    [House Hearing, 108 Congress]
    [From the U.S. Government Publishing Office]

                         H.R. 660: THE SMALL BUSINESS HEALTH
                                   FAIRNESS ACT
                 ___________________________________________________
                 ___________________________________________________

                                      HEARING

                                     BEFORE THE

                     SUBCOMMITTEE ON EMPLOYER-EMPLOYEE RELATIONS

                                       OF THE

                             COMMITTEE ON EDUCATION AND
                                   THE WORKFORCE

                              HOUSE OF REPRESENTATIVES

                             ONE HUNDRED EIGHTH CONGRESS

                                    FIRST SESSION
                                      ________

                    HEARING HELD IN WASHINGTON, DC, MARCH 13, 2003
                                      ________

                                  Serial No. 108-10
                                      ________

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

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                        COMMITTEE ON EDUCATION AND THE WORKFORCE
                            JOHN A. BOEHNER, Ohio, Chairman

    THOMAS E. PETRI, Wisconsin					GEORGE MILLER, California
    CASS BALLENGER, North Carolina				DALE E. KILDEE, Michigan
    PETER HOEKSTRA, Michigan					MAJOR R. OWENS, New York
    HOWARD P. "BUCK" McKEON, California			DONALD M. PAYNE, New Jersey
    MICHAEL N. CASTLE, Delaware				ROBERT E. ANDREWS, New Jersey
    SAM JOHNSON, Texas					LYNN C. WOOLSEY, California
    JAMES C. GREENWOOD, Pennsylvania				RUBE?N HINOJOSA, Texas
    CHARLIE NORWOOD, Georgia				CAROLYN McCARTHY, New York
    FRED UPTON, Michigan					JOHN F. TIERNEY, Massachusetts
    VERNON J. EHLERS, Michigan					RON KIND, Wisconsin
    JIM DeMINT, South Carolina					DENNIS J. KUCINICH, Ohio
    JOHNNY ISAKSON, Georgia					DAVID WU, Oregon
    JUDY BIGGERT, Illinois					RUSH D. HOLT, New Jersey
    TODD RUSSELL PLATTS, Pennsylvania				SUSAN A. DAVIS, California
    PATRICK J. TIBERI, Ohio					BETTY McCOLLUM, Minnesota
    RIC KELLER, Florida					DANNY K. DAVIS, Illinois
    TOM OSBORNE, Nebraska					ED CASE, Hawaii
    JOE WILSON, South Carolina					RAU?L M. GRIJALVA, Arizona
    TOM COLE, Oklahoma					DENISE L. MAJETTE, Georgia
    JON C. PORTER, Nevada					CHRIS VAN HOLLEN, Maryland
    JOHN KLINE, Minnesota					TIMOTHY J. RYAN, Ohio
    JOHN R. CARTER, Texas					TIMOTHY H. BISHOP, New York
    	MARILYN N. MUSGRAVE, Colorado
    	MARSHA BLACKBURN, Tennessee
    	PHIL GINGREY, Georgia
    	MAS BURNS, Georgia

                 Paula Nowakowski, Chief of Staff
           John Lawrence, Minority Staff Director

            SUBCOMMITTEE ON EMPLOYER-EMPLOYEE RELATIONS
        SAM JOHNSON, Texas, Chairman

    JIM DeMINT, South Carolina					ROBERT E. ANDREWS, New Jersey
    JOHN A. BOEHNER, Ohio					DONALD M. PAYNE, New Jersey
    CASS BALLENGER, North Carolina				CAROLYN McCARTHY, New York
    HOWARD P. "BUCK" McKEON, California			DALE E. KILDEE, Michigan
    TODD RUSSELL PLATTS, Pennsylvania				JOHN F. TIERNEY, Massachusetts
    PATRICK J. TIBERI, Ohio					DAVID WU, Oregon
    JOE WILSON, South Carolina					RUSH D. HOLT, New Jersey
    TOM COLE, Oklahoma					BETTY McCOLLUM, Minnesota
    JOHN KLINE, Minnesota					ED CASE, Hawaii
    JOHN R. CARTER, Texas					RAU?L GRIJALVA, Arizona
    MARILYN N. MUSGRAVE, Colorado
    MARSHA BLACKBURN, Tennessee

    Table of Contents

    OPENING STATEMENT OF CHAIRMAN SAM JOHNSON, SUBCOMMITTEE ON
    EMPLOYER-EMPLOYEE RELATIONS, COMMITTEE ON EDUCATION AND THE
    WORKFORCE	2

    OPENING STATEMENT OF RANKING MEMBER ROBERT ANDREWS,
    SUBCOMMITTEE ON EMPLOYER-EMPLOYEE RELATIONS, COMMITTEE ON
    EDUCATION AND THE WORKFORCE	3

    STATEMENT OF THE HONORABLE ANN L. COMBS, ASSISTANT SECRETARY,
    EMPLOYEE BENEFITS SECURITY ADMINISTRATION, U.S. DEPARTMENT OF
    LABOR, WASHINGTON, D.C.	5

    STATEMENT OF PHYLLIS M. BURLAGE, PRESIDENT, BURLAGE ASSOCIATES, PA,
    MILLERSVILLE, MD, TESTIFYING ON BEHALF OF THE NATIONAL FEDERATION OF
    INDEPENDENT BUSINESS	23

    STATEMENT OF PHYLLIS M. BURLAGE, PRESIDENT, BURLAGE ASSOCIATES, PA,
    MILLERSVILLE, MD, TESTIFYING ON BEHALF OF THE NATIONAL FEDERATION OF
    INDEPENDENT BUSINESS	25

    STATEMENT OF GREG SCANDLEN, DIRECTOR, CENTER FOR CONSUMER DRIVEN
    HEALTH CARE, THE GALEN INSTITUTE, ALEXANDRIA, VA	28

    APPENDIX A - WRITTEN OPENING STATEMENT OF CHAIRMAN SAM JOHNSON,
    SUBCOMMITTEE ON EMPLOYER-EMPLOYEE RELATIONS, COMMITTEE ON
    EDUCATION AND THE WORKFORCE	41

    APPENDIX B - WRITTEN STATEMENT OF THE HONORABLE ANN L. COMBS,
    ASSISTANT SECRETARY, EMPLOYEE BENEFITS SECURITY ADMINISTRATION, U.S.
    DEPARTMENT OF LABOR, WASHINGTON, D.C.	47

    APPENDIX C - WRITTEN STATEMENT OF PHYLLIS M. BURLAGE, PRESIDENT,
    BURLAGE ASSOCIATES, PA, MILLERSVILLE, MD, TESTIFYING ON BEHALF OF THE
    NATIONAL FEDERATION OF INDEPENDENT BUSINESS	59
    APPENDIX D - WRITTEN STATEMENT OF PHYLLIS M. BURLAGE, PRESIDENT,
    BURLAGE ASSOCIATES, PA, MILLERSVILLE, MD, TESTIFYING ON BEHALF OF THE
    NATIONAL FEDERATION OF INDEPENDENT BUSINESS	65

    APPENDIX E - WRITTEN STATEMENT OF GREG SCANDLEN, DIRECTOR, CENTER
    FOR CONSUMER DRIVEN HEALTH CARE, THE GALEN INSTITUTE, ALEXANDRIA,
    VA	81

    APPENDIX F - SUBMITTED FOR THE RECORD, STATEMENT OF THE HEARTH,
    PATIO & BARBECUE ASSOCIATION, ARLINGTON, VA	87

    APPENDIX G - SUBMITTED FOR THE RECORD, STATEMENT OF DONALD L.
    WESTERFIELD, Ph.D., PROFESSOR, WEBSTER UNIVERSITY, SENIOR FELLOW,
    NATIONAL CENTER FOR POLICY ANALYSIS	93

    APPENDIX H - SUBMITTED FOR THE RECORD, STATEMENT OF THE AMERICAN
    FARM BUREAU FEDERATION	105

    APPENDIX I - SUBMITTED FOR THE RECORD, STATEMENT OF THE ASSOCIATION
    HEALTHCARE COALITION, WASHINGTON, D.C.	109

    APPENDIX J - SUBMITTED FOR THE RECORD, STATEMENT OF COUNCIL OF
    SMALLER ENTERPRISES, CLEVELAND, OH	115

    APPENDIX K - SUBMITTED FOR THE RECORD, STATEMENT OF THE SMALL
    BUSINESS ASSOCIATION OF MICHIGAN, LANSING, MI	121

    APPENDIX L - SUBMITTED FOR THE RECORD, STATEMENT OF THE DETROIT
    REGIONAL CHAMBER	135

    APPENDIX M - SUBMITTED FOR THE RECORD, LETTER TO RANKING MEMBER
    ROBERT ANDREWS, FROM DONALD A. YOUNG, M.D., PRESIDENT, HEALTH
    INSURANCE ASSOCIATION OF AMERICA (HIAA), MARCH 13, 2003	141

    APPENDIX N - SUBMITTED FOR THE RECORD, STATEMENT OF NATIONAL
    ASSOCIATION OF INSURANCE COMMISSIONERS	147
    APPENDIX O - SUBMITTED FOR THE RECORD, STATEMENT OF RONALD F.
    POLLACK, EXECUTIVE DIRECTOR, FAMILIES USA, WASHINGTON, D.C.	157

    APPENDIX P - SUBMITTED FOR THE RECORD, LETTER TO CHAIRMAN JOHN A.
    BOEHNER AND RANKING MEMBER GEORGE MILLER, FROM MIKE PICKENS,
    NATIONAL ASSOCIATION OF INSURANCE COMMISSIONERS (NAIC) PRESIDENT,
    KANSAS CITY, MO	173

    APPENDIX Q - SUBMITTED FOR THE RECORD, STATEMENT OF NATIONAL SMALL
    BUSINESS UNITED	179

    APPENDIX R - SUBMITTED FOR THE RECORD, LETTER TO SPEAKER OF THE
    HOUSE, J. DENNIS HASTERT AND SENATE MAJORITY LEADER, BILL FRIST, M.D.,
    FROM MENTAL HEALTH LIASON GROUP, C/O PETER NEWBOULD, AMERICAN
    PSYCHOLOGICAL ASSOCIATION PRACTICE ORGANIZATION, WASHINGTON, D.C.
    	191

    APPENDIX S - SUBMITTED FOR THE RECORD, NEWS RELEASE, "AHPs WILL
    INCREASE HEALTHCARE COSTS FOR CONSUMERS,"
    BLUECROSS BLUESHIELD ASSOCIATION, CHICAGO, IL	197

    Table of Indexes	206

    HEARING ON H.R. 660:  THE SMALL BUSINESS

    HEALTH FAIRNESS ACT

    ____________________

    Thursday, March 13, 2003

    U.S. House of Representatives

    Subcommittee on Employer-Employee Relations

    Committee on Education and the Workforce

     U.S. House of Representatives

    Washington, D.C.

    	The Subcommittee met, pursuant to notice, at 1:05 p.m., in Room 2175, Rayburn House
    Office Building, Hon. Sam Johnson, Chairman of the Subcommittee, presiding.

    	Present:  Representatives Johnson, Ballenger, Platts, Tiberi, Cole, Kline, Blackburn,
    Andrews, Payne, Tierney, McCollum, and Case.

    	Staff present:  David Connolly, Jr., Professional Staff Member; Kristin Fitzgerald,
    Professional Staff Member; Travis McCoy, Legislative Assistant; Ed Gilroy, Director of
    Workforce Policy; Greg Maurer, Coalitions Director for Workforce Policy; Christine Roth,
    Workforce Policy Counsel; Kevin Smith, Communications Advisor; Kevin Frank, Professional
    Staff Member; Counsel; Deborah L. Samantar, Committee Clerk/Intern Coordinator.

    Michele Varnhagen, Minority Labor Counsel/Coordinator; Dan Rawlins, Minority Staff
    Assistant/Labor.

    Chairman Johnson. A quorum being present, the Subcommittee on Employer-Employee
    Relations will come to order.  The Subcommittee is meeting today to hear testimony on H.R. 660,
    the Small Business Health Fairness Act.

    	I'm eager to get to our witnesses today, so I'm going to limit the opening statements to the
    Chairman and Ranking Member.  Therefore, if other Members have statements, they will be
    included in the hearing record.  With that, I ask unanimous consent for the hearing record to remain
    open for 14 days to allow Members' statements and other extraneous material referenced during the
    hearing to be submitted in the official hearing record.  Without objection, so ordered.

    OPENING STATEMENT OF CHAIRMAN SAM JOHNSON,
    SUBCOMMITTEE ON EMPLOYER-EMPLOYEE RELATIONS,
    COMMITTEE ON EDUCATION AND THE WORKFORCE

    	Good morning, Ms. Combs.  Let me extend a warm welcome to all of you, to the Ranking
    Member, Mr. Andrews, and my other colleagues who are here today.  As many of you know, this is
    Cover the Uninsured Week.  That's one key reason we're here today.  Today's hearing focuses on
    H.R. 660, the Small Business Health Fairness Act, and how this bill will expand access to health
    care for uninsured Americans.

