[House Hearing, 110 Congress]
[From the U.S. Government Publishing Office]


 
                       FULL COMMITTEE HEARING ON 
                      LIMITED HEALTH CARE OPTIONS 
                       FOR SMALL BUSINESSES IN THE 
                           SMALL GROUP MARKET 

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

                      COMMITTEE ON SMALL BUSINESS
                 UNITED STATES HOUSE OF REPRESENTATIVES

                       ONE HUNDRED TENTH CONGRESS

                             SECOND SESSION

                               __________

                            JANUARY 23, 2008

                               __________

                          Serial Number 110-67

                               __________

         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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                   HOUSE COMMITTEE ON SMALL BUSINESS

                NYDIA M. VELAZQUEZ, New York, Chairwoman


HEATH SHULER, North Carolina         STEVE CHABOT, Ohio, Ranking Member
CHARLIE GONZALEZ, Texas              ROSCOE BARTLETT, Maryland
RICK LARSEN, Washington              SAM GRAVES, Missouri
RAUL GRIJALVA, Arizona               TODD AKIN, Missouri
MICHAEL MICHAUD, Maine               BILL SHUSTER, Pennsylvania
MELISSA BEAN, Illinois               MARILYN MUSGRAVE, Colorado
HENRY CUELLAR, Texas                 STEVE KING, Iowa
DAN LIPINSKI, Illinois               JEFF FORTENBERRY, Nebraska
GWEN MOORE, Wisconsin                LYNN WESTMORELAND, Georgia
JASON ALTMIRE, Pennsylvania          LOUIE GOHMERT, Texas
BRUCE BRALEY, Iowa                   DEAN HELLER, Nevada
YVETTE CLARKE, New York              DAVID DAVIS, Tennessee
BRAD ELLSWORTH, Indiana              MARY FALLIN, Oklahoma
HANK JOHNSON, Georgia                VERN BUCHANAN, Florida
JOE SESTAK, Pennsylvania             JIM JORDAN, Ohio
BRIAN HIGGINS, New York
MAZIE HIRONO, Hawaii

                  Michael Day, Majority Staff Director

                 Adam Minehardt, Deputy Staff Director

                      Tim Slattery, Chief Counsel

               Kevin Fitzpatrick, Minority Staff Director

                                 ______

                         STANDING SUBCOMMITTEES

                    Subcommittee on Finance and Tax

                   MELISSA BEAN, Illinois, Chairwoman


RAUL GRIJALVA, Arizona               DEAN HELLER, Nevada, Ranking
MICHAEL MICHAUD, Maine               BILL SHUSTER, Pennsylvania
BRAD ELLSWORTH, Indiana              STEVE KING, Iowa
HANK JOHNSON, Georgia                VERN BUCHANAN, Florida
JOE SESTAK, Pennsylvania             JIM JORDAN, Ohio

                                 ______

               Subcommittee on Contracting and Technology

                      BRUCE BRALEY, IOWA, Chairman


HENRY CUELLAR, Texas                 DAVID DAVIS, Tennessee, Ranking
GWEN MOORE, Wisconsin                ROSCOE BARTLETT, Maryland
YVETTE CLARKE, New York              SAM GRAVES, Missouri
JOE SESTAK, Pennsylvania             TODD AKIN, Missouri
                                     MARY FALLIN, Oklahoma

        .........................................................

                                  (ii)

  


           Subcommittee on Regulations, Health Care and Trade

                   CHARLES GONZALEZ, Texas, Chairman


RICK LARSEN, Washington              LYNN WESTMORELAND, Georgia, 
DAN LIPINSKI, Illinois               Ranking
MELISSA BEAN, Illinois               BILL SHUSTER, Pennsylvania
GWEN MOORE, Wisconsin                STEVE KING, Iowa
JASON ALTMIRE, Pennsylvania          MARILYN MUSGRAVE, Colorado
JOE SESTAK, Pennsylvania             MARY FALLIN, Oklahoma
                                     VERN BUCHANAN, Florida
                                     JIM JORDAN, Ohio

                                 ______

            Subcommittee on Urban and Rural Entrepreneurship

                 HEATH SHULER, North Carolina, Chairman


RICK LARSEN, Washington              JEFF FORTENBERRY, Nebraska, 
MICHAEL MICHAUD, Maine               Ranking
GWEN MOORE, Wisconsin                ROSCOE BARTLETT, Maryland
YVETTE CLARKE, New York              MARILYN MUSGRAVE, Colorado
BRAD ELLSWORTH, Indiana              DEAN HELLER, Nevada
HANK JOHNSON, Georgia                DAVID DAVIS, Tennessee

                                 ______

              Subcommittee on Investigations and Oversight

                 JASON ALTMIRE, PENNSYLVANIA, Chairman


CHARLIE GONZALEZ, Texas               , Ranking
RAUL GRIJALVA, Arizona               LYNN WESTMORELAND, Georgia

                                 (iii)

  













































                            C O N T E N T S

                              ----------                              

                           OPENING STATEMENTS

                                                                   Page

Velazquez, Hon. Nydia M..........................................     1
Chabot, Hon. Steve...............................................     2

                               WITNESSES

Teske, Donn, Kansas Farmers Union, on behalf of the National 
  Farmers Union..................................................     4
Eckstein, Scott, James Scott Custom Builders, on behalf of the 
  National Association of Home Builders..........................     5
Sandman, Cathey, Sandman Family Daycare, on behalf of the 
  National Federation of Independent Businesses..................     8
Lee, Richard, Lee's Flower & Card Shop, on behalf of the Society 
  of American Florists...........................................    10
Groza, Lee, Mountjoy & Bressler, LLP, on behalf of the American 
  Institute of Certified Public Accountants......................    12
Eby, Dr. R. Stephen, on behalf of the American Academy of Family 
  Physicians.....................................................    14

                                APPENDIX


Prepared Statements:
Velazquez, Hon. Nydia M..........................................    31
Chabot, Hon. Steve...............................................    33
Altmire, Hon. Jason..............................................    34
Teske, Donn......................................................    35
Eckstein, Scott..................................................    42
Sandman, Cathey..................................................    45
Lee, Richard.....................................................    51
Groza, Lee.......................................................    57
Eby, Dr. R. Stephen..............................................    61


Statements for the Record:
National Cattlemen's Beef Association............................    64
CompTIA..........................................................    65
National Funeral Director's Association..........................    74
Western PA Coalition for Single-Payer Healthcare.................    76

                                  (v)

  


                   FULL COMMITTEE HEARING ON LIMITED
                     HEALTH CARE OPTIONS FOR SMALL
                     BUSINESSES IN THE SMALL GROUP
                                 MARKET

                              ----------                              


                      Wednesday, January 23, 2008

                     U.S. House of Representatives,
                               Committee on Small Business,
                                                    Washington, DC.
    The Committee met, pursuant to call, at 10:00 a.m., in Room 
2360 Rayburn House Office Building, Hon. Nydia Velazquez 
[chairman of the Committee] presiding.
    Present: Representatives Velazquez, Cuellar, Clarke, 
Ellsworth, Chabot, Akin, King and Gohmert.

           OPENING STATEMENT OF CHAIRWOMAN VELAZQUEZ

    Chairwoman Velazquez. This hearing on limited options for 
small businesses in the small group market is now called to 
order.
    It is clear that our economy is facing many challenges, and 
small businesses know this better than anyone. Whether it is 
finding access to adequate capital during a credit crunch or 
dealing with today's overall uncertainty, small businesses are 
confronting many obstacles to success. Despite the growing list 
of concerns, something that continues to top that list is 
access to affordable health insurance.
    Since 2001, small businesses have been confronted with 
annual price increases for health insurance ranging from six 
percent to over ten percent. During that time, the average 
small business has seen their premiums double. This has forced 
many entrepreneurs to decide whether they can continue to offer 
coverage. These rising costs are clearly having an impact. 
According to the small business administration, price is the 
most significant factor influencing the decision of small firms 
to offer health insurance.
    But price is not the only factor. Today's hearing will 
address the growing cost of health insurance for small 
businesses, as well as highlight the variety of challenges 
small firms face in offering health coverage. The panelists 
before us will explain how difficult it is for small firms to 
find, keep, and administer health insurance plans. Each of 
these challenges influences whether a small firm will offer 
coverage.
    Unfortunately, the stories we hear today are not out of the 
ordinary. Similar struggles could be told by nearly any 
business in any town across the country. The first obstacle 
small firms usually confront in offering coverage is 
identifying health insurance options. There are no one stop 
locations where these entrepreneurs can identify available 
health care options and compare plans. This only adds to the 
disproportionate administrative burden small firms face in 
comparison to larger counterparts.
    Small businesses in rural America often face greater 
difficulty where physician shortages and limited access to 
health services discourage insurers from offering coverage. 
This can lead to one carrier being the only game in town, which 
can drive up overall costs.
    Because access to insurance is restricted, many small 
business owners simply abandon the search for small group 
insurance. Managing a plan also creates additional cost for 
these companies. Small business owners must devote valuable 
resources working with vendors, handling insurance, paper work, 
and addressing employee claims issues.
    Because small firms often do not have HR departments or 
brokers, owners are forced to take time away from their 
businesses to insure coverage for their employees.
    Along with the challenges of offering insurance, small 
firms regularly struggle with keeping their insurance plans 
affordable. A major problem is the uncertainty created by high 
cost claims. Too often minor surgeries, pregnancies, and other 
basic health care treatment that are part of everyday life 
result in double digit rate increases.
    Small business owners quickly find themselves in the 
position of having to choose between paying unreasonable 
premium hikes or dropping coverage altogether. This explains 
the findings in a recent study that found over 60 percent of 
firms that already have health care options are shopping for 
different coverage. The fact these businesses are looking 
reveals one of the largest heating costs of health insurance.
    The goal of this hearing is to bring into focus these and 
other very real problems faced by small firms every time they 
offer or consider providing insurance. This is the third 
hearing this Committee has held on the issue of health 
insurance access and affordability. The problem is complex as 
it is severe for small businesses.
    We have with us small business owners from around the 
country. I want to thank you for taking the time away from your 
firms to discuss these challenges. As Chairwoman of the Small 
Business Committee, I plan on keeping this issue in the 
spotlight because it is so important to firms across the 
country.
    There are many in this Congress that say that health care 
reform will not be addressed until we have a new 
administration. But one thing is sure. We need to keep this 
issue in the forefront by bringing it to Capitol Hill, by 
telling members of Congress that out of the 44 or maybe more 
million of people in this country that do not have any kind of 
health coverage, 62 percent, 62 percent of those are either 
small businesses, their employees, and relatives.
    So health insurance and access to health coverage is a 
small business issue.
    I now look forward to today's testimony and yield to the 
Ranking Member for his opening statement, who is a year younger 
today. Congratulations.
    [Laughter.]

