[House Hearing, 112 Congress]
[From the U.S. Government Publishing Office]
HEALTH CARE: CHALLENGES FACING PENNSYLVANIA'S WORKERS AND JOB CREATORS
=======================================================================
FIELD HEARING
before the
SUBCOMMITTEE ON HEALTH,
EMPLOYMENT, LABOR AND PENSIONS
COMMITTEE ON EDUCATION
AND THE WORKFORCE
U.S. House of Representatives
ONE HUNDRED TWELFTH CONGRESS
SECOND SESSION
__________
HEARING HELD IN BUTLER, PA, FEBRUARY 22, 2012
__________
Serial No. 112-53
__________
Printed for the use of the Committee on Education and the Workforce
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----------
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COMMITTEE ON EDUCATION AND THE WORKFORCE
JOHN KLINE, Minnesota, Chairman
Thomas E. Petri, Wisconsin George Miller, California,
Howard P. ``Buck'' McKeon, Senior Democratic Member
California Dale E. Kildee, Michigan
Judy Biggert, Illinois Donald M. Payne, New Jersey
Todd Russell Platts, Pennsylvania Robert E. Andrews, New Jersey
Joe Wilson, South Carolina Robert C. ``Bobby'' Scott,
Virginia Foxx, North Carolina Virginia
Bob Goodlatte, Virginia Lynn C. Woolsey, California
Duncan Hunter, California Ruben Hinojosa, Texas
David P. Roe, Tennessee Carolyn McCarthy, New York
Glenn Thompson, Pennsylvania John F. Tierney, Massachusetts
Tim Walberg, Michigan Dennis J. Kucinich, Ohio
Scott DesJarlais, Tennessee Rush D. Holt, New Jersey
Richard L. Hanna, New York Susan A. Davis, California
Todd Rokita, Indiana Raul M. Grijalva, Arizona
Larry Bucshon, Indiana Timothy H. Bishop, New York
Trey Gowdy, South Carolina David Loebsack, Iowa
Lou Barletta, Pennsylvania Mazie K. Hirono, Hawaii
Kristi L. Noem, South Dakota Jason Altmire, Pennsylvania
Martha Roby, Alabama
Joseph J. Heck, Nevada
Dennis A. Ross, Florida
Mike Kelly, Pennsylvania
Barrett Karr, Staff Director
Jody Calemine, Minority Staff Director
SUBCOMMITTEE ON HEALTH, EMPLOYMENT, LABOR AND PENSIONS
DAVID P. ROE, Tennessee, Chairman
Joe Wilson, South Carolina Robert E. Andrews, New Jersey
Glenn Thompson, Pennsylvania Ranking Member
Tim Walberg, Michigan Dennis J. Kucinich, Ohio
Scott DesJarlais, Tennessee David Loebsack, Iowa
Richard L. Hanna, New York Dale E. Kildee, Michigan
Todd Rokita, Indiana Ruben Hinojosa, Texas
Larry Bucshon, Indiana Carolyn McCarthy, New York
Lou Barletta, Pennsylvania John F. Tierney, Massachusetts
Kristi L. Noem, South Dakota Rush D. Holt, New Jersey
Martha Roby, Alabama Robert C. ``Bobby'' Scott,
Joseph J. Heck, Nevada Virginia
Dennis A. Ross, Florida Jason Altmire, Pennsylvania
C O N T E N T S
----------
Page
Hearing held on February 22, 2012................................ 1
Statement of Members:
Andrews, Hon. Robert E., ranking member, Subcommittee on
Health, Employment, Labor and Pensions, prepared statement
of......................................................... 31
Kelly, Hon. Mike, a Representative in Congress from the State
of Pennsylvania............................................ 4
Prepared statement of.................................... 5
Roe, Hon. Phil, Chairman, Subcommittee on Health, Employment,
Labor and Pensions......................................... 1
Prepared statement of.................................... 3
Statement of Witnesses:
Bishop, Kathleen, IOM, president/CEO, Meadville-Western
Crawford County Chamber of Commerce........................ 12
Prepared statement of.................................... 14
Joint, Lori, director of government affairs, Manufacturer &
Business Association....................................... 21
Prepared statement of.................................... 23
Kanterman, Patti-Ann, chief financial officer, Associated
Ceramics & Technology, Inc................................. 33
Prepared statement of.................................... 35
Knecht, Will, president, Wendell August Forge................ 42
Prepared statement of.................................... 43
Koehler, Georgann, retired SEIU member, psychiatric aide..... 16
Prepared statement of.................................... 19
Nelson, Paul T., owner and CEO, Waldameer Park, Inc.......... 36
Prepared statement of.................................... 38
Vitt, Ralph, owner, Vitt Insure.............................. 39
Prepared statement of.................................... 40
White, Hon. Donald C., senator, State of Pennsylvania;
chairman, Committee on Banking and Insurance............... 7
Prepared statement of.................................... 10
HEALTH CARE: CHALLENGES
FACING PENNSYLVANIA'S WORKERS
AND JOB CREATORS
----------
Wednesday, February 22, 2012
U.S. House of Representatives
Subcommittee on Health, Employment, Labor and Pensions
Committee on Education and the Workforce
Washington, DC
----------
The subcommittee met, pursuant to call, at 1:00 p.m.,
Butler Township Administration Building, 290 S. Duffy Road,
Butler, Pennsylvania, Hon. Phil Roe [chairman of the
subcommittee] presiding.
Present: Representatives Roe and Kelly.
Staff Present: Casey Buboltz, Coalitions and Member
Services Coordinator; Benjamin Hoog, Legislative Assistant;
Brian Newell, Deputy Communications Director; Todd Spangler,
Senior Health Policy Advisor; Daniel Brown, Minority Policy
Associate.
Chairman Roe. A quorum being present, the subcommittee on
Health, Employment, Labor and Pensions will come to order.
Good afternoon, everyone. First I want to thank the people
of Butler, Pennsylvania for hosting today's hearing on the
Health, Employment, Labor and Pensions Subcommittee. Thank you
all sincerely for being here.
Second, allow me to extend our appreciation to the
witnesses for being with us today. We are grateful for the
opportunity to hear your thoughts and personal experiences on
the very important issues of healthcare and job creation.
Over four years ago, our nation fell into the worst
recession since the Great Depression. Businesses closed. Jobs
were lost. Savings disappeared. And countless lives were
transformed in the pain of the economic downturn. While we've
had some modest progress in recent months, we still have a long
way to go before we reach the height of prosperity our
families, employers and workers once enjoyed.
Recently the Gallop Polling Company talked to a number of
small business owners who said they weren't looking to hire any
workers. And Gallop asked why. The vast majority expressed
concerns about the state of the economy and poor sales.
However, 46 percent of small business owners cited fear of
government regulations, and 48 percent pointed to rising
healthcare costs.
As a policymaker, these responses by our nation's leading
job creators are startling, yet not unexpected. For too long
some in Washington have viewed our economic crises as the
political means to advance an agenda that ignores real
challenges facing our nation. This disturbing trend over the
last several years has destroyed virtually any sense of
certainty in the economy, making it more difficult for
businesses to grow and create jobs.
Perhaps the greatest example of this misguided agenda was
the healthcare reform legislation signed into law in 2010. At a
time when millions of Americans were looking for work and
taxpayers were swimming in government debt, Democrats in
Washington were advancing a multi-trillion dollar government
takeover of healthcare. A lot of lofty promises were made in an
attempt to win public support, yet the reality of such new
healthcare law is one of broken promises.
We were told it would help lower healthcare costs.
President Obama pledged in his plan to decrease insurance
premiums by $2,500 for the average family. Not true. The Kaiser
Family Foundation reports that the average family health plan
now costs more than $15,000 thanks to a nine percent increase
in costs just last year.
We were told if you like your current healthcare plan, you
can keep it. Not true. The President's decision to force
private employers including religious organizations to offer
services that may violate their moral beliefs demonstrates that
Washington is in control, and significant changes to our
healthcare are inevitable.
Finally, we were told that the law will create millions of
jobs. Again, not true. At the center of the Affordable Care Act
are job-crushing mandates and regulations. Employers with more
than 50 workers are now forced to provide expensive and
government-approved health insurance. If they can't afford to,
they face a fine of $2,000 per worker except for the first 30
workers.
We've heard many employers--we will hear more today--
describe the difficult choices they now face, choices between
providing government-approved healthcare and cutting hours or
laying off workers. It is clear the healthcare law is failing
to adjust to the challenges facing our country. In fact, in
many ways, it's making things worse.
I'm committed to repealing this government takeover of
healthcare. Pursuing the right reforms and lower costs to
workers will not undermine the success of employers. I know
it's a commitment shared by Representative Kelly and many of
our colleagues across the country as well. The questions we
will ask today are: What types of responsible reforms will help
reign in the cost of healthcare? How can we turn recent gains
we've seen into long-term economic growth? And what do the
people of Pennsylvania see as the challenges facing their state
and country and where do they believe the road to prosperity
lies?
I look forward to our discussion. Before I kick it over to
Mike Kelly, let me just tell you who I am a little bit. I grew
up in middle Tennessee on a small farm. The first home I lived
in didn't have indoor plumbing or running water. The school I
went to the first year of my life didn't have indoor plumbing
or running water.
My dad was a union member. He worked for B.F. Goodrich
making shoe heels in a factory and never made $10,000 a year in
his life until he died. My mother was a bank teller. I went to
college at Austin Peay, a small college in my hometown, worked
my way through college, worked in medical school, served in the
2nd United States Infantry Division, took a small family to
east Tennessee just to go work as a doctor and raise my family.
I've had the privilege of working in the medical school in
Johnson City, Tennessee and growing our practice from four
doctors to 87 and 350 employees. And the problem in America
today is--and this is something that absolutely--when I got to
Congress three years ago, I worked for 31 years practicing
medicine. I'm an OB doctor. I've delivered almost 5,000 babies.
Let me tell you it worked out pretty well making deliveries on
the voters. I can tell you that. [Laughter.]
Chairman Roe. But I saw the cost of what was hurting
America, being denied to my patients. The American healthcare
system is the greatest in the world, but it cost too much money
to go to the doctor.
Number two, we have a segment of our population that can't
afford health insurance coverage. I've seen those patients in
Appalachia where I live.
And, third, we have a liability crisis in America. We're
going to be here today to discuss those things and listen to
all sides of this. I'm really looking forward to this. This is
not the first time I've done this.
We have been in Evansville, Indiana, really around the
country. I'm a doctor that's been in Congress for three years.
I'm not a career politician. Neither is Mike Kelly.
Now, without objection, I'll recognize Representative
Kelly, a strong advocate on behalf of Pennsylvania's families
and job creators.
[The statement of Dr. Roe follows:]
Prepared Statement of Hon. Phil Roe, Chairman, Subcommittee on
Health, Employment, Labor and Pensions
Good morning, everyone. First, I want to thank the people of
Butler, Pennsylvania for hosting today's hearing of the Health,
Employment, Labor, and Pensions Subcommittee. Second, allow me to
extend our appreciation to the witnesses for being with us today. We
are grateful for the opportunity to hear your thoughts and personal
experiences on the very important issues of health care and job
creation.
Over four years ago, our nation fell into the worst recession since
the Great Depression. Businesses closed, jobs were lost, savings
disappeared, and countless lives were transformed by the pain of a deep
economic downturn. While we've made some modest progress in recent
months, we still have a long way to go before we reach the height of
prosperity our families, employers, and workers once enjoyed.
Recently, the Gallup polling company talked to a number of small
business owners who said they weren't looking to hire new workers right
now. Gallup asked: Why? The vast majority expressed concerns about the
state of the economy and poor sales. However, 46 percent of small
business owners cited fear of government regulations and 48 percent
pointed to rising health care costs.
As a policymaker, these responses by our nation's leading job
creators are startling yet not unexpected. For too long, some in
Washington viewed our economic crisis as the political means to advance
an agenda that ignores the real challenges facing the nation. This
disturbing trend of the last several years has destroyed virtually any
sense of certainty in the economy, making it more difficult for
businesses to grow and create jobs.
Perhaps the greatest example of this misguided agenda was the
health care reform legislation signed into law in 2010. At a time when
millions of Americans were looking for work and taxpayers were swimming
in government debt, Democrats in Washington were advancing a multi-
trillion dollar government takeover of health care.
A lot of lofty promises were made in an attempt to win public
support, yet the reality of the new health care law is one of broken
promises. We were told it would help lower health care costs. President
Obama pledged that his plan would decrease insurance premiums by $2,500
for the average family. Not true. The Kaiser Family Foundation reports
that the average family health plan now costs more than $15,000--thanks
to a nine percent increase in cost just last year.
We were told if you like your current health care plan, you can
keep it. Not true. The president's decision to force private
employers--including religious organizations--to offer services that
may violate their moral beliefs, demonstrates that Washington is in
control and significant changes to our health care are inevitable.
Finally, we were told the law would create millions of new jobs.
Again, not true. At the center of ObamaCare are job crushing mandates
and regulations. Employers with more than 50 workers are now forced to
provide expensive and government-approved health insurance. If they
can't afford to, they face a fine of $2,000 per worker (except for the
first 30 workers). We've heard many employers, and we will hear more
today, describe the difficult choices they now face, choices between
providing government-approved health care and cutting hours or laying
off workers.
It is clear the health care law is failing to address the
challenges facing our country. In fact, in many ways, it is making
things worse. I am committed to repealing this government takeover of
health care and pursuing the right reforms that will lower costs for
workers while not undermining the success of employers. I know that is
a commitment shared by Representative Kelly, and many of our colleagues
across the country as well.
The questions we will ask today are: What types of responsible
reforms will help rein in the costs of health care? How can we turn the
recent gains we've seen into long-term economic growth? What do the
people of Pennsylvania see as the challenges facing their state and
country, and where do they believe the road to prosperity lies? I look
forward to our discussion.
Without objection, I will now recognize Representative Kelly, a
strong advocate on behalf of Pennsylvania's families and job creators,
for any opening remarks he wishes to make.
______
Mr. Kelly. Thank you, Doctor. I appreciate that. Today's
hearing is timely and important. I think it's critical for
members of Congress to get outside the Beltway and hear from
the men and women whose lives are affected by policies advanced
in our nation's capital.
The recent recession ended almost three years ago, yet we
continue to struggle through a very difficult time in a
sluggish economy. Our state needs jobs.
We've been fortunate to experience modest progress recently
as more Pennsylvanians are working today than a year ago;
however, this progress still does not make up for the
devastation caused by the economic downturn. We must make sure
federal policies continue the gain and are not permitted to
undermine the growth we've seen here in Pennsylvania and across
our nation.
I'm grateful for the opportunity today to come here and
listen to the people in the room. As the doctor and I tell you,
we are not professional politicians. You know my background.
I'm from Butler. I sold cars here for almost 60 years. I
understand how tough it is. I understand what you go through
and the uncertainties you face right now.
So we want to come here to Western Pennsylvania and hear
what Western Pennsylvania had to say, not Washington telling
you what Washington needs to say, but what do you need to say?
What do we need to hear, and what do we need to take back?
Employer provided health insurance is critical to the
healthcare needs of many Pennsylvania families. Roughly 54
percent of Pennsylvanians receive insurance through an
employer, slightly more than the national average.
As a business owner, I, like so employers, am keenly aware
that shifts in healthcare policies can have a dramatic impact
on my business. The costs associated with health insurance can
often determine whether an employer is able to raise wages or
even hire new workers.
You noted, Mr. Chairman, a recent Gallop poll survey of
small businesses currently not looking to add new workers. It
is deeply troubling that one out of every two small business
owners may not be able to hire due to concerns of rising
healthcare costs. The regulations, government regulations
continue, continue to drive their cost of operation up.
This kind of fear and uncertainty among the country's top
job creators poses a clear threat to economic recovery and
future job creation. I know some prefer to focus on a few
provisions in the law that continue to receive bipartisan
support, such as providing coverage to individuals with
preexisting conditions. However, this debate never been about
whether to help those who need help. The choice has never been
between doing nothing and supporting a government takeover of
healthcare.
It has and continues to be about the degree to which we
allow the federal government to dictate some of the most
personal decisions in our lives.
The recent regulatory action taken by the President to
force private employers to offer health services they find
morally objectionable demonstrates that Washington has gone
much too far. Now, we can act smart and sponsor reforms at
lower costs and expand access to care without putting the
federal government in charge of one-sixth of our nation's
economy.
Those who happen to believe that change is only possible
through more government control and more government spending do
a nation a great disservice. We have a responsibility to
actually chart a different course. Our witnesses today are
going to help us do just that. Rest assured we will bring your
thoughts back to Washington, D.C.
We'll use them to persuade some of our reluctant colleagues
that it's time to repeal the law. Get government out of the
way. Get them out of the hair of our job creators and work
towards common sense solutions that we know work every day in
our regular lives to help expand access to affordable
healthcare for all American people.
Doctor, I go back to you.
