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OBAMACARE’S EMPLOYER PENALTY AND ITS

IMPACT ON TEMPORARY WORKERS

HEARING

BEFORE THE

SUBCOMMITTEE ON HEALTH CARE, DISTRICT OF

COLUMBIA, CENSUS AND THE NATIONAL ARCHIVES

OF THE

COMMITTEE ON OVERSIGHT

AND GOVERNMENT REFORM

HOUSE OF REPRESENTATIVES

ONE HUNDRED TWELFTH CONGRESS

FIRST SESSION

OCTOBER 6, 2011

Serial No. 112–119

Printed for the use of the Committee on Oversight and Government Reform

(

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

http://www.house.gov/reform
(II)

COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM

DARRELL E. ISSA, California, Chairman

DAN BURTON, Indiana

JOHN L. MICA, Florida

TODD RUSSELL PLATTS, Pennsylvania

MICHAEL R. TURNER, Ohio

PATRICK T. MCHENRY, North Carolina

JIM JORDAN, Ohio

JASON CHAFFETZ, Utah

CONNIE MACK, Florida

TIM WALBERG, Michigan

JAMES LANKFORD, Oklahoma

JUSTIN AMASH, Michigan

ANN MARIE BUERKLE, New York

PAUL A. GOSAR, Arizona

RAU ́ L R. LABRADOR, Idaho

PATRICK MEEHAN, Pennsylvania

SCOTT DESJARLAIS, Tennessee

JOE WALSH, Illinois

TREY GOWDY, South Carolina

DENNIS A. ROSS, Florida

FRANK C. GUINTA, New Hampshire

BLAKE FARENTHOLD, Texas

MIKE KELLY, Pennsylvania

ELIJAH E. CUMMINGS, Maryland, Ranking

Minority Member

EDOLPHUS TOWNS, New York

CAROLYN B. MALONEY, New York

ELEANOR HOLMES NORTON, District of

Columbia

DENNIS J. KUCINICH, Ohio

JOHN F. TIERNEY, Massachusetts

WM. LACY CLAY, Missouri

STEPHEN F. LYNCH, Massachusetts

JIM COOPER, Tennessee

GERALD E. CONNOLLY, Virginia

MIKE QUIGLEY, Illinois

DANNY K. DAVIS, Illinois

BRUCE L. BRALEY, Iowa

PETER WELCH, Vermont

JOHN A. YARMUTH, Kentucky

CHRISTOPHER S. MURPHY, Connecticut

JACKIE SPEIER, California

LAWRENCE J. BRADY, Staff Director

JOHN D. CUADERES, Deputy Staff Director

ROBERT BORDEN, General Counsel

LINDA A. GOOD, Chief Clerk

DAVID RAPALLO, Minority Staff Director

SUBCOMMITTEE ON HEALTH CARE, DISTRICT OF COLUMBIA, CENSUS AND THE

NATIONAL ARCHIVES

TREY GOWDY, South Carolina, Chairman

PAUL A. GOSAR, Arizona, Vice Chairman

DAN BURTON, Indiana

JOHN L. MICA, Florida

PATRICK T. MCHENRY, North Carolina

SCOTT DESJARLAIS, Tennessee

JOE WALSH, Illinois

DANNY K. DAVIS, Illinois, Ranking Minority

Member

ELEANOR HOLMES NORTON, District of

Columbia

WM. LACY CLAY, Missouri

CHRISTOPHER S. MURPHY, Connecticut
(III)

C O N T E N T S

Page

Hearing held on October 6, 2011 ............................................................................ 1

Statement of:

Lenze, Ed, senior vice president, American Staffing Association; John

Uprichard, president/CEO, Find Great People International; Tav

Gauss, president/CEO, the Action Group-Human Resources Solution;

and Christopher Spiro, managing director, health policy, the Center

for American Progress Action Fund ............................................................ 5

Gauss, Tav ................................................................................................. 28

Lenze, Ed ................................................................................................... 5

Spiro, Christopher ..................................................................................... 32

Uprichard, John ......................................................................................... 23

Letters, statements, etc., submitted for the record by:

Gauss, Tav, president/CEO, the Action Group-Human Resources Solution,

prepared statement of ................................................................................... 30

Gosar, Hon. Paul A., a Representative in Congress from the State of

Arizona, memo dated October 5, 2011 ........................................................ 44

Lenze, Ed, senior vice president, American Staffing Association, prepared

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

Spiro, Christopher, managing director, health policy, the Center for

American Progress Action Fund, prepared statement of ........................... 34

Uprichard, John, president/CEO, Find Great People International, prepared statement of ........................................................................................ 25

(1)

OBAMACARE’S EMPLOYER PENALTY AND ITS

IMPACT ON TEMPORARY WORKERS

THURSDAY, OCTOBER 6, 2011

HOUSE OF REPRESENTATIVES, SUBCOMMITTEE ON HEALTH CARE, DISTRICT OF

COLUMBIA, CENSUS AND THE NATIONAL ARCHIVES, COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM, Washington, DC.

The subcommittee met, pursuant to notice, at 9:33 a.m. in room

2154, Rayburn House Office Building, Hon. Trey Gowdy (chairman

of the subcommittee), presiding.

Present: Representatives Gowdy, Gosar, Burton, Davis, Clay,

Murphy and Cummings (ex officio).

Staff present: Brian Blase, professional staff member; Molly Boyl,

parliamentarian; Drew Colliatie, staff assistant; Sery E. Kim, counsel; Jaron Bourke, minority director of administration; Yvette

Cravins, minority counsel; Devon Hill, minority staff assistant; and

Jennifer Hoffman, minority press secretary.

Mr. GOWDY. Good morning.

This is a hearing on Obamacare’s employer penalty and its impact on temporary workers. The committee will come to order. I

will recognize myself for an opening statement and the distinguished gentleman from Illinois, Mr. Davis.

Two months ago, this committee heard from five business owners

that the new health care law will cause them to reinvest less in

their companies, reduce the number of workers on their payrolls,

automate more services and move workers into part-time status to

minimize compliance costs. The testimony revealed that job loss

from the law might be considerably worse than the CBO predicted

which was 800,000 jobs lost by the end of the decade.

Today, we will hear from professionals in the staffing and temporary worker industry that will highlight the negative impact of

Obamacare on their industry and the economy as a whole. This

hearing will provide a better understanding of the vital role that

staffing firms and temporary workers play in our economy and will

also reveal the negative effects of burdensome statutes in President

Obama’s healthcare law.

American staffing companies are an extremely important component of our economy. As a sector, they employ nearly 3 million

workers per day and over 10 million workers annually. For many

workers and businesses, staffing firms provide an on-the-job interview that often leads to permanent employment. Even workers who

do not gain permanent employment from their position earn a paycheck and improve upon a skill set.
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Perhaps most importantly, staffing firms promote flexibility in

the labor market which is an essential feature of job creation. In

fact, between June 2009 and June 2011, the staffing industry

added nearly half a million jobs accounting for over 90 percent of

all total non-farm job growth.

