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80–820 2013

THE HEALTH CARE LAW: IMPLEMENTATION AND 

SMALL BUSINESSES 

HEARING 

BEFORE THE

COMMITTEE ON SMALL BUSINESS 

UNITED STATES 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED THIRTEENTH CONGRESS 

FIRST SESSION 

HEARING HELD 

APRIL 17, 2013 

Small Business Committee Document Number 113–011 

Available via the GPO Website: www.fdsys.gov 

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Congress.#13
(II) 

HOUSE COMMITTEE ON SMALL BUSINESS 

SAM GRAVES, Missouri, Chairman 

STEVE CHABOT, Ohio 

STEVE KING, Iowa 

MIKE COFFMAN, Colorado 

BLAINE LUETKEMER, Missour 

MICK MULVANEY, South Carolina 

SCOTT TIPTON, Colorado 

JAIME HERRERA BEUTLER, Washington 

RICHARD HANNA, New York 

TIM HUELSKAMP, Kansas 

DAVID SCHWEIKERT, Arizona 

KERRY BENTIVOLIO, Michigan 

CHRIS COLLINS, New York 

TOM RICE, South Carolina 

NYDIA VELA ́ ZQUEZ, New York, Ranking Member 

KURT SCHRADER, Oregon 

YVETTE CLARKE, New York 

JUDY CHU, California 

JANICE HAHN, California 

DONALD PAYNE, JR., New Jersey 

GRACE MENG, New York 

BRAD SCHNEIDER, Illinois 

RON BARBER, Arizona 

ANN McLANE KUSTER, New Hampshire 

PATRICK MURPHY, Florida 

LORI SALLEY, Staff Director 

PAUL SASS, Deputy Staff Director 

BARRY PINELES, Chief Counsel 

MICHAEL DAY, Minority Staff Director 

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(III) 

C O N T E N T S 

OPENING STATEMENTS 

Page 

Hon. Sam Graves ..................................................................................................... 1 

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

WITNESSES 

Douglas Holtz-Eakin, Ph.D., President, American Action Forum, Washington, 

DC .......................................................................................................................... 4 

William J. Gouldin, Jr., President, Strange’s Florists, Greenhouses and Garden Centers, Richmond, VA, testifying on behalf of the National Federation 

of Independent Business ...................................................................................... 5 

Louisa McQueeney, General Manager, CFO, Palm Beach Groves, Lantana, 

FL, testifying on behalf of Main Street Alliance ............................................... 7 

Kevin Tindall, Owner, Tindall & Ranson Plumbing & Heating, Princeton, 

NJ, testifying on behalf of the Plumbing-Heating-Cooling Contractors— 

National Association ............................................................................................ 9 

APPENDIX 

Prepared Statements: 

Douglas Holtz-Eakin, Ph.D., President, American Action Forum, Washington, DC ..................................................................................................... 36 

William J. Gouldin, Jr., President, Strange’s Florists, Greenhouses and 

Garden Centers, Richmond, VA, testifying on behalf of the National 

Federation of Independent Business ........................................................... 44 

Louisa McQueeney, General Manager, CFO, Palm Beach Groves, 

Lantana, FL, testifying on behalf of Main Street Alliance ........................ 53 

Kevin Tindall, Owner, Tindall & Ranson Plumbing & Heating, Princeton, 

NJ, testifying on behalf of the Plumbing-Heating-Cooling Contractors— 

National Association ..................................................................................... 59 

Questions for the Record: 

None. 

Answers for the Record: 

None. 

Additional Material for the Record: 

ABC - Associated Builders and Contractors, Inc. .......................................... 63 

GAO - U.S. Government Accountability Office Draft Report - Small Employer Health Tax Credit Factors Contributing to Low Use and Complexity ............................................................................................................ 65 

Harris Interactive, Inc. Report ........................................................................ 107 

New York Daily News - Small business owners have no strategy for 

coping with rising healthcare costs: report ................................................. 111 

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(1) 

THE HEALTH CARE LAW: IMPLEMENTATION 

AND SMALL BUSINESSES 

WEDNESDAY, APRIL 17, 2013 

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

The Committee met, pursuant to call, at 1:00 p.m., in Room 

2360, Rayburn House Office Building. Hon. Sam Graves [chairman 

of the Committee] presiding. 

Present: Representatives Graves, Chabot, King, Luetkemeyer, 

Mulvaney, Tipton, Herrera Beutler, Huelskamp, Schweikert, Collins, Rice, Vela ́zquez, Schrader, Clarke, Hahn, Payne, Barber, 

McLane Kuster, and Murphy. 

Chairman GRAVES. I would like to call the hearing to order. 

And I want to thank all of our witnesses for being here today. I 

look forward to your testimony. 

Today we are going to examine the implementation of one of the 

most far-reaching laws in our nation’s history—the Health Care 

Reform Law—and its consequences for small businesses. It was 

signed into law on March 23, 2010, just over three years ago, so 

this is a good time to assess how small businesses are faring and 

how the law is being implemented. 

According to a February 2013 Newtek Business Services poll, 65 

percent of small business owners do not have a strategy to manage 

their health care costs over the next 12 months. Most small businesses are not even aware of the yet of the thousands of pages of 

mandates, requirements, and taxes in the new health care law or 

they are uncertain just how to comply. Some provisions are already 

in effect, including a new tax on the sale of medical devices, a new 

Medicare payroll tax for higher earners, and new net investment 

income tax for higher earners, new limits on tax-favored health 

spending accounts, and medical loss ratio provisions. Next year, the 

employer mandate, the individual mandate, the requirement that 

employers’ plans cover a wide range of essential health benefits 

and the tax on health insurance, all become effective. 

In a recent U.S. Chamber of Commerce survey, 86 percent of 

small businesses said regulations and taxes negatively affect their 

ability to operate. Seventy-five percent expect the health care law 

will increase their costs, and 71 percent believe the law will make 

it harder to hire employees. Just 5 percent expect that their health 

care coverage will become more affordable. Small companies, already hurting, are struggling to find ways to absorb additional 

costs. Beginning in 2014, the employer mandate will require employers with the equivalent of 50 full-time workers to offer affordSBREP-219 with DISTILLER

2 

able health insurance to employees who work more than 30 hours 

per week, or pay a penalty. This one change is already causing 

small business owners to consider shifting workers to part-time 

status, reducing the workforce to just simply not hiring. 

In a comment letter I sent to the Treasury Department on its 

employer mandate proposed rule, I suggested minimizing the law’s 

impact on small employers—for example, not deeming just 30 

hours per week a full-time work week. Small businesses are concerned, and for very good reason. All employers, even small businesses with fewer than 50 workers not subject to the employer 

mandate will be affected by various reporting, notification and 

record-keeping requirements. 

In a January 2013 analysis by Dr. Douglas Holtz-Eakin, who is 

one of our witnesses today, found that the law will dramatically increase the cost premiums for small employers, and the temporary 

small business health care tax credits help very few. A Government 

Accountability Office report that I requested found that despite estimates that 1.4 to 4 million small firms will be eligible in 2010, 

only 170,000 have claimed even a partial credit. These are the 

same small businesses that we are counting on to grow, invest, and 

create new jobs. And the laws, provisions, and regulations are still 

coming. 

Today we will hear from small business owners and others about 

the effects of the health care law’s implementation. I look forward 

to your testimony. And I yield to Ranking Member Vela ́zquez for 

her opening remarks. 

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

calling this hearing. I want to take this opportunity to thank all 

the witnesses for being here with us today. 

Three years ago the president signed into law the Affordable 

Care Act. Landmark legislation aimed at improving the system 

that has been broken for too long. For consumers, low income workers, and families with children suffering from a preexisting condition, the health insurance system offered a raw deal for many decades now. Small businesses and entrepreneurs were among those 

left out in the cold by a structure that put insurance company profits ahead of health care consumers’ needs. In that, small firms 

have seen their premiums escalate by 113 percent over the course 

of the last decade. For many of the smallest enterprises, those with 

50 employees or less, providing quality health care to their staff 

was simply not an affordable option. 

Last year, the Supreme Court upheld the Affordable Care Act, 

finding its provisions constitutional. Regardless of where each of us 

stood when Congress considered and passed the bill, that debate is 

now over. Indeed, rolling back or defunding the measure would be 

of enormous harm to our nation’s entrepreneurs. The challenge before this Committee is ensuring reform is implemented in a way 

that allows small businesses to benefit while minimizing disruption 

for smaller companies. 

Make no mistake, there are significant benefits for entrepreneurs 

in the ACA. Forty billion dollars in tax credits are being made 

available for small businesses that supply insurance coverage to 

their employees. The smallest companies, those with fewer than 10 

employees, gained the most from these credits. As rates have risen, 

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the small employers have encountered the most difficulty offering 

coverage. 

Over just a nine year period, their coverage levels declined by 

more than 10 percent, providing the need for a targeted credit. 

While these tax credits offer great promise, challenges remain in 

ensuring eligible businesses take full advantage of the program. 

With only 335,000 small firms applying for this assistance, it is 

clear that more must be done to make small companies aware of 

how to apply and take advantage of this provision. 

I look forward to hearing from our witnesses today what can be 

done at the IRS and throughout the government to maximize small 

firms’ use of the tax credit. Small businesses are also beginning to 

reap the benefits from the law’s more general provisions that protect consumers from unfair insurance industry practices. As purchasers of coverage, small companies are negatively impacted when 

one of their employees encounters a rare or debilitating illness. For 

these firms, the caps on lifetime limits and elimination of preexisting conditions are helping to create a fairer health insurance 

marketplace. They prevent insurance companies from drastically 

raising rates when one of the small firms’ employees grows gravely 

ill. 

In addition to preventing insurance companies from abusing 

their small business customers, the law offers a more consumer 

friendly marketplace for small companies wishing to offer coverage. 

By January of next year, there will be health insurance exchanges 

within every state providing a competitive marketplace for small 

firms to shop for affordable coverage that meets their needs. For 

too long, affordable quality insurance was only available to those 

who worked for large employers, such as major corporations or the 

state and federal governments. With full implementation of the Affordable Care Act, we can enable small firms to offer compatible 

coverage, making them more competitive and allowing them to attract employees who might otherwise flock only to major companies. 

When any major law of this complexity is implemented, there 

will be an adjustment period. It is my hope we can ensure implementation goes as smoothly as possible for small firms, both by 

shaping how regulations are crafted and where necessary making 

minor statutory changes. 

With that, Mr. Chairman, I thank you and I yield back. 

Chairman GRAVES. Thank you very much. 

Now we will go to our witnesses. We have got votes that will 

probably happen sometime between 1:25 and 1:40, in there, so we 

will probably get through all of your statements. And then we will 

probably get started on questions and then come back to finish 

questions. Unfortunately, they scheduled votes right in the middle 

of the hearing. But with that, each of you have five minutes. 

Our first witness is going to be Douglas Holtz-Eakin, Ph.D. Dr. 

Holtz-Eakin is president of the American Action Forum. He served 

as commissioner of the congressionally chartered Financial Crisis 

Inquiry Commission from 2009 to 2011 and director of the Congressional Budget Office from 2003 to 2005. Welcome, and we appreciate you coming in today. 

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STATEMENTS OF DOUGLAS HOLTZ-EAKIN, PH.D, PRESIDENT, 

AMERICAN ACTION FORUM; WILLIAM J. GOULDIN, JR., 

PRESIDENT, STRANGE’S FLORISTS, GREENHOUSES AND 

GARDEN CENTERS; LOUISA MCQUEENEY, GENERAL MANAGER, CFO, PALM BEACH GROVES; KEVIN TINDALL, OWNER, 

TINDALL & RANSON PLUMBING AND HEATING 

STATEMENT OF DOUGLAS HOLTZ-EAKIN 

Mr. HOLTZ-EAKIN. Chairman Graves, Ranking Member 

Vela ́zquez, and members of the Committee, thank you for the privilege of being here today. I have submitted a written statement for 

the record. Let me just talk about a couple of things in the opening 

remarks. 

The Affordable Care Act is many things. It is health policy. It is 

budget policy. But it is certainly also dramatic economic policy, and 

from that perspective I think it has significant flaws. It is a very 

costly regulatory initiative whose uncertainty has not yet fully been 

resolved. It contains numerous taxes and fees of a magnitude of 

nearly a trillion dollars over the next 10 years that are hard to describe as pro-growth. And it imposes burdens on employers, raising 

insurance costs at the very time when they have a mandate to provide insurance to employees. These are significant economic policy 

headwinds and they have a particular implication for small businesses. And I want to talk a little bit about each of those. 

At the American Action Forum, we spend a lot of time trying to 

track the costs of regulatory initiatives in this area and elsewhere, 

and the ACA is very costly. It has about $24 billion in reported regulatory compliance costs. These are estimates that come from the 

administration itself. Eighty million hours of paperwork time spent 

complying with those regulations. To give you some perspective, 

that is 40,000 full-time employees filling out paperwork for a year 

nonstop. And there are also in a table in the written testimony, 11 

regulations that have significant economic impact on a substantial 

number of small entities which is simply a term of art for noticeable and significant burdens on small business. And so this is, in 

fact, an initiative that has $2 billion in costs on small businesses, 

has another 11 million hours that are particularly focused on paperwork for small businesses, and we are not yet done. I think as 

everyone on the Committee knows, the exchanges are not yet fully 

implemented and there are open questions about whether we will 

meet the October 1st deadline and other aspects of the bill remain 

far from finished, and the ultimate regulatory burden will not be 

seen. But we are already seeing some of the impacts on the small 

business community, and I remain concerned about whether overall 

this does pass the typical benefit-cost test. 

If you look at the taxes and the fees in the growth, as I said, 

there are a trillion dollars in new taxes here, including the mandate on those employers or the tax on those employers who do not 

provide insurance, the so-called mandate. Two thousand dollars is 

a significant impact. The provision of that insurance itself is an impediment to small business hiring. We are going to see business 

after business shift as the chair mentioned to part-time as opposed 

to full-time employment. They are going to have to devote resources to insurance costs instead of hiring new people, and it is 

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a particular burden on minimum wage workers, where there is 

very little flexibility in terms of the pay package so that you could 

provide less in cash wages and more in terms of health insurance. 

And so I am particularly worried about the impact at the bottom 

of the economic ladder, the first step in upward mobility, and the 

small business role in that. 

We have seen other taxes that got mentioned that are particularly onerous on small business. The medical device tax is a 2.3 

percent tax on sales that is utterly divorced from the economic 

health of any entity, and the research shows will have a disproportionate impact on small businesses. It is not surprising in a country 

that leads the world in medical science that many of those devices 

are, in fact, the creations of small businesses and startups. And 

even prior to making a single dime they are going to have a tax 

burden as they try to develop their products. And finally, the new 

net investment income tax, which is going to show up on many 

small businesses’ individual income tax returns, is simply a third 

tax system above and beyond the income tax and the alternative 

minimum tax. It is incredibly complex, and it is going to be quite 

onerous for our entrepreneurs and small businesses to comply with. 

The last thing I will mention is the cost of insurance itself. There 

are lots of reasons to believe the essential benefits package, the requirement to cover people with pre-existing conditions, the limited 

age-rating bands that are in the law, that one would expect the insurance premiums of younger and healthier workers to go up, particularly in small businesses. The survey work that the chairman 

mentioned that we did was to simply ask how big could that be? 

And for small businesses with healthy workforces, these are double 

digit, sometimes triple digit increases. We saw increases over 150 

percent as a result of the impacts of the law itself. These are a substantial burden, an implicit tax on growth, at a time when we need 

businesses, small businesses especially, to restore their traditional 

role of creating jobs and speeding the pace of economic recovery. 

So I thank you for the chance to be here today, and I look forward to the chance to answer your questions. 

Chairman GRAVES. Thank you very much. 

Our next witness is William J. Gouldin, Jr., who is president of 

Strange’s Florists, Greenhouses and Garden Centers in Richmond, 

Virginia. Strange’s is a family-run business that began in 1935 and 

has four generations of experience. Mr. Gouldin has been president 

since 1971. He is testifying on behalf of the National Federation of 

Independent Business. Welcome to the Committee. 

STATEMENT OF WILLIAM J. GOULDIN 

Mr. GOULDIN. Thank you, sir. Chairman Graves, Ranking 

Member Vela ́zquez, members of the Small Business Committee, 

thank you for inviting me today. 

