[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


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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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