    [House Hearing, 109 Congress]
    [From the U.S. Government Publishing Office]

      SMALL BUSINESSES ACCESS TO HEALTH INSURANCE: LESSONS FROM NEBRASKA?

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

                                    HEARING

                                   before the

                          COMMITTEE ON SMALL BUSINESS
                            HOUSE OF REPRESENTATIVES

                           ONE HUNDRED NINTH CONGRESS

                                 FIRST SESSION

                                   __________

                          WASHINGTON, DC, JUNE 6, 2005

                                   __________

                               Serial No. 109-19

                                   __________

             Printed for the use of the Committee on Small Business

     Available via the World Wide Web: http://www.access.gpo.gov/congress/
                                     house

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                          COMMITTEE ON SMALL BUSINESS

                     DONALD A. MANZULLO, Illinois, Chairman

    ROSCOE BARTLETT, Maryland, Vice      NYDIA VELAZQUEZ, New York
    Chairman                             JUANITA MILLENDER-McDONALD,
    SUE KELLY, New York                    California
    STEVE CHABOT, Ohio                   TOM UDALL, New Mexico
    SAM GRAVES, Missouri                 DANIEL LIPINSKI, Illinois
    TODD AKIN, Missouri                  ENI FALEOMAVAEGA, American Samoa
    BILL SHUSTER, Pennsylvania           DONNA CHRISTENSEN, Virgin Islands
    MARILYN MUSGRAVE, Colorado           DANNY DAVIS, Illinois
    JEB BRADLEY, New Hampshire           ED CASE, Hawaii
    STEVE KING, Iowa                     MADELEINE BORDALLO, Guam
    THADDEUS McCOTTER, Michigan          RAUL GRIJALVA, Arizona
    RIC KELLER, Florida                  MICHAEL MICHAUD, Maine
    TED POE, Texas                       LINDA SANCHEZ, California
    MICHAEL SODREL, Indiana              JOHN BARROW, Georgia
    JEFF FORTENBERRY, Nebraska           MELISSA BEAN, Illinois
    MICHAEL FITZPATRICK, Pennsylvania    GWEN MOORE, Wisconsin
    LYNN WESTMORELAND, Georgia
    LOUIE GOHMERT, Texas

                      J. Matthew Szymanski, Chief of Staff

              Phil Eskeland, Deputy Chief of Staff/Policy Director

                      Michael Day, Minority Staff Director

                                      (ii)
    ?

                                C O N T E N T S

                                  ----------

                                   Witnesses

                                                                       Page
    Green, Ms. Peggy, President/CEO, Green's Plumbing, Heating,
      Cooling and Remodeling.........................................     4
    Lanik, Mr. Bob, CEO/President, St. Elizabeth's Regional Medical
      Center.........................................................     6
    Janssen, Mr. Charlie, Chairman/CEO, RTG Medical..................     8
    Durham, Mrs. Debi, President, Siouxland Chamber of Commerce......    10
    Miller, Mr. John, President, Oxbow Hay Company...................    12
    Moline, Mr. Robert, CEO, HomeServices of Nebraska................    13

                                    Appendix

    Opening statements:
        Manzullo, Hon. Donald A......................................    22
        Fortenberry, Hon. Jeff.......................................    24
    Prepared statements:
        Green, Ms. Peggy, President/CEO, Green's Plumbing, Heating,
          Cooling and Remodeling.....................................    26
        Lanik, Mr. Bob, CEO/President, St. Elizabeth's Regional
          Medical Center.............................................    29
        Durham, Mrs. Debi, President, Siouxland Chamber of Commerce..    35
        Miller, Mr. John, President, Oxbow Hay Company...............    38
        Moline, Mr. Robert, CEO, HomeServices of Nebraska............    41
    Attached:
        Seng, Hon. Coleen, Mayor, Lincoln, Nebraska..................    46

                                     (iii)

      SMALL BUSINESSES ACCESS TO HEALTH INSURANCE: LESSONS FROM NEBRASKA?