I am Bill Gouldin, president of Strange’s Florists, Greenhouses 

and Garden Centers in Richmond, Virginia. I work with my two 

brothers, my wife, my son, and my daughter, along with 120 to 150 

employees. We have a blend of full-time, part-time, and seasonal 

employees, along with contractor hours at the major holidays. We 

have four retail flower shops, a wholesale greenhouse range, and 

two retail garden centers. 

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Due to the holiday season and the nature of our business, virtually all of our employees are hourly employees. We have been 

paying 100 percent of the health care premium for all of our fulltime employees all of my career, and we also provide a 401(k) plan 

for our employees. I thought providing health care benefits was important because I felt our employees needed it and we could provide it for less than it cost them, but in recent years I have come 

to realize that all third-party pay systems are having difficulties 

and that usually the beneficiaries have little knowledge of the costs 

and some just do not care; and then I have very little control over 

those costs. 

When the health care debate was raging, I realized there was 

plenty of rhetoric, both pro and con, but there was very limited detail. So when people ask me about what happened in the financial 

crisis, my comment has always been it was lack of due diligence 

and integrity on all of our parts that the financial system got in 

such trouble. And I think the same is true of the health care industry and the Patient Protection and Affordable Care Act. 

That caused me to take the time to begin scanning the House 

and Senate bills as they were progressing, and I printed every page 

that I could find that referenced the employer and the employee 

and quickly realized that there were parts that were very vague 

and confusing, many parts that were not workable, and some that 

were very dangerous to employees and their employers. I realized 

that this law would be the most disruptive instrument to the American workplace in my lifetime, and no one seemed to know or care 

right in the middle of the worst recession/depression since the 

Great Depression. 

The IRS has the undesirable task of weeding through the details 

of implementation and is making some progress but has a long way 

to go. Their most complete list just came out December of 2012. It 

was late in the game but it was a big help for some of the questions I had. One of the most dangerous parts of the law is the statutory definition of full-time employment at 30 hours per week, or 

as interpreted at 130 hours per month. The IRS cannot correct that 

definition. Congress will have to amend the law. The use of 30 

hours to define full-time employment is the lowest in the world, far 

below the common practice of 37.5 to 40 hours per week that is 

common practice for both public and private employers in this 

country. This is already causing rescheduling of employees where 

employers have read the law. 

Every employer will be forced to define part-time employment as 

something below 30 hours a week. Most will use between 20 and 

27.5 hours per week. There millions of people who currently work 

between 30 and 36 hours per week because that suits their lifestyle 

and their income needs. These people will be required to lose hours 

of work and income. Some employers are paying ‘‘time and a half’’ 

to avoid hiring additional employees. The new full-time employee 

definition will cause a hole in employment between 27.5 and 37.5 

hours per week and possibly wider. 

In 2009, I began developing the table that I gave you all a copy 

of, and I have been tracking the Kaiser Family Foundation average 

national premiums. And I made modest adjustments of 5 percent 

inflation for 2013 and 2014. The tables show the marginal cost of 

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offering health insurance at $119.05 an hour for an employee allowed to work 30 hours per week where the employer pays 100 percent of the premium, which is in their case, or a premium of $95 

an hour if the employer pays 80 percent of the premium. These 

staggering marginal costs are evidence of the problematic employment wedge that has been created. The 9.5 percent affordability 

test will only aggravate the problem and drive wage rates at the 

rate of health care inflation. 

My concern is that no one seems to care about the millions of employees that will lose their job in whole or in part because of this 

30-hour rule. Most employers have no pricing power to pass these 

increased costs on to their consumers so they have no options but 

to reduce hours or personnel. If a business tries to absorb these 

costs and goes out of business, everybody loses their jobs. 

The employer confusion caused by this law is already causing 

higher unemployment and I believe that real unemployment, which 

is the U–6 table, will rise as employers try to adapt to this law. 

Amend the definition of full-time employee to read 37.5 hours per 

week and begin to improve the U–6 unemployment today instead 

of watching it rise above 14.5 percent. This will increase employment better than any scheme that I have heard and not cost the 

government a dime. Our every effort should be to move people from 

unemployment to working taxpayers. 

We need a paradigm change to genuine respect for those private 

businesses that create jobs in this country and for those who go to 

work every day. The most patriotic thing any of us can do is to create a job or go get a job. 

Thank you very much. I look forward to your questions. 

Ms. VELA ́ ZQUEZ. Mr. Chairman, it is my pleasure to introduce 

to the Committee Ms. Louisa McQueeney. Ms. McQueeney is the 

chief financial officer of Palm Beach Groves, an orange shipping 

business located in Lantana, Florida. The company has been family 

owned since 1946 and has a handful of employees. Ms. McQueeney 

has been with the business for over a decade. She is testifying 

today on behalf of the Main Street Alliance, a national network of 

state-based small business coalitions. Welcome. 

STATEMENT OF LOUISA MCQUEENEY 

Ms. MCQUEENEY. Chairman Graves, Ranking Member 

Vela ́zquez, and members of the Committee, thank you for the invitation to testify on how the Affordable Care Act is impacting small 

businesses. 

My name is Louisa McQueeney, and I am the general manager 

and CFO of Palm Beach Groves, a small business in Lantana, Florida. We ship gift citrus across the United States and Canada. Last 

year we employed six year-round employees and three seasonal 

workers. 

Part of my job as CFO is managing health care benefits. I have 

grown quite accustomed to yearly double-digit rate increases from 

12 percent to as high as 32 percent. 

For almost a decade, our staff has not seen any raises, because 

the raise would go to yet another increase in health insurance premiums. 

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Then, the first components of the Affordable Care Act, or 

‘‘Obamacare’’ were implemented. 

In November of 2011, our insurance agent called with our renewal. Instead of the nightmare news I have come to expect, I 

found out that our premiums would increase by a grand total of 0.2 

percent. Zero point two. Flat. 

I was floored. This flat renewal came with exactly the same 

plan—no dumbing down the coverage, no increase in our 

deductibles, everything remained the same. 

Then, at tax time, we applied for the small business health care 

tax credit, which cut our total health care costs by about 10 percent—$7,400—for 2011. 

Last summer, we also received a $1,582 rebate check in the mail 

from our insurance company. Our health insurer had not met the 

‘‘80/20’’ rule which requires them to spend at least 80 percent of 

premiums on medical care. So, they were forced to pay us back the 

difference. I was so excited I really thought about framing the 

check. 

My family was also personally benefitting with a free annual 

well-visit, and we were also able to keep our daughter on our 

health insurance until age 26. Between the stable rate, the tax 

credit, and the rebate check, last year our health care costs went 

down 12 percent, the first time ever, thanks to the Affordable Care 

Act. 

Since the law will not be fully implemented until 2014, we still 

face challenges. All of our employees are in their 50s and 60s. Last 

year we had four major health care events in our very small group. 

One of our long-time employees died after battling lung cancer. The 

spouse of another was diagnosed with a serious heart condition. 

Thank God he was covered under our insurance, because it literally 

did save his life. 

Under Florida law, health insurers are allowed to impose additional rate hikes to small businesses based on the health status 

and claims experience of the group. When you only have a few employees to begin with, just one battle with cancer can dramatically 

affect your rates. Add a heart condition diagnosis and a generally 

aging workforce, and we found ourselves facing another doubledigit rate hike at our latest renewal. 

Starting next year, the Affordable Care Act prohibits insurers 

from hitting small businesses with these rate hikes based on health 

status or claims experience. Gone will be the days when, if one of 

your employees gets cancer, your rates will skyrocket. Frankly, it 

cannot come soon enough. 

I am pleased that Governor Scott has joined with other republican governors in dropping the opposition to the law and wants to 

accept the Medicaid expansion, which will help many Floridians. 

However, this issue is still being hotly debated in our state legislature. I hope they do the right thing. 

We need to move forward with health insurance exchanges where 

small businesses can compare costs and coverage. Too many small 

business owners still do not know that they could benefit from the 

health care tax credit, a dollar-for-dollar reduction in your tax bill. 

I found out about the credit through a small business IRS mailing, 

but many business organizations, like the U.S. Chamber of ComSBREP-219 with DISTILLER

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merce, opposed the law for ideological reasons. I feel they have 

been remiss in educating their members about how they might benefit and lower their health care costs. 

Before I finish, I want to say something briefly about employer 

responsibility. In our system, health care insurance is generally 

provided by the employer. We feel it our duty to provide health coverage to our employees who are like family to us. How can you look 

an employee in the eye while they battle cancer and say ‘‘We are 

going to drop your coverage’’ when you know it will financially devastate their family? 

As a business doing the right thing in offering health coverage, 

it is a problem for us when businesses much larger than ours do 

not offer health insurance and force us to subsidize their costs. The 

shifting of uncompensated health care costs represent a hidden tax 

in our premiums that cost our business hundreds of dollars per employee per year How is that fair? 

In conclusion, the Affordable Care Act is bringing affordable good 

quality health coverage within reach for many small businesses. 

We are already seeing the benefits and have even more to look forward to with the establishment of the state health insurance exchanges, the prohibition on rating due to health status, and other 

provisions that are still on their way. We need to keep building on 

the foundation of the Affordable Care Act, not tear it down. Small 

businesses across the country cannot afford to go back to the broken, free market health care system we faced before reform. 

I thank you very much. 

Chairman GRAVES. Thank you, Ms. McQueeney. 

Our final witness is Kevin Tindall, who is the owner of Tindall 

and Ranson Plumbing and Heating in Princeton, New Jersey. Mr. 

Tindall received the International Association of Plumbing and Mechanical Officials Green Contractor of the Year Award. He is testifying on behalf of the Plumbing-Heating-Cooling Contractors—National Association. Welcome to the Committee. 

STATEMENT OF KEVIN TINDALL 

Mr. TINDALL. Thank you, Chairman Graves, and members of 

the Committee. 

As the owner of a small business and on behalf of the PlumbingHeating-Cooling Contractors National Association, I would like to 

thank you for the opportunity to appear before the Committee to 

discuss health care reform. I applaud the efforts to hold this hearing on one of the most important issues facing the citizens of our 

nation. 

Tindall and Ranson provides plumbing, heating, and cooling 

services. My wife, Kathy, and I established the company 20 years 

ago. We now have 20 full-time employees. I am proud to say that 

we provide quality health care insurance to all those working at 

Tindall and Ranson. 

For the purposes of my appearance, I would like to ask that you 

look at me as a small business job creator. I further ask that you 

receive my testimony as someone who has worked to help create, 

build, and improve the quality of life for those living in my community, as well as providing quality careers for those who work for my 

company, my partners. 

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I am not an expert in health care reform. I am, however, a person who must live with business decisions and policies that Congress establishes which either increases or inhibits my ability to 

create jobs. For that I am an expert. I have yet to understand how 

as a nation we continue to state that we need to create more jobs, 

yet challenge, threaten, or even ignore the very mechanisms for job 

creation. 

I would like to touch on a very few small business dynamics that 

relate to health care reform. 

Small business health care credits. When Congress passed the 

health care reform package, I heard and read much about tax incentives for small business. I received material with the intent of 

calculating any benefits of the reform in terms of tax credits. I am 

proud to say that I do not qualify. The average salary for those who 

work for my company exceeds the $50,000 threshold, thereby disqualifying me. Tax credits as an incentive are meaningless unless 

you happen to fall within a very limited universe as defined by the 

reform. 

Rising insurance premiums. One of the issues during the health 

care reform debate was rising insurance premiums and the need to 

be brought under control. I could not agree more. But that is the 

difference between policy and the real world. For my company, insurance renewal costs for 2011 experienced an increase of 9.7 percent, followed by an increase of 9.3 percent in 2012. Because I always view those who work for my company as partners and because I will always provide my partners and their families with 

quality health care insurance, this increase simply means the cost 

of doing business has increased. Eliminating health care insurance 

or perhaps turning to a lower quality health care insurance to save 

money is not an option. The continued rise in cost of providing 

health care insurance absolutely stifles my ability to create, provide, and sustain jobs. 

Educational materials. As an officer of the Plumbing-HeatingCooling Contractors National Association, I have access to health 

care reform information webinars, materials, and analysis, and I 

take advantage of all those tools. I raise this point for two reasons. 

1. With my years as a member of the association and my position 

as an officer with the association, combined with the efforts and 

time to understand the complexities of the reform, I still have questions and concerns. 

2. I raise the question—what about other small businesses across 

the country who do not belong to an association—state or national? 

We assume these small businesses know about reform and understand its timetables, but I would submit they may not have the resources, time, ability, or know-how to reach out and find out more. 

I very much agree that one of the nation’s top priorities should 

be job creation, but job creation is not a concept. It begins in communities like mine and with people like me. 

In closing, Mr. Chairman, I would like to thank you and the 

members of the Committee again for this opportunity. I would be 

happy to answer any questions that you may have either now or 

in the future. Thank you. 

Chairman GRAVES. Thank you, Mr. Tindall. I appreciate it. 

And we are going to turn to Mr. Collins. 

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Mr. COLLINS. I would like to thank the panel very much. I have 

a question really for you, Mr. Tindall. But first of all, Dr. HoltzEakin, you have confirmed a lot of the things I have heard as well. 

Last week I was the breakfast speaker at the Job Creators Alliance Leadership Summit down in Florida, and I heard time and 

again the very issues that you were raising. So thank you for your 

comments. 

And Mr. Gouldin, I am a fellow member of the NFIB, a great organization. 

And I would like to also congratulate Ms. McQueeney and Mr. 

Tindall on being job creators, entrepreneurs in what we know is a 

tough economic climate. And more so even in understanding the 

fact that you provide your employees health care because that is 

not true of all small businesses. 

So Mr. Tindall, my concern is jobs. And there is a saying that 

I have in the business world, ‘‘You grow or you die as a small businessman.’’ You have to focus on growth. But then again, you have 

got expenses. So I guess my question to you, and also if you could 

relate what you are hearing from other folks in the plumbing, heating, and air conditioning business, as your expenses are going up 

and you are faced with this mandate, my view is you either have 

to raise prices, but that could cost your company market share because others may not be doing it, or you are going to have to cut 

expenses. I do not see an alternative. And if that is advertising or 

other things to get more business, all I am seeing is a wet blanket 

on job creation. And I would like to ask you to speak to your company, but also what you are hearing from other fellow members of 

your association. 

Mr. TINDALL. Absolutely. Their primary concern is obviously 

there are—some of my competition does not provide health care to 

their employees, and this law did not really do anything to help 

that. The other thing is we are not being able to predict the cost 

going forward. You know, the implementation of the law was supposed to create a cost controlling mechanism and as a company I 

have not seen that yet. Quite the contrary. I mean, the renewals 

are talking about up to a 50 percent increase on renewals, which 

is going to create very much the issues that you are talking about. 

It is unaffordable. We will have to look at other options but, you 

know, we still do not consider elimination of health care an option. 

So it is of great concern. And I guess the biggest problem I have 

is that it is unpredictable. 

Mr. COLLINS. Quickly, Dr. Holtz-Eakin, you mentioned the 

medical device tax. I would like to point out, and you certainly 

know this, but it is 2.3 percent of revenue. Not 2.3 percent of profit. 

So if you are a small business and it is 2.3 percent of revenue and 

you are just barely breaking even, I can do the math but I would 

like you to share what you think might be happening in those companies subject to that if, in fact, they do not make 2.3 percent of 

revenue even to their bottom-line. 

Mr. HOLTZ-EAKIN. We actually have a research paper on this 

which I would be happy to provide to you but the situation is exactly as you characterize it. You have a lot of these companies who 

have very small profit margins, under 2.3 percent. The 2.3 percent 

chews up all the profit margin. They are typically start-up innoSBREP-219 with DISTILLER

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vator device companies who need to plow that money back into the 

firm in order to get scales sufficient to market more effectively. 

They do not have the opportunity to do that. Often, they cannot 

hire in times they need to. And the anecdotal evidence that I have 

heard already is about several of these firms simply giving up and 

leaving the industry. 

