[House Hearing, 113 Congress]
[From the U.S. Government Publishing Office]





 
                HEALTH CARE CHALLENGES FACING KENTUCKY'S
                        WORKERS AND JOB CREATORS

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

                             FIELD HEARING

                               BEFORE THE

                        SUBCOMMITTEE ON HEALTH,
                    EMPLOYMENT, LABOR, AND PENSIONS

                         COMMITTEE ON EDUCATION
                           AND THE WORKFORCE

                     U.S. House of Representatives

                    ONE HUNDRED THIRTEENTH CONGRESS

                             FIRST SESSION

                               __________

          HEARING HELD IN LEXINGTON, KENTUCKY, AUGUST 27, 2013

                               __________

                           Serial No. 113-29

                               __________

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                COMMITTEE ON EDUCATION AND THE WORKFORCE

                    JOHN KLINE, Minnesota, Chairman

Thomas E. Petri, Wisconsin           George Miller, California,
Howard P. ``Buck'' McKeon,             Senior Democratic Member
    California                       Robert E. Andrews, New Jersey
Joe Wilson, South Carolina           Robert C. ``Bobby'' Scott, 
Virginia Foxx, North Carolina            Virginia
Tom Price, Georgia                   Rubeen Hinojosa, Texas
Kenny Marchant, Texas                Carolyn McCarthy, New York
Duncan Hunter, California            John F. Tierney, Massachusetts
David P. Roe, Tennessee              Rush Holt, New Jersey
Glenn Thompson, Pennsylvania         Susan A. Davis, California
Tim Walberg, Michigan                Rauul M. Grijalva, Arizona
Matt Salmon, Arizona                 Timothy H. Bishop, New York
Brett Guthrie, Kentucky              David Loebsack, Iowa
Scott DesJarlais, Tennessee          Joe Courtney, Connecticut
Todd Rokita, Indiana                 Marcia L. Fudge, Ohio
Larry Bucshon, Indiana               Jared Polis, Colorado
Trey Gowdy, South Carolina           Gregorio Kilili Camacho Sablan,
Lou Barletta, Pennsylvania             Northern Mariana Islands
Martha Roby, Alabama                 John A. Yarmuth, Kentucky
Joseph J. Heck, Nevada               Frederica S. Wilson, Florida
Susan W. Brooks, Indiana             Suzanne Bonamici, Oregon
Richard Hudson, North Carolina
Luke Messer, Indiana

                    Juliane Sullivan, Staff Director
                 Jody Calemine, Minority Staff Director
                                 ------                                

        SUBCOMMITTEE ON HEALTH, EMPLOYMENT, LABOR, AND PENSIONS

                   DAVID P. ROE, Tennessee, Chairman

Joe Wilson, South Carolina           Robert E. Andrews, New Jersey,
Tom Price, Georgia                     Ranking Member
Kenny Marchant, Texas                Rush Holt, New Jersey
Matt Salmon, Arizona                 David Loebsack, Iowa
Brett Guthrie, Kentucky              Robert C. ``Bobby'' Scott, 
Scott DesJarlais, Tennessee              Virginia
Larry Bucshon, Indiana               Rubeen Hinojosa, Texas
Trey Gowdy, South Carolina           John F. Tierney, Massachusetts
Lou Barletta, Pennsylvania           Rauul M. Grijalva, Arizona
Martha Roby, Alabama                 Joe Courtney, Connecticut
Joseph J. Heck, Nevada               Jared Polis, Colorado
Susan W. Brooks, Indiana             John A. Yarmuth, Kentucky
Luke Messer, Indiana                 Frederica S. Wilson, Florida
                            C O N T E N T S

                              ----------                              
                                                                   Page

Hearing held on August 27, 2013..................................     1

Statement of Members:
    Barr, Hon. Andy, a Representative in Congress from the state 
      of Kentucky................................................     8
        Prepared statement of....................................    10
    Guthrie, Hon. Brett, a Representative in Congress from the 
      state of Kentucky..........................................     6
        Prepared statement of....................................     7
    Roe, Hon. David P., Chairman, Subcommittee on Health, 
      Employment, Labor and Pensions.............................     1
        Prepared statement of....................................     2
    Yarmuth, Hon. John A., a Representative in Congress from the 
      state of Kentucky..........................................     3
        Prepared statement of....................................     5

Statement of Witnesses:
    Banahan, Carrie, Executive Director, Office of the Kentucky 
      Health Benefits Exchange...................................    16
        Prepared statement of....................................    18
    Basham, Debbie, Southwest Breast Cancer Awareness Group......    47
        Prepared statement of....................................    49
    Bologna, Joe, Owner, Joe Bologna's Italian Pizzeria and 
      Restaurant.................................................    14
        Prepared statement of....................................    16
    Humkey, John, President, Employee Benefit Association, Inc...    19
        Prepared statement of....................................    21
    Kanaly, Tim, Owner and President, Gary Force Honda, Bowling 
      Green......................................................    12
        Prepared statement of....................................    13
    McPhearson, John, CEO, Lectrodryer...........................    50
        Prepared statement of....................................    53
    Meadows, Donnie, Vice President Of Human Resources, K-VA-T 
      Food Stores, Inc...........................................    41
        Prepared statement of....................................    43
    Moores, Janey, President and CEO, BJM & Associates, Inc......    30
        Prepared statement of....................................    33
Additional Submissions:
    Roe, Hon. David P., Chairman, Subcommittee on Health, 
      Employment, Labor and Pensions, submitted for the record:
        Prepared statement of Randall Childers Consulting........    58


                HEALTH CARE CHALLENGES FACING KENTUCKY'S



                        WORKERS AND JOB CREATORS

                        Tuesday, August 27, 2013

                        House of Representatives

        Subcommittee on Health, Employment, Labor, and Pensions

                Committee on Education and the Workforce

                            Washington, D.C.

    The subcommittee met, pursuant to call, at 10:02 a.m., at 
the Lexington Public Library, Farish Theater, 40 East Main 
Street, Lexington, Kentucky, David Roe [chairman of the 
subcommittee] presiding.
    Present: Representatives Roe, Guthrie, and Yarmuth.
    Also Present: Representative Barr.
    Staff Present: Molly Conway, Professional Staff Member; 
Benjamin Hoog, Senior Legislative Assistant; Alex Sollberger, 
Communications Director; Todd Spangler, Senior Health Policy 
Advisor; and Mark Zuckerman, Minority Senior Economic Advisor.
    Chairman Roe. The Subcommittee on Health, Employment, 
Labor, and Pensions will come to order.
    Good morning, everyone, and welcome to today's hearing. I 
would like to first take a moment to welcome our witnesses 
joining us to discuss the important issue of healthcare.
    I would also like to thank the staff at the Lexington 
Public Library for their warm hospitality, and what a terrific 
facility you have here. And I think libraries speak volumes 
about the community that you live in, and this certainly is a 
real plus for Lexington.
    Since the President's plan for healthcare reform became law 
in 2010, employers and job creators have grown increasingly 
worried about the law's effect on their families and small 
businesses. More than 11 million Americans are searching for a 
job today, including 178,000 workers here in the Bluegrass 
State. Building a stronger economy for businesses to grow and 
hire new workers remains a national priority. As elected policy 
makers, we have to examine whether Federal policies are helping 
or hurting that effort.
    According to the so-called experts in Washington, the 
healthcare law is working just fine. Secretary Kathleen 
Sebelius, the President's top healthcare official, described 
reports of job losses stemming from the law is speculation. I 
was there in the committee hearing the day she said that.
    The White House called the law's pervasive incentive for 
businesses to rely more on part-time employees an urban legend, 
and the President himself has dismissed problems with 
implementation of the law as mere glitches or bumps.
    However, news reports and personal experiences of everyday 
Americans reveal a much harsher reality than supporters of the 
Obamacare would like to admit. It seems each day workers and 
job creators encounter new challenges as they look to ease the 
pain this government takeover of healthcare has inflicted on 
their workplaces. The leading concern for many is the employer 
mandate, which requires businesses with 50 or more full-time 
workers to provide government-approved health insurance or pay 
higher taxes.
    The non-partisan Congressional Budget Office has said this 
mandate will impose a $140 billion tax increase on employers. 
It is no secret what happens when job creators are forced to 
pay higher taxes. Fewer jobs are created and more costs are 
pushed to consumers. This is precisely what employers have said 
time and again. For example, a Gallup poll showed 41 percent of 
employers have frozen hiring due to the healthcare law. The 
same poll revealed more than half of small business owners 
expect the law will increase healthcare costs. As a result, 1 
out of 4 small business owners may stop offering health 
insurance as they try to control the costs.
    Perhaps this explains why President Obama decided to delay 
enforcement of the employer mandate for 1 year. While this 
temporary reprieve is certainly welcome news, it does not alter 
the fact that this fatally flawed law will destroy jobs 
regardless of when it is implemented.
    The unilateral delay of the employer mandate is also an 
implicit admission that the President's healthcare law is not 
working. In fact, the law is making our economy and health 
system worse. As a doctor who practiced medicine for more than 
30 years, I know our healthcare system is not perfect. It is 
far too expensive and too many families lack access to 
affordable care.
    If we are going to put Americans back to work and advance 
smarter reforms that will lower healthcare costs, we must first 
repeal or dismantle the President's misguided law. Today's 
hearing plays a vital role in reaching these important goals.
    I want to thank our witnesses again for being with us today 
and sharing their personal experiences with the committee.
    With that, I now will recognize my distinguished colleague 
and good friend, John Yarmuth, the acting senior Democrat 
member of the subcommittee, for his remarks. Congressman 
Yarmuth?
    [Applause.]
    [Disturbance in hearing room.]
    [The statement of Chairman Roe follows:]

     Prepared Statement of Hon. Phil Roe, Subcommittee on Health, 
                    Employment, Labor, and Pensions

    Good morning everyone and welcome to today's hearing. I'd first 
like to take a moment to thank our witnesses for joining us to discuss 
the important issue of health care. I would also like to thank the 
staff at the Lexington Public Library for their warm hospitality.
    Since the president's plan for health care reform became law in 
2010, employers and job creators have grown increasingly worried about 
the law's effect on their families and small businesses. More than 11 
million Americans are searching for a job today-including 178,000 
workers here in the Bluegrass State. Building a stronger economy for 
businesses to grow and hire new workers remains a national priority. As 
elected policymakers, we have to examine whether federal policies are 
helping or hurting that effort.
    According to the so-called experts in Washington, the health care 
law is working just fine. Secretary Kathleen Sebelius, the president's 
top health care official, described reports of job losses stemming from 
the law as ``speculation.'' The White House called the law's perverse 
incentive for businesses to rely more on part-time employees an ``urban 
legend.'' And the president himself has dismissed problems with 
implementation of the law as mere ``glitches and bumps.''
    However, news reports and personal experiences of every day 
Americans reveal a much harsher reality than supporters of ObamaCare 
would like to admit. It seems each day workers and job creators 
encounter new challenges as they look to ease the pain this government 
takeover of health care has inflicted on their workplaces.
    A leading concern for many is the employer mandate, which requires 
businesses with 50 or more full-time workers to provide government-
approved health insurance or pay higher taxes. The nonpartisan 
Congressional Budget Office has said this mandate will impose a $140 
billion tax increase on employers. It's no secret what happens when job 
creators are forced to pay higher taxes: Fewer jobs are created.
    This is precisely what employers have said time and again. For 
example, a Gallup poll showed 41 percent of employers have frozen 
hiring due to the health care law. The same poll revealed more than 
half of small business owners expect the law will increase health care 
costs. As a result, one out of four small business owners may stop 
offering health insurance as they try to control costs.
    Perhaps this explains why President Obama decided to delay 
enforcement of the employer mandate for one year. While this temporary 
reprieve is certainly welcome news, it does not alter the fact this 
fatally flawed law will destroy jobs-regardless of when it is 
implemented. The unilateral delay of the employer mandate is also an 
implicit admission that the president's health care law isn't working. 
In fact, the law is making our economy and health care system worse.
    As a doctor who practiced medicine for more than 30 years, I know 
our health care system isn't perfect. It is far too expensive and too 
many families lack access to affordable care. If we are going to put 
Americans back to work and advance smarter reforms that will help lower 
health care costs, we must first repeal or dismantle the president's 
misguided law.
    Today's hearing plays a vital role in reaching these important 
goals. I want to thank our witnesses again for being with us today and 
sharing their personal experiences with the committee. With that, I 
will now yield to my colleague, Congressman Brett Guthrie, for his 
opening remarks.
                                 ______
                                 
    Mr. Yarmuth. Thank you.
    Chairman Roe. Would you yield for one moment?
    Mr. Yarmuth. I will yield, Mr. Chairman.
    Chairman Roe. Let me tell you all to start with, this is 
the fourth hearing I have had like this across the country. I 
am a very respectful person. This is not a town hall meeting. 
This is an official hearing of the U.S. Congress.
    I want to start by reading the initial disruption of this 
hearing right now. Number one, the committee is not in order. I 
want to make it clear to our guests in the audience that any 
comments or disruptions during today's meeting from the public 
will not be tolerated, and if, necessary, will result in the 
removal of those disrupting from the committee room. That is 
the first one.
    And I am going to say that we want you to be here. I want 
you to listen, and we are not going to comment. But if you do, 
that is the initial request I am making of you now 
respectfully.
    Now, Mr. Yarmuth?
    Mr. Yarmuth. Thank you, Mr. Chairman. And I will echo your 
remarks, and also certainly testify to the fact that you are an 
extremely honorable man and chairman, so I appreciate you 
calling this hearing. And also it is good to be here with my 
friends and colleagues, Congressmen Barr and Guthrie.
    Thank you once again for holding this hearing. I also want 
to thank all of you in the audience for joining us today to 
discuss the Affordable Care Act, and for the witnesses, in 
particular. I know it takes a lot of courage to share your 
stories in a congressional hearing, and I commend all of you 
for being here.
    I also want to recognize Governor Beshear and Carrie 
Banahan, director of the Kentucky Health Benefit Exchange. 
Because of their great work in preparing Kentucky's health 
insurance marketplace, our Commonwealth is positioned to be a 
national model.
    Today and in the next several months and in the years to 
follow, every person in this room will have a different story 
to tell about the Affordable Care Act. Some will have access to 
affordable, quality care for the first time. Others will have 
the benefit of insurance as they fight their second, third, or 
fourth battle with cancer. I have heard from individuals whose 
lives have been transformed, and several whose lives have been 
saved, by the law.
    Under the law, preexisting conditions will no longer 
prevent you from getting coverage. The healthcare exchanges 
will offer new coverage options, and Kentuckians will be able 
to compare plans the way they shop for flights online. If you 
are a small business owner, you will be able to take advantage 
of tax credits to provide insurance to your employees and make 
yourself a more competitive employer.
    I would just like to add that far from being a job 
destroyer, there is evidence that this act has already been a 
job creator. Last week in a released report, a national survey 
of small businesses under 50 employees, employment is up by 6 
percent this year. Small businesses are borrowing to expand, 
and confidence levels of small business owners is at a high 
over the last 7 or 8 years.
    If you are a young person embarking on a career for the 
first time, you can stay on your parents' insurance so you can 
focus on building a stronger future right from the start.
    Healthcare affects everyone differently, which makes 
healthcare policy difficult to explain and easy to spin. But 
after 40 failed attempts to repeal, undermine, or defund the 
Affordable Care Act, I think that we owe it to our constituents 
to acknowledge that this is the law, and its implementation is 
ongoing and inevitable.
    Over the next several months, we are going to make history 
here in the Commonwealth: 640,000 uninsured Kentuckians will 
become eligible for coverage, many for the first time. This 
builds on the progress we have made in Kentucky during the past 
3 years as a result of the Affordable Care Act. So far, the law 
has saved 72,000 Kentucky seniors $112 million on prescription 
drugs by closing the prescription drug donut hole. It has 
enabled 48,000 additional young adults to get coverage through 
their parents' health insurance plan. It has provided critical 
preventive care for 650,000 women and 486,000 seniors and 
people with disabilities. And it has provided $15 million in 
rebates from insurance companies to a quarter of a million 
Kentuckians.
    Across the country, the ACA is putting customers back in 
charge of their healthcare. For the first time in our history, 
insurance companies cannot say no to you if you have a 
preexisting condition, like diabetes, cancer, or heart disease. 
Your medical history is your business alone. You will not face 
annual or lifetime limits on coverage, meaning battling a major 
disease will not lead to bankruptcy. And you will get a rebate 
if your insurance company spends less than 80 percent of your 
premium dollar on anything other than your care.
    Investing in access to healthcare gives Kentucky families 
new opportunities to prosper. It also means economic prosperity 
and jobs for Kentucky. According to a University of Louisville 
study, new healthcare investment will create nearly 17,000 jobs 
and generate an additional $15.6 billion in economic activity 
in Kentucky over the next several years.
    It is also fiscally prudent. The governor's actions on 
healthcare will mean hundreds of millions of dollars in savings 
for the State through 2021.
    Now, we know there are some issues that need to be resolved 
with the law. For instance, the administration is continuing to 
work with the Restaurant Association and Retailers on safe 
harbor provisions that will largely address problems they are 
seeing with employee hour requirements. They have also delayed 
the employer mandate so that issues like the ones Mr. Kanaly 
and Mr. Bologna will raise in their testimony can be resolved.
    So today I hope we will focus on what would be the most 
beneficial to our constituents and Kentucky businesses, 
ensuring that they are taking advantage of every benefit the 
law has to offer, and raising any concerns so that they can be 
addressed as we move forward with implementation.
    I look forward to today's testimony. I yield back. Thank 
you, Mr. Chairman.
    [The statement of Mr. Yarmuth follows:]

    Prepared Statement of Hon. John A. Yarmuth, a Representative in 
                  Congress from the state of Kentucky

