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



 
   OBAMACARE IMPLEMENTATION: STICKER SHOCK OF INCREASED PREMIUMS FOR 
                          HEALTHCARE COVERAGE 

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

                                HEARING

                               before the

                         COMMITTEE ON OVERSIGHT
                         AND GOVERNMENT REFORM

                        HOUSE OF REPRESENTATIVES

                    ONE HUNDRED THIRTEENTH CONGRESS

                             FIRST SESSION

                               __________

                           NOVEMBER 22, 2013

                               __________

                           Serial No. 113-78

                               __________

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

         Available via the World Wide Web: http://www.fdsys.gov
                      http://www.house.gov/reform

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              COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM

                 DARRELL E. ISSA, California, Chairman
JOHN L. MICA, Florida                ELIJAH E. CUMMINGS, Maryland, 
MICHAEL R. TURNER, Ohio                  Ranking Minority Member
JOHN J. DUNCAN, JR., Tennessee       CAROLYN B. MALONEY, New York
PATRICK T. McHENRY, North Carolina   ELEANOR HOLMES NORTON, District of 
JIM JORDAN, Ohio                         Columbia
JASON CHAFFETZ, Utah                 JOHN F. TIERNEY, Massachusetts
TIM WALBERG, Michigan                WM. LACY CLAY, Missouri
JAMES LANKFORD, Oklahoma             STEPHEN F. LYNCH, Massachusetts
JUSTIN AMASH, Michigan               JIM COOPER, Tennessee
PAUL A. GOSAR, Arizona               GERALD E. CONNOLLY, Virginia
PATRICK MEEHAN, Pennsylvania         JACKIE SPEIER, California
SCOTT DesJARLAIS, Tennessee          MATTHEW A. CARTWRIGHT, 
TREY GOWDY, South Carolina               Pennsylvania
BLAKE FARENTHOLD, Texas              TAMMY DUCKWORTH, Illinois
DOC HASTINGS, Washington             ROBIN L. KELLY, Illinois
CYNTHIA M. LUMMIS, Wyoming           DANNY K. DAVIS, Illinois
ROB WOODALL, Georgia                 PETER WELCH, Vermont
THOMAS MASSIE, Kentucky              TONY CARDENAS, California
DOUG COLLINS, Georgia                STEVEN A. HORSFORD, Nevada
MARK MEADOWS, North Carolina         MICHELLE LUJAN GRISHAM, New Mexico
KERRY L. BENTIVOLIO, Michigan        Vacancy
RON DeSANTIS, Florida

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



                            C O N T E N T S

                              ----------                              
                                                                   Page
Hearing held on November 22, 2013................................     1

                               WITNESSES

Mr. Dan Waters, Preesident, Dan Waters & Associates
    Oral Statement...............................................     7
    Written Statement............................................     9
Ms. Sherry Overbey, Director, Belmont Crisis Pregnancy Center
    Oral Statement...............................................    11
    Written Statement............................................    13
Mr. Joel Long, President, Gastonia Sheet Metal Services
    Oral Statement...............................................    15
    Written Statement............................................    17
Mr. Jason Falls, Owner, Falls Insurance
    Oral Statement...............................................    21
    Written Statement............................................    23
Mr. Tav Gauss, President, The Action Group Human Resources 
  Solutions
    Oral Statement...............................................    27
    Written Statement............................................    29

                                APPENDIX

Inserts for the Record, 2 Articles offered by Chairman Issa, and 
  Excerpts from the Heritage Report on Healthcare Costs Under the 
  ACA............................................................    46


