[House Hearing, 112 Congress]
[From the U.S. Government Publishing Office]





   EXAMINING THE IMPACT OF OBAMACARE ON JOB CREATORS AND THE ECONOMY

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

                                HEARING

                               before the

                         COMMITTEE ON OVERSIGHT
                         AND GOVERNMENT REFORM

                        HOUSE OF REPRESENTATIVES

                      ONE HUNDRED TWELFTH CONGRESS

                             SECOND SESSION

                               __________

                             JULY 10, 2012

                               __________

                           Serial No. 112-159

                               __________

Printed for the use of the Committee on Oversight and Government Reform










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              COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM

                 DARRELL E. ISSA, California, Chairman
DAN BURTON, Indiana                  ELIJAH E. CUMMINGS, Maryland, 
JOHN L. MICA, Florida                    Ranking Minority Member
TODD RUSSELL PLATTS, Pennsylvania    EDOLPHUS TOWNS, New York
MICHAEL R. TURNER, Ohio              CAROLYN B. MALONEY, New York
PATRICK T. McHENRY, North Carolina   ELEANOR HOLMES NORTON, District of 
JIM JORDAN, Ohio                         Columbia
JASON CHAFFETZ, Utah                 DENNIS J. KUCINICH, Ohio
CONNIE MACK, Florida                 JOHN F. TIERNEY, Massachusetts
TIM WALBERG, Michigan                WM. LACY CLAY, Missouri
JAMES LANKFORD, Oklahoma             STEPHEN F. LYNCH, Massachusetts
JUSTIN AMASH, Michigan               JIM COOPER, Tennessee
ANN MARIE BUERKLE, New York          GERALD E. CONNOLLY, Virginia
PAUL A. GOSAR, Arizona               MIKE QUIGLEY, Illinois
RAUL R. LABRADOR, Idaho              DANNY K. DAVIS, Illinois
PATRICK MEEHAN, Pennsylvania         BRUCE L. BRALEY, Iowa
SCOTT DesJARLAIS, Tennessee          PETER WELCH, Vermont
JOE WALSH, Illinois                  JOHN A. YARMUTH, Kentucky
TREY GOWDY, South Carolina           CHRISTOPHER S. MURPHY, Connecticut
DENNIS A. ROSS, Florida              JACKIE SPEIER, California
FRANK C. GUINTA, New Hampshire
BLAKE FARENTHOLD, Texas
MIKE KELLY, Pennsylvania

                   Lawrence J. Brady, Staff Director
                John D. Cuaderes, Deputy Staff Director
                     Robert Borden, General Counsel
                       Linda A. Good, Chief Clerk
                 David Rapallo, Minority Staff Director














                            C O N T E N T S

                              ----------                              
                                                                   Page
Hearing held on July 10, 2012....................................     1

                               WITNESSES

Mr. Jamie Richardson, Vice President White Castle Systems, Inc.
    Oral Statement...............................................    10
    Written Statement............................................    12
Mr. Michael Fredrich, President and Owner, MCM Composites
    Oral Statement...............................................    18
    Written Statement............................................    20
Ms. Mary Miller, President and CEO, Jancoa Janitorial Services, 
  Inc.
    Oral Statement...............................................    26
    Written Statement............................................    28
The Honorable Daniel Wolf, Massachusetts State Senator, Founder 
  and CEO, Cape Air
    Oral Statement...............................................    40
    Written Statement............................................    43
Mr. John Goodman, Ph.D. President and CEO, National Center for 
  Policy Analysis
    Oral Statement...............................................    45
    Written Statement............................................    47

                                APPENDIX

The Honorable Elijah E. Cummings, a Member of Congress from the 
  State of Maryland, Opening Statement...........................    98
GAO Report to Congressional Requesters on Small Employer Health 
  Tax Credit.....................................................   100
Massachusetts Health Reform Spending, 2006-2011: an Update on the 
  ``Buster'' Myth................................................   151
The Honorable Gerald E. Connolly, a Member of Congress from the 
  State of Virginia, Opening Statement...........................   161
National Federation of Independent Business, Statement for the 
  Record.........................................................   163

 
   EXAMINING THE IMPACT OF OBAMACARE ON JOB CREATORS AND THE ECONOMY

                              ----------                              


                         Tuesday, July 10, 2012

                  House of Representatives,
              Committee on Oversight and Government Reform,
                                                   Washington, D.C.
    The committee met, pursuant to call, at 1:32 p.m. in Room 
2154, Rayburn House Office Building, Hon. Darrell E. Issa 
[chairman of the committee] presiding.
    Present: Representatives Issa, Platts, Walberg, Lankford, 
Amash, Labrador, DesJarlais, Gowdy, Farenthold, Kelly, 
Cummings, Towns, Maloney, Norton, Kucinich, Tierney, Connolly, 
Quigley, Davis, and Yarmuth.
    Also Present: Representative Keating.
    Staff Present: Alexia Ardolina, Assistant Clerk; Brian 
Blase, Professional Staff Member; Molly Boyl, Parliamentarian; 
John Cuaderes, Deputy Staff Director; Adam P. Fromm, Director 
of Member Services and Committee Operations; Linda Good, Chief 
Clerk; Christopher Hixon, Deputy Chief Counsel, Oversight; Mark 
D. Marin, Director of Oversight; Laura L. Rush, Deputy Chief 
Clerk; Cheyenne Steel, Deputy Press Secretary; Noelle Turbitt, 
Assistant Clerk; Rebecca Watkins, Press Secretary; Beverly 
Britton Fraser, Minority Counsel; Kevin Corbin, Minority Deputy 
Clerk; Ashley Etienne, Director of Communications; Susanne 
Sachsman Grooms, Minority Chief Counsel; Angela Hanks, Minority 
Counsel; Carla Hultberg, Minority Chief Clerk; Una Lee, 
Minority Counsel; Suzanne Owen, Minority Health Policy Advisor; 
Dave Rapallo, Minority Staff Director; and Ellen Zeng, Minority 
Counsel.
    Chairman Issa. This hearing of the Committee on Oversight 
and Government Reform will come to order.
    The Oversight Committee's mission statement is we exist to 
secure two fundamental principles: First, Americans have a 
right to know the money Washington takes from them is well 
spent. Second, Americans deserve an efficient, effective 
government that works for them. Our duty on the Oversight and 
Government Reform Committee is to protect these rights. Our 
solemn responsibility is to hold government accountable to 
taxpayers because taxpayers have a right to know what they get 
from their government. We will work tirelessly in partnership 
with citizen watchdogs to deliver the facts to the American 
people and bring genuine reform to the Federal bureaucracy. 
This is the mission of the Oversight and Government Reform 
Committee.
    Today's hearing focuses on how the President's health care 
law affects job creators and the economy, and with our mandate 
to protect taxpayers money, now that we know Obamacare is a 
tax, it is particularly important that we protect that money. 
This hearing builds on previous hearings conducted during the 
Congress by Subcommittee Chairman Gowdy, including one this 
morning.
    We know that Obamacare makes labor more expensive. It 
requires employers of at least 50 full-time workers to offer a 
more expensive, selected and mandated government health care 
insurance, or pay an insurance tax of $2- or $3,000 per worker.
    The law will discourage 63,000 businesses with between 40 
and 59 workers from expanding. If those industry companies 
below 50 choose not to expand and not to offer or pay the fine, 
it still won't change the fact that government will, in fact, 
tax another $2,000 per worker for not buying insurance and, of 
course, that insurance without an organized health care plan of 
at least a minimum nature will be inherently more expensive.
    Ninety percent of employers report that Obamacare will 
increase their organization's health care costs. The other 10 
percent clearly haven't checked the price. Although some of the 
cost increases will be passed on to customers, most will be 
passed on to workers in the form of lower wages or lost job 
opportunities. Let's make no mistake, competitiveness in a 
global market does not allow prices to ultimately rise to any 
point hoping that we can be competitive. There is a darn good 
reason that you don't buy Greek cars or Greek electronics. 
Seventy-four percent of small businesses say the President's 
health care law makes it more difficult to hire additional 
workers. The Congressional Budget Office projects that the law 
will lead to 800,000 fewer jobs by the end of the decade.
    A paper by economists at Harvard and the University of 
Chicago finds workers more negatively affected by the law are 
disproportionately young, female, or minority, and those just 
starting out in the workforce. Obamacare increases government 
employment, particularly at the IRS, where thousands of new IRS 
agents will be charged with enforcing compliance with the law 
that taxes and mandates.
    According to projections, the greatest percentage of growth 
in Federal health care spending comes from the Federal 
Government's administration of health care. In other words, 
Medicare, Medicaid are already, in fact, expensive, and fail to 
deliver value programs.
    Let us make no mistake. Everyone on this dais wants good, 
affordable health care. Where we differ is on whether or not 
Obamacare delivers affordable health care or simply mandates a 
series of nice-to-have, good-to-have, or in some cases, need-
to-have requirements but does so in a way that creates some of 
those 12,000 already produced new pages of regulations.
    One part of the law aimed towards assisting small 
businesses has already failed miserably. Obamacare contained 
tax credits for small businesses to offer health insurance. So 
few businesses claimed these credits because it was overly 
complicated and required businesses to fill out seven different 
duplicative forms. This failure is symbolic of the bureaucratic 
approach of the President's health care law.
    This single party law is typical of what happens when you 
produce 2,400 pages of documents--pages of a bill in the dark, 
bring it to the floor and then say we must pass it so we can 
find out what's in it. The law which spends more than $2 
trillion over the next decade, increases American taxes and 
premiums, is unaffordable. I look forward to hearing from 
business owners, and business owners, remember, are employers. 
So they are the people who create the private sector jobs that 
pay for everything, including the government jobs this 
President is so fond of creating.
    For many reasons, tomorrow the House will vote to repeal 
Obamacare. There is no doubt that our health care system needs 
reform, but these reforms must lower the price of health 
insurance rather than increase the burdens on employers and 
workers with higher taxes and Federal spending and more 
government red tape.
    With that, I recognize the distinguished ranking member, 
Mr. Cummings, for his opening statement.
    Mr. Cummings. Thank you very much, Mr. Chairman.
    This week the Republican House leadership has scheduled yet 
another debate and vote on the House floor to take away access 
to health insurance coverage for tens of millions of Americans. 
They also want to eliminate key protections that were passed as 
a part of the Affordable Care Act.
    Without legitimate ideas of their own on how to replace the 
Affordable Care Act, House Republicans simply want to gut it, 
and they want to rehash the same debate over and over again. 
Speaker Boehner proudly highlights on his own Web site that the 
House has already taken ``30 votes to scrap the President's 
health care law'' during this Congress alone.
    30 votes. Despite the fact that the Senate has already 
rejected this legislation, it is difficult to imagine a more 
monumental waste of time.
    The only difference between the first 30 votes and the vote 
scheduled for this week is that the Supreme Court, in a 
decision by Chief Justice John Roberts, has now ruled that the 
Affordable Care Act is constitutional. Nevertheless, this week 
we will engage in another exercise in futility by spending 
hours and hours debating vote number 31.
    Unfortunately, today's hearing is part of this needless 
exercise. We are rehashing this exact same ground the House 
Subcommittee covered a year ago in a remarkably similar hearing 
entitled ``Impact of Obamacare on job creators and their 
decision to offer health insurance.''
    As we learned back then, the Affordable Care Act will 
extend health insurance coverage to 30 million people. Millions 
of young adults have already gained access to health coverage 
through their parents' policies. Medicare beneficiaries are 
paying lower prescription drug costs. And more than 86 million 
Americans have benefitted from preventive care free of charge, 
such as mammograms.
    At the same time, hundreds of thousands of small businesses 
are receiving tax credits to maintain and expand health 
coverage for their employees. And millions of Americans are now 
receiving rebates under a new rule requiring that insurance 
companies spend at least 80 percent of their premium dollars on 
health and medical services or refund the difference.
    Imagine that, insurance companies returning your money 
rather than doling it out to corporate executives. This year 
alone individuals are expected to receive $426 million in 
rebates from their insurance companies, and small businesses 
are expected to receive $377 million.
    These are significant accomplishments that will help 
millions of people in very real ways, and there are more 
changes to come as additional provisions of the Affordable Care 
Act come online in the next 2 years to reduce the cost of 
health care further and provide patients with additional 
protections.
    Despite these accomplishments, Republicans will continue 
the same old scare tactics today, warning about massive job 
losses and economic ruin should the Affordable Care Act 
continue.
    The main problem with their theory is that it did not 
happen in Massachusetts. In 2006, then-Governor Mitt Romney 
signed into law the model for the Affordable Care Act, 
including subsidies for individuals purchasing coverage, a 
health insurance exchange, insurance market reforms, and 
mandates for employers and individuals. As a result, today, 
more than 98 percent of Massachusetts residents are now insured 
with no indication of negative job consequences. With a 6 
percent unemployment rate, Massachusetts remains significantly 
lower than the national average.
    The fact is that the Affordable Care Act passed by both 
Houses of Congress, signed by the President of the United 
States and now upheld by the Supreme Court, is vital to the 
health of our people and the strength of our Nation, and it 
will without a doubt save many American lives.
    Let's put an end to this pointless political theater. The 
Supreme Court has spoken and has spoken loudly. It is time to 
focus on insuring that the law is implemented effectively and 
efficiently so that the American people can take full advantage 
of its protections.
    Mr. Chairman, I ask unanimous consent that Representative 
Bill Keating from Massachusetts welcome his Senator from his 
State.
    Chairman Issa. The gentleman will be recognized to 
introduce his representative.
    With that, we go to the distinguished doctor from 
Tennessee, Dr. DesJarlais, for an opening statement.
    Mr. DesJarlais. Thank you, Mr. Chairman.
    I would dispute the fact that we have been told that this 
is an exercise in futility or an unnecessary hearing. We have a 
number of job creators from around the country, and I have 
talked to a number in my district in Tennessee who are very 
concerned about what this Affordable Health Care Act, and it's 
hard for me to even say that because it has been proven to be 
unaffordable, will do to their ability to hire employees and 
expand and grow their businesses. It has done nothing but 
create more and more uncertainty. It has given us over 12,000 
pages of regulation. And why? I think that is a fair question. 
Why should we bring it to the floor to vote to repeal it again. 
It has been pointed out that we have made 30 votes already to 
repeal this.
    I think the answer to that question is because this is a 
law that the American people did not ask for, they didn't want, 
and they can't afford. Sixty-three percent of the people 
opposed this law when it was passed in the dark of night behind 
closed doors without transparency. And they continue to reject 
it. The majority of Americans still do not like this bill.
    So I don't think that we just give up on the American 
people. I think we continue to fight for them. Now that this 
has had to go to the Supreme Court, and part of it was ruled 
unconstitutional, about States having to expand their Medicaid 
programs, which are already stretched and breaking a lot of 
States, now we have a chance for maybe some of the Democrats 
who voted for this the first time to listen to their 
constituents, the ones who are still left who were not voted 
out of office in 2010 can do the right thing and vote to repeal 
this bill now that we know it's a tax.
    I don't think anybody sitting up here thinks that this bill 
would pass again today if it were brought to a vote, because it 
was done in a fashion that was deceitful. It was clearly called 
a penalty, and now it's only constitutional because it is a 
tax. And they still don't want to call it a tax.
    This President vowed to not raise taxes one dime on the 
middle class. Not one dime. But clearly, this is one of the 
largest tax increases in history. It is one of these bills that 
Nancy Pelosi said we have to pass to see what's in it. 
Sometimes maybe you have to pass a bill to see what's not in 
it. Business owners are going to find, who have over 50 people, 
that there is no language in this bill that even allows for 
them to collect the taxes of 3,000 per employee against your 
companies. If the State does not set up an exchange and the 
Federal Government comes in and sets up an exchange, there is 
no language in this bill that allows for them to charge you 
that. And you have a right to know that.
    So this hearing is far from meaningless. We are doing the 
people's work here, and this is the job of oversight.
    With that, I yield back.
    Chairman Issa. With that, I recognize the gentleman from 
Ohio, Mr. Kucinich, for an opening statement.
    Mr. Kucinich. Thank you very much, Mr. Chairman.
    Prior to the Affordable Health Care Act, at least 50 
million American didn't have health care. Why? Because they 
couldn't afford it. Think about that. These are members of our 
family, they're our friends, our constituents. They couldn't 
afford health care. Even with the Affordable Care Act, there 
are people who will still be hard-pressed. What are we supposed 
to do in America? Are we supposed to tell people that because 
they can't afford health care, they are just condemned?
    And what about those people that were able to afford health 
care? If they had a claim, their expenses could be run up to 
the point where they weren't able to pay the extra expenses 
associated with an illness. Do you know, about half of the 
bankruptcies in America are connected to people not being able 
to pay their hospital bills. So this isn't just a narrow health 
care issue, this is a societal issue that determines what kind 
of society are we. Are we a society that is going to drive 
people into poverty because they get sick?
    Illness doesn't respect political parties. You can be a 
Democrat, Republican, Independent, if you get ill, your house 
could be on the line. Your life savings could be on the line. 
Everything you've worked a lifetime for could be on the line. 
We need to get back to this kind of thinking. We're involved in 
polemics here. We need to look at the practical application of 
the law.
    Look, like some of my colleagues, I wasn't for the 
Affordable Care Act in the beginning. Why? Because I'm for 
universal, single payer, not-for-profit health care. I don't 
believe in for-profit health care. I think that if you're 
talking about health care reform, though, we were able to at 
least prove that reform within the context of a for-profit 
system was possible. If we couldn't even prove that, then later 
on, when those of us who want to continue to advocate for a 
single payer system, when we're told look, it wouldn't be 
possible, well, how can we challenge that if we had 
participated in the defeat of the only thing that was in front 
of the American people at the time.
    Is this plan perfect? No. No one is maintaining that. But 
it is addressing what is a fundamental problem in our society, 
and that is, lack of accessibility and lack of affordability to 
health care. We must not lose sight of that.
    You know, elections come and go. But the outcome of this 
election in 2012 may or may not solve the health care problems 
of tens of millions of Americans.
    Now there is another issue here too that I want to put on 
the table right now that really ought to take place in these 
discussions about health care, and that is, each one of us does 
have some responsibility for our own health. Government can't 
give me health care. I had to change my diet years ago to have 
a chance at health care. Government couldn't do that for me. I 
had to make my own decision. The government doesn't tell me 
what to eat, nor should it.
    We have to create a more health-conscious society where 
people are given more information about the choices that they 
can make that can lead to better health so that we don't have a 
situation where through a lifetime of bad choices, people then 
come to a system that is already overburdened with high costs 
and add to it.
    So there is an element of personal responsibility which 
should never be ignored, but that, then, goes into how do we 
redescribe health care? How do we reengineer our health care 
system to include diet and nutrition, and to include physical 
education and those kinds of things. We need to broaden the 
discussion.
    Unfortunately, this discussion that we're having here is 
not going to do that for the most part. It's about polemics, 
it's about the next election. But sooner or later, we are going 
to have to come to grips in this country with the fact that we 
have a fiscally unsustainable health care system, and sooner or 
later we have to understand that this step that we took in the 
Affordable Care Act was a step in the right direction, although 
not by any means the final step. And for those of us who think 
that everyone should have access to high quality, affordable 
health care, there is no question that in the long term, and in 
the medium term, we're going to need to go to a single payer, 
not-for-profit system if for no other reason than to control 
costs.
    So with that, I want to thank the chair for this 
opportunity to make that statement, and welcome the witnesses. 
I hope at some point we can really get into the details of what 
we can do to make health care available to all Americans, help 
businesses, help grow the economy and put this highly-charged, 
partisan debate behind us.
    Thank you very much, and I yield back.
    Chairman Issa. I thank the gentleman.
    I now recognize the former chairman of the full committee, 
Mr. Burton, for an opening statement.
    Mr. Burton. First of all, Mr. Chairman, we do have to 
revise the health care system in this country, but there is an 
alternative which we have proposed which is not being discussed 
today because the Obamacare plan is, in effect, law right now, 
and it needs to be addressed before we can get to a solution 
that will solve the problem without putting such a burden on 
the future generations of America.
    I look out here today and I see an awful lot of young 
people in the audience. When you talk about making sure 
everybody has health care, it sounds pretty good, because it 
takes care of everybody. We don't have any problems. If you get 
sick, everything is solved. The government is going to take 
care of everything. It sounds really good. What we don't say is 
we are $16 trillion in debt. The interest on the national debt 
is humongous. These young people out here are never, ever going 
to be able to live the kind of life that we have because of the 
cost of government. And this bill is going to run it right 
through the ceiling.
    There is no question that we need to do something about 
health care, and all of us want to do that. But to create 
socialized medicine, which Europe is running away from right 
now, I'm chairman of Europe and Eurasia on the Foreign Affairs 
Committee. I just got back from over there. And I can tell you 
right now, those countries are on the brink of disaster. Spain 
is about to go down the tubes. And I think they probably will, 
even though it will take a little time. Greece is about gone. 
Italy is in trouble. France will be in trouble. Ireland is in 
trouble--because they've had a socialistic approach to 
government, and socialized medicine only compounds the problem.
    Yes, we have problems. And yes, we need to solve them. And 
yes, they need to be addressed. But they can be addressed in a 
business-friendly way that will solve the problems of the 
people of this country. Socialized medicine is not the answer. 
And to the young people out here who may be favoring this 
today, 10 years from now, 15 years from now, if this thing 
remains law, you remember what I'm saying right now because 
we're loading a burden on your backs that you will not believe. 
We have already loaded $16 trillion on your backs, and your 
kids and your grandkids, but this is only going to compound the 
problem.
    I yield back the balance of my time.
    Chairman Issa. The gentleman yields back.
    All members may have 7 days in order to place additional 
opening statements in the record. With that, pursuant to 
unanimous consent, I would recognize the gentleman from 
Massachusetts to introduce his witness.
    Mr. Keating. Thank you, Chairman Issa, and Ranking Member 
Cummings. Before I resume my other duties in another committee, 
I want to thank you for the opportunity to address this 
committee and for inviting Senator Dan Wolf, who is not only 
the co-chair of the Joint Committee on Labor and Workforce 
Development in Massachusetts in the State Senate and a 
decorated Cape businessman, but a constituent of mine and a 
friend. We welcome him here today to testify.
    Cape Air's story is well known in my district, particularly 
in the Cape Cod area and the island where the company gets its 
name. I'm pleased that other business owners nationwide will 
hear this story today and hopefully expand their successes 
through using the Cape Air model as an example. This example 
promotes success through carrying for the company's surrounding 
communities and staff.
    Senator Wolf, thank you for being here today. Your 
testimony in today's hearing is essential to provide a 
firsthand account of the impact of the health care reform on 
small businesses directly from a CEO. I can personally attest 
to the strength of the Cape Air team which has been 
crisscrossing the globe in Cessna 402s since 1989. Furthermore, 
the Cape Air team serves as a crucial link to the rest of the 
country and to the world. For many throughout Massachusetts, it 
is essential, but particularly for the Cape and islands where 
tourism in a driving economic force for those who live there 
year round, like myself.
    I know that the airline has been at the forefront of 
national initiatives like health care and green energy 
initiatives for years. For this reason, the advent of the 
health care reform in Massachusetts followed by the Affordable 
Care Act, and perhaps in the future, a strategy to curb 
greenhouse gases and switch to renewable energy sources is an 
investment in preparedness.
    Again, I welcome my friend from Massachusetts to the 
Capitol, and I thank the committee for the opportunity to 
introduce him here today.
    Chairman Issa. Thank you, Mr. Keating. Thank you for 
introducing your witness and for being here today.
    With that, we will go to the gentleman from Michigan for a 
similar introduction. And I only barely let you have this. 
Remember, we are alumni together. The fact that he is a 
constituent is an accident of current address.
    The gentleman is recognized.
    Mr. Walberg. I thank the chairman. When you hear my 
introduction, you will understand I even have more claim to him 
than you do as an alumnus of distinguished Siena Heights 
University in Adrian.
    Mr. Jamie Richardson grew up in my home school district of 
Onsted, Michigan. I watched him as a late high school student 
and as a student at Siena Heights University, an outstanding 
student, outstanding athlete, outstanding character. He 
developed to a point that ultimately after graduation, he 
became a marketing guru at J Walter Thompson. Ultimately, 
through a long chain of events, and you can read his resume, he 
ended up at White Castle Corporation, a family-owned business. 
And I think this is where it comes to the point of who Jamie is 
and why it is a privilege for me to introduce him today.
    I think what would be the first and foremost statement 
about Jamie Richardson is that he is married to Cate and has 
five wonderful kids, that he spends unbelievable amounts of 
time with intentionally making sure that that happens, even as 
he is involved in numerous other organizations and entities.
    White Castle Corporation is a family-owned business which 
has its unique benefits as well as challenges in the world in 
which we live today, especially in relationship now to things 
like Obamacare. The challenge that we have there for family 
businesses is very strong.
    Jamie is presently the vice president, government and 
shareholder relations and assistant secretary. He was the 
gentleman involved in getting White Castle as the first company 
involved with Undercover Boss and worked with CBS in 
accomplishing that, indicating how that program would go and 
demonstrating how employees and employers must work together to 
complement each other to make business happen. He understands 
the benefits of job security and the opportunities for people 
to expand and grow.
    White Castle is known for its benefits, its security, its 
ability to reach youth, single parents, part-time adult 
workers, et cetera, with a job that has benefits. And 
ultimately, with this law going into place, if it is carried 
out, will discourage and very likely do away with those same 
benefits that people stay at White Castle to work for.
    Mr. Richardson evidences his commitment to meeting the 
needs of people by being involved in directorships, trustees 
with American Red Cross, Catholic Foundation, YMCA, the 
Kiwanis, the National Family Enterprise U.S.A., on and on 
giving back to the community, giving back to society, and 
making a commitment that ultimately goes again back to the 
family of Cate, those five kids, and people just like him.
    So it is a privilege to have Jamie here today, and I look 
forward to your testimony.
    Chairman Issa. The gentleman yields back.
    Now for those not fortunate enough to have a personal 
friend on the panel, I will now introduce Mr. Michael Fredrich. 
He is President and owner of MCM Composites, welcome. Ms. Mary 
Miller, is CEO of JANCOA Janitorial Services, Inc. And Dr. John 
Goodman is a health economist and President and CEO of National 
Center For Policy Analysis.
    With that, I would ask you all to rise and pursuant to the 
committee rules, if you would please take the sworn oath and 
raise your right hand.
    Do you solemnly swear or affirm the testimony you are about 
to give will be the truth, the whole truth, and nothing but the 
truth?
    Let the record indicate that all witnesses answered in the 
affirmative.