    Chairman Roe and My Colleagues Congressmen Barr and Guthrie:
    Thank you for holding today's hearing. I also want to thank all of 
you in the audience for joining us today to discuss the Affordable Care 
Act. And for the witnesses in particular, I know it takes a lot of 
courage share your story in a Congressional hearing, and I commend all 
of you for being here.
    And I want to recognize Governor Steve Beshear and Carrie Banahan, 
director of the Kentucky Health Benefit Exchange. Because of their 
great work in preparing Kentucky's health insurance marketplace, our 
Commonwealth is positioned to be a national model.
    Today, and in the next several months, and in the years to follow, 
every person in this room will have a different story to tell about the 
Affordable Care Act. Some will have access to affordable, quality care 
for the first time. Others will have the benefit of insurance as they 
fight their second, third, fourth battle with cancer. I've heard from 
individuals whose lives have been transformed, and several whose lives 
have been saved, by the law.
    Under the law, pre-existing conditions will no longer prevent you 
from getting coverage. The health care exchanges will offer new 
coverage options, and Kentuckians will be able to compare plans the way 
you shop for flights online.
    If you're a small-business owner, you will be able to take 
advantage of tax credits to provide insurance to your employees and 
make yourself a more competitive employer. If you're a young person 
embarking on a career for the first time, you can stay on your parents' 
insurance - so you can focus on building a strong future right from the 
start.
    Health care affects everyone differently, which makes health care 
policy difficult to explain and easy to spin. But after 40 failed 
attempts to repeal, undermine, or defund the Affordable Care Act, I 
think we owe it to our constituents to acknowledge that this is the 
law, and its implementation is ongoing and inevitable.
    In the next several months, we are going to make history here in 
the Commonwealth: 640,000 uninsured Kentuckians will become eligible 
for coverage - many for the first time.
    This builds on the progress we've seen in Kentucky during the past 
three years as a result of the Affordable Care Act. So far, the law 
has:
     Saved 72,000 Kentucky seniors $112 million on drugs by 
closing the prescription drug donut hole;
     Enabled 48,000 additional young adults to get coverage 
through their parents' health insurance plan;
     Provided critical preventive care for 650,000 women and 
486,000 seniors and people with disabilities;
     Provided $15 million in rebates from insurance companies 
to a quarter of a million Kentuckians.
    Across the country, the ACA is putting consumers back in charge of 
their health care. For the first time in our history, insurance 
companies can't say no if you have a pre-existing condition like 
diabetes, cancer, or heart disease. Your medical history is your 
business alone.
    You won't face annual or lifetime limits on coverage, meaning 
battling a major disease won't lead to bankruptcy. And you'll get a 
rebate if your insurance company spends less than 80 percent of your 
premium dollar on anything other than your care.
    Investing in access to health care gives Kentucky families new 
opportunities to prosper. It also means economic prosperity and jobs 
for Kentucky.
    According to a University of Louisville study, new health care 
investment will create nearly 17,000 jobs and generate an additional 
$15.6 billion economic activity in Kentucky over the next several 
years. It is also fiscally prudent: the Governor's actions on health 
care will mean hundreds of millions of dollars in saving for the state 
through 2021.
    Now, we know there are some issues that need to be resolved with 
the law. For instance, the administration is continuing to work with 
the restaurant association and retailers on safe harbor provisions that 
will largely address problems they're seeing with employee hour 
requirements. They have also delayed the employer mandate, so that 
issues like the one Mr. Kanaly will raise in his testimony can be 
resolved.
    So today, I hope we will focus on what will be the most beneficial 
to our constituents and Kentucky businesses: ensuring that they are 
taking advantage of every benefit the law has to offer and raising any 
concerns so that they can be addressed as we move forward with 
implementation. I look forward to today's testimony.
                                 ______
                                 
    Chairman Roe. I thank the gentleman for yielding.
    I now will yield to my friend and colleague, Mr. Brett 
Guthrie, for his opening remarks.
    Mr. Guthrie. Thank you, Mr. Chairman. Thanks for coming to 
Kentucky today. I appreciate having you. He grew up just on the 
wrong side of the border in Clarksville, Tennessee, so he is 
very close to being a Kentuckian, but not quite.
    And it is always great to be with Congressman Yarmuth and 
Congressman Barr. We have crossed paths a few times since we 
have been home in August, and it always great to cross paths 
with you guys.
    And thank you for being here, and I appreciate you all 
coming here today, and everybody here today, to talk about the 
impact that the healthcare bill has on our employers in the 
Commonwealth.
    And throughout August all the way through early September, 
I am doing 21 town hall meetings. And I have done 14, and I am 
doing them one in each county. And when we open it up, what 
most people want to talk about is the healthcare bill--that is 
the number one issue--and the impact it will have on them, 
their jobs, and their employer, and their healthcare coverage.
    And there are a lot of questions that have been asked, and 
unfortunately we have yet to come up with answers to these 
questions, such as, will their employer reduce their hours so 
they will no longer trigger the requirement for health 
insurance? Will they be able to stay on their current health 
insurance plan? Will their premiums be affordable, or will they 
have to spend more for essentially the same coverage? Will 
employers be able to continue to afford to provide insurance 
for their workers? And will they be able to hire the few extra 
workers they need, or will that cause them to trigger the 
employer mandate?
    And so, this one-size-fits-all law is providing a great 
concern for consumers, employers, and healthcare providers 
alike.
    In July, the non-partisan Government Accountability Office 
warned that because government officials have missed multiple 
key deadlines to set up the new healthcare exchanges, there is 
serious concern that the exchanges will be not ready in October 
as scheduled. And the IT data security testing necessary to 
open the exchanges was recently pushed back until September 
30th, the day before the exchanges are expected to go live. 
This is after multiple missed deadlines and leaving them no 
buffer to correct any problems, risking possible security 
lapses.
    Employers and families across Kentucky have expressed, in 
my town hall meetings in different ways, have expressed serious 
concerns about meeting the requirements of the law, and 
wondering if they will lose their coverage, be forced to choose 
different providers, or be saddled with enormous new costs. And 
given the Administration's move to delay only the employer 
mandate, families and small business owners are left with even 
more uncertainty.
    Small businesses are the backbone of our economy and likely 
to be the hardest hit. Some local employers say the law could 
put them out of business. One restaurant owner says it will be 
a challenge for the whole industry, and many will be forced to 
lay off employees. Others simply say it will be extremely 
difficult to insure all of their existing employees.
    With the lack of information and transparency from the 
Administration, business leaders do not even know what types of 
insurance programs they might be able to offer, or if they will 
be forced to alter the shape of their workforce in order for 
their business to stay afloat. Given the lack of information 
and tools available for implementation, it is evident that not 
only is this law not the solution to our healthcare problems, 
but it is not ready for implementation.
    I hope that today's field hearing will offer us the 
opportunity to explore these concerns further and hear directly 
from employers about how the law is impacting them. I 
appreciate the committee's efforts in this area, especially 
those of Chairman Roe, and I welcome him to the Commonwealth. 
And I yield back the balance of my time.
    [The statement of Mr. Guthrie follows:]

Prepared Statement of Hon. Brett Guthrie, a Representative in Congress 
                       from the state of Kentucky

    Thank you, Mr. Chairman. I appreciate you all coming to Kentucky 
today to discuss Obamacare and the impact it's having on the economy 
and employers, particularly in the Commonwealth of Kentucky. Throughout 
August and the beginning of September, I am hosting 21 town hall 
meetings - one in every county in the Second District. Obamacare 
continues to be a top issue at each meeting, with Kentuckians wondering 
how it will impact them, their employees, their jobs, and their health 
care coverage.
    Unfortunately, we don't have all the answers. The law that was 
famously ``passed so we could find out what's in it'' has yet to calm 
the fears of ordinary citizens. Will their employer reduce their hours 
so they no longer trigger the requirement for health insurance? Will 
they be able to stay on their current health insurance plan? Will their 
premiums be affordable or will they have to spend more for essentially 
the same coverage? Will employers be able to continue to afford to 
provide insurance for their workers? Will they be able to hire the few 
extra workers they need or will that cause them to trigger the employer 
mandate?
    There is no shortage of red flags when it comes to the train wreck 
known as Obamacare. The one-size-fits-all law is proving to be 
disastrous for consumers, employers and health care providers alike. In 
July, the nonpartisan Government Accountability Office warned that 
because government officials have missed multiple key deadlines to set 
up the new health insurance exchanges, there is serious concern that 
the exchanges will not be ready in October, as scheduled.
    The IT data security testing necessary to open the exchanges was 
recently pushed back until September 30th - the day before the 
exchanges are expected to go live. This is after multiple missed 
deadlines and leaving them with no buffer to correct any problems, 
risking possible security lapses.
    Employers and families across Kentucky have expressed serious 
concerns about meeting the requirements of the law and wondering if 
they will lose their coverage, be forced to choose different providers, 
or be saddled with enormous new costs. Given the Administration's move 
to delay only the employer mandate, families and small business owners 
are left with even more uncertainty.
    Small businesses, the backbone of our economy, are likely to be 
hardest hit. Some local insurers say the law could put them out of 
business. One restaurant owner says it will be a challenge for the 
whole industry and many will be forced to lay off employees. Others 
simply say it will be extremely difficult to insure all of their 
existing employees. With the lack of information and transparency from 
the Administration, business leaders don't even know what types of 
insurance programs they might be able to offer or if they will be 
forced to alter the shape of their workforce in order for their 
business to stay afloat.
    Given the lack of information and tools available for 
implementation, it is evident that not only is this law not the 
solution to our nation's health care problems, but it is not ready for 
implementation. I hope that today's field hearing will offer us an 
opportunity to explore these concerns further and hear directly from 
employers about how the law is impacting them.
    I appreciate the Committee's efforts in this area, especially those 
of Chairman Roe. I welcome him to the Commonwealth and yield back the 
balance of my time.
                                 ______
                                 
    Chairman Roe. Thank the gentleman for yielding.
    I now yield to my friend and colleague, Mr. Andy Barr, for 
his opening remarks.
    Mr. Barr. Thank you, Mr. Chairman. I would like to thank 
everybody for coming today and participating in this field 
hearing. I would especially like to thank the House Education 
and Workforce Committee for its interest and willingness to 
come to Lexington, Kentucky, my hometown, to hold this hearing.
    Thank you to Chairman Roe, Congressman Guthrie, and 
Congressman Yarmuth, for traveling to the 6th Congressional 
District so that we can continue to assess the impact of the 
Affordable Care Act, commonly known as Obamacare, on American 
families and employers.
    Finally, I would like to thank all of the witnesses with us 
today. You all are the most vital part of this hearing because 
you can provide vital, firsthand insights into the healthcare 
challenges facing workers and small businesses. We are here to 
listen to what you have to say.
    It is clear that cracks in Obamacare are growing and 
getting deeper. Slowly but steadily, the Administration and its 
supporters have reluctantly had to acknowledge the shortcomings 
of the law. In the past few weeks and months, we have news 
stories about problems with implementation of Obamacare . We 
have seen front page stories about massive rate increases in 
the insurance market, and we have all heard about the 
Administration's decision to temporarily delay for 1 year the 
implementation of the law's employer mandate.
    And, in particular, what concerns me about that unilateral 
decision is whether or not the Administration's decision 
through administrative fiat complies with the take care clause 
in the Constitution.
    While I certainly welcome the Administration's interest in 
saving businesses from Obamacare's costly and burdensome 
mandates, this does raise a number of questions that are 
central to the viability of the law.
    First, if the employer mandate is simply so unworkable that 
it needs to be delayed until after 2014, nearly 5 years after 
the President signed it into law, why should employers believe 
that this mandate will become any more acceptable in 2015 and 
every year thereafter?
    Secondly, why not provide for a permanent delay of the 
employer mandate as opposed to holding the specter of its 
implementation over the heads of employers?
    And finally, if a reprieve from Obamacare mandates is going 
to be provided to America's businesses, should America's 
families not also receive that same benefit of delay from the 
high cost of Obamacare in the individual mandate?
    Now, my opposition to Obamacare is not a partisan one. It 
is not simply because the President is a Democrat. It is not 
simply because--
    [Disturbance in hearing room.]
    Mr. Barr. I would yield.
    Chairman Roe. I will interrupt you for a second. This is 
the second disruption we have got. I am not going to tolerate 
this in this hearing. Pursuant to House rules and rules of the 
committee, the chair has a duty to maintain order and decorum 
during committee meetings. This is not a town hall meeting.
    Members of the audience must maintain order and refrain 
from manifestations of approval or disapproval of the committee 
proceedings or interfere with the conduct of the committee's 
business. It is the duty of the chair to order those in the 
audience causing the disruption to cease their actions 
immediately, and, if necessary, be removed by persons 
responsible for the disturbance. Those removed may be subject 
to arrest.
    Please allow the committee to continue with the meeting. 
This is not a town hall.
    And I will yield back.
    Mr. Barr. Thank you, Mr. Chairman.
    My opposition to Obamacare is not a partisan one. It is not 
simply because the President is a Democrat and I am a 
Republican. And, in fact, I very much appreciate the 
participation of Congressman Yarmuth in this hearing. I think 
this is an opportunity for all of us to look for solutions on a 
bipartisan basis hopefully as much as possible.
    But my opposition is simply because I believe Obamacare is 
bad policy for the American people. Obamacare does nothing to 
lower healthcare costs, which are the main driver of our debt. 
Instead the law will lead to massive job losses, the rationing 
of care, insurance policy changes, trillion dollar tax 
increases, increases in the national debt, violations of 
religious liberties, increases to healthcare premiums, and 
costs on American families.
    In fact, despite the President's promise that premiums 
would decrease by $2,500, the average family premium has grown 
by over $3,000 since 2008.
    On top of all of this, it is worth noting that young people 
are among the most punished by this law. Reports indicate rate 
shock for young adults under this law with these individuals 
seeing premiums increase on the average between 145 and 189 
percent annually.
    As you can all see, there are many different aspects to 
this law. I am excited for today's hearing, though, because it 
is a great opportunity for us to dive further into one 
particular area: Obamacare's impact on jobs.
    One of my top priorities in Congress is getting Kentuckians 
back to work, and I believe that Obamacare stands firmly in the 
way of this goal.
    As I have traveled around the 6th District and spoken with 
employers throughout central and eastern Kentucky, a consistent 
theme I have heard is employers citing Obamacare as creating a 
severe chilling effect on their ability to retain and hire 
workers. It is important for us to listen to our constituents, 
and that is what they are telling us.
    And this is certainly not a sentiment exclusive to 
Kentucky. A March report from the Federal Reserve specifically 
stated, ``Employers in several districts cited the unknown 
effects of the Affordable Care Act as reasons for planned 
layoffs and reluctance to hire more staff.'' Further, according 
to a study by the National Federation of Independent Business, 
an employer mandate, like the one included in Obamacare, could 
eliminate over 1 million jobs.
    So I would just like to conclude my remarks by, again, 
thanking everybody for being here. There are significant 
concerns with how Obamacare will lead to shifting more and more 
full-time workers to a part-time basis. These are folks 
sometimes commonly known as the 29ers--29 hours to avoid the 
30-hour threshold in the law. And while this may seem odd and 
counterproductive, the law is unfortunately forcing employers 
to get creative in order to free themselves from its mandate 
and higher costs.
    The bottom line is that Kentucky's workers, families, and 
job creators deserve permanent relief from Obamacare, not a 1-
year reprieve. I am hopeful that this hearing can play a 
constructive role in the process by shining a spotlight on the 
need to provide permanent relief from Obamacare. I look forward 
to hearing from the witnesses and, again, thank them for coming 
here today to share their story.
    I yield back.
    [The statement of Mr. Barr follows:]

Prepared Statement of Hon. Andy Barr, a Representative in Congress from 
                         the State of Kentucky

    I'd like to thank everyone for coming today and participating in 
this field hearing. I'd especially like to thank the House Education 
and the Workforce Committee for its interest and willingness to come to 
Lexington, Kentucky to hold this hearing. Thank you to Chairman Roe, 
Congressman Guthrie, and Congressman Yarmuth for traveling to the Sixth 
District so that we can continue to assess the impact of the Affordable 
Care Act - commonly known as Obamacare - on American families and 
employers.
    Finally, I'd like to thank all the witnesses with us today. You are 
the most important part of this hearing because you can provide vital, 
first-hand insights into the health care challenges facing workers and 
small businesses. We are here to listen to what you have to say.
    It's clear that cracks in Obamacare are growing and getting deeper. 
Slowly but steadily, the Administration and its supporters have 
reluctantly had to acknowledge the shortcomings of the law. In the past 
few weeks and months, we have seen the news stories about problems with 
the implementation of Obamacare; we have seen front page stories about 
massive rate increases in the insurance market; and we have all heard 
about the Administration's decision to temporarily delay for one year 
the implementation of the law's employer mandate.
    While I certainly welcome the Administration's interest in saving 
businesses from Obamacare's costly and burdensome mandates, this does 
raise a number of questions that are central to the viability of the 
law:
     If the employer mandate is simply so unworkable that it 
needs to be delayed until after 2014 - nearly five years after the 
President signed it into law - why should employers believe that this 
mandate will become any more acceptable in 2015 and every year 
thereafter?
     Why not provide for a permanent delay of the employer 
mandate, as opposed to holding the specter of its implementation over 
the heads of employers?
     Finally, if a reprieve from Obamacare's mandates is going 
to be provided to America's businesses, shouldn't America's families 
also receive that same benefit of delay from the high costs of 
Obamacare?
    Now, my opposition to Obamacare is not a partisan one - it's not 
simply because the President is a Democrat and I'm a Republican. My 
opposition is simply because I believe that Obamacare is bad policy for 
the American people. Obamacare does nothing to lower healthcare costs, 
which are the main driver of our debt. Instead, the law will lead to 
massive job losses, the rationing of care, insurance policy changes, 
trillion dollar tax increases, increases to the national debt, 
violations of religious liberties, and higher health care premiums and 
costs on American families. In fact, despite the President's promise 
that premiums would decrease by $2,500, the average family premium has 
grown by over $3,000 since 2008.
    On top of all of this, it's worth noting that young people are 
among those most punished by the law. Reports indicate a rate shock for 
young adults under this law, with these individuals seeing premiums 
increase on average between 145 and 189 percent annually.
    As you can all see, there are many different aspects to this law. 
I'm excited for today's hearing though because it's a great opportunity 
for us to dive further into one particular area: Obamacare's impact on 
jobs. One of my top priorities in Congress is getting Kentuckians back 
to work, and I believe that Obamacare stands firmly in the way of this 
goal.
    As I have traveled around the Sixth District and spoken with 
employers throughout central and eastern Kentucky, a consistent theme 
I've heard is employers citing Obamacare as creating a severe chilling 
effect on their ability to retain and hire employees. And this is 
certainly not a sentiment exclusive to Kentucky. A March report from 
the Federal Reserve specifically stated, ``Employers in several 
Districts cited the unknown effects of the Affordable Care Act as 
reasons for planned layoffs and reluctance to hire more staff.'' 
Further, According to a study by the National Federation of Independent 
Business, an employer mandate like the one included in Obamacare could 
eliminate over one million jobs!
    In addition to the lost jobs, there are also significant concerns 
with how Obamacare will lead to shifting more and more full-time 
workers to a part-time basis or to 29 hours. While this may seem odd 
and counterproductive, the law is unfortunately forcing employers to 
get creative in order to free themselves from its mandates and higher 
costs.
    The bottom line is that Kentucky's workers, families, and job 
creators deserve permanent relief from Obamacare, not a one year 
reprieve. I am hopeful that this hearing can play a constructive role 
in the process by shining a spotlight on the need to provide permanent 
relief from Obamacare. I look forward to hearing from the witnesses and 
again thank them for coming today to share their story.
                                 ______
                                 