                OPENING STATEMENT OF MR. CHABOT

    Mr. Chabot. Thank you, Madam Chairwoman, for yielding and 
noting how old I am and for holding this hearing on the limited 
health insurance options for small businesses.
    I appreciate our witnesses who in many instances have come 
from far distances to share their testimony.
    I want to especially thank Dr. Stephen Eby who is from 
Cincinnati, Ohio, which happens to be the great community that 
I represent in Congress, and I will be introducing him shortly.
    Madam Chairwoman, 47 million people, as you indicated, in 
our country do not have health insurance. According to the 
National Federation of Independent Business, about 27 million 
of the uninsured are self-employed or small business owners and 
their families.
    The uninsured are less likely to have access to preventive 
care and chronic disease management, all of which would save 
lives and save money in the long term, and for small businesses 
that are able to offer their employees health insurance, the 
cost of doing so continues to rise. Many of these small firms 
are faced with double digit premium increases and have only one 
or two insurance companies from which to choose.
    When the members of this Committee travel back to their 
districts, I know that we all meet small business owners every 
day who are struggling to cope with the rising cost of 
providing health care for their employees. Increasing 
competition is one way to bring down these costs.
    I, for example, support Association Health Plans, AHPs, 
which would permit small business owners to pool together to 
purchase health insurance at lower rates. These arrangements 
could increase negotiating leverage and administrative 
efficiencies and help to insure more consistent benefits among 
the states.
    I also want to mention that I have introduced over a number 
of years now the Health Insurance Affordability Act, which is 
legislation to allow individual taxpayers and small businesses 
to deduct 100 percent of their health insurance premiums from 
their annual tax returns. This would help bring more people 
into the health insurance marketplace and ultimately increase 
competition and reduce health insurance costs.
    Today we will hear from small business owners who will 
share their personal stories of the challenges in finding, 
affording, administering, and keeping adequate health insurance 
for their employees. I look forward to their comments and 
continuing our work in developing health care solutions.
    And I again want to thank you for holding this hearing, and 
I look forward to hearing from the witnesses here this morning.
    Thank you.
    Chairwoman Velazquez. Thank you, Mr. Chabot.
    And now I would like to introduce our first witness, Mr. 
Donn Teske. He is the President of the Kansas Farmer Union in 
McPherson, Kansas. Mr. Teske is the fifth generation to operate 
his family farm in northwestern Kansas. He is testifying on 
behalf of the National Farmers Union, which represents over 
250,000 farm and ranch farmers.
    Welcome, Mr. Teske. You will have five minutes to make your 
testimony.

   STATEMENT OF DONN TESKE, PRESIDENT, KANSAS FARMER UNION, 
   McPHERSON, KANSAS, ON BEHALF OF THE NATIONAL FARMERS UNION

    Mr. Teske. Thank you, Madam Chairman and Ranking Member and 
members of the Committee for allowing me to speak here today.
    As the Chairwoman said, my name is Donn Teske, and my wife 
Kathy and I live in northeast Kansas. I serve as President of 
the Kansas Farmers Union, and today I am representing National 
Farmers Union.
    When I was asked if I would be willing to testify today, I 
jumped on that because I, like many Americans have a personal 
story to share with you, and so most of my testimony is 
bellyaching instead of actual testimony.
    [Laughter.]
    Mr. Teske. My wife Kathy and I live in rural northeast 
Kansas. The hometown where we live of Wheaton is 97 people. The 
neighboring community of Onaga is where our health care system 
is, where our kids go to school.
    We are a fifth generation farm as you say. Our roots are 
deep, and when Kathy finally decided that we had to go off the 
farm to get health insurance, she went to the community 
hospital to work, and she works there in insurance and in 
reception, and she has been there for ten years.
    She went to get health insurance, and literally all of her 
health insurance goes to pay health care costs for the family, 
and we have a very healthy family. We do not have big problems, 
but our community hospital is a rural hospital. It is a very 
large, very modern rural hospital and serves many of the 
surrounding communities and employs almost 300, and our family 
is insured through the group plan.
    I was always concerned that the insurance was inadequate to 
other policies, and regretfully we ran into this the last few 
years. My wife Kathy had to have two partial knee replacements 
over the past several years. After our deductible was met, we 
were personally responsible for over $6,000 that we had to take 
loans out and that we are paying hopefully off some day above 
what the policy would cover.
    And what really has my dander up now is that this past 
summer when I was welding on the combine, I screwed up my back, 
and I am one of those guys that you screw up your back and you 
go to the chiropractor a couple of times and you get over it 
and life goes on and you are fine. I could not throw it, and so 
this fall I went in and had two epidurals done on my back. Come 
to find out that farming is not covered under insurance policy. 
That is right. If you are self-employed for profit, this 
insurance policy does not even cover the spouse.
    And so we may very well have another $4,000 we have got to 
figure out how to pay from that.
    The Onaga Community Hospital is a good hospital, and it is 
desperately needed in the community. I have no problem with the 
hospital, but there are many families like ours that the spouse 
is just there working for the family's health insurance, and 
now the spouse of the employee is not covered?
    If this is the best health care policy that an entity like 
the Onaga Community Hospital can offer to its employees, then 
there is something wrong with the economics of rural America 
and adequate health care because it is clashing.
    Now, farmers are small business owners. We cannot get the 
group rates like others can get. We end up paying higher 
premiums. In 2006, I was asked by the Access Project out of 
Massachusetts if we would be willing to participate in a study. 
I agreed to a professional survey of my membership base. I had 
no idea what the response would be when my staff sent out 600 
surveys to randomly selected Kansas Farmers Union members.
    To my great surprise, 47 percent of those surveyed 
responded. Obviously, it is important to Kansas residents. The 
study found that 29 percent of residents in rural Kansas under 
the age of 65 have medical debt even though 95 percent of them 
had some type of health care insurance. Like our family, their 
coverage was not sufficient to offset the cost of treatment.
    Even more disturbing was a study finding that 67 percent 
had delay receiving primary medical care because of financial 
concerns. As a result of this involvement, I became involved 
with the KHCC, the Kansas Health Consumer Coalition in Kansas 
whose mission is affordable health care for all Kansas.
    Rural communities have difficulties providing adequate 
health care. However, the challenges facing rural health care 
are not insurmountable. There are successful examples: 
Massachusetts, West Virginia, New York. They all have programs 
that help small businesses.
    Clearly, rural Americans need assistance to insure they 
have access to the health care they need. As you move forward, 
I urge you to consider the unique needs of rural Americans, 
many of whom are small business owners, and draft legislation 
that will help them to obtain quality health care at an 
affordable price.
    Thank you very much, and I welcome any questions.
    [The prepared statement of Mr. Teske may be found in the 
Appendix on page x.]
    Chairwoman Velazquez. Thank you. Mr. Teske.
    Our next witness is Mr. Scott Eckstein. He's the President 
of James Scott Custom Builders in Bollingbrook, Illinois. James 
Scott Custom Builders has provided custom home building in the 
area for the last 15 years.
    Mr. Eckstein is also President of the Home Builder 
Association of Illinois and is representing the National 
Association of Home Builders. The National Association of Home 
Builders represents over 235,000 home builders and 
professionals in related fields.
    Welcome, sir.

   STATEMENT OF SCOTT ECKSTEIN, JAMES SCOTT CUSTOM BUILDERS, 
NAPERVILLE, ILLINOIS, ON BEHALF OF THE NATIONAL ASSOCIATION OF 
                         HOME BUILDERS