Mr. COLLINS. To follow up on that, I assume you could support 

easily a cap to say if the medical device tax at 2.3 percent of revenue but cannot exceed something like 10 percent of profits, which 

would answer the question of some company where they do not 

even make 2.3 percent, certainly modifications like that which 

bring the tax burden into alignment with the underlying economics 

of these enterprises is the right thing to do. If you put aside the 

large debate over the designability of the law, there is a lot of bad 

tax policy in the Affordable Care Act. If you just look at it as tax 

policy—the device tax, the investment tax, the health insurance fee 

premium tax—are all designed in ways that have very perverse 

economic incentives and need to be fixed. 

Mr. COLLINS. Thank you very much, Mr. Chairman. I yield 

back. 

Ms. VELA ́ ZQUEZ. Mr. Chairman, in light of the fact that there 

is going to be a vote, I will defer to my colleagues on the democratic 

side. 

Chairman GRAVES. Thank you. 

Ms. VELA ́ ZQUEZ. I will be coming back. I will ask my questions 

later. 

Chairman GRAVES. Mr. Schrader. 

Mr. SCHRADER. Thank you, Mr. Chair. 

Mr. Eakin, a lot of work—excuse me—on this issue. Did you take 

into account the number of small business jobs that will be created 

as a result of the consulting industries that are developing, doctors’ 

offices, nurse practitioners being hired to fulfill the need of implementing the health care bill? 

Mr. HOLTZ-EAKIN. We have not done a precise employment estimate. 

Mr. SCHRADER. Okay. So that has not been done. Did you take 

into account the benefits that will occur in lowering costs based on 

the event of health that was testified by Ms. McQueeney, the fact 

that we have lifestyle adjusted premiums that will obviously drive 

down costs? Was that part of your analysis? 

Mr. HOLTZ-EAKIN. There is no evidence that—— 

Mr. SCHRADER. But you cited anecdotal evidence just a moment ago that the premiums are going to be going up maybe 50 

percent and stuff. 

Mr. HOLTZ-EAKIN. That is actually a survey. 

Mr. SCHRADER. If I may reclaim my time. 

My point is that while your study is prophesying doom and 

gloom, the premiums on my small business, my little vendor world, 

were going up double digits prior to any discussion about health 

care reform. Every single business man/woman I knew in my great 

state of Oregon was clamoring for health care reform. The real 

world is the health care bill has not even taken effect yet. And that 

is what the 9 percents that Mr. Tindall has talked about that are 

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9 to 10 percents that are gouging him. The higher double-digit increases we have seen. 

Now, the one point I think the panel has made very well, and 

I truly appreciate it, is the uncertainty. You do not know what is 

going to happen next. Is it going to get worse? Is it going to get 

better? Did I buy a pig in a poke with this whole ACA thing? That 

is legitimate, and unfortunately, it is going to be uncertain for a 

little while. Panels like this can help inform us. I do agree with 

frankly the discussion on the temporary workers. Our definition 

there probably needs some tweaking. I think that is a really good, 

solid point and hopefully we will bring that back. 

The medical device issue though, I mean, I disagree again respectfully, Mr. Holtz-Eakin, that all these new taxes are horrific 

and going to stifle jobs in the industry. What was taken into account during the ACA discussion by the insurance companies, the 

medical device manufacturers and everyone else that was going to 

see a score of new lives, have access to their products, have access 

to insurance that do not have access now, they are actually going 

to drive the cost down over the long term. They are actually going 

to be able to sell their devices where they could not sell very many 

of them before. 

So I think it is very important that we understand that during 

the ACA, I did not hear a whole lot of discussion about this. After 

the ACA, sure. No one wants to pay any more taxes than they have 

to. I get that. But the real world is I think there is a tendency to 

overstate things. 

And the last comment I guess I would make that I think is extremely important is that we have already seen economists around 

the world, maybe you are one of the few that does not agree, but 

I just came from a presentation by Doug Elmendorf a few moments 

ago. There seems to be a growing consensus among economists that 

the moderation in health care costs—not just Medicare, not just 

Medicare—but in private health care costs, it is not just because 

the recession is preventing people from getting health care. That 

is part of it. I get that. But it is because of the rethinking that the 

medical community is thinking about how they deliver health care. 

Bundled health care payments, more coordinated care. I mean, over 

the long haul I think we will have huge benefits in driving costs 

down. 

And I am old enough to remember back when we looked at different types of health care premiums 15, 20 years ago, and my 

state, we were trying to do this managed care thing and jeez, what 

is that going to do? It drove costs down dramatically, despite the 

initial fears that it was going to be the worst thing since, you 

know, the invasion of France by the Germans for goodness sake. 

So there has been some tremendous changes that I think we want 

to figure out what the real score is going to be before we all say 

it is horrible. Productively from the panel is there some key tweaks 

we have to do? Get rid of the uncertainty as soon as possible. 

Last, last comment is, you know, a question, I guess. How many 

businesses, small businesses have less than 50 employees? Doctor, 

do you know the answer to that one? I do but I am just asking. 

Mr. HOLTZ-EAKIN. The number of small businesses? 

Mr. SCHRADER. Less than 50 employees. 

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Mr. HOLTZ-EAKIN. I do not know the precise number. 

Mr. SCHRADER. Yeah, it is 97 percent. 

So the bottom-line is most businesses, most real small businesses, are not going to be affected by this. They are totally unaffected. They do not have to pay health insurance. Do not pay a 

bloody penalty. Do not have to do anything except go to work every 

bloody day. And their employees go to work. 

So let us put this in perspective. I do agree—I am trying to be 

collegial here—that those businesses between 50 and 200 employees—this is a tough deal. We have got to figure out how to make 

this work for you all. Business as usual will not do it. And it is a 

sad comment I think that health insurance premiums—I provide 

health care to my employees. My maximum deductible says health 

care costs went up. Got up to 200 to 500. Now 2,000 is not uncommon. That is just a comment on the current system; let us make 

it better. 

And I yield back. Thank you. 

Chairman GRAVES. Mr. Mulvaney. 

Mr. MULVANEY. Thank you, Mr. Chairman. 

Ms. McQueeney, I am a little confused because what I am hearing is that your costs went up only very slightly because of the Affordable Care Act, and Mr. Tindall’s went up a lot because the Affordable Care Act has not yet been implemented. So I am a little 

confused on that. But I want to talk more about your business. 

I was listening to your story about your business and was wondering, your health insurance premiums should have gone up considerably; right? I mean, you have had people with substantial 

claims. You have had some people with some health issues. Your 

health insurance premium should have gone up; right? 

Ms. MCQUEENEY. I have been at Palm Beach Grove since 2000, 

since the year 2000. And the premiums of health care have gone 

up every single year, arbitrarily, whether we had a health experience or not. 

Mr. MULVANEY. But last year—— 

Ms. MCQUEENEY. Last year it went up, and I understood that 

one because we had four horrendous cases. That I can understand. 

But the previous 11 years I really could not understand. 

Mr. MULVANEY. You had four horrendous cases and your premium only went up 0.2 percent? 

Ms. MCQUEENEY. No, no, no. That was the year 2010–2011. 

Last year, 2012. So the premiums for 2013 went up again. 

Mr. MULVANEY. And I guess there is my point. You are employing—you said all your employees were in their 50s and their 

60s. 

Ms. MCQUEENEY. Yes. The ones that are on the plan; correct. 

Mr. MULVANEY. Health care costs are not going down. Health 

care costs continue to go up. They go up faster than the rate of inflation. 

I would suggest to you, Ma’am, that the reason that you experienced this particular benefit is because you were hiring people or 

you have people who are 50 and 60 years old. And it is folks like 

my business where we hire young people, folk 18, 20, 22—I ran a 

restaurant—who are paying for your low rates. 

Ms. MCQUEENEY. Would you like me to lay them off? 

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Mr. MULVANEY. Ma’am, I will tell you that someone has to pay 

for it. Someone has to pay for it. It is not free. 

Ms. MCQUEENEY. I understand. 

Mr. MULVANEY. You are getting it for free, and you are getting 

it on the backs of people who are 18, 20, and 24 years old. If you 

are a young person in this country, it used to be that the insurance 

companies could charge you a much lower rate than they could to 

older people. It was, I think, age banding or something like that. 

Ms. MCQUEENEY. Would you prefer—— 

Mr. MULVANEY. The Affordable Care Act, Ma’am, I would be 

happy to ask you a question in a few minutes. The Affordable Care 

Act prevents us from doing that. The Affordable Care Act is now 

forcing insurance companies to raise premiums on young, healthy 

people because they are no longer able to offer them lower rates. 

So I suggest to you that while it is great for your company, it 

has worked out wonderfully for you, someone is paying for that. 

And that someone happens to be folks who are probably under the 

age of 30 and who are healthy. 

Mr. Holtz-Eakin, you mentioned before about the medical device 

tax. If my margin in my business is 2.3 percent or I am paying a 

2.3 percent sales tax on my revenues, what percentage income tax 

is that? 

Mr. HOLTZ-EAKIN. It is nearly an infinite income tax. It is a 

zero base. 

Mr. MULVANEY. Exactly. If you are not making more than 2.3 

percent gross margins, this is at least 100 percent income tax on 

your business. That is what this act stands for. If you voted for this 

act, you voted for a 100 percent increase on some businesses. One 

hundred percent tax income or income tax on some businesses. 

That is what I cannot get through a lot of my small businesses’ 

heads when they come in and say, ‘‘Oh, this has worked out for 

me.’’ There are other folks for whom it did not work out for. There 

is nothing free in this business. Someone is paying for your low 

premiums, Ms. McQueeney, and my guess is it is several of the 

other people here at this podium. 

Ms. MCQUEENEY. Can I answer you, please? 

Mr. MULVANEY. I did not ask you a question. 

Ms. MCQUEENEY. Oh, I am so sorry. But I would just, respectfully, I would like to say to you I pay $1,200 a month with a $5,000 

deductible. I am not taking anything for free from anyone. We have 

people that pay $1,800 a month. 

Mr. MULVANEY. Do you know how much the coverage costs? 

How much the actual health care that your employees receive cost? 

Do you know what you got in exchange for that premium? 

Ms. MCQUEENEY. Can I ask you another question? 

Mr. MULVANEY. I am asking you a question. Do you know—— 

Ms. MCQUEENEY. Last year we got an enormous amount of 

money in health care for that. Absolutely. 

Mr. MULVANEY. How much? 

Ms. MCQUEENEY. How much they actually were billed for or 

how much the insurance company actually paid? 

Mr. MULVANEY. How much did it actually cost? 

Ms. MCQUEENEY. Which number would you like? 

Mr. MULVANEY. Tell me how much it actually cost. 

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Ms. MCQUEENEY. No, which number would you like? I can give 

you two numbers. 

Mr. MULVANEY. If I ask you the question how much did it 

cost—— 

Ms. MCQUEENEY. First of all, I do not have the records to my 

employees. That is private information. 

Mr. MULVANEY. You do not know the answer, do you? 

Ms. MCQUEENEY. I do know the answer. 

Mr. MULVANEY. None of us know the answer. None of us know 

what health care costs in this country. You can go to the doctor 

today and ask them—I do because I have a high deductible program. What does it cost? Ma’am, please. 

Ms. MCQUEENEY. What would you like me to do? Lay people 

off? 

Mr. MULVANEY. Please. I do not want you to lay any people off. 

I want you to understand—— 

Ms. MCQUEENEY. What would you like me to do then? 

Mr. MULVANEY.—the fact that someone is paying for that and 

it is young people in this country. 

Ms. MCQUEENEY. I cannot access your health care. I have no 

choice. 

Mr. MULVANEY. I have the same—I have the same health care 

as every other federal worker. 

Ms. MCQUEENEY. But I do not have that choice. 

Mr. MULVANEY. I have a high deductible program. I go to my 

doctor’s office with a sick child and I say, ‘‘How much does this 

visit cost?’’ Do you know what they tell me? They do not know. We 

do not know what health care costs. You are complaining about a 

premium that you say costs $1,200 a month. That is only an unreasonable number depending on what you are getting in exchange for 

that $1,200 worth of premium. If you are getting a million dollars 

worth of actual benefit for $1,200, that is not a bad deal. And I 

would suggest to you that we have broken down into a discussion 

about health insurance, not the cost of health care. We are sitting 

here discussing today what our premiums are, what happened to 

our premiums, what we have to pay to our employees, and the difficulty is that we are not talking about the cost of health care; we 

are talking about the cost of health insurance. And unless you 

know what health care costs, you have no basis for saying that 

your health insurance is expensive, cheap, a great deal, or a lousy 

deal. 

I ask you one last question, Ms. McQueeney, which is you mentioned your daughter—oh, I am sorry. The clock was not turned on 

so I lost track. I am sorry. I apologize. I yield back the balance of 

my time. 

Chairman GRAVES. Ms. Hahn. 

Ms. HAHN. Thank you. 

I am one of those that obviously does believe that the Affordable 

Care Act is going to make for a healthier nation, a healthier business climate. And I do know that there is a lot of misfortune of 

misinformation out there, a lot of outright lies and deception that 

are being propagated in terms of the Affordable Care Act. 

I actually just held a workshop in my district with Natalie Orta 

of the Small Business Administration and David Chase of the 

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Small Business Majority. And I had about 25–30 small businesses 

that actually for the first time heard the actual facts about what 

the Affordable Care Act would mean to those small businesses. And 

the first fact that bowled everybody over is what Dr. Schrader 

talked about, which is 97 percent of the businesses will be exempt 

from this because they have less than 50 employees. 

But one of the things—by the end of the workshop everyone was 

feeling a lot better about the benefits of the Affordable Care Act. 

Many of them had also received the rebates from the insurance 

company because they were not spending 80 percent of the premiums on health care and only 20 percent on administration. So 

that is already a huge benefit to people who are paying into the 

system. 

You know, I was going to ask Ms. McQueeney, you know, clearly 

you felt it was important to offer your employees health insurance 

even before the implementation of the Affordable Care Act. Could 

you expand on that a little bit, particularly because some of your 

competitors were not providing health insurance. You were spending a little bit more money on that. Could you share with us why 

you felt that was an important thing to do and how did that ultimately benefit your business? 

Ms. MCQUEENEY. Well, the family that owns Palm Beach 

Groves, they have always provided health care. And again, I have 

to stress that this is how you get health care in this country is 

through employment overall. And it used to be not a problem as 

big as it is now. It is a huge problem, and every year you have to 

make the choice can we continue on with this? Like Mr. Tindall 

says, or do we need to cut the health care—do we need to cut their 

insurance? It is not an easy decision to make but we do not have 

any control over—I agree with him, we have no control over any 

of the costs. I have no leverage with the insurance company. I cannot go there and say, no, I want a better plan. There is just nothing out there for us. So what am I supposed to do? That is my 

question. I would like to have people answer me. What would you 

like me to do? Not insure? Get on the rolls of the uninsured? I do 

not want to do that. 

Ms. HAHN. Well, that is what I was hoping you would elaborate 

on a little bit. What are the benefits for you? 

Ms. MCQUEENEY. The benefits are people are secure in their 

jobs, they are great staffed, they know the company. I do not want 

to lose them over this. They are like family to us. Am I going to 

devastate people financially because they get sick to no fault of 

their own? It is just the system is broken and we are trying to find 

help here. 

Ms. HAHN. Well, the system was broken and I think that is why 

this Congress passed the Affordable Care Act to fix what was a 

very broken system. 

Ms. MCQUEENEY. But I do agree it is not addressing the cost. 

It is not addressing the cost enough. And we have no control over 

the cost whatsoever. I can go to a doctor’s office, and I have asked 

how much is a particular procedure. And you get no answer. None. 

Ms. HAHN. Right. And that is the real problem, is the real true 

cost of health care. 

SBREP-219 with DISTILLER

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Ms. MCQUEENEY. If I have a heart attack I cannot say how 

much will this cost to fix my heart because at that moment I might 

not be capable to make that decision. 

Ms. HAHN. Right. Well, again, I would urge my colleagues to 

hold similar workshops with the Small Business Administration, 

with those who are actually very knowledgeable in what the Affordable Care Act does and walk people through—small businesses 

out there are fearful. They are uncertain. And again, there are a 

lot of lies out there that just are not telling the truth about what 

this law will actually—how it will actually benefit people in this 

country. 

Thank you. 

Chairman GRAVES. Mr. Schweikert. 

Mr. SCHWEIKERT. Thank you, Mr. Chairman. 