                                  ----------

                              MONDAY, JUNE 6, 2005

                       House of Representatives
                                    Committee on Small Business
                                                         Washington, DC
        The Committee met, pursuant to call, at 11:05 a.m., at the
    Cornhusker Hotel, 301 South 13th Street, Lincoln, Nebraska.,
    Hon. Donald A. Manzullo [chair of the Committee] Presiding.
        Present: Representatives Manzullo and Fortenberry.
        Also Present: Representatives Osborne and Terry.
        Mr. Manzullo. We know the gavel works. Welcome to our
    hearing here. I don't know if you're going to have enough
    chairs.
        Mr. Fortenberry. That's a good problem.
        Mr. Manzullo. We need to have the chair committee bring in
    more chairs.
        I am Congressman Don Manzullo from the 16th District of
    Illinois, chairman of the small business committee. And we have
    been having hearings literally all over the country on the
    issue of affordability of health care.
        One of the outstanding members of our committee is Jeff
    Fortenberry, your congressman from Lincoln. Now let's all give
    him a nice round of applause.
        [Applause.]
        Mr. Manzullo. Let me say it's a real pleasure to have Jeff
    as a member of the small business committee. He's one of those
    members that shows up quite a bit, asks all kinds of questions,
    causes all kinds of trouble, which is good because you didn't
    send him to town just to sit there but to raise the hackles of
    the people that are trying to make a policy.
        Here are the rules. The witnesses will speak for five
    minutes. I am going to be the timekeeper. And when I go like
    this, that's four minutes. Okay? When I am getting ready to do
    this, all right, I'll bet that's five minutes. And those are
    the rules on it, and I am going to turn the table over to
    Congressman Fortenberry.
        [Chairman Manzullo's opening statement may be found in the
    appendix.]
        Mr. Fortenberry. Thank you so much, Mr. Chair. What a
    privilege we have today in welcoming Chairman Don Manzullo to
    join us for this official field hearing on the house small
    business committee. Chairman Manzullo is from northern
    Illinois, the 16th District. He lives in the town of Egan. We
    are desperately trying to find a map to figure out where that
    is because 39 people live there. He won't tell us.
        Welcome, Mr. Chairman. Thank you so much. We are glad to
    have you in Nebraska. We are also joined by my colleague, the
    Second District representative, Congressman Lee Terry. Thank
    you, Mr. Terry, for being here today. We appreciate all of your
    willingness to come out today and talk and hear about this
    important topic of health care coverage and small business.
        And, Mr. Chairman, everywhere I go, this topic does come
    up. We are very happy that you are here to address it with us
    because we know you have significant interest in this issue as
    well.
        So as I mentioned today, we will examine the issue of small
    business and health care coverage, health care costs, as well
    as employees who are affected by this.
        Small businesses represent the heart of entrepreneurship.
    Small businesses, including family farms, is where most
    families are trying to get a little bit ahead in life. Products
    are made and delivered with the imprint of a real person where
    workers and owners can most directly take responsibility for
    production and service and receive the full fruit of their
    labor.
        Often closer to their customers, small family owned
    businesses often see opportunities in niche markets and provide
    personalized service. Small business is the key to long term
    economic well-being for families, and that's why I am so
    privileged to be a part of this important committee in
    Congress.
        For every single large corporation in America, there are
    300 smaller ones. These smaller companies employ half of the
    total private work force and consistently produce around 75
    percent of the new jobs in the country.
        I believe we should seek to reward this efficiency and
    dynamism encouraging the creative entrepreneurship that the
    risk takers undergo. Yet as I often talk to small business
    owners or budding entrepreneurs a consistent concern arises,
    how to deal with the cost of health insurance. The rising cost
    of providing health coverage for employees is a growing
    obstacle for many small business persons, as you're well aware,
    or those who may wish to join their ranks.
        Insurance premiums for small businesses doubled between
    1994 and 1999, a much more dramatic rise than faced by large
    other corporations. It's no surprise that only 63 percent of
    smaller companies can even afford to offer health insurance,
    one reason that three out of five uninsured persons in our
    nation are either small business owners, employees, or their
    families.
        A decade ago government regulation was most often listed as
    the single most important problem that small businesses face.
    Today the cost and availability of health insurance is the top
    complaint. Some 30 percent of small businesses fear this more
    than anything else. This fact discourages the creation of small
    businesses, keeps them from hiring, and limits those who can
    attract--limits who they can attract to work for them.
        Of course, a number of innovative solutions have been
    proposed, and it is important that we promote those that make
    the most sense to hard working Americans in the small business
    communities.
        Some proposals would seek to provide relief to small
    businesses by the tax code, including additional measures of
    support for health savings accounts as an example. By involving
    consumers more directly in medical decisions, the rising costs
    may be mitigated and insurance savings achieved. Also, better
    use of technology for medical administration, as well as loss
    of abuse as to foreign measures can also reduce costs.
        You get used to this in Washington. I will try not to
    ramble, Mr. Chairman.
        America provides the finest health care in the world, and
    yet rising costs to a growing number of younger workers are
    scared of the expense and opt out of the system of insuring
    themselves.
        [Congressman Fortenberry's opening statement may be found
    in the appendix.]
        Again, I thank you all for joining us today for this
    important discussion, and I am especially grateful to our
    witnesses who have come from all across the First District of
    Nebraska. I look forward to your testimony, and, Mr. Terry, if
    you would like to make an opening comment, then I will proceed
    with introductions of our panel.
        Mr. Terry. Very good. Thank you, Congressman Fortenberry,
    and let me just start off with complimenting you in putting
    together this field hearing and getting the esteemed chairman
    of the small business committee to our great state. He is your
    chairman, and he is my friend. In fact, we are neighbors.
        Mr. Manzullo. Illinois hasn't had much to crow about. I
    observed there was something going on in this city.
        Mr. Terry. Yes. If you need to attend the football 101
    clinic, as we know somebody from Illinois may need instruction.
        But, Jeff, you've done a good job in putting this hearing
    together. On the drive down here studying your panelists, it's
    an impressive panel that you have here. I think it's going to
    cover a wide variety of Nebraska's economy and interests. And
    so, Mr. Chairman, I think you will learn a lot. We are a small
    business state, ag-based economy, but small business
    especially. That's what drives us.
        Yes, we have Fortune 500 companies located in Nebraska, but
    even those companies started as Nebraska's small businesses and
    grew, some very large with lots of railroad tracks and other
    assets, but nonetheless, locally grown companies. That's the
    heart of Nebraska.
        So to the panelists the Fortenberry team has impaneled
    here, thank you for spending your day with us. You are an
    important cog in democracy here so that we can learn of your
    issues, your ideas. And most good ideas--I had to admit this to
    a student group. We actually have a young group of boys in the
    back and some college students attending here. I had to admit
    to them that congressmen don't come up with all of the good
    ideas, although we claim it. They start with panelists like you
    that offer testimony and your time and talents before us. So
    thank you for this.
        Jeff, I will turn it back to you, Acting Chairman
    Fortenberry.
        Mr. Fortenberry. Thank you, Mr. Terry. Again, we appreciate
    your input today.
        I will introduce the entire panel. And, Ms. Green, if you
    will start. We have with us Ms. Peggy Green, President and CEO
    of Green's Plumbing and Heating here in Lincoln. Green's
    Plumbing and Heating was founded in 1921 by your grandfather.
    Welcome.
        We also have Bob Lanik. He is president and CEO of St.
    Elizabeth's Regional Medical Center here in Lincoln, 242 bed
    hospital, 90-person physician network. And Mr. Lanik has been
    the CEO for 20 years now, I understand.
        Mr. Lanik. Yes, sir.
        Mr. Fortenberry. Welcome. Mr. Charlie Janssen is also with
    us. We're glad to have Mr. Janssen here. He is CEO/chairman, I
    believe founder as well, of RTG Medical. They employ 39 people
    in Fremont, founded in 2001. Welcome.
        Ms. Debi Durham is here representing the--she is president
    of Siouxland Chamber of Commerce working on some innovative
    ideas in the area of health care coverage for the Siouxland
    region. You reside in Sioux City, Iowa, but as we call South
    Sioux City and Sioux City, we call it the neighborhood.
    Welcome.
        Mr. John Miller is here. He is president and founder of
    Oxbow Hay Company. Oxbow is located in Murdock, Nebraska, a
    small but important community in the First District of 250
    people. John hired his first employee seven years ago and now
    has 40, turning a former grain farm into a thriving export of
    specialized agricultural products. So Oxbow is an exporter of
    specialized agricultural products. Welcome. Thank you for
    coming today.
        Mr. Robert Moline is CEO of HomeServices of Nebraska. They
    employ 600 real estate agents as independent contractors
    throughout the state and are based here in Lincoln, Nebraska.
    Thank you, Mr. Moline for joining us today.
        Ms. Green, if you would proceed with your testimony.