    Mr. Eckstein. Thank you.
    Good morning, Chairman Velazquez and Ranking Member Chabot 
and members of the Committee.
    My name is Scott Eckstein. I am a 41 year old self-employed 
custom home builder-remodeler from Naperville, Illinois, west 
of Chicago. My wife Jackie and I work together in our family 
business along with raising three daughters.
    I have operated my two companies, Dupage Design and 
Construction, Inc. and James Scott Custom Builders, for the 
past 15 years.
    I currently employ five full-time workers and my companies 
have thrived in the northern Illinois market.
     Currently, I serve as President of the Home Builders 
Association of Illinois. The HBA of Illinois represents over 
5,000 businesses throughout the state. Nearly 80 percent of our 
members are small companies, such as mine, and have similar 
issues and concerns.
    During my presidency I have been traveling the state and 
meeting with members. I have quickly learned that the issue of 
health care and its affordability are overshadowed only by the 
concerns for the state of the housing market in general. I find 
it ironic that the very people that house our country's doctors 
cannot afford proper health care coverage.
    When my first daughter was born, I was employed in a 
management job with a large national retailer. I had excellent 
insurance coverage and paid less that $350 a month to insure my 
young family. When my wife's pregnancy of our first daughter 
required an emergency C-section, there was no discussion. 
Doctors acted decisively and she was born.
    Years later I realized my own dream to start my business. 
Luckily, I kept my insurance through a COBRA extension. I 
carried that insurance for years, each year experiencing large 
increases, but never having an affordable option for change.
    A few years later I went back to work for a mid-size 
builder in the Chicago land area. The employer provided me with 
health insurance coverage through an HMO program. Sixteen 
months after starting this job, my wife and I found ourselves 
expecting our second child.
    This time the doctors advised us that a Caesarian was not 
necessary. They were wrong. My daughter was injured during the 
birth process, born with an APGAR score of 0, later 
resuscitated, but suffered brain damage and cerebral palsy, 
which still affects her today.
    Because of this I have been unable to change my health 
insurance for the past 16 years despite many arbitrary 
increases.
    My personal policy under COBRA that once cost me under $600 
per month for my family was now as high as $1800 per month. I 
currently pay in excess of $21,000 a year for two insurance 
carriers to provide my family with unreliable health care 
coverage. My wife spends, on an average, two to four hours a 
week on the phone with our insurance companies fighting for 
coverage, prescription refills, or payment of bills.
    My daughter, with preexisting conditions as a result of her 
birth injury, often misses scheduled therapy appointments 
because of our carriers' inability to process referrals when 
needed. This is the quality of health care coverage business 
owners can expect for $22,000 a year?
    My written testimony includes several examples of premium 
increases up to 32 percent in a given calendar year. An 
increase like this could cost a small company of six an 
additional $18,0000 annually. If new home prices rose at this 
rate, could you imagine the cost to shelter our nation?
    My inability as an employer to provide adequate, affordable 
health coverage over the past few years has directly resulted 
in employee turnover and my inability to hire consistent, 
qualified workers. Over the years many of my qualified 
employees have left the company and I believe they could have 
been retained if I was able to offer affordable health care 
options.
    I hear the rhetoric in regards to this issue in every 
election. Yet when the polls close and the politicians are 
elected, nothing ever changes and we are faced with a deeper 
quagmire than before. It is time for the federal government to 
stop talking and start acting on behalf of the small business 
owners.
    Following the tragedies of 9/11 and Hurricane Katrina our 
industry carried the national economy through tough times, 
preventing a deeper recession from taking hold. The building 
community pulled together to help others, yet shamelessly many 
of our people cannot afford health care coverage.
    I am here today as a small business owner and a 
representative of the home building community to ask for your 
help in solving this crisis. This just does not affect home 
builders. If affects everybody in America. It is up to you, our 
elected leaders, to stop this runaway train before it derails 
our American health care system altogether.
    Association health plans that would allow organizations, 
such as ours, to receive large group pricing and avoid 
exemptions from pre-existing conditions would make health care 
affordable and accountable to the consumer again.
    Keep in mind that our members are small business owners. 
They cannot take a day off of work for a cold or a sniffle 
because they have a business to run. Generally, we are healthy 
individuals performing active work, making us attractive 
clients to any insurance carrier. Yet these are the individuals 
who struggle to receive the same benefits that a bag boy at a 
national grocery store can obtain through his company's plan.
    In a country that encourages the entrepreneurial spirit, 
health care must become affordable and available to our 
businesses. Thank you for the opportunity to share my thoughts 
and experience with this Committee today. I look forward to 
answering any questions you might have.
    [The prepared statement of Mr. Eckstein may be found in the 
Appendix on page x.]
    Chairwoman Velazquez. Thank you, Mr. Eckstein, for sharing 
your personal story. Quite compelling, and I am really sorry to 
hear what happened to your daughter.
    I also want to share with you that in the last Congress I 
was the lead sponsor of the Association Health Plan.
    Now, I welcome Ms. Cathey Sandman. She is the owner of 
Sandman Family Daycare in Lockport, New York. Ms. Sandman is 
representing the National Federation of Independent Business, 
NFIB. It is the national organization that has been 
representing small businesses since 1943 and has over 600,000 
members.
    Welcome.

STATEMENT OF CATHEY SANDMAN, SANDMAN FAMILY DAYCARE, LOCKPORT, 
 NEW YORK, ON BEHALF OF THE NATIONAL FEDERATION OF INDEPENDENT 
                           BUSINESSES

    Ms. Sandman. Thank you.
    On behalf of NFIB, I want to thank Chairwoman Velazquez for 
inviting me to discuss the significant challenges facing small 
businesses trying to access and afford health insurance.
    My name is Cathey Sandman and I operate Sandman Family 
Daycare, a home-based business located in Lockport, New York.
    As a small business owner, mother, wife and child care 
professional, I deeply believe that health care is at a 
critical tipping point. Something must be done to improve 
access to and affordability of health care.
    The health care cost crisis affects two specific small 
business sectors, those who are insured and struggling to keep 
up with the 100 percent increase over the last six years, and 
the 27 million in the small business community who are 
uninsured.
    NFIB members represent both of these sectors. I once was an 
NFIB member with insurance. Today I am an NFIB member with no 
health insurance for myself or my family. I have been an in-
home child care provider for 18 years. I personally service 13 
families and up to 18 children in any given week, ranging from 
six week old through 13 years.
    My services are vital to these families and enable them to 
go to work and be productive. Like most small business owners, 
I work long hours, 12 to 14 hour days. I spend a great deal of 
time when I am not working planning and organizing for the next 
day.
    Mr. Chabot. Ms. Sandman, I apologize for interrupting you, 
but could you pull the mic a little closer. The folks in the 
back may have trouble hearing you.
    Thank you.
    Ms. Sandman. This is one of the best aspects of owning your 
own business. Is that better?
    Mr. Chabot. I would pull it even closer.
    Ms. Sandman. Thank you.
    This is one of the best aspects of owning your own 
business. You work for yourself, so the extra hours are not a 
burden. I have a passion for the families and children in my 
community and work to serve many of their needs.
    Five years ago my husband joined my business as my 
assistant and business partner. We then had to purchase our own 
health insurance and found it expensive, but affordable. But 
after multiple premium increases the cost began to threaten our 
ability to maintain our insurance.
    In October of 2007, my husband and I made the difficult 
decision to give up our health insurance. It was not an easy 
choice, but after the last few premium increases, the monthly 
cost of our health insurance was the same as our monthly 
mortgage payment.
    Since I am self-employed and work out of my home, I felt 
there was no other choice. I need a place to live and I need a 
place to work. But I simply could no longer afford to pay the 
equivalent of a second mortgage. So we terminated our coverage 
as of October 1st, 2007, and tried to figure out what to do 
next.
    Unfortunately, time was not on our side. On October 13th, 
less than two weeks after becoming uninsured, I became ill and 
ended up in the hospital with appendicitis. I had to have 
surgery and my appendix was removed. The hospital and doctor 
bills totaled $10,000. Today I am on a payment plan with the 
hospital.
    While I appreciate their willingness to work with me, every 
dollar I spend to pay off this bill I cannot use to purchase 
health insurance.
    Back home in Niagara County, I am not alone in this 
struggle. There are about 125 in home child care providers in 
my county, and I know many of them. I operate a training and 
support group to assist all providers. The health care crisis 
is on everyone's mind. I hear discussions about it constantly.
    It is necessary, but unavailable to many, and it is a heavy 
burden to many more. It is vitally important that something 
changes and soon. As Congress works to develop specific policy 
related solutions, please keep in mind that many small 
businesses are looking for a balance, a balance similar to the 
one outlined in NFIB's small business principles for health 
care reform.
    The principles are a foundation for health care reform that 
achieves four goals: access to quality care, affordability, 
predictability, and consumer choice. Those goals are achieved 
by creating a system that is universal, private, affordable, 
unbiased, competitive, portable, transparent, efficient, 
evidence-based, and realistic.
    NFIB will pursue legislative proposals that are reflective 
of these ten principles.
    Finally, Madam Chairwoman, I appreciate the work your 
Committee has done with NFIB. I am hopeful that you will 
continue working with NFIB and other groups that are committed 
to developing effective solutions for small business owners, 
employees, and their families as well as the broader 
population.
    Recognizing that many voices are stronger together, NFIB 
joined Divided We Fail in 2007. The coalition, which includes 
AARP, Business Roundtable, and the Service Employees 
International Union, represents more than 53 million people. 
These groups do not agree on many issues, but the coalition 
does agree on the need to seek out and engage in a serious 
dialogue to find broad based bipartisan solutions that address 
what has become a national crisis for American job creators, 
health care.
    Thank you, again, for holding this hearing today and 
shining a spotlight on the health care crisis facing small 
businesses. I greatly appreciate your interest and your 
willingness to listen to my story.
    NFIB shares your desire to address the nation's health care 
crisis. I am hopeful that working together, today's horror 
stories can be transformed into tomorrow's success stories.
    Thank you.
    [The prepared statement of Ms. Sandman may be found in the 
Appendix on page x.]
    Chairwoman Velazquez. Thank you, Ms. Sandman.
    Our next witness is Mr. Richard Lee. He is the President of 
Lee's Flower and Card Shop in Washington, D.C. Mr. Lee is the 
fourth generation to run the family owned business. It was 
established in 1945.
    Mr. Lee is testifying on behalf of the Society of American 
Florists. The Society of American Florists represents over 
15,000 retailers, growers, wholesalers, and importers in the 
floral industry.
    Welcome.