    	We will hear from the Administration, a small business owner, and policy experts on the
    effects of association health plans on the uninsured.

    	As you recall last session, this Subcommittee took the lead regarding the rising costs of
    health care and how they impact employers and employees.  In the last year alone, employers'
    health care benefits costs have increased by an average of 13 percent.  In the year 2002, over 41
    million Americans were uninsured.  That means one in seven Americans went without health
    insurance.

    	You might ask just who these uninsured are.  Well, they're working people who can't afford
    insurance, don't have access to insurance, or their employer can't afford to participate in a plan for
    them.  Sixty percent, that's 24 million, of uninsured Americans work in small businesses.  Some of
    these people are offered insurance and turn it down, because they can't pick up their part of the tab.

    	As the latest Kaiser health poll report reveals, more Americans are worried about health
    care costs today than about losing their job, paying their rent, losing money in the stock market, or
    being a victim of a terrorist attack. Specifically, the report found that nearly 40 percent of
    Americans say they are very worried that their expenses for health care services or health insurance
    will increase over the next six months.  Studies show health care costs are rising 15 to 20 percent a
    year under current rules.  These same Americans are worried their income might not keep up with
    the rising prices in the next six months.

    	To combat these problems, I worked with a bipartisan group from the House and Senate to
    introduce the Small Business Health Fairness Act to create Association Health Plans (AHPs).  This
    bill would allow small businesses to band together through associations to purchase quality health
    care at a lower cost.  It will significantly expand access to health coverage for many of the 41
    million uninsured Americans.  The bill will increase small businesses' bargaining power with health
    care providers, give them freedom from costly state-mandated benefit packages, and lower their
    overhead cost by as much as 30 percent.

    	These are all real benefits that many large corporations like General Motors, Frito-Lay, and
    U.P.S. as well as many unions, already enjoy because of their larger economies of scale. It's time
    we leveled the playing field for small business and gave them the health care clout they deserve.

    It's time they had access to AHPs.

    WRITTEN OPENING STATEMENT OF CHAIRMAN SAM JOHNSON,
    SUBCOMMITTEE ON EMPLOYER-EMPLOYEE RELATIONS, COMMITTEE
    ON EDUCATION AND THE WORKFORCE - SEE APPENDIX A

    Chairman Johnson   I'd like to welcome all of our witnesses who are here today, and we look
    forward to hearing your testimony. But I now yield to the distinguished Ranking Member of the
    Subcommittee from New Jersey, Mr. Andrews, for whatever opening statement he wishes to make.

    OPENING STATEMENT OF RANKING MEMBER ROBERT ANDREWS,
    SUBCOMMITTEE ON EMPLOYER-EMPLOYEE RELATIONS,
    COMMITTEE ON EDUCATION AND THE WORKFORCE

    Thank you, Mr. Chairman.  Good afternoon, ladies and gentlemen.  I'd like to thank you for
    your continuing interest in this subject, your good faith in dealing with the Minority, and your
    eagerness to present us with information.  I enjoy working with you on this and look forward to it.

    	We believe that the highest priority in the area of health care in our country is dealing with
    the needs of more than 40 million uninsured Americans.  For many years, people felt that economic
    growth would solve the problem of uninsured Americans.  We had higher economic growth in the
    1990s than we had in virtually any other decade since World War II.

    	But even in a decade where unemployment fell by more than 50 percent, where the welfare
    rolls dropped by 53 percent, where the equity markets nearly quadrupled in value, where the gross
    domestic product went from $3 trillion to nearly $10 trillion, despite all that growth, the number of
    uninsured people went up, not down, in the 1990s.  So we understand there are systemic problems
    in the U.S. health care system that have led to this enduring and difficult problem.

    	We have three concerns about the Association Health Plan idea.  The first is its relative lack
    of power or efficiency in dealing with the problems of the uninsured. Most adults who are
    uninsured work, either full-time or part-time.  But they work in low-wage, entry-level jobs,
    typically for employers who are in industries that have very thin margins. It is my belief that most
    of these employers would love to provide health insurance for their employees, but they're not in an
    economic position where doing so is viable.

    	Even if Association Health Plans work as their most avid backers hope they would, the
    impact on health insurance premiums would be such that growth might be moderated, or perhaps
    there would be a minimum or minor reduction in premiums.

    	That's not nearly enough to justify an employer who is operating on a 1 or 2 percent margin
    to spend $10,000 per family to buy family health insurance coverage for their employees.  It just
    isn't going to make much difference for most of the uninsured people of the country, even if it
    works the way its proponents would advocate.

    	Our second concern is the effect that the AHP plan would have on some very important
    protections for consumers and patients in the country.  All across the nation, people have lobbied
    their state legislatures to make sure that when a woman gives birth through a C-section, that there is
    a minimum stay in a hospital; that when a woman has a radical mastectomy, there is a minimum
    stay; that services such as colon cancer screenings or breast cancer examinations must be included
    in the package of benefits someone gets when they receive a health insurance policy.  We are
    gravely concerned that AHP proposals would strip those protections from consumers across the
    country.

    	The third concern that we have is that we have some experience in ERISA when we
    compare an entity that is closely watched and regulated with one that's not.  And I believe the AHP
    plan effectively creates a deregulated zone of federal law for health insurance.

    	You could make an argument that a similar deregulated zone exists in pension law with
    respect to 401Ks. Now, 401Ks have been a magnificent and positive thing for the country.  We
    support them.  We wish more people had more money and more of them. The Subcommittee's
    recent exploration, however, of the Enron scandal would show that there are some serious
    deficiencies in the protections that pensioners enjoy with respect to self-directed retirement
    accounts.

    	We had Mr. Tom Padgett, an employee of the Enron Corporation, testify before this
    Subcommittee some months ago. He's an individual who had $600,000 in his 401K in 1999 and
    $15,000 in his 401K by the time he testified before the Subcommittee, because he had all of his
    investment in the stock of his employer, which sadly turned out to be Enron.

    	I think that following that model and creating a protection-free zone in ERISA for health
    insurance would be a troubling prospect indeed.  We don't want to over regulate.  We understand
    that for employers to voluntarily adopt plans, the cost must not outweigh the benefit.  But we're
    very concerned that these plans would raise the objections that I talked about.

    	Having said that, we think it's important to have hearings so people can argue and thrash out
    these questions, that we can ask questions and work together, learn more about this.

    	So Mr. Chairman, we look forward to hearing from the witnesses.  I would ask for
    unanimous consent that statements in opposition to the AHP proposal from the National
    Association of Insurance Commissioners, the HIAA, the Health Insurance Association of America,
    Families U.S.A., the National Small Business United, and several others be admitted to the record.

    Chairman Johnson. I'd be glad to do that.  At the same time, I would ask unanimous consent to
    enter into the record all those who support this plan.

    Mr. Andrews. Absolutely.

    Chairman Johnson. Thank you.  Hearing no objection, so ordered.

    Our only witness on the first panel is the Hon. Ann Combs.  And we appreciate your return.

    	As you all know, Ms. Combs is the Assistant Secretary of the Employee Benefits Security
    Administration (EBSA). Before her appointment, Ms. Combs was Vice President and Chief
    Counsel, Retirement and Pensions issues for the American Council of Life Insurers.  During the
    Reagan and prior Bush Administrations, Ms. Combs spent six years as Deputy Assistant Secretary
    of Labor for EBSA.  Her previous experience includes the National Association of Manufacturers
    and PriceWaterhouse, Inc.

    	On behalf of the Subcommittee, I welcome you back. Thank you.  You may begin your
    testimony.

    STATEMENT OF THE HONORABLE ANN L. COMBS, ASSISTANT
    SECRETARY, EMPLOYEE BENEFITS SECURITY ADMINISTRATION,
    U.S. DEPARTMENT OF LABOR, WASHINGTON, D.C.

    Thank you, Mr. Chairman, and Ranking Member Andrews.  I appreciate the opportunity to
    appear before the Subcommittee on this very important issue.

    	The Bush Administration is dedicated to helping small businesses gain access to affordable
    quality health insurance, and the AHP legislation introduced in the House by a bipartisan group of
    lawmakers is a critical part of our agenda.

    	As events occur around the nation during Cover the Uninsured Week, there is simply no
    better time for discussing this proposal that can do so much for so many American men and women
    who work for small businesses.

    	As the head of the EBSA, which would be directly responsible for the regulation,
    administration, and enforcement of Association Health Plans, I am personally dedicated to making
    sure this legislation will deliver the health care benefits it promises to American workers and their
    families.  And I have the full support of Secretary Chao and the Administration in this effort.

    	AHP legislation is the centerpiece of the President's efforts to expand health insurance
    opportunities for all Americans, and we're very pleased that you have made passage of this bill an
    immediate priority, Mr. Chairman.

    	Unfortunately, we have all become accustomed to hearing about double-digit health care
    inflation and the vulnerability of small businesses in the insurance market. But this Subcommittee,
    more than any other, recognizes that behind these statistics are millions of people who struggle to
    make ends meet to keep themselves and their families protected with quality health insurance.

    	Indeed, the statistics demonstrating the crisis facing small businesses and their workers are
    startling.  Not only are small businesses half as likely to provide insurance to their employees when
    compared to larger firms, but also the costs of those that do provide coverage are 20 to 30 percent
    higher.  Even worse, their costs are rising more than 60 percent more rapidly than costs for a larger
    firm.

    	Today's health insurance market has simply failed small businesses and their workers.  The
    status quo has failed the small businesses that are the engine of our country's economic growth.
    The status quo failed the small businesses that create two out of every three new jobs in our
    country. And rising health insurance costs are the greatest impediment employers face that want to
    hire new workers, according to recent surveys by the Conference Board.

    	Small employers tell us that they want to provide coverage, but they can't because of costs,
    legal barriers, market barriers, and the threat of fraud.  Association Health Plans are aimed squarely
    at filling the gap in coverage among small businesses.  By banding small companies together,
    AHPs will give small employers many of the economic and legal advantages currently enjoyed by
    large employers and unions. Small businesses will enjoy greater bargaining power, economies of
    scale, and administrative efficiencies, as well as the benefits of a uniform federal regulatory
    structure.

    	The Bush Administration is committed to making sure that the benefits of AHPs are
    available to as many small businesses and workers as possible.  They will work best if they broadly
    spread risk and make insurance affordable for qualifying individuals regardless of their health
    status.

    	H.R. 660 includes numerous provisions to encourage broad pooling of risk, and to protect
    against cherry picking of low-risk individuals.  Only bona fide associations in existence for three
    years for purposes other than providing health insurance can offer an AHP.  AHPs must offer all
    available options to everyone in the association.  They must follow HIPAA's requirements to cover
    preexisting conditions, and to charge healthy and sick employees of the same company the same
    premium.

    	And this year's bill, H.R. 660, explicitly bars AHPs from charging one participating
    company more than others based on health status, unless the state law allows it and they choose to
    follow the state law.  That means they cannot set prices based on participants' medical condition,
    medical history, claims experience, their receipt of health care, genetic information, or disability.

    	Let me turn now to another important safeguard in the bill's solvency requirements.  AHPs
    offering fully-insured health plans would have to comply with state solvency rules, just as fully-
    insured group health plans offered by large companies and unions do today.  The AHP legislation
    would not undermine these protections.

    	AHPs that offer self-insured coverage that pay the claims out of their own funds will be
    subject to a single effective national certification solvency and oversight process that will be
    administered by the Department of Labor. Contrary to some critics' claims, self-insured AHPs will
    be fully regulated by the Federal Government.

    	To combat fraud and to further insure solvency, AHPs would have to meet federal
    certification standards and comply with rigorous ongoing oversight by the department.  EBSA will
    examine AHP sponsors to make sure they are bona fide trade or industry associations, meet the
    membership requirements, and satisfy the solvency and financial rules necessary to establish a self-
    insured AHP.

    	The financial requirements are strong.  They must set premiums and maintain reserves that
    are actuarially adequate to cover claims.  They must maintain an additional financial surplus as a
    cushion.  They must carry stop-loss insurance to cover unusually large claims.  They must carry
    indemnification insurance to cover unpaid claims if the AHP terminates.  And the Department of
    Labor will establish a fund to continue to pay premiums to a terminated AHP's indemnification
    insurance so that it will not lapse.  These provisions parallel the requirements that states impose on
    health insurers, and are essential to insure that AHPs deliver promised benefits.

    	AHPs will also give small businesses the benefits of a uniform oversight system instead of
    having to comply with as many as 50 different sets of regulations.  Associations will be able to
    fashion coverage that best meets their members' needs and budgets.