     STATEMENT OF PEGGY GREEN, GREEN'S PLUMBING, HEATING, COOLING
                             AND REMODELING

        Ms. Green. I would be happy to. Thank you for inviting me.
    I am actually asked to also represent today Associated Builders
    & Contractors, and I will explain a little bit about that
    association. We also refer to them as ABC contractors. It's a
    national association, and it represents 23,000 merit shop
    construction and construction related firms in 79 chapters
    across the United States. And here in Nebraska we do represent
    240 member firms. Green's has been a member since 1978.
        I would like to also say that I think I represent
    employees. Employees to me are my best asset, and I want to
    share a little story that prompted me to be willing to
    participate in something like this. We provide a physical for
    each employee before we hire them, part of our prescreening
    plan, and we also do drug screens. And we hired an employee
    that participated in our physical, and when the nurses called
    me, they said that this particular person had a fairly serious
    medical problem and that we would not be able to employ him
    unless something--some action was taken.
        And the problem resulted because he was not taking his
    medication, and the employee was not taking his medication
    because where he was at prior he was not participating in any
    type of health plan. He could not afford health insurance. His
    employer did not provide it, and he couldn't afford
    prescription medication. We proceeded to negotiate and did hire
    the employee. He was able to join our health plan. We were able
    to pay for it, get him on our prescription drug plan which, by
    the way, is just $10 per generic drug and get him back on a
    wellness track. So he's now part of our team, and we're very
    pleased that we could do that not just for him but for what he
    contributes to our business.
        So that's a little story I wanted to share with you because
    I feel I represent a lot more than just small business.
        I will go ahead and kind of go through a few things about
    my company. We are mechanical contractors. So I am representing
    the construction industry, and the construction industry is
    pretty small. My people do maybe a small service call in your
    home. We're in people's homes that have health issues as well.
    They might be sick, may not. We're at construction sites that
    may be safe, may not be safe. And so we're very much aware of
    the importance of wellness because we have people that are
    involved in a crew, and we're working with teams. And if
    someone is not able to get work one day, then we're not as
    productive as we should be.
        I am going to tell you a little bit about our costs, and I
    want to say that in the Lincoln environment, I am fortunate
    because I benefit from some of the larger major employers. I do
    provide insurance for my employees.
        Over the years we have had to change our approach to that.
    Being third generation, been at my employer--or in my company
    for over 35 years. We started out by providing full family
    coverage. That would include the entire family. Over the years
    it got too expensive. We went to finally providing insurance
    for the single employee.
        At this point we were taking advantage of the other
    employers in Lincoln, though, because we are a city government.
    We have the Capitol of Lincoln right here. So we have many of
    our spouses that are employed by the state, federal or county
    employers. We have three hospitals, three universities, and we
    have several headquarters of insurance companies here in
    Lincoln. So I benefit by the major employers, but that's not
    what the advantage is for other people across the state of
    Nebraska. So I do have that savings.
        If I were to pay for all of my employees, there would be a
    substantial change in the financial condition of my company.
    But on the other hand, if I don't pay for insurance for my
    employees, I have another challenge of not having healthy, well
    employees that can show up for work.
        I am going to move ahead because of my time. My insurance
    company--and I want to say good things about my insurance agent
    because he did help me with my testimony. On one of the pages
    it will show you some comparison of what my rates are, and it
    shows the increases. And they were very polite in providing me
    with some numbers here showing how over the years the rates
    have changed 18 percent, 13 percent, and 20 percent.
        Those increases every year, of course, they don't compare
    with any of my other costs. That's a lot of increases every
    year. And this year they're predicting--or next year they're
    predicting my rates will go up again anywhere from 15 to 20
    percent. You have a chart in front of you that kind of shows
    that, a graph that I think will visually give you some kind of
    idea of what we look at, and especially if you want to look at
    the graph that shows monthly premiums that compares three
    years.
        You know, the ones that show some family--it looks like
    that. It shows this year anybody that is participating in my
    family coverage, that I am able to provide--do you see that? I
    am sorry.
        Mr. Fortenberry. Yes.
        Ms. Green. Okay. A family plan would cost $903. To me, I
    know some of my employees that's probably about what they pay
    for a mortgage payment per month. So it's a substantial part of
    their--their annual expense.
        The next page, the bar graph, in order to maintain some of
    the premiums, which I am hoping you will review some of the
    costs later, we have had to make changes in what the
    deductibles are, out-of-pocket expense. We're always having to
    shop insurance every year to try to make it as affordable to us
    as a small business but also to my employees. Like I said, I am
    no longer able to pay for the family plan.
        And as you continue with the packet, it shows the actual
    plan that we have and the different benefits. I am very proud
    to be able to say that what we provide for our employees is if
    they need to visit the doctor, they only have to pay $25, and,
    again, we're encouraging them to see a doctor. It doesn't do
    any good for me to provide health insurance to an employee that
    they can't even afford to use. So the co-pay is $25, and then
    generic prescription drugs are $10.
        And on the final page it does show you--excuse me. Not the
    final page, but it continues to show you in these charts the
    cost comparisons, different premium, different policies they
    could purchase.
        The next chart will give you some ideas if you want to
    compare other carriers that I had choices that I could choose.
    And I could choose insurance policies that cost less.
        Mr. Manzullo. Now, we have to choose to end your testimony.
        Ms. Green. In closing, I am very glad that this is
    happening because I am concerned about the future. The
    financial burden, the small businesses have it now, that is if
    they are even providing for their employees. And I think in the
    future we have to make some tough decisions what we're going to
    do as other costs of doing business are arising as well. Thank
    you.
        [Ms. Green's statement may be found in the appendix.]
        Mr. Fortenberry. Thank you for your testimony. And, for the
    record, please note that your full written statement from each
    witness will be a part of this formal record.
        Mr. Lanik?

    STATEMENT OF BOB LANIK, ST. ELIZABETH'S REGIONAL MEDICAL CENTER

        Mr. Lanik. Thank you, Congressman, and thank you for the
    opportunity to speak before this committee on the--on the
    committee of small business on providing health coverage for
    employees. My testimony today will try to provide some insight
    into the drivers of costs.
        The issue of increasing health care costs is very complex,
    and I will only be able to scratch the surface during my
    testimony.
        Mr. Manzullo. Bob, could you pull the mike closer to your
    mouth.
        Mr. Lanik. Sure. Thank you. I also am sensitized to the
    increasing cost of health care insurance as we have seen double
    digit increases in our own health insurance plan.
        The key drivers that I will talk about today are labor,
    supplies, pharmaceuticals, technology, regulation, defensive
    medicine, malpractice, increased utilization, and the practice
    of cost shifting which directly impacts the premiums paid by
    employers.
        In our hospital benefits and wages comprise 42 percent of
    our expenses. That's pretty similar to other hospitals.
    Nationally, according to the American Hospital Association,
    there is an 8.1 percent of vacancies in registered nurses.
    These shortages have forced hospitals to provide higher wages.
    When vacancies can't be filled by employment, at St. Elizabeth
    and other hospitals we use temporary staffing from agencies. At
    St. Elizabeth we pay a 70 percent premium for the cost of those
    agency nurses.
        Supplies is another area of rapid increases in cost. To
    give you an example of some of the devices that we're providing
    patients these days, a biventricular pacemaker costs us 23,750
    for some of our cardiology patients. A cochlear implant for a
    deaf person costs almost $27,000, and a knee implant can run
    from 5,000 to 8,500 depending upon whether it's made of metal
    or ceramic. And you may have noticed that the manufacturers are
    running TV ads marketing directly to the public promoting the
    ceramic model.
        During 1998 to 2003, prescription drugs accounted for about
    18 percent of the spending growth in health care. The federal
    government estimates during the 1990s 10 percent to 40 percent
    of the annual growth in personal health care spending was
    attributable to technology.
        Let me give you a couple of examples of regulation that
    costs the health care bills to rise. According to the American
    Hospital Association, in California new seismic standards will
    cost the hospitals an estimated $24 billion, and compliance
    with just a handful of HIPAA privacy requirements alone will
    cost hospitals in the nation up to 22 billion over five years.
        In a recent publication by Blue Cross/Blue Shield Plans,
    they report that rising malpractice insurance premiums are
    driving up provider fees especially in the areas of obstetrics
    and gynecology and surgery.
        The AMA in March of 2004 identified 19 states that they
    categorized as crisis states because of the availability and
    affordability of malpractice insurance.
        A related issue is that of defensive medicine. In a recent
    study published by the Journal of the American Medical
    Association, 93 percent of the 824 physician respondents
    reported using some form of defensive medicine.
        And, finally, I would like to speak to the issue of the
    cost of the uninsured and underinsured and inadequate
    reimbursement by Federal and State programs that also drive up
    the cost of health care, particularly to other purchasers,
    including small businesses. 5.6 percent of the patients in the
    United States that are hospitalized are uninsured. There is
    also a large number of underinsured. And we're certainly
    pleased to provide charity care; however, there is a cost, and
    that cost needs to be passed on to someone.
        At St. Elizabeth Medicare pays us about 85 percent of the
    cost of providing care. Medicaid provides us about 65 percent
    of the cost for providing care. The way we have traditionally
    dealt with that is to shift costs to another payor.
        You can see that there are many factors that drive up
    health care costs. Again, I can only touch on these briefly
    with this time. But thank you for allowing me to testify this
    morning.
        [Mr. Lanik's statement may be found in the appendix.]
        Mr. Fortenberry. Thank you, Mr. Lanik. We appreciate your
    insight.
        For the record as well, Mr. Chairman, without objection,
    the mayor of Lincoln, Coleen Seng, sent a welcoming letter. We
    would like to include that as a formal part of the proceeding.
        [Mayor Seng's letter may be found in the appendix.]
        Mr. Fortenberry. Mr. Janssen?