  STATEMENT OF RICHARD S. LEE, PRESIDENT, LEE'S FLOWER & CARD 
 SHOP, WASHINGTON, D.C., ON BEHALF OF THE SOCIETY OF AMERICAN 
                            FLORISTS

    Mr. Lee. Thank you, very much, Chairman Velazquez and also 
to the members of the Committee.
    Good morning and thank you for this opportunity to present 
testimony on behalf of the Society of American Florists and the 
U.S. floriculture industry on this subject of limited health 
care options for small businesses.
    At the outset, I want to thank you, Chairwoman and the 
other members of the Committee who have been particularly 
supportive of the need for health care reform for so many 
years. And thank you for holding this hearing and once again 
being the voice of small business in the halls of Congress.
    My name is Rick Lee. I am President of Lee's Flower and 
Card Shop in Washington, D.C. The Society of American Florists 
is the national trade association representing the entire 
floriculture industry, a $19 billion component of the United 
States economy. Membership includes about 10,000 small 
businesses nationwide, and this issue is important to nearly 
every one of them.
    Lee's Flower and Card Shop has been in business for 62 
years, since 1945. We are a full-time and full service retail 
floral shop. As a family owned business we pride ourselves on 
our service, both to our customers and to our community.
    Community service is a family tradition started by my 
parents, Winnifred and William Lee, when they founded the shop. 
We have stood by our neighborhood, through its ups and downs, 
and I am happy to say we are back in an upswing now.
    Everyone knows about the U Street corridor and how it has 
come back and the gentrification that is going on there. I 
founded the neighborhood's first Jaycee chapter back in 1968 
after the assassination of Martin Luther King, Jr.
    My daughter, Stacey, who works in the business, donates a 
substantial chunk of time to at least five civic and charity 
groups.
    So it is not only a disadvantage to us not to be able to 
offer health insurance coverage to our employees. It goes 
against my philosophy of community service.
    There was a recent poll reported by HR News that 
demonstrates the importance employees place on health 
insurance. According to this poll, of 1,200 United States 
adults, age 18 and older, 84 percent say health insurance is 
the most important factor in choosing a job.
    So offering health care in reality is a benefit that is 
necessary for a business to succeed. We have seven full-time 
employees plus many part-timers on a weekly basis, and more at 
holiday and special events. The biggest enticement besides 
salary in our repertoire of tools to attract and keep employees 
is benefits, and the most important benefit is our ability to 
offer health care.
    There are very limited health care options for small 
businesses in the small group market. I believe that cost is 
the biggest impediment, but is also a lack of options and lack 
of negotiating power that are also important.
    Right now there does not seem to be any options in all of 
the market for me. And I know from talking to others in my 
industry the small businesses in many states are similarly 
faced with the limited or no choice.
    When I was in the market I had to rely on agents and 
brokers to help me choose a plan, and some agents did not want 
to deal with me because of my company being so small. I can 
tell you first hand that small businesses do not have the same 
market advantage that large businesses do. Small businesses 
have no negotiating power.
    So even if we can purchase insurance, if a year later we 
have had one or two expensive claims, the premium costs go up 
by double digits and the out-of-pocket costs go up also.
    The last time I attempted to purchase insurance and offer 
it to my employees I had to ask them to pay 25 percent of the 
premiums. It was the best deal that I could get, but even then 
the younger ones decided it was not viable for them. They said 
they would rather roll the dice, pray, and cross their fingers 
that they did not get sick or injured.
    Our work force spans a range of ages from 20 years to a 
driver in his 60's. They want and need different things in a 
health plan, and I need to be able to find a policy that 
provides adequate coverage but is affordable and responds to 
their different needs.
    Right now one of my long-term employees who has been with 
us for 26 years--he is one of our drivers--just could not 
afford the coverage and recently had an accident. He was 
treated in the emergency room and could not pay. So now he has 
had his wages garnished.
    Another example is one of my employees who became pregnant. 
She could not afford the health care so she went on public 
assistance. If employees do not get affordable coverage through 
the employer, they certainly are not going to hunt for coverage 
in the non-group market where the costs are out of reach for 
these workers.
    The outcome is that the small business owners and the small 
business employees are often not covered by any health 
insurance. My two daughters also work in the business. Both 
have spouses, fortunately, whose employers provide coverage so 
they are covered. My wife, who retired from Verizon a number of 
years ago, and I receive health insurance on her plan.
    Unfortunately, my other employees have few options for 
health insurance coverage. Three of them have spouses, but the 
spouses do not have health insurance. So it is a vicious 
circle. The higher the cost, the more workers are shut out or 
priced out of the system.
    Having uninsured workers has an impact on everyone who is 
insured.
    So in conclusion, I hope that my sharing with you these 
experiences with trying to provide health insurance as a small 
businessman has been helpful to the Committee in understanding 
both the importance of my ability to do this and the urgency 
that Congress create the solutions to this problem.
    Please find a way to expand the availability of affordable 
health care coverage. It is probably the number one problem 
facing small businesses and their employees today.
    Thank you very much.
    [The prepared statement of Mr. Lee may be found in the 
Appendix on page x.]
    Chairwoman Velazquez. Thank you, Mr. Lee.
    Our next witness is Mr. Lee Groza. He is a partner at 
Mountjoy & Bressler, an accounting firm based in Louisville, 
Kentucky. The firm has over 100 employees with four locations 
throughout the state.
    Mr. Groza is testifying on behalf of the American Institute 
of Certified Public Accountants. AICP is a national 
organization representing over 330,000 certified public 
accountants.
    Welcome.

    STATEMENT OF LEE DAVID GROZA, MOUNTJOY & BRESSLER, LLP, 
 LOUISVILLE, KENTUCKY, ON BEHALF OF THE AMERICAN INSTITUTE OF 
                  CERTIFIED PUBLIC ACCOUNTANTS

    Mr. Groza. Thank you, Chairwoman Velazquez, Ranking Member 
Chabot, and members of the Committee.
    My name is Lee Groza. I am a CPA and one of several owners 
of Mountjoy & Bressler, LLP, located in Kentucky. I am here 
today representing the American Institute of Certified Public 
Accountants. I include several of my own opinions based on the 
experiences with my firm.
    The topic of health care coverage has been an interest of 
mine for a number of years and one that I have been able to 
view from several different perspectives. Not only am I small 
business owner who has spent a considerable amount of time 
involved in considering coverages for our own employees, but as 
a CPA, I am an advisor to many small businesses and have been 
able to witness their health care challenges first hand.
    Additionally, I am currently the President of the Kentucky 
Society of CPAs and have served as a member and former 
chairperson of the committee that oversees the association 
sponsored health care plan that is offered to our nearly 5,000 
members across the commonwealth.
    At my CPA firm, we are annually faced with the challenge of 
offering quality health care benefits at a manageable cost. 
This delicate balancing act between benefits and affordability 
has resulted in my own firm switching to three different 
insurers in the last three years alone.
    Like many small businesses, we significantly subsidize the 
premium cost to our employees, but we do not cover 100 percent 
of this cost. We have found that even though our offices lie in 
the larger population centers of the state, our health 
insurance options have been limited to just a few dominant 
insurers.
    While having just a few options may call into question the 
competitive nature of this process, just two alone has resulted 
in an experience where one insurer dramatically decreased their 
bid in an effort to counter another's proposal to secure the 
relationship. Truly, when competition does exist, we as 
consumers of health care can benefit greatly. And as the number 
of options increase, our potential benefit increases 
accordingly.
    As of the first of this year, our employees were offered 
the option of a high deductible health plan coupled with a 
health savings account feature. These new plans have now become 
the lowest cost option for our employees and were intended to 
provide a better way to manage and potentially gain from their 
individual health care spending while assuming a manageable 
amount of additional risk.
    These plans encourage healthy behavior and efficient 
spending while protecting our employees from escalating costs. 
I am encouraged by the fact that nearly 30 percent of our 
participants decided to make the switch to these HSA plans in 
the first year alone.
    My involvement with the Insurance Committee at our state 
association pool has left me somewhat discouraged. As a 
statewide membership organization, our association health plan 
must be able to provide coverage to our CPA members who are 
located in every corner of the state.
    Consequently, we have been left with only one insurer with 
a provider network that is sufficient enough to maximize our 
coverage area. In this situation, there is no room for 
negotiation, and our annual renewal meetings have become an 
exercise in futility where the terms are clearly dictated by 
the insurer.
    As our association pool continues to evolve into one that 
serves very small practitioners in the increasingly rural areas 
of the state, there is no doubt that we are paying higher 
premiums than our members who are served in larger areas and 
have more options.
    When developing the required annual premium for our pool, 
the insurer will often rely on national trend rates that may 
have no correlation of the cost trend based on our actual 
claims' history.
    In a clear show of dominance, they have gone so far as to 
additionally assess an explicit profit charge among all other 
administrative costs which appears to serve no other purpose 
but to pad their profitability.
    A few years ago we were able to add a risk sharing 
arrangement to our association pool health plan that provides 
for a refund of premium in the event that the initial estimates 
used by our insurer were too high. Of course, this arrangement 
brought with it an additional fee.
    So we are now in a situation where we feel compelled to pay 
an additional significant sum of money every year just to 
ensure some degree of accuracy in the determination of our 
health insurance costs. I cannot help but believe there is 
something fundamentally wrong with a system that permits this 
practice.
    I have personally witnessed how competition in the area of 
health care can work to our advantage, and I am a strong 
believer that any step taken to increase competition is a 
positive step for the American consumer. As an employee of the 
federal government nearly 20 years ago, I fondly remember the 
ability to select from a variety of plans and insurers to suit 
my needs. Today most, if not all, small business employees do 
not have that luxury.
    Thank you, again, for the opportunity to testify before you 
today.
    [The prepared statement of Mr. Groza may be found in the 
Appendix on page x.]
    Chairwoman Velazquez. Thank you, Mr. Groza.
    And now I will recognize the Ranking Member, Mr. Chabot, 
for the purpose of introducing our next witness.
    Mr. Chabot. Thank you, Madam Chairwoman.
    And I have the honor of introducing our next witness who is 
Dr. Stephen Eby, who is from the greatest city in America, 
Cincinnati, Ohio. We are very pleased to have him here.
    Chairwoman Velazquez. After New York.
    Mr. Chabot. After New York, of course.
    He is actually originally from Toledo, Ohio, and educated 
at Ohio State University in Columbus. After completing his 
residency in family practice at the University of Cincinnati, 
Dr. Eby joined a multi-specialty group. He also worked as an 
emergency room physician before starting his independent solo 
practice.
    Currently Dr. Eby is the senior partner and President of 
Western Family Physicians, which is, I believe, a six-doctor, 
independent family medical practice with 25 employees, serving 
the west side of Cincinnati.
    We are very pleased to have you here this morning, Dr. Eby, 
and we look forward to your testimony.