Just so conceptually there is an understanding, my friend, Mr. 

Mulvaney, was basically just trying to describe transfer costs. Basically, we have decided to transfer costs to young taxpayers or just 

young people in their health care costs to subsidize folks on the 

other end of the age curve. So it is very simple. Once again, I think 

the technical health care term is young people get screwed once 

again. 

Doctor, can you actually—a couple mechanical questions. I repeatedly hear stories of businesses that are basically now trying to 

manage their employee counts to stay under 50, to stay under their 

number of hours. What do you see happening out there? And some 

of the blogosphere discussions on small business sites now talking 

about how they are even trading employees, even though they are 

separate organizations to keep them all under there, are we about 

to see a transition in the small business economy to gain the new 

health care law? 

Mr. HOLTZ-EAKIN. Well, certainly, the incentives in the law are 

what they are and they have been a concern. Exempting everyone 

under 50 employees means that you penalize people for taking on 

the 50th employee. And the incentive effects of that are one of the 

things we are going to try to see how they play out, especially in 

the part-time fund that we discussed before. It was a concern with 

the small business tax credit which penalized paying people more, 

taking on workers, how it was anti-growth and which the administration in its budget actually proposed trying to reform for a year, 

try to take some of those features out. But that cost $10 billion 

every 10 years and shows you the problem, the tension in the law 

on that front. 

So what will ultimately happen? We do not know. It is something 

I have been concerned about and we are watching carefully. I do 

know that with subsidies as generous as the ones that we see in 

the exchanges and the negative incentives to take people on as employees and offer them insurance, there is the real potential for 

clever gaming of the system to leave people in the exchanges. And 

that has been a concern from day one. 

Mr. SCHWEIKERT. Mr. Gouldin. 

Mr. SCHRADER. A point of order, Mr. Chair. 

Chairman GRAVES. Yes. 

Mr. SCHRADER. Just real quick. People cannot drop their business coverage and move to the exchanges. They do not get any subSBREP-219 with DISTILLER

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sidies. If your employer offers you a legitimate health care plan 

that meets the test, you cannot drop and go into the exchanges. 

Mr. HOLTZ-EAKIN. That is true. 

Mr. SCHWEIKERT. Hold on. My time. 

Mr. Chairman, I was happy to yield but I do hope the left side 

will also extend the same courtesies when we have a point of order. 

All right? 

Ms. VELA ́ ZQUEZ. Excuse me, but the previous member—— 

Mr. SCHWEIKERT. Madam Ranking Member, I did not yield. 

Okay? I was just making a simple, simple point so we can have the 

dialogue. 

Mr. Gouldin, back to my point and my time, if we are—basically 

now have designed our economy through this health care law saying you do not want to go over 50 employees—— 

Mr. GOULDIN. Exactly. 

Mr. SCHWEIKERT. You do not—we have just created a whole 

series of incentives to not grow. What have you done to—mechanically, your business, you are up against 50 employees. What would 

you do? What do you do now? 

Mr. GOULDIN. Well, in our case, we are above that line so I do 

not have to think about that anymore. We are going to have to pay 

the premiums, but you know, I think most of the analysis that I 

have seen thus far has been talking about the escape penalty. And 

I watched the escape penalty as it was being written. It started at 

$400 and I tried to tell everybody that was just a sucker’s pitch. 

And it went to 750. Then it went to 1,000, and it went to 2,000. 

And anyone in this room or anybody in this country that thinks it 

is going to stay at 2,000 is insane. It is going to go through the 

roof—2,500, 3,000, 4,000, 5,000. It was designed to be the least expensive thing for an employer to do. And lay loose. 

Mr. SCHWEIKERT. Is it Mr. Tindall? 

Mr. TINDALL. Yes. 

Mr. SCHWEIKERT. Okay. You were sharing with the Committee 

that you have a small problem in the fact that you pay your employees on average over 50,000 a year; correct? 

Mr. TINDALL. Yes. 

Mr. SCHWEIKERT. I will ask you to turn on your mic. 

Mr. TINDALL. I did. I am sorry. 

Mr. SCHWEIKERT. I am sorry. Sometimes these things you 

have to lean into. 

So now we have created an environment where if you were actually rebuilding your compensation packages from a business modeling standpoint you would do everything you could not to break 

that 50,000, whether you had to find some way to gain it in other 

mechanics, you need to stay under that $50,000 average to get 

some of the benefits that are built into this law. Am I understanding your position? 

Mr. TINDALL. I would have created it with a philosophy that 

there were a number of employees that would do that just because 

of the cost savings. 

Mr. SCHWEIKERT. So once again we look at this new health 

care law and we are doing everything in our power to transfer costs 

to young people, to keep businesses from growing, and to suppress 

salaries. 

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Mr. Chairman, with that I yield back. 

Chairman GRAVES. With that we have got one vote, so we will 

adjourn and come back. Mr. Murphy will be up or whoever next. 

Whoever is next in line. 

It should not take us very long. Long enough for us to walk over 

and walk back. I apologize for the inconvenience to all of you. 

Nydia and I do not get to set the schedule, unfortunately. 

[Recess.] 

Mr. HANNA. Thank you, Mr. Chairman. 

Ms. VELA ́ ZQUEZ. Go ahead. I am not ready. 

Chairman GRAVES. Okay. We will go with Mr. Hanna. 

Mr. HANNA. Thank you. 

It is pretty clear to everybody there is a lot of hyperbole and 

myths and disinformation associated with that and I would hope 

that we do not need a health care provider in this room today the 

way things go sometimes. This is one subject that gets very heated. 

The Federal Reserve though recently, Mr. Holtz-Eakin, in their 

own Beige book, our Federal Reserve, which examines economic 

conditions across the country called and cited the health care bill 

as a reason for employers having layoffs and holding back hiring. 

Your January 13th analysis of major insurers, particularly that 

across all markets the law will dramatically increase the cost of insurance for small employers, precisely that group most likely and 

to be affected by this mandate, I would like you to speak to that 

if you could, sir. 

Mr. HOLTZ-EAKIN. Well, thank you. There are lots of reasons 

to suspect that the provisions in the law would raise insurance premiums, and whether it is the underlying benefit package or the inability to charge young relatively less compared to older individuals, the coverage of preexisting conditions, all of that has been debated for a long time. So I thought what we ought to do is simply 

take very specific insurance policies in very specific places, whether 

they were Albany, New York or any other particular city that we 

might want to look at, and then ask insurers what would the different provisions in the law do to the cost of a premium for this 

particular policy? And we sent that to the insurers. They sent back 

their answers to my lawyer. 

Mr. HANNA. So this is as empirical as you could get it? 

Mr. HOLTZ-EAKIN. We should go to the people who do this and 

find out what the numbers are. And they are as I reported in my 

written testimony, and we have a larger paper on it, quite striking 

in many cases. Triple digits. 

Mr. HANNA. Could you elaborate on that? I mean, I happy to 

give you the balance of my time to talk about all of that. 

Mr. HOLTZ-EAKIN. We tried to do this as impartially as we 

could by picking very specific policies. We were not going to let insurers pick the policy that went up the most or anything like that. 

We asked a very particular question. I do not know which insurers 

answered. I do not know what individual insurer responses were. 

They sent their survey responses to my lawyer, who signed a confidentiality agreement. He added up the averages and brought 

them to me. 

Mr. HANNA. The broad conclusion was? 

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Mr. HOLTZ-EAKIN. And the broad conclusion is for small employers, especially those with younger, healthier workforces, you 

are going to see what I think of as sticker shock in health insurance premiums come 2014. 

Mr. HANNA. Generally, what would you say about the incentive 

structures that are built within the employer mandate and the employee mandate, if you will? 

Mr. HOLTZ-EAKIN. This raises the cost of employment. I mean, 

there is no question about that. For those who are already offering 

insurance, we made the benefits more rich and we see the premium 

shock for those who are not. It is a more costly thing to get into. 

For minimum wage workers, you cannot lower their wages to cover 

the additional insurance cost. So this is a negative impact for employment. It is not offset in any serious way by other provisions of 

the law. And the one thing we do know is that there is a very rich 

set of benefits sitting out in the subsidized exchanges, and the concern for a long time has been employers would get out of the business of offering employer-sponsored insurance and they would end 

up on the government and the taxpayers’ fist. 

So those are the incentives. If you do not hire—— 

Mr. HANNA. So extrapolate from that. If I were to say to you 

then this system is either implicitly or explicitly designed to move 

towards a single-payer option, what would you say to that? 

Mr. HOLTZ-EAKIN. I would say you cannot rule that out. Given 

the structure of what is going on, employers are not going to hire. 

Mr. HANNA. Without underlying cost savings—— 

Mr. HOLTZ-EAKIN. If we are going to recognize they will not 

cover whole families in many cases. They will offer affordable insurance to employee but not family coverage. We are going to have 

other issues. 

Mr. HANNA. So if we do not change the fundamental delivery 

system of health care, whatever that means, ultimately this is only 

going to cost more. 

Mr. HOLTZ-EAKIN. Yes. The things I just covered were all insurance rate effects. Remember, insurance just covers the nation’s 

health care bill. It shifts it around from one person to another. Our 

problem is the bill is too big for the quality of care we get. That 

is the core issue that remains to be solved. 

Mr. HANNA. Do you have a few ideas on that? I have a minute 

and a half here. 

Mr. HOLTZ-EAKIN. I have a day and a half’s worth of ideas on 

that but, I mean, I think the number one thing that a Congress 

could be would be to do Medicare reform. Medicare pays a lot of 

America’s bills. It drives practice patterns. And at the moment it 

is dominated by care that is uncoordinated, fee for service, and in 

many ways drives bad practice patterns in the United States. 

Mr. HANNA. How big a factor in all of that would you say—I 

mean, we have talked about the fact that nobody in this room, certainly I do not, know what my health care costs. That is a big deal. 

Mr. HOLTZ-EAKIN. Big problem. 

Mr. HANNA. We are not informed purchasers of health care, 

which is 18 percent of our economy. For many of us it is the biggest 

thing we purchase on a regular basis. How big a problem is that? 

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Mr. HOLTZ-EAKIN. That is a very big problem, both in the lack 

of transparency in some cases, which should be fixed, and also the 

lack of incentive to care what it costs. Third-party payer does that. 

Mr. HANNA. Sure. So the people can basically get sick and hope 

that the government can handle it, take care of it? 

Mr. HOLTZ-EAKIN. The trouble is—— 

Mr. HANNA. Not that anything wants to get fixed. 

Mr. HOLTZ-EAKIN.—balance sheet recently, that guaranty is 

far from perfect. 

Mr. HANNA. Thank you. I yield back the balance of my time. 

Chairman GRAVES. Ranking Member Vela ́zquez. 

Ms. VELA ́ ZQUEZ. Yes, thank you, Mr. Chairman. 

I would just like to hear your comments. ACA, Affordable Care 

Act, is the law of the land. It is happening. It will happen. It will 

be fully implemented. We understand from anecdotal experience 

shared with us that some businesses are facing premiums going up. 

It looks like some insurance companies some might say are rushing 

to increase the cost of premiums in light of the fact that there is 

going to be full implementation of the Affordable Care Act. Is it not 

true that once most of the important provisions of the Affordable 

Care Act are implemented, one event that will bring transparency, 

increasing the pool of people that will be insured, that that by itself 

provides for more competition and will draw costs down? 

Mr. HOLTZ-EAKIN. I do not think so. I think if you put aside 

the health insurance aspects, which are a big part of the bill, as 

I said before, the core issue is how much the United States spends 

on health care and the purpose of insurance is to simply shift that 

cost from one person to another so they stay within their financial 

means. I do not think there was anyone who in the aftermath of 

the signing of the Affordable Care Act felt it bent the cost curve. 

The Congressional Budget Office did not say that. 

Ms. VELA ́ ZQUEZ. Okay, if I ask you what is the one area you 

recommend changes be made in order to make it better? It is going 

to happen. You can come here and talk about your studies and reports and everything, but it is going to happen. So we need to move 

forward. 

I would like to ask Ms. McQueeney, in your dealing with, you 

know, the IRS, you learn from the IRS about the tax credits. You 

took advantage of it. You got rebates back. What are you doing 

with that money? Are you reinvesting that in your business? 

Ms. MCQUEENEY. Absolutely. 

Ms. VELA ́ ZQUEZ. What has been your experience with the IRS 

in helping you navigate the system? 

Ms. MCQUEENEY. Well, I am on a small business IRS e-mail 

list, so if there is anything that affects our business then I get informed that way. I downloaded the form. It takes about an hour 

to do. And submitted it to the accountant and he submitted it and 

we got the tax credit. 

Ms. VELA ́ ZQUEZ. For the small businesses that are here, the 

IRS released the proposed regulation just a few months ago. A 

hearing will be held next week regarding feedback they receive. So 

I would like to know if any of you or your respective trade associations provided any comments to express your concerns about these 

guidelines. Have you done that? 

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Mr. TINDALL. I was not aware of the Committee hearing going 

on, and as far as I am aware of, our association has not provided 

any testimony or any comment. 

Ms. VELA ́ ZQUEZ. They have or have not? 

Mr. TINDALL. Have not. Have not. 

Ms. VELA ́ ZQUEZ. Okay. So then if you have not done that or 

your association, and this is the process where public comment is 

allowed, how do you think that the concerns that you have could 

in any way be raised so that they consider those and come out with 

a final rule? 

Mr. TINDALL. I agree with you that we should be involved in 

it but the problem is, again our primary responsibility is to run our 

businesses and create jobs. And we, unfortunately, do not have the 

time to focus on everything that is going on down here. 

Ms. VELA ́ ZQUEZ. But the associations, your members, they are 

supposed to do that. 

Mr. TINDALL. Absolutely. Absolutely. But not every plumbing 

and heating contractor across the country belongs to an association. 

So, and I believe a large number of them do not by a lot. And so 

for those people to be involved in the process, they do not even 

know the process exists. 

Ms. VELA ́ ZQUEZ. If it is a trade association, believe me, they 

do. They do. 

Yes, Mr. Gouldin. 

Mr. GOULDIN. I personally have written to the IRS with my 

comments throughout the entire process, plus this is what the 

American Florists and the National Federal of Independent Business have also. 

Ms. VELA ́ ZQUEZ. Okay. 

Mr. GOULDIN. Right now the biggest concern to my business is 

that we are waiting for the IRS to rule on what is going to be the 

definition of seasonal worker. Right now nobody seems to know 

what that is going to be. That is a big issue. 

Ms. VELA ́ ZQUEZ. Okay. 

Ms. McQueeney, 90 percent of small businesses have 20 employees or less, which means that they are now subject to the insurance 

mandate in the Affordable Care Act. However, these businesses are 

eligible to receive tax credits, which you benefitted from. And so 

given this reality, do you believe that the concerns regarding the 

impact on small businesses are a little bit overblown? 

Ms. MCQUEENEY. I can only speak for our business. 

Ms. VELA ́ ZQUEZ. Sure. 

Ms. MCQUEENEY. In our case it helped us with our 2011 year. 

You know rates went up in 2013 or just last time period because 

of what we experienced last year. But definitely, that was the first 

time ever in all my years of Palm Beach Groves that the cost ever 

went down. 

Ms. VELA ́ ZQUEZ. Okay. 

Ms. MCQUEENEY. It has been consistently going up. 

Ms. VELA ́ ZQUEZ. Yes, Mr. Gouldin. I know that you have, what, 

over 150? 

Mr. GOULDIN. We range between 120 and 150. And your question was whether or not we have seen health—— 

SBREP-219 with DISTILLER

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Ms. VELA ́ ZQUEZ. Well, when people are making statements 

about the mandate, it just—it makes it sound like it is going to impact most small businesses when, in fact, 90 percent of all small 

businesses have 20 employees or less. 

Mr. GOULDIN. Well, it has direct and indirect impact. But you 

are right in that the law requires participation once you hit 50 employees. But I think that all businesses, regardless of size, see the 

paperwork and requirements of reporting as a major expense. In 

our case, in our small company of 150 people, we will probably 

have to hire an additional person full-time just to track our compliance of our staff to their scheduling. It is a very complicated law. 

And so its biggest expense to small businesses, even the ones 

below 50, is the state of confusion that it has caused, and that is 

the state of confusion caused by the complexity of the law. 

