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[House Hearing, 115 Congress]
[From the U.S. Government Publishing Office]

REIMAGINING THE HEALTH CARE MARKETPLACE FOR AMERICA'S SMALL BUSINESSES

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

HEARING

BEFORE THE

COMMITTEE ON SMALL BUSINESS
UNITED STATES
HOUSE OF REPRESENTATIVES

ONE HUNDRED FIFTEENTH CONGRESS

FIRST SESSION

__________

HEARING HELD
FEBRUARY 7, 2017

__________

[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

Small Business Committee Document Number 115-002
Available via the GPO Website: www.fdsys.gov

____________

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23-825 WASHINGTON : 2017

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HOUSE COMMITTEE ON SMALL BUSINESS

STEVE CHABOT, Ohio, Chairman
STEVE KING, Iowa
BLAINE LUETKEMEYER, Missouri
DAVE BRAT, Virginia
AUMUA AMATA COLEMAN RADEWAGEN, American Samoa
STEVE KNIGHT, California
TRENT KELLY, Mississippi
ROD BLUM, Iowa
JAMES COMER, Kentucky
JENNIFFER GONZALEZ-COLON, Puerto Rico
DON BACON, Nebraska
BRIAN FITZPATRICK, Pennsylvania
ROGER MARSHALL, Kansas
VACANT
NYDIA VELAZQUEZ, New York, Ranking Member
DWIGHT EVANS, Pennsylvania
STEPHANIE MURPHY, Florida
AL LAWSON, JR., Florida
YVETTE CLARK, New York
JUDY CHU, California
ALMA ADAMS, North Carolina
ADRIANO ESPAILLAT, New York
BRAD SCHNEIDER, Illinois
VACANT

Kevin Fitzpatrick, Staff Director
Jan Oliver, Chief Counsel
Adam Minehardt, Minority Staff Director

C O N T E N T S

OPENING STATEMENTS

Page
Hon. Steve Chabot................................................ 1
Hon. Nydia Velazquez............................................. 2

WITNESSES

Mr. Tom Secor, President, Durable Corporation, Norwalk, OH,
testifying on behalf of the National Small Business Association 5
Mr. Keith Hall, President and Chief Executive Officer, The
National Association for the Self-Employed, Annapolis Junction,
MD............................................................. 6
Mr. Kevin Kuhlman, Director of Government Relations, National
Federation of Independent Business, Washington, DC............. 8
Ms. Dania Palanker, Assistant Research Professor, Center on
Health Insurance Reforms, Georgetown University, Washington, DC 10

APPENDIX

Prepared Statements:
Mr. Tom Secor, President, Durable Corporation, Norwalk, OH,
testifying on behalf of the National Small Business
Association................................................ 32
Mr. Keith Hall, President and Chief Executive Officer, The
National Association for the Self-Employed, Annapolis
Junction, MD............................................... 45
Mr. Kevin Kuhlman, Director of Government Relations, National
Federation of Independent Business, Washington, DC......... 51
Ms. Dania Palanker, Assistant Research Professor, Center on
Health Insurance Reforms, Georgetown University,
Washington, DC............................................. 58
Questions for the Record:
None.
Answers for the Record:
None.
Additional Material for the Record:
Women Impacting Public Policy (WIPP)......................... 67

REIMAGINING THE HEALTH CARE MARKETPLACE FOR AMERICA'S SMALL BUSINESSES

----------

TUESDAY, FEBRUARY 7, 2017

House of Representatives,
Committee on Small Business,
Washington, DC.
The Committee met, pursuant to call, at 11:00 a.m., in Room
2360, Rayburn House Office Building. Hon. Steve Chabot
[chairman of the Committee] presiding.
Present: Representatives Chabot, King, Luetkemeyer, Brat,
Radewagen, Kelly, Blum, Comer, Bacon, Fitzpatrick, Marshall,
Velazquez, Evans, and Lawson.
Chairman CHABOT. The Committee will come to order. Good
morning. We want to thank everyone for being here with us today
so that we can discuss a critical issue facing America's small
businesses, what I could consider to be a catastrophe our
health insurance marketplace.
In my opinion, and in the opinion of many, President
Obama's signature legislation has proven to be a disaster,
especially for America's small businesses. From the very
beginning, promises were made which turned out to be untrue.
The American people were told that premiums would decrease by
$2,500. Instead, average premiums and job-based coverage have
increased by $3,775. President Obama famously promised, and I
quote, ``If you like your doctor, you can keep your doctor. If
you like your healthcare plan, you can keep your healthcare
plan.'' Nothing, as it turned out, could have been further from
the truth.
As a result of losses in the market, major insurers have
bolted for the exits. Their withdrawal from Obamacare-
established marketplaces left little to no competition within
the exchanges, leaving consumers fewer choices in health
insurance options. Doing nothing is not an option because the
current system is in, quite frankly and literally, a death
spiral. We need to enact real patient-centered reforms that
lower costs, improve portability, and ensure coverage for the
millions of Americans who are struggling to find affordable and
reliable health insurance.
In 2016, the National Federation of Independent Businesses,
NFIB, published a survey which found that the cost of health
insurance continues as the number one problem small businesses
face. NFIB members are not the only ones concerned. In late
2015, the National Small Business Association, NSBA, released a
survey that found that while the majority of employers think
offering health insurance is very important to recruiting and
retaining good employees, just 41 percent of firms with up to 5
employees offered health benefits, and that is down from 46
percent in 2014. Overall, the NSBA survey found that 65 percent
of small firms reported offering health insurance in 2015, down
from 70 percent in 2014.
Survey results like these track with what we have been
hearing from our constituents for the past 8 years. We all hear
from small business owners in our districts who want to provide
health insurance for their employees, not just as a recruitment
and retention tool, but also out of a sense of duty to do the
right thing for their workers and their families. It is
important to remember that the damage done by Obamacare was not
limited to the new problems it created for the healthcare
marketplace. It also exacerbated and made worse longstanding
problems in that marketplace.
While we have a badly damaged system right now, I believe
there is light at the end of the tunnel. We have a real
opportunity to enact positive change, and we are going to do it
the right way, and I believe a better way. America's small
businesses will not be an afterthought or a bill payer this
time around. We are going to listen to what they are telling us
because they are on the frontlines and can help us create the
step-by-step solutions that will improve access, lower costs,
and fix a broken system.
We have an excellent panel of witnesses today, and I want
to thank each and every one of them for coming here, and very
shortly here, testifying before us. We thank you for your time,
and I would now like to yield to the ranking member for her
opening remarks.
Ms. VELAZQUEZ. Thank you, Mr. Chairman. I am going to try.
If not, I will ask Mr. Evans to read my statement. Can you
understand me? Yes? Okay, good.
Seven years ago, the president signed into law the
Affordable Care Act. For the over 20 million people that have
secured coverage, it has not been a disaster. This gain has
been significant for small business employees. Between 2013 and
2015, the number of uninsured small business employees dropped
by 4.1 percent million, and their uninsured rate fell from 27
percent to less than 20 percent. These individuals not only
gained insurance coverage, they gained high-quality insurance
coverage. The ACA instituted reforms to--can you read this?
Mr. EVANS. Many of these reforms were particularly
important for small businesses. Before the ACA, one employee's
rare illness could cause insurers to drastically raise rates
for the entire firm. Now the insurance companies are not
allowed to charge higher premiums based on health status,
insurance claims, or gender. The insurance market is fair and
more consumer-friendly than it was seven years ago. The ACA has
ushered in a period of freedom for entrepreneurs who no longer
will have to choose between starting their own business and
retaining their health benefits.
I recently held a healthcare event in my district. One New
York entrepreneur said, and I quote, ``I would not be able to
own my business without the Affordable Care Act.'' The act has
also contributed to reducing healthcare cost growth. In recent
years, premium rates increases in the employer market has been
modest. Between 2010 and 2015, premiums raised 27 percent,
significantly lower than the 69 percent increase from 2000 to
2005.
As with any major law of this complexity, there have been
challenges in implementation for many eligible firms have not
taken advantage of the small business tax credit. Similarly,
markets have had mixed success in the Small Business Health
Option Program. I look forward to hearing testimony today on
these programs that could be improved.
However, rather than working together to develop targeted
reforms, Republicans want to throw out the baby with the bath
water. For years, they proposed little more than repeal with
vague, at best, planned replacement. Even today, there is no
agreement upon a concrete plan or legislative path to
replacement. Experts agree that even with a partial repeal
without a concurrent replacement will destabilize the market.
The Congressional Budget Office estimated that repealing
the Affordable Care Act, the reconciliation would cause 30
million people to lose coverage over the next decade. This
coverage drop would cause nearly $1.7 trillion in lost revenue
to hospitals, doctors, and other providers between 2019 and
2028. At the same time, demand for uncompensated care would
skyrocket.
CBO also predicts that premiums in the non-group market
would increase by 20 percent to 25 percent. This increase would
reach about 50 percent in the years following the elimination
of the Medicare expansion and the marketplace subsidies. Even
if the Affordable Care Act is repealed with a delay,
uncertainty in the marketplace would likely cause a significant
premium increase in insurance market exists. These sweeping
proposals are careless and will cause a great deal of damage to
our healthcare system and every American who relies on it.
Small firms are not being served by our healthcare system
and face many challenges before the Affordable Care Act. The
Affordable Care Act sought to provide small firms with greater
stability, flexibility, and cost controls. Though we have seen
considerable gains, more work remains through a thoughtful and
bipartisan examination of the policies, we can make targeted
improvements that better serve small firms. I hope my
Republican colleagues will join me in this examination and
abandon their dangerous and disruptive plan for repeal.
Thank you, Mr. Chairman. I yield back.
Chairman CHABOT. Thank you very much. The gentleman and
gentlelady yield back.
If Committee members have an opening statement prepared, I
would ask that they be submitted for the record.
And I will take just a moment to explain our timing and
lighting system here. We operate by the 5-minute rule, both the
witnesses and the folks up here, so we ask that you stay within
that. There will be a green light that is on there for 4
minutes. Then the yellow light will come on to let you know
that you have got a minute to wrap up. And when the red light
comes on, we would ask you to stay within that. We will give
you a little leeway, but not a whole lot, so we would ask you
to follow that, if you would.
And I would now like to introduce our very distinguished
panel here today.
Our first witness is Tom Secor, president of Durable
Corporation, a small manufacturing and master distributor of
loading dock bumpers and floor matting, primarily serving the
material handling and janitorial supply industries, located in
Norwalk, Ohio since 1941. He has been with Durable since 1993,
which currently employs 37 people. Mr. Secor is an active small
business advocate, serving on the Board of Directors for the
National Small Business Association, who he is testifying on
behalf of today, and the Ohio Chamber of Commerce. We welcome
you to the Small Business Committee.
Our second witness is Keith Hall, President and Chief
Executive Officer of the National Association for Self-
Employed, NASE. As a 23-year member of the organization, Keith
has served as Chief Operating Officer, Chief Financial Officer,
and National Tax Advisor. He has also spent time on the board
of directors. He began his career with the international
accounting firm of KPMG, and later served as the chief
financial officer for a medium-sized bank and a long-term care
provider. Mr. Hall is a certified public accountant and has
provided consulting and tax services to small businesses for
over 20 years, and we welcome you here as well this morning.
And up next is Kevin Kuhlman, the director of Government
Relations at the National Federation of Independent Business,
NFIB. He manages NFIB's House of Representatives lobbying team
in advocacy strategy, specializing in healthcare and health
insurance issues. He also closely follows the regulatory
process and comments on regulations that impact the NFIB's
membership. Before joining NFIB in 2011, he handled healthcare,
labor, education, and small business issues for Congressman
Peter Roskam from Illinois. He started his career in Capitol
Hill in 2006 as a support research staff member for the
Committee on Ways and Means. We thank you for being here as
well.
And I will now yield to the ranking member for the
introduction of our fourth witness.
Ms. VELAZQUEZ. Thank you, Mr. Chairman.
It is my pleasure to introduce Dania Palanker. She is an
assistant research professor at the Center on Health Insurance
Reforms at Georgetown Health Policy Institute. She analyzes
state and federal insurance market reforms and is an expert on
health benefits provision of the ACA and ERISA. She is also
chair of the Plan Management Advisory Committee of the District
of Columbia Health Benefits Exchange. Ms. Palanker holds a J.D.
from Georgetown University and an MPP from the Harvard Kennedy
School. She received her B.A. from Middlebury College. Welcome,
and thank you for being here.
Chairman CHABOT. Thank you. And Nydia, I think you will
acknowledge, I did not do it, did I? I had nothing to do with
this?
Ms. VELAZQUEZ. I guess that--well, I do not know.
Chairman CHABOT. All right. We will begin with Mr. Secor.
Mr. Secor, you are recognized for 5 minutes.