    Chairman Roe. I thank the gentleman for yielding.
    Pursuant to Committee Rule 7(c), all members will be 
permitted to submit written statements to be included in the 
permanent hearing record. And without objection, the hearing 
record will remain open for 14 days to allow such statements 
and other extraneous material referenced to during the hearing 
to be submitted for the official hearing record.
    [The information follows:]
    Chairman Roe. We have two distinguished panels of witnesses 
today, and I would like to recognize Mr. Brett Guthrie to 
introduce our first witness.
    Mr. Guthrie. Thank you very much. I would introduce 
someone, a car dealer, Gary Force Honda, who is a dear friend 
of mine. His parents are my neighbors. His name is Tim Kanaly, 
and I welcome him here. He has Gary Force Honda in Bowling 
Green.
    Mr. Kanaly. Thank you, Congressman.
    Chairman Roe. I thank the gentleman. Now, I would like to 
recognize Mr. Andy Barr to introduce our remaining witnesses.
    Mr. Barr. Thank you, Mr. Chairman.
    Mr. Joe Bologna is owner of John Bologna's Italian Pizzeria 
and Restaurant in Lexington, Kentucky. Mr. Bologna has been a 
restaurateur since 1973, and I will state for the record you 
have the best garlic bread sticks in town. And that might be a 
bipartisan sentiment, I will say.
    Ms. Carrie Banahan is the executive director of the Office 
of Kentucky Health Benefit Exchange in Frankfort, Kentucky. Ms. 
Banahan is a graduate of the University of Louisville and has 
over 30 years of experience in State government.
    Mr. John Humkey, our final witness on the first panel, is 
president of Employee Benefit Associates in Lexington, 
Kentucky. Mr. Humkey is a native of Lexington and began his 
career in insurance in 1977 after graduating from the 
University of Kentucky.
    Thanks to all of the witnesses for being here.
    Chairman Roe. Okay. Before I recognize you to provide your 
testimony, let me briefly explain our lighting system. You have 
5 minutes to present your testimony. When you begin, the light 
in front of you will turn green, when 1 minute is left, the 
light will turn yellow, and when your time has expired, the 
light will turn red, at which point I will ask you to wrap up 
your remarks as best you can.
    After you have testified, the members will each have 5 
minutes to ask questions, and the chairman will try to also 
adhere to the 5-minute rule. We will not interrupt you right in 
the middle, but we have two panels, so it should be a long 
morning.
    I will now open it to Mr. Kanaly.

STATEMENT OF TIM KANALY, OWNER AND PRESIDENT, GARY FORCE HONDA, 
                    BOWLING GREEN, KENTUCKY

    Mr. Kanaly. Thank you. A year ago I started having some 
concerns about the Affordable Health Care law. I own 50 percent 
of Gary Force Honda located in Bowling Green, Kentucky, and 50 
percent of Dixie Auto Sales in Louisville, Kentucky.
    We currently have 46 employees at Gary Force Honda and 6 
employees at Dixie Auto Sales in Louisville. I did not know 
that because of my joint ownership in the two companies if they 
would be grouped together for the Affordable Health Care law. 
If they were put together, it would put us over the 50-employee 
threshold and require us to furnish insurance to both groups of 
employees.
    We currently pay 100 percent of the insurance costs for the 
employees at Gary Force Honda in Bowling Green. We are unable 
at this time to furnish health insurance to the employees at 
Dixie Auto Sales in Louisville. We would like to be able to 
furnish insurance to the employees at Dixie Auto Sales at some 
time in the future, but being a new business, we cannot do it 
at this time.
    I started looking for clarification on this issue by 
calling our group health insurance provider. After a couple of 
weeks they got back in touch with me. I was told that they have 
an expert that they could hire to advise me on the rules and 
regulations of the new health care law. I read their opinion on 
my situation and really got no definite answer.
    I then asked my agent what he thought I should do. He told 
me to contact an attorney that specializes in these matters. I 
said that sounds good, could you refer me to one? He got back 
to me after a couple of weeks and said they did not have one 
they could recommend.
    After asking around and trying to do some research on my 
own, someone recommended that I contact my accountant since the 
IRS would have a hand in implementing this new law. My 
accountant reviewed the regulations and gave me his opinion. He 
started his opinion by saying it was his best guess. He could 
not guarantee that any of the information he was giving me was 
correct.
    He seems to think that the Affordable Care Act follows the 
same guidelines as the Family Medical Leave Act, and my two 
companies would be considered separate. He is the only person 
that I have talked to that would even give me an educated 
guess. I do not feel real good about his confidence on this 
subject, but I appreciated his effort.
    I kind of tabled the issue until I was contacted by someone 
in Congressman Guthrie's office. I was referred to him by my 
insurance agent as someone who was having issues understanding 
the Affordable Healthcare Act. I explained this issue and some 
other concerns that I had with the new law.
    I asked him to please give me the name and number of 
someone in the HHS or the IRS that could give me a definitive 
answer to my questions. After a couple of weeks, he called me 
back and he told me that with all the resources available to 
him, he could not give me anyone or even the right government 
agency to call.
    In closing, I think there are serious questions about these 
huge changes. It concerns me deeply that no one can even answer 
my most basic questions.
    Thank you.
    [The statement of Mr. Kanaly follows:]

Prepared Statement of Tim Kanaly, Owner and President, Gary Force Honda

    A year ago I started having some concerns about the Affordable 
Health Care law. I own 50% of Gary Force Honda located in Bowling 
Green, Ky and 50% of Dixie Auto Sales in Louisville, Ky. We currently 
have 46 employees at Gary Force Honda and 6 employees at Dixie Auto 
Sales in Louisville. I didn't know that because of my joint ownership 
in the two companies they would be grouped together. If they were put 
together it would put us over the 50 employee threshold and require us 
to furnish insurance to both groups of employees. We currently pay 100% 
of the insurance cost for the employees at Gary Force Honda in Bowling 
Green. We are unable at this time to furnish health insurance to the 
employees at Dixie Auto Sales in Louisville. We would like to be able 
to furnish insurance to the employees at Dixie Auto Sales at some time 
in the future but being a new business we can't do it at this time.
    I started looking for clarification on this issue by calling our 
group health insurance provider. After a couple of weeks they got back 
in touch with me. I was told that they have a expert that they have 
hired to advise them on the rules and regulations of the new health 
care law. I read their opinion on my situation and really got no 
definite answer. I then asked my agent what he thought I should do. He 
told me to contact a attorney that specializes in these matters. I said 
that sounds good, could you refer me to one. He got back to me after a 
couple of weeks and said they didn't have one they could recommend.
    After asking around and trying to do some research on my own, 
someone recommended that I contact my accountant since the IRS would 
have a hand in implementing this new law. My accountant reviewed the 
regulations and gave me his opinion. He started his opinion by saying 
it was his best guess.
    He seems to think that if the Affordable Care Act follows the same 
guidelines as the Family Leave Act my two companies would be considered 
separate. He is the only person that I've talked to that would even 
give me a educated guess.
    I didn't feel real good about his confidence on this subject but I 
appreciated his effort.
    I kind of tabled the issue until I was contacted by someone in 
Congressman Guthrie's office. I was referred to him by my insurance 
agent as someone who was having issues understanding the Affordable 
Care Act. I explained this issue and some other concerns that I had 
with the new law. I asked him to please get me the name and number of 
someone in the HHS or IRS that could give me a definitive answer to my 
questions. After a couple of weeks he called me back and told me that 
with all the resources available to him he couldn't give me anyone or 
even the right government agency to call.
    In closing I think there are serious questions about these huge 
changes. It concerns me deeply that no one can even answer the most 
basic questions.
                                 ______
                                 
    Chairman Roe. Thank you very much for your testimony.
    Mr. Bologna?

STATEMENT OF JOE BOLOGNA, OWNER, JOE BOLOGNA'S ITALIAN PIZZERIA 
              AND RESTAURANT, LEXINGTON, KENTUCKY

    Mr. Bologna. Thank you for letting me be here.
    Just a little background on myself. I was born on April 
23rd, '45, in Detroit, Michigan. I always loved to cook at 
home, and my grandmother was a fantastic cook, and my 
grandfather was a small businessman that only finished third 
grade, but had a business mind. I hope I have a little part of 
each of them.
    At 17, I cooked at a little fast food place, and I always 
had a dream of owning my own restaurant since I was 16. I 
cooked in the Air Force from '65 to '69, and cooked for as many 
as 3,000 and as few as one, I was a general's aide in Vietnam.
    My first job after being discharged from the service was at 
Matthew's Roast Beef, so I needed to learn how to manage. The 
second job, I went to management training school at Big Boy's 
in Michigan, and every place I have worked has been a part of 
my restaurant today.
    I moved to Lexington in '72, and then I opened Joe 
Bologna's Restaurant and Pizzeria, and I have been in total 
food service for 54 years, and I am currently president and 
manager of Joe Bologna's.
    When I started in 1973, I always cared about employees, and 
there were employees that made more than I did when I started 
being that I was working 16 hours a day, and figured I worked 
for a dollar an hour. I have always had health insurance. It 
has been important to me and important to take care of 
employees. For full-time, I paid 100 percent, and have always 
offered full-time employees 50 percent that I would pay for it 
from the beginning. And I probably have 30 full-time and 35 
part-time. I do not think I have ever more than 10 total 
employees on healthcare.
    Sort of like the recession of '92, restaurants across the 
country and bars dropped 25 percent in sales, and they are now 
recovering. This is one of the first places customers and 
families cut under budget when the economy is not good. You 
cannot afford to go out to eat and go to bars, so.
    And in passing this bill, the ultimate cost to the customer 
would be less people can go out to eat, and have already lost 
money in the last 2 years. Adding healthcare would put a lot of 
business out.
    And today, you know, it takes a lot of money today to start 
up a business, and a lot of independents go under quick. A very 
small percentage survives. So why expand and putting in the 
risk and going in debt?
    In 2007, we had 75 employees. At the beginning of 2013, we 
had 30 full-time employees and 38 part-time. And the idea we 
came up with is we closed on Mondays and reduced our total 
employees from 54 to 46 or 47. By taking all the part-times and 
adding them together and dividing that by 30 hours reduced us 
down to 47.
    And I have talked to plenty of customers. A lot of times I 
am over there on Monday, and they talk to me about it. And they 
cannot blame us for doing what we are doing and understand. And 
hopefully later on if this changes, we will go back opening on 
Monday.
    I feel Affordable Care causes fewer jobs because I am going 
to try to keep under that 50, and jobs are the biggest problem 
today. So we want to hire people.
    If healthcare is to be fair, then it should be fair for 
everybody, no exceptions. I am for healthcare, but I think it 
should be the same from top to bottom. The government has not 
provided us with guidelines whatsoever, yet we are expected to 
follow them, and you have to try to find it yourself, and clear 
and compute information with unavailable rules, incomplete, and 
changing.
    The Affordable Care does not into account varying hours and 
work per week. You might work 25 hours one week, and 35 hours 
another week to average 30 hours to equal full-time. We wind up 
being too low. It would be good to ask for solutions to 
healthcare issues, ones that are practical and affordable.
    If this bill passes the way it is, looking out for 
employees--most employees live week to week, will have less 
money in their paychecks to spend, and will spiral the economy 
backwards. And it will be bad for all businesses because they 
are not going to have enough extra money to spend, whether it 
is going out to dinner or buying those extra things, even 
grocery shopping.
    And I was thinking about it last night, and I was saying my 
grandfather came here in 1910 and worked 6 days a week from 
5:00 a.m. until 6:00 p.m. And my grandmother had 11 kids at 
home, born in the home with no insurance at all. My grandfather 
worked hard to provide for them without insurance. And I think 
our country needs to really look at what our parents and 
grandparents did, and why our healthcare is like it is today. 
And that would be it.
    Thank you.
    [The statement of Mr. Bologna follows:]

    Prepared Statement of Joe Bologna, Owner, Joe Bologna's Italian 
                        Pizzeria and Restaurant

    Health insurance has always been important to me. I already pay 
health insurance for full time managers and offer to pay fifty percent 
for full time employees who want it. I currently have thirty full time 
and thirty five part time employees.
    The recession of the last six years has taken a toll on restaurants 
and bars. This is one of the first places customers & families cut out 
of their budgets. Passing off cost to customer would mean less people 
can go out to eat for me and a lot of other restaurants. Have already 
lost money for last two years. Adding health care cost would put a lot 
of us out of business.
    Why expand taking the risk of putting yourself in debt? In 2010, we 
had 75 employees. At the beginning 2013 we had thirty full time 
employees and thirty eight part time (24 FTE) so we closed on Mondays, 
to get below SO FTE. In 2010 we had 73 employees. This does not count 
all the administration cost of A.C.A.
    The affordable care act causes fewer jobs. Jobs are the biggest 
problem today. If health care is to be fair It should be the same for 
everybody. No exception.
    The government hasn't provided us with any guidelines whatsoever, 
yet we are expected to follow them. Have to try to find info yourself, 
clear and complete information unavailable -rules incomplete and 
changing.
    A.C.A does not take Into account restaurant's varying hours worked 
per week. Example: EE works 25 hours (P/T) one week, 35 another (F/T) 
30 hours== full time. TOO LOW.
    Would be good to ask for solutions to health insurance issues - 
ones that are practical and affordable.
                                 ______
                                 
    Chairman Roe. Okay. Thank you, sir. And, first of all, 
thank you for your service as a fellow veteran of the 2nd 
Infantry Division, and I know Mr. Guthrie is. We thank you for 
your service to our country.
    Ms. Banahan?

