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S. HRG. 113–347 

AFFORDABLE CARE ACT IMPLEMENTATION: 

EXAMINING HOW TO ACHIEVE A SUCCESSFUL 

ROLLOUT OF THE SMALL BUSINESS EXCHANGES 

HEARING 

BEFORE THE

COMMITTEE ON SMALL BUSINESS 

AND ENTREPRENEURSHIP 

UNITED STATES SENATE 

ONE HUNDRED THIRTEENTH CONGRESS 

FIRST SESSION 

NOVEMBER 20, 2013 

Printed for the Committee on Small Business and Entrepreneurship 

( 

Available via the World Wide Web: http://www.fdsys.gov 
(II) 

COMMITTEE ON SMALL BUSINESS AND ENTREPRENEURSHIP 

ONE HUNDRED THIRTEENTH CONGRESS 

MARY L. LANDRIEU, Louisiana, Chair 

JAMES E. RISCH, Idaho, Ranking Member 

CARL LEVIN, Michigan 

TOM HARKIN, Iowa 

MARIA CANTWELL, Washington 

MARK L. PRYOR, Arkansas 

BENJAMIN L. CARDIN, Maryland 

JEANNE SHAHEEN, New Hampshire 

KAY R. HAGAN, North Carolina 

HEIDI HEITKAMP, North Dakota 

WILLIAM M. COWAN, Massachusetts 

DAVID VITTER, Louisiana 

MARCO RUBIO, Florida 

RAND PAUL, Kentucky 

TIM SCOTT, South Caarolina 

DEB FISCHER, Nebraska 

MICHAEL B. ENZI, Wyoming 

RON JOHNSON, Wisconsin 

JANE CAMPBELL, Democratic Staff Director 

SKIFFINGTON HOLDERNESS, Republican Staff Director 
(III) 

C O N T E N T S 

OPENING STATEMENTS

Page 

Landrieu, Hon. Mary L., Chair, and a U.S. Senator from Louisiana .................. 1 

Risch, Hon. James E., Ranking Member, and a U.S. Senator from Idaho ......... 8 

Heinrich, Hon. Martin, a U.S. Senator from New Mexico ................................... 18 

WITNESS TESTIMONY

Nold, William, Deputy Executive Director, Office of The Kentucky Health 

Benefit Exchange, Frankfort, KY ....................................................................... 11 

Hickey, Martin, M.D., CEO, New Mexico Health Connections, Albuquerque, 

NM ......................................................................................................................... 18 

Allen, David, President and CEO, David Allen Enterprises, LLC, Boulder, 

CO .......................................................................................................................... 24

Greenblatt, Drew, Owner, Marlin Steel Wire Products, Baltimore, MD ............ 31 

Salter, Sheila A., Founder and CEO, EARLY2SURG, Chapel Hill, NC ............. 43 

Evans, Connie, President and CEO, Association for Enterprise Opportunity, 

Arlington, VA ........................................................................................................ 50 

Kofman, Mila, Executive Director, D.C. Health Benefit Exchange Authority, 

Washington, DC ................................................................................................... 58 

Borzi, Hon. Phyllis C., Assistant Secretary, Employee Benefits Security Administration, U.S. Department of Labor, Washington, DC .............................. 79 

Cohen, Gary, Deputy Administrator and Director, Center for Consumer Information and Insurance Oversight, Centers for Medicare and Medicaid Services, U.S. Department of Health and Human Services, Baltimore, MD .......... 87 

O’Brien Markowitz, Marianne, Regional Administrator, Region V, U.S. Small 

Business Administration, Chicago, IL ................................................................ 98 

ALPHABETICAL LISTING AND APPENDIX MATERIAL SUBMITTED

Allen, David 

Testimony .......................................................................................................... 24 

Prepared statement .......................................................................................... 27 

Barker, Andy 

Letter dated November 15, 2013, to Senator McConnell .............................. 253 

Borzi, Hon. Phyllis C. 

Testimony .......................................................................................................... 79 

Prepared statement .......................................................................................... 81 

Additional comment for the record ................................................................. 205 

Cohen, Gary 

Testimony .......................................................................................................... 87 

Prepared statement .......................................................................................... 89 

Dayton, Mark 

Letter dated November 20, 2013, to Chair Landrieu .................................... 239 

Department of Health & Human Services 

ASPE Issue Brief .............................................................................................. 259 

Enzi, Hon. Michael B. 

Prepared statement .......................................................................................... 112 

Evans, Connie 

Testimony .......................................................................................................... 50 

Prepared statement .......................................................................................... 52 

Greenblatt, Drew 

Testimony .......................................................................................................... 31 

Prepared statement .......................................................................................... 33 
Page

IV 

Heinrich, Hon. Martin 

Opening statement ........................................................................................... 18 

Hickey, Martin 

Testimony .......................................................................................................... 18 

Prepared statement .......................................................................................... 21 

Kaiser Family Foundation 

List of Total Health Insurance Exchange Grants .......................................... 256 

Kofman, Mila 

Testimony .......................................................................................................... 58 

Prepared statement .......................................................................................... 60 

Landrieu, Hon. Mary L. 

Opening statement ........................................................................................... 1 

Meredith, Griffin L. 

Letter dated November 19, 2013, to Senator McConnell .............................. 252 

Nold, William 

Testimony .......................................................................................................... 11 

Prepared statement .......................................................................................... 13 

Documents submitted for the record ............................................................... 133 

O’Brien Markowitz, Marianne 

Testimony .......................................................................................................... 98 

Prepared statement .......................................................................................... 100 

Pickering, Kathy 

Letter and report titled ‘‘Understanding the Implications of the Affordable Care Act: Enrollment, Education and Taxes’’ ..................................... 206 

Politico 

Article titled ‘‘Only 5 Enrollments Completed in D.C. Obamacare Exchange’’ ........................................................................................................... 255 

Risch, Hon. James E. 

Opening statement ........................................................................................... 8 

Responses to post-hearing questions from: 

Mila Kofman .............................................................................................. 118 

Hon. Phyllis C. Borzi ................................................................................. 120 

Gary Cohen ................................................................................................ 122 

William Nold .............................................................................................. 127 

Marianne O’Brien Markowitz ................................................................... 131 

Rubio, Hon. Marco 

Prepared statement .......................................................................................... 116 

Salter, Sheila A. 

Testimony .......................................................................................................... 43 

Prepared statement .......................................................................................... 45 

State by State Enrollments, Cancellations, and Premium Increases November 

20, 2013 ................................................................................................................. 241 
(1) 

AFFORDABLE CARE ACT IMPLEMENTATION: 

EXAMINING HOW TO ACHIEVE A SUCCESSFUL ROLLOUT OF THE SMALL BUSINESS 

EXCHANGES 

WEDNESDAY, NOVEMBER 20, 2013 

UNITED STATES SENATE, COMMITTEE ON SMALL BUSINESS

AND ENTREPRENEURSHIP, Washington, DC. 

The committee met, pursuant to notice, at 10:00 a.m., in Room 

428–A, Russell Senate Office Building, Hon. Mary L. Landrieu 

(Chair of the Committee) presiding. 

Present: Senators Landrieu, Shaheen, Heinrich, Booker, Risch, 

Vitter, Scott, Fischer, Enzi, and Ron Johnson of Wisconsin. 

OPENING STATEMENT OF HON. MARY L. LANDRIEU, CHAIR, 

AND A U.S. SENATOR FROM LOUISIANA 

Chair LANDRIEU. Good morning, everyone, and if we could take 

our seats and welcome to this important hearing this morning. 

The purpose of today’s hearing is to explore the success stories 

of the rollout of the Affordable Care Act in states throughout the 

country where teamwork and cooperation has proven to be exceedingly effective. 

We will also hear from a federal panel that will talk about the 

federal rollout and some of the challenges that have presented 

themselves. Normally, we have the federal panel first and the state 

panel second. But at the discretion of the Chair, I reversed it but 

required the federal leaders to be here to hear from the state exchanges and from individual business owners about how the situation could be improved. 

I would like to begin by quoting, I think it was Mark Twain who 

said, ‘‘A lie can get halfway around the world before truth gets out 

of bed in the morning and puts its boots on.’’ 

So, this morning we are going to try to give truth a chance. 

Thank you for joining us for this hearing. The Affordable Care 

Act passed, as we all know, in March of 2010 and was signed into 

law by the President three days later. That was over three and a 

half years ago. 

Last year, the Supreme Court upheld one of the essential components of this law, including the no free rider provision, requiring 

full participation through private and public health insurance marketplaces. 
2 

The goals of the Affordable Care Act at the time we passed the 

law were implemented for creating a workforce that was healthy 

because only a healthy workforce can be a strong workforce and 

America needs the strongest workforce we can get so we can continue to have the strongest economy in the world. 

Those were the goals three and a half years ago. That is the hope 

and promise today. 

There were four specific goals of the Affordable Care Act. One, 

to slow skyrocketing health care costs and reduce what America 

spends on health care as a share of our GDP. It was rising from 

15 percent to 16.5 and headed very soon to 19. That trend has been 

reversed. 

To use the power, not of the government but of the private sector 

competition, the proven power of private sector competition to rein 

in costs and improve quality care and coverage. 

To provide the first opportunity in the history of our country, 

whether union or nonunion, middle, high, or low income wage earner, whether self-employed, small or large business to access affordable quality health care. 

And one of the most exciting and under appreciated features of 

the Affordable Care Act and one that this Committee has focused 

a great deal of work is that it provided for the first time a key to 

Americans to unlock them from job-lock which prevents individuals 

in every state, including my own, from starting a new business because the risk associated with leaving full and good employment 

with full and good health care coverage causes them to stay sometimes in companies where they themselves might even do a better 

job starting their own providing disruptive technology or good services. 

I am proud to hand many of our entrepreneurs that key and intend to do so. 

According to the Robert Wood Johnson Foundation, nearly 1.5 

million Americans, including 25,000 Louisianians, will become selfemployed thanks to this bill, allowing them to fulfill their dream 

of becoming entrepreneurs, to pursue their dreams, to create the 

product or the system or service that they have dreamed about and 

have health insurance which was not possible before the Affordable 

Care Act. 

Fourth, to provide coverage to millions of low income and working-class families that work 40, 50, and 60 hours a week and 

worked for decades and yet could not afford health care in the 

United States of America. 

The way that this bill has been crafted, they will, if the governors would expand Medicaid, to be able to choose their hospitals, 

doctors, and have health care. Unfortunately, many of our governors are standing in the way. 

This is the hope and vision that we fought for. It is still worth 

fighting for now. 

The focus of today’s hearing will be specifically, though, on coverage options and access to our small businesses or businesses regardless of size, and I want to be clear. This is about the self-employed, about the growing percentage of our population that call 

themselves contractors because of the way our economy is struc-
3 

tured to be very flexible and independent, small businesses below 

50 and small businesses above. 

Now, we all know the rollout of the federal marketplace for individuals as not worked as well as we had hoped. We know that 

there are many challenges. We will hear about those today. 

But thank goodness there are bright examples throughout the 

United States where the ACA’s vision is working and we are going 

to hear from those states today. 

Specifically, we are going to hear from representatives leading 

the implementation of the SHOP marketplaces now open at the 

state level to understand both the challenges and the successes experienced by those states who accepted the responsibility to build 

their own exchanges, who accepted the challenge of the Federal 

Government to say we cannot always do things right. Here, we will 

give you the option to do it. 

Some of our governors were brave enough to do so; others were 

not. 

Usually, this Committee hears from federal officials, as I said, 

but I have asked them specifically to be in the room because they 

need to hear the best practices about what is going on around the 

country so they can get a better understanding of what we are trying to do. We will also be hearing from representatives of federal 

agencies, et cetera. 

Now, let me go into a few more things and the time that I take 

will be given equally to the minority. 

Before we begin, I would like to take a moment to put today’s 

discussion into context. As we were debating the Health Reform 

Act in 2009 and I was here and robustly engaged in that debate 

and helped to design the system that we have now which was a 

compromised system between a government-run, single-payer system and a medical savings account system with no floor or no safety net, we designed this. 

It was particularly for 96 percent of all businesses that employ 

fewer than 50 people who were struggling to remain competitive 

and we were focused on helping them. 

Small businesses were paying an average of 18 percent more 

than big business for health insurance that was not the same quality and they saw their health care costs increase faster than the 

prices of products and services they were selling. The record says 

four times faster than the rate of inflation between 2001 and 2009. 

After the number of employers offering coverage remained relatively flat in the 1990s, average annual family premiums for 

workers at small businesses increased by 123 percent, from 5700 

in 1999 to 12,700 in 2009. 

So, in the rate of increase was going up substantially before the 

Affordable Care Act which is one of the reasons it was passed to 

try to taper down those rates and get them lower. 

The percentage of small firms offering coverage started falling 

from 65 percent to 59 percent, and it was spiraling downward. It 

is no wonder that since 1986 one concern for every small business 

every year has been access to affordable care and this is not from 

a liberal think tank. This is the finding of the National Federation 

of Independent Business. They have testified before our Committee 

on many occasions. 
4 

This made reform, in my mind, imperative and the small business health care marketplace an important tool towards increasing 

choice and competition, reducing costs for small business and providing coverage to their employees that serve as the backbone of 

this American economy and a model for the world. 

A SHOP is an online marketplace where small businesses with 

50 or fewer employees can purchase health insurance for their employees voluntarily because under the Affordable Care Act they are 

not required, the businesses are not required, employees can. Functioning SHOP marketplaces will give small business owners the 

tools they need to be smart consumers as they choose affordable options for their businesses without damaging their bottom line and 

leveling the playing field with large businesses through improved 

access to affordable health benefit options for their employees. 

Many are like family. I cannot tell you how many small business 

owners have come up to me over the course of the last several 

years and said, Senator, I would love to offer my people insurance 

but I cannot find it anywhere; and because my best friend to help 

me start this businesses wife has cancer, we are now completely 

priced out. 

How am I going to keep my business because I feel badly because 

I do not want to ask him to leave? If he would leave, I could get 

insurance for my businesses. 

That is a choice I do not think Americans should be making and 

I do not want anyone in Louisiana to make that choice or have to 

make that choice. 

At the end of this month, small businesses with 50 or fewer fulltime equivalents will be eligible, but not required, to purchase and 

provide coverage to their employees. Beginning in 2006 (sic), all 

SHOPs will be open to employees with up to 100 individuals. 

Pooling these eligible, or FTEs, pooling these eligible small businesses and larger groups will spread risk, allowing insurers to stop 

charging higher premiums that accompany the greater uncertainty 

about the likely health care costs of small groups. 

The new SHOP marketplaces will allow small businesses to compare plans easily which was never, hardly ever possible before, taking the administrative burden off employers and allowing them to 

get back to running their businesses which they do best, not filing 

paperwork to get health insurance. 

It was a broken market. We intend to fix it. 

According to a 2009 Business Roundtable Report, the administrative costs to small businesses through the exchanges would be reduced by as much as 22 percent. 

I would like my staff to put up what is happening around the 

states, and I would like people’s eyes to focus on what is happening 

in a good way and still challenging ways. 

This is the United States of America. You will recognize it. Declared state-based exchanges are in red. Planning for partnership 

exchanges are in the gray area, and those states that defaulted to 

the Federal Government, and I want to underscore this because 

mine is one of them, states that had a chance to set up an exchange for their small businesses that were given every opportunity, and in the case of my State was also attached with a check 
5 

for $16 billion to help make it work, was rejected by my governor 

and by many governors. 

And instead they defaulted, at their own choice, not my choice, 

at their own choice, not at President Obama’s choice, to let the 

Federal Government set up their exchanges and then did nothing 

of virtually to help. It is no wonder some of them are not working. 