 STATEMENT OF R. STEPHEN EBY, M.D., M.D., CINCINNATI, OHIO, ON 
      BEHALF OF THE AMERICAN ACADEMY OF FAMILY PHYSICIANS

    Dr. Eby. Thank you.
    Well, thank you, Chairman Velazquez and Representative 
Chabot. Happy birthday.
    Mr. Chabot. Just to clear up the record, it was actually 
yesterday, but--
    [Laughter.]
    Mr. Chabot. --who is counting?
    Dr. Eby. And the members of the Committee, I thank you for 
the opportunity to participate in this hearing.
    As one of 93,800 members of the American Academy of Family 
Physicians, I applaud your concern for how the cost of health 
insurance impacts small medical practice. It makes it difficult 
for these small businesses to provide health insurance benefits 
for their employees.
    My name is Dr. Steve Eby. My practice, Western Family 
Physicians, is a small practice providing primary care health 
services to families on the west side of Cincinnati, a practice 
of six doctors, 25 employees.
    To attract and retain good employees, since the inception 
of our small business we have paid for our employees' 
individual insurance. We have never been able to afford health 
insurance for their families.
    Between 2003 and 2008, the cost of a single policy has 
increased 80 percent, an average of 16 percent a year. This 
staggering escalation has occurred despite other steps we took, 
such as increasing the deductibles to $500 and the co-pays by 
33 percent.
    The monthly premium for a family coverage in Cincinnati, 
even with high deductibles, is $1,300. That amounts to over 
half of our average office worker's monthly pay before taxes.
    Because of these astounding expenses, one of our 
receptionists, a single mom, is able to afford coverage only 
for herself. Her children, therefore, went on Medicaid.
    Our front desk coordinator has been with us for seven and a 
half years. She was pregnant when her husband lost his job and 
his health insurance. Our employee purchased individual 
coverage, covered her in the delivery, but once born the infant 
had no insurance coverage. Fortunately the necessary 
immunizations are covered by the Ohio Vaccines for Children's 
program, Physician Visits or Not.
    The costs associated with well baby care and all shots 
necessary through H2 equals about $2,200. This amount takes 
into consideration no additional visits for acute illnesses.
    Not only is it our employees who are struggling with these 
insurance costs. My wife and I cannot obtain health insurance 
through my practice because the premiums are unaffordable. She 
is a registered nurse with a Master's degree. She was able to 
take a second job with a large hospital system in order for us 
to get affordable health insurance coverage.
    Similarly, I am aware of medical practices in the 
Cincinnati region which are not able to get health coverage at 
any price because some of their employees have common chronic 
conditions, such as diabetes, blood pressure, and heart 
disease. I suppose when these people become ill they will have 
to go to the emergency room and pray that the hospital bills 
don't drive them into bankruptcy.
    Affordability is a relative concept of both expenses and 
revenues. I know this Committee is well aware of it, but I 
would be remiss if I didn't mention the significant problem on 
the income side particularly affecting small, primary care 
practices like mine. And that problem is the statutory formula 
for determining physician payment under Medicare. This formula, 
known as the sustainable growth rate, is dysfunctional and 
inaccurate.
    Due to a cumulative nature of the SGR, payments rates have 
not kept pace with medical inflation even as measured by the 
government. Physicians are currently being paid at 2001 rates, 
and if Congress does not intervene, a steep 10.6 percent cut 
will take effect July 1 of this year.
    The inability of even medical doctors to offer adequate 
health insurance benefits to their employees or in some cases 
even themselves is more proof that a health insurance crisis 
exists today in this country, and this is occurring while 
health plans are reporting record profits.
    In closing, family physicians commend the Committee for 
highlighting these issues associated with health insurance 
coverage for employees and owners of small businesses and even 
medical practices. And we urge Congress to give high priority 
to actions that will provide affordable health coverage for 
every American.
    In addition, we would ask Congress to recognize and 
appreciate the emergency situation that has been created by the 
arcane Medicare payment formula that is incorporated in the 
statute.
    I thank you for the opportunity to share these views with 
you, and I look forward to answering your questions.
    [The prepared statement of Dr. Eby may be found in the 
Appendix on page x.]
    Chairwoman Velazquez. Thank you. Thank you very much to all 
of the witnesses.
    I would like to address my first question to Mr. Eckstein.
    There seems to be no disagreement among small business 
owners that health insurance is their number one concern. Mr. 
Lee made reference to the fact that employees responded to a 
survey by 84 percent, and when we look and watch the 
presidential candidates' debate that is taking place in 
America, we know that I guess at least they know that health 
insurance or lack of health coverage is the number one concern 
of the American public.
    Additionally, it is also one of the most unpredictable 
costs small firms face. Given the current housing market and 
the financial challenges you must address, how do you cope with 
this volatility while keeping your business afloat and 
maintaining coverage?
    Mr. Eckstein. Quite honestly, that is a situation that we 
will continue to address as this unfolds and we see how far 
this decline in housing takes us. In the past, I had one year, 
one instance where I had to sell property, valuable real estate 
at a loss in order to liquidate funds so I could send my 
daughter to get the medical treatment she needed because the 
insurance company wouldn't pay it.
    If this continues the way it is, I will be forced to and I 
have already been forced to relinquish my 401(k) in order to 
meet my overhead obligations, but I have to keep my employees 
insured.
    I have got an incredible staff right now, and you know, I 
fight every day to make ends meet to keep them around, but we 
will see how this thing unfolds.
    Chairwoman Velazquez. Mr. Groza, according to a recent 
study, the majority of small businesses who already have health 
insurance coverage continue to shop for new plans. As a small 
business owner with a plan in place, how often do you search 
for new insurance? How much time do you devote to identifying 
new options for your firm?
    Mr. Groza. We do it on an annual basis, and I suspect that 
is common probably with most small businesses. The health 
insurers typically will write the policy for a 12-month 
coverage period, and then you know, around nine months into 
that plan, they start contacting you to want to come in and 
tell you how bad the news is for the next policy period.
    So we do it on an annual basis. We enlist the use of a 
broker to help us through that process, and we tell them to go 
out and see who is on the market, tell us if there are new 
options that we can consider, and price it for us.
    Chairwoman Velazquez. What would be the average cost? How 
much will you pay a broker?
    Mr. Groza. Well, my experience is a little different in 
that area. On the association side, I think typically the 
commission rates have been in the range of five to ten percent, 
but I do know that there's some health insurers out there that 
on new business they're willing to pay commissions of upwards 
of 30 percent. So 30 cents of every dollar goes to compensate 
somebody for selling the policy as opposed to covering claims.
    Chairwoman Velazquez. And when the insurer's called you and 
say it is time for us to come and talk to you and give you the 
bad news, what type of explanation will they give you as to the 
cost? How do they explain the premiums going up?
    Do you find any transparency in that process?
    Mr. Groza. No. There is little transparency in the process, 
but I would probably say that the explanation or the 
justification that we hear more often than not is just because 
medical costs in general are rising across the board. Drug 
costs are rising in general across the board. We expect that 
drug utilization increased. The prescription costs are going 
up, and we have no choice but to take the premiums up.
    Chairwoman Velazquez. Mr. Teske, in your testimony you 
mentioned that your wife works at a local hospital for the 
purpose of supplying health insurance to your family. If you 
were not longer able to be insured under your wife's plan, what 
insurance options would be available to your family?
    And could your small business afford the costs?
    Mr. Teske. That is the problem. When you are not under a 
group payment plan, you end up paying higher premiums. There 
are opportunities available. I consider Blue Cross in Kansas to 
be the premier health care provider, and people that have that 
are very happy that they have it.
    My wife's employers decided that was too expensive and they 
could not afford it for their employees. There are options, but 
it is going to cost me more, and we are struggling at this 
point to make our cash flow meet with the health care payments 
under the employment.
    And the hospital does co-pay. My wife's policy is $655 a 
month. The hospital is co-paying 326 addition. So if we had to 
take that all on as a farm operation, the cash flow would be 
much tighter.
    Chairwoman Velazquez. Thank you.
    Dr. Eby, insurers tell us that increasing health care costs 
are the primary culprit for rising premiums, and I would be 
inclined to believe them if insurance profits were not also on 
the rise.
    In your estimation how much have your premiums increased in 
recent years?
    Dr. Eby. What is remarkable to me is how across the board 
the story is the same. On a good year, it is ten percent. In a 
bad year it is 30. We have seen jumps that high in one year. 
Never does the coverage get better. It always gets worse, 
higher co-pays, higher deductibles.
    Probably in our practice from the business end, 20 percent 
of our receipts come straight out of the pocket of the patient 
in co-pays. That has gone up.
    Chairwoman Velazquez. And during that time, have you seen a 
significant increase in your reimbursement rates for medical 
care that was provided?
    [Laughter.]
    Dr. Eby. Some increase some years. I talked with my 
practice manager, two, three percent from the same company, in 
fact, that jacked our rates. My payments go up 16 percent. My 
receipts go up two or three.
    Chairwoman Velazquez. Thank you.
    Ms. Sandman, I am curious. I know that you participated in 
New York's Healthy New York Program for Small Businesses.
    Ms. Sandman. Yes.
    Chairwoman Velazquez. And the goal of the program is to 
make insurance more affordable and available to small 
businesses like yours. In your opinion, why did the Health New 
York Plan fail to work for you and your husband?
    Ms. Sandman. Because the premium became oppressive. I 
simply as a small business owner cannot afford a second 
mortgage. Currently, because I do not have insurance and we are 
constantly shopping around, the Healthy New York premium is 
about $50 more than it was when I lost my coverage in October.
    Chairwoman Velazquez. Okay. I now recognize Mr. Chabot.
    Mr. Chabot. Thank you, Madam Chairman.
    First of all, I'll address this to the whole panel, the 
question, but before I do, let me just make a statement.
    The Chairwoman had mentioned that she was the lead co-
sponsor of the association health care plan. I want to commend 
her for that leadership, and I am a supporter of that as well.
    Chairwoman Velazquez. With Mr. Johnson, Sam Johnson.
    Mr. Chabot. Oh, yes, Sam Johnson as well, absolutely.