[The statement of Mr. Kelly follows:]
Prepared Statement of Hon. Mike Kelly, a Representative in
Congress From the State of Pennsylvania
Today's hearing is a timely and important event. I think it is
critical for members of Congress to get outside the Beltway and hear
from the men and women whose lives are affected by the policies
advanced in the nation's capitol.
The recent recession ended almost three years ago, yet we continue
to struggle with a difficult and sluggish economy. Our state needs
jobs. We've been fortunate to experience modest progress recently as
more Pennsylvanians are working today than a year ago. However, this
progress still does not make up for the devastation caused by the
economic downturn. We must make sure federal policies support continued
gains, and are not permitted to undermine the growth we've seen here in
Pennsylvania and across the nation.
I am grateful for the opportunity today to listen to folks in this
room describe the challenges facing families in the Keystone state, and
learn what you see coming in the horizon. Regrettably, I don't have to
tell you that numerous new mandates and regulations will soon threaten
our workplaces, thanks to the health care law many of us have dubbed
``ObamaCare.''
Employer-provided health insurance is critical to the health care
needs of many Pennsylvania families. Roughly 54 percent of
Pennsylvanians receive insurance through an employer, slightly more
than the national average. As a business owner, I, like so many
employers, am keenly aware that shifts in health care policies can have
a dramatic impact on my business. The costs associated with health
insurance can often determine whether an employer is able to raise
wages or hire new workers.
You noted, Mr. Chairman, a recent Gallup survey of small businesses
currently not looking to add new workers. It is deeply troubling that
one out of every two small business owners may not be hiring due to
concerns of rising health care costs and government regulations. This
kind of fear and uncertainty among the country's top job creators poses
a clear threat to our economic recovery and future job creation.
I know some prefer to focus on a few provisions in the law that
continue to receive bipartisan support, such as providing coverage to
individuals with pre-existing conditions. However, this debate has
never been about whether we help those who need help. The choice has
never been between doing nothing and supporting a government takeover
of health care.
It has and continues to be about the degree to which we allow the
federal government to dictate some of the most personal decisions in
our lives. The recent regulatory action taken by the president that
will force private employers to offer health services they find morally
objectionable demonstrates Washington has gone too far.
We can enact smart, responsible reforms that will lower costs and
expand access to care without putting the federal government in charge
of one-sixth of our nation's economy. Those who would have us believe
that change is only possible through more government control and
spending do the nation a great disservice.
We have a responsibility to chart a different course and our
witnesses today will help us to do just that. Rest assured, we will
bring your thoughts to Washington, D.C. and use them to persuade our
reluctant colleagues that it is time to repeal ObamaCare, get
government out of the way of our job creators, and work toward
commonsense solutions that help expand access to affordable health care
for the American people.
______
Chairman Roe. Pursuant to Rule 7(c), all members will be
permitted to submit written statements to be included in the
permanent hearing record. Without objection, the hearing record
will remain open for 14 to allow such statements and other
extraneous material referenced during the hearing to be
submitted to the official hearing record.
Now, Mr. Kelly, would you introduce our witnesses.
Mr. Kelly. Thank you, Mr. Chairman.
First of all, on panel one--we have two panels today--we
have Honorable Don White. Senator White is a State Senator
serving the people of Pennsylvania's 41st District since 2001.
Before entering public service, Senator White was an insurance
broker. So he knows very much what it is we're talking about
today.
Ms. Kathleen Bishop is also with us. She is the President
and CEO of the Meadville-Western Crawford County Chamber of
Commerce in Meadville, Pennsylvania. Ms. Bishop specializes in
the areas of economic, social, educational and political
progress for the Meadville area.
Also Ms. Georgann Koehler is a retired SEIU member and
psychiatric aide. She is from Pittsburgh, Pennsylvania.
Ms. Koehler, thank you for being here.
Ms. Lori Joint is here. She is the director of government
affairs for the Manufacturing and Business Association in Erie,
Pennsylvania, a manufacturing and business partnered with more
than 4,500 businesses in Pennsylvania, New York and Ohio,
providing employee benefit services, government representation
and employee training programs. Ms. Joint holds a degree in
political science from Gannon University.
Lori, thank you for being here today. Mr. Chairman.
Chairman Roe. Before we start today, we live in a free
nation. I've had the privilege of being in Afghanistan with our
troops in the last 90 days, and I would like, if you would, to
stand and let's first have you introduce Mr. Nelson.
Mr. Kelly. Thank you very much. We have with us today--one
of our witnesses is Mr. Paul Nelson. And there are a lot of
Veterans with us today. So if we could, all those Veterans who
are in the room, please stand so we can recognize you and thank
you for the great service you provide to our country.
[Applause.]
Chairman Roe. If everybody will rise, we will start.
[Pledge of Allegiance.]
Chairman Roe. Before I recognize you to provide your
testimony, let me briefly explain our light system. You have
five minutes to present your testimony. When you begin, the
light in front of you will turn green, and when one minute is
left, the light will turn yellow. When your time has expired,
the light will turn red, at which point I'll ask you to wrap up
your remarks as best you're able. I won't interrupt you, but
please be mindful of the lighting system. I'd appreciate it if
you will.
After you have testified, members will each have five
minutes for questions. And we will start now with the Honorable
Mr. Don White.
Thank you for being here, Mr. White.
STATEMENT OF HON. DON WHITE, SENATOR PA-41, PENNSYLVANIA STATE
SENATE
Mr. White. Thank you very much. It's very uplifting to have
my local congressman, who is also a longtime small businessman,
and have somebody from the medical profession down in D.C.,
especially on an issue like this. It's gratifying. I appreciate
your service.
I want to thank you for the opportunity to discuss the
impact of the Federal Patient Protection and Affordable Care
Act on the individual state's employers, particularly those
doing business here in our Commonwealth of Pennsylvania. As
chairman of the Pennsylvania State Senate Committee on Banking
and Insurance, I've had a front row seat on the development of
state action in the Commonwealth of Pennsylvania to comply with
this law, and I have discussed this matter at length with my
colleagues, business leaders, hospitals, healthcare providers
and consumers.
To begin with, I want to make it clear that Pennsylvania is
taking the initial steps to comply with this federal mandate by
January 1, 2013. The last thing anyone in Pennsylvania wants is
for the federal government to take this over and issue edicts
over the people of our state. I'm sure that feeling is echoed
by my peers in most other states. Yes, the Patient Protection
and Affordable Care Act is yet another mandate on states,
businesses, individuals and families.
We recognize the legislation may have passed along with the
best of intentions, but let's be clear that it's a mandate
being passed along with little guidance, no funding for states
or for the businesses that will be impacted by these
requirements.
At this point, as the time for compliance continues to
elapse, let me make it clear there is a tremendous amount of
anxiety and trepidation at the state level among the business
community. Yes, we are moving forward in implementation. But
this progress is tempered by the sense of pragmatic caution. No
one is comfortable with taking an aggressive approach in
implementation.
We've had little or no guidance in this matter, nor do we
have a model to work from. It's true that Massachusetts and
Utah have developed systems similar to what is being mandated
by the Federal Patient Protection and Affordable Care Act. But
those systems are vastly different in structure, and I don't
believe that either would serve as an appropriate model for the
people of Pennsylvania.
With legislation pending in the U.S. Supreme Court and with
the Presidential election set for November of this year, there
is a lack of confidence that the federal Patient Protection and
Affordable Care Act will stand unscathed and remain unchanged
when all is said and done. The actions we take now may end up
being superfluous and even contrary to the ultimate compliance
if this measure or any part of it ultimately becomes effective.
This uncertainty has a detrimental effect on Pennsylvania's
economy, business growth and job creation in Pennsylvania. At
this point, no one is even certain what must be covered under
the Act. The states and employers see a requirement for
essential health benefits. But no one knows what is going to
fall under the parameters of ``essential benefit.''
Granted, the federal Department of Health and Human
Services is currently providing some latitude in states in this
area, but it remains an area of contention and likely a fertile
ground for litigation. The controversy surrounding mandated
contraceptive coverage is a prime example of the controversy
that will surround this provision, and it certainly will not be
the only area of contention.
As I've seen on numerous occasions at the state level and
particularly in insurance coverage as monitored by the
Committee on Banking and Insurance, the broad questions of
what's in and what's out and the various nuances therein are
rife for dispute and contention.
As additional essential benefits are added, the cost that
must be borne by government and employers will increase as
well. We still need answers to some important actuarial value
and cost sharing questions that will determine whether the
package is affordable.
Looking down the road, the confident of this mandate on the
states are already set to increase because of the Medicaid
expansion as was clearly described in Forbes magazine on
January 27, 2012, and I quote, ``The healthcare reform law
passed in March 2010 provides for substantial expansion of the
must cover population, essentially anyone from a family with
income below 138 percent of the federal poverty line, an amount
that varies based on family size, this is a major component of
the healthcare reform law. According to the Congressional
Budget Office, half of the uninsured, who they project to
become covered as a result of the new law, will obtain coverage
because of the Medicaid expansion.
``From the state's point of view, the problem is how will
they come up with the money to cover their share of the cost of
healthcare for these additional people. The health reform law
provides a partial answer. The federal government will pay for
the entire cost of coverage for those who are newly eligible
but only for the first three years, from 2014 to 2016. The
federal government will reduce its contribution to 95 percent
in 2017, dropping to 90 percent in 2020 and thereafter.
``For states to pay ten percent of the cost may not seem
like much, though it might turn out to be quite a substantial
sum of money given the large numbers of people involved. The
fact is that most states budgets are already strained, and
Medicaid spending is already one of the largest items in every
state budget.''
I strongly concur with the author's opinion. In fact, one
of the key cost drivers in the proposed 2012 state budget just
unveiled by Governor Corbett on February 7 were mandated
increases of more than $800 million to the Department of Public
Welfare. The Governor responded to those mandates proposing a
shift of expenditures within the department which ultimately
could result in increased cost for counties and/or reduction in
human services available for the citizens. An increase in state
Medicaid cost, even if only ten percent of the expansion, will
surely have an adverse impact on Pennsylvania's state budget
and will lead to further reductions in support for other key
services and programs and a broad-based tax increase on
employers and/or individuals.
In particular, small business owners are going to be
crushed by the federal Patient Protection and Affordable Care
Act. I live in a small borough of Indiana, Pennsylvania. We
have a fair sized university surrounded by quite a few small
businesses that I assure you will never make the Fortune 500.
Yet these small operations are the heart of my community. They
provide good jobs, important services, and many are going to be
hit with unnecessary cost.
As you know, the federal act adds an employer mandate for
all firms with 50 or more full-time employees, regardless of
their trade or line of business. These businesses are still
waiting for regulatory definitions on seasonal and temporary
workers and whether they count toward that arbitrary 50-worker
threshold. They're also facing the impact of the fee on small
business health insurance plans. While this is being called a
fee, it's actually a tax on small business.
The Congressional Budget Office, the CMS actuary--it's an
independent Medicare actuary--and the Joint Committee on
Taxation all confirm that these costs would be passed on to the
consumer. As a result of the Manager's Amendment, House
Resolution 3590, the legislation exempts self-insured
businesses and select, select, not-for-profit insurers,
corporations and labor unions.
Those exceptions are a devastating blow to small business
because they are forced to bear the brunt of this tax in the
form of significant premium increases in a fully insured
market. Additionally, the law includes an unprecedented
increase in Medicare payroll on income over $200,000 for
individuals, 250 for joint filers. Adding to the problem, wages
are not indexed for inflation meaning that more small
businesses, particularly those employing 20 to 200 workers,
will face this tax increase each year.
Since the majority of small business owners pay their taxes
at the individual level, this tax will hit the business income
of many small business owners who collectively provide jobs for
more than one-quarter of the American workforce. Proponents of
this federal Act claim the cost and economic burdens of this
mandate will be offset by a small business tax credit. However,
the reality is it will do little to make purchasing insurance
affordable for small firms. Although the credit is intended to
offset the cost of insurance, these savings expire after five
years at maximum.
I realize I've gone over my time. I apologize for that. But
in closing, I want to thank you for the opportunity to address
this, and I truly think it's about time. I'm grateful to see
you out of the Beltway and out here addressing something that
as we kick this can down the road, the date of implementation
of this with each passing day is a burden that a lot of people
are starting to be quite well aware of. So I thank you very
much.
[The statement of Mr. White follows:]
Prepared Statement of Hon. Donald C. White, Senator, State of
Pennsylvania; Chairman, Committee on Banking and Insurance
Thank you for this opportunity to discuss the impact of the federal
Patient Protection and Affordable Care Act on the individual states and
employers, particularly those doing business in the Commonwealth of
Pennsylvania.
As Chairman of Pennsylvania State Senate Committee on Banking and
Insurance, I have had a front row seat on the development of state
action in the Commonwealth of Pennsylvania to comply with this law and
I have discussed this matter at length with my colleagues, business
leaders, hospitals, health care providers, and consumers.
To begin with, I want make it clear that Pennsylvania is taking the
initial steps to comply with this federal mandate by January 1, 2013.
The last thing that anyone in Pennsylvania wants is for the federal
government to take this over and issue addition edicts over the people
of my state--and I am sure that feeling is echoed by my peers from most
other states.
And, yes, the Patient Protection and Affordable Care Act is yet
another mandate on states, on business and individuals and families.
We recognize that this legislation may have been passed along with
the best of intentions, but let's be clear that it is a mandate being
passed along with little guidance, no funding for states or for the
businesses that will be impacted by its requirements.
At this point, as the timeframe for compliance continues to elapse,
let me make it clear that there is a tremendous amount of anxiety and
trepidation at the state level and among the business community.
Yes, we are moving forward, in implementation, but this progress is
tempered by sense of pragmatic caution.
No one is comfortable with taking an aggressive approach in
implementation.
We've had little to no guidance on this matter.
Nor do we have a model to work from.
It is true that Massachusetts and Utah have developed systems
similar to what is being mandated by the Patient Protection and
Affordable Care Act, but those systems are vastly different in
structure and I don't believe that either would serve as an appropriate
model for Pennsylvania.
With legislation pending in the US Supreme Court and with a
presidential election set for November, there is a lack of confidence
that federal Patient Protection and Affordable Care Act will stand
unscathed and remain unchanged when all is said and done. The actions
we take now may end up being superfluous and even contrary to ultimate
compliance if this measure, or any part of it, it ultimately becomes
effective.
This uncertainty has had a detrimental effect on Pennsylvania's
economy, business growth and job creation in Pennsylvania.
At this point, no one is even certain what must be covered under
the Patient Protection and Affordable Care Act. The states and
employers see a requirement for ``essential health benefits,'' but no
one knows what is going to fall under the parameters of an
``essential'' benefit.
Granted, the federal Department of Health and Human Services is
currently providing some latitude to the states in this area, but it
remains an area of contention and likely a fertile ground for continued
litigation.
The controversy surrounding mandated contraceptive coverage is a
prime example of the controversy that will surround this provision and
it certainly will not be the only area of contention. As I've seen on
numerous occasions at the state level, and particularly in insurance
coverage as monitored by the Committee on Banking and Insurance the
broad questions of ``what's in'' and ``what's out'' and the various
nuances therein are rife for dispute and contention.
As additional ``essential benefits'' are added, the cost that must
be borne by government and employers will increase as well. We still
need answers to some important actuarial value and cost-sharing
questions that will truly determine whether the package is affordable.
Looking down the road, the costs of this mandate on the states are
already set to increase because of the Medicaid expansion, as was
clearly described by Forbes on January 27, 2012:
``The health reform law passed in March 2010 provides for a
substantial expansion of the ``must cover'' population--essentially
anyone from a family with income below 138% of the federal poverty line
(an amount that varies based on family size). This is a major component
of the health reform law: according to the Congressional Budget Office,
half the uninsured who they project to become covered as a result of
new law will obtain coverage because of the Medicaid expansion.
``From the states' point of view, the problem is, how will they
come up with the money to cover their share of the cost of health care
for these additional people? The health reform law provides a partial
answer: the federal government will pay for the entire cost of coverage
for those who are newly eligible--but only for the first three years,
from 2014 to 2016. The federal government will reduce its contribution
to 95% in 2017, then in stages, dropping to 90% in 2020 and thereafter.
``For states to pay 10% of the cost may not seem like much, though
it might turn out to be quite a substantial sum of money, given the
large numbers of people involved. The fact is that most state budgets
are already strained, and Medicaid spending is already one of the
largest items in every state budget.''
I strongly concur with the author's opinion. In fact, one of the
key cost drivers in the proposed 2012-13 state budget unveiled by
Governor Corbett on February 7, 2012 were mandated increases of more
than $800 million in the Department of Public Welfare. The Governor
responded to those mandates by proposing to shift expenditures within
the Department, which ultimately could result in increased costs for
counties and/or a reduction in human services available for citizens.
An increase in state Medicaid costs, even if only 10 percent of the
expansion, will assuredly have an adverse impact on Pennsylvania's
state budget and would lead to further reductions in support for other
key services and programs and/or a broad-based tax increase on
employers and/or individuals.