Ms. VELA ́ ZQUEZ. Complexity and maybe misinformation. So we 

have to do a better job as government and elected officials to provide the information and do workshops and bring government officials from HHS, IRS. I have done that in my district and believe 

me, those who were confused are not that confused anymore and 

are taking advantage of the tax credits provided by the law for 

those type of businesses. 

Many uninsured, Mr. Gouldin, many uninsured consumers are 

forced to set-aside money in low interest accounts to make sure 

that they have enough to cover unexpected medical costs. You mentioned how important it is to maximize employment and economic 

growth. Would you agree that the security provided by health insurance can free up that savings for more purchases of consumer 

goods? In fact, when we hear about surveys among small businesses, the number one issue that comes up is the lack of consumer 

spending. 

Mr. GOULDIN. I think that the number one problem we have 

right now as a result of the financial collapse and the restructuring 

is the lack of employment. And I am amazed by all the things that 

I read all over the place about the stock market’s return and everything else’s return, but employment is still terrible. And everybody, 

all the greatest economists seem to be so befuddled. Why is no one 

hiring? So my question is, well, I do not know. What has changed 

during the process? And my answer to that is that, one, the Affordable Care Act got passed and a lot of businesses are confused and 

frustrated and see additional costs coming their way that they are 

trying to figure out what are they going to be. And we did raise 

minimum wage 41 percent, the last year being 2009, right in the 

middle of the recession. There is talk about raising it again. 

Ms. VELA ́ ZQUEZ. Okay. 

Mr. GOULDIN. So that would slow employment. And without an 

increase in employment, you cannot get the economy back on its 

feet. 

Ms. VELA ́ ZQUEZ. It is just that we love to comment on surveys 

conducted about small businesses and what they feel are the most 

important obstacles hindering economic growth or expansion in 

their businesses, and they mention the lack of consumers coming 

through their doors, regulation, and health care number three, 

four. So that is why I was making reference to it. 

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Ms. McQueeney, more young adults are moving back home after 

college, exactly for some of the reasons that Mr. Gouldin made reference to. It is very difficult to find employment. And now we know 

that under the ACA, children can stay on their parents’ health insurance until they turn 26, ensuring that they have health coverage. Are your employees finding this new benefit to be helpful for 

their families? 

Ms. MCQUEENEY. Yes. All of us, again, are in our 50s and 60s, 

and all of us have children that age. They are all on our health 

plan. 

Ms. VELA ́ ZQUEZ. Thank you. 

Chairman GRAVES. Mr. Tipton. 

Mr. TIPTON. Thank you, Mr. Chairman. Thank you, panel, for 

being here. 

You know, last month I spoke to a Pizza Hut franchise owner in 

my district. Nancy stated that the federal health care law has 

caused a variety of issues for restaurants and employees, and one 

of the biggest hindrances is a change that now classifies full-time 

work as averaging only 30 hours per week. And she stated that because of this change alone she will not be hiring any more full-time 

employees and eventually will have to be able to reduce some of 

their formerly part-time employees to those hours. She described in 

detail a conversation she had with one of her employees who was 

literally in tears about the prospect of having those hours cut. 

Some of you may well remember with me a time in this country 

when we fought to have a 40-hour work week. Now we have got 

people that are trying to fight to get a 40-hour work week. And because of the Affordable Care Act we are continuing to see I think 

something that was well noted. Businesses that are afraid to hire. 

We do not know what the costs are going to be and the impacts 

economically across the board, I believe we truly have yet to fully 

measure. 

You know, Mr. Gouldin and Mr. Holtz-Eakin, maybe you would 

answer for me the question when we are talking about regulatory 

compliance. We have had numerous amounts of testimony in this 

committee. Right now we are spending $1,750,000,000 in regulatory compliance. Small businesses are paying better than $10,000 

per year per employee just to be able to comply with the federal 

government. And you note now an additional $30 billion burden is 

being put on the back of small businesses in this country. Is this 

going to discourage hiring? 

Mr. GOULDIN. I think without a doubt. As I said before, we 

need a paradigm change in this country. Most of us have lived in 

the belief of America the way it was post-World War II up until 

1970, which was there would be plenty of employers to hire plenty 

of employees. Those days are gone. We are in a competitive world 

and we have to meet with competition. So whenever you increase 

the cost of anything beyond what the market will bear, you create 

problems. I think that from my experience of being in business 40 

years, and I look at all the great successful businesses. The big 

publicly ones, they are all in the business of labor elimination. I am 

in the labor business. Our business hires people. We are a laborintensive craft industry, but all the efforts that most big businesses 

that make a lot of money make it on is—think of Amazon. It is all 

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labor elimination. So I think we just keep leering on costs of employment and thinking there will not be any impact. I am telling 

you the impact is massive unemployment. 

Mr. TIPTON. You know, I would like you both to maybe just give 

a quick comment, if you would. This just came out on the Hill this 

afternoon. Senator Max Bacchus, a democrat out of Montana, Senate Finance Chairman commenting to Secretary Sebelius. He said 

Wednesday he fears a train wreck as the Obama administration 

implements its signature health care law. ‘‘I see a huge train wreck 

coming down,’’ Bacchus told Health and Human Services Secretary 

Sebelius at a Wednesday hearing. ‘‘You and I have discussed many 

times and I do not see any results yet.’’ 

Is the confusion—is the cost one of the biggest obstacles where 

government is not becoming a stepping stone to be able to create 

success in this country but a stumbling block for American prosperity and job creation? 

Mr. HOLTZ-EAKIN. Congressman, as I said in my opening remarks and my statement, the cost is real. I mean, these are selfreported costs from the agencies, HHS in particular reported to the 

administration. This law has 11—it is in my written testimony— 

11 particular regulations which HHS has identified as having a significant economic impact on small entities. That is a very unusual 

number. This just does not happen very often. So I think the scale 

of the costs are real. You cannot ignore that. 

The second thing is the uncertainty is enormous about what will 

and will not get done. I think Senator Bacchus’s comments reflect 

the uncertainty about whether the exchanges will be up and running on time. We have already seen the administration put off the 

so-called shop provisions which were supposed to provide options 

for small businesses. Just what will be there of the law is an open 

question. 

Mr. TIPTON. It truly is. And one thing I thought we ought to 

be very clear on. You know, we talk about tax credits. It is something that the president is now calling loopholes. He is trying to 

be able to create more of them. Someone will pay for those loopholes that the president is now creating. And my biggest concern 

as a small businessman is there is a quantitative difference between everybody in the country having health insurance versus 

quality health care. I can tell you this as a matter of fact. We are 

on the cusp of a rising health care crisis in rural America simply 

because of the Affordable Care Act. We are seeing doctors drop out 

of the system. We are not going to be able to see that delivery. We 

can have all of the insurance in the world, but if there are not doctors there to be able to accept it we are going to be hurting health 

care in America. 

Mr. Chairman, I yield back. Thank you. 

Chairman GRAVES. Ms. Clarke. 

Ms. CLARKE. Thank you very much, Mr. Chairman. And I 

thank the ranking member, Ms. Vela ́zquez. I thank our panelists 

this afternoon for your testimony here today. 

As a member of one of the committees of jurisdiction in the 111th 

Congress, the former Education and Labor Committee, I am proud 

of the work that Congress was able to do in providing the American 

people with quality health care regardless of preexisting conditions. 

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As with any new law, there is bound to be confusion, as well as 

apprehension as it is implemented, and I look forward to working 

with my colleagues and the small business community at large in 

ensuring that our small businesses and entrepreneurs are educated 

on all of the provisions and ensuring that it causes as little disruption as possible. 

Having said that, my first question is to you, Mr. Gouldin. Unlike larger businesses, most small firms do not have a legal department to assist with tax compliance. How much time and money 

have you dedicated to navigating the tax credit and employer payment regulations? 

Mr. GOULDIN. Navigating the tax credit? 

Ms. CLARKE. Mm-hmm. And employer payment regulations. 

Mr. GOULDIN. We do not have any idea how many hours we 

have spent. We have a HR department which consists of my wife 

and my daughter and I am the president. The three of us have 

spent I do not know how many man-hours trying to understand 

this law. My wife is at a seminar today trying to figure out what 

in the world the law means. 

Ms. CLARKE. So as you get more familiar with the new tax 

rules, do you expect the calculations and decisions will get easier 

with time? And if so, why? And if not, why not? 

Mr. GOULDIN. Do I think the decisions will get easier with 

time? I have no way of knowing. Right now there are still too many 

issues. 

Ms. CLARKE. Well, I mean, you have had an opportunity along 

with your family to begin this process, so you have somewhat of a 

sense of what it takes. And I am wondering whether you think you 

will be more familiar and whether that as you become more familiar it becomes easier for you to be able to navigate. 

Mr. GOULDIN. It will get easier if it gets clarified. That is the 

biggest issue is there have been so many questions. There are 

many departments in the government today that have differing 

opinions on the law from one branch to the other. So what would 

be very helpful—— 

Ms. CLARKE. You are thinking clarification—— 

Mr. GOULDIN. I think that if there was—— 

Ms. CLARKE.—would be one of the major pieces to assist? 

Mr. GOULDIN. It would be very helpful if there was a definitive 

organization in the federal government that spoke for the entire 

federal government instead of having five or six different interpretations by the SBA versus another department. There is no place 

to go to for the employer to get detailed information about interpretation of the law. They have to go to associations to get that. If you 

want to go to the federal government and get a marketing position 

on it, that is fine. But we need detailed employment information. 

Hopefully, it will get easier. 

Ms. CLARKE. Very well, Mr. Gouldin. I appreciate that. 

Ms. McQueeney, the state exchanges have the potential to bring 

small employers together to offer coverage while also keeping 

prices affordable. Do you think this will allow small firms to compete on a level playing field with their larger counterparts when attracting the most talented workers? 

SBREP-219 with DISTILLER

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Ms. MCQUEENEY. I do not know yet. The state of Florida is 

probably not going to implement a state exchange and we still do 

not know what is going on there. So I really cannot give you a clear 

answer on that. 

Ms. CLARKE. And have you seen any benefit to the law? 

Ms. MCQUEENEY. Well, the benefits to our small company have 

been there. Yeah. We got the tax credit and we got the refund 

check from the insurance company. I think one of the more important parts of the law is the medical loss ratio and I think that is 

the one part that actually keeps costs under control because they 

have to spend that much money on medical care, and if they do not 

they have to rebate it. So to me that is probably the most important part of the law. 

Ms. CLARKE. Very well. 

Mr. Chairman, I yield back the balance of my time. 

Chairman GRAVES. Mr. Huelskamp. Do you want to go? 

Mr. Rice. 

Mr. RICE. Thank you, Mr. Chairman. 

Small business people here, thank you very much for being here, 

and you, too, Mr. Holtz-Eakin. You know, I do not think we have 

ever formally met but I have heard you a couple of times and I 

have quoted you dozens of times, and I appreciate very much you 

being here as well. Thank you to you small business people for taking time to come and educate us about the particular problems and 

circumstances you face. 

I have been a tax lawyer and CPA for 25 years. I have carried 

health insurance for all of my employees. When you have got to 

buy health insurance you choose the kinds of coverage you want. 

I am curious, do you all carry maternity coverage for your employees? All of you? 

Mr. GOULDIN. Yes. 

Ms. MCQUEENEY. Yes. 

Mr. TINDALL. Yes. 

Mr. RICE. Do you all carry mental health coverage? 

Mr. GOULDIN. Yes. 

Ms. MCQUEENEY. Yes. 

Mr. TINDALL. Yes. 

Mr. RICE. And substance abuse? 

[No audible response.] 

Mr. RICE. And oral care? And dental care? 

Mr. GOULDIN. No. 

Ms. MCQUEENEY. No. 

Mr. TINDALL. Yes. 

Mr. RICE. Under this law there are things that they define as 

essential health benefits, and by law, if you—you know, you do not 

have to provide insurance if you are under 50 employees, but if you 

do, they have to meet these criteria, these essential health benefits 

criteria. So where I chose as an employer and with my employees 

what kind of coverages we were going to buy, guess what? You do 

not have those choices anymore. The federal government is now 

going to choose that for you. They are going to dictate the kind of 

coverages that you have to buy. And those coverages, do you think 

they are free? They cost money. And you are going to pay for them. 

And not only are you going to pay for yours, but those other people 

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that need to be subsidized, you are going to pay for theirs, too. 

Thus, all these taxes and such. 

Mr. Holtz-Eakin, the effect of these taxes, the effect of this massive regulation, the effect of all this uncertainty, it is obvious but 

what is the effect on the employment status in the United States? 

Mr. HOLTZ-EAKIN. This is a negative. I do not think there is 

any way around that. Whatever your other objectives might be, if 

you set out to enhance job creation and growth in the United 

States you would not pass a bill with a trillion dollars of taxes, a 

large entitlement program, and this amount of regulation. That is 

not a good strategy. 

Mr. RICE. My opinion is we are the greatest nation on earth and 

we have been in a long dip, but if we could ever get our tax policy, 

if we could get past this health care debate, if we could take the 

blinders off, get rid of the uncertainty, and put into effect a competitive tax rate, get these regulations off our business, I think we 

are ready to gallop. But this is just one more example of government inserting itself into business, trying to make decisions for 

business ‘‘one size fits all,’’ and hamstringing our businesses and 

making us less competitive. It is one more reasons why we see millions of American jobs hemorrhage overseas very year. And until 

we stop this it will continue. 

Thank you very much. 

Chairman GRAVES. Mr. Payne. 

Mr. PAYNE. Thank you, Mr. Chairman, to the Ranking Member, 

the Committee. Thank you for all your testimony. I apologize for 

my tardiness in getting here today. It has been one of those days 

where I just had a bad start and have not been able to catch up. 

Most of your testimonies mentioned a need for the increased educational materials and outreach regarding health care laws, the 

law. And you know, thank you for mentioning that, in addition to 

encouraging HHS to provide increased awareness about the 

changes due to the Affordable Care Act. I will be hosting meetings 

in my district for constituents and will be sure to include small 

businesses in those discussions. 

And I have a question for the panelists. You know, due to the 

nature of the costs associated with small health plans, small businesses have long been vulnerable to steep premium hikes. In fact, 

health care premiums increased roughly 129 percent since 2000, 

forcing many small businesses to drop health coverage prior to the 

enactment of the Affordable Care Act. And in her testimony, Ms. 

McQueeney mentioned annual double-digit rate increases for her 

company’s plan prior to the enactment of the Affordable Care Act. 

Can the rest of you discuss the rate increases you have experienced 

prior to this law as well? 

Mr. GOULDIN. I looked it up before coming here and I think I 

put it in my testimony that I looked back to income statements 

back to 1968. We were providing health care back then to all of our 

staff and we only had three or four employees. And it was 0.44 of 

sales, and last year it was almost 2 percent of sales. So that is 

quite a bit higher. Five times higher as a percentage of sales. And 

of course, sales have been rising over the years. 

Mr. TINDALL. We have experienced the same thing. I mean, the 

health care costs have gone up in the 20 years I have been in busiSBREP-219 with DISTILLER

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ness. Almost every year, I cannot remember a year that it did not 

go up, most years by double-digits. So it has been on the increase. 

But we still have not seen any benefit yet from the health care reform. Our premiums have not been noticeably different on the increase and the projected increase for next year, you know, could be 

significantly greater than what the past increases have been. So I 

do not know whether that is an evolution of the insurance companies trying to get ahead of the curve or what, but again, as the testimony was that small businesses do not have much leverage with 

insurance companies. They give you a premium and you pay it or 

you move on. And there is no leverage. So it has been a problem. 

Mr. PAYNE. You know, and I think that that is one of the major 

issues that will be faced as what insurance companies are doing 

now to bump their rates up in preparing for in the Affordable Care 

Act how they will be controlled. So it is a false increase in premiums to get it, as you said, get ahead of the curve because they 

know at some point with the Affordable Care Act that they will not 

have the opportunity to do so in the future. 

And you know, last year the leadership blocked the funding for 

implementation of the Affordable Care Act which obviously impacts 

the success of the law and influenced the concerns that individuals 

such as Mr. Bacchus might have had. So I just wanted to put that 

on the record. And I yield back. 

Chairman GRAVES. Mr. Huelskamp. 