               STATEMENT OF CHARLIE JANSSEN, RTG MEDICAL

        Mr. Janssen. I would like to thank Congressman Manzullo,
    Congressman Fortenberry and Congressman Terry and the Committee
    on Small Business for recognizing that affordability of health
    care insurance is a pressing issue for small businesses.
        RTG Medical is a Nebraska-based nationwide temporary health
    care staffing company that began operations in 2001. And we
    agree that affordability of quality health care insurance has
    become an issue of expanding our own business in Fremont,
    Nebraska.
        In 2004, we asked six different insurance companies for
    competitive bids for health insurance. At the time of the bid,
    November of 2004, we had 39 employees eligible for insurance of
    which 18 were on our PPO plan that was administered through
    United Healthcare. We got the following response from the
    following companies:
        AMS, declined a bid due to low participation.
        Coventry, declined a bid, no explanation.
        Humana, a non-competitive bid.
        United Healthcare, our 2003 plan carrier, bid, 90 percent
    increase over their own 2003 rate.
        Principal Financial, bid, 93.5 percent over our 2003 rate.
        Blue Cross/Blue Shield, bid, 96.8 percent over our 2003
    rates.
        With few options, we stayed with United Healthcare's PPO
    plan at the 90 percent increase, and we also offered a
    qualified high deductible health plan which had premiums that
    were 43 percent higher than our 2003 PPO plan but also allowed
    employees to open a health savings account which they have
    taken advantage of.
        As of June 2005, we currently have 100 eligible employees
    with 35 participants in our plan. One factor that led to the
    increase in our number of eligible employees from 39 in
    November of '04 to 100 today is that the waiting period of 90
    days was adjusted for RTG Medical employees, plus the business
    has grown exponentially over the past year as well.
        The participation rate in the RTG plan is also affected by
    the fact that a spouse may have a plan that provides family
    coverage at a lower cost than we can provide, and our traveling
    employees that work across the nation also work on 13-week
    contracts and may obtain their own individual insurance based
    on sex and age at a lower rate than our composite rates could
    offer to them.
        The temporary medical staffing business is a highly
    competitive one which makes it very difficult to pass the cost
    increases on to our client facilities. Insurance costs have
    been spiraling out of control for several years. We have
    determined the only way we can control costs for the company is
    to limit our reimbursement to employees, in essence, passing
    the cost increase on to employees and provide them the
    opportunity to control their costs through wise usage of health
    care providers.
        Rising insurance affects--rising insurance costs affect the
    ability of small businesses to hire talented individuals. They
    need to grow to grow their business. Larger companies have the
    option of self-insuring medical costs and just paying the
    insurance company for administration. This allows larger
    companies to deliver a lower cost insurance benefit to an
    employee than a small business can.
        In some ways small businesses are subsidizing the rates or
    costs of larger companies by paying higher rates for
    individuals based on group size, providing better insurance,
    buying groups for small businesses where they can pool their
    employees to buy down a rate that could assist in this. This
    would provide access to more carriers, and that competition
    would push rates down.
        In our industry, affordability of health care is a major
    issue for our traveling employees. COBRA provides portability
    for 18 months, but it is at a great administrative cost to the
    small business, in our case requires a small staff to comply
    with those regulations. We would like to see COBRA compliance
    become the responsibility of the insurance provider. The small
    business would only have to notify the insurance provider to
    change the employment status and all notifications, billings,
    and collections would be taken care of by the insurance
    company. The small business gets no benefit from providing
    COBRA. It is a cost.
        The employee should have affordability of insurance. The
    insurance company is the entity making the insurance premium,
    and it would seem appropriate to push the cost of
    administration to them.
        If this committee were looking for a way to make an
    immediate impact on helping small business, this minor change
    would have a tremendous impact. It would allow our extremely
    small and overworked administrative employees more time to
    concentrate on growing our business and less time spent
    conforming to strict COBRA compliance regulations that
    ultimately benefit the insurance companies.
        It seems a little suspect myself that United Healthcare
    would raise our premiums 90 percent and then expect us to
    invoice and collect premiums from their clients, and if we
    don't do that, face huge fines. We would like to point out that
    we have nothing against large corporations or insurance
    companies. We are simply hopeful that we can all work together
    in order to find a solution in making health care insurance
    more affordable for all involved.
        We believe a potential employee should base their
    employment decision upon the direction and integrity of the
    company as opposed to the health care plan and co-pay of a
    company.
        Mr. Fortenberry. Thank you, Mr. Janssen. We appreciate you
    coming today, for your insightful testimony.
        Ms. Durham.