STATEMENTS OF TOM SECOR, PRESIDENT DURABLE CORPORATION; KEITH
HALL, PRESIDENT AND CHIEF EXECUTIVE OFFICER THE NATIONAL
ASSOCIATION FOR THE SELF-EMPLOYED; KEVIN KUHLMAN, DIRECTOR OF
GOVERNMENT RELATIONS NATIONAL FEDERATION OF INDEPENDENT
BUSINESS; DANIA PALANKER, ASSISTANT RESEARCH PROFESSOR CENTER
ON HEALTH INSURANCE REFORMS GEORGETOWN UNIVERSITY

STATEMENT OF TOM SECOR

Mr. SECOR. Good morning, Chairman Chabot, Ranking Member
Velazquez, and members of the House Small Business Committee. I
want to thank you for the opportunity to address this body in
reference to the current conditions that small businesses are
facing since the passage of the Patient Protection and
Affordable Care Act, ACA, and offer some solutions as Congress
works to improve the law.
My name is Thomas E. Secor, and I am the president of
Durable Corporation and a board member of the National Small
Business Association, NSBA.
Fewer and fewer small businesses, especially those with
less than 50 employees, offer health insurance as an employee
benefit. This is not because they do not want to; it is because
they simply cannot afford to offer a plan. At Durable, I had to
make the difficult decision, in 2014, to no longer offer health
insurance due to the increased cost and complexity of having to
move to an ACA-approved plan. Then the Obama administration
ruled we can continue our non-ACA approved plan due to the
failure of a small business market developing. And each year
since, we wait to hear if we can continue. To date, we still
offer health insurance. Even with a non-ACA approved plan, our
average total cost per employee has risen 51.7 percent between
2013 and 2017.
According to NSBA's Health Care Survey, offering health
insurance as an employee benefit is something the majority of
small businesses think is very important in terms of recruiting
and retaining good employees. Yet, with the huge healthcare
cost increases and the continual struggle to navigate
significant confusion and complexity within ACA, fewer firms
report that they offer some kind of health-related benefit.
NSBA's survey found that when it comes to ACA, the average time
it takes for small businesses to stay abreast of all the
changes to health care is 13 hours per month. That is nearly 4
workweeks every year, and 90 percent reported premium increases
at their most recent renewal, with 1 in 5 firms reporting
increases exceeding 20 percent, while 69 percent reported an
annual increase exceeding 20 percent over the last 5 years.
It is no wonder one in four small firms are purposely not
growing as a result of the ACA. Complexity and uncertainty give
rise to a system that inappropriately overshadows and often
stifles the ability of business owners and individuals to
succeed, innovate, and pursue entrepreneurship. The NSBA survey
shows that one-third of small businesses held off on hiring a
new employee, and more than half say they held off on salary
increases for employees as a direct result of high insurance
costs. This continuous uncertainty and never-ending cost
increases are not sustainable. Our employees who get up and go
to work every day deserve better, deserve more certainty,
deserve more consideration, deserve to have access to
affordable health insurance and high-quality healthcare
services.
NSBA is focused on reform efforts to fix some of the issues
most burdensome to small businesses, understanding that the ACA
as passed was primarily about expanding access, not reducing
cost. Efforts should be made to prioritize healthcare cost
containment and reduce the rate of medical utilization while
improving healthcare quality and empowering consumers.
Incumbent on any requirement to purchase health insurance is a
need to ensure that appropriate and affordable coverage is
available for all. With a goal of universal participation,
there is a need to strike a balance between the population
served, the premiums charged, and the underwriting risk.
Wasteful, inefficient, and improper health care is contributing
astronomical sums to the overall cost of U.S. health care and
will likely continue absent engaging consumers in their own
health care.
The Institute of Medicine estimates that $105 billion of
annual waste in healthcare spending can be attributed to the
lack of competition and excessive price variation. A lack of
public information on the price of healthcare services
contributes to this waste by denying employers, purchasers, and
consumers the information they need to make smart choices.
The small business community needs substantial relief from
the ACA. This level of relief can only be achieved through a
broad reform of the current healthcare system with a goal of
reducing cost and added expenses, focusing on individual
responsibility and empowerment, creating the right market-based
incentives and persistent emphasis on improving quality while
driving out unnecessary, wasteful, and harmful care.
Again, thank you for what I consider a true honor to be
able to address this Committee of elected officials in our
Nation's capital, and I look forward to answering any of your
questions.
Chairman CHABOT. Thank you very much.
Mr. Hall, you are recognized for 5 minutes.

STATEMENT OF KEITH HALL

Mr. HALL. Thank you, Mr. Chairman, Ranking Member
Velazquez, members of the Committee. Thanks so much for having
this hearing on this obviously very important topic.
My name is Keith Hall. I work with the National Association
for the Self-Employed. We have about 150,000 members in all 50
States. We represent over 27 million self-employed business
owners. Virtually all of those businesses have very few
employees. About half of them work out of their home, and their
average gross family income is about $90,000. It is estimated
by the year 2020, that number is going to be 50 million self-
employed. Now, to put that in perspective, the IRS processes
about 150 million tax returns a year. So by 2020, one out of
three tax returns will have a self-employed business attached
to that tax return. My point, of course, is this is a very
important part of our economy, of our culture, and of our
healthcare decisions. So thanks again for holding this hearing.
I think this is very, very important.
The ACA concentrated on three areas: quality, access, and
affordability. In a lot of ways, the ACA got some stuff right,
especially as it relates to quality and access. There are over
11 million Americans who are covered today that would not be
covered without the ACA. Those with preexisting conditions and
those with incomes below the thresholds now have coverage that
they would not have had before. Those people can now go to the
doctor with pride and with dignity. I like that. I think we
made a difference.
I think we, as citizens, as Americans, are called to help
people that need help. And I like that. I do believe whatever
solution we find needs to include some level of subsidies for
those that need help, and an exclusion from screening against
preexisting conditions. I think that is very important.
I think quality and access have been helped, but I think it
has been a struggle. The number of actual health plans has
dramatically decreased, and the number of insurance companies,
as the chairman mentioned, has dramatically decreased. Some
have given up. Many places only have one ACA option. I think
considering opening up interstate ability to expand some plans
may give more options, and I think we should certainly look at
that. I think the discussion should also include access to
healthcare, not just access to health insurance.
Now, I would like to spend most of my time talking about
affordability. I think that is where we really struggled. I
think it is important to note that the self-employed business
owner considers this a business expense. The self-employed is
unique in that we really have to pay twice. We have to pay the
cost, but then, also, if we are sick or out of work, our
business suffers, also.
Now, as I mentioned before, the average family income is
about $90,000 for this group. Now, that is right at the
threshold where they do not get subsidies, and so that makes it
extra difficult. As an example, a family in Cheyenne, Wyoming,
will pay about $14,000 a year for a Silver Plan. That is about
16 percent of their income. We have got to concentrate on
lowering that cost. Some options could be incentives for
younger and healthier people, give them incentives. Maybe
reducing some of the mandated benefits that exist now, and then
maybe some of the expansion of ability to go interstate could
help as well. This is the toughest part of the discussion
because how do we pay for all that we want?
And I know at some point the cost is going to be the cost.
But this is the most important thing I want to say today. Even
after we do all that we can do to reduce cost, the self-
employed business owner will still pay 15.3 percent more for
their health insurance just because of the tax code. That same
family in Cheyenne, Wyoming, is going to pay $2,100 more for
their health coverage just because they are a self-employed
business owner. That just does not make sense to me. The reason
is their health insurance is not deductible as a business
expense. And this is easy to fix. Congress can just move the
deduction off of page 1 of their tax return over to the
Schedule C. That saves 15 percent right here, right now. Easy
to do.
Now, I wish I had a great solution. I wish I could stand in
front of this Committee, lay out a specific plan that covers
everybody, everywhere, for everything, and then show you an
easy way that we can pay for it. But, I am not that smart. I
do, however, believe strongly in the American small business.
My only formal request is that those self-employed business
owners have exactly the same rules as big businesses do. If big
businesses get a deduction for their health insurance cost,
small businesses should as well. If big businesses can use
flexible spending accounts, health reimbursement arrangements,
then small businesses should as well. If big businesses get a
lower net tax on their net income, small business owners should
have that lower tax rate benefit as well.
I know this is really sappy, but I believe in small
business. I believe in what the American spirit can do. Small
business owners are creative, intuitive problem solvers. They
will figure this out. Tell us the rules, but then let the rules
be the same for everyone.
And thank you so much for the opportunity to be here. I
really appreciate what you guys do for us every day. So thank
you.
Chairman CHABOT. Thank you very much.
Mr. Kuhlman, you are recognized for 5 minutes.