    One of the more frustrating things that I have seen around 
here in a number of years is we are obviously in opposite 
parties, but when my party was in control for five or six times 
in the last five years, we would pass association health plans 
in the House, and then it would go over in the Senate, and over 
there you do not just need a simple majority. You need 60 votes 
for anything. The Democrats find that very frustrating now. The 
Republicans found it very frustrating when we were in control.
    But for whatever reason, we could not get 60 votes over in 
the Senate. So we were unable to actually pass it into law. The 
House did its job. The Senate could not. So we never got it 
passed into law.
    Unfortunately, this past year we obviously had a 
changeover, and now that Democrats control, we did not get it 
out of the House this time. Again, I want to commend the 
Chairwoman because she is a supporter, but we just did not have 
the votes in the House.
    And all of your or many of you spoke favorably towards 
association health plans. If we could maybe go down the line, 
if you could just say one or two quick points about why you 
think that would be helpful to small businesses in the country 
if we had association health plans.
    And, Mr. Teske, I guess we'll begin with you.
    Mr. Teske. If I understand it correctly, I would think that 
if we could qualify under some type of association group rates 
as individual farmers, it would have to be better premiums than 
what we get.
    Mr. Chabot. Mr. Eckstein.
    Mr. Eckstein. In a situation mine where my daughter has 
preexisting conditions, putting everything on a group level 
playing field definitely has to help from a premium standpoint. 
You know, in the event that this recession or, sorry, slowdown 
in the market--
    [Laughter.]
    Mr. Eckstein. --slowdown in the market stays and I have to 
relinquish my health insurance, I have no options. I do not 
know what I will do. I am forced to. That is the last bill I 
have to pay.
    Mr. Chabot. Ms. Sandman.
    Ms. Sandman. Well, I believe that pooling would give us 
some real leverage and negotiating power to lower our premiums. 
It would directly change my life.
    Mr. Chabot. Thank you.
    Mr. Lee.
    Mr. Lee. Well, in my personal opinion, I am for universal 
health care. I believe that health care should be available to 
every American citizen. You know, that is representing my own 
personal view.
    Mr. Chabot. But short of that, would you support 
association health plans?
    Mr. Lee. Yes, I would.
    Mr. Chabot. Okay. Mr. Groza?
    Mr. Groza. I am very favorable to association health plans 
for a couple of reasons. One is I have seen on our member side 
that it tends to decrease the volatility in their insurance 
costs because under association plans typically you only have a 
range in which you can increase premiums instead of just 
letting it ride as it may.
    The other benefit that association plans have provided our 
members is it provides a guaranteed benefit. So as our other 
panelists said, you cannot deny client coverage for an 
association, at least our association, and preexisting 
conditions are covered after a 12-month waiting period. So that 
provides another alternative.
    The most important thing about associations is I feel if we 
can get the numbers into an association to properly provide 
leverage against those costs and to further dampen the 
volatility, I think the prices are going to continue to drop, 
but I think that leverage has to be accomplished across state 
lines and not contained within a single state because we just 
can't get the numbers that are needed.
    Mr. Chabot. Thank you.
    And finally Dr. Eby.
    Dr. Eby. I think as independent practitioners we are in 
kind of a bind because if we collude for things, we are in 
restraint of trade, and in order to have a close enough 
association to legally do that, you have to give up your 
independence. A group rate I think would be excellent, but I do 
not think that is available to independent doctors.
    You know, the whole point of insurance is to spread the 
risk so that nobody gets hit too hard. I think that the concept 
of spreading the risk universally makes sense.
    Mr. Chabot. Okay. Thank you.
    In my opening statement I had mentioned a bill that I have 
introduced a number of times, and we have gotten support, but 
not sufficient to get it passed into law yet, which would allow 
small businesses and individuals to fully deduct their health 
care premiums from their taxes.
    Could I just see a show of hands perhaps so that we do not 
have to take the time to go down the line? How many believe 
that that would be a good idea? If I could just see that.
    One, two, three, four. Okay. So four out of six, five out 
of six. Okay. Pardon me?
    Mr. Teske. I meant to raise a point.
    Mr. Chabot. Yes, feel free to if you would like.
    Mr. Teske. I think maybe twice in the last 25 years I have 
paid income tax. It only helps you if you actually pay income 
tax. Farming has not been that good of a business.
    Mr. Chabot. But there are many that do pay income tax. So 
you would not, I assume, hold it against them that they would 
get a break on their taxes. You do not have to answer that 
question.
    Mr. Eckstein. I may need to change my vote, next year.
    Mr. Chabot. Okay. Let me get another question real quickly. 
Mr. Lee had indicated that he was supportive of universal 
health care or what many would term, you know, socialized 
medicine similar to a Canadian or plan that they would have in 
Great Britain.
    Now, our country has chosen not to go down that path. 
Again, to be fair here, is there anybody else who thinks that 
this nation should go that far and do that?
    Two out of six.
    Dr. Eby. Anything is better than what we have, sir.
    Mr. Chabot. But, Doctor, would you want to go to a Great 
Britain type plan or Canadian plan where you have essentially 
socialized?
    Dr. Eby. Strictly speaking, from my personal opinion, 
anything is better than what we have.
    Mr. Chabot. Okay.
    Dr. Eby. I would be willing to take that hit.
    Mr. Chabot. You think that is reflective of the majority in 
the medical community at this time?
    Dr. Eby. No.
    Mr. Chabot. No?
    Dr. Eby. I do not.
    Mr. Chabot.
    Thank you.
    What city are you from again? No, I am just kidding.
    Dr. Eby. I am so conservative I am past conservative.
    Mr. Chabot. Okay, okay.
    [Laughter.]
    Mr. Chabot. The Chairwoman just reminded me that is why we 
call Ohio a swing state.
    [Laughter.]
    Mr. Chabot. Not necessary red or blue, but purple now.
    And finally, Dr. Eby, how much, if any, of the problem do 
you see in high medical cost, insurance cost to be the fact 
that there have been, arguably, or have there been I guess I 
should say, not to tilt this one way or the other, medical 
malpractice cases, frivolous lawsuits which have had a tendency 
to perhaps put doctors in a position where, and insurance 
companies as well, where their rates have gone up as a result 
of those particular lawsuits?
    Would you want to comment on that?
    Dr. Eby. Thank you.
    Especially being an ER doc in my past life, it is a 
significant problem. If everybody had a medical home with a 
family doctor who knew who they were, knew their background, 
was accessible, I think we would all be happy, doctors and 
patients alike, and efficient use of specialists.
    On the contrary, when folks go to the ER, the ER doc's 
perspective, they do not know the patient, and they cannot 
afford to miss anything. You know, if you walk into the ER with 
a headache, you are going to get a CAT scan. Almost guarantee 
it. If you walk in with a sore throat, you will probably get a 
blood count, and that is rational in that setting because they 
have to practice defensive medicine.
    Mr. Chabot. Right.
    Dr. Eby. They have to. It is a huge problem.
    Now, if they could get in to see their family doctor who 
knows them and get a rapid strep test and be done, it would be 
$86 instead of $860. Yes, it is a big problem.
    Mr. Chabot. Thank you very much, Doctor. I appreciate it.
    And thank you for the whole panel. I think your answers and 
your testimony was excellent really. Thank you.
    I yield back the balance of my time, Madam Chair.
    Chairwoman Velazquez. Thank you.
    Mr. Ellsworth.
    Mr. Ellsworth. Thank you, Madam Chair.
    Mr. Teske, you were raising your hand and trying to get a 
point. I am going to let you get that in on my time, and then I 
will make my comments, if you remember what you were going to 
say.
    Mr. Teske. Well, I do. It was the part about one payer 
health care. With all of the American public that is on 
Medicare now and Medicaid and other social programs, I have 
seen statistics that we have 47 percent of the American public 
now under some type of socialized medicine, and so I think it 
is getting beyond the point of debate. I think society is going 
that way so fast that it is a matter of when do you 
appropriately address these.
    Mr. Ellsworth. Thank you.
    Mr. Teske. Thank you.
    Mr. Ellsworth. Madam Chair, I am not sure I have a 
question. I find myself over here getting to, oh, I do not 
think I am going to need medical care, but just over the 
situation. I look at this and I see the different backgrounds 
of the folks, and I do ont see Republicans and Democrats. I do 
not think this issue is Republican-Democrat. It is American.
    And somebody said it on TV tonight. We are better than 
this. And I can remember several months ago, and I think Mr. 
Eckstein brought up the presidential debates, and I can 
remember when the different candidates on both sides were 
bringing up their plan for the health plans, and they said, 
``We are going to announce this tomorrow,'' and before they 
ever said what the details were of the plan, the other side was 
already saying, ``Here is what it is going to be, and here is 
why it is bad.''
    And if we continue that debate, and it has become, I guess, 
politically dangerous to think out loud and to throw things 
out, and that is what is, I guess, so sad about this situation; 
that when we think out loud, somebody is there to cut your head 
off and feed it to you.
    We have got to do better than this. You know, doctors 
deserve better. Lawyers are not going away, and I do not think 
they should. So I see the backgrounds here, and America is 
better than this, and it is going to take debate, and it is 
going to take honesty and it is going to take not being afraid 
to throw an idea out there and cast out.
    It may not be a good idea, but it has got to be one that 
says, ``Hey, could this work?'' and be willing to do that and 
not be afraid to look stupid and/or, like I said, get your head 
chopped off.
    So this is a crisis. When this background of folks is 
saying it is a crisis and Dr. Eby is saying anything is better 
than this, we have got to do something. And I commend you and 
Ranking Member Chabot for your willingness to take this on, and 
I would just say that this Committee needs to push and push and 
push until we get something through, and if we start with small 
business and get it through for them, maybe they will take that 
as an example and go with the rest of our country and 
businesses.
    And so that is not a question, but thank you all for your 
testimony. It has enlightened me, and when I fly back through 
your great city to another great city in Indiana--so I am 
surrounded by good friends in the Midwest all around--I will 
have some good things to tell the folks of Indiana.
    Thank you.
    Chairwoman Velazquez. Thank you.
    Mr. Gohmert.
    Mr. Gohmert. Thank you, Madam Chair.
    And I appreciate the panel all being here. I am also a 
supporter of the Associated Health Plans, but to me that is 
just a Band-Aid fix. That will give you a little more leverage 
with the insurance companies. That will help a little bit. We 
are still going down the road to socialized medicine. That may 