        STATEMENT OF DEBI DURHAM, SIOUXLAND CHAMBER OF COMMERCE

        Ms. Durham. Mr. Chairman, Congressman Terry, Congressman
    Fortenberry, I also thank you for this opportunity. Siouxland
    is a regional banner branded to include the tri-state area of
    Sioux City, Iowa, South Sioux City, Nebraska, and North Sioux
    City, South Dakota. With a combined population of approximately
    150,000, our region functions largely as a single economy
    operating across state lines in economic development,
    marketing, transportation, and long-term strategic planning.
        In Siouxland our employers are burdened by dramatically
    increasing health insurance costs. Many of our small businesses
    are currently faced with rather unpalatable choices of reducing
    the work force, reducing employee benefits, passing on
    increasing health insurance costs to their employers,
    employees, or even canceling insurance coverage in order to
    remain viable.
        Many factors influence this trend already spoken of today.
    With the aging of our local population, growing number of
    working uninsured, and an overall increase in the number of
    people lacking health insurance, the situation in Siouxland has
    grown from disconcerting to critical.
        Like you, we also realized this would be a difficult and
    demanding process requiring innovative and collaborative
    approaches. Our Chamber of Commerce brought together a
    coalition of community health care providers, business leaders,
    and governmental partners to develop a multifaceted approach to
    address both escalating health insurance costs and improved
    access to affordable health care in Siouxland.
        In the 2004 Siouxland Laborshed analysis, our research
    demonstrated that certain benefits offered in lieu of higher
    wages could be the catalyst driving an employee to change
    employment. In fact, the survey confirmed that 72.8 percent of
    respondents would be influenced to either maintain or change
    employment if the employer would share the premium for health
    insurance. This data confirmed that those businesses that
    provided employee health insurance plans enhanced their
    recruiting efforts and maintained a more stable work force.
        In the essence of time, I will highlight a few strategies
    that capture the collaborative tactics of how we believe
    affordable health care can be provided for small business
    employers and the self-employed.
        First of all, bundling of insured lives. Provide true
    purchasing pool for small businesses to band together as a
    purchasing block to lower premium costs. Of the Chamber's 1,100
    members, 56 percent represent small businesses with less than
    10 employees, a number that makes it difficult to find a
    competitive plan. The support we would request is allow for a
    tri-state association of insurance purchaser plans to be
    developed.
        Gap health care coverage for the working uninsured. Our
    concern for the growing number of working uninsured in our
    community led us to the Muskegon, Michigan Community Health Non
    Profit Program, a plan that markets to the uninsured small
    business population. The plan instills personal responsibility
    with a three share pay model divided so the employer pays 30
    percent, the employee pays 30 percent, and the community pays
    the remaining 40 percent funded by the disapportionate hospital
    fund.
        Coverage is comprehensive, less a few catastrophic care
    items. In fact, at times the coverage is non- conventional and
    holistic in its approach. Costs are managed with the
    utilization of case workers from the local nursing school
    assigned to individuals covered in the plan, a true managed
    care oversight.
        The Siouxland region is seeking a pilot project status with
    an appropriation to implement a small business coverage plan
    designed to narrow the gap between public and private insurance
    coverage patterned after the Muskegon model. This plan would
    make health care insurance obtainable for the growing number of
    working uninsured in our region and encourage healthy choices
    by the consumer.
        Health savings accounts. The business community is
    intrigued by the consumer directed component of the health
    savings account initiative. However, implementation in the
    first two years for small businesses is a hurdle that many
    employers are unable to overcome making greater utilization
    difficult. Price savings for employers is not significant
    enough to create an implementation incentive. So we would ask
    to increase utilization of the health savings accounts by
    providing for significant tax incentives for the employers, and
    also require financial participation by the employee.
        Medicare reimbursement. The tri-state region continues to
    experience a low Medicare reimbursement for all aspects of
    medical care, despite providing demonstratable high quality
    health care. It has become a vicious cycle. The more the
    government payers reduce what they pay, the more the health
    care providers try to shift it to the private payers.
        The support that we would request is to implement a tri-
    state Medicare reimbursement rate for the Siouxland region. At
    the current Nebraska rate, the highest in the region today,
    include quality monitors and patient outcome measures as
    variables in the Medicare reimbursement formula, increase
    compensation rates for providers who insure better outcomes.
        Thank you for this opportunity to significantly raise the
    awareness of the difficult plight of our small businesses in
    assessing affordable health care in our communities.
        [Ms. Durham's statement may be found in the appendix.]
        Mr. Fortenberry. Thank you, Mrs. Durham. We appreciate
    that. As you can see, Mr. Chair, the chairman of the Siouxland
    region was very active and definitive. Thank you for your
    insightful testimony.

              STATEMENT OF JOHN MILLER, OXBOW HAY COMPANY

        Mr. Miller. Yes, good morning, and thank you for allowing
    me to come and speak a little bit about a few of our small
    companies' problems.
        As Mr. Fortenberry was explaining to you at the beginning,
    Oxbow Pet Products is a small pet food company that specializes
    in proper nutrition and supportive care for small pet
    herbivores, better known as rabbits, guinea pigs, chinchillas,
    and a few other similar exotic pets.
        Our company is located close to Murdock, Nebraska, which is
    a small farming community of 250 people. The business is
    located on our family farm from which the business evolved
    starting in our garage, then moving to our old barn. Our
    business is now housed in the refurbished barn as offices and
    in two other new buildings which serve as production and the
    warehouse.
        The pet food idea started about 12 years ago evolving out
    of my alfalfa hay business, which was a large part of our
    farming operation at that time. We have experienced phenomenal
    growth over these last 12 years. We started with just one
    little bag of alfalfa, and now we have 22 products that are
    distributed all over the world.
        We hired our first employee seven years ago and now employ
    over 40 people. We are the largest non- governmental employer
    of women in our county. Our payroll surpasses $1 million per
    year, most of which is paid into the surrounding community.
        The pet food business grew with part-time help from
    neighbors who were looking for part-time work. Most of these
    early part-time employees were able to get health insurance
    through their spouses at other locations. Even though these
    people were always interested in health insurance as a benefit,
    the lack of insurance in those early years was not too big of a
    problem.
        As the business grew, we needed more and more full-time
    employees for the continuity that full-time employees bring to
    the job. Our payroll has had to increase dramatically to
    attract the caliber of people that we need to succeed. Full-
    time people expect and need health insurance. This has been a
    huge issue for us and the survival of our small company.
        Early efforts to obtain small group insurance that would
    work for a large percentage of our employees plus be affordable
    for our small company were very frustrating. We have had health
    insurance now for a little over two years.
        During those early periods of determining what we were
    going to offer, it was very confusing for a small family
    business to sort out the options that are available and which
    of those options of are good value. We really didn't have the
    experience that we needed to know what was good and what
    wasn't, plus we had a couple of early large claims into our
    small group plan which compounded our problems.
        Approximately one year ago we changed health coverage to a
    plan that was more inclusive for all of our employees but which
    also carried a very high deductible that was designed to be
    covered by a health savings plan. We were assured that by going
    to this high deductible, which we understand is a hardship on
    our employees that we wish was not there, that our premium
    would remain basically unchanged for a period of two to three
    years.
        This month, only one year into our coverage, we just
    received notice that our premium was going up 12 percent for
    the coming year. I can guarantee that double digit growth in
    our health insurance premium is not going to be long-term
    sustainable for our little company.
        As owners, my wife and I want Oxbow to be a special place
    to work. We have worked hard over these 12 years to create a
    culture of caring for our employees. Obtaining and expanding
    our benefit--our employee benefit package is a high priority
    for us. Last year we added additional PTO days that are more
    easily obtainable, a simple IRA and life insurance in addition
    to our new health insurance that revolves around this health
    savings account. In order to get the monthly premium down to an
    affordable price, we did have to sacrifice our dental plan and
    go to a $2,000 deductible plan and add the health savings
    account option.
        We feel sometimes we are taking one step forward and two
    steps back, a more affordable offering but less coverage. We
    want rural Murdock, Nebraska to be a great place to work and
    raise your family. We want Oxbow Pet Products to be a long-term
    employer in rural Nebraska for decades to come. It will be
    imperative that solutions be found that will help to make
    health insurance affordable.
        [Mr. Miller's statement may be found in the appendix.]
        Mr. Manzullo. I guess I am going to be the bad guy and say
    you're out of time.
        Mr. Miller. Is that right?
        Mr. Terry. It goes quick, doesn't it.
        Mr. Miller. Sorry.
        Mr. Fortenberry. Mr. Moline.