STATEMENT OF KEVIN KUHLMAN

Mr. KUHLMAN. Thank you, Chairman Chabot, Ranking Member
Velazquez, thank you, and members of the Committee. Thank you
for the opportunity to testify at this important and timely
hearing. My name is Kevin Kuhlman. I am the director of
Government Relations at the National Federation of Independent
Business.
The Affordable Care Act has led to higher healthcare costs,
increased compliance burdens, and decreased flexibility for
small businesses. These consequences resulted in a significant
25 percent reduction in the offer rate for small businesses
between 2010 and 2015. For the first time, fewer than 30
percent of small businesses offered health insurance to their
employees in 2015. As Congress considers a partial repeal of
the ACA through reconciliation and a repair of the health
insurance markets, please prioritize affordability,
flexibility, and predictability for small businesses. Health
reform that works for small business will work for the rest of
the country.
The cost problem predates the ACA, but the law exacerbated
this problem. The ACA was the most significant Federal overhaul
of the individual and small business health insurance markets
ever. Forty-one percent of small business owners purchase
health insurance in the individual markets and 33 percent
purchase insurance through their business. The ACA added new
insurance requirements and taxes to these markets that drove up
plan costs. These costs are passed along to small business
owners and employees in the form of higher health insurance
premiums and out-of-pocket costs.
For small business owners, increased costs are unlikely to
be offset by tax credits. Only 6 percent of small employers
received an advanced premium tax credit in the individual
exchange marketplace. Many of the 9 million unsubsidized
individuals in the broader individual market are small business
owners. Few small businesses qualified for the Small Business
Health Insurance Tax Credit, and the credit expired last year
for the few businesses that did initially qualify. This
population needs the most cost relief.
The ACA implementation by the Departments of Health and
Human Services, Labor, and Treasury increased compliance and
paperwork burdens for small businesses. The biggest current
compliance headache is the employer mandate. Businesses must
track the cost of coverage for each employee monthly, provide
current and former employees with a Form 1095, and provide the
IRS with a Form 1094. Whether outsourced to a payroll company
or handled within the business, these increased compliance
requirements again result in higher costs for small businesses.
IRS regulations limited flexible arrangements that were a
common market practice for small businesses. Fewer and fewer
small businesses can afford the high cost of group health
insurance. Instead, to assist employees with healthcare costs,
many small businesses directly paid for or reimbursed
employees' individual market health plans and qualified medical
expenses. NFIB estimated 16 percent of businesses reimbursed
employees for insurance they purchased on their own in the year
2015. The IRS prohibited these arrangements and threatened $100
per employee per day penalties. Penalties of this magnitude
would be catastrophic for small businesses, forcing many to
close their doors.
Repeal will eliminate taxes and mandate penalties, but more
action must be taken to lower costs and increase coverage
options for small business. Congress cannot only pass repeal
legislation without considering replacement legislation that
focuses on affordability, flexibility, and predictability for
small businesses.
On affordability, reconciliation rules prevent
reconsidering the increased health insurance requirements in
repeal legislation. Adjusting tax and insurance rules with a
laser-like focus on affordability will organically increase
coverage for the small business population.
On flexibility, NFIB continues to advocate for innovative
offering arrangements. NFIB supported the Small Business
Healthcare Relief Act that allowed businesses to contribute to
their employees' individual market plans with tax preferred
dollars. The ACA eliminated these innovated offering
arrangements, as I mentioned earlier, but NFIB, with some other
small business organizations, helped lead the effort to restore
them on a limited basis in the 21st Century Cures Act, and we
appreciate Congress for doing so. Expanding these arrangements
will allow small businesses to tailor benefits that fit their
employees' needs and could help stabilize the individual
insurance market.
On predictability, during the repeal-and-repair process,
Congress and the administration must avoid disrupting the
fragile individual and small business health insurance markets.
Congress or the administration should allow individuals and
businesses to keep their transitional plans by relaxing
grandfather plan regulations and extending the Obama
administration's grandmother plan extension policy. These
policies could also enroll new individuals and business
customers to ensure true choice.
Small business was an afterthought during ACA consideration
and implementation. NFIB remains committed to advocating for
solutions that promote affordability, increased flexibility,
and ensure predictability for small businesses.
Thank you for allowing me to testify today. I look forward
to any questions.
Chairman CHABOT. Thank you very much.
Ms. Palanker, you are recognized for 5 minutes.