Unfortunately, this industry is threatened. The new healthcare

law was bad for temporary workers and it will harm America’s

ability to have a more flexible labor force to better compete in the

global economy.

The President’s healthcare law, Obamacare, contains many reasons for this pessimism. The employer mandate provision places a

tax penalty on businesses that fail to offer their full-time workers

a health insurance package with terms dictated by the Department

of Health and Human Services. This employer mandate places the

burden of carrying out the President’s vision of healthcare reform

on the backs of businesses.

The law defines a full-time worker as an employee who works at

least 30 hours per week with respect to any month. Because of the

high administrative costs of doing calculations for each worker each

month, the Department of Treasury does not think this provision

is workable and is proposing a lookback period of 3 to 12 months

for the purposes of calculating the employer mandate tax penalty.

The law’s non-discrimination rules prohibit an employer from

providing different health insurance to different classes of workers.

The penalty for violating this non-discrimination rule is $100 per

day per affected employee. The administration is currently writing

this regulation and is seemingly oblivious that it is commonsense

to compensate different classes of workers differently.

However, there is a common sense economic principle that everyone can understand. As something gets more expensive, people

tend to buy less of it. With the employer mandate tax penalty, the

minimum essential benefit package and the non-discrimination

rules, this healthcare law has made the cost of labor more expensive. These provisions will result in fewer jobs and lower wages for

many Americans and unfortunately, those most affected will be

younger workers and those with fewer skills.

Many of these workers are just now starting their career paths

and because of this irrational law, they will have more difficulty

getting their feet in the door which will delay or prevent them from

learning the skills necessary to move up the economic ladder. In reality, for many Americans, the American dream will be replaced by

government dependency.

The witnesses before us today may testify about the urgent need

to exempt temporary workers from the employer mandate and nondiscrimination rules. They may also call for a longer look-back period. In essence, there will be more calls for Obamacare waivers.

A government by waiver environment, as Richard Epstein calls it,

creates uncertainty and breeds favoritism. Uncertainty translates

into economic stagnation and only promulgates the distrust in our

Federal Government.

Rather than issuing waivers to particular industries, the

healthcare law should be repealed and common sense reforms at

lower healthcare costs should be pursued. This is the only way to
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combat the negative effects of the Affordable Care Act currently

rippling across our economy.

With that, I will recognize the distinguished gentleman from Illinois, the ranking member of this committee, Mr. Davis.

Mr. DAVIS. Thank you very much, Mr. Chairman.

I want to begin by thanking the witnesses for their appearance

today. I appreciate the fact that you traveled quite a distance to

share your concerns about the Affordable Care Act and for that, we

are grateful.

We want to listen to you. Our discussions with the American people led to the Affordable Care Act. We learned there is nothing

more important and precious than good health. This should not be

a privilege afforded to just a few. The Patient Protection and Affordable Care Act provided a pathway to accessible health care for

the masses.

In an effort to balance the needs of businesses and workers, we

understand that the administration is listening too and it has

opened the process for crafting the implementation of ACA. Innumerable hours have been spent communicating with stakeholders,

employers and employees. Several government agencies, including

the Internal Revenue Service, have solicited public comment on a

range of employment issues. This has been and continues to be a

fair, transparent and flexible process.

The ACA was clearly designed with temporary workers in mind.

Because in America, most people have obtained health insurance

through their employer, and temporary workers have been at a disadvantage. For many temporary work has meant working for minimum wage or slightly higher, by the hour with generally no access

to health care. These are among the workers receiving primary

care in the emergency room. These are among the workers that are

forced into bankruptcy due to a tragic accident.

The ACA has provided a solution to that problem for temporary

workers. The ACA is immeasurable progress, but no one here believes that it is perfection. That is why the public input is crucial

in this process of developing and implementing regulations for this

law. Let us not lose sight of the major achievement for temporary

workers that the ACA represents.

We look forward to your testimony. Again, I thank you for your

appearance.

I yield back the balance of my time.

Mr. GOWDY. I thank the gentleman from Illinois.

It is my pleasure now to introduce our witnesses. I would ask

you to come up at this time. On behalf of all of us, we are delighted

to have you. We appreciate your willingness to lend us your expertise. I will introduce you from my left to right, your right to left,

and after the introductions are complete, you will be recognized for

your 5 minute opening statement.

There may be a series or panel of lights in front of you. Those

lights mean what they traditionally mean in society—a green is go;

yellow is speed up and see if you can get through the stop light

quickly; and red means, see if you can wind up your thought. By

way of reminder, make sure you turn on your mic so we can hear

you loud and clear.
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Mr. Ed Lenz is senior vice president, American Staffing Association. Thank you for joining us, Mr. Lenz. John Uprichard is president/CEO, Find Great People International and a resident of the

State of South Carolina, I hasten to add. Mr. Tav Gauss, president/

CEO, the Action Group-Human Resources Solution. Mr. Christopher Spiro, managing director, health policy, the Center for

American Progress Action Fund. Welcome to each of you.

We will now recognize Mr. Lenz for his opening remarks.

STATEMENTS OF ED LENZE, SENIOR VICE PRESIDENT, AMERICAN STAFFING ASSOCIATION; JOHN UPRICHARD, PRESIDENT/CEO, FIND GREAT PEOPLE INTERNATIONAL; TAV

GAUSS, PRESIDENT/CEO, THE ACTION GROUP-HUMAN RESOURCES SOLUTION; AND CHRISTOPHER SPIRO, MANAGING

DIRECTOR, HEALTH POLICY, THE CENTER FOR AMERICAN

PROGRESS ACTION FUND

STATEMENT OF ED LENZ

Mr. LENZ. Thank you, Mr. Chairman. We greatly appreciate the

opportunity to testify this morning. I appreciate your excellent

overview of the issue that confronts the staffing industry and I do

appreciate Mr. Davis’ comments as well. Thank you to the other

members of the subcommittee as well.

I am senior vice president for Legal and Public Affairs of the Association which represents staffing firms throughout the United

States. I will try not to repeat all of the points the chairman made

but I will try to touch the highlights.

Staffing firms play a vital role in the economy, as you mentioned,

Mr. Chairman. We provide critical employment flexibility for employees and businesses. We provide services in every sector of the

economy in a wide range of jobs. Mr. Davis noted the low income

workers but I think it is also important to point out that staffing

firms today provide services in health care, information technology,

engineering and scientific sectors including professional and managerial services. The low income worker is certainly a part of our

work force but by no means is necessarily representative of it.