   OBAMACARE IMPLEMENTATION: STICKER SHOCK OF INCREASED PREMIUMS FOR 
                          HEALTHCARE COVERAGE

                              ----------                              


                       Friday, November 22, 2013

                  House of Representatives,
       Committee on Oversight and Government Reform
                                           Washington, D.C.
    The Committee met, pursuant to call, at 10:05 a.m., in the 
Gaston County Courthouse, 325 North Marietta Street, Gastonia, 
North Carolina, Hon. Darrell Issa [Chairman of the Committee] 
presiding.
    Present: Representatives Issa and McHenry.
    Also Present: Mr. Pittenger.
    Staff Present: Drew Colliatie, Professional Staff Member; 
Linda Good, Chief Clerk; Meinan Goto, Professional Staff 
Member; Mark D. Martin, Deputy Staff Director for Oversight; 
and Rebecca Watkins, Communications Director.
    Chairman Issa. The Committee will come to order.
    As is the practice in the House of Representatives, every 
morning we begin our ceremony with the Pledge. Since we are 
here and not in the House, I have asked Congressman Pittenger 
to lead us in the Pledge.
    Will you all please rise?
    [Audience rises.]
    [Pledge of Allegiance recited.]
    Chairman Issa. Please be seated.
    The Oversight and Government Reform Committee exists to 
secure two fundamental principles. First, Americans have a 
right to know that the money Washington takes from them is well 
spent. And second, Americans deserve an efficient, effective 
government that works for them.
    Our duty on the Government Oversight and Reform Committee 
is to protect these rights. Our solemn responsibility is to 
hold government accountable to taxpayers, because taxpayers 
have a right to know what they get from their government. It is 
our obligation to work tirelessly in partnership with citizen 
watchdogs to deliver the facts to the American people and to 
bring genuine reform to the federal bureaucracy.
    I regret that there are no Democrats here today. Mr. 
Cummings had initially said he would be able to make it and 
then said he could not.
    I would now ask unanimous consent that the gentleman from 
North Carolina, Mr. Pittenger, who is not a member of the 
committee but a member of Congress in good standing, be allowed 
to participate in the hearing today. Without objection, so 
ordered.
    In a sense, I made my opening statement before we even 
began. In another sense, today is a day that no American can 
start his day without thinking that 50 years ago today, John F. 
Kennedy died in Dallas, Texas. I was 10 years old. He was only 
in his mid-40s.
    Medicare had not been created. Most of government spending 
disproportionately was on the military, more than half. 
Healthcare was important and talked about, but it was mostly 
veterans, Indian health; and quite frankly, after that, most 
healthcare was not delivered through federal means. Much has 
changed over those 50 years.
    America has, on a bipartisan basis, established Medicare to 
secure healthcare for the elderly. We have expanded a number of 
other healthcare programs and three and a half years ago, 
President Obama signed into law the Patient Protection 
Affordable Care Act. We are not here today to question that Act 
or its validity. What we are here today is to review what is 
happening in light of its rollout.
    Our committee has primary jurisdiction over a number of 
areas, and you have seen it, you have seen us dealing with the 
failure of the website, which per se is not the failure of 
Obamacare, it is a contracting failure. And we will continue to 
work to try to reform the systems that deliver information from 
the federal government to all of you.
    At the same time, the rollout of the Affordable Care Act 
has had major problems. The most important one to me is the 
access to care. More than four and a half million Americans 
have lost the plans they have so far. That is about 44 people 
losing their plans for each one getting into an exchange under 
the Affordable Care Act. We need to do better.
    Under the Affordable Care Act, it was forecasted that rates 
would go down by $2500 per family. So far, they have gone the 
opposite way. We are here in North Carolina because it is one 
of the states with one of the higher raises in care. For many 
people, the Affordable Care Act also means not only higher 
initial payments, but higher deductibles.
    The President has responded to this ad launch, if you will, 
by proposing that people should be able to keep plans they 
already have. We will, as a committee, look into whether that 
is feasible, can we get people to be able to stay in plans they 
have, plans that cost less, plans that have lower deductible. 
This will require legislation, it will not be done alone by 
presidential action. But I believe that Congress, once they 
have heard all the facts, looked at viable legislation, worked 
with insurers to find out what they can do and maintain their 
financial integrity, with hospitals and other healthcare 
providers, what they can do--we will react.
    Today's hearing is really about that. We know some of the 
problems, the most important of which is access and then 
affordability. Those are important issues that we are going to 
hear from our witnesses today and in the days to come.
    I want to thank our witnesses for being here today. I look 
forward to their testimony and I now recognize the 
distinguished gentleman on this side from North Carolina, Mr. 
McHenry, for his opening statement.
    Mr. McHenry. Thank you, Mr. Chairman. And first of all, I 
would like to welcome you back to western North Carolina and to 
the town I grew up in, my hometown of Gastonia. And our host 
today, the Gaston County Commission, in their chambers here in 
Gastonia.
    It is a particularly special thing because I grew up just 
two miles from where we are sitting here with a big rambling 
family and what I saw in Gastonia and Gaston County is what 
most of the country has experienced with tough economic times. 
We just experienced it over a longer period of time with the 
loss of textiles and much of manufacturing in this country. So 
the town I grew up in, I saw declining wages, I saw less 
economic opportunity because high paid manufacturing jobs, 
textile jobs, were going overseas. So the loss of benefits, 
loss of pay is something very real to me because I lived it and 
saw it with my friends and neighbors growing up here in 
Gastonia.
    So it is of particular concern today when we are talking 
about the cost of health insurance and access to health 
insurance. Access and cost are often linked. So I brought 
Congress to North Carolina to understand the real impact of 
Obamacare on real Americans.
    And while the President is talking about administrative 
fixes and tech searches, what I am most concerned about and 
focused on are people. That cannot be lost in this whole thing 
about stats and statistics--the actual real people that are 
being adversely affected by this law. Now there are some folks 
that are benefitting from the law, but by and large, most folks 
are feeling the pain as a result of higher insurance costs.
    Here in the Tenth District, my constituents are struggling, 
they are struggling to understand why the health insurance 
policies they like are being canceled. They are struggling to 
make ends meet now that healthcare costs are going up two or 
three times what they were before. Ultimately, they are 
struggling because of broken promises of this administration 
under this healthcare law.
    Few states have been as hard hit by Obamacare's broken 
promises as North Carolina. It was promised that signing up for 
healthcare will be as easy as shopping on Amazon or booking a 
flight on Kayak. Yet, through the first four weeks, only 1662 
North Carolinians managed to select a plan on Healthcare.gov.
    The President promised that if you liked your health 
insurance, you could keep it under Obamacare. Yet, over 180,000 
North Carolinians have received notices that their policies, 
the ones that they chose and liked, are being canceled. The 
President claimed that these issues are temporary and can be 
resolved. He said the website will soon be fixed, although the 
Administration's definition of fixed is that one in five 
Americans who try to log on will still not be able to log on to 
the website. That is not acceptable.
    President Obama admitted he misled the American people when 
he said if you like your plan, you can keep it. Another 
administrative fix was in order to resolve that promise.
    Regrettably, nothing will fix the broken promise that has 
hurt the people of North Carolina the most. President Obama 
promised this law would bring down health insurance costs. But 
North Carolinians are not seeing prices go down. They are 
seeing the complete opposite, as prices have simply gone up. 
Prior to the exchanges opening, Forbes magazine reported a 
study that estimated underlying premium prices for health 
insurance in our state would increase 136 percent on average. 
No administrative fix or tech search will resolve that 
troubling statistic that affects people. These exorbitant 
premium prices do not discriminate either. In North Carolina, 
it does not matter if you are a man or a woman, young or old, 
you are likely to see premium prices go up.
    Older North Carolinians in particular are hardest hit. 
Forbes reported the average premium price for women age 64 in 
North Carolina would increase over 180 percent. These folks are 
often early retirees or have lost their jobs, their well-
paying, good-paying jobs, and yet are not eligible for Medicare 
yet. They are usually on fixed incomes and cannot afford to pay 
nearly double what they were previously paying for their health 
insurance.
    These are people like a constituent of mine, Roberta, here 
in Gastonia. She ended her career early to take care of her 
ailing mother. She had a policy that cost her $150 a month for 
health insurance, but it was canceled. The new Obamacare-
compliant policy costs over $500 a month. She cannot afford 
that.
    There is Jonathan, in Iron Station, just up in Lincoln 
County. He has a fixed income of $950 a month. You may not know 
Jonathan, but we all know a Jonathan who is under this similar 
circumstance. His new insurance policy price tag is $350 a 
month. He cannot afford that.
    Tom, in Hickory, retired at age 62 due to a downturn in the 
economy and losing his job. His premiums jumped from 450 bucks 
a month to over $1200. He cannot afford that. He does not know 
how he is going to be able to get health insurance now and he 
said he is likely to go uninsured until he is eligible for 
Medicare in a couple of years.
    We all know a Tom. We all know a Tom, we all know a 
Roberta, we all know a Jonathan. This is about people.
    So when we talk about government policy in our discussion 
today, I think it is important that we think in those terms. 
And I am sure our witnesses here today, a great panel, will be 
able to talk more about this and how they are dealing with the 
day-to-day consequences of this failed healthcare reform.
    Now it is a particular honor to have a hearing from 
Congress anywhere outside of Washington. And today, as I said 
to Chairman Issa, that North Carolinians, even if we disagree, 
are a polite lot. Heck, we are Southern, cannot help it, can 
we? So even when we disagree, we can do it in an agreeable 
fashion.
    I appreciate the Chairman starting the hearing out with 
that tone because southern California has some of those same 
qualities as the real south, right?
    But if I may, Mr. Chairman, I do want to recognize our host 
and the distinguished elected officials we have here today. As 
I said, our county commissioners here in Gaston County have 
given us use of this chamber, and I want to thank the full 
county commission. But in particular, our two county 
commissioners that are here today--Mr. Tracy Philbeck and Jason 
Williams. Thank you.
    And additionally, we have our Register of Deeds here in 
Gaston County, who is here today, Susan Lockridge, thank you.
    We also have State Representative Dana Baumgardner, is here 
today; former State Representative Mike Harrington; and our 
State Senator for Gaston County, Kathy Harrington. Thank you.
    And then finally, on a healthcare note, we have our 
hospital administrator for our local hospital here in Gaston 
County for our region, Doug Lockett--sorry--Luckett--sorry. 
Doug, thank you so much for being here.
    And then finally, I want to thank our Sheriff, who secures 
this courthouse for judges and for the public on a daily basis 
and serves our county in a very able fashion. Has been a 
distinguished public servant and I would consider him a friend, 
and that is Alan Cloninger. Thank you, Alan, for your service 
to our county and for hosting us here today.
    And with that, Mr. Chairman, I thank you for the generosity 
of your time and I yield back.
    Chairman Issa. Thank you.
    Mr. Pittenger.
    Mr. Pittenger. Thank you, Mr. Chairman. I do appreciate 
this time that you have yielded to me.
    Chairman Issa. Well, thanks for letting us come to your 
district.
    Mr. Pittenger. Well, I came to Mr. McHenry's district. And 
I appreciate the courtesy that Congressman McHenry offered, and 
your coming here, it means a great deal to all of us in our 
region, that you would bring you and this committee to listen, 
to learn of the challenges, the difficulties, that are faced 
with the individuals and businesses and the complexities and 
the problems of Obamacare.
    While I do not sit on this committee, I do appreciate the 
impact, the effects that the Affordable Care Act is having on 
hard-working tax-paying Americans.
    This hearing will shed light, I am sure, on the problems 
that North Carolinians have faced as a result of the healthcare 
plan. My office, frankly, continues to receive a barrage of 
emails and phone calls every single day, of personal concerns 
that individuals have. Tom Mount is here today from my 
district. We were on a Google chat yesterday where he shared 
his experience. He has an IT background and business experience 
in terms of processing. And the real challenges that are out 
there, even affecting our personal information that can be 
exploited because it is not properly assessed and addressed on 
their system to date.
    We are aware that only 100,000-plus people have been able 
to process out their healthcare through the current system, 
while currently five million people have been denied their 
healthcare. Upwards to 10 million we expect to hear by the end 
of this year will be denied their personal healthcare. So these 
are very troubling.
    Congressman McHenry shared the numbers in North Carolina. 
Premiums are going up, you know, 200 percent on many healthcare 
plans.
    So all these are a basis for a real concern of why it is 
important, particularly in our state, to hold this hearing.
    I do realize that the promise that Mr. Obama made said that 
you could keep your healthcare plan if you wanted to, frankly 
appears to be very misleading and we need to understand the 
impact that that statement has had on many people. Today, the 
American people and our state deserve to have their voice heard 
and your coming out today to these fine witnesses and all those 
who are here, to sense the real concerns, we appreciate your 
being here. We are your public servant and we are here to do 
the job for you. So thank you, Mr. Chairman, again, for 
allowing me to be here and for conducting this hearing.
    Chairman Issa. Thank you, Rob.
    I now ask unanimous consent that the Manhattan Institute, a 
Published Study of State-by-State Analysis of the Impact of 
Obamacare Premiums be placed in the record. Without objection, 
so ordered.
    Additionally, I ask that excerpts from USA Today today and 
excerpts from the Heritage Report on Healthcare Costs under the 
Affordable Care Act be placed in the record. Without objection, 
so ordered.
    Additionally, I ask unanimous consent that all members may 
place additional and extraneous material in the record for up 
to five days after this hearing. Without objection, so ordered.
    Lastly, as I said before the hearing opened, I ask general 
leave that individuals present today may have up to five days 
to submit additional written material as a result of their 
attendance here, for the record. Without objection, so ordered.
    We now go to our distinguished panel of witnesses.
    Mr. Dan Waters is President of Dan Waters and Associates. 
Welcome.
    Ms. Sherry Overbey is Director of the Belmont Crisis 
Pregnancy Center. Again, welcome.
    Mr. Joel Long is President of the Gastonia Sheet Metal 
Services. I guess that is one of the remaining heavy 
manufacturers. Welcome. Thank you for being here.
    Mr. Jason Falls is owner of Falls Insurance. Again, thanks 
for your presence.
    And lastly, Mr. Tav Gauss is President of The Action Group 
Human Resource Solutions here in North Carolina.
    Pursuant to the committee rules, all witnesses must be 
sworn. Will you please rise and raise your right hands to take 
the oath.
    [Witnesses sworn.]
    Chairman Issa. Please be seated. Let the record reflect 
that all witnesses answered in the affirmative.
    This is a field hearing. It is just as formal as anywhere 
else in Congress. One of the formalities that we observe is 
that your entire opening statements be placed in the record. 
However, we observe a five-minute rule and, to the greatest 
extent possible, equally enforce it against ourselves for each 
round of questioning. So when you see the light go from green 
to yellow, it's just like here in North Carolina, you had 
better hurry, or else.
    [Laughter.]
    Chairman Issa. When it gets red, if you are in the middle 
of a phrase, please finish it, but do not start a new subject. 
It will be placed in the record in its entirety.
    Additionally, during questioning, it is often possible if 
you have left something out of your opening statement to 
essentially answer it as part of a question.
    And I will do the same for those of us on the dias. We may 
go multiple rounds, but our last question, you will have as 
much time to answer as is reasonable, but we will not ask 
another question after we have gone to red, until the next 
round, if necessary.
    So I want to thank you all for being here, and Mr. Waters, 
I am told that I kick off with you first. You are recognized 
for five minutes.