STATEMENT OF CARRIE BANAHAN, EXECUTIVE DIRECTOR, OFFICE OF THE 
     KENTUCKY HEALTH BENEFITS EXCHANGE, FRANKFORT, KENTUCKY

    Ms. Banahan. Mr. Chairman and members of the Committee, my 
name is Carrie Banahan. I am the executive director of the 
Office of the Kentucky Health Benefit Exchange. I, along with 
members of my staff, have been given the responsibility by 
Governor Beshear to create a State-based exchange in Kentucky.
    At the outset, let me say that I am not a lawyer, an 
actuary, a doctor, or an economist. I am a 30-year veteran of 
State government, with expertise in the areas of health 
insurance and Medicaid. However, because of the work conducted 
by our office, I believe that the Affordable Care Act will 
provide substantial opportunities to improve the health of the 
people of the Commonwealth.
    Kentucky ranks 44th overall in health status when compared 
to other states, so there is much improvement to be made. To 
exacerbate an already troublingly unhealthy environment, an 
estimated 640,000 Kentuckians lack healthcare coverage. That 
translates to 1 in every 6 Kentuckians.
    A multitude of State and national studies have demonstrated 
a direct correlation between healthcare coverage and health 
status. Getting the healthcare coverage that Kentuckians need 
is critical to improving the health of our citizens and our 
Commonwealth.
    Individuals without insurance are more likely to skip 
regular checkups, go without prescription medicines, and delay 
doctor visits until serious problems develop. As a result, they 
are more likely to seek treatment in an emergency room when 
their problems are more advanced and treatment is more 
difficult and more costly.
    Children without health insurance are more likely to have 
unmet medical needs like untreated asthma and diabetes. They 
are also more likely to go for long periods of time without 
seeing a doctor, which means they do not get regular checkups 
for immunizations, preventive care, and the vision and hearing 
tests they need for healthy development.
    In addition to the obvious health toll, being without 
insurance can also spell financial disaster for individuals and 
families, especially in a poor State. Without health insurance, 
patients must cover 100 percent of their medical costs, which 
can quickly add up. And just one visit to the emergency room 
can put a deep hole in the household budget for an individual 
or family. In fact, nearly two-thirds of all bankruptcies are 
linked to serious illness.
    A critical step in making healthcare accessible to all 
Kentuckians was Governor Beshear's decision to establish a 
State-based health benefit exchange, which we are calling 
kynect, Kentucky's Healthcare Connection.
    Education and outreach efforts for kynect are ongoing. 
Perhaps you have watched our television commercials, seen our 
print ads, or heard our radio spots. These efforts will ramp up 
as we move towards open enrollment on October 1st. If you have 
not already, I encourage you to visit our website at 
kynect.ky.gov.
    In addition to paid advertisements, our office is doing a 
considerable amount of direct consumer engagement through our 
kynect mobile tour. We just completed 10 days at the Kentucky 
State Fair, during which we handled thousands of questions from 
interested consumers who were eager to learn more about the 
Affordable Care Act and how it will benefit them.
    Beginning October 1st, kynect will operate as an online 
marketplace where individuals and families, as well as small 
businesses, can comparison shop for health insurance based on 
cost, benefits, and quality. It will also allow eligible 
individuals and businesses to receive premium subsidies and tax 
credits. And through kynect, individuals will also be able to 
apply and have their eligibility determined for Medicaid and 
KCHIP.
    The kynect website is one of many ways Kentuckians will 
also be able to select health plans. They will also be able to 
shop through a toll-free contact center, which opened on August 
15th, a mail-in application, or in person with kynectors.
    Two kynector grant awards were recently awarded to 
Community Action of Kentucky and the Kentuckiana Regional 
Planning Development Agency. Funding to support the kynectors 
is also being awarded to several agencies within the Cabinet 
that have established partnerships with local agencies. We will 
soon be issuing another request for proposals to ensure we have 
a statewide network of kynectors.
    Beginning January 1st, a number of significant changes in 
the healthcare coverage of our citizens will come to fruition. 
We are very excited about the possibility for dramatic 
improvements in Kentucky's health indicators that could result 
from the changing landscape of healthcare in the Commonwealth 
and our Nation.
    Thank you.
    [The statement of Ms. Banahan follows:]

Prepared Statement of Carrie Banahan, Executive Director, Office of the 
                   Kentucky Health Benefits Exchange

    Mr. Chairman and Members of the Committee,
    My name is Carrie Banahan. I am the Executive Director of the 
Office of the Kentucky Health Benefit Exchange. I, along with members 
of my staff, have been given the responsibility by Governor Beshear to 
create a state-based exchange in Kentucky.
    At the outset, let me say that I am not a lawyer; an actuary; a 
doctor; or an economist. I am a 30-year veteran of state government, 
with expertise in the areas of health insurance and Medicaid.
    However, because of the work conducted by our office, I believe 
that the Affordable Care Act will provide substantial opportunities to 
improve the health of the people of the Commonwealth. Kentucky ranks 
44th overall in health status when compared to other states, so there 
is much improvement to be made.
    To exacerbate an already troublingly unhealthy environmental, an 
estimated 640,000 Kentuckians lack healthcare coverage. That translates 
to one in every six Kentuckians.
    A multitude of state and national studies have demonstrated a 
direct correlation between healthcare coverage and health status. 
Getting the healthcare coverage that Kentuckians need is critical to 
improving the health of our citizens and our Commonwealth.
    Individuals without insurance are more likely to skip regular 
checkups, go without prescription medicines and delay doctor visits 
until serious problems develop. As a result, they are more likely to 
seek treatment in an emergency room, when their problems are more 
advanced and treatment is more difficult and more costly.
    Children without health insurance are more likely to have unmet 
medical needs like untreated asthma or diabetes. They are also more 
likely to go for long periods of time without seeing a doctor, which 
means they do not get regular check-ups for immunizations, preventive 
care, and the vision and hearing tests they need for healthy 
development.
    In addition to the obvious health toll, being without insurance can 
also spell financial disaster for individuals and families, especially 
in a poor state. Without health insurance, patients must cover 100% of 
their medical costs, which can quickly add up. And just one visit to 
the emergency room can put a deep hole in the household budget for an 
individual or family. In fact, nearly two-thirds of all bankruptcies 
are linked to serious illness.
    A critical step in making healthcare accessible to all Kentuckians 
was Governor Beshear's decision to establish a state-based health 
benefit exchange, which we are calling kynect, Kentucky's Healthcare 
Connection.
    Education and outreach efforts for kynect are ongoing. Perhaps you 
have watched our television commercials, seen our print ads or heard 
our radio spots. Those efforts will really ramp up as we move toward 
open enrollment on October 1. If you have not already, I also encourage 
you to visit our website at kynect.ky.gov.
    In addition to paid advertisements, our office is doing a 
considerable amount of direct consumer engagement through our kynect 
mobile tour. We just completed 10 days at the Kentucky State Fair, 
during which we handled thousands of questions from interested 
consumers who were eager to learn more about the Affordable Care Act 
and how it will benefit them.
    Beginning October 1, kynect will operate as an online marketplace 
where individuals and families, as well as small businesses, can 
comparison shop for health insurance based on cost, benefits and 
quality. It will also allow eligible individuals and businesses to 
receive premium subsidies and tax credits. And through kynect, 
individuals will also be able to apply and have their eligibility for 
Medicaid and KCHIP determined.
    The kynect website is one of many ways Kentuckians will also be 
able to select health plans - they will also be able to shop through a 
toll-free contact center, which opened on August 15; a mail-in 
application or, in person with kynectors.
    Two kynectors grant awards were recently awarded to Community 
Action of Kentucky and the Kentuckiana Regional Planning Development 
Agency. Funding to support the kynectors is also being awarded to 
several agencies within the Cabinet that have established partnerships 
with local agencies. We will soon be issuing another request for 
proposals to ensure we have a statewide network of kynectors.
    Beginning January 1, 2014, a number of significant changes in the 
healthcare coverage of our citizens will come to fruition. We are very 
excited about the possibility for dramatic improvements in Kentucky's 
health indicators that could result from the changing landscape of 
health care in the Commonwealth and our nation.
    Thank you.
                                 ______
                                 
    Chairman Roe. Thank you for yielding back.
    I am not going to tolerate these outbursts. I am going to 
have you removed if this continues. I want you to understand 
that. We are in a congressional hearing, and this is not a town 
hall. I will say it again one more time, and I am not going to 
say it after that. Be respectful to everyone up here.
    Mr. Humkey?

     STATEMENT OF JOHN HUMKEY, PRESIDENT, EMPLOYEE BENEFIT 
             ASSOCIATION, INC., LEXINGTON, KENTUCKY

    Mr. Humkey. I would like to thank you, Chairman Roe, 
Ranking Member Andrews, Congressmen Barr, Guthrie and Yarmuth, 
for the opportunity to testify about the challenges that many 
employers in Kentucky will face in the coming months as the 
Affordable Care Act is fully implemented.
    My name is John Humkey. I am the president and founder of a 
benefits insurance agency here in Lexington. My clients are 
made up of individuals, small employers, and large employers. I 
have held a life and health insurance license in Kentucky since 
1977. I am also a member of the National Association of Health 
Underwriters, and I am a past president of our local chapter, 
the Central Kentucky Association of Health Underwriters.
    Today I would like to address the impact of the Patient 
Protection and Affordable Care Act, and, in particular, 
modified community rating on small employer groups, such as my 
clients here in Kentucky.
    For those not familiar with modified community rating, this 
part of the Affordable Care Act impacts individual and small 
group health plans, employers under 50. This rating model only 
allows for an insured member's age, tobacco use, family 
composition, and geographic region to be used in establishing 
premiums. It eliminates the traditional underwriting 
considerations such as health status, gender, and, for groups, 
their industry.
    So let me expand on some of these considerations. First, 
age. Currently, an insurer is allowed--excuse me--for a spread 
in premiums using a 5 to 1 ratio. To simplify, a male, age 25 
may have a premium of $100 a month, and a male age 64 would be 
charged $500 a month; thus, a 5 to 1 ratio from the highest 
premium to lowest premium is charged.
    The Affordable Care Act compresses this to a 3 to 1 ratio; 
thus, forcing younger insureds to subsidize a premium reduction 
for older insured members. Currently there is a bill before 
Congress, H.R. 544. It is a piece of bipartisan legislation 
introduced by Representatives Phil Gingrey, Republican of 
Georgia, and Jim Matheson, Democrat of Utah. It seeks to 
address this Affordable Care Act reduction of compression 
rates. It does allow the States the flexibility to change that 
to a higher ratio, or it defaults a 5 to 1. I would encourage 
each of you to support that bill.
    Second is gender. With the elimination of gender in 
modified community rating, young males can expect that their 
rates will increase significantly, while younger females, 
normally charged for maternity, will decrease.
    Third, health status. The elimination of health status in 
modified community rating may have the greatest impact on 
individuals and small employer groups purchasing health 
insurance. In a nutshell, healthy individuals and groups may 
pay more for premiums to subsidize the unhealthy. Individuals 
will lose significant motivation to live a healthier lifestyle, 
or for an employer to implement wellness programs within their 
company. Why invest dollars to implement a wellness program 
when your employees, who are healthier, thus having lower 
claims, will not impact their premiums?
    Admittedly there are other motivations and considerations 
to implement wellness programs, but it does take away a 
significant factor in calculating a rate of return on 
investment when deciding to spend money on implementing a 
wellness program within your company.
    In addition, for modified community rating, for individuals 
and small employer groups, the Affordable Care Act mandates 
essential benefits to be included in health plans. There are 10 
essential benefits in all. One that stands out that is not 
currently included in most plans is coverage for pediatric 
dental and vision. As noble and attractive as mandated benefits 
are, each mandate adds to the cost of claims, and, thus, 
increases premiums insurers must charge their customers.
    So let me paint you a picture. The young, young males and 
the healthy will be required to pay significantly higher 
premiums under the Affordable Care Act. The older, young 
females, and those with significant health status or health 
conditions may pay less in premiums. In other words this law, 
in my opinion, picks winner and losers. This may force many 
young adults and healthy individuals to drop coverage as 
premiums under the Affordable Health Care Act increase or, in 
some cases, may double. As the young and the healthy leave 
these insured pools, the less healthy will enroll for coverage, 
and as a result, claims and premiums will go up.
    As we move towards full implementation of the Affordable 
Care Act on January 1st, let me share with you some facts and 
the impact that the Affordable Care Act has on some of my small 
employer groups. Insurance carriers here in Kentucky have 
already begun to notify agents and brokers, as well as our 
clients directly here in Kentucky, that they may be looking at 
significant premium increases when their plans renew in 2014. 
It is not necessary to name insurance carriers because this 
trend is universal among the carriers. I have clients that have 
been notified of an increase of anywhere from 11 percent to 110 
percent. The great majority of these rate increases are in the 
range of 50 to 90 percent.
    I have great clients that provide good benefit packages to 
attract and retain skilled employees. Most of them pay a 
significant portion of those premiums. Many of those employers 
treat their employees as family. But next year, many employers 
in Kentucky and around the country will face significant 
premium increases that will force them to radically change the 
way they provide benefits to their employees or, in extreme 
cases, like my client that faces a 100 percent increase, may be 
forced to drop health insurance altogether and send their 
employees into the exchanges.
    Let me end my testimony with this thought. No matter how 
fair a market reform idea might seem on its surface, it is not 
at all fair if it also prices people out of coverage options. 
And I submit to you that this is what the Affordable Care Act 
will do to many Kentuckians come January 1.
    Thank you.
    [The statement of Mr. Humkey follows:]

    Prepared Statement of John Humkey, President, Employee Benefit 
                           Association, Inc.

    I would like to thank Chairman Roe, Ranking Member Andrews and 
Congressmen Barr, Guthrie and Yarmuth, for the opportunity to testify 
about the challenges that many employers in Kentucky will face in the 
coming months as the Affordable Care Act is fully implemented. My name 
is John Humkey. I am the president and founder of a benefits insurance 
agency here in Lexington. My clients are made up of individuals, small 
employers and large employers. I have held a Life and Health Insurance 
license in Kentucky since 1977. I am also a member of the National 
Association of Health Underwriters and I am a Past-President of our 
local chapter - The Central Kentucky Association of Health 
Underwriters.
    Today I would like to address the impact of the Patient Protection 
and Affordable Care Act (ACA) and in particular ``Modified Community 
Rating'' on Small employer groups (my clients) in Central Kentucky.
    For those not familiar with Modified Community Rating this part of 
the Affordable Care Act impacts individual and small group (50 
employees or less) health plans. This rating model only allows for an 
insured members age (3:1), tobacco use (1.5:1), family composition and 
geographic regions (defined by each state) to be used in establishing 
premiums. It eliminates traditional underwriting considerations such as 
health status, gender & industry code if you are a group.
    So let me expand on some of these considerations. Age - Currently 
an insurer may allow for a spread in premiums using a 5:1 ratio. To 
simplify, a male, age 25 may have a premium of $100 per month and a 
male age 64 would be charged $500 per month. Thus a 5 to 1 ratio, from 
the highest to lowest premium charged. The ACA compresses this to a 3 
to 1 ratio thus forcing younger insured's to subsidize a premium 
reduction for older insured members. Currently there is a bill before 
congress - HR 544, a piece of bipartisan legislation introduced by 
Representatives Phil Gingrey (R-GA) and Jim Matheson (D-UT) that seeks 
to address the impact that the ACA's age-rating rules have on young 
Americans. Forty-two states nationwide now have in place a 5:1 age-
band. This bill will change the 3 to 1 ratio that begins on January 1st 
and instead allow states the flexibility to determine their own age-
band or default to a 5 to 1 ratio. I would encourage you to support 
this bill. Gender - with the elimination of gender in Modified 
Community Rating the load for maternity traditionally charged to 
younger females will now be shared with males. So young males can 
expect their rates to increase significantly in Modified Community 
Rating. Health Status - The elimination of health status in Modified 
Community Rating may have the greatest impact on individuals and small 
employer groups purchasing health insurance. In a nut shell healthy 
individuals and groups will pay more in premium to subsidize the 
unhealthy. Individuals will lose a significant motivation to live a 
healthier lifestyle or for an employer to implement wellness programs 
within their company. Why invest company dollars to implement a 
wellness program for your employees when healthier employees (i.e. 
lower claims) will not have an impact on their premiums. Admittedly 
there are other motivations and considerations to implement wellness 
programs but it does take away a significant factor in calculating a 
return on investment (ROI) when deciding to spend money on implementing 
a company wellness program.
    In addition to Modified Community Rating for individuals and small 
employer groups the ACA mandates certain ``Essential Benefits'' be 
included in health plans. There are ten Essential Benefits in all. One 
that stands out that is not currently included in most health plans is 
coverage for Pediatric Dental & Vision. As noble and attractive as 
mandated benefits are each mandate adds to the cost of claims and thus 
increases the premiums insurers must charge their customers.
    So let me paint you a picture . . . . The young, young males and 
the healthy will be required to pay significantly higher premiums under 
the ACA. The older, young females and those with significant health 
conditions may pay less in premium. In other words this law in my 
opinion picks winner and losers. This may force many young adults and 
healthy individuals to drop coverage as premiums under the ACA double. 
As the young and healthy leave these insured pools the less healthy 
will enroll for coverage and as a result claims and premiums will go 
up.
    As we move with the full implementation of the ACA on January 1, 
2014 let me share with you some facts and the impact of the ACA upon 
some of my small employer groups. Insurance Carriers here in Kentucky 
have already begun to notify agents and brokers, as well as our clients 
directly that many of them will be looking a significant premium 
increases when their plans renew in 2014. It is not necessary to name 
the insurance companies because this trend is universal among carriers. 
I have clients that have been notified of an increase from 11% to a 
high of 110%. The great majority of these increases are in the range of 
50% to 90%.
    I have great clients that provide good benefit packages to attract 
and retain skilled employees. Most pay a significant portion of these 
premiums. Many treat their employees as family. But next year many 
employers in Kentucky as around this country will face significant 
premium increases that will force them to radically change the way they 
provide benefits to their employees or in extreme cases like my client 
that is facing a 110% increase, may be forced to drop health insurance 
altogether and send their employees into the exchanges. In speaking 
with my client that is facing the 110% increase in his health insurance 
premiums next year this small employer had some very colorful words to 
express his dismay that I will not repeat in my testimony today. He is 
now faced with significantly changing the benefits he now provides his 
employees or worst dropping coverage altogether.
    Let me end my testimony with this thought: ``No matter how fair a 
market reform idea might seem on its surface, it's not at all fair if 
it also prices people out of coverage options''. This is what the 
Affordable Care Act will do to thousands of Kentuckians on January 1st.
                                 ______
                                 
