```

[House Hearing, 112 Congress]
[From the U.S. Government Publishing Office]

 
 HEALTH CARE: CHALLENGES FACING PENNSYLVANIA'S WORKERS AND JOB CREATORS 

=======================================================================

                             FIELD HEARING

                               before the

                        SUBCOMMITTEE ON HEALTH,
                     EMPLOYMENT, LABOR AND PENSIONS

                         COMMITTEE ON EDUCATION
                           AND THE WORKFORCE

                     U.S. House of Representatives

                      ONE HUNDRED TWELFTH CONGRESS

                             SECOND SESSION

                               __________

             HEARING HELD IN BUTLER, PA, FEBRUARY 22, 2012

                               __________

                           Serial No. 112-53

                               __________

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

                   Available via the World Wide Web:
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           committee.action?chamber=house&committee=education
                                   or
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72-813 PDF                       WASHINGTON : 2012 

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                COMMITTEE ON EDUCATION AND THE WORKFORCE

                    JOHN KLINE, Minnesota, Chairman

Thomas E. Petri, Wisconsin           George Miller, California,
Howard P. ``Buck'' McKeon,             Senior Democratic Member
    California                       Dale E. Kildee, Michigan
Judy Biggert, Illinois               Donald M. Payne, New Jersey
Todd Russell Platts, Pennsylvania    Robert E. Andrews, New Jersey
Joe Wilson, South Carolina           Robert C. ``Bobby'' Scott, 
Virginia Foxx, North Carolina            Virginia
Bob Goodlatte, Virginia              Lynn C. Woolsey, California
Duncan Hunter, California            Ruben Hinojosa, Texas
David P. Roe, Tennessee              Carolyn McCarthy, New York
Glenn Thompson, Pennsylvania         John F. Tierney, Massachusetts
Tim Walberg, Michigan                Dennis J. Kucinich, Ohio
Scott DesJarlais, Tennessee          Rush D. Holt, New Jersey
Richard L. Hanna, New York           Susan A. Davis, California
Todd Rokita, Indiana                 Raul M. Grijalva, Arizona
Larry Bucshon, Indiana               Timothy H. Bishop, New York
Trey Gowdy, South Carolina           David Loebsack, Iowa
Lou Barletta, Pennsylvania           Mazie K. Hirono, Hawaii
Kristi L. Noem, South Dakota         Jason Altmire, Pennsylvania
Martha Roby, Alabama
Joseph J. Heck, Nevada
Dennis A. Ross, Florida
Mike Kelly, Pennsylvania

                      Barrett Karr, Staff Director
                 Jody Calemine, Minority Staff Director

         SUBCOMMITTEE ON HEALTH, EMPLOYMENT, LABOR AND PENSIONS

                   DAVID P. ROE, Tennessee, Chairman

Joe Wilson, South Carolina           Robert E. Andrews, New Jersey
Glenn Thompson, Pennsylvania           Ranking Member
Tim Walberg, Michigan                Dennis J. Kucinich, Ohio
Scott DesJarlais, Tennessee          David Loebsack, Iowa
Richard L. Hanna, New York           Dale E. Kildee, Michigan
Todd Rokita, Indiana                 Ruben Hinojosa, Texas
Larry Bucshon, Indiana               Carolyn McCarthy, New York
Lou Barletta, Pennsylvania           John F. Tierney, Massachusetts
Kristi L. Noem, South Dakota         Rush D. Holt, New Jersey
Martha Roby, Alabama                 Robert C. ``Bobby'' Scott, 
Joseph J. Heck, Nevada                   Virginia
Dennis A. Ross, Florida              Jason Altmire, Pennsylvania

                            C O N T E N T S

                              ----------                              
                                                                   Page

Hearing held on February 22, 2012................................     1

Statement of Members:
    Andrews, Hon. Robert E., ranking member, Subcommittee on 
      Health, Employment, Labor and Pensions, prepared statement 
      of.........................................................    31
    Kelly, Hon. Mike, a Representative in Congress from the State 
      of Pennsylvania............................................     4
        Prepared statement of....................................     5
    Roe, Hon. Phil, Chairman, Subcommittee on Health, Employment, 
      Labor and Pensions.........................................     1
        Prepared statement of....................................     3

Statement of Witnesses:
    Bishop, Kathleen, IOM, president/CEO, Meadville-Western 
      Crawford County Chamber of Commerce........................    12
        Prepared statement of....................................    14
    Joint, Lori, director of government affairs, Manufacturer & 
      Business Association.......................................    21
        Prepared statement of....................................    23
    Kanterman, Patti-Ann, chief financial officer, Associated 
      Ceramics & Technology, Inc.................................    33
        Prepared statement of....................................    35
    Knecht, Will, president, Wendell August Forge................    42
        Prepared statement of....................................    43
    Koehler, Georgann, retired SEIU member, psychiatric aide.....    16
        Prepared statement of....................................    19
    Nelson, Paul T., owner and CEO, Waldameer Park, Inc..........    36
        Prepared statement of....................................    38
    Vitt, Ralph, owner, Vitt Insure..............................    39
        Prepared statement of....................................    40
    White, Hon. Donald C., senator, State of Pennsylvania; 
      chairman, Committee on Banking and Insurance...............     7
        Prepared statement of....................................    10

                        HEALTH CARE: CHALLENGES
                     FACING PENNSYLVANIA'S WORKERS
                            AND JOB CREATORS

                              ----------                              

                      Wednesday, February 22, 2012

                     U.S. House of Representatives

         Subcommittee on Health, Employment, Labor and Pensions

                Committee on Education and the Workforce

                             Washington, DC

                              ----------                              

    The subcommittee met, pursuant to call, at 1:00 p.m., 
Butler Township Administration Building, 290 S. Duffy Road, 
Butler, Pennsylvania, Hon. Phil Roe [chairman of the 
subcommittee] presiding.
    Present: Representatives Roe and Kelly.
    Staff Present: Casey Buboltz, Coalitions and Member 
Services Coordinator; Benjamin Hoog, Legislative Assistant; 
Brian Newell, Deputy Communications Director; Todd Spangler, 
Senior Health Policy Advisor; Daniel Brown, Minority Policy 
Associate.
    Chairman Roe. A quorum being present, the subcommittee on 
Health, Employment, Labor and Pensions will come to order.
    Good afternoon, everyone. First I want to thank the people 
of Butler, Pennsylvania for hosting today's hearing on the 
Health, Employment, Labor and Pensions Subcommittee. Thank you 
all sincerely for being here.
    Second, allow me to extend our appreciation to the 
witnesses for being with us today. We are grateful for the 
opportunity to hear your thoughts and personal experiences on 
the very important issues of healthcare and job creation.
    Over four years ago, our nation fell into the worst 
recession since the Great Depression. Businesses closed. Jobs 
were lost. Savings disappeared. And countless lives were 
transformed in the pain of the economic downturn. While we've 
had some modest progress in recent months, we still have a long 
way to go before we reach the height of prosperity our 
families, employers and workers once enjoyed.
    Recently the Gallop Polling Company talked to a number of 
small business owners who said they weren't looking to hire any 
workers. And Gallop asked why. The vast majority expressed 
concerns about the state of the economy and poor sales. 
However, 46 percent of small business owners cited fear of 
government regulations, and 48 percent pointed to rising 
healthcare costs.
    As a policymaker, these responses by our nation's leading 
job creators are startling, yet not unexpected. For too long 
some in Washington have viewed our economic crises as the 
political means to advance an agenda that ignores real 
challenges facing our nation. This disturbing trend over the 
last several years has destroyed virtually any sense of 
certainty in the economy, making it more difficult for 
businesses to grow and create jobs.
    Perhaps the greatest example of this misguided agenda was 
the healthcare reform legislation signed into law in 2010. At a 
time when millions of Americans were looking for work and 
taxpayers were swimming in government debt, Democrats in 
Washington were advancing a multi-trillion dollar government 
takeover of healthcare. A lot of lofty promises were made in an 
attempt to win public support, yet the reality of such new 
healthcare law is one of broken promises.
    We were told it would help lower healthcare costs. 
President Obama pledged in his plan to decrease insurance 
premiums by $2,500 for the average family. Not true. The Kaiser 
Family Foundation reports that the average family health plan 
now costs more than $15,000 thanks to a nine percent increase 
in costs just last year.
    We were told if you like your current healthcare plan, you 
can keep it. Not true. The President's decision to force 
private employers including religious organizations to offer 
services that may violate their moral beliefs demonstrates that 
Washington is in control, and significant changes to our 
healthcare are inevitable.
    Finally, we were told that the law will create millions of 
jobs. Again, not true. At the center of the Affordable Care Act 
are job-crushing mandates and regulations. Employers with more 
than 50 workers are now forced to provide expensive and 
government-approved health insurance. If they can't afford to, 
they face a fine of $2,000 per worker except for the first 30 
workers.
    We've heard many employers--we will hear more today--
describe the difficult choices they now face, choices between 
providing government-approved healthcare and cutting hours or 
laying off workers. It is clear the healthcare law is failing 
to adjust to the challenges facing our country. In fact, in 
many ways, it's making things worse.
    I'm committed to repealing this government takeover of 
healthcare. Pursuing the right reforms and lower costs to 
workers will not undermine the success of employers. I know 
it's a commitment shared by Representative Kelly and many of 
our colleagues across the country as well. The questions we 
will ask today are: What types of responsible reforms will help 
reign in the cost of healthcare? How can we turn recent gains 
we've seen into long-term economic growth? And what do the 
people of Pennsylvania see as the challenges facing their state 
and country and where do they believe the road to prosperity 
lies?
    I look forward to our discussion. Before I kick it over to 
Mike Kelly, let me just tell you who I am a little bit. I grew 
up in middle Tennessee on a small farm. The first home I lived 
in didn't have indoor plumbing or running water. The school I 
went to the first year of my life didn't have indoor plumbing 
or running water.
    My dad was a union member. He worked for B.F. Goodrich 
making shoe heels in a factory and never made $10,000 a year in 
his life until he died. My mother was a bank teller. I went to 
college at Austin Peay, a small college in my hometown, worked 
my way through college, worked in medical school, served in the 
2nd United States Infantry Division, took a small family to 
east Tennessee just to go work as a doctor and raise my family.
    I've had the privilege of working in the medical school in 
Johnson City, Tennessee and growing our practice from four 
doctors to 87 and 350 employees. And the problem in America 
today is--and this is something that absolutely--when I got to 
Congress three years ago, I worked for 31 years practicing 
medicine. I'm an OB doctor. I've delivered almost 5,000 babies. 
Let me tell you it worked out pretty well making deliveries on 
the voters. I can tell you that. [Laughter.]
    Chairman Roe. But I saw the cost of what was hurting 
America, being denied to my patients. The American healthcare 
system is the greatest in the world, but it cost too much money 
to go to the doctor.
    Number two, we have a segment of our population that can't 
afford health insurance coverage. I've seen those patients in 
Appalachia where I live.
    And, third, we have a liability crisis in America. We're 
going to be here today to discuss those things and listen to 
all sides of this. I'm really looking forward to this. This is 
not the first time I've done this.
    We have been in Evansville, Indiana, really around the 
country. I'm a doctor that's been in Congress for three years. 
I'm not a career politician. Neither is Mike Kelly.
    Now, without objection, I'll recognize Representative 
Kelly, a strong advocate on behalf of Pennsylvania's families 
and job creators.
    [The statement of Dr. Roe follows:]

     Prepared Statement of Hon. Phil Roe, Chairman, Subcommittee on
                 Health, Employment, Labor and Pensions

    Good morning, everyone. First, I want to thank the people of 
Butler, Pennsylvania for hosting today's hearing of the Health, 
Employment, Labor, and Pensions Subcommittee. Second, allow me to 
extend our appreciation to the witnesses for being with us today. We 
are grateful for the opportunity to hear your thoughts and personal 
experiences on the very important issues of health care and job 
creation.
    Over four years ago, our nation fell into the worst recession since 
the Great Depression. Businesses closed, jobs were lost, savings 
disappeared, and countless lives were transformed by the pain of a deep 
economic downturn. While we've made some modest progress in recent 
months, we still have a long way to go before we reach the height of 
prosperity our families, employers, and workers once enjoyed.
    Recently, the Gallup polling company talked to a number of small 
business owners who said they weren't looking to hire new workers right 
now. Gallup asked: Why? The vast majority expressed concerns about the 
state of the economy and poor sales. However, 46 percent of small 
business owners cited fear of government regulations and 48 percent 
pointed to rising health care costs.
    As a policymaker, these responses by our nation's leading job 
creators are startling yet not unexpected. For too long, some in 
Washington viewed our economic crisis as the political means to advance 
an agenda that ignores the real challenges facing the nation. This 
disturbing trend of the last several years has destroyed virtually any 
sense of certainty in the economy, making it more difficult for 
businesses to grow and create jobs.
    Perhaps the greatest example of this misguided agenda was the 
health care reform legislation signed into law in 2010. At a time when 
millions of Americans were looking for work and taxpayers were swimming 
in government debt, Democrats in Washington were advancing a multi-
trillion dollar government takeover of health care.
    A lot of lofty promises were made in an attempt to win public 
support, yet the reality of the new health care law is one of broken 
promises. We were told it would help lower health care costs. President 
Obama pledged that his plan would decrease insurance premiums by $2,500 
for the average family. Not true. The Kaiser Family Foundation reports 
that the average family health plan now costs more than $15,000--thanks 
to a nine percent increase in cost just last year.
    We were told if you like your current health care plan, you can 
keep it. Not true. The president's decision to force private 
employers--including religious organizations--to offer services that 
may violate their moral beliefs, demonstrates that Washington is in 
control and significant changes to our health care are inevitable.
    Finally, we were told the law would create millions of new jobs. 
Again, not true. At the center of ObamaCare are job crushing mandates 
and regulations. Employers with more than 50 workers are now forced to 
provide expensive and government-approved health insurance. If they 
can't afford to, they face a fine of $2,000 per worker (except for the 
first 30 workers). We've heard many employers, and we will hear more 
today, describe the difficult choices they now face, choices between 
providing government-approved health care and cutting hours or laying 
off workers.
    It is clear the health care law is failing to address the 
challenges facing our country. In fact, in many ways, it is making 
things worse. I am committed to repealing this government takeover of 
health care and pursuing the right reforms that will lower costs for 
workers while not undermining the success of employers. I know that is 
a commitment shared by Representative Kelly, and many of our colleagues 
across the country as well.
    The questions we will ask today are: What types of responsible 
reforms will help rein in the costs of health care? How can we turn the 
recent gains we've seen into long-term economic growth? What do the 
people of Pennsylvania see as the challenges facing their state and 
country, and where do they believe the road to prosperity lies? I look 
forward to our discussion.
    Without objection, I will now recognize Representative Kelly, a 
strong advocate on behalf of Pennsylvania's families and job creators, 
for any opening remarks he wishes to make.
                                 ______
                                 
    Mr. Kelly. Thank you, Doctor. I appreciate that. Today's 
hearing is timely and important. I think it's critical for 
members of Congress to get outside the Beltway and hear from 
the men and women whose lives are affected by policies advanced 
in our nation's capital.
    The recent recession ended almost three years ago, yet we 
continue to struggle through a very difficult time in a 
sluggish economy. Our state needs jobs.
    We've been fortunate to experience modest progress recently 
as more Pennsylvanians are working today than a year ago; 
however, this progress still does not make up for the 
devastation caused by the economic downturn. We must make sure 
federal policies continue the gain and are not permitted to 
undermine the growth we've seen here in Pennsylvania and across 
our nation.
    I'm grateful for the opportunity today to come here and 
listen to the people in the room. As the doctor and I tell you, 
we are not professional politicians. You know my background. 
I'm from Butler. I sold cars here for almost 60 years. I 
understand how tough it is. I understand what you go through 
and the uncertainties you face right now.
    So we want to come here to Western Pennsylvania and hear 
what Western Pennsylvania had to say, not Washington telling 
you what Washington needs to say, but what do you need to say? 
What do we need to hear, and what do we need to take back?
    Employer provided health insurance is critical to the 
healthcare needs of many Pennsylvania families. Roughly 54 
percent of Pennsylvanians receive insurance through an 
employer, slightly more than the national average.
    As a business owner, I, like so employers, am keenly aware 
that shifts in healthcare policies can have a dramatic impact 
on my business. The costs associated with health insurance can 
often determine whether an employer is able to raise wages or 
even hire new workers.
    You noted, Mr. Chairman, a recent Gallop poll survey of 
small businesses currently not looking to add new workers. It 
is deeply troubling that one out of every two small business 
owners may not be able to hire due to concerns of rising 
healthcare costs. The regulations, government regulations 
continue, continue to drive their cost of operation up.
    This kind of fear and uncertainty among the country's top 
job creators poses a clear threat to economic recovery and 
future job creation. I know some prefer to focus on a few 
provisions in the law that continue to receive bipartisan 
support, such as providing coverage to individuals with 
preexisting conditions. However, this debate never been about 
whether to help those who need help. The choice has never been 
between doing nothing and supporting a government takeover of 
healthcare.
    It has and continues to be about the degree to which we 
allow the federal government to dictate some of the most 
personal decisions in our lives.
    The recent regulatory action taken by the President to 
force private employers to offer health services they find 
morally objectionable demonstrates that Washington has gone 
much too far. Now, we can act smart and sponsor reforms at 
lower costs and expand access to care without putting the 
federal government in charge of one-sixth of our nation's 
economy.
    Those who happen to believe that change is only possible 
through more government control and more government spending do 
a nation a great disservice. We have a responsibility to 
actually chart a different course. Our witnesses today are 
going to help us do just that. Rest assured we will bring your 
thoughts back to Washington, D.C.
    We'll use them to persuade some of our reluctant colleagues 
that it's time to repeal the law. Get government out of the 
way. Get them out of the hair of our job creators and work 
towards common sense solutions that we know work every day in 
our regular lives to help expand access to affordable 
healthcare for all American people.