                       WITNESS STATEMENTS

    Chairman Issa. Mr. Richardson, being a returning 
contestant, I will expect you to be so good on this, but for 
the rest of you, it's like a stoplight. Green means go for some 
of your 5 minutes. Yellow means, as Mr. Gowdy said this 
morning, go real quick to get under it before it turns red. And 
red means stop. If you can stay as close to 5 minutes I will 
ask member on the dais during questioning to do the same.
    Mr. Richardson.

                 STATEMENT OF JAMIE RICHARDSON

    Mr. Richardson. Chairman Issa, Ranking Member Cummings, and 
members of the Oversight and Government Reform Committee, 
thanks for the opportunity to testify today on behalf of White 
Castle and the National Restaurant Association. My name is 
Jamie Richardson, and I serve as vice president of government 
and shareholder relations for White Castle. It is an honor to 
be able to share the impact the Patient Protection and 
Affordable Care Act is having on businesses like ours and the 
restaurant and foods services industry in general, particularly 
on our ability to create jobs.
    White Castle is based in Columbus, Ohio, and we first 
opened our doors in 1921 in Wichita, Kansas. Soon after, we 
joined the National Restaurant Association as one of its first 
members. Still, to this day, we are a family-owned business and 
a privately held company. We employ nearly 10,000 team members. 
Most work in our 408 restaurants across 12 States. Our culture 
is one of family, and we proudly began offering health care 
coverage to our team members in 1924.
    White Castle offers a rich, full, medical health benefit 
package after 6 months of service to any team member who is 
open to being scheduled for full-time hours which we consider 
35 hours per week. Year after year, employees name the benefits 
package as the reason why they come to work at White Castle and 
why they stay. White Castle prides itself on listening to team 
members and responding to their needs by offering benefits they 
want and use. We have incorporated wellness incentives. And 
since 2009, we have eliminated employee co-pays for regular 
checkups to encourage healthy lifestyles and to increase team 
members' use of their benefits to prevent illness.
    Under the law, White Castle and other applicable large 
employers like us will have to comply with the employer 
mandate, the automatic enrollment requirement, and extensive 
and detailed new reporting to the IRS on health plan offerings 
and each individual to whom it was offered.
    In 2014, we estimate our current plan costs could increase 
by over 20 percent. This estimate is dramatically different 
than what we have started to experience recently. As it 
appears, our focus on wellness and preventive care is having a 
positive effect. Year to date in 2012, our health care costs 
are trending and estimated to increase less than 3 percent 
compared with the prior year.
    As 2014 and compliance with the employer requirements of 
the law fast approaches, we will have to balance requirements 
of the law with employee needs and the ever-increasing cost of 
health care coverage.
    While we work in a castle, in our realm, there is no magic 
treasure room to cover these increasing costs without 
sacrificing job creation. The health care law will have an 
impact on jobs in the restaurant and food service industry. The 
only questions are: How? And to what extent? Some of the 
potential impact will be answered once we know the rules with 
which to comply and the implementing regulation and hence, the 
impact on our workforce. Everything we have seen has shown 
current costs will increase. Many in our industry are worried 
that our slim profits per employee will not be sufficient to 
cover the additional cost of more employees accepting our offer 
of coverage or potential penalties that may apply despite our 
best efforts to provide the required coverage.
    For White Castle, the uncertainty associated with the 
health care law has made us cautious to expand into new markets 
and impacted the number of jobs we are creating. We have 
conducted the extensive research necessary to explore expansion 
into other parts of the country, but have not acted on those 
plans yet due to the uncertain cost environment. If we were to 
pursue those potential expansion plans, it would bring 400 to 
500 team member jobs, not to mention the construction supplier 
jobs associated with opening new restaurants.
    In our business, we all manage risk. We do it all the time. 
Whenever we launch a new product, for example. But the 
uncertainty of increased costs that the health care law brings 
creates risks that no one can manage against. The result is 
that the growth and expansion of businesses that drive job 
creation is put on hold, and so are the jobs.
    In conclusion, for White Castle and the restaurant and food 
service industry, the law cannot stand as is. We need in fact, 
we crave reform that addresses the unsustainable increases in 
the cost of coverage. We must find solutions that will allow 
restaurant operators to offer great health benefits to their 
employees without excessive cost and regulatory burdens that 
threaten their businesses.
    Thanks again for the opportunity to testify regarding the 
impact of the health care law on job creators such as White 
Castle and the restaurant and food service industry. We have 
great gratitude for your service and all you do for our 
country.
    And we would also like to offer, if anyone wants to come a 
castle to work behind the counter and meet the hamburger heroes 
of White Castle firsthand, we would welcome it.
    Chairman Issa. Be careful what you wish for. When you get 
done with Congress, it may be the best job you have possible 
afterwards. And it would probably be a move up in how the 
public would feel about us from 9 to 90 percent, at least.
    [Prepared statement of Mr. Richardson follows:]





    
    Chairman Issa. Mr. Fredrich.