But today we are going to have the opportunity to talk to those 

governors and those states, both Republican and Democrat, that 

did step up and lead, that did take what was offered to them and 

set up exchanges that could work for their small businesses. 

Each state has the flexibility to decide how they want to operate 

their health insurance marketplaces. As you can see on this map, 

there are four different categories that each of the 50 states and 

the District of Columbia fit into. 

Some states have what they call federally-facilitated exchanges 

which means that they are not choosing to set up their own market 

and leaving it to the Federal Government. Unfortunately, that 

would be mine. I wish I had been given that choice but unfortunately that was one mistake in the bill, leaving it up to governors, 

maybe not a mistake but in some cases it was it seems. 

Other states are operating partnership exchanges where the Federal Government operates the marketplace in conjunction with the 

state. Some states chose a partnership with the Federal Government. We will see how that is working. 

And another group of states have split exchanges where the Federal Government runs the individual marketplace and the state 

runs the SHOP marketplace. 

The final category is made up of states that run both, their own 

individual and small business marketplaces. These states cover approximately one third of the population of the United States. 

This is a big country, and it goes way beyond the Beltway of 

Washington D.C. You are going to hear today about one third of 

the population that is either working really, really well or it is 

working to some degree and with some changes could work better 

and a few places where they are having some serious challenges. 

But you are going to hear from people that are at least trying. 

Kentucky and the District of Columbia are included in this category. We will be hearing from representatives of these exchanges 

during our first panel this morning. In total, there are 18 states 

plus the District of Columbia running their own SHOP exchanges. 

And for the record, since this is so important, I want to put these 

states in the record. California, Colorado, Connecticut, the District 

of Columbia—not a state yet, maybe one day—Hawaii, Idaho, Kentucky, Maryland, Massachusetts, Minnesota, Nevada, New Mexico, 

New York, Oregon, Rhode Island, Utah, Vermont, and Washington 

State. 

In all parts of our country, some with Republican governors, 

some with Democratic governors, some with Republican legislators, 

some with Democratic legislators, but all with people who need 

leadership to help them find health care that they can afford. 

Nearly 40 percent of all the Nation’s small employers are in 

these states. That is who we are focused on today. 

We all know that the rollout of the individual insurance exchange website has been disappointing to say the least, but today’s 
6 

hearing is focused on implementing the rollout of the SHOP exchanges which is the focus of our Committee where we had a lot 

of input into how this bill was designed to emphasize the need for 

a better rollout, not just for individuals but for small businesses. 

Today, as I said, we are joined by states who accepted this challenge and responsibility to create state-based exchanges and did it 

well, as well as those who are having difficulty. 

For those states that have made the decision to operate their 

own SHOP marketplaces, we are already seeing evidence. I am not 

going to repeat everything that is in the testimony but I will say 

that for Kentucky, I was completely happy to see and I spoke to 

Governor Beshear, Kentucky did what I thought we should do and 

I have a bill to correct this, to use their licensed health agents to 

sell the policies which is a brilliant idea. We did not do that unfortunately. 

And so, they hit the ground running because their agents were 

already licensed and understood the market well and were able to 

sell. We will hear more about that. That is Kentucky, and you will 

hear more about Kentucky. 

In D.C., between October 1 and 13, they had more than 84,000 

visitors to their website. What I loved about the testimony from 

D.C., and you will hear more about it, is that instead of the Chamber of Commerce dragging its feet, he says, the D.C. Chamber of 

Commerce, the Greater Washington Area Hispanic Chamber, and 

the Restaurant Association partnered to build this exchange and 

put their muscle and their brainpower behind it, and it is probably 

one of the most successful in the country. Nearly 700 employer accounts have been created using their site. 

Finally, in New Mexico, and our senator is here, has seen similar 

success as well. They accepted the leadership challenge, and today 

1,143 small businesses with 3,192 employees have been registered, 

required information with the New Mexico exchange. 

If they all fully enroll with the average number of dependents, 

that would be a potential total of 8,000 members, and it has just 

been opened for a very short period. We will hear more about that. 

Making the ACA work the way it was intended is what I intend 

to try to do. There are others that have different goals. Ensuring 

that these marketplaces work the way they were intended when we 

passed the Act is vital to helping the businesses in our country and 

families that depend on these businesses to get the help that they 

need to stay healthy. 

And most importantly for me as a mother, not just to stay 

healthy physically but to be mentally free of the worry that any 

day your business is one day away from bankruptcy or your family 

is one accident away from bankruptcy. 

There is no price that you can put, in my view, on peace of mind. 

I do not know any economist in the world that could price it but 

I could tell you as a mother that it is very costly. 

The SHOP marketplaces need to work so that small-business 

owners can easily and efficiently compare the different plans available for themselves which they were never able to do, and their 

employees can pick the plan that makes the most sense. 
7 

Now, opponents of the law, and there are many, are fixated, fixated on the problems of the law as opposed to the promise that it 

holds. I believe this is wrong. 

These problems, while challenging, are fixable. We have fixed 

many things in the United States, big things, bold things, and 

great things. This is something we can fix. 

And regardless of how we voted for the ACA, whether we liked 

it or not, it is the law of the land; and in my view, it deserves to 

be fixed, not repealed. We have the responsibility to make the Affordable Care Act work, not because of politics but because of the 

people. 

This is not about President Obama. It is about the people of the 

United States of America. It is about the millions of small business 

owners who want desperately to provide quality, affordable health 

care to their employees who dreamed about building a business, 

who love the people that they work with, and they were never able 

to find something that they could afford or count on. 

And if they did, they had to compromise below their standards 

because I know Americans pretty well and they are very generous 

people. And it is about people like Kiwi Armstrong from Baton 

Rouge, and independent construction worker. He works on big 

projects in both oil and gas onshore and off. We have a lot of those 

people. 

Because of the nature of his employment, he works on several 

different projects throughout the course of his year and he is not 

a member of a labor union. In 2012, he got nine different W–2s. 

He works hard every day. 

But the shifting nature of his employment means he cannot get 

coverage through his employers. When he tried to get Blue Cross 

Blue Shield through his last steady job, they denied him because 

of type II diabetes. 

Because of the Affordable Care Act, he can get coverage on the 

health insurance marketplace. It will be there when he needs it, 

and give him flexibility to work any project he wants without worrying about whether it will provide coverage or not. 

This is why we are having this hearing today. We are having this 

hearing to make sure we are doing everything possible to make 

sure that this Act works for small business owners and their employees. 

My goal for this hearing is it will not be occasion for 

grandstanding but rather an opportunity to focus on the work before which is fixing what is broken. 

And to do that, we have to be honest with each other and open 

to hear testimony about what is working, what is not working; and 

when we find something that is not working, how it can be fixed. 

Some of our witnesses today are also small business owners that 

have yet to realize the benefits that their colleagues in states 

where these exchanges are working. Some of these businesses are 

in states where the governor has basically said, no, we are sorry, 

we do not want to help you. I am sorry that you all are in those 

states but that is the situation. 

I am going to add one thing for the record and turn it over to 

my Ranking Member. There was a study that came out yesterday 

that I want to put into the record, a tax study, I have it here. 
8 

This study came out this week. The Supreme Court’s ACA decision and its hidden surprise for employers. This report is about 

Medicaid expansion, and the key finding is, states that do not expand Medicaid leave employers exposed to higher shared responsibility of payments under the Affordable Care Act. The associated 

cost to employers could total $876 million to $1.3 billion each year 

in the 22 states that have opposed or leaning against or remain undecided. By way of example, the decision in Texas to forgo Medicaid 

expansion may increase federal tax penalties on Texas employers 

by $299 to $448. 

Now, this is from a completely nonpartisan Jackson Hewitt, I 

think they prepared tax returns. I do not think they are a stakeholder group to anyone. 

So, because of the decision that Governor Perry made, his decision, not President Obama’s, is going to cost his businesses more. 

Now, I am going to turn this over to Senator Risch. He can have 

as much time as I did which I think is probably about 20 minutes, 

25 minutes, and then we will go to, your statements will be submitted to the record and then we are going to go directly to our testimony. I thank all of my colleagues for coming this morning. 

OPENING STATEMENT OF HON. JAMES E. RISCH, RANKING 

MEMBER, AND A U.S. SENATOR FROM IDAHO 

Senator RISCH. Well, thank you very much, Madam Chairman. 

First of all, I commend you for holding this hearing, but probably 

not for the reasons that you think. Certainly, when you throw hundreds of billions of dollars against the wall, something is going to 

stick; and to try to use the handful of things that actually have 

worked in this 3,000 pages of legislation and nobody knows how 

many pages of regulations and say, okay, well, it is working because this small part is, really is to ignore the overall problem. 

Again, I commend you for your courage in holding this hearing; 

and more importantly, Madam Chairman, I commend you for your 

statement that you helped to design this system that we have 

today. 

I suspect that as we go forward trying to find people who will 

admit to having had some part in this is going to be like trying to 

find somebody that admitted voting for Richard Nixon. 

This has been a catastrophic failure across America. And you 

talked about the truth and you know, the American people, they 

do not understand all the niceties and all the complexities of health 

care and health care insurance and what have you. 

But they know when they have been lied to, and the polling is 

incredibly strong, indicating that they believe that they have been 

lied to. And once the American people believe they have been intentionally lied to, it really causes difficulties in trying to solve problems. This does not bode well as we go forward. 

You provided your list of successes and one of them was Idaho. 

When I was Governor, I appointed the gentleman who now sits as 

the Director of the Department of Health and Welfare. My successor kept him on and he is a really good guy. He came out of the 

insurance industry. 

I am not exactly sure if you were boasting that Idaho is one place 

where Obamacare is working. But I can tell you that it is a dis-
9 

aster in Idaho. Perhaps it is not in Louisiana, but it is a disaster 

in Idaho. 

I know that you brought in some people from Kentucky to talk 

about some of the good things. I believe that Kentucky is working 

better than other places, although that is not a very high bar. 

I have got a couple of letters I want to put into the record from 

insurers who are working in this area in Kentucky, and I am just 

going to read parts of them as an indication of what is actually 

happening in Kentucky. 

This is from Houchens Insurance Group from Bowling Green, 

Kentucky. This is written by their Executive Vice President. 

He says, ‘‘We are writing to you to explain what we are seeing 

here in Kentucky and throughout other parts of the country that 

Houchens Industries, Incorporated, and the Houchens Insurance 

Group serves regarding our clients’ implementation of the Affordable Care Act.’’ 

‘‘While Houchens, with over 18,000 employees, is not a small 

company, our insurance group, HIG, serves over 1000 small businesses with their insurance needs throughout Kentucky and the 

United States. The remainder of this letter lays out what we are 

seeing. For an agency to represent its’ customers responsibly, we 

need to be able to share all options available. At this point, Kentucky’s Healthcare Connection, Kynect, presents us with more challenges than solutions. To date we have not enrolled any groups in 

the Small Business Health Options Program, SHOP, primarily because of the confusion the system has created. Business owners are 

anxious and frustrated as to what they have to do in order to get 

pricing. Creating an account within Kynect and then assigning an 

agent takes a considerable amount of time and is not something 

they should have to do while managing their business.’’ 

He then goes on to list many more of the problems with Kentucky’s system. 

The other letter comes from The Benefits Firm, another company 

in Kentucky. And again, their Senior Vice President writes, ‘‘Kentucky has been viewed by other states and people in Washington, 

D.C., as a state that most things have gone correctly with the 

Health Insurance Market place. While it is true that Kynect has 

been operating properly, especially compared to the Federally Facilitated Marketplace, there are still many unresolved problems. In 

particular, I would like to address the SHOP exchange. Logistically 

and technologically, we are not having the same success with the 

SHOP exchange as we are with individuals in Kynect in Kentucky. 

This week, I have reached out to numerous employee benefit brokers in Kentucky, none of which have finished a SHOP exchange 

application. While I do believe that the technical hindrance is part 

of the problem, it is not the primary obstacle to the success of the 

SHOP exchange. I firmly believe there are flaws to this system 

that the current law cannot overcome. Numerous businesses that 

I have worked with decided that with PPACA there are advantages 

to their business through Kynect. However, the advantage to their 

business is to drop their employer-sponsored health plan and allow 

each of the individuals and families to enroll in Kynect.’’ 

And then he goes on and explains why that is a very good financial decision for small businesses. 
10 

So, there is no doubt you are going to find some things that happened here that are good. But, like I say, when you throw these 

kinds of hundreds of billions of dollars at something, you are bound 

to find that. 

Lastly, I would like to focus on what has been something that 

has really undermined the confidence of the people of America in 

this. When the President stood up as many times as he did, and 

particularly Democrat senators stood up as many times as they did, 

looked in the camera and said, if you liked your health care plan, 

you can keep it, those of us who listened to that the first time said 

that that is impossible. Where the government was going to lay out 

all of these new requirements in the new health care plans, no plan 

would exist. 

So, I do not know how the President of the United States could 

stand up and say that, and then repeat it over and over and over 

again, when his people had to tell him that the policies no longer 

existed. Somebody should have said, ‘‘Mr. President, stop saying 

that. You are going to get hit over the head with this.’’ And of 

course now, the chickens have come home to roost. 

And that is where we are. You know, we tried to change this. My 

good colleague, Senator Enzi, introduced Senate Joint Resolution 

Number 39, and we had a vote on the Senate floor on September 

21, 2010. 

And that resolution which, if passed, would have become the law 

of the United States said, if you like your plan, you can keep it. 

But we were not able to pass that were we, Senator Enzi? There 

was a straight partyline vote with all Republicans voting for Senator Enzi’s bill saying just like the President had promised and 

every Democrat voting against that promise. 

It is really unfortunate that it has come to that. Well, here we 

are again trying to apply lipstick to this pig; and no matter how 

many times it is said, the American people are not buying it. 

The numbers are deteriorating every day as far as the confidence 

of the American people—not only in what has happened here, but 

particularly in going forward—what we are going to do about this 

catastrophe. 

And that is a problem that I think you and your colleagues are 

going to have a very, very difficult time wrestling with. But the 

good news is we are Americans and we are free. 

We are going to have an election next November and the Americans again are going to have a say in this. And everybody is going 

to be able to stand up and say, look, I did this, I helped design this 

system, I had my hands involved in this. So, put me back there and 

see if I cannot do a little bit better next time, and the American 

people are going to decide whether or not that is enough. 

And that is exactly as it should be in America. And, as with all 

other issues we have had in America, even though this is what 

someone would call a man-made disaster, we will get through this. 

We are Americans. We know how to fix these problems and we will 

do it. 

With that, I yield back, Madam Chair. 

Chair LANDRIEU. Thank you very much, Senator. 
11 

Let us begin on the panel with our first panelist, and then I am 

going to call on Senator Heinrich to introduce the gentleman from 

his State. 

But let me start with Mr. William Nold, Deputy Executive Director of the Office of Kentucky Health Benefit Exchange. Then we 

have Mr. David Allen, President and CEO of David Allen Enterprises. I am sorry. We are going to go in the order of Mr. Nold, go 

ahead. I will come back and introduce everyone else. 

Go ahead. Thank you. 

STATEMENT OF WILLIAM NOLD, DEPUTY EXECUTIVE DIRECTOR, OFFICE OF THE KENTUCKY HEALTH BENEFIT EXCHANGE, FRANKFORT, KY 

Mr. NOLD. Chairman Landrieu, Ranking Member Risch, and 

members of the Committee, we really appreciate the opportunity—— 

Chair LANDRIEU. You are going to have to speak into your mic. 

