordable Care Act. 

Mr. TUBEL. I think my question would be how do you apply one 

size to fit all? I mean, that is probably one of the biggest questions 

we have in health care, is that you can’t put the one program in 

to cover everyone because everyone is different, and there should 

be some basis that you could allow some correction within the industry, based upon the industry demographics, to allow us to be 

able to afford the health care. 

Chairman ROE. Dr. Huff? 

Dr. HUFF. How do we provide incentives that are already part of 

the Affordable Care Act to increase the ability to make sure that 

primary care physicians are readily available in this country to 

take care of the people we need? Because we have a significant lack 

of primary care physicians, and part of the reason that we need 

health care reform is to make sure we incentivize the educational 

programs to make sure those persons are going to those areas of 

need. 

Chairman ROE. Thank you, Dr. Huff. 

Mr. Silver? 

Mr. SILVER. I would challenge the Secretary to make this a good 

program, to implement changes that would not have the negative 

impact that they have now. It is beyond belief how complex, needlessly how complex this program has become, and that is my question. 

Chairman ROE. We will pose those questions. And before I yield 

to Mr. Hudson for the last questions, Dr. Huff, just to let you know, 

there is a program in Medicare called Graduate Medical Education, 

GME. I am co-chair of the Academic Health Caucus in the Congress. What the Affordable Care Act did was in graduate—GME is 

graduate medical education—is how we train our young doctors 

across the country, and you are absolutely correct, we do not have 

enough. We will have, by 2025, 120,000 primary care doctors short 

in this nation, and we are going to be lined up around Wal-Mart 

to get in. 

The Affordable Care Act cut the funding for graduate medical 

education so there is less money to train our residents. We are 

graduating more medical students, but they can’t get into residency 

slots, and that is an impending disaster that we are working on. 

Mr. Hudson, I yield. 

Mr. HUDSON. Thank you, Mr. Chairman. 

It was very enlightening to hear each of you say what you would 

ask the Secretary, and I think that is important. And again, I 

think that was part of the goal of this, was to allow real people to 

talk about real challenges out here in the real world. And so I appreciate your testimony and I appreciate those candid answers. 

I guess I would just try to dig a little bit deeper on what are 

some of the things in each of your businesses that you do to control 

health care costs, and how does this law impact that. So what are 

some of the processes you go through, the decision-making you do 

currently to control costs, and then how does this law impact that 

sort of decision-making process? And I will just start with Mr. 

Bass. 

49 

Mr. BASS. For us, similar to other panelists, we have a significant emphasis on wellness. We do cover preventive care and the 

like, and we believe that that sets the stage for better long-term 

care and outcomes for the associate, as well as for us as a business, 

as well, on the cost side. There is a lot of uncertainty about exactly 

how wellness discounts work within the rate structure, and that is 

a significant question for us and, frankly, a concern, and that could 

dramatically impact how we offer wellness programs which, in the 

end, benefit the associate as much as it benefits our business. 

Mr. HUDSON. Thank you. 

Mr. Tubel? 

Mr. TUBEL. Well, because of the nature of our business, we encourage our people to join the YMCA and the other fitness places 

around. We have a lot of time to group together and do it as teams, 

but we don’t have anything formal within the actual restaurant 

itself. 

Mr. HUDSON. Thank you. 

I don’t know if this question applies to your practice, but—— 

Dr. HUFF. Well, actually, I have in front of me my notepad that 

says, ‘‘Eat smart, move more, North Carolina.’’ I think the things 

that you all are talking about that provide healthier ways of living 

is really a great emphasis. 

I would like to mention one program in Greenville, South Carolina, and this is an OB/GYN program. Under the Medicaid program 

in South Carolina, they have actually taken pregnant women who 

are in the highest risk categories and reduced the premature birth 

weight by 47 percent. That is how we save money, and that is how 

we reduce costs, by really attending to those areas that are high 

risk and need attention to prevent it. 

Mr. HUDSON. Mr. Silver? 

Mr. SILVER. I am a small business. I started this out of my condominium in 1988 as a part-time job, and we kept adding and adding people. Two areas that I am a little sensitive to is weight and 

smoking, so I personally reward people that work within the company that quit smoking, financially, out of my own pocket, and lose 

weight for some people that we have had who had serious weight 

problems. We just preach a healthy lifestyle. 