We are also playing a vital role in the current economy by keeping people working. Without the temporary work option, U.S. unemployment rates would be much higher. You noted, Mr. Chairman, that almost 3 million people work on any given day but over

the course of a year, 10 million go through our doors, showing the

high turnover in the temporary work force.

The reason for that primarily is that most people use temporary

work as a short term, stop gap on their way to permanent employment. We facilitate that. One of the things we are most concerned

about the impact of this law is it would put a dampening effect on

our ability to bridge people into permanent work.

Of course we are concerned about the impact of the employer tax

penalties. As you mentioned, they are assessed in one of two ways.

If you do offer coverage to your workers, you only pay a tax on

those people getting subsidies. If you don’t offer coverage, you pay

the tax on all of your full-time employees.

Staffing firms are uniquely exposed to the penalties for two reasons. One is the unpredictable nature of temporary work which
5

means that staffing firms have no way of knowing who will be a

full-time employee and therefore, won’t have any way of knowing

what their penalties will be or who to enroll in coverage.

The second is that they have limited health insurance options for

covering their temporary workers which means they might not

have a practical way to offer coverage to everybody which means

they would pay penalties on all their full-time employees, not just

those getting subsidies, so it is a conundrum.

The historical reason for why there is limited overage for temporary employees is simple. It stems from the fact that they are

short term, high turnover workers and when given the option of

health coverage, they generally refuse it. Only a tiny fraction of

temporary employees accept coverage from their employer even

when it is available. It is hard to get insurance companies to write

that kind of coverage.

The result has been that the low cost, so-called mini-med plans

have been the only practical option for most staffing firms. If they

are abolished, staffing firms may not have an economical way to

offer coverage, especially if the new non-discrimination rules limit

their ability to provide flexible coverage for workers as they need

it and to the extent they need it.

To address these issues, we need two things to happen. I should

say parenthetically and without minimizing the point, we are

strongly in favor of health care insurance for people and for reform

in general. We think many of the aspects of this bill are sound and

to be applauded but as structured, it creates enormous problems

for employers that need to be addressed and we are hoping that

they can be.

First, we need a sensible definition of who is a full-time employee. You mentioned the look-back rule Treasury is currently

considering. We strongly support that. It ought to be a look back

of at least 12 months we believe.

Second, we need to have viable health insurance options for temporary employees meaning that the non-discrimination rules have

to be drafted so as to permit that. We are working with the administration, as I mentioned to do that but our concern is that the statute may not afford enough leeway for them to do what they need

to do to fix the problem. Our preference would be for the employer

penalties to be repealed entirely or substantially reduced or modified.

Staffing firms operate on razor thin margins and they cannot afford to put those costs through to employers. If they do, as you

pointed out, the result will be fewer temporary jobs. The elimination of the penalties would resolve that problem and we hope

that Congress would consider doing that.

We appreciate the opportunity to testify. We look forward to

working with you in the future. Thank you.

[The prepared statement of Mr. Lenz follows:]
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Mr. GOWDY. Thank you, Mr. Lenz.

Mr. Uprichard.

STATEMENT OF JOHN UPRICHARD

Mr. UPRICHARD. Mr. Chairman, and members of the committee,

thank you for the opportunity to be here today to discuss the impact of health care reform on the staffing industry and my company specifically.

My name is John Uprichard and I am the president and CEO of

Find Great People. We are a temporary staffing and executive

search firm headquartered in Greenville, SC with offices throughout the Carolinas. We have actually been in business or 30 years

and have provided job opportunities and stability to thousands of

people throughout the Carolinas as well as nationwide. We work

very hard to take good care of our employees and as a result, we

have been recognized as Best Place to Work in South Carolina for

3 years in a row.

In order to help clarify the ramifications of health care reform on

my organization, I would like to give you some background on my

company. We currently have 50 internal employees with an average salary of $64,000 a year and an average tenure of 5 years. Our

internal payroll for 2010 was $2.9 million. Our temporary payroll

was $7.4 million.

We provide 100 percent of our internal employees health insurance and long term disability insurance premiums. We also give

them access to our 401(k) retirement savings plan and in addition,

they have generous time off as well. We believe our internal employees are vital to the success of our organization and we are very

committed to their individual financial success and stability.

Moving to the folks who work with us on a temporary basis, we

also recognize the need to provide fair, competitive wages and benefits to them. We currently have 400 people working for us on a

temporary basis at one time. The average wage is $14.28, well

above the national minimum wage.

We provide these temporary employees with access to mini-med

coverage that is not dependent on their temporary work schedule

because we know their hours will fluctuate and we want them to

have consistent access to medical care. In addition, they have access to our 401(k) program.

The average assignment length for one of our temporary employees is 5 months. In most cases, the temporary assignments serve

as a bridge to a full-time job opportunity either with one of our clients or a different employer of their choice. Those full-time job opportunities are usually dependent upon their performance with the

opportunity given by one of our customers.

As we began to study the impact of health care reform on our

business, we quickly recognized there were some very significant

and unintended consequences. First is cost. Based upon historical

volumes, our monthly health care costs would increase by $62,000

to $76,000 per month. That is a mathematical problem for us.

In addition, the administrative cost to comply with the regulatory and compliance aspects would be over $40,000 annually. Offering coverage to temporary employees will be difficult because

their hours fluctuate and they are moving in and out of coverage
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constantly. Also, it is essential to note that we do not control the

hours. Those are controlled by the clients to whom we provide the

service.

Ultimately, health care reform legislation imposes large employer

costs in infrastructure on staffing firms like FGP because we cannot qualify as a small business. We technically have 400 employees

but only 50 are regular, full-time staff.

You might ask why can’t we pass on this cost to our customers?

This is a question we have studied the feasibility of. We do not believe it is a viable solution based upon our recent experience with

increased cost from our State unemployment taxes. In 2011 in the

State of South Carolina, we had a 300 percent increase in our State

unemployment taxes. We had to have this conversation with our

customers and we received significant pushback. Our volume started to drop as a result of these conversations.

Once we take into account the increased cost from health care reform and unemployment taxes, we really hit a ceiling on price

where the client actually looks at the cost benefit analysis and says

it doesn’t make sense and it is an affordability issue. As a result,

jobs are going to be impacted. Unfortunately, those jobs will be impacted within our own organization for the full-time and temporary

folks that work with us. This could result in hundreds of jobs per

year. That is what keeps me up at night, that is difficult.

The people who have helped us build this company, especially

the 50 employees that are with us internally who have been with

us several years, if we are unable to move forward, we have to

make a business decision. We will not close as a company but we

will more than likely get out of the temporary staffing business

which means we will have to down size those employees who have

worked with us for many years.

I appreciate the opportunity to come before the committee today.

I would ask that the committee strongly support the look-back rule

the Treasury Department is now considering.

[The prepared statement of Mr. Uprichard follows:]
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Mr. GOWDY. Thank you, Mr. Uprichard.