In particular, small business owners are going to be crushed by the
federal Patient Protection and Affordable Care Act. I live in the small
borough of Indiana, Pennsylvania. We have a fair-sized state university
surrounded by quite a few small businesses that will never make the
Fortune 500 list. Yet, these small operations are the heart of the
community. They provide good jobs and important services and many are
going to be hit with unnecessary costs.
As you know, the Patient Protection and Affordable Care Act adds an
employer mandate for all firms with 50 or more full-time employees,
regardless of their trade or line of business. These businesses are
still waiting for regulatory definitions on seasonal and temporary
workers and whether they count toward that arbitrary 50 worker
threshold.
They are also facing the impact of the ``fee'' on small business
health insurance plans. While this is being called a ``fee,'' it is
actually a tax on small business. The Congressional Budget Office
(CBO), CMS Actuary (an independent Medicare Actuary), and the Joint
Committee on Taxation (JCT) all confirm that these costs will
ultimately be passed on to consumers. As a result of the Manager's
Amendment to H.R. 3590, the legislation exempts self-insured businesses
and select not-for-profit insurers--corporations and labor unions.
These exemptions are a devastating blow to small business, because they
will be forced to bear the brunt of this tax in the form of significant
premium increases in the fully-insured market.
Additionally, the law includes an unprecedented increase in
Medicare payroll on income over $200,000 for individuals and $250,000
for joint filers. Adding to the problem, wages are not indexed for
inflation, meaning that more small businesses, particularly those
employing 20 to 200 workers, will face this tax increase each year.
Since the majority of small business owners pay their taxes at the
individual level, this tax will hit the business income of many small
business owners who collectively provide jobs for more than one-quarter
of the American workforce.
Proponents of the Patient Protection and Affordable Care Act claim
the costs and economic burdens of this mandate will be offset by a
small business tax credit. However, the reality is it will do little to
make purchasing insurance affordable for more small firms. Although the
credit is intended to offset the cost of insurance, these ``savings''
expire after five years at maximum. Only 309,000 small businesses--out
of the four million advertised by proponents--had claimed the credit as
of October 2011.
In summary, this mandate will negatively impact the Commonwealth of
Pennsylvania is many ways. Without knowing what costs and mandates they
will ultimately be subjected to, business owners have told me that they
are hesitant to hire on new staff without know what, if any additional
costs they will be subjected to if certain provisions of the Patient
Protection and Affordable Care Act become effective.
Plain and simply, this law and the uncertainty that surrounds it
are job killers.
Again, I thank you for this opportunity to address this panel and
provide you with the facts about how this measure is impacting the
Commonwealth of Pennsylvania, our businesses, our individuals and our
families.
I would now be happy to answer your questions.
______
Chairman Roe. Thank you, Senator White. Your comments and
all of your testimony will be in the record in full.
Ms. Bishop?
STATEMENT OF KATHLEEN BISHOP, PRESIDENT/CEO, MEADVILLE-WESTERN
CRAWFORD COUNTY CHAMBER OF COMMERCE
Ms. Bishop. Congressman Kelly, Congressman Roe, thank you
for the opportunity to testify before the Subcommittee on
Health, Employment, Labor and Pensions. I am president and CEO
for the Meadville-Crawford County Chamber of Commerce. Our
chamber is 205 years old this year, and we represent over 500
businesses in the northwestern Pennsylvania area. We are a
community of tool and die manufacturing, professional services,
medical facilities, gas and well services and home to Allegheny
College.
I am not a healthcare expert, and I am definitely not an
expert on the healthcare reform law. I am a chamber president
who has passion for business owners and employees who want to
work for awesome companies. My time with you this afternoon is
limited, so I will share with you a few concerns and comments
of our chamber members.
But before I do, I would just like to give you an example
of the impact that will happen in our own chamber. With us
being 205 years old, we are a nonprofit organization, and we
depend on our members to pay their dues just to maintain our
existence. We have a staff of five that varies in the ages of
40 to 65 years old. Not all of our employees want or need
healthcare benefits provided by the chamber.
However, under the new healthcare reform bill, in 2014 we
will face a $2,000 fine per employee. Now, $10,000 may not seem
like a lot of money to other businesses, but for us, it means a
lot. Membership in our chamber is $250 per member. We would
need to grow and retain an additional 40 members per year above
and beyond what we are already growing just to pay this fine,
or we would have to raise the price of our membership dues.
Neither of these two options would we be able to attain.
With the economy as the buzz word and businesses pulling
back on marketing to offset the cost of labor and goods, we are
already finding that membership dues at a local chamber of
commerce is not on the priority list. We could struggle to make
it to our 210 anniversary. Nonprofits are facing many
challenges. Rising state and local taxes and unemployment
taxes, raising costs on holding events for the benefit of
communities and promoting our member businesses and employees
who are not typically paid well.
We believe that healthcare is essential. I am one of the
employees who have health insurance at the chamber; however, I
also in the past have looked for employers that have optional
healthcare coverage, and that is my right as an American. It
should also be the right of my employer.
Back in the day, if you were looking for work, you either
chose the employer who had benefits or who didn't. You also
knew that if they offered health insurance, you had a good
chance at a retirement plan, vacation pay and paid holidays,
but sometimes you just wanted a good old-fashioned job where
you worked on straight commission and you took care of
yourself. Just as men and women are not the same size and
created equal, neither are businesses created equal.
The Healthcare Reform bill cannot be a one size fits all.
We should have the right to choose. I am here today
representing over 500 businesses, and I have asked them to give
me some thought on healthcare reform. Here's what just a few of
them said. One chamber member business says stop advertising on
TV for prescription drugs. Repeal the reform. Just let private
businesses continue to work with health insurance companies and
brokers to allow them to be competitive and thrive. Our rates
were comparable today to what they were ten years ago with the
same coverage and minimal out-of-pocket expenses for our
employees. More government will just screw it up even more.
Another chamber business says allow healthcare insurance
companies to cross state lines. If car insurance companies can
do it, why can't the health insurance carriers. As a small
business, there are some days when it is tough enough just to
make payroll. I can't even imagine also paying a fine because I
couldn't afford to pay for health insurance.
Lastly, our chamber also shares the echos of the U.S.
Chamber of Commerce, and here are their concerns. The U.S.
Chamber's plan to control cost, improve quality and expand
coverage, point one, repeal the most enormous provision of
PPACA. The new healthcare law creates new mandates and taxes on
businesses and individuals. While the chamber supports the
repeal of the Patient Protection and Affordable Care Act, we
recognize that the total repeal in the 112th Congress is
unlikely.
Therefore, we stand ready to work with Congress to repeal
the provisions, including the employer mandate and many new
taxes that will be passed onto employers and employees in the
form of higher premiums.
Two, push back through written comments on regulations
implementing PPACA. The chamber has filed over 28 comments to
highlight the operational problems and unintended consequences
of the rapidly drafted flawed regulations issued to instruct
how to comply with the new mandates and requirements on
healthcare reform.
Three, enact meaningful medical liability reform. The
chamber supports healthcare caps on punitive damages and other
medical liability reforms that ensure fair damage awards,
eliminate frivolous lawsuits and lower the costs.
Four, expand access to care. The chamber supports
strengthening employer-sponsored health insurance by expanding
its availability and affordability to every worker. We also
believe that the playing field must be leveled to allow
individual consumers, families and small businesses purchase
coverage on a tax preferred basis while protecting the benefits
of a uniform federal regulatory system.
Five, support consumer-focused healthcare. Congress should
make account-based plans more attractive to small businesses
increasing the flexibility and improving the transparencies of
cost and quality data to permit Americans to shop smart for the
best care. We support repealing the ban on flexible spending
accounts and house savings accounts to purchase over-the-
counter products without a prescription and repealing the
limitation on flexible spending account contribution levels to
2,500. Realign reimbursement mechanisms to reward quality, not
quantity.
We urge Congress make it easier for employers and insurers
to develop insurance plans that they pay for quality, not
quantity, to reward doctors for keeping patients healthy.
Seven, rein in Medicare and Medicaid fraud abuse. Medicare
and Medicaid fraud runs rampant and costs taxpayers tens of
billions of dollars every year. A broad array of
countermeasures should be enacted immediately.
And, lastly, advocate for workplace wellness and disease
management. The chamber supports favorable tax treatment for
companies who offer workplace wellness plans and incentive
participation.
Thank you for the time this afternoon. Thank you for your
willingness to serve our great country. And I urge you to
repeal the healthcare reform bill and let Americans get back to
work.
[The statement of Ms. Bishop follows:]
Prepared Statement of Kathleen Bishop, IOM, President/CEO,
Meadville-Western Crawford County Chamber of Commerce
Thank you for the opportunity to testify before the Subcommittee on
Health, Employment, Labor, and Pensions.
I am President/CEO of the Meadville-Western Crawford County Chamber
of Commerce. Our Chamber is 205 years old and represents over 500
businesses in the Northwestern PA area. We are a community of Tool &
Die, Manufacturing, Professional Services, Medical facilities, Gas &
Well Services and Allegheny College.
I am not a healthcare expert and I definitely am not an expert on
the Health Care Reform Bill. I am a Chamber President who has a passion
for business owners and employees who want to work for awesome
companies. My time with you this morning is limited and so I will share
with you a few comments our Chamber members.
Our Chamber is 205 years old, a non-profit organization that
depends on its members to pay their dues for us to maintain our
existence. We have a staff of 5 people that varies in ages from 40-65.
Not all the employees want or need health insurance from us. However,
under the Health Care Reform Bill, in 2014 we could face a $2,000 fine
per employee. Now $10,000 is not a lot compared to many other
businesses, but here is what it will mean to us.
Membership is $250.00 per member; we would need growth and retain
an additional 40 businesses per year above what we are already growing
just to pay the fines. Or, we would have to raise the price of the
dues. Neither is an option. With the economy as the buzz word and
businesses pulling back on marketing to offset the costs of labor and
goods we are finding that membership dues at your local Chamber of
Commerce is not on the priority list. We could struggle to find it to
year 210!
Non-Profits are already facing many challenges, rising state and
local taxes and unemployment taxes, rising costs on holding events for
the benefit of the community and promoting our members businesses and
employees who are not typically paid well.
We believe that Health Care is essential; I am one of the employees
who have the health insurance at the chamber. However, I look for
employers to have as an option Health Care coverage, and that is my
right as an American. It should also be the right of my employer.
Back in the day, if you were looking for work you either chose the
employer who had benefits or you didn't. You also knew that if they
offered Health insurance then you had a good chance at a retirement
plan, vacation pay and paid holidays. But, sometimes you just wanted a
good old fashioned job where you worked on straight commission and you
took care of yourself.
Just as men and women are not the same size and created equal,
neither are businesses created equal, the Health Care Reform Bill
cannot be a one size fits all. We should be able to choose!
Because I am here today representing over 500 businesses I had
asked them to give me some thoughts on the Health Care Reform Bill and
here is what just a few said.
One chamber member business says:
Stop TV Advertising of prescription drugs.
Repeal reform.
Just let private businesses continue to work with health
insurance companies and brokers and allow competition to thrive--our
rates are comparable today to what they were 10 years ago with the same
coverage and minimal out of pocket expense for our employees.
More government will just screw it up more!
Another Chamber member business says:
Allow Health Insurance companies to cross state lines. If
car insurance can do it, why can't health insurance carriers.
As a small business, there are some days when it is tough
just to make payroll. I can't imagine having to also pay a fine because
I couldn't afford to purchase health insurance for the employees.
Lastly we share the same thoughts as the U.S. Chamber of Commerce
The U.S. Chamber's Plan to Control Costs, Improve Quality, and
Expand Coverage:
Repeal the most onerous provisions of PPACA: The new
health care law creates new mandates and taxes on businesses and
individuals. While the Chamber supports the repeal of the Patient
Protection and Affordable Care Act (PPACA), we recognize that total
repeal in the 112th Congress is unlikely. Therefore, we stand ready to
work with Congress to repeal the most egregious provisions, including
the employer mandate and the many new taxes that will be passed on to
employers and employees in the form of higher premiums.
Push back through written comments on regulations
implementing PPACA: The Chamber has filed 28 comments to highlight the
operational problems and unintended consequences of the rapidly
drafted, flawed regulations issued to instruct how to comply with the
new mandates and requirements of health reform.
Enact meaningful medical liability reform: The Chamber
supports health courts, caps on punitive damages, and other medical
liability reforms that ensure fair damage awards, eliminate frivolous
lawsuits, and lower costs.
Expand access to care: The Chamber supports strengthening
employer-sponsored health insurance by expanding its availability--and
affordability--to every worker. We also believe that the playing field
must be leveled to allow individual consumers, families, and small
businesses to purchase coverage on a tax-preferred basis while
protecting the benefits of a uniform federal regulatory system.
Support consumer-focused health care: Congress should make
account-based plans more attractive to small businesses by increasing
flexibility and improving the transparency of cost and quality data to
permit Americans to shop smart for the best care. We support repealing
the ban on using Flexible Spending Accounts and Health Savings Accounts
to purchase over-the-counter products without a prescription and
repealing the limitation on Flexing Spending Account contribution
levels to $2,500.
Realign reimbursement mechanisms to reward quality, not
quantity: We urge Congress to make it easier for employers and insurers
to develop insurance plans that pay for quality, not quantity, and
reward doctors for keeping patients healthy.
Rein in Medicare and Medicaid fraud and abuse: Medicare
and Medicaid fraud runs rampant and costs taxpayers tens of billions of
dollars every year. A broad array of countermeasures should be enacted
immediately.
Advocate for workplace wellness and disease management:
The Chamber supports favorable tax treatment for companies that offer
workplace wellness programs and incent participation.
Thank you for the time this afternoon. Thank you for your
willingness to serve this great country. I urge you to repeal the
Health Care Reform Bill and let America get back to work!
______
Chairman Roe. Thank you, Ms. Bishop.
Ms. Koehler?
STATEMENT OF GEORGANN KOEHLER, RETIRED SEIU MEMBER, PSYCHIATRIC
AIDE
Ms. Koehler. Today I stand here in front of you to tell you
the story of a man who fell through the cracks of a broken
healthcare system, never to return to us again. That man's name
is Billy. He is my beloved brother.
Billy was the born on March 18, 1951. He was baptized
William Anthony, but he was always Billy to me. He was a good
kid and grew up to be a great man. My sister, Katie, describes
him as a man who was loving and generous to his family, friends
and those in need. That love and generosity came easy to him
because of his loving relationship with his Lord and Savior,
Jesus Christ.
Billy was a true believer in the teachings of the Lord that
we are our brothers' and sisters' keepers. Because of that
belief, Billy was a quiet hero to many. Billy suffered his
first cardiac arrest when he was 39. He was diagnosed with
having a sudden death type of arrhythmia. There is no cure for
this arrhythmia, but it is recommended that the patient have an
implanted AICD ready to fire at any time.
Billy was discharged from the hospital with his life saving
defibrillator. He had insurance through his job, so caring for
his heart and his defibrillator wasn't a big deal.
In the spring of 2003, Billy went to work. He heard the
news that the company would be closed. It closed a few days
later. No more VCRs to repair, no more job, no more health
insurance. He sent out application after application hoping to
find another job that offered a fair wage and health insurance.
He went on interviews, but that job was nowhere to be found,
especially for a man who had to wear a Medic Alert bracelet.
Billy didn't want the government to give him anything. He
wanted to buy a private health insurance plan. He called every
health insurance company in Pittsburgh in the hopes of buying a
private plan, but the answer was always the same: Denied due to
his preexisting condition. Billy found a job delivering pizza.
The job paid minimum wage with no benefits, but nonetheless, he
was thankful for the work.
On December 14, 2007 Billy collapsed at work. He was rushed
to a local hospital and was admitted to a 23-hour monitored
bed. His cardiologist came into the room and said, ``Mr.
Koehler, you're a very lucky man. Your defibrillator battery is
so low, I'm surprised it fired this time. It needs to be
replaced.'' The doctor told Billy the replacement would be done
as an outpatient procedure and that he needed to make an
appointment to be seen in the office in three months.
Billy said, ``I have no insurance and I don't know if I'll
have it by the time of the appointment. If I don't, what will
happen?'' The doctor said, ``If you don't have insurance, you
will have to pay up front, and you will have to bring thousands
of dollars with you, or you will not be seen.'' Billy said, ``I
don't know what to do because I don't have thousands of dollars
nor does my family. I don't know what to do.''
It was then the doctor said, ``Mr. Koehler, do you put oil
in your car?'' Billy didn't answer. The doctor said, ``Mr.
Koehler, I asked you a question. Do you put oil in your car?''
Billy replied, ``Of course, I put oil in my car.'' The doctor
then said, ``Do you buy the best oil money can buy so your car
runs smoother and lasts longer? Because that's what you have to
do for your heart.'' Billy said, ``You're talking about a can
of oil that costs me $8.50 to a defibrillator that cost me
$10,000, and that doesn't include the surgery. I'll never have
that kind of money.''