                       WITNESS STATEMENTS

                    STATEMENT OF DAN WATERS

    Mr. Waters. Thank you, Chairman Issa.
    My name is Dan Waters and I'm President of Dan Waters and 
Associates in Hickory, North Carolina. I am a lifetime resident 
of Catawba County and a graduate of Lenoir Rhyne University 
with a degree in economics. I have served the people of Hickory 
as an insurance agent and broker for 33 years.
    During my tenure in the insurance industry, I have seen 
companies come and I have seen companies go. I have seen 
policies change and policies terminated. I have offered Basic 
Benefits, Basic Benefits with Extended Coverage, Basic Benefits 
plus Major Medical, and Comprehensive Major Medical. At no time 
did these benefits require 2700 pages of explanation, let alone 
2700 pages that neither the clients, their agents or their 
Congressional Representative fully understand or have 
personally read.
    Now, agents and brokers are tasked with the challenging job 
of trying to explain this complex law to our groups and to 
individuals. Everywhere we turn, there is confusion, 
misinformation, questions about the programs offered, cost of 
premiums, tax ramifications and more.
    In order to prepare brokers and agents, they have been 
attending seminars, webinars, reading the NAHU Washington 
Updates, taking the required PPACA certificate course, better 
known as--we call it P-PACA. In addition, we have been keeping 
up with the latest technology tools for group clients as well 
as individuals. Our goal is to be able to communicate the 
benefits in an understandable way, quote the accurate premiums 
and in general allay the fears and concerns of our clients with 
regard to new plans.
    Some examples of these concerns are--I am hearing from my 
office on a daily basis like you have:
    I like my current plan. Why can I not keep it?
    Why do I have to pay for benefits I will never use such as 
maternity benefits, birth control, pediatric vision and dental, 
rehab services?
    How will I pay for higher deductibles I must have in order 
to make my plan affordable?
    Do I qualify for a subsidy? Why do I not qualify for a 
subsidy?
    Why is my health care premium so much higher than before?
    And then some say I don't want to pay for insurance. Why is 
it not my right to choose without having a penalty?
    Do our current medical policies need to be changed in many 
ways? Some reasonable parties will agree that this is the case. 
Do we want to provide coverage for those who can't afford it, 
but need it or want it? Yes, definitely. Should there be a way 
for Americans with preexisting conditions to keep or get 
coverage at a reasonable rate? Yes, of course. Is the 
government mandated Affordable Care Act, requiring all policies 
meet the same minimum standards, regardless of the needs or 
stage in life, the answer? I would say from the reaction of my 
clients, that would be a resounding ``no.''
    As soon as the ACA became law, PPACA, Obamacare, became 
law, our office phones were ringing with questions as to what 
it means for our clients, particularly our individual clients. 
After the cancellation notices were received, new premiums were 
announced, those calls and the frustrations of our clients 
increased exponentially, since clients found their monthly 
costs more than doubling. An example of what I am saying is my 
wife had a monthly premium of $396 with a $2500 deductible was 
canceled and will be replaced with a premium of $735 with a 
higher deductible. And as with many of our clients, she is 
choosing to go with a significant increase in her deductible in 
order to reach a reasonable cost. Since the recent announcement 
of the President that people could keep their current plans, a 
large portion of my individual clients are seeking to wait and 
do just that, if the laws permit.
    I fear that the mandatory ACA will be detrimental to my 
community as a whole. We have experienced an economic downturn 
in the last decade resulting in industries closing, a depressed 
housing market, an overall lowering of disposable income. While 
struggling employers are required to pay more in benefits, 
either they will be forced to reduce their workforce, 
contribute less to the employees' health plans, or drop those 
plans altogether. Less income on the part of the business or 
the individual translates into less spending and less growth 
for our area.
    Thank you for your time to consider these important matters 
and for the opportunity to share my concerns. It is my hope 
that together we can come to a better solution that will allow 
healthcare to be fair, yet affordable, for employers and 
individuals without making it a burden to our society.
    Chairman Issa. Thank you.
    Mrs. Overbey.
    [Prepared statement of Mr. Waters follows:]

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
    
                  STATEMENT OF SHERRY OVERBEY

    Mrs. Overbey. I am one those who recently received an 
astronomical increase of my insurance rates from Blue Cross 
Blue Shield of North Carolina. As you can see, I am a woman and 
I am healthy.
    My monthly health insurance premium for 2013 is $395.60. 
Beginning in January 2014, my renewal rate will be $713.11. 
This amount of $713.11 is higher than my mortgage and my second 
mortgage combined. This amount will, in all likelihood, 
continue to rise every year. I also have a higher deductible 
and higher out-of-pocket amount, but, of course, I have 
maternity coverage and I also can get free birth control pills, 
which at age 58 I am sure I am going to need both frequently.
    [Laughter.]
    Mrs. Overbey. As we all know, President Obama on numerous 
occasions was telling the American people, ``If you like your 
health insurance, you can keep it.'' But we now know that the 
opposite was true. Now you can call this deception, deceit, 
falsifying information, fabrication, whatever. But the bottom 
line is no matter what nicety you give it, a lie is a lie is a 
lie.
    Our very own North Carolina Senator Kay Hagan was right 
there alongside Obama delivering the same message. Senator 
Hagan stated, and I quote, ``People who have insurance they're 
happy with can keep it. We need to support the private 
insurance industry, so that people who have insurance they're 
happy with can keep it.'' This is another lie.
    Women like me are being hurt by these lies and changes 
brought about by this unjust law. We now have fewer choices 
than we have ever had.
    I contacted my Blue Cross Blue Shield agent asking him what 
alternatives I have. His reply to me was, ``No one is sure 
what's happening.'' He checked the subsidies amount and because 
I am married and my husband and I make just above the $62,040 
amount, I am disqualified. Oh, and by the way, if I were not 
married and I could live with my boyfriend, we could make 
$45,000-plus each, that's $90,000-plus as a couple, and qualify 
for these subsidies in the Affordable Healthcare Act. And by 
the way, the name Affordable Healthcare Act is just a lie by 
virtue of the title itself. It should be called the 
Unaffordable Healthcare Act.
    This huge increase in my monthly insurance premium and out-
of-pocket expense and deductible does not supply any more 
coverage, nor does it provide better coverage.
    The American people did not ask for, nor vote for this 
unaffordable health--oh, excuse me, I mean Affordable 
Healthcare Act.
    For people not to have a choice in keeping their insurance, 
to be required to buy insurance they do not want and be fined 
for not doing so takes precious freedom away from every 
American. How Supreme Court Justice Roberts could have cast the 
deciding vote as constitutional is beyond any reasoning.
    For the first time in our government's history through 
Obamacare and some exchanges, we will be paying for abortions 
with our tax dollars. We can now go into the safe, protective 
home of the womb and kill an innocent baby by this healthcare 
law. That is another thing that is beyond any reasoning.
    If the same scenario were my car insurance, I'd be calling 
other companies, getting better rates and adjusting the 
coverage as necessary. Now, because of the 10 required 
government inclusions, I am paying an unfair price for less 
coverage. I did like my insurance coverage, most Americans do. 
Another lie that is circulating at the present time is that 
most Americans do not like their coverage. There is an old 
saying that goes, ``Tell a lie long enough and it becomes the 
truth.''
    This is the foundation of Obamacare and Obama's 
Administration, for that matter. President Obama wants his 
legacy to be Obamacare, this is what his whole presidential 
tenure was based. But the legacy is going to be Obamacare is a 
lie. We had the most wonderful healthcare system in the world 
until the President, for reasons of control, began dismantling 
it.
    As a woman, President Obama and Senator Kay Hagan have 
taken away my choice and with my choice, my rights and freedom. 
I have talked to other women who are in similar situations as I 
am and their policy was canceled altogether. I have friends who 
recently retired, their policies were canceled under the 
Affordable Healthcare Act. And others? Well, they cannot get on 
the website, they cannot afford the insurance, and they cannot 
afford the penalty for not having the insurance.
    The bottom line and the truth, which we will not hear from 
this President, is this has never been about healthcare. It is 
about control. Think about it. A majority of Americans had some 
healthcare coverage. Why not let those people keep it? Our 
taxes are going up anyway, who do you think is going to pay for 
Obamacare? Why not provide coverage for those who are without? 
This would be a win-win situation. Americans would be happy to 
keep their insurance. Those without insurance will be happy 
because they have coverage. That's what makes sense if 
Obamacare had not been about control. But Obamacare is about 
control. What better way to control the lives of American 
people than through healthcare. It is the number one issue that 
concerns us all. It is the gathering of all kinds of 
information into one system about you and me.
    Thank you.
    Chairman Issa. Thank you.
    Mr. Long.
    [Prepared statement of Mrs. Overbey follows:]