    	Finally, I would note that AHPs must comply with the full range of important federal
    standards passed by Congress for existing group health plans.  These include the strict fiduciary
    and claims procedures of ERISA, as well as HIPAA, COBRA, Mental Health Parity, the Newborns'
    and Mothers' Health Protection Act.

    	What we are tackling here today is truly a crisis. "Uninsurance" is on the rise, and
    premiums are skyrocketing. Small business employees and their families are especially at risk of
    losing or being unable to obtain quality insurance coverage.

    	Fortunately, this crisis can be abated through a voluntary private market-based solution,
    AHPs.  Small business insurance coverage can rise rather than fall if we act now. The Department
    of Labor has a long history of effectively regulating and enforcing federal laws regarding group
    health plans, as well as combating insurance fraud.  We will confidently carry out the AHP
    responsibilities contemplated by the legislation with effective and timely regulation, oversight, and
    enforcement.

    	I'd be happy to respond to any questions the Subcommittee has, and I look forward to
    working with all of you to help enact and administer legislation that expands access to affordable
    quality health insurance for working Americans and their families.  Thank you.

    WRITTEN STATEMENT OF THE HONORABLE ANN L. COMBS, ASSISTANT
    SECRETARY, EMPLOYEE BENEFITS SECURITY ADMINISTRATION, U.S.
    DEPARTMENT OF LABOR, WASHINGTON, D.C. - SEE APPENDIX B

    Chairman Johnson. Thank you.  We appreciate your testimony.

    Ms. Combs, let me ask you.  Critics of the AHPs charge that the Department of Labor lacks
    the ability to oversee and regulate AHPs effectively.  Are they right?  If so, what can we do about
    it?  And if they're wrong, can you explain why?

    Ms. Combs. I'm convinced that the Department of Labor is fully capable of taking on the
    responsibilities that are contemplated in this bill, and of overseeing and enforcing the law with
    respect to AHPs.

    	We currently oversee 2-1/2 million health care plans.  We cover 131 million Americans.
    And there are 67 million people who are in self-insured plans that are solely regulated by the
    Department of Labor.  We have a good track record.  Those plans provide good benefits, quality
    benefits, and do not present terrific enforcement risks.  In addition, we are solely responsible for
    overseeing five million people who work in multi-employer union plans that are not covered by
    state regulation.

    	In addition to ERISA, as I mentioned, we administer COBRA, HIPAA, WHCRA, I could
    go through all of the acronyms, The Newborns' Act, and Mental Health Parity.  We have a good
    relationship with the states in working with these issues.  I know there are some differences in
    policy.  But at a working level, I can assure you we work closely with the NAIC and the state
    insurance commissioners.  We were just at their quarterly meeting this week, on Monday, working
    with them and explaining to them a new compliance assistance program we've put in place for
    health care.

    	We have a strong enforcement policy.  We have 116 civil and 25 criminal investigations
    open right now into MEWA fraud, which is a problem.

    	So I'm convinced that we can do this.  We have expertise in the health care area.  Yes, if
    this legislation passes, we will need to take on additional responsibilities. We're fully prepared to
    do that.

    Chairman Johnson. It appears that your Department recently released a report entitled Health
    Disclosure and Claims Issues, FY 2001 Compliance Project Report. Could you comment on its
    relevance to the Department's ability to oversee AHPs?

    Ms. Combs. Sure.  I think it's a good example of the kind of work we've been doing in recent
    years.  The Department has really stepped up, in the last three to four years, its focus on health care.
    This was a project where we selected 1300 health plans to look at and see whether they were
    complying with all the new laws that had been enacted in the late '90s.  You had HIPAA and the
    Women's Health Care Act, The Cancer Act, and those laws.

    Chairman Johnson. Well, I'm sure you could think of another acronym.

    Ms. Combs. There are many of them.  But we went out and we actually looked at these plans to
    see if they were complying.  We identified those areas where compliance was an issue, notice
    provisions, and we worked with the health plans to point out problems.  We had great success and
    great cooperation from health plans.

    	In many instances, we would sit down with plans and identify a hidden preexisting
    condition exclusion that was in their policy, and they were willing to fix that.  I think it
    demonstrates our experience and our knowledge.  We took that report and used it to develop a
    compliance assistance program, where we're doing outreach with health plans, with the states, with
    the insurance commissioners.  We developed model notice provisions so that people would know
    how to comply with the laws and audit checklists.

    	We're very proactive in this area, and we'll take that same kind of spirit and determination
    and apply it to AHPs.

    Chairman Johnson. You also mentioned that critics charge that the creation of national AHPs will
    result in what's called cherry picking, by which they mean the market will be segregated into two
    groups, one that is young and healthy, and the other one that's elderly and sick.  Can you review the
    reasons why you don't believe this is the case?

    Ms. Combs. We're very concerned about cherry picking, and I know that the Subcommittee is and
    should be.  We don't want to destabilize the insurance market.  What we want to do is create a
    viable alternative for small businesses.  So I think it is important, and the law does contain very
    significant protections to prevent cherry picking.

    	I mentioned several of them in my testimony.  You have to be a bona fide association that
    isn't in existence just to sell health insurance.  You have to make the options that you offer through
    the AHP available to everyone who is qualified to be a member of the AHP.  You can't charge
    different individuals different rates based on their health status.  That's a new addition to this year's
    bill, and I think a big improvement.  It picks up health status that was included in HIPAA.

    	So there are a number of provisions here.  And obviously, we want to work with the
    Subcommittee and with others to make sure that we're not creating a situation where people are
    only skimming off the healthy risk.  We need broad pooling, that's what this is all about, to keep the
    costs down, and to make sure that insurance is available to people who need it.

    Chairman Johnson. Thank you.  One more question.  We often hear about the importance of state
    mandates and consumer protection to the small group market.  I understand that the financial
    burden these mandates place on small business is responsible for one in every five decisions by a
    small employer not to offer insurance.  In your opinion, should we focus on increasing the number
    of Americans with insurance, or focus on making sure every single state mandate is met?

    Ms. Combs. I think we have a crisis facing the health insurance system, and I think that small
    businesses make up a disproportionate share of the people who are lacking insurance coverage.  It's
    a balancing act, and the status quo is just not acceptable.

    	I think that benefit mandates do add to costs. There are protections in the AHP legislation.
    They would be subject to the federal mandates that Congress has seen fit to impose nationally, such
    as COBRA, HIPAA.  They are subject to the claims procedures under ERISA. They're important.
    Fully-insured AHPs will continue to be subject to some of the state protections about market
    conduct and licensing of brokers and the insurance companies that write those policies and the
    external review systems in those states.

    	So we think it strikes an appropriate balance.  But we do need to get costs down.  We do
    need to make insurance more widely available.  And the status quo has failed.

    Chairman Johnson. Yeah.  The ultimate goal is to get more Americans insured.

    Mr. Andrews, do you care to query?

    Mr. Andrews. I do.  Thank you, Madam Secretary, for your testimony.  As usual, it was well
    thought out, and we appreciate you being here.

    Ms. Combs. Thank you.

    Mr. Andrews. I agree with you there is a crisis in health insurance, and I agree that the data make
    it obvious that it's focused on what you refer to in your testimony as low-paying small firms.  You
    define these firms as firms with a relatively small number of employees that pay no more than
    $9.50 an hour, on the average. I think that's the way you defined it, where only 34 percent of the
    employees employed by such firms have health insurance. I agree that that's the crux of the
    problem right there.

    	I'm extremely skeptical that the proposal that you embrace will do anything about that at all.
    And I want to walk through the numbers with you to point out the reason for my skepticism. If we
    take that $9.50 an hour and actually make it a little higher, take a person making $10 an hour
    working full-time, makes $400 a week gross pay.  On page 11 of your testimony, you cite a CBO
    study that says that savings from AHPs could be as much as 25 percent for employers.

    	Let's assume that that's correct.  I'm not willing to make that assumption.  But for the
    purpose of this question, let's assume that that is correct.  In the market that I live in, a family
    health insurance policy costs about $10,000 per family per year.  If this plan went into effect and
    worked gloriously well and reduced the premium by 25 percent, that plan would cost $7,500 per
    family per year.  If you divide that out, it comes to $144 a week.  If the employer were to provide
    two-thirds of the cost of that coverage for an employee, it would be about $100 a week.

    	Employers in low-margin companies that don't make much money are not going to take a
    $400-a-week employee and increase that person's compensation by 25 percent and spend $100 a
    week on their health care.  I'm sure they would love to, but that's just out of the question for them
    doing.	Under what set of circumstances are you arguing that the employee in that situation is going
    to get health care coverage because of this proposal?

    Ms. Combs. I think that you're absolutely right. That is the toughest market to penetrate, if you
    will.  I think this proposal will vastly improve the situation.  There will be employees and
    employers who will be able to do it. There may be a second earner in a family who can actually
    take a significant portion of their wages and dedicate it to purchasing health insurance for their
    family.

    Mr. Andrews. But I'm already assuming in my example that a third of the cost is paid by the
    employee, a person making $400 bucks a week taking $50 bucks a week out of that to pay for
    health care.  I'm not sure that works either. But I've already assumed that it does.  How is the
    employer going to come up with $100 per employee per week for an employee making $400 a
    week?

    Ms. Combs. Well, the surveys of the employers show astonishing percentages of them, above 75
    percent, say they would be very likely to try to offer health insurance.  I don't think we're going to
    get 100 percent coverage.  I don't think this bill will cover all 41 million Americans.  I think we can
    make a real dent in it.

    Mr. Andrews. I'm surprised that not 100 percent say they would offer health insurance, because
    the questions usually imply that it's affordable.  This is not affordable. I grant you, if someone is
    making $45,000 a year, and it's in a higher-margin industry, if your 25 percent number has any
    reality to it, it might get more people covered.  But your own data show that the vast majority of
    uninsured working people are low-wage people in low-margin industries, and  I don't see where the
    coverage comes from.

    Ms. Combs. Well, I think this is also a piece of how you tackle the problem of the uninsured.
    We're also looking at tax credits to help people in those situations purchase insurance.

    Mr. Andrews. Does the President's budget include tax credits for uninsured people?

    Ms. Combs. Yes.  We have a proposal for tax credits for the uninsured.

    Mr. Andrews. Is it in the budget?

    Ms. Combs. I don't know the answer to that.  I'll get back to you.  We've supported that.

    Mr. Andrews. But none of the President's tax cut proposal has a tax credit for uninsured people,
    does it?

    Ms. Combs. I think it's separate from the growth package.  The tax credit for the uninsured was
    just expanded through the Trade Adjustment Assistance.  And there are other tax credits to help the
    uninsured.  I think $1,000 for individuals and $3,000 for families is the refundable tax credit.
    That's aimed at helping those people who are really struggling and at a margin.

    	I think a 25 percent reduction in premiums is significant.  I also think we can get there.  I
    think this will create competition in the market.  It will give small employers the kind of leverage
    they need to negotiate with insurers to drive prices down.

    	We have to tackle the problem of health care costs across the board.  But I think this is an
    important piece of that, and I think it can really make health insurance available for a significant
    portion of the people.

    Mr. Andrews. I don't dispute that a 25 percent reduction in premiums would be very significant.  I
    would dispute whether this proposal would cause it.  I think that's highly questionable.

    	I think that even if you assume that, when you look at the kind of employer and the kind of
    employee who's not getting coverage, the price just doesn't drop by nearly enough to put this
    anywhere within the employer's realm of possibility.  No employer that I know who is hiring $10-
    an-hour people can afford to give that worker a 25 percent raise, which is what this really would be
    about, even if the employee covers a third of the cost herself or himself. So I think it's very
    important we not oversell the idea that this is going to get a lot of people covered who are not.

    	I think my time is probably up.  You didn't turn the light on, which I appreciate.  But I think
    it's unfair to my colleagues to not yield back, which I will do.

    Chairman Johnson. Mr. Ballenger, do you care to question?

    Mr. Ballenger. Yes, sir, if I may.

    Chairman Johnson. We'll turn the light on for you, if that's okay.

    Mr. Ballenger. I'd just like to say that I've been in business a long time, and I've been watching
    health insurance plans for 45 years.  And I can remember back in the old days when you got a
    simple Blue Cross plan, and there were about two things it would cover.  And no matter what
    happened, you paid all the costs for your employee, because health care was pretty cheap back in
    those days.

    	Later, you got into a regular plan that gave you full coverage for a whole bunch of stuff, and
    you still covered all the costs.  And then you began co-payments when things started going up, and
    employees started figuring some of it out.

    	I think one of the strangest things that we're discussing on the floor today, and one thing
    that really proved a point to me, is the fact that we found out that when we were insuring ourselves
    we could cut our health insurance costs almost in half by not covering the delivery of children.  The
    most expensive part of any health care plan, at least back in those days, was the fact that you
    covered the birth of children.