It was then the doctor pointed his finger at Billy and
said, ``You get your priorities straightened out and you'll
come up with that money.'' The doctor left the room and
discharged Billy from his service. Billy was discharged from
the hospital on December 15, 2007.
Billy was pro life. He believed in the importance of life
from conception until natural death. I only saw him mad or
angry three times, when he heard Terri Schiavo's tube feeding
was going to be discontinued, when his cardiologist gave him
that humiliating lecture comparing putting oil in his car to
taking care of his heart, and on that day of discharge, that
day when he walked out of the hospital with a death sentence
handed down by a broken healthcare system and realized that in
our country, unless you have money, you will never have your
health.
On March 6, 2009, Billy went to church to spend his hour at
Adoration. He knelt before the altar thanking and praising God
for his blessings and for that job. He asked God to bless his
family, friends and those in need. He asked his All Mighty
Healer to heal his heart. Billy left work to come home at 5:00
p.m. on March 7, 2009. He drove two blocks, came to a stop
sign, put his car in park and slumped into his steering wheel.
Compassionate strangers came to his aid. They brought him
out of his car and began CPR while others stood in silence
offering their prayers. A teenager placed his sweatshirt under
Billy's head in a gesture of comfort for a man in need. That
day these compassionate strangers didn't care if Billy had
health insurance. All they cared about and all that mattered to
them was doing what they could to give Billy back another day
of life, something his cardiologist could have done, should
have done, and told him no can do. So why didn't he?
The answer is found in a word, and that word is written
throughout his medical record. That word is uninsured.
Today I'm not here to ask you to feel mine and my family's
pain. I would never want to take you there. I am going to ask
you though when you have a minute, maybe watching the sun go
down or standing on the porch sipping a cup of decaf, to close
your eyes and look inside yourself, not to your heart, but to
your soul because that is where you will find your moral
compass. And ask yourself this question: If Billy was alive
today, would his life matter to you? Would you be one of those
compassionate strangers trying your hardest to give Billy
another day of life? If when you open your eyes the answer is
yes, then you will not be able to repeal Affordable Care Act,
an Act that would have saved Billy's life and an Act that is a
hopeful light for millions of Americans who without it are only
left with the thought of death. Thank you. Sorry I went over.
[The statement of Ms. Koehler follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
------
Chairman Roe. Thank you very much for your testimony.
Lori Joint?
STATEMENT OF LORI JOINT, DIRECTOR OF GOVERNMENT AFFAIRS,
MANUFACTURING AND BUSINESS ASSOCIATION
Ms. Joint. Good afternoon. My name is Lori Joint, and I'm
the director of government affairs of the Manufacturing and
Business Association, a regional employers' association that
represents more than 4,500 members throughout 27 counties in
Pennsylvania. I would like to thank Chairman Roe and
Congressman Kelly for providing this opportunity to the discuss
Patient Protection and Affordable Care Act and its impact on
the business community.
Our member companies have been very clear in expressing
their concern and uncertainty over the law and its potential
implications and costs causing many employers to hold off on
plans for growth and investment in their business operations.
We strongly believe in the need for healthcare reform and have
advocated for it for decades. But the act fails to address many
of the long-term problems associated with the cost of
healthcare. We have called for market-based reforms rather than
government takeover of the healthcare industry.
The Act proposes numerous tax hikes that will slow economic
growth, reduce employment and suppress wages. A recent study
from the Heritage Foundation finds that the Act contains 18
separate tax increases that will cost taxpayers $503 billion
between now and 2019. The Cato Institute calculates that the
Act will result in more than $606 billion in new increased
taxes over its first ten years. And the Congressional Budget
Office estimates that the employer mandate will cost businesses
$52 billion in tax penalties from 2014 to 2019.
Employers are concerned about many aspects of the law.
Specific examples and details are in my written testimony. I'd
like to focus this time on comments from some of our member
companies as they are the true job creators.
From Randy in Erie, PA: The PPACA will literally kill my
business. We currently employ approximately 200 people, 50 full
time and 150 part time. We are a minimum wage based business.
Due to competition, our average wage is $7.65 for part time and
$8.50 78 for full time. Adding health insurance would be
approximately twice the cost of the $2,000 penalty. On an
hourly basis, I'd have to add $1.44 per hour plus
administration costs to cover this.
All of my competitors with less than 50 employees would
automatically win every bid by 20 percent. To summarize, the
first year of the Act will cost me every bid and $150,000 in
penalties making it my last year of earning a living and
providing meaningful employment.
From Paul Reid in Lockport, New York. Our company has an
office in Erie, PA as well as a number of retail stores named
Crosby's. This law will drive up healthcare costs and dampen
employment opportunities. Businesses will reduce costs by
eliminating employees in the market. Government bureaucrats
cannot manage the healthcare industry. Only markets can
accomplish this task, markets driven by consumer choice and
consumer responsibility, one of the aspects that this law
affirmatively rejects. This is not being considered in the
damaging effects of the taxes embedded in this law.
From Mark in Meadville, PA. Mark says their company
welcomes opportunity for industry recommended solutions to
address the cost of compliance with care and reduce the
competition that embodies government-mandated provisions for
employee benefits. Without more competition among insurance
providers, the inevitable single payor system for a government-
run healthcare program will be the only option. He says their
company has evaluated the cost impact, and under the law, they
will likely eliminate their healthcare coverage.
From Raine at Hermitage Health, Cambridge Springs. We
strongly feel that the Healthcare Reform Act will significantly
increase health insurance costs, lead to rationing, long waits
for services, drive doctors out of their field and severely
limit options. We will likely be forced to drop all coverage
and let employees fend for themselves.
From Don in Corry. Our premiums are going up eight percent
this year. I think it is unfair we have to cover children up to
age 26 even if they are couch potatoes. I completely agree with
providing coverage while they are in college or technical
school, but this is typical socialism. You're essentially
training our youth to expect entitlements at any early age. The
law penalizes employers with more than 50 employees that have
an employee who opts out of our insurance plan. We are
penalized $2,000 per employer per year. Who wouldn't opt out
and let the government provide the insurance? What happens if
everyone does this?
More examples can be found in my written testimony. Health
insurance has long been the biggest concern of most businesses
and they would truly welcome cost effective reform. However,
they don't consider the PPACA as cost effective reform. Looking
forward, there's cause to believe small businesses will see
higher premiums, greater administrative burdens, reduced
options and many unwanted surprises.
In summary, we need to reform the system in a way that
controls costs. We would ask for market-based reforms that
allow individuals a tax deduction on their premiums, require
all doctors, hospitals and providers of healthcare services to
list their services, outcomes and pricing, create total
transparencies from insurance companies, on all provider
contracts and administrative fees, apply a moratorium on all
unfunded government mandates, allow for the purchase and sale
of insurance products across state lines, allow individuals and
employer sponsored plans to purchase specific services they
want and need as opposed to government-mandated benefits and
services, provide immediate tort reform and allow insurance
companies to properly calculate risk by imposing additional
premium charges to those who refuse to make changes to risky
lifestyle activities.
This represents a small list of actions that would have an
immediate impact on reducing the cost of healthcare, insurance
premiums and utilization.
Thank you once again, Chairman Roe, and members of the
committee, for your interest in learning more about the needs
we want on reform.
[The statement of Ms. Joint follows:]
Prepared Statement of Lori Joint, Director of Government Affairs,
Manufacturer & Business Association*
Good afternoon. My name is Lori Joint and I am the Director of
Government Affairs at the Manufacturer & Business Association (MBA), a
regional employers' association that represents more than 4,500 member
companies throughout 27 counties of Pennsylvania. With offices in Erie,
Williamsport, and Harrisburg, we provide information and services to
our members that will assist them in the pursuit of their business and
community interests.
---------------------------------------------------------------------------
*Additional information and sources included in written testimony.
---------------------------------------------------------------------------
I would like to thank Chairman Roe and members of the House
Subcommittee on Health, Employment, Labor and Pensions, for providing
this opportunity to discuss the impact of the Patient Protection and
Affordable Care Act (PPACA) on the business community. The law is
extremely complicated and there are many rules and regulations yet to
be finalized. Our member companies have been very clear in expressing
their concern and uncertainty over the law and its potential
implications and cost--causing many employers to hold off on plans for
growth and investment in their business operations.
We strongly believe in the need for health-care reform and have
advocated for it for decades. But the PPACA fails to address many of
the long-term problems associated with the cost of health care and
insurance for small businesses. For the past 25 years, we have called
for market-based reforms, rather than a government takeover of the
health-care industry.
The PPACA imposes numerous tax hikes that will slow economic
growth, reduce employment and suppress wages. A recent study from the
Heritage Foundation finds that the Act contains 18 separate tax
increases that will cost taxpayers $503 billion between now and 2019.
The Cato Institute calculates that the PPACA will result in more than
$669 billion in new or increased taxes over its first 10 years.
Employers are concerned about many aspects of the law including:
the requirement for plan sponsors to start reporting health-care
premiums on their employees W-2's, the Patient Centered Outcome
Research Fund Fees and the pending Quality of Care Reporting
requirements. These are examples of government intervention in the
free-enterprise system. I will discuss a few additional sections of the
law that are of concern to the business community.
The employer mandate and ``Essential Health Benefits'' requirement
have many businesses concerned and will likely cause the most harm to
businesses already offering coverage. The Congressional Budget Office
(CBO) estimates that the employer mandate will cost businesses $52
billion in tax penalties from 2014 to 2019. Companies will be forced to
adjust by raising prices, cutting wages and benefits, and reducing
their work force.
The PPACA small business tax credit is complex and narrowly
focused. Less than one-third of small businesses meet the size and
contribution requirements to qualify for the tax credit. This
percentage shrinks if a company increases their work force, gives
raises to employees, employs family members, has part-timers or is more
generous with their insurance offerings--basically discouraging
businesses from hiring or rewarding employees. (Specific example in
written testimony)
More details on these items as well as additional concerns
regarding: new Medicare taxes, Subsidies, Grandfathered status,
Exchanges, Mini-meds and the Health Insurance Premium Tax can be found
in my written testimony. You will hear many facts and statistics today,
some of which are included in my written testimony. I would like to
focus this time on comments from some of our member companies; as they
are the true job creators.
Bonded Services, Inc., Erie, Pennsylvania--Randy R. Nyberg, President/
CEO--238 employees
The PPACA will literally kill my business and the janitorial
services industry (along with lawn care and security services to name a
few). Our business currently employs approximately 200 people (50 full-
time and 150 part-time). We are a minimum-wage based business due to
competition (the minimum wage is $7.25 per hour and our average wage is
$7.65 for part-time and $8.50 for full-time). This hourly wage does not
include purchasing health care insurance, which is totally
unaffordable, and would be approximately twice the cost of the $2,000
PPACA penalty. The penalty for my business would be in excess of
$150,000 annually. On an hourly basis, I would have to add $1.44 per
hour plus administration costs to cover this. All of my competitors
with less than 50 employees would automatically win every bid by 20-
percent. To summarize, the first year of PPACA will cost me every bid
and $150,000 in penalties, making it my last year of earning a living
and providing meaningful employment to hundreds.
The Reid Group--Paul Reid, President--Lockport, NY--64 employees
Our company has an office in Erie, Pennsylvania as well as a number
of retail stores named Crosby's. This law will drive up health-care
costs and dampen employment opportunities. Businesses, especially small
businesses like ours, will reduce costs by eliminating employees in the
margin. Government bureaucrats cannot manage the health-care industry,
only markets can accomplish this task. Markets driven by consumer
choice and consumer responsibility are the key to fixing health care,
and one of the aspects that this law affirmatively rejects (fewer
HSAs). This does not even consider the damaging effects of the taxes
embedded in this law; they will crush our economy in my opinion.
Tech Tool and Molded Plastics, Meadville, Pennsylvania--Mark Hanaway,
Vice-President--114 employees
Mark says their company welcomes the opportunity for industry
recommended solutions to address the cost of compliance, cost of care,
and reduced competition that embodies government mandated provisions
for employee benefits. Without more competition among insurance
providers, the inevitable single-payer system or government run health-
care program will be the only option. He says their company has
evaluated the cost impact and under current law, they will likely
eliminate their health-care coverage.
Ray Overholt, Executive Director, Hermitage House Youth Services,
Cambridge Springs, Pennsylvania--90 employees
We strongly feel that the health-care reform act will significantly
increase health insurance costs, lead to rationing and/or long waits
for services, drive doctors out of their field, and severely limit
options. We will likely be forced to drop all coverage and let
employees fend for themselves.
Cynthia Kramer, Kramer Automotive Specialties, Butler, PA--Five
employees
The new law set up unfunded mandates that have cost us more in
employee health insurance. Highmark has gone from a not-for-profit to a
for-profit company, and they are surcharging us based on the health of
our employee group because they anticipate their costs to skyrocket. To
get the cheapest plan available, coverage has gone up for our small
group by 24 percent, from $531 to $649. Our coverage to keep the better
plan we had before was $794 per person. Our good healthy years no
longer count as we grow older. We are surcharged for the age of our
group as well as the group's health. Next year, I will no longer be
offering employee health care if I can't get a rate under $500 per
person. I can't afford it. My employees are like family to me, and I
want to provide health care, but how can a small business do so with
rates like these?
North Country Brewing Company, Slippery Rock, PA--Bob McCafferty, Co-
owner--60 employees
I own a brewery with a brewpub attached. I also represent 34
restaurants in Butler County for the Butler County Tourism and
Convention Bureau. I feel that there are many honest employers who do
what they can for their employees, and don't need the government in
their day-to-day business. Restaurants have razor thin profit margins.
We offer health care to full-time employees and hope they build their
career with us. We struggle to remain open due to the government-
involved regulations and the way they have expanded in such a short
time. The more regulations, the more paperwork, longer timelines and
impossible prices are killing businesses. The health-care reform law
just adds one more layer. I think if the government wants to run all of
our businesses, then they should start by reviewing their own P&L.
EA Mundkowsky Finishing LLC--Elsie A Mundkowsky, Owner/President
The health-care law is so complicated that you have to have an
attorney just to be able to know what is expected. I know that it will
cost me money and I am already hanging by a thread. I really don't
think that my business can handle much more out-of-pocket. There are so
many regulations, insurances and taxes that it is so hard to keep my
head above water. So as a very small business owner, I must tell you
that I can't afford anything else. I just want to pay the people that
work for me, pay my bills and I get no help from the government at all.
I just keep getting taxed and taxed to death. Profit must be a dirty
word.
Corry Micronics, Corry, Pennsylvania--Don Pavlek, President--30
employees
Our premiums are going up 8-percent this year. I think that it is
unfair that we have to cover children up to age 26 even if they are
couch potatoes. I completely agree with providing coverage while they
are in college or technical school but this is typical of socialism. We
are essentially training our youth to expect entitlements at an early
age. The law penalizes employers with more than 50 employees that have
an employee who opts out of our insurance plan. If we are penalized
$2,000 per employee per year, who wouldn't opt out and let the
government provide the insurance. What are the consequences if everyone
does this?
In addition, I received many shorter responses with similar
comments and common themes. Health insurance has long been the biggest
concern of most businesses and they would welcome cost-effective
reform. However, they do not view the PPACA as cost-effective reform.
Looking forward, there is cause to believe that small businesses will
see higher premiums, greater administrative burdens, reduced options
and many unwanted surprises.
Thank you for your interest in learning more about the business
community's view on health-care reform. We need to reform the system in
a way that controls cost through private market forces. We would ask
for market-based reforms that: allow individuals a tax deduction on
their premiums; require all doctors, hospitals and providers of health-
care services to list their services, outcomes and pricing; create
total transparency from insurance companies on all provider contracts
and administrative fees; apply a moratorium on all unfunded government
mandates; allow for the purchase and sale of insurance products across
state lines; allow individuals and employer-sponsored plans to purchase
the specific services they want and need, as opposed to government-
mandated benefits and services; provide immediate tort reform; and
allow insurance companies to properly calculate risk by imposing
additional premium charges for those who refuse to make changes to
risky lifestyle activities. This represents a small list of actions
that would have an immediate impact on reducing the costs of health
care, insurance premiums, and utilization.
Thank you once again, Chairman Roe and members of the committee,
for taking the time to hear from so many concerned business owners and
constituent groups throughout this process.
______
Chairman Roe. Thank all the witnesses. You all have done a
great job. We're going to try to stay within our five minutes.
Let me start by saying you can't get--when you look at the
healthcare, this has bugged me from day one--is that healthcare
should not be a Republican or Democrat problem. It's an
American problem. I've never seen a Republican or a Democrat
heart attack in my life. I've never operated on a Republican
and Democrat cancer.
The hardest decision I've had in my life was to sit down
next to a friend's bedside and say, ``There's nothing more I
can do for you as a physician. You're in God's hands.'' I've
dealt with that over the three decades in my life. It's not
about whether--it's what's the best way to do it. How much
should government be involved?