Mr. HUDSON. That is great. Well, I am impressed with your answers. But did any of you want to elaborate, though, on what the 

new health care law, the impact it will have on your ability to do 

some of these incentive programs? Is it going to be helpful, or is 

it going to kind of eliminate some of your flexibility to do these 

things? Anyone want to jump in? Mr. Bass? 

Mr. BASS. Yes, I will jump in. I think that the key for us is that 

lack of clarity around the rate structure and discounts for wellness 

programs. At the end, we have so many dollars we can really spend 

on our benefits program. We are proud to do that. But to the extent 

that there is a lack of clarity and uncertainty, it puts us at risk 

of compliance, and the fines involved typically are much more expensive than some of the benefits involved. So it forces us into potentially making hard choices. We don’t know where it is going to 

go quite yet as we gather all the information over the course of the 

summer. But there is a significant potential negative impact, I 

think, for myself and other large employers who are considering 

50 

the pros and cons of the rates, the regs, and the impact on 

wellness. 

Mr. TUBEL. We would hope that the Affordable Care Act would 

provide some means for just about everybody to have the opportunity to be involved in the YMCA or a fitness center on a regular 

basis. 

Dr. HUFF. And in relationship to prevention, again, North Carolina has drawn down several million dollars already from the Affordable Care Act to put into place prevention programs for obesity 

prevention, smoking prevention, and to increase activity. So there 

has been some effort that has been made under the Affordable 

Care Act for different states, certainly North Carolina, to benefit 

from some of the monies that can provide better prevention. 

Mr. SILVER. We are going to continue to do what we have been 

doing, and that is to try to make our company as strong as it can 

be and our employees as healthy as they can be. 

Mr. HUDSON. Great. Well, I thank the panel and, Mr. Chairman, 

I yield back. 

Chairman ROE. I thank the gentleman for yielding, and I certainly want to thank our witnesses for taking your time today. It 

has been fantastic. And I also want to thank all the people here 

in the audience who came in. As you can see, this is incredibly 

complicated, and we have only been two hours. We have only begun 

to scratch the surface of how complex our health care system is. 

By the way, I want to mention one thing. I think when the Lord 

walks on this earth again, it will start at St. Jude’s Children’s Hospital. I was a medical student there in 1969. My first rotation, pediatric rotation, was St. Jude’s Children’s Hospital. At that point 

in time, 90 percent of those children died, 90 percent. Today, 90 

percent of those children live. It is absolutely unbelievable. And 

every child is treated for free. Every child’s family is flown there 

for free. I probably will get a little bit emotional talking about this. 

My partner’s child, my partner in medical practice, his wife was 

in the hospital having a baby when his 3-year-old child had a seizure and found out that he had a metastatic tumor from the abdomen with a 98 percent mortality. He was 3 years old. That boy 

graduates from high school this year. It is an amazing story. I hope 

that this health care plan, or whatever you want to call it here, 

doesn’t interrupt the incredible medical innovations that we have 

in this nation. 

Yesterday on the airplane flying over here to Charlotte from the 

Tri-Cities, I ran into a constituent of mine who was going to the 

M.D. Anderson Hospital. He had a familial leukemia that had a 4- 

month survival rate 12 years ago. We don’t want to stop that in 

this nation. We want to continue to be the country that provides 

that medical research and doctors that provide the kind of care 

that we are getting that is available nowhere else in the world. 

I will now yield to my good friend, Mr. Hudson, for his closing 

remarks. 

Mr. HUDSON. Thank you, Mr. Chairman. Again, thank you for 

being here today, bringing this hearing to Concord and Cabarrus 

County. This has been extremely informative to me, and I thank 

our witnesses from both panels for sharing your testimony. 

51 

I think we all share the goal of having the best health care in 

the world here in this country, having it accessible to everyone, and 

having it at a price people can afford. My desire is that individuals 

have more power and more control over the decisions when it 

comes to health care. A lot of you may have seen Dr. Ben Carson 

when he spoke at the Prayer Breakfast recently. I thought he put 

it so well when he said if it was up to him, every child who is born 

in this country, he would hand them a birth certificate and a 

health savings account. And if they couldn’t afford to put money in 

their health savings account, then the Federal Government would 

put it in for them because it would be cheaper than a lot of the 

social welfare programs we do now. 

And by putting the power in that individual’s hands to make 

health care decisions, if you combine that with some commonsense 

things like liability reform, like more transparency in costs, allowing insurance companies to compete across state lines, tax credits 

for folks who buy their own insurance, if you bring these marketbased reforms into health care and empower individuals to make 

decisions, individuals will make smarter decisions. They will make 

smarter decisions about what kind of preventive care they seek. 