    	We saw on "60 Minutes" not too long ago that the doctors and the hospitals and so forth
    were so likely to get sued that the most sensible thing to do was to say, "I'm sorry, we don't cover
    that.  And we hope that you can find some way to take care of it."

    	But anyhow, we just pulled delivery costs out of our health plan.  We used to cover the
    families, and then we gave it to the employee to cover the families.  We used to have no co-
    payments.  Now we do have co-payments.  We've got 225 employees.  I think we fit some of this
    constituency that you're speaking of.

    	One of the things that maybe our friend from New Jersey doesn't realize about $10 an hour
    employees is that I'm not talking about right now, but two years ago.  My pay is better than $10 an
    hour.  But two years, you would very definitely offer health insurance, even though it costs a
    substantial amount of money, because you had to hold the employees.

    	Health insurance and retirement are two things that you've got to offer nowadays.  And I
    would say that if we could somehow stop the increase in health insurance cost, this plan would
    work very well.

    	I know when we started there were no regulations. In fact, I think we had the plans that
    we're talking about.  We belonged to a group of people that had a plan.  And then all of a sudden,
    the government started regulating it, and we had to get out of it. The government has screwed up as
    many things as it's helped. And you've got to realize I'm biased.

    	You stated that you have regulated other plans and so forth? So you've got the experience to
    do this, even though the numbers would be greater.  And common sense says that he, to a very
    large extent, is correct, that there are going to be 15 to 20 percent of the people that are never going
    to offer health insurance no matter what it is. It's just too expensive.  It's a little bit like the people
    that you hire to pick cotton, or the people that you hire to cut down Christmas trees and things.
    They'll never get health insurance.

    	I realize that with Association Health Plans, in my considered opinion, the cherry picking
    used to be the big argument against them.  And I think that according to what you all say here, that
    is pretty well taken care of.  If so, all those names that he mentioned that might be against this plan
    would disappear, if there really were protection against cherry picking.

    	I don't really have any questions.  All I wanted to do is preach.

    Chairman Johnson. Well, you did pretty well.  What I wonder are state mandates a problem for
    you, because that, apparently, is what's causing some of the prices to go up?

    Mr. Ballenger. Yes, I think the state mandates may be a problem.  If you're going to cover an
    employee with regular health care, and you've got to throw in mental health care, who knows what
    the cost of that is going to be.  And slowly but surely, somebody is going to throw in dental costs as
    well.  All of these things may be forced by state and federal regulation.  I hope they're not.

    	But anyhow, I thank you for your testimony.

    Ms. Combs. Thank you.

    Chairman Johnson. Does the gentleman from Hawaii wish to question?  Mr. Case?

    Mr. Case. Thank you, Mr. Chair.

    I don't have any preaching to do.  I just have some questions.

    Chairman Johnson. That's allowed, too.

    Mr. Case. Thank you.  In my State of Hawaii we have a rather unique state law which requires
    prepaid health care through our employer system, and to a great extent if you are employed, you
    must be covered.  And we have an exemption from ERISA that allows us to operate that system.

    	Now, that system exists for better or worse, and needs a little bit of amending.  But I believe
    that I asked Secretary Chao in a previous hearing about the impact of this bill on that system.  And
    I just don't know if you have an answer for me today.  But if you don't, that's fine.  I'm just
    reminding Secretary Chao that she undertook to respond to me on exactly how this might impact a
    pretty unique state law.

    Ms. Combs. Yes, she asked me to look into that, and I do have an answer for you today.

    Our reading of the bill is that it would not affect Hawaii's health law.  How the bill would
    work is employers in Hawaii would be able to offer AHPs as an option, but they would have to
    include the benefits that were mandated by the State of Hawaii.  That's unique to Hawaii because of
    your situation.

    	In the other states, they would not have to offer the benefit mandates, but in Hawaii they
    would have to offer those mandates that are in Hawaii's act.  That would be the only effect.
    Otherwise, they would be able to offer it as another option for the workers in Hawaii.

    Mr. Case. Okay.  Thank you very much for that answer, first of all.  That's helps.  So do I
    understand, then, that in Hawaii, if an employer is required, under the provisions of state law, to
    offer health insurance because that employer meets the requirements of our law, that employer
    simply has an option under this bill to offer that insurance through an AHP?

    Ms. Combs. That's right.

    Mr. Case. Okay, thank you.

    Nobody has said much about the provisions of this law relating to collective bargaining.
    But do I understand the bill correctly that if an employer and a representative employee group wish
    to negotiate a different scheme, they can do so?  Is it that open, that loose, that if there is a
    separately negotiated health care coverage system, that they can basically opt out of this law, or do
    they have to fit within the AHP process?

    Ms. Combs. Typically I don't think we expect that many collective bargaining plans would join
    AHPs, because they negotiate the benefits between themselves, and in the multi-employer context,
    the participating employers.  I don't think there's any restrictions in the law, and I'm not 100 percent
    sure we couldn't, but they couldn't agree to negotiate or bargain to offer a policy through an AHP.  I
    don't think that's what people feel would typically happen, but I don't think there's any reason that it
    couldn't happen if the union and the employers agree that was the best and most efficient and cost-
    effective way to deliver health care.

    Mr. Case. Was that true for government collective bargaining as well, or does this bill affect state
    and county government provisions of health insurance?

    Ms. Combs. I don't know the answer to that.  I'll have to get back to you for the record.  I'm sorry.

    (NOTE:  This item was not submitted prior to the official printing of the hearing transcript.
    However, the item will be maintained upon its submission and available for inspection in the
    Majority office of the Committee on Education and the Workforce.)

    Mr. Case. Okay, because again, in my state, as well as most states, we have pretty extensive
    coverage and my state negotiated through collective bargaining with public employees.

    Ms. Combs. Well, one of the hopes is that if AHPs come into existence, and there is this ability for
    larger groups to negotiate reductions, that will create competition in the health insurance market in
    general.  So even if they're not participating in AHP, the hope is that they'll be able to take
    advantage of some lower health prices.

    Mr. Case. And finally, I'm not sure I understand the impact of this law, if any, on medical savings
    accounts.  I just don't understand the connection there.  Is there any?

    Ms. Combs. I think they're on parallel tracks.  I think you could have a medical savings account
    and use it to purchase coverage through the Association Health Plan.  The medical savings account
    (MSA) is kind of a financing mechanism, and this is the actual delivery mechanism.  So you would
    be able to take advantage of the tax advantages through the MSA to purchase an AHP.

    	But again, we'll follow up with you for the record. H. R. 660 was just introduced, and I'm
    not exactly sure of the intricacies.

    (NOTE:  This item was not submitted prior to the official printing of the hearing transcript.
    However, the item will be maintained upon its submission and available for inspection in the
    Majority office of the Committee on Education and the Workforce.)

    Mr. Case. I was just noting in some testimony, and I forget whether it was your testimony, the fact
    about the advocacy for improving the applicability coverage of medical savings accounts.  And it
    just occurred to me that I think I support the general direction of that testimony.  But it also
    occurred to me that if you did provide that expansion of the ability to use MSAs, it might well
    enhance the utilization of this particular mechanism.  Is that right?

    Ms. Combs. I think that's right, and make it more affordable.

    Mr. Case. Thank you.  I yield back.

    Chairman Johnson. You're right.  It's an uninsured package.  The medical savings accounts are
    not considered under this bill.

    Mr. Kline, do you care to query?

    Mr. Kline. Yes.  Thank you, Mr. Chairman.  And thank you, Ms. Combs, for being here and
    answering our questions.

    	This bill appeals to me very much both its goals and how it's laid out.  But in looking at
    legislation since being newly elected to this Congress, this one is extremely confusing to me,
    because it seems that every claim is virtually countered by an opposite claim.  And the critics of
    this bill say, for example, that not only will it not lower costs and expand coverage, but will in fact
    increase premium costs and not expand coverage at all.  I'm looking at a claim here that will make
    coverage unaffordable for older and sicker groups.

    	Would you care to address either one of those?

    Ms. Combs. I think the latter claim is really more relevant to the prior bill.  I think there was
    concern that there was not sufficient protection in the legislation to prevent cherry picking on the
    basis of health status. The bill that's been introduced this session, H.R. 660, explicitly prohibits
    pricing on the basis of health status, or rating premium cost on the basis of health status.

    	So I think as I said in my testimony, that is a major improvement over the earlier versions
    of the bill.  And I think that addresses a lot of the concerns expressed by people in the insurance
    market.

    	This bill, you know, shakes up the status quo.  It's going to introduce more competition into
    the health insurance market, and that makes people nervous.  We need to work together and we
    need to resolve that and make sure that doesn't happen.  I think a lot of the concerns have been
    addressed, and I think we can continue to work to make sure that does not happen.

    Mr. Kline. Thank you.  I yield back, Mr. Chairman.

    Chairman Johnson. Thank you.  I think Mr. Andrews would agree that competition is healthy.

    Mr. Andrews. Very healthy.

    Chairman Johnson. Even among us.  Ms. McCollum, do you want to question?

    Ms. McCollum. Yes.  Thank you, Mr. Chair.  I have a few questions.  I want to ask about a
    conversation that's kind of loosely being held here about what's going to be covered and what's not
    going to be covered; a comment about state mandates.

    	In Minnesota, we had to pass a law to make sure that insurance companies provided needles
    along with the insulin. In Minnesota, we've passed a law to allow women to see obstetrics and
    gynecology physicians within the plan assortments and offer that as primary care if that's what a
    woman chooses. I know many health plans don't cover contraception, yet they'll cover Viagra.

    	I want to know who are going to be the winners and losers in deciding what is mandated
    coverage and what is not. Because I find it rather interesting that the federal government is going to
    implement a plan in which all 50 states have all this flexibility and options when it comes to health
    care.

    	Then the other question I have has to do with status.  I heard you talk about age.  What
    about gender?  What about age?  What about what happens in those cases?

    Ms. Combs. On the first question on mandates, I think that this bill represents a balancing of
    access to health insurance and the kind of "Cadillac" plans, as people call them, that cover broad
    and all varieties of benefit mandates that have been enacted over the years at the state level.

    	It does try to level the playing field and make available to small businesses the same sort of
    exemption from state benefit mandates that are available to large employers. One of the main
    reasons large employers self-insure is so that they don't have to comply with the 50 different states'
    benefit mandates.

    	Many of those plans continue to offer those same sorts of coverage.  Covering obstetrics
    and gynecology is common, obviously, in self-insured markets.  And I would expect, particularly
    since most of small business owners are women, maternity and child care delivery to be covered by
    these plans, or they're not going to want to participate in them because they're not going to cover a
    benefit that they need.

    Ms. McCollum. That wasn't what I said.

    Ms. Combs. I'm sorry.

    Ms. McCollum. I said women in Minnesota have a choice of having their designee the obstetrics
    gynecology professional.

    Ms. Combs. Oh, not having to go to a gatekeeper to receive it?

    Ms. McCollum. That's correct.

    Ms. Combs. Right.  Well, that has not been passed as a federal mandate.  But again, I think the
    market has moved in response to a lot of the discussions that have taken place over recent years
    about tightly-controlled managed care.  The market has moved beyond that, I believe.

    	But you are correct that this bill would not require AHPs to offer that mandate.  And it's a
    trade-off in terms of cost.

    Ms. McCollum. I have to make a decision to vote on this bill, and I've been through some of these
    battles.  We had a battle to pass a law that said diabetics who were receiving insulin could also
    have their needles covered.  And I just want to know before I vote on this if I'm undoing that in my
    home state.  Because I don't want to go back home, and have small business owners not realizing
    the plans that they are providing don't have these fundamental health care rights in them.  So I'm
    trying to grapple with that.

    	But could you tell me how this is going to affect gender, and how this is going to affect
    age?

    Ms. Combs. The bill does allow AHPs to underwrite insurance based on risk.  They cannot charge
    different prices for health status, but they are allowed to charge different prices for age and gender.
    In many states a lot of insurers who underwrite charge different rates for age and gender.

    Ms. McCollum. So if I hear you correctly, if I am a small business and we allow this plan to move
    forward, it's more expensive to cover women, because they become pregnant, or they would like to
    have access to contraception. I know we have laws in place against workplace discrimination but
    maybe subtly I won't hire women.  Or maybe I don't start hiring older people, because they might
    be more predisposed to heart conditions.

    	What kind of guarantees are we going to put in these plans to protect consumers?

    Ms. Combs. It is a very complicated piece of legislation, I will say, but as I understand it the bill
    would allow the AHP to underwrite on the basis of age and gender, which means they could charge
    different rates.  But they couldn't charge individuals who work for a company differently.  They
    couldn't charge the women more than they charge the men.  What they could do if an employer had
    a work force that was much older than average, they could charge the employer a different
    premium if they chose to, but they wouldn't have to. This happens under state insurance laws in
    many states.  It may not be in Minnesota, but many states do allow that.  And again, the idea here is
    to give people access to health insurance.