STATEMENT OF DANIA PALANKER

Ms. PALANKER. Chairman Chabot, Ranking Member Velazquez,
and members of this Committee, thank you for the opportunity to
participate in today's hearing about the healthcare marketplace
for small businesses.
My name is Dania Palanker. I am an assistant research
professor at Georgetown University Center on Health Insurance
Reforms. However, the views I share today are my own and do not
represent those of the university, its faculty, or staff.
Small businesses have long struggled to provide health
insurance to their workers facing high and often volatile
premiums. These struggles have existed for decades. One of the
goals of the Patient Protection and Affordable Care Act was to
lessen these burdens.
In 2012, before the ACA was fully implemented, only half of
businesses with 3 to 9 workers, and less than three-quarters of
businesses with 10 to 24 workers offered health insurance. The
small group market provided coverage to only one in five small
business owners with less than 25 workers. And workers of small
businesses who received insurance historically had less
generous coverage than those working for large employers, with
higher deductibles and lower contributions for their
dependents.
Health plans for businesses with less than 15 employees
were not required to cover maternity services in 35 States and
the District of Columbia, leaving some workers and their family
members or their spouses without coverage for tens of thousands
of dollars for the costs of childbirth and prenatal care. A
Cesarean delivery was actually about--the average cost was
about the same cost of median income.
Health insurers in 23 States were not required to include
mental health coverage in small group plans, and there was no
Federal requirement to cover substance use disorder treatments,
such as opioid addiction, and small businesses could purchase a
plan without prescription drug coverage.
Today's small businesses have more choices. They can offer
their workers the same plan if the issuer made the decision not
to terminate the plan. Small businesses can choose to purchase
in the traditional small business market or through the shop
marketplace. And they can help workers purchase coverage
through the individual market, including providing premium
support as we have heard because of the recent passage of the
21st Century Cures Act. There is no penalty for employers with
fewer than 50 employees that do not provide health insurance.
And finally, small business owners and individuals who are
self-employed can enroll themselves and their families through
the individual market.
Prior to the ACA, the individual market was not an option
for many small business owners, the self-employed, and their
workers. Applicants were denied coverage because of preexisting
conditions, including a history of a Cesarean section, a cancer
diagnosis, even acne. And those who did receive coverage often
would have the coverage for preexisting conditions excluded.
People experienced job lock where they would feel locked into
their job because that was the only way they could access
health care. And that also prevented people from starting their
new business, preventing entrepreneurship.
And small business owners and entrepreneurs are getting
coverage through the ACA. Almost 10 percent of small business
owners purchased coverage through the individual health
insurance marketplaces in 2014, and as marketplace enrollment
has grown since then, we expect that more have been covered
since then. In States that expanded Medicaid, there is a
healthcare safety net for entrepreneurs if they start a
business that is not profitable in the first few years.
The uninsured rate for small business workers has fallen by
10.8 percentage points in just the first year of the
marketplaces in 2014. And this was due to people enrolling in
individual insurance and Medicaid. And small businesses are
also benefitting from an unprecedented slowdown in healthcare
cost growth. So while premiums are growing, they're growing
significantly slower than they were prior to the Affordable
Care Act. For small employers with less than 50 employees, a
national survey found that there was only an average 4 percent
rate increase for single coverage and 4.2 percent for family
coverage between 2010 and 2015, and the rate increase was
actually only 1 percent between 2014 and 2015.
Before the Affordable Care Act, a small business could see
a large double-digit rate increase because only one or two
workers had high medical costs, such as one employee having an
HIV diagnosis or a premature baby being born that had to spend
many days in the NICU. Small businesses with female workforces
paid higher premiums. Some employers were charged more because
of the industry and the occupation of their employees. For
decades the small group market has actually failed small
businesses and their workers, and the result was that many went
without insurance. And the ACA has improved and is continuing
to improve access to coverage. Thank you.
Chairman CHABOT. Thank you very much.
We will now ask questions, and I will yield myself 5
minutes to begin. And I will begin with you, Mr. Kuhlman, if I
can.
Towards the end of your statement you made, I thought, a
very strong comment. I will repeat it. You said that small
business was an afterthought in consideration and
implementation of Obamacare. Could you expand upon that? You
know, why do you think that is the case and what is a better
alternative, especially since you are here before the Small
Business Committee?
Mr. KUHLMAN. Thank you for the question. During
consideration, NFIB was active throughout the consideration and
trying to be productive and helpful through the discussions
with Chairman Baucus to House discussions, designing a health
insurance tax credit. We provided a suggestion and we were
told, no, we are going to do this one instead. And the one that
ended up being created was just too limited on many factors,
and that was clear from, I think, the results. Four million
postcards were sent out advertising the credit, and I think we
are under fewer than 200,000 business have been able to take
advantage of it. Just too many limitations.
The second portion is the Small Business Exchange. Again,
we tried to be productive during consideration, and even
formulation through the regulations, and it just did not really
offer anything different than what already existed. The
exchange was eventually where you could claim the tax credit,
but again, I do not think it was anything innovative or
different enough to incentivize businesses to begin offering or
to move toward that and shift from what they already do offer
if they were on the outside market.
Chairman CHABOT. Thank you very much. Thank you.
Mr. Secor, I will move to you at this point. As a small
business owner who has continued to try to offer the best
insurance options possible to your employees, has Obamacare
made it easier or harder to continue to offer insurance to your
employees? What changes would you specifically like us to make
that would make it easier for you as a person in small business
trying really to do the best for your employees as far as their
health care goes?
Mr. SECOR. The ACA, if it would have been fully
implemented, would have put us out of the insurance market. It
was just totally unaffordable. The rates we got we could not
pay. And the complexity, I believe it was over 10,000 pages
added to the Federal Register. The amount of time it takes us
to--you know, when you look at 4 weeks a year, workweeks that
you are spending trying to figure out things, we do not have,
you know, corporate attorneys and staffs of people to sort
through this stuff. We tend to find out about stuff like that
when a regulator is knocking on the door and it is not a
pleasant situation. So, you know, the complexity is huge in
this.
I think the intent, you know, it is fine, but the intent
was too focused on expanding coverage. You have to address
cost. And you can talk about any additional coverage you want,
and there is a lot of good quality reasons to add this coverage
or that or whatever, but if you add a coverage and now it is
not affordable and a company has to drop their insurance, well,
this person got coverage and these 10 people lost everything
they had. And that is where we need some--we sort of think the
idea of a bare-bones medical plan, if you will, or medical
insurance like we used to have years ago, coupled with an HAS,
maybe would allow the individual to sort of spend their money
where they need to spend it on a personal basis and yet still
have that umbrella coverage that if they or their children
break an arm or were in a car accident or did get some disease,
they would have a coverage. But that basic level of coverage,
the cost has to be affordable.
Chairman CHABOT. Thank you.
I have only got about a minute left. Mr. Hall, I am going
to ask you to work miracles here and see if you cannot answer
two questions for me. One is, you voiced your support for
allowing insurance companies to sell their insurance across
state lines, I assume to increase the competition to bring
costs down. So if you could talk about that and why you think
that is a good thing.
Secondly, under the 21st Century Cures Act that we passed
last year, it lifted some of the restrictions on the use of
health reimbursement accounts, but there are still some
restrictions that remain, how would you like to see those
changed?
Mr. HALL. Okay. As far as opening competition, I do think
that is a good thing. I am certainly not an economist. I am not
smart enough to understand all the implications of that, but I
do recognize that when you are in Lincoln, Nebraska, and you
only have one option, it is difficult for them to choose what
is best for you and your family.
Back to the overall cost. If increasing competition by
allowing carriers to go into other States would provide us an
opportunity to increase choice and reduce cost, then that has
got to be a good thing. If that does not work, then it seems to
be pointless, but it still goes back, as you probably heard
through a bunch of different people, it still comes down to the
cost.
The HRA is one of my personal pet peeves. The smallest
businesses struggle with the cost of a group plan. It is very
difficult for a business who has three employees to get a Blue
Cross Blue Shield, ACA-compliant, major medical plan and stay
in business. But if they can provide $1,000, $2,000, $3,000,
whatever their budget will allow to help their employees with
the cost, then we should promote them being able to do that.
And an HRA, a health reimbursement arrangement, is exactly how
they do that.
So I would prefer removing all restrictions, and if there
is a qualified medical expense, as defined in the Internal
Revenue Code, that an employee incurs, the business ought to be
able to reimburse that with a tax benefitted status. It just
seems like an easy decision to me.
Chairman CHABOT. Okay. My time is expired.
The gentlelady is recognized for 5 minutes. The ranking
member.
Ms. VELAZQUEZ. Thank you, Mr. Chairman.
Ms. Palanker, is it not true that before the ACA premiums
in the small business market were skyrocketing and employers
were dropping their coverage?
Ms. PALANKER. Yes, that is true. The increase in employer
premiums, including for small businesses, did not start with
the passage of the Affordable Care Act. It had been happening
for many, many years, which was one of the reasons that the
Affordable Care Act was needed. And there actually was a
dramatic cut in small employers offering health insurance
before the Affordable Care Act passed. And I will also add that
some of the employees who used to get coverage through a small
business that are not anymore are now able to get coverage
through the individual market.
Ms. VELAZQUEZ. Thank you.
Mr. Secor, like nearly 96 percent of all American firms,
you have fewer than 50 employees, correct?
Mr. SECOR. Yes.
Ms. VELAZQUEZ. So automatically, you are exempted from the
employer mandate?
Mr. SECOR. That is correct.
Ms. VELAZQUEZ. Correct. So given that you are not subject
to the mandate, what aspects of the Affordable Care Act
specifically have been a regulatory burden to you?
Mr. SECOR. Well, if we are going to offer insurance, then
you end up offering through the ACA. And once you get in, you
have all the rules and regulations still apply. The fact that
we have fewer than 50 employers, you are correct, we do not
have to offer insurance.
Ms. VELAZQUEZ. Correct.
Mr. SECOR. But morally, those employees----
Ms. VELAZQUEZ. No, if you offer it through the ACA, you are
going to get more options than you got before.
Mr. SECOR. Actually, we got less. We had one carrier that
was willing to offer insurance is what our insurance agent told
us, that there was one. Now, here again, I am in a rural
section in Ohio, and I think that is part of the difficulties,
and that is where you see some of the things have occurred is
that, you know, in the State of Ohio, we have 88 counties and
we have 3 what I will call major cities for us: Cleveland,
Columbus, Cincinnati. And we have a handful of other ones, but
most of Ohio is rural and so we do not get the kind of
coverage. If you are in Cleveland, Columbus, Cincinnati, you
had options. We did not. And it was explained to me that is why
they allowed us to continue to offer that insurance is because
we did not get the option.