help us pull off in a rest area for a little while, but we are 
still headed down the same road.
    And I was an exchange student of the Soviet Union back in 
1973. I saw true socialized medicine. With all due respect, Dr. 
Eby, I do not want to go there. You know, when you are paying 
your physicians $200 a year and it is nine to five and too bad 
if you are sick and you leave sicker, I do not want to go 
there.
    But having been in private practice and had to pay those 
premiums and seeing them going up like you all are talking 
about, ten percent in a good year, 30 percent, actually I think 
we went up 50 to 60 percent one year; it is just devastating, 
and then you want to reward your employees by giving them a 
raise, but then they cannot see that you have already given 
them a huge raise and they do not even benefit because their 
co-pay went up.
    I also appreciate everybody, and this seems to be the 
terminology in Washington. We want to see everybody with good 
health care coverage. Well, I am sorry. I do not. I want to see 
everybody with good health care.
    Now, the fact that it seems like most people want to make 
sure that the insurance companies make plenty of money and that 
is what you get when you make sure everybody has good 
insurance. The insurance companies are in the business to make 
a profit, and they are going to.
    So I am not sure I want to see everybody with good health 
coverage. I want to see everybody with good health care that 
they can afford.
    You know, one of the reasons I had not gotten personally 
into the health savings account before recently was because 
until the last Congress, you could have money pulled out pre-
tax and put in a health savings account, but if you did not use 
it, you lose it. And I did not want to run the risk of losing 
money at the end of the year.
    Well, then in the last Congress we passed a bill that would 
allow it to roll over. So I am now in the health savings 
account, and I understand the idea of socialized medicine. I 
know there are a lot of folks here in Washington, the 
bureaucrats that would look forward to all of the additional 
jobs where they would get to tell doctors and patients what 
coverage you can have and what care you can get and who you can 
see. I would really rather avoid that. I would rather avoid 
giving insurance companies more employees.
    I would like to return people to where they got control, 
and I appreciated my friend, Mr. Ellsworth, saying we need to 
have people not afraid to be embarrassed throwing ideas out, 
and I have never been afraid to be embarrassed. You know, it is 
one of the benefits, I think, of being a Texan, but--
    [Laughter.]
    Mr. Gohmert. But with a health savings account, it seems 
like that is a possibility there where whether it is a union 
worker, where instead of putting $5,000 a month into some 
insurance company with the big profits, you put it in their 
health savings account. And it gets me to keep calling this 
medical insurance. I mean, because we all pay for gasoline, and 
I am thinking, well, dadgum, if it has worked so well for 
health care that you just call it insurance where they pay for 
everything, maybe we need gasoline insurance where everybody 
pays this huge amount every month into this gasoline insurance, 
and then they will pay for your gasoline and the company will 
make a big profit on top of that.
    I mean that is basically what it is. It is not insurance if 
it covers everything. So I am thinking if we can get to that 
deductible and people have got $5,000 that are in the account, 
I think it would even do the government good and be better off 
just to spot people that cannot afford it that have health care 
problems. Put 5,000 in their account so that they have got the 
deductible. Then they get to choose their doctor. They get to 
say, ``No, I do not want that procedure. It is too expensive,'' 
or, ``you are charging too much. The doctor down the road will 
do it for half that.''
    That is when we finally get some responsibility and get 
some power back in the hands of the patient. Because I am tired 
of going to the doctor and not having a doctor-patient 
relationship because my insurance does not cover that procedure 
or it does not cover that medication. I want power back in the 
hands of the patient and the doctor, and the bureaucrats and 
the insurance companies not profit so much, and I have got more 
control.
    I would just throw that out. I got here late, and I 
apologize because we appreciate your time, but has anybody 
looked at possibly like unions, demanding HSAs where you have 
got the power instead of the insurance company?
    Yes, Mr. Groza.
    Mr. Groza. We did. I touched on it briefly. We started 
offering an HSA, and it worked out fairly well for our 
employees.
    The problem is they are not all the same flavor. They do 
not come in the same shapes and sizes. So HSAs are only 
attractive to the extent that the insurer is really going to 
give you a break on the high deductible health plan that is 
associated with the HSA.
    In my personal example as someone who is in an HSA, I got a 
considerable break in the premium by going to an HDHP with an 
HSA, and I took that money, set it aside in an account, and 
since our utilization fortunately has been low, I have got a 
little bit of money there to spend. It has built up and 
otherwise would have gone off to an insurance company and added 
to the bottom line.
    But I have seen other insurers that did not give you that 
much of a price increase for going to an HSA, and in that 
instances I would say--
    Mr. Gohmert. Do you mean decrease?
    Mr. Groza. Right. I am sorry. There is not that much of a 
decrease.
    Mr. Gohmert. Yes.
    Mr. Groza. So why take on the additional risk if you are 
not going to get a price break?
    Mr. Gohmert. Right. You would have to get the break.
    And if I could throw this in, it looks like to me right now 
a problem with the HSAs that I have encountered is, you know, 
the price you are quoted by a hospital or a doctor is not what 
Blue Cross pays. It is not what the government pays, but right 
now if you pay cash, you are paying more than those folks.
    And so it seems like that was something that we would need 
to do so that you could negotiate more effectively. I had a 
relative who was in a car wreck, and the other side's insurance 
company obviously owed it. Her health care had paid it. So I 
was trying to get that back, and she had $10,000 in health care 
bills. The other insurance company settled, and I did not take 
a fee as a relative. This is before I came to Congress and when 
I was not a judge, and anyway, the law requires that you pay 
back anything the health care provider has paid.
    And so I said, ``All right. We have got the settlement. 
Show me exactly what you paid and I will cut you a check 
today.'' Ten thousand dollars in bills, and there was $800 was 
all that health care insurance had paid in full and final 
payment of all that.
    So we need to get that kind of power back in the hands of 
the people.
    Chairwoman Velazquez. Your time has expired, Mr. Gohmert.
    Mr. Gohmert. Thank you, Madam Chair.
    Chairwoman Velazquez. I now recognize Mr. Akin.
    Mr. Akin. Well, I appreciate Louie's passion and his 
interest in solving problems, and I cannot match a sermon like 
that, but just a quick question. I did not have a chance to 
hear your testimonies. They schedule us in multiple hearings at 
the same time, and we have not figured out how to be in 
multiple places.
    But my question is: do you see a pattern of the insurance 
companies developing almost a monopoly in various markets? And 
it may be from one city to the next. Is that pattern out there, 
and is that something that legislatively could be dealt with?
    Dr. Eby. Yes.
    Mr. Akin. Doctor?
    Dr. Eby. Well, I cannot speak to the second half of that as 
far as the legislation.
    Mr. Akin. yes.
    Dr. Eby. Not my area of expertise. But clearly, the number 
of plans out there is shrinking as acquisitions and mergers and 
whatnot, and in Cincinnati, we have still got a number of 
plans. I do not think in our practice any one plan is above 25, 
30 percent. That is still an 800 pound gorilla in your living 
room.
    I think there are other markets where there is probably one 
or two carriers.
    Mr. Akin. That is what I have heard, is that there are some 
markets, some cities where you have got basically one type of 
car. It is a black Ford and that is all you have a choice of.
    Dr. Eby. You had better like it.
    Mr. Akin. You had better like it, yes, right or worse, yes.
    Okay. A second question. I think it was the Wall Street 
Journal not too long ago carried an article that I thought was 
kind of scary. It was basically one of these hard luck stories 
about some guy who does not feel too well, goes to see a 
doctor. The doctor is not a very competent doctor. He has some 
kind of an infection that the doctor does not correctly 
diagnose. He starts spinning down, gets in worse shape, finally 
gets to a decent hospital. They say, ``Hey, you are pretty 
sick, you know.''
    ``Well, that is what I have been trying to tell people.'' 
But anyway, so he almost dies. He goes into septic shock. 
Finally they manage to save his life, and they blow through the 
top of their insurance, which I think they had a $2 million 
insurance policy, and this guy had $3.5 million bills.
    So after the two million, the insurance that their little 
business had cut and ran, and now you have got a husband-wife, 
a very sick husband and a wife at home, and they are due for a 
million and a half worth of bills.
    Well, it is all of this monopoly money. It is this funny 
money, and the hospitals try and collect from anybody who has 
got some money. They just about had this woman selling her 
house and extra mortgages and putting them in the poor house, 
and finally, when the newspaper and media shined a light on it, 
the hospital backed off and said, ``Well, we will settle for a 
couple hundred thousand,'' or something like that, maybe even 
less than that, in fact.
    So it was one of these things where the hospitals in order 
to make their bottom line, they are just basically fleecing 
anybody it looks like they can get money from, but there is not 
really any consistency. They have got an $800 pair of stockings 
to help protect you from swelling or something and you could 
buy them at Wal-Mart, you know, for $1.30 or something.
    So do you see that same kind of pattern happening where we 
are getting our costs complete out of line just because people 
are trying to figure out how to make the bottom line?
    Ms. Sandman. I would like to address that if I may, Mr. 
Akin. I think that what we really need is transparency. I think 
that that would just open the window to a lot of people to be 
able to shop around for a doctor that they have heard about or 
call someone and ask them what their record is.
    I also think that everybody in America needs to be 
responsible for some part of health care. I do not think it 
should be automatically an employer's responsibility. I think 
they need to shop around for it like you do car insurance. Do 
you know what I mean? It is something that everyone is going to 
have some responsibility for.
    And when that happens, then the transparency can fall right 
into play, and I think it will improve overall health care. I 
mean not only health care insurance, but health care for 
everyone.
    Mr. Akin. Thank you.
    Ms. Sandman. You are welcome.
    Chairwoman Velazquez. Thank you.
    Ms. Sandman, do you think that if we offer like a one stop 
shop that will provide information to small businesses as to 
health care options, how much it will be, the differing 
information that will empower small businesses to make the 
right choice in terms of what is good for them based on the 
nature of their businesses, the number of employees and so on, 
that that will be a great tool for small businesses?
    Ms. Sandman. Absolutely. I think that it is an intimidating 