Do we need healthcare reform? Absolutely. Well, what did
this plan do? And what concerned me greatly are our senior
citizens. It took $550 billion out of an already underfunded
Medicare plan. I am Medicare age. I'm on Medicare. We have 3
million baby boomers retiring each year going to the Medicare
system. In ten years, we're going to have $550 billion less to
spend on 36 million more people. I can tell you what's going to
happen. You're going to have less access to care. The quality
of your care is going to go down and the cost is going to go
up. That's the first time in the history, taking money that's
designated for our senior citizens and move it to another
entitlement, very first time in the history of our country.
I run a business and my healthcare out of my practice. And
we have a situation where we pay about $6,000 per employee. Ms.
Joint, you mentioned this is extremely important. Businesses
around that 50 mark, or in my case, 350, if I go out and pay
this, if one person moves off into the exchange, I then can
drop my employees off into the exchange, and I can save
myself--I can pay a $2,000 fine. I got to pay tax on that
money. I can save $3,000 per employee. For me that's $900,000
to my business. Why wouldn't I do that?
Businesses are asking why wouldn't I ask Secretary Sebelius
that. I can tell you a Fortune 500 company came to my office in
D.C. and said it's going to cost us $120 million, this mandate
is. Because remember, you don't get to decide what your health
insurance is. Essential benefit package is decided by the
government, not you and your business and what you can afford.
The example I used at lunch today is very--so bear with me.
I've been fixed. My wife has been fixed. We got three grown
kids. We don't need any more children. I got two grandkids. But
an essential benefits package--and I'm going to jump off the
tallest building in Johnson City, Tennessee face first in the
parking lot if I thought I was going to have another child at
my age. You get the idea. But an essential benefits package may
require me to buy fertility insurance coverage for my wife.
She's 55, 56 years old.
So the question is: Why shouldn't those decisions be made?
Why aren't companies going to do exactly what I just mentioned?
Ms. Joint. I'm not sure I understand exactly what is----
Chairman Roe. If you're about 50, why wouldn't you drop it
and pay the fine and have your employees going into the
exchange?
Ms. Joint. That is the argument or the question, I guess,
or the concern of a lot of the businesses. In their cases, for
many of them depending on what their costs are, it would make
more sense to do that. But then the question becomes what if
everybody does that? Where does the money come from to paper
all that? There have been estimates of how many people go into
the exchanges and what that would do fiscally.
Chairman Roe. Another thing I liked about all this is--I
have three children--to allow your adult-aged child to stay on
until age 26. That's a good deal. It actually costs about two
and a half percent of a premium to do that. So it does increase
the cost, but what people don't tell you about that is what if
you don't have a mom and dad--the way the actuaries do this
now, it used to be a six to one. You could charge anybody at my
age six times what you would charge a young adult. Now that
ratio has been changed to three to one. So a youngster that's
out there now trying to buy insurance on their own that doesn't
have a parent that can afford it, their price just went up two
times.
Senator White, I want to ask you a question. In Tennessee
we tried healthcare reform in 1993 called TennCare. It's a
managed care plan. Basically it covered--because we're not a
very rich state. We have a lot of people and our per capita
incomes are low. We tripled our cost in ten years. Our Governor
Haslam and Governor Bredesen, who is a Democrat, had to deal
with it as to the 2,000, almost bankrupted our state. Right now
this mandate to expand Medicaid--quite frankly, the Medicaid
and the 26 year olds may be the most coverage that's expanded.
It could be between 15 and 24 million more people on Medicaid.
How is that going to affect the budget of the State of
Pennsylvania if you added that many more people? You all have
probably done the estimates.
Mr. White. The situation with the budget of Pennsylvania,
which as I know Congressman Kelly is aware, is about as
streamlined as you possibly could get it. The $800 million of
additional premium in dollars that we have to spend on Medicare
coverage this year is on a $27.2 billion budget, pretty
dramatic, considering that if we had a--our governor in his
infinite wisdom--we had a $500 million surplus last year, and
despite a lot of people that wanted to rant and rave about
spending that money decided to hold onto it. Thank God, because
we have an $800 deficit this year. Just compound that year
after year after year, not even to begin to mention--if I may
make one statement, Congressman.
This is near and dear to me. I don't know of any other
landmark legislation that's ever been done at the Congressional
level that wasn't done by bipartisan support. That's not the
case here. That's not the case at all. The number of
stakeholders that had limited input into this piece of
legislation is abominable.
Chairman Roe. Senator, my time has expired, but I will make
one final statement. There are countless issues in the 111th
Congress, 115 of them this year. Not one time was I asked about
anything in the 2,500 page bill, which I read in its entirety,
maybe one of the few people. As I said today, it doesn't say a
lot about my intelligence, but I read every page of it, and
there have been ten that are--and the regulatory writers are
still writing--over 10,000 pages of rules right now and still
counting.
Yield the time now to Mr. Kelly.
Mr. Kelly. Thank you, Mr. Chairman. I want to thank you,
everybody, that came before us today in testifying. I'm going
to come about it from a little different approach. What we
talked was a field hearing on healthcare challenges and facing
Pennsylvania's workers and job creators. I just want to make
sure that we understand. This has never been about healthcare,
never been about the things that touch--pull at our heart
strings. It's about what we can afford to do and what we can
provide. And then what happens when we realize that there's a
lot of things that this bill puts in there that are totally
unaffordable and decrease the amount of accessibility.
So if it's about affordability, it's about accessibility,
it certainly missed the mark. Senator, I know what Pennsylvania
faces. Really the challenges we face today in everything that
we're looking at, all the shortfalls we have are because of the
fact that we don't have enough people working. We don't have
enough companies making profits. Because the last time I
looked, tax revenues drive all of these opportunities and all
of these packages that we have available. Services we have
available for people is paid for by taxpayers, hard working
Americans that go to work every day and spend their money on
taxes that the state collects, local municipalities collect,
school districts collect, the federal government collects, and
every time they buy something, there's a sales tax. You are so
overtaxed right now, I just wonder what--the old saying is
don't worry about the mule; just slow the wagon--at what point
does the mule say I'm unhitching myself from the wagon.
Again, this is not about somebody's healthcare. This is
about affordability and accessibility. And I have to tell you
from a guy who hires people, when I don't know what it's going
to cost to actually pay somebody, it's hard to make that
decision. And I would ask you, because in your years since
2001, as you go through your district, the number one concern
of job creators, small business people, what do you hear from
them?
Mr. White. Well, in this case, they talk about fees. But
they're talking we need jobs. We need job creators. We need
entrepreneurs. And in this environment we currently have in
Pennsylvania, as you're very well aware, Congressman, to come
to Pennsylvania and want to conduct a business and be from out
of state, be from out of country--this is a global economy--in
my opinion--and you're an exception; you had a very exceptional
career as a local businessman--I think you'd have to be one of
three things: You'd have to have family entrenched here in
Pennsylvania or you'd have to be philanthropist or you'd have
to be plain stupid. And I mean that sincerely about our working
environment here in Pennsylvania.
We're behind so many different states. You at the national
level are well aware of our CNI and a few other of our little
issues. My hope is that--you put a burden like this on top of
this, which doesn't address cost of insurance, all this is is
minor insurance reform. This has nothing to do with the cost.
How can you discuss overall medical reform when you don't
even discuss for one minute tort reform, medical malpractice
and defensive medicine, Doctor? How does this happen? Does
everybody in your position and my position want to make sure
that everybody out there has access to affordable insurance?
Yes, we do. But the key word is affordable, and you can't place
the burden on one segment of society.
Mr. Kelly. Thank you, Senator.
Ms. Bishop, also Ms. Joint, because you come into contact
with so many small business people and job creators, truly if
this nation is to recover, it will come from the small sector.
It will come from the private sector and job creators, small
business people. That's where it's going to come from. It's not
going to come from government growing bigger and bigger every
day which takes more and more out of your pocket to operate.
It's going to come from the private sector.
You talk to people every day, as I do. Just if you could,
because you're involved with associations, some of the
challenges that your folks face. You talk to them on a very
personal basis and you know what they're talking about when
they're wringing their hands and they're saying I want to be
able to do this. I'm just not sure what it's going to cost me.
I think that's the part that's so hard to explain to people. As
a job creator, as an employer, you really don't know what this
is going to cost you ultimately.
If you could, Ms. Bishop and Ms. Joint, because you talk to
so many of these folks on a very personal basis, if you could
just share a little bit of that.
Ms. Bishop. You're exactly right, Congressman. Part of the
challenge is when you're running a business, you have a budget
set up. You know how much income is coming in, and you
anticipate how many expenses are going to go out. Could you
imagine trying to run that budget and having no idea how much
in expenses, you don't know how much in income. We can't even
do that on our own personal level. You know when you bring home
your paycheck how much in bills you have to pay. Well, what if
all of a sudden you didn't know what your bills are and you
don't know if your salary is even going to be able to match a
quarter of it, half of it, or what the case may be.
There are a lot of scared business owners in our community,
and healthcare is just one piece. The other part of it is we
have jobs in northwestern Pennsylvania. We can't get people to
go to work. Two reasons. One, they can't pass a drug test. Two,
they don't want to come off the unemployment extended vacation
plan. So that is a huge concern in our community. So you
compound those three together, and you've got a lot of business
owners really worried about the future.
Mr. Kelly. Thank you. Ms. Joint.
Ms. Joint. I've been with our association for almost 20
years, and I've met some wonderful, wonderful business owners
all over the State of Pennsylvania and beyond. I can tell you
they do care about their employees. They do want to see good
things happen and help them and have things be reasonable;
however, some of the comments that I didn't have time to
include in my testimony today is, you know, my employees are
like family to me. This is so hard for me, but I literally
cannot afford one more thing.
And what a lot of it comes down to--we do a lot of surveys
and we go out and meet, talk with businesses--it's regulations.
First, they don't understand it, and that's, I think, one of
the biggest things. Now that I've really studied a lot of the
different parts of this, there are so many different parts of
this law that people have no idea, that don't even make sense.
There's no common sense to it. I think you're seeing that as
the federal government starts to back out of some of the things
and change some of the things they've done.
So it's the uncertainty of this, but it's the regulations.
They look at this in many ways as what more. I can't tell you
how many times I hear ``One more thing and I'm out of business,
one more thing and I'm going to have to lay off people that
work for me, they're going to have no job,'' because we
literally--I don't want people to think all these businesses
are making--I'm not talking even a GE or whatever.
I'm talking your typical, what most of our members are,
which are your five employees to 25 employees, and they feel
like they can't get a break. And this is one more thing on top
of it. It's very sad as a human being and a person to go out
and see these things. It's very, very sad. So it's one more
regulation on top of what they're already facing.
Mr. Kelly. Thank you. And just so you both can weigh in,
we're not talking about huge employers like GE and GM and AK
Steel. We're talking about very small family-owned businesses
that struggle every day to make it, and they hire our sons and
daughters and they're the ones that enable us to stay in the
communities we live in right now by providing that type of
work.
So thanks so much for coming here today. Senator, it's good
seeing you again. Ms. Koehler, thank you so much.
Chairman Roe. Just one final statement before you leave. I
think you've all been great, great panel. Let me say that
Secretary Sebelius has granted over 1,700 waivers so far. If
this bill was that great, why would you have to have 1,700
waivers? Let me give you--when they wrote this, it was written
with such speed and went through no committee hearings. The
Senate, the bill, did not have any committee hearings.
I picked this up and wrote to the IRS. When you have a
state run exchange, the subsidies that the federal government
gave you are not as much as what your employers have been
paying, and the other is not tax deductible. So it cost the
person getting the insurance through the exchange more. When
you get in the weeds and start reading this, about half of you
understand that.
Secondly, what they did in this was stagnate--missed that
tax deductibility on the state run, the government run, federal
run exchange. Texas is facing that right now. So they created
an IRS problem with the people in Texas.
You all have been great. Thank you very much. We'll let you
go and then we'll have the second panel step up.
Before we introduce our next panel, Mr. Kelly, I'd like to
introduce for the record the Ranking Member, Rob Andrews, who
would like to include a statement.
Without objection, so ordered.
[The information follows:]
Prepared Statement of Hon. Robert E. Andrews, Ranking Member,
Subcommittee on Health, Employment, Labor and Pensions
Good Morning, Mr. Chairman. As we all very well know, health care
costs have been skyrocketing for decades. And for decades, Congress
failed to do anything about it. Recognizing that reforming this
country's health care system could wait no longer, congressional
Democrats passed and President Obama signed the historic Affordable
Care Act into law nearly two years ago.
This law takes control of health care away from the multibillion
dollar insurance industry and returns it to American families where it
belongs. And, while much of the law will not be fully implemented until
2014, today, millions of Americans are already benefiting.
Medicare is stronger. Seniors are paying less for prescription
drugs. Young adults are able to stay on their parents' health plan.
Children who need life-saving medical attention can no longer be denied
coverage due to a pre-existing condition, and all Americans are
protected against lifetime limits and rescissions. Additionally, small
employers can obtain substantial savings in health care costs through
the small business tax credit.
Pennsylvanians now have long overdue protections against their
insurance companies.
Nearly 7.7 million Pennsylvania residents can no longer be
subjected to a lifetime limit cap on their health coverage.
Nearly 680,000 Pennsylvanians no longer face the
uncertainty that their health insurer can drop their health coverage
when they need it the most.
More than 32,000 young adults in Pennsylvania may now have
coverage through their parent's health plan because of the law.
Nearly 4,400 previously uninsured Pennsylvanians with a
preexisting condition have already obtained coverage through the law's
Pre-existing Condition Insurance Plan.
Employers are also realizing the benefits of the law. More than
179,000 small employers in the state may be eligible for the law's
small business tax credit. More than 430 employers in Pennsylvania and
their employees are paying less for retiree health care after receiving
more than $106 million in financial assistance through the Early
Retiree Reinsurance Program.
And when the Affordable Care Act is fully implemented, the law will
extend access to quality, affordable health care coverage to those who
need it. Americans will no longer fear losing their health insurance if
they change jobs, decide to start a small business or have a
preexisting condition.
Employers could see even more savings through the elimination of
pre-existing condition underwriting, medical loss ratio standards,
states successfully combating unreasonable premium increases, and
reforms such as Accountable Care Organizations that pay for quality of
outcomes, rather than quantity of tests.
Seniors are also seeing significant benefits right now. Last year,
235,820 Medicare beneficiaries in Pennsylvania who hit the Medicare
prescription drug donut hole saved a total of $156 million on their
prescriptions--an average of $662 per beneficiary. That is a
significant savings. One million seniors on Medicare received at least
one preventive service last year, including almost 59,000 annual
wellness visits, without cost sharing or deductibles. With the passage
of the Affordable Care Act, Pennsylvania has received funding to plan
for a health insurance exchange, support programs that prevent illness
and promote health, strengthen the health care workforce, and invest in
groundbreaking biomedical research. Specifically, the state has
received:
More than $48 million to support 231 projects in the state
that show potential in producing new and cost-saving therapies. More
than $18 million for primary care training that will expand and support
Pennsylvania's primary care workforce.
$2 million to allow school based health centers to expand
and provide more services to students in Pennsylvania.
Nearly $2 million for community and clinical prevention
services that will help Pennsylvania prevent and manage costly
conditions.
A $1 million exchange planning grant to conduct the
research and planning necessary to build a health insurance exchange.
Despite doomsayers, putting patients and doctors back in control of
their health care hasn't hurt the economy. In fact, more than 500,000
jobs have been created in the health care field since the law's
enactment with more than 3.5 million private sector jobs created
overall nationwide.
All of these critical reforms would vanish if the law is repealed.
Seniors would pay more for their prescriptions and preventive care,
young adults would no longer have to ability to stay on their parents'
plan, and insurance companies could once again discriminate based on a
preexisting condition.
While House Republicans have pressed for repeal, their only
alternative to the Affordable Care Act thus far has been a proposal to
end Medicare as we know it.
This would be a disaster for our nation's seniors. This plan will
increase costs faster and shift more of the burden on the back of
seniors themselves. Even after paying into the system for decades, the
107,000 individuals between 44 and 54 in this congressional district
would have to pay more than $6,000 per year in increased costs in 2022
and pay about $12,000 more per year in increased costs in 2032 under
the Republican plan to end the Medicare guarantee.
To cover these additional costs, a 54-year-old would need to save
$182,000 by the time he or she retires to purchase health insurance. I
don't know a whole lot of working people who can scrape up an extra
$182,000 before they retire.
As we approach the second anniversary of the Affordable Care Act,
we should be reinforcing the protections that hard working families now
enjoy under the law. We should not be finding ways to end Medicare. In
closing, spending our precious time refighting the same political
battles will not move this country forward. The American people deserve
better. In the short time left in this Congress, we should be working
together to put more Americans back to work and strengthen the middle
class.
______
Mr. Kelly. Thank you, Mr. Chairman. Our second panel is
also made up of local business owners all from this area, and I
think it's really important to understand the whole purpose of
this hearing was not to ask you to come to Washington, D.C. so
Washington, D.C. could hear your concerns. It was to come out
in the field and meet you in the places where you live and the
businesses that you run, be able to get your feelings and your
weigh-in on what the federal government is doing.