                 STATEMENT OF MICHAEL FREDRICH

    Mr. Fredrich. Thank you, Mr. Chairman and Ranking Member 
Cummings. Thank you for having me today.
    I bought MCM in 2001. We closed on the business 45 days 
after 9/11, so there was a bit of uncertainty. And certainly 
the economy right after we closed did not serve us well. We 
also had the disadvantage of, I call it being too smart to not 
know what you don't know. And so we had a big learning curve 
right after we bought the business. But we made it. We made it 
at least up until 2009, and 2009 was just a god-awful year. Our 
revenues were cut in half. We got down to 43 employees. We have 
58 right now. We lost customers. We were working 2 days a week. 
All the salaried people got 60 percent of their salary. We just 
couldn't do it any other way. We had to balance cash. So we 
worked through that.
    Last year, they say there is a recovery, there's not. I 
would call it treading water. You can see that in the 
fundamentals of our business, where things like customers are 
delaying orders. They will place a order and then they will 
call and say don't ship that. That is a good indicator that it 
is not good in the economy, and that is across all of our 
customer base. Also, there is not much investment in new 
tooling. All of our parts are made with tools that are owned by 
our customers, and so we have an early look at what their 
investment strategies are, and they are just not making any. 
The largest investor that I can see right now is actually a 
German company, and they're building $1 million worth of tools, 
and it is in the aerospace business, and that will be good for 
us, but that is a small segment.
    So on top of this, we made last year, we did $7 million in 
sales. We made $138,000 which is peanuts. It is barely eking 
out a profit. I think this year will be about the same. Our 
revenue is about the same. So I'm not optimistic.
    And on top of that, we now face something I was praying we 
would never have to face, which is this new health care law 
which is going to create God knows what. I mean, it is going to 
be a burden to be sure, and it is going to be costly and it is 
going to affect companies like ours and larger companies in 
hiring and the business. I think it will be a general 
depressant on the entire economy.
    So what do we do? I mean, we will have to live with it. We 
have persevered before and we will persevere again. But what 
this Act does is it changes our focus. We right now need to 
focus on our business. We need to expand our customer base. My 
time would be better served today calling on some prospects and 
trying to generate some more business. But my focus is here 
because this is a real threat to us.
    It's adding--it is going to add cost. I don't see how it 
can't add cost to the health care system. It doesn't do 
anything to address the basic problem which is it is a 
dysfunctional market. And it has been dysfunctional since 1942, 
and what you've done here with this law, you have made it more 
dysfunctional. You've taken a step in the wrong direction. And 
that is, unfortunately, what we are going to have to deal with.
    So what do we do? I look at our company. We have, as I 
said, 58 employees. We are kind of on the bubble. We could get 
down to 50 and not be subject to this law and shrink our 
business. Well, who wants to do that? Think about it, why in 
the heck would you be in business so you can shrink your 
business? You want to grow your business and add people. So 
that's not a very good option.
    We could continue on with the plan we have. Do nothing and 
hope for the best. I think eventually we'll lose our plan. It 
is a high deductible HSA. It sounds like the Secretary of HHS 
will determine whether that is acceptable, which to me is 
repulsive in the first place. That somebody is going to tell us 
what is acceptable and what isn't, I don't like it.
    The third option is on the first day, is drop our coverage 
completely and leave all of our employees. We have 43 out of 58 
who take the coverage, and just drop the coverage. And we are 
not going to do that because we will not do that to our 
employees. There is enough turmoil going on, I don't need to 
add turmoil to their live. I am not going to do it. So, we have 
to do something. Somehow we have to adjust to this. I can only 
plead, I guess, with the committee that you go in the direction 
of the free market and to trust the free market. It works 
everywhere else.
    I was talking to Mr. Richardson, and I said why are 
hamburgers so cheap? And I was being facetious. He actually was 
going to tell me why, but they are so cheap because people 
compete in the hamburger business. The government doesn't run 
the hamburger business, not yet.
    I see my time is up, so I appreciate the time. And thank 
you very much and look forward to your questions.
    Chairman Issa. Thank you for noting that.
    [Prepared statement of Mr. Fredrich follows:]





    Chairman Issa. Ms. Miller.

                    STATEMENT OF MARY MILLER

    Ms. Miller. Chairman Issa, Ranking Member Cummings, and 
distinguished members of the committee. Thank you for inviting 
me to testify before you today on the impact of the health care 
reform on job creators and the economy.
    My name is Mary Miller and I am the CEO of JANCOA 
Janitorial Services headquartered in Cincinnati, Ohio. I am 
honored to be here today on behalf of the U.S. Chamber of 
Commerce.
    This year, we are celebrating our 40th year in business at 
JANCOA. We are a family business with literally clusters of 
small families within our business. My husband was a student at 
the University of Cincinnati when his economics professor 
casually mentioned vendor contracting such as janitorial 
services. Noticing how dirty the floors were at the local bar, 
he thought cleaning would be a way to pay for bar tabs. With 
going to school full-time and working another job already, he 
started hiring friends to help him. When his father, Bill, went 
to have heart surgery, Tony promised to take care of the 
family. His father died, and at the age of 19, Tony left school 
and created JANCOA to support his mother and three siblings. 
Today our company has 320 full-time employees and we clean more 
than 10 million square feet just in the greater Cincinnati 
area.
    One of our most important duties is to attract, train, and 
motivate quality employees. Our business model helps us do 
this. Unlike the majority of janitorial companies, we rely on 
full-time employees. In fact, 98 percent of our employees are 
full-time and we have very low turnover, nearly half of the 
industry's national average. We find most people in our 
community want full-time work, and our company does better with 
full-time employees. This is an important win/win.
    By hiring nearly exclusively full-time employees, we are 
better able to recruit, retain team members and improve 
efficiency, productivity, and quality. We also offer good 
benefits, including vacation pay, paid holidays, health 
insurance coverage, and what we call the dream manager program. 
Although our dream manager program is a source of great pride 
for our company, given the brevity of my time and the focus of 
the hearing, I will limit my remarks on it and simply say that 
the dream manager program has been responsible for many of our 
employees realizing the American dream. It has helped our 
employees become homeowners, achieve economic independence 
through starting their own small business, and further their 
education by earning GED and/or college degrees. In short, it 
exemplifies our mantra of taking the ``dead end'' out of dead 
end jobs and to let our employees grow. I hope you will read 
more about it in my written testimony.
    One of the benefits we offer which very few of our 
employees take advantage of is health care coverage. We offer a 
PPO to all of our full-time employees and pay an average of 85 
percent of the premiums, but less than 6 percent of our 
employees take advantage of this coverage. The vast majority of 
our employees have historically chosen to take home their 
earnings as wages to pay their bills. The coverage that we can 
afford to provide is subject to a $6,000 annual limit, and it 
is a limited benefit plan. Our issuer got a waiver so that we 
can continue to offer this coverage to our employees until 
2014.
    Sure, this is not an ideal coverage, but it is what we can 
afford to offer and allows them an option of some coverage at a 
very reasonable price, $20-30 a month. However, come 2014, when 
the employer mandate and the individual mandate kicks in, 
neither our company nor our employees will be able to make 
these choices about health insurance. Our company will no 
longer have the option of offering this type of plan to our 
employees, will no longer have the freedom to choose how to 
spend their wages. Even worse, the law will force my husband 
and me to choose between several impossible options in order to 
remain in business. This will jeopardize our ability to offer 
jobs that our employees value. We face additional costs that 
exceed $1.4 million in premium cost increases, over 400 
percent, because of this law. It's a devil's choice. No matter 
what we do, our company and our employees will suffer as a 
result.
    As many in the service industry know, for me, raising 
prices is not an option. Most janitorial companies rely on 
part-time employees and therefore will not be subject to such 
penalties and employer mandate. It certainly seems to me like 
the law creates very perverse incentives, particularly in this 
economy when jobs are on everyone's mind. Why would you 
penalize businesses for hiring full-time employees and provide 
a competitive advantage to those businesses that limit their 
hours their employees can work? These perverse incentives will 
negatively impact businesses such as ours that want to hire 
full-time employees. Regardless of how much better my services 
are, there's only so much a customer is willing and able to 
pay.
    In conclusion, although my employees prefer full-time 
employment, and I prefer to hire full-time workers, this law 
may force me to reduce the majority of my team members to part-
time employment. This will destroy the foundation upon which my 
company was built, and the quality of life we are trying to 
help our employees achieve. Regrettably, for me and my 
employees, the new health care law is a dream killer.
    Thank you.
    Chairman Issa. Thank you.
    [Prepared statement of Ms. Miller follows:]





    Chairman Issa. We have 15 minutes on a vote on the House 
floor, so counting 5 and 5, I can get you both done if you 
stick to the 5.
    Senator Wolf.

                 STATEMENT OF HON. DANIEL WOLF

    Mr. Wolf. Thank you, Mr. Chairman.
    Good afternoon. My sincerest thanks to the committee for 
the opportunity to testify on such an important issue for the 
American people. I come before you today to share the 
perspective of a person who, thanks to the hard work and 
dedication of a team of remarkable individuals, has achieved 
amazing success in one of the most challenging industries in 
the country, the airline industry.
    25 years ago, as a trained and licensed aircraft mechanic 
and pilot, my dream was to start an airline in Massachusetts. 
And with one airplane, one route, and six employees, Cape Air 
flew our first flight in 1989. Today, headquartered in 
Massachusetts, Cape Air operates in 11 States, four U.S. 
territories and commonwealths, and three foreign countries. We 
will carry over 725,000 passengers this year, and generate more 
than $105 million of revenue.
    As a member of the Alliance for Business Leadership, Cape 
Air now offers nearly a thousand full-time jobs with about 500 
of them based in Massachusetts, and they are full-time jobs. 
Nearly 300 of our employees have been with the company for more 
than a decade, and our employees share the ownership in the 
company with us.
    Cape Air's success allowed me at the age of 52 to enter 
government 2 years ago, and the voters from the Cape and 
Islands chose me to represent them in the Massachusetts State 
Senate.
    My primary goal in this capacity is to help government and 
private business partners in ways that make our communities 
healthier and make our economy stronger. They are not mutually 
exclusive. And what is also informing my perspective, other 
than the Cape Air experience, is 6 years on the Federal Reserve 
Board Advisory Council for New England, the chairman of the 
board of one of the largest Chambers of Commerce in the 
Commonwealth of Massachusetts, and I also serve as the trustee 
of the largest mutual bank in the region. Cape Cod Five Cents 
Savings Bank.
    From all of these vantage points, I have come to realize 
that one of the most important values that we must embrace is 
that every American should have access to affordable and 
excellent health care, and I am really proud that we have come 
a long way towards accomplishing that goal in Massachusetts. We 
have done so without stunting business growth, and we have done 
so without cutting jobs.
    One of the reasons I'm here today is to debunk some of the 
myths and distill fear and misunderstanding about the 2006 
Health Care Reform Act that Massachusetts enacted with strong 
bipartisan support, and I stress strong bipartisan support. In 
the State Senate, the vote was 40-0 to enact that law in 
Massachusetts. It is also the template for much of the 
Affordable Care Act now sanctioned as the law of our land.
    From Cape Air's first day in business, we have offered 
health care coverage knowing that affordable health care 
coverage helps us to retain a great workforce. And it has. This 
year, Cape Air's health insurance premium will cost close to $3 
million, roughly 3 percent of the company's gross income. The 
company will pay just over half of that cost and the employees 
will pay the rest.
    In 2007, when Massachusetts' health care reform went into 
effect, there were dire predictions of the impact on businesses 
like Cape Air. Here is what really happened to our business. We 
added some new dependents under 26 years of age to those of us 
in our company who had family plans. Beyond that, the 
transition was seamless for us. There was no bureaucracy, no 
heavy lifting in the front office.
    Since then, we have added a solid 15 percent more 
Massachusetts-based jobs with our total revenue growing far 
faster. Health care reform in Massachusetts has not stifled 
business. Health care reform was designed to ensure access, not 
curtail costs. And with landmark legislation now close to 
passage, building on the success of the 2006 Act, Massachusetts 
is on the verge of implementing new strategies to contain costs 
while continuing to provide coverage for more than 98 percent 
of our Massachusetts residents, and that bill is now in 
conference committee in the Massachusetts legislature.
    I can also report that health care costs have not spiraled 
because of this plan. They have not spiraled. This year, Cape 
Air saw a 5 percent increase in premiums, too much, but far 
from the 15 to 20 percent increases we saw year after year 
before this reform took effect. Last year, our increase was 4 
percent. The previous year, we were able to negotiate a 5 
percent decrease in premiums. That is after the passage of the 
law.
    Our success should be taken in the State context. 
Unemployment in Massachusetts has dropped from 8 percent in 
2009 to 5.8 percent in May of this year. That is 2.4 percent 
below the national average. Since January 2007, Massachusetts 
has ranked third in the Nation in economic performance as 
defined by our gross State product. And our bond rating in the 
State is AAA bond rating, the best in the United States.
    Meanwhile, additional State spending for health care 
programs resulting from payment reform only represented 1.4 
percent of the State budget in 2011. Again, with more than 98 
percent of our residents covered, which includes a 400,000 net 
increase in the number of non-elderly insured residents.
    Chairman Issa. Senator, your entire statement will be 
placed in the record, if you can please wrap up
    Mr. Wolf. I just have four paragraphs.
    Chairman Issa. Pick one.
    Mr. Wolf. I will read them quick.
    As important and positive as enacting the Affordable Care 
Act is now and will be, it's not the last word. Just as 
Massachusetts is now moving forward with cost containment 
initiatives, there will be more opportunities to continue and 
reform our health care structure. Access is only one of the 
pillars on which great health care is built. The others to 
address are cost, complexity, outcomes and transparency.
    I look forward to a national conversation about all of 
them, and especially a better understanding of the link between 
a healthy business climate and access to health care for all.
    Chairman Issa. Thank you, Senator.
    [Prepared statement of Mr. Wolf follows:]





    Chairman Issa. Dr. Goodman.

                   STATEMENT OF JOHN GOODMAN

    Mr. Goodman. Mr. Chairman and members of the committee, the 
Affordable Care Act will impose very high costs on the private 
sector of our economy. The minimum health benefit for a family 
will cost almost $6 per employee per hour. When you combine 
that health minimum wage with a money minimum wage, it means 
that employees will have to produce at least $13 of goods and 
services every hour or they'll be priced out of the labor 
market. That's why hundreds of thousands of low-skilled workers 
are in danger of losing their jobs.
    The Act will impose about $500 billion in new taxes over 
the first 10 years, and it will do so in ways that will reduce 
investment, reduce output, and reduce employment. The Act 
creates very high marginal tax rates for moderate income 
families. And if we can have the first slide to demonstrate 
that, moderate income families are going to discover that they 
get to keep less than 40 cents of each additional dollar they 
earn as a result of the phasing out of the subsidies for health 
care as well as other taxes.
    In addition, the Act creates a bizarre system of subsidies. 
There is no help in the legislation for a $10-15 an hour 
workers at McDonald's and Wendy's and Wal-Mart, corporations 
like that, no additional help at all. And yet if one of these 
employers decides to completely end its health plan, all of 
those workers can go over to a health insurance exchange and 
get from $10 to $15,000 in subsidies, and maybe even more. 
These subsidies, by the way, are in danger of causing a 
complete restructuring of business, not for sound economic 
reasons, but just in response to the subsidies.
    If I can have the second slide, economists at Stanford and 
the University of Chicago have created an uncertainty index, 
and they have found that we are now at the highest point that 
we've been over the past 30 years. They have concluded that 
public policy uncertainty is responsible for the loss of 2.3 
million jobs over the last 4 or 5 years. And one of the reasons 
for that is the Affordable Care Act.
    If I could have the final slide. Employers are responding 
to these conditions in certain ways that create a jobless 
recovery. What has happened is hours of work have actually 
increased. In terms of the number of hours employees are 
working, the recession is over. We are back to normal. What is 
not normal are the number of people being hired. In terms of 
being hired, it is as though the recovery has not even begun.
    Under the Affordable Care Act, there is no penalty for 
having employees work additional hours. There are penalties for 
hiring additional employees.
    Let me just say something about the Massachusetts 
experiment, because I have looked at it. It hasn't bothered 
employers very much because all of the expansion is in terms of 
subsidized insurance. All of the newly insured people are 
either in Medicaid or they are getting subsidized insurance. 
They are not getting additional insurance from employers.
    And contrary to the statement you just heard, nobody is 
getting more health care in Massachusetts today. There are no 
more doctors. There are no new nurses, there are no new 
clinics. The same amount of health care is being delivered now 
as was delivered 4 or 5 years ago. More people are going to 
hospital emergency rooms than before the reform was passed. 
More people are going to the community health clinics. 
Basically, people are going to the same places they went 
before, and they're getting the same care they got before, and 
all that is happening in Massachusetts is we are just moving a 
lot of money around.
    Thank you, Mr. Chairman.
    Chairman Issa. Thank you.
    [Prepared statement of Mr. Goodman follows:]