    Doctor, I go back to you.
    [The statement of Mr. Kelly follows:]

       Prepared Statement of Hon. Mike Kelly, a Representative in
                Congress From the State of Pennsylvania

    Today's hearing is a timely and important event. I think it is 
critical for members of Congress to get outside the Beltway and hear 
from the men and women whose lives are affected by the policies 
advanced in the nation's capitol.
    The recent recession ended almost three years ago, yet we continue 
to struggle with a difficult and sluggish economy. Our state needs 
jobs. We've been fortunate to experience modest progress recently as 
more Pennsylvanians are working today than a year ago. However, this 
progress still does not make up for the devastation caused by the 
economic downturn. We must make sure federal policies support continued 
gains, and are not permitted to undermine the growth we've seen here in 
Pennsylvania and across the nation.
    I am grateful for the opportunity today to listen to folks in this 
room describe the challenges facing families in the Keystone state, and 
learn what you see coming in the horizon. Regrettably, I don't have to 
tell you that numerous new mandates and regulations will soon threaten 
our workplaces, thanks to the health care law many of us have dubbed 
``ObamaCare.''
    Employer-provided health insurance is critical to the health care 
needs of many Pennsylvania families. Roughly 54 percent of 
Pennsylvanians receive insurance through an employer, slightly more 
than the national average. As a business owner, I, like so many 
employers, am keenly aware that shifts in health care policies can have 
a dramatic impact on my business. The costs associated with health 
insurance can often determine whether an employer is able to raise 
wages or hire new workers.
    You noted, Mr. Chairman, a recent Gallup survey of small businesses 
currently not looking to add new workers. It is deeply troubling that 
one out of every two small business owners may not be hiring due to 
concerns of rising health care costs and government regulations. This 
kind of fear and uncertainty among the country's top job creators poses 
a clear threat to our economic recovery and future job creation.
    I know some prefer to focus on a few provisions in the law that 
continue to receive bipartisan support, such as providing coverage to 
individuals with pre-existing conditions. However, this debate has 
never been about whether we help those who need help. The choice has 
never been between doing nothing and supporting a government takeover 
of health care.
    It has and continues to be about the degree to which we allow the 
federal government to dictate some of the most personal decisions in 
our lives. The recent regulatory action taken by the president that 
will force private employers to offer health services they find morally 
objectionable demonstrates Washington has gone too far.
    We can enact smart, responsible reforms that will lower costs and 
expand access to care without putting the federal government in charge 
of one-sixth of our nation's economy. Those who would have us believe 
that change is only possible through more government control and 
spending do the nation a great disservice.
    We have a responsibility to chart a different course and our 
witnesses today will help us to do just that. Rest assured, we will 
bring your thoughts to Washington, D.C. and use them to persuade our 
reluctant colleagues that it is time to repeal ObamaCare, get 
government out of the way of our job creators, and work toward 
commonsense solutions that help expand access to affordable health care 
for the American people.
                                 ______
                                 
    Chairman Roe. Pursuant to Rule 7(c), all members will be 
permitted to submit written statements to be included in the 
permanent hearing record. Without objection, the hearing record 
will remain open for 14 to allow such statements and other 
extraneous material referenced during the hearing to be 
submitted to the official hearing record.
    Now, Mr. Kelly, would you introduce our witnesses.
    Mr. Kelly. Thank you, Mr. Chairman.
    First of all, on panel one--we have two panels today--we 
have Honorable Don White. Senator White is a State Senator 
serving the people of Pennsylvania's 41st District since 2001. 
Before entering public service, Senator White was an insurance 
broker. So he knows very much what it is we're talking about 
today.
    Ms. Kathleen Bishop is also with us. She is the President 
and CEO of the Meadville-Western Crawford County Chamber of 
Commerce in Meadville, Pennsylvania. Ms. Bishop specializes in 
the areas of economic, social, educational and political 
progress for the Meadville area.
    Also Ms. Georgann Koehler is a retired SEIU member and 
psychiatric aide. She is from Pittsburgh, Pennsylvania.
    Ms. Koehler, thank you for being here.
    Ms. Lori Joint is here. She is the director of government 
affairs for the Manufacturing and Business Association in Erie, 
Pennsylvania, a manufacturing and business partnered with more 
than 4,500 businesses in Pennsylvania, New York and Ohio, 
providing employee benefit services, government representation 
and employee training programs. Ms. Joint holds a degree in 
political science from Gannon University.
    Lori, thank you for being here today. Mr. Chairman.
    Chairman Roe. Before we start today, we live in a free 
nation. I've had the privilege of being in Afghanistan with our 
troops in the last 90 days, and I would like, if you would, to 
stand and let's first have you introduce Mr. Nelson.
    Mr. Kelly. Thank you very much. We have with us today--one 
of our witnesses is Mr. Paul Nelson. And there are a lot of 
Veterans with us today. So if we could, all those Veterans who 
are in the room, please stand so we can recognize you and thank 
you for the great service you provide to our country. 
[Applause.]
    Chairman Roe. If everybody will rise, we will start.
    [Pledge of Allegiance.]
    Chairman Roe. Before I recognize you to provide your 
testimony, let me briefly explain our light system. You have 
five minutes to present your testimony. When you begin, the 
light in front of you will turn green, and when one minute is 
left, the light will turn yellow. When your time has expired, 
the light will turn red, at which point I'll ask you to wrap up 
your remarks as best you're able. I won't interrupt you, but 
please be mindful of the lighting system. I'd appreciate it if 
you will.
    After you have testified, members will each have five 
minutes for questions. And we will start now with the Honorable 
Mr. Don White.
    Thank you for being here, Mr. White.

STATEMENT OF HON. DON WHITE, SENATOR PA-41, PENNSYLVANIA STATE 
                             SENATE

    Mr. White. Thank you very much. It's very uplifting to have 
my local congressman, who is also a longtime small businessman, 
and have somebody from the medical profession down in D.C., 
especially on an issue like this. It's gratifying. I appreciate 
your service.
    I want to thank you for the opportunity to discuss the 
impact of the Federal Patient Protection and Affordable Care 
Act on the individual state's employers, particularly those 
doing business here in our Commonwealth of Pennsylvania. As 
chairman of the Pennsylvania State Senate Committee on Banking 
and Insurance, I've had a front row seat on the development of 
state action in the Commonwealth of Pennsylvania to comply with 
this law, and I have discussed this matter at length with my 
colleagues, business leaders, hospitals, healthcare providers 
and consumers.
    To begin with, I want to make it clear that Pennsylvania is 
taking the initial steps to comply with this federal mandate by 
January 1, 2013. The last thing anyone in Pennsylvania wants is 
for the federal government to take this over and issue edicts 
over the people of our state. I'm sure that feeling is echoed 
by my peers in most other states. Yes, the Patient Protection 
and Affordable Care Act is yet another mandate on states, 
businesses, individuals and families.
    We recognize the legislation may have passed along with the 
best of intentions, but let's be clear that it's a mandate 
being passed along with little guidance, no funding for states 
or for the businesses that will be impacted by these 
requirements.
    At this point, as the time for compliance continues to 
elapse, let me make it clear there is a tremendous amount of 
anxiety and trepidation at the state level among the business 
community. Yes, we are moving forward in implementation. But 
this progress is tempered by the sense of pragmatic caution. No 
one is comfortable with taking an aggressive approach in 
implementation.
    We've had little or no guidance in this matter, nor do we 
have a model to work from. It's true that Massachusetts and 
Utah have developed systems similar to what is being mandated 
by the Federal Patient Protection and Affordable Care Act. But 
those systems are vastly different in structure, and I don't 
believe that either would serve as an appropriate model for the 
people of Pennsylvania.
    With legislation pending in the U.S. Supreme Court and with 
the Presidential election set for November of this year, there 
is a lack of confidence that the federal Patient Protection and 
Affordable Care Act will stand unscathed and remain unchanged 
when all is said and done. The actions we take now may end up 
being superfluous and even contrary to the ultimate compliance 
if this measure or any part of it ultimately becomes effective.
    This uncertainty has a detrimental effect on Pennsylvania's 
economy, business growth and job creation in Pennsylvania. At 
this point, no one is even certain what must be covered under 
the Act. The states and employers see a requirement for 
essential health benefits. But no one knows what is going to 
fall under the parameters of ``essential benefit.''
    Granted, the federal Department of Health and Human 
Services is currently providing some latitude in states in this 
area, but it remains an area of contention and likely a fertile 
ground for litigation. The controversy surrounding mandated 
contraceptive coverage is a prime example of the controversy 
that will surround this provision, and it certainly will not be 
the only area of contention.
    As I've seen on numerous occasions at the state level and 
particularly in insurance coverage as monitored by the 
Committee on Banking and Insurance, the broad questions of 
what's in and what's out and the various nuances therein are 
rife for dispute and contention.
    As additional essential benefits are added, the cost that 
must be borne by government and employers will increase as 
well. We still need answers to some important actuarial value 
and cost sharing questions that will determine whether the 
package is affordable.
    Looking down the road, the confident of this mandate on the 
states are already set to increase because of the Medicaid 
expansion as was clearly described in Forbes magazine on 
January 27, 2012, and I quote, ``The healthcare reform law 
passed in March 2010 provides for substantial expansion of the 
must cover population, essentially anyone from a family with 
income below 138 percent of the federal poverty line, an amount 
that varies based on family size, this is a major component of 
the healthcare reform law. According to the Congressional 
Budget Office, half of the uninsured, who they project to 
become covered as a result of the new law, will obtain coverage 
because of the Medicaid expansion.
    ``From the state's point of view, the problem is how will 
they come up with the money to cover their share of the cost of 
healthcare for these additional people. The health reform law 
provides a partial answer. The federal government will pay for 
the entire cost of coverage for those who are newly eligible 
but only for the first three years, from 2014 to 2016. The 
federal government will reduce its contribution to 95 percent 
in 2017, dropping to 90 percent in 2020 and thereafter.
    ``For states to pay ten percent of the cost may not seem 
like much, though it might turn out to be quite a substantial 
sum of money given the large numbers of people involved. The 
fact is that most states budgets are already strained, and 
Medicaid spending is already one of the largest items in every 
state budget.''
    I strongly concur with the author's opinion. In fact, one 
of the key cost drivers in the proposed 2012 state budget just 
unveiled by Governor Corbett on February 7 were mandated 
increases of more than $800 million to the Department of Public 
Welfare. The Governor responded to those mandates proposing a 
shift of expenditures within the department which ultimately 
could result in increased cost for counties and/or reduction in 
human services available for the citizens. An increase in state 
Medicaid cost, even if only ten percent of the expansion, will 
surely have an adverse impact on Pennsylvania's state budget 
and will lead to further reductions in support for other key 
services and programs and a broad-based tax increase on 
employers and/or individuals.
    In particular, small business owners are going to be 
crushed by the federal Patient Protection and Affordable Care 
Act. I live in a small borough of Indiana, Pennsylvania. We 
have a fair sized university surrounded by quite a few small 
businesses that I assure you will never make the Fortune 500. 
Yet these small operations are the heart of my community. They 
provide good jobs, important services, and many are going to be 
hit with unnecessary cost.
    As you know, the federal act adds an employer mandate for 
all firms with 50 or more full-time employees, regardless of 
their trade or line of business. These businesses are still 
waiting for regulatory definitions on seasonal and temporary 
workers and whether they count toward that arbitrary 50-worker 
threshold. They're also facing the impact of the fee on small 
business health insurance plans. While this is being called a 
fee, it's actually a tax on small business.
    The Congressional Budget Office, the CMS actuary--it's an 
independent Medicare actuary--and the Joint Committee on 
Taxation all confirm that these costs would be passed on to the 
consumer. As a result of the Manager's Amendment, House 
Resolution 3590, the legislation exempts self-insured 
businesses and select, select, not-for-profit insurers, 
corporations and labor unions.
    Those exceptions are a devastating blow to small business 
because they are forced to bear the brunt of this tax in the 
form of significant premium increases in a fully insured 
market. Additionally, the law includes an unprecedented 
increase in Medicare payroll on income over $200,000 for 
individuals, 250 for joint filers. Adding to the problem, wages 
are not indexed for inflation meaning that more small 
businesses, particularly those employing 20 to 200 workers, 
will face this tax increase each year.
    Since the majority of small business owners pay their taxes 
at the individual level, this tax will hit the business income 
of many small business owners who collectively provide jobs for 
more than one-quarter of the American workforce. Proponents of 
this federal Act claim the cost and economic burdens of this 
mandate will be offset by a small business tax credit. However, 
the reality is it will do little to make purchasing insurance 
affordable for small firms. Although the credit is intended to 
offset the cost of insurance, these savings expire after five 
years at maximum.
    I realize I've gone over my time. I apologize for that. But 
in closing, I want to thank you for the opportunity to address 
this, and I truly think it's about time. I'm grateful to see 
you out of the Beltway and out here addressing something that 
as we kick this can down the road, the date of implementation 
of this with each passing day is a burden that a lot of people 
are starting to be quite well aware of. So I thank you very 
much.
    [The statement of Mr. White follows:]

     Prepared Statement of Hon. Donald C. White, Senator, State of 
       Pennsylvania; Chairman, Committee on Banking and Insurance

    Thank you for this opportunity to discuss the impact of the federal 
Patient Protection and Affordable Care Act on the individual states and 
employers, particularly those doing business in the Commonwealth of 
Pennsylvania.
    As Chairman of Pennsylvania State Senate Committee on Banking and 
Insurance, I have had a front row seat on the development of state 
action in the Commonwealth of Pennsylvania to comply with this law and 
I have discussed this matter at length with my colleagues, business 
leaders, hospitals, health care providers, and consumers.
    To begin with, I want make it clear that Pennsylvania is taking the 
initial steps to comply with this federal mandate by January 1, 2013. 
The last thing that anyone in Pennsylvania wants is for the federal 
government to take this over and issue addition edicts over the people 
of my state--and I am sure that feeling is echoed by my peers from most 
other states.
    And, yes, the Patient Protection and Affordable Care Act is yet 
another mandate on states, on business and individuals and families.
    We recognize that this legislation may have been passed along with 
the best of intentions, but let's be clear that it is a mandate being 
passed along with little guidance, no funding for states or for the 
businesses that will be impacted by its requirements.
    At this point, as the timeframe for compliance continues to elapse, 
let me make it clear that there is a tremendous amount of anxiety and 
trepidation at the state level and among the business community.
    Yes, we are moving forward, in implementation, but this progress is 
tempered by sense of pragmatic caution.
    No one is comfortable with taking an aggressive approach in 
implementation.
    We've had little to no guidance on this matter.
    Nor do we have a model to work from.
    It is true that Massachusetts and Utah have developed systems 
similar to what is being mandated by the Patient Protection and 
Affordable Care Act, but those systems are vastly different in 
structure and I don't believe that either would serve as an appropriate 
model for Pennsylvania.
    With legislation pending in the US Supreme Court and with a 
presidential election set for November, there is a lack of confidence 
that federal Patient Protection and Affordable Care Act will stand 
unscathed and remain unchanged when all is said and done. The actions 
we take now may end up being superfluous and even contrary to ultimate 
compliance if this measure, or any part of it, it ultimately becomes 
effective.
    This uncertainty has had a detrimental effect on Pennsylvania's 
economy, business growth and job creation in Pennsylvania.
    At this point, no one is even certain what must be covered under 
the Patient Protection and Affordable Care Act. The states and 
employers see a requirement for ``essential health benefits,'' but no 
one knows what is going to fall under the parameters of an 
``essential'' benefit.
    Granted, the federal Department of Health and Human Services is 
currently providing some latitude to the states in this area, but it 
remains an area of contention and likely a fertile ground for continued 
litigation.
    The controversy surrounding mandated contraceptive coverage is a 
prime example of the controversy that will surround this provision and 
it certainly will not be the only area of contention. As I've seen on 
numerous occasions at the state level, and particularly in insurance 
coverage as monitored by the Committee on Banking and Insurance the 
broad questions of ``what's in'' and ``what's out'' and the various 
nuances therein are rife for dispute and contention.
    As additional ``essential benefits'' are added, the cost that must 
be borne by government and employers will increase as well. We still 
need answers to some important actuarial value and cost-sharing 
questions that will truly determine whether the package is affordable.
    Looking down the road, the costs of this mandate on the states are 
already set to increase because of the Medicaid expansion, as was 
clearly described by Forbes on January 27, 2012:
    ``The health reform law passed in March 2010 provides for a 
substantial expansion of the ``must cover'' population--essentially 
anyone from a family with income below 138% of the federal poverty line 
(an amount that varies based on family size). This is a major component 
of the health reform law: according to the Congressional Budget Office, 
half the uninsured who they project to become covered as a result of 
new law will obtain coverage because of the Medicaid expansion.
    ``From the states' point of view, the problem is, how will they 
come up with the money to cover their share of the cost of health care 
for these additional people? The health reform law provides a partial 
answer: the federal government will pay for the entire cost of coverage 
for those who are newly eligible--but only for the first three years, 
from 2014 to 2016. The federal government will reduce its contribution 
to 95% in 2017, then in stages, dropping to 90% in 2020 and thereafter.
    ``For states to pay 10% of the cost may not seem like much, though 
it might turn out to be quite a substantial sum of money, given the 
large numbers of people involved. The fact is that most state budgets 
are already strained, and Medicaid spending is already one of the 
largest items in every state budget.''
    I strongly concur with the author's opinion. In fact, one of the 
key cost drivers in the proposed 2012-13 state budget unveiled by 
Governor Corbett on February 7, 2012 were mandated increases of more 
than $800 million in the Department of Public Welfare. The Governor 
responded to those mandates by proposing to shift expenditures within 
the Department, which ultimately could result in increased costs for 
counties and/or a reduction in human services available for citizens.