First I'd like to introduce Ms. Cathyann Kanterman. She
serves as the chief financial officer for Associated Ceramics &
Technology in Sarver, PA. Associated Ceramics & Technology
employs 33 Pennsylvanians and specializes in engineering and
manufacturing complex ceramic products. Thank you, Ms.
Kanterman.
Mr. Paul Nelson, as you may remember, he was our Veteran
who we asked to do the Pledge of Allegiance. I want you to
listen to where Mr. Nelson came from. He's the owner of
Waldameer Park & Water World in Erie, PA which a lot of us know
because we grew up going there on weekends. Mr. Nelson started
at Waldameer as a dishwasher 67 years ago, and he's owned that
park since 1978. The park employs 400 part-time seasonal
workers.
Mr. Nelson, thanks for being here.
Also, Mr. Ralph Vitt, who owned Vitt Insurance in
Pittsburgh for 20 years. His expertise was in providing
business owners with healthcare. Mr. Vitt holds both a
Bachelor's and a Master's degree from the University of Akron
in Akron, Ohio.
Good to have you with us. Thank you.
Mr. Will Knecht is the president of the Wendell August
Forge in Mercer, Pennsylvania. If there's a person in this area
that doesn't know of Wendell August Forge and have a piece in
their home, then you haven't lived here very long. Mr. Knecht
runs the oldest small metal forgery in the United States
producing what I think is the most beautiful handwrought metal
that I've seen since 1923.
Thank you all for being here, and we appreciate you taking
time out of your professional and private lives to come and
share your experiences with us. Mr. Chairman.
Chairman Roe. Remember the light system. Five minutes. It
will turn amber when you've got one minute, turn red when your
time is expired. We will not gavel you right in the middle of
it, but please try to wrap it up, if you would.
Ms. Kanterman?
STATEMENT OF CATHYANN KANTERMAN, CHIEF FINANCIAL OFFICER,
ASSOCIATED CERAMICS & TECHNOLOGY
Ms. Kanterman. Thank you, Mike, for inviting us here today,
first of all.
Secondly, our business was started by my father and two
partners over 45 years ago. So we're a family-owned business,
and I'm part of the family, and I've been working there for
over 20 years.
I've been involved with the purchase of our employee
benefits for over 15 years. We have 41 employees. We offer
healthcare insurance to our full-time employees, and we
currently cover 33 employees' healthcare insurance at a cost of
more than a quarter of a million dollars per year. Add to that
our HRA reimbursements in 2011 of $12,000.
The Federal Patient Protection and Affordable Care Act of
2010 is concerning for me mostly on the things it did not do.
It did not reduce the cost of insurance. It did not reduce the
uncertainty of offering insurance. It did not force insurance
companies to disclose any information to purchasers, us
employers. And it did nothing to address the supply side of the
healthcare equation.
As far as reducing the cost of insurance, the affordable
care part of the title of this bill was a misnomer. The bill
added coverage to millions of people. It's my belief that
anyone who thinks you can cover more people and reduce the
overall cost of insurance must be delusional. The tax on
medical device manufacturers and the small business insurance
tax will be passed onto us, the employers. The fact that so
many employers and unions have requested exemptions from
provisions of the bill indicate that those employers and unions
do not believe the Act will reduce the cost of insurance.
Our insurance this past year increased 11 percent. So
again, I don't see how that is affordable care. In regard to
reducing the uncertainty of offering insurance, as more and
more provisions of the Act are enacted, the uncertainty of
offering insurance to our employees will certainly increase.
The uncertainty is part of the reason that we are currently
using temporary services to fill our position and working
overtime with our current employees rather than adding
additional employees.
We also need to be mindful of the additional requirements
as we approach the magical number of 50 employees. At that
number we will not be eligible for healthcare exchanges. We
will be subject to penalties if we choose not to offer
insurance. Another area of uncertainty is the FSA limits.
Currently if one of our employees covers more than just the
individual employee, we offer--we, the company, pays two-thirds
of the premium and the employee pays the one-third, and we do
that through a premium only FSA.
With the new limit of $2,500 for the tax deductible part of
that FSA, our employees will no longer be able to cover the
full one-third of their premium payment. And this is basically
a tax increase on working class employees. And keep in mind
that's at today's cost. It doesn't factor in any future
increases on those premiums. Suppose that the lack of tax
deductibility of the premium and the increase in insurance
encourages our business to drop the coverage and pay our
employees a flat rate to cover their own insurance. I would
predict other than employees with known health issue, many of
our employees would take those premium dollars, put them in
their pocket and pay the penalty rather than purchase
individual insurance policies due to the artificially low
penalty that this bill imposes.
When those employees get sick or have health problems, the
elimination of preexisting conditions from insurance policies
will make it easy for them to buy insurance at that time.
Therefore, only truly sick people will be buying insurance, and
the cost of insurance will probably be astronomically high. So
the penalty for buying insurance will also have to increase
astronomically. This will cause our employers to come back to
us and request a pay increase to cover the cost of either the
insurance or the penalty. How can this not lead to inflation.
Where are the market forces?
With regard to forcing insurance companies to disclose
information to employees as the purchasers of insurance, I
think that Congress could have actually used this bill to help
us as small employers when we are dealing with health insurance
companies. As I told you in the opening, we pay a quarter of a
million dollars for our insurance.
Our health insurance provider does not tell us how much
money they pay on behalf of our employees. You know that they
know a hundred percent exactly how much they pay, but they
don't have to tell us unless we have more than a hundred
employees. Our business is too small to put time and effort and
financial resources into a program like a wellness program
without knowing what the pay-off or potential pay-off might be.
As to the supply side of the healthcare equation, it
bothers me that this bill does nothing to address supply. Where
is the assistance to get more primary care doctors or nurse
practitioners? How can you expect to give coverage to millions
of people and not expect that they want to see a provider?
Finally, I'm concerned about being caught in the excise tax
on high cost plans, the so-called Cadillac tax, even though I
don't think our plan is a Cadillac plan. The excise tax goes
into effect in 2018. We are only 20 percent below the threshold
amount for the excise tax in 2012. With an average increase of
11 to 13 percent, I see zero chance that we won't be in that
excise tax, and that's basically a tax on us as a small
business.
It's disappointing from a business perspective. When the
Congress had a chance to make a change in healthcare insurance
in America, instead of choosing to make the health insurance
industry operate more like a market, they chose to come up with
this whole new concept of accountable care organizations which
have not been defined and cannot be shown to make the market
operate more efficiently.
They increase demand without addressing supply and, as far
as I can tell, did nothing to address the cost of care.
Thank you for your time, and I appreciate being heard. I
also appreciate that Congress repealed the 1099 provision.
[The statement of Ms. Kanterman follows:]
Prepared Statement of Patti-Ann Kanterman, Chief Financial Officer,
Associated Ceramics & Technology, Inc.
My name is Patti-Ann Kanterman. I would like to thank Congressman
Mike Kelly for inviting me here today. I am currently the Chief
Financial Officer of Associated Ceramics & Technology, Inc. This is a
family-owned business that manufactures industrial ceramics for which I
have been working for over 20 years. I have been involved with the
purchase of our employee benefits for over 15 years. We have 41
employees. We offer health care insurance to our full-time employees.
We currently cover 33 employees' health care insurance at a cost of
more than a quarter of a million dollars per year. Add to that HRA
reimbursements in 2011 of over $12,000.
The Patient Protection and Affordable Care Act of 2010 is
concerning for me mostly on the things that it did not do.
1. It did not reduce cost of insurance.
2. It did not reduce uncertainty of offering insurance.
3. It did not force insurance companies to disclose information to
the purchasers (employers).
4. It did nothing to address the supply side of the health care
equation.
As far as reducing the cost of insurance, the ``Affordable Care''
part of the title of this bill is a misnomer. The bill added coverage
to millions of people. It is my belief that anyone who thinks that you
can cover more people and reduce the overall cost of insurance, must be
delusional. The tax on medical device manufacturers and the small
business insurance tax will be passed on to purchasers (employers). The
fact that so many employers and unions have requested exemptions from
provisions of the bill indicates that those employers and unions do not
believe that the Act will reduce the cost of insurance. In fact, our
average increase in insurance over the last 14 years has been 13%,
despite our increase of the deductible for our plan from $0 to $1,250
per person and the addition of an HRA where we reimburse our employees
for one-half of the deductible. Our premium increase from 2011 to 2012
was 11%. We have not realized a reduction in our cost. This is not what
I would call ``Affordable Care''.
In regard to reducing the uncertainty of offering insurance, as
more and more provisions of the Act are enacted, the uncertainty of
offering insurance to our employees will increase. The uncertainty is
part of the reason that we are using temporary services to fill our
open positions and working overtime with our current employees rather
than adding additional employees. We also need to be mindful of the
additional requirements as we approach the ``magical'' number of 50
employees. At that number, we will not be eligible for health care
exchanges and we will be subject to penalties if we choose not to offer
insurance. Another area of uncertainty is FSA limits. Currently, if one
of our employees covers more than the individual, we pay \2/3\rds of
the premium and allow the employee to cover their portion of the
premium through a premium only FSA. With the new limit of $2,500 for a
tax-deductible FSA, our employees will no longer be able to cover all
of their portion of the premium payment through the FSA, effectively
increasing the taxes for the employees. This is a tax increase on
working class employees. Keep in mind that this is at today's cost. It
does not address future premium increases.
Let's suppose that the lack of tax deductibility of the premium and
the increase in insurance cost encourages our business to drop coverage
and pay employees a flat rate to purchase their own insurance. I would
predict that other than employees with known health issues, most of our
employees would take those premium dollars and put them into their
pocket and pay the penalty rather than purchase an individual insurance
policy, due to the artificially low penalty. When those employees get
sick or have a health problem, the elimination of pre-existing
conditions from insurance policies will make it easy for those
employees to purchase insurance at that time. Because only truly sick
people are buying insurance, the cost of insurance will probably be
astronomically high, so the penalty for not buying insurance will
increase astronomically as well. This will cause our employees to come
back to us and request a pay increase to cover the cost of either the
insurance or the penalty. How can this not lead to inflation? Where are
the market forces in this legislation?
With regard to forcing insurance companies to disclose information
to the employers as the purchasers of insurance, I think that Congress
could have used this bill to actually help us as a small employer when
we are dealing with health insurance companies. As I told you in my
opening, we pay a quarter of a million dollars in health insurance
premiums. Our health insurance provider does not tell us how much they
pay out on behalf of our employees. In fact, our health insurance
company tells us that they do not need to tell us that information
until we have over 100 employees. I do not think this is fair. You know
that they know exactly how much they pay out. I do not want to know how
much they pay for employee A versus employee B, I just want to know the
total. It is hard to justify the cost of a wellness program when the
insurance company won't disclose information. Our business is too small
to put time, effort, and financial resources into a program and
``hope'' for a payoff.
As to the supply side of the health care equation it bothers me is
that the bill does nothing to address supply. Where is there assistance
to get more primary care doctors or nurse practitioners? How can you
think that you will give health care coverage to millions more people
and not suspect that they will want to actually see a provider?
Finally, I am concerned about being caught in the Excise tax on
High-Cost plans (the so called ``Cadillac'' tax) even though I don't
think that our plan is a Cadillac plan. The excise tax goes into effect
in 2018. We are only one 20% below the threshold amount for the excise
tax in 2012. At an average of 11-13% annual premium increases, I see
the chances of not meeting the threshold for the excise tax as
extremely slim. So this is another tax on our business in addition to
the small business health insurance tax. Why would the Congress want to
add more taxes to small businesses?
It is disappointing that from a business perspective, when the
Congress had a chance to make a change in health insurance in America,
instead of choosing to make the health insurance industry operate like
a market, they chose to come up with a whole new concept of Accountable
Care Organizations, which have not been defined and cannot be shown to
make the market operate more efficiently. They increased demand without
addressing supply, and as far as I can tell did nothing to address the
cost of care.
Thank you for your time and attention. If nothing else comes of my
testimony, I feel better having been heard.
______
Chairman Roe. Thank you, Ms. Kanterman.
Mr. Nelson, I appreciate your service. I, too, one summer
at Boys Scout Camp washed 350 dishes three times a day. I
decided at that point in time--that had, in fact, convinced me
that chemistry was not that hard.
Mr. Nelson, you're up.
STATEMENT OF PAUL NELSON, OWNER,
WALDAMEER PARK & WATER WORLD
Mr. Nelson. Thank you very much. First of all, I want to
say one thing. We have been successful because we do long-term
planning. We have a five-year plan. We have a ten-year plan.
No way can Congress, the Senate or the President help a
small business if they can't make long-term plans. It's the
most important thing you can do. Our bank needs to know this.
Our management team needs to know it. And our employees need to
know it.
My name is Paul G. Nelson, and I'm owner and CEO of
Waldameer Park, Inc. in Erie, PA. The park opened in 1896 as an
amusement park, and we added a water park to the complex. There
are three generations of our family working in Waldameer. We
have engineers, my daughter who's on a heart team. We have a
lot of college employees. And when you think about seasonal
businesses, our full-time employees make more money than people
working in plants.
I graduated in 1955 with a college degree in business from
Michigan State. Then I served in the Army. At the completion of
my tour in Germany, I came home and became manager of our
family business. I started working when I was 11. I have done
every job in the park. In fact, dishwashing was easy.
I wanted a promotion when I was 12, and I was pretty big
for my age. So I asked the right person. He said, ``Don't
worry. When you come back, you've got that better job.'' I had
a keyring, two keys and a whistle. And, boy, was I impressed
until I found out--I knew where his office was, over the
ladies' room. And every hour on the hour all summer long I blew
that whistle, and I cleaned the toilets in the park.
I'm still working full time. I'm 78, and I love it. I've
been active in our community, in our industry. I've been past
president of the following organizations: I was president of
the Millcreek Township Chamber of Commerce, and I merged it
with the city because I believe that bigness cuts cost. I was
president, and we started in our park office the Erie County
Tourist and Convention Bureau. I was president of the
Pennsylvania Amusement Park Association. I was asked and was on
the bored of our International Association of Amusement Parks
and Attractions several times. I was asked to be president. I
couldn't do that because it's a four-year obligation and you're
traveling all over the world.
The majority of family-owned amusement parks in
Pennsylvania, in our nation, have gone out of business in the
last 10 to 20 years. Waldameer is one of the few successful
family-owned amusement parks that continue to grow. We are
definitely a small business. We only have 18 full-time
employees, and we have 400 seasonal employees. The majority of
the seasonal employees are high school or college students.
We have continued to grow by having long-term plans,
sticking to our family goals, plus an excellent relationship
with our bank. And how do you get a good relationship with your
bank? You pay your bills. You have long-term plans. I meet with
the bank four times a year. Of course, I do admit that I get a
free meal. We operate with a small dedicated full-time staff.
Have a good relationship with our outside contractors. We spend
hundreds of thousands of dollars outside our park having small
contractors work for us.
We find out it's best to go to the experts. We're good at
what we do, but there are other people that are better at doing
some of the stuff we thought we could do. We do this for major
projects. For example, at one time we could buy a major ride
for $25,000 and install it ourselves. Today a major ride costs
in the millions, and we could not install without the help from
the manufacturer and experts in this construction.
For those who know about the Ravine Flyer II, it was voted
the best coaster in the world. It was built the year it came
up. This year will be its fifth season. That cost our small
park $7 and a half million.
Waldameer is one of the major engines in the promoting of
our regional recreation, and we have spent millions of dollars.
We advertise between Buffalo, Pittsburgh and Cleveland on over
150 radio stations.
We know that health insurance is very expensive. We felt we
should do something to help our full-time employees with the
cost. Many years ago we decided to pay 100 percent of the cost.
About ten years ago to help control what our employees were
doing with their insurance and because of the rising of the
cost, we had the employees pick up 20 percent. So any new
employee pays 20 percent. We pay 80.
But all the old-time employees, which is half of our crew,
I promised that I would pay a hundred percent. So we still do
and we will until each one of those retire. Our employees feel
this is a very fair decision, and we all work together.
Our health insurance is handled by HealthAmerica. The
family rate is $12,587 annually. Then it works down for other
classifications. What worries us about the government is for
our part-time employees. We are a seasonal business. We work 90
days a year. That's where the money comes in. The rest of the
time we're spending it. We worry about the state of the
economy, but we also worry about the weather. It's a major
factor in our annual success.
The majority of our part-time employees are students, and
many of them are already on their parents' health insurance
policies. Insurance companies do not want to put on part-time
people for those part-time people could jump on the policy,
have something done, and jump off. Therefore, our cost would go
up to pay for this, and that's something that worries me.
The simple fact is we cannot afford health insurance for
400 part-time employees. Waldameer, one of the main engines to
promote our tourist industry in northwest Pennsylvania, would
just be out of business, and no one would benefit from us
leaving the scene. Thank you.