    Chairman Issa. The committee will stand in recess until 
approximately 10 minutes after the last vote, which should be 
in about the 3:15 time frame.
    Chairman Issa. The committee will come to order. I want to 
thank you all for your patience. As members return, they will 
be called by their seniority in the order in which they arrive.
    I will now recognize myself for the first round of 
questions.
    Ms. Miller, in your case, many of your employees are 
exactly the people who didn't have health care unless they had 
a job that provided health care, isn't that true?
    Ms. Miller. Yes.
    Chairman Issa. And I'm going to ask you a question that I 
asked in this morning's hearing. If Obamacare had said that you 
have to give $2,000 to every one of your employees whether they 
wanted it or not in the form of a health savings account, they 
could spend any way they wanted, but that you had to give that, 
or be taxed, would you be here today?
    Ms. Miller. No, sir.
    Chairman Issa. Mr. Fredrich?
    Mr. Fredrich. I would much rather put cash in the hands of 
people and that will encourage the private-sector market. 
Absolutely.
    Chairman Issa. Mr. Richardson?
    Mr. Richardson. We would feel the same way.
    Chairman Issa. Dr. Goodman. I know yours is an economic 
question. Well, let me ask you the other question, though. When 
you look at the uncertainty, if the--if, in fact, Obamacare 
said that you have to not cost shifts, so you have to provide a 
minimum amount of dollars intended to prevent, if you will, 
total uninsured behavior, would we have lowered the uncertainty 
by having instead of 12,000 pages of new regulations, and 
growing, out of a 2,400-page document, if we had simply had a 
very straightforward, no-cost shifting provision without a 
mandate of various and sundry, would that have dramatically 
lowered or eliminated the uncertainty that came out of 
Obamacare that led to what you see as a loss of jobs being 
created?
    Mr. Goodman. Well, I'm not quite sure what you have in 
mind, but what we could do----
    Chairman Issa. In other words, if there were certainty as 
to the cost of Obamacare, regardless of what it was, I use 
$2,000 because that is the amount that employers know that they 
can just pay and get out from underneath it, but it doesn't 
change the total cost of Obamacare because of the 21 other 
taxes and so on.
    Mr. Goodman. I think we can afford to give every American a 
$2,000 refundable tax credit. It could come through the place 
of employment, or if they weren't employed it could just go to 
them directly. And we can, in fact, probably even be a little 
bit more generous than that, and replace all of the existing 
tax and spending subsidies. That would create certainty. It 
would be adequate for most people, and it wouldn't destroy 
jobs.
    Chairman Issa. One of the--one of the questions I guess, 
Mr. Richardson, is not only obviously you would prefer 
something that went to your employees, but your company, since 
before you were born, has provided health care at least at that 
level, haven't they?
    Mr. Richardson. That's correct, Mr. Chairman.
    Chairman Issa. So your employees enjoyed exactly what was 
described as the problem of Obamacare, meaning with the 
exception perhaps of 25-year old adult children being covered, 
but depending upon the State, you already provided a level of 
care that was what had justified the need for Obamacare, isn't 
that right?
    Mr. Richardson. Correct.
    Chairman Issa. So in a sense, you are a victim of 
overregulation when, in fact, you were not part of the problem?
    Mr. Richardson. That's how we feel.
    Chairman Issa. Well, when you look at those 21 new taxes, 
medical device tax, that is going to raise cost and is not 
going to help health care, when you look at essentially a whole 
new tax on capital gains and other income, is any part of that 
going to help you build your business?
    Mr. Richardson. No. It just added to a lot of uncertainty 
and indecision.
    Chairman Issa. Now, Mr. Fredrich, you mentioned that, and 
this was particularly interesting, because I started off in 
manufacturing in Ohio, and a lot of--made a lot of products 
with my employer's or my customer's tools. So I was often 
working with the tool and die shops to create the tool that 
would be the least cost for me to then manufacture their 
products.
    If your costs go up, and your tooling go up--we will forget 
about your 49, 51 employees--what is likely, the likelihood 
that that German company will simply either move the tool 
making overseas, or, in fact, move the entire production to 
another country?
    Mr. Fredrich. Most of our customers are large companies and 
what they have the ability to do is outsource, and their market 
is the world. So we don't compete just against companies in the 
U.S. We compete against companies all over the world, China, 
India. So they are going to source it somewhere else. And the 
reason they buy from us is because of good service, good 
quality. They can buy it in smaller lot numbers. They don't 
have to buy container loads full of handles or something. But 
without question, if we become--and they are very price 
conscious. But if our price gets out of line, they go somewhere 
else; not in this country. They go somewhere else in the world 
to source it.
    Chairman Issa. Okay, Senator Wolf, you certainly made a 
good case for why you support Governor Romney's bipartisan 
effort in Massachusetts. But let me ask you a different 
question. You compete down in the Virgin Islands and so on. I 
noticed your flights go into those places. If your cost of 
fuel, your cost of pilots, your cost of maintenance, your cost 
of Cessna 400 series aircraft, if all of those go up, are you, 
in fact, likely to do less business, or can you simply pass it 
on?
    Mr. Wolf. To a degree, we can pass it on. But if the costs 
go up significantly, obviously, that does have an impact on 
business. So I would say the answer to that is it depends. I 
will say, though, that the variability of health insurance is a 
lot less than the variability of some of the other cost factors 
that we face, fuel being a primary one, if you look at that 
volatility.
    Chairman Issa. Sure, no, I understand the volatility of 
fuel, but no cost in America has equaled the increased cost of 
health care, and I want to preface this in closing, before or 
after Obamacare. There is no question that healthcare costs led 
the cost increases in the years before Obamacare, and of 
course, in the years since it has been passed. So for any of 
you here, what is it in the President's health care, in ACA, 
that in fact, in your estimation will lower your cost of doing 
business?
    In other words, what in those taxes, what in those 
regulations, if anything, is actually going to lower your cost 
of health care for your employees? Anything?
    Mr. Wolf. Is this for any of us?
    Chairman Issa. Well, I am getting noes from everybody, so I 
will give you, Senator Wolf, what is it in the President's 
health care that will actually cause health care costs to go 
down? Because nothing has happened so far. They have to--they 
would have to drop about 20 percent from where it is today to 
get back to where it was, isn't that correct?
    Mr. Wolf. For our company that has always provided the 
benefit, a portion of our premium dollars is going to provide 
health care for people who are uninsured. That is pretty 
accepted in the industry. So.
    Chairman Issa. But you were already in a State that 
prevented that. You already had all of that, so you wouldn't 
see any of that. And yet, Massachusetts, where you operate, you 
are paying additional taxes even though you had already 
implemented effectively Obamacare, isn't that correct?
    Mr. Wolf. I think one of the reasons that our health 
insurance premium rates have stabilized is because we are not 
any longer cross-subsidizing the 16 percent nationwide that do 
not have health insurance, but is in our Commonwealth right 
now.
    Chairman Issa. Right, but your State, people in your State, 
are seeing additional taxes, substantial additional taxes, $87 
billion from the increase in Medicare payroll tax alone, and 
the list goes on and on for $1 trillion, your constituents as a 
State senator are going to pay that tax even though you are not 
part of the problem under Obamacare, isn't that correct?
    Mr. Wolf. It is. The case that the increase in cost in the 
State budget, since the implementation of this bill, has been 
de minimis. And when I say de minimis----
    Chairman Issa. No, no, Senator, I appreciate now that you 
are now a State senator. Your constituents, though, are going 
to pay these taxes. The estimated $123 billion, $87 billion, 
$60 billion, $52 billion, $46 billion, these were all from 
taxes that Obamacare expects the people who make appliances, 
parts for the medical industry that ultimately, you know, the 
thing that goes into your bones when you are having an 
artificial limb and so on, all of those are enjoying a tax that 
is expected to be billions of dollars. Your constituents of 
their manufacturing are paying that even though your State was 
not part of the problem. I recognize my time is up, and I 
recognize the ranking member for his opening questions.
    Mr. Cummings. Let me pick up where it was left off here. 
Senator, first of all, I want to thank you for--I am going to 
thank all of you for being here. I want to thank you, Senator, 
and you and Governor Romney for the Massachusetts law.
    And I mean that very sincerely. I'm not--it is not a 
political statement. It is that I see the people who don't get 
health care.
    I'm assuming that when this law, when you all did this, 
there must have been a moral issue here somewhere. It seems to 
get lost up here. The person, the lady that came up to me in my 
community not long ago who had colon cancer and said I have no 
where to go. We ended up sending her to NIH. You know, or my 
neighbor, who died. The last thing he said on his death bed to 
his wife is, Ruth, I got to get up out of here because we ain't 
got no insurance.
    Was that a part of the consideration, because it seems to 
get lost up here. The fact that people die, and I'm not--and 
I'm saying this for a reason. I'm trying to figure out as a 
former businessman, I understand the other side of it too, 
trying to make sure that you keep costs down so you can make a 
profit, so that you can employ people, and I have no problem 
with things that these folks have said, and I know you don't, 
because you understand. You are a business person just like 
them.
    In some kind of way, I'm trying to figure out where--how 
did you all come to the conclusion that, first of all, you 
needed to do something? Was there a moral consideration in 
this, and do you believe you have saved lives? Do you believe 
you have saved needless suffering and pain, and do you believe 
that it's been worth it? In some kind of way, we had got to--we 
have to figure that out.
    I guess the question of who we are as a society, some of my 
constituents, somebody said to me in a debate, Cummings, you 
know, if you--you ought to tell the people and apologize for 
voting for the Affordable Care Act. And I told my constituents, 
I said if you--if you expect me to apologize for not leaving 
somebody on the side of the road to die, then I'm your wrong 
candidate. You need to vote for somebody else. And I just 
wondered, where did that come in? And I believe that Governor 
Romney had a compassion. There was some compassion there. And 
any time you are going to get 40 votes in a Senate, bipartisan, 
that's something serious. So help me with this.
    Mr. Wolf. Thank you for the question. And as an employer, I 
will tell you that since the primary way to procure health care 
in this country historically since 1942 has been through 
employment, we have always seen that as a responsibility.
    I could tell you stories that would make you come to tears 
about employees of ours who came to us with preexisting 
conditions prior to this law who were not able to procure 
health insurance on our plan, or employees who became sick and 
had to leave our company and were unable to get insured after 
they left. The law in Massachusetts has fixed that. And I think 
that is right, and I think it is compassionate. It is also 
smart business.
    So that I think part of it is a moral obligation that we 
have to make sure that everybody has access to both 
preventative health care, and health care in crisis, and I 
think that we have a responsibility A, as an employer, now that 
I am a senator, I see that responsibility carrying through to 
all of the citizens of the Commonwealth who I represent.
    Mr. Cummings. And so when you're--the argument, and I know 
you, I know you empathize with the comments of your fellow 
business folks there. I mean, and you are head of a Chamber of 
Commerce? You were, is that right? Is that what you said?
    Mr. Wolf. Yeah.
    Mr. Cummings. You know, the thing that I guess you all 
have--you all have tried it, and it seems to be working, but I 
mean, what's the--and Mr. Goodman basically said all you are 
doing is moving money around, something to that effect, 
whatever you said. I mean, do you agree with all of that? Can 
you talk about some of the things that he said in complaining 
about the plan, and how it--he said people are getting the same 
kind of treatment. You heard the things he said, and I just 
want you to answer those.
    Mr. Wolf. A couple of facts in the statement which I would 
just like to address or correct. First of all, the statement 
was made that more Massachusetts businesses did not offer it 
after the plan and that's not the case. Prior to this bill 
going into effect, 69 percent of the businesses in 
Massachusetts offered health care. At this point, 77 percent of 
all those employers that have more than three employees offer 
health care, so that's been a success.
    The other statement that I would like to address is a 
statement about people still going to emergency rooms for 
primary care. Since enacting this legislation, we have saved 
$118 million by diverting folks from emergency rooms as their 
source of primary care treatment back to primary care clinics 
and primary physicians. So both of those aspects I think have 
been a success as well.
    Mr. Cummings. And so that the fact that they, you know, are 
diverted from the emergency rooms, you know, I hear from my 
hospitals all the time, their concerns and whatever, and I am 
just curious, I mean, has that had an effect on their, I'm sure 
it has, bottom line, and how does that affect the program 
overall? Do you follow me?
    Mr. Wolf. Well, if we get people to get treatment and 
preventative treatment prior to emergency rooms, it is going to 
ultimately cost less for everybody. So it is not only more 
humane, but it is also a more cost-effective way to do it.
    As a business person who looks at efficiency every day in 
the business that we run, there is so much inefficiency in our 
health care system, that just as important as addressing the 
access issue which this bill does, we need to very aggressively 
go after the cost issue. There is a lot of low hanging fruit to 
wring cost out of this industry while providing a better and 
more humane health care system.
    Mr. Cummings. Now, do you all have a similar provision in 
your bill to the ones in the Affordable Care Act where if the 
insurance company spends more than a certain percentage on 
things other than direct health care, that money has to be 
refunded to the insured?
    Mr. Wolf. We do. That is a great question. Our target in 
Massachusetts is 90 percent, so that the insurance companies 
are expected to spend 90 percent or more on what we call the 
loss, the direct loss, or the payment, the claims. And that 
would leave 10 percent for administrative.
    Mr. Cummings. And so what happens if they go over?
    Mr. Wolf. There is a rebate.
    Mr. Cummings. I see. Thank you very much, Mr. Chairman.
    Mr. Gowdy. [Presiding.] I thank the gentleman from 
Maryland. I now recognize the gentleman from Michigan, Mr. 
Walberg.
    Mr. Walberg. Thank you, Mr. Chairman. Mr. Richardson, could 
you inform the committee what White Castle's employee retention 
rate is?
    Mr. Richardson. Yeah, we have tremendous loyalty among our 
team members. We are really proud to say that we had only a 57 
percent turnover rate among our hourly employees, but then with 
our management team last year, it was only 6 percent compared 
to an industry average, probably closer to 25, 30 percent.
    Mr. Walberg. So seemingly some significant satisfaction 
there?
    Mr. Richardson. We are able to measure that as well, and we 
do that by doing surveys, and measuring that engagement and do 
very well in that area.
    Mr. Walberg. Where does your benefit package, specifically 
health care come in on that?
    Mr. Richardson. The biggest thing about our health care 
focus is providing what we call freedom from anxiety, so that 
is something we have been focused in on since 1924. That 
benefit specifically is rated one of the highest in terms of 
why people come to White Castle, and why they continue to stay.
    Mr. Walberg. Prior to Obamacare's passage, businesses had 
significant concerns about providing workplace coverage. What 
was the primary concern of employers like you?
    Mr. Richardson. The primary concern was increasing cost as 
we saw the landscape changing, and big increases each year.
    Mr. Walberg. Does the Patient Protection Affordable Health 
Care Reform Act alleviate any of those concerns?
    Mr. Richardson. No, unfortunately, to us it adds more 
uncertainty because we can see looking ahead to 2014, 
significant increases coming down the pike.
    Mr. Walberg. Ms. Miller, wherever I go in my district in 
talking to employers, I hear concern about rising health care 
costs, and Obamacare. You told, as reported here, in CNN, you 
told them ``We are afraid to spend because we don't knee what 
the big scary monster around the corner looks like.''
    Ms. Miller. Correct.
    Mr. Walberg. Would you have invested and spent more if the 
health care law had not been enacted?
    Ms. Miller. Definitely. We are a company of 40 years that 
we have always invested money back into the business and 
spending in a way to grow our business and create innovation, 
and we have never had the cash on hand we have today because we 
are not spending money, because we don't know exactly what that 
looks like before this came down, the penalty if we don't do 
anything being $640,000 for us. We pay over 320 employees.
    I have to make sure I have enough money on hand as this 
goes into play until we can figure out how to make this work. 
Because it is not going to be an easy process to make these 
changes.
    Mr. Walberg. Is there any estimate at the Chamber or any 
business organization you know of, estimate of how much capital 
is sitting on the table, under the table, behind the table?
    Ms. Miller. I do not have a number like that, sir.