    An increase in state Medicaid costs, even if only 10 percent of the 
expansion, will assuredly have an adverse impact on Pennsylvania's 
state budget and would lead to further reductions in support for other 
key services and programs and/or a broad-based tax increase on 
employers and/or individuals.
    In particular, small business owners are going to be crushed by the 
federal Patient Protection and Affordable Care Act. I live in the small 
borough of Indiana, Pennsylvania. We have a fair-sized state university 
surrounded by quite a few small businesses that will never make the 
Fortune 500 list. Yet, these small operations are the heart of the 
community. They provide good jobs and important services and many are 
going to be hit with unnecessary costs.
    As you know, the Patient Protection and Affordable Care Act adds an 
employer mandate for all firms with 50 or more full-time employees, 
regardless of their trade or line of business. These businesses are 
still waiting for regulatory definitions on seasonal and temporary 
workers and whether they count toward that arbitrary 50 worker 
threshold.
    They are also facing the impact of the ``fee'' on small business 
health insurance plans. While this is being called a ``fee,'' it is 
actually a tax on small business. The Congressional Budget Office 
(CBO), CMS Actuary (an independent Medicare Actuary), and the Joint 
Committee on Taxation (JCT) all confirm that these costs will 
ultimately be passed on to consumers. As a result of the Manager's 
Amendment to H.R. 3590, the legislation exempts self-insured businesses 
and select not-for-profit insurers--corporations and labor unions. 
These exemptions are a devastating blow to small business, because they 
will be forced to bear the brunt of this tax in the form of significant 
premium increases in the fully-insured market.
    Additionally, the law includes an unprecedented increase in 
Medicare payroll on income over $200,000 for individuals and $250,000 
for joint filers. Adding to the problem, wages are not indexed for 
inflation, meaning that more small businesses, particularly those 
employing 20 to 200 workers, will face this tax increase each year. 
Since the majority of small business owners pay their taxes at the 
individual level, this tax will hit the business income of many small 
business owners who collectively provide jobs for more than one-quarter 
of the American workforce.
    Proponents of the Patient Protection and Affordable Care Act claim 
the costs and economic burdens of this mandate will be offset by a 
small business tax credit. However, the reality is it will do little to 
make purchasing insurance affordable for more small firms. Although the 
credit is intended to offset the cost of insurance, these ``savings'' 
expire after five years at maximum. Only 309,000 small businesses--out 
of the four million advertised by proponents--had claimed the credit as 
of October 2011.
    In summary, this mandate will negatively impact the Commonwealth of 
Pennsylvania is many ways. Without knowing what costs and mandates they 
will ultimately be subjected to, business owners have told me that they 
are hesitant to hire on new staff without know what, if any additional 
costs they will be subjected to if certain provisions of the Patient 
Protection and Affordable Care Act become effective.
    Plain and simply, this law and the uncertainty that surrounds it 
are job killers.
    Again, I thank you for this opportunity to address this panel and 
provide you with the facts about how this measure is impacting the 
Commonwealth of Pennsylvania, our businesses, our individuals and our 
families.
    I would now be happy to answer your questions.
                                 ______
                                 
    Chairman Roe. Thank you, Senator White. Your comments and 
all of your testimony will be in the record in full.
    Ms. Bishop?

STATEMENT OF KATHLEEN BISHOP, PRESIDENT/CEO, MEADVILLE-WESTERN 
              CRAWFORD COUNTY CHAMBER OF COMMERCE

    Ms. Bishop. Congressman Kelly, Congressman Roe, thank you 
for the opportunity to testify before the Subcommittee on 
Health, Employment, Labor and Pensions. I am president and CEO 
for the Meadville-Crawford County Chamber of Commerce. Our 
chamber is 205 years old this year, and we represent over 500 
businesses in the northwestern Pennsylvania area. We are a 
community of tool and die manufacturing, professional services, 
medical facilities, gas and well services and home to Allegheny 
College.
    I am not a healthcare expert, and I am definitely not an 
expert on the healthcare reform law. I am a chamber president 
who has passion for business owners and employees who want to 
work for awesome companies. My time with you this afternoon is 
limited, so I will share with you a few concerns and comments 
of our chamber members.
    But before I do, I would just like to give you an example 
of the impact that will happen in our own chamber. With us 
being 205 years old, we are a nonprofit organization, and we 
depend on our members to pay their dues just to maintain our 
existence. We have a staff of five that varies in the ages of 
40 to 65 years old. Not all of our employees want or need 
healthcare benefits provided by the chamber.
    However, under the new healthcare reform bill, in 2014 we 
will face a $2,000 fine per employee. Now, $10,000 may not seem 
like a lot of money to other businesses, but for us, it means a 
lot. Membership in our chamber is $250 per member. We would 
need to grow and retain an additional 40 members per year above 
and beyond what we are already growing just to pay this fine, 
or we would have to raise the price of our membership dues. 
Neither of these two options would we be able to attain.
    With the economy as the buzz word and businesses pulling 
back on marketing to offset the cost of labor and goods, we are 
already finding that membership dues at a local chamber of 
commerce is not on the priority list. We could struggle to make 
it to our 210 anniversary. Nonprofits are facing many 
challenges. Rising state and local taxes and unemployment 
taxes, raising costs on holding events for the benefit of 
communities and promoting our member businesses and employees 
who are not typically paid well.
    We believe that healthcare is essential. I am one of the 
employees who have health insurance at the chamber; however, I 
also in the past have looked for employers that have optional 
healthcare coverage, and that is my right as an American. It 
should also be the right of my employer.
    Back in the day, if you were looking for work, you either 
chose the employer who had benefits or who didn't. You also 
knew that if they offered health insurance, you had a good 
chance at a retirement plan, vacation pay and paid holidays, 
but sometimes you just wanted a good old-fashioned job where 
you worked on straight commission and you took care of 
yourself. Just as men and women are not the same size and 
created equal, neither are businesses created equal.
    The Healthcare Reform bill cannot be a one size fits all. 
We should have the right to choose. I am here today 
representing over 500 businesses, and I have asked them to give 
me some thought on healthcare reform. Here's what just a few of 
them said. One chamber member business says stop advertising on 
TV for prescription drugs. Repeal the reform. Just let private 
businesses continue to work with health insurance companies and 
brokers to allow them to be competitive and thrive. Our rates 
were comparable today to what they were ten years ago with the 
same coverage and minimal out-of-pocket expenses for our 
employees. More government will just screw it up even more.
    Another chamber business says allow healthcare insurance 
companies to cross state lines. If car insurance companies can 
do it, why can't the health insurance carriers. As a small 
business, there are some days when it is tough enough just to 
make payroll. I can't even imagine also paying a fine because I 
couldn't afford to pay for health insurance.
    Lastly, our chamber also shares the echos of the U.S. 
Chamber of Commerce, and here are their concerns. The U.S. 
Chamber's plan to control cost, improve quality and expand 
coverage, point one, repeal the most enormous provision of 
PPACA. The new healthcare law creates new mandates and taxes on 
businesses and individuals. While the chamber supports the 
repeal of the Patient Protection and Affordable Care Act, we 
recognize that the total repeal in the 112th Congress is 
unlikely.
    Therefore, we stand ready to work with Congress to repeal 
the provisions, including the employer mandate and many new 
taxes that will be passed onto employers and employees in the 
form of higher premiums.
    Two, push back through written comments on regulations 
implementing PPACA. The chamber has filed over 28 comments to 
highlight the operational problems and unintended consequences 
of the rapidly drafted flawed regulations issued to instruct 
how to comply with the new mandates and requirements on 
healthcare reform.
    Three, enact meaningful medical liability reform. The 
chamber supports healthcare caps on punitive damages and other 
medical liability reforms that ensure fair damage awards, 
eliminate frivolous lawsuits and lower the costs.
    Four, expand access to care. The chamber supports 
strengthening employer-sponsored health insurance by expanding 
its availability and affordability to every worker. We also 
believe that the playing field must be leveled to allow 
individual consumers, families and small businesses purchase 
coverage on a tax preferred basis while protecting the benefits 
of a uniform federal regulatory system.
    Five, support consumer-focused healthcare. Congress should 
make account-based plans more attractive to small businesses 
increasing the flexibility and improving the transparencies of 
cost and quality data to permit Americans to shop smart for the 
best care. We support repealing the ban on flexible spending 
accounts and house savings accounts to purchase over-the-
counter products without a prescription and repealing the 
limitation on flexible spending account contribution levels to 
2,500. Realign reimbursement mechanisms to reward quality, not 
quantity.
    We urge Congress make it easier for employers and insurers 
to develop insurance plans that they pay for quality, not 
quantity, to reward doctors for keeping patients healthy.
    Seven, rein in Medicare and Medicaid fraud abuse. Medicare 
and Medicaid fraud runs rampant and costs taxpayers tens of 
billions of dollars every year. A broad array of 
countermeasures should be enacted immediately.
    And, lastly, advocate for workplace wellness and disease 
management. The chamber supports favorable tax treatment for 
companies who offer workplace wellness plans and incentive 
participation.
    Thank you for the time this afternoon. Thank you for your 
willingness to serve our great country. And I urge you to 
repeal the healthcare reform bill and let Americans get back to 
work.
    [The statement of Ms. Bishop follows:]

       Prepared Statement of Kathleen Bishop, IOM, President/CEO,
         Meadville-Western Crawford County Chamber of Commerce

    Thank you for the opportunity to testify before the Subcommittee on 
Health, Employment, Labor, and Pensions.
    I am President/CEO of the Meadville-Western Crawford County Chamber 
of Commerce. Our Chamber is 205 years old and represents over 500 
businesses in the Northwestern PA area. We are a community of Tool & 
Die, Manufacturing, Professional Services, Medical facilities, Gas & 
Well Services and Allegheny College.
    I am not a healthcare expert and I definitely am not an expert on 
the Health Care Reform Bill. I am a Chamber President who has a passion 
for business owners and employees who want to work for awesome 
companies. My time with you this morning is limited and so I will share 
with you a few comments our Chamber members.
    Our Chamber is 205 years old, a non-profit organization that 
depends on its members to pay their dues for us to maintain our 
existence. We have a staff of 5 people that varies in ages from 40-65. 
Not all the employees want or need health insurance from us. However, 
under the Health Care Reform Bill, in 2014 we could face a $2,000 fine 
per employee. Now $10,000 is not a lot compared to many other 
businesses, but here is what it will mean to us.
    Membership is $250.00 per member; we would need growth and retain 
an additional 40 businesses per year above what we are already growing 
just to pay the fines. Or, we would have to raise the price of the 
dues. Neither is an option. With the economy as the buzz word and 
businesses pulling back on marketing to offset the costs of labor and 
goods we are finding that membership dues at your local Chamber of 
Commerce is not on the priority list. We could struggle to find it to 
year 210!
    Non-Profits are already facing many challenges, rising state and 
local taxes and unemployment taxes, rising costs on holding events for 
the benefit of the community and promoting our members businesses and 
employees who are not typically paid well.
    We believe that Health Care is essential; I am one of the employees 
who have the health insurance at the chamber. However, I look for 
employers to have as an option Health Care coverage, and that is my 
right as an American. It should also be the right of my employer.
    Back in the day, if you were looking for work you either chose the 
employer who had benefits or you didn't. You also knew that if they 
offered Health insurance then you had a good chance at a retirement 
plan, vacation pay and paid holidays. But, sometimes you just wanted a 
good old fashioned job where you worked on straight commission and you 
took care of yourself.
    Just as men and women are not the same size and created equal, 
neither are businesses created equal, the Health Care Reform Bill 
cannot be a one size fits all. We should be able to choose!
    Because I am here today representing over 500 businesses I had 
asked them to give me some thoughts on the Health Care Reform Bill and 
here is what just a few said.
    One chamber member business says:
     Stop TV Advertising of prescription drugs.
     Repeal reform.
     Just let private businesses continue to work with health 
insurance companies and brokers and allow competition to thrive--our 
rates are comparable today to what they were 10 years ago with the same 
coverage and minimal out of pocket expense for our employees.
     More government will just screw it up more!
    Another Chamber member business says:
     Allow Health Insurance companies to cross state lines. If 
car insurance can do it, why can't health insurance carriers.
     As a small business, there are some days when it is tough 
just to make payroll. I can't imagine having to also pay a fine because 
I couldn't afford to purchase health insurance for the employees.
    Lastly we share the same thoughts as the U.S. Chamber of Commerce
    The U.S. Chamber's Plan to Control Costs, Improve Quality, and 
Expand Coverage:
     Repeal the most onerous provisions of PPACA: The new 
health care law creates new mandates and taxes on businesses and 
individuals. While the Chamber supports the repeal of the Patient 
Protection and Affordable Care Act (PPACA), we recognize that total 
repeal in the 112th Congress is unlikely. Therefore, we stand ready to 
work with Congress to repeal the most egregious provisions, including 
the employer mandate and the many new taxes that will be passed on to 
employers and employees in the form of higher premiums.
     Push back through written comments on regulations 
implementing PPACA: The Chamber has filed 28 comments to highlight the 
operational problems and unintended consequences of the rapidly 
drafted, flawed regulations issued to instruct how to comply with the 
new mandates and requirements of health reform.
     Enact meaningful medical liability reform: The Chamber 
supports health courts, caps on punitive damages, and other medical 
liability reforms that ensure fair damage awards, eliminate frivolous 
lawsuits, and lower costs.
     Expand access to care: The Chamber supports strengthening 
employer-sponsored health insurance by expanding its availability--and 
affordability--to every worker. We also believe that the playing field 
must be leveled to allow individual consumers, families, and small 
businesses to purchase coverage on a tax-preferred basis while 
protecting the benefits of a uniform federal regulatory system.
     Support consumer-focused health care: Congress should make 
account-based plans more attractive to small businesses by increasing 
flexibility and improving the transparency of cost and quality data to 
permit Americans to shop smart for the best care. We support repealing 
the ban on using Flexible Spending Accounts and Health Savings Accounts 
to purchase over-the-counter products without a prescription and 
repealing the limitation on Flexing Spending Account contribution 
levels to $2,500.
     Realign reimbursement mechanisms to reward quality, not 
quantity: We urge Congress to make it easier for employers and insurers 
to develop insurance plans that pay for quality, not quantity, and 
reward doctors for keeping patients healthy.
     Rein in Medicare and Medicaid fraud and abuse: Medicare 
and Medicaid fraud runs rampant and costs taxpayers tens of billions of 
dollars every year. A broad array of countermeasures should be enacted 
immediately.
     Advocate for workplace wellness and disease management: 
The Chamber supports favorable tax treatment for companies that offer 
workplace wellness programs and incent participation.
    Thank you for the time this afternoon. Thank you for your 
willingness to serve this great country. I urge you to repeal the 
Health Care Reform Bill and let America get back to work!
                                 ______
                                 
    Chairman Roe. Thank you, Ms. Bishop.
    Ms. Koehler?

STATEMENT OF GEORGANN KOEHLER, RETIRED SEIU MEMBER, PSYCHIATRIC 
                              AIDE

    Ms. Koehler. Today I stand here in front of you to tell you 
the story of a man who fell through the cracks of a broken 
healthcare system, never to return to us again. That man's name 
is Billy. He is my beloved brother.
    Billy was the born on March 18, 1951. He was baptized 
William Anthony, but he was always Billy to me. He was a good 
kid and grew up to be a great man. My sister, Katie, describes 
him as a man who was loving and generous to his family, friends 
and those in need. That love and generosity came easy to him 
because of his loving relationship with his Lord and Savior, 
Jesus Christ.
    Billy was a true believer in the teachings of the Lord that 
we are our brothers' and sisters' keepers. Because of that 
belief, Billy was a quiet hero to many. Billy suffered his 
first cardiac arrest when he was 39. He was diagnosed with 
having a sudden death type of arrhythmia. There is no cure for 
this arrhythmia, but it is recommended that the patient have an 
implanted AICD ready to fire at any time.
    Billy was discharged from the hospital with his life saving 
defibrillator. He had insurance through his job, so caring for 
his heart and his defibrillator wasn't a big deal.
    In the spring of 2003, Billy went to work. He heard the 
news that the company would be closed. It closed a few days 
later. No more VCRs to repair, no more job, no more health 
insurance. He sent out application after application hoping to 
find another job that offered a fair wage and health insurance. 
He went on interviews, but that job was nowhere to be found, 
especially for a man who had to wear a Medic Alert bracelet.
    Billy didn't want the government to give him anything. He 
wanted to buy a private health insurance plan. He called every 
health insurance company in Pittsburgh in the hopes of buying a 
private plan, but the answer was always the same: Denied due to 
his preexisting condition. Billy found a job delivering pizza. 
The job paid minimum wage with no benefits, but nonetheless, he 
was thankful for the work.
    On December 14, 2007 Billy collapsed at work. He was rushed 
to a local hospital and was admitted to a 23-hour monitored 
bed. His cardiologist came into the room and said, ``Mr. 
Koehler, you're a very lucky man. Your defibrillator battery is 
so low, I'm surprised it fired this time. It needs to be 
replaced.'' The doctor told Billy the replacement would be done 
as an outpatient procedure and that he needed to make an 
appointment to be seen in the office in three months.
    Billy said, ``I have no insurance and I don't know if I'll 
have it by the time of the appointment. If I don't, what will 
happen?'' The doctor said, ``If you don't have insurance, you 
will have to pay up front, and you will have to bring thousands 
of dollars with you, or you will not be seen.'' Billy said, ``I 
don't know what to do because I don't have thousands of dollars 
nor does my family. I don't know what to do.''
    It was then the doctor said, ``Mr. Koehler, do you put oil 
in your car?'' Billy didn't answer. The doctor said, ``Mr. 
Koehler, I asked you a question. Do you put oil in your car?'' 
Billy replied, ``Of course, I put oil in my car.'' The doctor 
then said, ``Do you buy the best oil money can buy so your car 
runs smoother and lasts longer? Because that's what you have to 
do for your heart.'' Billy said, ``You're talking about a can 
of oil that costs me $8.50 to a defibrillator that cost me 
$10,000, and that doesn't include the surgery. I'll never have 
that kind of money.''