Just lean into it. Thank you. 

Mr. NOLD. We appreciate the opportunity to come over here to 

D.C. this morning and to share Kentucky’s experience with our exchange which we call, as Senator Risch said, we call it kynect. It 

is a combined exchange in the sense that both our SHOP and our 

individual, for administrative purposes, operates under one name. 

My name is William Nold, and as the Senator said, I am the 

Deputy Executive Director of the Office of the Kentucky Health 

Benefit Exchange. It is a long title and we have got a lot of responsibilities. I have submitted a written statement and also some 

other documents that I assume will be made part of the record. 

Chair LANDRIEU. We do. That will be part of the record and you 

have four minutes and 10 seconds. 

Mr. NOLD. Yes, ma’am. My next note was time is limited. But I 

think a little time should be spent to talk about the landscape in 

Kentucky as it has existed for a number of years. 

Our population is about 4.4 million. 640,000 of those individuals 

are uninsured. Of grave concern to our governor, however, is the 

health status of our State. 

We are 44th in overall health status, 50th in smoking, 40th in 

obesity, 41st in diabetes, 50th in cancer deaths, 49th in heart disease, 43rd in cholesterol counts, 48th in heart attacks. 

You know, we began our implementation of this law immediately 

after it was passed. But as you know, many of the provisions in the 

law were related to insurance matters early on and the exchange 

seemed like it was far off, year 2010, and the exchanges really do 

not have to be operational until 2014. 

But we began immediately to try to bring consensus among all 

the stakeholders in Kentucky about what we were wanting to do 

with this exchange when the time came. Everyone in our State 

wanted us to do a state-based exchange, everyone. 

I think Deb Moessner, who is the President of Anthem in Kentucky, probably said it best. She said, ‘‘If I am going to be regulated, I want to be regulated across the Kentucky River, not the 

Potomac River.’’ 

And that kind of said it all, I think. Although a lot of the stakeholders were opposed to this law, they realized that, you know, at 
12 

least until the Supreme Court would make its decision that we 

were stuck with it. And it is a good thing that we are stuck with 

it. That is the way we found it anyway. 

So, of course, we continued to meet with Governor Beshear along 

the way, making decisions about what we were going to do, and so 

he wanted to wait until after the Supreme Court had ruled to really dig into this and get moving on it and that is what he did. 

And so, we presented all the pros and cons to our governor about 

what we should do or what we should not do, and he kind of 

stopped us. He said look, he said, and he is a lawyer, he had read 

the bill. 

He said this bill provides a unique opportunity for Kentucky to 

improve these health statistics. I want you to do everything that 

you can do to use this bill, not let this bill use me, but to use this 

bill to improve our health. And that has been the charge that we 

have accepted and have gone with ever since. 

You know, my time is getting short here. I do want to share with 

you, you know, we went live on October 1, down for a few hours, 

not down, slowed up for a few hours. Got that all straightened out 

and we have been running ever since and helping people get enrolled, not only in our SHOP but also in the individual market. 

So, I guess the message from our governor is that he was very 

strong in his opinion that the best way we could improve the 

health of our State was to go the state-based exchange route. And 

then also what we have done is that we have gotten agents involved. Right now, 94 percent of the small insurance policies in our 

State, small employer insurance policies, are offered through 

agents. 

Chair LANDRIEU. Try to wrap up please. 

Mr. NOLD. Yes, ma’am. 

Well, to summarize, and again this is in particular with regard 

to the SHOP, since we went live on October 1, we have had 193 

small businesses that have started applications to be eligible for an 

employer coverage. 

[The prepared statement of Mr. Nold follows:] 
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Chair LANDRIEU. I am sorry. I am going to have to stop you 

there. We have so many people to testify, and I really appreciate 

and you have a wonderful statement. We have put it in the record. 

Thank you, Mr. Nold, but we are going to have to go to our second 

panelist. 

Senator. 

OPENING STATEMENT OF HON. MARTIN HEINRICH, A U.S. 

SENATOR FROM NEW MEXICO 

Senator HEINRICH. Thank you, Chair Landrieu for holding this 

hearing on the rollout of the Affordable Care Act small business exchanges. 

With attention squarely focused on implementation challenges at 

the national level, a deep understanding of how our small businesses are fairing in securing meaningful, affordable health insurance coverage for their employees is timely and essential to the 

economic well-being of Americans. 

Just an introduction, okay. Well, I am delighted and honored to 

be here today to introduce one of our invited panelists, Dr. Martin 

Hickey. He will describe to you in detail the success of the New 

Mexico SHOP. 

Dr. Hickey is not only a member New Mexico Health Insurance 

Exchange Board but he is also the CEO of the New Mexico Health 

Connections, a co-op, not-for-profit plan formed under the Affordable Care Act to provide health insurance to small groups and individuals in New Mexico. 

He is also a general internist who first practiced on the Navajo 

Nation, and he has dedicated himself to developing rural health 

programs. 

Over the past three decades, he built a distinguished career in 

health systems administration and delivery system reform across 

the country and we are fortunate to have him in New Mexico. 

I give you, Dr. Hickey. 

Chair LANDRIEU. Thank you. 

Dr. Hickey, please and you have five minutes. 

STATEMENT OF MARTIN HICKEY, M.D., CEO, NEW MEXICO 

HEALTH CONNECTIONS, ALBUQUERQUE, NM 

Dr. HICKEY. Chairman Landrieu, Ranking Member Risch, and 

distinguished Senators, thank you for the opportunity to testify 

today about the early success of the New Mexico small business exchange. 

New Mexico legislated a state-based exchange board in March of 

just this year. The board consists of 13 highly representative members of groups including small business, consumers, Native Americans, Hispanics, physicians, hospitals, health insurers. 

Within five months, the board and it’s very capable CEO and 

team selected an experienced private exchange vendor, developed a 

statewide plan for marketing, trained over 500 health care guides, 

set the rules for an open market exchange, and succeeded in 

launching a fully operational enrollment website, Be Well New 

Mexico, on October 1. 

In this time of national glitches and confusing rhetoric, the 

board, our very supportive governor, Susanna Martinez, the ex-
19 

change health insurers, and all New Mexicans are very proud of 

the early enrollment successes that I will detail. 

You got a background on myself. I have been CEO and a senior 

manager in insurance companies, medical groups, hospitals. I have 

seen this business from every single side. And what I am so proud 

of is that I have always dwelt to on fixing access to care, and I can 

tell you that this board that has come together from literally both 

sides of the aisle in New Mexico, has come together passionately 

to assure access to care. 

New Mexico is 23 percent uninsured, second only to Texas, has 

200,000 uninsured and 118,000 of them are eligible for financial assistance. 

And the Board gets this. Only 47 percent of the population has 

employer-sponsored insurance, the lowest in the Nation which has 

an average of 58 percent. 

Our State exchange is unique from most others and we call it a 

hybrid. Because the exchange formed so late, we did not have time 

to implement an individual exchange this year. We were, however, 

able to procure a competitive contract with Get Insured, an information technology company with seven years of experience in 

building private exchanges. 

Next month, they will begin work on implementing the technology for an individual exchange which will be ready to rollout for 

enrollment in October of 2014. 

In the meantime, we have had to depend upon the federal exchange, but Be Well New Mexico has a calculator, is educational; 

and when the federal exchange becomes fully operational, people 

will be informed. 

The small business exchange is also unique in that it not only 

offers employers a choice of plan but offers choice to each of their 

employees as well. 

The employer enters the site, selects a metal level and a reference plan. The employer designates a percentage of premiums 

that will be covered. That then creates a dollar amount made available to the employee for premium support in whatever plan the 

employee chooses. 

Thus, the employees have a choice of any plan of any carrier at 

that metal level at whatever cost. That is what is so great about 

New Mexico health insurance exchange for small businesses and 

their employees. Choice, choice, and choice. 

You know what? Even better it works, and it is easy. I did it for 

my family last week and it was like going down a water slide. 

There is even a calculator to help an employee choose the right 

plan based upon generalized use of health care in the past. 

I think the following quote from a small business in Albuquerque, an attorney with four employees, sums it up best. 

‘‘I was very pleasantly surprised. I thought it was going to be an 

administrative nightmare and it literally took me 15 minutes. They 

gave me a quote that would save me $1,000 over what I was paying. I thought this was going to be an all-day thing so I had a Diet 

Coke handy, was well rested and had a good lunch, and it was almost disappointing that it was so easy. I was blown away.’’ 

So, to date, as you said, Senator, 1,143 small businesses in our 

little State with a number of employees is essentially propelled us 
20 

to a potential, once all the enrollment finishes up by the end of the 

month, of over 8,000 members which already meets the goal that 

the board had set for the State, and we still have got the rest of 

the year and all next year to go. 

So, as I said, about 500 personal assistors and brokers are very 

heavily involved as well. 

The other thing you emphasized was cost, and basically I will tell 

you that our superintendent estimates that the rates for next year 

will be no more than five percent of what they were this year, 

when the American Society of actuaries said it would be a 34 percent increase. He also set up a very competitive process. I know. 

I had to go through it. 

So, New Mexico small employers now have a great opportunity 

to cover their employees and do so with a sense of choice and low 

rates and a system that works. 

[The prepared statement of Dr. Hickey follows:] 
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Chair LANDRIEU. Thank you, Dr. Hickey. My only question is are 

you available to come to Washington? 

[Laughter.] 

Chair LANDRIEU. All right. We will go now to Mr. David Allen. 

STATEMENT OF DAVID ALLEN, PRESIDENT AND CEO, DAVID 

ALLEN ENTERPRISES, LLC, BOULDER, CO 

Mr. ALLEN. Madam Chairperson, members of the Committee, 

thank you for the opportunity to speak with you today about the 

affects of the Affordable Care Act on my small business and our experience with the Colorado State insurance exchange. 

I am the owner and operator of Flatirons Practice Management. 

We are an independent medical billing company in Boulder, Colorado. We provide medical billing and practice management services 

to several hundred health care providers in eight states. 

I currently employ 33 full-time personnel. Obviously, we are well 

below the employer mandate threshold of 50 FTEs yet we provide 

company-paid health insurance to our employees anyway under a 

small-group plan and have for many years. 

We do so because we can and we feel that it is the right thing 

to do. I myself worked as an employee for other companies before 

choosing self-employment and I relied on my employers for access 

to health insurance. 

Unfortunately, it has been increasingly hard for me to continue 

to provide health insurance for my employees. Second only to payroll, health insurance is our next largest expense. Even with annual inflation rates in the one to two percent range, our premiums 

have increased every year by 20 percent or more. 

As much as I wish I could simply pass this along to my customers, they too are experiencing the same pressures to manage 

rising expenses in their small businesses. 

We have done some creative things over the years to reduce the 

magnitude of the premium increases while maintaining the integrity of our coverage and have been successful in continuing to pay 

for 100 percent of the cost of the premiums for our employees. 

One such tactic was to select an insurance policy that covers only 

generic pharmaceuticals. Anyone who requires a pharmaceutical 

that is only available as a brand name product has to purchase it 

out-of-pocket. As a result of the Affordable Care Act, our carrier 

has discontinued this policy as it does not meet the minimum 

standards as stipulated under the law. Due to this one change, our 

premiums are now scheduled to increase by 52.3 percent in January 2014. 

Clearly, absorbing this expense in order to continue to provide 

the same benefit to my employees is entirely unrealistic. I will have 

no choice but to require my employees to contribute substantially 

to the cost of their premiums. The irony is that none of my employees currently take any brand name prescriptions or expect to in the 

foreseeable future. 

This law has turned what was a potential expense for my employees into a guaranteed expense for my employees for something 

they neither need nor want. 

Since the Affordable Care Act is what caused this problem for 

me, I decided to embrace it and turned to the state SHOP insur-
25 

ance exchange in hopes that it would provide me with more affordable and appealing options. 

The first obstacle I encountered was that the website would not 

allow me to create an account. After my fourth failed attempt, I initiated an on-line chat with one of the exchange support personnel 

and was told after close to an hour of waiting that they were having technical difficulties with creating accounts and I should try 

again later. 

I did eventually create an account and download the census template. I then began the frustrating experience of attempting to 

upload the census. I tried unsuccessfully several times and received 

nonsensical errors such as ‘‘wrong file type’’ when the file I was attempting to upload was the very template that I downloaded from 

the website. 

After initiating my second on-line chat, it eventually came out 

that my web-browser might be at fault. I find it unfortunate that 

the website did not disclose any browser limitations before I wasted 

yet another hour spinning my wheels. 

Upon switching browsers, I was able to get the website to acknowledge the file that I was attempted to upload but it ultimately 

rejected the file on the basis that the date of hire field was not formatted correctly. 

My third on-line chat resulted in validation that my data was, 

in fact, formatted correctly and the website was again experiencing 

technical difficulties. 

Growing increasingly impatient, I resorted to having my assistant manually type the information into the website. What should 

have taken us minutes to complete instead took us hours. 

Having finally uploaded our census, I received 34 insurance plan 

options from which to choose. I found it challenging to objectively 

compare and contrast them with our current plan and its 2014 

equivalent because we currently offer a tolerable $750 annual deductible to our employees and the lowest annual deductible available to us under the state exchange is $1,500. 

In short, the only way we can markedly reduce the cost of our 

health insurance through the state exchange is to select a policy 

with a dramatically higher deductible thus shifting the financial 

burden from me to my employees. 

Frankly, I could do this on my own without the assistance of the 

exchange and have consciously chosen not to pursue high deductible plans in the past because of the financial strain that it would 

create for my employees. Instead, we opted to make concessions 

that did not cause a financial strain such as forgoing brand name 

pharmaceuticals. 

On the surface, my company stands to benefit from the Affordable Care Act on the basis that more people will consume health 

care services provided by my clients thus resulting in more business for me. But this theory hinges on the affordability of the insurance available to the populace. 

If my experience is any indication of the unintended consequences of this law, it would appear that the Affordable Care Act 

accomplished the polar opposite of what the law was designed to 

do. 

Thank you for your attention. 
26 

[The prepared statement of Mr. Allen follows:] 
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Chair LANDRIEU. Thank you. Our next witness is Mr. Drew 

Greenblatt. Please identify your state and the kind of exchange you 

have. 

And Mr. Allen, just for the record, you are in Colorado with a 

state-run exchange that is obviously, according to your testimony, 

has some difficulties. 

Mr. Greenblatt, what is your state and what kind of exchange do 

you have? 

Mr. GREENBLATT. Maryland state and we have the SHOP exchange but it is starting in April. 

Chair LANDRIEU. And is it a federal exchange? 

Mr. GREENBLATT. I believe Maryland State is trying to do it on 

its own but I am not positive. 

Chair LANDRIEU. A state-run exchange? 

Mr. GREENBLATT. State run. 

Chair LANDRIEU. Okay. 

STATEMENT OF DREW GREENBLATT, OWNER, MARLIN STEEL 

WIRE PRODUCTS, BALTIMORE, MD 

Chair LANDRIEU. Chairwoman Landrieu, Ranking Member Risch, 

and members of the U.S. Senate Committee on Small Business and 

Entrepreneurship, thank you for the opportunity to testify before 

you today. 

I am Drew Greenblatt, and I am president and owner of Marlin 

Steel Wire Products, based in Baltimore, Maryland. Marlin is a 

manufacturer of wire baskets, wire forms and precision sheet metal 

fabrications. We make it 100 percent in the USA. We make it here 

and we ship it to 36 countries, and my favorite is we export to 

China. 

I am pleased to testify on behalf of the National Association of 

Manufacturers. I am on the Executive Committee of National Association of Manufacturers. 