They will make smarter decisions about what kind of tests that 

they and their doctors decide they might need or that a family 

member might need, and we will continue to have the best quality 

health care in the world. 

There is a reason people come here for health care from other 

parts of the world. It is because we have the best quality. So I want 

to see us move toward more access, more affordability, but keep 

that quality of care. I am just really afraid that the program we 

are moving towards, the Affordable Care Act, is going to destroy 

the quality and the access in an attempt to fix the price. 

And then the other side effect that we have talked about a lot 

today here is the impact on our businesses, businesses who are trying to do the right thing, to provide health care, to even provide 

preventive care. I have heard some remarkable stories here today. 

But this law is going to become such a burden to these businesses. 

Not only can they not afford to do what they are doing to take care 

of their employees, but I question whether they can keep their 

doors open and keep the jobs that we need so desperately in our 

communities. 

And so I appreciate the testimony, I appreciate the opportunity 

to highlight these issues, and I just pledge to you that I will continue to work as hard as I can to make improvements to this law 

as long as this law is the law of the land and look for alternatives 

to this law as we build support to do that. 

So, with that, Mr. Chairman, with much gratitude to you for 

being here, I yield back to you, sir. 

Chairman ROE. I thank the gentleman for yielding, and I want 

to thank the panel and the audience. You have been great out 

there. 

And if he is not going to do it, if Mr. Hudson is not going to do 

it, I am going to introduce his mother, who is here in the audience 

today—— 

[Laughter.] 

52 

Chairman ROE [continuing]. And thank her for being here, because without you, he wouldn’t be here. So, thank you for that. 

I was out at a VA jogging many years ago when this veteran 

stopped me and he said, Doc, he said, do you know what the problem with this place is? And I said no. And he said, alcohol, tobacco, 

and inertia. And I think that is what basically, Mr. Bass, you said 

was the problem we have, is that people need to get up and move 

and not smoke and drink too much, and that probably would take 

care of their own health. 

To give you an example of a wellness program, the government 

had absolutely nothing to do with this. It is called BAE. BAE is a 

large, worldwide corporation, and they make in my district C-4. If 

it blows up in Afghanistan, we made it in Kingsport, Tennessee. 

When the helicopter blew up inside the bin Laden compound, I 

know where the C-4 came from. 

They started a prevention program about six years ago where if 

you were an obese, diabetic, smoking, hypertensive train wreck 

waiting to happen, you could do that, but you were going to be an 

expensive train wreck and it was going to cost you. But if you got 

your hemoglobin A1C down, you quit smoking, you got on the 

wellness program, they would pay you. So they reversed the incentives. Doctors have been incentivized to take care of sick people instead of incentivized to make people well. So what they did was 

they had put this program in, and all of their 700 employees, every 

single one of them participated in this program, and in six years, 

even with these huge rate increases—they are self-insured—they 

have had one minimal rate increase in six years. It is amazing. 

That should be done around the country. 

I personally use a health savings account, as Mr. Hudson said. 

I am a very savvy consumer of health care. I negotiate. I went into 

the outpatient clinic not long ago for a procedure. I had to have a 

minor procedure. So I negotiated the price, because they got their 

money in a millisecond. I didn’t ask the insurance company. I 

asked my doctor. I knew I needed it. I went in and got it done. I 

got a 35 percent discount. My son worked for the hospital medical 

system. He said, dad, you could have gotten a 50. I wasn’t as good 

a negotiator as I thought. [Laughter.] 

But anyway, I think we have learned a lot today, and I want to 

thank the host here at the college for allowing us to be here and 

sharing this facility, and all of you all for coming. I have learned 

a lot. You can see just how we have just scratched one part. We 

haven’t even talked about Medicare, which I am passionate about. 

I have a bill out there that I am the primary sponsor of, and Mr. 

Hudson is a co-sponsor of this bill, to repeal the IPAB. It is the 

worst piece of the entire health care bill, and it is going to drastically affect our senior citizens in a negative way. It will ultimately ration their care. 

So I am going to continue to work on this as long as I am allowed 

to serve in the Congress of the United States, and certainly his 

door is open, my door is open. I have learned more at these hearings out here in the field than I do back in D.C., and I want to 

thank you all for being here, all eight of you. 

And without any further comments, this hearing is adjourned. 

[Whereupon, at 11:00 a.m., the subcommittee was adjourned.] 

53 

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