[The statement of Mr. Nelson follows:]
Prepared Statement of Paul T. Nelson, Owner and CEO,
Waldameer Park, Inc.
My name is Paul T. Nelson and I am owner and CEO of Waldameer Park,
Inc. Waldameer opened in 1896 as an amusement park and added a water
park to the complex. Today there are 3 generations of our family
working at Waldameer.
I graduated in 1955 with a college degree in business from Michigan
State, then served in the U.S. Army. At the completion of my tour in
Germany, I came home and became manager of our family business (at 11
years old I started working at Waldameer, and am still a full-time
employee at the age of 78). I have been active in our community and
industry, being past president of the following organizations:
Millcreek Township Chamber of Commerce, Erie County Tourist and
Convention Bureau, Pennsylvania Amusement Park Association, and on the
Board of the International Association of Amusement Parks and
Attractions several times.
The majority of family owned amusement parks in Pennsylvania and
our nation have gone out of business in the last 10 to 20 years.
Waldameer Park is one of the few successful family-owned amusement
parks that continues to grow. We are definitely a small business, with
only 18 full-time employees and approximately 400 seasonal employees,
and the majority of those are high school and college students. We have
continued to grow by having long term plans, sticking to our family
goals, plus an excellent relationship with our bank.
We operate with a small, dedicated full-time staff and have good
relationships with outside contractors who supplement our staff when we
have major capital projects. For example, at one time we could buy a
major new ride for $25,000 and install it ourselves. Today, a major
ride costs in the millions and we would not be able to install it
without help from the manufacturer and experts that specialize in this
type of construction.
Waldameer is one of the major engines of promoting our region as a
recreational area and have spent millions of dollars advertising
between Buffalo, Pittsburgh and Cleveland.
We know that health insurance is very expensive and felt that we
should help our full-time employees with this cost. Many years ago we
decided to pay 100% of the cost. About 10 years ago, to help control
how our employees were using their health insurance and to help defray
the cost increases, we decided that new full-time employees would pick
up 20% of the cost and we would pay for 80%. For the old-timers we
still pay 100%, as that is what I promised to do. Waldameer employees
feel that this is a fair decision.
Our health insurance is handled by Health America and the family
rate is $12,587 annually and works downward for other classifications.
What worries us is what the government is planning for part-time
employees. We are a seasonal business that is only open 90 days. We
worry about the state of the economy, but the weather is also a major
factor in our annual success. The majority of our part-time employees
are students, and many of them are already on their parents' health
insurance policies. Insurance companies are not interested in part-time
employees being added to our plan. A part-time employee could have an
expensive procedure, then leave employment, sticking the insurance
company with the bill. This increased cost would cause the insurance
company to raise our rates.
The simple fact is that we cannot afford health insurance for 400
part-time employees, and Waldameer, one of the main engines of
promoting the tourist industry in NW Pennsylvania, would be out of
business, and no one would benefit from this situation.
______
Chairman Roe. Thank you, Mr. Nelson.
Mr. Vitt?
STATEMENT OF RALPH VITT, OWNER, VITT INSURANCE
Mr. Vitt. Thank you for the opportunity to testify before
this panel. Today I realize how my alma mater's, the University
of Akron, football team must have felt when they played Penn
State in Beaver Stadium opening season. To their credit, they
stayed the game all four quarters. I intend to do this also.
My name is Ralph Vitt. I owned Vitt Insurance Services in
Pittsburgh for 20 years. My medical insurance company employed
two people, but I worked with countless small business owners
over the years helping them purchase insurance for themselves
and their employees. I have an appreciation of small business
owners' concerns and challenges in buying health insurance,
which is why I speak in support today of the Affordable Care
Act.
There are many reforms in this new law. Some have been
implemented already and others that will be put in place over
the next couple of years that will help small business owners.
Most small employers with whom I have dealt would prefer not to
be part of the healthcare delivery system as purveyors of
medical insurance.
With the advent of insurance exchanges, they may get some
relief both in purchasing a medical plan for their business or
the possibility that many folks will purchase individual plans
giving them affordability to move to another job without loss
of coverage.
In addition, the idea of having medical insurance that is
not contingent upon being with a specific employer will allow
employers to staff their businesses with folks whose training,
experience and career paths are in sync with the success of
their organization. At the same time, employees will not be
forced to remain in a position for which they are not
adequately trained or forego a different career path just
because they need health insurance. The improvement in the
productivity of the employee will, no doubt, improve the
profitability of the business.
Moreover, small business tax credits which are available to
small employers now will also help make insurance more
affordable. The nonpartisan small business majority found that
one-third of small business owners who do not offer health
insurance will be more likely to do so because of the tax
credits and 31 percent of those who do would be more likely to
continue offering insurance because of the tax credits.
In these difficult economic times, every dollar helps and
small businesses appreciate anything that will make insurance
more affordable. I have seen other reports that small
businesses are worried about the cost of healthcare. A small
business majority also released polling that found most small
businesses don't know about many of the provisions to help
them. It's no wonder they're concerned. They don't know these
things exist to help lower costs.
The wellness benefits are a big help in providing
preventive medicine. If medical treatment is needed, reduce the
cost of procedures by acting early in the diagnosis. This will
lower overall healthcare costs across the board.
Additionally, allowing children to stay on their parents'
medical insurance until age 26, regardless of student status,
is an excellent benefit to individuals entering the workforce.
As an example, my granddaughter will graduate from college in
May 2012 and has a job offer that will use her degree in
international business. Her future employer, a small firm of
eight to ten people, does not offer a group medical plan. By
staying on her father's plan, she can accept the offer, work in
a field for which she has trained, and begin a career path
right out of college.
Of the benefits that will be phased in over time, the
guaranteed issue of coverage without regard to preexisting
conditions is, in my opinion, the most important component of
the ACA. Having sold medical insurance for 20 years, I realize
the frustrations people experience when they are declined for
coverage due to medical history. If medical underwriting is no
longer used and the threat of adverse selection is reduced by
requiring that individuals purchase health insurance, the
market will grow exponentially plus broadening the actuarial
base used to determine rates. This will allow individuals to
select plans that fit more closely to their financial and
medical needs.
The Affordable Care Act, if allowed to be fully implemented
and refined, will go a long way to reforming the medical
insurance system that began in the 1940s and has basically
remained static until today. Implementation of this law will
not only help small businesses thrive, but it will also help
our economy as well. Thank you.
[The statement of Mr. Vitt follows:]
Prepared Statement of Ralph Vitt, Owner, Vitt Insure
Thank you for the opportunity to testify before this panel. Today I
realized how my alma mater, the University of Akron's football team,
must have felt when they played Penn State in Beaver Stadium a few
years ago. To their credit, they stayed in the game for all four
quarters as I intend to do.
My name is Ralph Vitt. I owned Vitt Insurance in Pittsburgh for 20
years. My medical insurance company employed two people, but I worked
with countless small business owners over the years, helping them
purchase insurance for themselves and their employees.
I have an appreciation of small business owners' concerns and
challenges in buying health insurance, which is why I speak in support
today of the Affordable Care Act. There are many reforms in this new
law--some that have been implemented already and others that will be
put in place over the next couple years--that will help small business
owners.
Most small employers with whom I have dealt would prefer not to be
a part of the health delivery system as purveyors of medical insurance.
With the advent of insurance exchanges, they may get some relief both
in purchasing a medical plan for their business or the possibility that
many folks will purchase individual plans giving them portability to
move to another job without a loss of coverage. In addition, the idea
of having medical insurance that is not contingent on being with a
specific employer will allow employers to staff their businesses with
folks whose training, experience and career paths are in sync with the
success of their organization.
At the same time, employees will not be forced to remain in a
position for which they are not adequately trained or forego a
different career path just because they need health insurance. The
improvement in the productivity of the employee will no doubt improve
the profitability of the business.
Moreover, small business tax credits, which are available to small
employers now, will also help make insurance more affordable. The non-
partisan group Small Business Majority found that one-third of small
business owners who don't offer insurance would be more likely to
because of the tax credits, and 31% of those who do would be more
likely to continue offering it because of them. In these tough economic
times, every dollar helps and small business owners appreciate anything
that will make insurance more affordable. I've seen other reports that
say small businesses are worried about the cost of healthcare, but
Small Business Majority also released polling that found most small
businesses don't know about many of these provisions to help them. It's
no wonder they're concerned if they don't know these things exist to
help lower their costs.
The wellness benefits are a big help in providing preventive
medicine, and if medical treatment is needed, reduce the cost of
procedures by acting early in the diagnosis. This will lower overall
healthcare costs across the board. Additionally, allowing children to
stay on their parent's medical insurance until age 26 regardless of
student status is an excellent benefit to individuals entering the
workforce. My granddaughter will graduate from college in May, 2012 and
has a job offer that will use her degree in International Business. Her
future employer (a small firm of 8-10 people) does not offer a group
medical plan. By staying on her father's plan, she can accept the
offer, work in a field for which she has trained and begin a career
path right out of school.
Of the benefits that will be phased in over time, the guaranteed
issue of coverage without regard to pre-existing conditions is, in my
opinion, the most important component of the ACA. Having sold medical
insurance for 20 years, I realize the frustrations people experience
when they are declined for coverage due to medical history. If medical
underwriting is no longer used and the threat of adverse selection is
reduced by requiring that individuals purchase health insurance, the
market will grow exponentially, thus broadening the actuarial base used
to determine rates. This will allow individuals to select plans that
fit more closely to their financial and medical needs.
The ACA, if allowed to be fully implemented and refined will go a
long way to reforming the medical insurance system that began in the
1940's and has basically remained static till today. Implementation of
this law will not only help small businesses thrive, but our economy,
as well. Thank you.
______
Chairman Roe. Thank you for staying on time.
Mr. Knecht?
STATEMENT OF WILL KNECHT, PRESIDENT,
WENDELL AUGUST FORGE
Mr. Knecht. Thank you, Mr. Chairman. Again, it's a real
pleasure and a privilege to be here.
I represent 120 folks that I have the privilege of working
with in three states. A sad statement that Congressman Kelly
said, which is an honor, that we're the largest manufacturer of
metal giftware in the country today on a large scale, and we're
a small company. In the 1940 and '50s we had 200 competitors in
America making metal giftware. Today we're the largest and
almost the only one still standing making it a hundred percent.
That's an indictment on a lot of things, patriotism one of
them. But government regulations is the second issue that our
industry faces. We're in the giftware industry, and 98.9
percent of our competitors are made in China, in India, Mexico,
Indonesia. We were at a gift show just a few months ago where
we were at a Made in America pavilion. You would have thought
we were rock stars for making it in America. What a sad
commentary. What a sad commentary that we are the exception and
not the rule.
In fact, over the last couple of weeks, actually Monday and
Tuesday of this week, I've gotten two emails from a gentleman
who represents a factory in China wanting to show his
capabilities and suggesting that he can fundamentally reduce
the cost of us doing business. Literally the guy is three
emails in like two days. This is not unique.
Our biggest competitor was a Pennsylvania company based in
Mount Joy, which is the eastern part of the state, Wilton
Armetale, a fantastic company. Just a few years ago they yanked
250 manufacturing jobs out of Mount Joy and moved them to
Mexico and China. We're trying to fight against that curve. All
120 of us are trying to work together as a family to do that.
But anything you do in Washington, anything the Senator
does in Harrisburg that hinders our ability to compete on an
international scale endangers every one of our jobs. I
apologize I'm going off script. I'm not nearly as smart or as
well versed in every detail on this bill as some of the
colleagues who spoke earlier to you.
But I'm smart enough to know that 2,500 pages of a bill
that no one had time to read is going to include gotchas that
none of us understand, and one of them was just revealed just
in the last couple of weeks with the mandate of abortion
coverage to employers of all sizes. I personally would be
offended if I had to do that, and many have spoken up.
But as we look at why we're here today, I sense we're here
today--shame on me as an American, shame on any American that
hasn't gotten behind this issue prior to March 2010 and come up
with a better solution. We have to have a better solution. The
costs are too high. We spend--again, we're a tiny company--
almost $400,000 just on healthcare in our little company.
That's crazy. That's crazy that we spend that money, but the
cost is out of control.
The accessibility is crazy. I'll tell you a story. It's
frustrating. We are desiring to offer healthcare to all of our
employees, part time, full time. And literally we went begging
almost to our insurance carrier. Help us find a solution that
we can pool together with other people in the country to offer
affordable healthcare for our part-time people. Their answer
was ``Well, there isn't one.''
They didn't bring a solution back to the table because they
didn't know that one existed. Here we are desiring to cover 120
people. We're not fighting against that. We're not saying we
want to cut people off. But we can't find the solution. So
accessibility is an issue that we face.
And as you look at the title of our theme, what are some
problems that small business are facing, well, it's the cost.
400,000 bucks is a lot of money. And then the inability when
desiring to offer. We can't find it.
You guys know far better than I what's in the bill, some of
the positives in the bill, some of the negatives in the bill. I
appreciate Mr. Vitt's opinion on some of those things that I
didn't know was in the bill. They sound like good things.
Portability is important to folks, especially in this day and
age when people are moving from job to job. They're not taking
a job for 40 years. We've got to have portability.
A story like Billy's, it's an embarrassment to us as
Americans. It's an embarrassment. But again shame on us as
Americans that we waited for Washington, D.C. to act. So I look
at myself. I wish I had a mirror to say shame on you that we're
here today, but we are. And I just would suggest, as my time
expires, I would just ask that you look to repeal this onerous
bill that no one understands the full tenet of and deal with
the heart of the problem, the cost and accessibility for all
Americans.
So thank you very much for hearing us out. Thank you for
standing up, for doing what's right in Washington.
[The statement of Mr. Knecht follows:]
Prepared Statement of Will Knecht, President, Wendell August Forge
My name is Will Knecht and I am the President of Wendell August
Forge, a family owned business headquartered in Grove City, PA. Since
1923 we have been America's leading manufacturer of metal giftware and
commemoratives. I am proud to work alongside 120 fellow employees in
our stores and workshops in Grove City, PA; Exton, PA; Berlin, OH; and
Wilmington, NC. In my somewhat biased opinion, our artisans are the
finest in the world. In the 1940's and 1950's, we had approximately 200
competitors making metal giftware in America. Fortunately for us but
unfortunately for America, today, we stand alone as the last metal
giftware company still making all of our products 100% in America. Many
great companies have simply closed their doors or off-shored their
production to China, Mexico, and India. In fact, just yesterday I
received an email from a gentleman in Ohio who represents a factory in
China where they believe they can make our giftware much cheaper than
we are able to domestically.
As we focus today on challenges facing Pennsylvania companies
regarding health care, I'd like to make 2 points relative to our
company:
1. It is our desire that every employee that works with us is
afforded an opportunity to receive health care during their employment
with us--but we have found no cost effective way to cover our part-time
workers
2. The issue facing our company is the continuing escalation in our
health care costs as we are competing with foreign products which
dominate our industry
I believe that we as a nation are about to walk into an unknown
abyss that humbly I believe our country will face with the full effect
and implementation of the 2010 health care bill in 2013-14. The fact
that the Congress in 2010 delayed implementation of most of the
provisions of the bill until after the 2012 Presidential election is
another example of passing the buck and pushing back the burden for
immediate political gain and expediency.
The shear monstrous size of the bill intimidates most Americans and
provides so many unknowns for the business community, it is scary. To
paraphrase then-
Speaker Pelosi during the voting on the bill in the House ``We have
to pass it so we can read it.'' In other words, no one really knows all
of the tentacles of this bill and that is bad for America and bad for
business. This was clearly demonstrated over the past few weeks as the
abortion funding mandate has been front and center of the national
discourse.
As a businessman, this is what I assume will be the impact to our
company:
Higher taxes
More regulation, more mandates
More uncertainty
More administrative costs
A couple of the provisions/elements that I know of that are a cause
for serious concern amongst business owners:
The fact that the government believes they are better
equipped to dictate and lead what to this point is the greatest health
care system in the world. Certainly, there is room for improvement but
people all over the world travel to America for medical care and that
must mean we are doing something right.
USPS vs. FedEx and UPS:
The fact that health care is by the passage of this
legislation being deemed a fundamental right. I don't remember seeing
that in the Constitution. We continue on a very slippery slope where
everything becomes a right and we move further toward socialism and the
nanny state.
Why are we trying to emulate Europe?
Defining full-time for health care purposes as 30+ hours
per week
This will force our company to do either 2 things:
Artificially deflate worker hours to keep them underneath
the 30 hour threshold because we can't afford the additional premiums
Hire fewer workers as a result of the increased costs of
health care forced on us
The health insurance tax being levied on insurance companies will
be passed on to consumers and business will bear the biggest brunt of
this tax increase.
Again, we add unnecessary financial burdens that make our company
less competitive in the global marketplace.
Finally, all of the unknowns that will only be uncovered
as we this massive law takes effect. Once more, I will reference the
abortion coverage mandate debacle the nation has been working through
over these last weeks as an example. What other 800 pound gorillas are
in the room that we don't yet know about?