Since you are the Small Business Committee, I thought you 

would be interested to know that our average member has 35 employees. 97 percent of us provide health insurance for our employees. I mention this because the health and safety of our workers 

is critical to manufacturers. 

As a matter of fact, at Marlin, my company, we hit a huge milestone two weeks ago. We have gone 1800 days without a lost time 

accident, the thing that I am most proud of in running this company. 

This commitment to a safe workplace and the overall health of 

our employees is critical. To me, offering high-quality health care 

coverage is part of that mix. Finding this good coverage is personally important to me because my family is in the same plan as all 

of my employees. So, we are all in this together. 

Generally, I have come to expect my health insurance costs to go 

up about 8 to 12 percent a year. I was startled, I was shocked when 

our health insurance went up 49 percent this year. 

I want to provide health insurance for my employees and their 

families. We have been doing it for 15 years since I bought the 

company. But now because it is so high, our plan, in effect, is not 

viable because it is not affordable. 
32 

Ultimately, we were able to secure an alternative coverage plan 

for my employees because our term ended December 1. My premium, however, is still going up 10 percent. The plan I purchased 

includes benefits I do not really need nor do my employees want. 

This is key. The affordability, it has gone up. The cost has gone up 

despite all the promises our costs would go down. 

If I told my clients we are raising your prices 49 percent, they 

would laugh at me. 49 percent is out of control. Even if I sat down 

and explained to them, listen you are going to have some new features, they do not want to hear about it; and this is the environment we are in. 

I recently discovered the SHOP exchange of Maryland was delayed until April. I am not sure what products it offers. This is the 

kind of instability that is harmful to our economy. 

See, we do not know how much our employees are going to cost 

this year. We do not know how much they are going to cost next 

year. How do I quote jobs against my competitors in China? How 

can I win jobs that are three-year and five-year contracts when I 

do not know how much my costs are going to be? 

I know that the ACA law is not going away and any change is 

going to have to happen through bipartisan legislation. I urge legislators on both sides of the aisle to look at all the health care laws 

that are not working and please fix them. 

This will not get better with finger-pointing. This is not going to 

get better with rhetoric or regrets over broken promises. We need 

practical approaches right now. 

Cost was and is and remains our main issue. Reducing the cost 

of care makes a health care delivery system more efficient and directly impacts the access to coverage. 

Chair LANDRIEU. Please wrap up. I am sorry. You have 56 seconds. 

Mr. GREENBLATT. 56 seconds. Driving up the cost of coverage and 

then providing subsidies to some just camouflages the underlying 

problem. I may not be a supporter of the current system but I 

would support changes that allow me to continue to provide high 

quality health care to my employees at a reasonable price. 

Thank you for the opportunity to testify today. 

[The prepared statement of Mr. Greenblatt follows:] 
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Chair LANDRIEU. Thank you, Mr. Greenblatt, for your excellent 

testimony, and I am not seeing well with my cold but you did a 

very good job and I thank you for focusing on fixing it as opposed 

to the rhetoric associated with another proposal. 

All right. Ms. Salter. 

STATEMENT OF SHEILA A. SALTER, FOUNDER AND CEO, 

EARLY2SURG, CHAPEL HILL, NC 

Ms. SALTER. Good morning, Madam Chair Landrieu, Ranking 

Member Risch, and other distinguished members of the Committee. 

I am honored to be here today and to share my negative impact 

Obamacare has had on my small business and me. 

My name is Sheila A. Salter and I am the sole proprietor of 

early2surg. I reside in North Carolina and that is a state that has 

defaulted to the federal exchange. 

My company is a marketing/consulting business and the mission 

is to improve or accelerate the development and commercialization 

of surgical devices. My primary customers are startup device companies. 

I have been in health care for over 35 years. I am well aware of 

the weaknesses and strengths within our health care system. I do 

not think there is a person in this great country of ours who does 

not wish for every individual to have affordable health care. 

Obamacare has negatively impacted my business and filled me 

with uncertainty. I am my business. I planned for many years to 

have my own business. I invested my time and my money to begin 

early2surg this past February. 

Now, because I have no employees, I am not eligible for SHOP 

at this time but it would be a reality if and when I could afford 

to expand. That is in my business plan. 

Now, I would like to direct you to either the screen or you have 

in front of you a chart that I submitted. You know, I was shocked 

back in September when I received notice from Blue Cross Blue 

Shield that my health care plan was going to be canceled and it 

was going to be replaced by one that had been chosen for me at 

the tune of $584 a month. 

Now, if you look at the chart, we all need to be clear on this. 

There is one health care plan. When I hear people talk about, oh, 

you know, go to the exchanges, shop, shop, shop. You have one 

plan. Okay. That plan includes the benefits listed in the left-hand 

column. 

Now, you can see Sheila’s plan. Sheila’s plan was the one that 

I chose. I chose my services. I have done that all these years. I 

chose those services, chose that deductible for $202 a month. 

Now, with Obamacare, I have to have those 10 essential benefits. 

Now, I challenge anybody in this room to look at the services that 

I selected for myself, noting that I am 61. I know I do not look it 

and I have no children or history of alcohol or drug abuse yet. 

Okay. 

[Laughter.] 

But does anybody here really think that I need all these services 

on the left-hand column? I do not think so. To have those choices 

removed from me, to have the government tell me, Sheila, this is 
44 

what is best for you, I really, I mean shocked is not the word. It 

is unacceptable. 

It is unacceptable now. It is going to be unacceptable 12 months 

from now and I am going to never accept for someone to make my 

health care choice for me. 

The only thing that exchanges do, and I have gone on the exchanges, you have the selection of what is your deductible, what is 

your co-pay, what you are going to do for prescription, are you 

going to be in network or out of network. 

But I do not care if you are a man or a woman, you are going 

to have maternity and newborn care, you are going to have pediatric services, and you are going to have services that you may or 

may not need. 

You know, that I think there should be a fix to it. I am open to 

work with anyone to fix that. 

So, how has it affected my business? Well, it has impacted how 

am I going to establish my business, grow my business, expand my 

business. All of that is going to be delayed. 

And as you know, the website is not working exactly up to par 

but I am concerned with the security of the website. You know, if 

I have identity theft, if any of us have identity theft, we all know 

what the consequence of that is. You know, it could wipe me out 

to the point I would never recover. 

So, you know, in our health care business we have a motto, first 

do no harm. I want to see everybody have affordable health care. 

That is a given but, you know, there are some fixes that need to 

be made and I am happy to help with that. 

Thank you again. 

[The prepared statement of Ms. Salter follows:] 
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Chair LANDRIEU. Thank you very much. 

Ms. Evans. 

STATEMENT OF CONNIE EVANS, PRESIDENT AND CEO, ASSOCIATION FOR ENTERPRISE OPPORTUNITY, ARLINGTON, VA 

Ms. EVANS. Good morning, Chair Landrieu, Ranking Member—— 

Chair LANDRIEU. Welcome back. 

Ms. EVANS. Thank you very much for having me back. Ranking 

Member Risch and members of the Committee, my name is Connie 

Evans and I am the president and CEO of the Association for Enterprise Opportunity, AEO, the national member organization and 

the voice of micro-business in the United States. 

For more than 21 years, AEO and its more than 450 member and 

partner network of non-profit lenders and business development organizations have provided critical services, access to capital and 

business counseling to under served entrepreneurs in micro-businesses all across the country. 

The importance of our topic today, health insurance and its value 

to micro-businesses can not be overstated. Similarly, our discussion 

of how certain elements of the Affordable Care Act are changing 

the health care landscape could not be timelier. 

Before we proceed to the topic, however, I would like to give the 

Committee some statistics about micro-businesses, those businesses 

with under five employees, that AEO released just last week. 

The report, Bigger Than You Think, the Economic Impact of 

Micro-Business in the United States, tells a powerful story of how 

the Nation’s smallest businesses make an outsized contribution to 

our economy. 

There are 26 million micro-businesses in the United States or 

about 92 percent of all businesses. The ripple effect of direct, indirect, and induced economic activities of these firms is quite impressive. 

Total employment of more than 41 million Americans, total economic impact of nearly $5 trillion, and total revenue contributions 

of $135 billion to federal, state, and local governments just in 2011. 

In other words, although these main street businesses are small, 

their combined impact is quite significant. Despite advantages, 

however, many would-be entrepreneurs are reticent to leave their 

jobs due to concerns about health care access. 

For decades the inability to obtain health insurance has been a 

barrier for those who are interested in starting a business. It is 

well documented that access to health insurance drives employee 

decisions. 

Before the ACA removed pre-existing conditions as a barrier to 

obtaining health insurance, employees often chose to stay with employers even though they were unhappy with their employment. 

The inability to access health insurance prevented those who might 

have otherwise left their jobs and start businesses. 

As the Chair expressed this morning, indeed, the Robert Wood 

Johnson Foundation does project that nearly 1.5 million Americans, 

including 25,000 just in the Chair’s home State of Louisiana, will 

become self-employed thanks to insurance reforms of the Affordable 

Care Act. 
51 

The entrepreneurs and micro-businesses that AEO members 

serve have had the unfortunate choice of hamstringing their revenues by providing health insurance to their employees or losing 

their employees to larger companies who can provide that insurance. 

The ACA he reforms to the health insurance market, in our opinion, were necessary and we hoped that these changes would lead 

to better prices and more choices. 

Our optimism is based largely on the exchanges, also referred to 

as new marketplaces, which allow individuals or small businesses 

to pool together statewide to obtain insurance. 

It is with profound disappointment that the federal rollout of this 

program is in complete disarray. While most of the government’s 

attention has been focused on fixing the individual exchange, and 

the small business exchange or SHOP has been treated as a secondary concern. 

We fear that implementation of the federally facilitated SHOP 

will continue to suffer delays. Even though the law requires individuals to obtain health insurance by March 2014, many plans for 

individuals and businesses end at the end of 2013. 

Decisions about coverage have to be made whether or not the 

Federal Government can successfully rollout the exchanges. We 

note that many individuals have received notices saying that their 

coverage will be discontinued because that plan does not comply 

with the ACA and the insurance companies have advised these customers to shop in the exchanges but, of course, the exchanges are 

not up and running so there is much frustration over what to do 

in the meantime. 

Do they just go without insurance and allow a gap in coverage? 

What do they tell their employees? 

In closing, our message is not based on any political leaning or 

philosophical notion regarding health insurance. We just want it to 

work. We urge the Congress and the Administration to come together to make it work for the 26 million micro-businesses on the 

front lines of our economy. 

Thank you for the opportunity to appear before you today and I 

look forward to answering any questions the Committee may have. 

[The prepared statement of Ms. Evans follows:] 
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Chair LANDRIEU. Thank you very much and all of you for your 

testimony. It was all helpful to helping us work forward to try to 

fix this bill for the benefit of our small businesses and individual 

contractors and self-employed. 

I am going to take five minutes for questions. We will do a fiveminute round alternating—I am sorry, Mila. I am so sorry to miss 

you. I will tell you this cold is really knocking me for a loop. 

Ms. Mila, go right ahead, Ms. Mila Kofman. 

STATEMENT OF MILA KOFMAN, EXECUTIVE DIRECTOR, D.C. 

HEALTH BENEFIT EXCHANGE AUTHORITY, WASHINGTON, DC 

Ms. KOFMAN. Thank you. Thank you very much, Madam Chairwoman Landrieu and thank you Ranking Member Senator Risch, 

and members of the Committee. 

My name is Mila Kofman and I am the Executive Director of the 

District of Columbia’s Health Benefit Exchange Authority, otherwise known as DC Health Link. 

Senator Landrieu, thank you so much for your leadership and 

advocacy on behalf of the Nation’s small businesses, both for your 

home State and nationwide. It is truly I appreciated all the work 

that you have done through the years for the small business community. 

It is my honor to be here today to share with you what we have 

done here in the District of Columbia. The District was an early 

leader with the Affordable Care Act implementation. 

In March of 2012, Mayor Gray signed legislation creating the DC 

Health Benefit Exchange Authority. We are a private-public partnership with seven voting members who are small business owners 

and experts in health insurance and health care financing. We also 

have four government members who serve as nonvoting. 

In the District, it really did take a village to bring success to 

date. We had a very strong partnership with all of our agents, government agencies. We also had a very strong partnership early on 

in our policy decisions. We had policy workgroups, stakeholders 

who helped us make our policies and set our priorities. 

We had strong support from Mayor Gray and his entire administration as well as the City Council and Congresswoman Norton. We 

had the political support we needed to move forward. 

We also had strong relationships in collaboration with the business community here in the District, business associations who represent the small business owners here. We also had strong support 

from the Federal Government and especially Gary Cohen and his 

entire team. 

On October 1, we opened for business; and as you know, it was 

reported that we were one of four states that opened on time and 

did not go down and we have not gone down. We are fully open for 

business and we welcome everyone, every individual who lives in 

the District, every small business that is in the District, and now 

I look forward to serving many of you and your staff. It was a great 

pleasure to be designated as a provider of health benefits to all of 

you. 

I want to know that we had very strong partnerships with our 

insurance industry. We have four major insurance companies selling to small businesses through DC Health Link and I think the 
59 

best insurance companies in the Nation, Aetna, United, CareFirst 

Blue Cross Blue Shield, and Kaiser Permanente. 

They offer 267 different products to small businesses, something 

for everyone. If you want zero deductible plan, it is there. If you 

want an HSA high deductible health plan, it is there, and everything in between at all price points. 

Our carriers offer nationwide physician and provider networks as 

well as very robust local and regional networks, and we are very 

proud to offer full employer and employee choice. 

So, when a small business comes in, it is very easy to create an 

account. DCHealthLink.com is our web address. When a small 

business comes in, the small business decides how much to contribute and what options to offer to employees. 

For the first time, a small business can offer the types of options 

that only in the past have existed for the large employers. A small 

business can pick what to contribute and pick a level of benefits 

like the gold level and employees have 112 different products to 

choose from. 

The small business gets one invoice and we clearly say how much 

the small business has to contribute and how much to withhold 

from the paychecks of employees. 

We also did not, we decided to take advantage of the private 

market innovations so we did not negotiate rates or benefits. We 

let the insurance companies compete and, boy, did they compete. 

After we made all of their premiums public, one company came 

back in lowering their rates twice. Another company came in and 

lowered their rates once and a third company came in and lowered 

their rates and offered additional product. 

So, we have seen real private market competition work. When insurance companies compete, small businesses and individuals benefit from that competition. 

Chair LANDRIEU. Please try to wrap up please. 

Ms. KOFMAN. Thank you, Madam Chair. 

I just want to note and thank the D.C. Chamber of Commerce, 

the Greater Washington Area Hispanic Chamber of Commerce, and 

the Restaurant Association of the Metropolitan Washington area. 

They had been our strong partners, and they are part of our success. 

I also want to note that the insurance brokers especially of the 

National Association of Health Underwriters has also been a critical part to our success. 

I look forward to answering any questions you may have. 

[The prepared statement of Ms. Kofman follows:] 
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Chair LANDRIEU. Thank you very much. 

Before I start my line of questioning, I would like to submit for 

the record a letter from the State of Minnesota, the governor, Mark 

Dayton, who was a member of the Senate, and he quotes, and I will 

put the rest in the record, Mnsure, which is—sure’s focus on small 

business as a result of our State’s decision to create a Minnesotamade exchange that best provides for the needs of Minnesotans. 

Virtually every health care organization, business organization or 

respected expert strongly supported our state exchange in designing something that would work for us. 

And he could not be here. Minnesota could not testify, but they 

have some excellent information. I would like to submit that to the 

record with no objection. 