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                     STATEMENT OF JOEL LONG

    Mr. Long. Good morning, Chairman Issa and members of the 
committee in attendance today. Thank you for taking the time to 
come to our neck of the woods to learn more about how the new 
healthcare law is impacting our day-to-day lives. Too many 
times leaders in Washington forget they represent real people 
with real challenges. You are to be commended for taking the 
discussion outside the Washington bubble.
    My name is Joel Long and I am the CEO of GSM Services/
Gastonia Sheet Metal, Incorporated. We are a third generation 
heating, air conditioning, and commercial roofing company 
founded in 1927. My brother Steven and I own and operate this 
business and employ 146 co-workers.
    I applaud your efforts today to hold this hearing on one of 
the most important issues facing the citizens of our nation. I 
cannot think of an issue that touches more people than 
healthcare.
    For the purpose of my remarks here today, I would like to 
ask that you not look at me as a business. I would ask that you 
instead look at me as a job creator. As such, I would further 
ask that my remarks be received as coming from someone who has 
worked to help create, build and improve the quality of life 
for those living in my community, as well as a provider for the 
foundation of a quality career for those who work in my 
company, my co-workers.
    I am the job creator who must live with the very decisions 
and policies Congress and the regulatory agencies establish 
which either improve or inhibit my ability to create jobs. I am 
the job creator who believes our government must be a partner 
for our mutual success. I am the job creator who believes the 
business community has been asking for many years to be treated 
as partners with lawmakers--not as the opposition.
    In my limited time, I would like to touch on two of the 
most important ramifications we are experiencing in the 
business world related to healthcare reform.
    Rising insurance premium costs. One of the most talked-
about issues during the healthcare reform debate was that 
rising insurance premiums needed to be brought under control. I 
couldn't agree more. But in my experience, that's the 
difference between policy and the real world. For my company, 
while our rates have risen consistently over the last decade, 
we have maintained a strong partnership with our insurance 
company and co-workers, and believe our current insurance plan 
has evolved into a plan that is providing excellent coverage at 
affordable rates for our co-workers. I've included our 10-year 
history of rate increases. I've also included our current 2013 
health insurance rates for you.
    In 2009, we transitioned to an HRA plan that allowed our 
co-workers to enjoy the low rates of a $10,000 deductible and 
also protect them and their families from large expenses in 
case of a health issue. Our plan is a partnership between GSM 
Services, our co-workers and our insurance company. GSM 
Services pays the first $1000 of our deductible, co-workers pay 
the next $2000 and we both split the next seven evenly. Total 
out-of-pocket expenses for our co-workers is $5500 per year per 
family in case of a large health event. Most of our co-workers 
never exceed the $1000 deductible GSM pays.
    In our 2012 plan year, GSM had a potential HRA medical 
liability of $481,500 and we only paid $41,532. Our 
prescription benefit under the HRA had a liability of $72,000 
and we only paid $1906, a testimony of our co-workers usage of 
85 percent generics. Our total HRA potential liability was 
$553,500 and we paid out $43,438. Numbers do not lie. This is a 
testament to the effectiveness of this strategy for GSM and our 
co-workers.
    Our company, our co-workers and our insurance company were 
happy with this agreement, with this partnership. We were all 
successful, it was our plan.
    As of this date, we have been forced to change our renewal 
date from May of 2014 to December of 2013 to avoid the 
projected minimum rate increase of 30 percent as our current 
plan will no longer be offered by our insurance company next 
year. We believe this minimum will be closer to 50 percent 
under the current conditions. This early renewal is an attempt 
to delay our increase as long as possible in the hope that 
legitimate changes will be made in 2014, so companies like ours 
can continue to offer better and more affordable options to our 
co-workers.
    Confusion is my second part. There is no debate as to the 
confusion this new law has created, not to mention 
implementation. That said, we as businesses cannot operate on 
unknowns. We cannot plan or budget on what we do not know or do 
not understand, and as we work to understand the law, we now 
see the confusion of those who are charged with its 
implementation. The chaos of pricing, policy cancellations and 
quality has caused instability. As business professionals, 
instability and chaos are our enemies. We seek real numbers 
that we can anticipate. A sweeping policy change like 
healthcare reform should have been better planned and 
implemented. The lives that are impacted by the instability of 
the new law are not statistics, they are the lives of real 
people.
    Thank you for your time today. I applaud your attention to 
our needs as citizens of this great nation and ask that you fix 
this issue so that we can get back to the work of running our 
businesses and providing for our families.
    Thank you.
    Chairman Issa. Thank you.
    Mr. Falls.
    [The prepared statement of Mr. Long follows:]

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                    STATEMENT OF JASON FALLS

    Mr. Falls. Good morning, Mr. Chairman and members of the 
committee. My name is Jason Falls and I am a licensed insurance 
professional in North Carolina. My purpose for testifying 
before you today is to share my understanding of how the 
Affordable Care Act is impacting individuals in our 
communities. In my role as an insurance professional, I discuss 
this impact almost daily.
    Residents of North Carolina have heard our President state 
that Healthcare.gov and the Affordable Care Act will reduce 
their premiums and improve their coverage. They have also seen 
a failed rollout of the website and an administration making 
changes to the law on a regular basis. These actions have 
caused confusion and concern by many. I have met with some that 
have opted to wait out 2014 and elect to pay the penalties, 
leaving them uninsured and vulnerable to financial ruin if they 
have medical needs.
    While the President's words on November 14th gave a glimmer 
of hope to some, those individuals covered under the state and 
federal high risk pools, known as Inclusive Health in North 
Carolina, received notification that their coverage would cease 
on December 31st as planned. Under her current coverage with 
Inclusive Health, Tina from Shelby pays a co-pay of $250 per 
month for a medication. Without the medication, her quality of 
life would be deeply diminished and could be life-threatening. 
Under the new plans offered under ACA guidelines, she would pay 
25 percent of the retail cost of that medication, which is 
currently $28,000 a year, leaving her with a bill for one 
prescription of nearly $600 a month. That is in addition to her 
increased premiums.
    In North Carolina, people making less than the poverty 
level or more than four times the poverty level do not qualify 
for the subsidies that are supposed to make premiums for the 
new plans under Obamacare affordable. Lisa and Wayne have seen 
first hand how Obamacare will impact them when they ran the 
numbers. Wayne is covered under Medicare because of serious 
medical issues, including organ transplants, and was being 
checked for cancer at Duke Medical this past Wednesday. His 
condition requires them to be at Duke often, so it's hard for 
Lisa to have a full time job. They make things work on just 
$9000 a year with the help of family, friends, and prayer. But 
that income is lower than the minimum of $15,510 required for a 
family of two to be eligible for subsidies. Without those 
subsidies, she can't afford coverage and is not eligible for 
Medicaid or any other coverage. She can't afford to cover 
herself under the new ACA-compliant plans, which have a higher 
premium than the plans offered in 2013.
    Several restaurants I have met with have canceled their 
employer-sponsored health insurance and will reduce the number 
of hours of their workers to avoid mandates. The employees are 
finding that coverage, even with subsidies, are higher than the 
employer plan that they were covered on.
    As an insurance professional, I am concerned with someone 
who chooses to ride it out without coverage. Some will, because 
of the higher premiums or confusion of the implementation of 
the Affordable Care Act. Others may, out of disdain of a 
government that forces individuals to purchase a product that 
the government designs under threat of financial penalty. For 
those that choose to ride it out, the real risk is the fact 
that the ACA forces you to make a choice by the deadline, for 
this year, March 31st. If you opt out, you cannot buy coverage 
later in the year without a qualifying event. So if I choose no 
coverage for me and I have a serious medical condition during 
the year from an accident or disease, I run the risk of 
financial ruin for my family. The potential is far worse than 
the option the President touts--to just pay the penalty if you 
don't want coverage.
    As someone with intimate knowledge of my industry, and as 
an American, I have serious concerns about Obamacare. What 
happens when Congress decides to work on our national debt--
which they should--and the target is put on those subsidies.
    My purpose here today was to tell the story of my friends 
and neighbors. They are confused, concerned, mad and fed up. We 
can't see the relationship between the value of the new plans 
and the dollars it takes from our families' budget. For those 
committee members that understand these challenges, I thank 
you. For those that don't, I invite you to spend the day with 
me as I visit with individuals and small businesses to see for 
yourself their concerns.
    I want to thank you for coming to our great state. I 
especially want to thank Chairman Issa for his leadership on 
the committee and our North Carolina Representatives that serve 
on this important committee, Congressman Patrick McHenry and 
Congressman Mark Meadows, as well as Congressman Pittenger, for 
being here today. You are all strong advocates for the 
residents of the state of North Carolina.
    Thank you for your time.
    Chairman Issa. Thank you.
    Mr. Gauss.
    [The prepared statement of Mr. Falls follows:]

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                     STATEMENT OF TAV GAUSS