    It was then the doctor pointed his finger at Billy and 
said, ``You get your priorities straightened out and you'll 
come up with that money.'' The doctor left the room and 
discharged Billy from his service. Billy was discharged from 
the hospital on December 15, 2007.
    Billy was pro life. He believed in the importance of life 
from conception until natural death. I only saw him mad or 
angry three times, when he heard Terri Schiavo's tube feeding 
was going to be discontinued, when his cardiologist gave him 
that humiliating lecture comparing putting oil in his car to 
taking care of his heart, and on that day of discharge, that 
day when he walked out of the hospital with a death sentence 
handed down by a broken healthcare system and realized that in 
our country, unless you have money, you will never have your 
health.
    On March 6, 2009, Billy went to church to spend his hour at 
Adoration. He knelt before the altar thanking and praising God 
for his blessings and for that job. He asked God to bless his 
family, friends and those in need. He asked his All Mighty 
Healer to heal his heart. Billy left work to come home at 5:00 
p.m. on March 7, 2009. He drove two blocks, came to a stop 
sign, put his car in park and slumped into his steering wheel.
    Compassionate strangers came to his aid. They brought him 
out of his car and began CPR while others stood in silence 
offering their prayers. A teenager placed his sweatshirt under 
Billy's head in a gesture of comfort for a man in need. That 
day these compassionate strangers didn't care if Billy had 
health insurance. All they cared about and all that mattered to 
them was doing what they could to give Billy back another day 
of life, something his cardiologist could have done, should 
have done, and told him no can do. So why didn't he?
    The answer is found in a word, and that word is written 
throughout his medical record. That word is uninsured.
    Today I'm not here to ask you to feel mine and my family's 
pain. I would never want to take you there. I am going to ask 
you though when you have a minute, maybe watching the sun go 
down or standing on the porch sipping a cup of decaf, to close 
your eyes and look inside yourself, not to your heart, but to 
your soul because that is where you will find your moral 
compass. And ask yourself this question: If Billy was alive 
today, would his life matter to you? Would you be one of those 
compassionate strangers trying your hardest to give Billy 
another day of life? If when you open your eyes the answer is 
yes, then you will not be able to repeal Affordable Care Act, 
an Act that would have saved Billy's life and an Act that is a 
hopeful light for millions of Americans who without it are only 
left with the thought of death. Thank you. Sorry I went over.
    [The statement of Ms. Koehler follows:]

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
    
                                ------                                

    Chairman Roe. Thank you very much for your testimony.
    Lori Joint?

   STATEMENT OF LORI JOINT, DIRECTOR OF GOVERNMENT AFFAIRS, 
             MANUFACTURING AND BUSINESS ASSOCIATION

    Ms. Joint. Good afternoon. My name is Lori Joint, and I'm 
the director of government affairs of the Manufacturing and 
Business Association, a regional employers' association that 
represents more than 4,500 members throughout 27 counties in 
Pennsylvania. I would like to thank Chairman Roe and 
Congressman Kelly for providing this opportunity to the discuss 
Patient Protection and Affordable Care Act and its impact on 
the business community.
    Our member companies have been very clear in expressing 
their concern and uncertainty over the law and its potential 
implications and costs causing many employers to hold off on 
plans for growth and investment in their business operations. 
We strongly believe in the need for healthcare reform and have 
advocated for it for decades. But the act fails to address many 
of the long-term problems associated with the cost of 
healthcare. We have called for market-based reforms rather than 
government takeover of the healthcare industry.
    The Act proposes numerous tax hikes that will slow economic 
growth, reduce employment and suppress wages. A recent study 
from the Heritage Foundation finds that the Act contains 18 
separate tax increases that will cost taxpayers $503 billion 
between now and 2019. The Cato Institute calculates that the 
Act will result in more than $606 billion in new increased 
taxes over its first ten years. And the Congressional Budget 
Office estimates that the employer mandate will cost businesses 
$52 billion in tax penalties from 2014 to 2019.
    Employers are concerned about many aspects of the law. 
Specific examples and details are in my written testimony. I'd 
like to focus this time on comments from some of our member 
companies as they are the true job creators.
    From Randy in Erie, PA: The PPACA will literally kill my 
business. We currently employ approximately 200 people, 50 full 
time and 150 part time. We are a minimum wage based business. 
Due to competition, our average wage is $7.65 for part time and 
$8.50 78 for full time. Adding health insurance would be 
approximately twice the cost of the $2,000 penalty. On an 
hourly basis, I'd have to add $1.44 per hour plus 
administration costs to cover this.
    All of my competitors with less than 50 employees would 
automatically win every bid by 20 percent. To summarize, the 
first year of the Act will cost me every bid and $150,000 in 
penalties making it my last year of earning a living and 
providing meaningful employment.
    From Paul Reid in Lockport, New York. Our company has an 
office in Erie, PA as well as a number of retail stores named 
Crosby's. This law will drive up healthcare costs and dampen 
employment opportunities. Businesses will reduce costs by 
eliminating employees in the market. Government bureaucrats 
cannot manage the healthcare industry. Only markets can 
accomplish this task, markets driven by consumer choice and 
consumer responsibility, one of the aspects that this law 
affirmatively rejects. This is not being considered in the 
damaging effects of the taxes embedded in this law.
    From Mark in Meadville, PA. Mark says their company 
welcomes opportunity for industry recommended solutions to 
address the cost of compliance with care and reduce the 
competition that embodies government-mandated provisions for 
employee benefits. Without more competition among insurance 
providers, the inevitable single payor system for a government-
run healthcare program will be the only option. He says their 
company has evaluated the cost impact, and under the law, they 
will likely eliminate their healthcare coverage.
    From Raine at Hermitage Health, Cambridge Springs. We 
strongly feel that the Healthcare Reform Act will significantly 
increase health insurance costs, lead to rationing, long waits 
for services, drive doctors out of their field and severely 
limit options. We will likely be forced to drop all coverage 
and let employees fend for themselves.
    From Don in Corry. Our premiums are going up eight percent 
this year. I think it is unfair we have to cover children up to 
age 26 even if they are couch potatoes. I completely agree with 
providing coverage while they are in college or technical 
school, but this is typical socialism. You're essentially 
training our youth to expect entitlements at any early age. The 
law penalizes employers with more than 50 employees that have 
an employee who opts out of our insurance plan. We are 
penalized $2,000 per employer per year. Who wouldn't opt out 
and let the government provide the insurance? What happens if 
everyone does this?
    More examples can be found in my written testimony. Health 
insurance has long been the biggest concern of most businesses 
and they would truly welcome cost effective reform. However, 
they don't consider the PPACA as cost effective reform. Looking 
forward, there's cause to believe small businesses will see 
higher premiums, greater administrative burdens, reduced 
options and many unwanted surprises.
    In summary, we need to reform the system in a way that 
controls costs. We would ask for market-based reforms that 
allow individuals a tax deduction on their premiums, require 
all doctors, hospitals and providers of healthcare services to 
list their services, outcomes and pricing, create total 
transparencies from insurance companies, on all provider 
contracts and administrative fees, apply a moratorium on all 
unfunded government mandates, allow for the purchase and sale 
of insurance products across state lines, allow individuals and 
employer sponsored plans to purchase specific services they 
want and need as opposed to government-mandated benefits and 
services, provide immediate tort reform and allow insurance 
companies to properly calculate risk by imposing additional 
premium charges to those who refuse to make changes to risky 
lifestyle activities.
    This represents a small list of actions that would have an 
immediate impact on reducing the cost of healthcare, insurance 
premiums and utilization.
    Thank you once again, Chairman Roe, and members of the 
committee, for your interest in learning more about the needs 
we want on reform.
    [The statement of Ms. Joint follows:]

   Prepared Statement of Lori Joint, Director of Government Affairs, 
                  Manufacturer & Business Association*

    Good afternoon. My name is Lori Joint and I am the Director of 
Government Affairs at the Manufacturer & Business Association (MBA), a 
regional employers' association that represents more than 4,500 member 
companies throughout 27 counties of Pennsylvania. With offices in Erie, 
Williamsport, and Harrisburg, we provide information and services to 
our members that will assist them in the pursuit of their business and 
community interests.
---------------------------------------------------------------------------
    *Additional information and sources included in written testimony.
---------------------------------------------------------------------------
    I would like to thank Chairman Roe and members of the House 
Subcommittee on Health, Employment, Labor and Pensions, for providing 
this opportunity to discuss the impact of the Patient Protection and 
Affordable Care Act (PPACA) on the business community. The law is 
extremely complicated and there are many rules and regulations yet to 
be finalized. Our member companies have been very clear in expressing 
their concern and uncertainty over the law and its potential 
implications and cost--causing many employers to hold off on plans for 
growth and investment in their business operations.
    We strongly believe in the need for health-care reform and have 
advocated for it for decades. But the PPACA fails to address many of 
the long-term problems associated with the cost of health care and 
insurance for small businesses. For the past 25 years, we have called 
for market-based reforms, rather than a government takeover of the 
health-care industry.
    The PPACA imposes numerous tax hikes that will slow economic 
growth, reduce employment and suppress wages. A recent study from the 
Heritage Foundation finds that the Act contains 18 separate tax 
increases that will cost taxpayers $503 billion between now and 2019. 
The Cato Institute calculates that the PPACA will result in more than 
$669 billion in new or increased taxes over its first 10 years.
    Employers are concerned about many aspects of the law including: 
the requirement for plan sponsors to start reporting health-care 
premiums on their employees W-2's, the Patient Centered Outcome 
Research Fund Fees and the pending Quality of Care Reporting 
requirements. These are examples of government intervention in the 
free-enterprise system. I will discuss a few additional sections of the 
law that are of concern to the business community.
    The employer mandate and ``Essential Health Benefits'' requirement 
have many businesses concerned and will likely cause the most harm to 
businesses already offering coverage. The Congressional Budget Office 
(CBO) estimates that the employer mandate will cost businesses $52 
billion in tax penalties from 2014 to 2019. Companies will be forced to 
adjust by raising prices, cutting wages and benefits, and reducing 
their work force.
    The PPACA small business tax credit is complex and narrowly 
focused. Less than one-third of small businesses meet the size and 
contribution requirements to qualify for the tax credit. This 
percentage shrinks if a company increases their work force, gives 
raises to employees, employs family members, has part-timers or is more 
generous with their insurance offerings--basically discouraging 
businesses from hiring or rewarding employees. (Specific example in 
written testimony)
    More details on these items as well as additional concerns 
regarding: new Medicare taxes, Subsidies, Grandfathered status, 
Exchanges, Mini-meds and the Health Insurance Premium Tax can be found 
in my written testimony. You will hear many facts and statistics today, 
some of which are included in my written testimony. I would like to 
focus this time on comments from some of our member companies; as they 
are the true job creators.
Bonded Services, Inc., Erie, Pennsylvania--Randy R. Nyberg, President/
        CEO--238 employees
    The PPACA will literally kill my business and the janitorial 
services industry (along with lawn care and security services to name a 
few). Our business currently employs approximately 200 people (50 full-
time and 150 part-time). We are a minimum-wage based business due to 
competition (the minimum wage is $7.25 per hour and our average wage is 
$7.65 for part-time and $8.50 for full-time). This hourly wage does not 
include purchasing health care insurance, which is totally 
unaffordable, and would be approximately twice the cost of the $2,000 
PPACA penalty. The penalty for my business would be in excess of 
$150,000 annually. On an hourly basis, I would have to add $1.44 per 
hour plus administration costs to cover this. All of my competitors 
with less than 50 employees would automatically win every bid by 20-
percent. To summarize, the first year of PPACA will cost me every bid 
and $150,000 in penalties, making it my last year of earning a living 
and providing meaningful employment to hundreds.
The Reid Group--Paul Reid, President--Lockport, NY--64 employees
    Our company has an office in Erie, Pennsylvania as well as a number 
of retail stores named Crosby's. This law will drive up health-care 
costs and dampen employment opportunities. Businesses, especially small 
businesses like ours, will reduce costs by eliminating employees in the 
margin. Government bureaucrats cannot manage the health-care industry, 
only markets can accomplish this task. Markets driven by consumer 
choice and consumer responsibility are the key to fixing health care, 
and one of the aspects that this law affirmatively rejects (fewer 
HSAs). This does not even consider the damaging effects of the taxes 
embedded in this law; they will crush our economy in my opinion.
Tech Tool and Molded Plastics, Meadville, Pennsylvania--Mark Hanaway, 
        Vice-President--114 employees
    Mark says their company welcomes the opportunity for industry 
recommended solutions to address the cost of compliance, cost of care, 
and reduced competition that embodies government mandated provisions 
for employee benefits. Without more competition among insurance 
providers, the inevitable single-payer system or government run health-
care program will be the only option. He says their company has 
evaluated the cost impact and under current law, they will likely 
eliminate their health-care coverage.
Ray Overholt, Executive Director, Hermitage House Youth Services, 
        Cambridge Springs, Pennsylvania--90 employees
    We strongly feel that the health-care reform act will significantly 
increase health insurance costs, lead to rationing and/or long waits 
for services, drive doctors out of their field, and severely limit 
options. We will likely be forced to drop all coverage and let 
employees fend for themselves.
Cynthia Kramer, Kramer Automotive Specialties, Butler, PA--Five 
        employees
    The new law set up unfunded mandates that have cost us more in 
employee health insurance. Highmark has gone from a not-for-profit to a 
for-profit company, and they are surcharging us based on the health of 
our employee group because they anticipate their costs to skyrocket. To 
get the cheapest plan available, coverage has gone up for our small 
group by 24 percent, from $531 to $649. Our coverage to keep the better 
plan we had before was $794 per person. Our good healthy years no 
longer count as we grow older. We are surcharged for the age of our 
group as well as the group's health. Next year, I will no longer be 
offering employee health care if I can't get a rate under $500 per 
person. I can't afford it. My employees are like family to me, and I 
want to provide health care, but how can a small business do so with 
rates like these?
North Country Brewing Company, Slippery Rock, PA--Bob McCafferty, Co-
        owner--60 employees
    I own a brewery with a brewpub attached. I also represent 34 
restaurants in Butler County for the Butler County Tourism and 
Convention Bureau. I feel that there are many honest employers who do 
what they can for their employees, and don't need the government in 
their day-to-day business. Restaurants have razor thin profit margins. 
We offer health care to full-time employees and hope they build their 
career with us. We struggle to remain open due to the government-
involved regulations and the way they have expanded in such a short 
time. The more regulations, the more paperwork, longer timelines and 
impossible prices are killing businesses. The health-care reform law 
just adds one more layer. I think if the government wants to run all of 
our businesses, then they should start by reviewing their own P&L.
EA Mundkowsky Finishing LLC--Elsie A Mundkowsky, Owner/President
    The health-care law is so complicated that you have to have an 
attorney just to be able to know what is expected. I know that it will 
cost me money and I am already hanging by a thread. I really don't 
think that my business can handle much more out-of-pocket. There are so 
many regulations, insurances and taxes that it is so hard to keep my 
head above water. So as a very small business owner, I must tell you 
that I can't afford anything else. I just want to pay the people that 
work for me, pay my bills and I get no help from the government at all. 
I just keep getting taxed and taxed to death. Profit must be a dirty 
word.
Corry Micronics, Corry, Pennsylvania--Don Pavlek, President--30 
        employees
    Our premiums are going up 8-percent this year. I think that it is 
unfair that we have to cover children up to age 26 even if they are 
couch potatoes. I completely agree with providing coverage while they 
are in college or technical school but this is typical of socialism. We 
are essentially training our youth to expect entitlements at an early 
age. The law penalizes employers with more than 50 employees that have 
an employee who opts out of our insurance plan. If we are penalized 
$2,000 per employee per year, who wouldn't opt out and let the 
government provide the insurance. What are the consequences if everyone 
does this?
    In addition, I received many shorter responses with similar 
comments and common themes. Health insurance has long been the biggest 
concern of most businesses and they would welcome cost-effective 
reform. However, they do not view the PPACA as cost-effective reform. 
Looking forward, there is cause to believe that small businesses will 
see higher premiums, greater administrative burdens, reduced options 
and many unwanted surprises.
    Thank you for your interest in learning more about the business 
community's view on health-care reform. We need to reform the system in 
a way that controls cost through private market forces. We would ask 
for market-based reforms that: allow individuals a tax deduction on 
their premiums; require all doctors, hospitals and providers of health-
care services to list their services, outcomes and pricing; create 
total transparency from insurance companies on all provider contracts 
and administrative fees; apply a moratorium on all unfunded government 
mandates; allow for the purchase and sale of insurance products across 
state lines; allow individuals and employer-sponsored plans to purchase 
the specific services they want and need, as opposed to government-
mandated benefits and services; provide immediate tort reform; and 
allow insurance companies to properly calculate risk by imposing 
additional premium charges for those who refuse to make changes to 
risky lifestyle activities. This represents a small list of actions 
that would have an immediate impact on reducing the costs of health 
care, insurance premiums, and utilization.
    Thank you once again, Chairman Roe and members of the committee, 
for taking the time to hear from so many concerned business owners and 
constituent groups throughout this process.
                                 ______
                                 
    Chairman Roe. Thank all the witnesses. You all have done a 
great job. We're going to try to stay within our five minutes. 
Let me start by saying you can't get--when you look at the 
healthcare, this has bugged me from day one--is that healthcare 
should not be a Republican or Democrat problem. It's an 
American problem. I've never seen a Republican or a Democrat 
heart attack in my life. I've never operated on a Republican 
and Democrat cancer.
    The hardest decision I've had in my life was to sit down 
next to a friend's bedside and say, ``There's nothing more I 
can do for you as a physician. You're in God's hands.'' I've 
dealt with that over the three decades in my life. It's not 
about whether--it's what's the best way to do it. How much 
should government be involved?