Let me respond in my time first to my good friend and Ranking 

Member’s reference to my not supporting Senator Enzi’s amendment. Senator Enzi is here. He can most certainly explain his 

amendment. 

But I want to say for the record the reason that I voted against 

it, and I remember the Democratic caucus, is because it would have 

eliminate the cap on lifetime limits. 

So, people could basically exceed their limits and I thought that 

was wrong and it would also have knocked young adults off their 

parents plans which is one of the strongest features of the Affordable Care Act. 

So, I would say Senator Enzi, of course, can defend himself in his 

rebuttal. His bill which I voted against and many Democrats did 

not keep the promise. It gutted in the bill. 

Now, I have a bill that will actually keep the promise and happily last week in the House of Representatives both Republicans 

and Democrats overwhelmingly voted to support some version of 

the Keep Your Promise Bill that would extend that for a year. That 

would help you, Ms. Salter, because you could actually keep your 

plan. 

So, I wanted to put that in the record. 

My first question would be to you, Ms. Salter. When did you 

start your current business? 

Ms. SALTER. I just started my business this past February. 

Chair LANDRIEU. Okay. So, you have been in business about nine 

months. 

Ms. SALTER. Uh-huh. 

Chair LANDRIEU. And you are just starting. 

Now, I want to put into the record that not only if my bill could 

pass, and I hope that you could support it or a version of it, you 

could keep the plan that you want. But if you chose to go to another plan, I want to put in the record, if you make $27,500 a year 

in your business, assuming you have no additional income, you will 

actually save $4,986 because of the premium that you and your 

business will receive. 

If you make $32,000 a year, your annual cost of your premium, 

even in North Carolina where the State itself chose not to help you 

by setting up their own exchange—they let it be set up by the Federal Government—so, your State made that decision, not to us— 

you would save, you would pay every year $919 and you would 

save $4,257. 
67 

If your business makes $35,000 in your first year and it goes up 

to 40 or 45,000, your premium, you would still save $2,823. So, I 

am sorry that your exchange is not working as well. That is what 

we are here to do. But there are some benefits that hopefully you 

can come to appreciate as we move forward. 

Ms. Kofman, let me ask you. The D.C. exchange has gotten some 

very good feedback, and as you said, both bipartisan, Republican 

and Democrat. It is understood. 

What would you say are the two most important features that 

caused your exchange to be so beneficial to your small businesses? 

Was it the way it was designed, was it the cooperative nature, 

what was it and what would you recommend to others trying honestly to fix this and to make it work for their small businesses? 

Ms. KOFMAN. Thank you, Madam Chair. 

There were several elements that were critical to us. We wanted 

to build the exchange from the ground up, community-based effort, 

priorities, policies that we adopted were very much stakeholder 

driven. The decisions we made reflect the stakeholders who were 

involved in helping us build DC Health Link. 

The other critical part to us is the huge choices that are available 

to small businesses, 267 different products, everything, HMOs, 

PPOs, no deductible, high deductible, everything from all of the 

major insurance companies. 

And our value proposition is we want to make it as easy as possible to small businesses to be able to offer coverage and offer small 

businesses the kind of clout they never had in the past, the clout 

that large employers have enjoyed for many, many years. 

That as well as the business community in the District stepping 

up to the plate, putting politics aside and helping us make hard decisions and helping us to build this DC Health Link to provide 

services that small businesses need and want and are desperate for 

in terms of affordability and predictability and an opportunity to 

offer great options to their workers. 

So, it took a village and the small business community was definitely a strong part of it. 

Chair LANDRIEU. Thank you so much. 

Senator Risch. 

Senator RISCH. Madam Chairman, back to the Enzi proposal 

again. I heard your explanation. You voted against it because it 

eliminated lifetime caps that were required under Obamacare and 

it eliminated the 26-year-old coverage which was required under 

Obamacare. But this is exactly the point. 

You did not promise us that if we politicians like your policy, we 

are going to let you keep it. You said, if you like your policy, you 

can keep it. There were a lot of people that wanted to buy policies 

that cost less and that did not have lifetime caps lifted, and there 

were a lot who wanted to buy plans that did not cover their 26- 

year-old. 

But you did not let us do that and that is the problem. The 

American people want to be free. We are smart people. We can 

make our own decisions. We do not need the Government telling 

us what we have to have. And that is the biggest complaint I get 

from Idahoans, from Americans, saying why are the politicians in 
68 

Washington, D.C., constantly telling us what we should do for ourselves. 

And that is the basic problem with all of this. Whenever you try 

to socialize an industry or nationalize an industry like has been 

done here, it has never worked. It has been tried in every communist country in the world. It has been tried in all kinds of socialist countries, and it never works, and it is not going to work here. 

Well, let me ask a couple of questions. First of all, Mr. Nold, I 

am told that there have been 150,000 small group plans that have 

been canceled in your state. Is that true? 

Mr. NOLD. Sir, I am not familiar with the number there. At the 

Department of Insurance is the agency that handles the mechanisms for that. I will be glad to provide that information to you. 

Senator RISCH. Well, I have got it. They said there are 150,000 

small group plans that have been canceled. On the other side of the 

ledger through November 8th, 309 have signed up again. That is 

a big problem it seems to me. We have 150,000 canceled and 309 

signed up. 

Mr. NOLD. Certainly with the small group, it is to note that the 

open enrollment period that affects individuals is not the same 

with small groups. There is a continuous open enrollment period 

available to small groups. They can sign up anytime during the 

year. 

Senator RISCH. Got it. 

Ms. Kofman, first of all, let me say that it is really encouraging 

to hear that you were one of five, did you say, that made the rollout work October 1. Is that what you said? 

Ms. KOFMAN. In the morning of October 1, Bloomberg news was 

reporting we were one of four jurisdictions—— 

Senator RISCH. Four. 

Ms. KOFMAN [continuing]. That went live without a glitch that 

morning. 

Senator RISCH. That is really good to hear that they were working. People were able to sign up. They were able to get on and do 

what they wanted to do. That is a really, really good thing. 

What is the population of the District? 

Ms. KOFMAN. We are a small population jurisdiction, about 

640,000. 

Senator RISCH. I am told that in the first month with you up and 

running, no glitches, everything is working well and with that kind 

of a population, that you had only five enrollees in the first month. 

Is that true? 

Ms. KOFMAN. No, that is not true. 

Senator RISCH. What is the number? 

Ms. KOFMAN. I can provide your office with the exact numbers. 

We did issue the most recent numbers as of November 13. We had 

close to 700 employer accounts created. In terms of individuals who 

completed their applications both for premium reductions and full 

premiums, we were at about 1350 for full-price applications and 

close to 2000 for reduced price. Each application could be a family 

of 10. We only count applications. 

In terms of account holders who selected a plan, over 1100 account holders selected a health plan and 565 account holders said 

they wanted to be invoiced to pay. 
69 

Now, they are not required to pay until December 15. So, I just 

want to make sure that people who are residents of the District are 

reminded of that. We are not asking for people to pay early. If they 

want coverage to be effective January 1, they do have to make 

their payment by December 15. 

Senator RISCH. So, by my calculation then, a little under one percent of the population in the District signed up. Would that be fair? 

Ms. KOFMAN. I can provide you better numbers. Right now folks 

who are shopping and making decisions, there is a lot of activity 

through DCHealthLink.com. 

I am encouraging both small businesses and individual shoppers 

to take their time. Selecting health insurance is not an easy decision and if you are not working with a broker who can help you 

through it, you really do have to take your time. 

I can tell you as a former insurance regulator myself, insurance 

is very complicated. Consumers who get a 150-page document 

which is their insurance contract which has the exclusions and 

what is included is very complicated. So, although we have made 

it much easier through our webpage to shop and compare apples 

to apples, we provide four-page coverage summaries that make it 

much easier than before to shop. It is still not a quick decision and 

we encourage everyone to take their time. 

Chair LANDRIEU. Thank you, Ms. Kofman. 

Senator Booker, and let me welcome you to this Committee and 

welcome you to the United States Senate. I look forward to your 

leadership. You have already been a champion of small business 

and you are just a perfect person to join us in our effort to help 

them. 

Senator BOOKER. Thank you very much, Chairwoman. I want to 

thank you and I want to thank the Ranking Member. 

These are the things you need to teach the new guy, how to turn 

on your microphone. 

But I want to thank the Chair and I want to thank the Ranking 

Member both who took times out of your busy schedule to sit and 

meet with me and help me get along my way. 

This is such an important issue for the State of New Jersey that 

I am very grateful to have the opportunity. I want to thank all the 

panelists. They have been informative. I wish we had more time 

and I look forward to reading more of your testimony that was submitted into the record. 

Mr. Greenblatt, first of all, I appreciate your Jersey connection, 

a guy who vacations in Jersey, and you have some Jersey boy aura 

sp to you. 

[Laughter.] 

I want to say to you, first and foremost, as the geologists say, you 

rock. And you rock not because of your Jersey connection because 

I feel one of a kinship with you, both you and I in the last month 

have come down to Washington. You get to go home I think; I am 

going to stick it out here and battle it out. 

But you deal with pragmatism and I have had to deal with it. 

I cut 25 percent of my employees as a mayor. One of the reasons 

I had to cut so much is because health costs were going up so 

much, my taxpayers could not afford it. 
70 

I had to balance the budget for every year. So do you. And the 

challenge that you have which I have seen working with local manufacturers in my city that I wanted to expand is that you said you 

export products to China. Right? 

Mr. GREENBLATT. Yes. 

Senator BOOKER. You are competing globally, right? 

Mr. GREENBLATT. Absolutely. 

Senator BOOKER. I would like you a lot and when you compete 

globally, you are competing against countries in Europe and Asia 

and across the globe, right? 

Mr. GREENBLATT. Absolutely. Right. 

Senator BOOKER. And many of those countries have different 

health care systems and most of those countries, most of our competitor Nation’s have much lower health care costs, right? 

Mr. GREENBLATT. Absolutely. This is a challenge for us. Take 

Canada, their health insurance is included, is part of the system 

but their taxes are 15 percent. Our taxes are 40 something percent. 

Senator BOOKER. God bless you. 

Mr. GREENBLATT. This makes it challenging to compete with 

Canada. 

Senator BOOKER. I want to compete with Canada in every way 

except for Toronto, their Mayor, they have challenges there. 

[Laughter.] 

So, my point to you is that your pragmatism I love because this 

is not about politics, it is not about the pugilism that is profoundly 

prodigious sp in Washington. It is about solving problems, lowering 

costs, giving access; and small business people like you want to 

compete with the big boys. Right? 

Mr. GREENBLATT. Absolutely. 

Senator BOOKER. And what I see in my city is many folks have 

a hard time keeping employees who could easily go to other companies who have better health insurance plans. 

In fact, you probably know people that will go to a company and 

get less salary for better health insurance. Is that not correct? 

Mr. GREENBLATT. I think that is one of our positive attributes 

that we have such a good plan. 

Senator BOOKER. Right. And so the key here, and the goal here, 

is to make sure that we take this variable which has made small 

businesses get so crushed in the past that it helps them be more 

competitive, not only in keeping employees locally but also competing against other countries that have lower health care costs, 

call it socialism or whatever you want, they have lower health care 

costs and you are competing against them because you internalize 

those costs and many of those companies do not. Right? 

Mr. GREENBLATT. You are right. 

Senator BOOKER. So, that is the pragmatism. We are not here to 

score political points. I do not care about in the next election. I care 

about solving the problems. And when you look at polls, they might 

not like politicians but most people are saying right now, fix the 

dagnab thing which you are saying. Right? 

Mr. GREENBLATT. Absolutely. 

Senator BOOKER. And so, Mr. Hickey, who has no New Jersey 

connection. 

Dr. HICKEY. Actually I do. 
71 

[Laughter.] 

Senator BOOKER. You do. In my last 90 seconds, sir, would you 

please, you are well down the field. You have a functioning exchange. You heard the good Jersey boy, Mr. Greenblatt, and Mr. 

Allen’s problems. 

Could you please tell us what the future could look like for them 

and how to solve the very real problems they brought up? 

Dr. HICKEY. Number one, put together an exchange board that 

is from both sides of the aisle but, as you say, they care about the 

people of New Jersey. Our board has people—— 

Senator BOOKER. I am sorry to interrupt you, sir. I do not know 

if you know about my governor. He is a very quiet, soft-spoken not 

to many people know who he is. 

[Laughter.] 

But he did not participate in the exchanges. We have one of the 

best local insurance-based knowledge there is and we did not engage in that in New Jersey. We left it up to the Federal Government. So we are way behind you in Kentucky, not a place that we 

like to be in New Jersey. But continue. Or New Mexico. 

Dr. HICKEY. Yes. And that board being made up of people even 

though they were vitriolic against the ACA. Once they got on that 

board, they said we have an obligation, a fiduciary duty to the people of New Mexico, and we are going to make this work. 

Senator BOOKER. Right and left coming together. 

Dr. HICKEY. Right. And we all came together. We have a great 

Chairman. He is also a doctor. We all came together and we met 

and we met and we met and resolved the issues. We hired an excellent CEO and we hired a company, a previous private exchange 

vendor, a SHOP in a box is what we call it, and it already worked 

and we knew it would work. 

Senator BOOKER. My time has expired but we do not have time. 

People are hurting right now. We have got to fix this before the 

next election and I appreciate you showing us the way forward. 

Chair LANDRIEU. Thank you very much, Dr. Hickey. 

Senator Enzi. 

Senator ENZI. Thank you, Madam Chairman. 

I had not anticipated getting into my Congressional Review Act. 

But since it has been brought up several times, I will. 

One of the reason that it included some things that you would 

prefer not to have in it is that when the Federal Register is published and says that there is going to be this huge cost of people 

losing their insurance even though the President has promised that 

if they like their insurance they can keep it, your choice is not to 

pick from the things that are in there. 

You have to reverse the whole regulation. The whole regulation 

would have made it possible for people to keep their insurance if 

they liked it. 

So, you also have a very limited time to be able to bring up a 

Congressional Review Act and have that kind of a forced eight-hour 

debate and then up or down vote on a regulation. And I took advantage of that window. 

After that window closes, the only people that can make a difference would be through the majority leader which means that the 

majority side could have brought up things that would have left out 
72 

the one or two things that were in that regulation that they did 

not like and they could have made it so that people could keep 

their insurance if they liked it provided it did not have those two 

things. 

That is not how it works and there has not been any effort in 

the meantime to do that. Now that it has been exposed, there is 

a tremendous effort and interest, and Senator Johnson has a bill 

that would comply with what I think the Chairman said would be 

acceptable to go ahead and fix it so that people who like their insurance can keep it, although it should have been done three years 

ago so that the insurance companies would have had the opportunity to adjust to the time, to have their actuarial stuff together 

for this particular time and I think it would have helped out businesses. 

There are actually three changes that I would like to make in 

Obamacare; and if we made those three changes, it would make 

more of a difference in jobs and the economy than the stimulus 

package did. 

One of those would be to change those hours for part-time from 

30 to 40, and that is kind of the standard by the Small Business 

Administration, and this is the Small Business Committee. So, I 

would hope that we would do that. 

I had a 10-step plan for fixing health insurance before the President ever became a Senator, and one of the things in that was 

small business health plans, and we had an opportunity to do that 

that would allow small businesses to group together through their 

association, any association, across state lines, nationwide, so they 

would have a big enough group that they could effectively negotiate 

with any insurance company. 

There is another proposal that would have allowed them to selfinsure on those big groups. Those would have provided a lot of advantages for small business. Those are not available. 