    Chairman Roe. Thank you, Mr. Humkey. And our first 
questions will be Mr. Guthrie.
    Mr. Guthrie. Thank you very much. Thank you, Mr. Chairman, 
for yielding.
    And, first of all, I want to say I know on this committee 
when we are in Washington quite often, Secretary Sebelius, I 
mentioned, Health and Human Services, came up and testified in 
front of our committee. And my understanding, if I did not miss 
this--I got in late last night from Breckinridge County, but I 
saw, I think, her father had passed away who was a governor of 
Ohio in the 70s. So our thoughts and prayers are with Kathleen 
Sebelius as she is going through a tough time now.
    When I was, you know, looking at, you know, employers here 
and I was hearing some of the comments coming from the audience 
as people were talking, employers that I talk to, well, they 
are distressed. They really are distressed not just about how 
it affects their business, but how this business affects their 
employees. And I understand from your testimony how you have 
rearranged and given less time, Mr. Bologna. And I know I have 
talked with Tim several times, Mr. Kanaly, about his business, 
just the stress about how it has forced him to make decisions 
that change the earning power of their employees.
    I mean, it is not something that, well, we have just got 
back off and not put more money in my pocket. They are truly 
distressed about, particularly in competitive retail 
environments, staying in business or making decisions that are 
adversely affecting their employees. And that is what you see.
    And with you, Mr. Kanaly, I know we have talked several 
times about your 46 plus 6, and we cannot get you an answer 
because we cannot get an answer from the people who are 
administering the rules.
    But if you are ruled to have 52 employees, what decisions 
does that force you to make? And if you are able to stay 
separate and you are Gary Force, that is 46, what does that 
limit you on growth?
    Mr. Kanaly. Well, what we would have to do is once we get 
an answer and somebody tells us exactly where we stand, I 
really, to be honest with you, Congressman, I do not know. We 
have to wait and see until that decision is made, and then we 
could take a look at all of our expenses and decide what we do 
going forward.
    Mr. Guthrie. The 1-year delay, has that helped you, and has 
it brought more uncertainty?
    Mr. Kanaly. I do not think it changes anything. I started 
on this sometime last fall. I mean, somebody brought it up to 
me at the barbershop and other places that I go. I have run 
into a couple of other small business people. One guy had a 
bunch of assisted care facilities, and we just started talking 
about it. It kind of gets you talking, so everywhere we go we 
ask, you know, does anybody have anybody who can give you 
answer. And like I said in my testimony, so far I have not 
found anybody.
    So I am kind of on hold, to be honest with you, until I 
find out where I stand.
    Mr. Guthrie. That is creating a lot of uncertainty in the 
marketplace, I know, by not just knowing the answer to these 
questions.
    And, Mr. Bologna, in your testimony, you describe you have 
30 full-time and 34 part-time?
    Mr. Bologna. Yeah.
    Mr. Guthrie. And you are having to reschedule, is it you do 
the Mondays off so you can get to the 34 part-time, is that--
    Mr. Bologna. Well, what we have done is being closed on 
Monday, of course, reduces the amount of employees for the 
whole week. So we took all the 34 part-time, and you add all 
those part-times together and divide it by 30, which is 
considered a full-time work week. And that brought us down from 
34, to an average of 24.
    And that reduces the total number of what they call full-
time at 30 hours, because most employees I have got work two 
jobs because 30 hours a week is not going to make a living.
    Mr. Guthrie. And then, so Mr. Humkey, in your testimony, 
you mentioned that businesses are considering dropping 
insurance coverage in the next year due to the premium 
increases. And what pressures will they be able to maintain, 
because you deal with a lot of small individual businesses.
    Mr. Humkey. Correct.
    Mr. Guthrie. And the $2,000 tax that you can pay in lieu of 
providing insurance versus dropping the cost of insurance.
    So what are the incentives for employers to--the question 
is and one of the concerns about the law is so many people 
putting people into the exchanges. The estimates of the law, 
which is, you know, a trillion dollars already, would just be 
completely blown out because of people dumping people into the 
exchanges because of the costs.
    What is the incentive with the $2,000 tax set up?
    Mr. Humkey. That tax you are talking about, the $2,000, or 
it could be $3,000 as part of the pay or play penalty, but that 
is imposed on large employers only or what we define as 50 plus 
today.
    When you look at the small employee marketplace, certainly 
it is the rate pressure upon employers to operate again in a 
very lean economy and very competitive times to try to take a 
50 percent increase or an 80 percent increase and work those 
costs into their cost of operations.
    I think most are going to make tough decisions to either 
pass that cost onto employees or pass part of that cost onto 
employees, or radically change their benefit plans. And even 
the Affordable Care Act in the small marketplace does put a 
limit on the deductible and out of pocket costs that you can 
have in a plan, again, further pressure. You cannot go too high 
with those deductibles and out of pockets. The law will not 
allow it. Yet as we force these plans on them, those premiums 
also become a complication. They also increase exponentially.
    Mr. Guthrie. You say a lot of small businesses with less 
than 15 employees. Well, that is who you deal with. They were 
all for health insurance.
    Mr. Humkey. Correct.
    Mr. Guthrie. And their pressure will be to, as the premium 
goes up to put some people in the exchange. And they do it 
without the tax.
    Mr. Humkey. If they find that it is unaffordable to 
continue to provide employees healthcare, yes, the one option 
is to cancel the coverage and send them to the exchanges.
    Mr. Guthrie. I think I see my time has expired. Thank you.
    Chairman Roe. Mr. Yarmuth?
    Mr. Yarmuth. Thank you, Mr. Chairman. Since I only have 5 
minutes, I want to make a couple of quick points.
    First of all, Mr. Kanaly and Mr. Bologna, as I mentioned in 
my opening statement, some of the regulations that relate to 
the issues you have raised have not been finalized yet. And the 
administration is considering safe harbors for particular 
industries like yours, Mr. Bologna.
    Since you are also my constituent, Mr. Kanaly, on Dixie 
Highway, I wish you had called me. We would have given you, I 
think, a little bit better information. We have arranged, by 
the way, for a person at IRS to talk to you about the issue, 
including whether you are considered jointly or separately your 
2 businesses.
    But even if you are considered jointly, the impact on you 
will be virtually nil because you do not have to cover 5 of the 
6 employees you have in Louisville, which means you would have 
no additional cost under the act. So I hope that makes you feel 
better.
    Mr. Humkey, I want to make two points. First of all, I 
disagree with you totally about gender discrimination. You 
know, women do tend to get pregnant, but men also have 
something to do with that.
    [Laughter.]
    Mr. Yarmuth. And the idea that women should be charged up 
to 80 percent more than men for the same coverage, to me, is 
fundamentally unfair.
    And I was a small business person before I got into 
politics. I ran a business with about 20 employees. Virtually 
all of them were very young and healthy. We had one middle-aged 
woman who had cancer. So every year we were facing premium 
increases of 20 percent, 25 percent, dealing with the types of 
issues you talk about.
    And so, the question of fairness is a curious one because 
to me that was very unfair that all of those young people 
either had to adjust their co-pays, their deductibles, and so 
forth, or raise their contributions because of one unhealthy 
employee.
    So going back to what I suspect you are suggesting to the 
pre-Affordable Care Act situation is something I do not think 
would necessarily solve any of the issues that you raised. And, 
in fact, in 2008 and 2009 when we were actually debating the 
Affordable Care Act, premiums across the country were going up 
25, 30, 38 percent in many cases, and that is what this act was 
designed to solve.
    So I do not have a question. I just wanted to raise those 
points.
    Mr. Humkey. I was going to ask if you were asking a 
question.
    [Laughter.]
    Mr. Yarmuth. No, I was not asking a question.
    Ms. Banahan, thank you for your testimony. And I would like 
you to take a few minutes briefly to walk us through what 
kynect will mean on October 1st, just 5 weeks away, less than 5 
weeks away. What will Kentuckians experience as they utilize 
kynect to enter the healthcare system, and small businesses, I 
am sorry.
    Ms. Banahan. Right. So individuals as well as small 
businesses--that would be those who had 50 or less employees--
will be able to go online using the web-based portal to select 
health insurance companies. They can also utilize an agent or a 
kynecter, or they can file an application with our contact 
center.
    Mr. Yarmuth. Okay. I know that the rates that we are 
expecting in the exchange have not been published yet, but 
there is some experience around the country when talking about 
increased rates. I assume you are familiar with some of the 
rates that have been published across the country, in 
California, and New York, and Oregon. What has been the 
experience in terms of the impact on rates and the Affordable 
Care Act would do?
    Ms. Banahan. So our rates will be available October 1st. 
You know, we're in the process--our Kentucky Department of 
Insurance is in the process of reviewing and approving those 
rates. And they will be available probably around October 1st.
    Mr. Yarmuth. But is it not true that where rates have been 
published in California, and New York, and Oregon, and other 
States, there has been a significant decrease in the rates--
    Ms. Banahan. There have been decreases, yes, in some of the 
other States.
    Mr. Yarmuth. In New York as much as 50 percent lower than 
pre-ACA rates, is that not correct?
    Ms. Banahan. That is correct.
    Mr. Yarmuth. I am not saying we can expect that we can--
    Ms. Banahan. Right. Right. Right, yeah, I mean, you know.
    Mr. Yarmuth.--in Kentucky, but there have been significant 
reductions in rates actually in other places.
    So in order to put this rumor to rest, will kynect be ready 
on October 1st? Have the tests and reviews been completed?
    Ms. Banahan. Certainly. Last week, HHS was in Frankfort 
conducting our operational readiness review, as well as our 
implementation review. Kentucky was the first State to have 
this review, and it went extremely well. So they found no major 
issues. And then, today we begin end-to-end user acceptance 
testings with the feds, and Kentucky is the first State to do 
that. And we will be open October 1st, and we will be able to 
take applications for individual coverage and small employer 
group coverage.
    Mr. Yarmuth. All right, thank you.
    Thank you, Mr. Chairman.
    Chairman Roe. Thank the gentleman.
    Mr. Barr?
    Mr. Barr. Thank you, Mr. Chairman.
    Mr. Kanaly, in response to my colleague, Mr. Yarmuth's, 
comments there, I wanted to get your reaction to the comment, 
in particular whether or not the delay, the 1-year delay in the 
employer mandate in any way gives you comfort in terms of your 
grouping of your employees and whether or not you are going to 
have to prepare for the 50-employee threshold employer mandate 
when it comes 1 year down the road.
    Mr. Kanaly. Again, I just do not know. By the way, I am not 
a constituent. I actually live in Bowling Green. I appreciate 
your help.
    [Laughter.]
    Mr. Kanaly. Anything you can do to help me, I promise you.
    Mr. Yarmuth. Your business is a constituent.
    Mr. Kanaly. Yes, sir. Thank you.
    To answer your question, really I do not know. Like I said, 
like I told Congressman Guthrie, I am just going to wait. And 
it will not really change anything. I just need a decision. 
Once I have that decision, then I will move forward. But I 
really do not know. I am going to keep asking questions, and it 
sounds like I might get an answer.
    [Laughter.]
    Mr. Barr. Well, let me ask you this. Does the 50 or more 
employee threshold, the employer mandate, just generally 
speaking, does it encourage or discourage you from growing a 
business?
    Mr. Kanaly. I cannot really say either way. I would 
seriously consider not doing anything forward and continue to 
try to stay under the 50 if I can. If it is going to be harmful 
to my businesses, I probably would go ahead. I will have to 
look really hard at it.
    Mr. Barr. Mr. Bologna, thank you for your entrepreneurship 
in the Lexington community for all these years. Thank you again 
for your service to the country and for your really American 
success story. We appreciate you sharing that.
    You mentioned in your testimony that are now closed on 
Mondays due to the healthcare law. Describe the impact that has 
had on your profitability and also the welfare of your 
employees.
    Mr. Bologna. Well, you know, for some employees that were 
working just one day, for instance, and have a full-time job 
besides, we had to actually eliminate a couple of employees and 
sort of force them to leave to have fewer employees to balance 
it out. And income wise, somehow we have got to make up for 
$20,000 a month because we are used to making a higher income 
and doing a lot of volume sales, you know.
    So that is slowly coming around, and we will have to work 
on that for the rest of the year to see how that really works 
out. It is too early to exactly tell how it will balance out.
    Mr. Barr. Thank you. Mr. Humkey, a couple of questions. Two 
categories of businesses probably that you work with are the 
small businesses, say, a 10-employee business, and then, say, a 
45-employee business.
    First describe the impact that you are seeing in terms of 
the decision making in the health benefits area, in the 
healthcare planning area for the medium-sized business, the 45-
employee, 48-employee. What impact do you see in terms of those 
companies in terms of their expansion plans?
    Mr. Humkey. Certainly the closer you get to 50, Congressman 
Barr, it is on the radar. They do understand the Affordable 
Care Act, if you are over 50 full-time and full-time 
equivalents will require you to provide both affordable and 
minimum value coverage, or it is going to assess a penalty on 
you. So they are aware of that. They are considering that in 
whether they grow to exceed that 50 benchmark that would throw 
them into a penalty.
    So it is on the radar. They do consider it. Again, as Mr. 
Kanaly said, many of them find it very hard to understand how 
that calculation is made. I have combed over a lot of 
information, both from the government and from accounting 
firms, and it is not going to be an easy task for an employer 
to make that calculation.
    Mr. Barr. And I see my time is running out, so I will spare 
you the second part of the question about the small because I 
think you have already testified that there is rate pressure 
applied even with the lower employee number of small businesses 
because of the modified community rating issue.
    But let me ask you a final question with the last bit of 
time I have, and it has to do with the grandfathering 
provisions. The Obama Administration has repeatedly assured 
employers, like the ones that you serve here in central 
Kentucky, that they did not have to worry about their reform 
plan, that their plans would be grandfathered in. That is to 
say they would not be subject to the mandate's regulations and 
the minimum essential coverage requirements.
    The Federal regulators are now telling us that only 1 in 5 
small employers and 1 in 3 large employers will remain 
grandfathered. Please share your view whether the assurances of 
the grandfather provision in Obamacare is truly a safe harbor 
for employers. And if it is not, explain why employers are 
unable to escape Obamacare's mandates.
    Mr. Humkey. Well, I think you are right with the statistics 
you cite. It is very true among my own clients. Very few have 
retained grandfather status, and one of the critical issues is 
that rates continue to increase even in the last 4 years. To be 
grandfathered, you had to change literally almost nothing. You 
could have no more than a 5 percent change in employer 
contributions or no more than a 5 percent change in some of 
your benefit design.
    So employers were forced to give up their grandfather 
status just to continue to make healthcare affordable for their 
employees. Very few employers are grandfathered, so if you are 
not grandfathered, you are subject to the full extent of the 
Affordable Care Act, which has all the pressures that we have 
talked about here today.
    And the second part of your question was? The last part?
    Mr. Barr. That was it. Thank you. I yield back.
    Chairman Roe. Thank you for yielding. I will now yield 
myself 5 minutes.
    I am Phil Roe. I am from Johnson City, Tennessee, a veteran 
of the United States Army, and I practiced medicine there for 
31 years in rural Appalachia. We started out with four doctors 
in our groups and 12 employees. We now have 100 providers and 
450 employees still providing care for rural Appalachia. I also 
teach in the medical school. So I have been involved deeply in 
healthcare my entire adult life.
    And one of the problems with the American healthcare system 
was, number one, it cost too much money. That is why I retired 
from my practice and ran for Congress was I knew I could see 
patients that could not afford the care they were given.
    Number two, we had people out there who were working every 
day, husband and wife, but they could not afford the care. They 
did not have access to affordable care.
    When you look at the healthcare system in America, you look 
at it in three phases, and then you look at the part that just 
defined those people I just mentioned. And number one, if you 
are in an employer-based ERISA plan, it covers 160 million 
people, just like my office. We provided health insurance just 
like these businesses have forever. Why? Because it is the 
right thing to do.
    And number two, you want good employees, and this is a good 
way to get that, to attract good employees to your practice. I 
have had people working with me for 35 years in my practice 
that are still there. And why? They are great people to work 
with. They are like family members.
    So we have the ERISA-based plans. Companies over 50 in this 
country, 96 percent provide health insurance coverage right now 
today. So they were not involved.
    Number two, and so preexisting conditions do not matter in 
ERISA-based plans. You have to cover everybody. Number two, I 
am Medicare age now, so when you hit 65 you hit that button. 
And you also do not have a preexisting condition. Number three, 
if you are Medicaid you do not.
    So what group of people are we actually looking at? We are 
looking at the small group market, and the individual market, 
and the uninsured. Now, what did we do? We passed a 2,700-page 
bill, which I unfortunately have read every word of it, and 
28,000 pages of rules right now to look at this segment of the 
population. We could have covered two-thirds of everything the 
Affordable Care Act did in two paragraphs. One is the 26-year-
olds and expanding Medicaid. That would have done two-thirds of 
what you wanted right there, those two items.
    Now, let me talk about just a moment the New York plan 
dropping. And it did, and let me tell you how that happened. 
The 1992 the individual market in New York had 1.2 million 
people. Governor Cuomo won, passed a no preexisting conditions, 
no lifetime limits, and caps. So by 10 years later, there were 
120,000 people in the individual market in a State of 19 and a 
half million people. Today there are 32,000 people. That is why 
the rates are so high.
    And what you said, Mr. Humkey down there, was when you 
bring these young people in, they are going to pay a lot more 
to lower the rates for a few people in that State. I do not 
think that is fair. There is a better way to do that, and to 
provide that coverage for those folks, and we go into that.
    I want to talk a little bit, Mr. Humkey, about those small 
businesses in our State. I have talked to our insurance 
commissioner. In the individual market, the rates are expected 
to go up 45 to 70 percent. And I asked her, if we did 
absolutely nothing, what would have happened to the rates. They 
would have gone up by 10 percent. And the small group market, 
small business market, about 50 to 55 percent.
    Are you seeing that here in Kentucky?
    Mr. Humkey. Yes. Many insurance carriers are telling them 
that if their plans were to renew in this year, they might be 
looking at single digit 10 percent, 15 percent renewals.
    Chairman Roe. Which is a lot.
    Mr. Humkey. Yeah, which in this day and time, if you get a 
single-digit renewal you are presented, you are pretty 
fortunate. But, yeah, compared to when their plans renew and go 
into modified community rating.
    As I said, there will be winners and losers. There will be 
some groups who have unhealthy or older employees that rates 
may come down, but they are a lot fewer than the employers. 
These rates will go up.
    Chairman Roe. I think that one of the things that was 
brought up earlier that we have to do is in prevention. I have 
seen certainly in preventive care in our district, we had 
businesses that changed the metric for that. In other words, we 
incentivize wellness, not illness, right now.
    So what are doing, we have seen businesses actually lower 
rates by saying, let us say if you are a diabetic who smokes 
and you change those behaviors, and you lower your hemoglobin 
A1C to less than 60 with good care, that those rates come down. 
And I think those are the kinds of things we need to look at in 
expanding coverage, a lot of good ideas.
    One other thing I want to mention before my time runs out 
is a part of the market we have not talked about, and that is 
the self-insured. Our self-insured people, it is going to cost 
my city $177,000 each year, for which they get absolutely 
nothing for. And what that is a $63 fee-per-person fee that 
they have to pay for each person insured for the first 3 years 
to help the indemnified insurance companies, which I find 
remarkable that you are doing that. And there is also going to 
be an exchange fee that they are going to have to pay, which I 
do not know how much money it is. So I know it is at least 
$177,000 debt for my local community where I was mayor.
    I see my time has expired. I want to thank the great panel. 
I want to thank the witnesses for taking your time to testify. 
I will now ask the second panel to come forward and take your 
seats. Thank you all very much.
    Exactly a 5-minute break. I will be back in 5 minutes.
    [Recess.]
    Chairman Roe. Call the meeting to order. It is my pleasure 
to yield to Mr. Andy Barr to introduce our second panel of 
witnesses.
    Mr. Barr. Thank you, Mr. Chairman, and thanks to the second 
panel for coming and participating in our hearing here today.
    I would first like to introduce Ms. Janey Moores, president 
and CEO of BJM & Associates in Lexington, Kentucky. Ms. Moores 
is a well-known vocational consultant, who is knowledgeable 
regarding issues affecting today's labor market, wages, 
compensation, and current employment trends. She has been a 
long-time member of the National Association of Women Business 
Owners.
    Mr. Donnie Meadows is the vice president of human resources 
for Food City Stores in Kentucky. Previously, Mr. Meadows 
worked for Walmart in its corporate labor division.
    Ms. Debbie Basham works at the Southwest Breast Cancer 
Awareness Group in Louisville, Kentucky. Ms. Basham works with 
women and families battling breast cancer to coordinate support 
and help ensure access to healthcare resources.
    Mr. John McPhearson is the CEO of Lectrodryer in Richmond, 
Kentucky, a company I have had the pleasure of visiting, and it 
is a great operation down there, great employer in Madison 
County. Lectrodryer dehumidifiers are used by 90 percent of the 
top 100 industrial firms in the United States.
    I yield back.
    Chairman Roe. I thank the gentleman for yielding, and 
before I recognize you, you have heard this before. But the 
lighting system is you each have 5 minutes to present your 
testimony, and the light will turn green. At 4 minutes, the 
light will turn yellow. And when your time has expired at 5 
minutes, it will turn red, and we will ask you to wrap up your 
remarks as best as you can at that time. And each member has 5 
minutes to ask questions.
    I will start with Ms. Moores.