    Do we need healthcare reform? Absolutely. Well, what did 
this plan do? And what concerned me greatly are our senior 
citizens. It took $550 billion out of an already underfunded 
Medicare plan. I am Medicare age. I'm on Medicare. We have 3 
million baby boomers retiring each year going to the Medicare 
system. In ten years, we're going to have $550 billion less to 
spend on 36 million more people. I can tell you what's going to 
happen. You're going to have less access to care. The quality 
of your care is going to go down and the cost is going to go 
up. That's the first time in the history, taking money that's 
designated for our senior citizens and move it to another 
entitlement, very first time in the history of our country.
    I run a business and my healthcare out of my practice. And 
we have a situation where we pay about $6,000 per employee. Ms. 
Joint, you mentioned this is extremely important. Businesses 
around that 50 mark, or in my case, 350, if I go out and pay 
this, if one person moves off into the exchange, I then can 
drop my employees off into the exchange, and I can save 
myself--I can pay a $2,000 fine. I got to pay tax on that 
money. I can save $3,000 per employee. For me that's $900,000 
to my business. Why wouldn't I do that?
    Businesses are asking why wouldn't I ask Secretary Sebelius 
that. I can tell you a Fortune 500 company came to my office in 
D.C. and said it's going to cost us $120 million, this mandate 
is. Because remember, you don't get to decide what your health 
insurance is. Essential benefit package is decided by the 
government, not you and your business and what you can afford. 
The example I used at lunch today is very--so bear with me.
    I've been fixed. My wife has been fixed. We got three grown 
kids. We don't need any more children. I got two grandkids. But 
an essential benefits package--and I'm going to jump off the 
tallest building in Johnson City, Tennessee face first in the 
parking lot if I thought I was going to have another child at 
my age. You get the idea. But an essential benefits package may 
require me to buy fertility insurance coverage for my wife. 
She's 55, 56 years old.
    So the question is: Why shouldn't those decisions be made? 
Why aren't companies going to do exactly what I just mentioned?
    Ms. Joint. I'm not sure I understand exactly what is----
    Chairman Roe. If you're about 50, why wouldn't you drop it 
and pay the fine and have your employees going into the 
exchange?
    Ms. Joint. That is the argument or the question, I guess, 
or the concern of a lot of the businesses. In their cases, for 
many of them depending on what their costs are, it would make 
more sense to do that. But then the question becomes what if 
everybody does that? Where does the money come from to paper 
all that? There have been estimates of how many people go into 
the exchanges and what that would do fiscally.
    Chairman Roe. Another thing I liked about all this is--I 
have three children--to allow your adult-aged child to stay on 
until age 26. That's a good deal. It actually costs about two 
and a half percent of a premium to do that. So it does increase 
the cost, but what people don't tell you about that is what if 
you don't have a mom and dad--the way the actuaries do this 
now, it used to be a six to one. You could charge anybody at my 
age six times what you would charge a young adult. Now that 
ratio has been changed to three to one. So a youngster that's 
out there now trying to buy insurance on their own that doesn't 
have a parent that can afford it, their price just went up two 
times.
    Senator White, I want to ask you a question. In Tennessee 
we tried healthcare reform in 1993 called TennCare. It's a 
managed care plan. Basically it covered--because we're not a 
very rich state. We have a lot of people and our per capita 
incomes are low. We tripled our cost in ten years. Our Governor 
Haslam and Governor Bredesen, who is a Democrat, had to deal 
with it as to the 2,000, almost bankrupted our state. Right now 
this mandate to expand Medicaid--quite frankly, the Medicaid 
and the 26 year olds may be the most coverage that's expanded. 
It could be between 15 and 24 million more people on Medicaid.
    How is that going to affect the budget of the State of 
Pennsylvania if you added that many more people? You all have 
probably done the estimates.
    Mr. White. The situation with the budget of Pennsylvania, 
which as I know Congressman Kelly is aware, is about as 
streamlined as you possibly could get it. The $800 million of 
additional premium in dollars that we have to spend on Medicare 
coverage this year is on a $27.2 billion budget, pretty 
dramatic, considering that if we had a--our governor in his 
infinite wisdom--we had a $500 million surplus last year, and 
despite a lot of people that wanted to rant and rave about 
spending that money decided to hold onto it. Thank God, because 
we have an $800 deficit this year. Just compound that year 
after year after year, not even to begin to mention--if I may 
make one statement, Congressman.
    This is near and dear to me. I don't know of any other 
landmark legislation that's ever been done at the Congressional 
level that wasn't done by bipartisan support. That's not the 
case here. That's not the case at all. The number of 
stakeholders that had limited input into this piece of 
legislation is abominable.
    Chairman Roe. Senator, my time has expired, but I will make 
one final statement. There are countless issues in the 111th 
Congress, 115 of them this year. Not one time was I asked about 
anything in the 2,500 page bill, which I read in its entirety, 
maybe one of the few people. As I said today, it doesn't say a 
lot about my intelligence, but I read every page of it, and 
there have been ten that are--and the regulatory writers are 
still writing--over 10,000 pages of rules right now and still 
counting.
    Yield the time now to Mr. Kelly.
    Mr. Kelly. Thank you, Mr. Chairman. I want to thank you, 
everybody, that came before us today in testifying. I'm going 
to come about it from a little different approach. What we 
talked was a field hearing on healthcare challenges and facing 
Pennsylvania's workers and job creators. I just want to make 
sure that we understand. This has never been about healthcare, 
never been about the things that touch--pull at our heart 
strings. It's about what we can afford to do and what we can 
provide. And then what happens when we realize that there's a 
lot of things that this bill puts in there that are totally 
unaffordable and decrease the amount of accessibility.
    So if it's about affordability, it's about accessibility, 
it certainly missed the mark. Senator, I know what Pennsylvania 
faces. Really the challenges we face today in everything that 
we're looking at, all the shortfalls we have are because of the 
fact that we don't have enough people working. We don't have 
enough companies making profits. Because the last time I 
looked, tax revenues drive all of these opportunities and all 
of these packages that we have available. Services we have 
available for people is paid for by taxpayers, hard working 
Americans that go to work every day and spend their money on 
taxes that the state collects, local municipalities collect, 
school districts collect, the federal government collects, and 
every time they buy something, there's a sales tax. You are so 
overtaxed right now, I just wonder what--the old saying is 
don't worry about the mule; just slow the wagon--at what point 
does the mule say I'm unhitching myself from the wagon.
    Again, this is not about somebody's healthcare. This is 
about affordability and accessibility. And I have to tell you 
from a guy who hires people, when I don't know what it's going 
to cost to actually pay somebody, it's hard to make that 
decision. And I would ask you, because in your years since 
2001, as you go through your district, the number one concern 
of job creators, small business people, what do you hear from 
them?
    Mr. White. Well, in this case, they talk about fees. But 
they're talking we need jobs. We need job creators. We need 
entrepreneurs. And in this environment we currently have in 
Pennsylvania, as you're very well aware, Congressman, to come 
to Pennsylvania and want to conduct a business and be from out 
of state, be from out of country--this is a global economy--in 
my opinion--and you're an exception; you had a very exceptional 
career as a local businessman--I think you'd have to be one of 
three things: You'd have to have family entrenched here in 
Pennsylvania or you'd have to be philanthropist or you'd have 
to be plain stupid. And I mean that sincerely about our working 
environment here in Pennsylvania.
    We're behind so many different states. You at the national 
level are well aware of our CNI and a few other of our little 
issues. My hope is that--you put a burden like this on top of 
this, which doesn't address cost of insurance, all this is is 
minor insurance reform. This has nothing to do with the cost.
    How can you discuss overall medical reform when you don't 
even discuss for one minute tort reform, medical malpractice 
and defensive medicine, Doctor? How does this happen? Does 
everybody in your position and my position want to make sure 
that everybody out there has access to affordable insurance? 
Yes, we do. But the key word is affordable, and you can't place 
the burden on one segment of society.
    Mr. Kelly. Thank you, Senator.
    Ms. Bishop, also Ms. Joint, because you come into contact 
with so many small business people and job creators, truly if 
this nation is to recover, it will come from the small sector. 
It will come from the private sector and job creators, small 
business people. That's where it's going to come from. It's not 
going to come from government growing bigger and bigger every 
day which takes more and more out of your pocket to operate. 
It's going to come from the private sector.
    You talk to people every day, as I do. Just if you could, 
because you're involved with associations, some of the 
challenges that your folks face. You talk to them on a very 
personal basis and you know what they're talking about when 
they're wringing their hands and they're saying I want to be 
able to do this. I'm just not sure what it's going to cost me. 
I think that's the part that's so hard to explain to people. As 
a job creator, as an employer, you really don't know what this 
is going to cost you ultimately.
    If you could, Ms. Bishop and Ms. Joint, because you talk to 
so many of these folks on a very personal basis, if you could 
just share a little bit of that.
    Ms. Bishop. You're exactly right, Congressman. Part of the 
challenge is when you're running a business, you have a budget 
set up. You know how much income is coming in, and you 
anticipate how many expenses are going to go out. Could you 
imagine trying to run that budget and having no idea how much 
in expenses, you don't know how much in income. We can't even 
do that on our own personal level. You know when you bring home 
your paycheck how much in bills you have to pay. Well, what if 
all of a sudden you didn't know what your bills are and you 
don't know if your salary is even going to be able to match a 
quarter of it, half of it, or what the case may be.
    There are a lot of scared business owners in our community, 
and healthcare is just one piece. The other part of it is we 
have jobs in northwestern Pennsylvania. We can't get people to 
go to work. Two reasons. One, they can't pass a drug test. Two, 
they don't want to come off the unemployment extended vacation 
plan. So that is a huge concern in our community. So you 
compound those three together, and you've got a lot of business 
owners really worried about the future.
    Mr. Kelly. Thank you. Ms. Joint.
    Ms. Joint. I've been with our association for almost 20 
years, and I've met some wonderful, wonderful business owners 
all over the State of Pennsylvania and beyond. I can tell you 
they do care about their employees. They do want to see good 
things happen and help them and have things be reasonable; 
however, some of the comments that I didn't have time to 
include in my testimony today is, you know, my employees are 
like family to me. This is so hard for me, but I literally 
cannot afford one more thing.
    And what a lot of it comes down to--we do a lot of surveys 
and we go out and meet, talk with businesses--it's regulations. 
First, they don't understand it, and that's, I think, one of 
the biggest things. Now that I've really studied a lot of the 
different parts of this, there are so many different parts of 
this law that people have no idea, that don't even make sense. 
There's no common sense to it. I think you're seeing that as 
the federal government starts to back out of some of the things 
and change some of the things they've done.
    So it's the uncertainty of this, but it's the regulations. 
They look at this in many ways as what more. I can't tell you 
how many times I hear ``One more thing and I'm out of business, 
one more thing and I'm going to have to lay off people that 
work for me, they're going to have no job,'' because we 
literally--I don't want people to think all these businesses 
are making--I'm not talking even a GE or whatever.
    I'm talking your typical, what most of our members are, 
which are your five employees to 25 employees, and they feel 
like they can't get a break. And this is one more thing on top 
of it. It's very sad as a human being and a person to go out 
and see these things. It's very, very sad. So it's one more 
regulation on top of what they're already facing.
    Mr. Kelly. Thank you. And just so you both can weigh in, 
we're not talking about huge employers like GE and GM and AK 
Steel. We're talking about very small family-owned businesses 
that struggle every day to make it, and they hire our sons and 
daughters and they're the ones that enable us to stay in the 
communities we live in right now by providing that type of 
work.
    So thanks so much for coming here today. Senator, it's good 
seeing you again. Ms. Koehler, thank you so much.
    Chairman Roe. Just one final statement before you leave. I 
think you've all been great, great panel. Let me say that 
Secretary Sebelius has granted over 1,700 waivers so far. If 
this bill was that great, why would you have to have 1,700 
waivers? Let me give you--when they wrote this, it was written 
with such speed and went through no committee hearings. The 
Senate, the bill, did not have any committee hearings.
    I picked this up and wrote to the IRS. When you have a 
state run exchange, the subsidies that the federal government 
gave you are not as much as what your employers have been 
paying, and the other is not tax deductible. So it cost the 
person getting the insurance through the exchange more. When 
you get in the weeds and start reading this, about half of you 
understand that.
    Secondly, what they did in this was stagnate--missed that 
tax deductibility on the state run, the government run, federal 
run exchange. Texas is facing that right now. So they created 
an IRS problem with the people in Texas.
    You all have been great. Thank you very much. We'll let you 
go and then we'll have the second panel step up.
    Before we introduce our next panel, Mr. Kelly, I'd like to 
introduce for the record the Ranking Member, Rob Andrews, who 
would like to include a statement.
    Without objection, so ordered.
    [The information follows:]

     Prepared Statement of Hon. Robert E. Andrews, Ranking Member,
         Subcommittee on Health, Employment, Labor and Pensions

    Good Morning, Mr. Chairman. As we all very well know, health care 
costs have been skyrocketing for decades. And for decades, Congress 
failed to do anything about it. Recognizing that reforming this 
country's health care system could wait no longer, congressional 
Democrats passed and President Obama signed the historic Affordable 
Care Act into law nearly two years ago.
    This law takes control of health care away from the multibillion 
dollar insurance industry and returns it to American families where it 
belongs. And, while much of the law will not be fully implemented until 
2014, today, millions of Americans are already benefiting.
    Medicare is stronger. Seniors are paying less for prescription 
drugs. Young adults are able to stay on their parents' health plan. 
Children who need life-saving medical attention can no longer be denied 
coverage due to a pre-existing condition, and all Americans are 
protected against lifetime limits and rescissions. Additionally, small 
employers can obtain substantial savings in health care costs through 
the small business tax credit.
    Pennsylvanians now have long overdue protections against their 
insurance companies.
     Nearly 7.7 million Pennsylvania residents can no longer be 
subjected to a lifetime limit cap on their health coverage.
     Nearly 680,000 Pennsylvanians no longer face the 
uncertainty that their health insurer can drop their health coverage 
when they need it the most.
     More than 32,000 young adults in Pennsylvania may now have 
coverage through their parent's health plan because of the law.
     Nearly 4,400 previously uninsured Pennsylvanians with a 
preexisting condition have already obtained coverage through the law's 
Pre-existing Condition Insurance Plan.
    Employers are also realizing the benefits of the law. More than 
179,000 small employers in the state may be eligible for the law's 
small business tax credit. More than 430 employers in Pennsylvania and 
their employees are paying less for retiree health care after receiving 
more than $106 million in financial assistance through the Early 
Retiree Reinsurance Program.
    And when the Affordable Care Act is fully implemented, the law will 
extend access to quality, affordable health care coverage to those who 
need it. Americans will no longer fear losing their health insurance if 
they change jobs, decide to start a small business or have a 
preexisting condition.
    Employers could see even more savings through the elimination of 
pre-existing condition underwriting, medical loss ratio standards, 
states successfully combating unreasonable premium increases, and 
reforms such as Accountable Care Organizations that pay for quality of 
outcomes, rather than quantity of tests.
    Seniors are also seeing significant benefits right now. Last year, 
235,820 Medicare beneficiaries in Pennsylvania who hit the Medicare 
prescription drug donut hole saved a total of $156 million on their 
prescriptions--an average of $662 per beneficiary. That is a 
significant savings. One million seniors on Medicare received at least 
one preventive service last year, including almost 59,000 annual 
wellness visits, without cost sharing or deductibles. With the passage 
of the Affordable Care Act, Pennsylvania has received funding to plan 
for a health insurance exchange, support programs that prevent illness 
and promote health, strengthen the health care workforce, and invest in 
groundbreaking biomedical research. Specifically, the state has 
received:
     More than $48 million to support 231 projects in the state 
that show potential in producing new and cost-saving therapies. More 
than $18 million for primary care training that will expand and support 
Pennsylvania's primary care workforce.
     $2 million to allow school based health centers to expand 
and provide more services to students in Pennsylvania.
     Nearly $2 million for community and clinical prevention 
services that will help Pennsylvania prevent and manage costly 
conditions.
     A $1 million exchange planning grant to conduct the 
research and planning necessary to build a health insurance exchange.
    Despite doomsayers, putting patients and doctors back in control of 
their health care hasn't hurt the economy. In fact, more than 500,000 
jobs have been created in the health care field since the law's 
enactment with more than 3.5 million private sector jobs created 
overall nationwide.
    All of these critical reforms would vanish if the law is repealed. 
Seniors would pay more for their prescriptions and preventive care, 
young adults would no longer have to ability to stay on their parents' 
plan, and insurance companies could once again discriminate based on a 
preexisting condition.
    While House Republicans have pressed for repeal, their only 
alternative to the Affordable Care Act thus far has been a proposal to 
end Medicare as we know it.
    This would be a disaster for our nation's seniors. This plan will 
increase costs faster and shift more of the burden on the back of 
seniors themselves. Even after paying into the system for decades, the 
107,000 individuals between 44 and 54 in this congressional district 
would have to pay more than $6,000 per year in increased costs in 2022 
and pay about $12,000 more per year in increased costs in 2032 under 
the Republican plan to end the Medicare guarantee.
    To cover these additional costs, a 54-year-old would need to save 
$182,000 by the time he or she retires to purchase health insurance. I 
don't know a whole lot of working people who can scrape up an extra 
$182,000 before they retire.
    As we approach the second anniversary of the Affordable Care Act, 
we should be reinforcing the protections that hard working families now 
enjoy under the law. We should not be finding ways to end Medicare. In 
closing, spending our precious time refighting the same political 
battles will not move this country forward. The American people deserve 
better. In the short time left in this Congress, we should be working 
together to put more Americans back to work and strengthen the middle 
class.
                                 ______
                                 
    Mr. Kelly. Thank you, Mr. Chairman. Our second panel is 
also made up of local business owners all from this area, and I 
think it's really important to understand the whole purpose of 
this hearing was not to ask you to come to Washington, D.C. so 
Washington, D.C. could hear your concerns. It was to come out 
in the field and meet you in the places where you live and the 
businesses that you run, be able to get your feelings and your 
weigh-in on what the federal government is doing.