Mr. HUELSKAMP. . Thank you, Mr. Chairman. I appreciate the 

testimony from the three small business owners. I had a number 

of questions. Just trying to follow up and take in a few of the comments which I will say are in many cases quite different from what 

I hear from my constituents in terms of it is very hard to find any 

support in the small business community or even in the medical 

field, providers. I come from a rural area, just like my colleague, 

Mr. Tipton from Colorado, and I have some real concerns about 

what occurs there. 

I want to follow up first with Ms. McQueeney about—I did not 

understand—I was not clear what your annual premiums were. 

Was that your total for businesses? Can you restate again what 

those were for your business? 

Ms. MCQUEENEY. Our premiums are tiered, so we are—I pay 

different for young men, say from 20 to 25, versus a young woman 

from 20 to 25. We are tiered by gender. We are tiered by age. So 

every premium is different. 

Currently, I can give you an example of a 55-year-old who has 

her family on there. It is $1,868 a month with a $5,000 deductible. 

In my case, my daughter found health care on her own. For me and 

my husband it is $1,242, plus a $5,000 deductible. So it is different 

for each and every employee, depending on what their circumstances, their age, and their sex is. 

Mr. HUELSKAMP. I appreciate the clarification. I heard the 

$1,200 a month earlier and did not know who that applied to. 

Ms. MCQUEENEY. That applied to myself, yeah. 

Mr. HUELSKAMP. And how many employees are covered under 

your plan? 

Ms. MCQUEENEY. Currently, there are three employees covered. The fourth one passed away last year. 

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Mr. HUELSKAMP. Three employees including yourself? 

Ms. MCQUEENEY. Including myself. 

Mr. HUELSKAMP. So there are just two employees that we are 

talking about here? 

Ms. MCQUEENEY. Well, I am an employee of the company. 

Mr. HUELSKAMP. Okay. 

Ms. MCQUEENEY. Right. So there are three of us and then we 

cover our families. 

Mr. HUELSKAMP. And the part-time workers that you employ, 

do you provide coverage. 

Ms. MCQUEENEY. The seasonal, no. 

Mr. HUELSKAMP. Where do they get their health care or health 

insurance coverage, do you know? 

Ms. MCQUEENEY. I have one who is Medicare age, so she is on 

Medicare. And the other ones we do not provide health care for. 

Mr. HUELSKAMP. Do you know if they have—— 

Ms. MCQUEENEY. And they have no health care. 

Mr. HUELSKAMP. They have none and you do not provide that 

for them. Okay. Well, I appreciate the clarification. 

Comment and perhaps question for the doctor here. But if you 

look at the actual cost and the actual impact from the Congressional Budget Office, they are expecting it is going to cost $1.88 

trillion, double what was guestimated just a couple years ago. They 

also guestimate that 7 million employees will lose employer-sponsored health care. And in so doing that it also robs $700 billion out 

of Medicare to pay for this. And at the end of the day, Doctor, how 

much does this add to the deficit under the CBO score, do you 

know, Doctor? 

Mr. HOLTZ-EAKIN. If you take the CBO score at face value, this 

is about $100 billion addition to the deficit over 10 years. And 

there have been—I will just say there has been a lot of question 

about whether that is a sensible projection from the beginning but 

that is their current estimates. 

Mr. HUELSKAMP. So how can folks claim this is going to reduce 

health care costs if it is increasing spending, increasing taxes, and 

increasing the deficit? 

Mr. HOLTZ-EAKIN. CBO, when it put out in particular its longterm budget which reflects the cost of these big health programs 

in the federal budget, they made it very clear that they did not 

change their long-term projections or the rise in health care costs 

after the law was passed. And so they saw no real change in that 

part of the equation. 

Mr. HUELSKAMP. I appreciate it. 

One last thing, and if there are some comments from the business owners I would appreciate that. I was just at a business by 

the name of Hercules, they decided that there are certain mandates 

from Kathleen Sebelius and this administration that morally they 

refuse to cover. But according to the law they are mandated to 

cover that. They won their lawsuit. I wonder if there is any response from the three business owners or there are things morally 

you might be opposed to that folks covering their health care plans 

or are you comfortable with any mandate that comes out of Kathleen Sebelius’s office? 

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Mr. GOULDIN. Sir, I do not have any complaints thus far but 

to give a blanket comfortableness, I do not think that is possible. 

Mr. HUELSKAMP. Do you cover every option that your insurance company says they will cover? 

Mr. GOULDIN. We have pretty broad coverage. The only thing 

we do not cover—we provide dental but we have the employees do 

that through payroll deduction. I do not pay for that because when 

I investigated most dental coverage, the premiums per annum were 

greater than the care given so I felt that was a pretty bad bargain. 

Mr. HUELSKAMP. Ms. McQueeney. 

Ms. MCQUEENEY. The same here. Yes. With pretty broad coverage and we do not supply dental or vision. 

Mr. HUELSKAMP. Do you pay for abortion and contraceptions 

or contraceptives as mandated? 

Ms. MCQUEENEY. Contraceptives are part of our—— 

Mr. HUELSKAMP. Abortions, do you pay for those under your 

company’s plan? 

Ms. MCQUEENEY. We are in our 50s and 60s. 

Mr. HUELSKAMP. Not all your employees. 

Ms. MCQUEENEY. There are not a lot of abortions I think going 

on at the moment. 

Mr. HUELSKAMP. That was not the question, ma’am. The question is does your coverage supply that. I thought you had some 

younger folks. 

Ms. VELA ́ ZQUEZ. Will the gentleman yield? 

Mr. HUELSKAMP. Absolutely. I am out of time. If the ma’am 

would answer the question, I would appreciate that. 

Ms. VELA ́ ZQUEZ. I just wanted to know if—— 

Mr. HUELSKAMP. I have not yielded, ma’am. 

Does your coverage provide for abortion coverage? 

Ms. MCQUEENEY. I would think so. 

Mr. HUELSKAMP. And the gentleman on the end? 

Mr. TINDALL. I am sure it does but, again, we as small business 

people do not have control over what the packages are. We are very 

limited to what we can buy on the open market, and especially in 

my state of New Jersey, I am very sure that it is included. 

Mr. HUELSKAMP. I would welcome you to come to Kansas. We 

have had a lady for eight years as insurance commissioner that ultimately destroyed our insurance market and we lost a lot of coverage. 

I yield 

Mr. COLLINS. The gentleman’s time has expired. 

Mr. Luetkemeyer. 

Mr. LUETKEMEYER. Thank you, Mr. Chairman. 

I know one of the comments that was made here a couple times 

has been uncertainty. In the small business world it is hard to plan 

if you have no idea what the future holds to be able to make the 

kind of investments and sort of proper plans for your business to 

grow and be successful. 

My understanding is that there is probably about 700 rules to be 

yet promulgated, Mr. Holtz-Eakin. Is that pretty close? I mean, I 

am sure you probably know more than—that is about half of them, 

a ballpark figure; okay? So that would be certainly another reason 

for the uncertainty among a lot of folks. 

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Also, a while ago I know there was a comment made with regards to 97 percent of the small businesses being under 50. Let us 

take that number and break that down. Let us say for instance 

that the average small business is 10 employees and you have 

1,000—I mean, 970 employees that would be covered. Yeah, 97 

businesses times 10 is 970 people you are talking about. If the 

other 3 percent, which is 50 to 500 would be an average of 300, you 

are looking at 900 people being covered. So you are in the ballpark 

of 50 percent but let us just say if we are talking and being conservative, let us say only 40 percent of the employees are impacted. 

We are talking about people now. We are not talking about companies or insurance. We are talking about real people whose lives are 

being affected by what is going on with this health care bill. 

I had a gentleman in my office yesterday who has a Taco Bell 

franchise. He is not going to allow people to have overtime. He is 

going to put them underneath the 30-some hours that it takes. And 

they are either going to have to do one of two things. Either learn 

to live on less or get a second job. This bill will have a tremendous 

impact on people’s lives. Not just their health care but on their 

lives as well and that is the point I want to make. 

I know that in your testimony, Mr. Holtz-Eakin, you talked about 

young people getting out of the market and having an impact on 

the health insurance as well. I know that we have in our package 

here, a February 17th article of the New York Times with regards 

to a lot of small businesses going to be self-insuring. That would 

certainly impact, I think, the pool of how this all works. Have you, 

Mr. Gouldin, Ms. McQueeney, and Mr. Tindall, have you thought 

about self-insuring at all, looked into it at all? Is this something 

that you may have to consider down the road as an option? 

Mr. GOULDIN. I have not looked at self-insurance. I cannot 

imagine a small business even conceiving of really having self-insurance of health care because of the cost of health care. One employee’s major incident would wipe you out. So what we have 

looked at and I have always thought might be more efficient than 

what we have been doing, I have been paying 100 percent of the 

premium for our employees. I now realize that is probably not very 

smart. I have been part of the problem. But what we would like 

to learn more about is health savings accounts and how deductible 

insurance, I do think it is very important that as many humans in 

this country get involved in the decision-making on health care is 

the only way you are going to get the cost down. 

Mr. LUETKEMEYER. If I am not mistaken, I think health savings accounts went by the wayside with this bill. 

Ms. McQueeney. 

Ms. MCQUEENEY. Actually, we do have a health savings account. I have a $5,000 deductible before health insurance pays anything. 

Mr. LUETKEMEYER. My question though is have you considered self-insurance? 

Ms. MCQUEENEY. I would definitely not consider that. 

Mr. LUETKEMEYER. Okay. Mr. Tindall. 

Mr. TINDALL. No. The liability that you would incur or the potential liability would put you out of business. 

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Mr. LUETKEMEYER. Okay. Mr. Holtz-Eakin, can you kind of 

put a face on this and whether this is a good deal, bad deal? What 

size business you thought it would be something that would be 

impactful on or where everybody else should go with this? I am 

sure you have probably got some ideas. 

Mr. HOLTZ-EAKIN. One of the concerns I had when the bill first 

passed—I will have to go back and review and see if the rule-making changed—you could actually opt to self-insure when things are 

going well and then giving guaranteed issue, a firm could then 

jump into another product if they got someone in their firm who 

got sick. So what you would end up with is self-insured low cost 

people with very high cost small firms in the exchanges. Those dynamics remain to be played out. 

Mr. LUETKEMEYER. My time is about up and I just want to 

make one more point here. 

You know, I saw in some of the testimony here that—I think it 

was Mr. Holtz-Eakin—the cost benefit analysis of the paperwork 

here is a 3 to 1 negative, which is kind of not surprising I guess 

because it is a government program. But it was interesting. I had 

a gentleman in my office yesterday, as I was saying, and with all 

the paperwork, the fire marshal came in and cited him for all the 

paper in his office. So just another problem to deal with. 

Thank you, Mr. Chairman. I yield back. 

Mr. COLLINS. Ranking Member Vela ́zquez, do you have any 

questions? 

Ms. VELA ́ ZQUEZ. No, I do not. 

Mr. COLLINS. Okay. Thank you. 

I do have one for Dr. Holtz-Eakin. The $100 billion health insurance tax, which is going to be imposed on all health insurance companies, I know my own concern is there may be companies with 

less than 50 employees that do provide health insurance. Common 

sense would say those costs are going to be passed on. Do you have 

a comment on how the health insurance tax, that $100 billion, 

might impact any and all health insurance policies? 

Mr. HOLTZ-EAKIN. I expected that tax to be fully passed forward into the premiums that people pay for their health insurance. 

No question about it. 

Mr. COLLINS. That would be mine as well. 

I want to thank Mr. Tindall, Ms. McQueeney, Mr. Gouldin, and 

Dr. Holtz-Eakin for your time today. Your testimony was very valuable. We will continue to monitor the implementation of the health 

care law and its impact on small business. We will be sending a 

letter to the Ways and Means Committee, Chairman Camp, and 

Ranking Member Levin to share the testimony today that we received, and I do ask unanimous consent that members have five 

legislative days to submit statements and supporting materials for 

the record. 

Without objection, so ordered. 

I ask unanimous consent that the following material be inserted 

into the record. A May 2012 Government Accountability Office Report titled ‘‘Small Employer Health Care Tax Credit Factors Contributing to Low Use and Complexity,’’ the U.S. Chamber of Commerce Fourth Quarter 2012 Small Business Outlook Survey showing 86 percent of small businesses believe that regulations and 

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taxes will impact their ability to operate with healthcare regulations causing the most concern, and a February 7, 2013 New York 

Daily News article titled ‘‘Small business owners have no strategy 

for coping with rising health care costs.’’ 

Without objection, so ordered. 

The hearing is now adjourned. 

[Whereupon, at 3:09 p.m., the Committee was adjourned.] 

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APPENDIX 

ACA, REGULATION, AND AMERICA’S SMALL BUSINESSES

U.S. HOUSE OF REPRESENTATIVES

COMMITTEE ON SMALL BUSINESS

DOUGLAS HOLTZ-EAKIN, PRESIDENT* 

AMERICAN ACTION FORUM

APRIL 17, 2013 

*The views expressed here are my own and not those of the 

American Action Forum. I thank, without implication, Sam 

Batkins, Sarah Hale, and Cameron Smith for their assistance. 

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Chairman Graves, Ranking Member Vela ́zquez, members of the 

Committee, thank you for the opportunity to testify today regarding the Patient Protection and Affordable Care Act (ACA)’s impact 

on small businesses. The American Action Forum keeps a close eye 

on the impacts of the law’s implementation, and carefully tracks 

the regulatory burden of federal rules and administrative actions. 

I’m pleased to share some of those details with the Committee. 

The review provides four main lessons regarding the Affordable 

Care Act and the growth of small businesses: 

• It imposes numerous costly regulatory burdens, 

• It creates further regulatory uncertainty at a time when 

we need small business entrepreneurs to hire, 

• The law’s taxes and fees create disincentives for small 

businesses to expand, and 

• It raises the cost of providing insurance for employees 

while concurrently penalizing firms that fail to do so. 

Let me discuss each in turn. 

The Regulatory Burden of the ACA 

The ACA’s regulatory burden already exceeds $30 billion on private, state, and local entities. With more than 80 million paperwork burden hours, the law’s implementation also imposes heavy 

burdens for small businesses and rural hospitals, two aspects that 

even the Administration’s own regulations concede. 

When the Congressional Budget Office (CBO) reviewed ACA 

under the Unfunded Mandates Reform Act (UMRA), it acknowledged the law ‘‘would greatly exceed’’ statutory cost thresholds ($70 

million for local governments and $141 for the private sector) ‘‘in 

each of the first five years that the mandates would be in effect.’’ 

After approximately three years of implementation, ACA’s regulatory burdens have greatly exceeded UMRA’s thresholds. 

According to AAF’s database of all federal regulations, ACA has 

imposed $24 billion in costs on private entities, $9.8 billion in burdens on state and local governments, and more than 80 million paperwork burden hours. These regulatory costs will place tremendous pressure on doctors, hospitals, health issuers, and small businesses. 

For example, ACA’s 80 million hours of paperwork is the equivalent of 39,822 employees working an entire year filling out the 

law’s new paperwork (assuming a 2,000-hour work year). We can 

conceptualize paperwork burdens by examining gross domestic 

product per hour worked. According to the Bureau of Labor Statistics, that figure was $61.59 in 2011. Thus, ACA’s red tape alone 

costs the U.S. approximately $4.9 billion annually, a figure that 

will grow as the pace of implementation quickens this year. 

White House estimates confirm that HHS’s paperwork burden 

has increased. In FY 2008, HHS imposed 412.8 million hours of red 

tape; in FY 2011, that figure stood at 518.8 million, a jump of 106 

million hours, or 25 percent in just three years. ACA is the direct 

cause of many of these new requirements. The figure below details 

HHS’s rising regulatory burden, with the pronounced jump in 2010. 

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Finally, AAF did not end its analysis with the law’s costs alone. 

We also searched the relevant Regulatory Impact Analyses (RIA’s) 

to determine aggregate benefits. Sadly, costs outweigh benefits by 

a factor of at least 3 to one - $33.8 billion in costs to $9 billion in 

quantified benefits. ACA not only fails the regulatory cost-benefit 

test, but the budgetary and policy tests as well. 