STATEMENT OF JANEY MOORES, PRESIDENT AND CEO, BJM & ASSOCIATES, 
                   INC., LEXINGTON, KENTUCKY

    Ms. Moores. My name is Janey Moores. I am the President and 
owner of BJM Staffing, BJM Medical Staffing, and Technitron. 
These are all employment services that place people in jobs in 
professional offices, accounting, law firms, IT professionals, 
as well as my nursing agency, placement in the healthcare 
field. I have placed over 250,000 people in jobs in the last 42 
years.
    Let me open by sharing with you the phone call that I 
received last week from my company's health insurance agent. 
Our group health insurance plan renews each May, so I was 
surprised to be receiving her call so soon after just renewing 
our premium rate a few months earlier.
    She explained to me that I was receiving the same phone 
call that she had made to 78 other businesses before she called 
me. She stated that if we renewed our group before this coming 
January 1, we would only have a 10 percent premium increase. If 
we wait until our standard renewal month of May next year, our 
renewal rate will have a 92 percent renewal rate.
    Once I picked myself up off of the floor and started 
breathing again, I asked her what in this world could cause our 
rate to double after January 1. She explained to me that there 
is a provision in the Affordable Healthcare Act called 
community rating, and that it is having a horrific impact on 
all private health insurance plans. She then reminded me that 
even if we can get an early renewal rate before January 1 that 
my business is still facing that same gigantic premium increase 
in another 12 months after we get the renewal. This no doubt 
will be the death knell for businesses throughout the country.
    So I have spoken with all of our business clients and 
medical facilities, and they are all receiving these same phone 
calls, and are paralyzed with fear about hiring any employees 
whatsoever. And can you blame us?
    What is the true unemployment rate? Well, what we receive 
in government numbers does not reflect people who have been 
moved from the unemployment rolls to the social security 
disability rolls. Once they are on the disability rolls for 2 
years, they are moved onto the Medicaid rolls where they pay no 
premiums, no co-pays, and no deductibles.
    When you have students who cannot find full-time work, they 
are not counted as unemployed. Any students remaining in school 
after graduation because they cannot find full-time work are 
not counted. And those who have never paid into the 
unemployment insurance fund, if they have been self-employed, 
independent contractors, small business owners who have lost 
their businesses, retirees, who are forced to leave retirement, 
students who have graduated but still cannot find full-time 
jobs, people retiring early, these people are not counted.
    My own business used to place thousands of people each year 
in some of Kentucky's finest manufacturers. However, reports 
have shown that Kentucky has lost over a third of our 
manufacturing jobs in the last 10 years, with the largest job 
loss occurring in the last 3 years. Accordingly, my company no 
longer places manufacturing employees.
    America has a rapid transition now going on from a Nation 
of full-time careers to a Nation of part-time jobs. Even now, 
the longer-term temporary projects that we used to get have 
disappeared, and we are only asked to fill an occasional short-
term employee here and there to help only during peak 
workloads. Also, with so many people unemployed now, the few 
remaining jobs have lower wages.
    There has been an alarming increase in the number of 
Americans now dependent upon disability payments from our 
government. According to a recent NPR report, every month 14 
million people now get a disability check from our government. 
Kentucky ranks as the third highest State for the number of 
residents receiving social security disability payments.
    My own business has had a growing number of our employees 
submitting forms to us to complete for them in order for them 
to quit working and start receiving disability payments. Once 
we complete those forms they bring to us, they pick them up, 
and we never see or hear from them again. Yet people relying on 
disability payments are often overlooked because they are 
considered not part of the labor force and are not counted 
among the unemployed.
    We have over 128 million Americans now receiving government 
assistance payments each month. My company spends a large and 
growing amount of our time each week completing and returning 
our employees' government assistance forms for food stamps, 
housing assistance, disability forms, and more. In addition, my 
business is also forced to spend more and more time responding 
to our employees' financial problems relating to their mortgage 
foreclosures, wage garnishments, credit card collections, 
school loan garnishments, and more.
    My business is open 24 hours a day, 7 days a week, 365 days 
a year trying to find jobs for people, then sending them to 
work. We get excited when we finally do get a job filled, and 
only to hear, well, two of the doctors are taking early 
retirement now, so our practice does not need to hire anyone 
else. And by the way, we would like to send you a couple of our 
employees' resumes because we are going to be letting them go 
this week.
    One northern Kentucky taxi cab company stated that they 
were reducing their 20 full-time drivers to part-time schedules 
and hiring another 20 part-time drivers due to the Obamacare 
healthcare law.
    Over the 42 years that I have been putting people to work, 
I have seen the job market go up and down from time to time. 
However, in the last few years, the job market has dropped off 
of a huge cliff and is likely to never return.
    So what is different now that was not a factor over the 
last few years? No one can deny that the toxic ingredient in 
today's job market is the so-called Affordable Healthcare Act. 
We now have an entrenched bureaucracy in the United States that 
is now the fourth branch of our government, and it will be the 
IRS who will ram the Affordable Healthcare Act down everyone 
else's throats but their own. I never, ever dreamed that I 
would live to see the day when my own government would work day 
and night to put me out of business.
    Esteemed members of the Congress, you see before you a 
vanishing species, an independent business owner who has paid 
millions of dollars in taxes to our government and put over 
250,000 Americans to work in first-class careers, only to be 
threatened with total extinction by a single, albeit 
unconstitutional, law being foisted upon America's hardworking 
citizens, we the people.
    Thank you.
    [The statement of Ms. Moores follows:]
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                                ------                                

    Chairman Roe. Thank you for your testimony.
    Now, Mr. Meadows?

STATEMENT OF DONNIE MEADOWS, VICE PRESIDENT OF HUMAN RESOURCES, 
          K-VA-T FOOD STORES, INC., ABINDGON, VIRGINIA

    Mr. Meadows. Chairman Roe, Congressman Yarmuth, Guthrie, 
and Barr, good morning. My name is Donnie Meadows, and I am the 
vice president of human resources with K-VA-T Food Stores. And 
as such, one of my responsibilities is the administration of 
health plan benefits. So thank you for allowing me this 
opportunity to appear here today and to express some of the 
challenges we are facing as we continue to comply with the 
Patient Protection and Affordable Care Act.
    I will condense my comments to a few key points, but 
respectfully request that you review the written testimony 
previously provided.
    K-VA-T Food Stores is headquartered in Abingdon, Virginia. 
We currently operate 106 retail supermarkets, employing over 
13,000 associates throughout the tri-state region of Kentucky, 
Virginia, and Tennessee. Fourteen of our retail supermarkets 
are located in Kentucky where we employ approximately 1,500 
associates.
    We were also one of the voices of the Food Marketing 
Institute and the supermarket industry. Food retailers and 
wholesalers employ about three and a half million workers, many 
operating under fluctuating schedules to meet employees' needs 
and consumer demands. Generally, the supermarket industry 
operates at approximately a 1 percent margin on average, so our 
industry has been diligent in seeking to minimize new burdens 
associated with implementing regulations and/or changes to the 
Affordable Care Act to allow retailers and wholesalers to 
continue to provide quality healthcare that is affordable to 
both the employee and to the employer.
    I would like to touch on some of the challenges to food 
retailers and offer support to some proposed solutions that are 
before Congress and the Administration.
    The Affordable Care Act has defined a full-time employee as 
someone who averages working 30 hours per week for an employer 
to be obligated to offer healthcare coverage. K-VA-T employs a 
significant number of part-time associates, and those folks are 
in age groups that possibly actually have health coverage from 
other sources, such as their parents or Medicare. At the 
present time, 67 percent of our part-time workforce falls into 
one of two age groups: those who are less than age 26 and those 
who are age 65 and older.
    K-VA-T currently provides health benefits to associates 
working full-time, but a 30-hour per week threshold is beyond 
what we can afford without potentially impacting the quality of 
coverage offered to our current full-time associates. It also 
impacts how our stores hire, how we structure responsibilities, 
and offer benefits to new hourly associates.
    The Affordable Care Act's 30 hour per week full-time 
threshold does not fit into the realities of supermarkets which 
operate outside of a traditional 9:00 to 5:00 work schedule. 
Our stores are staffed based on customer needs and those of our 
associates who often are seeking flexible work arrangements. 
Many do not want full-time work.
    Earlier this year, the Administration released look back 
period rules in an attempt to reduce those circumstances by 
tracking and averaging out associate hours over a longer period 
of time, but the administration of this is complex. We have 
developed our systems to track the look back periods, and we 
have conducted training with our management staff. And this 
results in fewer hours for some of the part-time associates 
just to ensure they do not trigger additional liabilities 
associated with working 30 hours or more per week, which adds a 
financial burden for some of those who were accustomed to 
working more hours, and honestly reduces our flexibility to 
serve customers.
    We support legislation, H.R. bill 2575, introduced and co-
sponsored by Chairman Roe and representatives here today, and 
others to address the issue. Frankly, we support any 
legislation that is honestly trying to correct ACA's definition 
of full-time and bring it in line with what is a more practical 
work environment.
    Under the Affordable Care Act, when our company offers 
health coverage to our full-time employees, we could still get 
penalized if premium costs of an associate are more than nine 
and half percent of their household income, or if the benefits 
do not cover at least 60 percent of the average costs. 
Regulatory agencies have offered some options, such as an 
affordability tests based upon employee wages and a calculator 
to certify coverage value. But we are still awaiting guidance 
on reporting and interactions with health exchanges to protect 
against someone being mistakenly awarded an ACA tax credit and/
or to protect our company from getting penalized even when we 
have attempted to follow the rules.
    Mandatory auto enrollment is one of the provisions under 
the Affordable Care Act, and honestly is putting increased 
administrative costs and caused confusion potentially between 
employers and employees. K-VA-T supports legislation, H.R. bill 
1254, that will repeal the mandatory enrollment provision, 
helping to ensure that associates are allowed to opt in to 
employer-sponsored coverage rather than opt out.
    Temporary reinsurance and other fees for employers. The 
charge to our company will be $63 per participant in a benefit 
year of 2014. That is over $400,000 in incremental costs and 
other annual costs going forward. And that is on top of some 
additional fees for the Patient-Centered Research Outcome 
Institute. These new fees not only affect our business, but 
given the low margin environment of our supermarket industry, 
they would eventually directly impact our consumers.
    Thank you for allowing me the opportunity to testify.
    [The statement of Mr. Meadows follows:]
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT] 
    
                                ------                                

    Chairman Roe. Thank you, Mr. Meadows.
    Ms. Basham, you have 5 minutes.

 STATEMENT OF DEBBIE BASHAM, SOUTHWEST BREAST CANCER AWARENESS 
                  GROUP, LOUSIVILLE, KENTUCKY

    Ms. Basham. Thank you for having me, and thank you for what 
everyone is doing.
    Seventeen years ago, I was diagnosed with late third stage 
breast cancer. According to the doctors, the chances of me 
living out my life were slim. After 6 months of chemotherapy, 
the doctors estimated I had 3 months unless we found a miracle. 
I was 44 years old.
    Fortunately, my husband's professional association provided 
good health coverage for our family, and I was accepted into an 
experimental treatment program for late third stage breast 
cancer at Duke University. When we arrived home 3 months later, 
I had won my battle. The treatment worked. But we faced 
$200,000 in bills to cover costs not paid by the insurance 
company.
    We were a middle-class American family, and we suddenly 
realized the cost of breast cancer was not over. We faced down 
the disease, but with the day-to-day expenses of raising two 
children, our bills kept mounting. My husband spent many hours 
of his day negotiating bills so we could keep our heads above 
water and keep our insurance paid up. No longer did we have 
financial security in our lives, but I had learned just how 
important having health coverage meant to my survival.
    I was also beginning to understand the constant state of 
confusion and fear when dealing with our healthcare system: 
office visits, hospitals, insurance companies. We would wait 
for answers. Would I be allowed to take the next test or get 
the pills that I needed? We were always calculating to see 
whether I would reach my annual limit and the insurance company 
would stop paying. And our family was not alone.
    That is why 15 years ago I started the Southwest Breast 
Cancer Awareness Group, which is now the largest participating 
breast cancer survivor group in Louisville. And having worked 
with thousands of women and their families since I beat the 
cancer, I have come to realize that you live or die based on 
the kind of insurance you have. You can get insurance and you 
can get some treatment without insurance, but the kind of 
treatment that alleviates suffering and saves lives simply is 
not available unless you have insurance to pay for it.
    I have held crying women in my arms knowing--I knew--they 
were doomed to die because their coverage was not good enough, 
had been cancelled, or because they could no longer afford the 
sky-rocketing premiums, they had reached their limits, or they 
had found themselves reliant on guaranteed-issue policies with 
outrageous costs, like the one that I ended up with, because 
when our family policy no longer covered me, I was suddenly 
locked out of the system. No insurer would cover me because of 
my pre-existing conditions. The guaranteed-issue plan I 
eventually obtained through Kentucky Access cost me $1,500 a 
month. With my husband's care, we were paying at $2,000.
    One by one, the women in my group come with their stories 
and their struggles, first medical, then financial. We struggle 
together, we pray together, and we hold on for dear life. I 
want to tell you about a few of these courageous women.
    Karen Blake and her husband, Kevin, owned a small business 
and had a privileged life when she joined our support group. 
But as the cancer came back, her standard of living started to 
fall, and her insurance company questioned life-saving 
treatments her doctors said that she needed. Her out-of-pocket 
expenses were very overwhelming. She was taking chemo in her 
doctor's office when she received a bill for $7,000 from the 
hospital. She called and explained she had not been to their 
hospital, but because the doctor was associated with the 
hospital, it was treated as if she had been admitted. Her 
insurance company would not pay. Is this the quality care some 
claim is the envy of the world?
    Lisa was 28 years old and her children's ages were 2, 4, 6, 
and 8. She was a skinny, spunky redhead. She had been diagnosed 
with stage four breast cancer. The doctor found the lump in her 
breast shortly after the birth of her fourth child. Lisa and I 
talked often and had become friends. She would sometimes call 
me at 2:00 a.m. because she could not sleep. She would always 
say, sorry, is it too late, is it okay? I would pray in the 
silence of my mind for God to give me the right words to ease 
her fears.
    She and her husband lost everything fighting breast cancer, 
their house and their car. They live below the poverty level 
now, and she spoke about how often she was ashamed when she 
could not pay her bills. Early on in our group, Lisa shared her 
sorrow when she thought of leaving her children behind. She 
always thought I was her rock, that I was holding her up, but 
little did she know her valiant courage made me determined to 
do something more about healthcare in our country.
    I spent the last Christmas of Lisa's life with her. When we 
arrived at her rented home, they had moved her bed into the 
small living room and the children all surrounded her, sitting 
as close on the bed as they could get. Children need a mother. 
Our breast cancer group had sent the children gifts and baked 
goodies, and sent gift cards to help with the expenses.
    The children played and they sang carols with us. Lisa did 
not seem sick that day. We were surrounded by laughter and 
giggles the way an American family should be. Time stood still, 
and Lisa had a wonderful day. As I left her house later on, our 
eyes met. In her beautiful smile I could see a wordless 
goodbye. I felt her strength and courage. Lisa gave a good 
fight, but in the end, her lack of care and the stress of 
overwhelming bills conspired, and her body caved in on top of 
her. She was never bitter, but she wondered why, and we talked 
often, why America could not do better for those less 
fortunate. This American girl deserved better.
    So did my friend Carla Norton. Even as breast cancer 
attacked every part of her body, she remained hopeful and 
brought light into our group. Her bare-bones insurance paid for 
virtually nothing, and she told me she knew she was muzzled in 
the fight for her own life. She left behind two teen boys and a 
mother that was devastated emotionally and financially.
    As women come in and out of our breast cancer support 
group, I know who will live and who will die based on what kind 
of insurance they have. I have seen this, oh, so many times. 
Where medical necessity should determine our outcomes in 
healthcare, greed often does instead.
    It has been 17 years since I first beat breast cancer, and 
yet I still cannot find an insurance company that will sell me 
a policy. But because of the Affordable Care Act, that will 
never again prevent me or the millions of women like me across 
our country from getting the coverage and the care needed. 
Annual and lifetime limits will no longer shift the tremendous 
burdens of cancer onto its victims. Families will no longer 
lose out on all the opportunities our Nation offers simply 
because they get sick.
    I only wish this law had gotten here in time for Lisa and 
Carla and the millions of women who deserved more than what 
they got. I am here today for them, and I thank you.
    [The statement of Ms. Basham follows:]