    	I understand and I'm sympathetic to the issues and the concerns, but we're arguing for the
    status quo.  This is a balancing act to give people access to insurance.  The price should come down
    because of the risk pooling, because of the efficiencies, because of administrative costs.  But there
    could be some differential based on age and gender and other factors, just as there are in states
    today.

    Mr. Cole. [Presiding]  Well, Madam Secretary, this is an interesting experience.  It's very heady for
    me.  It's like the first time your dad gives you the keys and walks out of the car, and equally as
    frightening for the passengers in the back seat, too.

    [Laughter.]

    Mr. Cole. But anyway it's good to have you as a chaperon.

    Mr. Andrews. It's like the movie Risky Business.

    Mr. Cole. It is indeed.  I wish I had had that much fun as a young man. Anyway, I have a couple of
    simple, direct questions, axiomatic, obviously. The legislation is complex.  There's no such thing
    ever as the perfect bill.

    	Is there any reason to believe if we passed this legislation that it would make the situation
    worse rather than better?  At the end of the day, wouldn't you logically expect there to be more
    people insured, or at least have access to insurance through their employer than is the case today?

    Ms. Combs. Yes, I think it will improve the situation.  And I think the best patient protection is
    access to health insurance.

    Mr. Cole.  We've had some speculation as to what employers will or will not do. Obviously, you
    never know until you actually pass the legislation and they're confronted with it.  But isn't it fair to
    say we've had any number of associations of particular types of companies and industries, the U.S.
    Chamber of Commerce, the National Federation of Independent Business, that have come to us and
    asked, "If you can give us this ability, we really do believe our members, in significant numbers,
    will respond?"  And that's going to enable them to offer a benefit to their employees that they can't
    currently manage to do.

    Ms. Combs. Yes.  There are over 80 associations representing small businesses, farmers, and
    others who strongly support this legislation.

    Mr. Cole. And finally if we assume competition is a good thing, we assume we will have more
    companies and more associations offering insurance. As different companies begin to offer
    insurance more and more, won't that increase the pressure on those who don't in terms of
    competing for employees, and " keeping up with the Jones's", so to speak, in a competitive
    business environment?

    Ms. Combs. Absolutely.  The big picture is, we're facing long-term worker shortages, and people
    are going to need to compete to get the kind of quality workers they need.  And health insurance is
    a very important part of the package.  So I think there will be intense pressure to be able to make
    this benefit available.

    Mr. Cole. I have no further questions.

    Chairman Johnson. Mr. Tierney?

    Mr. Tierney. Thank you, Mr. Chairman.

    Ms. Combs, we meet again, over and over it seems.  This is like in Groundhog Day.

    Ms. Combs. It gets better every time.

    Mr. Tierney. If you say so.

    [Laughter.]

    Let me see if we can put this in some perspective.  Obviously, what's going on here is that
    everybody thinks that if we have a larger pool, that we're going to get a better deal on the
    insurance, right?

    Ms. Combs. Yes.

    Mr. Tierney. So what's to stop us from saying we can have a larger pool, and it just has to comply
    with the state regulations?  You know, choose the most severe regulation that you have, make that
    your threshold, and say, "There you go.  As long as your plan meets that threshold, then you can
    put this in place."

    Ms. Combs. Well, I think the state benefit mandates do add substantially to the cost of health
    insurance, and that's one of the reasons that the bill allows the exemption.

    Mr. Tierney. So the clear trade-off is that states that decide they need to protect their citizens are
    supposed to be kicked aside so that the price goes down.  That's the essential trade-off.  You lose
    rights and protections in return for a better price.

    Ms. Combs. There remain in place, you know, central federal protections.

    Mr. Tierney. But let me tell you, after just a quick review of this bill it will kick out 22 protections
    that the Commonwealth of Massachusetts has, right?  The group that insures access to independent
    review:  gone.  A number of regulations that would insure appropriate access to care:  gone.  A
    number that would insure fair insurance premiums to small groups: gone. And others that would
    insure marketing protections:  gone.	Others that would insure health plans cover important benefits
    that go beyond the federal requirements like mental health parity, alcoholism treatment, maternity
    benefits, mammography screening, in vitro fertilization, well-child care, prompt payment rules:
    gone. Other regulations that would insure appropriate oversight of insurers:  gone.  Others that
    would prevent failures and insure payment of claims and promote access to the uninsured on many
    COBRA rules are all gone.

    	So that's what Massachusetts would be trading off if this bill went into effect.  You would at
    least agree with me on that.

    Ms. Combs. If I may offer a caveat.  If the AHP were fully insured our reading of the law says that
    external review would continue to apply.  People would still have access to that.  The market
    conduct rules would continue to apply to the insurers. So in the insured AHP market, which we
    frankly think will be the larger share of this market, some of those protections will remain.  But you
    are right about the mandates.

    Mr. Tierney. Most of those have gone by the by with this.

    All right.  So that's one problem we have.  And obviously, it's going to be hard for Members
    from a state that has more protections to justify voting for something that basically just lessens
    protections for the citizens in their state.

    	The second part of this, we're talking about solvency protections.  Will you compare with
    me what an adverse state, if there is such a thing, has for solvency protections, and how it compares
    against the solvency protections that you have in this bill?

    Ms. Combs. I'm not familiar with the specific solvency requirements of particular states.  But it's
    the same type, getting at the same issues.  In this case, an actuary determines that the reserves are
    adequate to pay the expected claims.  And then you have to have surplus on top of the reserves so
    that there's a cushion.

    Mr. Tierney. Who would make the determination as to what the anticipated claims would be?

    Ms. Combs. They have to get a qualified actuary who has to certify professionally that the reserves
    are adequate to meet the claims experience of the AHP.

    Mr. Tierney. So they pick this person?

    Ms. Combs. They pick the person, and that's filed with us and we oversee that.  So if we ran into a
    problem with one, we would be able to check the other plans that use the same actuary.

    Mr. Tierney. I always have concerns with that.  It reminds me a little bit of Wall Street and having
    the accountants and the auditors watch each other back and forth.

    	What I want to address in the limited time that we have is have you done a cost benefit
    analysis of what the cost is going to be to the Department of Labor to regulate and enforce this?

    Ms. Combs. Well, we've been looking at what it would take to implement this.  We don't have
    dollar amounts or numbers of employees yet, because the legislation hasn't passed.  But when it
    does pass, we'll be allocating the resources that are necessary to do it.

    Mr. Tierney. Can I just interrupt you a second? Don't we generally get a push by the Majority on
    this side to always get a cost benefit analysis of things before they go through?  And this hasn't
    been requested of your Department or you yet on this bill?

    Ms. Combs. No.

    Mr. Tierney. Because back in 1997, as I said, it's like Groundhog Day all over again.  It's not the
    first time we've been around the track on a similar bill, and the Department of Labor estimated it
    would take them 300 years just to review each and every AHP once. I mean, the regulatory process
    of having a national program is obviously going to be enormous.  And I'm just curious as to what
    the cost is going to be on that, and how effective it's going to be.

    	We have all the states doing the job.  I think most of them are doing a pretty good job.  And
    now we run the risk of having a regulation really get watered down by expanding it nationwide and
    taking the states out of the pictures.  You might want to address that.

    Ms. Combs. Yes. You know, the previous Administration did not support this legislation, and they
    felt that they weren't willing or able to take it on.  I disagree. I think we are able.  I think they
    would have had the capability of doing it, and needed additional resources. We acknowledged we
    would need additional resources.

    Mr. Tierney. Well, you know, give me a ballpark figure of additional resources, because I don't
    want to gloss over that.

    Ms. Combs. I don't have a ballpark yet.  But I recognize that this is an expansion of what we do
    right now when we're regulating self-insured employers and multi-employer plans in many ways.

    Mr. Tierney. A huge expansion of what you're doing right now, right?

    Ms. Combs. I don't know how many AHPs there are going to be.  I mean I don't know where the
    300 years came from.  Frankly, I don't know what they assumed.

    Mr. Tierney. It came from testimony in 1997.

    Mr. Cole. I think the gentleman is close to exhausting his time.

    Mr. Tierney.  And I appreciate you allowing me to go over the time limit to get an answer from
    this witness.  Thank you,  I'm finished.  We have rules of etiquette around here, so we're going to
    finish on that.

    Ms. Combs. I don't have a cost estimate.  We have not done cost estimates on how many
    employees we would have to hire.  Essentially, we would be hiring.  And the bill also gives us the
    ability to contract with the states to do some of this work.  We would explore that.  And as the
    legislation moves through the process, we'll gear up.

    	You know, as you said, we've been talking about this for several years, so I don't think it
    would be prudent for us to be implementing legislation that hasn't been enacted yet. And that's why
    we have not requested specific resources yet.

    Mr. Tierney. Thank you.  And I thank the Chairman for his usual courtesy.

    Mr. Cole. Thank you.  Mr. Payne, do you have any questions?

    Mr. Payne. No.  I'll reserve my questions for the next panel.  Thanks.

    Mr. Cole. Okay.

    Thank you for your testimony, Madam Secretary.

    Ms. Combs. Thank you very much.

    Mr. Cole.  I'd like to introduce the first witness on our second panel.  Ms. Phyllis Burlage is the
    President of an accounting firm, Burlage and Associates, PA, based in Millersville, MD.  She is
    testifying on behalf of the National Federation of Independent Business.

    Our second witness is Ms. Alice Weiss, Director of Health Policy for the National
    Partnership for Women and Families, Washington, D.C.

    	Our last witness is Mr. Greg Scandlen.  Mr. Scandlen is Director of the Center for
    Consumer Driven Health Care at the Galen Institute in Arlington, VA.

    	Please limit your statements, if you will, to five minutes.  Your entire written statement will
    appear in the record.  I remind the Members that the same five-minute rule for questioning
    witnesses applies to this panel after we receive their testimony.

    	So Ms. Burlage, if you would like to begin, please do so.

    STATEMENT OF PHYLLIS M. BURLAGE, PRESIDENT, BURLAGE
    ASSOCIATES, PA, MILLERSVILLE, MD, TESTIFYING ON BEHALF OF
    THE NATIONAL FEDERATION OF INDEPENDENT BUSINESS

    	Thank you.  Good afternoon, Mr. Chairman and members of the committee.  I want to thank
    you for inviting me today to talk about this important issue of affordable health insurance for small
    businesses.  I'm pleased to be here on behalf of the National Federation of Independent Business,
    representing 600,000 members who face a similar challenge.

    	I own Burlage Associates.  My name is Phyllis Burlage.  We're a small accounting firm in
    Millersville, Maryland.  My employees and I work together to help individuals in small businesses
    comply with federal, state, and local tax regulations.  And I think you can say how important this
    bill is to me, because I should be tied to my desk right now with a ball and chain doing just that
    during tax season.  But it was very important for me to come here and talk to you today.

    	Unlike other small women-owned businesses I know, I've been able to offer health
    insurance to my employees since the day I opened.  And thankfully, I've been able to provide a
    comprehensive benefit and pay 100 percent of that cost.  Each employee is eligible to participate
    after 30 days of working for me.  I initially pay for my employees only, and I usually use family
    and dependent coverage as a form of a raise.

    	I administer my own plan, and every year in March, I hold my breath when my renewal
    comes in.  I've changed my policy four times in the last four to six years because of premium rates
    only.  I have very few choices because of the many mandates in the State of Maryland.

    	Two weeks ago, I received my renewal in the mail. And my heart stopped, because my rate
    hike this year is 45 percent.  Overall, I've had a 226 percent increase since 1996. How can any
    business absorb increases of this magnitude?

    	This year, our rates went from $226 to $265 per month for an individual, $476 to $557 for
    an employee and spouse, and skyrocketed to $750 a month to add a family, up from $650 only a
    year ago.  Should I raise my clients' fees to cover this increased health cost?  Will I lose clients to
    competitors if I do?  It's a vicious cycle for me and for many business owners.

    	Each year, I search for a plan, because health insurance is important to my employees and
    me.  My employees and I work together to evaluate our options, including higher deductibles and
    co-pays.  But we know that in spite of our best efforts, the cost will increase every year, because
    our rates are based on the average age of our small group.

    	Since my group consists of three people, and we get a year older every year, there's no pool
    to offset that fact. At this rate, by the time I qualify for Medicare in 14 years, my premium will be
    $3,486 for me per month, and if I still have my group, $10,141 for my employees and me.

    	While I continue to struggle to provide affordable coverage, some of the big companies
    have announced record profits in the last few quarters.  As an entrepreneur, I'm in favor of profits.
    But looking at double-digit annual increases, I believe the lack of competition in the small group
    market is making insurance company executives richer at small businesses' expense.