    First I'd like to introduce Ms. Cathyann Kanterman. She 
serves as the chief financial officer for Associated Ceramics & 
Technology in Sarver, PA. Associated Ceramics & Technology 
employs 33 Pennsylvanians and specializes in engineering and 
manufacturing complex ceramic products. Thank you, Ms. 
Kanterman.
    Mr. Paul Nelson, as you may remember, he was our Veteran 
who we asked to do the Pledge of Allegiance. I want you to 
listen to where Mr. Nelson came from. He's the owner of 
Waldameer Park & Water World in Erie, PA which a lot of us know 
because we grew up going there on weekends. Mr. Nelson started 
at Waldameer as a dishwasher 67 years ago, and he's owned that 
park since 1978. The park employs 400 part-time seasonal 
workers.
    Mr. Nelson, thanks for being here.
    Also, Mr. Ralph Vitt, who owned Vitt Insurance in 
Pittsburgh for 20 years. His expertise was in providing 
business owners with healthcare. Mr. Vitt holds both a 
Bachelor's and a Master's degree from the University of Akron 
in Akron, Ohio.
    Good to have you with us. Thank you.
    Mr. Will Knecht is the president of the Wendell August 
Forge in Mercer, Pennsylvania. If there's a person in this area 
that doesn't know of Wendell August Forge and have a piece in 
their home, then you haven't lived here very long. Mr. Knecht 
runs the oldest small metal forgery in the United States 
producing what I think is the most beautiful handwrought metal 
that I've seen since 1923.
    Thank you all for being here, and we appreciate you taking 
time out of your professional and private lives to come and 
share your experiences with us. Mr. Chairman.
    Chairman Roe. Remember the light system. Five minutes. It 
will turn amber when you've got one minute, turn red when your 
time is expired. We will not gavel you right in the middle of 
it, but please try to wrap it up, if you would.
    Ms. Kanterman?

   STATEMENT OF CATHYANN KANTERMAN, CHIEF FINANCIAL OFFICER, 
                ASSOCIATED CERAMICS & TECHNOLOGY

    Ms. Kanterman. Thank you, Mike, for inviting us here today, 
first of all.
    Secondly, our business was started by my father and two 
partners over 45 years ago. So we're a family-owned business, 
and I'm part of the family, and I've been working there for 
over 20 years.
    I've been involved with the purchase of our employee 
benefits for over 15 years. We have 41 employees. We offer 
healthcare insurance to our full-time employees, and we 
currently cover 33 employees' healthcare insurance at a cost of 
more than a quarter of a million dollars per year. Add to that 
our HRA reimbursements in 2011 of $12,000.
    The Federal Patient Protection and Affordable Care Act of 
2010 is concerning for me mostly on the things it did not do. 
It did not reduce the cost of insurance. It did not reduce the 
uncertainty of offering insurance. It did not force insurance 
companies to disclose any information to purchasers, us 
employers. And it did nothing to address the supply side of the 
healthcare equation.
    As far as reducing the cost of insurance, the affordable 
care part of the title of this bill was a misnomer. The bill 
added coverage to millions of people. It's my belief that 
anyone who thinks you can cover more people and reduce the 
overall cost of insurance must be delusional. The tax on 
medical device manufacturers and the small business insurance 
tax will be passed onto us, the employers. The fact that so 
many employers and unions have requested exemptions from 
provisions of the bill indicate that those employers and unions 
do not believe the Act will reduce the cost of insurance.
    Our insurance this past year increased 11 percent. So 
again, I don't see how that is affordable care. In regard to 
reducing the uncertainty of offering insurance, as more and 
more provisions of the Act are enacted, the uncertainty of 
offering insurance to our employees will certainly increase. 
The uncertainty is part of the reason that we are currently 
using temporary services to fill our position and working 
overtime with our current employees rather than adding 
additional employees.
    We also need to be mindful of the additional requirements 
as we approach the magical number of 50 employees. At that 
number we will not be eligible for healthcare exchanges. We 
will be subject to penalties if we choose not to offer 
insurance. Another area of uncertainty is the FSA limits. 
Currently if one of our employees covers more than just the 
individual employee, we offer--we, the company, pays two-thirds 
of the premium and the employee pays the one-third, and we do 
that through a premium only FSA.
    With the new limit of $2,500 for the tax deductible part of 
that FSA, our employees will no longer be able to cover the 
full one-third of their premium payment. And this is basically 
a tax increase on working class employees. And keep in mind 
that's at today's cost. It doesn't factor in any future 
increases on those premiums. Suppose that the lack of tax 
deductibility of the premium and the increase in insurance 
encourages our business to drop the coverage and pay our 
employees a flat rate to cover their own insurance. I would 
predict other than employees with known health issue, many of 
our employees would take those premium dollars, put them in 
their pocket and pay the penalty rather than purchase 
individual insurance policies due to the artificially low 
penalty that this bill imposes.
    When those employees get sick or have health problems, the 
elimination of preexisting conditions from insurance policies 
will make it easy for them to buy insurance at that time. 
Therefore, only truly sick people will be buying insurance, and 
the cost of insurance will probably be astronomically high. So 
the penalty for buying insurance will also have to increase 
astronomically. This will cause our employers to come back to 
us and request a pay increase to cover the cost of either the 
insurance or the penalty. How can this not lead to inflation. 
Where are the market forces?
    With regard to forcing insurance companies to disclose 
information to employees as the purchasers of insurance, I 
think that Congress could have actually used this bill to help 
us as small employers when we are dealing with health insurance 
companies. As I told you in the opening, we pay a quarter of a 
million dollars for our insurance.
    Our health insurance provider does not tell us how much 
money they pay on behalf of our employees. You know that they 
know a hundred percent exactly how much they pay, but they 
don't have to tell us unless we have more than a hundred 
employees. Our business is too small to put time and effort and 
financial resources into a program like a wellness program 
without knowing what the pay-off or potential pay-off might be.
    As to the supply side of the healthcare equation, it 
bothers me that this bill does nothing to address supply. Where 
is the assistance to get more primary care doctors or nurse 
practitioners? How can you expect to give coverage to millions 
of people and not expect that they want to see a provider?
    Finally, I'm concerned about being caught in the excise tax 
on high cost plans, the so-called Cadillac tax, even though I 
don't think our plan is a Cadillac plan. The excise tax goes 
into effect in 2018. We are only 20 percent below the threshold 
amount for the excise tax in 2012. With an average increase of 
11 to 13 percent, I see zero chance that we won't be in that 
excise tax, and that's basically a tax on us as a small 
business.
    It's disappointing from a business perspective. When the 
Congress had a chance to make a change in healthcare insurance 
in America, instead of choosing to make the health insurance 
industry operate more like a market, they chose to come up with 
this whole new concept of accountable care organizations which 
have not been defined and cannot be shown to make the market 
operate more efficiently.
    They increase demand without addressing supply and, as far 
as I can tell, did nothing to address the cost of care.
    Thank you for your time, and I appreciate being heard. I 
also appreciate that Congress repealed the 1099 provision.
    [The statement of Ms. Kanterman follows:]

  Prepared Statement of Patti-Ann Kanterman, Chief Financial Officer,
                 Associated Ceramics & Technology, Inc.

    My name is Patti-Ann Kanterman. I would like to thank Congressman 
Mike Kelly for inviting me here today. I am currently the Chief 
Financial Officer of Associated Ceramics & Technology, Inc. This is a 
family-owned business that manufactures industrial ceramics for which I 
have been working for over 20 years. I have been involved with the 
purchase of our employee benefits for over 15 years. We have 41 
employees. We offer health care insurance to our full-time employees. 
We currently cover 33 employees' health care insurance at a cost of 
more than a quarter of a million dollars per year. Add to that HRA 
reimbursements in 2011 of over $12,000.
    The Patient Protection and Affordable Care Act of 2010 is 
concerning for me mostly on the things that it did not do.
    1. It did not reduce cost of insurance.
    2. It did not reduce uncertainty of offering insurance.
    3. It did not force insurance companies to disclose information to 
the purchasers (employers).
    4. It did nothing to address the supply side of the health care 
equation.
    As far as reducing the cost of insurance, the ``Affordable Care'' 
part of the title of this bill is a misnomer. The bill added coverage 
to millions of people. It is my belief that anyone who thinks that you 
can cover more people and reduce the overall cost of insurance, must be 
delusional. The tax on medical device manufacturers and the small 
business insurance tax will be passed on to purchasers (employers). The 
fact that so many employers and unions have requested exemptions from 
provisions of the bill indicates that those employers and unions do not 
believe that the Act will reduce the cost of insurance. In fact, our 
average increase in insurance over the last 14 years has been 13%, 
despite our increase of the deductible for our plan from $0 to $1,250 
per person and the addition of an HRA where we reimburse our employees 
for one-half of the deductible. Our premium increase from 2011 to 2012 
was 11%. We have not realized a reduction in our cost. This is not what 
I would call ``Affordable Care''.
    In regard to reducing the uncertainty of offering insurance, as 
more and more provisions of the Act are enacted, the uncertainty of 
offering insurance to our employees will increase. The uncertainty is 
part of the reason that we are using temporary services to fill our 
open positions and working overtime with our current employees rather 
than adding additional employees. We also need to be mindful of the 
additional requirements as we approach the ``magical'' number of 50 
employees. At that number, we will not be eligible for health care 
exchanges and we will be subject to penalties if we choose not to offer 
insurance. Another area of uncertainty is FSA limits. Currently, if one 
of our employees covers more than the individual, we pay \2/3\rds of 
the premium and allow the employee to cover their portion of the 
premium through a premium only FSA. With the new limit of $2,500 for a 
tax-deductible FSA, our employees will no longer be able to cover all 
of their portion of the premium payment through the FSA, effectively 
increasing the taxes for the employees. This is a tax increase on 
working class employees. Keep in mind that this is at today's cost. It 
does not address future premium increases.
    Let's suppose that the lack of tax deductibility of the premium and 
the increase in insurance cost encourages our business to drop coverage 
and pay employees a flat rate to purchase their own insurance. I would 
predict that other than employees with known health issues, most of our 
employees would take those premium dollars and put them into their 
pocket and pay the penalty rather than purchase an individual insurance 
policy, due to the artificially low penalty. When those employees get 
sick or have a health problem, the elimination of pre-existing 
conditions from insurance policies will make it easy for those 
employees to purchase insurance at that time. Because only truly sick 
people are buying insurance, the cost of insurance will probably be 
astronomically high, so the penalty for not buying insurance will 
increase astronomically as well. This will cause our employees to come 
back to us and request a pay increase to cover the cost of either the 
insurance or the penalty. How can this not lead to inflation? Where are 
the market forces in this legislation?
    With regard to forcing insurance companies to disclose information 
to the employers as the purchasers of insurance, I think that Congress 
could have used this bill to actually help us as a small employer when 
we are dealing with health insurance companies. As I told you in my 
opening, we pay a quarter of a million dollars in health insurance 
premiums. Our health insurance provider does not tell us how much they 
pay out on behalf of our employees. In fact, our health insurance 
company tells us that they do not need to tell us that information 
until we have over 100 employees. I do not think this is fair. You know 
that they know exactly how much they pay out. I do not want to know how 
much they pay for employee A versus employee B, I just want to know the 
total. It is hard to justify the cost of a wellness program when the 
insurance company won't disclose information. Our business is too small 
to put time, effort, and financial resources into a program and 
``hope'' for a payoff.
    As to the supply side of the health care equation it bothers me is 
that the bill does nothing to address supply. Where is there assistance 
to get more primary care doctors or nurse practitioners? How can you 
think that you will give health care coverage to millions more people 
and not suspect that they will want to actually see a provider?
    Finally, I am concerned about being caught in the Excise tax on 
High-Cost plans (the so called ``Cadillac'' tax) even though I don't 
think that our plan is a Cadillac plan. The excise tax goes into effect 
in 2018. We are only one 20% below the threshold amount for the excise 
tax in 2012. At an average of 11-13% annual premium increases, I see 
the chances of not meeting the threshold for the excise tax as 
extremely slim. So this is another tax on our business in addition to 
the small business health insurance tax. Why would the Congress want to 
add more taxes to small businesses?
    It is disappointing that from a business perspective, when the 
Congress had a chance to make a change in health insurance in America, 
instead of choosing to make the health insurance industry operate like 
a market, they chose to come up with a whole new concept of Accountable 
Care Organizations, which have not been defined and cannot be shown to 
make the market operate more efficiently. They increased demand without 
addressing supply, and as far as I can tell did nothing to address the 
cost of care.
    Thank you for your time and attention. If nothing else comes of my 
testimony, I feel better having been heard.
                                 ______
                                 
    Chairman Roe. Thank you, Ms. Kanterman.
    Mr. Nelson, I appreciate your service. I, too, one summer 
at Boys Scout Camp washed 350 dishes three times a day. I 
decided at that point in time--that had, in fact, convinced me 
that chemistry was not that hard.
    Mr. Nelson, you're up.

                STATEMENT OF PAUL NELSON, OWNER,
                  WALDAMEER PARK & WATER WORLD

    Mr. Nelson. Thank you very much. First of all, I want to 
say one thing. We have been successful because we do long-term 
planning. We have a five-year plan. We have a ten-year plan.
    No way can Congress, the Senate or the President help a 
small business if they can't make long-term plans. It's the 
most important thing you can do. Our bank needs to know this. 
Our management team needs to know it. And our employees need to 
know it.
    My name is Paul G. Nelson, and I'm owner and CEO of 
Waldameer Park, Inc. in Erie, PA. The park opened in 1896 as an 
amusement park, and we added a water park to the complex. There 
are three generations of our family working in Waldameer. We 
have engineers, my daughter who's on a heart team. We have a 
lot of college employees. And when you think about seasonal 
businesses, our full-time employees make more money than people 
working in plants.
    I graduated in 1955 with a college degree in business from 
Michigan State. Then I served in the Army. At the completion of 
my tour in Germany, I came home and became manager of our 
family business. I started working when I was 11. I have done 
every job in the park. In fact, dishwashing was easy.
    I wanted a promotion when I was 12, and I was pretty big 
for my age. So I asked the right person. He said, ``Don't 
worry. When you come back, you've got that better job.'' I had 
a keyring, two keys and a whistle. And, boy, was I impressed 
until I found out--I knew where his office was, over the 
ladies' room. And every hour on the hour all summer long I blew 
that whistle, and I cleaned the toilets in the park.
    I'm still working full time. I'm 78, and I love it. I've 
been active in our community, in our industry. I've been past 
president of the following organizations: I was president of 
the Millcreek Township Chamber of Commerce, and I merged it 
with the city because I believe that bigness cuts cost. I was 
president, and we started in our park office the Erie County 
Tourist and Convention Bureau. I was president of the 
Pennsylvania Amusement Park Association. I was asked and was on 
the bored of our International Association of Amusement Parks 
and Attractions several times. I was asked to be president. I 
couldn't do that because it's a four-year obligation and you're 
traveling all over the world.
    The majority of family-owned amusement parks in 
Pennsylvania, in our nation, have gone out of business in the 
last 10 to 20 years. Waldameer is one of the few successful 
family-owned amusement parks that continue to grow. We are 
definitely a small business. We only have 18 full-time 
employees, and we have 400 seasonal employees. The majority of 
the seasonal employees are high school or college students.
    We have continued to grow by having long-term plans, 
sticking to our family goals, plus an excellent relationship 
with our bank. And how do you get a good relationship with your 
bank? You pay your bills. You have long-term plans. I meet with 
the bank four times a year. Of course, I do admit that I get a 
free meal. We operate with a small dedicated full-time staff. 
Have a good relationship with our outside contractors. We spend 
hundreds of thousands of dollars outside our park having small 
contractors work for us.
    We find out it's best to go to the experts. We're good at 
what we do, but there are other people that are better at doing 
some of the stuff we thought we could do. We do this for major 
projects. For example, at one time we could buy a major ride 
for $25,000 and install it ourselves. Today a major ride costs 
in the millions, and we could not install without the help from 
the manufacturer and experts in this construction.
    For those who know about the Ravine Flyer II, it was voted 
the best coaster in the world. It was built the year it came 
up. This year will be its fifth season. That cost our small 
park $7 and a half million.
    Waldameer is one of the major engines in the promoting of 
our regional recreation, and we have spent millions of dollars. 
We advertise between Buffalo, Pittsburgh and Cleveland on over 
150 radio stations.
    We know that health insurance is very expensive. We felt we 
should do something to help our full-time employees with the 
cost. Many years ago we decided to pay 100 percent of the cost. 
About ten years ago to help control what our employees were 
doing with their insurance and because of the rising of the 
cost, we had the employees pick up 20 percent. So any new 
employee pays 20 percent. We pay 80.
    But all the old-time employees, which is half of our crew, 
I promised that I would pay a hundred percent. So we still do 
and we will until each one of those retire. Our employees feel 
this is a very fair decision, and we all work together.
    Our health insurance is handled by HealthAmerica. The 
family rate is $12,587 annually. Then it works down for other 
classifications. What worries us about the government is for 
our part-time employees. We are a seasonal business. We work 90 
days a year. That's where the money comes in. The rest of the 
time we're spending it. We worry about the state of the 
economy, but we also worry about the weather. It's a major 
factor in our annual success.
    The majority of our part-time employees are students, and 
many of them are already on their parents' health insurance 
policies. Insurance companies do not want to put on part-time 
people for those part-time people could jump on the policy, 
have something done, and jump off. Therefore, our cost would go 
up to pay for this, and that's something that worries me.
    The simple fact is we cannot afford health insurance for 
400 part-time employees. Waldameer, one of the main engines to 
promote our tourist industry in northwest Pennsylvania, would 
just be out of business, and no one would benefit from us 
leaving the scene. Thank you.