          STATEMENT OF ROBERT MOLINE, HOMESERVICES OF NEBRASKA

        Mr. Moline. Thank you, Mr. Chairman, committee members for
    allowing me to testify today before you in on small business
    health plans. I have been involved with the real estate
    brokerage business for over 18 years. Currently I am involved
    with the real estate brokerage that employs over 600 real
    estate agents who are independent contractors across the state
    of Nebraska. Essentially, each of these real estate agents are
    a small independent business with the same needs and desires of
    any other business in the United States today.
        Unfortunately, health insurance for them is non- existent,
    unaffordable, or even unavailable. The National Association of
    Realtor's data shows that one out of four realtors have no
    health coverage, and the number of realtors without health
    coverage has doubled in the past eight years. Seventy-four
    percent of realtors without health insurance said the reason
    they lack it is because of high cost.
        Twice in my career I have attempted to provide health
    insurance coverage to our real estate agents through some form
    of modified group type plan. I was turned away by most
    insurance companies since our real estate agents were not
    salaried employees of a real estate brokerage. However, we were
    able to contract with a health maintenance organization for our
    real estate agents if we included our salaried employees. This
    health contract worked reasonably well for several years until
    an HMO was purchased by a large insurance company. After the
    sale of the health maintenance organization, we were informed
    that we would no longer be allowed to put new real estate
    agents on our plan. As a consequence, our health plan lost
    participants and started shrinking. Health insurance premiums
    increased substantially, and it led to adverse selection
    because the healthy participants in our health plan found
    insurance elsewhere.
        We were unable to receive any other health insurance quotes
    because of the small number of real estate agents that were
    remaining on our plan. Eventually, we were forced to end the
    health insurance plan because of high costs and move to
    different health insurance for our salaried employees.
        Mr. Chairman, I was responsible for telling 16 real estate
    agents and their families that they no longer had health
    insurance. That was one of the most difficult things I have
    ever done in my life. They had fear, despair. They didn't know
    where to go because there were no opportunities for them.
        So what do we do in the future to correct this problem? We
    need to pass legislation like the Small Business Health
    Fairness Act, which would provide small businesses and the
    self-employed access to the same health benefits that labor
    unions and large corporations currently enjoy under federal
    law.
        I've listed out 10 points. I would like to share some of
    them with you. This plan should create federally-certified
    small business health plans, sometimes also referred to as
    association health plans.
        2, under SBHPs small businesses could band together through
    their professional or trade organizations to either purchase
    coverage from established insurance companies, or if they cover
    enough participants, they could self-insure.
        SBHPs would be subject to the same--they should be subject
    to the same federal and state regulations by which large
    companies and unions are compelled.
        They could reduce health cost insurance--excuse me. SBHPs
    would reduce the cost of health insurance coverage by allowing
    for the creation of larger pools of insured workers, thus
    increasing the bargaining power of these individuals. We should
    only allow legitimate industry or trade organizations that have
    been in operation for a number of years to sponsor SBHPs, and
    they should be certified by the US Department of Labor and be
    required to meet some certification.
        SBHPs should be subject to regulation by state insurance
    regulators and the US Department of Labor.
        SBHPs should be subject to the Health Insurance Portability
    and Accountability Act, HIPAA, which makes it illegal to deny
    coverage to any eligible participant based on health status of
    an individual employee or employer.
        And I would agree with the person that testified earlier
    that some parts of HIPAA are a little bit overbearing and could
    be made more efficient.
        SBHPs would reduce the cost of health insurance coverage by
    allowing for the creation of larger pools of insured workers,
    increasing the bargaining power of these individuals creating
    options we have never had before, lowering per capita
    administration costs, spreading risks over a larger pool of
    participants, making use of existing marketing/communication
    mechanisms of associations.
        Allowing associations to create groups of insureds across
    state boundaries will allow associations to create larger
    groups, spread the risk, and increase more bargaining power.
        In the end, the congressional budget office estimates that
    small businesses obtaining insurance through SBHPs will enjoy
    premium reductions between 9 and 25 percent. That's huge.
    That's huge for us.
        The continued problems with rising health insurance costs
    are not going to be solved today by passing Small Business
    Health Plan legislation. However, I do believe it will provide
    a good first step allowing small businesses to have new tools
    to combat rising health insurance costs and increased access to
    insurance.
        The time to move forward is now. We have seen great debate
    on this issue time and time again through several sessions of
    Congress, and it's time for everyone to come together, clarify
    the remaining issues and find a solution. Each day the debate
    continues, many employees of small businesses are going without
    health insurance and just hoping that a major health insurance
    concern does not land at their doorstep that day.
        Thank you for allowing me to testify. I would be happy to
    answer any questions you might have.
        [Mr. Moline's statement may be found in the appendix.]
        Mr. Fortenberry. Thank you so much, Mr. Moline, for your
    testimony today. Mr. Chairman, if it's acceptable to you, I
    will ask the first question.
        By the way, for those of you who may be interested in
    submitting questions to us who are with us in the audience
    today, you can e-mail my Web site. I will give you that Web
    site address. It's JeffFortenberry.house.gov. And then we will
    try as best we can to answer your questions. That Web address
    will get you to our e-mail address.
        Mr. Lanik, if I could start with you. You did a very
    comprehensive job of obviously reviewing the main drivers of
    ever increasing health care costs. This is going to be a very
    difficult question. If it's impossible to answer, I completely
    understand. But could you assign a percentage to that list to
    weight each one of those variables in terms of their impact on
    health care costs?
        And, secondly, it's related to something that several
    panelists have said, including Ms. Green, in terms of cost
    shifting, and overutilization as another one of the panelists
    had suggested, and then the solutions that are out there that
    again involve the consumer of health care a little more
    directly in controlling their own cost, how have you seen
    that--have you seen that as a successful way in your experience
    in administering a hospital in which again the consumer of
    health care is in a better position to help you and them
    manager costs?
        Mr. Lanik. That's--
        Mr. Fortenberry. Is that narrow enough for you.
        Mr. Lanik. Just help me along. I did have government
    references to two of the drivers. One was pharmaceuticals, I
    believe, and one was technology. And I think technology,
    depending upon the year, was 10 to 40 percent of the inflation.
    And I believe that the government office of--I think it's
    Medicare/Medicaid services actuary office predicted 18 percent
    of that was for prescription drugs. So there is 38 to 68
    percent right there.
        That's a very difficult question. I think utilization is a
    bigger number than we can get our hands around because as we
    age particularly we are consuming more resources. I think about
    the lifestyle issues that we deal with, obesity and smoking
    being two of the largest, and I see what happens in our
    hospital every day. I think about our own employees every day.