    Mr. Gauss. Mr. Chairman, welcome to North Carolina, 
distinguished members of the committee. I have been asked to 
come here today to talk about the effects the Patient 
Protection and Affordable Care Act, also known as Obamacare, 
has had on businesses and individuals in areas of my state.
    I would like to make two comments to the people listening 
to this. Please read my entire testimony, especially my updates 
from my last testimony two years ago in Washington. And please 
know that I am a non-affiliated voter. I have disdain for both 
parties equally.
    [Laughter.]
    Chairman Issa. Thank you.
    Mr. Gauss. As you can see below, I belong to three national 
organizations that span North America. So I have asked some of 
my colleagues of 32 years to give me their input as well. I 
asked only for instances, good or bad, that they have firsthand 
knowledge of, no conjecture, no speculation, no pontification.
    I received multiple responses from Florida, California, 
Connecticut, Louisiana, North Carolina, South Carolina, 
Kentucky and Virginia and I have heard from others since my 
deadline for the testimony. I will say that I was given a 
deadline--we were all given a deadline of Wednesday, and I 
asked your staffer could we make it longer because things are 
apt to happen on a daily basis like they did this morning. So I 
don't have that written in my testimony, we can talk about that 
later.
    There are two words that have been pervasive in everybody's 
concerns--uncertainty and trust, or lack thereof. And our 
employees have added the word ``fear.''
    When a person or a business has money to spend, they 
usually do not spend it without some degree of certainty as to 
what they will get in return. If they do not know what they're 
going to get in return, they will not spend it, will not spend 
as much.
    Across the country, especially in my area, businesses are 
hesitant to invest in any people, plant, or equipment because 
they cannot be certain of the ultimate costs and returns on 
those investments. They are not hiring people because of the 
unknown cost of Obamacare and other issues coming from federal 
and state governments. North Carolina employers and employers 
in 12 other states also have the added burden of employment tax 
increases imposed on them to pay back money the states borrowed 
from the federal government as their state unemployment funds 
went dry during the last recession and its extended benefits 
period.
    There is one known fact. All of our costs for healthcare 
have got to go up because the plan is adding heretofore non-
insured people, many of whom will not be making a significant 
contribution, if any at all, to the premiums paid to health 
insurers. As written now, the majority of that burden will be 
on the business community. And please refer to my two positions 
on two insurance companies. I do understand underwriting and 
insurance products.
    We've heard from others and these are direct quotes, either 
made directly to me or to my colleagues:
    ``We're going to reduce head count below 50 people.''
    ``Because I pay 100 percent of my employees' health 
insurance premiums, I will take whatever raises I was going to 
give them and use them for their new health insurance 
premiums.'' Note too, the health insurance is deductible 
expense for a group plan. The bonuses would have been taxed as 
income, so they're taking income taxes and turning them into 
health insurance premiums.
    ``I am creating more part time positions that will be for 
28 or 29 hours per week and making sure my seasonal or part 
time help stays under 29 hours per week.''
    ``I plan to make some full time fully benefitted positions 
part time and non-benefitted.''
    ``The rules for a variable hour employee are too confusing, 
they are too subjective.
    People, myself included, have been asked by their clients 
to payroll people for their company, but for less than 30 hours 
a week.
    A company in southwest Florida has stopped paying for any 
employee's share of health insurance until the numbers become 
more quantifiable.
    A staffing company in south Florida trying to do the right 
thing, tried to offer a plan this October and had 160 people 
eligible for the plan to begin October 1, 2013. Seventeen 
signed up because they had to pay premiums.
    And I will stop there, Mr. Chairman.
    [The prepared statement of Mr. Gauss follows:]