Ms. VELAZQUEZ. So, Ms. Palanker, based on your research and
data, does it reflect that in rural America you get less
coverage than prior to the enactment of the ACA?
Ms. PALANKER. Health insurance varies and the issuers vary
tremendously across the country, and it has always been true
that in small rural areas there have been less options for
health coverage than large areas, and there have been certain
States that have more competition than others. But I would add
that we do have now the added--I think the individual market
option for small businesses is very important because for those
that cannot afford the coverage or do not have those options it
is something there now for their workers.
Ms. VELAZQUEZ. Thank you.
Mr. Kuhlman, the ACA instituted a number of reforms that
serve to create a more predictable small business market. One
such reform was prohibiting different prices for coverage based
on health status or gender of employees. Do you think we should
go back to a scenario where some small businesses, such as
those who hire predominantly women, are charged higher
premiums?
Mr. KUHLMAN. I do not believe that. I think you are
referring to underwriting. And there were winners and losers in
that older system and there are likely winners and losers in
this new system. But I do not think we need to go back to a
heavily underwritten thing. But I would encourage more
flexibility.
Ms. VELAZQUEZ. Okay. Ms. Palanker, Republicans have not
agreed upon a concrete proposal to replace the ACA. However,
most offered plans have a few common elements, including
expanding health savings accounts, establishing new tax credits
for health coverage, and restructuring Medicaid through the use
of block grants. Could you please discuss the merits of these
proposals and likely impact on consumers, particularly those
from low- and middle-income families?
Ms. PALANKER. These proposals are good if you are wealthy
and healthy, and if you have health problems, if you are
moderate or low income, they really provide a lot of struggles.
The health savings accounts work for people who have the
disposable income to put into the health savings account and
for the people who do not end up using that entire account for
their health care. If not, it is really just shifting from the
insurance paying for the cost to people paying out of pocket.
For Medicaid, we have a longstanding process of Medicaid
being a State and Federal partnership, and if it is
significantly restructured into a block grant, you are actually
taking a situation where when we have economic downturn, the
risk of that downturn is now put on the States who are forced
to, unfortunately, cut benefits or cut employees, people off of
Medicaid at a time when it is most important to have.
Ms. VELAZQUEZ. Thank you, Mr. Chairman. Thank you for your
indulgence.
Chairman CHABOT. Okay. The gentlelady's time has expired.
The gentleman from Iowa, Mr. King, is recognized for 5
minutes.
Mr. KING. Thank you, Mr. Chairman. I want to thank the
witnesses for your testimony today.
And I direct my first question to Mr. Hall. I am using a
little bit of thinking about how businesses start and grow into
Fortune 500 companies and how often it is an entrepreneurial
individual in a garage or a shop somewhere that has an idea. Or
I am thinking about the local carpenter who went to work for
the construction company and decided to go out on his own, take
his tools. Now, the day that he goes out there and starts to
pound his own nails in his own little self-employed little
company with no employees, is his health insurance deductible
on that day?
Mr. HALL. Well, interesting question. And thanks for the
question. But on that day when he becomes self-employed, if he
has exactly the same cost, exactly the same policy, nothing
changes other than who cuts a check to him for his services, he
pays 15.3 percent more for his health insurance beginning that
day simply because the insurance is not deductible.
Mr. KING. It is whether or not he has employees?
Mr. HALL. It is whether or not he, himself, is an employee.
Now, interesting, because as a small business owner, if he
hires employees, he has got three people and he has the ability
to pay for their insurance, he does get a full deduction for
his employees' insurance. But his insurance, for him and his
family, 15.3 percent more just because he is self-employed.
Mr. KING. But if he is running a sole proprietorship and he
is not drawing his salary out of that and not paying himself,
but he is paying the expenses out of the business itself
without any corporation, just a sole proprietorship, then can
he then deduct his health insurance premiums?
Mr. HALL. His premiums are deductible, but only on the face
of his 1040, on page 1, not as a business expense.
Mr. KING. Standard deduction?
Mr. HALL. Not standard. It is on page 1, self-employed,
line 29, instead of being a business expense. So he pays taxes
for FICA, Medicare, self-employment tax, basically 15.3
percent. If he worked for the old carpentry company as an
employee, even if he paid his own health premiums, most likely
the company had a cafeteria plan, a 125 plan that he paid for
all of those expenses pretax. So bottom line, at the end of the
day, my example, the family in, Wyoming, at the end of the day,
that family has $2,100 less in cash. No other differences.
Mr. KING. That is what you describe in your testimony, the
$2,100 difference. And so here is some of the narratives that
come to me. We have a lot of farming families that surround me,
thankfully, and if they do not have an employee, they tell me
they are allowed to deduct the health insurance premiums as an
expense if they are a partnership or a husband-and-wife team.
Would you concur with that?
Mr. HALL. Well, again, and this is a critical point, I
appreciate you bringing this up. I will pay you later for
planting this question. But the important point is most people
do not understand the difference in how the premiums are,
indeed, deductible. So point blank answer to your question,
yes, those premiums are deductible. But not in the same way as
big businesses. So, yes, they are deductible, but not in the
right place on the return.
Mr. KING. Okay.
Mr. HALL. So that farmer still is paying 15.3 percent more
for their health insurance.
Mr. KING. And then if he hires a part-time employee and
pays for the health insurance for that part-time employee, does
that change the deductibility of the farmer and his wife?
Mr. HALL. Negative. Still the same.
Mr. KING. Okay.
Mr. HALL. And if you do not mind, if I could expand, the
thing that really hurts my heart is that carpenter or that
individual that did not take that plunge into their American
dream for being self-employed, but they became self-employed
kind of by accident: the company laid them off, the company
decided for whatever reason we no longer have employees, we are
only going to deal with independent contractors, you are going
to do the same thing for us you did before, yet you do not have
vacation, you do not have paid time off, and you do not have
health insurance. That person now still pays 15.3 percent and
they did not even make the choice. They are like a necessity
entrepreneur. Those are the ones that really reach out and
touch me.
Mr. KING. Let me pose another thing that I heard here, and
that is all very interesting and I am awfully glad you are here
as a witness to clarify these delicate points that they are.
When I am listening to the discussion about selling insurance
across State lines and the discussion about what should be
mandated in health insurance premiums, does anyone on the panel
have the ability to describe how we can have a successful
competition established between the 50 States if we repeal the
components of McCarran-Ferguson that allow for States to write
monopolistic legislation? Can we maintain Federal mandates and
still allow for competition between State lines or does that
nullify? And I would ask Mr. Hall while I have got you here.
Mr. HALL. My first thought is that probably that would take
an act of Congress, so that is up to you guys. I do believe
that is a possibility. I think as we go through the concept of
mandates, of shared responsibility penalties, people who chose
not to have an ACA-compliant plan, we encourage them to get an
ACA plan with a negative encouragement. We said if you do not
do it, we are going to penalize you. I like both. I like the
negative penalty, but I also like encouraging people. So if
part of this nationwide group could include incentives for
younger people, healthier people to get into the pool, I am not
an actuary, but that helps the math----
Mr. KING. Thank you.
Mr. HALL. --if more healthy----
Mr. KING. I would ask unanimous consent for an additional
minute.
Chairman CHABOT. Seeing no objection, the gentleman is
recognized for an additional minute.
Mr. KING. Thank you, Mr. Chairman. I will try to go fast.
I would like to turn to Mr. Secor and ask you, as I see
this, if we have mandates that are put on at a Federal level
and we are trying to establish competition between the States.
And if it is for the opioid addiction, as the gentlelady
mentioned, or OB care or preexisting conditions even or
whatever it might be, can you see how we would end up with
competition between the States if we loaded them up with
mandates that all States had to comply with?
Mr. SECOR. I guess our focus from the NSBA side is still on
cost. And the more mandates you put on, the higher the cost of
the product is going to be. So whether there is competition or
not, you are still going to be driving the cost of that basic
coverage up and then it does not become affordable. How that
works in that market, to be quite honest, I really do not know.
Mr. KING. That is still a clear answer, and so I appreciate
it. And I thank you, Mr. Chairman. I yield back. Thanks.
Chairman CHABOT. The gentleman yields back.
The gentleman from Pennsylvania, Mr. Evans, is recognized
for 5 minutes.
Mr. EVANS. Thank you, Mr. Chairman.
Ms. Palanker, the question I would like to ask you is what
can you share your thoughts on the small business tax credit?
And what are your thoughts on how to make the incentives more
appealing to small employers?
Ms. PALANKER. For the small business tax credits that were
eligible and used the tax credit, it was very helpful to make
coverage more affordable. I believe the tax credit could be
expanded for higher--you know, for employers with higher wages.
It did sort of go out very quickly once an employer started
having more employees. So it could be really a more robust
credit that could also go longer and is an option to look at to
help make coverage more affordable for small businesses.
Mr. EVANS. Do you have any thoughts or suggestions in terms
of people taking advantage of it, sort of incentives?
Ms. PALANKER. Well, I think for the small business tax
credit, although there were postcards sent, there still was
research shown that people did not know it was available. One
piece is people do need to know that the credit is available.
In addition, when it rolled out, it rolled out at the time that
SHOP was very new. You had to buy the coverage through SHOP. So
I would say to sort of continue the credit and get more people
to enroll, it is really trying to both make sure that the
employers know it is there and that it is designed to both work
with the employers and work with the insurance options
available.
Mr. EVANS. Thank you.
Mr. Kuhlman, you stated that during the repeal-and-repair
process, Congress and the administration must avoid disrupting
the individual and small business health insurance market. In
your view, what is the leading components that must be
implemented by a replacement proposal?
Mr. KUHLMAN. I am a broken record, so I just say focus on
affordability, flexibility, and predictability. You know, I do
not have a plan to present to you today, but we remain very
interested in working together as that plan proceeds.
Ms. VELAZQUEZ. Will the gentleman yield?
Mr. EVANS. Yes.
Ms. VELAZQUEZ. And do you think the Republicans have a
plan?
Mr. KUHLMAN. I think there are many plans out there. I have
read the A Better Way plan. A lot of things that we agree with
in that plan.
Ms. VELAZQUEZ. What are those things that you agreed on
with those plans?
Mr. KUHLMAN. Well, in that there is a little bit more
affordability, flexibility, and predictability. There is an
expansion of the Small Business Health Care Relief Act.
Ms. VELAZQUEZ. Well, can you help me identify what piece of
legislation contains those elements?
Mr. KUHLMAN. Well, I mentioned the Small Business Health
Care Relief Act that we supported last Congress that was
partially put in the 21st Century Cures Act.
Ms. VELAZQUEZ. Okay. That was last Congress. But I am
talking about today. People are talking about repeal, though I
hear now they might just--thank you.
Mr. KUHLMAN. I would love to be helpful.
Ms. VELAZQUEZ. Yeah. Well----
Mr. EVANS. Let me follow up. Your view is that Congress
should equalize the tax treatment between the group market and
the individual market. Can you share your thoughts on the small
business tax credit?
Mr. KUHLMAN. Again, I just think it was too limited. When
it was designed, I feel like it said, here, we have a box. Now,
let's fit this into the box. And it was driven by a cost
target. So it was estimated $40 billion worth of tax relief,