    	As many of you may know, recently in my home state of Maryland, Well Point Health
    Network, Incorporated, the biggest publicly traded Blue Cross and Blue Shield plan, attempted to
    purchase the non-profit Care First Blue Cross/Blue Shield Company.  Fortunately, Commissioner
    Larson denied the conversion, citing basically the initial $119.7 million bonus plan for the Blues'
    executives. And despite state oversight, these insurance companies had found ways to cherry pick
    the healthiest individuals in order to increase their profitability, looking forward to this potential
    buyout.

    	The subject of health insurance comes up at every professional meeting I attend, both with
    other women-owned business owners and with my clients.  We are afraid that we will not be able
    to cover our employees and ourselves, and consequently, we will not be able to attract qualified
    employees and compete in the market.

    	We need to be able to spread this risk out over more than our own employee group.  The
    small business community is struggling each year to afford the cost of increasing premiums.  It is
    for this reason that I support H.R. 660, the Small Business Health Fairness Act of 2003.  AHPs will
    allow small business owners to band together across state lines to purchase health insurance as part
    of a larger group, insuring greater bargaining power, lower administrative costs, and freedom from
    the cost of complying with 50 different sets of state mandates.

    	AHPs will level the playing field and give small employers the same privileges as their
    counterparts in labor and big business.  In addition, AHPs will introduce into the marketplace
    competition and diversity that is needed to make health insurance premiums more affordable.
    Without the ability to shop for more affordable options, we are left with the choice to shift costs to
    our employees, or drop coverage. And if we drop coverage, we're just adding to the number of
    uninsured.  Association Health Plans would help to end this nightmare.

    	Like most small business owners, I talk to a lot of people every day.  To be competitive on
    Main Street, you have to keep your ear to the ground.  I know from talking to other accountants
    that they and their clients need AHPs.  They are a good, common sense solution to controlling the
    cost of quality health care.

    Mr. Chairman, thank you.

    WRITTEN STATEMENT OF PHYLLIS M. BURLAGE, PRESIDENT, BURLAGE
    ASSOCIATES, PA, MILLERSVILLE, MD, TESTIFYING ON BEHALF OF THE
    NATIONAL FEDERATION OF INDEPENDENT BUSINESS - SEE APPENDIX C

    Chairman Johnson. Thank you for your testimony.

    Ms. Weiss, you may begin your testimony now.

    STATEMENT OF PHYLLIS M. BURLAGE, PRESIDENT, BURLAGE
    ASSOCIATES, PA, MILLERSVILLE, MD, TESTIFYING ON BEHALF OF
    THE NATIONAL FEDERATION OF INDEPENDENT BUSINESS

    Good afternoon, Chairman Johnson, Ranking Member Andrews, and other Members of the
    Subcommittee. Thank you for the opportunity to testify today.

    	My name is Alice Weiss, and I'm the Director of Health Policy for the National Partnership
    for Women and Families, a non-profit, non-partisan advocacy organization that promotes work
    place fairness, policies that balance work and family, and access to quality health care for women
    and families.

    	As my written testimony discusses in greater detail, the National Partnership supports the
    efforts of this Subcommittee to develop solutions to the problems small businesses face in
    obtaining affordable health insurance. Today, I will offer the partnership's principles for reform,
    and explain how H.R. 660 falls short of these principles, and may ultimately hurt, not help, the
    uninsured.

    	Today's small business crisis has significant impact on women.  Women are
    disproportionately likely to be either owners of or workers for very small firms.  And as the
    National Partnership survey research shows, it is most often women that pay the price when health
    coverage is unavailable.

    	In the face of this crisis, it is critically important for Congress to act.  We have developed
    four principles to evaluate proposals to improve health coverage access for small businesses.

    	First, proposals must cover the uninsured.  With 41 million individuals now uninsured,
    proposals must provide new coverage, not just shift the already insured from one coverage to
    another.

    	Second, proposals must also provide small businesses and their low-income workers access
    to affordable and comprehensive coverage.

    	Third, these proposals can't ignore those who are most in need.  One in four uninsured
    Americans has at least one chronic condition that puts them at greater need for coverage and at risk
    for discrimination.  Legislation must help those in poor health, not just the healthy.

    	Finally, proposals must preserve strong consumer protections.  All 50 states and the District
    of Columbia have passed tough consumer protections to stabilize the small group health insurance
    market.  Strong protections are needed to lessen the likelihood of a new trend of fraud and abuse.

    	H.R. 660 offers Association Health Plans as a solution, but H.R. 660 is not the right policy
    option.  It suffers from three basic problems.

    	First, despite proponents' claims to the contrary, H.R. 660 still allows AHPs to cherry pick
    the healthy and leave the less healthy behind.

    	Second, H.R. 660 preempts critical state oversight, denying consumers the protections they
    need to insure that AHPs will make good on their coverage promises.

    	Third, AHPs will be subject to nominal and inadequate federal standards and oversight
    under the Department of Labor, with no meaningful resources provided to DOL to help it undertake
    these new responsibilities.

    	H.R. 660 also fails to meet every one of the principles I have outlined.  It simply offers no
    solution to the problem of the uninsured.  According to CBO, less than 1 percent of the 41 million
    uninsured today will get new coverage, and AHPs would drive up costs for four out of five small
    business owners and their workers, more than 20 million individuals.

    	H.R. 660 also fails to insure access to affordable and comprehensive coverage.  Because
    nothing in H.R. 660 prevents AHPs from saving money by paring down benefits and targeting the
    healthy, the cost of coverage for those remaining in the state-regulative market will go up, even as
    coverage options decline.

    	Under H.R. 660, healthy people win, while those most in need will lose.  AHPs would leave
    the elderly, disabled, and chronically ill behind without help.  And because women are more likely
    to use health care services and need expensive reproductive health benefits, women would also lose
    with AHPs.

    	H.R. 660 also undermines strong consumer protections.  Virtually all state law protections,
    including patients' rights, rating rules, fraud and solvency, and direct enforcement protections, are
    eliminated for AHPs, and replaced with minimal federal oversight and weak solvency standards.
    For example, H.R. 660 would allow the AHP's own actuary to certify its solvency, a practice that
    would make even Enron executives blush.  And by loosening the reins of oversight, the AHP
    legislation could increase the risk of fraud already rampant and on the rise.

    	Last year alone, 55,000 workers and their families were left uninsured due to association
    plan scams, amounting to $65 million in unpaid medical claims, and millions more in premiums
    paid for coverage that consumers never got.  Although many small business owners and their
    workers are uninsured now, under H.R. 660, they could be paying for the privilege.

    	While we do not oppose the concept of AHPs and could support a proposal that met our
    criteria, H.R. 660 as now drafted fails to meet these criteria.  And there are other ways to address
    the current small business health care crisis. Here are three examples.

    	One, small employer tax credits and new state-regulated purchasing pools could give small
    employers a new tax incentive to offer coverage, and would encourage states to create new pooling
    arrangements without undermining existing protections.

    	Two, allowing small employers to buy into FEHBP and state employee pools would give
    small employers new options to reap the benefits of better choice and lower cost that pooling on a
    large scale can provide, also without threatening consumer protections.

    	Three, building on existing public programs like Medicare, Medicaid, SCHIP would
    harness the cost savings reaped from public programs to target assistance to those most in need:
    low-wage, older, and less healthy workers.

    	The health insurance problems facing small employers are a major concern for women and
    families.  However, we urge you to take a cautious approach to legislative action.  H.R. 660 will
    likely do more harm than good for small employers and their workers alike without addressing the
    problem of the uninsured.

    	For H.R. 660 to work, it would have to provide meaningful assistance for the uninsured,
    prohibit wrongful discrimination and cherry picking, and create an effective oversight and
    enforcement mechanism, including strong solvency standards and sufficient resources to support
    DOL oversight. H.R. 660 as now drafted does not address these concerns.  Significant changes are
    needed to address these real and critical flaws.

    	Thank you for your consideration of this important issue and for the opportunity to testify,
    and I'm happy to answer any questions.

    WRITTEN STATEMENT OF PHYLLIS M. BURLAGE, PRESIDENT, BURLAGE
    ASSOCIATES, PA, MILLERSVILLE, MD, TESTIFYING ON BEHALF OF THE
    NATIONAL FEDERATION OF INDEPENDENT BUSINESS - SEE APPENDIX D

    Chairman Johnson. Thank you.  I appreciate your testimony.

    Mr. Scandlen, you can begin your testimony now.

    STATEMENT OF GREG SCANDLEN, DIRECTOR, CENTER FOR
    CONSUMER DRIVEN HEALTH CARE, THE GALEN INSTITUTE,
    ALEXANDRIA, VA

    	Thank you.  Mr. Andrews has cautioned the proponents of this bill not to overstate their
    case, and I think that is an extremely welcome comment.  In fact, too often in the political sphere,
    both opponents and proponents overstate their cases, and I think that's happening with this issue.

    	It seems to me that Association Health Plans are a considerable contribution to solving
    some of the problems of the small group market.  They're certainly not going to solve all the
    problems.  They're not going to solve the problems of the uninsured.  But they're a step in the right
    direction, and I think it can be a major component to a comprehensive approach to solving our
    health care problems.

    	Anyone who thinks that the small group market back in their home state in their home
    district is working just fine should probably vote against this bill.  But I'm here to tell you that the
    mandates, the excessive regulations, the rating instructions, the level of competition, and the costs
    are going through the roof.  If all of that is producing happy companies and happy employers, then
    nothing should be changed.

    	But, in fact, the current market is a disaster. Even at this moment, in your home district,
    there's probably an employer who is notifying his employees that he can no longer afford to carry
    the coverage.  It's a tragedy out there.  And frankly, I believe it is a consequence primarily of
    excessively zealous state legislators who have passed outrageous legislation.

    	I was very closely involved, with the NAIC twelve or more years ago when they were
    starting on their so-called campaign to reform the small group market.  I predicted at the time that
    their reforms would result in chaos in the small group market.  And I think time has borne me out.
    That is exactly what is happening today.

    	As I say, AHPs are only part of the solution.  We also need to expand medical savings
    accounts.  We need tax credits.  We need malpractice reform.  We need new ideas like the health
    reimbursement arrangements that the IRS has just recently approved.  We need more competition
    and more innovation in the small group, and every other insurance market in the United States.  I
    think AHPs will contribute to the level of competition in a market where there are virtual monopoly
    conditions today.

    	The AMA did a very fascinating report on market concentration in health insurance.  And in
    very many markets, there are two or three dominant players that control 70 percent or more of the
    market.  That is a large part of the reason there's such a problem.  These dominant carriers have a
    take-it-or-leave-it attitude.  If you don't want what they buy, there's no place else to go.  AHPs will
    give small employers an alternative and an option.  It will also open up the market to ideas like
    medical savings accounts, which are also not the solution to all of our woes, but another
    contributor.

    	I live in Maryland.  I have been a small employer. And I tell you, in Maryland, small
    employers cannot get medical savings accounts, because the Health Care Access Commission has
    added so many bells and whistles to them that they're impractical in that state.

    	In Connecticut, there is a mandate that requires no more than a $50 deductible for home
    health services.  So in Connecticut, no one is allowed to have a medical savings account, even
    though the United States Congress passed the legislation about seven years ago.  So there are huge
    problems out there.

    	Some of the criticisms that have been leveled, I think, are simply illegitimate.  This notion
    that AHPs will only take the good risks and leave the bad behind, I think, is nonsense.  In Senate
    testimony, Len Nichols testified that in Arkansas, they had exactly the opposite experience when
    the state formed a purchasing pool for small employers in that state.  And they couldn't find an
    insurance company to take it, because the insurance companies all thought that the worst risks
    would join the association, not the best risks. There is no reason to think in a guaranteed issue
    environment that an Association Health Plan would only end up with the very best risks.

    	Another argument is that shady operators will come in and take the money and flee to Costa
    Rica, as happened with MEWAs.  Now, I guess I'm an optimist, but I like to think that human
    beings learn from experience.  And I think this bill builds in quite a number of safeguards to
    prevent that from happening this time around.  MEWAs certainly were a disaster.  They were
    unregulated by either of the states or the Federal Government, and that shouldn't be allowed to
    happen.

    	I think there are some legitimate criticisms of the legislation.  Insurers will tell you if
    regulatory relief is needed, give us the regulatory relief, and we'll fix the problem.  I think that's
    right.  I'm not quite sure how to get there.  I don't think Association Health Plans are the only way
    of doing this, but I think it's the only one way on the table right now.

    	Thank you, sir.

    WRITTEN STATEMENT OF GREG SCANDLEN, DIRECTOR, CENTER FOR
    CONSUMER DRIVEN HEALTH CARE, THE GALEN INSTITUTE,
    ALEXANDRIA, VA - SEE APPENDIX E

    Chairman Johnson. Thank you.  We appreciate the testimony of all three of you.