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    Chairman Issa. Thank you.
    And I'll recognize myself for a first round of questions.
    Mr. Waters, have you ever seen another form of insurance 
that required that the pool, if you will, contain coverages 
that people do not want? For example, have you ever seen where 
somebody has life insurance and whether they are 18 or 80, they 
pay the same amount for that term life insurance?
    Mr. Waters. No, I have not.
    Chairman Issa. Mr. Falls, have you ever seen insurance like 
that?
    Mr. Falls. No, sir, I have not.
    Chairman Issa. Prior to the Affordable Care Act, did you do 
healthcare insurance--and Mr. Long, obviously you have dealt 
with this too--did you do insurance based on that or did you 
evaluate your pool and your insurance carriers evaluate the 
pool based on the unique characteristics of the pool? In other 
words, all of your 160 employees, Mr. Long.
    Mr. Long. We always pool, insurance is based on that pool, 
people pooled together as a group, group coverage. And so it 
would be approached in that manner.
    Chairman Issa. But it was the actual pool that you had, 
your 160 employees.
    Mr. Long. The actual pool of employees that we had or that 
were going to be participating in the plan; yes, sir.
    Chairman Issa. And I would like to follow up a little bit. 
Mr. Long, under the Affordable Care Act, if I understand your 
catastrophic insurance, because you have a high deductible that 
you and your company pay, is going to change.
    Mr. Long. Yes.
    Chairman Issa. Meaning you are going to pay more for an 
insurance that you almost never use, because in fact your 
company effectively pays apparently almost all of the coverage, 
between you and your employees, with the exception of the 
administrative cost of negotiating with hospitals for rates and 
the like; is that correct?
    Mr. Long. Our plan, we are told, will go from the $10,000 
deductible to the $5000 deductible, that will be what we will 
be focused on. And so, yes, we will have less choices and we 
will be in a different situation with that going forward. But 
we do pay--the way it works now, we do pay the majority of 
those bills, because most of our co-workers do not go above 
that $1000 deductible that we pay. And then on the rate side, 
we also--our rates, we pay 50 percent when employees start with 
us, up to covering it fully in a 10-year period. So even their 
rates are covered.
    Chairman Issa. The reason I asked it is there has been a 
lot of discussion about these deductibles and co-pays. In your 
case, your employees were essentially at or below that $5000 
level; weren't they?
    Mr. Long. Yes.
    Chairman Issa. And the difference was what you chose to 
pay. But under the Affordable Care Act, if I understand 
correctly, they are taking away your, as an employer, your 
ability to pay that. And they are saying that it does not 
matter who pays it, the deductible has to be that amount, which 
in most cases, most people are complaining because their 
deductible went up in order to make it look more affordable.
    Mr. Long. In our case----
    Chairman Issa. I just want to understand how it is 
affecting you and your choice to cover that on behalf of your 
employees.
    Mr. Long. They are changing our formula without our input, 
and so now we will be in a--every employee in our company will 
be in a situation where we pay more for a different coverage, 
and we were already happy with our coverage. And so yes, our 
employees paid $5500 maximum, we paid $4500, but almost no 
employees ever got to that point.
    Chairman Issa. Now Mr. Long, and I think for all the others 
that are insurance experts, if you will, apparently you have 
been working sort of best practices, same as Safeway and a lot 
of other much larger companies, to try to work with your 
employees to lower the cost of delivery of healthcare. Is that 
correct? You mentioned the 85 percent generics and so on. Your 
plan allows for people to get non-generics if they need them, 
but encourages them to spend their money wisely; is that 
correct?
    Mr. Long. Yes, sir.
    Chairman Issa. One question--and I am going to be 
respectful of the limited time for each round. Is there 
anything in the Affordable Care Act that does the kinds of 
things that Mr. Long has been doing? In other words, what in 
the Affordable Care Act encourages the individual and/or the 
employer to drive down the cost of delivery of healthcare? Do 
any of you have any examples?
    Mr. Falls. All I know is if somebody holds himself out as 
having one, then they do not know what they are talking about.
    Chairman Issa. Well, that is an area that hopefully 
Congress will address, is the cost drivers, the things that Mr. 
Long has been working with his employees on.
    I will close by mentioning a couple of facts. On the 
Affordable Care Act, if you do not want insurance, as long as 
you are willing to pay a $5000 individual fine, up to, and a 
$12,500 family plan, up to; you can choose not to have 
insurance. The amazing thing is if you can pay that fine, then 
you can choose to pay your own healthcare over and above that. 
I have not quite figured that out.
    But I will note that every member of Congress, until next 
year, and every federal employee and their families, that is 
over eight million people, receive a program called FEHBP, the 
Federal Employee Healthcare Benefit. It is in fact reimbursed 
or paid for at 72 to 82 percent by the federal government, 
depending upon whether you are a postal or non-postal worker. 
It does not age discriminate the way the Affordable Care Act 
is, and it has not changed to be, if you will, fully compliant 
with the Affordable Care Act. Oddly enough, the deductibles 
under the FEHBP are lower than under the new exchanges that the 
three of us as members of Congress, by law, have to go into.
    So I just want to put that into the record because you will 
be hearing, at least from this member, and from Lacy Clay, 
Congressman Clay of Missouri, that every American should have 
access to that FEHBP, something that everyone from the 
President down to your postal delivery man has, and that at a 
minimum, what we have as federal workers should be available to 
all Americans.
    And with that, I go to Mr. McHenry.
    Mr. McHenry. Well, Mr. Chairman, I thank you for mentioning 
that. And I join you in supporting your legislation that 
enables all Americans to have the same health insurance that 
members of Congress and federal employees have. I think that 
would be a useful and positive step. And in fact, this is not 
some partisan idea. In fact, this is something you have long 
supported and I have been very supportive as well.
    Now, I want to address a question most folks--a lot of 
folks--have. Preexisting condition, discrimination against 
somebody who has a chronic condition. Mr. Waters, in the state 
of North Carolina, let us rewind two or three years ago. If 
someone came to you and they had a chronic condition, were you 
able to get them health insurance as a result of a North 
Carolina program?
    Mr. Waters. There was a North Carolina program called 
Inclusive Health that was able to do that. And so I thought we 
were addressing the program pretty reasonably at that time. So, 
yes, North Carolina did a good job with that.
    Mr. McHenry. So Inclusive Health----
    Mr. Waters. Yes.
    Mr. McHenry. --which was a state-based initiative----
    Mr. Waters. That is correct.
    Mr. McHenry. --that helped individuals with chronic 
conditions or preexisting conditions get health insurance.
    Mr. Waters. That is correct.
    Mr. McHenry. Okay. So we were able to do that prior to the 
Affordable Care Act or Obamacare's passage.
    Mr. Waters. That is correct.
    Mr. McHenry. Okay. So are you able to offer Inclusive 
Health for next year?
    Mr. Waters. No. Inclusive Health has been terminated as of 
the end of December, so you cannot write it any more starting 
as of December 1st, it is over with.
    Mr. McHenry. And unfortunately that is a result of----
    Mr. Waters. Of Obamacare.
    Mr. McHenry. Okay. I just wanted to be clear about that.
    Mr. Waters. That is correct.
    Mr. McHenry. So to say that someone with a preexisting 
condition could not get health insurance in North Carolina that 
is reasonably affordable is simply not the case.
    Mr. Waters. Right. That is correct.
    Mr. McHenry. Thank you.
    Mrs. Overbey, I was taught by my mother to not ask a lady's 
age, a woman's age. But let me ask you, your prior insurance 
plan, did you have maternity coverage under that?
    Mrs. Overbey. No.
    Mr. McHenry. No. And you are required--your new plan 
requires you to have this?
    Mrs. Overbey. Yes.
    Mr. McHenry. Okay. Is that somewhat absurd?
    Mrs. Overbey. Well, yes, it is. I am not planning to have 
any more children and it is not possible.
    Mr. McHenry. Okay. Likewise, I heard from a constituent of 
mine named Pauline, who told me that coverage for her four year 
old daughter for maternity care, she did not find appropriate 
either.
    Mrs. Overbey. Yes.
    Chairman Issa. Will the gentleman yield?
    Mr. McHenry. Sure.
    Chairman Issa. Was the gentleman aware that the men at the 
table also have to have maternity coverage under the law.
    Mr. McHenry. Well, you beat me to the punch. I was going to 
ask Mr. Long.
    [Laughter.]
    Mr. McHenry. I was going to ask Mr. Long if he intended to 
have children.
    Chairman Issa. Personally.
    Mr. Long. Personally? Probably not.
    Mr. McHenry. Okay. So this type of coverage that actually 
increases your cost is not helpful.
    Mrs. Overbey. No, it is not.
    Mr. McHenry. Okay. All right, just trying to understand 
this. And your premiums are currently?
    Mrs. Overbey. I currently pay $395.60.
    Mr. McHenry. Okay.
    Mrs. Overbey. And it is going to go to $713.11. That is my 
monthly premium. And of course my deductible and out-of-pocket 
and all that is going up too.
    Mr. McHenry. Okay. Mr. Long, the economy in Gaston County 
and Mr. Falls, the economy in Cleveland County, certainly hit a 
rough spot. But Mr. Long, as a result of Obamacare, will you be 
able to employ more people and pay higher wages than without 
it?
    Mr. Long. I think that is yet to be certain. However, I 
know this will increase our cost. And so it can have nothing 
but a negative impact on our future and what we will do next 
year. There are other factors of course that come into hiring 
more employees and more co-workers, but there is no way this 
can help us. It is the exact opposite of the trend that we were 
heading on our cost for insurance.
    Mr. McHenry. Okay, so you would find that this would be a 
hindrance rather than----
    Mr. Long. This would stifle my ability to create more jobs, 
yes.
    Mr. McHenry. Okay. Mr. Falls.
    Mr. Falls. We are seeing in Cleveland County, with a lot of 
our businesses there, are going to be scaling back, taking full 
time employees and putting those to part time employees, 
reducing the number of workers. So personally, I expect to see 
a spike in our unemployment rate in Cleveland County because of 
it.
    Mr. McHenry. So it would be a hindrance rather than a help 
to economic growth and more jobs.
    Mr. Falls. That is correct.
    Mr. McHenry. Okay. Thank you all for your testimony. Thanks 
for your time today and I yield back.
    Chairman Issa. Thank you.
    Mr. Pittenger.
    Mr. Pittenger. Mr. Waters, thank you for your testimony. 
You mentioned your issues related to compliance. Give us some 
idea of the hours or manpower as it relates to the additional 
compliance requirements of your business.
    Mr. Waters. Virtually every day we start off with the 
telephone ringing and obviously the questions are the normal 
questions you ask, as I had mentioned before. And it is hard to 
explain over the telephone, we try to get people into our 
office to talk to them more about compliance and what is going 
on.
    I would say that there is--the time element that is 
involved that we have to do as far as insurance agents are 
concerned is that we had to pass a test--study for another four 
or five hours and then pass a test in order to qualify for 
PPACA, to sell the program and to understand it, which is okay, 
but every person in my office had to do that also, which takes 
a tremendous amount of time in order to do that.
    And then the technology part is changing rapidly, as you 
know. We have to have better equipment, better programs, in 
order to even--we have to get into the system to make sure that 
they are in compliance and they are meeting the numbers that 
they are supposed to meet in order to qualify currently for 
this program.
    So it is an ongoing saga as to what is--and I do not know 