    Mr. Walberg. That would be significant at this point.
    Ms. Miller. I'm sure they can find that number for you and 
get back to you on that.
    Mr. Walberg. Okay. Thank you. Mr. Goodman, do we know how 
many people will lose their health insurance because of the 
government takeover of health care?
    Mr. Goodman. No, we don't, but it could be as high as 80 
million. I assume you mean lose their employer-sponsored?
    Mr. Walberg. Employer-sponsored.
    Mr. Goodman. Yes, it could be very high, much higher than 
the Congressional Budget Office has estimated.
    Mr. Walberg. Taking that into consideration, what will be 
an overriding economic impact of the takeover of health care to 
our economy, to our businesses?
    Mr. Goodman. Well, as I said we are imposing heavy labor 
costs on every employer in America, and if they don't bear that 
cost, and they have to pay a pretty substantial fine, we have 
$500 billion in new taxes which the way they are imposed is 
going to reduce investment, reduce growth, reduce output, and 
as you point out, people are going to have to switch where they 
are getting their health insurance because employers are going 
to find, in many cases, it is just cheaper to pay the fine and 
send the employees to an exchange where they can get very, very 
substantial subsidies.
    Mr. Walberg. Does this--does this potentially add, based 
upon economic impact, add to a significant increase in debt 
crisis simply because of the health care reform bill?
    Mr. Goodman. Well, the Affordable Care Act is not paid for, 
and that's the point that hasn't been made yet in this hearing. 
Half the cost of the Affordable Care Act is paid for by cuts in 
Medicare spending and yet the chief actuary of Medicare has 
said that if you go ahead and do this, you are going to have 
one out of seven hospitals go out of business before the end of 
the decade, and senior citizens won't be able to find a doctor.
    And the prediction, apparently by the actuary's office and 
by the Congressional Budget Office, they don't put it quite 
this way, but they keep putting out these alternative 
forecasts. And what they are really saying is, we don't believe 
Congress will stick with this. You didn't really pay for this 
bill. Okay.
    Mr. Walberg. That's an amazing balloon in the sky with all 
sorts of uncertainty, isn't it?
    Mr. Goodman. Yeah.
    Mr. Walberg. Except the certainty that we can't pay for it.
    Mr. Richardson, or any of you, I would be glad for you to 
address this. When asked what he believed to be the single--I 
see my time has expired.
    Mr. Gowdy. Unanimous consent, for 30 seconds if you want to 
ask one more----
    Mr. Walberg. I appreciate that.
    Mr. Gowdy. Okay.
    Mr. Walberg. The cofounder of Home Depot, Bernie Marcus 
responded when asked what was the single greatest impediment to 
job growth today, he said the U.S. Government.
    Asking business people here at the table, would you agree 
with him and why?
    Mr. Richardson. We would tend to agree because what we are 
seeing right now is more uncertainty than we have ever 
encountered. I think as we look at the landscape, this is an 
aggressive program in terms of health care reform. The cost of 
health care reform have come at the absolute worst time and the 
fact that we can't even calculate what the costs are going to 
be make it impossible for restaurants like White Castle to be 
able to plan for the future.
    So you can't commit to opening new restaurants and going 
into new markets if you don't know what you are going to be 
paying a year and a half from now as far as your costs go. So 
we find ourselves in the unenviable position of having to make 
the unconscionable choice between violating our conscience, or 
mortgaging our future in a way to continue to provide the 
benefit our team members have become accustom to. So it is 
paralytic.
    Mr. Fredrich. I actually think that it's our single 
greatest risk right now for our business. We are in the 
country. We have nowhere to go, and we are borrowing $4 billion 
a day. You, not our company, obviously. And that is not a good 
long-term plan. And if you don't address that seriously, we are 
right with Greece, Spain, and nobody is going to bail us out. 
We are too big.
    Ms. Miller. My husband and I have had a conversation more 
than once that when he started this business 40 years ago, he 
thought it was about cleaning toilets and mopping floors. And 
today we have to spend a large percentage of our time dealing 
with government compliance, and paying taxes and figuring that 
out, rather than focusing on how to make our business better, 
to grow our employee base, and take care of customers, to 
create jobs, and to create more revenue. And it takes us away 
from what it takes to run a business.
    Mr. Walberg. Thank you.
    Mr. Wolf. Can we all answer that?
    Mr. Walberg. It's up to the chairman, but I'm willing to 
listen.
    Mr. Gowdy. Yes.
    Mr. Wolf. I think the question is, is the biggest threat to 
our growth, is it overregulation or is it government? I operate 
a business in the most highly regulated industry in the 
country, which is the airline industry, and we have found that 
regulation is not what gets in the way of our growth. I will 
tell you, if I had the opportunity to come down here and talk 
about how do we level and make predictable energy costs, for 
example, in an industry where there are profits being made hand 
over fist without any effort to make that a predictable cost, I 
would have showed up a lot earlier for that hearing.
    This is 3 percent of our company's expense. And it is not a 
significant mover relative to whether we continue to grow. And 
by the way, we have grown 75 percent as a company since 2007, 
since the law was enacted in Massachusetts as far as gross 
revenue.
    So the answer would be no. I do not think the regulation of 
health care is an inhibitor at all to our business growth.
    Mr. Walberg. Thank you, Mr. Chairman.
    Mr. Gowdy. Thank you. The chair would now recognize the 
gentlelady from the District of Columbia, Ms. Holmes Norton.
    Ms. Norton. Thank you, Mr. Chairman. I really want to thank 
each and every one of you for your testimony. I have listened 
very carefully, and I think I understand what you are feeling, 
particularly about uncertainty.
    Remember, we are talking about a bill, major parts of which 
don't go into effect until 2014, and yet we are here trying to 
calculate how many jobs it makes or doesn't make.
    The--I also appreciate your concerns about whether it will 
slow job growth, notwithstanding the CBO, which has repeatedly 
said that it will slow the increase in the cost of health care. 
But I know that I want to ask Senator Wolf a set of questions.
    You come from various States, Texas, as I understand it, 
Columbus, Ohio; Cincinnati, Ohio; Wisconsin, so you are pretty 
representative of at least some parts of the country. But I 
tell you, we have seldom had in the Congress, a real-time 
example as any kind of model when we have enacted legislation 
by which to measure what we are doing, and that's what the 
State laboratory of Massachusetts has given us.
    It has given us, as it turns out, a Republican model from a 
Republican governor who made it a bipartisan bill in a 
Democratic State.
    And in these he had to prove himself. It's the model as it 
turns out as Mr. Wolf said, that the country has embraced since 
the early 1940s, which is, hey, look, just use the existing 
system. Preserve insurance, and build around it. That's what 
that is. That is all that is, is what we have always had. So 
let me ask Mr. Wolf who has some real-life experience from 
which we can draw some conclusions. Mr. Wolf, Senator Wolf, I'm 
sorry, in your State, there is a free rider prohibition or 
penalty on both the employer, and the employee, as I understand 
it. Is that not correct? So let me ask you straight away. Did 
the employer mandate and the company penalty cause a drop in 
employer-based jobs of health care, or in jobs in your State? 
And if they didn't, why not? Since all the predictions are for 
catastrophe on that score, why in the world didn't that happen 
in Massachusetts, if it did not happen in Massachusetts?
    Mr. Wolf. Because in Massachusetts, we are overcoming that 
with a lot of other government assistance through education, 
and workforce training. I mean, it is a State that is looking 
very hard at our economy. We have cut taxes. In fact, this year 
we cut both income tax at a personal level and at a corporate 
level, part of the healthy economy story. But again, 
Massachusetts is eighth in job creation so far this year with 
almost 38,000 jobs created. We are third in gross State product 
growth since 2007 when this bill was enacted. It is clearly not 
inhibiting business health and growth, and I will repeat what I 
said before too, that when this bill went into effect, 69 
percent of the businesses in Massachusetts with more than three 
employees gave this benefit. Now, 77 percent do.
    So it has incentivized more businesses to give this, and 
very few businesses are paying a penalty because most 
businesses are complying with the law.
    Ms. Norton. Well, the other--the other speculation, and 
again, I want to go with real experience for a change. The 
Massachusetts experience seems to contradict. According to your 
testimony, you had a 15 to 20 percent increase in health care 
before this bill, your bill took effect, and the last year, as 
I recall, as I read your testimony, your increase had gone from 
15 to 20 percent down to 4 percent, and that you were actually 
able to negotiate a 5 percent decrease.
    Would you explain that in light of the parade of horribles 
we have heard here, all speculation, all before the bill has 
gone into effect, as the Massachusetts bill already has.
    Mr. Wolf. Yeah, it--the bill has allowed for premium rates 
to stabilize in Massachusetts. The personal experience of Cape 
Air, again, as you point out, is 2 years ago we were able to 
negotiate a 5 percent decrease in premiums, and the last 2 
years, the increase has been about 4.
    Ms. Norton. Did the fact that you had a larger pool of 
people who are in health care, help to bring down the cost of 
health care? This is economics 101. The smaller the pool, the 
greater the cost. When you had a larger the pool, did that help 
to bring down the cost.
    Mr. Wolf. It did, and one of the things that Massachusetts 
has done is we have implemented a pool opportunity for up to 
85,000 employees for small business to actually get together 
and accumulate their employee groups so that they can go with a 
bigger number and try to get reduction. So we are also 
addressing the fact that, yeah, there is a scaling issue which 
is that if you can put more employees together to negotiate for 
that, then the rates will come down.
    Ms. Norton. Senator Wolf, this may explain why if you look 
at every economy in the world, when countries choose to offer 
health care, and by the way, almost all countries do, even the 
developing countries, they use not a system we use, we are 
respecting the old system with employer-based health care. They 
use some kind of single payer. Singapore, which is not exactly, 
which is perhaps everybody's example of a free market 
unregulated economy, single payer, sometimes a single payer is 
sometimes employer based, but it is always single payer. And 
the reason I think comes down to the fact, if you put the sick 
and the well, and all of us together in one pool, the basic 
theory of insurance, the basic theory of economics is, we bring 
down the costs for everyone. Thank you very much, Senator Wolf.
    Mr. Gowdy. Thank you, gentlelady from the District of 
Columbia. The chair would now recognize the gentleman from the 
great State of Oklahoma, Mr. Lankford.
    Mr. Lankford. Thank you, Mr. Chair. I have enjoyed all of 
the conversation from both sides of the aisle today praising 
Governor Romney. I will look forward to their support in 
November as well, and I'm the same voice on that. I also 
appreciated some of the conversation about other countries.
    And in my area in Oklahoma City, let me tell a couple of 
stories. In Oklahoma City, there is a surgical hospital there 
that does a flat-fee surgery. It is a tremendous hospital, very 
popular. When they started several years ago, the owner of the 
hospital said the surprise that he had is once they posted 
their fees on line and started competing and opened up, the 
first folks that started to call them were the Canadians, who 
would rather fly to Oklahoma City, stay there, pay for the 
surgery, and fly home than wait 6 months for the exact same 
surgery back home.
    Another story, there is a cancer radiation treatment center 
in Oklahoma City; two really fantastic ones that are there, 
stellar. Twenty-five percent of their business is from the U.K. 
because we have more advanced cancer treatment in Oklahoma City 
than they have in all of the U.K.
    So while we talk about perspectives here, it is interesting 
for me to look at and say, we will get some flat amount that 
everyone will get access to, but the world is still coming 
here. And the lines are apparently very long overseas, and 
those who have the money and can fly out and go cut the line 
get it, and those who don't, suffer and wait.
    So that the promises that are built into this have been 
interesting to me to be able to track. The promise that you are 
going to be able to keep your health care. If you like it, you 
can keep your plan.
    Now we are going hearing from the administration up to 80 
percent of the small business plans will not be acceptable and 
will not be grandfathered in. Up to 80 percent. Up to 64 
percent of the larger employer plans will not be grandfathered 
in and we will have to make some sort of change. The cost has 
changed in the last 2 years from $800 billion to $1.8 trillion, 
in 2 years, and it has not been fully implemented yet. And now 
we hear from CBO, that they estimate in the next 10 years, 
800,000 jobs will be affected by this; 800,000 lost jobs. Now, 
may I remind everyone in June or economy only created 80,000. 
So we are talking about 800,000 lost jobs.
    Now, my concern is is that there seems to be some 
assumption that health care is complicated and difficult, and 
if we would only give it to the Federal Government, it would be 
so much easier and more efficient and faster.
    And I think that is where I struggle with the process on 
this. It is--it is the thought that there's something that the 
States do that if the Federal Government did it, it would be 
better. If there is something that private business did, if the 
Federal Government did it, it would be better, and I just 
struggle with that, personally. Does anyone know of an example 
of a State regulation that went to Federal that was so much 
more efficient and cheaper and faster, or of a private business 
that when it was federalized, it suddenly got cheaper and 
faster and more efficient?
    I don't either. And I'm not anti-government. But there 
seems to be this assumption that it will be so much more 
efficient, it will be so much cheaper, it will be so much 
better if we will just federalize this.
    Mr. Wolf. Is that a rhetorical question?
    Mr. Lankford. No, it was an actual question.
    Mr. Wolf. I do have an answer to that. Again, it is the 
industry that I'm in. I cannot imagine air transportation 
commerce being regulated State by State.
    Mr. Lankford. Now, I can understand that, even though.
    Mr. Wolf. Do you want an answer to the question?
    Mr. Lankford. No, no, here is the thing on that. There is a 
difference between setting the boundaries, State highway 
department, aviation, whatever it may be, and if instead weaken 
your business, as you mentioned before with health care costs 
or with energy costs, you mentioned that, the fluctuating cost 
of the energy. If we went in and did a mandate on energy, we 
were going to lock in the fees, my question to you, you know, 
I'm on the Aviation Subcommittee for Transportation. I could 
bring up a bill for aviation, say you know what, let's go into 
all the--because I don't like paying the different prices. I 
have noticed different months, different prices for aviation. I 
would like to lock those down and just have one price and I'm 
going to set it.
    In fact, I'm going to come to all of the aviation groups 
and I'm going to say, I don't like how much advertising you do. 
I see it all the time. It is a waste. So I'm going to say, 95 
percent has to go to the passenger. I need 95 percent of the 
money. You can keep 5 percent for administration. You would be 
ticked at that point because you run a great company, 
apparently, and you should have the flexibility to run a great 
company and provide a great service, and compete and win.
    And the concern is that somehow if we federalized it, if we 
went into your company, not just set boundaries for safety but 
went into, not just regulating, but running your company, it 
would somehow make it better.
    Now, I do want to ask a question of Mr. Richardson. You 
brought up an interesting thing, you said 400 to 500 jobs have 
not been created because you all have hesitated on expanding 
business. Would you clarify that for me as well?
    Mr. Richardson. Yeah, for the past several years we have 
been looking to expand into new territories so we have done 
market research to explore that. In looking towards that, we 
are concerned about what our cost curves are going to look 
like, so we have held back on any expansion at this point.
    Mr. Lankford. So right now you are just on pause until 
what? Until we get to 2014 and try to figure out what the costs 
are going to be, and then try to see where to move from there, 
so at least 2 more years of pause?
    Mr. Richardson. We are a family-owned business in the 
restaurant industry, so by nature, we are optimistic. But I 
think we are really trying to sort out and understand. We know 
for certain, so it isn't speculation on our part, we can look 
and model out that our costs are going to increase more than 20 
percent when it comes to health care. That is $7 million-plus. 
That is a lot of money that could go into building new 
restaurants, creating new jobs, and providing more benefits for 
our team members.
    Mr. Lankford. Thank you. With that, I yield back.
    Mr. Gowdy. I thank the gentleman, from Oklahoma. The chair 
would now recognize the gentleman from Massachusetts, Mr. 
Tierney.
    Mr. Tierney. Thank you, Mr. Chairman. I want to thank all 
of our witnesses for being here today, and Senator Wolf, I want 
to thank you in particular, because I--you are the one that has 
experience with the real program. You are a little bit like a 
skunk at a lawn party. Everybody else is talking about myths, 
and fear, and speculation, and then you throw a little cold 
water on it and talk about reality, but you go right back to 
the myths, and fear, and speculation, because that narrative is 
something people apparently don't want to change.
    But the, you know, one of the things we talk about is what 