process. You go out looking, and you hear an outrageous rate, 
and you can go through the Chamber of Commerce in your area and 
there is no easy way to access it.
    I think it will open doors for everyone. There is no easy 
way to shop for health care in my community.
    Chairwoman Velazquez. Well, let me just mention the fact 
that the Small Business Committee as part of the SBA 
Reauthorization, we passed legislation in this Committee that 
passed through the House that will direct the Small Business 
Administration through the networks of SBDCs, small business 
development centers, to create a resource center with the type 
of information that will enable small businesses so that they 
know where to go.
     We have, between SBDCs and sub-centers across this 
country, close to 1,100 centers. So our position is that that 
will be a great way and a very effective way for the Small 
Business Administration and the SBDCs to help small businesses.
    Ms. Sandman. Absolutely.
    Chairwoman Velazquez. To know what options are there, and 
we all know, Mr. Groza, you know, when small businesses do not 
have a human resources department or the resources, the 
manpower to do the research. This will be then a great tool for 
them to have.
    Ms. Sandman. It would be, and I know that people in my 
community would use it.
    Chairwoman Velazquez. Okay. Mr. King, would you want to ask 
any questions?
    Mr. King. Yes. Thank you, Madam Chair.
    As the Committee members know and I think a lot of the 
people here in this room know that I have spent my life in 
small business, and I recall a time that my Congressman came to 
my community. It was the first time anyone had ever entered 
into a small community like that that came from Washington, and 
it drew quite a crowd, 70 to 80 people
    And he asked the question of the 80 people that were 
roughly in the room, ``How many of you are employers?''
    Twelve of us were employers in that room.
    ``How many of you provide health insurance for your 
employees?'' And I was the only one out of that room that did.
    And so you will know that I have shopped for premiums, and 
I have tried to put together packages, and I have run into a 
number of obstructions. One of them is the inability to 
purchase group insurance if you're a small employer, and 
another one would be the lack of flexibility of being able to 
purchase individual policies for your employees because of 
federal restrictions that prohibit us from being able to shop 
and pick a policy that fits one employee's family and then find 
another policy from a different company that fits another 
employee's family.
    Because the federal government seems to believe that 
employers want to discriminate against employees, and so 
therefore, you must have a one size fits all.
    And as I look at this and I wonder where can we go to solve 
this problem, one is association health care plans, which I 
thoroughly support. Another approach is to be able to allow 
that flexibility for employers to be able to go out on an open 
market and buy individual policies for individual employees 
that are tailor made for those employees.
    Now, if you have got one or two or five or ten or 20 
employees, you know them. You know their families. You have 
their interests in mind. And so why is the federal government 
intervening into this kind of a relationship, this contractual 
relationship between an employer and an employee?
    Then another component that I think would be 
extraordinarily valuable to give us the flexibility would be to 
expand the deductible contributions into HSAs. Why do we have a 
cap on that? I would at least double that.
    And if we could double the HSAs and we would see young 
couples that enter into the job market. Let's just say even at 
today's standard if they entered into the job market when they 
are 20 years old--I pick that number because it is a round 
number--and they work for 45 years and qualify for Medicare at 
45 years of work at age 65, even under today's numbers and if 
you spend $2,000 a year in real dollars, that comes out to be 
almost a million dollars a year in HSA.
    Well, what a wonderful tool to have to have the flexibility 
to be able to manage your health care, and a lot of this 
problem that we have is lack of the freedom to make decisions, 
and I think that as small employers you recognize that.
    I am watching the most empathy from Ms. Sandman, and I 
would ask you if you would want to comment on some of those 
remarks that I made.
    Ms. Sandman. I like what you are saying, and it makes a 
whole lot of sense, but one of the things that comes to my mind 
immediately is that I need to be able to purchase my insurance 
or put money into an account pre-tax dollars. Currently my 
money that I spend, I am not now covered by any health 
insurance, but when I was paying my premiums, it was after 
taxes. That would help small businesses a lot.
    Mr. King. I left that part out. Let's double emphasize that 
point because that has been one of my frustrations, too, that 
big business can do this, corporations can do this and the 
government can do this, but small employers, sole 
proprietorships cannot, not in the fashion necessary for 
themselves.
    Ms. Sandman. I think also we need to educate the public to 
what health savings would be cause there is a terror of being 
uninsured out there, and people are terrified of the $860 
compared to $86 that you could spend. The education and the 
transparency is so important at the same time so that people 
have a sense of what it really costs and what their power is.
    Because we have no power now. There is no control on a 
small business level.
    Mr. King. And I think you.
    And, Mr. Eckstein, would you care to comment on those 
points that have been made?
    Mr. Eckstein. Well, my thought goes to I hear the federal 
government talking about writing checks, $800 to every 
taxpayer, and I question that, but why couldn't that money be 
directed into health savings accounts to encourage people to 
spend money on health insurance to get coverage where they need 
and get us back to some kind of national fiscal responsibility 
instead of just foregoing our children's health care, which is 
just crazy?
    Mr. King. Let me weigh in on that since our light is still 
green, Mr. Eckstein. Looking at the magnitude of this proposal 
that the federal government, the White House, seems to be 
floating out there that hopefully will float for a while so 
that we can get our senses here, I remember when Bill Clinton 
came in as President, and he rode in on the concern about there 
being a recession. I do not know that there actually was one, 
but in order to cure that problem, he went to Congress and 
asked for $30 billion and an economic incentive plan.
    The Democrat Congress negotiated that down to 17 billion 
and finally decided that it was not enough money to make a 
difference, and so here we are now with 145 or $150 billion, 
and that is borrowed money, borrowed money that adds to our 
national debt or reduces the amount of the Social Security 
trust fund, which is only in bonds, and we simply cannot spend 
our way into prosperity.
    All of you in small business know that, and so I am 
concerned about where we are going with all of this, but to 
maximize the freedom, make sure that there is deductibility for 
sole proprietors to have everybody in America be able to deduct 
their health insurance except sole proprietors is an atrocity 
against your business.
    Ms. Sandman. It is, and what it does is it takes the bottom 
line away. It takes away my ability to expand, to improve my 
business, to go place where I would like to go with my business 
because there is not enough funds.
    Mr. King. And it positions you to where one day a 
government job is going to look attractive just for the health 
care.
    Thank you very much. I appreciate the testimony. Madam 
Chair, I appreciate the privilege to ask some questions.
    Chairwoman Velazquez. Mr. Chabot?
    Mr. Chabot. Yes, just one final question, if I could throw 
it back to you again, Dr. Eby. You know, obviously, I sense the 
level of frustration in your testimony, and I hear that 
frustration oftentimes when I am talking to doctors and medical 
personnel back in Cincinnati, and I am sure this is true all 
over the country. So many of them tell me that especially those 
that are perhaps considering retiring, they apparently decided, 
yes, they are going to retire or I have heard some act like 
they wish perhaps they had gone into something else because 
there seems to be much more control over what they can do, what 
medicines they can provide, whether it is covered or not 
covered by kind of, for lack of some better term, some 
insurance bureaucrat who is making those decisions about 
whether they are going to pay for the procedure or not.
    So there just seems to be a real sense of frustration in 
the medical community, and that is reflected in everything we 
have heard here as well.
    Is that true and would you want to comment on that?
    Dr. Eby. Are you sure?
    Mr. Chabot. Yes, go ahead.
    [Laughter.]
    Dr. Eby. I would say that is very accurate. We spend a huge 
amount of our time doing things that really are not what we are 
trained to do in providing medical care, which is evaluate 
somebody and find out how you can help them. Filling out a 
prior authorization form because the insurance company does not 
want to pay for Allegra D for your chronic sinus, particularly 
in Cincinnati is not what I went to school for, but yet that is 
one of the things I did Monday, and that is just the tip of the 
iceberg.
    Yes, there is an awful lot of wasted time and trouble, and 
certain there is good intent. Prior authorizing of expensive 
imaging tests like MRIs, patients have some responsibility, 
too. They come in with a back ache because they are out of 
shape. They strained it, and they want an MRI, and it may not 
be necessarily if you look at the research appropriate in that 
case. That is 1,000-odd dollars. Well, actually they charge 
two, but they only get paid 800.
    Yes, there is a lot of wasted time, and you have to call 
the insurance company, explain to somebody that is a low level 
clerk why when you do feel it is medically indicated, why it 
should it be covered. Because their leg is going to be 
paralyzed? Well, but do they have this, that or that?
    Frustration is a mild term.
    Mr. Chabot. Thank you very much.
    I want to again thank the panel for their testimony here 
today. I think it has been very helpful to this Committee.
    Thank you.
    Ms. Sandman. It was a pleasure.
    Chairwoman Velazquez. And I, too, want to thank you for 
taking time and being here with us today. I know this is a very 
complex issue, and there are not easy solutions or easy 
answers, but one thing is clear. This Committee will continue 
to address this issue and in ways where we can provide input 
into the different candidates.
    And we know that each one of us are supporting someone who 
is running for President of the United States, but if it takes 
the route that we must not do anything during this session, at 
least we are getting the information, the stories to be able to 
share this with those presidential candidates.
    But you have to help us in keeping this issue in the front 
burner. It is an important issue as and, Mr. Ellsworth, Mr. 
Chabot said, clearly, this is just not an issue of one 
particular sector. This is an issue that affects every person 
in this country, and the ripple effect of the lack of health 
coverage is incredible. It not only affects the public health 
of the American people, but also the impact in terms of our 
economy.
    So I want to thank you all, and let me ask unanimous 
consent that members will have five days to submit a statement 
and supporting materials for the record. Without objection so 
ordered.
    This hearing is now adjourned.
    [Whereupon, at 11:36 a.m., the Committee was adjourned.]

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