        So I think that's probably a very significant driver in the
    increase in health care costs. I don't have--I don't have a way
    to quantify that.
        Mr. Fortenberry. I was speaking with an emergency room
    physician in a rural--on staff of a rural hospital. He told me
    that approximately 50 percent of the patients that he sees in
    the emergency room, the issue could be dealt with at home. Does
    this track with your findings as well.
        Mr. Lanik. That certainly is an issue, and our--a couple
    things are happening. Sometimes our emergency departments are
    being used for routine care where they could have made an
    appointment at the physician's office or found a less expensive
    urgent care center to receive care.
        The other thing that happens is that people that don't have
    insurance sometimes will put off care, and then when they do
    show up to the emergency department, their situation is much
    more acute and it's a much more expensive intervention. But
    that--
        Mr. Fortenberry. I guess that's under cost shifting, and
    somebody is going to pick up the cost somewhere.
        Mr. Lanik. There are costs to providing care. We do provide
    charity care. In some sense, maybe if there was a way to
    provide some support to underinsured, uninsured, we might be
    able to then substitute the cost of helping there because we
    are providing it now in the way of charity, and we are cost
    shifting.
        Mr. Fortenberry. If you would make a comment regarding
    overutilization. Again, I think what you have seen in the
    industry is businesses being effectively forced into cost
    shifting or sharing that burden with the employees because it's
    simply not affordable. But does that lead to actually some
    better outcomes, better decisions that are made by consumers if
    they're in control of their own dollars, such as you mentioned
    the health savings account.
        It's a balance there, obviously. You're trying to provide
    the coverage that people need but shifting some cost to
    employees and helping to manage that through HSA is another
    intervention primarily.
        Mr. Lanik. I think personal participation is very important
    in whatever health care arrangements we have because it does
    force people to think a little bit more about the options that
    they use, how often they go for care, where they go for care.
    So whether that's deductibles, co-pays, some participation, I
    think, is--I think it would be a very important piece of any
    kind of health care plan.
        Mr. Fortenberry. Thank you.
        Mr. Manzullo. I just have a couple comments.
        Mr. Lanik, we have had hearings on this topic now five
    years, and you're the only witness that I can remember that's
    talked about the high cost of technology. And the cost of
    technology has always vastly outpaced the increase in the cost
    of living. And based upon your factor here that technology
    increased amounts between 10 and 40 percent, that means you
    start out with the basis that the cost of increase in health
    care premiums will always vastly outpace the cost of living.
    You have to start there. That means you have to look to
    different media or different forms as, I guess, a way to bring
    the cost of health care under control. Because if you don't use
    the best, you know what happens. The patients aren't getting
    the best that's available.
        The other comment I had was Debi Durham, my district had
    the first pilot of the tri-care or of the three share, and
    that's down to two share. You can't have a government
    component. You just can't get a government subsidy to run the
    health care system because it's unreliable, it will not last,
    there is no assurance, and Washington is broke.
        In the Rockford, Illinois model, a small employer qualified
    only if that employer had not been able to offer health and
    accident insurance for one year. That was done purposely to get
    people from switching from the other plans to this. It's
    modestly successful. Certainly not--you know, not what
    everybody wants. The area we're really starting to see in
    Congress is Pete Hoekstra's district on the western side of
    Michigan where people came together on that. But it's an
    innovative approach, and it's certainly worth pursuing.
        The other thing that I would like to say is that we have
    never had a hearing with so many people attending either in
    Washington or any field hearing throughout the country. This is
    the largest number of people. (Applause.) It's obviously a
    testament to Congressman Fortenberry, plus the interest that
    has been peaked by this.
        The other thing I would suggest is this. We held a hearing
    in my hometown of Rockford, Illinois, and a man by the name of
    Phil Bartman, who is a Cellular One dealer, testified he had
    gotten a bill with a dramatic increase for health and accident
    insurance for his employees. Sitting in the audience was a
    fellow by the name of Scott Shelley from Greenwood, Illinois in
    the US district I represent. He came up to him afterwards and
    said have you thought about getting a second carrier to write
    your deductible.
        I have seen rates of insurance vacillate based upon the
    salesman that you talk to. And I am not here to take a book
    away from any salesperson, but I would shop, shop, shop. There
    are so many different plans out there available. In fact,
    sometimes you can get a cheaper rate from a salesperson who
    works directly for a company than from an independent agent.
    Again, I am not criticizing anybody. I am just saying that it's
    very interesting how these rates will vacillate throughout the
    country.
        I don't want any independents to get upset with me because
    sometimes independents can shop and get a better price than
    people that are directly related to a company. Nobody is doing
    anything wrong. It's just weird the way that pricing is done.
        Mr. Terry. All right. Thank you, Mr. Chairman.
        Ms. Green, I am going to start with you, and just if you
    can go down. I ask this to all of the small businesses that I
    meet with, particularly when we talk about health care costs. I
    am just curious, what percentage of your budget do you reserve
    for health care in your business? And to put it in further
    context for us, compare that to whatever your--10 years ago,
    one year ago on just a percentage that you spend on health
    care.
        Ms. Green. I am going to answer that by saying that it's
    just out of the budget. I mean, you can't budget for something
    that's going to increase 20 percent and every year you try to
    reallocate it. We base it on our labor burden and what we can
    afford because we are a construction company where we're trying
    to bid projects against other competitors that don't even offer
    health insurance. So we try to base it on what we can afford
    for our labor burden and be competitive.
        So this year, for example, we just hit a mark where we
    estimate that per employee we're going to pay about $300 per
    employee per month, and that gives us a labor total that we're
    averaging what we can afford.
        In terms of other costs, they're rising so high it's kind
    of hard for me to answer as well. This year we have had the
    burden of gasoline fuel costs. As a construction company, it's
    been very difficult. I have a fleet of over 30 trucks. My
    gasoline costs have increased tremendously.
        We have health insurance, workman's comp. Budgeting right
    now--I didn't bring those numbers. Let's just say in my company
    it's in the top four. That's including, like I said, labor,
    other business insurance, liability insurance. It's in the top
    four.
        Mr. Terry. All right. I know you represent a whole service
    entity, but you still have employees. What do you think.
        Mr. Lanik. Our benefit costs are 27 percent of our wages
    and salaries, and health is clearly the largest. The second
    would probably be our contribution to the retirement plan. But
    health care is clearly the largest and the one that drives the
    increase the most.
        Mr. Terry. Mr. Janssen.
        Mr. Janssen. We always try to hold it within 20 and 25
    percent, and sometimes that makes us do some cost shifting. And
    one of the best things we did last year were the HSA accounts,
    although I have feared that a lot of our younger employees are
    not taking full advantage of those accounts. They're getting
    the--they're getting on the plan.
        Mr. Terry. I am going to come back to you and John about
    that. Debi.