has been happening in our State, Massachusetts, at least, those 
64 million-plus residents in Massachusetts with Medicare have 
saved--I'm sorry, residents in Massachusetts saved under 
Medicare, $64 million in prescription drug costs. Right?
    Mr. Wolf. Yep.
    Mr. Tierney. 1,324,000 in Massachusetts with private health 
insurance gained preventative service coverage with no cost 
sharing, right? We have a better value for our premium dollar 
through the 80/20 rule. You have a 90 percent rule in your law 
in Massachusetts, so an average of $140 for 85,000 families in 
Massachusetts, right? And we have an ability to scrutinize the 
premium increases. Will you tell us a little bit what the 
governor did with the legislative support on premiums?
    Mr. Wolf. Well, I mean I can--yeah, but I can also give you 
some real data which is that when premiums are considered as a 
percentage of household income in Massachusetts, we are now 
48th out of the 50--51, out of the 50 States plus the District 
of Columbia; 48th as far as the percentage of premium relative 
to household income. And that has gone down dramatically since 
the implementation of this law.
    Mr. Tierney. So I was a former local chairman of the 
Chamber of Commerce, as well. Do you agree with me that as far 
as our small businesses at a local level this is good for them?
    Mr. Wolf. I think that CNBC is about to announce this 
afternoon, I hope, that Massachusetts is considered to be the 
number one place in the United States to do business. If this, 
what we are talking about on a national basis was so 
deleterious to the economy and to small business growth, how is 
it possible that the one State that implemented it would be 
named as the best State in the country to do business? It just 
doesn't make sense.
    Mr. Tierney. That won't deter anybody, though. But Ms. 
Miller, let me ask you some questions. You have a policy you 
say that you offer to your employees, correct?
    Ms. Miller. Yes, sir.
    Mr. Tierney. How much on an hourly basis does your newest, 
lowest-level employee make?
    Ms. Miller. $9.80.
    Mr. Tierney. $9.80 an hour. So take-home pay somewhere 
around $6.80, $6.75.
    Ms. Miller. Somewhere around there.
    Mr. Tierney. All right, and how much would their share of a 
premium cost for health care cost on a dollar basis?
    Ms. Miller. That's $20 a month, sir. This is what our 
minimum is.
    Mr. Tierney. So the $6, they work 40 hours a week, what are 
they bringing home?
    Ms. Miller. Bringing home net, yes.
    Mr. Tierney. How much are they bringing home on a net basis 
on a weekly?
    Ms. Miller. I'm not a mathematician.
    Mr. Tierney. Well, 40 times $6.00, so $240 or $300, or 
whatever. And your plan is limited, you said, right?
    Ms. Miller. Yes, sir.
    Mr. Tierney. So limited in a sense is a big copay?
    Ms. Miller. No, small copay, just max is $6,000 a year, 
sir.
    Mr. Tierney. Oh, and that's it. So a lifetime cap and an 
annual cap?
    Ms. Miller. Correct.
    Mr. Tierney. Deductibles?
    Ms. Miller. It is a low deductible. I can't remember the 
number off the top of my head. But it is like a copay to go to 
the doctors is like $10 to $15.
    Mr. Tierney. Out of that $6-an-hour job, all right, and the 
deductibles?
    Ms. Miller. I only know that it is a $6,000 max a year.
    Mr. Tierney. It is any surprise to you that 85 percent of 
your employees don't take advantage of this plan?
    Ms. Miller. Yes, sir, it is a surprise.
    Mr. Tierney. Really?
    Ms. Miller. Because it covers basic health care.
    Mr. Tierney. Well, I mean, I think that, you know, I have 
seen people that bring home that amount of money and there 
isn't a lot left over for playing with deductibles and copays 
and that kind of a share on it, or whatever, so it is no 
surprise to me--and people that were in my Chamber wouldn't be 
surprised, and Senator Wolf, I suspect people in your Chamber 
wouldn't be surprised. Am I right?
    Mr. Wolf. Yes. 
    Ms. Miller. Sir, the costs would go up quite a bit higher 
with the new plan.
    Mr. Tierney. Well, let me suggest what the market was doing 
before we had the Affordable Care plan. In the last 10 years 
before we had the Affordable Care plan, the premiums more than 
doubled, a rate three times faster than wage increases. From 
2004 to 2007, 12.6 million adult Americans, 36 percent of those 
who tried to purchase a policy from an insurance company in the 
individual market were denied coverage, charged a higher rate, 
or discriminated against because of a preexisting condition; 
8.6 millions more Americans were uninsured. So it went from 
38.4 million to 47 million.
    If we don't act, if we hadn't acted, it was estimated the 
cost of employer-sponsored family health insurance plans would 
reach $24,000 just by 2016. That would be an increase of 84 
percent. Most American households would be spending 45 percent 
of their income on health insurance. Family premiums would be 
expected, without the Affordable Care Act to rise on an average 
of $1,800 a year.
    So those people that work for you for $6.25 or $6.75 an 
hour would have to pick up an extra amount of that every year, 
$1800. Fourteen million more Americans would be expected to be 
uninsured. So we go from 47 million to 61 million. Small 
businesses, in the 10 years before we had the Affordable Care 
their premiums were rising at 129 percent. I know it because I 
saw it in my business. Senator Wolf, I suspect you saw it in 
yours, and Ms. Miller, I think you saw it in yours as well.
    If we hadn't acted on the Affordable Care Act, premiums 
would have increased more than doubling in most States. It 
would have risen by 60 percent in the best cases, and small 
businesses were projected to lose more than $52 billion in 
profits due to high health costs. So for the last 10 years 
before we had the Affordable Care Act, our national health care 
spending increased 90 percent.
    So if you want to see damage done to our economy and to 
young people, and what the effect would have been, that would 
be it. So Senator Wolf, I will say once again, give you a last 
opportunity to wrap up here. That was the projection without a 
health care plan like the one in Massachusetts, the Affordable 
Care Act. With the plan in Massachusetts, what have you seen in 
reality?
    Mr. Wolf. Well, both our company, but also statewide, as I 
said, we have seen the amount being spent on premiums as a 
percentage of household income drop significantly since the 
implementation of the plan. And I think that's probably the 
best measure because, if you look at absolute dollars, you then 
have to adjust it for different regions and the cost of living, 
and all of that stuff. So I think the best measure is the cost 
to a family as a percentage of their household income. And I 
think in Massachusetts, that's been a success story since the 
implementation.
    Mr. Tierney. Thank you very much. I yield back.
    Ms. Miller. Sir, may I respond to your earlier question, 
please?
    Mr. Gowdy. It's your question.
    Mr. Tierney. Give me the time, sure.
    Ms. Miller. Right now out----
    Mr. Tierney. I mean, I saw the young lady hand you the 
note. Would you like her to testify?
    Ms. Miller. No.
    Mr. Tierney. Is she from the Chamber of Commerce?
    Ms. Miller. She's doing the calculator for me.
    Mr. Tierney. Is she from the chamber of commerce?
    Ms. Miller. Yes, sir.
    Mr. Tierney. Oh, of course.
    Ms. Miller. As I said, our policies, our benefits cost 
between $20 to $30 a month, so average of $25 a month; 12 
months, it is $300 a year cost, for minimal coverage, but it is 
coverage. With the new plan it would cost them $1,500 a year.
    Mr. Tierney. Well, you don't have a new plan under this 
plan. It hasn't gone into effect yet.
    Ms. Miller. But it would be.
    Mr. Tierney. So it is your speculation?
    Ms. Miller. Yes, sir.
    Mr. Tierney. That's my point. If you want a reality, 
Senator Wolf is sitting right next to you. Thank you, I yield 
back.
    Mr. Gowdy. The chair would now recognize the gentleman from 
Tennessee, Dr. DesJarlais.
    Mr. DesJarlais. Thank you, Mr. Chairman. I'm just sitting 
here listen to all of these numbers rattle through my head, and 
I think Massachusetts care just sounds almost too good to be 
true.
    We are about to implement a law that, in my experience in 
health care, cannot bring down costs when you are adding more 
recipients and not ration care in some form or another. We have 
got--something has got to give when it comes to the cost of 
health care because the Affordable Health Care Act does not do 
anything to address cost containment. Health care costs are 
rising, so I don't know how this is going to be cheaper, but we 
are fortunate to have a number cruncher on the panel, Dr. 
Goodman. Maybe you can explain, you know, whether or not 
Obamacare is really affordable for this country and why is the 
care in Massachusetts so much better than what we are 
projecting for this?
    Mr. Goodman. Well, I want to start with Mrs. Miller's 
company and her employees. There is nothing in the Affordable 
Care Act that does anything to help her or her employees afford 
a $15,000 family policy. There is nothing. There is no new 
subsidy, no new tax break. It is just a law that says that if 
she and her employees can't come up with $15,000 for a health 
plan, they are going to be fined. How does that help anyone? It 
doesn't.
    Now, in Massachusetts, again, the expansion, the way they 
cut the uninsured in half was not by going out and forcing 
employers to provide a lot of new health insurance. They cut 
their health insurance, uninsurance rate in half by putting 
most of the people in Medicaid, and the rest of them are 
getting highly subsidized insurance from the State. So this 
isn't affecting employers very much, but also, we need to 
correct the impression that a lot of people are getting 
additional care because they are not. And a lot of people in 
this room are confusing health insurance with health care.
    I was in Massachusetts last year and I talked to a woman 
cab driver and I said, how is the health plan working? And she 
said, well, she is on Mass Health which is Massachusetts 
Medicaid. She said, well, I had to go down a list of 20 doctors 
before I could find one that would see me. I said, are you 
going down the Yellow Pages? She said, no, this is the list 
that Medicaid gave me.
    You can't give people more health care if you don't create 
more doctors, more nurses, more clinics or deregulate the 
market so that it can more efficiently provide services. So 
Massachusetts made the same mistake that Obamacare is making at 
the Federal level.
    In Texas, we have 25 percent of our population uninsured. 
Now, we can go put them all on Medicaid, but where are they 
going to find the doctors? Where are they going to get more 
care? They are not. And so we are creating a promise of more 
access to care but we are not going to be able to deliver, and 
they haven't done it in Massachusetts. And I will repeat again, 
more people are going to hospital emergency rooms in 
Massachusetts today than ever before, and the same number of 
people going to community health centers are still going there 
even though they now are insured, and they are not getting more 
care.
    Mr. DesJarlais. Senator Wolf, your company sounds 
fantastic. I mean, when all of these airlines are going 
bankrupt you are just thriving and increasing profits and that 
is wonderful. Congratulations. How many employees do you have?
    Mr. Wolf. About 1,000.
    Mr. DesJarlais. 1,000, and do you offer all of these 
employees health care?
    Mr. Wolf. They are all offered and some of them are covered 
under other plans, but yes, they are all offered it.
    Mr. DesJarlais. What does it cost you approximately per 
employee to provide health care for them?
    Mr. Wolf. The total policy, or our portion of it?
    Mr. DesJarlais. Your portion of it.
    Mr. Wolf. An individual policy is between $5- and $6,000. 
Generally, we pay 60 percent of it.
    Mr. DesJarlais. Okay, well, you sound like a very shrewd 
businessman. So you said not all thousand are on it but about 
$6,000. So you are spending, if you are insuring all of them, 
$6 million a year in health care coverage.
    Mr. Wolf. Our total premium dollars are somewhere just over 
$3 million. A lot of our employees----
    Mr. DesJarlais. Okay, now, 3 percent of your company's 
budget.
    Mr. Wolf. That's right.
    Mr. DesJarlais. Okay, now, what are you going to say to 
your accountants who come in and said do you realize if you pay 
the tax that President Obama is proposing, you can cut that 
cost in half? I mean, you are doing well right now, but what if 
times get tough? Are you going to keep those employees on that 
health care?
    Mr. Wolf. We think it is our obligation as an employer, 
since that is how human beings get health coverage, and I 
agree, we are confusing health insurance with health care, but 
the fact is health insurance is the gateway into health care. 
And we just don't think it is a humane workplace to have 
employees who either personally or family crisis drives them on 
to the street or into bankruptcy.
    Mr. DesJarlais. So you think it is a right to have health 
care?
    Mr. Wolf. We will do whatever we have to do to continue to 
provide that for our employees.
    Mr. DesJarlais. Okay, how about our business folks here? Is 
that a similar experience that you are having, Mr. Richardson.
    Mr. Richardson. Seventy-five percent of our team members 
who are eligible for health care, all of our full-time team 
members are eligible; 75 percent participate in the program. 
Our cost is $30 million a year, a significant investment. We 
have been making a similar investment over the decades. We have 
seen that cost increase, but for us, it is about the dignity of 
each person, providing that as something that is part of that 
special relationship we have between an employer, and an 
employee. I guess where we are concerned is, to us, it hasn't 
been speculation, but it has been a fear because we see a semi-
truck of extra costs about 3 feet away about to hit us and 
every one of our restaurants in each one of our neighborhoods, 
so we are really struggling with how are we going to be able to 
make ends meet to be able to continue what we have done for 
almost 90 years.
    Mr. DesJarlais. It may be humane, but if your company is 
broke, you are not going to be able to provide health care or 
wages.
    Mr. Richardson. The choice I referred to earlier was that, 
yeah, this is a difficult position we are in.
    Mr. DesJarlais. All right, well, my time is expired and I 
thank the panel.
    Mr. Gowdy. Thank you, the gentleman from Tennessee. The 
chair would now recognize the gentleman from Virginia, Mr. 
Connolly.
    Mr. Connolly. Thank you, Mr. Chairman. Senator Wolf, first 
of all, I assume you represent Falmouth?
    Mr. Wolf. Actually, no, the Senate president represents the 
great town of Falmouth.
    Mr. Connolly. So you are not quite, my family's State 
senator, but close. You would like to represent Falmouth.
    Mr. Wolf. I would love to represent Falmouth.
    Mr. Connolly. Well, I am a fellow Bay Stater by birth and 
child rearing, and so I'm glad to have you here today.
    I'm confused. We heard unbelievably dire predictions about 
what would happen if the Affordable Care Act were adopted, and 
if it were to be implemented. Would it be fair to say similar 
dire predictions about unemployment, investment, budget 
busting, and whether it was efficacious to begin with were 
similarly echoed in Massachusetts at the time of the adoption 
of Romneycare?
    Mr. Wolf. To some degree, yes. However, because it was a 
bipartisan effort, the message from government was, we have 
come together, both parties, to do what we think is right for 
the citizens of the Commonwealth. And I think the message 
matters from government as we roll out a plan like this.
    Mr. Connolly. Senator Wolf, your business credentials, you 
are not some wide-eyed, lefty, commie, pinko, are you, I mean? 
I mean, you were in fact----
    Mr. Wolf. I choose not to answer that question.
    Mr. Connolly. Yeah, on the grounds that it may incriminate 
somebody. But you served as the chair of one of the Chambers of 
Commerce in Massachusetts, is that correct?
    Mr. Wolf. I was on the board of the Cape Cod Chamber of 
Commerce for 15 years. I served as the chair from 2005 through 
2007.
    Mr. Connolly. And you are also or were a trustee in one of 
the largest mutual banks?
    Mr. Wolf. Still am, yes.
    Mr. Connolly. Still are.
    Mr. Wolf. Yes.
    Mr. Connolly. Other than that, you sound like a communist. 
So those dire predictions that some made and some are making 
now, what--let me ask you this: Is it true that 98 percent of 
the residents in Massachusetts now have health insurance?
    Mr. Wolf. It is true, yes.
    Mr. Connolly. What was it before Romneycare was adopted?
    Mr. Wolf. We went from about, I believe about 88 percent to 
98 percent.
    Mr. Connolly. Is there any other State in the Union that 
has 98 percent health insurance coverage?
    Mr. Wolf. The rest of the country has on average of 16 
percent not employed--I mean, I'm sorry, uninsured.
    Mr. Connolly. Uninsured. Versus 2 in Massachusetts, 
correct.
    Mr. Wolf. That's correct.
    Mr. Connolly. Well, the unemployment rate, though, must 
have skyrocketed because of this hobnailed boot of government 
on the backs of business.
    Mr. Wolf. The unemployment rate has dropped since the 
recession in 2009 from 8 percent to 5.8 percent.
    Mr. Connolly. So you have actually been creating jobs?
    Mr. Wolf. We have been creating jobs.
    Mr. Connolly. Against all predictions? Well, premiums, 
premiums, health care premiums must have skyrocketed, because 
we all know, as we have heard from testimony here today, health 
care costs are going to spiral up with no matter what we 
predicted, no matter what the various experts predicted in the 
adoption of the Affordable Care Act. What happened to premiums 
after Romneycare got adopted in Massachusetts?
    Mr. Wolf. As I said before, the premiums for us and 
statewide have leveled off and relative to other States, are 
actually doing really well.
    Mr. Connolly. Now, there is a debate going on about whether 
it is a tax, or a penalty, and you know, somebody with a little 
bit of a theological background, it's almost a little bit like 
how many angels can dance on the head of a pin. But in 
Massachusetts, I received an email from somebody close to me 
and he said, in Massachusetts, the statute passed and signed 
into law by Governor Romney, requires every Massachusetts 
resident to file a certificate with the annual State income 
taxes that they have to file, proving you have insurance. If 
you don't have insurance, then you get hit with a penalty. It's 
the exact same plan. Is that an accurate description, Senator 
Wolf?
    Mr. Wolf. Yes, it is.
    Mr. Connolly. Well, is that a tax, or a fee, or a penalty?
    Mr. Wolf. That sounds to me like a semantic discussion, 