and that sounds pretty good. I think more recently that
estimate has been revised downward three or four times to less
than $10 billion now. And for folks who did take advantage of
it, it is over. I had one business from Pennsylvania who said,
you know, as the ACA started, I moved to the SHOP, small
business, because I was able to take the tax credit. Now it is
over. Comparing plans inside SHOP to outside SHOP, the outside
SHOP ones were better. So I was in the SHOP with the tax credit
and then that credit disappeared, so now I am out. So I would
be happy to work with you on that or to simplify or broaden any
tax credit.
Mr. EVANS. Thank you, Mr. Chairman.
Chairman CHABOT. The gentleman yields back. The gentleman's
time is expired.
The gentleman from Mississippi, Mr. Kelly, who is the
Chairman of the Subcommittee on Investigations, Oversight, and
Regulations, is recognized for 5 minutes.
Mr. KELLY. Thank you, Mr. Chairman. And thank all you
witnesses for being here.
Mr. Secor, you know, us southerners do not do
pronunciations very well, but in your written testimony you
talk a little bit about how your workforce has gotten younger
in recent years and how that is affecting your health insurance
rates. In your experience, what are the reasons that young
people are declining coverage? And then as an ancillary to
that, it appears to me if younger people are entering the
workforce, that insurance rates should go down because they
have less health costs, but, in fact, what is happening is that
it is less because they are declining. So if you could comment
on that, Mr. Secor.
Mr. SECOR. Well, I think one of the things that happened in
ACA is they narrowed the bands. There was five bands of
coverage and they went down to three. And I think possibly one
of the thoughts was, okay, we are going to start, you know,
here and work down and at the bottom, work up, so to speak.
Well, they really did not do that. They started at the top and
worked down. So the health--because from the insurance
perspective, okay, here is our major risk. We are going to try
to price this accordingly. And what it did is it made it just
extremely unaffordable for those younger employees. I mean, and
that is what--as we have seen retirees and these young
employees come in, I mean, I talk to them and they just say,
you know, we really cannot--it is not worth the money. And they
look at themselves sometimes as indestructible being young
people. And I guess I was probably that way a long time ago,
too. But nonetheless, you know, we have to broaden that market.
And increasing the bands would be, I think, a possibility to at
least provide different rates.
Mr. KELLY. And also for you, you and I are both from rural
areas. And can you talk about the importance of access to
telemedicine and urgent care clinics? And do you think your
employees consider these alternatives when deciding on which
health insurance plans to use?
Mr. SECOR. You know, I am amazed at how smart our employees
are. I mean, I get to go to work every day with 36 fantastic
individuals. But when it comes to health care, what is
interesting is buying health insurance, they are not prepared
for. In their lives, they have never purchased this product.
And the idea that they can just go out and buy this product, I
selected annually with a health insurance specialist. You know,
without that person at my side, I have the same problem. But if
you have things in the plan that give them incentives, such as
things like you mentioned where you have a health unit or
whatever, I know specifically as our deductibles went up,
MRIs--I had to have an MRI years ago and I was talking to some
people on the shop floor. They said, no, no, no, do not go to
this hospital. Go over here to this clinic. The hospital was
$3,000. The clinic was $1,500. They knew this. They actually
knew which store to go to get which kind of prescription drug
because certain stores had a lower price than others. So there
are parts of this they are very able and willing to embrace.
Once again, the complexity of the overall insurance packet
is extremely difficult, and especially, you know, when I look
at employees that have been with us for 30 years and they have
never bought this product in their lives, ever, and now all of
a sudden it is like, okay, go buy health insurance, that is a
tough one.
Mr. KELLY. It is.
And Mr. Hall, I am going to try to do this one real
quickly. I think a lot of times we talk about the cost of
insurance plans. However, I am from a poor State, so we do not
have--if you make $90,000 in Mississippi, you are a rich
person. And I mean that. You are in the upper echelon. So we
talk about health care and the cost of the premiums, but we
rarely talk about the cost of the deductibles. And even I, as a
private employer, my deductibles went from being $500 a year to
now it is not uncommon to have $5,000 or $10,000 deductibles.
Well, if you add that to your premiums, the net effect is you
are paying a tax and you are getting zero coverage until you
expend like $15,000 or $20,000 a year. Do you think we are
taking into account the high deductible as well as the cost of
the plan?
Mr. HALL. Well, I think we are. I think we are probably not
taking it into account enough because it is a factor. I was
actually doing a seminar in Eugene, Oregon, and was talking to
a lady who is a hairdresser. She makes $40,000. Her husband is
disabled, works part-time, makes some money, but they make
$70,000 combined. They do not get any subsidies, but they pay
$12,000 a year for an ACA plan and their deductible is $6,000.
So the math does not work that they have to pay $20,000 or
$18,000 before it kicks in because there is an out-of-pocket
maximum, also, but the overall cost, that out-of-pocket is
material. It is a material factor.
And if I can go back to the previous question, you know,
those kids that are over 26--and I am an authority on this
because I have three kids that are in this age range--but they
are at this point where there is like an age line and you can
decide which side of the age line you are on. But if you get an
illness, if one of my daughters, they feel like something is
wrong, the very first thing they do is they go to Google and
they research it and they find out. They are knowledgeable.
They know what is going on. The telemedicine idea, expanding
options, that is what they do. My mom, same situation. She felt
something was bad. She made an appointment with her doctor. And
I think that is a material difference with the young people and
incenting them to be part of this pool is giving them different
options, maximizing use of technology. All of those things can
be very creative solutions to help get the young people into
the pool.
Mr. KELLY. Thank you, Mr. Chairman. My time is expired.
Chairman CHABOT. The gentleman's time is expired.
The gentleman from Florida, Mr. Lawson, is recognized for 5
minutes.
Mr. LAWSON. Thank you very much, Mr. Chairman. And anyone
can respond to this.
I have been in the insurance business for over 36 years and
have done quite a bit of health insurance group coverage for
employees and so forth. The problem that I see here is one that
we are having to deal with, there are fixes for the Affordable
Care Act, but it does not seem to be that anyone really wants
to work and take care of the fixes it is so politicized, until
one group says we just have to do the repeal and we are going
to come up with something. And then you have the people on my
side who are pretty much saying that no one has asked to get us
involved and to make these fixes. And when during the course of
the campaign, when I was campaigning, every rural community and
every place I went they say take this message up to Congress.
We want them to fix it, you know. And so, but how do you get
there?
You all have recommendations. We have an educator here, Ms.
Palanker, and we are looking to get some recommendations, you
know, so people can sit down and say the most important thing
is health care regardless of who takes the credit. We are not
worrying so much about who is going to have all the credit, but
for people to have a pathway to get health care. And that is
the thing that is kind of frustrating to be here for 30 days
and to hear all the rhetoric coming from it.
Mr. HALL. Well, I appreciate those comments, and I guess I
do not want to say anything that will get me uninvited from any
other opportunity to visit for this group. But one of the
things I do hear that seems to be uncomfortable is I hear, you
know, one group of people say if we do this, costs are going to
go up. Then I hear another group of people say if we do this--
if we do not do this, costs are going to go up. And it seems
like the one consensus is that costs are going to go up.
And back to what we have heard so much today is the
affordability of the solution we choose is paramount. We have
got to find a way, in my opinion, to expand the pool of covered
individuals. Everyone having access to coverage. Everyone
having access to health care I think is what you just said. It
is difficult for me to see anyone who would stand up and say I
disagree with that, everyone having the opportunity to get the
medical care they need. Still, how do we pay for that?
And my little platform, you know, my issue is, my number
one goal is I would like for everyone to be on the same playing
field. Now, I do not mean that every single person regardless
of your income pays the same thing because obviously there
should be different tiers, different subsidies, but the tax
code should be treated the same for all businesses. Individuals
should be able to have choice. And I think expanding those type
of things is what we all should be talking about together. At
least that would be my opinion.
Ms. PALANKER. And I would say I think the starting point
should be on the improved health insurance market. We have
corrected some of the problems that small businesses faced
prior to 2010 and prior to 2014, because we do have a system
now where more people are covered and it is a system that is
more fair and that has ended some discrimination. And that is
very important.
The other piece is when you consider cost, there are two
sides of cost. There is cost of premiums and there is cost of
health care. And if the way that you are bringing down cost of
premiums is by limiting what the benefits are that are offered,
somebody is still paying for that. It is just instead of the
employer and the employee paying that through premiums, the
employee that happens to need that health service that is no
longer covered is facing paying that entire cost of that health
care. Or if they are not paying for it, they are going without
needed health care, which can be extremely detrimental to their
health.
Mr. SECOR. I would like to thank you for representing the
people that sent you here, and I guess from the rural part of
the country, the most important word in USA is the first one.
Chairman CHABOT. Is the gentleman finished? The gentleman
yields back. Thank you very much.
The gentleman from Missouri, who is the Vice Chairman of
this Committee, Blaine Luetkemeyer is recognized for 5 minutes.
Mr. LUETKEMEYER. Thank you, Mr. Chairman. And thank the
panelists this morning. I appreciate always having some small
business folks who sit in that chair where they have to make
lots of tough decisions, and sometimes that means going without
a paycheck yourself in order to make sure that your employees
get paid and make sure at the end of the day the rest of your
bills get paid. So I understand what you go through and I
appreciate you being here today and telling some of your
stories.
You know, it is interesting. I saw statistically 74 percent
of the uninsured--or, excuse me, 74 percent of the people who
are uninsured are employed, which tells me that it is a great
way to deliver health insurance if we can find a way to allow
the employers to be able to afford it. So it is not doable in
every situation from the standpoint that businesses have to
make enough money to be able to afford that. By the same token,
if we can find a way to enable the employers to be able to
afford it, it is a great way to deliver health care to the
employees should they desire to take that.
So I want to talk to Mr. Kuhlman for a minute here. What
would your suggestions be, sir, if in order to be able to
enable the small business folks to be able to find a way to
deliver health care?
Mr. KUHLMAN. I think a theme throughout everyone's
testimony is just to help lower the barrier of entry. If the
product is too expensive for new businesses or small
businesses, to start offering--you get into the situation you
are describing, or if it gets to those who are offering too
expensive to continue to offer, again, you just add to that 74
percent.
So one of the specific ideas that a couple of us have
mentioned is instead of having to--that group coverage be an
option, but instead of being the only option, allow businesses
to help their employees with their individual market plans. I
thought the SHOP's opportunity would be to do something like
that, be like the private exchanges that allow you to give a
contribution. Your employees go, they have a menu of options,
they pick whatever best fits their employees' needs. It did not
go that direction, but I still think there is opportunity
either through private exchanges or just in the existing
individual market.