Regulations with ‘‘a significant economic impact on a substantial 

number of small entities.’’ Under the Regulatory Flexibility Act 

(RFA) and its subsequent amendments, all federal agencies must 

consider the impact of their proposal on small entities, seek appropriate input, and develop regulatory alternatives for small businesses. Agencies have the flexibility to ignore the RFA, mostly because the key term is undefined, so acknowledging that a regulation imposes a ‘‘significant economic impact on a substantial number of small entities’’ is rare. 

Below are the eleven regulations that HHS estimated would 

place significant burdens on small businesses. Combined, rural hospitals and doctors would incur more than $1.9 billion in burdens 

and 11.3 million paperwork hours. 

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These regulations are only part of the law’s overall burden. Several of the administration’s regulatory analyses admit they will adversely affect small rural hospitals. One proposal covering Skilled 

Nursing Facilities [SNF] stated, ‘‘We anticipate that the impact on 

small rural hospitals would be similar to the impact on SNF providers overall. Therefore, the Secretary has determined that this 

final rule may have a significant impact on the operations of a substantial number of small rural hospitals.’’ 

Although $1.9 billion in costs, and adverse impacts on doctors 

and rural hospitals might appear significant, the actual burden is 

much higher. Many of the administration’s formal regulatory publiSBREP-219 with DISTILLER


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1 According to the rule, ‘‘These requirements are exempt from the PRA [Paperwork Reduction 

Act] in accordance with the provisions of the Affordable Care Act.’’ 75 Red. Reg. 72238. 

cations never capture the macroeconomic impact. The impact on 

small businesses is likely much greater than $1.9 billion. 

Increased Regulatory Uncertainty 

Since 1996, after the latest round of amendment to the Regulatory Flexibility Act, the White House has published two ‘‘Unified 

Agendas’’ of federal regulations every year. Last year, however, the 

administration decided simply not to publish a spring agenda, leaving industries across the U.S. guessing about long-term regulatory 

actions. The lone agenda was not published until shortly before 

Christmas. 

This policy toward the Unified Agenda was unprecedented, and 

did little to foster transparency in an administration that touts its 

openness. In addition to delays in the Unified Agenda, the administration has also imposed several self-inflicted delays that only add 

to this uncertainty. In an AAF study last year, we found HHS 

missed nearly half of its self-imposed deadlines for proposed and 

final ACA rules. 

This tardiness has reached into approving state exchanges as 

well, which are supposed to be open for enrollment to individuals 

and small businesses in October 2013. The timeline for certifying 

state exchanges under the law has been modified frequently during 

the past years; few think the administration will be ready with 

functioning exchanges by the ACA deadlines. 

Two recent polls do suggest that businesses and consumers are 

concerned about this uncertainty. The latest, from Gallup, found 

that 56 percent of small-business owners worry about ‘‘new government regulations.’’ The survey of 601 participants concluded, 

‘‘[T]hat so many owners say worries about such things as potential 

healthcare costs and potential new government regulations are 

holding back hiring is troublesome for the job market outlook.’’ 

This evidence echoes an earlier poll from Gallup on regulations. 

In a September 2012 poll of 1,017 adults, 47 percent said there was 

‘‘too much’’ regulation, as opposed to 26 percent who stated there 

was ‘‘too little’’ regulation. Gallup notes this data is hardly an aberration. ‘‘In fact, over the 15 times since 1993 that Gallup has asked 

this question, never have more than a third of Americans said 

there is too little regulation of business and industry.’’ 

Regulatory uncertainty does not have to be the norm. It gives 

markets and states the expectation that the law will move forward 

based on partisan motives, as opposed to good public policy. The 

least the administration could do is ensure transparency and issue 

timely regulations with the legally prescribed cost-benefit analysis. 

Unfortunately, in a difficult economy, and an otherwise uncertain 

spending and regulatory environment, ACA leaves small employers 

with a large paperwork burden, higher costs, and an even greater 

degree of uncertainty. Those in health-related fields are more directly impacted than others, but many firms now have at least 

eleven more regulatory reasons not to expand. Although the law 

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may have been well intentioned, its implementation negatively affects the small businesses and start-ups that might otherwise be 

hiring new employees and creating wealth. 

Taxes and Fees Hamper Small Businesses 

Beyond the regulatory impact, the law contains new fees and 

taxes that negatively affect small businesses and their employees. 

Businesses with fifty or more employees are subject to a $2,000 

per employee (in excess of 30 full-time employees (FTEs)) penalty 

if they do not provide coverage. This penalty includes businesses 

that have less than 50 full-time employees, if they have a significant number of part-time employees. For example, a company with 

33 full-time employees and 30 part-time employees is considered an 

employer of 50 full time employees, given that 30 part-time employees amount to the equivalent of 17 full-time employees. Notably, a business does not avoid the penalty if they opt to cover employees with plans deemed inferior to those offered in exchanges. 

Therefore, regulations dictate that small employers who offer plans 

that are ‘‘unaffordable’’ or inadequate are subject to the full penalty. 

In its most recent Budget and Economic Outlook, the Congressional Budget Office estimated that the government would collect 

$13 billion more than previously estimated from this penalty. This 

projected increase indicates that a substantial number of Americans will lose whatever employer sponsored coverage that they 

have now. 

The 2.3 percent excise tax on medical devices will tilt the playing 

field against smaller companies who are less able than larger companies to absorb lost revenue because of higher fixed costs and 

smaller cash reserves. Since about 90 percent of medical device 

companies in the U.S. are small to medium-sized firms, the tax will 

lower employment and raise prices in one of the few manufacturing 

industries where the U.S. remains dominant. Beyond concerns 

about the business impact, it is simply an ill-conceived tax policy. 

Removing $20 billion from this industry merely undercuts employment and increases cost throughout the healthcare sector. 

New legislative and regulatory requirements may lead to further 

decline in the number of practicing independent doctors. Physicians 

who own their own practices or are members of small groups are 

already feeling pressure to consolidate or become employees of larger hospitals and healthcare systems. Doctors in private practice 

have declined from 59 percent of all physicians in 2000 to 39 percent in 2012. Legislative and regulatory changes, including Medicare payment reductions, Accountable Care Organization incentives, and a host of health IT, quality, and reporting requirements 

mean that it is easier to be part of a large system than a solo practitioner. Although consolidation may have benefits and drawbacks 

in some areas, it has a decidedly negative impact on physicians 

who run small businesses or do not have the opportunity to consolidate themselves. 

The administration often points to the way in which ACA helps 

small businesses afford health insurance for their employees. To 

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erage can qualify for a healthcare tax credit. Unfortunately, due to 

its structure, very few companies actually qualify for the credit, 

and the Government Accountability Office has stated that the complicated application process and numerous exceptions meant that 

fewer have claimed the credit than expected. 

In 2011, 170,300 claimed some amount of the credit, even though 

anywhere from 1.4 to 4 million businesses were eligible. Those eligible for the full credit must have fewer than 10 FTEs, and an average wage of $25,000 or less. The expected cost of this credit for 

2010 was $2 billion, and it amounted to a mere one-quarter of this 

projection. ACA exceeds expected cost projections in terms of expanded bureaucracy and public entitlement programs, but comes in 

dramatically under budget on a tax credit that might have assisted 

small businesses trying to provide affordable coverage. 

Given the additional burdens facing small businesses when they 

cross the threshold from 49 to 50 employees, ACA’s new regulations actually encourage small businesses to pay small. Uncertainty about the law’s impact on future insurance premium costs, 

payroll, prices, and profit margins can only continue to adversely 

affect the ability of a typical small business to grow. 

Health and Insurance Costs Continue to Rise 

There are legitimate policy debates over the implementation of 

ACA and its role in health care costs. However, there is no dispute 

that its regulations will increase premiums. For example, the final 

ACA rule on ‘‘Preexisting Condition Exclusions’’ noted that if HHS 

failed to grant a waiver, ‘‘[T]he restricted annual limit provisions 

of these interim final regulations would result in a significant decrease in access to benefits or a significant premium increase.’’ 

Likewise, the proposed ‘‘Notice of Benefit and Payment Parameters for 2014,’’ which is currently in final form at the White 

House, acknowledged it too could lead to premium price hikes. 

‘‘There are administrative costs to States to set up and administer 

these programs. For issuers not receiving payments, any contribution is an additional cost, which an issuer could pass on to beneficiaries through premium increases.’’ Critics of the law warned 

this could happen during passage, it has come to pass, and new research is putting a price tag on these increases. 

In a paper released last month, I examined possible health care 

premium spikes in 2014. We surveyed large health insurers that 

cover a majority of patients in the U.S. The survey areas included 

Atlanta, GA, Austin, TX, Chicago, IL, Phoenix, AZ, and Milwaukee, 

WI. The results are sobering: young and healthier individuals, including small employers, can expect a 169 percent premium increase, averaged across the five cities. Consumers in Milwaukee 

could experience the greatest sticker shock, with a 190 percent increase in 2014. 

These younger, healthier individuals are likely to subsidize the 

cost of insurance for older patients, but not by nearly enough to 

avoid an overall increase. Older and less healthy individuals could 

enjoy a 22 percent premium decrease. It is no surprise that ACA 

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surance. However, a 169 percent premium increase begs the attention of policymakers to address the structural flaws in the legislation. 

Thank you for the chance to appear. I look forward to answering 

your questions. 

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Chairman Graves, Ranking Member Vela ́zquez, and members of 

the Small Business Committee, thank you for inviting me to testify 

on how new federal definitions in the healthcare law will impact 

the marginal costs of small businesses and the livelihood of their 

employees. 

I am Bill Gouldin and I have been the President of Strange’s Florists, Greenhouses, and Garden Centers since 1978. I came to the 

business in 1971 and going to college and serving in the U.S. Army. 

My father owned the business and managed it on a part-time basis 

because he worked as a full-time railroad engineer. Two of my 

brothers joined me in the business after graduating from high 

school and college. My wife works for the business as our Human 

Resources Manager. My son joined the business as Treasurer after 

graduating from college and serving in the U.S. Army. My daughter joined the business as Assistant Manager of Human Resources 

after graduating from college. 

We currently have four retail florists, a wholesale greenhouse 

range, and two retail garden centers in the Richmond, Virginia 

metropolitan area. Due to the highly seasonal nature of our business, virtually all of our employees are paid by the hour. Our staff 

size ranges from a low of approximately 120 employees to a high 

of over 150 employees depending on the season. We have a blend 

of full-time, part-time and seasonal personnel that is constantly 

changing. In addition to our employees, we pay a large number of 

contract drivers to assist our delivery staff around the holidays. 

We provide health insurance for our full-time employees who 

work over 37.5 hours per week. We have been paying 100% of the 

health insurance premium of all of our full-time employees that desire it my entire career. My father stated the policy of paying for 

health benefits before me. In 1983, we started our 401(k) plan for 

all full-time employees as a tool to help our employees to save for 

their retirement and learn about return on investments. In the 

early years, I felt providing health insurance was the proper thing 

to do because our employees should have coverage and we could 

provide it for less than it would cost them individually. As I studied the results over the years, I realized that all third party payment systems are inherently inefficient because the beneficiary has 

little knowledge, or concern in some cases, for the total costs; and 

providers have very few tools to control costs. 

Before Passage - Employer Confusion 

By necessity, not by choice, I have become well-aware with our 

business’ rising cost of providing health insurance. Our premium 

costs have risen from .44% of sales in 1968 to nearly 2% of sales 

in 2012 and will continue to increase. Of course, the constant rise 

in health insurance costs is regressively suppressing wages. 

When the healthcare debate was raging I realized there was 

plenty of rhetoric by proponents selling all of the benefits and opponents displaying all of the negatives, but no one seemed to have 

any detailed information. Simple mathematics seemed to be lost in 

the debate. I asked questions of all of our professional organizations in which we have memberships, my Congressman, and Senator, but could not get all of my questions answered. When people 

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ask me what caused the financial crisis, my answer is the lack of 

due diligence and integrity by all of us. The same is true of our 

healthcare system and the Patient Protection and Affordable Care 

Act. 

That caused me to take the time to begin scanning the House 

and Senate bills as they were progressing. I looked for the words 

employee and employer. I printed every page I could find that referenced the employer and employee and quickly realized there 

were parts that were very vague and confusing, many parts that 

were not workable, and some that were very dangerous to employees and their employers. I realized that this law would be the most 

disruptive instrument to the American workplace in my lifetime 

and no one seemed to know, or care, right in the middle of the 

worst recession/depression since the Great Depression. 

After Passage - Disruptive and Problematic Definitions 

The IRS has the undesirable task of weeding through the details 

of implementation and is making some progress but they have a 

long way to go. Their most complete list of interpretations and 

opinions was released on December 28, 2012. That was very late 

in the game but helped answer some of my outstanding questions. 

Unfortunately, some provisions were designed in a way that cannot 

be fixed by regulations. For example, a new federal employment 

definition that must interact with an affordability test will harm 

employees by reducing hours and wages. One of the most dangerous parts in the law is the statutory definition of full-time employment as 30 hours per week, or 130 hours per month. The IRS 

cannot correct that definition. Congress will have to amend the 

law. The use of 30 hours to define full-time employment is the lowest in the world and far below the common practice of 37.5 to 40 

hours used by most public and private employers. This is already 

causing rescheduling of employees where public and private employers have read the law. The federal government has never attempted to define full-time employment until now. 

If the 30 hour definition is not amended several consequences 

will occur. Every employer will be forced to define part-time employment as something below 30 hours per week and most will use 

between 20 and 27.5 hours per week. There are millions of people 

who currently work between 30 and 36 hours per week because 

that works for their lifestyle and income needs. Many are students 

trying to pay for their education or the second wage earner in the 

household. These people will be required to lose needed hours of 

work and income. Millions will be forced to work two part-time 

jobs. The fixed cost of health insurance premiums is already so 

high that many employers will pay the penalty of ‘‘time and a half’’ 

because it is less than the marginal cost of health insurance per 

hour for an additional employee. Using the 30 hour definition begins to override the ‘‘time and a half’’ penalty. The new full-time 

employee definition will cause a hole in employment between 27.5 

and 37.5 hours per week and very few people will be allowed to 

work between those hours. 

In 2009, I created the attached tables to show the hourly costs 

of health insurance based on the Kaiser Family Foundation Survey. 

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I used their average national premiums from 2009 and have updated the table annually to 2012. I have projected premium modest 

increases of only 5% per annum for 2013 and 2014. The tables 

show the marginal cost of offering health insurance at $119.05 per 

hour for an employee allowed to work 30 hours per week when the 

employer pays 100% of the premium or $95.24 if the employer pays 

80% of the premium. These staggering marginal costs are evidence 

of the problematic employment wedge that has been created. This 

is a very regressive law. The cost of health insurance is of less concern as you move up the income scale and is why so many highly 

paid people have overlooked this problem. The 9.5% affordability 

test will only aggravate the problem, and drive wage rates at 

healthcare inflation rates (as shown on the right side of the tables). 

My concern is that no one seems to care about the millions of employees that will lose their job in whole or in part because of this 

provision. Most employers have no pricing power to pass these increased costs on to the consumers so they have no options but to 

reduce hours or personnel. If a business tries to absorb these costs 

and goes out of business, everybody loses their jobs. 

Now is the Time for a Simple Fix 

The employer confusion caused by this law is already causing 

higher unemployment and I believe that real unemployment (U–6 

table) will rise if a change is not made. I have tried to be aware 

of the language in the law, but very few businesses have any idea 

of what is in this law. But they are beginning to find out. 

Amend the definition of full-time employee to read 37.5 hours per 

week and begin to improve the U–6 unemployment table today instead of watching it rise above 14.5%. This will increase employment better than any scheme that I have heard and cost the government a dime. Our every effort should to move people from unemployment (expense column) to working taxpayers (revenue column). 

We all know that tax rates have been raised and some deductions will probably be changed. Many spending programs have been 

overpromised and must be cut or altered. The least painful way out 

of this mess is economic growth and maximum employment. We 

need a paradigm change to genuine respect for those private businesses that create jobs in this country and for those who go to work 

every day. It is very important to enhance, and not prevent, the opportunity of young people to work part-time to gain the experience 

of working. This basic training may lead to a full-time job upon finishing high school or college. Most businesses have entry level 

training in-house and some have tuition assistance for full-time 

employees who want more formal training or college. There are 

many benefits to working beyond wages and health insurance. The 

middle class flourished in the period between 1945 and 1970 and 

has been struggling since. The belief that there will always be an 

endless supply of businesses that want to hire Americans should 

have ended then because the rest of the world had recovered from 

WWII and became stronger competitors. Every law, and tax, needs 

to be reviewed to see if it will enhance private sector job creation 

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ate a job or go get a job. Our Generals are smart enough to understand that the greatest risk to our country’s safety is a weakened 

private sector that cannot keep pace with our growing government. 