Mr. Gauss.

STATEMENT OF TAV GAUSS

Mr. GAUSS. Mr. Chairman, distinguished members of the committee, thank you for having me here today.

I am Tav Gauss. I am from eastern North Carolina. I started my

business 30 years ago after going to the University of North Carolina, the real Carolina, and then Wake Forest University and then

being a commercial banker.

So as not to repeat what you have already heard, it is in my testimony but let me get down to some brass tacks. I have 16 permanent people in my company whose payroll is over $1 million a year.

We are in eastern North Carolina. I think two of my folks have a

college degree; the rest are high school degreed or associates. The

average tenure with the company during the 30 years is 18 years.

These people are benefited with health insurance for which they

pay a premium, a significantly large premium. We have a huge deductible. We have a 401(k) plan that is open to our permanent staff

as well as our field staff. The field staff, to my knowledge, there

have been fewer than 50 people who have wanted to contribute to

that in the 30 years we have been in business. We match the 5 percent match or whatever and we do that for field staff as well. We

have a lot of vacation time for our permanent staff and we have

paid vacation for our temporary staff who have been with us over

1,500 hours and it continues on as long as they live with us at certain levels.

We have 1,700 field staff this year. Mini-med plans have been offered to them since 1992. I cannot tell you the numbers that have

come across our desk and the ones that would work and wouldn’t

work, and so forth. To my knowledge, we have never had a temporary staffer take their portion of the mini-med plan. I can say

that with 99 percent positivity. They would rather have the money. My temporary staff makes an average of $9.25 an hour which is

significantly above the prevailing minimum wage in North Carolina and the Federal Government. We live in, I wouldn’t say a

rural part of the State, but we are not in the metropolitan part of

the State. If you take $9.25 an hour, that annualizes at a little less

than $20,000 a year. They would much rather have that extra $30

or $40 a week, or whatever, than to pay for medical care. Some are

young and think they are bullet proof and think they don’t need

it, and some would rather have the money.

If the health care plan goes in as it is written now, my premiums

for health insurance will go from $80,000 a year to $711,000 a

year. I would close my doors. All of my people would be out of

work, temporary and permanent staff. If I was able to pass some

of that cost onto my temporary staff, say 20 percent, I am still out

of business because it goes from $80,000 to $500,000.

In an effort to skip ahead if I may say this, I know this bill was

passed with good intentions by everybody who signed off on it.

There is no doubt in my mind we need reform in health care. When

I look at my personal situation with the $5,000 and $10,000 deductible, that is pretty high, but when you take the health care

plan and put it on top of the increases in Federal unemployment
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taxes, State unemployment taxes, regulatory more and more rules

and laws and fees being charged and fines being raised and

charged, this is a piling on.

I ask that you please put it off for a while until we get the loose

ends tied up. We cannot figure out how to stay in business the way

this plan is written now. By the way, the Treasury’s idea on look

back is not a bad idea, but it needs to be 12 months. Three months

is way too short a period of time for a lot of obvious reasons that

I won’t go into here.

Thank you for your time and thank you for listening. I appreciate

it.

[The prepared statement of Mr. Gauss follows:]
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Mr. GOWDY. Thank you, Mr. Gauss.

Mr. Spiro.

STATEMENT OF CHRISTOPHER SPIRO

Mr. SPIRO. Mr. Chairman, Ranking Member Davis, thank you for

the opportunity to testify today.

Starting in 2014, all Americans will have access to affordable

health insurance. Carl Camden, president and CEO of Kelly Services, one of the largest employers of temporary workers, explains

why this is so important: ‘‘The United States remains the only advanced nation in which individuals lack access to affordable group

health coverage outside the employment setting. As a result, health

insurance related job lock afflicts millions which is bad for entrepreneurship, worse for economic dynamism and frustrating for an

industry that relies on a free agent work force. Simply put, nontraditional workers are treated badly by the current model. Any

policy choice that enhances the availability and mobility of talent

is a good thing for the staffing industry and the economy as a

whole.’’

As Mr. Camden observes, access to affordable health insurance

will benefit not only workers, but also their employers. Preventive

care will reduce absenteeism and increase and the productivity of

workers. Health care costs for the uninsured will no longer be shifted onto employers through higher premiums and for staffing firms,

millions of newly insured Americans will create demand for health

care workers of all types.

In addition to these economic benefits, many temporary workers

who work long, hard hours but may be struggling to pay the bills

and cannot afford health insurance through no fault of their own,

will not lay awake at night out of fear that a family member will

become sick, sending the family over the edge into bankruptcy.

If you agree with Mr. Camden that access to affordable health

insurance is a good thing, as I do, then employer responsibility is

an essential piece of the puzzle. It provides an incentive for employers that currently offer coverage to maintain that coverage.

Otherwise, many employers might drop coverage and allow taxpayers to pick up the tab, which would increase the Federal deficit

by billions of dollars. In fact, the non-partisan Congressional Budget Office concluded that the absence of employer responsibility

would significantly erode employer-based coverage.

Simple financial comparisons of potential penalty liabilities to

the cost of coverage may not drive employer decisions. Many employers offer coverage because their employees expect them to do

so and they want to remain competitive in the labor market. Since

individuals will have a responsibility to maintain coverage, there

will be much more demand for their employers to offer it.

Finally, the cost of coverage will still be excluded from income

and payroll taxes. In fact, in Massachusetts, enrollment in employer-based coverage actually increased even during the recession.

Therefore, it is not surprising CBO concluded that the Affordable

Care Act would have very little effect on employer-based coverage.

Congress carefully targeted employer responsibility under the Affordable Care Act and the Treasury Department is carefully examining how to implement the law so that it is practical and flexible
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for employers. I want to highlight several aspects of the statute

and its implementation that demonstrate this careful approach.

First, and most importantly, employer responsibility only applies

to large employers with at least 50 full-time employees. As a result,

the vast majority of employers will be exempt from employer responsibility altogether. Second, small employers do not become

large employers just because they hire seasonal workers. Third,

since penalties apply with respect to full-time employees, the definition of full-time employee is important. Treasury has proposed a

safe harbor in which an employer can generally look back up to 12

months to determine whether employees averaged at least 30 hours

per week.

Employers for Flexibility in Health Care, a coalition of employers

that rely on large numbers of temporary workers, strongly supports

Treasury’s proposal, commenting that it ‘‘has the potential to provide flexibility employers need to preserve flexible work arrangements, provide a stable source of coverage and allow for the practical administration of benefits.’’

In addition to proposing the safe harbor, Treasury has requested

comments on alternative methods. Of course any method must not

undermine the purpose of employer responsibility that I discussed

earlier to prevent erosion of employer-based coverage which would

be disruptive and increase cost to taxpayers.