how long this will go on, but it is an ongoing saga as to what 
it takes.
    Mr. Pittenger. Well, currently, what percentage increase in 
compliance time is required, do you think, by your staff?
    Mr. Waters. I would say it has increased 15 percent, 20 
percent of my staff's time.
    Mr. Pittenger. A substantial amount.
    Mr. Waters. Yes.
    Mr. Pittenger. Thank you.
    Mr. Gauss, you made reference to uncertainty. You made 
reference to fear. These are major emotional words that bring 
into light the challenges that you anticipate unfolding ahead 
and what you do not anticipate, what you--the unknowns. Give us 
some idea of what would bring some sense of resolve or comfort 
to you. What would you like to see done, given where we are 
today in the context of the current legislation that is in 
front of us? If you were in our shoes, what would you like us 
to do?
    Mr. Gauss. I would stop and then fix it, but do not try to 
fix it while it is still going. There is no doubt that there 
are some good things for some people in the Act.
    Underwriting, we are all going to share in the heavier 
expenses, there is no doubt about that. But you cannot--I think 
somebody from Congress said it is like trying to fix a flat 
tire while the car is running. If we tried to do that in 
business, our customers would go somewhere else. They would not 
buy our product, they would go buy product from somebody who 
knew what they were doing. Stop and fix it.
    Mr. Pittenger. Okay. Mr. Long.
    Mr. Long. Yes, sir.
    Mr. Pittenger. Thank you for your testimony. You referred 
to yourself as a job creator.
    Mr. Long. Uh-huh.
    Mr. Pittenger. I understand that you have some 150 jobs 
that you are in some measure responsible for in this region. 
That is a significant amount.
    Mr. Long. Uh-huh.
    Mr. Pittenger. You alluded to some, but I am trying to get 
a handle in terms of the ongoing effects of this healthcare 
plan. How do you believe that is really going to impede your 
growth of your business and that of other businesses that you 
are involved in? Where do you see the shortfalls? What keeps 
you up at night in terms of your ability to expand and your 
ability to grow?
    Mr. Long. Well, in the Charlotte region, we are focused 
typically in a 50-mile radius of Gaston County, our work is, 
and so we are very fortunate to have Charlotte, that 
metropolitan area, that really drives our economy.
    Mr. Pittenger. That is a great area.
    Mr. Long. It is. It is a beautiful place, best place in the 
world to live. However, I believe that everything we are seeing 
from government, from a regulatory standpoint and this, the 
Affordable Care Act, is dampening our growth every day. With 
all the issues we face as a nation on our economic side with 
our government growing faster than the private sector, we need 
to grow out privately of our problems, so that we can have a 
broader tax base instead of raising taxes and raising cost of 
doing business. And this is just another way that our 
government is not being a good partner at the right scale.
    And so I think it will just negatively impact--and a lot of 
times, these regulations, the impact is hard to see on the 
surface, there are a lot of hidden costs and there is a lot of 
hidden impact of slower growth. You are trying to prove a 
negative and that is very difficult.
    Mr. Pittenger. Mr. Falls, thank you for your testimony.
    You know, we get calls every day in our office, ``what do I 
do now?'' In your practice, can you shed some light on what you 
tell your customers, what they can do in light of the 
challenges that they face? What are the options, what advice 
can you give us?
    Mr. Falls. Well, it is very confusing for my clients as 
well as the industry. Even as late as last week, when the 
President spoke, he changed direction on the industry as well. 
I have met with many people and talked to them about their 
subsidy options, talked to them about coverage without 
subsidies, the different plans that are out there, limited 
plans, less plans than we had in 2013. And even after meeting 
with them and talking to them about the direction to go, they 
will hear something on the news, they will hear from the 
President or they will hear something from the newsmen and they 
will make a phone call to me and say ``I do not understand. 
Everything sounds different today than it did yesterday, and is 
there going to be any resolve to this.'' And my answer is ``I 
do not know.''
    Mr. Pittenger. It is tough.
    I yield back.
    Chairman Issa.  We are going to a quick second round if you 
all can stay for that. I have just got a couple of questions.
    Mr. Long, as an employer of 160 or 146-plus, I guess you, 
your wife and a few others in the family, your brother. You 
have had insurance for a long time.
    Mr. Long. Uh-huh.
    Chairman Issa. Did you have insurance when you were growing 
up?
    Mr. Long. Sure.
    Chairman Issa. Did your family do it for the previous 
generation?
    Mr. Long. Yes.
    Chairman Issa. Even the first generation, there was some 
consideration?
    Mr. Long. You know, I am not sure, but I would--I am not 
sure we did, that first generation.
    Chairman Issa. But for decades your family has provided it.
    Mr. Long. Yes, decades definitely; yes, sir.
    Chairman Issa. Now, I am going to ask an anecdotal question 
that I know the answer to, but if you do not, just say you do 
not, but in your experience, the companies that do not provide 
health insurance, particularly in your industry, they tend to 
be less than 50, do they not?
    Mr. Long. Yes, sir.
    Chairman Issa. So, one of the things that always bothered 
me in the Affordable Care Act is we waived companies less than 
50, when in fact, the vast majority of the companies in my 
recognition and in studies that have been done, the vast 
majority of companies that do not provide healthcare are these 
small, sometimes fly-by-night companies, sometimes just 
startup, well-intended. The Act waived providing it for the 
companies who least likely provided it while mandating the 
individual to have it.
    So in a strange, perverse way, the changes you are seeing, 
small competitors who are not providing healthcare and are not 
mandated to provide healthcare, do not see. Do you see that as 
anti-competitive if we are going to have a law and then we are 
going to waive for people who least likely provided healthcare?
    Mr. Long. Of course, if that is the case with employers 
under 50. We believe insurance partnership with our employees 
is something we must do to hire incredible co-workers and to 
provide the services that we want--the level of service we want 
to provide. But if it is not even across the board, there is 
more and more chance of uneven competition.
    Chairman Issa. Well, having been an electronics 
manufacturer, I agree that covering your employees gets you a 
better employee, to say the least.
    Mr. Gauss, the other thing that is in this Act is this idea 
that if you lower people to part time, particularly the 
restaurant industry and so on, you do not have to cover them. 
Does that make any sense to you, that the part time employee, 
the one least able to afford to pay the healthcare all by 
themselves is exempted no matter how large a company is?
    Mr. Gauss. Not at all. In our industry as well as the 
restaurant industry and other seasonal part time industries, it 
may be very easy to take even someone who is making 32 hours or 
34 hours down to 29 hours. You do not hear as much about it now 
because some large companies made the mistake of making that 
public about 18 months ago, so people have quit talking about 
the fact that they have actually done this. But they are doing 
it.
    What I do not understand is my turnover is nine weeks in 
the staffing industry, which is okay for the staffing industry. 
And so the insurance underwriter underwrites my employee for 
nine weeks and then he goes somewhere else, whether it is to a 
permanent job, to another company, whatever, quits. All of a 
sudden, the insurance company has underwritten this guy for 
nine weeks and now he is gone. I cannot figure the accounting 
on that and neither can the IRS, by the way. They came to us 
and asked us.
    Chairman Issa. One of the things about federal mandates is 
that we often pass them and then begin correcting them as soon 
as they are implemented.
    I guess my last question is a comment. I was in business 
for many years and as a member of the Chamber, we would have 
speakers. It has been about 15 years since the founder of 
Starbucks came to us and I might note that Starbucks is a part 
time employer. Most of the people that you see working at 
Starbucks are all part time. But they have provided 
proportional healthcare benefits. In other words, they pay a 
certain amount into a healthcare benefit for every employee, no 
matter how few hours, throughout their years. And I have got to 
be honest, that behavior is behavior I would like to have seen 
in the Affordable Care Act and I still would like to see. The 
idea that if people, someone has two part time jobs, their 
employer would be encouraged to pay in a portion to what 
ultimately would end up being combined.
    One of the things that I found in the Affordable Care Act 
that I do not understand is for the most part, individuals 
cannot--do not have a system where they can go to the exchange 
and have their employers each pay in a portion to it, if they 
are, for example, in your staffing situation. Do you want to 
address that? Because you have obviously looked at the fact 
that you have people that are going to be in individual 
accounts on the exchange, they are going to come to you for 
nine weeks and then going to go somewhere else. Is that right?
    Mr. Gauss. Yeah. And I am going to step out on a limb and 
act like I know the answer to a question, but if I am not 
mistaken, proportionate contributions is forbidden under the 
Act.
    Chairman Issa. That is my understanding too.
    Mr. Gauss. I am probably wrong.
    Chairman Issa. But again, Starbucks had a program that made 
sense long before there was a law.
    My time is expiring, but I--or expired. I just want you to 
understand that part of the listening session today is every 
one of us as members of Congress hopefully in a bipartisan 
House/Senate bicameral, will have an opportunity to see if we 
cannot make some of those fixes. One of the challenges, and I 
would ask you all, and for that matter, actuarials that may be 
listening to this, to weigh in on how it affects it. Because we 
realize that these changes also would have consequences for 
cost. But these are areas that I personally am concerned, that 
well-meaning employers, such as Starbucks over these many 
years, should be encouraged to continue doing what they are 
doing, not prohibited from it.
    Mr. McHenry.
    Mr. McHenry. Well, let me begin, you know, Mr. Long, your 
business is a competitive one, it is a service and the quality 
of what you do matters a lot. But can you go out to the 
marketplace and just set your price?
    Mr. Long. No, sir.
    Mr. McHenry. I asked this--you know, this is Congress we 
are talking to.
    Mr. Long. Sure.
    Mr. McHenry. I just wanted to make sure.
    Chairman Issa. You can set the price. The question is will 
the customer come.
    Mr. McHenry. Right.
    Mr. Long. We can set any price we want, but that does not 
mean that we will get it.
    Mr. McHenry. Why?
    Mr. Long. Because of open competition.
    Mr. McHenry. Competition.
    Mr. Long. Competition is an incredibly wonderful thing. It 
makes us better.
    Mr. McHenry. So competition will set price.
    Mr. Long. It makes us better, yes.
    Mr. McHenry. So if you have less competition--well, let us 
say you have more competition, right? Prices come down.
    Mr. Long. Yes.
    Mr. McHenry. Okay. Well, Mr. Waters, you are in the health 
insurance business, right? How long you been in the health 
insurance business?
    Mr. Waters. Thirty-three years.
    Mr. McHenry. Okay. So let us walk through this. I come to 
you, a small employer, and I say I would like to buy a health 
insurance plan--this is a couple of years ago. How many options 
do I have?
    Mr. Waters. What we do is that we would run this through--
we have about four or five carriers in our office, as it 
relates to how many we get in North Carolina, so we take four 
or five of the biggest carriers, we run that through the 
formula, our computer system, to try to find out which one of 
those gives you the best rate for what you are looking for. And 
then we go with that.
    Mr. McHenry. So let us say instead of four or five 
carriers, you have two.
    Mr. Waters. Then that breaks down the competition to where 
the two carriers----
    Mr. McHenry. Let me ask another question. We are sitting in 