which I don't necessarily--I don't have an answer for that.
    Mr. Connolly. Well, certainly Governor Romney, when he was 
governor, vetoed this.
    Mr. Wolf. No.
    Mr. Connolly. He didn't?
    Mr. Wolf. No.
    Mr. Connolly. You mean he signed that into law?
    Mr. Wolf. Yes, that was signed into law.
    Mr. Connolly. Well, he criticized it at the time when he 
signed it, right?
    Mr. Wolf. Not that I remember.
    Mr. Connolly. Hmm. Well, would it be fair to say, is it 
your understanding that when President Obama and Congress, 
those of us who participated in the Act, used Massachusetts as 
a model for the national Affordable Care Act, is that your 
understanding?
    Mr. Wolf. Yes, the Massachusetts law was used as a 
template, and I think there are a lot of similarities. There 
are some differences as well.
    Mr. Connolly. Including an individual mandate?
    Mr. Wolf. Yes.
    Mr. Connolly. My time is expired, but I thank the good 
senator for his testimony.
    Mr. Gowdy. Thank you the gentleman from Virginia. The chair 
would now recognize the gentleman from Idaho, Mr. Labrador.
    Mr. Labrador. Mr. Chairman, thank you. Mr. Wolf, you said 
something that is really interesting. The message matters. The 
government, when you rolled out the Massachusetts health care 
plan, you actually had bipartisan support for this plan, isn't 
that correct?
    Mr. Wolf. Yes.
    Mr. Labrador. Don't you think that was one of the biggest 
mistakes that was made here in Congress that they didn't look 
for a bipartisan solution to a health care crisis that we have 
in the United States; instead we looked for a one-party 
solution?
    Mr. Wolf. I----
    Mr. Labrador. Be honest about this.
    Mr. Wolf. No, I cannot pretend to understand how this works 
down here. I can just tell you how it works in Massachusetts.
    Mr. Labrador. But what did Governor Romney do in 
Massachusetts? He talked to the senators, to the Democratic 
leadership, because it was controlled by Democrats in 
Massachusetts, and he was able to find a bipartisan solution 
that he believed worked in Massachusetts. Isn't that what he 
did?
    Mr. Wolf. The belief in Massachusetts that was a genesis of 
this plan, was that as close as possible, every citizen of the 
Commonwealth should have access to affordable and good health 
care.
    Mr. Labrador. But you believe the only way to get to that 
solution was by involving both parties; isn't that correct?
    Mr. Wolf. That's where the dialogue started. There was 
bipartisan belief that every citizen of the Commonwealth of 
Massachusetts should have access to affordable health care.
    Mr. Labrador. Wait, that's not my question, you're not 
answering my question. The belief was in order to have a 
solution that would work for Massachusetts, you would need to 
have both parties actually work, not just one party working on 
the solution; and the answer is yes, I think you have already 
have said.
    Now, there was a study done by Gogan from Stanford and 
Hubbard from Columbia that said that the Massachusetts plan has 
caused health insurance to rise 5.9 percent more per year than 
the rest of the United States; isn't that true?
    Mr. Wolf. It may be true that the study says that. That is 
not what my numbers show.
    Mr. Labrador. So you disagree with that study?
    Mr. Wolf. I disagree with that study.
    Mr. Labrador. Dr. Goodman, can you talk about that study 
and talk about where the disagreement is here?
    Mr. Goodman. Well, Massachusetts has some of the highest 
health insurance premiums in the whole country. It is right up 
near the very top. It was a very misleading statement by 
Senator Wolf when he divided by State income. It also is a high 
income State. But their premiums are among the highest in the 
whole country. They have not controlled health care costs and 
they admit they have not controlled them. There is nothing in 
the Massachusetts health reform project that even tries to 
control costs. But now they are threatening the State with a 
global budget. What a global budget means is they will give you 
a certain amount of money and make you ration health care. That 
is what Massachusetts is very seriously considering right now.
    Mr. Labrador. Senator Wolf is nodding his head no. Dr. 
Goodman, why is he nodding ``no'' as you are making that 
statement?
    Mr. Goodman. Well, John Gruber and everybody involved, 
including Governor Romney admitted they didn't have any cost 
control that they put in place. They acknowledge that. Just as 
the Obamacare legislation, there is no cost control in the 
Affordable Care Act. They just pushed that aside. They have 
some demonstration projects. The CBO has three times said that 
what you are doing in these demonstration projects is not going 
to control costs. So in Massachusetts, they are going to fall 
back on global budgets. They have been pretty open about that 
is the road that they want to take.
    Mr. Labrador. You stated that Massachusetts actually has 
the highest health insurance costs; is that correct?
    Mr. Goodman. Yes. But they also had very high costs before 
Romneycare.
    Mr. Labrador. Has this made it the lowest cost or the 
middle?
    Mr. Goodman. No, still the highest in the country. Near the 
very top.
    Mr. Labrador. Would you not agree, Senator Wolf, that 
Massachusetts has some of the highest health care costs?
    Mr. Wolf. Massachusetts has some of the best teaching 
hospitals and research centers for medical care.
    Mr. Labrador. Again, you're not answering the question. I 
know you're a senator and you're a politician, but just answer 
the question, please.
    Mr. Wolf. I will consider that a compliment.
    Massachusetts, relative to its income, has the 48th out of 
51 States. So if you look at absolute costs, yes. But the cost 
of living in Massachusetts is overall higher. So relative to 
the impact on an individual family's ability to make ends meet, 
Massachusetts is the third best in the United States of America 
today.
    Mr. Labrador. Because it has the third highest income, 
correct?
    Mr. Wolf. Because as a percentage of family income----
    Mr. Labrador. The income is the third highest in the United 
States. So if you want to play semantics and play with the 
numbers, but the reality is your health care costs are higher 
than 48 other States?
    Mr. Wolf. Let me try it this way: Massachusetts, 9.8 
percent of a family's annual income is towards health care. The 
annual average now is close to 15 percent. I would rather live 
in Massachusetts then.
    Mr. Labrador. That's good. And you are doing a good job 
representing Massachusetts, but it is still the third highest 
in the United States; isn't that correct? The cost of health 
insurance?
    Mr. Wolf. We are going to keep doing this.
    Mr. Labrador. Just answer the question. It is a simple 
question. I could be wrong; I could be right.
    Mr. Goodman. You're correct. I'll answer it for him.
    Mr. Wolf. The question was asked of me, and I'm going to 
answer it, if you will, please. Massachusetts relative to 
income, is 48 of 51 States.
    Mr. Labrador. I have heard you say that five times, five 
times you have said the same thing, but you are not answering 
the simple question that Dr. Goodman just answered, which has 
the third highest cost of health insurance in the United 
States. That's all I was trying to ask.
    Thank you.
    Mr. Gowdy. The chair thanks the gentleman from Idaho, and 
the chair now recognizes the gentleman from Illinois, Mr. 
Davis.
    Mr. Davis. Dr. Goodman, you mentioned at one point that 
people are still going to emergency rooms and community health 
centers. I don't know necessarily about the emergency rooms, 
but I believe they are still going to the community health 
centers because they get good care and they can afford it. I 
think they are one of the best approaches to providing health 
care, especially primary care, to large numbers of low income 
people that we know are in this country.
    Senator Wolf, let me read portions of an op-ed that 
Jonathan Gruber wrote, and I'm going to quote. He worked for 
Governor Romney on his health plan. He is an MIT economist, and 
I'm reading directly what he said. He said that ``Lately, 
critics of the Affordable Care Act have been promoting a 
different claim, that Obamacare is a job killer. Specifically, 
they say it will stifle the economy with regulations and taxes. 
But the economic literature doesn't support this claim. If 
anything, it suggests the opposite. The Affordable Care Act 
will boost the economy.''
    Senator Wolf, does the Massachusetts experience support the 
conclusion that the ACA will boost the economy?
    Mr. Wolf. My experience in Massachusetts, as I said in my 
testimony, is that it has not had a deleterious effect on the 
economy or in job growth in the Commonwealth, and the 
statistics that we look at will bear that out, sir.
    Mr. Davis. He went on to say that the law will result in 
more than 30 million additional Americans getting health 
insurance but what few realize is by expanding insurance 
coverage, the law will also increase economic activity. Many 
uninsured consumers are forced to set aside money in low 
interest liquid accounts to make sure that they have enough to 
cover unexpected medical costs. With the security provided by 
health insurance, they can feel free that money up for 
consumption that is much more valuable to them, more purchases 
of consumer goods will provide short-run stimulation to the 
economy and more hiring. Would you agree with this comment?
    Mr. Wolf. Yes.
    Mr. Davis. I also agree, and I find it difficult to 
understand what people are talking about when they talk about 
the increase in need for health care, given the fact that many 
more people will be seeking it. That has to increase the 
economy, and if it doesn't right away--and I see, Dr. Goodman, 
you're shaking your head. It's amazing to me that as more 
people seek health care, as more people live longer and receive 
care, as more doctors and nurses and medical technologists and 
other health personnel are needed, how could this not increase 
the economy?
    Mr. Goodman. First of all, there is no provision in the 
Affordable Care Act to create more doctors, more nurses, more 
health care. It's all about health insurance. It is not about 
expanding the supply of medical resources. You have to remember 
that every dollar spent on the Affordable Care Act on health 
insurance for those 30 million people is a dollar that has to 
come from somewhere else. It's a dollar you take away from the 
seniors on Medicare, the disabled on Medicare or the device 
makers or the people who go to tanning salons. And when you 
take dollars away from those people, then they are not spending 
the dollars. I'm surprised that Jonathan Gruber would say what 
he said because I do have respect for him. But just shifting 
money out of one pocket into another does not increase total 
spending.
    Mr. Davis. As people are living longer, as they are 
consuming consumables, as they are using food, as they are 
using housing, does not this expand the economy?
    Mr. Goodman. Not if the dollars that they spend are taken 
from somewhere else. And there is also nothing in the 
Affordable Care Act that will make people live longer because 
there is nothing in the Affordable Care Act that expands the 
supply of health care.
    Mr. Davis. Well, if they receive more health services and 
they are adequate and good, I think they will live longer, as 
I've seen people who die prematurely for lack of care, and I 
yield back.
    Mr. Gowdy. I thank the gentleman from Illinois.
    The chair will now recognize himself for 5 minutes of 
questions.
    The gentleman from Ohio, Mr. Kucinich, who incidentally 
enough is widely viewed as being a very genial, very popular 
Member of Congress who is very devoted to his political 
ideology--I happen to disagree with his political ideology--but 
nonetheless he is a very devoted, very genial man, and I was 
listening to his opening statement and he talked about the 
virtues of universal care, and it just struck me while he was 
talking that it is counterintuitive to believe that an entity 
can give you something and also not place limits on how you can 
use it or extract commitments from you on how you can use it.
    It is just counterintuitive. I mean, cliches are cliches 
for a reason, because they are universally accepted as being 
true. And the cliche that there is nothing free in life is 
true.
    So against that backdrop, let me ask you this, Senator 
Wolf. Are there things that States can do that Congress cannot 
do?
    Mr. Wolf. I would say that there are appropriate roles for 
States to play that are not appropriate at the Federal level. 
And that's an opinion, but, yes.
    Mr. Gowdy. Well, it is an opinion that is also shared by 
our Framers. Ours is a limited powers government. The 
Constitution limits the powers of the Federal Government, and 
that is why we have a 9th and 10th Amendment. So whatever is 
not specifically given to the Federal Government is reserved 
either to the people or to the States. So you would agree with 
me that there are things that the State of Massachusetts can do 
that Congress cannot do?
    Mr. Wolf. Yes, I would agree with that.
    Mr. Gowdy. All right. Can Congress tax Mr. Richardson's 
business for not providing dental insurance to his employees?
    Mr. Wolf. I think a higher power than I, which would be the 
Supreme Court of the United States, has answered that question.
    Mr. Gowdy. No, I said dental insurance; I didn't say health 
insurance. I'm trying to see what the limits of the power of 
the Federal Government are. You're right, it was a 5-4 
decision. I think it is tragic that decisions that impact 
generations of Americans to come, whether it is capital 
punishment decision or whether it is a health care decision 
would be decided by one person. But nonetheless, you're right, 
to the surprise of many conservatives, Chief Justice Roberts 
provided that fifth vote that said that while we can't make you 
do it, and that's important, if you read his commerce clause 
analysis, we cannot make you do it, but we can tax you if you 
do not do it.
    So my question is: Can Congress tax Mr. Richardson's 
business for not providing dental insurance to his employees?
    Mr. Wolf. My belief is, based on the experiment in 
Massachusetts, which has been successful, and based on the 
Supreme Court ruling, that it is appropriate for the Federal 
Government, for the Congress, to pass legislation that both 
covers health and dental.
    And by the way, I have always supported dental care. It is 
the one orifice that everything that enters our body goes 
through. And I have never understood why dental care is not 
considered as part of health care. So yes, I believe it is 
appropriate.
    Mr. Gowdy. Just so we are clear, good oral health is 
tantamount to good overall health. I will spare everyone the 
studies that support that. But you believe it is within 
Congress' power to tax employers who do not provide dental 
insurance? It is not a trick question. I just want to make sure 
that the answer is yes.
    Mr. Wolf. I believe that the law as written is appropriate 
for Congress to enforce. That's my answer to that question. 
You're choosing the word ``tax.'' I'm not using the word 
``tax.'' I'm not choosing to use it. Or the word penalty or 
anything, because as I said before, to me that is semantics. I 
believe the implementation and enforcement of this law is 
appropriate at the Federal level.
    Mr. Gowdy. The only reason I use the word ``tax'' is 
because that is the only power by which Congress can do it. The 
Supreme Court said you can't do it on the commerce clause. One 
of my colleagues asked you about your line of work, and you 
correctly cited the commerce clause as the reason that we don't 
have 50 different sets of systems for air traffic control and 
for airplanes because it is inherently interstate commerce. The 
Supreme Court specifically rejected that analysis. There are 
limits on what Congress can do via the commerce clause. I'm 
trying to decide whether there are any limits to what 
government can do via the tax clause.
    I think you would agree with me that exercise and good diet 
are tantamount to good health. So can Congress tax Mr. 
Richardson for not providing a free gym membership to his 
employees; and if not, why not?
    Mr. Wolf. I hate to keep frustrating you people by saying 
the same thing over and over again, I'm going to answer you the 
same way I did before, which is, I believe based on the law 
passed and signed by the President and the Supreme Court ruling 
that the Federal Government has the right to pass and enforce 
the law that is now the law of this land, and has been 
sanctioned.
    Mr. Gowdy. I'm not being argumentative. I'm genuinely 
trying to determine what limits, if any, you believe exist on 
Congress's authority to dictate to businesses what they have to 
do? You are a business owner, a successful one, which I laud 
you for. My question to you is those of us sitting here, can we 
tax you for not providing a free gym membership? Are there any 
limits on what we can do in Congress with respect to health 
care?
    Mr. Tierney. Mr. Chairman, just a point of clarification, 
are you questioning Senator Wolf as a constitutional legal 
expert, because I wasn't aware that was his background? I 
thought he was in the airline industry.
    Mr. Gowdy. I'm not a constitutional legal expert so it 
would be impossible for me to ask any questions about that. I'm 
asking him as a businessman, if he believes, and I think he 
made, and I stand to be corrected by the gentleman from 
Massachusetts, I think he made a reference to the recent 
Supreme Court case. I don't think that you have to be a 
constitutional legal expert to understand it. If so, I wouldn't 
have been able to read it.
    Mr. Tierney. Well, I guess my question was, he made a 
reference to the case as to what existing facts are. You are 
asking him a hypothetical on something that I think perhaps 
would take a legal scholar to answer. I'll let him answer if 
you want. I don't know what the value of his opinion would be--
--
    Mr. Gowdy. He has been markedly more successful in life 
than I have been, so I think he is able to answer the question. 
And if he can't, he'll say what all witnesses say, which is ``I 
can't answer the question.'' It's not a trick question. I am 
genuinely trying to understand the intersection between 
government power--and you represent a State, we represent 
Congress--the intersection between State power, Federal power, 
and personal responsibility. It is not a trick question, and if 
it comes across as one, I apologize to you. I want to know what 
are the limits to what we can do next session, to your 
business, to your business, and to your business. If exercise 
is good for you, why can't we tax you for not doing it?
    Mr. Wolf. My answer to that, and what interested me and got 
me into politics after a successful career in business, is much 