In closing, employers of temporary workers need not fear employer responsibility. It is an essential part of health reform which

will expand access to affordable health insurance to millions of

Americans. Mr. Camden of Kelly Services writes, ‘‘Someone suggested that higher penalties imposed on staffing firms will narrow

the cost advantage of using temporary employees and thus, weaken

demand for our services. I think that concern is misplaced.’’ Rather,

Mr. Camden sees significant opportunity that the Affordable Care

Act will ‘‘accelerate the growth of non-traditional workers and remove longstanding barriers to employment options.’’

Mr. Chairman, this concludes my testimony and I am happy to

answer any questions you may have.

[The prepared statement of Spiro follows:]
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Mr. GOWDY. Thank you, Mr. Spiro.

Pursuant to committee rules, all witnesses are to be sworn before

they testify, so I would ask you to please rise and raise your right

hands.

[Witnesses sworn.]

Mr. GOWDY. Let the record reflect that the witnesses answered

in the affirmative.

All of us are subject to being called for votes at any minute, so

in that case, we will go as quickly as we can to vote and then come

back as quickly as we can so that we can all be good stewards of

your time. We do not control the floor and the timing of votes.

Mr. Spiro, are you familiar with the phrase pyrrhic victory?

Mr. SPIRO. Yes, I am.

Mr. GOWDY. What is a pyrrhic victory?

Mr. SPIRO. It is a victory that at first is small but turns out to

be not a victory.

Mr. GOWDY. Right. It when you win the battle but all your soldiers die.

Mr. SPIRO. Correct.

Mr. GOWDY. The gentlemen to the right of you just testified that

they are going to lay off workers if this is not changed and yet you,

and I would assume you would agree with me, they have better access to information with respect to their businesses than you do?

Do you agree with that?

Mr. SPIRO. I agree he probably has more access to information

about his workers than I do.

Mr. GOWDY. That is not a trick question. They have better access

to the numbers within their own business than you would have and

they both testified that they are going to lay off workers if this isn’t

changed. I guess my question, and it may be a rhetorical question,

are you better to have access to full health care and no job or are

you better to have a job and a mini-med plan?

Mr. SPIRO. Mr. Chairman, they are still implementing the law.

Treasury is still carefully implementing the law, so they do not

have full information about how the law will be implemented.

Mr. GOWDY. Which raises another point. Did you testify before

any committee or subcommittee when they were debating or considering the Affordable Care Act?

Mr. SPIRO. No, I did not.

Mr. GOWDY. Do you know anyone who did?

Mr. SPIRO. Yes.

Mr. GOWDY. You do? How many committee hearings did they

have?

Mr. SPIRO. There were several committee hearings over a span

of many years leading up to the passage of the Affordable Care Act.

Mr. GOWDY. And amendments were able to be offered?

Mr. SPIRO. I can’t speak to that.

Mr. GOWDY. Do you know if any representatives from the businesses to your right were able to give their perspective on it?

Mr. SPIRO. I am happy to go back and search through the hearing record.

Mr. GOWDY. What do you think the Speaker meant when she

said ‘‘We will have to pass it to see what is in it?’’
41

Mr. SPIRO. I think she meant perhaps that the benefits of the Affordable Care Act only will be realized in 2014. It will take some

time for the general public to become comfortable with this law,

but I think I agree with the Speaker that once people have experience under the law, as they have had in Massachusetts, the public

overwhelmingly supports that law.

Mr. GOWDY. Mr. Uprichard, you have such a good reputation in

the State of South Carolina personally and your business does as

well. The thing I was struck by when you and I met and talked

is there wasn’t a partisan comment that came out of your mouth.

There wasn’t an ideological comment that came out of your mouth.

There wasn’t a political comment that came out of your mouth. To

this day, I do not know your politics. Frankly, it is none of my business.

The entire extent of our conversation was your concern for

whether or not you were going to have to lay off your workers because of this. I would like you to tell me—take a minute or minute

and a half—tell me this has nothing to do with politics from your

perspective. This is all about saving your business and allowing

you to provide jobs to people that you care deeply about and you

are genuinely fearful that if this is not changed, you are not going

to be able to keep them.

Mr. UPRICHARD. You are correct, that is really what keeps me up

at night. When we look at our staffing business, the margins are

not significant, they are thin. When we have significant increased

costs we can’t pass on to our customers, it becomes a mathematical

problem.

We also take on significant risk with our staffing business, personal guarantees that I personally guarantee millions of dollars in

working capital for this staffing business to run. As a business

owner, one of the things I have to do is a cost benefit and risk analysis. As the margins erode, the risk is too great and it doesn’t make

sense to move forward.

The challenge with that is we have built a great company and

I have 50 employees who have been with us for several years, people that I am friends with. I coach their kids in soccer, I see them

all the time out in the community and they earn high wages. The

challenge will be that we will no longer be able to move forward

with temporary staffing as part of the services that we offer which

means I will reduce my infrastructure resulting in probably at

least half our employees losing their jobs.

With the impact on our industry, they really aren’t able to go get

jobs with other staffing companies because they will also be impacted as well. That is what keeps me up at night and that is what

is important because that is what I am responsible for, is making

sure we provide a paycheck to those 50 employees as well as the

temporary employees we have out on billing on a weekly basis.

Mr. GOWDY. Thank you, Mr. Uprichard.

I would now recognize the gentleman from Illinois, the ranking

member of the subcommittee, Mr. Davis.

Mr. DAVIS. Thank you very much, Mr. Chairman.

Again, I want to thank the witnesses for being here.

Mr. Lenz, let me ask, what would you say are the basic reasons

for temporary employment?
42

Mr. LENZ. That is a broad question and there are many answers.

Some of them are from the worker standpoint and others from the

business standpoint. Employees use temporary help most often as

a stop gap when they are out of work, looking for new work or simply looking for a different kind of opportunity. Students, retired

people make up a huge portion of the work force. In the current

environment, lots of people are unemployed and the only work they

can find is temporary work.

The reason why temporary jobs constitute such a huge portion of

the new jobs that have been created since the recession technically

ended in June 2009 is precisely because of business uncertainty or

concern about making a commitment to permanent hire, but they

still need to get the job done, so the temporary employees are a

way for them to get the job done and a way to keep a substantial

portion of the population employed. That is a unique situation in

the current environment.

From the business standpoint, more generally, I think the key

word is flexibility. Most labor economists recognize that flexible

labor markets is one reason why we have had in the past and hopefully will again soon in the future, such a dynamic economy because employers can make employment decisions based on the

needs of their businesses and the conditions in the economy and

use labor as needed.

I think it is also important to point out that temporary jobs represent a relatively small percentage of non-farm jobs on a daily

basis, really less than 2 percent, but we play a disproportionate

role in the economy because we provide that flexibility to both employees and to employers.

Mr. DAVIS. Let me ask, would a diminution of temporary work

foster an increase in full-time work?