Thank you for your time. I look forward to answering any questions. 

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U.S. House of Representatives 

Committee on Small Business 

Hearing: ‘‘The Health Care Law: Implementation and Small 

Businesses’’ 

Testimony of Louisa McQueeney 

General Manager/CFO, Palm Beach Groves 

Lantana, FL 

April 17, 2013 

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Chairman Graves, Ranking Member Vela ́zquez, and members of 

the committee, 

Thank you for the invitation to testify before your committee on 

the topic of how the implementation of the Affordable Care Act is 

impacting small businesses. I appreciate the opportunity to share 

my experiences on these issues from the perspective of a small 

business. 

My name is Louisa McQueeney. I am the General Manager and 

CFO of Palm Beach Groves, a small business in Lantana, Florida 

that ships citrus gift baskets across the United States and Canada. 

Last year we employed 6 year round employees and 3 seasonal 

workers. 

I’ve worked at Palm Beach Groves for the last 13 years. Part of 

my job as CFO is managing health care benefits. Over the last decade, I have grown quite accustomed to yearly double digit rate increases—12 percent, 22 percent, one year even as high as 32 percent. Renewal season has always been a nerve-wracking time, as 

the decision to continue providing health coverage—and how much 

of the cost to shift onto employees—has gotten harder each year. 

Each year, I shop around to different insurance companies, but 

none can quote better rates. In fact, they can actually charge an 

additional 15% if they find one pre-existing condition from any person covered on the plan. All of us have pre-existing conditions. 

For almost a decade, our staff hasn’t seen any raises, because the 

raise would go to yet another increase in health insurance premiums. 

How early provisions of the Affordable Care Act are helping small businesses 

Then, the first components of the Affordable Care Act, or 

‘‘Obamacare’’ were implemented. 

In November of 2011, our insurance agent called with our renewal. Instead of the nightmare news I’d come to expect, I found 

out our premiums for the next year would increase by a grand total 

of 0.2 percent. Zero point two. Flat. 

I was floored. This flan renewal came with exactly the same 

plan—no dumbing down the coverage, no increase in our 

deductibles, everything was the same. 

Then, at tax time, we applied for the small business health care 

tax credit. That credit cut our total health care costs by about 10 

percent—$7,400—for 2011. We will receive this tax credit again for 

2012. 

Last summer, we also received a $1,582 rebate check in the mail 

from our insurance company. Our health insurer had not met the 

‘‘80/20’’ rule which requires insurers to spend at least 80 percent 

of premiums on medical care. So, they were forced to pay us back 

the difference. 

This had never happened before. I was so excited, I thought 

about framing the check. 

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During this time, my family was also personally benefiting from 

the ability to keep our adult daughter on our health insurance plan 

until age 26, and I also benefited from free preventive care with an 

annual well-visit. 

Counting it all up—the stable rate, the tax credit, the rebate 

check—last year our business saw our health insurance costs cut 

about 12 percent, with better coverage and greater peace of mind, 

thanks to the Affordable Care Act. 

Continuing challenges for small businesses 

Since the law will not be fully implemented until 2014, we still 

face challenges. All of our employees are in their 50s and 60s. 

We’re not spring chickens and we’ve got more than a few pre-existing conditions among us. 

Last year, we had four major health care events in our very 

small group. One of our long time employees died after battling 

lung cancer. The spouse of another was diagnosed with a serious 

heart condition. Thank God he was covered under our insurance, 

because it literally saved his life. He was given a wearable 

defibrillator sudden cardiac arrest protection device, which he 

would not have been able to afford had he not been covered. The 

device actually shocked his heart numerous times keeping him 

alive until the ambulance arrived. He ended up with a defibrillator/ 

pacemaker implant at a billed cost of over $172,000. Who can afford any of this? 

Under Florida law, health insurers are allowed to impose additional rate-hikes to small businesses based on the health status 

and claims experience of the group. When you only have a few employees to begin with, just one battle with cancer can dramatically 

affect your rates. Add a heart condition diagnosis, a spouse with 

Alzheimer’s, and a generally aging workforce, and we found ourselves facing another double-digit rate-hike at our latest renewal. 

That’s why I’m looking forward to the health care law being fully 

implemented. Starting next year, the Affordable Care act prohibits 

insurers from hitting small businesses with an extra rate-hike 

based on the health status or claims experience of their small 

group. Premiums will be allowed reasonable variation for age and 

smoking status, but gone will be the day when, if one of your employees gets cancer, you can count on your rates skyrocketing when 

you need health care the most. Gone will be the days when you can 

be discriminated against based on gender. Frankly, it can’t come 

soon enough. 

I am pleased that Governor Rick Scott has joined with other Republican Governors in dropping fervent opposition to the law, and 

taking the practical approach of supporting expanding Medicaid for 

more Floridians. Nevertheless, this issue is still being hotly debated in our state legislature. I hope they do the right thing, because accepting the Medicaid expansion would help take some pressure off our hospitals and reduce the cost-shifting of uncompensated care costs onto private payers, including businesses like ours. 

We also need to move forward with implementing health insurance 

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exchanges where small businesses can compare coverage options 

apples-to-apples and get the best deal at the best price. 

Too many small business owners still don’t know that they could 

benefit from the health care tax credit, a dollar for dollar reduction 

in your tax bill. According to the GAO, between 1.4 and 4 million 

small businesses qualified for the tax credit and only about 170,000 

took advantage of it. I found out about the credit through a small 

business IRS mailing. But many business organizations, like the 

US Chamber of Commerce, opposed the law for ideological reasons. 

I feel they have been remiss in educating their members about how 

they might benefit and lower their health care costs. 

Maybe it’s true that too few small businesses qualify for the tax 

credit. So, one opportunity to move forward that I would encourage 

you to support is expanding eligibility for the credit. While some 

elected officials are using the news of lower than expected utilization as an excuse to criticize the credit and the Affordable Care Act 

as a whole, that’s not helpful to small businesses. If you want to 

help us, it would make more sense to ask the question, ‘‘What can 

we do to make this credit work for more of our small businesses?’’ 

Currently the credit is limited to businesses with fewer than 25 

FTEs and average wages under $50,000. Why not expand the FTE 

requirement to 50, 75, or even 100 employees, and increase the salary cap? You have an opportunity to help so many more small businesses throughout the country with the small business health care 

tax credit. I hope you will take it. 

I want to say something briefly about employer responsibility. 

We’ve always considered it our responsibility to provide health coverage to our employees. If we don’t provide it, where are they supposed to get it... and who will pay the bill? At a small business, 

our employees are like family. How could I look one of my employees in the eye while they battle cancer and say, ‘‘We’re going to 

drop your coverage’’ when I know it will financially devastate their 

family? 

In the last year, I’ve read a lot in the news about some companies that are larger than ours taking extraordinary steps to avoid 

their responsibility under the law. 

The employer responsibility provision of the Affordable Care Act 

is often presented as a problem for small businesses. I believe the 

opposite is true. As a business who is doing the right thing and offering health coverage to our workers, the real problem for us is 

that when other businesses who are much larger than us don’t 

offer health care, we’re forced to subsidize their health care costs. 

The shifting of uncompensated health care costs to businesses that 

pay for health insurance represents a ‘‘hidden tax’’ in our premiums that costs our small business hundreds of dollars per employee per year. How is that fair? 

Opponents of the health care law argue that the employer responsibility requirement will hurt job creation. I disagree. More 

than 9 out of 10 businesses with 50 or more employees already 

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1 Agency for Healthcare Research and Quality, Center for Financing, Access and Cost Trends, 

2010 Medical Expenditure Panel Survey—Insurance Component; Table I.A.2(2010) Percent of 

private-sector establishments that offer health insurance by firm size and selected characteristics: United States, 2010, http://meps.ahrq.gov/mepsweb/datalstats/summltables/insr/national/ 

seriesl1/2010/tia2.htm 2 No out-of-state insurers offer plans in Georgia,’’ Atlanta Journal-Constitution, April 30, 2012, 

http://www.ajc.com/news/no-out-of-state-1428329.html 

offer health coverage.1 Think about it this way: for every business 

around the 50 FTE threshold that doesn’t already offer coverage, 

there are many more that do. Right now, the barrier to job creation 

for the businesses that do offer health care—like mine—is the fact 

that we’re paying more to subsidize the ones that don’t. The only 

way to fix this is through a system of shared responsibility where 

all businesses above the threshold pitch in and nobody takes a free 

ride at the expense of the rest of us. 

Alternatives: Will they work? 

Opponents of the law say they want to replace it with something 

else. But there are no real alternatives being offered. 

‘‘Let health insurance companies sell across state lines.’’ Sounds 

nice in theory, but will my cheap South Dakota health insurance 

pay the more expensive care in South Florida? Who will regulate 

that? To date I have heard no real answers to these questions. We 

need the protection of law to ensure that insurance is worth more 

than the paper it’s written on. Besides, our neighbors in Georgia 

tried this. Not a single out-of-state insurance company tried to 

enter the market there, so it does not seem like a feasible alternative.2

Or ‘‘Health Savings Accounts’’ which are supposed to make us 

‘‘better,’’ ‘‘more informed,’’ and ‘‘more responsible’’ consumers of 

healthcare. Try calling a doctor’s office and ask for the price of a 

biopsy, or a fix for a broken leg or by-pass surgery. The first answer you get is ‘‘I don’t know’’ and if you persist you get ‘‘depends 

on your insurance,’’ but you will not get a price. Good luck with 

that one. 

We have experience with HSAs. 

A few years ago, our company was forced into a high deductible 

HSA plan by our insurer. This meant paying the first $5,000 of 

healthcare costs out-of-pocket and then paying a high monthly premium on top of that before the health insurance company paid a 

dime. 

That’s not a solution. It feels a lot like paying to be uninsured, 

and it’s just more of the same old squeeze. 

Conclusion 

The Affordable Care Act is working for our business and is taking important steps forward to address the barriers to lower health 

care costs and bring affordable, good quality health coverage within 

reach for many small businesses. Businesses like ours are already 

seeing the benefits as early provisions of the law take effect. We 

have even more to look forward to with the establishment of the 

state health insurance exchanges, the prohibition on rating due to 

health status, and other provisions that are still on their way. 

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We need to keep building on the foundation of the Affordable 

Care Act, not tear it down. Small businesses across the country 

can’t afford to go back to the broken health care marketplace we 

faced before reform. We need to keep moving forward. 

By taking full advantage of the opportunities created by the Affordable Care Act, we can break down the barriers to lower health 

care costs and finally level the playing field for small businesses. 

Then small businesses like ours will be able to focus our full attention on building our businesses, creating jobs, and strengthening 

our local economies. Thank you. 

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Chairman Graves and members of the committee, my name is 

Kevin Tindall. My wife and I own Tindall and Ranson Plumbing 

and Heating located in Princeton, New Jersey. I also serve as an 

officer and member of the Board of Directors of the Plumbing-Heating-Cooling Contractors—National Association located in Falls 

Church, Virginia. As the owner of a small business and on behalf 

of the leadership and members of the Plumbing-Heating-Cooling 

Contractors—National Association, thank you for the opportunity 

to appear before the Committee to discuss health care reform. I realize the statutory title of the act is known as ‘‘The Patient Protection and Affordable Care Act’’ however, in the small business 

world, we merely refer to it as health care reform. I am also aware 

of the many challenging issues you face as national leaders, and I 

applaud your efforts today to hold this hearing on one of the most 

important issues facing the citizens of our nation. 

Tindall & Ranson provides plumbing, heating, and cooling services. We were established 20 years ago with only two stockholders 

and four employees. We now have 20 full-time employees ranging 

from highly qualified technicians to administrative and management professionals. I am proud to say that we also provide quality 

health care insurance to all of those working at Tindall and 

Ranson. We measure success by providing quality service to our clients and quality careers for our employees so that they can provide 

for their families. We don’t measure success by evaluating our profit margin. 

For the purposes of my appearance here today, I would like to 

ask that you not look at me as the owner of a plumbing and heating company. I would ask that you instead look at me as a small 

business job creator—not unlike millions of other small business 

job creators. As such, I would further ask that you receive my testimony as someone who has worked to help create, build and improve the quality of life for those living in my community as well 

as providing the foundation of a quality career for those who work 

in my company—my partners. 

I am not an expert in health care or health care reform. I am 

however, the person who must live with the very business decisions 

and policies Congress establishes which in many cases, either increases or inhibits my ability to create jobs. For that, I am an expert. I have yet to understand how we as a nation can continue to 

state that we need to create more jobs, yet challenge, threaten, or 

even ignore the very mechanisms for job creation. 

I would like to touch on a few very important small business dynamics that are the result of what we are experiencing in the small 

business world as they relate to health care. I would also like to 

briefly discuss what we see as the future. I want to again emphasize that my views are that of someone who is responsible for 20 

individuals and their families. 

• Tax Credits for Small Business 

When Congress debated, considered, then passed the health 

care reform package, I heard and read much about tax credit 

incentives for small business. On the surface, this was a positive. Something that the business community viewed as a way 

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to partner with the reform. I have spent countless hours viewing health care reform webinars, reviewing materials and 

speaking with other small business owners with the intent of 

calculating any benefits of the reform in terms of tax credits. 

I am often asked why I don’t take advantage of the small business tax credit incentives. I am proud to say that I don’t qualify—the average salary for those who work at my company exceeds the $50,000 threshold, thereby disqualifying me. Tax 

credits as an incentive are meaningless unless you happen to 

fall within a very limited universe as defined by the reform. 

This is also the reason why many small businesses have not 

taken advantage of the credits—they can’t. 

• Rising Insurance Premium Costs 

One of the most talked about issues I heard during the 

health care reform debate was that rising insurance premiums 

need to be brought under control. I couldn’t agree more. But 

in my experience, that’s the difference between policy and the 

real world. For my company, the insurance renewal cost for 

2011 experienced an increase of 9.7%, followed by an increase 

of 9.3% for 2012. Let me repeat, an increase of 9.7% in 2011 

and an increase of 9.3% in 2012! I would challenge anyone who 

has experienced a 9.3% to 9.7% increase in anything in their 

professional or personal life who can simply absorb the excess 

cost and not have to take action. Because I will always view 

those who work at my company as partners, and because I will 

always provide my partners and their families with quality 

health care insurance, this increase simply means that the cost 

of doing business has increased. Eliminating health care insurance or perhaps turning to lower quality health care insurance 

in order to save money, is not an option. The continued rise in 

the cost of providing health care insurance absolutely stifles 

my ability to create, provide and sustain jobs. Again Mr. Chairman and members of the Committee, I have yet to understand 

how we as a nation can continue to state that we need to create more jobs, yet challenge, threaten, or even ignore the very 

mechanisms for job creation. 

• Educational Materials 

As I mentioned, I serve as an officer of the Plumbing-Heating-Cooling Contractors—National Association. I have access to 

health care reform information webinars, materials, and analysis, and I take advantage of all of these tools. I raise this 

point for two reasons. 

1. With my years as a member of the association and in 

my position as an officer with the association, combined 

with my efforts and time to understand the complexities of 

the reform, I still have many questions and concerns. 

2. I raise the question—what about the other small businesses across the country who don’t belong to an association—state or national. We assume these small businesses 

know about the reform and understand its timetable. But 

I would submit, they may not have the resources, time, 

ability, or know-how to reach out to find out more. 

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As I watch and listen to the news each evening, I often hear the 

term ‘‘job creation.’’ I very much agree that one of the nation’s top 

priorities should be creation. But job creation is not a concept, it 

begins in communities like mine and with people like me. 

In closing, Mr. Chairman, I want to thank you and the members 

of the Committee for this opportunity. The Plumbing-Heating-Cooling Contractors—National Association appreciates the thoughtful 

approach of this Committee and looks forward to working with you. 

I am more than happy to answer any questions or provide any information today or in the future you or the committee may request. 

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