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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 | |
| ____________ | |
| U.S. GOVERNMENT PUBLISHING OFFICE | |
| 23-825 WASHINGTON : 2017 | |
| _______________________________________________________________________________________ | |
| For sale by the Superintendent of Documents, U.S. Government Publishing Office, | |
| http://bookstore.gpo.gov. For more information, contact the GPO Customer Contact Center, | |
| U.S. Government Publishing Office. Phone 202-512-1800, or 866-512-1800 (toll-free). | |
| E-mail, <a href="/cdn-cgi/l/email-protection" class="__cf_email__" data-cfemail="d4b3a4bb94b7a1a7a0bcb1b8a4fab7bbb9">[email protected]</a>. | |
| 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.] | |
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