Mr. UPRICHARD. I don’t think so, perhaps at the margin, some,

but there is such reluctance on the part of businesses to over hire

and to burden themselves with workers they cannot sustain and

cannot support because the business is not there that I do not

think that shortfall would be made up in permanent jobs by any

means.

Mr. DAVIS. Mr. Gauss, do you think seasonal work becomes a big

factor in this as well?

Mr. GAUSS. Yes. Seasonal work, where I come from, usually has

to do with agriculture and you do not find temporary employees,

by definition, in the agricultural seasonal work but I have friends

in Miami and New York and the seasons for the hotel workers, the

restaurant workers, and once the season is over, then they go

someplace else and put them wherever else they are needed. Could

I expand a little on your question?

Mr. DAVIS. Yes.

Mr. GAUSS. When I first started this years and years ago, basically when someone would call us it was because someone was

going to be out on vacation. As time has gone by, most of my business is manufacturing. Light industrial is what we call it in our industry. Industries, especially with the global economy, have to be

more flexible.

To answer your question, if our industries were only doing business in the United States of America, there may be more perma-
43

nent hiring—they are scared to death—but it is not and we are

competing against a lot of low wage countries. For our manufacturers to stay flexible, it protects the jobs of their permanent employees. If they have too many permanent employees onboard, they

have to lay off a ton of people. If they layoff temporary staff here,

we can put this temporary staff someplace else.

Mr. DAVIS. Finally, quickly, do you think that under the Affordable Care Act more small businesses will be able to provide some

form of health care for their workers than without it?

Mr. GAUSS. Small business is defined as what?

Mr. DAVIS. Individual companies with 25 or less employees?

Mr. GAUSS. It doesn’t apply to me. Actually, I am two businesses.

I am considered a large business by statute, yet we have less than

50 permanent employees.

As I said, my portion right now is $80,000 a year; my staff pays

about $40,000 a year. We have 16 people and there is a $5,000 deductible and a $10,000 family deductible. To answer your question,

I have no earthly idea. I would love to think mine would come

down.

Mr. DAVIS. Thank you very much, Mr. Chairman.

Mr. LENZ. Mr. Chairman, may I respond to Mr. Davis briefly on

the small business aspect of this? I think it is an important question and a good question.

The problem is the definition of small business rarely does a

staffing firm very much good and the reason for that is most staffing firms have very small permanent staffs and large numbers of

temporary employees that come and go. If you were to measure the

size of the company by revenue, they might be small under Small

Business administration standards, but by head count standards,

they almost always exceed 25 and even 50 and with respect to the

State health insurance exchanges, they have more than 100, and

you have to be awfully small to meet those head count thresholds.

The vast majority of staffing firms cannot meet them.

Mr. DAVIS. Thank you, Mr. Chairman.

Mr. GOWDY. I thank the gentleman from Illinois.

The Chair would now recognize the distinguished gentleman

from Arizona, Dr. Gosar.

Dr. GOSAR. Mr. Chairman, I would like to submit for the record,

testimony from a ski area in Flagstaff, AZ which I would like to

highlight that talks about temporary workers.

Mr. GOWDY. Without objection.

[The information referred to follows:]
44
45

Dr. GOSAR. This letter basically highlights what we do in the

west when we have temporary solutions as far as utilizing a ski

area that may operate as little as 6 weeks out of a year, and as

many as 4 months out of a year. That gives us a great idea.

Mr. Spiro, have you ever run a business?

Mr. SPIRO. No.

Dr. GOSAR. So you have never signed the back end of a paycheck?

Mr. SPIRO. That is correct.

Dr. GOSAR. Mr. Gauss, you have been in business for 30 years;

I was in business for about 27 years in health care, by the way.

How much has your overhead gone up in the administrative aspect

in regard to rules and regulations?

Mr. GAUSS. I would say a good 75 percent over the last eight or

9 years.

Dr. GOSAR. Interesting.

Mr. Spiro, do you think the government has a right to turn out

the lights on a business?

Mr. SPIRO. No, but I do not think they are turning out the light

on business.

Dr. GOSAR. How would you answer these two gentlemen if these

rules go into effect, and they are fairly nebulous rules, how would

they stay in business?

Mr. SPIRO. Congressman, I have not seen all the numbers and

assumptions they have used. All I can tell you is that the CBO

studied this issue comprehensively. They looked at all the studies

out there and concluded that the effects of the Affordable Care Act

on the labor markets would be purely marginal.

Dr. GOSAR. It actually shows—lets us go back and recalibrate

that. It actually shows that we lose a significant amount of jobs

and costs incredibly more than what was originally orchestrated. Is

that true?

Mr. SPIRO. I disagree with your conclusion.

Dr. GOSAR. That isn’t what the CBO said?

Mr. SPIRO. They said there would be marginal effects.

Dr. GOSAR. Let me ask you a question. You are familiar with the

Massachusetts model?

Mr. SPIRO. I am somewhat familiar but I am not from Massachusetts.

Dr. GOSAR. But you cited it, did you not?

Mr. SPIRO. That is correct, I did cite it in my testimony.

Dr. GOSAR. Have premiums gone up?

Mr. SPIRO. They have gone up as they have gone up everywhere

around the country.

Dr. GOSAR. So it is not a solution?

Mr. SPIRO. It was never intended to lower cost. They are now engaging in a second round of payment reforms intended to lower

costs.

Dr. GOSAR. What you are saying to me—you actually highlighted

it for me—it was a solution process but it is not a solution process

because we have seen these premiums going up all over the place.

Mr. SPIRO. It was a solution to the problem of the uninsured and

on that score, Massachusetts has been found to be wildly successful

and popular, reducing the uninsured rate to a couple of percent.
46

Dr. GOSAR. Let me ask you the question, where was that money

dumped? Was it on the backs of the businesses or on the taxpayer?

Let me answer it for you—on the taxpayer.

Mr. SPIRO. It was from taking the cost of uncompensated care

and redistributing it so that it was not being shifted onto higher

premiums for employers.

Dr. GOSAR. So let me ask the next question. Premiums went up

then or went down? From what you just said, it should have gone

down. They went up, sir. When you run a business you understand

how those dynamics work and obviously you need to spend some

time in the private sector before you start pulling out rules.

How do you feel about that, Mr. Gauss? Does the government

have the right to turn your lights off by these rules and regulations?

Mr. GAUSS. No, sir, they do not.

Dr. GOSAR. It seems to me there was a lot of nebulism in this.

We talked about mini-med plans. We asked the Secretary to define

the number to use in mini-med plans and holy cow we went off on

tens of millions of dollars and gave waivers to 1,500 industries,

picking and choosing. Do you think that was fair?

Mr. GAUSS. No, I do not.

Dr. GOSAR. How do you feel about that, Mr. Uprichard?