Small business owners in Wyoming are asking me what can be 

done. Wyoming did not do an exchange. It is the least populated 

state in the Nation. It is less populated than the District of Columbia, and we have a lot of miles between places, and we have extremely small towns, and we only have two insurance companies 

that are interested in serving there. 

Under prescription part D, we only had two companies providing 

prescriptions until we did prescription part D. And one of the 

things that surprised us, suddenly 48 companies wanted the business in Wyoming even though it was a small populated state. 

What was the effect? Before the law even went into effect, it 

dropped prices by 25 percent and gave people choices. We could 

have had that same thing here but we do not. 

So, I want to thank you all for the testimony that you had. I had 

some pretty specific questions that I would ask just quickly. 

Mr. Allen, you mentioned that drugs cost 52 percent more because of the name brand requirement. Could you expand on that 

just a little more? 

Mr. ALLEN. Yes. So, the plan that we have presently covers only 

generic drugs, and the difference in premiums to go to the new policy that includes the brand-name drugs, the difference in the premium is 52.3 percent. 
73 

Senator ENZI. I think you said that none of your employees were 

using brand-name drugs? 

Mr. ALLEN. That is correct. In preparation for my testimony 

today, I did a poll among my employees and not one single person 

is presently taking or has any plans to take any pharmaceuticals 

that are only available as a brand-name product. 

Senator ENZI. Thank you. 

I think there are a number of great examples there, and I appreciated Mr. Greenblatt’s comments about his sales to China and how 

he bids those three or five years in advance, and sometimes he 

could not use a little bit of stability in what his prices are going 

to be, and he is not getting that under the exchange. 

I thank the Chair. 

Chair LANDRIEU. And I thank the Senator from Wyoming. 

Senator Shaheen, who also comes from a small State, just to put 

for the record as the Senator knows, there are 576,000 people in 

Wyoming less than in the District of Columbia. One chose the exchange, one chose not. 

Senator. 

Senator SHAHEEN. Thank you very much, Chair Landrieu and 

Ranking Member Risch for holding the hearing. Thank you all for 

being here. I am sorry I missed your spoken testimony this morning but I do think it is very important for all of us to hear from 

small businesses. 

In New Hampshire, 96 percent of our employers are small businesses. It is a brilliant foundation of our economy, and the frustrations that you have shared are ones that I think everybody on this 

panel appreciates and shares in terms of how to make this law 

work and what we can do better. 

You know, one of the biggest concerns that I have heard from 

New Hampshire small businesses is about the cost of health care, 

and Mr. Greenblatt, you and Senator Booker engaged in a back 

and forth on that this morning. 

But small businesses currently in New Hampshire are paying 18 

percent more than large businesses because of administrative costs. 

So, finding a way to address the challenges that you face is going 

to be critical. 

And you know, looking at what we can do to fix this legislation 

I think is very important. In that vein, I have all offered a bill that 

would delay open enrollment in the individual market because that 

is the immediate problem that we are facing in New Hampshire, 

and I did that because we want to make sure that people have time 

to enroll. 

Now, fortunately with the SHOP exchanges, that is an ongoing 

opportunity. But New Hampshire like Wyoming, like a number of 

other states, also has not chosen to do a state to exchange; and so 

we are very much struggling with what is happening at the federal 

level. 

I wonder for Mr. Nold and Ms. Kofman as you have participated 

in state exchanges that are working, if you could talk about the reaction of those businesses that are enrolled in the SHOP exchanges 

in the District of Columbia and in Kentucky and how they are feeling at this point about the product that they are getting. 

Mr. Nold, maybe you would go first. 
74 

Mr. NOLD. Sure. As you are aware, the enrollment process will 

in the small-group exchange, the SHOP exchange, is really a twostep process. 

The first step is the employer themselves will come to the exchange and shop and try to determine which plans they want to 

offer to their employees. Once they go through that process and 

pick the plans that they want to offer, then the employees are 

given a 30-day open enrollment opportunity to go on line and pick 

the one they want. 

So, it takes a little longer in the SHOP to really get to the point 

where you actually are enrolling. So, that process has to be completed. That is, the open enrollment period for the employees has 

to be completed. 

We have a participation requirements in Kentucky that says that 

75 percent of the employees have to participate. If they do not, 

then the employer, so that takes time. 

We have gotten to the point where now employers have selected 

plans and the open enrollment period is ongoing where employees 

can come in and choose. 

So, what I am trying to say is that it is difficult to say how that 

is all going to happen. It is again predicting the future. So, but we 

are very, very encouraged about the numbers. I mean, we have had 

over 93 employers that have gotten to the point where their employees are now picking plans. 

Senator SHAHEEN. Great. Thank you. Ms. Kofman. 

Ms. KOFMAN. Thank you. I will just share with you a theme 

small businesses have shared with me of their experience. So, one 

small business is growing and they never offered coverage in the 

past. So, this is the first time they can offer coverage to their workers and themselves because if the workers are not covered it is 

likely the owner is not covered either. So, one small business was 

very excited about that. 

Another small business I spoke to on October 1 said, the owners 

said, based on his quick review of all the products he will save 12 

percent, at least 12 percent. At that point in time he has not made 

a decision of the products he wanted to offer. 

And another small business I spoke to said they were very happy 

not to be paternalistic any longer. They can just decide how much 

to contribute and let their employees decide which HMO or PPO 

or insurance company to select. 

So, anecdotally, small businesses that I have talked to have been 

very, very pleased with the product offerings, the range of offerings, and the price is. 

Senator SHAHEEN. Thank you. 

Thank you, Madam Chair. 

Chair LANDRIEU. Thank you very much. 

Senator Johnson, thank you for joining us. 

Senator JOHNSON. Thank you, Madam Chair. 

In solving any problem, in negotiation, the first thing you want 

to do is figure out what you can agree on. There are a couple of 

things I can agree right off the bat with you, Madam Chair. 

You know, we need to fix this bill, and there is a lot to fix. Secondly, it sounds certainly in your opening statement that you are 
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giving states a lot of credit and we are having real problems on the 

federal level. 

I agree. The federal level I do not think has any capability of 

doing this. The states are far better, a far better place to start solving these problems. 

So, I want to start my first question with Mr. Nold. Did Kentucky need a 1600-page bill with 20,000 plus pages of regulations 

to do this small business exchange? 

Mr. NOLD. Uh—— 

Senator JOHNSON. Quickly. 

[Laughter.] 

You could have done it on your own. Could you not? 

Mr. NOLD. We tried to do it back in 1990, the early 1990s and 

it—— 

Senator JOHNSON. You did not need a federal bill. Did you? 

Doctor Hickey, did you really need a 1600-page bill and 30,000 

pages, 20 or 30,000 pages of regulations, to do this in New Mexico? 

Dr. HICKEY. That set up some of the rules and regulations, Senator, but we had a 60-page bill creating the exchange. 

Senator JOHNSON. So, you could have done it far easier. We did 

not need a federal solution. We did not need to take over one sixth 

of our economy to start doing these things. 

So, again I will stipulate. Another thing we agree on. I think a 

small business exchange is a good idea. It is a sharing of the risk 

pool. 

Dr. HICKEY. Right. 

Senator JOHNSON. It is a good idea. 

Dr. HICKEY. Right, right. And we had a very supportive Republican governor doing it and a Democratic legislature and they compromised on this bill and we moved right out of the gate. I think 

states are a great place to start. 

Senator JOHNSON. To paraphrase Senator Booker, this is not 

about politics. It should not be. It is really about solutions. I would 

say it is really about recognizing reality. It is about telling the 

truth. 

In fact, the matter is the American people have not been told the 

truth. Let us talk about cost. You know, we were guaranteed that 

if you pass this law, the cost for an average family plan would be 

reduced by $2500 per year. 

Ms. Salter, by the way, did a great job here. I want to ask you, 

because you have the exact experience, if you have a health care 

plan and that add, we will say, ambulatory patient services, is that 

going to increase the cost or decrease it? 

Ms. SALTER. If I have one now? 

Senator JOHNSON. Yeah. 

Ms. SALTER. It will increase. 

Senator JOHNSON. Doctor Hickey, if you add emergency hospital 

services to that, is that going to increase the cost or decrease it? 

Dr. HICKEY. They are automatically covered. 

Senator JOHNSON. But again, in other words, if you add coverages to a health insurance plan, is that going to increase the cost 

or decrease the cost? 

Dr. HICKEY. That generally will increase the cost but the state, 

again coming back to the state, the state had the authority under 
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the federal bill to decide what essential benefits were going to be 

covered. 

Senator JOHNSON. But again, I am just talking about the truth 

of what promises were made here and we were promised that the 

health care law would actually decrease costs but all of the added 

costs, all the added coverages, all the added mandates have increased costs. Correct? 

Dr. HICKEY. Sir, if I could point out to you that 25 percent of the 

premiums that you pay today goes to cover the uninsured and the 

services they get from wherever they get them from. 

So, in fact, I think, is where the opportunity, once those people 

get covered, the insurance companies will have a major opportunity—— 

Senator JOHNSON. Right, that is —— 

Dr. HICKEY [continuing]. To lower the cost. 

Chair LANDRIEU. Please let him answer. 

Senator JOHNSON. But that is really not—— 

Chair LANDRIEU. Please let him answer. 

Senator JOHNSON [continuing]. What the business people are experiencing. 

Chair LANDRIEU. Senator Johnson, please let him answer. 

Go ahead. 

Senator JOHNSON. Well, I have such limited time here so I have 

got to move quickly. 

I do want to talk about the other totally broken promise. Fraud, 

and it is massive fraud. It was a political deception that if you like 

your health care plan you could keep it. While I do appreciate that 

Senator Enzi pointed that out if you like your health plan you can 

keep it which again I appreciate Madam Chair’s, her attempt, but 

her bill only covers those individuals who participate in the individual market where we are going to see, I believe, because of 

those increase in cost, 49 percent, 52 percent increase in insurance 

premiums, we are going to see a massive loss of employer-sponsored coverage coming next year. 

So, I guess I would certainly encourage Madam Chair to take a 

look at my bill which actually is all inclusive, and it is not quite 

so onerous on forcing insurance companies to do what they may not 

be able to do because of state regulators. 

So, I would really like you to take a look at your law versus my 

law and I would like to start working with you folks to actually 

start giving Americans in the freedom, allow them to keep their 

ability to choose the types of health care plans that they can afford, 

that they actually want. 

So, thank you, Madam Chairman. 

Chair LANDRIEU. Thank you. I will look forward to doing that. 

Your bill, of course, guts be Affordable Care Act. Mine fixes it. We 

will talk about that later. 

Senator Vitter. 

Senator VITTER. Thank you, Madam Chairman. 

First of all, I wanted to give a quick update. At one of our last 

hearings about Obamacare and small business, we had a very compelling witness from Louisiana, Larry Katz, the owner of Dot’s 

Diner. And unfortunately—I have followed up with him in response 

to his testimony, and unfortunately, it has gone from bad to worse 
77 

due to he was forced to cancel policies he provided before in particular so that many of his employees could still be eligible for a 

subsidy on the exchange. 

Now, he followed the law by giving 90-day notice and he also 

asked and hired a consultant to come in to help his employees with 

the Obamacare exchange application. 

However, all the website problems have pretty much shut down 

their ability to purchase insurance on the federal exchange for now. 

The consultant next coming in December 1st which gives them two 

weeks to enroll. 

If his employees go to the individual market, they will see an average premium increase of 54 percent; and if they cannot get plans 

there on the exchange, there will be 30 individuals who were previously happy with their employer-based coverage who will not 

have any coverage. So, that is a very real-world but unfortunate 

update. 

In terms of questions, Ms. Kofman, I wanted to ask you a few 

particularly based on Congress and congressional staff going to the 

D.C. SHOP exchange under the special carveout rule for Congress. 

Are there more than 50 members of Congress or employees that 

will procure insurance on this D.C. SHOP exchange? 

Ms. KOFMAN. I am sorry. All of the enrollment for employers is 

protected information, and I am not able to share with you any 

specific details about the Congressional enrollment. 

Senator VITTER. Based on the size of Congress, 535 members and 

the size of their employee base, would you expect that number to 

be more than 50? 

Ms. KOFMAN. More than 50 people enrolling? 

Senator VITTER. Yes. 

Ms. KOFMAN. Oh, yes, I am sorry. I did not understand your 

question. That is correct. The provision under the Affordable Care 

Act that speaks about Congressional enrollment essentially overrides the small business size and that is how you are able to avail 

yourself of the same choices that small businesses have in the District. 

Senator VITTER. Correct. Is there any other large employer, 

meaning over 50, who gets the same treatment and gets to go to 

that exchange? 

Ms. KOFMAN. So, At this time, the Congressional provision—the 

Congressional prevision only applies to Congress. In 2016—— 

Senator VITTER. Forget about the Congressional provision. 

Right now, for 2013, 2014, going into 2014 is there any other 

large employer who has the opportunity to go to the D.C. SHOP exchange or whose employees can? 

Ms. KOFMAN. In the city, we made a decision to limit the size of 

the small business market to up to 50 workers. 

Senator VITTER. So, Congress is the only large employer who gets 

that special treatment? 

Ms. KOFMAN. It is a function of one of the provisions in the Affordable Care Act. 

Senator VITTER. Okay. And is there any large employer who gets 

this huge subsidy well above the normal income-based subsidies of 

Obamacare in that exchange? 
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Ms. KOFMAN. So, small businesses in the District, they also, 

many contribute 100 percent to the premium just as you have 

heard from other witnesses. Small businesses, especially nonprofits, in the District provide platinum plus level of coverage to 

their workers and contribute 100 percent. Many contribute 100 percent toward the premiums so they do better than Congress. 

Senator VITTER. But again, Obamacare has a clear distinction between under 50 and over 50. So, my question was. Are there any 

other large employers, which means over 50, who go to an exchange, go to the D.C. SHOP exchange at all or go there and contribute this big subsidy? 

Ms. KOFMAN. So, in the District, we do not allow larger employers to come in. In 2016, larger employers up to 100 can come in 

starting in 2016, and then it will be a policy decision for the District whether or not to expand the DC Health Link to larger-sized 

employers. 

Senator VITTER. What, in your opinion, justifies this completely 

different and better treatment for Congress? 

Ms. KOFMAN. Congress gets the same treatment as all small 

businesses in the District. You have the same—— 

Senator VITTER. Congress is not a small business. It is not under 

50 employees. 

Ms. KOFMAN. So, by going through DC Health Link, you get access to everything that small businesses in the District get. By 

choice—— 

Senator VITTER. I understand. 

Chair LANDRIEU. Your time is up. 

Senator VITTER. But my question is. What in your opinion justifies this completely different—— 

Chair LANDRIEU. Senator Vitter, I am very sorry. Your time is 

up so let me answer that question. 

The Federal Government is not a small business. The Federal 

Government is a large business and the Federal Government, Congress, employees, postal workers as you know very well because 

you have studied this issue very well is under the same as large 

businesses in America; and that insurance premium is shared between the worker and the government, their employer. 

Now, that is not the subject of this hearing. We can talk about 

it. We have debated it. You have had ample time to debate that 

on the floor. So, if you do not mind that, let us take that debate 

to the floor. 

Senator VITTER. Madam Chair, can I briefly the respond? 

Chair LANDRIEU. No, you may not and your time—— 

Senator VITTER. Can I briefly respond? 

Chair LANDRIEU. I will give you 20 seconds to respond because 

you have a lot of time on the floor on this issue and Ms. Kofman 

does not. 

Senator VITTER. Well, I certainly did not have a 25-minute opening statement here so I would just like to briefly respond. 

Chair LANDRIEU. You have plenty time on the floor. You can respond. Ms. Kofman does not have the time. 

