[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:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
------
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]