    [The statement of Mr. Nelson follows:]

          Prepared Statement of Paul T. Nelson, Owner and CEO,
                          Waldameer Park, Inc.

    My name is Paul T. Nelson and I am owner and CEO of Waldameer Park, 
Inc. Waldameer opened in 1896 as an amusement park and added a water 
park to the complex. Today there are 3 generations of our family 
working at Waldameer.
    I graduated in 1955 with a college degree in business from Michigan 
State, then served in the U.S. Army. At the completion of my tour in 
Germany, I came home and became manager of our family business (at 11 
years old I started working at Waldameer, and am still a full-time 
employee at the age of 78). I have been active in our community and 
industry, being past president of the following organizations: 
Millcreek Township Chamber of Commerce, Erie County Tourist and 
Convention Bureau, Pennsylvania Amusement Park Association, and on the 
Board of the International Association of Amusement Parks and 
Attractions several times.
    The majority of family owned amusement parks in Pennsylvania and 
our nation have gone out of business in the last 10 to 20 years. 
Waldameer Park is one of the few successful family-owned amusement 
parks that continues to grow. We are definitely a small business, with 
only 18 full-time employees and approximately 400 seasonal employees, 
and the majority of those are high school and college students. We have 
continued to grow by having long term plans, sticking to our family 
goals, plus an excellent relationship with our bank.
    We operate with a small, dedicated full-time staff and have good 
relationships with outside contractors who supplement our staff when we 
have major capital projects. For example, at one time we could buy a 
major new ride for $25,000 and install it ourselves. Today, a major 
ride costs in the millions and we would not be able to install it 
without help from the manufacturer and experts that specialize in this 
type of construction.
    Waldameer is one of the major engines of promoting our region as a 
recreational area and have spent millions of dollars advertising 
between Buffalo, Pittsburgh and Cleveland.
    We know that health insurance is very expensive and felt that we 
should help our full-time employees with this cost. Many years ago we 
decided to pay 100% of the cost. About 10 years ago, to help control 
how our employees were using their health insurance and to help defray 
the cost increases, we decided that new full-time employees would pick 
up 20% of the cost and we would pay for 80%. For the old-timers we 
still pay 100%, as that is what I promised to do. Waldameer employees 
feel that this is a fair decision.
    Our health insurance is handled by Health America and the family 
rate is $12,587 annually and works downward for other classifications. 
What worries us is what the government is planning for part-time 
employees. We are a seasonal business that is only open 90 days. We 
worry about the state of the economy, but the weather is also a major 
factor in our annual success. The majority of our part-time employees 
are students, and many of them are already on their parents' health 
insurance policies. Insurance companies are not interested in part-time 
employees being added to our plan. A part-time employee could have an 
expensive procedure, then leave employment, sticking the insurance 
company with the bill. This increased cost would cause the insurance 
company to raise our rates.
    The simple fact is that we cannot afford health insurance for 400 
part-time employees, and Waldameer, one of the main engines of 
promoting the tourist industry in NW Pennsylvania, would be out of 
business, and no one would benefit from this situation.
                                 ______
                                 
    Chairman Roe. Thank you, Mr. Nelson.
    Mr. Vitt?

         STATEMENT OF RALPH VITT, OWNER, VITT INSURANCE

    Mr. Vitt. Thank you for the opportunity to testify before 
this panel. Today I realize how my alma mater's, the University 
of Akron, football team must have felt when they played Penn 
State in Beaver Stadium opening season. To their credit, they 
stayed the game all four quarters. I intend to do this also.
    My name is Ralph Vitt. I owned Vitt Insurance Services in 
Pittsburgh for 20 years. My medical insurance company employed 
two people, but I worked with countless small business owners 
over the years helping them purchase insurance for themselves 
and their employees. I have an appreciation of small business 
owners' concerns and challenges in buying health insurance, 
which is why I speak in support today of the Affordable Care 
Act.
    There are many reforms in this new law. Some have been 
implemented already and others that will be put in place over 
the next couple of years that will help small business owners. 
Most small employers with whom I have dealt would prefer not to 
be part of the healthcare delivery system as purveyors of 
medical insurance.
    With the advent of insurance exchanges, they may get some 
relief both in purchasing a medical plan for their business or 
the possibility that many folks will purchase individual plans 
giving them affordability to move to another job without loss 
of coverage.
    In addition, the idea of having medical insurance that is 
not contingent upon being with a specific employer will allow 
employers to staff their businesses with folks whose training, 
experience and career paths are in sync with the success of 
their organization. At the same time, employees will not be 
forced to remain in a position for which they are not 
adequately trained or forego a different career path just 
because they need health insurance. The improvement in the 
productivity of the employee will, no doubt, improve the 
profitability of the business.
    Moreover, small business tax credits which are available to 
small employers now will also help make insurance more 
affordable. The nonpartisan small business majority found that 
one-third of small business owners who do not offer health 
insurance will be more likely to do so because of the tax 
credits and 31 percent of those who do would be more likely to 
continue offering insurance because of the tax credits.
    In these difficult economic times, every dollar helps and 
small businesses appreciate anything that will make insurance 
more affordable. I have seen other reports that small 
businesses are worried about the cost of healthcare. A small 
business majority also released polling that found most small 
businesses don't know about many of the provisions to help 
them. It's no wonder they're concerned. They don't know these 
things exist to help lower costs.
    The wellness benefits are a big help in providing 
preventive medicine. If medical treatment is needed, reduce the 
cost of procedures by acting early in the diagnosis. This will 
lower overall healthcare costs across the board.
    Additionally, allowing children to stay on their parents' 
medical insurance until age 26, regardless of student status, 
is an excellent benefit to individuals entering the workforce. 
As an example, my granddaughter will graduate from college in 
May 2012 and has a job offer that will use her degree in 
international business. Her future employer, a small firm of 
eight to ten people, does not offer a group medical plan. By 
staying on her father's plan, she can accept the offer, work in 
a field for which she has trained, and begin a career path 
right out of college.
    Of the benefits that will be phased in over time, the 
guaranteed issue of coverage without regard to preexisting 
conditions is, in my opinion, the most important component of 
the ACA. Having sold medical insurance for 20 years, I realize 
the frustrations people experience when they are declined for 
coverage due to medical history. If medical underwriting is no 
longer used and the threat of adverse selection is reduced by 
requiring that individuals purchase health insurance, the 
market will grow exponentially plus broadening the actuarial 
base used to determine rates. This will allow individuals to 
select plans that fit more closely to their financial and 
medical needs.
    The Affordable Care Act, if allowed to be fully implemented 
and refined, will go a long way to reforming the medical 
insurance system that began in the 1940s and has basically 
remained static until today. Implementation of this law will 
not only help small businesses thrive, but it will also help 
our economy as well. Thank you.
    [The statement of Mr. Vitt follows:]

          Prepared Statement of Ralph Vitt, Owner, Vitt Insure

    Thank you for the opportunity to testify before this panel. Today I 
realized how my alma mater, the University of Akron's football team, 
must have felt when they played Penn State in Beaver Stadium a few 
years ago. To their credit, they stayed in the game for all four 
quarters as I intend to do.
    My name is Ralph Vitt. I owned Vitt Insurance in Pittsburgh for 20 
years. My medical insurance company employed two people, but I worked 
with countless small business owners over the years, helping them 
purchase insurance for themselves and their employees.
    I have an appreciation of small business owners' concerns and 
challenges in buying health insurance, which is why I speak in support 
today of the Affordable Care Act. There are many reforms in this new 
law--some that have been implemented already and others that will be 
put in place over the next couple years--that will help small business 
owners.
    Most small employers with whom I have dealt would prefer not to be 
a part of the health delivery system as purveyors of medical insurance. 
With the advent of insurance exchanges, they may get some relief both 
in purchasing a medical plan for their business or the possibility that 
many folks will purchase individual plans giving them portability to 
move to another job without a loss of coverage. In addition, the idea 
of having medical insurance that is not contingent on being with a 
specific employer will allow employers to staff their businesses with 
folks whose training, experience and career paths are in sync with the 
success of their organization.
    At the same time, employees will not be forced to remain in a 
position for which they are not adequately trained or forego a 
different career path just because they need health insurance. The 
improvement in the productivity of the employee will no doubt improve 
the profitability of the business.
    Moreover, small business tax credits, which are available to small 
employers now, will also help make insurance more affordable. The non-
partisan group Small Business Majority found that one-third of small 
business owners who don't offer insurance would be more likely to 
because of the tax credits, and 31% of those who do would be more 
likely to continue offering it because of them. In these tough economic 
times, every dollar helps and small business owners appreciate anything 
that will make insurance more affordable. I've seen other reports that 
say small businesses are worried about the cost of healthcare, but 
Small Business Majority also released polling that found most small 
businesses don't know about many of these provisions to help them. It's 
no wonder they're concerned if they don't know these things exist to 
help lower their costs.
    The wellness benefits are a big help in providing preventive 
medicine, and if medical treatment is needed, reduce the cost of 
procedures by acting early in the diagnosis. This will lower overall 
healthcare costs across the board. Additionally, allowing children to 
stay on their parent's medical insurance until age 26 regardless of 
student status is an excellent benefit to individuals entering the 
workforce. My granddaughter will graduate from college in May, 2012 and 
has a job offer that will use her degree in International Business. Her 
future employer (a small firm of 8-10 people) does not offer a group 
medical plan. By staying on her father's plan, she can accept the 
offer, work in a field for which she has trained and begin a career 
path right out of school.
    Of the benefits that will be phased in over time, the guaranteed 
issue of coverage without regard to pre-existing conditions is, in my 
opinion, the most important component of the ACA. Having sold medical 
insurance for 20 years, I realize the frustrations people experience 
when they are declined for coverage due to medical history. If medical 
underwriting is no longer used and the threat of adverse selection is 
reduced by requiring that individuals purchase health insurance, the 
market will grow exponentially, thus broadening the actuarial base used 
to determine rates. This will allow individuals to select plans that 
fit more closely to their financial and medical needs.
    The ACA, if allowed to be fully implemented and refined will go a 
long way to reforming the medical insurance system that began in the 
1940's and has basically remained static till today. Implementation of 
this law will not only help small businesses thrive, but our economy, 
as well. Thank you.
                                 ______
                                 
    Chairman Roe. Thank you for staying on time.
    Mr. Knecht?

              STATEMENT OF WILL KNECHT, PRESIDENT,
                      WENDELL AUGUST FORGE

    Mr. Knecht. Thank you, Mr. Chairman. Again, it's a real 
pleasure and a privilege to be here.
    I represent 120 folks that I have the privilege of working 
with in three states. A sad statement that Congressman Kelly 
said, which is an honor, that we're the largest manufacturer of 
metal giftware in the country today on a large scale, and we're 
a small company. In the 1940 and '50s we had 200 competitors in 
America making metal giftware. Today we're the largest and 
almost the only one still standing making it a hundred percent.
    That's an indictment on a lot of things, patriotism one of 
them. But government regulations is the second issue that our 
industry faces. We're in the giftware industry, and 98.9 
percent of our competitors are made in China, in India, Mexico, 
Indonesia. We were at a gift show just a few months ago where 
we were at a Made in America pavilion. You would have thought 
we were rock stars for making it in America. What a sad 
commentary. What a sad commentary that we are the exception and 
not the rule.
    In fact, over the last couple of weeks, actually Monday and 
Tuesday of this week, I've gotten two emails from a gentleman 
who represents a factory in China wanting to show his 
capabilities and suggesting that he can fundamentally reduce 
the cost of us doing business. Literally the guy is three 
emails in like two days. This is not unique.
    Our biggest competitor was a Pennsylvania company based in 
Mount Joy, which is the eastern part of the state, Wilton 
Armetale, a fantastic company. Just a few years ago they yanked 
250 manufacturing jobs out of Mount Joy and moved them to 
Mexico and China. We're trying to fight against that curve. All 
120 of us are trying to work together as a family to do that.
    But anything you do in Washington, anything the Senator 
does in Harrisburg that hinders our ability to compete on an 
international scale endangers every one of our jobs. I 
apologize I'm going off script. I'm not nearly as smart or as 
well versed in every detail on this bill as some of the 
colleagues who spoke earlier to you.
    But I'm smart enough to know that 2,500 pages of a bill 
that no one had time to read is going to include gotchas that 
none of us understand, and one of them was just revealed just 
in the last couple of weeks with the mandate of abortion 
coverage to employers of all sizes. I personally would be 
offended if I had to do that, and many have spoken up.
    But as we look at why we're here today, I sense we're here 
today--shame on me as an American, shame on any American that 
hasn't gotten behind this issue prior to March 2010 and come up 
with a better solution. We have to have a better solution. The 
costs are too high. We spend--again, we're a tiny company--
almost $400,000 just on healthcare in our little company. 
That's crazy. That's crazy that we spend that money, but the 
cost is out of control.
    The accessibility is crazy. I'll tell you a story. It's 
frustrating. We are desiring to offer healthcare to all of our 
employees, part time, full time. And literally we went begging 
almost to our insurance carrier. Help us find a solution that 
we can pool together with other people in the country to offer 
affordable healthcare for our part-time people. Their answer 
was ``Well, there isn't one.''
    They didn't bring a solution back to the table because they 
didn't know that one existed. Here we are desiring to cover 120 
people. We're not fighting against that. We're not saying we 
want to cut people off. But we can't find the solution. So 
accessibility is an issue that we face.
    And as you look at the title of our theme, what are some 
problems that small business are facing, well, it's the cost. 
400,000 bucks is a lot of money. And then the inability when 
desiring to offer. We can't find it.
    You guys know far better than I what's in the bill, some of 
the positives in the bill, some of the negatives in the bill. I 
appreciate Mr. Vitt's opinion on some of those things that I 
didn't know was in the bill. They sound like good things. 
Portability is important to folks, especially in this day and 
age when people are moving from job to job. They're not taking 
a job for 40 years. We've got to have portability.
    A story like Billy's, it's an embarrassment to us as 
Americans. It's an embarrassment. But again shame on us as 
Americans that we waited for Washington, D.C. to act. So I look 
at myself. I wish I had a mirror to say shame on you that we're 
here today, but we are. And I just would suggest, as my time 
expires, I would just ask that you look to repeal this onerous 
bill that no one understands the full tenet of and deal with 
the heart of the problem, the cost and accessibility for all 
Americans.
    So thank you very much for hearing us out. Thank you for 
standing up, for doing what's right in Washington.
    [The statement of Mr. Knecht follows:]

   Prepared Statement of Will Knecht, President, Wendell August Forge

    My name is Will Knecht and I am the President of Wendell August 
Forge, a family owned business headquartered in Grove City, PA. Since 
1923 we have been America's leading manufacturer of metal giftware and 
commemoratives. I am proud to work alongside 120 fellow employees in 
our stores and workshops in Grove City, PA; Exton, PA; Berlin, OH; and 
Wilmington, NC. In my somewhat biased opinion, our artisans are the 
finest in the world. In the 1940's and 1950's, we had approximately 200 
competitors making metal giftware in America. Fortunately for us but 
unfortunately for America, today, we stand alone as the last metal 
giftware company still making all of our products 100% in America. Many 
great companies have simply closed their doors or off-shored their 
production to China, Mexico, and India. In fact, just yesterday I 
received an email from a gentleman in Ohio who represents a factory in 
China where they believe they can make our giftware much cheaper than 
we are able to domestically.
    As we focus today on challenges facing Pennsylvania companies 
regarding health care, I'd like to make 2 points relative to our 
company:
    1. It is our desire that every employee that works with us is 
afforded an opportunity to receive health care during their employment 
with us--but we have found no cost effective way to cover our part-time 
workers
    2. The issue facing our company is the continuing escalation in our 
health care costs as we are competing with foreign products which 
dominate our industry
    I believe that we as a nation are about to walk into an unknown 
abyss that humbly I believe our country will face with the full effect 
and implementation of the 2010 health care bill in 2013-14. The fact 
that the Congress in 2010 delayed implementation of most of the 
provisions of the bill until after the 2012 Presidential election is 
another example of passing the buck and pushing back the burden for 
immediate political gain and expediency.
    The shear monstrous size of the bill intimidates most Americans and 
provides so many unknowns for the business community, it is scary. To 
paraphrase then-
    Speaker Pelosi during the voting on the bill in the House ``We have 
to pass it so we can read it.'' In other words, no one really knows all 
of the tentacles of this bill and that is bad for America and bad for 
business. This was clearly demonstrated over the past few weeks as the 
abortion funding mandate has been front and center of the national 
discourse.
    As a businessman, this is what I assume will be the impact to our 
company:
     Higher taxes
     More regulation, more mandates
     More uncertainty
     More administrative costs
    A couple of the provisions/elements that I know of that are a cause 
for serious concern amongst business owners:
     The fact that the government believes they are better 
equipped to dictate and lead what to this point is the greatest health 
care system in the world. Certainly, there is room for improvement but 
people all over the world travel to America for medical care and that 
must mean we are doing something right.
    USPS vs. FedEx and UPS:
     The fact that health care is by the passage of this 
legislation being deemed a fundamental right. I don't remember seeing 
that in the Constitution. We continue on a very slippery slope where 
everything becomes a right and we move further toward socialism and the 
nanny state.
     Why are we trying to emulate Europe?
     Defining full-time for health care purposes as 30+ hours 
per week
    This will force our company to do either 2 things:
     Artificially deflate worker hours to keep them underneath 
the 30 hour threshold because we can't afford the additional premiums
     Hire fewer workers as a result of the increased costs of 
health care forced on us
    The health insurance tax being levied on insurance companies will 
be passed on to consumers and business will bear the biggest brunt of 
this tax increase.
    Again, we add unnecessary financial burdens that make our company 
less competitive in the global marketplace.
     Finally, all of the unknowns that will only be uncovered 
as we this massive law takes effect. Once more, I will reference the 
abortion coverage mandate debacle the nation has been working through 
over these last weeks as an example. What other 800 pound gorillas are 
in the room that we don't yet know about?