    Ms. Weiss, we answered most of those questions that you brought up earlier with Assistant
    Secretary Combs.  I think that this is just another plan on the table from a smorgasbord of plans out
    there, all of which cost too much.  And how we get the cost of health care down, I don't know.

    	But Ms. Burlage, it seems like we've got reports, papers, arguments, speeches, whatever.
    From your standpoint, does it make sense for us to pass legislation that could reduce some costs
    and cover more workers and families, whether it's 300,000 or if it's 8 million?

    Ms. Burlage. Mr. Chairman, when my clients come to me and ask me about buying a new
    computer system, they want it to do everything that it can possibly do, including shine their shoes
    and digest their dinner.  I tell them to make a list.  And if they can find a system that will solve 80
    percent of their problems, jump on it.

    	And that's the way I feel about Association Health Plans.  They're a step in the right
    direction.  They're going to help us.  We need to take that step.

    Chairman Johnson. Thank you.  I appreciate that comment.

    Mr. Kline, do you wish to question?

    Mr. Kline. Yes.  Thank you, Mr. Chairman.

    Mr. Scandlen, let me say how much I appreciate your comment that the claims on both
    sides of this argument are extreme, which is probably too soft a word.  It's amazing how one side is
    saying "up" and the other "down", and one "black" and the other "white" and so forth.  And I very
    much appreciate your comment.

    	I have just a couple of very quick questions, because there are so many.  In your judgment,
    would AHPs actually reduce the administrative burden of small employers?

    Mr. Scandlen. I think they might somewhat.  I think more importantly, they would allow small
    employers to access professional benefits managers like large employers currently can.  A
    30-person print shop has a boss that really doesn't know anything about health care, doesn't really
    care anything about health care.  If he could tap into the resources of a trade association to provide
    those kind of professional services, I think that would be a big help to him.  Whether administrative
    costs are actually lowered very much, I'm not so sure.  I think the bigger problem is the cost of the
    regulations.

    Mr. Kline. Okay, thank you.  And the issue here in large part is that we have state regulations, and
    federal regulations would be over-arching and change some of those. Is there any benefit to
    consistent nationwide regulation over the state regulations?

    Mr. Scandlen. That is a very tough issue that I think is going to need to be addressed eventually.
    Obviously, the insurance market is already fragmented.  You have larger employers that are self-
    insured that are ERISA protected and completely free of any state regulations.  You even have
    small employers down to say 100 or so that are self-insured and free.  Then you have mid-sized
    employers who are fully insured and not free of those regulations.  Then you have different
    regulations on the state level for each of those Blue Cross plans, commercial carriers, individual
    market, small group market, and large group market.  We already have a horribly fractured
    insurance oversight system that I think needs to have a sober look taken at it.  And perhaps that
    implies federal oversight.  I'm not sure.  But what we have today is simply not working.

    Mr. Kline. Thank you.

    Ms. Burlage, I'm just still stunned that you have experienced a 226 percent increase in your
    premium since 1996.

    Ms. Burlage. Yes, sir.

    Mr. Kline. How in the world did you handle that? What did you do to offset that expense?

    Ms. Burlage. Well, quite frankly, when I hire somebody, the cost of the insurance is built into the
    compensation package that I offer.  So they may wind up with an hourly rate that might be
    considered to be below par simply because I'm going to be covering them with health insurance.
    And my employees know and understand that.

    	I also, as I have stated in my written testimony, tend to pay my employees with a lot of
    flexibility. I have a woman who raised her child up through the time she entered kindergarten by
    bringing the child into the office. So that kind of flexibility, and them knowing that the health
    insurance is literally a part of their hourly rate, has helped me.  But it's reaching the point right now
    where I honestly do not know what I'm going to do in the coming years.

    Mr. Kline. So in other words, you're driving down the salary or the wages that you can pay, in
    effect.

    Ms. Burlage. Effectively.  And quite honestly, because I do not have to pay payroll taxes on health
    insurance benefits, if I increase my employees' wage base through health insurance, it lowers my
    overhead as far as payroll taxes go.

    Mr. Kline. Thank you very much.  I yield back, Mr. Chairman.

    Chairman Johnson. Thank you.

    Mr. Andrews.  I apologize for skipping over you.

    Mr. Andrews. That's all right.  I got so much time the last time, I guess that was my punishment.
    I'd like to thank each of the three witnesses for excellent and well-thought-out testimony.  Thank
    you.

    Ms. Weiss, I understand you may have a little person to start bringing to the office soon.  I
    congratulate you on that great news.

    Ms. Weiss. Thank you.

    Mr. Andrews. I wanted to ask you which of your three proposals to increase health care coverage
    do you think would be most efficient.  Would it be opening up the public programs, or expanding
    SCHIP, or would it be the pooling and the tax credit?  If we could do one of those things, what
    would you recommend to us?

    Ms. Weiss. I think if you want to look at the broader the issue of the small business and what
    they're facing, I think you would probably want to encourage them to offer the pooling
    arrangements and the tax credits as an option targeted at the small employers, and then provide
    subsidies to the states.

    Mr. Andrews. Do you think that we should propose such a tax credit for all employers, including
    those who presently insure their employees, or only those who do not insure their employees,
    which is a very tough question?

    Ms. Weiss. Right.  I think that's an important issue.  Unfortunately, as you already know, the way
    the current system is set up, all employers have a tax incentive to offer coverage.  The idea behind
    offering small employers an additional tax credit or incentive is intended to try to get over the
    barrier, that I think was being referred to in the last question-and-answer period, about what the
    small employers are going to face in terms of whether or not they would be willing to actually take
    up coverage and get over the hump of affordability.

    Mr. Andrews. Thank you.

    Ms. Burlage, if I lived in Maryland, I'd hire you to do my taxes.  You obviously seem to be
    very client-oriented.

    Ms. Burlage. Thank you very much.

    Mr. Andrews. You remind me of the accountant that does my family's taxes.  They're also very
    personable and a very small firm.  Since I'm going to publish my tax return on the Internet, which
    all of us non-profits do in these days of full disclosure, I want to make sure it's right.

    	I want to ask you your opinion of this idea.  What if we said that we took a collection of
    consumer protections like you've heard about here today, coverage of mammograms and colon
    cancer screenings and the rest, put them into one national standard, and said to the insurance
    industry, "If you meet this national standard, you can sell insurance in any state in the union."
    So if a carrier in Maryland or Ohio or California met strong consumer protection standards, they
    could sell their policy anywhere in the union.  What do you think of that idea?

    Ms. Burlage. Well, I know that because of the number of mandates the State of Maryland has,
    many insurance companies will not even come into the State of Maryland.  If I look at the AARP
    magazine that comes out, and they talk about various insurance companies, or I see something on
    TV about call in about insurance, we call in, and they'll reply, "Oh, you're in Maryland?  We're not
    coming there."

    	So I think if something could be done that would help to even out those bumps in the road
    as far as individual state mandates go, it would be a step in the right direction.

    Mr. Andrews. Thank you.

    Mr. Scandlen, I appreciate the very last paragraph of your testimony about not overselling
    the effects of this legislation.  And by the way, I don't believe there would be any positive effects
    either.  I just think that in a marketplace where about 80 percent of the working uninsured people
    make a very low wage in industries that have a very low margin that even offering a very deep
    discount to the employer is not going to make a lot of difference.

    	What would make a difference?  You make reference to this. What in combination with
    some of the other proposals could make a significant improvement?

    	How would you reach universal coverage of people in this economy?

    Mr. Scandlen. Well, I'm afraid that I would disagree with the premise, first of all.  I, frankly, don't
    think we will ever get universal coverage.

    Mr. Andrews. So how would you increase it to near universal?

    Mr. Scandlen. Right.  I think refundable individual tax credits would go a long way.  As I cited in
    my example of a print shop with 30 employees, it has never made sense to me to rely on the owner
    of that print shop to be a provider of health insurance benefits.

    Mr. Andrews. I'm sorry.  When you say "refundable," you mean that if an individual doesn't make
    enough money to pay federal income taxes, they would still get a credit anyway, right?

    Mr. Scandlen. Yes.  And I think it should be equivalent to the subsidy that's currently provided to
    employer-sponsored benefits through the exclusion, which is about 35 to 40 percent. I think that
    would just be a starting place.

    Mr. Andrews. Would you offer this to all uninsured people, or all people?

    Mr. Scandlen. I would offer it to all people that are not getting coverage through their employer.

    Mr. Andrews. Do you think that it would lead to a hemorrhaging where employers who do offer
    insurance would just stop doing it, because the public would now subsidize it?

    Mr. Scandlen. I think many employers might very well do that.  But I think they would continue to
    make a contribution towards that employee's health insurance premium, as they do now.  And I
    think that's more appropriate, with the exception of large companies.  The General Motors and GE's
    and those sorts of companies do a wonderful job of managing benefits programs.  But the small to
    mid-size guys simply don't.  And I think the public would be better served if they simply made a
    financial contribution to the cost of coverage for their employees.

    Mr. Andrews. I would be interested, if you could supplement the record later with your estimate of
    how much that would cost the federal treasury.

    	I thank each of the three witnesses.  Thank you.

    (NOTE:  This item was not submitted prior to the official printing of the hearing transcript.
    However, the item will be maintained upon its submission and available for inspection in the
    Majority office of the Committee on Education and the Workforce.)

    Chairman Johnson. Mr. Tierney, the gentleman from Massachusetts.

    Mr. Tierney. Thank you, Mr. Chairman.

    Mr. Scandlen, most of the savings that we think might be generated from the AHPs under
    this bill, would they come from the fact that there would be a release from the state regulatory
    process?

    Mr. Scandlen. Yes, I believe so, sir.  Although I'm not quite clear on some of the provisions of the
    bill. For instance, it seems to me that it's deferring to the states on rating restrictions, on community
    rating and that sort of thing.  And if the bill is doing that, then I think a large chunk of your savings
    would be lost.

    Mr. Tierney. So the bill would be even less effective if that's what it does.

    Mr. Scandlen. I believe so, sir.

    Mr. Tierney. Now, the Congressional Budget Office looked at this bill, and they thought at best, it
    would save about 13 percent over the traditional premiums.  So it indicates to me that maybe that's
    the case.  I'll check that myself also.

    Ms. Weiss, do you agree that most of the savings from any proposal like this are intended
    the come from the state regulatory process?

    Ms. Weiss. Actually, I think the CBO report that you're referring to found that there were actually
    two sources of savings.  One was the fact that they'd be out from under the state benefit
    requirements, and the second was the opportunity that the associations would have to design their
    own benefits package, and therefore, draw in healthy risk.

    Mr. Tierney. So cherry picking.

    Ms. Weiss. Cherry picking.

    Mr. Tierney. Okay, thank you.  Now, given that, Ms. Burlage,  I was in a business pretty much
    like yours, only probably smaller, before I got to Congress.  I had the same problems all the time.
    You get your premium notices, and you want to open the window and jump, and hope you're on the
    first floor.

    Ms. Burlage.  Yes.

    Mr. Tierney. Just as a protest.  You didn't really want to hurt yourself, right?  But let me tell you,

    [Laughter.]

    if we went to a system like this, and, in fact, the reason to have that money was to get out from
    under regulation, I assume that being the good employer that you are, you still want to get a good
    policy for your employees.

    Ms. Burlage. Of course.

    Mr. Tierney. So would it affect your decision if you were going to try to get a policy where
    consumers can no longer have an independent external review of any claim that's denied?  Is that
    going to impact your decision whether or not to go to that type of a policy?

    Ms. Burlage. I have to tell you that, quite frankly, I guess it's like somebody who's hungry.  If you
    haven't had a meal for a while, you're not really concerned what you eat.  You just want to eat.
    And right now, my employees are much more concerned with the fact that they will have
    insurance.

    Mr. Tierney. Well, you're covering them now, aren't you?

    Ms. Burlage. I'm covered now.  And they want to make sure that they stay covered.

    Mr. Tierney. Right.  So I guess my question to you is if you're now looking at a policy, and one of
    the things that it does not provide is an independent external review of claims that are denied, is
    that one thing you would factor in when determining whether or not you wanted to go in that
    direction?

    Ms. Burlage. Probably not.

    Mr. Tierney. You don't care.

    Ms. Burlage. I probably would be more concerned with the premium and the co-pays.

    Mr. Tierney. But not what it covers?

    Ms. Burlage. Yes, what it covers.  But are you talking about when I go to the doctor and I have my
    annual mammogram, or my well woman or my child coverage, is that covered?

    Mr. Tierney. Let me ask you that, then.  If you have a policy that doesn't cover mammography
    screening, would that be an impact on your decision?

    Ms. Burlage. Yes.