Prepared Statement of Debbie Basham, Southwest Breast Cancer Awareness 
                                 Group

    Seventeen years ago, I was diagnosed with late 3rd stage breast 
cancer. According to the doctors, the chances of me living out my life 
were slim. After six months of chemotherapy, the doctors estimated I 
had three months unless we found a miracle. I was 44 years old.
    Fortunately, my husband's professional association provided good 
health coverage for our family, and I was accepted into an experimental 
treatment program for late-stage breast cancer at Duke University. When 
we arrived home three months later, I had won my battle--the treatment 
worked. But we faced a $200,000 bill to cover costs not paid by the 
insurance company. We were a middle-class American family, and we 
suddenly realized the cost of breast cancer wasn't over. We faced down 
this disease, but with the day-to-day expenses of raising two children, 
our bills kept mounting. My husband spent many hours of his days 
negotiating bills so we could keep our heads above water and keep our 
insurance paid up. No longer did we have financial security in our 
lives, but I had learned just how important having health coverage 
meant to my survival.
    I was also beginning to understand the constant state of confusion 
and fear when dealing with our health care system--office visits, 
hospitals, and insurance companies. We would wait for answers: Would I 
be allowed to take the next test or get the pills I needed? We were 
always calculating to see whether I would reach my annual limit and the 
insurance company would stop paying. And our family wasn't alone.
    That is why 15 years ago, I started the Southwest Breast Cancer 
Awareness Group, which is now the largest breast cancer survivor group 
in Louisville. And having worked with thousands of women and their 
families since I beat my cancer, I have come to realize that you live 
or die based on the kind of insurance you have. You can get some 
treatment without insurance, but the kind of treatment that alleviates 
suffering and saves lives simply isn't available unless you have the 
insurance to pay for it.
    I have held crying women in my arms knowing they were doomed to die 
because their coverage wasn't good enough, had been cancelled because 
they could no longer afford the sky-high premiums, had reached their 
limits, or had found themselves reliant on guaranteed-issue policies 
with outrageous costs--like the one I ended up with. Because when our 
family policy no longer covered me, I was suddenly locked out of the 
system: No insurer would cover me because of my pre-existing condition. 
The guaranteed-issue plan I eventually obtained through Kentucky Access 
cost $1,500 per month.
    One by one, the women in my group come with their stories of 
struggle--first medical, then financial. We struggle together, pray 
together, and hold on for dear life. I want to tell you about a few of 
these courageous women.
    Karen Blake and her husband, Kevin, owned a small business and had 
a privileged life when she joined our support group. But as her cancer 
came back, her standard of living started to fall, and her insurance 
company questioned life-saving treatments her doctors said she needed. 
Her out-of-pocket expenses were overwhelming. She was taking chemo in a 
doctor's office when she received a bill for $7,000 from the hospital. 
She explained she had not been to their hospital, but because the 
doctor was associated with the hospital, it was treated as if she had 
been admitted. Her insurance company would not pay. Is this the quality 
care some claim is the envy of the world?
    Lisa was 28 years old and her children 2, 4, 6, and 8. She was a 
skinny, spunky redhead. She had been diagnosed with Stage 4 breast 
cancer. The doctor found the lump in her breast shortly after the birth 
of her fourth child. Lisa and I talked often and had become friends. 
She would sometimes call me at 2 a.m. because she couldn't sleep. She 
would always say, ``Sorry it is so late--is it OK?'' I would pray in 
the silence of my mind for God to give me the right words to ease her 
fears.
    She and her husband lost everything fighting breast cancer--their 
house, their car. They lived below the poverty level, and she spoke 
often about being ashamed when she couldn't pay her bills. Early on in 
our group, Lisa shared her sorrow when she thought of leaving her 
children behind. She always thought I was her rock, that I was holding 
her up. But little did she know her valiant courage made me determined 
to do something more about health care in our country.
    I spent the last Christmas of Lisa's life with her. When we arrived 
at her rented house, they had moved her bed into the small living room 
and the children all surrounded her, sitting as close on the bed as 
they could get. Our breast cancer group had sent the children gifts, 
baked goodies, and gift cards to help with their expenses.
    The children played and sang carols. Lisa didn't seem sick that day 
we were surrounded by laughter and giggles. Time stood still, and she 
had a wonderful day. As I left her house later on, our eyes met. In her 
beautiful smile I could see a wordless goodbye. I felt her strength and 
courage. Lisa gave a good fight. But in the end, her lack of care and 
the stress of overwhelming bills conspired, and her body caved in on 
top of her. She was never bitter, but she wondered why America couldn't 
do better for those less fortunate. This American girl deserved better.
    So did my friend Carla Norton. Even as breast cancer attacked every 
part of her body, she remained hopeful and brought light to our group. 
Her bare-bones insurance paid for virtually nothing, and she told me 
she knew she was muzzled in the fight for her life. She left behind two 
teen boys and a mother--devastated emotionally and financially.
    As women come in and out of our breast cancer support group, I know 
who will live and who will die based on what kind of insurance they 
have. Where medical necessity should determine our outcomes in health 
care, greed often does instead.
    It has been 17 years since I first beat breast cancer, and yet I 
still can't find an insurance company that will sell me a policy. But 
because of the Affordable Care Act, that will never again prevent me or 
the millions of women like me across our country from getting the 
coverage and care we need. Annual and lifetime limits will no longer 
shift the tremendous cost burdens of cancer onto its victims. Families 
will no longer lose out on all the opportunities our nation offers 
simply because they get sick.
    I only wish this law had gotten here in time for Lisa, Carla, and 
the millions of other women who deserved more than they got. I am here 
today for them. Thank you.
                                 ______
                                 
    Chairman Roe. Mr. McPhearson?