Senator VITTER. You are right that Congress is not a small business. It is a large employer and it is treated completely differently 

than any other large employer and far better by being able to go 
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to this exchange, the only large employer that is allowed to do that. 

And by being able to get a huge subsidy, only large employer that 

is able to do that for this period or any time soon. 

Chair LANDRIEU. And if your bill passes, the only large employer 

that will not be able to get insurance would be you and your staff. 

Thank you all very, very much. I really appreciate it. It has been 

an excellent hearing. We are going to go to the second panel. 

[Pause.] 

Excuse me. Welcome back. Thank you all so much and let us 

begin with our second panel. If you will just briefly introduce yourself. 

In light of the time, we would like to extend this for another 30 

minutes. It is very, very important. 

Most of the members have left accept Senator Vitter and myself. 

So, we will stay here and debate this or get testimony on the 

record. 

If you would proceed please—I am sorry. Senator Booker is also 

here. 

If you would introduce yourself briefly and begin. Ms. Borzi. 

STATEMENT OF HON. PHYLLIS C. BORZI, ASSISTANT SECRETARY, EMPLOYEE BENEFITS SECURITY ADMINISTRATION, 

U.S. DEPARTMENT OF LABOR, WASHINGTON, DC 

Ms. BORZI. Thank you, Madam Chair. Good morning, or I guess 

it is afternoon by now, to you, Chair Landrieu. 

Chair LANDRIEU. Can you speak into your mic please? You have 

got to lean and I am very sorry. It is uncomfortable but you have 

to lean forward. 

Ms. BORZI. Thank you very much for inviting me here this morning. I am Phyllis Borzi. I am the Assistant Secretary of Labor for 

the Employee Benefits Security Administration and I am here 

today to discuss the Department of Labor’s activities related to 

communicating with small business about the opportunities and requirements that exist under the Affordable Care Act. 

The department’s Employee Benefits Security Administration or 

EBSA is committed to helping small businesses and employees understand and benefit from the law. 

The health insurance market place premium tax credits and notices to employees of coverage options available through the marketplace are all designed to expand access to affordable health coverage. 

For small businesses, the small business health options program, 

the SHOP exchange, offers one-stop shopping to enable small businesses to find and compare private health insurance options. The 

SHOP is administered by HHS and the states. 

The marketplaces will help individuals and small businesses 

evaluate their private health insurance options for coverage effective January 1, 2014. The new Fair Labor Standards Act Section 

18B notice gives employees information about coverage options 

available through the marketplace and, if applicable, information 

about their employer-offered coverage. 

Employers covered by the FLSA are required to provide this key 

notice of coverage options to each employee no later than October 

1, 2013. For all new employees hired after that date, employers 
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have to provide the notice within 14 days of the employee’s start 

date. 

Now, although there is a statutory duty on employers to provide 

this notice, there is no fine or penalty under the statute for failing 

to do so. 

On May 2, the department issued Technical Release 2013–2 providing guidance on the coverage options notice, as well as model 

notices. We are increasingly using model notices in an effort to be 

helpful to small businesses because a model notice makes the notice requirement far less burdensome. 

Without a model notice, employers need to figure out for themselves how to comply with statutory requirements or hire somebody 

to help them. 

EBSA worked with HHS and our other sister agencies to develop 

the model notices. We also received feedback from employers. The 

model notice serves as a compliance assistance tool for employers 

but employers are not compelled to use these notices. 

There is one model notice for employers who offer health plans 

to their employees and a second one for employers who do not offer 

health plans. These notices are posted on our website in multiple 

formats for easier use by employers and are also available in Spanish. 

The two model notices make the process for shopping for health 

care coverage easier for both employers and employees. For example, the model notice for employers who offer health care coverage 

deliberately contains more information than the minimum statutory requirements for this notice. Why? Because then employees 

will have more information about their coverage options inside and 

outside of the marketplace. 

This also creates efficiencies for employers because the extra information in the model notices matches exactly the marketplace 

employer coverage tool designed by HHS which is part of the single 

streamlined application for the coverage in the marketplace. 

This means that an employer who uses our model notice will not 

face additional requests for information from the marketplace 

about coverage with respect to the employee because the model notices satisfy both the FLSA and the HHS requirements. 

Outreach and compliance assistance are very high priorities for 

EBSA. We partner with HHS, Treasury, IRS, and the Small Business Administration using a multifaceted approach that—— 

Chair LANDRIEU. Please try to wrap up. 

Ms. BORZI. Certainly—coordinated online information linked to 

other agencies, webinar trainings and compliance and participant 

assistance. 

In addition, we have benefit advisors that are available to assist 

small employers with compliance both through our website and 

through our toll-free hotline. 

I think I will stop there and be happy to take any questions. 

[The prepared statement of Ms. Borzi follows:] 
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Chair LANDRIEU. Thank you very much. 

Mr. Cohen, please introduce yourself briefly and get into your 

testimony. Thank you. 

STATEMENT OF GARY COHEN, DEPUTY ADMINISTRATOR AND 

DIRECTOR, CENTER FOR CONSUMER INFORMATION AND INSURANCE OVERSIGHT, CENTERS FOR MEDICARE AND MEDICAID SERVICE, U.S. DEPARTMENT OF HEALTH AND HUMAN 

SERVICES, BALTIMORE, MD 

Mr. COHEN. Thank you, Chair Landrieu and members of the 

Committee. I am Gary Cohen. I am privileged to serve as Director 

of the Center for Consumer Information and Insurance Oversight 

within the Centers for Medicare and Medicaid Services, and thank 

you for the opportunity to discuss the many benefits the Affordable 

Care Act provides for small businesses. 

I was very pleased, as I know you were Madam Chair, to hear 

from our state partners from Kentucky and New Mexico and the 

District of Columbia about their successes in building small business marketplaces at the state level. 

From the very beginning we encouraged every state to set up 

their own marketplaces because we believe that states were in the 

best position to create those marketplaces in hallway that would 

best serve the residents of their states. 

We have worked very closely and, indeed, every day with our 

state partners to help them stand up those exchanges, and we take 

great pride in the success that they have had. 

But I think it is also important to remember that the reforms of 

the Affordable Care Act are not just about the exchanges. They go 

beyond the exchanges to the entire small business market. 

As you know did in your opening statement, Madam Chair, many 

small businesses that would like to offer health benefits to their 

employees have faced significant challenges in the market as it exists today. 

Premiums have been going up, double digit, 20 plus percent 

every year. Small businesses have been charged 18 percent more 

for the same type of coverage that the larger employers pay; and 

most importantly, they were subject to wide variations and high 

volatility in premiums based on the type of work that the business 

did, based on the health status and demographic characteristics of 

their employees. So, a small construction company would pay more 

than an accounting firm of the same size for the same coverage. 

Small employers often face significantly higher rates if they had 

older workers or more women in their workforce than others. Because of the small risk pool, if even one employee became sick, 

rates for the entire company would skyrocket. 

The Affordable Care Act is changing all of that and transforming 

this market. Most importantly, we are expanding the risk pool to 

all of the small business enrollees in an entire state. We are 

spreading the risk among all of those employers. 

We are saying that you cannot charge more just because some 

people get sick or are women, and there are limits to how much 

more you can charge people because of their age. 

So, the whole point of this is for the small business market to 

function more like the large group market has functioned and, as 
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you noted, Madam Chair, where premiums have been significantly 

lower. 

In addition, what we have said is that insurance should be real 

insurance. It should not run out just as soon as you have an illness 

that requires a hospital visit. It should provide the essential benefits that were determined by states and were pegged in most cases 

to what was prevalent in the small group market today. 

So, these are not a bunch of new benefits that nobody ever 

thought about or wanted to have. This is what small businesses 

had today and what we said is that it is the type of coverage that 

is real coverage so that people do not find that if they become sick 

and they all of sudden have to go to the doctor or go to the hospital, oh, you do not have that coverage. You do not have hospital 

coverage. You do not have prescription drug coverage. It is real coverage. 

Now in addition, the Affordable Care Act created the small business health care tax credit to help small employers of 25 or fewer 

employees who earn an average of less than $50,000 a year, and 

if the employer pays at least 50 percent of the premium cost of 

their employees, they qualify for a tax credit. 

That tax credit has been in effect and hundreds of thousands of 

small businesses have already benefitted from it. Beginning in 

2014, the tax credit increases to up to 50 percent of the employers 

contribution to their employees health care costs. 

I just want to touch very briefly on some of the things that we 

have done to make sure that small businesses are aware of these 

benefits and options, and in particular I want to say that we have 

worked very closely with the agent-broker community. 

We understand that most small businesses do obtain coverage 

from an agent, using an agent or a broker. We have done a series 

of many webinars and trainings for literally tens of thousands of 

agents and brokers who participated in those so they can understand how to participate in the SHOP exchange. 

In addition, our regional offices have conducted many, many 

workshops and programs across the country to inform small business about the benefits of the Affordable Care Act. 

Thank you very much. 

[The prepared statement of Mr. Cohen follows:] 
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Chair LANDRIEU. Thank you very much. 

Ms. Markowitz. 

STATEMENT OF MARIANNE O’BRIEN MARKOWITZ, REGIONAL 

ADMINISTRATOR, REGION V, U.S. SMALL BUSINESS ADMINISTRATION, CHICAGO, IL 

Ms. MARKOWITZ. Chair Landrieu and members of the Committee, 

thank you for having me here today to discuss SBA’s efforts to educate small businesses about the Affordable Care Act. 

As SBA’s Regional Administrator for Region V, I serve as the 

agency’s principal representative for Illinois, Indiana, Michigan, 

Minnesota, Ohio, and Wisconsin. In this role, I oversee SBA’s Affordable Care Act outreach through our seven district offices in the 

Midwest. 

America’s 28 million small businesses are the backbone of our 

economy, creating two out of every three net new jobs and employing half of America’s work force. 

At SBA, we are committed to providing entrepreneurs with the 

tools and the resources they need to start and grow businesses. 

This includes an aggressive outreach effort around the Affordable 

Care Act to ensure that small business owners have the facts that 

they need to make sound business decisions for their businesses 

and their employees. 

With a nationwide network of 68 district offices, SBA is uniquely 

positioned to provide outreach and education on the Affordable 

Care Act. Since February 2013, we have participated in more than 

1200 Affordable Care Act outreach events reaching over 68,000 

small business owners and stakeholders across the country. 

I have personally presented at over 20 health care forums, and 

my team in Region V has participated in an additional 100 plus 

events throughout the Midwest. 

These events are often hosted in partnership with local chambers 

and other community organizations and enable SBA to connect 

with a wide range of entrepreneurs. 

In conjunction with our federal partners at the Department of 

Health and Human Services, the Department of Labor, and other 

agencies, SBA provides small business owners with the most updated information on the Affordable Care Act. 

We continue to educate entrepreneurs on issues such as the impact of the law based on a businesses size, the tax credits available 

for small companies, and the eligibility and enrollment details relevant to the individual marketplace. 

I cannot emphasize enough that there is a great deal of misinformation about the health care law and the small business community. In my travels, I frequently meet with small business owners who are anxious and apprehensive about how the Affordable 

Care Act may impact their business. 

When I speak at outreach events, many entrepreneurs, regardless of the size of their business, often mistakenly believe that they 

will be affected by the employer shared responsibility rules. I am 

able to reassure them that this is not the case. 

In fact, 96 percent of all businesses and most of the businesses 

that I encounter in these sessions are too small to be impacted. Of 
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the remaining four percent, the vast majority already provide 

health care that meets these standards required by the law. 

When entrepreneurs have access to accurate information, they 

are able to have their questions answered. They can leave better 

equipped to make educated decisions about what is best for their 

unique business. 

SBA also promotes the benefits available to small businesses 

through the SHOP marketplace. Whether it is a state-run exchange 

or a federal program, these new marketplaces are designed to give 

small businesses with generally up to 50 full-time employees the 

same purchasing power and options enjoyed by larger companies. 

While there is no requirement for employers to participate, the 

marketplaces provide a tremendous opportunity for many small 

business owners who want to purchase quality, affordable health 

insurance for their employees. 

In addition to these efforts, SBA has developed a robust online 

and digital toolkit that complements our in-person counseling activities and provides business owners with on-demand access to the 

latest information about the Affordable Care Act. 

We have created extensive online content at both SBA.gov and 

businessUSA.gov. These sites together receive more than 2 million 

visitors per month. We also launched a direct enewsletter which 

reaches more than 1 million subscribers. 

In participation with the Small Business Majority since July, we 

have held more than 35 Affordable Care Act one-on-one webinars 

for small businesses across the country. These popular online sessions which take place every Thursday have reached more than 

16,000 entrepreneurs and have been very well received. 

SBA leverages our extensive resource partner network to help 

educate small businesses on the Affordable Care Act. Earlier this 

year, we held a series of apprehensive webinar trainings for our 

Small Business Development Centers, our Women’s Business Centers and our SCORE counselors. 

Working with over 1 million entrepreneurs annually, these partners are able to expand our Affordable Care Act outreach efforts 

and serve as a resource on the law in their communities. 

As the Affordable Care Act continues to be implemented, SBA is 

committed to collaborating with our federal partners in ensuring 

that small business owners have the facts and resources they need 

to understand and benefit from the law. 

Thank you again for the opportunity to testify today. I look forward to your questions. 

[The prepared statement of Ms. Markowitz follows:] 
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Chair LANDRIEU. Thank you. Our hearing has gone 15 minutes 

over time but this is so important I want to continue the questioning. I think we have gotten a lot of valuable testimony on the 

record as we continue to try to fix and improve the Affordable Care 

Act. 

But let me ask all three of you briefly my first question. We have 

the Department of Labor represented here, Ms. Borzi. We had the 

Center for Medicaid and Medicare, CMMS. We have Small Business Administration. 

The three of you all are primarily responsible to helping implement the Affordable Care Act at the federal level, and there has 

been undoubtedly justified criticism of what has happened so far at 

the federal level and in those states where governors, mostly Republican but some Democrats, have refused to set up their own exchange and ask you to come in and do it. There has been some difficulty. 

So, my question is. What are you going to promise to do better, 

what are you working on specifically? And I want 30 seconds each 

of you starting with you, Ms. Markowitz. And what did you learn 

this morning that could help you do a better job? Starting with you. 

Ms. MARKOWITZ. Sure. Thank you, Chairman Landrieu. 

Chair LANDRIEU. Speak into the mic. You have to press your 

back button. 

Ms. MARKOWITZ. Sorry. What the SBA is focused on is outreach 

and we continue more than ever to get the word out to small businesses. One of the biggest problems that we run into is the misinformation in the small business community. 

Chair LANDRIEU. Which is purposefully I think in large measure 

but go ahead. 

Ms. MARKOWITZ. It is very prevalent. Most of the rooms that I 

walk into are filled with small businesses. They are nowhere near 

the size that would be impacted by the employer shared responsibility provision and yet they are positive that they will be impacted 

by this. So, we cleared that up. 

Chair LANDRIEU. Just for the record, could you clear that up now 

that when you walk into a room it is mostly filled with businesses 

that are of what size? 

Ms. MARKOWITZ. Well under 50 employees. 

Chair LANDRIEU. And are they affected by it at all? 

Ms. MARKOWITZ. Not at all. 

Chair LANDRIEU. So, no business in America that is under 50 employees are affected at all by the employer shared responsibility. 

Ms. MARKOWITZ. No. In fact, that represents 96 percent of all 

overall businesses. In addition to not being impacted by the employer shared responsibility, those 96 percent of businesses have, 

you know, access to new benefits and protections that they never 

had before. 