        Ms. Durham. Ours is running between 25 and 30 percent, and
    we're seeing double digit increases and have for the last few
    years having less than 10 employees. So what we are doing is
    basically backloading the plan, and I pray every day that none
    of my employees actually have to use it because of the high
    deductibles and larger co-pays.
        Mr. Miller. Okay. We have approximately 25 of our employees
    who take our health insurance, and that cost is a little over
    10 percent of our total payroll.
        Mr. Terry. I am sorry. I missed that. We had a slight
    interruption up here. One of the lesser known members of the
    house of representatives is here.
        Mr. Miller. So I suppose we get to do this all again.
        Mr. Terry. Yes. Please start over. John, give me what you
    feel is a ballpark of your percentage.
        Mr. Miller. We're paying about 12 percent of our total
    payroll in health insurance benefits or in costs. But we only
    have about 52 percent of our employees that are taking health
    insurance. We have--oh, a fairly large percentage of our
    employees are Hispanic who don't necessarily want to take the
    insurance.
        Mr. Terry. Very good. Bob, is there any way to calculate
    for your entity with the independent brokers.
        Mr. Miller. Mr. Terry, I can probably do a good job on our
    salaried employees. It's been between 10 and 25 percent a year
    in the last 10 years. When you asked that question, sir, I need
    to modify that answer and also remind you that during that
    time, we have taken substantial increases in deductibles and a
    watering down of the actual benefits that the health insurance
    pays.
        Mr. Terry. Good point.
        Mr. Miller. To keep it in tier, things that our employees
    can pay. And during that time also, we have had to shift more
    costs to our employees. On the independent contractor side, it
    really comes down to accessibility to health insurance rather
    than what it costs. It's just not there because they don't fit
    into--
        Mr. Terry. Individual and family policies are the hardest.
    In fact, some of our own Nebraska companies have gotten out of
    that business mostly because of the regulatory burdens.
        Go ahead. Thank you.
        Mr. Manzullo. Do you have some questions, Coach.
        Mr. Osborne. I don't have a mike. You won't let me talk.
    It's hard to get the microphone away.
        I just want to say a couple things. First of all, thank Don
    for coming. Don has been a good friend, a great friend of Lee's
    and mine, and also mention that Jeff is doing a good job of
    representing you, all of us here about the cost of health care.
    It's gone out of sight.
        I know you've talked about association health plans, at
    least I am assuming you have at this point. One thing that you
    may not have talked about, which is of great interest to me, is
    the issue of reimportation of drugs. Have you talked about
    that?
        Mr. Manzullo. No.
        Mr. Osborne. Okay. The reason that's so important is the
    cost of drugs is going up about 18 percent a year. It's a huge
    portion of our health care. And the House did pass a bill
    calling for reimportation regulation where a pharmaceutical
    company could not sell drugs at a higher price than what they
    charge in Canada, which, generally speaking, is 40 to 50
    percent higher than in the US. And so I am continuing to push
    that. I think most of us here are in favor. I can't speak for
    the other gentlemen here.
        But one of the problems we're running into, there are twice
    as many lobbyists from the pharmaceutical industry in
    Washington as there are members of Congress. So you add that
    up, and you see what the problem is. But it just doesn't make
    sense because a lot of your health care costs are bound up in
    the price of drugs.
        And the other thing I just wanted to mention real quickly
    is the importance of electronic medical records. I think we
    could all save a lot of money if that was implemented.
        And so not having heard your testimony, I am at a little
    bit of a disadvantage, but I guess I can say we feel your pain.
    We understand what you're going through. My family is a small
    business company, and I hear this from my brother all the time.
    So I think we're, all of us, committed to do whatever we can.
    It's a difficult playing field right now.
        So I will turn it back over and not ask any other
    questions. Thank you.
        Mr. Manzullo. You come in and you stir the pot, huh, Coach?
    Anybody want to ask the Coach's favorite color.
        Mr. Fortenberry. Again, this has been extraordinarily
    insightful, and one of the difficulties with this type of
    hearing, even in Washington, is the limits of time. So we only
    have a few more moments left.
        And all of you have pointed out specific things that are
    impacting you but also that potentially could be done. I think
    there is an important underlying point that is spread through
    all of your testimony, is that health insurance is a big
    sociological factor. In other words, people are making
    decisions about what they want to produce, where they want to
    make their livelihood, how they want to use the fruit of their
    own labor based upon not a desire of heart but where they can
    potentially obtain health insurance.
        As you mentioned, you have spouses shifting the cost. You
    have one spouse being employed with areas of coverage that are
    traditionally more stable, such as the government or larger
    employers, making, in other words, economic decisions based on
    benefit, not based upon necessarily where a person would choose
    to use their talents if the playing field was level.
        I think all of you have pointed out some of those types of
    sociological factors. You see this very much in farm
    communities as well where one spouse may have to drive 30, 40,
    50 miles simply to be employed to get health insurance
    coverage. So that is a very big factor in rural America.
        Mr. Manzullo. Jeff, let me exercise my prerogative and
    close the hearing. Is that okay with you.
        Mr. Fortenberry. Absolutely.
        Mr. Manzullo. Again, we want to thank you all for coming.
        Let me take a couple minutes. I want to share one thing
    with Congressman Fortenberry, what he has meant to me on the
    small business committee. Jeff also serves on the international
    relations committee. Sometimes people say, well, what does that
    got to do with the price of corn? A lot. But what does that
    have to do with Lincoln, Nebraska and the rest of the counties
    that you represent? I have a rural area, and also I am on leave
    of absence from the international relations committee.
        Jeff has done something extraordinary in going to Iraq with
    this war going on. It's extremely important that members of
    Congress obviously concentrate on the issues that are dear to
    you, health care, agricultural issues, and Jeff does an
    excellent job on that. But one of the reasons that he is on the
    international relations is that he's one of the people that has
    to do the intensive studies, make the marks, and lead all of us
    into the very difficult positions, decisions as to the next
    theatre of conflict where young men and women may have to take
    up arms. So that's the most difficult part of being a member of
    Congress is voting to send these young people off to war.
        Jeff went to Iraq because when he faces you, the people
    that he represents, he wants to be able to look you in the eye
    and say I went there, I seen what's going on personally. And
    that's important when you have children and grandchildren that
    face the prospects of going overseas.
        So, Jeff, I want to take the time to thank you for your
    distinguished service after being in Congress just a very short
    period of time. You're a pup compared to me. And, Coach, I want
    to thank you for your great service. And Lee as well, you are
    all doing a tremendous amount of work. We have 19 members--
        [Applause.]
        Mr. Manzullo. These people represent you exceedingly well.
        We're going to have to close. We're going to do a little
    press over here, and then we have to be out the door at 12:10.
    I am on my way from here to Dayton, Ohio where we have to do a
    manufacturing conference and then back to Washington where we
    have to do war on Tuesday evening with the votes again. Thank
    you again for coming here, and this hearing is adjourned.
        [Whereupon, the committee was adjourned.]

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