more about how we can partner the private sector and the public 
sector. Not a question of limitation, but looking for 
opportunities to work together to provide the future. And that 
involves health care. In my case, it involves transportation. 
It involves a whole slew of issues. Some of those will be 
challenged as we move forward public and private sector 
together, and that is appropriate. There is a process to do 
that. This is part of that process and I am very fortunate and 
very grateful to have been a part of it.
    Mr. Gowdy. My time is up; and I now recognize the 
gentleman, my friend from Kentucky, Mr.Yarmuth.
    Mr. Yarmuth. I thank the chairman, and I appreciate the 
testimony of all the witnesses.
    Mr. Richardson, I want to especially welcome you and thank 
you for nourishing me through most of my life. I happen to 
represent a district that brags about having the largest White 
Castle store in the country.
    Mr. Richardson. Castle number 7.
    Mr. Yarmuth. I'm glad to see you here, and I appreciate 
your testimony.
    Senator Wolf, you mentioned during your response to a 
question, you said you want to make sure, you will continue to 
do this as long as you can because this is how people get their 
insurance. You are speaking specifically of the United States, 
I assume, that is the historical pattern, at least in modern 
history in the United States?
    Mr. Wolf. That's correct.
    Mr. Yarmuth. Mr. Fredrich, you referenced something about--
well, you talked about, and I think your quote was that you 
would prefer to see a market-based health care system, health 
care insurance system, and you said it works everywhere else. I 
assume you were talking about in other segments of the economy 
and not in other geographic jurisdictions?
    Mr. Fredrich. It works in this country. And as long as we 
have a free market with limited controls, it works just fine.
    Mr. Yarmuth. What would you describe as the system we have 
had up until now?
    Mr. Fredrich. For health care?
    Mr. Yarmuth. Yes.
    Mr. Fredrich. It is a system that developed out of a bad 
bad choice, trying to regulate the amount that people could pay 
in wages in 1942 during the war, and that's what started this. 
We don't have the same problem with home care or auto--I mean, 
home insurance and auto insurance. You have to ask why. Why is 
it so different and why are we here talking about how difficult 
it is to control costs when it is so obvious how you control 
costs? You don't have the user of the service buying the 
service. It is that simple. The user of the service is me if 
I'm sick. The buyer of the service is the insurance company, 
and you don't have that. It is the only way this will ever get 
fixed.
    Mr. Yarmuth. Doesn't the free market theory rely on an 
equal amount of power, the buyer and the seller? You can't have 
a truly free market if demand is something you can't control; 
is that correct? Would you agree or disagree?
    Mr. Fredrich. I disagree.
    Mr. Yarmuth. So when you're sick or in an accident, you 
have the same freedom to make intelligent choices as when 
you're well?
    Mr. Fredrich. You mean if I'm awake? I assume somebody is 
going to take me to a hospital.
    Mr. Yarmuth. Exactly. Do you know any place in the world 
where there is a free market health care system that you can 
point to as evidence that what you would prefer to see is 
effective?
    Mr. Fredrich. Yes. You see islands of free market health 
care. You see--Singapore, I think, has a hospital where people 
fly to. Thailand has a hospital.
    Mr. Yarmuth. People fly to. But the citizens of Singapore 
are under a government-run system; correct?
    Mr. Fredrich. But that is an indication of what a free 
market will do, so why not use it? I don't get the fact that 
just because it is health care, that the government has to run 
it. It doesn't run anything well.
    Mr. Yarmuth. The question is not whether the government has 
to run it, but the question is whether the free market can 
organize it effectively, and there has never been a situation 
that I have been able to find and you have been able to 
indicate to me, that there is evidence that that can work?
    Mr. Fredrich. Other than the rest of the entire economy? So 
this is just a special thing that just doesn't work?
    Mr. Yarmuth. There are many people who actually believe 
that.
    Mr. Fredrich. Well, it sure doesn't seem to be working, 
does it?
    Mr. Yarmuth. No, it is not working. I happen to believe 
with Congressman Kucinich. I'm a single payer person.
    Ms. Miller, I want to ask you a question as well. You 
talked about a very small number of your employees actually use 
the insurance system, avail themselves of it because they can't 
afford it?
    Ms. Miller. No. They choose. They can afford it. Our 
employee base averages a $10-an-hour rate. So that is higher 
than a lot of other cleaning companies that only hire part-time 
employees. We went to full-time employees so they could have 
health insurance. We found policies that cost between $20 to 
$30 a month, so it is an affordable policy. There are only 6 
percent of our employees that choose.
    Mr. Yarmuth. Okay. I was actually looking at it from the 
other direction.
    I'll ask one further question of Dr. Goodman. You talked 
about 25 percent of Texas residents being uninsured. You said 
that without any indication that that's a bad thing. What 
happens to those 25 percent who are uninsured when they get 
sick? Do they die? Do they suffer, or do they use the same 
health care facilities and essentially have a subsidy and let 
the rest of the people subsidize them?
    Mr. Goodman. Well, they use safety net institutions, just 
like they do everywhere else. I don't advocate that. I like the 
idea of the universal refundable tax credit that allows 
everybody to have private insurance.
    May I respond to the free market for health care? The 
international market for medical tourism is a free market and 
it is growing very fast. Thailand is competing in it. India and 
Singapore. But also, we are getting closer to home. We also 
have within the United States a domestic medical tourism 
market, and that is what the Canadians participate in. When 
they come here, they pay half of what you and I would pay for a 
knee replacement. They get package prices, and they can compare 
prices and compare quality.
    Cosmetic surgery, that's a free market. Lasix surgery, 
that's a free market. Mediclinic is a free market. So there are 
many individual health care markets that give you an indication 
of how a market can work in health care.
    Mr. Yarmuth. If we were only talking about elective 
procedures and procedures that people could afford, none of us 
would be here. This wouldn't even be a conversation.
    Mr. Goodman. Yes. But if we gave everyone a refundable tax 
credit and gave them a financial means to have decent 
catastrophic coverage and a health savings account, then people 
would have the wherewithal to participate in a free market for 
health care.
    Mr. Yarmuth. How much would that cost?
    Mr. Goodman. I think we could replace all of the existing 
tax and spending subsidies with a tax credit, let's say $2,500 
for an adult, maybe $8,000 for a family, and that's enough.
    Mr. Yarmuth. Thank you. I yield back.
    Chairman Issa. [Presiding.] I thank the gentleman. I might 
note as a native Clevelander like Mr. Kucinich that, in fact, 
the Cleveland Clinic is an example where they are not taking 
emergency rooms, they are really not taking health care 
insurance, but people are flocking there from all over the 
world. The private system does work if you either have 
excellence or a low cost. But Mr. Kucinich will probably go to 
the Cleveland Clinic if he needs really great care. He will not 
go to Canada.
    With that, I recognize the former chairman of the full 
committee, Mr. Towns, for 5 minutes.
    Mr. Towns. Thank you very much, Mr. Chairman, and I 
appreciate you having this hearing.
    Let me begin by asking you, Mr. Richardson and Mr. Fredrich 
and Ms. Miller, is there anything that you like about the 
Affordable Care Act? Anything?
    Mr. Richardson. Thank you, Congressman. I think for us, it 
has always been about the dignity of the individual. So our 
founder, Bill Ingram, started our business with that in mind. 
He wanted people to have freedom from anxiety. So as we 
developed and grew the business, that was a primary focus in 
terms of how do we provide that in any way that we can.
    That freedom from anxiety in 1924 started with a health 
insurance plan. And after that, we came up with a defined 
benefit pension plan, and then a profit sharing plan. And then 
each year we take a percentage of sales up to 1 percent and 
give that back to team members because we wanted to have that 
be part of everything that we are doing.
    So when we look at the Affordable Care Act, what we see is 
a wall that is being placed between ourselves and our employees 
because we have been able to have that conversation with them 
on a daily basis. Every year we do surveys to find out what is 
on their mind. We listen intently, and we modify those 
benefits. We have done that over time. Now we feel like there 
has been a barrier placed between us that tells us how we have 
to do that, something we have been doing very successfully.
    It almost feels like we're trying to communicate with an 
orange juice can and string versus being able to go direct like 
we were. That is what has us concerned because as we are 
looking to the future, we are very concerned about the cost 
implications that this has for us and our ability to continue 
to do that. We are put into a bit of a box where really the 
only way that we can continue to offer the benefit that our 
team members have come to depend upon us for and that we have a 
great relationship with them on is to reduce the quality of the 
benefit. So to us it seems like we're walking around in paradox 
alley just trying to understand it.
    Mr. Towns. Thank you.
    Mr. Fredrich. My answer is, no. There is nothing about it. 
To me, it is a step in the wrong direction because I believe 
the only solution to this is a market-based system, and it is 
just moving away from that.
    Mr. Towns. You are not impressed with the testimony of 
Senator Wolf who indicated that 98 percent of the people in the 
State of Massachusetts are now covered? That doesn't impress 
you in any way?
    Mr. Fredrich. Not a bit. I seriously doubt the numbers. I 
didn't study Massachusetts, but I think we are playing with 
numbers here, and that is easy to do. And makes statistics look 
real good, but I don't believe it.
    Mr. Towns. Mr. Chairman, I think what we have here is fear. 
I think people who really have not had any dealings because 
this has not been implemented, and I think there is fear here. 
When I listened to Senator Wolf, who has had experience with 
this, I mean he is now living it. And, of course, what he is 
saying to me is very different from what I am hearing coming 
from all of you.
    Ms. Miller. Mr. Towns, if I may answer that also, you're 
right. I have a lot of fear about this plan. I don't know all 
of the details, but when they tell me that I have three 
options. Basically I can get health insurance for all of my 
employees under this plan, and it would cost me based on the 
numbers put out there, $1.4 million. I'm a cleaning company. I 
don't get the kind of rates that airlines can get in Cape Cod. 
I am a cleaning company in Cincinnati, and I think I average 
and represent more businesses than an airline in Cape Cod would 
represent.
    I also have the opportunity to go to all part-time 
employment and that doesn't help my employee base because then 
they would have to have two or three jobs to be able to cover 
their costs. Or I could drop it and pay just the penalty or tax 
or whatever you want to call it. And that would cost me still 
$640,000. That is not in my budget anywhere. I do have fear.
    Our focus has been for the past 20 years to improve the 
quality of life for our employees, to encourage them to go 
after the dreams, improve their quality of life, and do what 
they want in their life. They have to have a job first before 
they can worry about health care. So you're right, there is a 
lot of fear here.
    Mr. Towns. Let me just run down a couple of things, Mr. 
Chairman. Many small business owners across the country have 
expressed strong support for the Affordable Care Act. Let me 
give just give you a couple. For example, Mike Roach, the co-
owner of Paloma Clothing in Portland, Oregon, said: Despite 
everything I've heard said about the Affordable Care Act, what 
I have never heard anyone argue about is the tremendous problem 
health care has been and continues to be for small businesses. 
The costs have been crushing. If nothing was done about health 
care costs, we would either have to cut benefits or lay some of 
our employees off, neither of which we want to do. The fact of 
the matter is the new law has already started helping us. 
Overturning the law now would not help us, it would hurt us. We 
want the law fully implemented with support from across the 
board.
    And then Mr. Wolf, who--let me give you another example. 
Betsy Burton is the owner of King's English book shop in Salt 
Lake City, Utah. Here is what she said. ``Before health care 
reform passed, I faced the very demoralizing decision to either 
drop my business health plan or lay off employees to contain 
costs. But we received tax credits through the Affordable Care 
Act which took that decision off the table. We are able to 
afford our insurance and have not had to lay off any of our 
valued employees.''
    And this is from Ken Weinstein, Mr. Chairman.
    Chairman Issa. Oh, no. Take all the time you want.
    It is interesting that a Federal subsidy is how the 
bookstore was able to stay in business. I guess if we 
subsidized everybody, it would be perfect.
    Mr. Towns. We are talking about creating jobs, aren't we? 
That's a job that is created. If that is what this is about, 
and I want to make certain that I am at the right hearing.
    Chairman Issa. Absolutely. As long as the Chinese keep 
loaning us the money.
    Mr. Towns. Ken Weinstein, owner of Charlie Card Diner in 
Philadelphia, Pennsylvania: ``Anyone opposing the new law 
obviously does not understand small businesses. Small 
businesses cannot afford the system under the status quo. 
Health care reform was needed to help bring down costs and 
level the playing field with large businesses.''
    Mr. Wolf, a study commissioned by Families U.S.A., and the 
small business majority found that more than 3.2 million small 
businesses employ 19.3 million workers across the Nation will 
be eligible for this tax credit this year. To me, this sounds 
like small businesses are finally getting the help they need.
    So I want to say, first of all, Mr. Wolf, Senator Wolf, 
that I really appreciate your sharing with us today, and I 
think you are helping us a great deal, because you have been 
involved with it, you have lived it, and of course you 
understand it. And I think once we get over the fear, we can 
recognize the fact that the Supreme Court has spoken. They have 
spoken. And you're right, in this hypothetical question to you, 
I think the only thing you should have added is that the 
Supreme Court has spoken and when that happens, that's the law 
of the land.
    I yield back.
    Chairman Issa. I thank the gentleman.
    I would now ask that the GAO report of May of 2012, small 
employer held tax credit, factors contributing to low use and 
complexity be placed in the record.
    Chairman Issa. Mr. Towns, this, in fact, is where it is 
shown that because of the complexity, less than a quarter of 
those anticipated in what you just read ever took advantage of 
it. In fact, the program, that is a good example of an abysmal 
failure where you have to fill out at least seven different 
forms in order to take advantage of that credit, so most 
companies have not done it. But I appreciate the fact that it 
had good intentions. Perhaps we can work to fix it during these 
waning days.
    Mr. Towns. Yes. I think we need to have another hearing and 
eliminate the forms.
    Chairman Issa. Mr. Chairman, this is why we were such good 
friends during your chairmanship.
    As we close, I would like to thank our witnesses. And I 
would like to thank my good friend, Mr. Towns, because during 
his tenure as chairman, we did work hard to try to reduce a lot 
of forms. Like most Federal officers we try, we fail. All of 
you as employers know, including Senator Wolf, the one thing 
government is not good at is reducing the complexity of paper 
filing. And if we go electronic, we still manage to have you 
have to do redundant entry.
    I might note in closing, General President George 
Washington died while being bled. His doctors felt that they 
needed to bleed him more, and so they did. In retrospect, they 
probably bled him to death. The American people are going to be 
taxed heavily for this program that has no cost controls. That 
ultimately is going to be one of the questions: Can America's 
competitiveness sustain a system that, as well intended as the 
President's flagship health care program is, ultimately has no 
cost controls, taxes in at least 21 additional places, and is 
likely to run up the cost.
    Senator Wolf, I have only one thing for you, and one 
question in closing because I am the keeper of the record. 
Could you please cite the source of 98 percent of all of 
Massachusetts being insured?
    Mr. Wolf. As they say in pilot lingo, stand by one.
    Chairman Issa. Yes, sir. People loved it so much we needed 
to get that in the record.
    Mr. Wolf. And it is an important number, so I want to make 
sure that we give you the right citing.
    Chairman Issa. Because we have been looking at the 2006 and 
the 2010, and we don't get close to that number.
    Mr. Wolf. So this is the Massachusetts Taxpayers 
Foundation, Massachusetts health reform spending 2006 through 
2011, an update on the budget buster myth by the Massachusetts 
Taxpayers Foundation.
    Chairman Issa. Okay. I ask unanimous consent that be placed 
in the record. Without objection, so ordered.
    Chairman Issa. I believe you have all done a very good job 
of making clear what you find in your businesses. The reason we 
have had a second hearing in which we had business people 
specifically on this health care initiative is that ultimately 
the success or failure will be found in your balance sheets.
    If we are right on what is your right, you will see higher 
costs and lower profits. If they are right on your left, we 
will all be pleased that, in fact, a health care initiative 
worked as well as Senator Wolf believes it has in 
Massachusetts.
    I, for one, will join with my good friend, Mr. Towns and 
say I hope Senator Wolf is right. And with that, we stand 
adjourned.
    [Whereupon, at 4:36 p.m., the committee was adjourned.]






                                 
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