To truly help Americans, humbly here are some suggestions to
improve access to affordable health care:
Repeal Obamacare and replace it with sensible improvements
to the real issues of reducing overall cost, increasing choice, and
improving access:
Give employers the ability to offer more pre-tax options
relative to individuals tailoring health care needs to their personal
situations
Provide for small business pooling for access to reduced
costs via more participation
This would give us an opportunity to choose and afford
coverage for part-timers
Expand opportunities for flexible spending accounts and
Health Savings accounts and the like
Encourage rather than discourage more competition. Right
now, it seems like a company such as ours has very limited options to
pursue for health care providers
Thank you for this opportunity to share with you my thoughts on the
current health care situation. Please never forget what makes America
great: the freedom to pursue dreams and become the best we can be by
providing equal opportunity, not equal outcome.
______
Chairman Roe. Thank you. Thank all of the panel.
The members will start the questioning and just basically
start out by telling you that I think people in this country,
individuals in your business and my business that I ran, know
what's best for our employees. It's like local teachers know
what's best, not Washington, D.C., what's going on in the
classroom. How arrogant it is for us to be around the bosses in
Washington telling a kindergarten teacher what they ought to
teach.
Healthcare decisions ought to be made between the doctor,
the patient and the patient's family, not the insurance
company, not the federal government. That's who ought to be
sitting down and making that decision. It's not right now.
And Mr. Vitt, you made a statement, and I had read your
testimony last night, that this allow individuals to select
plans that fit more closely to their financial needs and
medical costs. That's the problem. If it did that, I would be
all for it.
The government decides what I get. A minimal, an essential
benefits package will be laid out by a bunch of bureaucrats in
Washington, D.C. They'll decide what I need. Every year since
1977 I sat down in my practice with an agent just like you,
just like you, Mr. Knecht, and worked out what we could afford
that year. I had the same insurance premiums and same insurance
plan that my employees did. We paid a hundred percent, Mr.
Nelson, for as many years as we could, until we could no longer
do that. Then we had to share it, 20 percent sharing with
people.
What we've gone through in our business is a consumer-
driven program, health savings account. That's helped us save
about 30 percent of our premiums.
The other thing that can be done I've seen work extremely
well are wellness programs that reverse the incentives. I'll
give you an example. Holston Munitions is a huge company.
They're part of a huge company. They make all this--if it blows
up and is C4, they made it in Kingsport, Tennessee. So they set
a program up all of you in the room should look at.
If you came in and you were an obese diabetic, hypertensive
smoking diabetic, you were a train wreck waiting to happen.
They said fine. You can be a train wreck. It's just going to be
an expensive train wreck. They changed those incentives and
said if you have a negative nicotine level, if your Hemoglobin
A1c is down, you're on a weight loss program, your blood
pressure is under control, we'll pay you.
This company with 800 employees has had one minimal
insurance increase, premium increase in six years. They've been
able to do that by changing the incentives. Right now in this
country, our incentives are wrong. They're backwards. We're
incentivizing consumption of healthcare, not wellness, and
that's what we should be doing. I'm absolutely committed to do
it. I've agreed a hundred percent we need to do this and start
over again.
Ms. Kanterman, I want to start with you. You brought up
some great issues about your employees. Also, do you all use
temporary employees in your company, or are they all full time?
Ms. Kanterman. We use some temporaries. Right now we have
two temporary employees. But when I said we have 41, those are
the 41 that are on our payroll.
Chairman Roe. So if you grow your business and you hit 50,
all of a sudden you're in a different situation. So would you
be incentivized to stop at 49?
Ms. Kanterman. Well, we're actually incentivized right now
to drop down to 25 so we can qualify for some of these small
business things. You actually sit down and say maybe we should
make two companies and one company will do this and one company
will do this. Both of them will have less than 25, and we can
get some of these nice incentives they're doing for small
businesses because we're just a little bit over it.
Chairman Roe. Well, those incentives stop in 2016. Another
thing, when I look at that, why would you have written a bill
where if someone's salary goes up a little bit, the incentive
goes down. If you get more employees, the incentive goes down.
So in 2016 all those credits go away. They're gone. So you're
then stuck.
Ms. Kanterman. There goes the carrot and here's the stick.
Chairman Roe. Here's the stick. The stick comes, which as
my colleague knows in a car factory, 36 months, 48 months from
now.
Mr. Nelson, do you know--it's not clear to me and I've read
the law, but are you clear what happens to those 400 young
people who I'm sure are very glad, as I was, to get a job every
summer and have a little spending money? It's not clear to me
the law yet on whether you're going to have to cover them,
whether those 400 who work in three months equal a hundred
FTEs. Do you know the answer to that?
Mr. Nelson. We do not know the answer, and we're afraid of
that because we're open weekends in May. Then we have June,
July and August. Then we're open weekends sometimes in
September. So we don't know how we're going to follow--what
they're going to call a part-time worker, how many hours
they're going to call to do that. People are working older.
I'm 78. My grandfather had a farm in Northeast. He worked
till his middle 90s. I hope not to. I hope to retire at 91. I
scare the hell out of my kids. I talk funny now because a vocal
cord. One of them decided to not work anymore. I've had a
pacemaker. I've had prostate cancer. But I go to work, and I
enjoy it. If you're optimistic, you can keep on working. And I
have a lot of older people that work in our company.
Now, when you have older people, your insurance probably
will go up. But people are healthier when they work.
Chairman Roe. I agree.
Mr. Kelly?
Mr. Kelly. Thank you, Chairman. I think the more I listen
to all of you, the thing I find the most egregious thing of
this whole healthcare bill is it's divided us as a nation. It
has pitted people who own companies against people who work for
companies, while most people in the area that I live love where
they work and they're happy with it. Because when it comes time
for fundraising, these are the people that help get their kids
little league uniforms and buy the Girl Scout cookies and buy
the hoagies to help the student bands, do all these different
things. So I think there's a very unique relationship between
the people who own businesses and the associates who work with
them.
I have to tell you as I watch this and as I listen to you,
the most egregious thing in all this is government has stepped
in between you and the relationship you have with the people
that you work with. Our business has been around since 1953. So
I know what it's like to go through hard times and only made it
through with the Grace of God. Everything else has worked with
me.
I've been to baptisms. I've been to first communions. I've
been to birthday parties. I've been to weddings. Also I've
unfortunately been to funerals. The relationship that each of
us has with the folks we work with is not some remote employer
who doesn't know who it is who's working with them, not
somebody who's sitting in some tower, ivory tower somewhere who
doesn't want to provide benefits to the folks that they work
with every day.
And I want to tell you the thing that's most upsetting
about all this is we pitted each one of us against each other.
That's the perception. There's not a person that I've ever
talked that owns a business that does not want his associates
to do well. We know that their success enables our success. It
happens all the time.
Will, when I hear you talk about what's happened to
America, there's no Patient Protection Affordable Care Act in
China, those are the people you're competing with. Their wages
are a lot different than your wages. So they can make a
product, and I guarantee you it's not as good your product.
I've been on the floor and I've watched your artisans. I
know what they do. They do incredible things. They take a piece
of metal and make it into something we'd love to have and we
pass it on generation after generation.
Mr. Vitt, I bought a lot of insurance. I bought a lot of
cars. All the cars we get I either buy from General Motors or
Kia. They don't give them to me.
So I know when you're talking, Mr. Nelson, and you're
talking, Ms. Kanterman, about long-range planning, because the
fact of the matter is when you go to a lender, a lender will
only lend you money if they're sure they're going to get it
back, that you have collateral that exceeds whatever it is
you're trying to borrow.
Tell me about how difficult it is to come up with long-
range plans, since that's the key here. We're trying to get an
economy started again. I want to tell you the hardest thing for
any business owner, any job creator is to not know what it's
going to cost them to bring people in. And that uncertainty is
what is killing this country right now.
This is a bill that absolutely was brought into being the
most horrendous way possible. Providers didn't have an
opportunity to weigh in on it. The actual doctors, nurses,
hospitals had no say at the table. Please. I think this is
important because the people that you work with every day, they
know you, they love you, they know what you're trying to do.
Same with you, Mr. Nelson. Same with you, Will. I walked your
places with you and I know what your folks are like.
It's the inability to plan. And I know about how difficult
it is to make decisions because the folks I talk with are
alike. They want to buy a car when they're sure they can make
those next 36 payments, 48 payments or 60 payments and they
actually know what the price of the car is going to be, not
told go ahead and buy, take delivery of the car, we'll send you
a payment book in three or four months and we'll let you know
how many years it's going to be to pay it off.
I mean, the planning is the key, whether it's your personal
business, your personal life, your churches, your schools. It's
the ability to know what's coming that makes the bill for us--
even for us to make a decision. How would you begin to plan?
Ms. Kanterman. You can't.
Mr. Kelly. You can't.
Ms. Kanterman. Not for this particular thing. You just
can't. You just can't make a plan. We're in the same position.
We compete with ceramic manufacturers all over the world. And
we just can't plan. Let's face it. Anything that the government
has taken over has become more expensive and more fraud
possibilities.
Mr. Kelly. Mr. Nelson, you talked about planning. Can you
talk a little bit about it? How would you begin to plan?
Mr. Nelson. First of all, you don't sleep nights. You
really have to plan. You have to know your business. You have
to get together. For example, we have a group of 12 parks
scattered through the United States. You're only asked to be in
it. They're the best family parks. We meet one week a year. We
exchange records. We give ideas to each other and then we
encourage. You have to get together and find somebody that
knows their business, and they'll help you.
Then you have to talk to your bank, and you have to meet
with them, and you tell you them the truth. If something
happens bad, go to them first thing. Don't hide it. They'll
appreciate that.
Also, you have to be an optimist. If you're not an
optimist, you shouldn't be in business.
Mr. Kelly. Will, I know that when you talk about--you're
one of the few in this country. How do you plan for the future?
Mr. Nelson talked about equipment, $7 and a half million. I
know about how easy it is to buy things. It's just paying for
them that's the difficult part.
Mr. Knecht. As we did our strategic planning, our three-
year plan late last year, early this year, one of the biggest
question marks is around this issue, the uncertainty. One of
the threats is the uncertainty and the increased cost that this
bill will bring onto us.
Again, something passed in 2010 that really doesn't take
effect until 2013, '14, '15, that's a bit circumspect, isn't
it? If it's so great, why do you wait? Then I remember then
Speaker Pelosi's comments when she said ``We've got to pass it
so we can read it.'' Logically as a citizen that's appalling.
Whether she was a Republican or Democrat, that's appalling.
Again, this is the environment that Washington is putting
their job creators in. We've added 30, almost 40 employees in
two years. We see this as a huge threat for us. Can we continue
to act? Do we need to scale back our plans? Do we need to cut
people's hours so we can compete with China and Mexico? We want
to give more. We want to stay in business the next 90 years. So
planning is--how do you do it when you don't know.
Mr. Kelly. Well, you can't. I'm not sure everyone knows
what happened. What year did your business burn to the ground?
Mr. Knecht. We burned to the ground almost two years ago.
We had about 70 employees at that time, and providentially--I
give all the credit to the Lord--we have almost 120 today and
we're growing.
Again, that's a testament to the other 119 people. You all
met me today. You know it's not me. The 119 people that I work
with are amazing. It's a testament to their stick-to-it-ness
that we're even here today and to the great people of this area
who supported us.
But long-term planning, it's a crap shoot for us right now
because we don't know all that's coming down. 2,500 pages, how
could you know?
Mr. Kelly. I know there's more to the story. I know that
you and your associates watched it as it burned. You made a
commitment to your folks that night that we will rebuild. It's
like the Phoenix rising from the ashes. It will rise again. We
will work again. We will produce great products again. And
that's the story of America. That's what I think is the
underlying issue here today.
If we really want to grow the economy, if we really want to
get Americans to work, if we really want to see this nation
accomplish great things, and there's only one thing standing in
the way right now. It's government. [Applause.]
Mr. Kelly. Thank you all for being here today. This is
again an exercise in what makes this country so great. We can
meet in open. We can disagree. We have people come in and say
exactly the opposite of us. And we welcome that. So thank you
so much.
I want to thank my colleague, Dr. Roe. This is a great
pleasure.
And it is truly an honor and a privilege serve you. Listen,
we work for you. Everything that we spend comes out of your
pockets. We're not benevolent monarchs that are coming here to
shower our wealth on you. You provide every single penny. You
and your grandchildren and your children have cosigned, by the
way, the debt that's facing us right now. We've got to get
through this as Americans. This is not a Republican or
Democratic or Libertarian or Independent issue. This is an
American issue. We've got to accomplish this, and we've got to
conquer it together. So thank you so much.
And, Doctor, thank you.
Chairman Roe. Thanks, Mr. Kelly. I'm going to finish up
today by just telling you a couple of stories we heard by a
panel, very quickly, in Evansville, Indiana. One was an Ihop
owner in the restaurant business that had 800 employees and I
think 12 or 14 Ihops. Apparently in the restaurant business, if
you can earn about $3,000 per employee, that's pretty good if
you earn that much money per employee. He said: Doc, what am I
going to do if I have more than 50 employees. If I get what the
government forces me to buy, it's going to cost me $7,000 per
employee. If I then pay the penalty, which is not tax
deductible, I take all my profit. I make no money.'' He said,
``What do I do?''
I said, ``Well, I'll tell you what Washington thinks. You
can charge me $10 for a pancake I won't go buy and you'll go
out of business. That's what will happen to you.''
A second man was Mr. Graber, had an eighth grade education.
He started in the '70s building pole barns in southern Indiana
with three Amish guys. Now he has 210 employees, spends over a
million dollars a year providing insurance for his employees.
He said, ``Doc, I'm thinking this may put me under. I may not
be able to survive this.''
Mr. Knecht, you're wrong. It's 10,000 pages in writing. The
rules by the government is 2,500-some pages. It's unbelievable.
I will say, Ms. Koehler, earlier I read your testimony last
week. It disturbed me as a physician greatly when I read it. I
got up early this morning and called my hospital administrator
in Tennessee. I called my best friend in the world, Dr. Tom
Eades. He's a cardiologist in San Antonio, Texas. I called Dr.
Jerry Brapple who's in the Fordingham Cardiology Group in
Kingsport, Tennessee. I talked with the local hospital
administrator there.
I don't know what kind of person or doctor you that talked
with. If that happened in any of these places--you just fix it
and you worry about how to pay it later. I was appalled by
that, and whatever that person's motivation is, I apologize for
it, because that should never happen and does not happen. I
talked to these folks at least in those four locations. I got
up early this morning. I woke my friend up in Texas I was so
upset.
Something I want to share with you all. This was in one of
the committee hearings a year ago. Any businesses, I'll make
sure the staff gets it to you. It's from the Lawton Group,
which is the largest HR group. They went in and looked through
this entire law to see how it would affect businesses from
small to large. You're welcome to it.
Secondly, you know that my website will get for you if you
want to know the details of this bill. I have downloaded it.
It's sort of a Cliff Notes version, four pages. You can see
when it comes about. If you like that, we'll get that to you.
We'll be glad to do that.
Ms. Kit, you mentioned about losing--my dad lost his job
when I was in the Army in Korea near the DMZ in 1973. So I know
what it is to have your job go overseas, manufacturing job that
my dad lived with after World War II. At 50 years old, high
school education, no job. So I understand that.
I want to thank you this group. You all have been
fantastic. It's been great being in Butler. It's very much like
my home. And as Congressman Kelly said, we work for you all.
We're here trying. We just have a different idea. I believe
individuals and families and small businesses make those
decisions. I know I worked with that my entire life. Certainly
there is a role for government. I was the mayor of Johnson
City. I feel really comfortable here. It reminds me of being
back in city hall.
But the best government you'll have will be local
government right here where you are in Butler, Pennsylvania.
You have more access to it. The farther it gets away, the worse
it is. I'm going to tell you right now I don't want any of you
sending another nickel of your hard earned tax dollars to
Washington, D.C. and see the waste that I see up there. It is
frustrating when I was the mayor, when I was a small
businessperson, to see the waste and to see this bill that was
written with all the good intentions in the world, no question
about that.
Because I believe we have the resources that we're
currently spending to provide care for all of our citizens. I
believe we can do that. I feel an obligation to see that
happen, and I think we can do that. This is a great country.
This proves it right here, that we have an open meeting today
where you've come and you can hear and see your government
working.
I thank Mike, I want to thank you for serving. I think this
area is very well represented with Mike Kelly. That's been
true. [Applause.]
Mr. Kelly. Thank you.
Chairman Roe. We're just a couple of guys that were out in
the real world until three years ago. We were not inside the
Beltway where Washington is bad. We're out here in the real
world. Again, both panels, for all of you, I commend your time
preparing this testimony. I read every word of it. We will take
it back, and we'll use these comments that we have to help work
legislation. Do you have any further comments?
Without any further comments, we are adjourned. Thank you
for being here.
[Whereupon, at 2:54 p.m., the subcommittee was adjourned.]