Mr. UPRICHARD. I would agree with Mr. Gauss, I do not think it

is fair. We are trying to run a for profit business, we are trying to

make a difference in peoples’ lives. As we have seen over the last

few years, even with our current economy, it is not easy. More regulations, more increased costs that we cannot pass on to our customers will force us out of business.

Dr. GOSAR. A business is run on a somewhat fairly certain environment. You have to have some variance in making sure you are

able to, God forbid, make a profit because that is the only way you

can open your doors, keep your doors open to do that. Do you see

the environment that was created by this law making it more certain or less certain?

Mr. UPRICHARD. I see it becoming less certain because the forecasting will be much more difficult. We look at hours right now but

we will have to look at hours in a very different way because of

the fluctuation in hours of the temporary workers, it will be incredibly difficult to forecast and people moving in and out of coverage

will also be very difficult to forecast. The administrative and compliance piece will really be problematic for our business.

Dr. GOSAR. Thank you.

Mr. GOWDY. I thank the gentleman from Arizona.

The Chair would now recognize the distinguished gentleman

from Maryland, the ranking member of the full committee, Mr.

Cummings.

Mr. CUMMINGS. Thank you, Mr. Chairman.

I have been listening to all of this and I was just wondering, Mr.

Uprichard, you are from South Carolina?

Mr. UPRICHARD. Yes, sir.

Mr. CUMMINGS. You realize in 2009, 16 percent of the people in

South Carolina had no insurance? Did you know that?

Mr. UPRICHARD. No, sir, I did not know that.
47

Mr. CUMMINGS. It is a fact. I ran a small law firm for years and

we had to do some sacrificing to provide our people with insurance

but we also wanted healthy people. I know you are a responsible

business person and I respect what you are doing. I know business

is hard. If you were to testify before folks in a hearing like this,

I know you would want people to be insured, would you not? You

would want people generally to be insured?

Mr. UPRICHARD. Yes, sir.

Mr. CUMMINGS. Because if they are not insured, in many instances, as in my district, they die. I want you to understand that,

dead, gone. I am just wondering what solution would you have, if

any, you don’t have to answer this, to help people get insurance?

I am not saying this is the answer. Do you have an answer on that

or does it matter? Do we just let them die?

Mr. UPRICHARD. No, sir, we do not let them die, but we create

a model that is practical and provides flexibility and has, for example, a 12-month look-back rule.

Mr. CUMMINGS. Mr. Spiro, they asked you about the Massachusetts model. I find it so interesting that obviously when Governor

Romney was the Governor, he must have felt there was a need for

some kind of care act and opponents of the Affordable Care Act ignored the reality that the health reform law could have positive impacts on the economy in addition to reducing the deficit over the

next two decades, the ACA could result in significantly improving

health outcomes in this country.

The number of people without health insurance rose in 2010 and

is estimated to be 49.9 million Americans, an increase of 900,000

from 2009. Expanding health coverage definitely improves health

outcomes by helping people obtain preventive care. A large part of

the Affordable Care Act of course is trying to help people stay well

so they can have employees, am I right, because if you are sick, you

can’t work?

Mr. SPIRO. That is correct, Congressman. Of course it benefits

employees and improves their health but we can’t forget how that

also benefits employers. As I said in my testimony, it reduces absenteeism and increases productivity. That will ripple through the

economy. It also deals with the problem of job block where people

feel like they can’t move to another job where they might be more

productive. All those benefits are for workers but also their employers.

Mr. CUMMINGS. The ACA also includes a provision in which certain employers, those with at least 50 full-time employees, would

pay a penalty for not offering health care coverage or if the insurance they offer does not meet certain criteria and at least one of

their workers receives a subsidy from individuals.

My colleagues on the other side have argued that this penalty

would dramatically lead to sharp reductions in employment. In contrast, the CBO has concluded that such penalties on firms with 50

or more employees that do not offer health insurance would have

little effect on hiring.

Mr. Spiro, do you believe that such penalties will force employers

to dramatically change their hiring practices? I have heard the testimony of these gentlemen. This is the other part. Mr. Spiro, the

State of Massachusetts also had an employer responsibility provi-
48

sion in their health plan which served as the model. I think we

need to make sure it is clear. Mr. Romney, who is now running for

President, who now acts like he doesn’t like his own plan, some

have called it Romneycare but my understanding is that the employer responsibility provisions of Romneycare are much stricter

than those in the ACA with penalties applying to employers with

10 or more full-time employees. Has Massachusetts seen a decline

or increase in enrollment in employer-based coverage?

Mr. SPIRO. You are right to point out that the Massachusetts employer penalty is much broader in scope. Even so, the vast majority

of employers are exempt. That is the key to remember that the employer responsibility under the Affordable Care Act will exempt the

vast majority of employers.

As you said, the CBO has studied this issue. It will have very

marginal effect on the labor market and employment.

Mr. CUMMINGS. Thank you. I see my time is up.

Thank you, Mr. Chairman.

Mr. GOWDY. I thank the gentleman from Maryland.

The Chair would now recognize the distinguished gentleman

from Indiana, Mr. Burton.

Mr. BURTON. Who was the chairman of this committee for 6

years. That is my ugly face up there on the wall. I have been

around here for a long, long time, 29 years. How old are you, young

man?

Mr. SPIRO. How old am I?

Mr. BURTON. Yes.

Mr. SPIRO. Thirty-six.

Mr. BURTON. You were 7 years old when I came to Congress.

Let me start off by saying to my colleague, my good buddy down

there, that in Indiana we don’t let people die. If people don’t have

insurance, they still get to go to the emergency room and they do

get coverage. I think it is probably that way in every part of the

country.

There is no question about it, Mr. Spiro, we need to make some

changes in health care. You are absolutely right. We have come up

with a bill that we think solves that problem in a little more effective way than the Affordable Care, we like to call it the Obamacare

Act.

We believe that small businesses ought to be able to band together to buy insurance like major corporations do so they can get

the better rate. We believe you ought to be able to buy insurance

across State lines so that companies out West or in the Midwest

can compete with companies in the East.

We believe there ought to be medical savings accounts with tax

deductible options in there so that people and the employers put

money into an account; if the people don’t use that money, say

$3,000 a year, it is carried over to the next year and the next year.

Then there is a major medical policy above that which takes it to

$100,000 or more. There are a whole host of things in our bill that

does not cause the Federal Government to start sticking its nose

into the private sector, but you are absolutely right, we do need to

make changes.

I am now the chairman of Europe and Eurasia on the Foreign

Affairs Committee. I just got back from Greece. Greece has had a
49

government that has from cradle to grave taken care of people.

They stuck their nose into everything. Do you know what they are

doing to salaries today? They are cutting them by 40 percent. Do

you know what they are doing to retirement benefits? They are cutting them by 40 percent. They are raising taxes on property and

doing it through the utilities over there. I talked to a policeman

who was very supportive of the government until they started

doing this and realized that government control over the private

sector only leads to chaos.