    To truly help Americans, humbly here are some suggestions to 
improve access to affordable health care:
     Repeal Obamacare and replace it with sensible improvements 
to the real issues of reducing overall cost, increasing choice, and 
improving access:
     Give employers the ability to offer more pre-tax options 
relative to individuals tailoring health care needs to their personal 
situations
     Provide for small business pooling for access to reduced 
costs via more participation
     This would give us an opportunity to choose and afford 
coverage for part-timers
     Expand opportunities for flexible spending accounts and 
Health Savings accounts and the like
     Encourage rather than discourage more competition. Right 
now, it seems like a company such as ours has very limited options to 
pursue for health care providers
    Thank you for this opportunity to share with you my thoughts on the 
current health care situation. Please never forget what makes America 
great: the freedom to pursue dreams and become the best we can be by 
providing equal opportunity, not equal outcome.
                                 ______
                                 
    Chairman Roe. Thank you. Thank all of the panel.
    The members will start the questioning and just basically 
start out by telling you that I think people in this country, 
individuals in your business and my business that I ran, know 
what's best for our employees. It's like local teachers know 
what's best, not Washington, D.C., what's going on in the 
classroom. How arrogant it is for us to be around the bosses in 
Washington telling a kindergarten teacher what they ought to 
teach.
    Healthcare decisions ought to be made between the doctor, 
the patient and the patient's family, not the insurance 
company, not the federal government. That's who ought to be 
sitting down and making that decision. It's not right now.
    And Mr. Vitt, you made a statement, and I had read your 
testimony last night, that this allow individuals to select 
plans that fit more closely to their financial needs and 
medical costs. That's the problem. If it did that, I would be 
all for it.
    The government decides what I get. A minimal, an essential 
benefits package will be laid out by a bunch of bureaucrats in 
Washington, D.C. They'll decide what I need. Every year since 
1977 I sat down in my practice with an agent just like you, 
just like you, Mr. Knecht, and worked out what we could afford 
that year. I had the same insurance premiums and same insurance 
plan that my employees did. We paid a hundred percent, Mr. 
Nelson, for as many years as we could, until we could no longer 
do that. Then we had to share it, 20 percent sharing with 
people.
    What we've gone through in our business is a consumer-
driven program, health savings account. That's helped us save 
about 30 percent of our premiums.
    The other thing that can be done I've seen work extremely 
well are wellness programs that reverse the incentives. I'll 
give you an example. Holston Munitions is a huge company. 
They're part of a huge company. They make all this--if it blows 
up and is C4, they made it in Kingsport, Tennessee. So they set 
a program up all of you in the room should look at.
    If you came in and you were an obese diabetic, hypertensive 
smoking diabetic, you were a train wreck waiting to happen. 
They said fine. You can be a train wreck. It's just going to be 
an expensive train wreck. They changed those incentives and 
said if you have a negative nicotine level, if your Hemoglobin 
A1c is down, you're on a weight loss program, your blood 
pressure is under control, we'll pay you.
    This company with 800 employees has had one minimal 
insurance increase, premium increase in six years. They've been 
able to do that by changing the incentives. Right now in this 
country, our incentives are wrong. They're backwards. We're 
incentivizing consumption of healthcare, not wellness, and 
that's what we should be doing. I'm absolutely committed to do 
it. I've agreed a hundred percent we need to do this and start 
over again.
    Ms. Kanterman, I want to start with you. You brought up 
some great issues about your employees. Also, do you all use 
temporary employees in your company, or are they all full time?
    Ms. Kanterman. We use some temporaries. Right now we have 
two temporary employees. But when I said we have 41, those are 
the 41 that are on our payroll.
    Chairman Roe. So if you grow your business and you hit 50, 
all of a sudden you're in a different situation. So would you 
be incentivized to stop at 49?
    Ms. Kanterman. Well, we're actually incentivized right now 
to drop down to 25 so we can qualify for some of these small 
business things. You actually sit down and say maybe we should 
make two companies and one company will do this and one company 
will do this. Both of them will have less than 25, and we can 
get some of these nice incentives they're doing for small 
businesses because we're just a little bit over it.
    Chairman Roe. Well, those incentives stop in 2016. Another 
thing, when I look at that, why would you have written a bill 
where if someone's salary goes up a little bit, the incentive 
goes down. If you get more employees, the incentive goes down. 
So in 2016 all those credits go away. They're gone. So you're 
then stuck.
    Ms. Kanterman. There goes the carrot and here's the stick.
    Chairman Roe. Here's the stick. The stick comes, which as 
my colleague knows in a car factory, 36 months, 48 months from 
now.
    Mr. Nelson, do you know--it's not clear to me and I've read 
the law, but are you clear what happens to those 400 young 
people who I'm sure are very glad, as I was, to get a job every 
summer and have a little spending money? It's not clear to me 
the law yet on whether you're going to have to cover them, 
whether those 400 who work in three months equal a hundred 
FTEs. Do you know the answer to that?
    Mr. Nelson. We do not know the answer, and we're afraid of 
that because we're open weekends in May. Then we have June, 
July and August. Then we're open weekends sometimes in 
September. So we don't know how we're going to follow--what 
they're going to call a part-time worker, how many hours 
they're going to call to do that. People are working older.
    I'm 78. My grandfather had a farm in Northeast. He worked 
till his middle 90s. I hope not to. I hope to retire at 91. I 
scare the hell out of my kids. I talk funny now because a vocal 
cord. One of them decided to not work anymore. I've had a 
pacemaker. I've had prostate cancer. But I go to work, and I 
enjoy it. If you're optimistic, you can keep on working. And I 
have a lot of older people that work in our company.
    Now, when you have older people, your insurance probably 
will go up. But people are healthier when they work.
    Chairman Roe. I agree.
    Mr. Kelly?
    Mr. Kelly. Thank you, Chairman. I think the more I listen 
to all of you, the thing I find the most egregious thing of 
this whole healthcare bill is it's divided us as a nation. It 
has pitted people who own companies against people who work for 
companies, while most people in the area that I live love where 
they work and they're happy with it. Because when it comes time 
for fundraising, these are the people that help get their kids 
little league uniforms and buy the Girl Scout cookies and buy 
the hoagies to help the student bands, do all these different 
things. So I think there's a very unique relationship between 
the people who own businesses and the associates who work with 
them.
    I have to tell you as I watch this and as I listen to you, 
the most egregious thing in all this is government has stepped 
in between you and the relationship you have with the people 
that you work with. Our business has been around since 1953. So 
I know what it's like to go through hard times and only made it 
through with the Grace of God. Everything else has worked with 
me.
    I've been to baptisms. I've been to first communions. I've 
been to birthday parties. I've been to weddings. Also I've 
unfortunately been to funerals. The relationship that each of 
us has with the folks we work with is not some remote employer 
who doesn't know who it is who's working with them, not 
somebody who's sitting in some tower, ivory tower somewhere who 
doesn't want to provide benefits to the folks that they work 
with every day.
    And I want to tell you the thing that's most upsetting 
about all this is we pitted each one of us against each other. 
That's the perception. There's not a person that I've ever 
talked that owns a business that does not want his associates 
to do well. We know that their success enables our success. It 
happens all the time.
    Will, when I hear you talk about what's happened to 
America, there's no Patient Protection Affordable Care Act in 
China, those are the people you're competing with. Their wages 
are a lot different than your wages. So they can make a 
product, and I guarantee you it's not as good your product.
    I've been on the floor and I've watched your artisans. I 
know what they do. They do incredible things. They take a piece 
of metal and make it into something we'd love to have and we 
pass it on generation after generation.
    Mr. Vitt, I bought a lot of insurance. I bought a lot of 
cars. All the cars we get I either buy from General Motors or 
Kia. They don't give them to me.
    So I know when you're talking, Mr. Nelson, and you're 
talking, Ms. Kanterman, about long-range planning, because the 
fact of the matter is when you go to a lender, a lender will 
only lend you money if they're sure they're going to get it 
back, that you have collateral that exceeds whatever it is 
you're trying to borrow.
    Tell me about how difficult it is to come up with long-
range plans, since that's the key here. We're trying to get an 
economy started again. I want to tell you the hardest thing for 
any business owner, any job creator is to not know what it's 
going to cost them to bring people in. And that uncertainty is 
what is killing this country right now.
    This is a bill that absolutely was brought into being the 
most horrendous way possible. Providers didn't have an 
opportunity to weigh in on it. The actual doctors, nurses, 
hospitals had no say at the table. Please. I think this is 
important because the people that you work with every day, they 
know you, they love you, they know what you're trying to do. 
Same with you, Mr. Nelson. Same with you, Will. I walked your 
places with you and I know what your folks are like.
    It's the inability to plan. And I know about how difficult 
it is to make decisions because the folks I talk with are 
alike. They want to buy a car when they're sure they can make 
those next 36 payments, 48 payments or 60 payments and they 
actually know what the price of the car is going to be, not 
told go ahead and buy, take delivery of the car, we'll send you 
a payment book in three or four months and we'll let you know 
how many years it's going to be to pay it off.
    I mean, the planning is the key, whether it's your personal 
business, your personal life, your churches, your schools. It's 
the ability to know what's coming that makes the bill for us--
even for us to make a decision. How would you begin to plan?
    Ms. Kanterman. You can't.
    Mr. Kelly. You can't.
    Ms. Kanterman. Not for this particular thing. You just 
can't. You just can't make a plan. We're in the same position. 
We compete with ceramic manufacturers all over the world. And 
we just can't plan. Let's face it. Anything that the government 
has taken over has become more expensive and more fraud 
possibilities.
    Mr. Kelly. Mr. Nelson, you talked about planning. Can you 
talk a little bit about it? How would you begin to plan?
    Mr. Nelson. First of all, you don't sleep nights. You 
really have to plan. You have to know your business. You have 
to get together. For example, we have a group of 12 parks 
scattered through the United States. You're only asked to be in 
it. They're the best family parks. We meet one week a year. We 
exchange records. We give ideas to each other and then we 
encourage. You have to get together and find somebody that 
knows their business, and they'll help you.
    Then you have to talk to your bank, and you have to meet 
with them, and you tell you them the truth. If something 
happens bad, go to them first thing. Don't hide it. They'll 
appreciate that.
    Also, you have to be an optimist. If you're not an 
optimist, you shouldn't be in business.
    Mr. Kelly. Will, I know that when you talk about--you're 
one of the few in this country. How do you plan for the future? 
Mr. Nelson talked about equipment, $7 and a half million. I 
know about how easy it is to buy things. It's just paying for 
them that's the difficult part.
    Mr. Knecht. As we did our strategic planning, our three-
year plan late last year, early this year, one of the biggest 
question marks is around this issue, the uncertainty. One of 
the threats is the uncertainty and the increased cost that this 
bill will bring onto us.
    Again, something passed in 2010 that really doesn't take 
effect until 2013, '14, '15, that's a bit circumspect, isn't 
it? If it's so great, why do you wait? Then I remember then 
Speaker Pelosi's comments when she said ``We've got to pass it 
so we can read it.'' Logically as a citizen that's appalling. 
Whether she was a Republican or Democrat, that's appalling.
    Again, this is the environment that Washington is putting 
their job creators in. We've added 30, almost 40 employees in 
two years. We see this as a huge threat for us. Can we continue 
to act? Do we need to scale back our plans? Do we need to cut 
people's hours so we can compete with China and Mexico? We want 
to give more. We want to stay in business the next 90 years. So 
planning is--how do you do it when you don't know.
    Mr. Kelly. Well, you can't. I'm not sure everyone knows 
what happened. What year did your business burn to the ground?
    Mr. Knecht. We burned to the ground almost two years ago. 
We had about 70 employees at that time, and providentially--I 
give all the credit to the Lord--we have almost 120 today and 
we're growing.
    Again, that's a testament to the other 119 people. You all 
met me today. You know it's not me. The 119 people that I work 
with are amazing. It's a testament to their stick-to-it-ness 
that we're even here today and to the great people of this area 
who supported us.
    But long-term planning, it's a crap shoot for us right now 
because we don't know all that's coming down. 2,500 pages, how 
could you know?
    Mr. Kelly. I know there's more to the story. I know that 
you and your associates watched it as it burned. You made a 
commitment to your folks that night that we will rebuild. It's 
like the Phoenix rising from the ashes. It will rise again. We 
will work again. We will produce great products again. And 
that's the story of America. That's what I think is the 
underlying issue here today.
    If we really want to grow the economy, if we really want to 
get Americans to work, if we really want to see this nation 
accomplish great things, and there's only one thing standing in 
the way right now. It's government. [Applause.]
    Mr. Kelly. Thank you all for being here today. This is 
again an exercise in what makes this country so great. We can 
meet in open. We can disagree. We have people come in and say 
exactly the opposite of us. And we welcome that. So thank you 
so much.
    I want to thank my colleague, Dr. Roe. This is a great 
pleasure.
    And it is truly an honor and a privilege serve you. Listen, 
we work for you. Everything that we spend comes out of your 
pockets. We're not benevolent monarchs that are coming here to 
shower our wealth on you. You provide every single penny. You 
and your grandchildren and your children have cosigned, by the 
way, the debt that's facing us right now. We've got to get 
through this as Americans. This is not a Republican or 
Democratic or Libertarian or Independent issue. This is an 
American issue. We've got to accomplish this, and we've got to 
conquer it together. So thank you so much.
    And, Doctor, thank you.
    Chairman Roe. Thanks, Mr. Kelly. I'm going to finish up 
today by just telling you a couple of stories we heard by a 
panel, very quickly, in Evansville, Indiana. One was an Ihop 
owner in the restaurant business that had 800 employees and I 
think 12 or 14 Ihops. Apparently in the restaurant business, if 
you can earn about $3,000 per employee, that's pretty good if 
you earn that much money per employee. He said: Doc, what am I 
going to do if I have more than 50 employees. If I get what the 
government forces me to buy, it's going to cost me $7,000 per 
employee. If I then pay the penalty, which is not tax 
deductible, I take all my profit. I make no money.'' He said, 
``What do I do?''
    I said, ``Well, I'll tell you what Washington thinks. You 
can charge me $10 for a pancake I won't go buy and you'll go 
out of business. That's what will happen to you.''
    A second man was Mr. Graber, had an eighth grade education. 
He started in the '70s building pole barns in southern Indiana 
with three Amish guys. Now he has 210 employees, spends over a 
million dollars a year providing insurance for his employees. 
He said, ``Doc, I'm thinking this may put me under. I may not 
be able to survive this.''
    Mr. Knecht, you're wrong. It's 10,000 pages in writing. The 
rules by the government is 2,500-some pages. It's unbelievable.
    I will say, Ms. Koehler, earlier I read your testimony last 
week. It disturbed me as a physician greatly when I read it. I 
got up early this morning and called my hospital administrator 
in Tennessee. I called my best friend in the world, Dr. Tom 
Eades. He's a cardiologist in San Antonio, Texas. I called Dr. 
Jerry Brapple who's in the Fordingham Cardiology Group in 
Kingsport, Tennessee. I talked with the local hospital 
administrator there.
    I don't know what kind of person or doctor you that talked 
with. If that happened in any of these places--you just fix it 
and you worry about how to pay it later. I was appalled by 
that, and whatever that person's motivation is, I apologize for 
it, because that should never happen and does not happen. I 
talked to these folks at least in those four locations. I got 
up early this morning. I woke my friend up in Texas I was so 
upset.
    Something I want to share with you all. This was in one of 
the committee hearings a year ago. Any businesses, I'll make 
sure the staff gets it to you. It's from the Lawton Group, 
which is the largest HR group. They went in and looked through 
this entire law to see how it would affect businesses from 
small to large. You're welcome to it.
    Secondly, you know that my website will get for you if you 
want to know the details of this bill. I have downloaded it. 
It's sort of a Cliff Notes version, four pages. You can see 
when it comes about. If you like that, we'll get that to you. 
We'll be glad to do that.
    Ms. Kit, you mentioned about losing--my dad lost his job 
when I was in the Army in Korea near the DMZ in 1973. So I know 
what it is to have your job go overseas, manufacturing job that 
my dad lived with after World War II. At 50 years old, high 
school education, no job. So I understand that.
    I want to thank you this group. You all have been 
fantastic. It's been great being in Butler. It's very much like 
my home. And as Congressman Kelly said, we work for you all. 
We're here trying. We just have a different idea. I believe 
individuals and families and small businesses make those 
decisions. I know I worked with that my entire life. Certainly 
there is a role for government. I was the mayor of Johnson 
City. I feel really comfortable here. It reminds me of being 
back in city hall.
    But the best government you'll have will be local 
government right here where you are in Butler, Pennsylvania. 
You have more access to it. The farther it gets away, the worse 
it is. I'm going to tell you right now I don't want any of you 
sending another nickel of your hard earned tax dollars to 
Washington, D.C. and see the waste that I see up there. It is 
frustrating when I was the mayor, when I was a small 
businessperson, to see the waste and to see this bill that was 
written with all the good intentions in the world, no question 
about that.
    Because I believe we have the resources that we're 
currently spending to provide care for all of our citizens. I 
believe we can do that. I feel an obligation to see that 
happen, and I think we can do that. This is a great country. 
This proves it right here, that we have an open meeting today 
where you've come and you can hear and see your government 
working.
    I thank Mike, I want to thank you for serving. I think this 
area is very well represented with Mike Kelly. That's been 
true. [Applause.]
    Mr. Kelly. Thank you.
    Chairman Roe. We're just a couple of guys that were out in 
the real world until three years ago. We were not inside the 
Beltway where Washington is bad. We're out here in the real 
world. Again, both panels, for all of you, I commend your time 
preparing this testimony. I read every word of it. We will take 
it back, and we'll use these comments that we have to help work 
legislation. Do you have any further comments?
    Without any further comments, we are adjourned. Thank you 
for being here.
    [Whereupon, at 2:54 p.m., the subcommittee was adjourned.]

                                 
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