So, often I walk into a room and there can be a very negative 

perceptions of this Act and they have not begun to explore the benefits that are available to them because they are so confused by the 

misinformation. 

Chair LANDRIEU. Okay. Mr. Cohen. 

Mr. COHEN. Thank you. What we are doing and I will not surprise you, we are working very hard to improve the online experi-
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ence. I am pleased to say that we actually have made significant 

improvements, and I keep hearing every day that more and more 

people are able to get through the application in a reasonable period of time and get enrolled in coverage. 

There is actually a story on NBC news today is the story about 

the healthcare.gov roll out outdated, and I think it is. I think we 

have moved on significantly from where we were before. 

In terms of what I learned today, I was really impressed by all 

the three states talking about the involvement of their stakeholder 

communities, and I think we have done that. 

But it is different at the federal level frankly than it is at the 

state level but I think we need to work really hard to make sure 

that we are working with the agent-broker community, the issuer 

community, the consumer community, the small business community, and so forth to make sure that everybody gets to the benefits 

of this law. 

Chair LANDRIEU. Ms. Borzi. 

Ms. BORZI. I have had the same experience that my colleagues 

had. I do a lot of small business roundtables. There is a lot of misinformation. People, not only do they not understand that the employer responsibility penalty does not apply to them, what I found 

remarkable is that they do not understand that the small business 

tax credit is already available, has been available since the law was 

signed, and these are small businesses who are trying to do the 

right thing by their employees which is providing coverage. 

I know, Madam Chair, that you are very interested in the notice 

requirement that we administer. We are trying very hard to make 

sure that people understand that this can be an opportunity for 

small businesses to understand a little bit better about their responsibilities and I certainly will promise you that we will work 

closely with your staff and the others, the staff of the other members of the Committee, to try to make the experience of having to 

fill out these forms clearer and easier. 

Chair LANDRIEU. I appreciate that. In my last few minutes, I 

want to submit the forms that the Department of Labor put out 

that I found very, very confusing, new health care insurance marketplace coverage. 

First of all, it should have said that if you receive this as an employer and you are under 50 people, disregard it. It is not appropriate for you. Over 50, this is what, and so I am going to submit 

something that we have come up with that might be a more clear 

form, and I hope that you all will work on that. 

Once the website gets up, people can have a better walk-through 

experience because the consumer experience with this is extremely 

important. 

So, thank you all very much and I will come back a few. I think 

it is Senator Johnson and then Senator Booker. 

Senator JOHNSON. Thank you, Madam Chair. 

Mr. Cohen, in general what is happening to the insurance premiums, the gross premiums now, not after taxpayer subsidy, what 

is happening to the insurance premiums of young, healthy individuals under the Affordable Care Act? 
105 

Mr. COHEN. I think they vary a lot from state to state and even 

within a state, region to region. I do not think it is possible to 

make a, you know, broad, general statement about that. 

Senator JOHNSON. I would like to enter into the record, I guess 

it is the Republican staff Committee has put together a summary 

sheet of what is happening, and I can say, for example, in the State 

of Illinois somebody 27 years old, a male is going to an experienced 

a 104 percent increase, a female about a 42 percent—— 

Chair LANDRIEU. Could you clarify, though, is that with subsidies 

or without? 

Senator JOHNSON. That would be the gross premium. 

Chair LANDRIEU. That is without subsidy. 

Senator JOHNSON. Yes. 

Chair LANDRIEU. But the bill has subsidies in it so let the 

record—— 

Senator JOHNSON. I understand that. 

Chair LANDRIEU [continuing]. Reflect that so we will not be confused. 

Senator JOHNSON. The point being is the only way that anybody 

is going to, not the only way, but one of the prevalent ways that 

people actually see their share of health premiums reduced is because taxpayers are going to subsidize their care. 

In Wisconsin—let me finish, Madam Chair—in Wisconsin, the 

cost of a male 27 years old will increase about 125 percent, a female about 77 percent. 

While that has to do really with the fact that we are a community rating, we are limiting the insurance premium rate on older, 

sicker individuals and we are increasing the premiums, making the 

younger, healthier people pick up that burden, right? Is that not 

correct? Is that not redistribution? 

Mr. COHEN. Well, what I think we are hoping to do is increase 

the number of younger people who are actually covered because the 

rate of coverage is—— 

Senator JOHNSON. Right. So, they can get in the pool and pay a 

lot more than they were currently paying in the individual marketplace. Correct? 

Mr. COHEN. Well, what—— 

Senator JOHNSON. I mean—— 

Mr. COHEN. We are expanding the risk pool so we can spread the 

risk across the whole population. That is the idea behind the law. 

Senator JOHNSON. Mr. Cohen, let me ask you as the expert in the 

CMMS. When did you realize that what the President was saying 

that if you like your health care plan you can keep your health care 

plan, if you like your doctor you can keep your doctor period, when 

did you—did you believe that ever? 

Mr. COHEN. The law provides that issuers could continue plans 

as grandfathered plans as long as they wanted to into the future. 

So that the law—— 

Senator JOHNSON. Well—— 

Mr. COHEN [continuing]. The law was designed to enable that 

what the President said. 

Senator JOHNSON. Yes, but my—— 

Mr. COHEN [continuing]. To be true and it was really up to the 

insurance industry to make decisions as they have in the past. 
106 

Senator JOHNSON. Let me explore that. My bill, If You Like Your 

Health Plan You Can Keep It Act uses the President’s exact same 

language in the bill. The problem with the President’s, the grandfather clause in the Affordable Care Act, yeah, you can keep your 

plan as long as you totally change it. 

What we did is we took out these as long as you totally change 

it, we did not force some of those initial essential health benefits 

on to those plans. 

So, the fact of the matter is you could not keep your plan unless 

you changed it. 

Mr. COHEN. Grandfathered plans are not subject to the essential 

health benefit requirements. 

Senator JOHNSON. But there are other things they are subject to, 

guaranteed issue, maximum, over the lifetime maximum. 

Mr. COHEN. No. They are not subject to guaranteed issue. In fact, 

it is quite the opposite you cannot add more people onto a grandfathered plan under the law. 

Senator JOHNSON. I am not asking to add more people. 

Mr. COHEN. Well, guaranteed issue, that is what you are talking 

about. 

Senator JOHNSON. Well, okay. Lifetime maximums. We will get 

you the list of the changes required in that grandfather clause because we extract that in my bill. 

But anyway getting back to my question. Did you believe that if 

people like their health care plan they would be able to keep it, 

across-the-board that nobody would lose their health care plan if 

they wanted it? 

Mr. COHEN. I believe that the law provided an opportunity for insurance companies to have grandfathered plans which would make 

President’s—— 

Senator JOHNSON. What about—— 

Mr. COHEN [continuing]. Promise to be true and it was also true 

that the large majority of Americans who have employer-sponsored 

coverage through large employers were also able to keep their 

plans. 

Senator JOHNSON. But every American? I mean, for example, did 

you realize that state high risk pools like in Wisconsin which covers 22,000 Wisconsinites, did you believe those things would still 

be available after implementation of Obamacare? 

Mr. COHEN. Well, before the Affordable Care Act, every American 

was not able to keep his or her health plan. You could lose it—— 

Senator JOHNSON. That is not what we are talking about. 

Mr. COHEN [continuing]. Because you could lose it if you got 

sick—— 

Senator JOHNSON. Listen. We are talking about the promise 

made that if you like your health care plan you can keep it. I have 

got a couple in Wisconsin, both cancer victims, that have been 

dropped, will be dropped from the high risk pool because it becomes 

obsolete January 1. 

You knew that as a health care expert, correct? 

Mr. COHEN. The law did not require states to drop their high risk 

pools. The law allows states to continue the high risk pools. So, I 

do not think that is a requirement of the law. That was a decision 

made by the State of Wisconsin. 
107 

Senator JOHNSON. But you knew those things would be gone? 

Mr. COHEN. No. 

Senator JOHNSON. You really believed, did you really believe that 

every American would be able to keep their health care plan and 

their doctor? You believe that to be a true statement? 

Mr. COHEN. Well, there is nothing in the law that requires anybody to lose their doctor. 

Senator JOHNSON. I am just asking you whether you believe that. 

Mr. COHEN. I believe that the law contained provisions that 

would enable that to be true but it also is a private market solution. So, it is not government mandated health care. It is up to insurance companies what products they offer in the marketplace. Insurance companies were given the option, the ability to maintain 

the existing plans as grandfathered plans, and if they do that, people are able to keep those plans. 

Senator JOHNSON. Are you surprised—— 

Mr. COHEN. That is the choice—— 

Chair LANDRIEU. I am sorry. Time. 

Senator JOHNSON. Are you surprised millions of Americans are 

losing their health care plan? Are you surprised by that? 

Mr. COHEN. Well—— 

Senator JOHNSON. Are you surprised? Just yes or no. Are you 

surprised that millions of Americans are losing health care plans? 

Mr. COHEN. I am not surprised or unsurprised. I did not have an 

opinion as to what the market would do. I knew what the law provided. 

Chair LANDRIEU. Senator Johnson, thank you for sharing such 

clarifying comments. 

Senator Booker. 

Senator BOOKER. First of all, I want to thank the Chair. You 

held this hearing at a difficult time with a lot of political noise and 

nonsense and rancor. 

You know, it reminds me of a great President who once said, it 

is not the critic counts, it is not the man who points out that the 

strong man stumbles or the doer of deeds could have done better, 

it is the person actually in the arena whose face is marred with 

blood and sweat. It is not the man in the arena this time; it is the 

woman. Thank you for holding this hearing and bringing right and 

left together to discuss practically what is going to help Americans. 

And so, I have a very simple question which is fueled by my frustration. I want to form a new caucus already and I have only been 

here 20 days, and it is the what is going to grow American businesses, what is going to help small businesses which, as you rightfully pointed out, are the job creators right now that are driving 

our economy right now. 

And what was before, I do not want to go back. I am not putting 

this country in reverse to go back to a time where small businesses 

were getting crushed because they were losing good employees because they did not have health insurance. 

Small businesses were getting crushed because those who tried 

to step up to the plate and provided insurance in a globally competitive market who were competing as countries who fixed this 

problem with lower health care costs, forcing small businesses to 

either internalized this or put their workers in the corner. 
108 

We have got to figure out a way to fix this in a way that is going 

to grow and strengthen small businesses. The idea in itself is very 

good, that we can find a way to create a competitive business environment for small businesses so they do not have to worry about 

this fear. 

I agree with the Ranking Member. This is about freedom from 

fear. I know tons of businesses that lived in that fear. So, the one 

thing that has already been discussed that you forget rhetoric, 

practically you are seeing what I am seeing, is that when you go 

around the State of New Jersey there is so much confusion fueled 

by politicians and media of folks about the facts. 

96 percent of businesses are not affected here, and yet I have 

small businesses in New Jersey who think somehow it is going to 

shake them and are not even aware that there are federal subsidies to help them. 

And so, in this state of mass confusion, fueled by media and politicians, please tell me from your experience what is the best way 

to cut through all this mishegoss—that is a Jersey term—all this 

mishegoss and get to what the facts are? 

How can we get the truth to small businesses who need to be 

freed, liberated from fear and know how this actually could help 

them? Anybody? 

Ms. MARKOWITZ. Well, thank you, Senator. 

Senator BOOKER. With a name like O’Brien Markowitz, you are 

about bringing things together, building bridges. 

[Laughter.] 

Ms. MARKOWITZ. This is true. 

You know, it is really about outreach and education and bringing 

the focus onto the benefits that are available for the 96 percent of 

small businesses that are not only not affected by the employer 

shared responsibility provision but that have all of these benefits 

that they cannot focus on because of the misinformation, and that 

is what we as an agency are entirely focused on. 

We work with our federal partners. HHS has been a great partner in this outreach as have some of our state partners. 

Once a business gets rid of that fear that you allude to which is 

very real, they can focus on the fact that there are these tax credits, be very excited about focusing on and exploiting those for their 

business. 

They understand more about the broader reform and that they 

cannot be discriminated for having a diverse workforce, for employing women, for employing sicker or older employees. I mean, these 

are things that once a business find out about the 80–20 rule and 

they understand that all of these benefits are available to them because of this important reform, they are very excited about it and 

that is what we are out there doing, creating more outreach and 

creating more educational opportunities. 

Senator BOOKER. So if you witness the relief, even the excitement from real companies, who you do not ask them if they are Republican or Democrat, you just ask how can we help the company 

and you see it which I have seen with my eyes, the relief many 

businesses feel. 

Can I ask you very pragmatically, when you are explaining 

things, is there anyone change or anything practically that we 
109 

could do here in Washington, besides listen to ourselves speak, to 

actually help this bill get a little better than it is now? Practically 

is there anything that you might want to suggest that could help 

this Committee? 

Ms. MARKOWITZ. I mean, honestly, what you are doing today is 

very helpful, bringing the focus on to the truth, you know, and the 

benefits that are available for small businesses. 

I think as the exchanges move forward and I know HHS is working around the clock. For instance, in my outreach before the 

launch, the focus on these businesses is really on the broader reform once they get through the misinformation. 

After the launch, it really is surprisingly it remained on that. 

They were not so focused on the website issues. They are really focused on this broader reform and how it impacts their business. 

The elephant in the room was the pricing, and now that the 

launch has happened for the SHOP exchanges, even though they 

may not be fully functional, and HHS is working on that, there is 

pricing information. 

So, with this information, it is just more information. The businesses can go away, do the analysis and figure how SHOP can 

eventually be a resource for their business. 

It is really all about information, education, outreach, and getting the truth out and cutting through all of the misinformation. 

Mr. COHEN. Very quickly I would just add, you know, one of the 

reasons why the states’ exchanges have been so successful is frankly they had had resources available to them to do a lot of this outreach because under 1311 we were able to give them grants and 

we have been limited in terms of what we were able to do. 

Chair LANDRIEU. And why were you limited? 

Mr. COHEN. Just because of the appropriation. We do not have 

funding under the appropriation process to do as much. We do outreach but to do as much as we would like to do so that is one area 

if we could work together in a bipartisan way just to get in the 

facts out, that would be wonderful. 

Chair LANDRIEU. Ms. Borzi, your last word. 

Ms. BORZI. Just one quick thing. The thing that troubles all businesses regardless of size, but it is particularly important for small 

businesses, is uncertainty. 

So, there is lots of misinformation but there is also lots of uncertainty because they keep hearing that it is going to be repealed, it 

is going to be changed, this is going to happen, that is going to be 

happening. 

It is very important as all of us go out to be able to say to small 

businesses, this is what is going to happen when, because it is not 

just 96 percent of them are not affected. It is that this Act can actually give you positive benefits like more choice, the ability to get 

coverage which you were not able to get for your employees before. 

Chair LANDRIEU. Thank you very much. This has been an excellent hearing and let me particularly thank Senator Booker. This 

has been an extraordinary first full hearing for you attend. 

Senator BOOKER. You always remember your first. 

Chair LANDRIEU. Yes, and you will remember this one, and it has 

been an extraordinary privilege to be here with you. And Senator 

Johnson thank you for participating all the way to the end. 
110 

I started this morning by saying, and I knew this hearing would 

be full of a lot of strong opinions, but I started this morning by saying, as Mark Twain said, that a lie can go half way around the 

world before truth gets out of bed and puts its boots on in the 

morning. 

This hearing was held to get the truth out about the benefits of 

the Affordable Care Act to small business and the challenges that 

are presented to us. 

As Americans, I think if we work together, we could meet those 

challenges. 

The meeting is adjourned. 

[Whereupon, at 12:34 p.m., the Committee was adjourned.] 
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