   STATEMENT OF JOHN MCPHEARSON, CEO, LECTRODRYER, RICHMOND, 
                            KENTUCKY

    Mr. McPhearson. I would like to start by emphasizing that 
our company, Lectrodryer, and I personally, believe in 
universal healthcare. We have during our tenure as owners 
offered the best possible healthcare coverage to our employees. 
Our current cost averages $3.68 per hour per employee, far in 
excess of any of the proposed penalties or fines in the 
Affordable Healthcare Act. Our costs have increased every year 
in the last 12 years, and the quality of coverage we are able 
to offer has declined steadily since the health insurers have 
continued to reduce the quality of their best plan.
    What I would like to present is the impact the AHA has had 
on our company to date, current concerns, and what we believe 
are the issues going forward.
    To date the impact on Lectrodryer has been a significant 
investment of time by our HR manager and upper management to 
understand the Affordable Healthcare Act. This has involved 
seminars and meetings with health care professionals and HR 
professional groups. It has been complicated by the massive 
size of the act and the continuing clarification rulings and 
changing dates.
    Additionally at this time, there is no information about 
the required State exchanges that we will have to offer on 
October the 1st. While we are required to notify our employees 
about these options by that date, we at this time have no 
details or information to answer the questions we are sure will 
come. Businesses do not like uncertainty. At this time there is 
significant uncertainty about the Affordable Healthcare Act's 
impact on Lectrodryer, both financially and operationally.
    The period from now until the end of 2013, assuming no 
additional date changes, will require us to do additional work 
in HR to document our employees' participation and meet the 
other reporting requirements of the Affordable Healthcare Act. 
At this time we believe that will be, at a minimum, 2 weeks of 
work for our HR manager. Considering that this constitutes 11 
percent of her time, it is no small cost.
    Going forward our concerns are considerable. The decision 
to manage the Affordable Healthcare Act through the insurance 
companies is a decision that will have significant long-term 
repercussions. We believe the four plans offered in the 
Affordable Healthcare Act, platinum down to bronze, will become 
the de facto plans offered by the healthcare companies. While 
some of the features of the plans, like lifetime maximums, are 
improvements, we feel the overall coverage will deteriorate for 
most of our employees. Our current plan co-pays and 
prescription benefits are better than those of the platinum 
plan we have seen offered. These everyday costs will have an 
impact on our employees.
    As a small business, one of the ways we have been able to 
distinguish ourselves as a better company has been to offer 
superior healthcare benefits. This has also helped us retain 
our employees. If we are correct that all companies will wind 
up with the same plans, this will simply take away one of the 
few options we have had to attract and retain the best 
employees for our company.
    I am also concerned that the AHA does not address what has 
been a key concern in recent years for our company to control 
costs. It is personal responsibility. As an example, 
Lectrodryer offers a monthly monetary incentive for health club 
membership, but the employee must provide proof of use or 
attendance. While the AHA provides benefits for preventative 
measures like annual physicals, it offers no penalty for not 
participating. It only guarantees you will be taken care of 
regardless of your personal behavior.
    One of the unique parts of the Lectrodryer business is that 
we have for the last five years exceeded 70 percent export 
sales. This has required me to travel extensively to many 
countries, including a number which have what is widely 
reported as universal healthcare coverage. It is my conclusion 
that healthcare is about good, affordable access to doctors and 
healthcare facilities.
    I am sure that was the intent of the Affordable Healthcare 
Act, but the reality is the law seems to be a lot about 
insurance companies, additional regulations, and the IRS. I do 
not see anything that guarantees that people in eastern 
Kentucky will have enough doctors and hospitals that they can 
access easily.
    Lectrodryer as a responsible employer has provided the best 
available healthcare benefits to our employees for the entire 
time we have owned the company. But now I believe the 
Affordable Healthcare Act will increase the cost of coverage, 
reduce the quality plans we can offer, and add additional 
regulatory burdens and costs to our company, this in a world 
that every day demands we be more efficient and competitive. As 
I started, we believe in universal healthcare. We just wonder 
why we as one of the small businesses of Kentucky have yet 
another burden added to our workload.
    Thank you.
    [The statement of Mr. McPhearson follows:]
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    Chairman Roe. Thank you.
    Mr. Guthrie?
    Mr. Guthrie. Thank you very much. Thank you, the second 
panel, for being here today. And I appreciate it very much.
    We hear from a lot of businesses, and I talk to businesses. 
It is affordability as well. It is, can we afford to provide 
this for employees? A lot of businesses do, as Congressman Roe 
talked about. And I can tell you from experience, you said 
insurance has increased every year for the last 12 years, which 
obviously pre-dated the Affordable Care Act.
    And so, the battle, I think, that we have or the issue is, 
how do we get a handle on the costs? And for a lot of people, 
one of the criticisms of the Affordable Care Act, it did not 
really try to deal with the costs of providing healthcare. And 
is there any of the three employers here that you see that this 
law is going to make the health insurance--and I read your 
testimony. I know where you are going with it. Is the health 
insurance you provide to your employees cheaper or more 
affordable?
    Ms. Moores. It certainly won't for my business or any of 
the clients we have been working with. Mr. Meadows. 
Unfortunately the opposite for us.
    Mr. McPhearson. Our indications from our insureds is that 
we will be facing significant increases, as everyone else has 
reported here.
    Mr. Guthrie. So it has been increasing, and whether it 
increases more or not, it is increasing at least at the same 
level, so it really has not--
    Mr. McPhearson. The indications are it will be a much more 
significant increase next year.
    Mr. Guthrie. And you said 92 percent, I think.
    Ms. Moores. Ours went from a 10 percent increase to 92 
percent.
    Mr. Guthrie. And, Mr. Meadows, you said that you are still 
waiting for guidance, because this hearing is about how the 
Affordable Care Act is affecting job creation in Kentucky, 
guidance. And Mr. Kanaly was here earlier. We asked him how 
some provisions would affect him. He said, well, I just do not 
know. I would have to know what provisions, how they affect me, 
and then I have to see how much it is going to cost me.
    And so, you know, for the last 3 years, I guess, and 
everywhere I go when I talk to employers, that is what you 
hear. It is, we just cannot make decisions, and, you know, we 
are October 1st going live. And we do not how much to buy on 
the exchange, and we do not how much exchange is going to cost 
us. We are 5 weeks away from my family having to make 
healthcare decisions, and we do not have that available to us.
    And it just seems that talk about how the uncertainty that 
the employers have--I am talking about employers and I am 
talking about job creation--has affected your ability to move 
forward on growing your business or making business decisions. 
I think that is replicated throughout the whole country. Is 
that kind of how that has affected your decisions?
    Ms. Moores. Well, I would agree with you because at one 
point I had three offices: Lexington, Georgetown, and 
Frankfort. And now, we are operating strictly out of the 
Lexington office, so that meant reducing staff, causing people 
looking for work to have to come to us instead of if we are 
filling a job in Scott County, we could have had our Scott 
County office.
    You have to cut your overhead wherever you can, and that 
involves some real sad decisions sometimes as far as locations, 
employees. You want to be near your clients. You want to be 
near people who are looking for work, job seekers. But you just 
cannot afford it with all of these expenses.
    Mr. Guthrie. How has the uncertainty affected your 
business, Mr. Meadows?
    Mr. Meadows. The uncertainty of the Affordable Care Act 
certainly has an impact, but more related to just the not 
knowing necessarily until certain regs are unveiled and so 
forth.
    But the economy itself has made it questionable, and the 
growth that we had in past years versus what we have had in 
most recent years, it has truly been a challenge. It is an 
extremely competitive marketplace. It is not a marketplace 
today that lends itself to adding costs.
    So I would say most retail employers in such a competitive 
environment, you are doing all you possibly can to control your 
expenses and your costs simply because growth is so restrictive 
at this point.
    Mr. Guthrie. Is there a difference?
    Mr. McPhearson. Yeah. Well, certainly the worldwide economy 
is an interesting subject. As I mentioned, we export over 70 
percent of our business. We are a manufacturer, also one of 
those that is a little bit of--everybody wonders how you do 
that, and we think we can compete very well from Kentucky.
    But the fact of the matter is that all of our customers 
have moved even though we have not. And so, all of the major 
manufacturing firms are now located somewhere else in the 
world. And businesses are springing up there trying to compete 
with us in China, in India, a variety of places. So we face 
those challenges and have to be extraordinarily competitive.
    So this year we made the decision because of a variety of 
things--there were also some other issues in Congress which 
left us with some uncertainty--that we were going to try and 
consolidate. And we have been growing constantly. We have had 
years of 40 and 60 percent growth. This year we just plan to 
stay level, to be quite frank.
    Mr. Guthrie. I think I see my time is just expiring, so 
thank you for your answers. And I yield back.
    Chairman Roe. I thank the gentleman for yielding.
    Mr. Yarmuth?
    Mr. Yarmuth. Thank you, Mr. Chairman. I am going to ask a 
few questions, but I first want to make one comment. Ms. 
Moores, there is a lot about your testimony I disagree with. 
But one thing is irrefutably wrong, and while you may feel that 
the Affordable Care Act is unconstitutional, the Supreme Court 
has said it is constitutional, and that is the only judgment 
that matters in that regard.
    Ms. Basham, I thank you for your testimony. Thank you for 
sharing your story and those of women you have worked with. 
When we get back to Washington in a few weeks, we will face a 
debate about whether to defund the Affordable Care Act or in 
some way shut down the government, and maybe take some other 
action.
    For those you have worked with and for yourself, what would 
the impact of defunding the Affordable Care Act be?
    Ms. Basham. Well, the impact would be absolutely what my 
testimony said. We would lose American citizens. We would lose 
mothers, and sisters, and wives. We would lose the dignity of 
our country, for our fellow Americans.
    We would lose families being able to have coverage and have 
a choice in what they want to have. We would lose care. Many 
women cannot get insurance, nor small children that are born 
with defects or with preexisting conditions. So I believe that 
our country would lose immensely when we have grown and grown 
as a country over every problem that we have ever had.
    I truly believe that business is wise enough to come up 
with ideas to work around the situation because what is more 
important, your American workers living a healthful life, and 
coming to work, and giving out a good product, or them going 
through what will happen to them health-wise if we do not have 
this?
    Mr. Yarmuth. I thank you. And I understand that when you 
told people in your support group that you were going to 
testify here, you asked them to share their stories, email and 
letters. Would you be willing to share those stories with us?
    Ms. Basham. Yes. There are a few here.
    Mr. Yarmuth. Just if you have them documented.
    Ms. Basham. I have them--
    Mr. Yarmuth. Not read them. Will you be able, for the 
record?
    Ms. Basham. For the record, yes, I will.
    Mr. Yarmuth. Mr. Chairman, I ask unanimous consent--
    Ms. Basham. Yes, I will be glad to give them.
    Mr. Yarmuth.--that we put them in the record.
    Chairman Roe. Without objection, so ordered.
    [The information follows:]
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    Mr. Yarmuth. Thank you. Mr. McPhearson, just out of 
curiosity, how many employees do you have at Lectrodryer? I 
just do not know enough--
    Mr. McPhearson. Sixty-three full-time and 70 counting the 
co-ops, temporaries, and interns.
    Mr. Yarmuth. Great. In terms of, you know, I know there is 
a lot of speculation, and, Ms. Moores, you talked about your 
insurance carrier said that rates would go up by 92 percent in 
the second year. Have you checked with any other insurance 
companies as to about what similar coverage might cost, because 
there is a lot of speculation out there. And I know insurance 
companies are throwing out these numbers, but we do not know 
for a fact that is what your coverage would cost, I mean, do 
we?
    Ms. Moores. Yes, we do because we shopped six companies, 
and the actuaries are the ones who gave us the 92 percent and 
the 10 percent.
    Mr. Yarmuth. But you have not actually been sent a bill. 
You do not know it?
    Ms. Moores. No.
    Mr. Yarmuth. You do not know. That could change 
considerably, could it not?
    Ms. Moores. We shopped that out, and with what we have got 
that is coming down the pike with this Affordable Healthcare 
Act, that is what they have available.
    Mr. Yarmuth. That is what they have available. Did they 
explain why, because, for instance, I have talked to a major 
employer the other day who said that their rates were going to 
go up 7 percent, so--
    Ms. Moores. It is the community rating section provision 
that is in the Affordable Healthcare Act that is getting the 
actuaries to have these astronomical increases for everyone.
    Mr. Yarmuth. Well, and that is what I am saying, that there 
is a lot of speculation out there, and we really do not know 
for sure what rates are going to be as we go forward.
    Ms. Moores. If we get that law the way that it is in place 
right now--
    Mr. Yarmuth. Well, it is--I am sorry.
    Ms. Moores.--community rating is there, and that is it.
    Mr. Yarmuth. I am sorry. It is the law. It is the law. It 
has been upheld by the Supreme Court.
    Ms. Moores. The community rating is in it.
    Mr. Yarmuth. What was your experience before the Affordable 
Care Act? Well, I am sorry, let me ask another question. 
Everybody I know is concerned about jobs. We are all concerned 
jobs and job creation, and I know a lot of opponents of the 
Affordable Care Act talk about its impact on employment. But 
since the Affordable Care Act was enacted in 2010, and many of 
the provisions have been in effect, including people being able 
to stay on their parents' insurance until 26, and the 
limitation on the lifetime benefits, and so forth.
    The private sector has added 6.7 million jobs. There have 
been 808,000 additional jobs created in the healthcare sector. 
And as I said, a national survey of small businesses just 
recently showed that small businesses under 50 have added 6 
percent employment just this year.
    Do you not think that is somewhat evidence that the 
Affordable Care Act is not having a deleterious impact on jobs?
    Ms. Moores. I am glad you asked me that because I had to 
keep my remarks to 5 minutes. So I attached a list of sources 
that I used. There are 15 sources there. Those are not the real 
facts that you just quoted.
    Unfortunately, businesses cannot run their business based 
on projections that the government is giving us. That is not 
the true unemployment picture. That is not the true growth. If 
you will read what I put in there from the U.S. Department of 
Labor, for one thing, Forbes, just 15 different articles that I 
have pulled there, and they are all within the last few months, 
that will show you what the true numbers are, not what you just 
gave us.
    Chairman Roe. The gentleman's time has expired.
    Mr. Yarmuth. Yes. Thank you, Mr. Chairman.
    Chairman Roe. Mr. Barr?
    Mr. Barr. Thank you. Before I ask questions, I would want 
to just make an observation about the question of the 
constitutionality of the Affordable Care Act, and that is that 
while a slim majority of the Supreme Court upheld the taxing 
power of the Congress to impose the individual mandate, it is 
noteworthy that a majority of the Supreme Court denied the 
Administration's principle rationale for the constitutionality 
of the act, namely the commerce power. And it should be noted 
for the record that the Supreme Court specifically denied that 
Congress has the power under the commerce clause to mandate 
individuals by particular product.
    Also, the question about whether or not the executive 
branch has the power to unilaterally pick and choose what 
provisions of statutory law it elects to implement and what 
provisions it elects to not implement, I think is clearly still 
an open question. And I think whether or not by unilaterally 
delaying the employer mandate for one year falls within the 
President's power is an open question, I think, subject to 
scrutiny.
    Mr. McPhearson, let me ask you a quick question about--I 
was particularly interested in your testimony that you travel a 
great deal across the globe. And many people compare the 
American healthcare system to the Canadian healthcare system, 
for example, as an example of government-run healthcare versus 
our partial market-based system prior to Obamacare.
    The chief justice of the supreme court of Canada in 
commenting on the Canadian healthcare system made an important 
observation, that access to a waiting line is not access to 
healthcare. Do you care to comment, Mr. McPhearson, in terms of 
your international travels about whether or not access is 
something that your employers under a market-based private 
health insurance system, whether or not access is something 
that you are able to provide for your employees?
    Mr. McPhearson. I do not think there is any doubt that my 
employees get extraordinary care by comparison to most places 
in the world, but they are well insured. You know, part of my 
comments certainly deals with that part of the issue that it 
has gone forward, and I think that is problematic.
    What we do see or what I have seen personally, and because 
it is a topic of discussion, I try and talk with people that I 
work with at other places. And what you see evolving is while 
you may have access, you do not choose your doctor, you do not 
choose when you get the care. And in many places, there are two 
levels of care: those that are in the general population and 
those that have the money, although some would argue that 
exists here already as well.
    Mr. Barr. But one quick follow-up question for you, Mr. 
McPhearson, and that is, you testified that your HR manager 
will spend a significant percentage of her time working on 
issues related to compliance with the healthcare law. What 
steps--well, let me just ask you this. What does that do in 
terms of taking time away from your staff to do the other parts 
of your job, and how is that going to negatively impact the 
other health benefits or other employee benefits that you 
provide?
    Mr. McPhearson. It certainly is an issue. You know, HR is 
responsible for health and safety, all the issues that are 
typically under that umbrella in our company. And we are 
approaching the point where we might to have add a second 
employee just to deal with that. That is a potential.
    Mr. Barr. Mr. Meadows, if I could ask you a question about 
your testimony. Have you all made any changes regarding for 
planning for the healthcare law as a result of the 
Administration's unilateral decision to delay the employer 
mandate?
    Mr. Meadows. We have not. We have continued in the same 
mode that we currently are, so we did not change our course.
    Mr. Barr. So it remains a great uncertainty for your 
employees and for your business planning, the fact that there 
remains the prospect of this employer mandate hanging over your 
head.
    Mr. Meadows. Certainly that is true.
    Mr. Barr. And another question. Are the benefits that you 
currently provide to both your part-time and full-time 
employees, are they in jeopardy as a result of some of the 
costly mandates of the Obamacare law, including your testimony 
about the $63 reinsurance fee? Does that jeopardize other 
benefits that you provide for your employees?
    Mr. Meadows. I would not speculate that it is necessarily 
going to jeopardize any other benefit. But benefit 
administration, you have a budget, so how you are going to 
allocate that budget if healthcare takes a greater portion of 
it, then, yes, potentially some other benefit may, in fact, 
feel the repercussion from it.
    Mr. Barr. I see my time has expired. I yield back the 
balance of my time.
    Chairman Roe. I thank the gentleman for yielding, and I, 
again, thank the panel for being here.
    And I want to just with a couple of statements that I would 
make. First of all, I believe a healthcare decision should be 
made between a physician, the patient, and that patient's 
family. It should not be made in consultation with the 
government. It should not be made in consultation with 
insurance companies. It should be made between a patient and 
the doctor.
    I have sat down and had the conversations, Ms. Basham, 
many, many times in my career. As a matter of fact, my 
practices averaged seeing one new female cancer a week for over 
30 years that I was there, the same for breast cancer. Very 
aware of that.
    And a couple of statements, and I want to tell you that 
this goes from the time I was in medical school, to show how 
things have changed in this Nation. In the late 1960s when I 
was a medical student in Memphis, I went and started IVs at St. 
Jude's Children's Hospital. I can still see some of those 
children's faces today 40 years later. Ninety percent of those 
children died. Today, 90 percent of those children live, and 
each child that is sent to St. Jude's Children's Hospital is 
treated for free. Their families are transported and put up for 
free.
    We have a branch of St. Jude's Children's Hospital in 
Johnson City, Tennessee where I practiced, and the same thing 
happens there. It is a phenomenal place. And cancer survival 
rates--if you came to me in 1977 as a woman with breast cancer, 
I would have to tell you had a 50/50 chance of surviving 5 
years. That has gone up astronomically. And are we there yet 
where we need to be? Absolutely not.
    And there are situations, and certainly the cases you 
talked about I have seen in my practice. But the thing that I 
have never seen is a patient denied care, at least in our 
community. I cannot speak for Lexington.
    Ms. Basham. But--
    Chairman Roe. I am going to finish. There are things we can 
do to make sure that does not happen in this country.
    And I also want to thank Mr. Meadows and his company at 
Food City. They have 5 stores in my--we shop there, full 
disclosure. It is a great company. I know the leadership of 
that company. They hire a lot of people in my community. Thank 
you for being in our community.
    One of the effects that has not been talked about, because 
this is on employer based. I live in rural Appalachia. There 
are three hospitals in my district and counties in my district 
that may go broke. They may go out of business. And across the 
country, there may be as many as 400 or 500 rural hospitals 
that because of the payments not necessarily with the employer 
side, but with the Medicare and Medicaid side, that may not 
survive the Affordable Care Act. And I do not know whether you 
all have seen that here, any of you all in rural Kentucky or 
not, and certainly probably eastern Kentucky where we are going 
to drive today.
    But I think the key issue we have today, and Mr. Yarmuth 
and I have talked about it and others today, jobs are the key. 
If we can get our economy cranked up and going, a lot of these 
problems go away because companies do want to do what you are 
doing at that great company in Richmond, Kentucky, is to 
provide jobs. We want to hire people. That is absolutely what 
we want to do.
    And so, I would ask, Ms. Moores, if you would comment, 
since that has been your life's work is to provide employment 
for people. Am I correct or incorrect?
    Ms. Moores. You are exactly right. And when we are 
employers, we are providing jobs, keeping people off the 
unemployment rolls, keeping them off the disability rolls, keep 
them off of workers' comp, and all these other government 
assistance programs. Plus they are paying taxes, and we are 
paying taxes.
    So the answer is to increase the jobs. That is where the 
money comes back into the government.
    Chairman Roe. I totally agree. And if you do not think it 
does not have a paralyzing effect, our largest employer in our 
community is our hospital system, 9,000 employees. We have a 
medical school, a pharmacy school, and we are a large referral 
area. I have been there 35 years. It is the first time that 
hospital has laid off anybody. It laid off over 300 people. My 
practice is not hiring anybody right now because of the 
uncertainty.
    Hopefully this will get better, and I would hope going 
forward that we would wait. I would like to see this delayed a 
year until we have a longer time to digest what was going on.
    To give you an example, and I think Mr. Guthrie referred to 
it. Each year around July, we would try to get our insurance 
straightened out for first of the year. I cannot even tell the 
people who work for me in the U.S. government 5 weeks from now, 
and neither can anybody on this panel, what the rates are going 
to be for the people who work for me in my congressional 
office. I do not know. We are mandated by law to buy our health 
insurance through the exchange, so I cannot tell anybody what 
their rates are going to be.
    That is uncertainty, folks. And if you are a business out 
there trying to figure out what to do come January 1, you have 
payroll to meet. If you do not have the money, you go out of 
business. Mr. Barr has already made some huge--not just the 
Affordable Care Act in fairness. It has been the economy, too. 
It has been more than just one thing. It has not just been the 
Affordable Care Act. It has been the costs of energy, 
uncertainty in the world. It is a world economy now. There is 
no question all of that is true. But this uncertainty right now 
certainly has added to it.
    Well, I see my time has expired, and I will gavel myself 
now.
    So anyway, I want to thank all eight witnesses. Let me tell 
you how much I want to thank--we will do that first. I want to 
thank all of you for being here today. This is the way 
America--I put a uniform on and left this country 40 years ago 
right now to serve this Nation in the U.S. military so that we 
could be free and have these kinds of events out here. And I 
want to thank those of you all that sat here attentively and 
not disrupted this. I appreciate what you have done. You are 
what make this country great and make all of us up here, 
regardless of our political affiliations, proud to serve you 
all.
    Lexington is a great community. I have been here many, many 
times, and we have great representatives here. And I commend 
you on the people you have sent, and thank you for attending. 
And I want to thank our witnesses again for being in front of 
the committee.
    I will now ask if any members, Mr. Guthrie, have any 
closing comments.
    Mr. Guthrie. Just welcome you to Kentucky. It is great to 
be here. It is great to represent this part of Kentucky. I do 
not have Lexington and Fayette County. I do have some of 
Jessamine, a good bit of Jessamine. And I always like to say, I 
know Representative Barr says he is from the district of Henry 
Clay. Well, I know the Ashland house is nearby, but Henry Clay 
represented the 2nd District of Kentucky during that era.
    [Laughter.]
    Mr. Guthrie. So I appreciate following in his footsteps. 
Thank you.
    Chairman Roe. Mr. Yarmuth?
    Mr. Yarmuth. Actually I think Henry Clay represented 
Louisville for one term.
    [Laughter.]
    Mr. Guthrie. He represented all of us.
    Mr. Yarmuth. Yeah, it did not make much difference. No, I 
want to thank my colleagues and assure those who are here today 
and those who may read the accounts of this hearing that we all 
on this panel want to make sure that we do the best job we can 
for the American people. And I wish the environment was such 
that we could work to make the Affordable Care Act function as 
well as possible rather than having a debate over whether we 
preserve it in the law.
    But ultimately, I totally respect particularly the business 
people who are here. Again, I have been in business. I come 
from a family of business people. And I know the struggles that 
all businesses face, particularly in tenuous times, and this is 
one of those. So thank you for trying to do the best by your 
employees.
    Ultimately, we need to have a country that works for 
everybody, and I think those of us who supported the Affordable 
Care Act, even when we would have preferred something 
different, and I am one of those.
    [Disturbance in hearing room.]
    Mr. Yarmuth. I think there are plenty of countries in the 
world that could offer us an important lesson about how to 
provide healthcare, even though I do believe that we have the 
best healthcare on earth if you can afford it.
    And that is what we just have to do our best to make sure 
that same level of care is accessible to as many people as 
possible. And that is what I certainly have been trying to do 
in my work on the Affordable Care Act. And I look forward to 
continuing to work with it within the system to make sure it 
functions as efficiently and effectively as possible.
    I thank my colleagues for holding this hearing and allowing 
me to participate. And, again, thanks to the witnesses, and 
thanks for your work. And we look forward to working with you, 
again, to make sure that we solve whatever problems exist with 
the law and work to make it work efficiently both for employees 
and for employers.
    Thank you, Mr. Chairman.
    Chairman Roe. I thank the gentleman for yielding.
    Mr. Barr?
    Mr. Barr. Thank you, Mr. Chairman, and thank you, Chairman 
Roe, for holding this field hearing in my congressional 
district, the 6th Congressional District. I want to thank the 
Education and Workforce Committee for bringing this important 
hearing to our congressional district where we could hear from 
our constituents, my constituents, right here in central and 
eastern Kentucky to hear about the impact that the Affordable 
Care Act will have on them, their businesses, their employees, 
patients, doctors, and everybody who interfaces with the 
healthcare system.
    I want to thank my colleagues, both Congressman Guthrie, 
Congressman Roe, and Congressman Yarmuth. And I will say as the 
successor to Henry Clay's seat in Congress that he did have an 
impact. He delayed the Civil War for 10 years. Obviously we 
would have wanted to avoid that terrible time in our Nation's 
history.
    But I think what we are doing here is very, very important. 
And no matter where you fall on the political spectrum or where 
you fall in terms of this particular issue, you know, this is 
important work because it impacts one-sixth of the American 
economy. So we have got to get it right.
    And what we all want is access to affordable healthcare, 
low-cost healthcare, and we want doctors to be in charge. We 
want patients and doctors to have viable relationship. And we 
do not want to put the government as the intermediary between 
patients and doctors. We want access to healthcare. We want 
affordable healthcare. We do not want waiting lines, and we 
certainly do not want uncertainty for employers in a time of 
economic distress and high unemployment.
    So thank you to our witnesses for testifying here today, 
for bringing a lot of light to this very heated discussion. 
Thank you very much.
    Chairman Roe. Well, thank you very much, and I appreciate 
the audience staying around for most of this. We do this all 
the time in D.C. This is the sixth committee hearing I have 
held outside I have been part of. I think the best results I 
get are outside Washington where we do not have paid lobbyists 
and so forth that come. We have regular folks that come in and 
testify, and I want to thank them as the rest of the panel has.
    Look, healthcare decisions, when I went to Congress, one of 
the most disappointing things that happened to me was that I 
went to Congress 5 years ago naively thinking somebody cared 
what I thought. And I was disappointed because bringing 30 
years of experience as a physician, also going through the 
healthcare reform we went through in Tennessee and then the 
reform of that, which was extremely painful, our TennCare plan 
that we went through. I thought I had something to offer to the 
debate.
    There were nine physicians in the House of Representatives, 
and I say this in all honesty, in all the years I served as a 
physician, I never saw a Republican heart attack or a Democrat 
heart attack. I never have operated on a Republican cancer or a 
Democratic cancer. It is something that affects every single 
American citizen in a personal way.
    And not one of us on the physician's caucus was asked 
anything about this bill. And quite frankly, the bill that was 
passed, as my friend John Yarmuth said, was not what a lot of 
us would have wanted. It was not even the House bill that was 
passed, which, in my opinion, was a better bill.
    So I think we do have a lot to do here, to do in this to 
make health insurance--healthcare, I should say, not insurance, 
but healthcare more affordable and available to all of our 
citizens. And I agree with you. There is enough money in the 
system, I think, to cover everybody, but I will oppose because 
of what I have seen in many a government-run plan.
    Again, I want doctors and patients making those decisions.
    I thank you all very, very much for being here today. With 
nothing further, the meeting is adjourned.
                                ------                                

    [Whereupon, at 12:19 p.m., the subcommittee was adjourned.]

                                 [all]