Mr. LUETKEMEYER. You know, there was an editorial in one of
the local newspapers recently, individuals talking about small
businesses, the entrepreneurs, and how difficult it was to
manage the business. And they were talking about the new SBA
director nominee and advising that individual on about five or
six different things that they needed to be able to overcome to
be able to help the small businesses, the entrepreneurs, and
one of them was Obamacare. One of them was the regulation that
is so difficult to comply with, so costly to comply with.
And I can tell you when I go home and I talk to my small
business people, regulation is always at the top of mine, and
the number one regulation they talk about is health care
because they want to provide it. It is an important thing they
want to provide to their employees, yet it is a very costly
benefit. And some of them will swear they are going to keep it
in place so they can make sure that they keep good employees,
but at the end of the day it is still about cost, whether you
can actually afford something like this.
You know, as we go through all this, you know, the mountain
of paperwork and mandates that have been caused by the
healthcare law, would you guys, Mr. Secor and Mr. Hall, would
you like to talk just a little bit about some of the mandates
and some of the costs that you incur to be able to comply?
Mr. SECOR. I agree wholeheartedly with what your
constituents are telling you in terms of the small business
side in terms of regulatory compliance. And the big issue is
the unknown. It would be simple if it came out and said, okay,
here are the rules. Boom. Here is a sheet of paper. Follow
these rules. You know, when it is 10,000 pages, it is tough.
And it is tough trying, you know, trying to afford to get the
expertise to tell you how it affects your specific business,
because so much of that in there, most of it does not even
apply to you, but you do not know which does and does not, and
you need somebody to sort that out. And it is expensive.
Mr. LUETKEMEYER. So do you hire somebody to do this for you
or do you have a person on staff that takes care of all this
for you?
Mr. SECOR. Well, we are not in the ACA.
Mr. LUETKEMEYER. Okay.
Mr. SECOR. And so, you know, when we made the decision that
because of cost and complexity, I sat down and looked at it
with our healthcare professional and I actually--and it was not
a fun decision--I met with all of our employees. We actually
had a discussion about this. And we decided we just cannot do
this and try to run a business. There are just too many moving
parts.
Mr. LUETKEMEYER. Actually, my time is expired. I apologize
to Mr. Hall, unless the chairman wants to allow him to just say
a few words. Thank you.
Chairman CHABOT. Thank you. I missed what you said there at
the end.
Mr. LUETKEMEYER. My time is expired. If Mr. Hall would like
to just----
Chairman CHABOT. Mr. Hall, go ahead.
Mr. LUETKEMEYER. --like 10 or 15 seconds----
Mr. HALL. Thank you. I would love that.
I think the normal smallest business is not a member of--
does not go through the ACA, are not required to, but the
compliance then relates to a tax issue because now the small
business owner, for themselves and their family, they are
making this decision of do I pay the penalty? Do I get an ACA
plan? What is it going to cost me? What is it going to cover?
And one unique thing we talked about for years is in order to
determine whether you are eligible for a subsidy, you have got
to guess what your income is for the next year.
Mr. LUETKEMEYER. Right.
Mr. HALL. Because it is based on current year, not last
year. And this is a unique market. The self-employed person
does not really know how much they are going to make. So they
have this fear of estimating their income, they get a subsidy,
they get to the end of the year, they had a great year, which
is awesome for small business. Right? No, it is not awesome
because now they have got to pay back their subsidy. And that
just adds angst to them, maybe more than paperwork. But having
to figure out the penalty, do I do it, what is my subsidy, what
is my income in advance, crystal ball, just provides this
uncertainty that is very uncomfortable to deal with.
Mr. LUETKEMEYER. Thank you.
Chairman CHABOT. The gentleman's time is expired.
Mr. LUETKEMEYER. Thank you, Mr. Chairman.
Chairman CHABOT. The gentleman from Pennsylvania, Mr.
Fitzpatrick, is recognized for 5 minutes.
Mr. FITZPATRICK. Thank you, Mr. Chairman.
Mr. Hall, just taking an objective, right-down-the-middle
view of the ACA, you had mentioned that there are some good
things about it. Obviously, like many statutes, there are
winners and there are losers, there are roughly, approximately
12 million people that are on the ACA exchange, about 85
percent, approximately, get subsidies; roughly another 12
million on the Medicaid expansion program. Pennsylvania, my
home State, is one of those participating States. So clearly,
they are the beneficiaries. People who kept their current
health plan and saw premiums skyrocket or deductibles raise
significantly or people that lost their health plan altogether
would say that they are not fans of that statute. That is from
the patient side. From the business side, are there any
benefits that you have seen on the small business side that did
not previously exist before the ACA?
Mr. HALL. I think whether it is individual side or small
business side, my answer would be the same. You mentioned right
down the middle. In the middle of myself, I have my head and I
have my heart. And for the heart side of me, the fact that
there are people who could not get health insurance before
because they had a preexisting condition, whether that is my
wife or whether that is one of my employees, I think the ACA
did well in that area. I think it fixed a problem that perhaps
was a very difficult problem. That is my heart.
With my head, I still get stuck on I love doing that, that
makes me feel right. I believe we, as Americans, are called to
do that and I think that is very important. But at the same
time, we still have to pay for it. And how does that work?
And the thing that worries me most is not the 85 percent of
the people that you mentioned that have a subsidy, that someone
is helping them. My heart goes out to that $90,000 average
American that is just outside the range of a subsidy that is
paying 16 percent of their gross family income for an ACA-
compliant plan. And to me, that hurts both sides of my right
down the middle. That hurts my head from a cost standpoint, and
it hurts my heart for that family. Those are the ones I am most
worried about.
Mr. FITZPATRICK. Thank you.
Ms. Palanker, you had mentioned that some of the provisions
of the Better Way plan were for the healthy and the wealthy.
Does that only pertain to health savings accounts? Are there
any proposals, any ideas that have been put forward on the
Republican side that you think would benefit average Americans?
Ms. PALANKER. It would depend on how they become
implemented. You know, high-risk pools are put out there and
they can work, but they can only work if they are adequately
funded. And the Tax Policy Center has estimated to adequately
fund high-risk pools would be a trillion dollars over 10 years
nationally, so that they sort of have that piece.
There have been some proposals around providing different
forms of premium assistance, but I would say they are
significantly lower than what is in the Affordable Care Act,
which would make it more difficult for people to afford
coverage unless the premiums are lower because fewer benefits
are covered, in which we go back to what I had said earlier
where the problem is people still need the health care, just
instead of it being covered through insurance, they are paying
for it themselves.
Mr. FITZPATRICK. But what is the way to drive cost down?
Because as many have acknowledged, having an insurance care in
your pocket is not the same as having health insurance. And do
you agree with out-of-state competition? Do you agree with
antitrust exclusions? Do you agree with medical liability
reform? Some of the proposals that were put forth are designed
to reduce cost and expand access.
Ms. PALANKER. I do not see those proposals as actually
succeeding in reducing overall healthcare costs. I think, first
of all, getting healthy people in will reduce health premiums,
not necessarily--and that is an important piece of it. But to
really reduce healthcare costs, it is really about changing how
we deliver health care in the country which, you know, which
includes trying to find ways to get people the right care in
the best setting in the least costly manner. And it is really
actually not as much about I would say the pieces that we have
seen in some of the current proposals, but really gets back to
how we deliver health care.
Mr. FITZPATRICK. Thank you. I yield back, Mr. Chairman.
Chairman CHABOT. The gentleman's time is expired. The
gentleman yields back.
The gentleman from Kansas, Dr. Marshall, is recognized for
5 minutes.
Mr. MARSHALL. Thank you. Thank you, Mr. Chairman.
Mr. Hall, what from the ACA has been successful? What would
you like to keep from it?
Mr. HALL. I would like to keep the no prescreening for
preexisting conditions. I think whatever solution we have ought
to be able to cover everyone, whether that includes a different
rate band or whatever. I am not sure how that would work, but I
think that part needs to be there. I think the subsidies for
those people at certain income levels that have no other
option. And my personal opinion is that we, as the taxpayers,
are paying for the medical care for those people anyway, so
they should be part of the insurance pool. Those are the two
things that immediately come to mind for me that I think we
should make part of any solution we come up with.
Mr. MARSHALL. Okay. Mr. Kuhlman, kind of the same question.
Would you add anything to what you would like to keep in the
ACA?
Mr. KUHLMAN. He did hit on some good ones that I think that
NFIB members would support. I cannot think of anything
specifically more to add.
Mr. MARSHALL. Ms. Palanker, what is the holy grail of the
ACA? What is most important to you? If you were in charge, what
do you think is the most important thing we keep?
Ms. PALANKER. It is a very hard question to answer because
people have talked about the ACA as a three-legged stool and I
have started talking about it as a three-legged stool made out
of Jenga blocks because so many pieces are interrelated that to
try to have one thing stay, you know, you really need the other
pieces. And I also think it is really more the goal. There are
these goals of improving access, reducing costs, getting people
covered altogether, and it is hard for me to pick one thing
because, yes, 27 percent of the population is impacted by
preexisting conditions, which is huge. Fewer people hit their
annual limits or their lifetime limits, but I actually have a
friend who is 5 years old, who was born----
Mr. MARSHALL. Sure.
Ms. PALANKER. --who was born with a congenital defect, who
would have hit his limit in his first year of life. And, you
know, so to me those are equally as important even though fewer
people are impacted by one of them.
Mr. MARSHALL. Okay. Ms. Palanker, I will follow up with
you. What do you think of transparency? What would that do to
costs of health care?
Ms. PALANKER. Cost transparency?
Mr. MARSHALL. Yes. And quality. Cost and outcomes, quality.
Ms. PALANKER. I think cost transparency, quality
transparency is very, very important. And I think it can in the
long run reduce cost of health care and improve quality as well
if it is done in a way that consumers of health care can access
the information and can understand the information, which is
sometimes very difficult. Quite honestly, some of those people
who are experts in health care even have difficulty
understanding and comparing costs right now.
Mr. MARSHALL. Okay. Are any of the panelists aware of what
the average deductible for a Bronze Family Plan is in ACA right
now? It is $12,000. Is that truly health insurance at all? Just
because you have health insurance and you have a $12,000
deductible, to most people that is like not having health
insurance at all. And I just wanted to make sure we point that
out for a second.
Anybody on the panel have experience with high-risk pools?
Go ahead.
Ms. PALANKER. Not direct experience, but having looked at
the high-risk pools that existed before we had the Affordable
Care Act, as I said, where they were successful was where there
was significant public funding and enough to provide adequate
benefits. And there were three big problems in a number of
States that had high-risk pools. One was that the annual limit
was capped significantly. So people who had cancer, who had
significant health costs, which was why they were there,
actually could not get their health services covered. The other
was extraordinarily high premiums that were unaffordable so
people did not enroll. And the final piece was some States
ended up with waiting periods. And if you have a high-risk pool
with a waiting period, you have people uninsured while they are
waiting to get in.
I will add that if you also have a continuous coverage
requirement, that could create a problem because someone could
then get caught waiting to get in to get coverage and also hurt
because they cannot have continuous coverage because there is a
waiting period.