The same thing is happening in Italy, in Spain, and in Portugal.

In Ireland, they had a little different situation but they are in bad

trouble as well. All those things do have an impact on the United

States of America.

I guess the thing I would like to get across is the private sector

is the engine that drives this country, that makes this country

great, not government, not government regulation or the government sticking its nose into the private sector. We need to get government out of the way so the private sector can flourish and create jobs.

The only way our government can create jobs is to take taxpayers’ money. You mentioned the term redistribution of wealth.

The only way the government can do that is to take money away

from the guy that is an entrepreneur that’s creating jobs and give

it to somebody else from the government. It just creates a big mess.

Right now I do not know how many regulations we have added

to the mix in the last couple of years but I think it is about 500

to 600 or more. That is another albatross around the neck of the

private sector. It is just really sad.

When I hear a businessman like Mr. Gauss and Mr. Uprichard,

I did not hear you, Mr. Lenz, I apologize because I was late getting

here, when I hear them telling us that they are going to lay off people because of government intrusion into their business, whether

healthcare or anything else, it really bothers me. I had my own

business, and I started it by myself, and I know what it means to

have government sticking their nose into your business.

You are absolutely right. We need to do everything we can to

make it more affordable for people. The way to do that is, as I said,

to get government out of the way, to create incentives for business

and industry to provide insurance, to give tax incentives for people

to do that, not to have the government come in and say you have

to do this, because it only leads to a really big problem.

I hope that you and other young people like you who are interested in doing good for the country will take a little look at history

and look at what is going on in other countries around the world

where the government has been very intrusive because it does not

work. It didn’t work in Russia, it does not work in Greece, it will

not work in Spain, it has not worked in Italy and it is not going

to work here.

What will happen is government will cause the free enterprise

system to collapse. We need to be a help to the private sector by

creating incentives for them to do the things that need to be done.

That is why the approach we think needs to be taken is to create

incentives for the private sector to do the right thing without government intrusion.
50

I will not ask any questions. I just thought I would get that off

my chest, Mr. Chairman. Thank you.

Mr. GOWDY. Thank the gentleman.

Mr. SPIRO. Mr. Chairman, may I respond?

Mr. GOWDY. Let me do this because they have a call for votes

and only because the gentleman from Missouri, Mr. Clay, is such

an efficient questioner and is a pithy with both his questions and

knows you will be with your answers, we will try to get the gentleman from Missouri in so we do not have to go vote and waste

a hour of your time. With that, the distinguished gentleman from

Missouri.

Mr. CLAY. Thank you so much, Mr. Chairman. I will be efficient

and keep it brief.

Some have argued that employers face considerable confusion

and uncertainty about the ACA including what it will cost employers in 2014, thus making planning for the future difficult. However,

the Federal Government Web site www.healthcare.gov was

launched after the ACA was enacted. Managed by the Department

of Health and Human Services, this Web site provides comprehensive information about the provisions of the ACA, including a small

business site with up-to-date guidance on small business tax credits, coverage options and reinsurance for retirees, among other

things.

Mr. Spiro, do you believe there is a lack of information available

for small businesses explaining the provisions of the ACA?

Mr. SPIRO. Congressman, there is a wealth of resources, as you

mentioned, www.healthcare.gov, there are calculators so that small

businesses can figure out if they are eligible for a tax credit. In addition, on this very issue with respect to temporary workers, you

can see the Treasury Department is being very responsive and they

sent out a Notice for Request for Comment before even issuing a

proposed rule. They are gathering those comments and they are

going to then issue a proposed rule, then get more comments before

issuing a final rule. It has been a very transparent process and

they have gone out of their way to solicit feedback from stakeholders such as the other witnesses at the table.

Mr. CLAY. Could the Federal Government do a better job of making sure the necessary information is available for employers as

they seek to comply with the ACA’s requirements?

Mr. SPIRO. I think there is lots of information out there and I

think hearings like this are an important piece of that to make the

public aware of issues surrounding implementation. Obviously, always more can be done but I am very pleased with the way the

administration has been transparent and seeking comments and

being responsive.

Mr. CLAY. On that point, for the entire panel, the IRS, HHS and

Treasury have all conducted outreach to stakeholders to provide

comment and guidance on a broad range of employment definitions.

Did any of you provide comment to the agencies or departments

promulgating these guidelines to express your concerns? Mr. Lenz.

Mr. LENZ. Yes, sir, we have. We have been working very closely

with the administration and we do appreciate the efforts that are

being made, but it is a complex subject and we are concerned they
51

may not get it right or may not have the legal authority to do what

they need to do to fix the concerns that we have.

Mr. CLAY. Thank you. Mr. Uprichard.

Mr. UPRICHARD. Yes, sir, Mr. Clay, we have. As a matter of fact,

I have been working closely with the Deputy of Health and Human

Services for the Southeast, Anton Gunn. He is actually coming to

Greenville to speak to some of our customer base on November

15th. When I was coming to D.C., he did try to make some introductions for me to the folks at the Treasury Department and Internal Revenue Service but they were unresponsive with the request

for a meeting.

Mr. CLAY. Thank you. Mr. Gauss.

Mr. GAUSS. Yes, sir, I did, mostly through Mr. Lenz because I

have been fighting on the State level because of unemployment

taxes going through the ceiling.

If I could answer about the Web site information, it is thorough

enough for me. That is where I got the $711,000 that is going to

put me out of business. That is how I understood it and I am in

the trenches. I am on the ground, boots on the ground.

Mr. CLAY. Thank you for that response. Mr. Spiro, would you

care to respond to Mr. Burton’s comment?

Mr. SPIRO. Do we have time, Mr. Chairman?

Mr. GOWDY. You have to solve all the world’s problems in 37 seconds.

Mr. SPIRO. I would just respond that the Affordable Care Act is

fundamentally a market-based solution. It is not single pair

healthcare as you would find in Europe. I think that is why Mitt

Romney supported it in Massachusetts. I would say when you raise

the issue of Greece and debt problems in Europe, that is exactly

why the Affordable Care Act was necessary. The CBO found that

it reduced the deficit $143 billion over the first 10 years and continues to reduce the deficit in subsequent decades. I think repealing the Affordable Care Act would have the opposite effect and

would worsen our debt problems.

Mr. GOWDY. On behalf of all of us, we want to thank our witnesses for your expertise, for your collegiality toward one another,

and for your helpfulness to this committee on what is a very important issue. Thank all four of you.

I am not singling out anyone, but Mr. Uprichard, safe passage

back to Heavens Gateway in the up State of South Carolina.

With that, the committee is adjourned. Thank you.

[Whereupon, at 10:39 a.m., the subcommittee was adjourned.]

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