    Mr. Tierney. And if you had one that didn't cover well child care, would that be an impact on your
    decision?

    Mr. Tierney. And if it didn't cover maternity benefits, would that impact your decision?

    Ms. Burlage. Probably not.

    Mr. Tierney. You wouldn't care if your policy covered maternity.

    Ms. Burlage. I don't have anybody in my office that that would impact at this point.

    Mr. Tierney. Well, suppose you did by the time you had to make this decision?  Suppose you had
    Ms. Weiss with you?

    [Laughter.]

    Assuming you could afford the payroll of Ms. Weiss.

    Ms. Burlage. Assume I could afford the payroll. Then at that point, yes.  I want to be able to offer
    my employees the coverage that they need, and that's the question that you're asking me.

    Mr. Tierney. It is.  And I guess my point is, if you haven't guessed it already, is that a lot of these
    states have gone through this process and tried to determine what their citizens want in a policy,
    what protections they want, and then have imposed those regulations.  And now we're sort of
    undoing that and going backward.  And I think what I heard from you, for example, at least in
    Massachusetts, some of the things that we have in our legislation that would be protected would
    make a difference to you if those were gone out the window now.

    Ms. Burlage. It might.  But I also know that when I speak to my employees about coverage, and
    when I speak to other people about what they want, lots of people have a list of what they want.
    But a lot of times they back down when it comes down to what they need and what they will deal
    with on a day-to-day basis.  A lot of these items can be negotiable.

    Mr. Tierney. Well, a young married couple might want to know that there are maternity benefits.

    Ms. Burlage. But they might not be so willing to pay the extra for in vitro if they know what that's
    going to do to the increase in their premiums.

    Mr. Tierney. Right.  But they also want to have the mammography screening.  I guess my point is
    that the states have gone through this process, and now on the federal level, we're just going to
    wipe it out, not just the in vitro, but also some of the other things that you would want or whatever.
    So it puts some complications in there.

    Ms. Burlage. But I think that there is room for negotiation, and that it needs to be discussed.

    Mr. Tierney. Well, I wish that the bill provided for that.  I yield back the balance of my time.

    Chairman Johnson. I think the gentleman's time is expired.

    Mr. Tierney. You know, it's interesting.

    Chairman Johnson. That's the way it is with the first-story man.

    Mr. Tierney. I saw your incredible questioning at the beginning or statements at the beginning of
    the questioning period, and I thought you were using your own time until I realized the light wasn't
    on, and I thought maybe I'd steal some of that time.  Thanks.

    Chairman Johnson. It was Mr. Andrews' time you were stealing there.

    Mr. Payne, do you wish to question?  And let me advise the Members and the witnesses that
    we're about to get a vote called on the floor, so we'll hurry this through. Mr. Payne.

    Mr. Payne. Okay.  I thought I gave my time up on the last round, but I guess I better rest on this
    one too.  Let me just say that the fact that this federal plan would override state plans, as Mr.
    Tierney mentioned, what happened in Massachusetts would certainly usurp a lot of the benefits that
    New Jersey consumers have.  And so I don't know why it would be beneficial for us in New Jersey.
    I don't know what states it benefits.

    Maybe Mr. Scandlen, since the Assistant Secretary is not here, you can answer some of
    these questions. First of all, it appears to me that there is the problem with health care, as Ms.
    Burlage was saying, we can pick and choose, which really makes a lot of sense for her firm.  I think
    one of the problems with the health insurance in general is that it's a lot different from insurance in
    general.

    	They tell me that the concept of insurance is that you get large, large numbers of people,
    and you have some kind of actuarial table to show that so many people are going to die, for
    example, for life insurance.  But everybody's kind of thrown into those big numbers.

    	It seems like health insurance can almost never work because of the question of tailoring
    the policy to an individual's work place.  Now, that makes sense for the individual in the work
    place.  But to me, it destroys the whole concept of what insurance in general is supposed to be
    about; large numbers where out of every 10,000 people, four people are going to get run over by a
    bus.  So you know that.

    	But if you kind of skew out and take people that are not going to have children, or maybe
    all men, so you don't carry maternity, I'm trying to figure out what the question is.  But I have a
    problem with the sort of tailor-made cherry picking, and that's what MEWAs and all those are.  I
    guess my question is do you think that we could ever have a system that's going to be affordable
    because of the manner in which insurance is done by small business in particular?

    Mr. Scandlen. I understand exactly what you're saying, sir, and I appreciate the question.  I think
    it's important to make a distinction between insurance and prepaid health care, and payment for
    ordinary health care needs.  A lot of the things that have been mandated around the country are
    actually fairly low-cost services.  Mammography screening doesn't cost very much.  And that's
    exactly the sort of thing that should start us rethinking the way we finance this stuff. It would be
    appropriate for medical savings accounts or a health reimbursement arrangement, a pool of cash
    from which people can pay directly, rather than processing it through an insurance mechanism.  It's
    a very expensive way of paying for a service like that, putting it through an insurance company.

    	At the same time, your idea of the massive insurance pool is absolutely right also.  And
    that's what you need the high deductible, or the backup, or the stop-loss policy for, which is much
    more of a traditional sort of insurance that is there for catastrophic needs. Florence Lorel, the
    insurance commissioner here in the District, did some very nice articles making that distinction,
    and I could send them to you, if you'd be interested.

    Mr. Payne. Okay.  Thank you very much.

    You know what?  Since we're going to have a vote in a minute, let me tell you what I think
    should happen.  I believe that the Federal Government should simply make a certain amount of
    money available to offset the cost of health insurance.  I mean, to me it's almost like an entitlement.
    You said that you don't think that there would ever be universal benefit care, universal coverage,
    and it doesn't seem like it's going that way.

    	But to be truthful, it seems to me that everyone should be entitled to health care.  I just think
    that it's a basic entitlement.  And the way the costs keep going up, so many people uninsured, even
    working poor, cannot afford it.

    	I would just hope that one day we might decide that the cost of this is so high that the same
    way that we provide defense and other things that are very essential to our country.  For example,
    our defense budget is going to be $400 billion this year, not counting Iraq.  It's up to another $100
    billion then.

    	Now, if we can do that yearly and provide for our common defense, it seems we could do
    the same to promote the general welfare as I learned in school, not to have the government simply
    say it costs too much.  We want everybody to be healthy.  They deserve it.  And we should just
    have a line item for health just like we have for defense. But that's just my theory on it.

    I'd like to yield back the balance of my time, Mr. Chairman.

    Chairman Johnson. Thank you, Mr. Payne.  We got through without the buzzer going off.  That's
    marvelous.

    	I want to thank you all so much for your testimony. It has been very enlightening, and as we
    can see there is no agreement on either side.  So we've got a long way to go.  And frankly, I don't
    think any of us have the answer for how to deliver health care to the population and get more
    people insured, but we're going to try every way we can.  So I thank you again for your time and
    testimony.

    I don't know if you knew it or not, but Kristin Fitzgerald, this young lady behind us who is
    our aide, has been on leave for three months after having a baby.  And we'd like to welcome her
    back to the Committee.

    	Thank you so much for your testimony.  The Committee stands adjourned.

    Whereupon, at 2:48 p.m., the Subcommittee was adjourned.

    APPENDIX A - WRITTEN OPENING STATEMENT OF CHAIRMAN SAM
    JOHNSON, SUBCOMMITTEE ON EMPLOYER-EMPLOYEE RELATIONS,
    COMMITTEE ON EDUCATION AND THE WORKFORCE

    APPENDIX B - WRITTEN STATEMENT OF THE HONORABLE ANN L.
    COMBS, ASSISTANT SECRETARY, EMPLOYEE BENEFITS SECURITY
    ADMINISTRATION, U.S. DEPARTMENT OF LABOR, WASHINGTON, D.C.

    APPENDIX C - WRITTEN STATEMENT OF PHYLLIS M. BURLAGE,
    PRESIDENT, BURLAGE ASSOCIATES, PA, MILLERSVILLE, MD,
    TESTIFYING ON BEHALF OF THE NATIONAL FEDERATION OF
    INDEPENDENT BUSINESS

    APPENDIX D - WRITTEN STATEMENT OF PHYLLIS M. BURLAGE,
    PRESIDENT, BURLAGE ASSOCIATES, PA, MILLERSVILLE, MD,
    TESTIFYING ON BEHALF OF THE NATIONAL FEDERATION OF
    INDEPENDENT BUSINESS

    APPENDIX E - WRITTEN STATEMENT OF GREG SCANDLEN,
    DIRECTOR, CENTER FOR CONSUMER DRIVEN HEALTH CARE, THE
    GALEN INSTITUTE, ALEXANDRIA, VA

    APPENDIX F - SUBMITTED FOR THE RECORD, STATEMENT OF THE
    HEARTH, PATIO & BARBECUE ASSOCIATION, ARLINGTON, VA

    APPENDIX G - SUBMITTED FOR THE RECORD, STATEMENT OF
    DONALD L. WESTERFIELD, Ph.D., PROFESSOR, WEBSTER
    UNIVERSITY, SENIOR FELLOW, NATIONAL CENTER FOR POLICY
    ANALYSIS

    APPENDIX H - SUBMITTED FOR THE RECORD, STATEMENT OF THE
    AMERICAN FARM BUREAU FEDERATION

    APPENDIX I - SUBMITTED FOR THE RECORD, STATEMENT OF THE
    ASSOCIATION HEALTHCARE COALITION, WASHINGTON, D.C.

    APPENDIX J - SUBMITTED FOR THE RECORD, STATEMENT OF
    COUNCIL OF SMALLER ENTERPRISES, CLEVELAND, OH

    APPENDIX K - SUBMITTED FOR THE RECORD, STATEMENT OF THE
    SMALL BUSINESS ASSOCIATION OF MICHIGAN, LANSING, MI

    APPENDIX L - SUBMITTED FOR THE RECORD, STATEMENT OF THE
    DETROIT REGIONAL CHAMBER

    APPENDIX M - SUBMITTED FOR THE RECORD, LETTER TO RANKING
    MEMBER ROBERT ANDREWS, FROM DONALD A. YOUNG, M.D.,
    PRESIDENT, HEALTH INSURANCE ASSOCIATION OF AMERICA (HIAA),
    MARCH 13, 2003

    APPENDIX N - SUBMITTED FOR THE RECORD, STATEMENT OF
    NATIONAL ASSOCIATION OF INSURANCE COMMISSIONERS

    APPENDIX O - SUBMITTED FOR THE RECORD, STATEMENT OF
    RONALD F. POLLACK, EXECUTIVE DIRECTOR, FAMILIES USA,
    WASHINGTON, D.C.

     APPENDIX P - SUBMITTED FOR THE RECORD, LETTER TO
    CHAIRMAN JOHN A. BOEHNER AND RANKING MEMBER GEORGE
    MILLER, FROM MIKE PICKENS, NATIONAL ASSOCIATION OF
    INSURANCE COMMISSIONERS (NAIC) PRESIDENT, KANSAS CITY, MO

    APPENDIX Q - SUBMITTED FOR THE RECORD, STATEMENT OF
    NATIONAL SMALL BUSINESS UNITED

    APPENDIX R - SUBMITTED FOR THE RECORD, LETTER TO SPEAKER
    OF THE HOUSE, J. DENNIS HASTERT AND SENATE MAJORITY
    LEADER, BILL FRIST, M.D., FROM MENTAL HEALTH LIASON GROUP,
    C/O PETER NEWBOULD, AMERICAN PSYCHOLOGICAL ASSOCIATION
    PRACTICE ORGANIZATION, WASHINGTON, D.C.

    APPENDIX S - SUBMITTED FOR THE RECORD, NEWS RELEASE,
    "AHPs WILL INCREASE HEALTHCARE COSTS FOR CONSUMERS,"
    BLUECROSS BLUESHIELD ASSOCIATION, CHICAGO, IL

    206

    Table of Indexes

    Chairman Johnson, 1, 5, 8, 9, 10, 12, 13, 14, 16, 17, 19, 25, 28, 30, 31, 34, 37, 39
    Mr. Andrews, 5, 10, 11, 12, 16, 19, 32, 33, 34
    Mr. Ballenger, 12, 13
    Mr. Case, 14, 15, 16
    Mr. Cole, 18, 19, 22, 23
    Mr. Kline, 16, 30, 31
    Mr. Payne, 23, 37, 38
    Mr. Scandlen, 28, 30, 31, 33, 34, 38
    Mr. Tierney, 19, 20, 21, 22, 34, 35, 36, 37
    Ms. Burlage, 23, 30, 31, 32, 33, 35, 36, 37
    Ms. Combs, 8, 9, 10, 11, 12, 14, 15, 16, 17, 18, 19, 20, 21, 22, 23
    Ms. McCollum, 17, 18
    Ms. Weiss, 27, 32, 34, 35

    cxcvii

    197