Mr. MARSHALL. Thank you, Mr. Chairman. I will yield back my
remaining time.
Chairman CHABOT. Thank you very much. The gentleman yields
back.
The gentleman from Iowa, Mr. Blum, who is the Chairman of
the Subcommittee on Agriculture, Energy, and Trade, is
recognized for 5 minutes.
Mr. BLUM. Thank you, Mr. Chairman. Thank you to our
panelists for being here today. I am a career small business
person, so these issues are near and dear to me.
As I think about this issue, I think back to 2008-2009 and
HHS Secretary then, Kathleen Sebelius, famously said, we are
going to bend the cost curve down with the ACA. Former
President Obama followed that up and he said, ``Every single
good idea to bend the cost curve down is in this bill.'' Over
the last 4 years in Iowa, I have asked my constituents in
almost every talk I have given about health care, give me an
example where the Federal Government, 535 suits in Washington,
D.C., have bent the cost curve down on anything. Life today, 4
years straight, zero hands have gone up.
I think we should just keep this simple. The ACA has not
decreased healthcare costs. The ACA has shifted healthcare
costs. The only proven way that I know to decrease the cost of
any product, and I am sure Mr. Secor would agree with this, and
increase the quality, is the miracle of the free market system.
We need to unleash consumers in this marketplace. We need to
make patients consumers.
Often, the patient today is described in this following
analogy: You take your dog to the veterinarian and the
veterinarian looks at the dog and he talks to the dog's owner
about the prescribed course of action. Everybody has an input
into the decision on what we are going to do other than the
dog, other than the patient.
You know, as a business owner myself over the last 20
years, and some of my companies had over 300 employees, I have
asked myself and my executive team, why are we making
healthcare decisions? Why are we making health insurance
decisions for 300 employees? That is over 1,000 people when you
include their families.
I would like to have your thoughts on this. I think we need
to unleash the consumers. I think we need to let the miracle of
the free market work. I think we need to make patients
consumers.
HSAs. I, as an employer, would rather deposit money into
HSAs of every one of my employees and let them decide what is
in their best interest and their family's best interest. This
will all work if we have competition. Competition is very
important. But HSAs, the government can deposit in them.
Employers can deposit into them. The employee can pretax
deposit into them. They can go out and decide if they even want
insurance and what is the best for them. I would like the
panel's thoughts on HSAs and unleashing the miracle of the free
market called consumers. And Mr. Secor, if you would start.
Mr. SECOR. I think it is an excellent idea. I think the one
key component that has to happen is we have to have
transparency in the cost and quality, and you have to come up--
and I do not have the answer of how to create that, but we have
to be able to get that out there.
The other thing that has complicated this in recent years
is we have seen hospitals buying doctors' practices. For
instance, well, now you go to the hospital to get the same care
you used to go to the doctor's office to get, and the care in a
hospital is more expensive, even if you are going into an
office. And so a lot of that has occurred.
So I do not know how you sort of go back, if you can, or
whatever, but whether it is the urgent care centers or
whatever, but I think the transparency of getting that out so
that they have something solid to work with, our people have
done it.
Mr. BLUM. That is a great point. I agree with you.
Mr. HALL. I obviously agree as well. I think tax incentives
are positive incentives. We talked about the penalty for not
having an ACA, so we are trying to encourage people with
negative stimuli. I think having positive stimuli is awesome. I
would add the health reimbursement arrangements to the
conversation so that you can have a whole range of individuals,
of governments, the State, the Federal, lots of different
people can share in the cost. I think the ACA was based on
cost-sharing, but maybe the cost-sharing did not land the way
we thought it was going to land. But HSAs, HRAs, expanding
those, making everything on a level playing field makes a lot
of sense.
Mr. BLUM. Because 99 percent of the conversation in this
town is about who is going to pay. I think 99 percent of the
conversation should be how can we drive the cost down so
everybody can afford it.
Kevin?
Mr. KUHLMAN. Yeah, you could sign us up. I think the
business owners and employees would be the most responsible
stewards of the money if they were controlling it themselves.
And I think there are some restrictions on many of those
accounts that need to be modified or lifted or raised in order
to make them truly viable for everybody.
Chairman CHABOT. The gentleman's time is expired. But go
ahead, you can answer the question.
Mr. BLUM. Thank you, Mr. Chairman.
Ms. PALANKER. I would start by saying that the employer
insurance market, particularly the large group market, was
created by the free market. Employers really created that on
their own in the United States and that sort of led to a large
part of our system. As far as providing HSAs with the idea of
an HSA or an HRA for the individual employees to go and buy
their own insurance, it needs to be recognized that, as we
said, buying insurance is complicated and it is very, very hard
for individuals to understand what they are purchasing. And one
of the benefits of employers is having someone who really
understands the business and the industry and how insurance
works helping to find and purchase that insurance.
Also, if HSAs are connected to increasing deductibles, then
you do end up shifting the cost onto the employee or the
individual enrolling in coverage, especially if the money going
into the HSA by the employer does not cover the cost of premium
and deductible.
Mr. BLUM. I yield back, Mr. Chairman, the time I do not
have.
Chairman CHABOT. The gentleman's time is expired.
The gentleman from Nebraska, Mr. Bacon, is recognized for 5
minutes.
Mr. BACON. Thank you, Mr. Chairman. I want to thank the
panel for being here.
Thank you. The top complaint being either the cost of red
tape, regulations, or the health care and ACA. Using just two
examples, I had one small business share with me that they
would hire nobody over 29 hours because it puts them over
certain trip wires, and another small business said they would
not hire anybody else because it would cost them $180,000 to
provide more health care for the entire team. Is this a regular
problem? I ask this to Mr. Secor and to Mr. Kuhlman. Do you see
this a lot, that folk are making hiring decisions, not hiring
more or not hiring people full time because of ACA?
Mr. SECOR. In our survey with small businesses people, it
is changing the attitude and direction of companies in terms of
the 30 hours, specifically, as well as in terms of, you know,
looking at the limits in terms of 50 employees. And even when
you are a small business, if you go look to pick up additional
work, sometimes that additional work does not come in one
employee; it comes in a new line. Well, that new line is 10
employees. So if I am at 42, I cannot put the new line in. And
those types of decisions are in our survey that we are getting
that feedback.
Mr. KUHLMAN. Yeah, I do not know if it figures out to the,
like, national Census figures, but to those businesses, say,
between and 60 employees, they are hypersensitive about both of
those thresholds, the 50 full-time equivalent employee
threshold and the 30-hour full-time employee definition. So
that is most significantly the population that I hear from,
those that are underneath, what does it mean crossing it, and
those who are above it saying, you know, I do not want to, but
if I have to do what can be done to get underneath it.
Mr. BACON. One more question for Mr. Hall. When I talk to
the self-employed folks in our district, it seems clear to me
that ACA is the number one issue. Many are paying $2,000 a
month, $12,000 deductibles, or a combination thereof. Is there
any issue that is more pressing to the self-employed right now
other than fixing ACA?
Mr. HALL. For 20 years we have done surveys of our members,
all self-employed. Very few of them have over five employees,
so this is the marketplace that you are talking about. We
always ask, what are your big issues? And for 20 years it has
always been three things. It has been access to capital; I need
funding. It has been the tax code is too cumbersome for me; I
do not understand it. And it has been access to quality health
insurance. Those kind of bounce back and forth, which one is
the top depending on where we are. There is no question today
that that third one, access to quality health insurance and,
different thing, and access to quality health care is the
number one issue.
Mr. BACON. Thank you very much, and I yield back, sir.
Chairman CHABOT. Thank you. The gentleman yields back. And
unless somebody else shows up, the last questioner today will
be the gentlelady from American Samoa, Amata Radewagen, who is
the Chairman of the Subcommittee on Health and Technology. You
are recognized for 5 minutes.
Mrs. RADEWAGEN. Thank you, Mr. Chairman. And I want to
thank the panel for appearing today.
In my home district of American Samoa, almost 100 percent
of our businesses are small businesses. Here is my question for
each of you. Considering that the United States territories
were left out of the Affordable Care Act altogether, what sort
of challenges do you see for these small businesses in the
territories when Congress addresses reform of the small
business healthcare marketplace? Mr. Secor?
Mr. SECOR. I am not sure what you have in terms of the
system there now, so I guess it would depend on what you have
today versus what you are going to get, so to speak. But my
guess is if they include you in this, you will be in the same
boat all the rest of us are and some may think that is good,
some may think that is bad. But I think no matter where you
are, if you are a small business, our people are telling us it
is cost and availability, affordable product and care. And, but
like I said, I really do not understand what your system is
today.
Mr. HALL. I think pre-ACA, during the debate for ACA and
after it has always been about quality, access, and
affordability. So I think if this discussion were expanded to
include the territories, which I think could expand the pools,
which I think overall actuarially is a positive thing, but my
best guess is, same thing, at the end of the day, there would
be an improvement in access for sure. I think particularly
those with preexisting conditions and those with particularly
low income would have access that perhaps they would not
otherwise have, but then the issue would continue to remain
cost.
Mr. KUHLMAN. Agree. Cost and flexibility. And it is not for
a lack of desire by the business owner. Just allow the business
owner to help their employees because that is what they want to
do. When you pile mandates or new requirements on top of them,
that interferes with that relationship. So I think just
sometimes the tendency to throw a heavy hand on top of it
interferes with that relationship.
Mrs. RADEWAGEN. Thank you.
Ms. PALANKER. If we can expand the pieces that aim to make
coverage for people more affordable to the territories, which
does not exist right now, then coverage would be more
affordable for individuals in the territories so that if things
were not improved for small businesses, but individuals could
get premium tax credits, cost-sharing reductions, and also if
there were consumer protections on the insurance benefits
themselves. And the other piece is investing in the healthcare
system is something that is very important, I know, for a
number of the U.S. territories and making sure that we are
making sure that our citizens have access to healthcare
services. Good healthcare services.
Mrs. RADEWAGEN. Thank you, Mr. Chairman. I yield back.
Chairman CHABOT. Thank you. The gentlelady yields back.
And in closing, I would just note that in my opinion there
is probably no issue that this Congress, the 115th, will deal
with in the next 2 years than dealing with the Affordable Care
Act or Obamacare, or some people refer to it as the
Unaffordable Care Act, whichever term you prefer. It affects so
many Americans in so many ways and it is critical that the
small businesses all across this Nation have a seat at the
table. And this hearing was a part of that and you obviously
saw that both sides had an opportunity to ask questions, and I
think we had a very, very good panel here. All four of the
witnesses I think did a great job, so we want to thank you for
your participation as this debate continues over the upcoming
weeks, months, and perhaps years.
That being said, I would ask unanimous consent that members
have 5 legislative days to submit statements and supporting
materials for the record. Without objection, so ordered. And if
there is no further business to come before the Committee, we
are adjourned. Thank you very much.
[Whereupon, at 12:41 p.m., the Committee was adjourned.]
A P P E N D I X

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