North Carolina, but South Carolina is just a short, you know, 
10 minute drive from where we sit.
    Mr. Waters. Sure.
    Mr. McHenry. Can I get a healthcare plan from South 
Carolina?
    Mr. Waters. No, I would love to have South Carolina because 
there is some good competition there.
    Mr. McHenry. Right. So competition--and the reason why I 
talk about it is competition matters.
    So we go in the individual market in North Carolina, prior 
to Obamacare, we had 12 carriers.
    Mr. Waters. Right.
    Mr. McHenry. Now, after Obamacare, going into next year, we 
have two--two. We have some counties, 61 out of 100 counties in 
North Carolina, we only have one provider in the exchange. What 
does that do for competition?
    Mr. Waters. No competition.
    Mr. McHenry. Does not pull down the price.
    Mr. Waters. No.
    Mr. McHenry. Does not make things more competitive. And I 
say this because this is an important ingredient when we talk 
about healthcare reform, health insurance reform, more 
competition. So employers and individuals have more options. 
Right?
    I ask this because that competition matters. Mr. Waters, 
what is the main reason why people do not buy health insurance?
    Mr. Waters. Primarily price drives the item. And then some 
people are looking for specific coverages, regardless of price.
    Mr. McHenry. Okay.
    Mr. Waters. But price normally drives the item.
    Mr. McHenry. Price drives--I am sorry?
    Mr. Waters. Drives the item that we are looking for.
    Mr. McHenry. Okay. So price drives--so this question about 
competition relates right back.
    Mr. Waters. Right.
    Mr. McHenry. Okay. Now this is something, in this whole 
discussion, instead of simply me as a member of Congress saying 
I did not vote for the Affordable Care Act or Obamacare. Well, 
you have to be for something instead, right? And I support a 
comprehensive plan that would address this, would allow 
competition across state lines. Would you find that beneficial 
in your offerings?
    Mr. Waters. I would find that beneficial, yes.
    Mr. McHenry. Okay. Now, so Mr. Long, in terms of your 
employees, now what are they looking for for their health 
insurance? I mean, you currently have a plan that you like, but 
unfortunately, in order to keep it, you are going to have to 
pay a whole lot more; is that right?
    Mr. Long. Yes. We are not going to be able to keep it. It 
is going to change, our plan will change.
    Mr. McHenry. So you are not able to keep your current----
    Mr. Long. No, our plan will change next year. We just 
deferred that decision until December of next year.
    Mr. McHenry. Okay. So what does this mean for your 
employees?
    Mr. Long. Our employees want the best coverage they can get 
for the dollars that they are willing to pay to protect their 
families in case of a healthcare problem. They do not want 
anything for free, but they do want good coverage at a 
reasonable cost and they want input into what they are 
receiving. They want choices. We need more choices instead of 
less choices. And I think all of us do.
    Mr. McHenry. Mrs. Overbey, would you like to have more 
choices in terms of your health insurance? Would you like to be 
able to make the choice on whether or not you purchase a policy 
that covers a procedure you are morally opposed to?
    Mrs. Overbey. Of course. I think that is what Americans 
want. We do not want to have to be forced to buy something that 
we do not have any choice in the matter.
    When I woke up this morning, I live in a capitalistic 
society, not a socialism society and I want to be able to make 
those choices, I want to be able to have that competition. I 
want to be able to go and look because as an American citizen I 
have the freedom and hopefully the right to do that. And I want 
those rights to continue, to be able to do that.
    Mr. McHenry. So, you know, when I look at this, there are a 
lot of pledges made about this law. I think people have various 
opinions about it, but disappointment is the greatest word I 
hear from--most consistent word I hear from my constituents.
    And so I thank you for taking the time to testify today. I 
know it is a challenge to take time out of all of your busy 
schedules, but it means a lot that you would take the time to 
tell your stories. And I appreciate those in the crowd that 
have their statements that they want to share and place in the 
Congressional Record. We will--the Chairman has made that 
possible and I appreciate your willingness to tell your 
stories. What we want is greater coverage and care at a lower 
price. We want more competition and choice, not fewer or less. 
And so I think we are unified in that.
    And the fact is that the higher insurance prices under this 
law are not Republican increases or Democrat increases, they 
are increases that American families are bearing or trying to 
bear. So it is not a partisan question, it is just a practical 
question about the cost for families.
    And so, Mr. Chairman, thank you for holding this hearing 
and I yield back.
    Chairman Issa. Thank you.
    Mr. Pittenger.
    Mr. Pittenger. Thank you, Mr. Chairman.
    Mrs. Overbey, your points related to coverage that is not 
needed, the Cadillac plans, everybody buys the same, inside the 
same box, we hear that. In fact, I co-sponsor a bill with 
Congresswoman Ellmers, as I believe my colleagues do, that 
would restrict the coverage to those items that you need and 
that you would want. So hopefully, clearer minds will prevail 
and we will have a better policy come through that.
    I would direct my last comments or questions to Mr. Waters 
and Mr. Falls.
    From your experience in your insurance business, as you 
look at the required actuaries and the pool risk, what do you 
anticipate will occur as those who sign up through the 
exchanges, what will we have in terms of a risk pool? Will it 
be adequate, will it be balanced? Will it only embrace those 
who have a preexisting condition?
    As you look at the motivation for people who buy 
insurance--you know, the Congressional Budget Office said that 
the healthcare plan is unsustainable. Max Baucus, the Democrat 
Chairman in the Senate Banking Committee, said it is a train 
wreck. Well, this has some major implications, and so I think I 
would just like to know from your personal experience, what you 
would anticipate down the road as these pools are being 
assembled.
    Mr. Falls. I would like to answer that question and also 
reference Congressman McHenry's prior question on Inclusive 
Health, to give an example on how I think from experience this 
will happen.
    Inclusive Health had a state option as well as had a 
federal option that was canceled earlier this year. It was no 
longer--you no longer can sign up on federal option. When that 
plan was first introduced, there was an influx of federal 
monies that was put into that plan, along with premiums being 
paid in by the people that elected to get on those plans. The 
premiums that were being paid in were not enough to cover the 
expenses of the plan and eventually those rates had to increase 
and that is the understanding that we--as insurance agents, 
that is what we were told the reason why they canceled that 
federal plan earlier this year rather than stopping it December 
31st, along with the state plan.
    The other reason why this plan is being canceled, both the 
federal option and the state options, the requirement--one of 
the requirements to be eligible for those plans is you cannot 
be eligible for coverage anywhere else. Because the Affordable 
Care Act--essentially there are no health insurance questions 
on the applications for health insurance now--there are no 
health questions other than if you use tobacco or if you are 
pregnant. And that is just to determine--the question on 
pregnancy is to determine how many people you are going to 
count in your household. Because there are no health questions 
on that now, everything is based on income.
    The subsidies are out there, the lack of underwriting, as 
Mr. Gauss spoke to earlier, this is going to go--I believe this 
is going to go the way that most insurance policies that are 
not well thought out will go. And they will eventually either 
have to increase the premiums drastically or those plans will 
just have to go away.
    Mr. Pittenger. This business model was based on the 
presupposition that those who are younger would also buy into 
it. Is it your experience that that age group buys into 
insurance at this time, will they fulfill their role in terms 
of the risk pool requirement?
    Mr. Falls. The premise that the young people are going to 
be the salvation of this plan, I find is hard to believe. 
Whenever you have someone that is 30 years old or younger and 
they elect to take a plan, most 30 year olds or younger that I 
know just come out of college, in our area, make less than 
$45,960. That is the upper limit where you qualify for 
subsidies. So those premiums they are going to be paying in are 
not really going to be that significant in most cases and are 
not going to help the pool.
    Mr. Pittenger. Thank you.
    Mr. Waters.
    Mr. Waters. I would agree everything he said. I just 
recently saw a program that came out of Kentucky and the 4600 
people that signed up, 25 percent--and they used zero to 30, I 
think it was 25 percent of the people had signed up of that 
4000. And then from 30 to about 55, there was only 34 percent 
that had signed up, and from 35 to 64, I think it was 39 
percent of the people had signed up. Obviously the older people 
need it, the younger people do not.
    Mr. Pittenger. Well taken.
    That ends my questions.
    Mr. Chairman, thank you for coming here. It is a huge 
statement by you from our Congress to come to our region and I 
just really applaud the effort that you have made.
    Chairman Issa. Thank you.
    I want to thank all our witnesses today. I want to thank 
the audience for being an extremely good audience.
    I am going to close with a question for the record, for all 
of our witnesses, and this is also a question for anyone that 
may want to submit their comments. I did not vote for the 
Affordable Care Act for a number of reasons, but my own state, 
California, was working on a similar piece of legislation under 
then Governor Swarzenegger and I participated in it. So I have 
looked at employer and individual mandates which were 
considered in my state by a Republican governor.
    I ask only one question for our witnesses and anyone else 
who wants to comment. Had the federal government enacted the 
Affordable Care Act requirements, but made them only linked to 
the aid given by the federal government, either through 
Medicaid or through the subsidies, such that the states would 
have retained their entire right, and employers like Mr. Long, 
to have the healthcare they already had pursuant to their state 
commissioner and pursuant to the Tenth Amendment, would we be 
here today? Or would we have gold plans, platinum plans, 
whatever you want to call them, determined by the federal 
government under the system and they would be the only plans 
eligible for subsidies. And those needing or wanting subsidies 
would choose from those plans and they would be essentially, if 
you want the federal dollars you play by the federal rules, 
which we do in Washington all the time. We do it with highway 
funds and so on.
    But if we had not touched the state insurance commissioner 
here in North Carolina or any other state, so that plans like 
Mr. Long and plans like Mr. Falls and Mr. Waters sell would 
still be available to everyone who wanted to buy them, but 
perhaps not eligible for the subsidies, would we be here today?
    You can comment on that and other things because as 
Congress looks at how to perhaps make changes in the Affordable 
Care Act so that all Americans can have the promise of the 
President that if you like your healthcare, you can keep it, we 
can begin looking at the question of did we overreach and is 
that distortion of the market the reason we are seeing so many 
costs go up, rather than the outreach of government with a 
large chunk of money--it clearly was a large chunk of money for 
these subsidies--which in fact, I never found a subsidy per se 
to be the driver of healthcare costs going up. But I have found 
the rules under the Affordable Care Act perhaps be part of it 
here today and in other hearings.
    So I leave that as an open question for everyone and I 
appreciate the audience's willingness to add to the dialogue 
today in writing. I thank our witnesses and we stand adjourned.
    [Whereupon, at 11:35 a.m., the Committee was adjourned.]



                                APPENDIX

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